ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue - [2003] NSWSC 697

No judgment structure available for this case.

Reported Decision:
59 NSWLR 196

Supreme Court

CITATION: ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697

HEARING DATE(S): 07/02/02, 08/02/02, 07/02/03, 0505/03, 08/07/03

JUDGMENT DATE:
12 August 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Barrett J

DECISION: Disallowance of plaintiff's notices of objection set aside. Notices of objection allowed. Stamp duty to be refunded with interest

CATCHWORDS: TAXES AND DUTIES - stamp duty - transfer of land - whether transfer expressed to be for consideration of "nil" is "made for nominal consideration" - TAXES AND DUTIES - stamp duty - unsuccessful attempt to tax underlying transaction - subsequent levying of duty on instrument - whether revenue estopped - STATUTES - repeal - implied repeal - whether existing provision allowing demand for further money where duty paid considered deficient was impliedly repealed by later provisions permitting amendment of assessment of duty (1992) or reassessment of duty (1998) - if no implied repeal, whether existing provision became subject to limitations in later provisions - STATUTES - operation and effect of statutes - provision creating power to delegate - act of delegate after such provision "omitted" from statute - whether delegation extinguished by omission - whether delegation saved as act, matter or thing before repeal - COURTS AND JUDGES - stare decisis - determining ratio decidendi where three judgments given - EQUITY - equitable estates and interests - interest under sub-trust - whether interests merge - whether trustee of sub-trust is bare trustee - whether trustee of head trust holders on trust for beneficiary of sub-trust - need for writing under Statute of Frauds provisions - estoppel - part performance

LEGISLATION CITED: Duties Act 1997, s.315
Interpretation Act 1987, s.49
Stamp Duties Act 1920, ss.3AA, 37, 73,
Stamp Duties Amendment Act 1992, s.35
Statute Law (Miscellaneous Provisions) Act (No 2) 1999, ss.4, 5
Taxation Administration Act 1996, ss.8, 9, 86, 91, 96

CASES CITED: Re Abbott (a Bankrupt) [1983] 1 Ch 45
Acorn v MCS Microcomputer Systems Pty Ltd (1984) 4 IPR 214
Adamson v Hayes (1973) 130 CLR 276
Aitken v South Hams District Council [1995] 1 AC 263
Arnold v National Westminster Bank plc [1990] Ch 573
Australia and New Zealand Banking Group Ltd v Widin (1990) 26 FCR 21
Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277
Avondale Printers v Haggie [1979] 2 NZLR 124
Baloglow v Konstantinidis [2001] NSWCA 451
Bannister v Bannister [1948] 2 All ER 133
Barrs v Jackson (1842) 1 Y & C Ch Cas 585
Barton v Official Receiver (1986) 161 CLR 75
Beaumont v Yeomans (1934) 34 SR (NSW) 562
Re Bellville's Settlement Trust [1964] Ch 163
Bird v John Sharp & Sons Pty Ltd (1942) 66 CLR 233
Bole v Horton (1673) Vaugh 360
Bolton v Dance [1968] VR 631
Booth v Turle (1873) LR 16 Eq 182
Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482
Bristol-Myers Squibb Co v F H Faulding & Co Ltd (2000) 170 ALR 439
Brittain v Rossiter (1879) 11 QBD 123
Broad v Commissioner of Stamp Duties [1980] 2 NSWLR 40
Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287
Burt v Barry & Roberts Ltd, Ex parte Barry & Roberts [1956] St R Qd 207
Butler v Attorney-General (1961) 106 CLR 268
Cadd v Cadd (1909) 9 CLR 171
Capital and Counties Bank v Rhodes [1903] 1 Ch 631
Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502
Chan v Cresden Pty Ltd (1989) 168 CLR 242
Re Charge Card Services Ltd [1987] Ch 150
Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226
Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1997) 45 NSWLR 639
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Cinema Plus Ltd v Australia and New Zealand Banking Group Ltd (2000) 49 NSWLR 513
Clinan v Cooke (1802) 1 Sch & Lef 40
Collin v Holden [1989] VR 510
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Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
Corin v Patton (1990) 169 CLR 540
Dennis Hotels Pty Ltd v Victoria (1960) 151 CLR 621
Department of Social Security v James (1990) 95 ALR 615
Deputy Commissioner of Taxation v Chamberlain (1990) 26 FCR 221
Dickensons Arcade Pty Ltd v Tasmania (1974) 130 CLR 177
Dillwyn v Llewellyn (1862) 4 DeGD&J 517
Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510; (1982) 149 CLR 431
Re Duke of Marlborough; Davis v Whitehead [1894] 2 Ch 133 at 141
Escoigne Properties Ltd v Inland Revenue Commissioners [1958] AC 549
Fels v Knowles (1906) 26 NZLR 604
Forbes v Moffatt (1811) 18 Ves 384
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Frederick v Frederick (1721) 1 P Wms 710, ER 582
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Grainge v Wilberforce (1889) 5 TLR 436
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Grey v Inland Revenue Commissioners [1958] Ch 375; [1960] AC 1
Head v Lord Teynham (1783) 1 Cox 57
Henderson v Henderson (1843) 3 Hare 100
Herdegen v Commissioner of Taxation (1988) 84 ALR 271
Hughes v Morris (1852) 2 DeGM&G 349
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ISPT Pty Ltd v Chief Commissioner of Stamp Duties (1997) 38 ATR 128
ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 34
E R Ives Investments Ltd v High [1967] 2 QB 379
Johnson v Gore Wood & Co [2001] 2 WLR 72
Jones v Peters [1948] VLR 33
Kok Hoong v Leong Cheong Kweng Mines Ltd[1964] AC 993
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Kutner v Phillips [1891] 2 QB 267
Re Lashmar [1891] 1 Ch 258
Last v Rosenfeld [1972] 2 NSWLR 923
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Re Lind [1915] 2 Ch 345
Ling v Commonwealth (1996) 68 FCR 180
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Oamington Pty Ltd v Commissioner of Land Tax (1997) 98 ATC 5051
Ogilvie v Ryan [1976] 2 NSWLR 504
Onslow v Wallis (1849) Mac & G 506
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Parker v Manessis [1974] WAR 54
Parramatta City Council v Stauffer Chemical Co (Aust) Pty Ltd [1971] 2 NSWLR 500
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Petition of Bankers Trust Co 108 N.Y.S.2d 213 (1951)
Pilcher v Rawlins (1872) 7 Ch App 259
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PARTIES :
ISPT Nominees Pty Limited - Plaintiff
Chief Commissioner of State Revenue - Defendant

FILE NUMBER(S): SC 1976/01

COUNSEL: Mr J.T. Gleeson SC/Mr M. Richmond - Plaintiff
Mr L.G. Foster SC/Dr H.G. Sorensen - Defendant

SOLICITORS: Freehills - Plaintiff
I.V. Knight, Crown Solicitor - Defendant

- 161 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

TUESDAY, 12 AUGUST 2003

1976/01 – ISPT NOMINEES PTY LIMITED v CHIEF COMMISSIONER OF STATE REVENUE

TABLE OF CONTENTS

PART 1 – INTRODUCTION

The transactions …………………………………………………………………… [1]

The original assessments and the challenge to them ………………………….. [5]

The claim for further duty ……………………………………………………….. [6]

The present proceedings ………………………………………………………… [9]

Core statutory provisions ……………………………………………… ……… [11]

PART 2 – THE CASE ADVANCED BY NOMINEES

Nominees’ first basic contention ………………………………………………. [23]

Nominees’ second basic contention …………………………………………... [28]

Nominees’ third basic contention ……………………………………… …….. [30]

PART 3 – ESTOPPEL AND RELATED MATTERS

The estoppel by omission argument …………………………………………... [32]

Abuse of process and estoppel distinguished ………………………………... [34]

Abuse of process – the United Kingdom approach …………………………. [40]

Abuse of process – the Australian approach ………………………………… [50]

Unadjudicated causes of action remain available …………………………… [59]

The position in this case ………………………………………………………… [63]

PART 4 – IMPLIED REPEAL AND RELATED MATTERS

Submissions – implied repeal …………………………………………………. [77]

Submissions – whether s.37 became subject to s.9 …………………………... [95]

Implied repeal – the law ………………………………………………………. [101]

Analysis and decision on implied repeal – 1992 provisions ……………….. [119]

Analysis and decision on implied repeal – 1998 provisions ………….. [130]

Were the notices defective for non-compliance with s.9?………………….. [142]

The s.124 reference …………………………………………………………….. [149]

PART 5 – WHETHER DELEGATIONS EFFECTIVE

The delegation power …………………………………………………………. [150]

Submissions …………………………………………………………………….. [153]

Analysis and decision ……………………………………………… …………. [160]

PART 6 – THE TRUST ASPECTS

The elements of s.73(2A) ……………………………………………… ……… [176]

Was the land trust property at Step 5? ………………………………………. [179]

The Court of Appeal decision ………………………………………………… [182]

Section 23C(1) of the Conveyancing Act – Mason P ………………………... [186]

The merger issue – Mason P ………………………………………………….. [188]

Conclusion as to existence of trust – Mason P ………………………………. [195]

The approach of Fitzgerald AJA ……………………………………………… [198]

Change in beneficial ownership by sub-trust? – Fitzgerald AJA ………….. [200]

Moving of an interest at Step 5 – Fitzgerald AJA …………………………… [205]

Conclusion as to existence of trust – Fitzgerald AJA ………………………. [207]

The approach of Meagher JA …………………………………………………. [214]

Does the ratio decidendi include a decision that a trust arose? …………… [218]

The Court of Appeal decision in summary …………………………………. [233]

Issue estoppel? …………………………………………………………………. [237]

Was the land trust property when transferred to CMPI? ………………….. [242]

The merger argument …………………………………………………………. [243]

Arguments against the Corin v Patton principle …………………………… [257]

Disappearance of intermediate bare trustee ………………………………… [266]

Was CMPI an intermediate bare trustee? …………………………………… [271]

If CMPI had been an intermediate bare trustee, would it have

disappeared?……………………………………………………………………. [283]

The s.23C argument ……………………………………………………………. [296]

Constructive or resulting trust ……………………………………………….. [303]

Proprietary interest created by contract ……………………………………… [306]

The Statute of Frauds cannot be used as an instrument of fraud …………. [329]

Analogy with purchaser under uncompleted contract …………………….. [337]

Estoppel …………………………………………………………………………. [340]

Absence of written approval of CMPI ……………………………………….. [345]

Decision on status of land after Step 5 ……………………………………….. [354]

PART 7 – “NOMINAL CONSIDERATION”

The issues ……………………………………………………………………….. [358]

Is “nil” a “nominal consideration”? ………………………………………….. [360]

Decision …………………………………………………………………………. [376]

PART 8 – THE VALUATION ISSUE

Issue not relevant ………………………………………………………………. [377]

PART 9 – DISPOSITION OF PROCEEDINGS

Summary of conclusions ………………………………………………………. [379]

Orders …………………………………………………………………………… [380]

PART 1 - INTRODUCTION

The transactions

1 At issue in these proceedings is the question whether ad valorem stamp duty became payable on two instruments of transfer of land executed on 27 January 1995. The instruments relate to land at Forster and Bondi Junction. The transferor in each case was Coles Myer Property Investments Pty Ltd (“CMPI”) and the transferee was the plaintiff, ISPT Nominees Pty Ltd (“Nominees”). Argument before me was confined to the instrument concerning the land at Forster, it being accepted by the parties that the outcome on that would also be the outcome in relation to the instrument concerning the Bondi Junction land.

2 The wider transactions in which the instruments played a part were examined by the Court of Appeal in proceedings in which the question of stamp duty liability on a basis quite distinct from that now in issue was before the court: Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1997) 45 NSWLR 639.

3 The transaction in relation to the Forster land consisted of the following steps taken in the following order on the same day, 27 January 1995:

· A unit trust known as the Forster No.1 Trust was established by deed executed by CMPI and ISPT Pty Limited (“ISPT”), with ISPT appointed as trustee. CMPI was issued with 17,973,996 units in the Forster No.1 Trust in consideration for a payment of $17,973,996 made by cheque drawn by CMPI on its bank and delivered to ISPT.

· CMPI, acting by an individual appropriately authorised, orally accepted a written offer from ISPT (as trustee) to purchase the property for $17,973,995 (that is, $1.00 less than the amount of the cheque delivered at Step 1). The cheque was negotiated by ISPT to CMPI by endorsement and delivery to CMPI. The resultant overpayment of $1.00 was paid in cash by CMPI to ISPT as trustee. (This constituted “Step 5” in the description in Fitzgerald AJA’s judgment, to be mentioned presently, and I shall refer to it in the same way). The written offer stated that CMPI was to hold the property as nominee as long as it remained the registered proprietor.

· Each of ISPT (as trustee of a separate unit trust, the ISPT Trust) and ISPT Custodians Pty Limited (“ISPT Custodians”) (as trustee of a third such trust, the Forster No.2 Trust) was issued 8,986,998 units in the Forster No.1 Trust. Each of them made payment for the units issued to it by a cheque for $8,986,998 drawn on its bank in favour of ISPT as trustee of the Forster No.1 Trust. ISPT (as trustee of the Forster No.1 Trust) redeemed the units previously issued to CMPI and, as consideration for the redemption, negotiated to CMPI, by endorsement and delivery, the cheques received by it from ISPT and ISPT Custodians.

· CMPI resigned as nominee of ISPT under the Forster No.1 Trust and was replaced as nominee by Nominees (Fitzgerald AJA’s “Step 8”). The property was transferred by CMPI to Nominees as the nominee of ISPT under the Forster No.1 Trust, with a stated consideration of ‘nil’ (“Step 9” in Fitzgerald AJA’s description).

4 Because it will be convenient to refer from time to time to the various steps by the numbers given to them by Fitzgerald AJA in the Court of Appeal, I set out in full his Honour’s description of the transaction ((1998) 45 NSWLR 639 at 656):

”1. ISPT Coles Myer (Forster) Property Trust (No 1) (the Forster No 1 Trust) was established by a deed executed by CMPI and ISPT Pty Ltd. ISPT was appointed trustee of the Forster No 1 Trust.
2. Coles Myer Property Investments applied for the issue of 17,973,996 units in the Forster No 1 Trust and provided ISPT as trustee of that trust with a cheque in the sum of $17,973,996. The units applied for were issued to Coles Myer Property Investments. No other units in the Forster No 1 Trust had been issued at that time.
3. ISPT as trustee of the Forster No 1 Trust made a written offer to Coles Myer Property Investments to purchase the Forster Shopping Village for $17,973,995. The offer made provision for Coles Myer Property Investments ‘... to hold the property as a nominee under the deed establishing the Trust for so long as Coles Myer Property Investments remains the registered proprietor ...’.
4. Coles Myer Property Investments orally accepted the offer.
5. The cheque for $17,973,996 in favour of ISPT as trustee of the Forster No 1 Trust which Coles Myer Property Investments had paid for its 17,973,996 units in that trust was then endorsed by ISPT in favour of Coles Myer Property Investments and returned to it. An overpayment of $1 was returned to ISPT as trustee of the Forster No 1 Trust.
6. ISPT as trustee of the Industries Superannuation Property Trust (the ISPT Trust) and ISPT Custodians Pty Ltd (ISPT Custodians) as trustee of the ISPT Coles Myer (Forster) Property Trust No 2 (the Forster No 2 Trust) each applied for 8,986,998 units in the Forster No 1 Trust, and each paid for those units by a cheque for $8,986,998 in favour of ISPT as trustee of the Forster No 1 Trust. The units applied for were issued to each of ISPT as trustee of the ISPT Trust and ISPT Custodians as trustee of the Forster No 2 Trust.
7. ISPT as trustee of the Forster No 1 Trust redeemed the 17,973,996 units in that trust which had previously been issued to Coles Myer Property Investments, and endorsed the two cheques, each for $8,986,998, which it had received from ISPT as trustee of the ISPT Trust and ISPT Custodians as trustee of the Forster No 2 Trust in favour of Coles Myer Property Investments.
8. Coles Myer Property Investments resigned as the ‘nominee’ of ISPT under the Forster No 1 Trust, and was replaced as ‘nominee’ by ISPT Nominees.
9. The Forster Shopping Village was transferred by Coles Myer Property Investments to ISPT Nominees as the ‘nominee’ of ISPT under the Forster No 1 Trust. The stated consideration for the transfer was ‘nil’.
In summary, the effect of the transaction was to transfer the legal title to the Forster Shopping Village to ISPT Nominees, and beneficial ownership of the property to a party other than Coles Myer Property Investments, which no longer has any estate or interest, legal or equitable (beneficial) in the property.”

References below to “Step 5”, “Step 8”, “Step 9” and so forth are references to the elements thus numbered by Fitzgerald AJA.

The original assessments and the challenge to them

5 On 20 April 1995, each of the transfers dated 27 January 1995 was assessed as liable to a fixed duty of $2. That duty was paid and each instrument was marked as being duly stamped. This decision was made on the footing that the transfers fell within s.73(2A) of the Stamp Duties Act 1920. On 21 September 1995, however, the Chief Commissioner purported to issue to ISPT assessments under Division 3A of the Stamp Duties Act on the footing that ad valorem duty was payable upon or by reference to transactions involving a change in the beneficial ownership of property notwithstanding that the transaction was not by way of written instrument. ISPT objected to the assessments. The Chief Commissioner disallowed the objections, whereupon ISPT appealed to this court. Studdert J allowed the appeal: ISPT Pty Ltd v Chief Commissioner of Stamp Duties (1997) 38 ATR 128. An appeal against Studdert J’s decision was later dismissed on 23 December 1998 in the Court of Appeal proceedings to which I have already referred (Meagher JA and Fitzgerald AJA, Mason P dissenting).

The claim for further duty

6 On 22 December 1999, two notices were issued to Nominees, purportedly under s.37(1) of the Stamp Duties Act 1920, calling for a further payment in respect of each of the instruments of transfer which had already been marked as duly stamped upon payment of duty of $2. In the case of Forster, the notice began as follows:

“A Real Property Act Transfer from Coles Myer Property Investments Pty Ltd (A.C.N. 050-141-654) to ISPT Nominees Pty Ltd (A.C.N. 066-648-077) (‘Nominees’) in respect of property known as the Forster Shopping Centre was, on 20 April 1995, assessed and stamped to duty of $2.00 under section 73(2A) of the Stamp Duties Act (the ‘Act’).

It appearing that there has been assessed on the Transfer an insufficient amount of duty or fine, pursuant to section 37(1) of the Act, I call upon ISPT Nominees, the person on whose behalf the Transfer was properly chargeable in respect of both duty and fine at the time of stamping of same, namely $1,168,869.60 calculated as follows: …”

7 Each notice issued on 22 December 1999 (and bearing that date) was signed “J.W. Purcell, Commissioner of State Revenue”. On 7 January 2000, two further notices were issued in order to supplement the original notices by specifying a due date for payment, being 28 January 2000. These were signed, “S.P. Johnson, Commissioner of State Revenue”. It is not disputed that the signatories held, on the respective dates, the position of Commissioner of State Revenue or that the notices were issued by the Commissioner of State Revenue.

8 Nominees, being dissatisfied with the decision to issue the notices, lodged a written objection under s.86 of the Taxation Administration Act 1996. Acting under s.91, the Chief Commissioner subsequently disallowed the objection. Nominees paid the sums demanded, together with fines, but without prejudice to its rights to challenge the disallowance of the objection.

The present proceedings

9 By its summons filed on 29 March 2001, Nominees claimed the following orders:

“1. An order that the decision of the Defendant of 2 February 2001 disallowing the Plaintiff’s Notice of objection dated 18 February 2000 to a notice under section 37(1) of the Stamp Duties Act 1920 purportedly issued by the Defendant dated 22 December 1999 in respect of property known as the Eastgate Shopping Centre be set aside.

2. An order that the decision of the Defendant of 2 February 2001 disallowing the Plaintiff’s Notice of Objection dated 18 February 2000 to a notice under section 37(1) of the Stamp Duties Act 1920 purportedly issued by the Defendant dated 22 December 1999 in respect of property known as the Forster Shopping Centre be set aside.

3. An order that the Plaintiff’s Notices of Objection dated 18 February 2000 be allowed.

4. An order that the Defendant refund the amount paid by the Plaintiff by way of stamp duty and fine pursuant to section 104 of the Taxation Administration Act 1996 together with interest.

5. Such further or other orders as the Court thinks fit.

6. Costs.”

10 The matter the subject of the fourth order, insofar as it is concerned with fines (as distinct from duty), has already been determined and disposed of by consent. As far as substantive relief is concerned, there remain the claims for the first to third orders and for the fourth as it affects duty as such. The orders are sought in exercise of the right of appeal arising under s.96 of the Taxation Administration Act 1996. By virtue of s.101, the party appealing (here, Nominees) has the onus of proving its case.

Core statutory provisions

11 It is necessary to refer at once to several of the relevant statutory provisions. From its enactment in 1920, the Stamp Duties Act 1920 contained, in s.37, provisions enabling the revenue to demand further payment in cases where it appeared that insufficient duty had been assessed. As in force at the time relevant to the present proceeding, s.37 was in the following terms:

…

(2) An amount payable under this section shall be a debt due to the Crown, and may be recovered from such person accordingly: Provided

(a) that such person, if dissatisfied, may object or appeal against the decision of the Chief Commissioner under section 124, the provisions of which shall, mutatis mutandis, apply, and

(b) that the instrument stamped under subsection (1) shall be as good and available for all purposes as though full duty and fine had been paid thereon.”

12 In 1992, the following ss.35A to 35C were added to the Stamp Duties Act 1920:

“ Stamp taken to constitute an assessment

35A For the purposes of this Act, the stamping of an instrument (excluding a return) by the Chief Commissioner is taken to be an assessment of the duty (and, where relevant, of any fine) payable under this Act in respect of the instrument.

Amendment of assessment by Chief Commissioner

35B (1) The Chief Commissioner may, in the chief Commissioner’s absolute discretion, amend an assessment, except as provided by this section.

(2) The amendment of an assessment may be made for any reason. In particular, an amendment may be made in connection with a reduction or refund of duty under section 35C.

(3) The Chief Commissioner must not amend an assessment in respect of an instrument (including a return) if the Chief Commissioner is satisfied that the assessment was made in accordance with the interpretation of this Act in respect of instruments of that kind commonly applied by the Chief Commissioner at the time the assessment was made

(4) An application by a person for the amendment of an assessment may be made only within 2 years after the date of the assessment.

(5) The Chief Commissioner may amend an assessment, otherwise than on an application by a person, only within 2 years after the date of the assessment.

(6) More than one amendment of an assessment may be made in accordance with this section.

(7) It is not competent for a person to bring proceedings against the Chief Commissioner to require the Chief Commissioner to exercise the discretion under subsection (1).

35C (1) The Chief Commissioner may, in the Chief Commissioner’s absolute discretion:

(a) reduce the amount of duty to be paid in respect of an instrument; or

(b) refund any amount which has been paid in respect of an instrument which is in excess of a requirement for payment under this Act,

except as provided by this section.

(2) The Chief Commissioner must not reduce or refund an amount in respect of an instrument if the Chief Commissioner is satisfied that the payment of the amount was made in accordance with the interpretation of this Act in respect of instruments of that kind commonly applied by the Chief Commissioner at the time the payment was made.

(3) An application for a reduction or refund of an amount may be made at any time within 2 years after the date of payment of the amount.

(4) A reduction or refund is subject to the production to the Chief Commissioner of the instrument concerned, except in the case of an instrument which has been destroyed by the Registrar-General following the registration of the instrument by the Registrar-General.

(5) The Chief Commissioner may refuse to make a refund is of the opinion that the person applying for the refund has passed the duty or other amount on to another person and the refund will not be paid to that other person.

(6) Instead of making a refund to a person, the Chief Commissioner may apply the amount that would otherwise be refunded to meet duty or any other amount payable (or which is likely to become payable) by the person in relation to any other instrument.

(7) It is not competent for a person to bring proceedings against the Chief Commissioner to require the Chief Commissioner to exercise the discretion under subsection (1).

(8) In this section, ‘instrument’ includes a return.”

13 On 1 January 1997, the Taxation Administration Act 1996 came into operation. Its ss.8 and 9, so far as relevant for present purposes, were as follows:

14 On 1 July 1998, the Duties Act 1997 came into operation. Several aspects of that Act are relevant for present purposes. First, s.315 and Schedule 2 caused ss.35B and 35C of the Stamp Duties Act 1920 to be omitted. The precise way in which that was done should be noted. Section 315 provided:

An Act specified in Schedule 2 is amended as set out in that Schedule.”

“[5] Sections 5, 6A, 8B, 8C, 9, 10, 13, 14, 19, 32, 35B, 35C, 36, 38A, 44E and 98V

Omit the sections.”

15 The second relevant change, for present purposes, effected by the Duties Act 1997 was the addition of references to both the Stamp Duties Act 1920 and the Duties Act 1997 in the definition of “taxation laws” in s.4 of the Taxation Administration Act 1996. This was effected by appropriate specification through s.315 and Schedule 2.

16 Third, s.315 and Schedule 2 to the Duties Act 1997 added to the Stamp Duties Act 1920 the following s.3AA:

“ Section 3AA Taxation Administration Act 1996

Taxation Administration Act

17 Fourth, s.315 of and Schedule 2 to the Duties Act 1997 caused to be omitted from the Stamp Duties Act 1920 s.124 thereof which, so far as relevant, had provided:

“Any person liable to the payment of duty … who is dissatisfied with the assessment of the Chief Commissioner may … deliver to the Chief Commissioner a notice in writing requiring him to state a case for the opinion of the Supreme Court.”

18 Section 315 of and Schedule 2 to the Duties Act 1997 were afterwards repealed. Section 4 of the Statute Law (Miscellaneous Provisions) Act (No 2) 1999 enacted:

“ 4. Repeals

Each Act specified in Schedule 4 is, to the extent indicated in that Schedule, repealed.”

“Name of Act Extent of Repeal
… …

19 Schedule 5 to the Statute Law (Miscellaneous Provisions) Act (No 2) 1999 contained certain provisions (given force by s.5) as to the effect of amendments made by that Act. It also contained provisions as to the effect of repeals and re-enactments made by that Act. There was no provision as to the effect of repeals without re-enactment.

20 The last provision to be mentioned is s.73(2A) of the Stamp Duties Act 1920, being the provision by reference to which Nominees contends that each instrument of transfer executed on 27 January 1995 was liable to a fixed duty of $2 only , as distinct from ad valorem duty. That section, as in force at the relevant time, was as follows:

21 Section 73(1), in so far as relevant, was as follows:

“The following instruments are not to be charged with ad valorem duty as conveyances, namely:
(a)

(i) An instrument appointing a new trustee, or
(ii) an instrument appointing an additional trustee, or
(iii) an instrument by which a trustee retires from a trust without any new trustee being appointed in his place, or

(iv) a declaration by an executor under section 11 of the Trustee Act 1925.”

22 It will be necessary to refer to other statutory provisions in due course. Those set out above are, however, the provisions of central relevance to the case.

PART 2 – THE CASE ADVANCED BY NOMINEES

Nominees’ first basic contention

23 Nominees’ case before me was based on three basic contentions, each of which involves a number of issues and sub-issues that will have to be examined in some depth.

24 Nominees’ first basic contention is that the notices purportedly issued under s.37(1) of the Stamp Duties Act 1920 on 22 December 1999 were not validly issued. The first argument advanced in support of that contention is that the Chief Commissioner was estopped from asserting the dutiability of the transfers having failed to do so in the previous proceedings determined by Studdert J and the Court of Appeal. This result is compelled, it is said, by the principles outlined in Port of Melbourne Authority v Anshun Pty Ltd (1980) 147 CLR 35 or, alternatively, because the assertion of dutiability the subject of these proceedings entails an abuse of process.

25 Nominees’ second argument in support of the proposition that the purported s.37(1) notices were not validly issued is that, in issuing the notices, the Commissioner purported to act under s.37 of the Stamp Duties Act at a time when that section was no longer in force, with the result that the notices had no legal effect. Briefly stated, that second argument runs as follows:

· Section 9 of the Taxation Administration Act confers a power of reassessment of tax liability, but only within certain limits (being the limits emerging from ss.9(2) and 9(3)). There is, Nominees says, no evidence that these requirements have been complied with.

· Parliament intended that the Taxation Administration Act provisions should be of general application in relation to the administration and enforcement of taxation laws (ie, to the exclusion of the taxation laws themselves). On 1 July 1998, the Stamp Duties Act became one of the Acts to which the Taxation Administration Act applied: s.315, Duties Act 1997.

· The enactment of s.315 of the Duties Act amounted to the implied repeal of s.37 of the Stamp Duties Act (as inconsistent with s.9 of the Taxation Administration Act).

· Section 315 of the Duties Act was repealed by the Statute Law (Miscellaneous Provisions) Act (No 2) 1999 but that repeal did not revive s.37 of the Stamp Duties Act: s.28, Acts Interpretation Act 1987.

· In issuing the notices, the Commissioner therefore purported to act under s.37 of the Stamp Duties Act when it was no longer in force.

26 Nominees’ third avenue of attack on the s.37(1) notices is a variant on the second. It submits that s.37 must be construed subject to the requirements of ss.9(2) and 9(3) of the Taxation Administration Act, with the Stamp Duties Act and the Taxation Administration Act being read together as directed by s.3AA of the latter. Section 9(2) of the Taxation Administration Act requires that the reassessment be in accordance with legal interpretations and assessment practices generally applied by the Chief Commissioner at the time he made the original assessment. It is said by Nominees that, because the notices of 22 December 1999 did not show that that requirement had been satisfied, they were invalid.

27 Nominees makes a fourth and final alternative submission in relation to the s.37 notices. It submits that the notices would only be valid if issued pursuant to a delegation of authority by the Chief Commissioner, and, the statute pursuant to which the purported delegation was made having been repealed, there is no evidence of any such delegation.

Nominees’ second basic contention

28 Nominees’ second basic contention is that, even if the s.37 notices were valid, each of the instruments of transfer was, by virtue of s.73(2A) of the Stamp Duties Act, liable to only the fixed duty of $2 paid in 1995 and there was accordingly no statutory basis for demanding further payment under s.37(1). Nominees’ argument on this front is briefly as follows:

· The conveyance duty imposed by the Stamp Duties Act is a duty on instruments, not on the underlying transactions they evidence or effect. Accordingly, it is necessary to determine the legal character and effect of each instrument of transfer. If the legal character and effect are such that the instrument falls within the terms of s.73(2A), the instrument will be liable to a fixed duty of $2, even if it is a step in a wider transaction under which a change in the beneficial ownership of the land occurs.

· Nominees then concentrates on the ownership of the land immediately after Step 5. In this respect, Nominees adopts the approach of the majority of the Court of Appeal (Meagher JA and Fitzgerald AJA). Their Honours proceeded on the basis that, immediately after Fitzgerald AJA’s Step 5, the land was held by ISPT (as trustee of the Forster No.1 Trust) through CMPI (as its nominee) on trust for CMPI (as sole unitholder in the Forster No.1 Trust); or, putting this another way, the land was held on trust by CMPI (as nominee) for ISPT (as trustee of the Forster No.1 Trust). ISPT held its interest on trust for CMPI, so that the effect of Step 5 was to give rise to a fully constituted trust.

· Alternatively, Nominees contends that the land became trust property by Fitzgerald AJA’s Step 6 when units were issued to the new unitholders, ISPT (as trustee of the ISPT Trust) and ISPT Custodians (as trustee of the Forster No 2 Trust). This was the approach taken by Studdert J at first instance in the earlier proceedings.

· Accordingly, before Step 8, the land was trust property. CMPI held the land as nominee for, and on trust for ISPT, which in turn held its interest on trust for the new unitholders. It is not clear whether ISPT asserts that before Step 8 CMPI held the legal estate in the land, and ISPT held its equitable interest, on trust for the new unitholders; or whether CMPI held its legal estate on trust for ISPT which, in turn, held it on trust for the new unitholders.

· The characterisation of Step 8 adopted by ISPT was explained as follows in written submissions:

“Step 8 involved a decision of the kind referred to in section 73(2A), i.e the appointment of a new trustee. As a result of step 8, [Nominees] was constituted as the new nominee and trustee of the land … Step 9 was a conveyance consequential upon such decision and operated to vest the trust property in the Plaintiff being the new trustee.”

29 After I had reserved judgment and had begun to consider the submissions, I formed the view that a point briefly mentioned in argument and relevant to the second basic contention regarding s.73(2A) required closer attention. The point is whether each instrument of transfer in which the consideration was expressed to be “nil” was properly regarded as a conveyance “for nominal consideration” as referred to in that section. I raised this matter with the parties and asked whether it was something to which the court was entitled to have regard. The defendant later filed a notice of motion seeking a declaration that the proceedings should be determined without regard to that matter. I did not accede to that application and made directions for the taking of further evidence and the making of further submissions: see ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 34. Evidence was given and submissions made on 7 February and 8 July 2003. This “nominal consideration” aspect is taken into account in my consideration of Nominees’ second basic contention.

Nominees’ third basic contention

30 Nominees’ third basic contention is that the property transferred at Step 9 was of minimal value only, with the result that, if ad valorem duty is payable, it is of a negligible amount. Nominees’ argument on that footing (that is, assuming that s.73(2A) did not apply) proceeds generally as follows:

· The transfers were liable to duty on the greater of the unencumbered value of the property conveyed and the amount or value of all encumbrances subject to which the property is conveyed: ss.4 and 66(3) and para.(2) of the “Conveyances of any Property” head of charge in the Second Schedule of the Stamp Duties Act.

· The property the subject of each transfer was not conveyed subject to any relevant encumbrances. ISPT’s equitable interest was not an encumbrance: Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226.

· If the property conveyed is properly regarded as the bare legal estate in the property (a proposition that needs to be closely examined in the light of cases such as DKLR Holding Co (No.2) Pty Ltd v Commissioner of Stamp Duties (1982) 149 CLR 431) the unencumbered value will be nominal.

· Alternatively, if the property conveyed is properly regarded as the interest of a registered proprietor (rather than the bare legal estate), the fundamental valuation test based on the price which a willing but not anxious vendor could reasonably expect to obtain and a hypothetical willing but not anxious purchaser could reasonably expect to have to pay will produce a nominal figure only, given that the property is subject to an existing trust.

31 Each of the three basic contentions upon which Nominees relies involves a number of distinct issues. I shall examine those contentions in the order in which they are set out above, dealing with the separate issues each raises in the order that seems to flow naturally.

PART 3 – ESTOPPEL AND RELATED MATTERS

The estoppel by omission argument

32 Nominees contends that the Chief Commissioner should have raised the question of ad valorem duty on the transfers during the proceedings heard by Studdert J and, having failed to do so, is precluded from raising it in these proceedings. This submission is based in the rule in Henderson v Henderson (1843) 3 Hare 100. In that case, Sir James Wigram VC said (at 114-5):

“In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires that parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgement, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

33 Nominees put this argument in the form of two alternative submissions: first, that the decision in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 prevents the dutiability of the transfers being raised in these proceedings; or, alternatively, that raising the dutiability of the transfers at this point would be an abuse of process: Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482. As will become clear, it seems to me that Nominees’ two submissions are merely different ways of putting the same argument based on the rule in Henderson v Henderson.

Abuse of process and estoppel distinguished

34 English courts have increasingly taken the view that the principle in Henderson v Henderson is an aspect of the court’s inherent jurisdiction to prevent an abuse of process, rather than some species of estoppel or res judicata. In Greenhalgh v Mallard [1947] 2 All ER 255 Somervell LJ said (at 357) that

“… res judicata for this purpose is not confined to the issues which the Court is actually asked to decide, but … covers issues … which are so clearly part of the subject matter of the litigation, so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.”

35 Lord Wilberforce, delivering the advice of the Judicial Committee in Brisbane City Council v Attorney-General for Queensland [1979] AC 411, said (at 425) that the “true basis” of the rule was abuse of process,

“and it ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation”

36 In Barrow v Bankside Agency Ltd [1996] 1 WLR 257 Bingham MR said (at 260):

“The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.”

37 In Bradford & Bingley Building Society v Seddon (above) Auld LJ (with whom Ward and Nourse LJJ agreed) said (at 1491):

“Although the courts have continued to speak of the rule variously as res judicata in ‘its wider sense’ (per Lord Kilbrandon in Yat Tung Investment Co. Ltd v Dao Heng Bank Ltd. [1975] AC 581, 590A), or not in a ‘strict’ of ‘true’ sense (per Stuart-Smith LJ in Talbot v Berkshire County Council [1994] QB 290, 296D-E), it is quite distinct from res judicata which, save in special circumstances in the case of issue estoppel, is an absolute bar to relitigation”.

38 In Manson v Vooght [1999] BPIR 376 May LJ, delivering the leading judgment, said (at 387-8):

“In my view, the use in this context of the phrase ‘res judicata’ is perhaps unhelpful, and this not only because it is in Latin. We are not concerned with cases where a court has decided the matter; but rather cases where the court has not decided the matter, but where in a (usually late) succeeding action someone wants to bring a claim which should have been brought, if at all, in earlier concluded proceedings. If in all the circumstances the bringing of the claim in the succeeding action is an abuse, the court will strike it out unless there are special circumstances. To find that there are special circumstances may, for practical purposes, be the same thing as deciding that there is no abuse, as Sir Thomas Bingham MR came close to holding on the facts in Barrow v Bankside Agency Ltd [1996] 1 WLR 257. The bringing of a claim which could have been brought in earlier proceedings may not be an abuse. It may in particular cases be sensible to advance cases separately. It depends on all the circumstances of each case. Once the court’s consideration is directed clearly towards the question of abuse, it will be sent that the passage from Sir James Wigram V-C’s judgment in Henderson v Henderson 3 Hare 100 is a full modern statement of the law so long as it is not picked over semantically as if it were a tax statute.”

39 The House of Lords has confirmed the rule’s basis in abuse of process as opposed to res judicata or issue estoppel: Johnson v Gore Wood & Co [2001] 2 WLR 72 at 89-90 per Lord Bingham of Cornhill (with whom Lord Goff of Chievely, Lord Cooke of Thorndon and Lord Hutton agreed on the abuse of process of point).

Abuse of process – the United Kingdom approach

40 The application of the Henderson rule in English courts reached its high point in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, where Lord Kilbrandon said that a claim that “could and therefore should” have been made in proceedings could not be later brought. English courts have since retreated from this high-water mark.

41 Before Yat Tung was decided Somervell LJ, in Greenhalgh v Mallard [1947] 2 All ER 255, described (at 257) the abuse as covering

“issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.”

“The second question depends on the application of a doctrine of estoppel, namely res judicata. Their Lordships agree with the view expressed by McMullin J that the true doctrine in its narrower sense cannot be discerned in the present series of actions, since there has not been, in the decision in no 969, any formal repudiation of the pleas raised by the appellant in no 534. Nor was Choi Kee, a party to no 534, a party to no 969. But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.”

42 A similar approach was taken in Talbot v Berkshire County Council [1994] QB 290. That case arose out of a motor vehicle accident. The passenger sued the driver and the county council. Damages were apportioned between the two defendants. The driver then brought a claim in respect of his own injuries against the council. The question to be determined was whether the driver’s claim against the council was abusive of process. Stuart-Smith LJ said (at 298):

“There can be no doubt that the [driver’s] personal injury claim could have been brought at the time of [the passenger’s] action. It could have been included in the original third party notice issued against the council (RSC Ord 16, r 1(b)(c)); it could have been started by a separate writ and consolidated with or ordered to be tried with [the passenger’s] action: Ord 4, r 9. The third party proceedings could have been amended at any time before trial and perhaps even during the trial to include such a claim notwithstanding that ti was statute-barred, since it arose out of the same or substantially the same facts as the cause of action in respect of which relief was already claimed, namely, contribution or indemnity in respect of [the passenger’s] claim: Ord 20, r 5. In my opinion, if it was to be pursued, it should have been so brought.”

43 It should be noted that Lord Kilbrandon’s formulation that a claim that “could and therefore should” have been made in earlier proceedings cannot subsequently be made is contrary to Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 where the defendant was allowed to raise defences that might previously been raised in proceedings in which the plaintiff obtained default judgment.

44 Since these cases there has been an apparent retreat, in the United Kingdom, from the position that a claim will necessarily be barred if it “could and therefore should” have been brought in earlier proceedings. In Bradford & Bingley Building Society v Seddon (above) Auld LJ (with whom Ward and Nourse LJJ agreed) said (at 1492-3):

“In my judgement mere ‘re’-litigation, in circumstances not giving rise to cause of action or issue estoppel, does not necessarily give rise to abuse of process. Equally, the maintenance of a second claim which could have been part of an earlier one, or which conflicts with an earlier one, should not, per se, be regarded as an abuse of process. Rules of such rigidity would be to deny its very concept and purpose. As Kerr LJ and Sir David Cairns emphasised in Bragg v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1982] 2 Lloyd’s Rep. 123, 137, 138-139 respectively, the courts should not attempt to define or categorise fully what may amount to an abuse of process: see also per Stuart-Smith LJ in Ashmore v British Coal Corporation [1990] 2 QB 338, 352. Sir Thomas Bingham MR underlined this in Barrow v Bankside Agency Ltd [1996] 1 WLR 257, stating, at p. 263B, that the doctrine should not be ‘circumscribed by unnecessarily restrictive rules’ since its purpose was the prevention of abuse and it should not endanger the maintenance of genuine claims: see also per Saville LJ, at p. 266D-E.

Some additional element is required, such as a collateral attack on a previous decision (see, e.g. Hunter v Chief Constable of the West Midlands Police [1982] AC 529; Bragg’s case [1982] 2 Lloyd’s Rep. 132, per Kerr LJ and Sir David Cairns, at pp. 137 and 139 respectively, and Ashmore’s case [1990] 2 QB 338), some dishonesty (see e.g. per Stephenson LJ in Bragg’s case, at p. 139 and Potter LJ in Morris v Wentworth-Stanley [1999] 2 WLR 470, 480 and 481; or successive actions amounting to unjust harassment (see eg Manson v Vooght , The Times, 20 November 1998; Court of Appeal (Civil Division) Transcript No. 1610 of 1998, per May LJ).”

45 One final important point made in Bradford & Bingley Building Society v Seddon should be noted. The Court of Appeal, having characterised the rule in Henderson v Henderson as a form of avoiding abuse of process, considered that the party raising the issue bore the onus of establishing it, and that the court should exercise caution before striking out claims on this basis (see at 1496).

46 The House of Lords revisited the issue in Johnson v Gore Wood & Co, holding that an “additional element” was not necessary for the rule in Henderson v. Henderson to apply. In Johnson v Gore Wood & Co the plaintiff had previously brought proceedings against the defendants in the name of a company that he operated and in which he held all but two of the issued shares. The defendants applied to have the new claim by the plaintiff personally struck out as an abuse of process. Lord Bingham of Cornhill (with whom Lord Goff of Chievely, Lord Cooke of Thorndon and Lord Hutton agreed on the abuse of process point) outlined the approach to be taken when applying the rule in Henderson v Henderson. His Lordship said (at 90):

“But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be must more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceeding necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgement which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. … While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”

47 The following propositions thus arise out of his Lordship’s judgment:

· Henderson v Henderson abuse of process is separate and distinct from cause of action and issue estoppel;

· the onus of proving the abuse rests on the party alleging it;

· the bringing of a claim may be an abuse where that claim should have been brought in previous proceedings, but it will not necessarily be so;

· the “additional element” referred to in Bradford & Bingley Building Society v Seddon is not necessary;

· determining whether a claim is abusive requires a “broad, merits-based” approach whereby the court must ask “whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before” bearing in mind the underlying public interest in finality of litigation and the undesirability of vexing a party twice; and

· it is wrong to first determine whether the claim is abusive, and then to ask whether there are “special circumstances” justifying it (see, for example, Manson v Vooght at 387-8). It is preferable to simply ask whether the claim is, in all the circumstances, abusive.

48 Other cases that reflect the apparent retreat from Lord Kilbrandon’s statement that Henderson v Henderson excluded matters which “could and therefore should” have been litigated in earlier proceedings include The Penelope II [1980] 2 Lloyd’s Rep 17 at 19, The Mekhanik Evgrafov [1988] 1 Lloyd’s Rep 330 and Arnold v National Westminster Bank plc [1990] Ch 573 at 593, 596, 600.

49 Because of High Court authority to which I am about to come, it is not appropriate for me simply to adopt the United Kingdom approach. However, I consider that approach to be instructive insofar as it reveals a rejection of the notion (obviously relevant to the present case) that a matter cannot be raised if it “could and therefore should” have been raised in earlier proceedings. Moreover, when applying the test emerging from High Court authority, the comments of the House of Lords in Johnson v Gore Wood & Co regarding the desirability of a “broad, merits-based approach” taking account of “all the circumstances” should be borne in mind.

Abuse of process - the Australian approach

50 I turn immediately to the decision of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. That case concerned injury arising out of the use of a crane owned by the Port of Melbourne Authority and hired by Anshun Pty Ltd. The agreement for hire provided that Anshun indemnify the Authority against any claims made against it arising out of the use of the crane. The injured worker claimed against both Anshun and the Authority. The latter failed to raise the indemnity as a defence. Damages were awarded against both defendants. The Authority then brought a claim against Anshun based on the indemnity. Anshun, relying on Henderson v Henderson, sought to have the proceeding struck out. The notion that Henderson v Henderson operated to bar a claim that “could and therefore should” have been brought in earlier proceedings was rejected by a majority of the High Court, and an unreasonableness test was adopted. Gibbs CJ, Mason and Aickin JJ said (at 601):

“However in Yat Tung [[1975] AC 581] the adoption of the principle in Henderson v Henderson [(1843) 3 Hare 100] was taken too far. Lord Kilbrandon spoke of it becoming ‘an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings’ [[1975] AC, at p. 590]. As we have seen, this statement is not supported by authority. And if we are to discard the traditional statement of principle [in Henderson v Henderson ] because it was linked to the rules of common law pleading, there is no reason for rejecting the powerful arguments based on considerations of convenience and justice which were associated with it.

Lord Kilbrandon’s remarks go further than the statement of Somervell LJ in Greenhalgh v Mallard [[1947] 2 All ER 255, at p. 257] which was recently approved by Lord Wilberforce in Brisbane City Council [[1979] AC, at p. 425]. Somervell LJ had said: ‘res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but … it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them’. Yet Greenhalgh v Mallard and Brisbane City Council , unlike Yat Tung , were not cases in which the alleged estoppel arose from a defendant’s failure to plead a defence. They were cases in which it was argued that a plaintiff was estopped from bringing a new proceeding by reason of the dismissal of an earlier action.

In these cases in applying the Henderson v Henderson principle to a plaintiff said to be estopped from bringing a new action by reason of the dismissal of an earlier action, Somervell LJ and Lord Wilberforce insisted that the issue in question was so clearly part of the subject matter of the initial litigation and so clearly could have been raised that it would be an abuse of process to allow a new proceeding. Even then the abuse of process test is not one of great utility. And its utility is no more evident when it is applied to a plaintiff’s new proceeding which is said to be estopped because the plaintiff omitted to plead a defence in an earlier action.

In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. See the illustrations given in Cromwell v County of Sac. [(1876) 94 US [24 Law Ed, at p. 199]].”

“The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By ‘conflicting judgments’ we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.

It is for this reason that we regard the judgment that the Authority seeks to obtain as one which would conflict with the existing judgment, though the new judgment would be based on a different cause of action, a contractual indemnity.”

51 The statement by Gibbs CJ, Mason and Aickin JJ that “the abuse of process test is not one of great validity” merits further attention. At first blush it appears that Gibbs CJ, Mason and Aickin JJ rejected the notion that Henderson v Henderson had come to have its basis in abuse of process. Their Honours’ statement must, however, be viewed in the context of their wholesale rejection of the formulation preferred by Lord Kilbrandon in Yat Tung. In referring to “the abuse of process test”, their Honours were, it seems, specifically referring to the test adopted by Lord Kilbrandon in Yat Tung (ie whether the matter “could and therefore should” have been raised in earlier proceedings), and were not disputing that the rule in Henderson v Henderson has its basis in abuse of process. They then proceeded to state their own test (ie whether the matter is “so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it”). Viewed in this way, the majority judgment in Anshun is consistent with United Kingdom jurisprudence. Ormiston JA, writing extra-judicially has adopted this approach saying (‘Abuse of Process, Anshun and the Criminal Law – A Commentary’ (1997) 71 ALJ 942 at 944):

“The difficulty about any such historical explanation of the majority’s apparent distaste for applying abuse of process in Anshun is that the judges who formed the majority were well aware of the extent to which courts, particularly English courts, had relied upon abuse of process in this area of the law. As explained by Handley JA in his third edition of Spencer Bower, Turner & Handley on Res Judicata the extended doctrine is ‘based on abuse of process’ [paragraph 443]. (See generally his discussion at pars 443-454.) Despite the comments in the passage quoted above from their judgment I would doubt that the majority in Anshun intended to say that the principle they extrapolated from Henderson and subsequent cases was not founded on the inherent jurisdiction of the court to prevent abuse of its processes, but they intended to say, rather, that merely incanting the words ‘abuse of process’ was not a useful test for determining in what circumstances a party would be shut out from raising a particular case. It is unlikely that they intended to disapprove the passage cited from Somervell LJ’s judgment in Greenhalgh v Mallard [[1947] 2 All ER 255]. He had said that the principle covered

‘issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be abuse of the process of the Court to allow a new proceeding to be taken in respect of them’ [ibid at 257].

It was only the extension by Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [[1975] AC 581 at 590] which the majority disapproved.”

52 Handley JA, writing extra-judicially, has also adopted this approach to Anshun estoppel (KR Handley, ‘Anshun Today’ (1997) 71 ALJ 934). His Honour said (at 934), “In the language of the stud book, one might say that Anshun was by abuse of process out of Henderson v Henderson”. He later said (at 940):

“The extended doctrine applied in Anshun is based on the court’s inherent jurisdiction to prevent abuse of its process by proceedings which are vexatious, that is, unreasonable. This, one would suppose, was the basis for the reasonableness test in Anshun .”

53 The reasonableness test set out in Anshun has been explained and refined in several decisions. In Rahme v Commonwealth Bank of Australia (unreported, NSWCA, 20 December 1991), the Court of Appeal was called upon to decide the question that arises in the instant case, viz, whether failure to plead a cause of action in previous proceedings precludes its being raised subsequently. In that case, the plaintiffs had brought an action for damages arising out of a foreign currency loan transaction. They relied on several causes of action. After the action failed they commenced a second set of proceedings, relying on the Contracts Review Act 1980, which had not been raised in the first proceedings. The defendant pleaded the Anshun principle and was successful at trial and on appeal. Priestley JA (with whom Meagher JA and Hope AJA agreed) analysed the application of Anshun to cases in which a new cause of action was sought to be raised subsequently to proceedings concerning the same set of facts. His Honour formulated the following propositions:

“1, that Wigram VC’s extended principle as stated in Henderson is accepted as good law by the High Court; 2, that that principle applies, inter alia, to category (3) cases, that is to a proceeding in which a party is asserting a cause of action which could have been raised, but was not, in a previous proceeding in which the same party was asserting a different cause of action based on substantially the same facts against the same party as the second principle is being brought; and 3, that the extended principle of Henderson will be applied to the second proceeding when it was unreasonable for the party asserting the cause of action in that second proceeding to refrain from raising it in the earlier proceeding against the same opponent party.”

54 His Honour then applied those propositions to the case before the Court of Appeal, saying that the relevant question was:

“whether the claim sought to be raised in the Supreme Court under the Contracts Review Act (a) could have been raised in the Federal Court proceedings and (b) raised matters so clearly part of the subject matter of the Federal Court proceedings that it was unreasonable on the part of the appellants not to have raised that claim in those proceedings.”

55 In Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287, the Full Federal Court applied Rahme to a case in which the defendants in certain proceedings subsequently raised a claim against the plaintiffs that could have been raised by way of cross-claim in the previous proceedings. The Court said (at 298) that:

“where, as here, a defendant’s claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both be litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments (cf Federal Court of Australia Act 1976 (Cth), s.22).”

56 The application of the Anshun unreasonableness test was further discussed by the Full Court of the Federal Court in Ling v Commonwealth (1996) 68 FCR 180. Wilcox J (with whom Whitlam J agreed) said (at 184):

“In considering reasonableness, as it seems to me, consideration must be given to all aspects of the case. They include the extent of the overlap between the facts underlying each claim; the greater the overlap, the easier it is to argue that it was unreasonable not to raise the matter in the first case. They also include any difficulties that existed, or might reasonably have been perceived, in raising the matter earlier.”

57 The decision in Ling concerned the plaintiff’s failure to bring his claim as a cross-claim in earlier proceedings in the Federal Court. The Court held that the failure was not unreasonable, because the claim could not have been instituted in the Federal Court, and would have had to have been brought in the Supreme Court in reliance on the exercise of a discretionary power of remittal to the Federal Court.

58 In Ling, Sundberg J (with whom Wilcox and Whitlam JJ agreed) took the view that the “special circumstances” exception in Wigram VC’s formulation should not be treated as an exception at all, but should, instead, form part of the analysis of the relevant unreasonableness. In other words, rather than determining whether the rule in Henderson applies prima facie and then determining whether there are special circumstances that exclude the rule, the Court took the view that the existence of special circumstances was a factor to take into account in determining whether the rule applied in the first place. His Honour noted (at 194) that the Privy Council in Yat Tung “appears to have considered ‘special circumstances’ as an issue separate from ‘unreasonableness’”. His Honour then said (at 195, referring to Yat Tung):

“The Board’s example seems to be one to which the rule would not apply at all, rather than a special circumstance requiring the non-application of the rule. On Lord Kilbrandon’s own formulation, the rule does not apply unless reasonable diligence would have caused a matter to be raised. A party who is unaware of the facts which answer a claim, and could not reasonably be expected to be aware of them, would not be held to have failed to exercise reasonable diligence, or to have acted unreasonably, in not raising the answer.

I prefer to approach the matter as the High Court appears to have done and that is simply to ask whether the appellant’s failure to raise his grievance in the Commonwealth proceeding was unreasonable. For the reasons I have given, I do not think it was, and accordingly I do not consider he is estopped from now litigating his negligence claim.”

Unadjudicated causes of action remain available

59 It is a general principle that an unadjudicated cause of action may be brought despite a party’s failure to raise it in earlier proceedings. This being so, Anshun, insofar as it relates to causes of action (as opposed to defences), must be regarded as operating to limit the scope of that general principle. In Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 Brennan and Dawson JJ said (at 346):

“A plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings ( Duedu v Yiboe [[1961] 1 WLR 1040, at p. 1046]) cannot be precluded from taking fresh proceedings merely because he could have and, if you will, should have counterclaimed on that cause of action in a forum chosen by the opposite party in proceedings in which the opposite party sued him. We do not read the majority judgment in Port of Melbourne Authority v Anshun Pty Ltd as holding to the contrary, except in a case where the relief claimed in the second proceeding is inconsistent with the judgment in the first: see especially at pp. 599-601.”

60 As author of the third edition of Spencer Bower’s Res Judicata, 1996, Handley JA said (at 265)

“Despite statements in Talbot v Berkshire CC [[1994] QB 290, CA, para 288, different causes of action arising out of the same factual context which have not been adjudicated upon may not be barred in later proceedings as an abuse of process. There is a substantial body of authority to the contrary. Thus a judgment in trespass is no bar to an action in conversion [ Lacon v Barnard (1626) Cro Car 35]; judgment for assault and false imprisonment did not bar an action for malicious prosecution [ Guest v Warren (1854) 9 Exch 378 at 383]; judgment for the plaintiff in replevin was no bar to an action for trespass to the land on which the goods were seized [ Gibbs v Cruikshank (1873) LR 8 CP 454], and judgment for damages to the plaintiff’s cab did not bar an action for his personal injuries [ Brunsden v Humphrey (1884) 14 QBD 141].”

61 His Honour has elsewhere said (‘Anshun Today’, above, at 940):

“There is substantial authority for the view that a cause of action which has not been adjudicated upon will still be available, although it could have been joined in earlier proceedings, provided it is not substantially the same as any then adjudicated. This point was made by Brennan and Dawson JJ in Tanning Research Laboratories [(1990) 169 CLR 332]. Familiar examples include Brunsden v Humphrey [(1884) 14 QBD 141], where the [English] Court of Appeal held that an action could be brought for personal injuries after proceedings for the recovery of property damage, and The Oropesa [[1943] P 32], where the [English] Court of Appeal held that parents of a deceased seaman could bring an action under the Fatal Accidents Act 1846 after an action to recover for loss to his estate. Presumably the second action in these cases did not arise out of substantially the same facts as the first.

Other recent authority includes Trawl Industries v Effem Foods [(1992) 36 FCR 406 at 422], where Gummow J held that an action for breach of s.52 of the Trade Practices Act 1974 barred an action for negligent misrepresentation at common law which arose out of substantially the same facts.”

62 The effect of Anshun in Australia is that a party may bring an unadjudicated cause of action provided that it is not “so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it” in the first action.

The position in this case

63 The question whether preclusionary principles apply here makes necessary an examination of the source and course of the previous litigation. The following summary is taken from the judgment of Studdert J ((1997) 38 ATR 128), with some explanatory material added in brackets:

353 In any event, even if no such defence could be made out, it could not be suggested that the appointment was void ab initio notwithstanding that it was made in breach of trust. A transaction made in breach of trust is not void ab initio, it is voidable at the suit of the beneficiary: see Pilcher v Rawlins (1872) 7 Ch App 259, Thomson v Clydesdale Bank Ltd [1893] AC 282, Fels v Knowles (1906) 26 NZLR 604, Tuckett v Rice [1917] VLR 36, Tito v Waddell (No 2) [1977] Ch 106 at 241.

Decision on status of the land after Step 5

354 A trust came into existence when ISPT paid the purchase price and CMPI came under an obligation to perform its contractual promise to constitute itself trustee of the land. The contract was enforceable at the suit of ISPT. Accordingly, an equitable interest was created in ISPT commensurate with that which a court of equity would protect. The trust arose notwithstanding the lack of writing. Section 23C does not affect the operation of constructive or resulting trusts: s.23C(2). Section 54A did not apply. Because the Statute of Frauds did not apply to the creation of this interest, it is unnecessary to find part-performance (as to which ISPT would have faced the insuperable difficulty that mere payment of the purchase price could not be sufficient part-performance).

355 A trust may also have come into existence pursuant to some estoppel. However this outcome is doubtful and the equitable interest acquired by ISPT pursuant to the contract to create a trust renders it unnecessary to decide the matter on this ground.

356 The other arguments for a trust coming into existence at Step 5 (the application of the principle whereby the Statute of Frauds cannot be used as an instrument of fraud, and the application, by analogy of the principle whereby the vendor under a contract for the sale of land holds the land on trust for the purchaser after the latter pays the purchase price) cannot be accepted.

357 In the light of these conclusions, it is unnecessary to consider the plaintiff’s alternative submission that the land became trust property at some point during Steps 7, 8 and 9, but it may be dealt with briefly. If the land did not, in fact, become an asset of the Forster No 1 Trust at Step 5 then CMPI continue to hold it absolutely until Step 9, whereupon it was transferred to the plaintiff (as nominee of ISPT under the Forster No 1 Trust). In such circumstances, such a transfer could not possibly amount to the appointment of a new trustee for the purposes of s.73(2A) of the Stamp Duties Act 1920.

PART 7 – “NOMINAL CONSIDERATION ”

The issues

358 I turn now to the additional question regarding the applicability of s.73(2A) to the transaction that was the subject of further evidence and submissions. Section 73(2A) is expressed to apply to transfers “made for nominal consideration”. The operative words of each of the transfers now under discussion were that the transferor, CMPI:

“… acknowledges receipt of the consideration of Nil and as regards the land specified above transfers to the Transferee an estate in fee simple.”

359 The Chief Commissioner contends that s.73(2A) should be read literally and that the transfers, framed in the way I have described, fall outside the ambit of the exemption. That argument proceeds on the simple footing that “nil” indicates no consideration and is therefore inconsistent with the proposition that there is any consideration at all, whether “nominal” or otherwise. Nominees raises three arguments against this construction: first, that the statute should be construed to apply to transfers for no consideration as well as those for nominal consideration, second, that the transfer, although expressed to be for no consideration, was in reality for some nominal consideration, viz, the acceptance by the transferee of its obligations as trustee and, third, that s.9(2) of the Taxation Administration Act 1996 compels the reassessment to be made on the basis that a transfer for no consideration falls within the exemption, that being the assessment practice at the time of the original assessment. I received evidence regarding such assessment practices.

Is “nil” a “nominal consideration”?

360 In ordinary parlance, the expression “nominal consideration” denotes merely token consideration, or consideration in name only. The fourth meaning of “nominal” in the 1993 edition of “The New Shorter Oxford Dictionary” is:

“Existing in name only, not real or actual; merely named, stated, or expressed, without reference to reality or fact; minimal in relation to the true value, token; so small or insignificant as hardly to justify the name.”

361 “Nominal consideration” is, on one view, the minimum required to support a simple contract at common law and is distinguishable from both valuable consideration and adequate consideration (see, for example, Re Abbott (a Bankrupt) [1983] 1 Ch 45; Barton v Official Receiver (1986) 161 CLR 75). Understood in this way, “nominal consideration” is not given unless something passes. If nothing passes, there is no consideration and therefore not even “nominal consideration”. It is on that basis that a conveyance in which the “consideration” is expressed to be “nil” might be said not to be “a conveyance made for nominal consideration”.

362 Nominees’ primary argument in favour of the proposition that “nil” must, in the present case, be taken to be “nominal consideration” is that any other construction would lead to an absurd result. If the section is to be construed otherwise, a situation would arise where a transfer for no consideration would be liable for duty in full, a transfer for some trifling consideration (such as $1 or a peppercorn) would be liable for $2 duty only, and a transfer for more than such a trifling consideration would be liable for duty in full. Such an outcome would undoubtedly be strange, especially when one considers the objective the exemption is obviously intended to achieve, that is, to ensure that a fixed duty only is payable where there is nothing more than the retirement or change of trustee in an existing trust.

363 This situation calls to mind the words of Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, where their Honours said (at 408):

“In particular, as McHugh JA pointed out in Isherwood v Butler Pownow Pty Ltd , if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.”

364 As I have said, when the “plain words” of s.73(2)(a) “are read in the light of the mischief which the statute was designed to overcome” there is significant “improbability of result”. On the other hand, however, the reference in the section to “nominal consideration” is clear, and the construction for which nominees contends may not be “reasonably open”, especially when one considers the principle expressio unius est exclusio alterius. However, “The use of the word ‘ambiguity’ in the context of statutory interpretation is not restricted to lexical or verbal ambiguity and syntactic or grammatical ambiguity. It extends to circumstances in which the intention of the legislature is, for whatever reason, doubtful”: Repatriation Commission v Vietnam Veterans’ Association of Australia NSW Branch Inc (2000) 48 NSWLR 548 per Spigelman CJ.

365 The intention of Parliament in using the words “made for nominal consideration” is not immediately clear. There is nothing of assistance in the parliamentary debates. The phrase first appeared in 1920 with the introduction of the Stamp Duties Act 1920. It was then contained in s.73(1), which read:

“(1) The following instruments are not to be charged with ad valorem duty as conveyances, namely:
(a) An instrument merely appointing a new trustee or executed on the retirement of a trustee or a conveyance made for nominal consideration upon the appointment or the retirement of a trustee (whether the trust is expressed or implied).”

That section evolved into the section now under examination. It has always included the reference to nominal consideration.

366 Both parties suggested that the reference to nominal consideration was included to reflect a conveyancing practice of the time whereby nominal consideration was given to rebut the presumption of a resulting trust. Woodman has said (Woodman and Nettle, The Torrens System, 2 ed, LBC, 2001, at para 46.140)

“In a conveyance of land under old system title, consideration was necessary to rebut the presumption of a resulting use. This gave rise to the practice, in conveyances by way of gift, of inserting a consideration of ten shillings or some other nominal amount. The need for a nominal consideration in common law conveyances was removed by s.44(1) of the Conveyancing Act , as from 1 July 1920.

For land under the Real Property Act , the need for nominal consideration probably never existed. The favoured view is that the Statute of Uses never applied to the statutory code operating under the Real Property Act (see, for example, Hogg, The Australian Torrens System (1905) pp 891, 892; Jacob’s Law of Trusts (6th ed, 1997), para 1220), although the contrary view has also been expressed – namely that the Statute of Uses could apply to Torrens title land, so that a resulting use could arise on a voluntary transfer of Torrens Title land (see Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSLWR 273 at 281, per Windeyer J; his Honour then went on to hold that s.44(1) of the Conveyancing Act 1919 would nowadays prevent a resulting use from arising; but the operation of that section would seem to be restricted to old system title).
Nevertheless, the practice of transferring land under the Act in consideration of one dollar still occurs (even though s.10 of the Taxation Administration Act 1996 requires the true consideration to be disclosed when duty is being assessed). At one time the practice may have been attributable to a misplaced dread of attracting a Registrar-General’s caveat; or to a belief that using the words ‘will’ or ‘devise’ in a transfer was out of order. Nowadays the only apparent explanation for continuing the practice is an unquestioning devotion to precedent.”

367 When attempting to discover the legislative intention behind a statute, common practice of professionals has long been a useful and valid extrinsic aid to interpretation. In 1744 Lord Hardwicke said, in Bassett v Bassett (1744) 3 Atk 203 (at 208), “The uniform opinion and practice of eminent conveyancers has always had great regard paid to it by all courts of justice”. In Escoigne Properties Ltd v Inland Revenue Commissioners [1958] AC 549, Lord Denning MR said (at 566):

“In this country we do not refer to the legislative history of an enactment as they do in the United States of America. We do not look at the explanatory memoranda which preface the Bills before Parliament. We do not have recourse to the pages of Hansard. All that the courts can do is take judicial notice of the previous state of the law and of other matters generally known to well informed people.”

368 Of course, the extrinsic aids excluded by Lord Denning MR are available in this State today (Interpretation Act 1987. s.34), but this does not discount the validity of common practice as an aid to interpretation. It has since been said that his Lordship’s reference to “well informed people” might be understood as “learned lawyers” (see Cross, Statutory Interpretation, 2ed, Butterworths, 1987, p191).

369 No evidence of conveyancing practice was tendered. However, because both parties proffered the same explanation for the inclusion of “nominal consideration” in the section, I am prepared to accept that the conveyancing practice to which I have referred did, in fact, exist, and that that practice was the reason for the inclusion of the phrase “nominal consideration” in the section. That being the case, I think that it would be absurd to exclude from the operation of s.73(2A) transfers for no consideration by adhering unnecessarily to a literal reading of a section which was phrased with obsolete conveyancing practices in mind. The following passage from the joint judgment Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 (at 320-1) is relevant:

“The rules of [construction], as DC Pearce says in Statutory Interpretation , p.14, are no more than rules of common sense, designed to achieve this object. They are not rules of law. If the judge applies the literal rule it is because it gives emphasis to the factor which in the particular case he thinks is decisive. When he considers that the statute admits of no reasonable alternative construction it is because (a) the language is intractable or (b) although the language is not intractable, the operation of the statute, read literally, is not such as to indicate that it could not have been intended by the legislature.
On the other hand, when the judge labels the operation of the statute as ‘absurd’, ‘extraordinary’, ‘capricious’, ‘irrational’, or ‘obscure’ he assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.”

370 Here, the literal interpretation of the statute, in the form of a finding that “nil”, being literally no consideration, was not “nominal consideration”, would undoubtedly yield a result characterisable as absurd, extraordinary, capricious or irrational.

371 It is instructive, in this context, to consider the decision of the High Court in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (1982) 149 CLR 431. Although the point now in issue was not argued in that case, observations about the status of the particular transfer under an earlier version of s.73(2A) are pertinent. The provision there under consideration, like the provision I am required to apply, referred to “a conveyance made for nominal consideration”. The instrument in question was a memorandum of transfer under the Real Property Act by which a transferor:

“in consideration of Nominal (the receipt whereof is hereby acknowledged), paid to the transferor by [the transferee] hereby transfers to [the transferee] an estate in fee simple in the land described in the following schedule …”

372 Gibbs CJ described this as a “conveyance, made for nominal consideration”. Mason J, with whom Stephen J agreed, said that it was “a conveyance within s.65 and was expressed to be made for nominal consideration”. Aickin J said that there was “no doubt that it was made for a ‘nominal consideration’”. Brennan J described the transfer as “expressed to be made for a nominal consideration”.

373 A form of words by which a transferor refers to “Nominal” as having been “paid” by the transferee and acknowledges “receipt” of “Nominal” is, in every realistic way, a nonsense. The only thing that can be both “paid” and “received” is money. A reference to “Nominal” is not a reference to money and is therefore not apt to show that any consideration at all passed or was accepted as having passed. “Nominal” therefore had in DKLR Holding Co the same connotation as “nil” in the context with which I am dealing.

374 I am satisfied that s.73(2A) reflects an unstated assumption that there is no such thing as a conveyance made without consideration. The reference to “a conveyance made for nominal consideration” covers a case in which the expressed consideration is not real, having an existence in name only. Transferors who purport to acknowledge receipt of (and to convey in consideration of) $1 or a peppercorn or “nominal” or “nil” must, I think, be regarded as communicating a uniform and consistent message, namely, that the transfer, although expressed to be made for the “consideration” so described, is made without any real consideration at all. In each case, therefore, the supposed consideration is to be regarded as existing in no more than name and is “nominal consideration”. My conclusion is that each of the transfers with which I am presently concerned is therefore “a conveyance made for nominal consideration” as referred to in s.73(2A).

375 I also note briefly that this conclusion is supported by the principle omne majus continet in se minus. In Tower Hamlets London Borough Council v Miah [1992] QB 622, for example, Scott LJ held that the term “leased” in the Housing Act 1985 (UK) also encompassed premises that had merely been licensed. His Lordship said (at 630) “It simply makes no sense to hold that a … licence obtained from a local authority gives a greater security than a … tenancy strictly so-called. It is a … permissible construction of para 6 of Sch 1 … to hold that the greater includes the less…”. Similarly, Bennion has said (Bennion, Statutory Interpretation, 4ed, Butterworths, 2002, p.476):

“The concept that the greater includes the less is akin to the reverse concept that it is commonsense to assume that an Act remedying a lesser mischief is also intended to remedy a greater mischief of the same class.

Example 197.9 It was held that tenements were ‘houses’ and not ‘other buildings’ within the meaning of the Housing Act 1957 (repealed) s.42(1) since otherwise, while a group of eight unfit houses in which sixteen families lived could be declared a clearance area, a group of eight unfit houses in which ninety families lived could not. ‘It would be strange indeed if the section had to be construed so that it was effective to abolish the smaller evil but the not greater.’ [ Quiltotex Co Ltd v Minister of Housing and Local Government [1966] 1 QB 704, per Salmon LJ at 712.]”

Decision

376 On a proper construction of s.73(2A), the instruments of transfer at issue in these proceedings must be regarded as “made for nominal consideration” since, in the context, the word “nil” indicates “nominal consideration”. It is therefore unnecessary for me to address Nominees’ second argument that the transfers, although expressed to be for “nil” consideration, were in truth made for some consideration and that consideration is properly described as “nominal”. It is also unnecessary to consider the evidence concerning assessment practices relevant to such transfers.

PART 8 – THE VALUATION ISSUE

Issue not relevant

377 The one matter remaining is Nominees’ submission that any ad valorem duty should be assessed on the footing that the property transferred at Step 9 was of purely nominal value, so that ad valorem duty would be of a negligible amount.

378 It is unnecessary to pursue this. If a trust arose at Step 5, s.73(2A) applied and duty of $2 only was chargeable. If no trust arose, the transfer of the land by CMPI to the Nominees (as nominee of ISPT under the Forster No 1 Trust) could not have been a transfer of the bare legal estate and there would be no basis for arguing that the interest of the registered proprietor had no real value. Matters that may arise from the decision of the High Court in Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651 therefore need not be discussed.

PART 9 – DISPOSITION OF PROCEEDINGS

Summary of conclusions

379 The conclusions I have reached may be summarised as follows:

1. The Chief Commissioner was not estopped by the earlier proceedings between ISPT and the Chief Commissioner from asserting the claim under s.37 of the Stamp Duties Act 1920 that became the subject of these proceedings.

2. Section 37 was in force and available to be used by the Chief Commissioner when notices dated 22 December 1999 were purportedly issued under that section.

3. The formation of the opinion of the Chief Commissioner activating s.37 was, however, a “reassessment” within s.9 of the Taxation Administration Act 1996, but failure to recite the matters relevant to the constraints imposed by s.9 did not invalidate the issue of the notices dated 22 December 1999.

4. The notices purportedly issued under s.37 were not issued by a person who was, at the relevant time, a duly appointed delegate of the Chief Commissioner invested with authority to issue such notices and were therefore not valid and effectual notices.

Orders

380 Nominees, as plaintiff, is entitled to relief generally in accordance with paragraphs 1 to 4 of the summons filed on 29 March 2001 (see [9] above). It is desirable, however, that order 4 (which must, in any event, be revised to take account of orders already made by consent with respect to fines and interest thereon) be framed so as to refer to the precise amounts of duty paid and the dates of payment so that there will be certainty as to their effect. These are no doubt matters that can be agreed.

381 I direct that short minutes giving effect to this judgment be filed by delivery to my Associate within fourteen days.

382 On costs, I am disposed to think that, although the Chief Commissioner was successful in countering some of the contentions advanced by Nominees, the success of Nominees has been such as not to warrant any departure from the general rule that costs should follow the event. I shall, however, hear submissions on costs at a time to be fixed, should the Chief Commissioner indicate that he seeks to resist such an outcome.

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Last Modified: 08/14/2003

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Citations

ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697

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CITATION:	ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697
HEARING DATE(S):	07/02/02, 08/02/02, 07/02/03, 0505/03, 08/07/03
JUDGMENT DATE:	12 August 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Disallowance of plaintiff's notices of objection set aside. Notices of objection allowed. Stamp duty to be refunded with interest
CATCHWORDS:	TAXES AND DUTIES - stamp duty - transfer of land - whether transfer expressed to be for consideration of "nil" is "made for nominal consideration" - TAXES AND DUTIES - stamp duty - unsuccessful attempt to tax underlying transaction - subsequent levying of duty on instrument - whether revenue estopped - STATUTES - repeal - implied repeal - whether existing provision allowing demand for further money where duty paid considered deficient was impliedly repealed by later provisions permitting amendment of assessment of duty (1992) or reassessment of duty (1998) - if no implied repeal, whether existing provision became subject to limitations in later provisions - STATUTES - operation and effect of statutes - provision creating power to delegate - act of delegate after such provision "omitted" from statute - whether delegation extinguished by omission - whether delegation saved as act, matter or thing before repeal - COURTS AND JUDGES - stare decisis - determining ratio decidendi where three judgments given - EQUITY - equitable estates and interests - interest under sub-trust - whether interests merge - whether trustee of sub-trust is bare trustee - whether trustee of head trust holders on trust for beneficiary of sub-trust - need for writing under Statute of Frauds provisions - estoppel - part performance
LEGISLATION CITED:	Duties Act 1997, s.315 Interpretation Act 1987, s.49 Stamp Duties Act 1920, ss.3AA, 37, 73, Stamp Duties Amendment Act 1992, s.35 Statute Law (Miscellaneous Provisions) Act (No 2) 1999, ss.4, 5 Taxation Administration Act 1996, ss.8, 9, 86, 91, 96
CASES CITED:	Re Abbott (a Bankrupt) [1983] 1 Ch 45 Acorn v MCS Microcomputer Systems Pty Ltd (1984) 4 IPR 214 Adamson v Hayes (1973) 130 CLR 276 Aitken v South Hams District Council [1995] 1 AC 263 Arnold v National Westminster Bank plc [1990] Ch 573 Australia and New Zealand Banking Group Ltd v Widin (1990) 26 FCR 21 Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277 Avondale Printers v Haggie [1979] 2 NZLR 124 Baloglow v Konstantinidis [2001] NSWCA 451 Bannister v Bannister [1948] 2 All ER 133 Barrs v Jackson (1842) 1 Y & C Ch Cas 585 Barton v Official Receiver (1986) 161 CLR 75 Beaumont v Yeomans (1934) 34 SR (NSW) 562 Re Bellville's Settlement Trust [1964] Ch 163 Bird v John Sharp & Sons Pty Ltd (1942) 66 CLR 233 Bole v Horton (1673) Vaugh 360 Bolton v Dance [1968] VR 631 Booth v Turle (1873) LR 16 Eq 182 Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482 Bristol-Myers Squibb Co v F H Faulding & Co Ltd (2000) 170 ALR 439 Brittain v Rossiter (1879) 11 QBD 123 Broad v Commissioner of Stamp Duties [1980] 2 NSWLR 40 Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 Burt v Barry & Roberts Ltd, Ex parte Barry & Roberts [1956] St R Qd 207 Butler v Attorney-General (1961) 106 CLR 268 Cadd v Cadd (1909) 9 CLR 171 Capital and Counties Bank v Rhodes [1903] 1 Ch 631 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Chan v Cresden Pty Ltd (1989) 168 CLR 242 Re Charge Card Services Ltd [1987] Ch 150 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1997) 45 NSWLR 639 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 Cinema Plus Ltd v Australia and New Zealand Banking Group Ltd (2000) 49 NSWLR 513 Clinan v Cooke (1802) 1 Sch & Lef 40 Collin v Holden [1989] VR 510 Commissioner of Stamp Duties v Agenti Architects Pty Ltd [2003] QCA 265 Commissioner of Stamp Duties v Edmunds [1989] 1 QdR 271 Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651 Commissioner of Taxation v Ryan (2000) 201 CLR 109 Commonwealth v Verwayen (1990) 170 CLR 394 Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 Re Cook [1948] Ch 212 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 Corin v Patton (1990) 169 CLR 540 Dennis Hotels Pty Ltd v Victoria (1960) 151 CLR 621 Department of Social Security v James (1990) 95 ALR 615 Deputy Commissioner of Taxation v Chamberlain (1990) 26 FCR 221 Dickensons Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 Dillwyn v Llewellyn (1862) 4 DeGD&J 517 Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510; (1982) 149 CLR 431 Re Duke of Marlborough; Davis v Whitehead [1894] 2 Ch 133 at 141 Escoigne Properties Ltd v Inland Revenue Commissioners [1958] AC 549 Fels v Knowles (1906) 26 NZLR 604 Forbes v Moffatt (1811) 18 Ves 384 Francis v Francis [1951] VLR 321 Frederick v Frederick (1721) 1 P Wms 710, ER 582 Garnett v Bradley (1878) 3 App Cas 944 Grainge v Wilberforce (1889) 5 TLR 436 Great Western Railway Company v Owners of SS Mostyn [1928] AC 57 Greenhalgh v Mallard [1947] 2 All ER 255 Grey v Inland Revenue Commissioners [1958] Ch 375; [1960] AC 1 Head v Lord Teynham (1783) 1 Cox 57 Henderson v Henderson (1843) 3 Hare 100 Herdegen v Commissioner of Taxation (1988) 84 ALR 271 Hughes v Morris (1852) 2 DeGM&G 349 Ingle v Vaughan Jenkins [1900] 2 Ch 368 ISPT Pty Ltd v Chief Commissioner of Stamp Duties (1997) 38 ATR 128 ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 34 E R Ives Investments Ltd v High [1967] 2 QB 379 Johnson v Gore Wood & Co [2001] 2 WLR 72 Jones v Peters [1948] VLR 33 Kok Hoong v Leong Cheong Kweng Mines Ltd[1964] AC 993 Ku-ring-gai Municipal Council v Attorney-General (NSW) (1957) 99 CLR 251 Kutner v Phillips [1891] 2 QB 267 Re Lashmar [1891] 1 Ch 258 Last v Rosenfeld [1972] 2 NSWLR 923 Re Latimer [1891] 1 Ch 258 Re Lind [1915] 2 Ch 345 Ling v Commonwealth (1996) 68 FCR 180 Low (As liquidator of Lekker Pty Ltd) v Dykgraaf [2001] WASC 332 LS v Director of FACS (1989) 18 NSWLR 481 Maddison v Alderson (1883) 8 App Cas 467 Manson v Vooght [1999] BPIR 376 Maritime Electric Company Ltd v General Davies Ltd [1937] AC 610 McBride v Sandland (1918) 25 CLR 69 McCormick v Grogan (1869) LR 4 HL 82 McKinnon Wallace Holdings Pty Ltd v Commissioner of State Revenue [1999] 1 VR 397 McMahon v Ambrose [1987] VR 817 McWilliam v McWilliam Wines Pty Ltd (1964) 114 CLR 656 Mitchell v Scales (1907) 5 CLR 405 Monte v Buongiorno [1978] WAR 49 Norris v Crocker 13 Howard 429 Oamington Pty Ltd v Commissioner of Land Tax (1997) 98 ATC 5051 Ogilvie v Ryan [1976] 2 NSWLR 504 Onslow v Wallis (1849) Mac & G 506 Organ v Sandwell [1921] VLR 622 Oughtred v Inland Revenue Commissioners [1960] AC 206 Parker v Manessis [1974] WAR 54 Parramatta City Council v Stauffer Chemical Co (Aust) Pty Ltd [1971] 2 NSWLR 500 Pascoe v Turner [1979] 1 WLR 431 Patti v Belfiore (1958) 100 CLR 198 Pearce v Pearce [1977] 1 NSWLR 170 Penn-Texas Corp v Murat Anstalt (No 2) [1964] 2 QB 647 Petition of Bankers Trust Co 108 N.Y.S.2d 213 (1951) Pilcher v Rawlins (1872) 7 Ch App 259 Plimmer v Wellington Corporation (1884) 9 App Cas 699 Port of Melbourne Authority v Anshun Pty Ltd (1980) 147 CLR 35 Pullan v Koe [1913] 1 Ch 9 R v Chalak (1983) 47 ALR 600 R v Hartington, Middle Quarter Inhabitants (1855) 4 E&B 780 Raffaele v Raffaele [1962] WAR 29 Rahme v Commonwealth Bank of Australia (unreported, NSWCA, 20 December 1991) Redden v Wilks [1979] WAR 161 Repatriation Commission v Vietnam Veterans' Association of Australia NSW Branch Inc (2000) 171 ALR 523 Rochefoucauld v Boustead [1897] 1 Ch 196 Rose v Hvric (1963) 108 CLR 353 Sarris v Penfolds Wines Ltd [1963] SR (NSW) 10 Saunders v Vautier (1841) 4 Beav 115 Re Sharpe [1980] 1 WLR 219 Re Applications of Shephard [1983] 1 NSWLR 96 In re Silver Brothers Ltd [1932] AC 514 Simultaneous Colour Printing Syndicate v Foweraker [1901] 1 QB 771 Sonenco (No 77) Pty Ltd v Silvia (1989) 89 ALR 437 Spellson v George (1992) 26 NSWLR 666 Steadman v Steadman [1976] AC 536 Stern v McArthur (1988) 165 CLR 489 Suatu Holdings Pty Ltd v Australian Postal Corporation (1989) 86 ALR 532 Suncorp Insurance & Finance v Commissioner of Stamp Duties (Qld) [1998] 2 QdR 285 Surtees v Ellison (1829) 9 B&C 750 Talbot v Berkshire County Council [1994] QB 290 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 The Mekhanik Evgrafov [1988] 1 Lloyd's Rep 330 The Penelope II [1980] 2 Lloyd's Rep 17 Thoday v Thoday [1964] P 181 Thomson v Clydesdale Bank Ltd [1893] AC 282 Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273 Tierney v Wood (1854) 19 Beav 330 Tito v Waddell (No 2) [1977] Ch 106 Tower Hamlets London Borough Council v Miah [1992] QB 622 Trifid Pty Ltd v Ratto [1985] WAR 19 Tuckett v Rice [1917] VLR 36 Walsh v Lonsdale (1882) 21 ChD 9 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Watson v Winch [1916] 1 KB 688 J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 Wratten v Hunter [1978] 2 NSWLR 376 Wright v McQualter (1970) 17 FLR 325 Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581
PARTIES :	ISPT Nominees Pty Limited - Plaintiff Chief Commissioner of State Revenue - Defendant
FILE NUMBER(S):	SC 1976/01
COUNSEL:	Mr J.T. Gleeson SC/Mr M. Richmond - Plaintiff Mr L.G. Foster SC/Dr H.G. Sorensen - Defendant
SOLICITORS:	Freehills - Plaintiff I.V. Knight, Crown Solicitor - Defendant