Weston, L.K. v Beaufils, S.W

[1994] FCA 328

JUDGMENT No. ..... ..,

M THE FED- COURT OF AUS- ) )

W SOUTH W-S	DISmICT RE-	)	No NG455 of 1992
)

- )

BETWEEN:

PTY LIMITED

-

Applicants

W :  STEPHEN

First Respondent

-	Second Respondent
lDELETEDl	Third Respondent

lDELETEDl

Fourth Respondent

I DELETED 1

Fifth Respondent

Sixth Respondent

OPENBAT PTY LI-

Seventh Respondent

OPENBRIDGE PTY LIMITEQ

Eighth Respondent

WINGEM PTY LIMITED

Ninth Respondent

DA.?XD:  18 APRIL 1994

RECEIVED

31 MAY 1994	LIMITED
FEDERAL COURT OF	Tenth Respondent

AUSTRALIA

PRINCIPAL REGISTRY

Eleventh Respondent

Twelfth Respondent

GmAM:  HILL J

W: SYDNEY

The applicants in these proceedings claim relief, inter alia, against Mr Stephen Wayne Beaufils and Mr Anthony Brownlee and companies over which Mr Brownlee presently has control, arising out of various transactions affecting land in New South Wales. The statement of claim as finally amended claims in respect of Messrs Beaufils and Brownlee, a solicitor and a financial and management consultant respectively, inter alia, that they were in breach of their duty to Mr Weston, the first applicant, who instructed them, in that properties were ultimately transferred to companies under their control and that the ultimate benefit of moneys representing either the proceeds of sale or mortgage were received by them or either of them.

In the course of the proceedings the applicants
sought to tender a document headed Declaration of Trust dated

24 August 1991 between Mr Beaufils and Mr Weston. That

document records that Mr Beaufils, therein described as the	trustee, holds certain shares in Openbridge Pty Limited, a New
South Wales company, and all incumbent proceeds derived from that company upon trust for Mr Weston absolutely. The instrument sought to be tendered is a copy but the evidence makes it clear that the original of that instrument has not been stamped. It is in these circumstances that counsel for the respondent objects to the tender.

In Davis v Federalissioner of Taxation 89 ATC

. .

4377 I held that, by force of the Judlcury Act 1903 (Cth) the provisions of 6.29 of the Stamw Duties Act 1920 (NSW) apply to proceedings in this Court where those proceedings take place in the State of New South Wales.

The consequence of that is that the provisions of s.29 would presently be applicable to these proceedings. That section provides in sub-sec.(l) relevantly that no instrument:

"relating (wheresoever executed) to any property situate or to any matter or thing done or to be done in any part of New South Wales, shall, except in criminal proceedings, be pleaded or given in evidence, or admitted to be good, useful, or available in law or equity for any purpose whatsoever, unless it is duly stamped in accordance with the law in force at the time when it was first executed. "

Sub-section (4) of that section, which was procedure whereby unstamped instruments may be tendered in introduced after my decision in Davis ' , C ase, sets out a	evidence on behalf of a party not being a person who is
primarily liable to duty in respect of the instrument provided the Court is satisfied:

"(a) that the party has informed, or will in accordance with arrangements approved by the Court, inform the Chlef Commissioner [of Stamp Duties] of the name of the person primarily liable to duty in respect of the instrument and

(b)	that the party will, in accordance with arrangements approved by the Court, lodge the instrument or a copy of the instrument with the Chief
Commissioner. "

Counsel for the applicants sought to tender the copy of the declaration of trust but did not rely upon sub-sec.(4). The argument raised by senior counsel for the applicant was that it was an exception to the language of 6.29 that an unstamped instrument could be tendered to show fraud.

Reliance was placed upon two English decisions, to which reference is made in the texts. The first is the decision in v Bower 4 M & W 361; 150 ER 1468. In that case a person who had petitioned the House of Commons against the return of a member on the ground of bribery subsequently entered into an agreement for a monetary consideration not to proceed further with that petition. The agreement itself was

admissible in evidence for the purpose of showing the	illegal. It was held that the written agreement was
illegality of the transaction. Lord Abinger CB stated the question to be decided as (at 366; 1470):

". .. whether the Stamp Acts were intended

to apply where the instrument is used, not as evidence of an obligatory contract between the parties, but to shew that the transaction between them is of such a nature as to be void in law."

His Lordship found that to be a question admitting

of easy answer.

The second authority relied upon was Holmea v

Sixsmith 7 EX 801; 155 ER 1174. That case concerned a written

agreement entered into by the plaintiff with a third party to run the plaintiff's horse against another horse called Flying Cloud, there being in truth no such horse as Flying Cloud, with an amount of money being deposited as a stake with the defendant. The whole transaction was apparently a concocted fraud and action was brought to recover back the stake. The agreement in question was tendered not to prove the terms of the agreement or to rely as such upon it, but as proof of the illegal transaction.

Lord Pollock CB indicated that the ground for
impeaching the document was to show the fraud and the

instrument was not tendered to show proof of the agreement

terms (at 807; 1176-7): itself. His Lordship expressed the principle in the following	"If it is used merely as part of the
machinery of a fraud, and to shew that the person paying money has been imposed upon, no stamp is necessary. In civil cases, if a document is used as an agreement, it must be stamped, but not so if it is used for any collateral purpose."

These cases do not establish a principle as broad as that for which senior counsel contends. The principle is not that an unstamped instrument may be tendered in any case where fraud is alleged against the other party. Rather, an unstamped instrument will be admitted into evidence to prove the fact of fraud but not to prove the instrument as an instrument to be relied upon in the litigation.

In the present case the declaration is tendered to prove the very fact which he discloses, namely, the trust relationship between Mr Beaufils and Mr Weston. It is intended to be relied upon as such. In those circumstances it is clear to me that the declaration falls outside the exception, as expanded in the cases cited, even if that exception survives the absolute wording of 6.29.

Indeed the more recent decision of the Court of

Ptv . .

Appeal in Bab Street P ~ ~ t i e s

v Pollnow (1987) 9

NSWLR 80 rather demonstrates the point. In essence what was

sought to be relied upon in that case was secondary evidence

of a transaction which proved a trust, having regard to the principles expounded in &&efoucauld v Boustead [l8971 1 Ch 196. The defendant in the proceedings had treated the so- called trust assets as his own, in breach of any trust relationship that existed. At first instance McLelland J allowed the secondary evidence to be given on the basis that the circumstances could be proved which brought about the trust relationship. On appeal his Honour's decision on this matter was reversed unanimously by the Court of Appeal. Leave to appeal was subsequently refused by the High Court.

The case was, as the present case is, one where there was alleged a flagrant breach of fiduciary duty. However the Court of Appeal, following the authoritative decision of the High Court in m v Moore (1919) 26 CLR 316, held that the force of 6.29 was to deprive the transaction, which was recorded in the instrument, of legal effect, notwithstanding, as Priestley JA points out (at 101), that reliance upon the operation of the Stam~ Duties Act gave rise to fraud in the equitable sense.

It follows, in my view, that the instrument is not admissible in evidence unless the procedure in sub-sec.(4) is followed (if that be applicable) or, alternatively, if it is possible for me still to take an undertaking of the kind

argued and I refrain from commenting further upon it. I referred to in Davis' case. That matter has not yet been reject the tender.

I certify that this and the

preceding six (6) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Mr Justice Hill.

Associate:

Date: 27 May 1994

Counsel and Solicitors	DF Rofe QC with R Bell
for Applicants:	instructed by O'Hara & CO
Counsel and Solicitors	VR Gray instructed by Hughes
for First, Sixth, Seventh,	& Taylor

Eighth, Eleventh Respondents:

Counsel and Solicitors	G Kennedy instructed by
for Second, Ninth, Tenth	Axtens; Watkins, Tapsell &

Respondents:  No l an

Counsel and Solicitors	JP Hamilton QC instructed by
for Twelfth Respondent:	Gye Perkes & Stone
Date of Hearing:	18 April 1994.
Date Judgment Delivered:	18 May 1994