Raptis & Sons Holdings v Comm of Stamp Duties Qld

[1998] HCATrans 2

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B43 of 1997

B e t w e e n -

A.RAPTIS & SONS HOLDINGS PTY LTD

Applicant

and

COMMISSIONER OF STAMP DUTIES FOR THE STATE OF QUEENSLAND

Respondent

Application for special leave to appeal

BRENNAN CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON FRIDAY, 17 APRIL 1998, AT 11.35 AM

Copyright in the High Court of Australia

MR D.G. RUSSELL, QC:   May it please the Court, I appear with my learned friend, MR K.F. HOLYOAK, for the applicant.  (instructed by Clayton Utz)

MR J.D. BATCH, SC:   If your Honours please, I appear with my learned friend, MS E.M. O’REILLY, for the Commissioner.  (instructed by Crown Solicitor for the State of Queensland)

BRENNAN CJ:   Yes.  Yes, Mr Russell.

MR RUSSELL:   Your Honour, the special leave question in the application by my client arises in this way:  section 56C of the Stamp Act of Queensland, which is document 2 in the volume of authorities that we have provided to the Court - your Honours will see that section 56C on its face plainly has an operation which if there is any present requirement that State law have a territorial nexus to be valid is too remote.

BRENNAN CJ:   Why?

MR RUSSELL:   I am sorry.

BRENNAN CJ:   When it is hinged upon the existence within the jurisdiction of property?

MR RUSSELL:   Your Honour, the formulation - in fact, what is taxed is not property within the jurisdiction at all.  What is taxed is a conveyance of the share and it is ‑ ‑ ‑

BRENNAN CJ:   Yes.  We are not concerned with what is taxed.  We are concerned with the nexus.

MR RUSSELL:   Yes, your Honour, and what Chief Justice Dixon said in Miller’s Case was this - it is set out in the judgment of the Court of Appeal at page 29 of the application book, and we say it applies equally here because of the way section 56C operates:

The business in New South Wales of the company may be a small part of its whole undertaking.  It may be a source of little profit or, indeed, of continual loss...  What the Legislature fastens upon as the subject of taxation is the share, not the economic advantage derived by the connection with New South Wales.  It does not supply the measure, the quantum, of tax by reference to the share and impose the tax so measured upon some act occurring or thing situate within its jurisdiction.

Our submission is that if that is a correct statement of the law, because section 56C ignores liabilities and imposes tax on the share which could be property or the transfer of the share which could be something which occurs wholly outside Queensland and the share itself could be property wholly outside Queensland and as here the parties to the transaction could be parties wholly outside Queensland and yet the liability to tax - there would be a liability to tax calculated without any reference to the economic advantage arising from the association in Queensland.

BRENNAN CJ:   But subsection (8) is the section which brings the instrument to charge, is it not?

MR RUSSELL:   Yes, your Honour.

BRENNAN CJ:   And it defines the instrument which it brings to charge by a reference to it being a disposition in relation to a share and that is what is statutorily defined.

MR RUSSELL:   Yes, your Honour.

BRENNAN CJ:   Now, then the rate of charge is dealt with by subsection (8) by reference to:

a conveyance free of encumbrances.....in all of the trust property held by the trustee -

Now, why does that not bring into charge an instrument which deals with a disposition of that which is trust property?

MR RUSSELL:   Your Honour, we say there are two problems with it.  We say the first thing is that it is a connection - if the requirement is as was said in Miller’s Case to be a connection to the economic advantage derived, then the refusal of the - the not taking into account of any liabilities means that the tax is not imposed on the economic advantage derived from the connection with Queensland.

BRENNAN CJ:   It is not on any question of economic advantage.  It is just a question of property.

MR RUSSELL:   Yes, your Honour, but it is the share - we say that because what is taxed is the share, not the property.

BRENNAN CJ:   It is not.  The share is not.  It is the disposition in relation to a share which is the enlivening ‑ ‑ ‑

MR RUSSELL:   Yes, I am sorry, your Honour, the disposition, and our point, put shortly, is that if a disposition is to be taxed and it can be taxed in relation to parties wholly outside Queensland, companies wholly outside Queensland, and by reference to part only of the connection with Queensland, in this case gross assets without regard to liabilities, then you have a situation - to pick one example.  If a bank deposit were made with a Queensland bank by a trust otherwise having no connection with Queensland and the trust’s assets may be negligible taken on the whole, ad valorem duty is payable on the transfer of shares in the trustee company by reference to the total value of the bank deposit without any regard to any liabilities of the trust and we say that is too tenuous a connection.  That is the short point, your Honour.

BRENNAN CJ:   That is the point, yes.

MR RUSSELL:   If the requirement is, as we submit that it is, a real connection or economic activity or economic advantage in Queensland, then that requirement is not met by the present nexus fixed by this section because of the absence of any acknowledgement of liabilities and because, in effect, one could have a duty very much greater than either the value of the share or, indeed, of all the trust assets. 

Your Honours, I suppose I should say if, your Honours - our point would then proceed on the basis of our submission that in some circumstances at least the section is plainly beyond power, the question then would be what happens in the event of a nexus.  Where the nexus is stated if it is shown to be defective, what follows from that, whether there is some operation of the distributive principle that would save it so that, in effect, one asks the question whether or not there could be another nexus which would have been valid and we say the answer to that is no, but, of course, before one gets into that question the question is simply whether, given the nature of the nexus chosen in this case, it is in some circumstances at least too remote and it is our submission on the state of current authority that it is.  That is really the point for your Honours.

BRENNAN CJ:   In the Court’s opinion the prospects of success on appeal are not sufficient to justify the grant of special leave.  For that reason special leave will be refused.

AT 11.44 AM THE MATTER WAS CONCLUDED