Roussos v Commissioner of Stamp Duties

[1992] TASSC 97

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Roussos v Commissioner of Stamp Duties [1992] TASSC 97; B18/1992

PARTIES:                   ROUSSOS & ANOR

v
THE COMMISSIONER OF STAMP DUTIES

FILE NO/S:  M96/1992
DELIVERED ON:  22 May 1992
JUDGMENT OF:  Cox J

Judgment Number:  B18/1992
Number of paragraphs:  10

Serial No B18/1992

List "B"

File No M96/1992

ROUSSOS & ANOR v THE COMMISSIONER OF STAMP DUTIES

REASONS FOR JUDGMENT  COX J

22 May 1992

Stamp Duties – Whether Business Licence Agreement liable as conveyance of personalty – Stamp Duties Act 1931, s21(1) and SchII.

1. This is an appeal pursuant to the Stamp Duties Act 1931, s21(1) ("the Act") against the assessment by the respondent of stamp duty of $5,612 made on 9 April 1992 in respect of a document described as a Business Licence Agreement dated 3 February 1992 and made between the appellants ("Roussos") and ("Kamari") Pty Ltd. The Commissioner assessed duty on the document under Sch2, item 7(a) upon the basis that it was a conveyance upon the sale and disposition of personal property to the appellants.

1. The document contains the following introductory clauses:

"AKamari is the owner of the business known as 'The Aegean Restaurant' comprising the following assets:

(i)the plant and equipment used in and about the operation of the said business ('the Plant and Equipment') the same being specified in the First Schedule to this Agreement.

(ii)the stock–in–trade used in the operation of the said business ('The Stock–in–Trade').

(iii)the goodwill established by Kamari in the course of operating the said business ('the Goodwill').

(iv)the registered business name 'The Aegean Restaurant' ('the Business Name').

AND for the purposes of this Agreement the Plant and Equipment, the Stock–in–Trade, the Goodwill and the Business Name shall be referred to collectively as 'the Business'.

BKamari agrees to licence Roussos to operate and conduct the Business on the terms and conditions set out below.

CRoussos agrees to accept the licence referred to in Paragraph B above and further agrees to operate and conduct the Business on the terms and conditions set out below."

1. There then follows an "operative" part whereby in cl.1 Kamari licences Roussos to operate and conduct the business at the basement, 121 Collins Street Hobart and to conduct therefrom the business in the manner and style in which it has previously been conducted. The licence is to continue from an unspecified date in February 1992 until 31 January 1994. Roussos acknowledge that the licence is personal to them and may not be assigned. Roussos also acknowledge that Kamari holds the premises on a lease and agree to take a non–assignable sub–lease. Roussos agree to use the plant and equipment in the premises, and none other without Kamari's consent, in the conduct of the business and to keep the same in repair (fair wear and tear excepted).

1. The document requires Roussos to make an initial payment to Kamari of $80,000. At the commencement of the term Kamari "shall sell and Roussos shall purchase all Stock–in–Trade" then on the premises, at valuation. Once the stock is valued, Kamari is to deduct and retain the price thereof from the initial payment and any balance is to be applied towards the licence fee and rental payable under the sub–lease. Clause 4.6 provides:

"At the commencement of the Term and thereafter on the day of each succeeding calendar month Roussos shall pay to Kamari the sum of EIGHT THOUSAND TWO HUNDRED AND FIFTY FIVE DOLLARS ($8,255.00) ('the Monthly Licence Fee')."

Ad valorem duty was levied on $198,120 representing the consideration of twenty–four monthly payments due under this clause.

1. Clause 6.10 provides that the relationship between Kamari and Roussos is "strictly that of Licensor and Licensee".

1. Clause 7 deals with the Business Name "The Aegean Restaurant". At the commencement of the term Kamari is to complete a "Form 4" (Statement of Change in Particulars) pursuant to the Business Names Act 1962 to enable Roussos to become the registrant of the Business Name and which form Roussos undertake to file. Roussos are to complete a similar but undated form in favour of Kamari and this is to be retained by the latter and filed in the event that the agreement is lawfully terminated. Roussos receive an option to purchase the business for $300,000 and the purchase price shall be apportioned "so that the Plant and Equipment shall be sold at its written down value as at the date of exercise of the option with the balance of the said purchase price being attributed to the Goodwill". Roussos also receive an option to extend the licence for a further two years at an increased monthly licence fee. There follow provisions for the termination of the agreement.

1. The Commissioner contends that this agreement operates as a sale or disposition of personal property consisting of the plant and equipment, goodwill and the right to use the Business Name and that the document giving it effect is dutiable as such. It is common ground that the provisions in respect of the stock–in–trade do not avail the Commissioner as a justification for holding the document dutiable.

1. It is quite obvious that no property in the plant and equipment passes. Roussos are obliged to keep and use it and replace any which becomes defective (fair wear and tear excepted) by equipment of comparable age and condition. The option to purchase includes the option to purchase plant and equipment at its then written down value, a clear indication that the parties regard the plant and equipment as remaining the property of Kamari. The same comment can be made of the goodwill for that likewise is subject to the option to purchase. The mere fact that use and periodic replacement of the plant and equipment by Roussos may result in an inability to return to Kamari, the subject matter of the Business Licence Agreement in identical form at its termination, does not, in my view, demonstrate a disposition of the plant and equipment. Nor does the fact that the goodwill may as a result of the manner in which Roussos conduct the business increase or decrease in value by the time the licence is terminated.

1. The authority to use the Business Name during the currency of the licence is likewise not, in my view, a proprietary right passing to Roussos which can be characterized as a disposition of personal property. The name is part of the goodwill of the business (see Maxim's Ltd v Dye [1977] 1 WLR 1155 and BM Auto Sales Pty Ltd v Budget Rent–A–Car System Pty Ltd (1977) 51 ALJR 254). The goodwill does not pass to Roussos under the agreement, merely the right to avail themselves temporarily of the benefits attaching to it. They will acquire it and Kamari will dispose of it only if and when the option to purchase is exercised.

1. In my opinion, the Business Licence Agreement is not dutiable under the Act, Sch2, item 7(a). The appeal is therefore allowed and I will hear counsel as to what consequential orders should be made.