Westpac Banking Corporation v Commissioner of Stamp Duties

[1992] QCA 318

IN THE COURT OF APPEAL

[1992] QCA 318

SUPREME COURT OF QUEENSLAND

Appeal No. 54 of 1992

IN THE MATTER of The Stamp Act 1894

- and -

IN THE MATTER of an Appeal by WESTPAC

BANKING CORPORATION against an
assessment of stamp duty by the
Commissioner of Stamp Duties on
30 May 1991 on an agreement
between the Commonwealth and
Westpac Banking Corporation

BETWEEN:

WESTPAC BANKING CORPORATION Appellant

-and-

COMMISSIONER OF STAMP DUTIES Respondent

Appeal No. 55 of 1992

IN THE MATTER of The Stamp Act 1894

- and -

IN THE MATTER of an Appeal by the

COMMONWEALTH OF AUSTRALIA against an assessment of duty by the Commissioner of Stamp Duties on certain instruments

BETWEEN:

THE COMMONWEALTH OF AUSTRALIA Appellant

-and-

COMMISSIONER OF STAMP DUTIES	Respondent
CASES STATED PURSUANT TO S.24

OF THE STAMP ACT 1894-1990

JUDGMENT - THE CHIEF JUSTICE

Delivered the 11th day of September, 1992

These are appeals by Westpac Banking Corporation (the
"Bank") and the Commonwealth of Australia (the
"Commonwealth") against assessments of duty made by the
Commissioner of Stamp Duties.

The Bank entered into an agreement with the Commonwealth on 9 November, 1988, being interested in taking over, under a privatisation arrangement, a Commonwealth agency's administration of a housing assistance scheme set up to benefit ex-servicemen.

Broadly, it was contemplated that the Bank would for the future make loans and take over existing arrangements which were in place with borrowers. The loans which the Bank would make would be subsidised as to interest rates so allowing the favourable treatment of qualified participants to continue. The arrangements already in place which the Bank would take over can comprehensively and for present purposes sufficiently accurately be described as mortgages and term sale contracts (referred to as "portfolio assets").

The value which would be placed on the portfolio assets was indicated and before us the components of that total as distributed among the various States and Territories were not in dispute. The agreement between the parties under one of its headings also provided for the attribution of a separate sum in respect of the agreed right of the Bank for the future to make subsidised loans to qualified borrowers.

The agreement for the Bank to make loans which would
attract a Commonwealth subsidy was referred to as a
"franchise" agreement.

The rights currently existing in the portfolio assets were not vested in the Commonwealth but in a government agency whose identity had varied over the years. At the relevant time it was the Defence Service Homes Corporation (the "Corporation"). The Corporation, was not party to the agreement of November, 1988 and the agreement itself did not purport to put into place the contemplated arrangements. Its implementation was to depend upon the passage of Commonwealth legislation which, with the title Defence Service Homes Amendment Act 1988 (Cth), was subsequently passed in a form annexing and giving effect to the agreement between the Bank and the Commonwealth. The Act was assented to on 14 December, 1988. The legislation with the annexed agreement contained machinery for fixing dates for the takeover of the portfolio assets in the various Australian jurisdictions and once enacted it also determined the time when the subsidised lending to customers under the franchise arrangement could commence.

Pincus J.A. and Demack J. in their joint reasons have identified the clauses of the November, 1988 agreement relevant for the consideration of the problems arising on the appeal and there is no need for me to repeat the references. They also quote a number of provisions of the Queensland stamp duty legislation and analyse their features with the result once again that my task is shortened. I shall make only such further references in these respects as is necessary for setting out my own conclusions against an appropriate background. In doing this I find that I do not need to express an opinion on some of the issues dealt with by Pincus J.A. and Demack J.

By way of preliminary, I state my agreement with the conclusion of Pincus J.A. and Demack J. that s. 109 of the Commonwealth Constitution cannot be relied on in aid of the challenge to the assessment. It seems to me that amongst the reasons to conclude that there is no inconsistency between the Defence Service Homes Amendment Act 1988 (Cth) and the Stamp Act 1894 (Qld) there is the consideration emerging from cl. 19 of the agreement which is set out in the schedule to the enactment. It is difficult to find any exclusion of liability to State stamp duty when the enactment which receives Commonwealth legislative endorsement expressly contemplates the possible imposition of stamp duty. The result of this conclusion is that the way is open for the State Commissioner to assess to stamp duty if the Stamp Act in terms imposes it in the present case. That is the next question.

The rights represented by the portfolio assets are clearly capable of being the subject of a conveyance or transfer within the meaning of the definition in s. 49 of the Stamp Act. They are capable also of being the subject of a contract or agreement for sale within the first branch of s. 54(1) and of being the subject of a contract or agreement whereby a person becomes entitled to a conveyance or transfer whether or not as the result of the satisfaction of terms and conditions within the second branch of s. 54(1). There can be no doubt that the portfolio assets are "property" within s. 54(1). However, the assets were not in fact the subject of any relevant contract or agreement in this case. The agreement in question was not one providing for the sale of the assets or entitlement to the conveyance or transfer of them because the structure of the arrangements between the Bank and the Commonwealth provided otherwise. The rights to the portfolio assets came not from the agreement between the parties but from the subsequent Commonwealth legislation. Certainly, much was foreshadowed by the agreement but the relevant hard rights were all transferred by the subsequent enactment.

The same argument applies to the franchise. There was no relevant contract or agreement for sale and no contract or agreement conferring a relevant entitlement because the rights in question came to the Bank as a result of subsequent Commonwealth legislation. In addition, in the case of the franchise there are reasons for thinking that a right to make loans in the future which the Commonwealth, for its part, agrees will attract subsidies payable by it, does not constitute "property" within the meaning of s. 54(1). The treatment in the joint judgment in The Commissioner of Stamp Duties (N.S.W.) v. Yeend (1929) 43 C.L.R. 235 of provisions equivalent to s. 54(1) and s. 56 seems to lead to the conclusion that the right to make the franchised loans here is an "ordinary simple contract" right "executory on both sides" which is not caught by s. 54(1) probably for the reason, amongst others, that it is not property (see at 241, 242) and that it is not caught by s. 56 because there is no sale and no relevant right within the meaning of that section (see at 243). This would appear to be so even if the agreement were effective to operate of its own force to implement the plan contemplated by the parties.

But all of the relevant effect under the agreed scheme comes from subsequent legislation and this is a fundamental reason why s. 54(1) and s. 56 do not catch either the treatment of the portfolio assets or the franchise. Further, so far as s. 56 and the franchise right are concerned, once the legislation was enacted it was the source of the franchise right which the Bank possessed. To hold the right in consequence of a statute is not to hold it secured by contract or by any of the other means specifically set forth in s. 56. There is no implication in the section which could extend the words "or otherwise" which there appear so that they cover such a case as the present.

The remaining matter which needs to be considered arises under s. 54(4). If this subsection were read as if it was intended to extend the type of transaction which will be caught rather than as simply to compensate for the absence of a written document then some of the wording in it would indeed have a wide effect. The facts in the present case disclose that property in Queensland has been acquired for consideration by a company registered in Queensland, the acquisition resulting from the 1988 statute. On the wording of s. 54(4) the fact that the effect is attributable to a statute rather than some transaction between parties would not have the same significance as previously discussed. However I agree, for the reasons stated briefly by Pincus J.A. and Demack J., that the absence of a memorandum of association registered in Queensland is fatal to the Commissioner's argument. The Bank, because of the way it was originally constituted, does not have anything which it is correct to describe as a memorandum of association. Counsel for the Bank traced the legislative history of the subsection and provisions in companies legislation as they appeared at various times and that history supported rather than weakened the conclusion that "memorandum of association" should be taken to mean what it would usually convey to a lawyer rather than referring to any constituent document of whatever kind. It seems that in recent times the legislature has simply chosen not to expand the scope of s. 54(4) and has been content to let the phrase "memorandum of association" remain notwithstanding the fact that provisions enabling corporations incorporated outside Queensland to achieve recognised status within the State have changed over the years.

I agree that the question should be answered in the manner which Pincus J.A. and Demack J. suggest.

IN THE COURT OF APPEAL

[1992] QCA 318

SUPREME COURT OF QUEENSLAND

Appeal No. 54 of 1992

IN THE MATTER of The Stamp Act

1894

- and -

IN THE MATTER of an Appeal by WESTPAC BANKING CORPORATION against an assessment of stamp duty by the Commissioner of Stamp Duties on 30 May 1991 on an agreement between the Commonwealth and Westpac Banking Corporation

BETWEEN:

WESTPAC BANKING CORPORATION Appellant

AND:

COMMISSIONER OF STAMP DUTIES Respondent

Appeal No. 55 of 1992

IN THE MATTER of The Stamp Act

1894

- and -

IN THE MATTER of an Appeal by the COMMONWEALTH OF AUSTRALIA against an assessment of duty by the Commissioner of Stamp Duties on certain instruments

BETWEEN:

THE COMMONWEALTH OF AUSTRALIA Appellant

AND:

COMMISSIONER OF STAMP DUTIES	Respondent
CASE STATED PURSUANT TO S.24 OF THE STAMP ACT 1894-1990

JUDGMENT - PINCUS J.A. AND DEMACK J.

Delivered the Eleventh day of September 1992

This is an appeal from a stamp duty assessment relating to a "privatisation" agreement. The Commonwealth of Australia made, outside Queensland, a written agreement with Westpac Banking Corporation, a purpose of which was to enable Westpac to take over the assets and assume the liabilities of a body which used to finance war service homes, the Defence Service Homes Corporation ("the Corporation"). The total consideration is said to be nearly $1.5 billion and the final argument for the Commissioner of Stamp Duties asserted an entitlement to ad valorem duty on that whole sum, i.e. about $55m. That is, the Commmissioner claims duty on the amount payable for all the assets of the Corporation taken over by Westpac, not merely the Queensland assets.

The principal dispute relates to the Commissioner's claimed entitlement to duty on the amount of the consideration for assets taken over by Westpac, the Commissioner arguing that Westpac is obliged to pay ad valorem conveyance duty under s.54(1) or s.54(4) of the Stamp Act 1894. There is also a claim to conveyance duty on what is said to be an agreement for the sale of a "franchise" to Westpac. The former claim is discussed under the heading: "A: Assets Vested in Westpac" and the latter under the heading "B: The Franchise".

In addition to those issues, a question arose during the hearing of the case with respect to the Commissioner's right or obligation, if entitled to conveyance duty, to apportion the duty so that it applies only to Queensland assets of the Corporation. The Commissioner's initial stance was that a specific provision of the Stamp Act (s.53) permitted apportionment, but it became common ground that s.53 has nothing to do with the matter. The Commissioner ultimately argued that he is entitled to duty on the whole consideration, although most of the assets dealt with are outside Queensland and the agreement was as we have said executed outside Queensland.

Lastly, a question was raised as to the application of s.109 of the Constitution, it being contended on behalf of Westpac and the Commonwealth that the relevant provisions of the Stamp Act are inconsistent with and therefore cannot validly apply to the statute which brought about the vesting of the assets, namely the Defence Service Homes Amendment Act 1988 ("the amending Act").

A: Assets vested in Westpac

The Commissioner relied upon two sub-sections of s.54 of the Stamp Act, but primarily upon s.54(1) which reads as follows:

"Any contract or agreement for sale of any property or any contract or agreement whereby a person becomes entitled or may, provided the terms and conditions thereof are met, become entitled to the conveyance or transfer of any property shall be charged with the same duty as if it were an instrument of conveyance of the property".

The Commissioner contended that the agreement in question was one for the sale of property and, if not, that it was at least an agreement actually or potentially entitling a person to a conveyance of property. The Commissioner sought to apply the argument to the sale of the franchise we have mentioned, as well as to the assets of the Corporation which were vested in Westpac. We think it convenient to deal in this section with the latter argument only.

The question raised depends upon an analysis of the effect of the agreement and its relationship to the amending Act. In essence, the argument for Westpac was that the agreement was not one for sale in the ordinary sense and that, although it contemplated that Westpac would have assets vested in it, the agreement created no entitlement to any conveyance or transfer of property, since it was the Act that vested the property.

In the following discussion of the agreement, the less critical portions are paraphrased rather than quoted. The agreement recited that under the Defence Service Homes Act 1918, the Corporation provided assistance to members of the Australian Defence Force and certain other persons to acquire homes, such assistance being given in the form of advances on mortgage and contracts for the sale of land on terms, as well as in other ways. The recitals went on to say that the Corporation had acquired interests in land mortgages and as vendor of land under contracts of sale on terms. Recital D read as follows:

"The Bank wishes to acquire such of the Corporation's interests as are described herein and for the consideration set out herein the Commonwealth is willing to pass legislation vesting such interests in the Bank".

This may be taken as embodying a promise on the part of the Commonwealth to pass such legislation, but no such promise is to be found in the operative clauses of the agreement; this point is further discussed below. The recitals are of course "subordinate to the operative part": Halsbury 4th Ed. title "Deeds", para. 1509.

Recital G read as follows:

"The Commonwealth and the Bank acknowledge that this Agreement is dependent upon the passage of legislation governing same, by the Parliament of the Commonwealth of Australia".

The agreement defined the expression "portfolio assets" in such a way as to include contracts for sale entered into by the corporation as vendor under various provisions of the Act, mortgages and certain other assets.

Clause 2.1 read as follows:

"Subject to Clause 4, all of the Corporation's interests, rights, title and obligations in the Portfolio Assets will vest in the Bank pursuant to the Amending Act for the Consideration referred to in Clause 3".

Westpac and the Commonwealth relied upon the words
"pursuant to the Amending Act" as making it clear that
assets were not vested pursuant to the agreement.

Under clause 2.2, the Bank agreed to assume the obligations of the Corporation in relation to the portfolio assets. Clause 3.1 contained a promise by Westpac to pay the Commonwealth a consideration consisting in a basic sum of $100m, together with certain other amounts, depending upon what might be found to be due to the Corporation by those whom it financed.

Clause 4 provided for the vesting of the portfolio assets. Its scheme was that the Bank was entitled to give notice under clause 4.4 nominating a date for vesting of the assets in one or more States or Territories; under clause 4.5 the Minister had to determine the vesting date, which was not to differ by more than three days from the date of vesting notified by Westpac. It was not argued that, because of the Minister's right to choose among the seven possible dates, his doing so effected the vesting. No doubt that was thought to be too narrow a view, since the Minister's function was mere machinery; apart from that, s.6B of the amending Act, set out below, would have refuted any such contention. The Bank's right to nominate a vesting date was limited by clause 4.6, but not in a way which needs to be set out in detail. Clause 4.1 said that on the vesting dates, the Corporation's interests to title rights and obligations in the portfolio assets were to progressively vest in Westpac -

"... by operation of the Amending Act in the manner provided for under the Agreement and it is a condition of this Agreement that the Amending Act shall be effective to so transfer those interests, title, rights and obligations from the Corporation to the Bank".

In our view, it is clear that the limited right of the bank to nominate vesting dates and the more limited right of the Minister to set a date in response to that nomination should not be regarded as detracting from the basic proposition that the assets were made to vest in Westpac by operation of the amending Act. That is explicit in s.6B of the amending Act which reads, in part, as follows:

"(6) Subject to this section, where the Minister determines a vesting date in relation to the portfolio assets in a State or Territory, then, unless that determination is revoked before that date:

(a) all rights, title and interest of the Corporation in the portfolio assets in that State or Territory as in force immediately before that date vest, by force of this section but not otherwise, in the Bank on that date; ...".

We draw attention to the words "by force of this section but not otherwise", which unequivocally identify the cause of the vesting.

Clause 6.1 said:

"This Agreement is binding on the parties but, except for this Clause, is subject to and conditional upon the Amending Act being passed by Parliament in the form of the draft Bill initialled on behalf of the parties at the time of execution of this Agreement with such amendments only as:

(i)  are agreed in writing by the parties; or

(ii) are taken to have been agreed to by the Bank pursuant to Sub-clause 6.4".

The draft Bill is not part of the case before us. The agreement was, as we have said, dated 9 November 1988. The Bill had its third reading in the Senate on 9 December 1988, was assented to on 14 December 1988 and, according to the case, commenced on 19 December 1988. The agreement contained no promise by the Commonwealth that the Bill would be passed in the form it had on 9 November; to the contrary, clause 6.2 obliged the Commonwealth to give notice to Westpac if the amending Act as passed differed from the draft Bill referred to in the agreement and clause 6.3 gave Westpac a right, in terms which it is not necessary to set out, to put an end to the agreement if the amendments were unacceptable to it. Clause 6.5 read as follows:

"The Commonwealth agrees that the draft Bill to be submitted to Parliament shall be the draft Bill referred to in Sub- clause 6.1 with only such amendments thereto as may be agreed in writing between the parties".

The Commonwealth did not, in so many words, promise by clause 6.5 to submit the draft Bill to Parliament, but it is in our view clear that it impliedly undertook to do so. What is not so clear is whether it impliedly undertook to endeavour to have the Bill passed by Parliament in that form, or indeed at all. As to the former implication, it is true that the Commonwealth cannot itself introduce a Bill; that can only be done by a Parliamentarian. It is reasonable to regard the agreement, however, as passed against the background of the practical operations of Parliament under which, in the ordinary way, a member of the executive government introduces legislation. It is not so easy to read the agreement as obliging the Commonwealth to do its best to ensure the passage of the Bill. Such an obligation might, if one read it in, be breached if the Minister responsible for the Bill did not advocate its passage, or if he or she too readily accepted substantial amendments, to satisfy those inclined to vote against the Bill. There is room for doubt as to the validity of a provision in an agreement purporting to make it a breach for a Parliamentarian to fail to push a piece of proposed legislation; cf. the doubts expressed as to the scope of a government's power to bind itself, by contract, not to exercise a discretion given by statute, in Ansett Transport

Industries (Operations) Pty. Limited v. The Commonwealth

(1977) 139 C.L.R. 54 at 74, 75 and 114 and see Commonwealth v. Hooper (N.S.W. Court of Appeal, unreported, 28 February 1992) pp.9, 10. On the whole, it appears to us to be going too far to imply a term of the second kind we have mentioned - i.e. a term that the Commonwealth would do its best to have the Bill passed. The argument for doing so gains some support from the terms of Recital D, quoted above, but not enough to justify the implication.

Under clause 15.2, the Commonwealth warranted that:

"15.2.2 the Amending Act shall be effective to transfer all of the rights, title, interests and obligations of the Corporation in and to the Portfolio Assets to the Bank in accordance with the provisions of this Agreement".

We do not read this provision as containing two promises, firstly, that there shall be an amending Act and, secondly, that it shall contain certain provisions. Having regard to the considerations just discussed, it appears to us that all it meant was that if the amending Act was passed it should be effective to "transfer" the rights and obligations of the Corporation to Westpac. The clause is not quite consistent with clause 6.8, which required that the amending Act provide that these rights and obligations "vest in the Bank ..."; we think, reading the agreement as a whole, that the earlier provision should be regarded as correctly expressing the parties' intention - but the point is of no great consequence.

It appears to us to be important to identify the Commonwealth's principal obligation, as regards the portfolio assets. It did not promise to transfer them to Westpac nor, as it seems to us, did it promise that they would be vested in Westpac. It was argued on behalf of the Commissioner that one could ascertain the true nature of the agreement by considering what the parties' respective positions were when the conditions laid down in the agreement were fulfilled and, in particular, when the condition as to passage of the amending Act was fulfilled (clause 6.1). At that stage, the portfolio assets were, subject to precise fixation of the dates of vesting under clauses 4.4 and 4.5, the property of Westpac. The Commissioner might have argued that such vesting took place pursuant to the agreement, on the basis that it was the Act which did the vesting and the Act, in turn, was introduced by virtue of the Commonwealth's implicit obligation created by the agreement. But a critical feature of the case is, in our opinion, that it cannot accurately be said that the vesting in Westpac occurred pursuant to the Commonwealth's promise; the vesting was not a fulfilment of any undertaking of the Commonwealth, conditional or otherwise.

To turn now to the language of s.54(1), it is convenient to consider separately the two categories it deals with.

First, the question arises whether the agreement was one for the sale of any property. In some contexts, the notion of "sale" extends beyond the central concept, which we take to be a transfer of property from a seller to a buyer for a consideration: Littlewoods Mail Order Stores Ltd. v. I.R.C. [1963] A.C. 135 at 152. Authorities given in Stroud's Judicial Dictionary 5th Edition under "Sales; Sell; Sold" illustrate that, as one would expect, the width of these expressions varies with their context. For example, a compulsory acquisition was held for a certain purpose not to be a "sale" in Marten v. Flight Refuelling Ltd. [1962] Ch. 115, but a contrary conclusion was come to, in a different context, in Smith v. The Federal Commissioner of Taxation (1932) 48 C.L.R. 178.

The Commissioner relied upon Oughtred v. I.R.C. [1960] A.C. 206 in support of a view that it is of no consequence that the Corporation was not a party to the agreement. In that case Lord Jenkins pointed out that property which is sold may be vested in a trustee for or nominee of the vendor and a transfer "by such person at the direction of the vendor is for the present purpose equivalent to a transfer by the vendor himself" (p.243). Here, the agreement was made by the Commonwealth, but the property was vested in the Corporation. The peculiarity of this case is that the Commonwealth did not direct the owner to, in effect, convey the property, as happened in Oughtred; instead, it was contemplated that Parliament would be asked to pass a statute having the requisite effect. We do not think that anything said in Oughtred throws light on the problem.

In the present case, one might loosely and in a commercial sense describe what has been done as a sale by the Commonwealth of the Corporation's assets, by the mechanism of an Act of Parliament. In our view, however, the rights and obligations created by the agreement, express or implicit, were not such as to enable one accurately to describe it as one for sale. Not only does the Commissioner have the difficulty that the owner of the assets, namely the Corporation, was not a party to the agreement; there is the additional and more serious obstacle that neither the Commonwealth nor the Corporation promised, conditionally or otherwise, to transfer property to or vest it in Westpac. On behalf of Westpac, it was said that the legislation which satisfied the condition in the agreement effected the vesting of the property, solely by force of the legislation.

We think that is correct and that the agreement is not one

which is properly called an agreement for sale.

The parties were unable to refer us to any authority with respect to the proper name of such an agreement as is before us, nor have we found any. We have concluded that the agreement is one sui generis and that the first category in s.54(1) does not catch it.

The second category in s.54(1) of the Stamp Act is that of an agreement whereby a person becomes entitled or may, provided the terms and conditions of the agreement are met, become entitled to the conveyance or transfer of any property. Part of the reasoning already set out is able to be applied here. It was not, on our understanding of the agreement and of the Act, the agreement which created an entitlement to a conveyance or transfer of property. The question whether any vesting of property occurred simply depended upon whether Parliament chose to pass a statute of the requisite kind and the Commonwealth did not promise that Parliament would do so.

Further, it is our opinion that even if the agreement entitled Westpac to the passage of the statute, that would not be an entitlement to a conveyance or transfer within the meaning of the Stamp Act. For the purposes of the Stamp Act the expressions "conveyance" and "transfer" included at the relevant date "every instrument and every decree or order of a court ... whereby property is vested, without an instrument of conveyance, transfer or assignment, in any person" upon registration: see s.49(1)(ii); see Act No. 76 of 1988, s.50. The expression "instrument" was, at the relevant time, defined - Act. No. 34 of 1988, s.4 - to include a "written document" and that language is wide enough to include a statute of the Commonwealth Parliament.

It is, however, an improbable intention to attribute to a State Parliament that it professes to exact tax on written documents being statutes of another Australian Parliament. It is difficult to suppose that the Queensland Parliament intended to exact conveyance duty, where such a statute vests property, on the statute itself. Leaving aside any question of constitutional power, one would need more explicit words to justify a conclusion that the Queensland Parliament imposed a tax on the legislative activities of the Commonwealth. We refer by way of analogy to the principle that prevents an Australian government from so legislating as to curtail the capacity of another such government to exercise its constitutional functions: Leeth v. The Commonwealth (unreported, High Court of Australia, 25 June 1992 at p.7).

In stating this conclusion, we have not overlooked the fourth exclusion - numbered (viii) - in s.49(1)(a); it had the effect of excluding from para. (ii) an instrument which "notifies a vesting by statute of a prescribed class, or any other instrument of a prescribed class". We think this obscure provision may imply that certain statutes not within the exclusion are dutiable, but we are of the view that if that is so, only Queensland statutes are caught.

Despite the wide prima facie meaning of "instrument" and whether or not the definition is apt to include any Queensland statute, we are of the view that the statutes of other Australian Parliaments are not, in general, instruments for the purpose of the Queensland Stamp Act. More particularly, such statutes which vest property are not conveyances for the purpose of the Queensland Stamp Act. The English cases to be found in the books which appear to support the exaction of duty on statutes depend on express provisions: see Great Western Railway Co. v. C.I.R. [1894] 1 Q.B. 507 at 508, Attorney-General v. Felixstowe Gas Light Co. [1907] 2 K.B. 984 at 984, 989.

The Commissioner's counsel also argued that conveyance duty might be exacted under s.54(4) of the Stamp Act, which reads as follows:

"If a company incorporated in Queensland or a corporation registered in Queensland acquires for a consideration in money or money's worth any property in Queensland and a contract or an agreement for the sale or an instrument of conveyance of the property is not executed or, being executed, is not duly stamped with ad valorem duty, then -

(a) in the case of a company incorporated or a corporation registered in Queensland, the memorandum of association of such company or the copy memorandum of association registered in Queensland of such corporation,

shall be deemed to be the instrument of conveyance of such property and, for the purposes of section 4B to have been signed or executed by this company or corporation and shall be chargeable accordingly with ad valorem conveyance duty".

The short answer put on behalf of Westpac is that Westpac has no memorandum of association. It was incorporated under the Bank of New South Wales Act 1850, having previously been a joint stock company pursuant to a deed of settlement. When it registered in Queensland under the Companies Act 1931, it did so by registering a copy of the New South Wales Act.

The argument of Westpac on this point appears to us clearly to be correct. The Commissioner would have us read s.54(4) as if there were some such expression as "or other founding document" inserted after the words "memorandum of association". We can see no justification in making that change in the language the legislature has chosen and the point seems to us to require no further discussion.

Our conclusion is that the agreement did not attract conveyance duty under s.54 of the Stamp Act, insofar as it contemplated or led to a vesting in Westpac of the former assets of the Corporation.

B: The franchise

An alternative argument advanced on behalf of the
Commissioner was based in the first place on s.56 of the
Stamp Act which reads as follows:

"Where, upon the sale of any annuity or other right not before in existence, such annuity or other right is not created by actual grant or conveyance, but is only secured by bond, warrant of attorney, covenant, contract, or otherwise, the bond or other instrument, or some one of such instruments if there be more than one, is to be charged with the same duty as an actual grant or conveyance, and is, for the purposes of this Act, to be deemed an instrument of conveyance on sale".

It is necessary to note that although the Commissioner's assessment originally relied upon s.56, the outline of argument first submitted appeared to abandon that contention. However, a supplementary outline was filed, basing on s.56 an argument which was further pursued at the hearing. The Commissioner contended that clauses in the agreement effecting, as was said, a sale of a lending franchise fall within s.56. The justification for dissecting out a part of the agreement and treating it as a separate instrument is to be found in s.15(a):

"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 is to be separately and distinctly charged as if it were a separate instrument, with duty in respect of each of the matters;
...".

No submission was advanced to the effect that the franchise clauses do not constitute a part of the agreement relating to that distinct matter.

Before discussing the relevant provisions of the agreement, it appears to be convenient to identify the problems which, on counsel's argument, are required to be solved. It was said that there was no sale of the franchise; that if there was a sale it did not relate to a right "not before in existence" because the Corporation had the same rights before the agreement with Westpac; that the right was one created by an "actual grant or conveyance"; that the section related only to property rights, not to personal rights of the kind here in question. Although, for reasons set out in part C of these reasons, we think no ad valorem duty is chargeable on the sale of the franchise, we will set out our views on the application of s.56; the case may go further.

Under clause 11.1, the Commonwealth agreed to pay Westpac a subsidy in respect of "Specified Portfolio Assets" and "Subsidised Advances" made by the Bank, and there followed elaborate provisions defining the precise extent of the Commonwealth's obligation to pay a subsidy to Westpac. Clause 13.1 read as follows:

"The Commonwealth hereby grants to the Bank on the terms set out in this Agreement the exclusive right to provide the first twenty five thousand dollars ($25,000), or such other amount as may be agreed upon by the parties, of any Subsidised Advance and other benefits upon which Subsidy is payable to all persons who satisfy the test of eligibility and entitlement under the Act, other than those members of the Defence Force who enlisted after 14 May 1985".

Under clause 14.1, provision was made for a refund of part of the consideration to Westpac in certain events. They may be broadly described as being, first, a change in the scheme under which advances were made and, secondly, a fall in the number of people applying to Westpac for Subsidised Advances and Instalment Relief.

It was argued for the Commissioner that the lending franchise granted is a species of property, not a mere personal right. But the Commissioner did not accept that, to bring s.56 into operation, it is necessary to show that what is being sold is a property right.

Westpac contended that it was settled by the decision of the High Court in Commissioner of Stamp Duties (New South Wales) v. Yeend (1929) 43 C.L.R. 235 that the right spoken of in s.71(1) of the New South Wales Stamp Duties Act 1920 there considered must be one of a proprietary kind and that the same rule applies to s.56 of the Queensland Stamp Act. It is difficult to extract that doctrine from the decision of the majority, which deals principally with the question whether the agreement dealt with was liable to duty as a conveyance under s.65 of the New South Wales Act, corresponding to s.49 of the Queensland Stamp Act. The Court analysed the relevant statute as producing the result that the expression "conveyance" included what is described as a "catalogue of instruments" whereby any property -

"... including real and personal property, and any estate or interest in any property real or personal, and any debt, and any thing in action, and any other right or interest is transferred to or vested in or accrues to any person" (p.241) .

The Court held that the definition it extracted from the Act was not wide enough to cover rights arising under an "ordinary simple contract, executory on both sides". The majority judgment appeared to contrast such rights with those dealt with under s.71 of the Act which was before it, which corresponds with our s.56. It said, speaking of the argument concerning the word "right" in the definition we have quoted:

"If this provision bore the wide meaning which the argument attributes to it, secs.41(1) and 71 would be superfluous" (p.241).

As to the contention based on s.71 itself, the reasons were brief:

"We think 'sale of a right' is an expression which could not be properly used to describe the promises made by the Club, although part of the consideration for which they were given was a promise to pay sums of money. There was neither a sale, nor a right, within the meaning of the section" (p.243).

The majority judgment is no authority for the proposition that s.71 of the Act being dealt with was confined in its operation to rights of a proprietary kind; the Court did not explain why the right there dealt with was not such a right as s.71 mentioned, although it implied that the word "right" in s.71 has a rather wide meaning.

It therefore does not appear to be correct that, as Westpac contended, the interpretation of provisions such as s.56 was settled in Yeend's case. The other judgment, that of Isaacs J., appears to give some support to the view that the types of rights dealt with by s.56 of our Act are the same as those dealt with by s.54; but his Honour's judgment in that respect may not accord with the view of the majority.

It was argued, and we are of opinion that the argument is sound, that s.56 cannot apply to all contracts under which one party acquires rights. That is so because the section speaks of the sale of a right in language which is not apt to describe every acquisition of rights under a contract. Rather curiously, there does not appear to be any authority which provides substantial assistance on the question whether the section applies in the present case. It appears to us that the proper approach is to consider whether, within the ordinary meaning of the language of the section, the various conditions are satisfied.

1. Was there a sale? This acquisition of a franchise would, we think, not ordinarily be described as a "sale", but here there is a special context: the section applies and applies only to a "sale" of rights "not before in existence", which must mean not in existence before the "sale". The instrument both creates the right and sells it.

Further, the "sale" must be of a right which is not actually granted or conveyed but "only secured by bond, warrant of attorney, covenant, contract or otherwise". This implies that the "sale" need not and indeed must not effect a transfer of property; nor need it provide for a transfer of property in future.

It appears that a promise to pay an annuity for good consideration is a "sale" within the meaning of the section, as can be deduced from its terms and from the authorities - for example in Faber v. C.I.R. (1936) 1 All E.R. 617. We see no reason why the acquisition of rights by Westpac under this agreement should not be regarded as a sale. The agreement treats Westpac's rights as saleable and makes provision for their assignment, subject to consent: clause 27.1. It was argued for Westpac that there could hardly be an assignment by Westpac to another bank without a complete rewriting of the agreement - a novation. We do not agree. No doubt if an assignment were made, all kinds of practical problems would have to be solved, but that is not to say that the provision for assignment should be treated as ineffective.

In short, within the wide and unusual concept of "sale" which appears to be contemplated by s.56, we think there was a sale of the franchise.

2. Was the right sold "not before in existence"? It was contended that the right sold existed previously, having been vested in the Corporation. In our view, that is not so. When the Corporation performed the functions which were taken over by Westpac, it did so as a matter of statutory obligation, as an activity of government. Further, the characteristics of the franchise were newly defined, by numerous provisions in the agreement, in such a way as to make it impossible to equate Westpac's position with that of the Corporation. The subsidy scheme as defined by clause 11 contains provisions which were, plainly enough, no part of the system operated by the Corporation.

3.    Was the right "created by actual grant or conveyance"?

The judgment of Isaacs J. in Yeend throws light upon this

problem; his Honour said that:

"Section 71 is another supplementary and independent section applying to the 'sale' of a non-pre-existing right, not created by actual grant or conveyance, but, of course, necessarily created in some way and only 'secured' by some collateral instrument ... Secs. 41 and 71 are precautionary provisions to prevent mere departure from the form of a conveyance allowing one to escape from the Act" (p.244).

As we have pointed out, insofar as Isaacs J. viewed the types of rights dealt with by s.71 as not to be differentiated from those dealt with by the conveyance duty provisions, that view finds no support in the majority's reasons; to that extent the dictum we have quoted must be treated with reserve. But we derive assistance from the dictum quoted in concluding, as we do, that there is nothing in this agreement which could be described as being a grant or conveyance in the proper sense of those terms. It is true that clause 13.1 quoted above commences "The Commonwealth hereby grants ...", but as explained above, the whole agreement is dependent upon Parliamentary action, which the Commonwealth does not undertake to achieve: see clause 6.1 quoted above. A merely potential creation of rights the effectiveness of which is entirely dependent upon Parliamentary action, is not, in our view, an "actual grant or conveyance" within the meaning of s.56 of the Stamp Act.

4.    Was the right created one "secured by ... contract"?

The expression "secured" appears to have nothing to do with a mortgage, but implies the existence of a document the terms of which set out the rights and may be relied on to enforce them. In our opinion, this condition is also satisfied.

The result is that the grant of the franchise is to be charged "with the same duty as an actual grant or conveyance".

Category 4 under the heading "Conveyance or Transfer" in the Schedule to the Stamp Act appears to apply and to make the duty payable a sum calculated "on the amount or value of the consideration ...". There was no separate sale dutiable under s.56, but clause 14.1, referring to refunds, was suggested by the Commissioner to achieve the result that $100m of the consideration is attributed by Westpac to its purchase of the exclusive right to provide subsidised advances. As we have mentioned above, Westpac did not argue against the Commissioner's contention that the sale of the franchise could be treated as a distinct matter under s.15(a). But it said in one of its written submissions (dated 28 May 1992) that the sum of $100m argued by the Commissioner to be the franchise consideration was "merely part of the consideration for entering into the agreement as a whole". Clause 14.1, which we do not here set out in full, provides in effect that in certain events Westpac is to have a refund of part of the consideration. The process of determining the amount of the refund contemplated includes a meeting between the Commonwealth and Westpac:

"... with a view to verifying the facts and then determining the extent, if any, to which a part of the Consideration referred to in sub-clause 3.1.1(a) paid by the Bank to the Commonwealth under this Agreement, and attributed by the Bank to its purchase of the exclusive right under this Agreement to provide Subsidised Advances and Instalment Relief to Entitled Applicants in future, namely $50 million, might be refunded to the Bank ...".

This is not easy to follow and, in particular, it is unclear whether it says that Westpac attributes $50m of the consideration referred to in sub-clause 3.1.1(a) to its purchase of the franchise. Whatever its meaning, the clause does not constitute an agreement between the parties to apportion the consideration; it appears to us to be irrelevant to the question of what is the proper consideration on which duty should be charged with respect to the sale of the franchise. We can find nothing in the case stated which enables the Court to fix the amount on which ad valorem duty is to be charged with respect to the sale of the franchise.

The case stated is, as has often been said, an unsatisfactory form of appeal. One of its unsatisfactory features is that if the facts stated are incomplete, the Court cannot decide the missing facts itself. Section 24 of the Stamp Act, which gives this Court jurisdiction, contains no express power to send the case back to the Commissioner for amendment. On the case in its present form, we can see no means of fixing a figure on which to charge ad valorem duty with respect to the franchise sale. It is, however, unnecessary to pursue that point further or to decide whether there is any inherent power in the Court enabling it to bring about or permit an amendment of the case stated. This is so because, as we have mentioned, for reasons explained in the next section no ad valorem duty is chargeable.

The second question which requires to be considered is whether the franchise sale is dutiable under s.54 of the Stamp Act. It is necessary to mention that the Commissioner's assessment did not, in relation to the franchise sale, rely upon s.54 and it was first raised as a ground of assessment of the franchise sale in the Commissioner's outline of argument. There is nothing in s.24 of the Stamp Act, on which the appeal is brought, which expressly limits the Commissioner to the basis of assessment which was put forward, nor do we think such a limitation is necessary: see Finance Corporation of Australia Limited v. Commissioner of Stamp Duties [1981] Qd.R. 493 at 514. But we are of opinion that the Commissioner's second thoughts about the problem were unsound; it is impossible to treat the deemed separate instrument consisting of the franchise sale as caught by s.54(1). What was agreed upon in the deemed separate instrument was not a sale in the ordinary sense (although it was one within the special meaning which s.56 requires one to adopt for its purposes). What was agreed, in essence, was that under a subsidy scheme, the Commonwealth would pay moneys to Westpac and not pay such moneys to others, nor did the deemed separate instrument entitle Westpac to any conveyance or transfer of property. The point seems to us too clear to require more elaborate discussion, but attention should be drawn to the circumstance that if s.54 did catch the deemed separate instrument, the difficulty with respect to ascertaining a consideration, discussed above, would arise.

C: Territorial Operation

Westpac said in effect that one should treat the agreement as capable of distributive operation, dealing with all the Corporation's assets separately, to reach the result that duty would be charged only on the Queensland assets. The case stated says their "base value" is a little under $300m. We mentioned above that it became common ground that s.53, on which the Commissioner originally relied as producing the result that duty was chargeable on the Queensland assets only, was eventually admitted to be irrelevant to the present problem. It is s.15(a) of the Act which, according to Westpac's contention, fills the gap. Section 15(a) reads as follows:

"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 is to be separately and distinctly charged as if it were a separate instrument, with duty in respect of each of the matters ...".

As we understood it, what was put was that on the proper construction of the Act, an agreement of this kind is to be taken to relate to "several distinct matters", each matter being a particular piece of property, for example a mortgage; it was said that the relevant provisions apply only to Queensland property, making necessary a distributive application of the Act based on s.15(a).

The argument appears to us to receive support neither from the authorities, nor from the terms of the Act. Where the legislature intends a transaction to be treated as divided so as to prevent the charging of duty on extraterritorial matters, it says so. Clear examples are to be found in ss.46, 46A and 70. As to the true effect of s.15(a), we refer to Commissioner of Stamp Duties (N.S.W.) v. Pendal Nominees Pty. Ltd. (1989) 167 C.L.R. 1 at 11, 12.

The question therefore appears to us to be, as the consideration.

The presumption is that the State Parliament does not intend to tax transactions having nothing to do with Queensland, but the Parliament may, subject to any constitutional limitation, override that presumption, wholly or partly. It may expressly state the extent to which the Act catches transactions having a "foreign element" - that is, having to do partly with Queensland and partly with other places. This has been done in relation to the sections just mentioned.

The key to an understanding of the general territorial reach of the Stamp Act is s.4(2):

"Save where the contrary is expressed in this Act, an instrument shall be chargeable with duty and shall be stamped in accordance with the law in force at that time -

(a)

in the case of an instrument which relates to property situated or to any matter or thing done or to be done in Queensland:

(i)	where the instrument (or, if the instrument is a document that is not executed, the original thereof) is executed outside Queensland before the commencement of the Stamp Act and Another Act Amendment Act 1982, when the instrument (or, as the case may be, the document) was first brought (whether before or after that commencement) into Queensland;
(ii)	where the instrument (or, if the instrument is a document that is not executed, the original thereof) is executed outside Queensland after the commencement of the Stamp Act and Another Act Amendment Act 1982, when the instrument (or, as the case may be, the original) was executed".

When this provision was inserted in the Act, in 1982, the same statute deleted the corresponding parts of s.4A which used to have a function in the Act similar to that now held by s.4(2): see The Stamp Act and Other Act Amendment Act 1982 (No. 65 of 1982), s.4. Section 4A was similar in structure to s.14(4) of the Stamp Act of 1891 (U.K.). The effect of s.14(4) was considered by the House of Lords in C.I.R. v. Maple & Co. (Paris), Ltd. [1908] A.C. 22. That concerned stamp duty on a document executed in France and transferring French property; the consideration consisted of shares issued and delivered in England. That was held to be a sufficient relationship with the United Kingdom to make the documents chargeable. Section 14(4) read as follows:

"Save as aforesaid, an instrument executed in any part of the United Kingdom, or relating, wheresoever executed, to any property situate or to any matter or thing done or to be done, in any part of the United Kingdom shall not, except in criminal proceedings, be given in evidence, or be available for any purpose whatever, unless it is duly stamped in accordance with the law in force at the time when it was first executed".

It should be noted that s.14(4), dealt with there, did not in terms say that the English Act had a certain territorial reach and for that reason it was held in the Court of Appeal that s.14(4) did not define "the totality of the instruments included in the sections that impose the duty of stamping": [1906] 2 K.B. 834 at 845 per Fletcher Moulton L.J. and see also at p.855 per Farwell L.J. When the case went to the House of Lords, the Court of Appeal's decision was reversed and the Court interpreted s.14(4) as defining territorial reach, although in terms the provision dealt only with the admissibility of evidence and availability for other purposes - as did s.4A.

The same approach was taken in Faber, referred to above. There, the instrument contained a promise to pay to a foreign company income to be derived in England and it was held to relate to a matter or thing done or to be done in the United Kingdom. Then in ACI Resources Limited v. Commissioner of Stamp Duties (N.S.W.) (1986) 86 A.T.C. 4810, Foster J. had to decide the liability to stamp duty of a deed executed outside New South Wales, but sought to be charged with duty under the law of that State. Following Maple's case (above) and applying a provision of the New South Wales Act equivalent to the former Queensland s.4A, Foster J. held the document dutiable. It was a deed of charge and its only connections with New South Wales were that the chargor was incorporated in that State and the deed of charge expressly required its registration in that State.

His Honour held this enough to make the deed one relating

to something to be done in New South Wales.

Other points should be noted as supporting the notion that s.4(2) was intended to fulfil the function of defining the territorial operation of the Act, as did the former s.4A. One is that the opening words of s.46 inserted by s.39 of the Stamp Act Amendment Act 1988 assumed that s.4 defines the territorial operation of the statute. Another is that the Treasurer's speech made on the introduction of the relevant Bill, which included s.4(2) made it clear that the legislative intention was to deal with the dutiability of foreign instruments, in substitution for s.4A; see in particular the first three paragraphs of the speech quoted by Mr. Mann at pp.567 and 568 of his work on stamp duties.

Apart from all that, in our opinion the very language of s.4(2) makes the intention plain. It establishes the general rule that instruments "shall be chargeable with duty and shall be stamped" in accordance with the law in force at a certain time; the history of the provision shows that the intention was not merely to deal with identifying the law applicable, having regard to the time of occurrence of relevant events. So to hold would, in our view, be inconsistent with the interpretation given in s.14(4) of the United Kingdom Act in Maple's case.

Treating the franchise sale as a separate instrument, as it was agreed we should, the question then becomes whether it "relates to property situated or to any matter or thing done or to be done in Queensland": see the introductory words of s.4(2)(a) of the Act. There is nothing in the case stated to connect the deemed separate instrument with Queensland. It is, we confess, not clear to us on what basis the Commissioner contends that it is dutiable under Queensland law. It is a foreign instrument under which the Commonwealth government agrees to subsidise certain of Westpac's future operations and not to subsidise operations of others. One may reasonably assume that some of these operations will be connected with Queensland, although the case stated does not say so. But that, even if stated, could not be enough; the deemed instrument does not refer expressly or implicitly to Queensland, nor require anything to be done in this State, nor depend for its effectiveness on the doing of anything in this State. We are therefore of opinion that the sale of the franchise, considered as a separate instrument, is not dutiable.

D. Other Matters

We have concluded that no ad valorem duty is chargeable under the agreement and that no duty at all is chargeable on the franchise sale, considered as a separate instrument. A number of other issues was canvassed and we think it convenient to say something about two of them.

It was said that the Stamp Act does not bind the Commonwealth, so that if it enters into an agreement with a citizen, of any kind, it cannot be affected by any provision of the Act. It was further said that the Commonwealth's immunity does not assist other parties to instruments which the Commonwealth executes, such as Westpac. If that is so, then an instrument of the present kind would, by virtue of the Stamp Act, be enforceable by but not against the Commonwealth in Queensland - perhaps an odd result. We do not think it necessary to say anything further about that point.

It was contended on behalf of Westpac that s.109 of the Constitution operates to deprive the Stamp Act of any valid operation as to this instrument, on the basis that the Stamp Act is inconsistent with the amending Act. It was argued that the amending Act so covers the field as to make it impossible for the Stamp Act to apply.

Reference was made to s.6B(6) of the amending Act, quoted above, which has the effect that on determination of a vesting date in relation to portfolio assets, they vest in Westpac. If the Stamp Act applies, it was argued, then that cannot occur, for the present s.4A makes the unstamped instrument not "available for any purpose whatever".

We are of opinion that the contention based on s.109 is adequately refuted by a submission made on behalf of the Commissioner. This was that the charging provisions of the Stamp Act are not inconsistent with any Commonwealth legislation and, in particular, not inconsistent with the amending Act. Accepting that s.4A, depriving the unstamped instrument of effect, could not stand with the amending Act, that cannot remove from the Commissioner his right to recover duty from Westpac: see s.4B of the Stamp Act, which makes the duty payable and debt due to the Crown and able to be sued for and recovered.

The questions for the determination of the Court set out in the case stated and our answers are as follows:

(a)	Is the agreement chargeable with duty in accordance with the assessments of the Commissioner? No.
(b)	If "no" to (a), with what amount of duty is the agreement chargeable? 50 cents.
(c)	Does any document comprise the memorandum of association of Westpac or copy of memorandum of association registered in Queensland of Westpac for the purposes of s.54(4) of the Stamp Act 1894- 1990? No.

(d) Unnecessary to answer.

The Commissioner must pay the costs of the appellants,
Westpac Banking Corporation and the Commonwealth of
Australia, of and incidental to the appeal.
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 54 of 1992

Before the Court of Appeal

The Chief Justice
Mr. Justice Pincus

Mr. Justice Demack

IN THE MATTER of The Stamp Act

1894

- and -

IN THE MATTER of an Appeal by WESTPAC BANKING CORPORATION against an assessment of stamp duty by the Commissioner of Stamp Duties on 30 May 1991 on an agreement between the Commonwealth and Westpac Banking Corporation

BETWEEN:

WESTPAC BANKING CORPORATION Appellant

AND:

COMMISSIONER OF STAMP DUTIES Respondent

Appeal No. 55 of 1992

IN THE MATTER of The Stamp Act

1894

- and -

IN THE MATTER of an Appeal by the COMMONWEALTH OF AUSTRALIA against an assessment of duty by the Commissioner of Stamp Duties on certain instruments

BETWEEN:

THE COMMONWEALTH OF AUSTRALIA

Appellant

AND:

COMMISSIONER OF STAMP DUTIES Respondent

CASE STATED PURSUANT TO S.24

OF THE STAMP ACT 1894-1990

JUDGMENT - PINCUS J.A. AND DEMACK J.

Delivered the Eleventh day of September 1992

MINUTE OF ORDER:	The answers to the questions set out in the case stated are as follows: (a) No. (b) 50 cents.
(c) No.
(d) Unnecessary to answer.
The respondent must pay the costs of the appellants, Westpac Banking Corporation and the Commonwealth of Australia, of and incidental to the appeal.
CATCHWORDS:
Counsel:	D.F. Jackson Q.C., with him S.D. McGill for the Appellant Westpac Banking Corporation
Ms S.M. Kiefel Q.C., with her C.H. Brandis for the Appellant the Commonwealth of Australia
E.J.P.F. Lennon Q.C., with him A.S.L. Doyle for the Respondent
Solicitors:	Feez Ruthning for the Appellant Westpac Banking Corporation The Australian Government Solicitor for the Appellant the Commonwealth of Australia The Crown Solicitor for the Respondent
Hearing Date(s):	15 and 16 June 1992