National Mutual Life Association v Commissioner of State Taxation

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
NATIONAL MUTUAL LIFE ASSOCIATION & ORS v COMMISSIONER OF STATE TAXATION
[2011] SASCFC 106
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice Vanstone)
30 September 2011
INSURANCE - LIFE INSURANCE - OTHER MATTERS
INSURANCE - LIFE INSURANCE - WHAT CONSTITUTES
TAXES AND DUTIES - STAMP DUTIES - WHAT TRANSACTIONS OR INSTRUMENTS ARE LIABLE - MISCELLANEOUS INSTRUMENTS AND TRANSACTIONS - SOUTH AUSTRALIA
Appeal from decision of Judge of Supreme Court dismissing appeals by four insurers against assessments of stamp duty made by the South Australian Commissioner of Taxation - the assessments under challenge relate to the amount of stamp duty payable and in particular the rate at which the duty was calculated - the Stamp Duties Act 1923 (SA) prescribes lower rate of duty payable on premiums “relating to life insurance” and higher rate on premiums “relating to policies of any kind (other than life insurances policies)” - appellants included additional benefits in their life insurance policies, such as “trauma” and “total and permanent disablement” benefits - where separate and identifiable premium payable in respect of those benefits - where Commissioner had assessed those benefits at the higher rate, and where the appellants contend that they should have been assessed at the lower rate - where debate at trial and on appeal as to the meaning of life insurance - whether the primary Judge in error in dismissing the appeals.
Consideration of the principles applicable to the interpretation of taxing statutes - consideration of the meaning of “life insurance”.
Held:
(1) National Mutual Life appeal allowed for the limited purpose of allowing the Commissioner to reconsider the assessments in relation to those trauma and total and permanent disablement premiums that were not separate and identifiable, in accordance with the reasons of this Court.
(2) Otherwise, appeals dismissed - stamp duty is a tax to be levied on instruments and it is important to address the true nature and character of the instruments the subject of the appeals - the premiums received for trauma insurance and total and permanent disablement benefits are to be characterised as “premiums relating to policies of any kind (other than life insurance policies)”, namely at the higher rate.
Stamp Duties Act 1923 (SA) s 2, s 4, s 5, s 32, s 33, s 34, s 36, Sch 2; Taxation Administration Act 1996 (SA) s 92, s 96, s 97 and s 98; Acts Interpretation Act 1915 (SA) s 21; Life Assurance Companies Act 1882 (SA); Life Insurance Act 1945 (Cth) s 4(1); Life Insurance Act 1995 (Cth) s 3(1A) and s 9, referred to.
Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614; National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261; Limmer Asphalte Paving Co v Commissioner of Inland Revenue [1872] 7 Ex 211; Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351; Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; Commissioner of State Revenue (Vic) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651; Commissioner of State Taxation (SA) v Cyril Henschke Pty Ltd (2010) 272 ALR 440; National Mutual Life Association of Australasia Ltd v Federal Commission of Taxation (1959) 102 CLR 29; Mercantile Mutual Insurance (Workers Compensation) Ltd v Commissioner of Stamps (SA) (1989) 20 ATR 328; Oceanic Life Ltd v Chief Commissioner of Stamp Duties (NSW) (1999) 168 ALR 211; Manly Council v Malouf (2004) 61 NSWLR 394; Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444; Independent Order of Odd Fellows v Commissioner of Stamps (SA) (1985) 38 SASR 282; Corporate Affairs Commissioner of NSW v Yuill (1991) 172 CLR 319; Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327; ICI Australia Ltd v Federal Commissioner of Taxation (1972) 46 ALJR 35; Marac Life Assurance Ltd v Commissioner of Inland Revenue (1986) 4 ANZ Ins Cas 76; AMP Life Ltd v Commissioner of State Revenue (2003) 10 VR 489; Commissioner of Stamp Duties (N.S.W.) v Pendal Nominees Pty Ltd (1989) 167 CLR 1; National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation (WA) (1996) 33 ATR 24; Re Carter, deceased [1963] ALR 176, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"life insurance", "general insurance"

NATIONAL MUTUAL LIFE ASSOCIATION & ORS v COMMISSIONER OF STATE TAXATION
[2011] SASCFC 106
Full Court: Gray, Sulan and Vanstone JJ
GRAY J:
Introduction

On 25 August 2010, a Judge of this Court dismissed appeals by four insurers: National Mutual Life Association of Australasia Ltd, ING Life Ltd,[1] ANZ Life Assurance Company Ltd and AMP Life Ltd against assessments of stamp duty made by the South Australian Commissioner of Taxation. Each insurer has appealed to this Court seeking a reversal of the primary Judge’s decision and a setting aside of the assessments. The appeals raise similar issues and, with the consent of all parties, were heard together before this Court.
[1] Now known as OnePath Life Ltd.
There was no dispute that stamp duty was payable by each insurer. The assessments under challenge[2] relate to the amount of stamp duty payable and in particular the rate at which the duty was calculated.
[2]    The total assessments applicable to each insurer were as follows:
National Mutual Life: for the period beginning 1 January 1994 and ending 31 December 2003, the assessment claimed that an additional $3,372,758.44 was payable. This amount comprised $1,966,574.50 for stamp duty - $772,140.24 in interest and $634,043.70 in penalty fees.
ANZ Life Assurance: for the period beginning 1 January 1994 and ending 31 December 2005, the assessment claimed that an additional $1,345,379.61 was payable. This amount comprised $730,342.50 for stamp duty - $394,067.82 in interest and $220,969.30 in penalty fees.
ING Life: for the period beginning 1 January 1994 and ending 31 December 2005, the assessment claimed that an additional $6,791,953.89 was payable. This amount comprised $3,863,536.00 for stamp duty - $1,816,308.29 in interest and $1,112,109.60 in penalty fees.
AMP Life: for the period beginning 1 January 1994 and ending 31 December 1999, the assessment claimed that an additional $332,155.12 was payable. This amount comprised stamp duty only as no interest or penalty was charged to AMP.
The Stamp Duties Act 1923 (SA) imposes a tax on instruments. Section 4(1) and its predecessor section 5(1) are the charging provisions and attract the general principle that stamp duty is levied on instruments, not on the underlying transactions to which they give effect.
Schedule 2 to the Stamp Duties Act identifies the instruments on which duty is levied. Paragraphs (a) and (ab) of that schedule identify the instruments to be discussed on these appeals. Those instruments are, on the one hand, applications for an annual licence[3] to carry on business as an insurer and, on the other, monthly returns to be lodged by an insurer.
[3] For a time during the relevant period the instrument the subject of assessment under the Act was an annual licence and later the instrument became the application for an annual licence. The parties were agreed that nothing turned on whether the assessment was on the annual licence or on the application for an annual licence. Throughout these reasons unless the context otherwise requires, each is described as an “annual licence application”.
Part 3 of the Stamp Duties Act contains provisions that address, inter alia, the obligations of insurers to obtain annual licences and to lodge monthly returns. Insurers that wish to conduct business in South Australia are obliged to make application for an annual licence in accordance with a specified form. An insurer that wishes to conduct life insurance business is obliged to disclose, as part of that application, the premiums received for life insurance business in the preceding 12 months. An insurer conducting general insurance business must lodge monthly returns disclosing premiums received for general insurance.
The Commissioner’s position throughout has been that the instruments the subject of assessment – monthly returns – should include the premiums received by the insurers relating to general insurance – trauma insurance and total and permanent disablement insurance – thereby attracting duty at a higher rate.[4] The insurers contended that a lower rate was applicable; the rate referable to premiums relating to life insurance.[5]
[4] The Commissioner adopting the language of Schedule 2 (ab) of the Stamp Duties Act 1923 (SA).
[5] The insurers adopting the language of Schedule 2 (a) of the Stamp Duties Act 1923 (SA).
It is convenient at this time to extract part of Schedule 2, the interpretation of which is critical on the appeal:[6]
[6] I extract Schedule 2 in full later in these reasons.
Amount of Duty
$
ANNUAL LICENCE or MONTHLY RETURN to be taken out or lodged by any company, person or firm of persons, whether corporate or unincorporate, which carries on or proposes to carry on in South Australia any life, personal accident, fire, fidelity, guarantee, livestock, plate glass, marine or other assurance or insurance business and whether the head office or principal place of business of that company, person or firm is in South Australia or elsewhere—
(a)in the case of an annual licence where the company, person or firm has received or in any manner charged in account (whether directly or by agents) premiums relating to life insurance within the period of 12 months preceding the year for which the licence is to be taken out—for every $100 or fractional part of $100 of those premiums ………………………………………………………………..1.50
(ab) in the case of a monthly return where the company, person or firm has received or in any manner charged in account (whether directly or by agents) premiums relating to policies of any kind (other than life insurance policies) within the month preceding the month in which the return is required to be lodged—for every $100 or fractional part of $100 of those premiums ……………………………8.00
[Emphasis added.]
Paragraph (a) of Schedule 2 makes reference to “life insurance” and paragraph (ab) refers to “policies of any kind (other than life insurance policies)”. At times in these reasons when it is convenient I use the description “general insurance” as a substitute for the phrase “policies of any kind (other than life insurance policies)”.
The insurers or their predecessors had conducted insurance business in South Australia for some decades. All had written policies of life insurance and policies of general insurance.[7] All had, from at least the early 1990s, written policies of insurance that provided both life insurance benefits and general insurance benefits in the one policy. In these policies, the general insurance benefits often included trauma benefits and total and permanent disablement benefits. In many cases, such policies would identify the separate premium payable in respect of the trauma benefit and total and permanent disablement benefit.[8]
[7] At times in these reasons I refer to contracts of insurance and, at other times, to policies. The context dictates the term to be used. They are interchangeable.
[8] In some cases the policy would offer life insurance cover and trauma cover. In some cases in addition, total and permanent disablement cover would be offered. In some cases life insurance cover would be offered along with total and permanent disablement cover. For ease of reference in the course of these reasons I will often simply refer to “trauma and total and permanent disablement” covers. It should be further noted that none of the representative policies contain trauma cover, total and permanent disablement cover and life cover, all with separate and identifiable premiums. In the case of the other insurers, their brochures did not exclude that such might be the case.
In the case of each of the policies of insurance underlying the monthly returns under consideration, it was accepted by the insurers that a separate and identifiable premium had been charged for a separate and identifiable benefit; namely, a benefit payable in the event that the insured suffered trauma as defined or total and permanent disablement as defined.
It is to be understood that the definition of trauma may vary from policy to policy. However, generally, trauma includes the circumstance where a person insured suffers one of the medical conditions particularised in the policy. These conditions commonly include cancer, coronary artery surgery, heart attack, hemiplegia, stroke, dementia, angioplasty, aplastic anaemia, blindness, chronic kidney failure, liver failure, lung disease, motor neuron disease, major head injury, multiple sclerosis, paraplegia, Parkinson’s disease, pulmonary hypertension, quadriplegia and severe burns. The meaning of total and permanent disablement again varies from policy to policy but the essential meaning remains the same. Later in these reasons, representative definitions are set out but, for example, total and permanent disablement has been defined to mean the loss of two limbs, the loss of sight of both eyes or the loss of one limb and the sight of one eye. In either case of trauma or total and permanent disablement the cover is predicated on the continuance of life, not on its termination.
Before coming to discuss the issues arising on the appeal, it is also convenient to address the Commissioner’s circular of 17 April 2001 which sets out the ruling that led to the assessments the subject of the appeals. The circular provided:
ANNUAL LICENCE
RIDER BENEFITS TAKEN IN CONJUNCTION WITH LIFE COVER
The Stamp Duties Act 1923, ("the Act") requires that persons who carry on insurance business in South Australia pay stamp duty on premiums received.
The Act provides the rate of stamp duty that is to be applied to premiums received in respect of life insurance ("life rate") and the rate to be applied to general insurance business ("general rate").
"general insurance business" means any assurance or insurance business not relating to life insurance policies;
"life insurance policy" does not include a policy covering personal accident or workers compensation or a policy complying with Part 4 of the Motor Vehicles Act 1959;
This circular confirms the position of this Office in respect of the application of the general rate to premiums that provide additional benefits to life policies ("Riders").
BACKGROUND
In recent times, a view has arisen that riders attached to life policies should be subject to duty at the life rate, notwithstanding that the riders may provide a benefit that is of a general insurance nature.
Proponents of that view have argued that the decision of the Supreme Court of Western Australia in National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation (unreported, Malcolm CJ, 10 June 1996) ("NMLA case"), establishes the principle that a life cover policy with a rider attached is one entire and inseverable contract and therefore the entire premium should be subject to stamp duty at the life rate.
However, the NMLA case was decided in a jurisdiction that attaches liability to pay duty to an instrument being the policy document or renewal.
That is not the case in South Australia
In contrast, under the Second Schedule to the Act, life and general insurance policies of themselves are not liable to stamp duty. Stamp duty is instead charged on the premiums disclosed in monthly or annual returns.
It is considered by this Office that the most relevant authority for this matter is the decision of the High Court in National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29.
The premiums charged by the appellant were computed by adding to the amount payable for life cover, a further amount calculated by reference to the risk in providing disability or accident benefits. The total premium was expressed as a single annual sum. The High Court held that whether or not a single instrument had more than one character, was only relevant to statutes which were concerned with the characterisation of instruments. The court held that where the Income Tax Assessment Act 1936 ("ITAA") speaks of "premiums received in respect of policies of life assurance" it was not referring to the instrument recording the contract but to the contractual obligations themselves. Schedule 2 of the Act refers to the receipt or charging to the account of "premiums relating to life insurance" and therefore, is expressed in similar terms to the ITAA relating not to the policy as an instrument but to the contractual obligations themselves. The question before the Court was not the characterisation of an instrument, but whether the premiums received by NMLA were divisible and apportionable between life and general insurance. The Court concluded that, in fact, the premiums were divisible and apportionable.
The Act imposes liability on premiums received rather than on the policy document as an instrument.
RULING
Where a life policy is issued with riders of a general nature attached and a separate premium component in respect of that rider can be determined with certainty, stamp duty at the general rate is payable on that portion of the premiums attributable to the rider benefit.
Examples of rider benefits that would be liable to stamp duty at the general rate include:-
·   Total and permanent disablement benefit
·   Crisis care benefit
·   Enhanced crisis care benefit
·   Recovery cover
·   Income protection cover
The list is not exhaustive.
[Emphasis added.]
The Commissioner made the challenged assessment in relation to AMP Life in September 2002. That assessment related to the instruments – the monthly returns – lodged between 1994 and 1999. The Commissioner made the challenged assessments in relation to National Mutual Life, ING Life and ANZ Life Assurance in April and May 2006. Those assessments related to the instruments – the monthly returns – lodged between 1994 and 2003 in the case of National Mutual Life and between 1994 and 2005 in the case of ING Life and ANZ Life Assurance, and also claimed interest and penalty payments.
The question to be determined in each appeal is how premiums received by the insurers relating to trauma insurance and total and permanent disablement insurance are to be treated for the purposes of paragraph (ab) of Schedule 2 of the Stamp Duties Act.
The Commissioner assessed the duty payable by reference to premiums that he characterised – in accordance with the language of Schedule 2 paragraph (ab) – as premiums relating to policies of any kind (other than life insurance policies). The Commissioner’s assessment followed the publication of his circular of April 2001. These premiums had been treated by the insurers over the previous two decades as premiums relating to life insurance. These premiums had not been disclosed by the insurers in their monthly returns.
In my view, the Commissioner’s assessments, subject to one matter, have not been shown to be incorrect and to that extent the appeal from the primary Judge should be dismissed. To be more particular, the Commissioner’s assessments related to the circumstance where the policies of insurance underlying each monthly return lodged by the insurers provided for both life insurance and other insurance, the latter being either trauma insurance or total and permanent disablement insurance. The assessments were only undertaken where a separate and identifiable premium was charged and paid in respect of that other insurance, and more particularly, where that premium was charged with respect to trauma benefits or total and permanent disablement benefits.

Although it would be a sufficient basis on which to dismiss the appeal to reach the conclusion that the Commissioner’s assessments have not been shown to be incorrect, I have reached the view that, subject to one matter, the assessments were correct. The premiums the subject of the relevant monthly returns the subject of the assessments fall directly within the terms of Schedule 2, paragraph (ab).
The one matter referred to above relates to some of the assessments made by the Commissioner with respect to the monthly returns lodged by National Mutual Life. During the course of the hearing before the primary Judge, it became apparent that a number of those assessments in part related to premiums that did not fall within the above description; that is, separate and identifiable premiums received in respect of trauma benefits or total and permanent disablement benefits. The appeal lodged by National Mutual Life should be allowed for the limited purpose of allowing the Commissioner to consider this circumstance and the Commissioner should be directed to conduct his assessment in accordance with the reasons of this Court.[9]
[9] This topic is further addressed at paragraph [152] of these reasons.
My reasons for these conclusions follow.
The Right of Appeal
Division 2 of Part 10 of the Taxation Administration Act 1996 (SA) governs appeals to the Supreme Court. That Division includes the following provisions:
92—Right of appeal
A person who has made an objection may appeal to the Supreme Court if—
(a)     the person is dissatisfied with the Minister's determination of the objection; or
…
96—Grounds of appeal
(1)     The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection or the reasons for the determination of the objection or the facts on which the determination was made.
(2)     However, if the objection was to a reassessment, any limitation of the matters to which the objection could relate under Division 1 applies also to the appeal.
97—Onus on appeal
On an appeal, the appellant has the onus of proving the appellant's case.
98—Determination of appeal
On an appeal, the Supreme Court may do one or more of the following:
(a)confirm or revoke the assessment or decision to which the appeal relates;
(b)make an assessment or decision in place of the assessment or decision to which the appeal relates;
(c)make an order for payment to the Commissioner of any amount of tax that is assessed as being payable but has not been paid;
(d)     make any further order as to costs or otherwise as it thinks just.
The effect of section 97 is that the insurers must prove that the amount assessed in fact exceeds their true liability to duty. A similar provision was considered by the High Court in the Federal Commissioner of Taxation v Dalco, where Brennan J observed:[10]
[10] Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614, 621, 623-624.
…[T]he purpose of the procedure of assessment, objection and appeal or review is to ascertain the true tax liability of the taxpayer under the substantive provisions of the Act. Oftentimes, the grounds of an objection and the Commissioner's notice of decision thereon will define the issues for determination by a court entertaining an appeal against the assessment; but not necessarily so. It is not the grounds of the objection against an assessment but the objection itself which is treated as an appeal and forwarded to a Supreme Court for hearing and determination: ss. 187(1)(b), 197, 199. It would be inappropriate for a court determining an appeal to make an order altering the tax liability assessed (s. 199) unless the court were satisfied that the amount to which it proposed to alter the assessment represented the true tax liability of the taxpayer. Although the grounds of objection limit the grounds of appeal, the ultimate question for the court hearing the appeal is not whether the grounds have been made out but whether the amount assessed as taxable income is wrong. The burden which rests on a taxpayer is to prove that the assessment is excessive and that burden is not necessarily discharged by showing an error by the Commissioner in forming a judgment as to the amount of the assessment.
…
The ground of objection on which the taxpayer here relies is error in the formation of a judgment as to the amount on which tax ought to be levied. But mere error in the formation of that judgment by the Commissioner does not warrant the setting aside of the amount assessed. Given the validity of the exercise of the power to make an assessment under s. 167(b), the ultimate question is whether the amount of the assessment is excessive. The amount of the assessment might not be excessive in fact, though the reasons which led to the assessment were erroneous. In George's Case the Full Court said:
the law has always been taken to be that in an appeal from an assessment the burden lies upon the taxpayer of establishing affirmatively that the amount of taxable income for which he has been assessed exceeds the actual taxable income which he has derived during the year of income.
Kitto J., from whose judgment the appeal in George's Case was brought, said:
[Section] 190 (b) places the burden of proving that the assessment is excessive upon the appellant; and in order to carry that burden he must necessarily exclude by his proof all sources of income except those which he admits. His case must be that he did not derive from any source taxable income to the amount of the assessment.
…
The manner in which a taxpayer can discharge that burden varies with the circumstances. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of the assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. …
[Footnotes omitted. Emphasis added.]
I consider that these observations and in particular those emphasised have direct application to this Court’s approach to the within appeals.
Appeals to the Primary Judge
A separate appeal was lodged by each insurer from the respective determinations by the Commissioner. The same counsel appeared for ING Life, ANZ Life Assurance and AMP Life and presented the one submission. National Mutual Life was separately represented and the submissions presented by that appellant, although with some differences, covered much the same ground.
Over the objection of National Mutual Life, without any order for consolidation, the primary Judge directed that the appeals be heard together and provided one set of reasons for her decision to dismiss all appeals.[11] However, although common questions arose, each appeal required separate and discreet consideration.
[11] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261.
The primary Judge determined that the premiums attributable to trauma insurance and total and permanent disablement insurance were properly regarded as “premiums relating to policies of any kind (other than life insurance policies)” and that duty was payable at the higher rate pursuant to paragraph (ab) of Schedule 2.
It is convenient before coming to address the primary Judge’s conclusions to first set out the structure of the arguments of the insurers, as they were summarised by the primary Judge:[12]
The primary argument put by the Appellants is that the term ‘life insurance’, as it is understood in the Stamps Act, is wide enough to include insurance cover for [total and permanent disablement] and trauma. This submission was put most forcefully by [ING Life, ANZ Life Assurance and AMP Life]. They submitted that the Stamps Act adopts the common law definition of life insurance and that that definition now incorporates [total and permanent disablement] and Trauma insurance. [National Mutual Life] put the argument slightly differently, saying that the Stamps Act deals with ‘life insurance business’ and that this may be broader than the common law definition of ‘life insurance’. In any event, [National Mutual Life] adopted the argument that trauma cover and [total and permanent disablement] cover are properly included within the meaning of “premiums relating to life insurance” for the purposes of the Stamps Act. If the Appellants are successful in this argument, then not only would the policies which include riders be taxed at the Life Insurance Rate, but so too will any stand alone policies providing for [total and permanent disablement], Trauma and/or [terminal illness] cover.
The second argument put by the Appellants is that, even if the definition of ‘life insurance’ does not include trauma or [total and permanent disablement], the operation of the Stamps Act is such that it is not proper for the Commissioner to apportion stamp duty between the Life Insurance Rate and the General Insurance Rate, when the insurance cover is included in the same policy document. This argument is put in slightly different ways by [ING Life, ANZ Life Assurance and AMP Life] and [National Mutual Life]. If the Appellants are successful in this argument then the Appellants may be partially or entirely successful in impugning the Assessments, however this argument cannot render ‘stand alone’ policies of trauma and/or [total and permanent disablement] to be subject to the Life Insurance Rate.
Thirdly, [ANZ Life Assurance] and [ING Life] argue that regardless of the success or otherwise of the above argument, the Commissioner erred in imposing a penalty on them.
[Footnotes omitted.]
[12] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [54]-[56].
In dismissing the appeals, the primary Judge concluded that the meaning of the words “life insurance” as used in the Stamp Duties Act was not dictated by an expanding definition of “life insurance” or “life insurance business” in other legislation, but that the Stamp Duties Act has retained the same meaning of life insurance. On this topic, the Judge observed:[13]
In summary, the legislation of the Commonwealth was expanding its definition of “life policy” and “life insurance business” at marked points over the past 150 years, while the Stamp Duties Act 1923 (SA) as amended in South Australia has retained its same definitions and approach, which is overtly different.
And later concluded:[14]
But even though it may be difficult to express a universally accurate definition of life insurance, this does not hinder the ability of a Court to find, as the High Court did in [National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation], that certain types of insurance fall outside of life insurance. I am satisfied that insurance cover for [total and permanent disablement], Trauma and [terminal illness] fall outside this definition.
In summary on this point, I reject [ING Life, ANZ Life Assurance and AMP Life’s] argument that the common law interpretation of life insurance has changed. I conclude that it remains as the High Court endorsed it in [National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation]. I conclude that the meaning of “life insurance” in the context of the Stamps Act is the same common law interpretation. Although they are part of the accepted practice of life insurance companies in life insurance business, I reject the argument that [total and permanent disablement] or Trauma cover as stand alone or as riders to a life insurance policy form part of the common law interpretation of life insurance.
[13] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [97].
[14] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [129]-[130].
The primary Judge determined that stamp duty was payable on premiums relating to trauma insurance and total and permanent disablement insurance within a policy, and that the leading and principal object test derived from Limmer Asphalte Paving Co v Commissioner of Inland Revenue[15] was not relevant. In this respect, the Judge observed:[16]
However, it is not correct to say that Limmer Ashpalte requires a consideration of the leading and principal object of the policy document in this case. That test is only relevant to the assessable “instrument”, which in this case is either the annual licence application or the monthly return. Therefore, under this scheme, the Limmer Ashpalte test has no practical relevance because, of their very nature, the annual licence application applies to life insurance and the monthly return applies to other than life insurance. ...
The Judge then concluded:[17]
… In short the insurance policy document is not relevant either to liability for duty or to the amount of the duty. As indicated, the focus of the legislation is on the “instrument”, which is the annual licence application or the monthly return, and the amount of duty which is related to the “premiums”. This interpretation is supported by the fact that the word ‘premium’ is defined in s 32 of the Act to mean, inter alia, “any amount paid or payable for assurance or insurance and includes … an instalment of premium.” This definition requires only that the amount is paid (or payable) for insurance, not that it is paid pursuant to a policy document. …
[Emphasis in original.]
[15] Limmer Asphalte Paving Co v Commissioner of Inland Revenue [1872] 7 Ex 211, 217.
[16] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [140].
[17] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [140].
The Appeals to this Court
The decision of the primary Judge in respect of each appeal has been the subject of further appeal to this Court. As earlier observed, although each is a separate appeal, without opposition, all appeals were heard together.
The appeals by the insurers challenge the primary Judge’s conclusions concerning assessments made by the Commissioner as a consequence of asserted underpayments of duty. The core of the dispute relates to the characterisation of premiums received.
As discussed above, the Commissioner’s conclusions concerning underpayments were based on the view that premiums that had been erroneously characterised by the insurers as premiums relating to life insurance were properly to be characterised as premiums relating to policies of any kind other than life insurance policies. It was the Commissioner’s case that the relevant policies of insurance provided both life insurance and insurance other than life insurance. It was submitted that as separate and identifiable premiums were charged in respect of the insurance other than life insurance – trauma insurance and total and permanent disablement insurance – those premiums were to be disclosed in the dutiable instrument under Schedule 2 paragraph (ab), namely the monthly returns.
The insurers’ case was that the relevant premiums had been correctly characterised as premiums relating to life insurance and that those premiums were to be disclosed in the dutiable instruments under Schedule 2 paragraph (a), namely the annual licence applications.
The resolution of the respective contentions requires this Court to consider the terms of the relevant policies of insurance, the terms of a number of brochures and other surrounding facts and circumstances. I propose to first discuss the facts, then address the approach to be taken to taxing statutes, then to set out the relevant aspects of the legislative scheme and finally to address and reach a conclusion as to the issues arising on the appeal.
As discussed earlier, during the course of the appeal to the primary Judge the Commissioner accepted that some of the assessments had proceeded on a misapprehension of fact. Apparently, as a result of information provided by National Mutual Life, it was accepted that there were a number of policies of insurance where life insurance benefits were provided and that in addition other types of benefits were provided, but where no separate, identifiable premium had been charged in respect of the other types of benefits. Alternatively, to use the language of the Commissioner’s circular, no premium could be calculated with certainty in regard to the provision of other types of benefits.
The Commissioner accepted that in respect of these policies, the duty initially charged on the relevant instrument – the annual licence application – was the correct duty. To put it another way, the Commissioner accepted that the premiums relating to these policies did not require disclosure in the instrument referred to in paragraph (ab) of Schedule 2 – the monthly returns. This concession necessarily leads to the conclusion that the appeal by National Mutual Life should be allowed for the purpose of enabling this aspect of the assessment to be re-addressed.
It was complained that the primary Judge had expressed views on other issues in terms that could be said to amount to declarations. It was in effect argued on appeal that there had been a denial of procedural fairness – these other issues were not addressed on the hearing and had not been the subject of submissions by counsel.
Particular complaint was made about the following observations of the primary Judge, made with respect to National Mutual Life:[18]
NMLA also offered different types of riders that it called “Optional Benefits”. These riders provided for an accelerated payment of all or part of the benefit upon the occurrence of a Trauma or TPD, or a combination of the two. Each of these riders was optional for the insured and attracted a specifically identified additional premium. As I have said above, premiums received in respect of such riders attract the General Insurance Rate.
There were also two more riders that were included in the policies offered. First, generally speaking [National Mutual Life’s] policies provided for an accelerated payment of all or part of the benefit upon the occurrence of a terminal illness. This additional [terminal illness] cover was usually automatically included in the policy and it was not stated to be the subject of an additional or increased premium. Secondly, with respect to policies containing a rider of the kind covering for Trauma, [National Mutual Life] would generally include an additional rider referred to as the “Health Insurance Benefit”. This rider provided for [National Mutual Life] to pay an additional amount over the Trauma benefit to pay the insured’s health insurance premiums if the insured had private health insurance on the occurrence of a Trauma. This rider was designed to encourage insureds to acquire private health insurance in addition to their NMLA policy. Where it was included, it was added automatically and not stated to be the subject of an additional or increased premium. The Commissioner elected not to charge any amount of the premium at the General Insurance Rate by virtue of these two riders. As this did not result in a higher rate of duty, it is not the subject of dispute in this case. However in accordance with my findings above, it would be appropriate for the Commissioner to have done so if a proportion of the premium could be said to have related to that rider.
[Footnotes omitted.]
[18] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [174]-[175], similar observations were made with respect to the other appellants, for example see [156]-[157], [160], [169].
On the hearing of the appeal to this Court, it was asserted by National Mutual Life that they had not been properly or adequately heard on the issues the subject of the above judicial observations. Its contention in this respect was accepted by the Commissioner. It was suggested that these observations were in the nature of declarations. Their correctness was challenged.

In my view, it was unnecessary for the primary Judge to address these other issues and, in the event, the primary Judge reached the above extracted conclusions in the absence of the issue being properly before the Court and the subject of full submissions. In the circumstances, the observations of the Judge should be treated as asides on issues not joined in the hearing made without the benefit of submissions. The same can be said for the Judge’s parallel observations concerning the other insurers.
The Facts
The appeals raise for consideration the terms of the relevant instruments lodged by each insurer; that is, the monthly returns over the entire period. It is necessary to ascertain the true nature of the instruments, the substance of the underlying transactions and then determine whether the Commissioner’s assessments were correct.[19] It may be understood that undertaken strictly, this would be an immense task. Each monthly return would need to be examined and consideration given to the terms of each policy of insurance underlying each monthly return pursuant to which a premium or premiums had been paid.
[19] Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351.
National Mutual Life sought to limit this task by selecting representative policies of insurance. The Court has been informed that the ruling to be made is to be applied to each of the policies underlying the instruments – the monthly returns.
ING Life, ANZ Life Assurance and AMP Life adopted a different approach. Each tendered brochures that addressed their insurance products as available from time to time over the relevant period. These brochures described the types of insurance on offer in a compendious way. As a consequence, in the case of these insurers, it has not been possible for the Court to review any particular policies of insurance underlying the monthly returns.
On the hearing of the appeals to the primary Judge, statements of agreed facts were tendered. In addition, documents were tendered by consent. Oral evidence was led during the course of the joint hearing through witnesses holding expertise with respect to matters arising in the insurance industry.
National Mutual Life
National Mutual Life conducted insurance business in South Australia during the period from 1994 to 2003. During this period, National Mutual Life paid stamp duty pursuant to each of the annual licence applications. It did so on the basis that separate and identifiable premiums received in respect of trauma benefits and total and permanent disablement benefits were to be treated as premiums relating to life insurance, and that when duty was charged on the annual licence application it was at the rate specified in Schedule 2 paragraph (a). To put the matter another way, it was the case of National Mutual Life that where policies provided life cover and in addition trauma cover or total and permanent disablement cover, the premiums received in respect of those covers were all to be treated as though they were premiums received in relation to life insurance.
During this same period, National Mutual Life also carried on general insurance business in South Australia. It lodged monthly returns. In the case of the policies of insurance underlying the instruments the subject of this appeal, the premiums received for the trauma insurance and total and permanent disablement insurance were not included in the monthly returns. As mentioned above, they were treated by National Mutual Life as relating to life insurance.
In December 2002, the Commissioner commenced an audit of the insurance business of National Mutual Life for the period of 1 January 1994 to 31 December 2003.
On 20 April 2006, the Commissioner issued a notice of assessment to National Mutual Life on the basis that there had been underpayment of duty on monthly returns. In the Commissioner’s view, premiums received that related to the insurance provided in respect of trauma and total and permanent disablement should have been disclosed in the monthly returns. These premiums had been incorrectly disclosed with the applications for annual licences and a lower rate of duty paid. Pursuant to the notice, the Commissioner assessed National Mutual Life as liable to stamp duty based on the higher rate, interest and penalty.
The Commissioner’s assessment was made on the monthly returns – the instruments to be charged – and the recalculation was based on the separate and identifiable premiums received in respect of trauma cover and total and permanent disablement cover. In the Commissioner’s view, Schedule 2 paragraph (ab) had application.
National Mutual Life objected to the assessment. The Treasurer of South Australia disallowed the objection in December 2006.[20]
[20] Save for having partially allowed the objection insofar as duty was assessed in respect of premiums received in relation to the “future insurability option”.
As mentioned, representative examples of insurance policies were tendered by consent before the primary Judge. However, as the hearing unfolded, it became apparent that only some of those policies were relevant – those where a separate premium relating to the trauma benefits and total and permanent disablement benefits were charged and could be identified with certainty. As a consequence, the Court was concerned with representative policies of insurance, numbered 1, 3, 4, 5, 6, 7, 11 and 12.
The representative policies may conveniently be discussed together. Although the policies contain a number of different terms, they are relevantly comparable. Each contained a schedule which set out the insurance benefits payable under the policy and, where a premium was payable, identified the amount of the premium. Each identified that trauma benefits or total and permanent disablement benefits were being provided in a particular amount and also identified a separate premium in respect of those benefits.
Each policy set out the terms relating to the payment of the trauma benefits and disablement benefits, whichever was applicable. Each also contained extensive definitions of the terms trauma and total and permanent disablement.
The representative policies of insurance are described on their title page as either a “Permanent Life Plan”, a “Life and Disablement Protection Policy” or as a “Life and Trauma Deluxe Protection Plan”. As mentioned above, at the commencement of each appears an insurance schedule setting out the nature and extent of the cover offered and the premiums payable for those covers. Each policy then has a number of annexures that address the terms of each particular cover. Not all annexures are attached to each representative policy.
Each insurance schedule identifies life insurance benefits. Some of the policies describe these as “basic benefit” and as “level life insurance”. Each insurance schedule also identifies a number of other benefits. Most policies describe at least one benefit as “trauma insurance”. Some policies describe two different types of “trauma insurance” and some refer to “total and permanent disablement insurance”.
In each, in respect of either trauma insurance or total and permanent disablement insurance, a separate and identifiable premium is identified in respect of that separate insurance cover. As noted earlier, the issue on appeal only arises where a separate and identifiable premium is to be charged.
An annexure to a number of the policies addresses whole of life insurance. The annexure provides for participation in profits, qualification for an end bonus and for the benefit to have a cash value. Another annexure addresses another life insurance benefit, being described as “level life insurance benefit”. That benefit is payable if the insured dies before the expiry date set out in the schedule.
An annexure to a number of the policies provides for a health insurance benefit. The annexure provides that the health insurance sum insured is payable upon the major trauma of the person insured and further provides that this benefit is not payable on death. No additional premium is payable for this benefit, providing that the insured’s plan includes trauma insurance.
An annexure to a number of the policies addresses trauma insurance. An example is to be found in policy 1, where the policy of insurance provides that trauma insurance benefits are payable upon the major trauma of the person insured “if it occurs before the expiry date of this insurance”. Then follow a number of conditions “relating to this insurance”. It is specified, inter alia, that “this benefit has no cash value” and that “this benefit will not participate in any distribution of our profits”.
Each policy provides that upon payment of the agreed trauma benefit or total and permanent and disablement benefit, the amount of the insured’s entitlement to the payment of any life insurance benefit would either be reduced or the plan would cease. For example, policy 1 provides:
Effect of this Plan of Payment of this Insurance
On payment of the Major Trauma of the Person Insured:
(a)the amount of each other benefit included in the Plan will be reduced by the amount of the Trauma Insurance; or
(b)if the Trauma Insurance Sum Insured is equal to the Life Insurance Sum Insured, the Plan will cease.
Policy 1 defines major trauma to mean “the happening to the Person Insured after the commencement of this Insurance of any of the following conditions”. Then follow 29 specified conditions some of which are subject to a 90 day waiting period and others are not. For example, those subject to a 90 day waiting period include:
CANCER
The occurrence of an invasive malignant tumour. Included will be all forms of leukaemia, lymphoma, Hodgkin’s disease and Malignant Melanoma at least 1.5mm Breslow thickness or Clark Level 3.
The following are excluded:
Tumors treated by endoscopic procedures alone, tumours classified as carcinoma in situ, prostate tumours classified as T1 (all categories) under the TNM classification system, malignant melanomas other specified above, other skin cancers, tumours that are a recurrence or metastases of a tumour that first occurred within the 90 day waiting period, Kaposi’s Sarcoma and other tumours associated with the HIV infection.
CORONARY ARTERY SURGERY
Coronary artery bypass grafting surgery performed by open chest surgery as a consequence of coronary artery disease. Non surgical techniques including angioplasty … laser and other catheter techniques are excluded.
HEART ATTACK
An acute myocardial infarction where such diagnosis has been document by the occurrence of:
(a)    typical acute electrocardiographic changes, and
(b)    the diagnostic elevation of cardiac enzymes or an increase in troponin to three times upper limit of normal.
HEMIPLEGIA
The total and permanent loss of the use of one side of the body due to paralysis.
STROKE
A cerebrovascular incident that is:
(a)     caused by haemorrhage, embolism or thrombosis; and
(b)     is associated with the onset of objective neurological signs, and
(c)     the neurological signs are ongoing, or
(d)the haemorrhage, embolism or thrombosis has been demonstrated by Magnetic Resonance Imaging, Computerised Tomography, or other reliable imaging techniques approved by us.
It is to be observed that this annexure, and the comparable annexure to each of the other relevant representative policies, provides for insurance that is within the description “general insurance”. Trauma insurance is not life insurance. The only link to the life insurance benefits provided in any of the policies is the provision that payment under the trauma annexure has an impact on benefits that might be payable under the life insurance cover. The same may be said about the representative policies including total and permanent disablement cover.
The schedules to the representative policies follow the same format, although the description of benefits, the amounts insured and the premiums payable vary. In several of the policies, a separate and identifiable and substantial premium, in almost the same amount as the premium for a life insurance benefit, is charged with respect to trauma benefit.
Counsel for National Mutual Life described the cover provided by the trauma annexure to policy 1 and its comparators in the other policies as being an acceleration of the life insurance benefit. As earlier mentioned, my review of the documents has not revealed such a phrase or the word “acceleration” in the representative policies, nor did counsel draw attention to any such reference. In my view it is not correct to describe there being an acceleration of the life insurance benefit. None of the policies provide for such an acceleration. The amounts payable for trauma insurance and total and permanent disablement insurance are separately identified. Although they may on occasions represent the same dollar sum, they are not the same benefit and are not payable with respect to the same risk. The only impact on life insurance benefits would appear to occur when trauma or total and permanent disablement payments are made, and in that event, the benefits payable with respect to life insurance are “reduced” or “the Plan will cease”.[21]
[21] Adopting the language used in policy 1. The other representative policies contain terms to the same substantive effect.
Counsel for National Mutual Life at times described the trauma insurance and total and permanent disablement insurance as “riders”. My review of the policies did not reveal the word rider, and counsel did not draw attention to any such reference. I note however that the word rider appears in the Commissioner’s circular. The trauma annexure and the total and permanent disablement annexure form part of a combined insurance policy where a separate benefit is identified and a separate premium for that benefit is identified. The use of a term such as rider could imply that a benefit identified is a mere incident to the life insurance provided. In my view, the use of the word rider has the capacity to mislead and should be used with care. What is in issue is the proper construction of Schedule 2 of the Stamp Duties Act and whether the premiums relating to the trauma benefits and total and permanent disablement benefits fall within paragraph (ab) of that schedule.
ING Life, ANZ Life Assurance and AMP Life
As earlier mentioned, the appeals lodged by ING Life, ANZ Life Assurance and AMP Life were each presented on an identical basis. The one counsel represented the three insurers and put the one submission. As a consequence, it is convenient to address the appeals of these three insurers together.
As discussed above, these insurers elected to present factual material without the tender of any policies of insurance. No representative polices were tendered. These insurers did not follow the course adopted by National Mutual Life.
ING Life, ANZ Life Assurance and AMP Life all wrote life insurance and general insurance and, throughout the relevant period, obtained an annual licence and lodged monthly returns. Each wrote combined policies; that is, policies that offered life cover as well as trauma and/or total and permanent disablement cover. It was agreed between the parties that a number of these policies identified a separate premium in respect to the life benefit on the one hand and trauma benefit and total and permanent disablement benefit on the other.
Each of ING Life, ANZ Life Assurance and AMP Life tendered brochures in the nature of customer information brochures that addressed the insurance protection they offered against death, disablement, serious illness and injury. The reader of the brochure would be aware of the combination of cover that could be selected. A reader would be able to select a particular combination to provide for the particular risks against which they wished to be protected.
In the case of ING Life, a brochure issued in March 1997 described the total and permanent disablement benefit as an option and in particular provided the following information:
Total and Permanent Disablement (TPD) Benefit
This benefit pays you a lump sum if you become totally and permanently disabled before you 65^th birthday. You may apply for this benefit if you are between 16 and 55 years of age on your next birthday. The sum insured for the TPD benefit can be equal to or less that the life cover sum insured. The maximum TPD sum insured is $2,000,000 (we count the TPD benefits on all policies we issue on your life). We will pay the TPD sum insured once only.
TPD cover ceases on the renewal date prior to your 65^th birthday.
The TPD sum insured is reduced by any amount paid under this policy for terminal illness or the optional trauma benefit.
Various definitions of Total and Permanent Disablement (TPD) are available. You may choose a definition that is appropriate to the work you do, whether it is paid employment or not. The TPD definitions are given on page 7. Details regarding the availability of the TPD definition for your occupation will be provided upon request. Maximum TPD sums insured apply for particular TPD definitions. See page 7 for details. The premium that will be charged for the TPD benefit depends on the TPD definition you select.
…
TPD Buy Back Benefit
If we pay a TPD benefit, the life cover and terminal illness benefit and, if applicable, the trauma benefit sum/s insured are reduced by the amount paid. Under this option your life cover and terminal illness benefit may be reinstated 12 months after we pay the TPD benefit. See page 7 for more details.
The brochure described the trauma benefit as an option and in particular provided the following information:
Trauma Benefit
This benefit pays a lump sum if you suffer one of the conditions covered by the policy before your 65^th birthday. You may apply for this benefit if you are between 16 and 55 years of age on your next birthday. A list of the covered trauma conditions appears on page 8. You may apply for Basic Trauma Cover or Extended Trauma Cover. The sum insured for the trauma benefit can be equal to or less than the life cover sum insured. The maximum trauma sum insured that you can apply for is $1,000,000. We take the trauma sums insured for all policies on your life into consideration in determining this amount. We will pay the trauma sum insured once only. The trauma benefit ceases on the renewal date prior to your 65^th birthday.
The trauma sum insured is reduced by any amount paid under this policy for terminal illness or the optional TPD benefit.
This benefit is available only if the policy is not taken out for superannuation purposes.
Trauma Buy Back Benefit
This benefit is included at no extra costs if the trauma benefit is purchased. If a trauma benefit is paid, we will offer to reinstate your life cover and terminal illness benefit 12 months later. Each year for three years, life cover equal to one third of the trauma cover sum insured paid by us under this policy will be offered. This offer will not be made if we have paid a trauma benefit in respect of Occupationally Acquired HIV, Loss of Independent Existence, or paid the terminal illness or TPD benefit/s.
Later in the brochure there is a fuller description of the total and permanent disablement benefit and advice that it can be taken up with “standard cover” “own occupation” or “homemaker [total and permanent disablement]” definitions. There is also a total and permanent disablement buy-back benefit, a trauma benefit and an “accelerated trauma buy-back benefit”. Other brochures outline similar benefits although some are described in different terms.
As mentioned earlier, it is not possible to ascertain the terms of any particular policy of insurance underlying any monthly return when addressing the ING Life appeal.
In the case of ANZ Life Assurance, brochures were tendered in evidence. As with the ING Life brochure, they provided general information about combined policies offered by ANZ Life Assurance and the options available to persons wishing to enter into a policy of insurance. It appears from the terms of the brochures that separate and identifiable premiums would be payable for total and permanent disablement benefits and trauma benefits. The brochure published in November 1996 describes the total and permanent disablement benefit as an “optional additional benefit” and provides as follows:
Total and Permanent Disablement Benefit
This optional benefit is available with a minimum entry age of 18 years next birthday and a maximum entry age of 55 years next birthday, with the maximum Sum Insured equal to the ANZ Life Insurance cover or $1.5 million, whichever is less. The benefit may be renewed at each Policy anniversary up to and including that immediately prior to the 60th birthday of the Life Insured.
The Sum Insured is payable in the event of the Total and Permanent Disablement (see page 9 for a full definition) of the Life Insured prior to the first Policy anniversary after age 60. However, we reserve the right to pay the amount of the benefit in half yearly instalments over five years, in which case an interest adjustment will be made. The payment of these instalments s subject to the Life Insured continuing to suffer Total and Permanent Disablement at each payment date. ANZ Life also has the discretion to defer payment, subject to receiving further medical advice.
Benefits are payable, provided that Total and Permanent Disablement does not result from:
-      an intentional self-inflicted injury or infection;
-being under the influence of alcohol level of 0.1 mmol/l or more) or any other medication or drugs (whether prescribed or not);
-      war (whether declared or not), military activity or insurrection; or
-      travelling by air, except as a fare-paying passenger on an airline.
On the full or part payment of the Total and Permanent Disablement Benefit, the ANZ Life Insurance Sum Insured will be reduced by the amount of the Total and Permanent Disablement Benefit paid.
Any trauma recovery benefit Sum Insured issued under the same policy will be reduced (if applicable) to the same level as the ANZ Life Insurance Sum Insured.
The premium payable will be in accordance with the reduced level of cover after the date of disablement.
Any premiums paid in respect of Total and Permanent Disablement Benefit, after the date of disablement, will be refunded.

In the case of trauma benefits four different options are outlined, for example:
Trauma Recovery Benefit (issued in conjunction with ANZ Life Insurance)
Covered Events
The Sum Insured is payable if the Life Insured suffers either :
- one of the 10 Specified Traumas (see Box A on page 5).
Conditions
- must be diagnosed as having suffered one the 10 Specified Traumas at least three months after the Commencement or Reinstatement Date of the Policy and survive a minimum period of 28 days from diagnosis.
Reductions – This applies to both Trauma Recovery Plus and Trauma Recovery Benefit.
Where a trauma recovery benefit is paid, the ANZ Life Insurance Sum Insured will be reduced by the amount of the trauma recovery benefit paid. Similarly, any Total and Permanent Disablement Benefit Sum Insured will also be reduced (if applicable) to the same Sum Insured of the ANZ Life Insurance. The remaining sums insured (if any) will continue at the applicable premium rates for that amount.
Buy Back Option – This applies to both Trauma Recovery Plus and Trauma Recovery Benefit.
In the event of a trauma recovery benefit payment whereby any ANZ Life Insurance is reduced (see above), the Policy owner has the right to reinstate the original level of ANZ Life Insurance cover over a three year period.
One year after the claim has been admitted, 1/3 of the amount of the ANZ Life Insurance cover reduced may be reinstated. If cover is reinstated on the 1st claim anniversary, the remaining cover may be reinstated by a further 1/3 on the next two anniversaries. Indexation does not apply to policies where the Life Insured has taken advantage of the buy back provision.
Another brochure outlined similar benefits in somewhat different terms.
Again, it is not possible to ascertain the terms of any particular policy underlying any particular monthly return when addressing the ANZ Life Assurance appeal.
In the case of AMP Life, two brochures were tendered, being dated 1 September 1996 and 1 September 1997. Both are voluminous, identifying a range of products offered by AMP and in particular, policies offering a combination of separate benefits. Those benefits include trauma benefits and total and permanent disablement benefits. It may be understood from those brochures that these benefits would be offered with separate and identifiable premiums.
The 1996 brochure addresses total and permanent disablement relevantly in the following way:
An injured person is totally and permanently disabled if their disability meets the requirements of either paragraph 1, or 2, in this definition and it:
-commences while the insured person is engaged in regular remunerative work (or within 6 months after they cease regular remunerative work); or
-commences while the insured person is engaged in home duties (or within 6 months after they cease home duties); or
-results directly and independently of all other causes from accidental bodily injury caused directly and solely by violent, external and visible means.
1. The insured person is disabled if they suffer an illness or injury and each of the following is the case:
-the illness or injury wholly prevents them from engaging in home duties, or regular remunerative work (whichever they were engaged in when they suffered the illness or injury) for at least 6 months in a row; and
-since they became ill or injured, they have been under the regular care and attention of a doctor for that illness or injury; and
-in AMP’s opinion, the illness or injury means they will never again be able to engage in home duties, or regular remunerative work, (whichever they were engaged in when they suffered the illness or injury) for which they are reasonably fitted by their education, training, or experience.
2. The insured person is disabled if they lose any of:
-both entire feet, or both entire hands; or
-an entire hand and an entire foot; or
-the entire sight of both eyes; or
-the entire sight of one eye and either an entire hand or an entire foot.
The loss must be unable to be remedied.
Again, it is not possible to ascertain the terms of any particular policy underlying any particular monthly return when addressing the AMP Life appeal.
It was accepted between the parties that the Court should proceed to address the appeals of ING Life, ANZ Life Assurance and AMP Life on the basis that the insurers were offering life insurance and also trauma insurance and/or total and permanent disablement insurance in the one policy. It was further agreed that a separate premium would be identified for the trauma cover and total and permanent disablement cover. A review of the brochures appears to confirm the trauma benefit and the total and permanent disablement benefit could be identified as sums insured and separate premiums would be charged in respect of those benefits. In the event of a claim being accepted, the sums insured would be paid. The effect of the brochures and the terms of any policy issued was that if this occurred, there would either be a reduction in the life insurance benefit payable, or there be no life insurance benefit payable at all.
Counsel appearing for ING Life, ANZ Life Assurance and AMP Life also used the expression “accelerated death benefit” and the word “rider”. My review of the tendered brochures has only disclosed the use of the expression “acceleration” in a different context to the issues arising on this appeal.My review has not revealed the word “rider”. Counsel did not draw attention to any relevant references. My earlier observations when dealing with the submissions of National Mutual Life have equal application.
Legislative Scheme – The Stamp Duties Act
The approach to the interpretation of taxing or fiscal statutory provisions has been the subject of extensive judicial comment.[22] The statutory interpretation principles generally applicable, where revenue statutes and in particular stamp duty statutes are under consideration, were recently stated by French CJ in Alcan (NT) Alumina Pty Ltd v CTR(NT):[23]
The starting point in consideration of the first question is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaudron J in Corporate Affairs Commission (NSW) v Yuill as: "dictated by elementary considerations of fairness, for, after all, those who are subject to the law's commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage." In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy.
[Footnotes omitted.]
The other members of the High Court in that decision further observed that “[t]he general purpose of the Act to raise revenue is insufficient to support an intention to exclude a clearly expressed definition and to substitute a quite different meaning”.[24] The fact that the statute is a taxing statute does not make it immune to the general principles governing the interpretation of statutes. The courts are as much concerned in the interpretation of revenue statutes as in the case of other statutes to ascertain the legislative intention from the terms of the instrument, viewed as a whole.
[22] A convenient summary can be found in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 320-321, 323 (Mason and Wilson JJ). See also Pearce & Geddes, Statutory Interpretation (6^th ed, 2004) [9.40].
[23] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, [4].
[24] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, [53].
Stamp duty is and remains in South Australia, a tax on instruments. What is to be determined is the legal nature and effect of the instrument in question to enable a determination of liability under the Stamp Duties Act.
Nature of an Instrument
The Stamp Duties Act imposes duty upon instruments, not the underlying transactions to which they give effect. This is a fundamental principle of the law relating to stamp duties.[25] Recently, the High Court in The Commissioner of State Taxation v Cyril Henschke Pty Ltd noted: [26]
Section 4 of the Stamp Duties Act 1923 (SA) is a provision which attracts the general principle that stamp duty is levied on instruments, not on the underlying transactions to which they give effect, so that it is a matter, in the present case, of ascertaining the subject matter with which the retirement deed deals according to its terms.
[Footnote omitted.]
[25] DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties(NSW) (1982) 149 CLR 431, 449; see also Commissioner of State Revenue (Vic) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651, [34]–[35]. The Court in Pioneer Concrete relied on the following observations from DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties(NSW) (1982) 149 CLR 431, 449, where Mason J observed:
It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transactions to which they give effect (Commissioner of Stamp Duties (Q.) v. Hopkins). As we shall see when we come to consider the liability to duty on each of the instruments, in the case of a conveyance the statutory command is that it attracts duty on the property conveyed; in the case of the declaration it attracts duty on "the property comprised therein". Consequently the issues are: (1) What was the property conveyed by the transfer?; and (2) What was the property comprised in the declaration? The decision on these issues hinges on the interpretation of the two instruments, that is, on the description given by them of the relevant estate or interest as applied to the facts of the case. It is a matter of ascertaining what is the property with which each instrument deals, according to its terms.
We cannot substitute for the issues presented by the statute a different issue having no foundation in the statutory provisions. Nor can we substitute for the property which the parties have chosen by their instruments to convey and make the subject of a declaration of trust the interest in property which in a practical sense represents the alteration in 29 Macquarie's position brought about by the combined operation of the two instruments.
[Footnote omitted]
[26] Commissioner of State Taxation (SA) v Cyril Henschke Pty Ltd (2010) 272 ALR 440, [5].
Latham CJ in Commissioner of Stamp Duties (Q) v Hopkins discussed this fundamental principle and the need to ascertain the legal operation of the instrument and determine the nature of the transaction which the instrument accomplishes:[27]
…It is true that, as has often been said, the Stamp Duty Acts impose duties upon instruments and not upon transactions. It is obvious that you can stick a stamp or impress a stamp upon an instrument, but not upon a transaction. But, in order to determine whether an instrument is dutiable, it is nevertheless necessary to ascertain the legal operation of the instrument, i.e., to determine the nature of the transaction which it accomplishes. …
Rich J discussed the circumstances in which extrinsic evidence may be admitted when the Court addresses the nature of a particular transaction:[28]
But the document does not stand by itself, and to treat it as doing so would give a wrong idea of the nature and course of the transaction of which it formed only a part. To understand the transaction, it is necessary to take into account certain matters extrinsic to the document. … Regarded in the light of these matters, the document is seen to be one factor in a process of settlement …
[27] Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351, 360.
[28] Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351, 369-370. At 378, Dixon J on this topic observed:
To the objection that this view involves looking outside the instrument, it may be answered that to ascertain the operation of the instrument some facts must always be taken into account, as, for instance, the existence and identity of the parties, and of the objects and subjects referred to. The very sweeping statements on this matter in Gatty v. Fry go too far. Some years ago I had occasion to examine the subject with which that case deals, and I adhere to what I then said: Edwards, Dunlop & Co. Ltd. v. Harvey.
The rule is very carefully stated in par. 955 of the second edition of Halsbury's Laws of England, vol. 28, p. 447, as follows:—"The question whether an instrument is duly stamped, or as to what stamp is required, is in general determined by what appears upon the face of it to be its legal operation when first executed so as to be capable of that operation, but the Court is not bound by the apparent tenour of an instrument, and will decide according to the real nature of the transaction, receiving, if necessary, extrinsic evidence."
Examples will be found in the authorities referred to in the notes. But, in any event, it seems to follow inevitably from the authorities to which I have referred that it is proper to look outside the instrument assessed as a settlement to ascertain whether the trust property has been vested in the trustee.
[Footnotes omitted.]
The charging provision, until 1 July 1997 was section 5(1) of the Stamp Duties Act, which provided:
Stamp duties to be charged and to be recoverable as a debt
Subject to the exemptions contained in the second schedule and other provisions of this Act, there shall be charged, for the use of the Crown, the several stamp duties specified in that schedule and elsewhere in this Act upon and for the several instruments therein set forth, and also such other duties as are specified in that schedule or in any other provision of this Act.
Section 5(1) was replaced on 1 July 1997, by section 4(1). This section is in the following terms:
Imposition of stamp duties
Subject to the exemptions contained in Schedule 2 and the other provisions of this Act, the stamp duties specified in that Schedule are charged in respect of the instruments specified in that Schedule.
It may be understood that the substantive effect of sections 5(1) and 4(1) is the same.[29] Both identify the Schedule 2 as the source of the instruments to be charged, as well as the rate of duty applicable to such instruments. The relevant provisions of Schedule 2 for the period 1 January 1994 to 30 June 1997 were as follows:[30]
[29] The reprint of the Stamp Duties Act at the commencement of the period relevant to these appeals, 1 January 1994, is reprint 5: A reprinted Act is the consolidated form of the Act as a whole which contains amendments to particular sections in the Act. Those amendments did not appear in the version of the Act in existence prior to the reprint. In the period 1994 to 2005, there were minor amendments to the Stamp Duties Act, including amendments to some of the relevant provisions. However, those amendments do not materially affect the present proceedings.
[30] Schedule 2 was amended effective 1 July 1997, but the amendments do not materially affect the outcome.
SECOND SCHEDULE
Nature of Instrument   Amount of Duty
$
* * * * * * * * * *
* * * * * * * * * *
ANNUAL LICENCE or MONTHLY RETURN to be taken out or lodged by any company, person or firm of persons, whether corporate or unincorporate, which carries on or proposes to carry on in South Australia any life, personal accident, fire, fidelity, guarantee, livestock, plate glass, marine or other assurance or insurance business and whether the head office or principal place of business of that company, person or firm is in South Australia or elsewhere—
(a)in the case of an annual licence where the company, person or firm has received or in any manner charged in account (whether directly or by agents) premiums relating to life insurance within the period of 12 months preceding the year for which the licence is to be taken out—for every $100 or fractional part of $100 of those premiums ....................................................................................................1.50
(ab) in the case of a monthly return where the company, person or firm has received or in any manner charged in account (whether directly or by agents) premiums relating to policies of any kind (other than life insurance policies) within the month preceding the month in which the return is required to be lodged—for every $100 or fractional part of $100 of those premiums ......................................................8.00
(b)Where the company, person or firm has not, prior to applying for an annual licence, transacted any assurance or insurance business—
(i)      if the annual licence is required for the full period of twelve months………
100.00
(ii)     if the annual licence is required for a shorter period than twelve months, a proportionate part of ..............................................................................100.00
For the purposes of this item, subject to the exemptions mentioned hereunder—
* * * * * * * * * *
(2)the premiums referred to in paragraph (a) are net premiums and shall be counted so as to exclude any amount in respect of stamp duty on the annual licence received or charged on or after 1 January, 1986, any commission or discount and any portion of those premiums actually paid by way of reinsurance effected in South Australia with any other such company, person or firm;
(2a)in the case of an annual licence to be taken out for the year commencing on 1 January, 1987, or a subsequent year, the amount of any premiums refunded during the period of 12 months preceding the year for which the annual licence is to be taken out (whether those premiums were received during that preceding period or earlier) shall be deducted from the amount of the premiums referred to in paragraph (a);
(2b)the premiums referred to in paragraph (ab) must be counted so as to exclude any amount in respect of stamp duty received or charged on or after 1 January 1986, and any portion of those premiums actually paid by way of reinsurance effected in South Australia with any other such company, person or firm;
(2c)in the case of a monthly return, there must be deducted from the amount of the premiums referred to in paragraph (ab) the amount of any refunds in respect of premiums (whenever received) made after the end of the month in respect of which duty was last paid under this item by the company, person or firm and before the commencement of the month in which the return is required to be lodged;
(3)no premiums received by any such company, person or firm for insurance risks outside South Australia, except life and personal accident insurance risks outside South Australia, shall be counted;
(3a)in the case of a life insurance policy, any amount that is paid on or after 1 January, 1986, from an account established for investment to an account established for insurance of a risk shall be deemed to be a premium received under that policy for insurance of that risk;
and
(4)the duty in respect of any one licence under paragraph (a) shall not in any case be less than $100.
Exemptions—
1.Premiums received or charged under any private guarantee fidelity insurance scheme promoted amongst and sustained solely for the benefit of the officers and servants of any particular public department, company, person or firm and not extended, either directly or indirectly, beyond such officers and servants.
2.Premiums received or charged under any scheme referred to in exemption 1 promoted amongst and sustained solely for the benefit of the officers and members of any registered friendly society or branch thereof and not extended, either directly or indirectly, beyond such officers and members.
3.Any premium or portion of a premium received or charged on or after 1 January, 1986, under a life insurance policy in respect of investment and not in respect of any risk insured by the policy.
4.Any premium received or charged under a policy in respect of a life or personal accident insurance risk where the principal place of residence of the policy owner is in the Northern Territory and the policy is registered in a registry kept in the Northern Territory pursuant to the Life Insurance Act 1945 of the Commonwealth.
5.Any premium or portion of a premium received or charged on or after the first day of January, 1985, under a policy of workers compensation insurance where the premium or portion is referable to insurance against liability to pay workers compensation in respect of workers under the age of 25 years.
6.Any premium or portion of a premium received or charged on or after the first day of January, 1985, under a policy of insurance by a registered medical benefits organization within the meaning of the National Health Act 1953 of the Commonwealth where the premium or portion is referable to insurance against medical, dental or hospital expenses.
7.Any premium or portion of a premium received or charged on or after 1 January, 1986, under any life insurance policy, being a policy for the payment of an annuity to the person insured.
8.Any premium or portion of a premium received or charged on or after 1 November, 1986, in respect of the insurance of the hull of a marine craft used primarily for commercial purposes or in respect of the insurance of goods carried by railway, road, air or sea or of the freight on such goods.
[Emphasis added.]
The amended Schedule 2 in operation at all relevant times after 30 June 1997 was in materially the same terms as set out above.

The Commissioner submitted that the policies the subject of the present appeal were in the nature of combined policies. They were policies that provided cover in respect of different risks. The risks of trauma and total and permanent disablement were separately identified risks in respect of which a separate and identifiable premium was to be charged and in respect of which a separate and identifiable benefit was payable. The Commissioner emphasised that the relevant instrument against which stamp duty was to be levied was not the policy of insurance, but was a monthly return under which an insurer was obliged to particularise premiums received in relation to general insurance – more particularly, received in respect of policies of any kind (other than life insurance policies). As a consequence, the Commissioner submitted that evidence as to how the industry view the meaning of life insurance was not relevant to the issues to be determined on the appeal. To put the point more starkly, the Commissioner said that the evidence of the experts and the submissions of the insurers simply missed the point.
Section 111 of the Income Tax Assessment Act 1936 (Cth), as was considered by the High Court in National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation,[52] used the expression “premiums received in respect of policies of life assurance”. The legislation contained no definition of either “premiums” or “policies of life assurance”.[53] It was therefore necessary to determine the “accepted connotation of the description”.[54] Windeyer J, with whom Dixon CJ, McTiernan and Kitto JJ agreed, observed:[55]
… The generally recognized differences between the various classes of insurance arise partly from essential differences in the nature of the contracts, partly from an insistent emphasis on distinctions which are the historical result of different forms of insurance having become commercially available in different periods of history and having been, for the most part, originally made available by insurance offices conducting one class of business only. In Bunyon on Life Insurance (sic) it is said that "The contract of life insurance may be further defined to be that in which one party agrees to pay a given sum upon the happening of a particular event contingent upon the duration of human life in consideration of the immediate payment of a smaller sum or certain equivalent periodical payments by another". This description covers the three forms which, historically, life insurance has taken, and which, single or in combination, are the essence of a life insurance policy. …
Windeyer J’s endorsement of Bunyon’s description indicates that the relevant meaning of life insurance had not relevantly changed since the initial enactment in 1902 of the relevant provisions now found in the Stamp Duties Act.
[52] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29.
[53] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 42.
[54] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 42.
[55] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 43.
The evidence in the present case establishes that as a matter of business practice, informed at least in part by changes to the regulatory framework applicable to insurers, many insurers who offer life insurance have conducted their business so as to include the writing of policies of insurance against risks that do not fall within the traditional meaning of “life insurance”. Because of those changes in business practice over time, many in the insurance industry today might comfortably refer to certain policies insuring other risks under the general rubric of “life insurance”, particularly where they appear in a single policy document or package with traditional life insurance. However, that change in usage of the expression “life insurance” has not changed the meaning or connotation of the expression as used in the Stamp Duties Act.
Insurance which takes as its contingency an event not relevantly dependent upon the duration of human life in the relevant sense is not “life insurance”. It also does not assist to assert that some of the benefits were offered only as part of a “package” with life insurance. Even if this assertion was made out by the evidence it is to be noted that a similar argument was expressly rejected by the High Court in National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation.[56]
[56] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 48; see also AMP Life Ltd v Commissioner of State Revenue (2003) 10 VR 489, [108]-[109].
In my view the submissions advanced by the insurers that life insurance took on an extended or changed meaning according to the views taken by the insurance industry should be rejected.
It was accepted by all parties that the instruments subject to duty raised by the within proceedings were the monthly returns. It was also accepted that Parliament intended to levy stamp duty on all premiums received for insurance cover. Parliament intended those premiums relating to life insurance to be levied with a lower rate of duty than those premiums relating to general insurance.
For many years the dutiable instruments were insurance policies themselves. However, the Stamp Duties Act was amended and the dutiable instruments were specified to be the annual licence applications and monthly returns. Each required a disclosure of premiums received – in the case of annual licence applications, those relating to life insurance, and in the case of monthly returns, those relating to general insurance. This amendment evidenced a clear intent by Parliament to impose stamp duty on monthly returns by reference to premiums.
It is relevant to note that a similar distinction arose for consideration in National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation.[57] Windeyer J, with whom Dixon CJ, McTiernan and Kitto JJ agreed, observed:[58]
A document which evidences an insurance contract is a policy of insurance. The word "policy" is an old one in this context (see 43 Eliz. c. 12). But the Income Tax Assessment Act is not concerned with instruments, as, for example, is an Act imposing stamp duty. The sections in question are concerned with the income of an insurance company; and, in my view, the Act, when it speaks of "premiums received in respect of policies of life assurance", is not referring to the instrument recording a contract but to the contractual obligations themselves (cf. Re Norwich Equitable Fire Assurance Society). The total of moneys paid to keep a combined policy afoot is not, I consider, properly described as a premium in respect of a policy of life insurance. If the premium paid in consideration of a combined policy were not severable and apportionable, then in my view, the result of s. 111 might well be, not that no part of the total premium should be included in the assessable income, but that all of it should be. The Commissioner does not contend that this is so. His attitude—and in my view it is correct—is that the total premium is here divisible and apportionable, and that only so much as is the true actuarially established premium for the life insurance element is within s. 111.
[Footnote omitted. Emphasis added.]
[57] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29.
[58] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 50-51.
It is to be accepted that Windeyer J contrasted the positions under income tax and stamp duties legislation. However, it may be inferred that Windeyer J was concerned with the circumstance where the instrument the subject of stamp duties was a policy of insurance. However, the legislation at issue in the within proceedings, as discussed above, does not seek to impose duty on policies of insurance as instruments. By Schedule 2, Parliament has defined a monthly return to be an instrument and imposed duty to be calculated by reference to premiums received that relate to general insurance. There is no duty payable upon a policy of insurance. In doing so it appears that Parliament has adopted the language of the income tax legislation discussed by Windeyer J in the above decision.
This is the distinction to which the Commissioner drew attention in his circular. It is this distinction which has formed the basis of the Commissioner’s submissions to this Court. The primary Judge applied this distinction and the reasoning of Windeyer J when upholding the Commissioner’s opposition to the within appeals.
The insurers sought to distinguish the observations of Windeyer J. It was their submission that properly construed Schedule 2, both in paragraphs (a) and (ab), was a reference to premiums received on life insurance policies and was not referring to particular contractual obligations within a policy. It was contended that the amendments to Schedule 2 had been brought about by a desire to simplify the process of assessing stamp duty by requiring annual and monthly returns in respect of the different forms of insurance business, and that any policies containing life cover together with trauma or total and permanent disablement cover were to be properly characterised as life policies, and that the premiums received be subject to duty at the lower rate, notwithstanding the presence of the trauma and total and permanent disablement cover.
It is to be recalled that paragraph (a) of Schedule 2 refers to “premiums relating to life insurance” and that paragraph (ab) refers to “premiums relating to policies of any kind (other than life insurance policies)”. Some debate took place before this Court as to whether any significance should be given to the absence of the word “policies” attaching to the words “life insurance” in paragraph (a).
In my view, Parliament did not intend to draw a distinction between life insurance on the one hand and life insurance policies on the other. The intent of Parliament was to levy stamp duty on all premiums received, but at a different rate on premiums relating to life insurance on the one hand, and on the other hand, insurance of any other kind. It was not Parliament’s intention to create separate categories of life insurance. This conclusion is supported by a careful analysis of the entire text of Schedule 2.
The insurers drew attention to the treatment of trauma benefits and total and permanent disablement benefits as life policies under the Life Insurance Act 1995 (Cth) to support their contention that they were to be characterised as life insurance for the purpose of the South Australian stamp duties legislation. The Commissioner contended to the contrary. The Commissioner argued that, properly understood, the Commonwealth Parliament addressed the issue by enacting an extended definition of life insurance.[59] In particular the Commissioner contended that while the Commonwealth Act has no impact upon the operation of the South Australian legislation, it does assist in explaining the delineation between life insurance business and other types of insurance business. For example, section 3(1A) of the Life Insurance Act specifically notes that it provides protection for the interests of those entitled to “other kinds of benefits provided in the course of carrying on life insurance business (including business that is declared to be life insurance business)”. The drafters of the Life Insurance Act thus, it was said, specifically included within its regulatory sphere benefits which otherwise did not constitute life insurance, so as to provide protection to owners of those benefits.
[59] The Life Insurance Act 1995 (Cth) contains an extended definition of “life policy” in section 9 of the Act, as follows:
(1)Subject to subsection (2), each of the following constitutes a life policy for the purposes of this Act:
(a) a contract of insurance that provides for the payment of money on the death of a person or on the happening of a contingency dependent on the termination or continuance of human life;
(b) a contract of insurance that is subject to payment of premiums for a term dependent on the termination or continuance of human life;
(c) a contract of insurance that provides for the payment of an annuity for a term dependent on the continuance of human life;
(d) a contract that provides for the payment of an annuity for a term not dependent on the continuance of human life but exceeding the term prescribed by the regulations for the purposes of this paragraph;
(e) a continuous disability policy;
(f) a contract (whether or not it is a contract of insurance) that constitutes an investment account contract;
(g) a contract (whether or not it is a contract of insurance) that constitutes an investment linked contract.
(2)A contract that provides for the payment of money on the death of a person is not a life policy if:
(a) by the terms of the contract, the duration of the contract is to be not more than one year; and
(b) payment is only to be made in the event of:
(i) death by accident; or
(ii) death resulting from a specified sickness.
Attention was also drawn to the predecessor to the Life Insurance Act 1995, the Life Insurance Act 1945, which also linked life policies to the happening of any “contingency dependent on the termination or continuance of human life”, reflecting the accepted meaning of life insurance, and distinguished between life policies and continuous disability policies.[60]
[60] From its commencement in 1945, “life policy” was defined in section 4(1) of the Life Insurance Act 1945 (Cth) as:
a policy insuring payment of money on death (not being death by accident or specified sickness only) or on the happening of any contingency dependent on the termination or continuance of human life (either with or without provision for a benefit under a continuous disability insurance contract), and includes an instrument evidencing a contract which is subject to payment of premiums for a term dependent on the termination or continuance of human life and an instrument securing the grant of an annuity for a term dependent upon human life.
In the Life Insurance Act 1945 (Cth) “continuous disability insurance contract” was defined in section 4(1) as:
a contract of insurance (which is by its terms to be of more than one year's duration and is incorporated in a life policy) whereby any person is to become entitled to a benefit in the event of the occurrence, within the duration of the contract, of death by accident or by some other cause specified in the contract, or of injury or disability caused by accident or sickness.
While the development of the life insurance industry since 1945 has occurred in the context of a specific regulatory scheme, the South Australian Parliament, in the Stamp Duties Act, has chosen not to calculate duty by reference to “life insurance business” or by reference to “life policies” as defined in the 1945 or 1995 Commonwealth Acts. As the primary Judge in these proceedings observed:[61]
… The very fact that Commonwealth legislation has sought to define life insurance in an extended way suggests that, absent legislative recognition, life insurance would not otherwise be described so as to include the added features. Moreover, as discussed above at [75]–[86], generally the language of the Commonwealth legislation regulating the insurance industry anticipates that life insurance business will be broader than merely the offering of life insurance. It is therefore difficult to see how this legislation supports an argument that a life insurance policy should be determined by identification of the policies which are offered by life insurers in the market. In fact it suggests the opposite.
[61] National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation [2010] SASC 261, [117].
In National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation, the High Court similarly rejected a submission to the effect that, because the additional benefits were “continuous disability policies”, and thus “life policies” under the 1945 Act, they constituted life insurance policies within the “accepted connotation” of that term.[62] Windeyer J said:[63]
Under the [1945 Act], additional benefits such as those in question would fall within the definition of life policy in that Act; but only because that definition refers to life policies "either with or without provision for a benefit under a continuous disability insurance contract". …
[62] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29.
[63] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 52.
Further, in National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation, as in the within proceedings, National Mutual Life had contended that the premiums relating to the separate components of the policies were not severable. The High Court rejected this argument.[64]
[64] National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, 48.
The insurers also placed reliance on the common law rule known as the rule in Limmer Asphalte, where Baron Martin observed:[65]
… There is no better established rule as regards stamp duty than that all that is required is, that the instrument should be stamped for its leading and principal object, and that this stamp covers everything accessory to this object. …
This rule was the subject of much debate before the primary Judge and before this Court. The insurers argued that the proper approach is to have regard to the policy document pursuant to which premiums are paid and to determine the “leading and principal object” of that document, in accordance with the Limmer test. The observations in Limmer have been approved and applied, including in Australia by the High Court in Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd.[66]However, the present appeals do not raise the question of the “dominant” or “principal” purpose of one policy of insurance. The policy of insurance is not the instrument on which duty is charged. The question to be answered on this appeal is the nature of a combined policy, when separate and identifiable premiums exist with respect to separate insurance risks.
[65] Referring to Limmer Ashphalte Paving Co Ltd v Commissioners of Inland Revenue (1872) LR 7 Ex 211, 217.
[66] Commissioner of Stamp Duties (N.S.W.) v Pendal Nominees Pty. Ltd (1989) 167 CLR 1, 10-11; see also National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation (WA) (1996) 33 ATR 24, 27, 32-33.
Conclusion
Having regard to the foregoing and recognising that stamp duty is charged on instruments, it is important to address the true nature and character of the instruments the subject of the within appeals. Those instruments were monthly returns lodged by each insurer throughout the relevant periods. The monthly returns were to include premiums received that related to general insurance. Accordingly, the issue for consideration is whether the Commissioner was correct to determine that the separate and identifiable premiums received in respect of the trauma benefits and the total and permanent disablement benefits were “premiums relating to policies of any kind (other than life insurance policies)”.[67]
[67] At times in the representative policies and in the brochures, terms such as “cover”, “risk”, “event” and “benefit” appear. These are all terms frequently found within policies of insurance. However, as discussed at the outset, the critical matter to be addressed in these appeals is the relevant provisions of the Stamp Duties Act 1923 (SA). Throughout these reasons I have attempted to utilise the terminology in the Act wherever possible.

The amendments to Schedule 2 of the Act disclose an intention on the part of the legislature not to charge an insurance policy as an instrument but instead to look to the character of the premium received – if the premium was relating to life insurance then it would fall under paragraph (a) and if the premium was relating to policies of any kind (other than life insurance policies), for example trauma insurance or total and permanent disablement insurance, then it would fall under paragraph (ab).
Parliament intended to ensure that stamp duty was paid on the receipt of all insurance premiums and intended to do so through the specified instruments – in the case of general insurance on the basis of premiums disclosed by the monthly returns.
In my view the similarity of the wording of the amended Schedule 2 paragraphs (a) and (ab) to the wording of the relevant provision of the Income Tax Assessment Act the subject of the observations of Windeyer J in National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation, is telling. I consider the reasoning of Windeyer J, although made in the context of a different taxing statute, provides considerable guidance.
I also consider that the approach outlined by Gibbs J in Re Carter (dec’d)[68] provides guidance in the resolution of these appeals. That decision concerned an application by the trustee of the property of a deceased person whose estate had been ordered to be administered in bankruptcy, for a declaration that all the proceeds of a certain policy of insurance and part of the proceeds of other policies of insurance, formed part of the deceased’s estate, divisible amongst his creditors. The policies were “combined policies” which were life assurance policies that included a form of accident insurance. Section 91(b) of the Bankruptcy Act 1924 (Cth) then provided that the property of a bankrupt “divisible amongst his creditors…shall not include…policies of life assurance or endowment in respect of his own life.” Gibbs J concluded:[69]
In spite of all these differences it remains true to say that each of these policies provides an accident insurance benefit that is additional to and distinguishable from the life assurance benefit, and that he amount of the premium is respect of the accident benefit is either fixed by the policy or apportionable. The policies are in truth combined polices, operating both as life assurance and accident insurance. In my judgment, s. 91(b) applies to them only insofar as they operate as policies of life assurance. The moneys payable under the accident insurance provisions contained in the policies are not within the protection of the section. In none of the three cases therefore, does the section protect the amounts paid or payable by reason of the fact that the death of Raymond John Carter was caused by accident.
[Emphasis added.]
[68] Re Carter, deceased [1963] ALR 176.
[69] Re Carter, deceased [1963] ALR 176, 55.
Gibbs J stressed the need to examine and construe the provisions of the particular policy. He considered three features to be of particular importance: the form of the policy; the rights of the respective parties under the policy with respect to the cancellation or renewal of the accident benefits; and, whether there was a separate amount of premium payable in respect of the accident benefits.
In the within proceedings, the assessments of the Commissioner addressed instruments under which lay a multitude of policies of insurance. Those policies were made up of different components,[70] some being life insurance and others being of a different character. Relevant to these appeals, those different components were trauma and total and permanent disablement. As discussed above, these appeals only concerned those different components where a separate and identifiable premium was charged.
[70] The word component is a word found in the representative policies and the brochures.
An alternative way of characterising the policies of insurance is that each was a combined policy.[71] The combined policy provided life insurance benefits and separately provided trauma and total and permanent disablement benefits. As separate premiums were identified and charged for the differing benefits, no difficulty arises in discerning which premiums relate to life insurance and which relate to other insurance. A review of the policies discloses that separate and distinct contractual terms relate to the trauma insurance and the total and permanent disablement insurance. In these circumstances the terms of Schedule 2 paragraphs (a) and (ab) can be addressed and a determination made as to which paragraph has application.
[71] This approach adopts the analysis of Gibbs J in Re Carter, deceased [1963] ALR 176, 55.
To draw on the approach outlined by Gibbs J in Re Carter (dec’d), it may be observed that the policies of insurance underlying the monthly returns under consideration in this appeal, provided general insurance benefits that were additional to and distinguishable from the life insurance benefits. The amounts of the premiums in respect of those general insurance benefits were separate and identifiable. Accordingly, the policies are combined policies, operating both as life insurance and general insurance. The premiums received that related to general insurance fall directly within Schedule 2 paragraph (ab). In the present appeals, there is no difficulty in ascertaining whether a particular premium relates to life insurance or to other insurance.
The trauma benefits and total and permanent disablement benefits do not form, in my view, any mere incident or “rider” or “add-on” to the life insurance cover provided in the combined policies, they are separate covers of insurance. The use of a combined policy cannot change their true character.
In the case of National Mutual Life, an examination of the policy documents allows the conclusion that separate premiums were charged for separate insurance benefits. The relevant policies offered a number of benefits. A separate and identifiable premium was charged in respect of life insurance benefits and a separate and identifiable premium was charged in respect of other benefits, in particular trauma benefits and total and permanent disablement benefits. The payment of trauma benefits and total and permanent disablement benefits had the consequence that life benefits were either reduced or the relevant plan ceased so that no life benefit would be payable. As earlier mentioned, I have not found a relevant reference in the policies to an “acceleration” of life benefits. I do not consider there to be any acceleration.
In the case of ING Life, ANZ Life Assurance and AMP Life, an examination of the brochures appears to confirm that separate premiums would be charged for separate insurance benefits. It may be inferred that in respect of policies of insurance underlying the monthly returns lodged, that separate and identifiable premiums were charged in respect of trauma benefits and total and permanent disablement benefits. These matters were acknowledged by the insurers. Again, as with National Mutual Life, the payment of trauma benefits or total and permanent disablement benefits had the consequence that life benefits were either reduced or the relevant plan ceased so that no life benefit would be payable. My review of the voluminous brochures does not suggest reference is made to an acceleration of life benefits.
As discussed above, a primary contention of ING Life, ANZ Life Assurance and AMP Life, was that the meaning of life insurance had changed. This was an alternative submission of National Mutual Life. The policies the subject of these appeals, it was said, were treated by the industry as life insurance, notwithstanding that separate premiums were charged in respect of the general insurance cover. In my view, this submission should be rejected. The question was not how the policy of insurance should be characterised, the issue before the Court was the interpretation of Schedule 2 and the application of that provision to the facts underlying each appeal. This approach accords with and adopts the approach identified by Mason J in DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties (NSW), namely:[72]
[The Court] cannot substitute for the issues presented by the statute a different issue having no foundation in the statutory provisions. …
[72] DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties(NSW) (1982) 149 CLR 431, 449.
It is to be understood that I have reached the conclusion that in respect of each appeal the premiums received for trauma insurance and for total and permanent disablement insurance should be characterised as premiums received as “premiums relating to policies of any kind (other than life insurance policies)” and that the Commissioner was correct to assess duty on the relevant instruments – the monthly returns – in accordance with Schedule 2 paragraph (ab).
In the case of the appeal by National Mutual Life the above conclusion has been reached in regard to representative policies numbered 1, 3, 4, 5, 6, 7, 11 and 12. However, the appeal by National Mutual Life should be allowed for the limited purpose referred to in paragraphs [17]-[18] above. This will enable the Commissioner of State Taxation to undertake the task of reassessment having regard to premiums received on policies of insurance where a separate and identifiable premium is payable.
I would dismiss the appeals by ING Life, ANZ Life Assurance and AMP Life.
SULAN J: I agree with the reasons of Gray J and the orders that he proposes.
VANSTONE J: I agree with the orders proposed by Gray J and with his reasons.

[2011] SASCFC 106

30 September 2011

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