Macquarie Industrial Management Limited v Chief Commissioner of State Revenue

[2003] NSWADT 12

CITATION:	Macquarie Industrial Management Limited -v- Chief Commissioner of State Revenue [2003] NSWADT 12
DIVISION:	Revenue Division
PARTIES:	APPLICANT Macquarie Industrial Management Limited as Responsible Entity of Macquarie Industrial Trust RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	016029
HEARING DATES:	22/07/02
SUBMISSIONS CLOSED:	08/05/2002
DATE OF DECISION:	01/20/2003
BEFORE:	Verick A - Judicial Member
APPLICATION:	Stamp Duties - credit for multiple securities
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Stamp Duties (Amendment) Act 1987 Stamp Duties (Miscellaneous Amendments) Act 1990 Stamp Duties Act 1920
CASES CITED:	Comptroller of Stamps (Vic) v Associated Broadcasting Services Ltd (1987) 87 ATC 4407-8; (1988) 88 ATC 4359 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 FC of T v Murray (1998) 193 CLR 605 Coles Myer Limited v Comptroller of Stamps (Victoria) (1987) 18 ATR 981 Citisecurities Limited v Commissioner of Stamp Duties (Qld) [1996] 2 Qd R 226 Myer Limited v Comptroller of Stamps (Vic) (1987) 87 ATC 4498 Citisecurities Limited v Commissioner of Stamp Duties [1996] 2 Qd R 226 Wilcox Moffin Ltd v Commissioner of Stamp Duties (NSW) (1978) 78 ATC 4191 Shepherd v Felt and Textiles of Australia Ltd 45 CLR 359 M & W Holdings Pty Ltd v. Exbea Pty Ltd. & Anor (1989) 89 ATC 4335
REPRESENTATION:	APPLICANT M Richmond, barrister RESPONDENT I Mescher, barrister
ORDERS:	1. That the objection decision of the Chief Commissioner be affirmed.

1 The decision under review in this matter is the disallowance by the Chief Commissioner of State Revenue (Chief Commissioner) of an objection by the Applicant dated 29 October 2001 against the stamp duty assessed in respect of a mortgage entered into in New South Wales by the Applicant with the Westpac Banking Corporation.

2 The question at issue is essentially whether the Chief Commissioner should, in calculating the duty payable on the mortgage, allow a credit under section 84B of the Stamp Duties Act 1920 (New South Wales) (the " NSWSD Act") in respect of duty paid or payable in Queensland on a Queensland mortgage.

Factual Background

3 The relevant facts are not in dispute and the parties' agreed statement of facts is as follows:

(1) On 14 October 1993, the Applicant (formerly called Industrial Property Management Limited) as manager and Perpetual Trustee Company Limited as trustee (the "Trustee') executed a trust called the Industrial Property Trust of Australia (the 'Trust').
(2) On 18 March 1994, the Trustee and the Applicant entered into a fixed and floating charge in favour of Westpac Banking Corporation ('Westpac') over all the assets and undertaking of the Trust ('Charge'). Attached, as Appendix A is a copy of the Charge. In addition, the Trustee and the applicant entered into a mortgage in favour of Westpac over real property located in New South Wales ('Prime Mortgage'). Attached, as Appendix B is a copy of the Prime Mortgage.
(3) At the time of first execution of both the Charge and the Prime Mortgage, ie 18 March 1994, the Charge and the Prime Mortgage only secured property in New South Wales. In addition, the Charge and the Prime Mortgage were both executed in New South Wales.
(4) The total amount secured by the Charge and the Prime mortgage was $13,800,000 which was advanced by Westpac. $9,000,000 was originally advanced and then $4,800,000 was advanced on or about 19 August 1994. Duty of $55,141 was paid in New South Wales.
(5) The instrument of security which was stamped with ad valorem duty was the Prime Mortgage. The Charge was stamped with nominal duty as collateral to the Prime Mortgage.
(6) On 5 August 1994 the Trustee and the Applicant entered into a mortgage in favour of Westpac over real property located in New South Wales ('5.8.94 Mortgage'). Attached as Appendix C is a copy of the 5.8.94 Mortgage. The 5.8.94 Mortgage was stamped collateral to the Prime Mortgage.
(7) On or about 21 October 1994 further advances by Westpac had taken the total advances to $20,700,000. At that time the Trustee and the Applicant entered into a mortgage in favour of Westpac over real property located in New South Wales ('21.10.94 Mortgage'). Attached as Appendix D is a copy of the 21.10.94 Mortgage. The 21.10.94 Mortgage was stamped collateral to the Prime Mortgage. The Prime Mortgage was upstamped with further duty of $27,600 in New South Wales in respect of this further advance of $6,900,000 on 25 November 1994.
(8) On 7 February 1995 the Trustee and the Applicant entered into a mortgage over real property located in Queensland ('Queensland Mortgage'). Attached as Appendix E is a copy of the Queensland Mortgage.
(9) On or about 6 March 1995 further advances by Westpac had taken the total advances to $28,400,000. The Queensland Mortgage was stamped as the prime document in Queensland to secure advances of $28,400,000. Duty of $10,695.50 was paid in Queensland under section 70 of the Stamp Act 1894 (Qld)("Queensland Act"). On 13 March 1995 the Prime Mortgage was upstamped with duty of $20,104.50 in New South Wales (being duty on the further advances of $7,700,000 after allowing a credit of $10,695.50 for the duty paid in Queensland).
(10) On or about 22 March 1996 further advances by Westpac had taken the total advances to $33,300,000. The Queensland Mortgage was upstamped in Queensland under section 70 of the Queensland Act, taking into account the proportion of property residing in New South Wales. Duty of $1,966.74 was paid in Queensland on 14 March 1996. On or about 26 March 1996 the Prime Mortgage was upstamped in New South Wales with duty of $19,600 in respect of the further advances of $4,900,000.
(11) On 3 February 1997 the Trustee and the Applicant entered into a mortgage in favour of Westpac over real property located in New South Wales ('3.2.97 Mortgage'). Attached as Appendix F is a copy of the 3.2.97 Mortgage.
(12) On or about 3 March 1997 further advances by Westpac had taken the total advances to $49,300,000. At this time the Queensland Mortgage was upstamped in Queensland to take into account the further advances on a proportionate basis under section 70 of the Queensland Act. Duty of $4,269.70 was paid in Queensland.
(13) In New South Wales the Applicant submitted the Prime Mortgage for stamping under section 84B of the Stamp Duties Act 1920 (NSW) ('NSW Act') to take into account the duty already paid in Queensland. By letter dated 2 April 1997 the Respondent assessed duty taking into account section 84B of the NSW Act, reducing the amount of duty payable by reference to the duty already paid in Queensland. Accordingly, duty of $59,730.30 was assessed and paid in New South Wales with the credit allowed under section 84B of the NSW Act being the amount of duty paid in Queensland.
(14) On or about 17 October 1997 further advances by Westpac had taken the total advances to $59,025,074. On or about 16 January 1998 the Queensland Mortgage was upstamped with duty of $1,580.35 to take into account further advances of $7,726,000 on a proportionate basis under section 70 of the Queensland Act. On or about 10 February 1998, the Prime Mortgage (along with the collateral securities) was upstamped in New South Wales to take into account the further advances. It appears from the notation on the Prime Mortgage that a credit was allowed for total duty paid in Queensland of $16,545.55 pursuant to section 84B of the NSW Act when calculating the duty payable in New South Wales.
(15) Between 17 October 1997 and 1 June 1999 further advances were made by Westpac which increased the total advances to the amounts set out below: (a) on 8 October, $62,061,177.60; (b) on 12 November 1998, $65,023,231.07; (c) on 24 November 1998, $74,668,338.67; (d) on 15 March 1999, $81,655,075.18; (e) on 1 June 1999, $86,684,643. Between 17 October 1997 and 1 June 1999 the Prime Document had been upstamped (along with the collateral securities) for full duty in New South Wales.
(16) On 6 August 1999 the Applicant changed its name from " Industrial Property Management Limited" to "Macquarie Industrial Management Limited".
(17) On or about 6 March 2000, the total advances made by Westpac to the Applicant amounted to $140,000,000. Further duty of $101,079.25 had by that date been paid in Queensland in respect of the Queensland Mortgage to secure the total advances. The Queensland Commissioner of Stamp Duties applied section 70 of the Queensland Act when calculating the duty.
(18) The Prime Mortgage was submitted in New South Wales for upstamping on 6 March 2000 on the basis that a further credit of $101,079.35 be allowed under section 84B of the NSW Act.
(19) By letter dated 10 April 2000, the Respondent advised that the Prime Mortgage was liable to further duty of $117,616.80 without any credit under section 84B of the NSW Act for the duty paid in Queensland and issued an assessment for that amount (the 'Assessment').
(20) On 6 June the applicant paid under protest the duty of $117,616.80 imposed by the Assessment.
(21) On 8 June 2000 the Respondent granted the Applicant an extension of time to lodge an objection to the Assessment to 8 August 2000.
(22) On 27 June 2000, the Applicant became the responsible entity of the Trust which was registered as a managed investment scheme and pursuant to section 601FC(2) of the Corporations Law from that time it held all the property of the Trust on trust for the scheme members.
(23) On 8 August 2000, the Applicant lodged an objection to the Assessment ('Objection').
(24) On 7 December 2000 the Applicant changed its name to "Macquarie Goodman Industrial Management Limited" and on 12 April 2002 the Applicant changed its name to "Macquarie Goodman Industrial Management Pty Limited".
(25) On 29 October 2001, the Respondent disallowed the Objection.
(26) An application for Review was lodged with the ADT on 20 December 2001.
(27) The amount of duty disputed in the Objection is $117,616.80."

4 The appendixes referred to in the "agreed statement of facts" were provided to the Tribunal but are not attached to this decision. It was also agreed by the parties that although further duty referred to in paragraph (17) of $101,079.25 had been paid by on or before the 6 March 2000 and that the Queensland Mortgage was not duly stamped until 7 of June 2000.

Issue and Relevant Legislative Provisions

5 The issue for consideration is whether, in calculating the stamp duty payable on the Prime Mortgage, a credit is to be allowed under s 84B of the NSWSD Act in respect of stamp duty paid or payable in Queensland on the Queensland Mortgage. The provisions of the NSWSD Act apply to the Prime Mortgage and other securities referred to in the agreed statement of facts because the relevant instruments were all executed before 1 July 1998. Accordingly, the current New South Wales Duties Act has no application to this matter.

6 In order to consider the issue, it is necessary to have background knowledge of several provisions of the NSWSD Act.

7 Duty is imposed under s 4 the NSWSD Act, upon and in respect of several instruments and matters described or mentioned in the NSWSD Act and in the Second and Third Schedules at the rates specified in the NSWSD Act or the Schedules. A "loan security" is referred to in the Second Schedule and is defined in s 83(1) of the NSWSD Act to include "a mortgage ... executed in New South Wales" and "a mortgage that, at the time of its execution, affected property in New South Wales...".

8 Under s 38 of the NSWSD Act the liability for duty on an instrument arises on the first execution of the instrument which may be stamped within two months of the date of its execution without any penalty (s 25(2)). The section also creates directly a liability in favour of the Crown for the payment of any duty as a debt due to the Crown.

9 Section 84 of the NSWSD Act distinguishes between a loan security under which the total amount secured or to be ultimately recoverable is limited to a definite and certain sum of money (which is referred to as a "limited security") and a loan security under which the total amount secured or to be ultimately recoverable is not limited (which is referred to as an "unlimited security"). There is no dispute between the parties in the present matter that the Prime Mortgage and the other securities involved are loan securities, which are "unlimited securities" for purposes of the NSWSD Act.

10 Duty in respect of limited and unlimited securities is as follows. In the case of a "limited security" the loan security is liable under s 84(2) to duty at the relevant time when the security is first executed and the duty is calculated by reference to the total amount secured or to be ultimately recoverable, irrespective of whether or not the limit is expressed in the loan security. If the total amount is increased, further duty becomes payable in respect of the increase under s 84(1).

11 On the other hand, in the case of an unlimited security, the loan security is liable to duty of $5 at the time of first execution with a statutory requirement to stamp or upstamp the security at the time of making each advance or additional advance, if the amount secured by the loan security after the advance is made exceeds the amount in relation to which duty has previously been paid. The relevant provisions are ss 84(3), 84(3A) and 84(6) which provide for as follows:

"(3) If the total secured or is ultimately recoverable by or under a loan security is not expressed (whether in the loan security or otherwise) to be limited to a definite and certain sum of money, the loan security is to be stamped with duty of $5 and, if an advance, or the total of the advance and one or more additional advances made under or secured by the loan security, exceeds $16,000, additional duty of $4 for every $1,000 or fractional remaining part of $1,000 of the total amounts advanced under or secured by the loan security in excess of $16,000 shall be payable.
(3A) Nothing in this section or the Second Schedule under the heading "Loan Security" requires the payment of duty in respect of an advance or additional advance if the amount payable or repayable under or secured by the loan security following the advance or additional advance does not exceed the maximum amount payable or repayable under or secured by the loan security (being an amount in relation to which duty as duty on a loan security, has previously been paid) at any time prior to the making of the advance or additional advance ....
(6) An advance or additional advance referred to in subsection...(3) shall for the purposes of section 25 of this Act be deemed to be made pursuant to a new and separate loan security first executed on the day on which the advance or additional advance was made."

12 Provision is made in section 84B to deal with multiple securities which may give rise otherwise to multiple duty by providing credit where duty has been paid in New South Wales or elsewhere in Australia. The provisions of section 84B are as follows:

'(1) If a loan security or other instrument of security for money has been duly stamped under this Act or under the law of another State or a Territory (in this subsection called "the stamped instrument") and there is another or other instruments which are security, wholly or partly, for the same money, the duty chargeable in respect of each of those other loan securities is to be reduced:
(a) if each such instrument is security for the whole of the same money, by the amount of duty (including duty paid or payable under the law of another State or Territory) that was paid or is payable on the stamped instrument; and
(b) if any of such other instruments is security for part of the same money, by an amount equal to the same proportion of the duty (including duty paid or is payable on the stamped instrument as the amount of the same money for which that other instrument is security bears to the amount for which the stamped instrument is security.'
(Section 84B without the words underlined was inserted by Stamp Duties (Amendment) Act 1990 (No 45 of 1990) in the NSWSD Act to repealed the former section 84B. The words underlined were added to the section by item (30) of Schedule 1 of Stamp Duties (Miscellaneous Amendments ) Act 1990 (Act.95 of 1990)).

13 A similar provision to s 84B is section 84F of the NSWSD Act. This section provides relief against the multiple duty that would be payable if a loan security relates to property in New South Wales and another Australian state or Territory. Section 84F provides as follows:

"Despite any other provision of this Act, if money secured or ultimately recoverable by or under a loan security is secured:
(a) partly on property in the State and partly out of the State, ad valorem duty under this Act is payable in respect of the loan security on that portion of the money as bears to the total amount of the money the same proportion as the value of the property in the State bears to the total value of all property to which the loan security relates; or
(b) wholly on property out of the State, the duty payable under this Act in respect of the loan security is, subject to any exemption under this Act, $10."

14 There is no dispute that section 84F has no application to the facts in the present matter because the Prime Mortgage is a security relating only to property in New South Wales.

The Taxpayer's submissions

15 The Applicant submits that s 84B should be given a fairly broad interpretation by looking at what it was intended to do which, in the Applicant's view was the following:

"(a) to provide relief from multiple duty (whether in New South Wales or another Australian jurisdiction) where there is more than one instrument of security for the same money;
(b) that a loan security should be entitled to that relief where duty is payable in another Australian jurisdiction on a collateral security securing the same money notwithstanding that it has been paid at the time the loan security becomes chargeable with duty in New South Wales."

16 The Applicant goes on to submit that 'the reference in the opening words of section 84B(1) to a "stamped instrument" which has been "duly stamped" is not intended to preclude relief where the "stamped instrument" has not yet been stamped.'

17 In suggesting this interpretation of s 84B, the Applicant relies on the terms of s 84B which the Applicant says is confirmed by the following explanatory notes that accompanied the legislation introducing the new s 84B -

"Schedule 1(8) substitutes section 84B. The section in its substituted form removes the distinction between a primary loan security and a collateral loan security and leaves to the lodging party the choice of nominating which loan security out of a group of loan securities which are security for the same money is to be duly stamped as a loan security. A credit is allowed for the duty payable on the other related instruments to the extent to which duty (including inter-State duty) has been paid on the duly stamped instrument, subject to a minimum duty of $10. It also seeks to strengthen the anti-avoidance provisions inserted in 1988 by removing an exemption for certain loan securities which secure, in whole or part, the same money as a loan security executed before 31 December 1988." (Explanatory Note to the Stamp Duties (Amendment) Bill 1990 which introduced the new s 84B) and
"A collateral loan security which secures the same money as a prime loan security on which stamp duty has been paid is entitled to a credit in respect of the loan security duty paid on the prime loan security. Problems may arise where the prime loan security is liable to duty in a number of jurisdictions and, at the time of stamping in New South Wales, duty is yet to be paid in another jurisdiction. At present, a credit is not allowable for duty payable but not yet paid. Items (30)(a) and (b) make amendments which allow the granting of such credit.

Item (30)(c) amends section 84B to make it clear that a credit for duty payable on a collateral security is available only to the extent to which stamp duty has been paid on the primary security in respect of the same money secured by the collateral security as is secured by the primary security." (Explanatory Note to item (30) of Schedule 1 of Stamp Duties (Miscellaneous Amendment) Act 1990 which added to the new s 84B the underlined words referred to in paragraph 12)

18 The Applicant further submits that s 84B applies to the Prime Mortgage for the following reasons:

'22. Subject to section 84B of the NSW Act, by 6 March 2000 the Prime Mortgage was chargeable with further duty under section 84(3) of the NSW Act because further advances had been made which increased the amount secured by it (being $140,000,000) above the amount in respect of which duty had been previously been paid (being $86,684,643). Consequently, the Prime Mortgage was required to be upstamped with further duty of $213,264 (being duty at the rate of $4 for every $16,000 on the further advances of $53,315,357) unless a credit was available under section 84B for the duty paid or payable in Queensland on the Queensland Mortgage, which amounted in total to $117,624.90.
23. A credit is available under section 84B for the Queensland duty for the following reasons:
(i) the Queensland Mortgage is a loan security or an instrument of security for the money which has been duly stamped in New South Wales (with duty of $10) and in Queensland (with ad valorem duty);
(ii) the Prime Mortgage is another instrument which secures the whole of the same money as the Queensland Mortgage as both securities secure the same right5 of payment or repayment of moneys ( Comptroller of Stamps (Vic) v Associated Broadcasting Services Ltd (1987) 87 ATC 4407-8; affirmed on appeal (1988) 88 ATC 4359 at 4363.)
(iii) at the time that the Prime Mortgage was chargeable with further duty under section 84(3), duty had been paid or was payable on the Queensland Mortgage in Queensland (amounting in total to $117,624.90);
(iv) therefore, the duty chargeable in respect of the Prime Mortgage is to be reduced by the amount of that Queensland duty.
24. The effect of the Assessment is that no credit has been given under section 84B for any of the duty paid or payable in Queensland on the Queensland Mortgage. The Respondent contends that section 84B cannot apply here because the Queensland Mortgage was executed after the Prime Mortgage. In the Respondent's letter dated 29 October 2001 in which it disallows the Objection, it is stated:
" The Act charges duty on a mortgage at the date of first execution (section 38), unlike other jurisdictions, which may charge duty at the date of first execution or the date of advance. Consequently, if the securities at the date of first execution are all within NSW, then the liability of the mortgage on each subsequent advance is liable on the full amount of the advance in NSW. Accordingly the provisions of section 84B of the Act, do not apply."
25. The Respondent has, in this passage, overlooked the fact under section 84(3) of the NSW Act an unlimited security is chargeable with duty as and when further advances are made which increase the amount secured above the amount in respect of which duty has previously been paid. To this extent, therefore, section 84(3) varies the general principle that an instrument is liable to duty at the time of its first execution. There is nothing in section 84B to indicate that the relief provided by this section only applies where the "stamped instrument" is in existence at the time of first execution of the loan security for which relief is sought.'

19 The Applicant also submits that s 84B must be construed in order to give effect to the statutory purpose or object of the section (cites the High Court judgment in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408) and that where the statutory purpose is to provide relief, the statute must be construed beneficially in order to promote the purpose of achieving that relief (relying on Kirby J's statement in FC of T v Murray (1998) 193 CLR 605 at p 632)

The Chief Commissioner's case

20 The Chief Commissioner's position as to why the Applicant is not entitled to any relief from the operation of s 84B is found in following paragraphs of the Chief Commissioner's written submissions:

'2. Section 84(3) is relevant provision in the Stamp Duties Act 1920 (NSW) ("the Act") applicable to the loan instrument executed on 18 March 1994 ("the prime mortgage") in respect of the last advance made on 6 March 2000 which brought total advances to $140 million. Relevantly, it is the loan security which is to be stamped - i.e. thee original mortgage dated 18 March 1994.
3. All advances subsequent to 18 March 1994 (including the last advance of 6 March 2000) are not deemed for general stamp duty purposes to be fresh and separate loan securities first executed on the day each of the subsequent advances was made. Section 84(6) only deems such advances to be new and separate loan securities for the limited purpose of the imposition of fines under s. 25 of the Act. No fresh instrument of security becomes chargeable: Coles Myer Limited v Comptroller of Stamps (Victoria) (1987) 18 ATR 981 at 983-984; Citisecurities Limited v Commissioner of Stamp Duties (Qld) [1996] 2 Qd R 226.
4. Accordingly, s. 84(6) is not a substantive provision deeming, for stamp duty purposes, the date of the advance as the relevant date. It does not deem any new dutiable instrument to be executed. The original instrument of security is still what is dutiable pursuant to s. 84(3).
5. That original instrument of security (the prime mortgage) was first executed on 18 March 1994. The Applicant is personally liable to the Crown for the payment of duty on the prime mortgage upon its first execution: s. 38(1). Section 38(1) is a primary charging provision. The provisions of s. 84B(1) (and s. 84(3)) yield to it. The original instrument is what remains dutiable and the date of its execution is 18 March 1994.
6. The liability to duty, therefore, of any mortgage in NSW is at the date of its first execution. This still remains the basis of assessment of each subsequent advance. As at the date of first execution on 18 March 1994, all assets to be secured were in NSW. There was no Queensland mortgage in existence as at that date. Any subsequent non NSW mortgages will not affect the payment of full ad valorem duty payable in NSW in respect of the prime mortgage. Section 84B(1) is, in such circumstances, not applicable and full ad valorem duty is payable in NSW without any credit for Queensland duty payable.
7. In accordance with the above, for s. 84B(1) to apply, the Queensland mortgage must have been in existence as at 18 March 1994 (the date of first execution of the prime mortgage) which it was not. No non-NSW mortgages were in existence as at 18 March 1994. As all securities at the date of first execution were within NSW then liability to stamp duty of the prime mortgage on each subsequent advance is on the full amount of the advance in NSW with no credit for the duty paid in Queensland on the Queensland mortgage.
8. Any wider interpretation of s. 84B(1) as contended for by the Applicant would frustrate the anti-avoidance intent of the provisions: see para 16 Applicant's submissions.
9. In addition, the Respondent submits that, in any event, s. 84B(1) is inapplicable because the Queensland mortgage, as at the date of the advance on 6.3.00, had not been "...been duly stamped.... under the law of another State": s.84B(1). The Queensland mortgage was not stamped until 7.6.00 although duty was paid prior to this date. The subsection cannot simply be amended by conveniently inserting the words "or is stampable" in the first three lines of s. 84B(1). Section 84B(1)(a) likewise refers to a stamped instrument (past tense) irrespective of whether duty was paid or payable ' .

21 The Applicant rejects the Chief Commissioner's submission that section 38(1) is "a primary charging provision". In the Applicant's view s. 38(1) "simply makes the duty chargeable on an instrument by another provision of the Act a debt due to the Crown" and that it "is necessary to go to other provisions of the Act to find which instruments are chargeable". The Applicant contends that section 4 of the NSWSD Act is the "primary charging provision" which provides that duty is to be charged on the several instruments and matters described in the Act and in the Second and Third Schedules. In the present matter the Applicant submits that "the relevant provision of the Act is s. 84(3) which charges an unlimited security with duty of $5 at the time of its first execution and in addition a further amount or amounts as and when advances are made under or secured by the loan security." For the view that s.84(3) is itself a charging provision, the Applicant relies on the decisions in Coles Myer Limited v Comptroller of Stamps (Vic) (1987) 87 ATC 4498 at 4500 - 4501 and Citisecurities Limited v Commissioner of Stamp Duties [1996] 2 Qd R 226 at 229.

22 The Applicant also rejects the Chief Commissioner submission that the Applicant's contended interpretation of s. 84B(1) 'will frustrate the 'anti-avoidance" intent of s.84B'. The Applicant takes the view that s. 84B "is a provision designed to provide relief from multiple duty and is not an anti-avoidance provision".

23 The Applicant also disagrees with the Chief Commissioner's submission that "s.84B is inapplicable because the Queensland Mortgage was not duly stamped as at the date of the advance on 6 March 2000". The Applicant contends that the words "duly stamped" in s. 84B 'do not require that the "stamped instrument" be stamped with the duty payable in respect of the further advance at the date on which the further advance is made' and 'that the words "duly stamped" require , at most, that the "stamped instrument" has been stamped in the other jurisdiction by the time relief under s.84B is granted'.

Reasons and decision

24 This case revolves around the correct interpretation of s. 84B. But there is some difference of opinion with the parties in relation to the operation of sections 4, 38 and 84. The Chief Commissioner takes the view that s. 38 "is the primary charging provision" and that liability to duty "of any mortgage in NSW is at the date of its first execution". The Chief Commissioner takes this view on the basis that the "provisions of s.84B (1) and s.84 (3) yield to" s.38. The Chief Commissioner accordingly submits that "for s.84B(1) to apply, the Queensland mortgage must have been in existence as at 18 March 1994 (the date of the first execution of the prime mortgage) which it was not." In the absence of any non-NSW mortgages as at 18 March 1994, the Chief Commissioner submits that the "liability to stamp duty of the prime mortgage on each subsequent advance is on the full amount of the advance in NSW with no credit for the duty paid in Queensland on the Queensland mortgage."

25 The Chief Commissioner also asserts that "all advances subsequent to 18 March 1994 (including the last advance of 6 March 2000) are not deemed for general stamp duty purposes to be fresh and separate loan securities first executed on the day each of the subsequent advances was made" because s.84 (6) "only deems such advances to be new and separate loan securities for the limited purpose of the imposition of fines under s.25 of the Act". Relying on the authorities of Coles Myer Limited v Comptroller of Stamps (Victoria) (1987) 18 ATR 981 at 983-984 and Citisecurities Limited v Commissioner of Stamp Duties (Qld) [1996]2 Qd R 226, the Chief Commissioner further asserts that the subsequent advances do not create any fresh chargeable instrument of security.

26 The Applicant agrees with the Chief Commissioner view as to the operation of s.84 (6). But disagrees that s 38 is the primary charging provision. I also agree with parties that s.84(6) operates in the manner suggested above by the Chief Commissioner.

27 With regard to the operation and interaction of sections 4 and 38, my view is as follows. Duty under the NSWSD Act is charged by virtue of s.4 on the instruments and matters described or mentioned in the NSWSD Act or schedules, at the rates specified in the Act or schedules. The liability, however, for stamp duty arises on the first execution of an instrument by virtue of s.38.

28 Section 84(3) deals with additional duty that is chargeable when further advances are made in the case of an unlimited loan security. To that extent it is a charging provision in the NSWSD Act and the loan security becomes chargeable when advances or additional advances are made. The original loan security remains the only security because s.84(6) only deems advances to be new and separate loan securities for purposes of extending the time for payment of the additional duty chargeable on the original loan security.

29 Section 84B in the form under review was introduced in June 1990 to remove the distinction between "primary" and "collateral" securities and to deal with multiple securities. Section 84B provides that where the same moneys (or part of the same moneys) are secured by another instrument or instruments then a credit is available in respect of a loan security otherwise dutiable for the duty paid or payable (including duty paid or payable in another Australian jurisdiction) on that other instrument or instruments.

30 In construing s.84B it is essential to consider four conditions that have to be satisfied before it can operate to provide any credit. They are: (1) there must be in existence a loan security or other instrument of security for money; (2) the instrument mentioned in (1) must be an instrument that "has been duly stamped" under the NSWSD Act or under the law of another State or a Territory (referred to as "the stamped instrument"), (3) there is another or other instruments which are securities, wholly or partly, for the same money (referred to as "other loan security or securities") and (4) the other loan security or securities must be chargeable to duty at the time the credit is sought. If all these conditions can be satisfied in respect of each of the "other loan security or securities", the person liable is entitled to a reduction of the duty chargeable by the duty that was paid or is payable on the "stamped instrument", subject to a minimum duty of $10.

31 In the present matter, conditions (1) and (3) are clearly met the on the agreed facts. The Queensland Mortgage is a loan security that would satisfy condition (1). The Prime Mortgage is another instrument which secures the whole of the same money as the Queensland Mortgage and would satisfy condition (3).

32 Condition (4) requires that the other loan security or securities are chargeable at the time the credit is sought under s.84B. The Chief Commissioner takes the view that to get the reduction the Queensland Mortgage had to be in existence as a duly stamped instrument on 18 March 1994 when the New South Wales mortgage was first executed. The Chief Commissioner relies on s.38 as being the "primary charging" provision.

33 As explained in paragraph 27 above I do not accept that s.38 is the primary charging provision. Nor do I agree with the Chief Commissioner's submission that s. 84B(1) and s.84(3) "yield" to s.38. In my opinion s.84B is an independent code to provide relief from double duty and operates on its own. Liability arises under s.38 but the charge in respect of unlimited securities is governed by s.83(3). But clearly the conditions that need to be present for s.84B to operate include condition (4). Under s.84(3) an unlimited security is chargeable with duty as and when further advances are made.

34 If the Chief Commissioner is correct that the credit is only available if the "duly stamped" instrument is in existence at the time of first execution of the Prime Mortgage then credit would seldom or ever be available under s.84B. Under s.84(3) an unlimited security is usually on first execution liable to duty of $5 and it would not satisfy the conditions that need to be satisfied under s.84B. It is only when further advances are made that the unlimited security becomes chargeable. In my opinion, s.84B would be a relevant consideration when the unlimited security becomes chargeable when further advances are made from time to time. If all the conditions can be satisfied a credit ought to be available at that time. There is nothing in the provisions of s.84B that supports the view that the credit will only be available if the "duly stamped" instrument is in existence when duty on the "other loan security or securities" is paid or payable.

35 At the time the Applicant sought the credit under s.84B(1), the Prime Mortgage was chargeable with further duty under s.84(3), which would satisfy condition (4).

36 The last condition that needs to be considered is condition (2) which deals with the requirement that the "stamped instrument" has been duly stamped under the NSWSD Act or under the law of another State or Territory. The Chief Commissioner's case is that the relevant "stamped instrument" must be in existence at the time of entering into the "other loan securities" instrument or instruments which he submits is the original date of execution of the New South Wales Prime Mortgage. The Applicant's case on the other hand is based on the argument 'that the reference in the opening words of section 84B(1) to a "stamped instrument" which has been "duly stamped" is not intended to preclude relief where the "stamped instrument" has not yet been stamped.'

37 The words "duly stamped" are defined in s.3 of the NSWSD Act as meaning "stamped in accordance with this Act and Regulations". But the words found in s.84B are for a wider purpose and they must therefore have their ordinary English meaning. No Australian case has attempted to give these words an ordinary meaning but there are Australian cases dealing with these words in the context of stamp duties legislation of various jurisdictions which assist in understanding the scope of these words.

38 In Wilcox Moffin Ltd v Commissioner of Stamp Duties (NSW) (1978) 78 ATC 4191 Meares J in the New South Wales Supreme Court rejected the submission that s.29 of the NSWSD Act which prevents documents not duly stamped from being used in civil proceedings also had to include documents exempt from duty as being "duly stamped". Otherwise it was argued that a substantial proportion of documents not liable to duty would be inadmissible in evidence in civil proceedings. Meares J in rejecting this submission expressed the view that s.29 implicitly only refers to documents liable to stamp duty. In Shepherd v Felt and Textiles of Australia Ltd 45 CLR 359, the Full High Court held that instruments in respect of which unpaid duty and fine when paid "are as efficacious from their execution as if they had never fallen within the operation of sec.29".

39 In M & W Holdings Pty Ltd v. Exbea Pty Ltd. & Anor (1989) 89 ATC 4335 Nicholson J in the Supreme Court of Western Australia, in construing the Western Australian Stamp Act 1921 expressed the following opinion in relation to the words "duly stamped" found in that Act:

"To be duly stamped an instrument must have affixed to it an adhesive stamp or coupon or be impressed by a die with a stamp denoting a duty, fine or fee.."

40 Although I have examined the above cases which provide some assistance in giving the words "duly stamped" their ordinary meaning, I do not have to conclusively decide the scope of the meaning of these words in the present matter. The relevant "stamped instrument", the Queensland Mortgage, was only duly stamped on the 7 June 2000 and the Chief Commissioner and the Applicant accept that it was a "duly stamped" instrument on that date.

41 I reject the Applicant's submission that the words "duly stamped" should be read to include instruments that have not yet been stamped. I think the case law referred to above supports my view that "duly stamped" would require the instrument to have been stamped in accordance with the relevant provisions of either the NSWSD Act or under a stamp act of another Australian jurisdiction. The relevant instrument was only "duly stamped" on 7 June 2000.

42 In the present matter, the Applicant submitted the Prime Mortgage for "upstamping" on 6 March 2000 and sought a credit under s.84B in respect of duty paid in Queensland on or about 6 March 2000. But as the Queensland Mortgage had not been duly stamped by that date, the Applicant was not in my opinion entitled to any credit under s.84B. The Chief Commissioner was entitled in those circumstances to refuse the credit sought by the Applicant.

43 In the present matter I express no views as to whether on 7 June 2000 the conditions to obtain the reduction were satisfied by the Applicant and it was entitled to a reduction of duty paid in New South Wales with a credit for the duty paid in Queensland in terms of s.84B. That issue is not before the Tribunal.

44 However, what occurred on the 7 June 2000 did not affect the objection decision made by the Chief Commissioner in respect of the assessment made by the Chief Commissioner dated 10 April 2000 issued to the Applicant by including a liability of further duty of $117,616.80 without giving the Applicant any credit under s.84B for the duty paid in Queensland. There are no grounds to disturb the Chief Commissioner's objection decision.

45 For the reasons given, the decision of the Tribunal is to affirm the objection decision made by the Chief Commissioner.