Rio Tinto Ltd v Commissioner of State Revenue

Case •

[2000] VSCA 45

•

4 April 2000

SUPREME COURT OF VICTORIA
  COURT OF APPEAL Not Restricted

No. 5725 of 1998

RIO TINTO LTD.
Appellant
v
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.:

  1. 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. 

  1. 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”).

  1. 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.”

  1. The Call Shares comprised 98,938,623 shares owned by Ballarat and 53,015,614 owned by North.  The option was, as I have said, exercised on 19 May 1994.  The next day CRA instructed Potter Warburg Securities Pty. Ltd. (“Potter Warburg”), a member of the Australian Stock Exchange, to sell 231,040,824 Pasminco shares, being the Call Shares together with 79,086,587 shares held by AM&S in Pasminco.  Those sales were in fact made by Potter Warburg, on market, on 20 May 1994;  settlement was to take place on 2 June 1994.  On 20 May 1994 – the day of the sale by CRA of the Pasminco shares – negotiations began between CRA, North and Ballarat for the making of an agreement which was in fact concluded, it would seem, by at the latest 12 noon on 24 May 1994.  That is the date of the letter recording the agreement made and that letter requires a step to be taken by noon on that day. 

  1. The letter begins by recording that North and Ballarat have agreed to amend the notice of exercise of option given on 19 May so as to make it read in accordance with the amended notice attached to the letter.  The consideration for this is the promise of CRA to pay North $700,000, which was in fact exactly one-half of the amount of $1.4 million which CRA had, two days earlier, on 22 May, paid to the Commissioner of State Revenue as the estimated stamp duty which the Commissioner considered to be payable.  That estimate was a close one, the amount of the default assessment that was ultimately made being only about a thousand dollars less than what had been paid.  No doubt the consideration of $700,000 agreed to for the “amendment” of the notice of exercise represented one-half of the saving in stamp duty which CRA hoped would result from the agreement recorded in its letter of 24 May.  The agreement contained provisions for the refunding of the $700,000 to CRA in the event that the Commissioner succeeded in the dispute with which this case is concerned. 

  1. The notice of exercise of option attached to the letter of 24 May required the Call Shares to be transferred “to such persons and in such numbers as Potter Warburg Securities Pty. Ltd. arranges in accordance with the instructions given by [CRA] on 20 May 1994”.  According to the letter, the amended notice was to be treated as if it had been delivered on 19 May.  The letter recorded that “in terms of the agreements between CRA, North and Ballarat, North and Ballarat are entitled to receive the Purchase Price (as calculated in accordance with the Option Agreement) for the Call Shares on 24 May 1994 at 12 noon”, at which time North and Ballarat were to deliver to Potter Warburg the share certificates relating to the Call Shares and CRA was to make payment to North and Ballarat of the purchase price by way of bank cheques and was to pay North the $700,000 bonus.  The letter went on to record the agreement of North and Ballarat that the Call Shares should be used to satisfy sales arising from instructions to sell shares in Pasminco given by CRA on 20 May and that CRA would be entitled to receive for its own account the full proceeds of the sale of the Call Shares to the transferees arranged by Potter Warburg, net of any brokerage or stamp duty, which was to be paid by CRA. 

  1. In accordance with the agreement recorded in the letter of 24 May, on that day North and Ballarat delivered the relative share certificates to Potter Warburg and CRA paid to North and Ballarat the purchase price and the $700,000 bonus.  The share certificates were accompanied by a letter from North and Ballarat to Potter Warburg directing it, in accordance with the agreement recorded in the letter of 24 May from CRA, to pay to CRA the proceeds of sale of the Call Shares.

  1. Two transfers were prepared, one of the 53,015,614 shares held by North and the other of the 98,938,623 shares held by Ballarat. The transferee was in each case Melfast Nominees Pty. Ltd. (“Melfast”), a nominee company of Potter Warburg. The case has been argued both below and on appeal as one in which Melfast may be treated as the purchaser of the shares from CRA notwithstanding that there were in fact a large number of individual purchasers. On 1 June 1994 Potter Warburg executed the two transfers on behalf of North and Ballarat respectively as transferor and on the following day Potter Warburg executed them on behalf of Melfast as transferee. On each transfer, and separately in respect of transferor and transferee, Potter Warburg certified “that Stamp Duty if payable has been or will be paid”, as required by s.60D(1) of the Stamps Act 1958. Potter Warburg recorded the sale and purchase of the Call Shares as required by s.60B(1) and made returns as required by s.60C(1), and the duty was paid.

  1. By the letter of 6 June 1994 already mentioned CRA’s solicitors disclosed to the Commissioner what had been done.  On 2 May 1997 notice of default assessment was given to CRA’s solicitors in the sum of $1,398,913.80.  CRA objected to the assessment;  the Commissioner disallowed the objection;  CRA requested the Commissioner to treat the objection as an appeal;  the appeal was heard in September 1998;  it was dismissed on 28 October 1998;  CRA has appealed against that dismissal.  The basis of the Commissioner’s contention appears from paragraphs 12 and 16 of the reasons given for the disallowance of the objection: 

“12.Each of the Transfers related or gave effect to two separate transactions, because:

a)the Transfer from North to Melfast Nominees Pty Ltd related or gave effect:

i)to the sale of the Call Shares by North to Rio Tinto;  and

ii)to the subsequent sale by Rio Tinto of the Call Shares or its beneficial interest therein to the purchasers arranged by Potter Warburg;  and

b)the Transfer from Ballarat to Melfast Nominees Pty Ltd related or gave effect:

i)to the sale of the Call Shares by Ballarat to Rio Tinto;  and

ii)to the subsequent sale by Rio Tinto of the Call Shares or its beneficial interest therein to the purchasers arranged by Potter Warburg.

…

16.Each Transfer is deemed, by section 22(c) of the Act, to contain a duly executed instrument in respect of each transaction. Section 55A(1) of the Act only excludes the operation of Subdivision (4) of Division 3 of Part II of the Act to the extent that the Transfers are deemed to contain an instrument which perfects the sale by Rio Tinto of the Call Shares or its beneficial interest therein to the purchasers arranged by Potter Warburg.”

  1. The outcome of this litigation turns on the effect of s.22 of the Stamps Act 1958:

“22.Except where express provision to the contrary is made by this or any other Act –

(a)        an instrument containing or relating to several distinct matters shall be separately and distinctly charged, as if it were a separate instrument, with duty in respect of each of such matters;  and

(b)       an instrument made for any consideration or considerations in respect whereof it is chargeable with ad valorem duty, and also for any further or other valuable consideration or considerations, shall be charged with duty in respect of such last-mentioned consideration or considerations as if it was a separate instrument made for such consideration or considerations only;  and

(c)        an instrument relating or giving effect to two or more transactions shall be separately and distinctly charged with duty in respect of each transaction as if it contained a duly executed instrument in respect of each transaction.”

  1. Paragraphs (a) and (b) are not peculiar to Victoria.  They derive ultimately from s.8 of the Imperial Act, 33 & 34 Vict., c.96, the Stamp Act 1870, which consolidated the stamp law into a single enactment, while at the same time amending it.  Section 8 became s.4 of the Stamp Act 1891 (Imp.).  In Victoria stamp duties were never imposed by a farrago of enactments such as had plagued the United Kingdom.[1]  The tax was introduced to Victorian taxpayers by the Stamp Duties Act 1879 (No. 645), s.30 of which corresponded to s.8 of the Imperial Act of 1870. 

    [1]Dowell, Stamp Duties and Stamp Laws, pp.80 et seq., deals with the highly unsatisfactory situation in the United Kingdom resulting from “this bewildering multiplicity of conflicting lengthy and obscure enactments” (p.89).

  1. Section 8 of the Act of 1870 had itself been preceded by at least one provision worth noting.  Under the heading “Conveyance” in Part I of the Schedule to 55 Geo. III, c.184 (the General Stamp Act  of 1815), where any deed or instrument operating as a conveyance on sale also contained “any other Matter or Thing besides what shall be incident to the Sale and Conveyance of the Property sold, or relate to the Title thereto”, the deed or instrument was to be charged with duty as a conveyance on sale and also charged “with such further Stamp Duty as any separate Deed, containing the other Matter, would have been chargeable with”.  That provision was relied on in Worthington v. Warrington[2].

    [2](1848) 5 C.B. 635 at 643; 136 E.R. 1027 at 1030.

  1. Provisions corresponding to the Victorian s.22 (a) and (b) are to be found in the legislation of other Australian jurisdictions and of New Zealand. Paragraph (b) need not be further considered.[3]

    [3]It is discussed in Whitworth and McKenzie, Alpe’s Law of Stamp Duties, 24th ed., pp.19-20, Adams, Law of Stamp Duties in New Zealand, 2nd ed., para.81 and Sims and Tavaré, Sergeant & Sims on Stamp Duties, 7th ed., p.41.

  1. Before the enactment of the Stamp Act 1870 – by 1831 at the latest – the courts had developed a rule that an instrument should be stamped for its leading and principal object and that this stamp covered everything accessory to that object.[4] For a long time provisions corresponding to para.(a) of s.22 seem to have been treated as effecting no change in the law. So, the third edition of Tilsley on Stamp Laws, published in 1871 as a result of the enactment of the Stamp Act 1870, in its lengthy discussion of instruments relating to several distinct parties or matters[5], altogether ignored s.8 of the Act which had occasioned the new edition.[6]  The way in which s.8 was neglected is further illustrated by the decision of the Court of Exchequer in Limmer Asphalte Paving Co. Ltd. v. Commissioners of Inland Revenue[7], which is generally treated as the leading case on the principal object rule.  The second branch of this case raised the question whether an instrument was chargeable with duty not only as a conveyance on sale but also as a covenant.  The Court disposed of the point by reference to the principal object rule and no reference was made, in argument or in the judgment, to s.8 notwithstanding that the whole case was governed by the Act of 1870. A century later Sheppard, J. of the Supreme Court of New South Wales set a cat among the pigeons by pointing out that it was the statutory provision, not the leading object rule, that had to be applied.[8]  His decision was approved by the High Court in a case which laid it down that the old rule had no life of its own but could be used in the application of the statutory provision as subservient to it.[9] For a discussion of provisions corresponding to para.(a) of s.22 and of the principal object rule, reference should be made to the texts.[10]  To be “distinct”, as required by para.(a), the matters must be different from the point of view of the Stamps Act and taxation and be such that they would have been separately and distinctly dutiable had they each been the subject of a separate instrument.[11]

    [4]Price v. Thomas (1831) 2 B.&Ad. 218; 109 E.R. 1125; Limmer Asphalte Paving Co. Ltd. v. Commissioners of Inland Revenue (1872) L.R. 7 Ex. 211 at 217; Tilsley on Stamp Laws, 3rd ed. (1871), pp.289 et seq.

    [5]pp.270-304

    [6]Compare the treatment in the second edition  (1854), pp.319-357.

    [7](1872) L.R. 7 Ex. 211.

    [8]Farrar v. Commissioner of Stamp Duties (1975) 5 A.T.R. 364 at 368.

    [9]Commissioner of Stamp Duties (N.S.W.) v. Pendal Nominees Pty. Ltd. (1989) 167 C.L.R. 1. Mason, C.J. thought it likely that the courts had fashioned their rule with the words in the Schedule to 55 Geo. III, c.184 in mind: 167 C.L.R. at 10.

    [10]Tilsley, 3rd ed., pp.289 et seq.;  Whitworth and McKenzie, 24th ed., pp.14-18;  Adams, 2nd ed., para.71;  Sims and Tavaré, 7th ed., pp.40-41;  Hines, Stamp Duties Victoria, paras.1.1400-1.1420.

    [11]Comptroller of  Stamps v. Martin [1967] V.R. 369 at 374-5; Pendal Nominees at 12 per Mason, C.J.

  1. Paragraph (c) of s.22, on which the present appeal turns, is indigenous to Victoria. It was introduced by s.4 of the Taxation Acts (Amendment) Act 1986.  Nothing in the Second Reading Speech on the Bill for the amending Act assists in the construction of the paragraph.  It was evidently regarded by the Treasurer, Mr Jolly, as one of “a number of technical provisions intended to streamline administration and to facilitate enforcement of the Act”.[12]  According to the Explanatory Memorandum accompanying the Bill:

“The current s.22 of the Stamps Act 1958 provides that where two or more instruments are contained in the one document each instrument is to be assessed separately for stamp duty. A recent Taxation Board of Review decision has held that s.22 did not bring to duty a document which related to two transactions but in form referred only to one transaction. This amendment will ensure that where an instrument relates to several transactions, duty is assessable in respect of each transaction.”

[12]Hansard, Legislative Assembly, vol. 384, p.1400.

  1. There seems to be only one case in which the effect of paragraph (c) has been considered:  Innvale Pty. Ltd. v. Comptroller of Stamps (Vic.)[13], in which the relevant part of the Explanatory Memorandum is conveniently set out at 2021.  The member constituting the Administrative Appeals Tribunal, Mr Gibson, there said of that Memorandum:

“I was told that the decision of the Taxation Board of Review that was referred to were cases number S/1/85 and S/2/85. Each decision turned on sec.22(a). Each concerned a contract that included a nominee clause. It was held in each that a ‘distinct matter’ for the purposes of sec.22(a) must be one in respect of which a liability to stamp duty is imposed by the Act, and that for sec.22(a) to apply it must be possible to find spelled out in terms in the ‘basic’ instrument a reference to another transaction which if it were expressed in another instrument would make that instrument liable to stamp duty.”

[13](1989) 89 A.T.C. 2019

  1. In Innvale, on 14 August 1987 one company (“Bevillesta”) contracted to sell to another (“Eblana”) “and/or nominee” two blocks of land for $20 million. On 6 October 1987 a document was executed whereby (i) Eblana nominated a third company (“Innvale”) as purchaser of one of the blocks of land “pursuant to the right of nomination contained in the contract of sale”; (ii) Innvale indicated its acceptance of the nomination by Eblana to buy the block for the price of $8,150,000 pursuant to the terms of the contract; and (iii) the guarantors under the original contract confirmed to Bevillesta that the guarantee should extend to and include the obligations of Innvale as the nominated purchaser. On 11 November 1987 Bevillesta executed an instrument transferring the block in question to Innvale for the sum of $8,150,000. The Comptroller invoked s.22(c), on the basis that the transfer was an instrument relating or giving effect to two transactions, the sale of the block in question by Bevillesta to Eblana and the disposition of the block from Eblana to Innvale. It was said that the stamp duty chargeable was $448,250 in respect of the first transaction and the same sum in respect of the second. Mr Gibson thought that there had been a novation as a result of which the original contract of sale had been discharged. In the result, he held, it could not be said that the transfer gave effect to two transactions, since the contract constituting one of them had been discharged.

  1. In the present case the judge referred to the decision of the Board of Review identified in Innvale as that mentioned in the Explanatory Memorandum as citing authority for the proposition that para.(a) of s.22 does not apply unless the other “matter” is expressly mentioned in the instrument. The Board was constituted by Mr R.L. Gilbert in Cases No. S/1/85 and S/2/85 and, since the decision is not readily available, I set out the passage:

“An examination of such authorities as I have been able to discover appears, in my opinion, to make it plain that, for the provisions of section 22(a), or its cognates, to apply, it must be possible to find spelled out in terms in the ‘basic’ instrument a reference to another transaction which if it were expressed in another instrument would make that instrument liable to stamp duty. See Comptroller of Stamps v. Martin [1967] V.R. 369 at 374; Hadgett v. I.R.C. (1877) 3 Ex D. 46; Ansell v. I.R.C. [1929] 1 K.B. 608; Farrar v. Commissioner of Stamp Duties (1975) 5 A.T.R. 364; Pagan v. Commissioner of Stamp Duties (Qld.) (1983) 14 A.T.R. 308; Cp. Bambro (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties (1963) 63 S.R., N.S.W. 522, and Fitch Lowell Ltd. v. I.R.C. [1962] 1 W.L.R. 1325 and, with regard to like earlier provisions, Cp. Brightman v. I.R.C. (1868) 18 L.T. 412; Wharton v. Walton (1845) 7 Q.B. 474, 115 E.R. 567; Corder v. Drakeford (1811) 3 Taunt. 382, 128 E.R. 151; Lovelock v. Franklyn (1846) 8 Q.B. 371, 115 E.R. 916.” (Certain case names and citations emended.)

  1. In the present case her Honour evidently adopted Mr Gilbert’s view.  She went on to contrast para.(c), which, she said “enables the consideration of transactions which underlie the instrument but are not apparent on the face of it”.

  1. Mr Gilbert’s conclusion seems to me, with respect, to be correct.  I would, however, say of it that most of the decisions cited by him seem to be decisions in which the instrument in fact disclosed on its face the existence of two “matters” rather than decisions expressly holding that the provision in question could not apply unless this was so.  Before us, both sides appeared to accept that para.(a) applies only where the instrument itself discloses the existence of two or more matters.  In support of the view that the two matters must appear on the face of the instrument for para.(a) to apply I would cite Reversionary Interest Society v. Commissioners of Inland Revenue[14];  Zealandia Soap and Candle Co. Ltd. v. Minister of Stamp Duties[15];  Comptroller of Stamps v. Martin[16];  Bambro (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties[17];  Pagan v. Commissioner of Stamp Duties[18];  and Pendal Nominees[19].

    [14](1906) 22 T.L.R. 740 at 741.

    [15][1922] N.Z.L.R. 1117 at 1123 per Hosking, J.

    [16][1967] V.R. 369 at 375 (“one must, I think, take the instrument itself …”).

    [17](1963) 63 S.R.(N.S.W.) 522 at 527 (“the transactions which instruments embody”; “matters contained in the same instrument”).

    [18][1983] 2 Qd.R. 466 at 470.

    [19](1989) 167 C.L.R. 1 at 10-12 per Mason, C.J. (“embodied”; “dealt with”; “expressed”); per Brennan, J. at 19 and 22; per Deane and Dawson, JJ. at 24 (“a provision in an instrument”).

  1. The present dispute calls to mind what was written in 1871 on the particular subject of “instruments relating to several distinct parties or matters”:

“Scarcely any subject, within the range of the Stamp Laws, is of so embarrassing a nature, in practice, as that which falls under the present division.”[20]

[20]Tilsley, 3rd ed., p.270.

  1. The judge upheld the Commissioner’s contention that each transfer gave effect to two transactions, one a sale by North or Ballarat to CRA and the other a sale by CRA to Melfast, and that, s.22(c) in effect deeming there to have been a dutiable instrument of transfer in respect of each transaction, and duty having been paid only on the transfer to Melfast, CRA was liable as transferee under the deemed transfers to it from North and Ballarat respectively.

  1. The Commissioner accepts that duty will be charged on an instrument as a result of the operation of paragraph (c) only if the duly executed instrument in respect of the transaction under consideration which the Act treats the actual instrument as containing is one falling within some head of charge to be found in the Act.  I might say at this point that I would not, with respect, accept the formulation in Innvale at 2023 that “the transactions that are referred to in sec.22(c) are transactions which if recorded in an instrument would make that instrument liable to duty under the Act” unless it is to be understood (as I think was intended) in the sense in which the Commissioner has put the matter in the present case.

  1. Transfers of marketable securities, other than those to perfect a sale or purchase to which subdivision (4A) of Division 3 of Part II applies (the “on-market” or “broker” provisions), that is, off-market transfers, are dealt with by Heading IV(A) of the Third Schedule and by subdivision (4) of Division 3 of Part II. (I am of course concerned with the Act as it was at the relevant time: Reprint No. 11 contains the Act as it then was.) Section 55B imposes liability to pay duty in respect of a transfer of a marketable security on, among others, the transferee, it being the person bearing the ultimate incidence. (The “broker” provisions, and in particular s.60C, operate not by charging duty upon transfers but by requiring the lodgment of returns and the payment of duty in respect of sales and purchases included in the returns which they require.) The Commissioner supports the assessment on the basis that the result of s.22(c) is that each of the two actual instruments of transfer is to be taken to contain a transfer by North or (as the case requires) Ballarat to CRA.

  1. Mr de Wijn, on behalf of CRA, says this is not the result of the section. Paragraph (c) is in his submission merely an “interpretative” provision: it enables actual instruments to be interpreted by reference to transactions not disclosed on their face. By way of suggested example, he takes the case where A holds 2,000 shares in a company, 1,000 of them beneficially and the balance on bare trust for B. B buys the 1,000 shares held beneficially by A for $1 million and requests a transfer both of the shares he has bought and of the 1,000 shares held by A as bare trustee. A single transfer of the whole 2,000 shares is executed. In those circumstances (it is said) the instrument would relate or give effect to two transactions, but, since this would not appear from the instrument itself, s.22(a) would not apply. If the transaction had been completed by two separate transfers each transfer would have been assessed on a different basis. The transfer of the shares sold would have been assessed as chargeable with ad valorem duty, while the transfer to the beneficial owner would have been assessed at the fixed duty of one dollar (Item 1(c) of Heading IV(A) – re-transfer by a trustee), unless it was exempt under Exemption (5)(c). Section 22(c) enables this result to be achieved. Its purpose is to “interpret” an instrument by reference to a transaction or transactions not disclosed on its face.

  1. In my opinion s.22(c) has a wider operation than this submission and example would allow. (The dutiability of the transfer in the example put, both having regard to s.22(c) and independently of that provision, need not now be considered.) I do not think the paragraph is intended merely to enable an actual instrument relating or giving effect to two more transactions between the same persons to be explained by extrinsic material which shows, for example, that it is in part a transfer on sale and in part a transfer by bare trustee to beneficial owner. There is no warrant for reading the paragraph down in this way. Moreover, it is significant that the concluding words of the paragraph require there to be imported into the actual instrument, not merely an instrument, but a duly executed instrument, in respect of each transaction. This shows that an actual instrument, for example, a transfer executed by one person as transferor, may by the operation of s.22(c) be treated as containing a transfer executed by a different person as transferor. In other words, the expression “duly executed instrument” shows that the section does not require one to work within the limits of what I might call the essentials of the actual instrument in the sense, for example, of a transfer of property from A to B, or, putting the matter more widely, an act in the law by A affecting B. Further, since paragraph (c) requires the actual transfer to be treated as if it contained a duly executed instrument in respect of each transaction, I see no reason why in an appropriate case it should not require the actual instrument (executed, say, by A and C) to be treated as replaced by two instruments (one executed by A and B and the other by B and C) so as to supplant as opposed to supplement the actual instrument.  This goes far beyond the mere interpretative function assigned by the appellant to the paragraph.

  1. What is to be regarded as the “transaction” between CRA, North and Ballarat for the purposes of s.22(c), which requires two or more transactions? It seems to me that the transaction begins with the option agreement. Just when it is to be regarded as ending is not so clear, and the answer to this may depend on whether certain acts (payment of the price and the bonus of $700,000 by CRA and delivery of share certificates to Potter Warburg on 24 May) are to be regarded as part of the transaction or as acts whereby it was given effect. But nothing turns on this. The “transaction” between the three companies underwent changes in the course of its career. It began life as an option agreement. Then the option was exercised. Finally came the burst of activity in the five days beginning on 20 May, in which what had been done was sought to be undone in the hope that liability to stamp duty might be minimised and the resulting saving split between the two parent companies. By 20 May 1994 the transaction, in its essentials, had become one whereby the two parcels of shares were to be sold by North and Ballarat to CRA (which had itself already sold them, acting through its broker) and transferred direct from North and Ballarat to CRA’s purchaser, with the economy achieved at the expense of the Revenue to be equally divided between the parent companies.

  1. Neither side has ever suggested that the disappearance of AM&S as “nominated transferee” presents any difficulty as regards the variation of the transaction on or shortly before 20 May 1994 notwithstanding that there is no evidence that it was a party to the variation.  At all times the disputants have treated the variation as efficacious in all respects (except as regards the desired saving in stamp duty), presumably on the basis that CRA is to be taken as having acted on behalf of its subsidiary as well as on its own behalf during those busy five days. 

  1. The transaction between the three companies became, in May 1994, one whereby CRA was to buy, or to be taken to have bought, shares from the other two companies and they were to transfer the shares, not to CRA, but to the persons to whom it had already disposed of them by a series of sub-sales. The two transfers were executed accordingly. This seems to me to fall within paragraph (c) of s.22 and to cause the charging provisions of the Act to operate upon a transfer by North to CRA and a transfer by Ballarat to CRA which the paragraph requires the two actual transfers to be treated as containing.

  1. It is clear that each of the two transfers in fact executed gave effect to two transactions – the transaction with CRA I have just been discussing and the transaction whereby CRA sold shares to Melfast.  The question is not whether the transfers executed fall within the opening words of paragraph (c) as instruments “relating or giving effect to two or more transactions” but what the consequence of their falling within those words is.  What is the effect in the present case of the requirement that the actual instrument be treated “as if it contained a duly executed instrument in respect of each transaction”?  By whom is the “duly executed instrument” to be taken to have been executed and what are its form and terms to be taken to be?

  1. In my view, in a case like the present, which is one of an instrument not merely “relating” but “giving effect” to two or more transactions, paragraph (c) has the effect of requiring the instrument in fact executed to be treated as replaced by two, or more than two, instruments (as the case requires), each in the same form and terms as the actual instrument but varied, both as to executing parties and as to terms, so far as is necessary to make it give effect to the particular transaction under consideration. For unless this is the effect of the paragraph, I do not know what form the “duly executed instrument” conjured up by it is to be treated as taking. Accordingly, if there is a sale of shares followed by a sub-sale of them, and a single transfer by the original vendor to the sub-purchaser, that transfer will be treated as if it contained, that is to say, as if it comprised, or was replaced by, two transfers, one by the original vendor to the original purchaser and the other by the original purchaser to the sub-purchaser, each of them duly executed by the parties to it. The result in the present case is that each transfer actually executed is to be treated as if it contained, in the sense of comprised, or was replaced by, two transfers, one by North (or Ballarat) to CRA, duly executed by those companies, and the other by CRA to Melfast, duly executed by those companies. (This case does not raise the question of the effect of the payment of duty under the “broker” provisions, subdivision (4A) of Division 3 of Part II, on supposed sales by North and Ballarat to Melfast and supposed purchases by Melfast from North and Ballarat, where s.22(c) requires the transfers actually employed to be treated as replaced by transfers from North and Ballarat respectively to CRA and transfers from CRA to Melfast.)

  1. By way of alternative submission it was said on behalf of CRA that both the head of charge and the provision imposing liability to pay duty contain an exclusion or exception which would in any event prevent s.22(c) from having the result that s.55B imposed liability on CRA as transferee of the shares in the two transfers to it which must be treated as having been executed. The head of charge, Heading IV(A) of the Third Schedule, uses the words “not being a transfer to perfect a sale or purchase to which subdivision (4A) of Division 3 of Part II applies”, and s.55A(1) similarly makes the provisions of subdivision (4) of Division 3 of Part II inapplicable to such a transfer. The argument is the simple one that, since the two transfers actually executed were each a transfer to perfect a sale or purchase to which subdivision (4A) of Division 3 of Part II applies, those words of exclusion in Heading IV(A) except them from the charging provision and (if it matters) the corresponding words of exclusion in s.55A(1) prevent the application of s.55B to the two transfers actually executed.

  1. But this argument is unsound. The words of exclusion in Heading IV(A) and s.55A merely mean that a transfer on a sale or purchase which will, by force of s.60C, require a broker to pay duty, is not a transfer brought to duty by Heading IV(A) or one in respect of which a liability to pay duty will arise under subdivision (4) of Division 3 of Part II. The words of exclusion say nothing on the question whether s.22(c) has the effect of bringing into existence a transfer on which the Act imposes duty, liability to pay which is cast upon the person sought to be made liable. For the same reason I reject the appellant’s further submission that the words of exclusion in Heading IV(A) make “express provision to the contrary” within the meaning of the introductory words of s.22(c).

  1. And so I agree with the judge’s conclusion upholding the assessment and would dismiss the appeal.

BATT, J. A.:

  1. I have had the considerable advantage of reading in draft the reasons for judgment of Brooking, J.A.  I agree that this appeal must be dismissed for the reasons his Honour gives.

CHERNOV, J.A.:

  1. I agree that, for the reasons given by Brooking, J.A., this appeal should be dismissed.

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