Rio Tinto Ltd v Commissioner of State Revenue - [2000] VSCA 45

SUPREME COURT OF VICTORIA

COURT OF APPEAL Not Restricted

No. 5725 of 1998

RIO TINTO LTD.

Appellant

COMMISSIONER OF STATE REVENUE
(IN HIS CAPACITY AS COMPTROLLER OF STAMPS)

Respondent

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JUDGES:	BROOKING, BATT and CHERNOV, JJ.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	14 March 2000
DATE OF JUDGMENT:	4 April 2000
MEDIUM NEUTRAL CITATION:	[2000] VSCA 45

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STAMP DUTIES – “Instrument … giving effect to two or more transactions” – Sale and sub-sale of shares – Transfer direct to sub-purchaser – Doubly dutiable.

Stamps Act 1958 s.22(a) and (c).

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr J.W. de Wijn, Q.C. and Mr P.H. Solomon	Arthur Robinson & Hedderwicks
For the Respondent	Mr R. Boaden	Solicitor for the Commissioner of State Revenue

BROOKING, J. A.:

This case is about stamp duty on two transfers of shares in Pasminco Ltd. (“Pasminco”). For present purposes the story can begin with the execution on 27 July 1992 of an option agreement made between North Broken Hill Peko Ltd. (“North”) and its wholly owned subsidiary, Ballarat Paper Mills Pty. Ltd. (“Ballarat”), as grantors and CRA Ltd. (“CRA”), now Rio Tinto Ltd., as grantee. By the agreement North and Ballarat granted to CRA an irrevocable option to require them to transfer to CRA, “its nominee or nominees, or any of them”, all the Pasminco shares to which they were beneficially entitled (“the Call Shares”). The agreement provided for the ascertainment of the “Option Period”, at the end of which the option was to expire if it had not been exercised in the meantime, and the “Completion Date”, on which North and Ballarat were to deliver to CRA duly executed transfers of the Call Shares in favour of the “Nominated Transferee”, together with the relative share certificates, and CRA was to pay, or procure the payment of, the purchase price to North and Ballarat. A formula was provided for calculating the purchase price.

By letter dated 18 May 1994 from CRA, a copy of which was signed on behalf of North and Ballarat by way of signifying their agreement, the “Completion Date” was varied to the third business day following the date on which the notice exercising the option was given. On 19 May 1994 CRA delivered to North and Ballarat a notice, dated 19 May 1994, exercising the option and requiring the transfer of the Call Shares to its wholly-owned subsidiary, Australian Mining & Smelting Ltd. (“AM&S”).

A letter sent on 6 June 1994 by the solicitors for CRA to the State Revenue Office said of the nomination of AM&S by CRA:

“Although AM&S was the Nominated Transferee in the Option Notice, it was not CRA’s intention that AM&S actually acquire the shares. Specification of a Nominated Transferee was required to effectively exercise the Option, but the intention was that the shares would be sold through the Australian Stock Exchange Ltd. (‘ASX’) to third parties.”

The Call Shares comprised 98,938,623 shares owned by Ballarat and 53,015,614 owned by North. The option was, as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Rio Tinto Ltd v Commissioner of State Revenue

Details

AGLC: Rio Tinto Ltd v Commissioner of State Revenue [2000] VSCA 45
Case: [2000] VSCA 45
Decision Date: 4 April 2000

CaseChat Overview and Summary

In the case of Rio Tinto Ltd v Commissioner of State Revenue, the dispute centered on the payment of stamp duty in relation to the sale and subsequent sub-sale of shares. The respondent, the Commissioner of State Revenue, argued that the sale was doubly dutiable, resulting in a substantial increase in the amount of stamp duty owed by the appellant, Rio Tinto Ltd. The matter was brought before the Court of Appeal in Victoria.

The primary legal issue before the court was whether the sale and subsequent sub-sale of shares constituted two separate transactions for the purpose of determining stamp duty liability under section 22(a) and (c) of the Stamps Act 1958. The court needed to determine whether the transfer of shares directly to the sub-purchaser constituted a single transaction or two distinct transactions.

The Court of Appeal held that the transfer of shares directly to the sub-purchaser constituted two separate transactions. The court found that the sale of shares to the intermediary, followed by the sub-sale of the same shares to the sub-purchaser, resulted in the transfer of shares being doubly dutiable. The court reasoned that the two transactions were distinct and independent of each other, and therefore, each transaction was subject to stamp duty. The court concluded that the respondent's interpretation of the relevant provisions of the Stamps Act 1958 was correct, and the appellant's appeal was dismissed.

The court made no further orders beyond dismissing the appeal. The decision confirmed that the sale and sub-sale of shares, where the shares are transferred directly to the sub-purchaser, constitutes two separate transactions for stamp duty purposes. This decision has significant implications for companies engaged in share transactions, as it highlights the importance of ensuring that stamp duty is properly calculated and paid.

Orders