Queensland Cement Ltd v Commissioner of Stamp Duties

[1995] QCA 315

IN THE COURT OF APPEAL	[1995] QCA 315
SUPREME COURT OF QUEENSLAND	Appeal No. 25 of 1995
Brisbane
BETWEEN:

NATIONAL AUSTRALIA BANK LIMITED

A.C.N. 004 044 937 Appellant

AND:

COMMISSIONER OF STAMP DUTIES Respondent

FITZGERALD P.

AMBROSE J. HELMAN J.

Judgment delivered 01/08/1995

Further orders 29/09/1995

1.          The respondent repay to the appellant excess duty in the sum of $690,000.00 and penalty in the sum of $110,400.00.

2.          The respondent pay interest thereon at the rate of 5.5% per annum from the date of payment of the duty and penalty until the date the refund is made.

Counsel:	R.W. Gotterson Q.C. with him H. Alexander for the Appellant National Bank Limited G.J. Gibson Q.C. with him G.J. Koppenol for the Respondent
Solicitors:	Mallesons Stephen Jaques for the Appellant National Australia Bank Crown Solicitor for the Respondent
Date(s) of Hearing:	12 July 1995

IN THE COURT OF APPEAL

[1995] QCA 315

SUPREME COURT OF QUEENSLAND

Brisbane

Before Fitzgerald P. Ambrose J. Helman J.

[Queensland Cement v. Commissioner of Stamp Duties]

[National Australia Bank v. Commissioner of Stamp Duties]

Appeal No. 24 of 1995

BETWEEN:

QUEENSLAND CEMENT LIMITED

(Appellant) Appellant

AND:

COMMISSIONER OF STAMP DUTIES

(Respondent) Respondent

Appeal No. 25 of 1995

BETWEEN:

NATIONAL AUSTRALIA BANK LIMITED

(Appellant) Appellant

AND:

COMMISSIONER OF STAMP DUTIES

(Respondent) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 01/08/1995
The Commissioner of Stamp Duties has stated two cases raising questions for determination by this

Court pursuant to s. 24 of the Stamp Act 1894. Each case relates to the same transaction and asks the

same questions in relation to the same instruments; presumably this course has been followed because

each of the parties to the transaction appealed against the Commissioner’s assessments of duty.

On 23 June 1992, the National Australia Bank Limited (“the Bank”) wrote to Queensland Cement

Limited (“QCL”) offering financial accommodation; a printed document described as “Bill Facility -

Letter of Offer” dated the same day and signed by the Bank was attached to its letter. On 23 July

1992, QCL wrote to the Bank as follows:

“Re: Banking Facilities
We refer to your correspondence dated 23rd June, 1992 regarding the offer of banking
facilities to Queensland Cement Limited and subsidiaries and advise that those facilities

are accepted.

... “

It is not suggested that any other documentation referred to by the Bank in its letter and attachment of

23 June 1992, or referred to, and enclosed with, QCL’s letter of 23 July 1992 has any present

significance.

In its letter, the Bank offered QCL an overdraft, with a limit of $2,500,000, and a “Multi-Option

Facility including Bills Accepted/Discounted (Fixed or Floating) and/or Bills Accepted and/or Term

Loan and/or Guarantee by Bank and/or Standby Letter of Credit and/or Market Rate Advance”, with

a limit of $170,000,000. Various terms were set out in the Bank’s letter with respect to the overdraft,

e.g., specifying a “Line Fee” calculated as a percentage and payable quarterly in arrears “on the limit

or peak debt whichever is the greater”, and in the letter and the Bill Facility - Letter of Offer in relation to the “Multi-Option Facility”, including other fees, interest rates, etc. Although our attention was drawn

in passing to various other aspects of those documents, there seems to be nothing more to be drawn

from them for present purposes. QCL’s letter did not contain an express promise to make any payment

to the Bank, but in the end it seemed to be accepted that it contained an implicit promise to pay the

various fees, any other amounts for which it became liable to the Bank in the utilisation of the “Facilities”,

and to pay interest etc. in accordance with the Bank’s letter and Bill Facility - Letter of Offer.

The Commissioner assessed the Bank’s letter and QCL’s letter to ad valorem duty of $10,000 by

reference to the amount of the overdraft limit of $2,500,000 in reliance upon “sections 65 and 68 of the

Stamp Act 1894 and that part of the First Schedule to that Act under the heading ‘Mortgage, Bond,

Debenture, Covenant’” - according to paragraph 9 of each of the Stated Cases - on the basis that those

two letters constituted a debenture issued by QCL. The same provisions were relied upon by the

Commissioner to assess the Bank’s letter and the attached Bill Facility - Letter of Offer and QCL’s

letter to ad valorem duty of $680,000 on the basis that the three documents constituted a debenture

issued by QCL. Before this Court, without objection from the appellants, the Commissioner sought,

alternatively, to support a total assessment of $690,000 by reference to the total of the two limits on the

basis that QCL’s letter was a debenture issued by it.

All other considerations aside, it was common ground that none of the documents, severally or in

combination, constituted a debenture unless debts in the respective amounts, or a total debt of the

aggregate of the amounts, from QCL to the Bank was acknowledged or created by QCL’s letter of 23

July; according to the appellants, the debts, or debt, had to be “specific”, and the acknowledgment or promise to pay had to be “express”, i.e., set out in QCL’s letter, not implied into it. However, it is

unnecessary to consider those submissions. The Commissioner’s argument depends upon acceptance

of the proposition that, upon QCL forwarding its letter to the Bank, it became contingently indebted to

the Bank in respect of the amount of each of the overdraft limit and the “Multi-Option Facility” limit; it

was submitted that moneys payable upon a contingency are payable for the purposes of the material

provisions of the Stamp Act.

The appellants did not dispute the latter proposition, but argued that the exercise of a right to utilise

financial accommodation such as the “Facilities” offered by the Bank to QCL, without any obligation

on QCL to do so fully, partially or at all, is not the happening of a contingency; reliance was placed on

the decision of the English Court of Appeal in Knights Deep Ltd v. Inland Revenue Commissioners

[1900] 1 Q.B. 217.

The Commissioner sought to distinguish Knights Deep and submitted that, if it cannot be distinguished,

it is inconsistent with Independent Television Authority and Associated-Rediffusion Ltd v. Inland

Revenue Commissioners [1961] A.C. 427 and the long line of authority following the decision of the

House of Lords in that case.

The first step in the Commissioner’s argument was a submission that the decision in Knights Deep

turned on the construction of the documents there under consideration, and that is correct in the sense

that, as commonly occurs, it was necessary for the Court to construe the document to determine its

effect. What is significant for present purposes is that the construction accorded to the documents was that each gave the company which had issued what were acknowledged to be debentures redeemable

for £100 each an option for early repayment at a higher sum. Even if the increased obligation were

regarded as contingent on the exercise of the right to early repayment, the decision that duty was only

payable on the specific sum payable in the event that the contingency did not happen is entirely

consistent with Independent Television Authority.

However, the Commissioner submitted that Independent Television Authority and subsequent cases also

established that if no specific sum is payable unless a contingency happens, an amount payable in that

event is money payable for the purposes of the material provisions of the Stamp Act. It is unnecessary

for present purposes to consider the scope of that principle; it extends to the performance of an

interdependent obligation by the prospective payee, for example, as Independent Television Authority

makes plain. However, there is no authority, we were told, which extends the principle to the exercise

of an option to borrow or otherwise become subject to an obligation to make a payment.

Knights Deep is clear authority to the contrary. The decision in that case was not made on the basis

that there was a contingent liability for the higher amount, but on the basis that there was no liability for

the additional amount which might become payable; as Collins L.J. said at p. 222: “... the debenture

cannot be said to be a security for anything which is only payable at the option of the obligors ...”. That

is entirely correct in principle: see, e.g., Placer Development Ltd v. The Commonwealth of Australia

(1969) 121 C.L.R. 353.

Accordingly, in our opinion, the documentation relied on by the Commissioner did not create or acknowledge a debt from QCL to the Bank for either the overdraft limits, or the limit of the “Multi-

Option Facility”; therefore, it was not a debenture.

The Commissioner did not seek to support the assessments on any other basis, or to establish that the

instruments are otherwise liable to duty. Accordingly, the questions for determination by the Court in

each Case Stated should be answered as follows:

(a)	Are the said instruments being Annexures “A”, “B” and “C” hereto, liable to be charged with duty in the amounts assessed by the Commissioner? No.
(b)	If “No” to (a), are the said instruments liable to be charged with duty in some other (and if so, what other) amount? No.
(c)	How should the costs of and incidental to the stating of this case and of the appeal thereon be borne and paid? By the Commissioner of Stamp Duties.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Brisbane

[Queensland Cement v. Commissioner of Stamp Duties]

[National Australia Bank v. Commissioner of Stamp Duties]

Appeal No. 24 of 1995

BETWEEN:

QUEENSLAND CEMENT LIMITED

(Appellant) Appellant

AND:

COMMISSIONER OF STAMP DUTIES

(Respondent) Respondent

Appeal No. 25 of 1995

BETWEEN:

NATIONAL AUSTRALIA BANK LIMITED

(Appellant) Appellant

AND:

COMMISSIONER OF STAMP DUTIES

(Respondent) Respondent

FITZGERALD P.

AMBROSE J. HELMAN J.

REASONS FOR JUDGMENT - THE COURT

Questions for determination in each Case Stated answered as follows:

(a)	Are the said instruments being Annexures “A”, “B” and “C” hereto, liable to be charged with duty in the amounts assessed by the Commissioner? No.
(b)	If “No” to (a), are the said instruments liable to be charged with duty in some other (and if so, what other) amount? No.
(c)	How should the costs of and incidental to the stating of this case and of the appeal thereon be borne and paid? By the Commissioner of Stamp Duties.
CATCHWORDS:	STAMP DUTIES - liability to stamp duty - s. 24 Stamp Act 1894 - whether the correspondence constituted a debenture within the First Schedule to the Act
Counsel:	J.D. Muir Q.C. with him D.J. McGill for the Appellant Queensland Cement Limited R.W. Gotterson Q.C. with him H. Alexander for the Appellant National Bank Limited G.J. Gibson Q.C. with him G.J. Koppenol for the Respondent
Solicitors:	Feez Ruthning for the Appellant Queensland Cement Limited Mallesons Stephen Jaques for the Appellant National Australia Bank Crown Solicitor for the Respondent
Date(s) of Hearing:	12 July 1995