Contracts - Offer and Acceptance - Offer and acceptance document not stamped nor duty paid - Statutory provision requiring payment of duty before document given in evidence - Whether undertaking by plaintiff to pay stamp duty in accordance with an arrangement made with Commissioner of State Revenue sufficient for document to be admitted - Statutory exception in favour of party not liable to pay duty on the instrument - Meaning of words 'instrument chargeable with duty' - Offer and acceptance held to be admissible pursuant to plaintiff's undertaking and available for use by both parties

Duties Act 2008 (WA), s 10, s 272, s 276, s 279

Evidence Act 1906 (WA), s 73A

Interpretation Act 1984 (WA), s 18

Stamp Act 1921 (WA), s 16(1),s 16(5), s 17C, s 27(1), s 27(3)(b), s 28, s 31

Taxation Administration Act 2003 (WA), s 47(1), s 20(6)

Acclaim Holdings Pty Ltd v Vlado Pty Ltd (1989) 1 WAR 128

Davis v Federal Commissioner of Taxation (1989) 86 ALR 195

Dimmock v Whymark [1964-5] NSWR 1557

Investments (WA) Pty Ltd v Hatton [2007] WASCA 110

Kia Ora Gold Corp NL v Washer [1982] WAR 306

Mackwell v Petkovic (Unreported, WASC, Library No 990070A, 18 February 1999

Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261

Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18; (1974) 131 CLR 286

Osborne Cold Stores WA Pty Ltd v Novacastrian Nominees Pty Ltd (1991) 6 WAR 350

Re Coolgardie Goldfields Ltd [1900] 1 Ch 475

Re Dehy Fodders (Aust) Pty Ltd (1973) 4 SASR 538

Rothwells Ltd (in liq) v Connell (1993) 119 ALR 538

Sangora Holdings Pty Ltd v Dunstan (1996) 16 WAR 552

Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359

St Andrew Property Holdings Pty Ltd v Gull Petroleum (WA) Pty Ltd (1991) 6 WAR 325

1 In these proceedings the plaintiff, Acemount Pty Ltd, seeks to enforce a contract for the sale of land at 88 Guildford Road, Mount Lawley. The contract consists of a printed offer and acceptance form reflecting an offer made by the plaintiff as would-be purchaser on 3 March 2005 and an acceptance of that offer by the defendant, Sunlong Holdings Pty Ltd, on 8 March 2005. Special conditions appear as annexure A to the offer and acceptance form with various deletions and amendments being noted and initialled by or on behalf of the parties.

2 After certain preliminaries had been attended to the relevant documents were later dated 18 April 2005. Thus, on the plaintiff's pleaded case it is said that the vendor accepted the plaintiff's offer to acquire the land on 18 April 2005.

3 For ease of reference I with henceforth refer to the vendor company, Sunlong Holdings Pty Ltd, as the defendant because the second defendant as the Registrar of Titles has played no active role in the proceedings and will abide by any ruling made by the court.

4 The plaintiff, as purchaser, contracted to acquire the land for a purchase price of $4,050,000. The contract included various special conditions and made provision for the purchase to be effected by the purchaser 'and/or nominee'. The contract included also standard form conditions which required the plaintiff to stamp the contract and transfer and deliver the latter document to the defendant prior to the settlement date.

5 The plaintiff pleaded at par 5.11 of its statement of claim that settlement was due to occur on 30 August 2005, described as 'the completion date'. This was admitted by the defendant at par 5.11 of its statement of defence.

6 It is common ground that the offer and acceptance comprising the contract was lodged at the Stamp Office by the plaintiff prior to the completion date and a stamp duty assessment notice dated 20 July 2005 was issued showing the duty payable to be $212,400. The duty was not paid prior to the completion date, or at any time thereafter. It is an undisputed fact that the plaintiff did not prepare and submit to the defendant or its representatives a stamped transfer in respect to the land prior to the completion date, or at all.

7 My understanding is that in due course the plaintiff negotiated an 'arrangement' with the Commissioner for payment of the stamp duty. I will say more about that later. However, I understand it to be common ground that as at the completion date, and up to the commencement of these proceedings, there was no document in existence relating to the transaction that could be described as a document stamped or endorsed by the Commissioner of State Revenue. That remains the position.

8 The parties have defined their positions in the pleadings. It will be sufficient for present purposes to describe the issues in summary form. The plaintiff complained of an alleged failure or refusal by the defendant to attend to certain matters including certain alleged encumbrances. On its case, the plaintiff was thereby excused by these alleged breaches from further performance of the contract and from proceeding to settlement on the completion date.

9 The defendant contended that the plaintiff was in default under the contract in various respects including its failure to prepare and deliver a stamped transfer to the vendor with the result that the defendant terminated the contract. This was done, according to the defendant, by issuing notice of default in the manner allowed for by the standard conditions; initially by delivering a notice to a company called Newriver Holdings Pty Ltd that was said to be the plaintiff's nominee, then by a notice delivered to the plaintiff company itself. The defendant also advanced a counterclaim for damages.

10 It was against this background that the matter was listed for trial.

11 At the commencement of the trial counsel for the plaintiff conveyed to the court that discussions were taking place between counsel for the respective parties with a view to narrowing the matters in issue. For that reason, a short adjournment was requested so that these discussions could be completed and certain documents brought together in a convenient form which would facilitate the presentation of the plaintiff's case in the light of the discussions.

12 I acceded to that request. In doing so, I indicated that consistent with the credo of the case management era, the parties should also give thought to certain matters that were of concern to me, having regard to the pleadings, the written submissions of the parties and the bundles of documents delivered to the court pursuant to earlier pre-trial directions.

13 First, as to the subject contract of sale dated 18 April 2005 referred to in par 5 of the statement of claim I pointed out that the offer and acceptance document included in the bundles of documents did not appear to be stamped. Having regard to s 27(1) of the Stamp Act 1921 (WA) and related provisions this raised an issue as to what use could be made of the contract at trial.

14 Put shortly, s 27(1) of the Stamp Act provides that no instrument chargeable with duty shall be pleaded or given in evidence unless it is stamped.

15 This appeared to be a matter of importance to both parties because both parties by their pleaded cases, sought to rely upon the provisions of the contract. The plaintiff was seeking to enforce the contract and acquire the land in question. The defendant relied upon the contractual provisions in alleging that the contract had been validly terminated due to the plaintiff's alleged default in failing to proceed to settlement in the manner required by the contract. Further, the defendant sought relief by way of counterclaim.

16 Counsel for the plaintiff confirmed that the plaintiff would seek to have a copy of the contract admitted in evidence. It then emerged that the plaintiff intended to rely upon a letter dated 12 May 2009 from the Commissioner of State Revenue evidencing an arrangement to pay the stamp duty in question. The original document was in the possession of the Commissioner having been lodged for assessment.

17 I made it clear to the parties that an arrangement satisfactory to the Commissioner was not necessarily sufficient to satisfy the court that the evidentiary provisions of the Stamp Act had been complied with. I therefore put the parties squarely on notice that the 12 May letter or related arrangements might not be sufficient to render the contract documents available for use in their pleadings or admissible in evidence. It would be for the parties to satisfy the court in the course of the trial that the contract documents could be relied upon in support of their pleaded cases or given in evidence.

18 I raised with the parties also a query concerning the form of relief sought by the plaintiff. It appeared from the papers for the judge that the plaintiff was seeking essentially a declaration that the subject contract still subsists and is binding on the parties thereto. I referred counsel to observations made by Barwick CJ and Jacobs J in Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18; (1974) 131 CLR 286 to the effect that it is generally undesirable that a court should make declarations without any orders for consequential relief. A consequence of a declaration concerning the status of a contract should be that the party seeking to enforce it should submit to the performance of the contract on his part and to an order for specific performance of the contract if that is appropriate.

19 I noted that there was an echo of these observations in the plaintiff's written submissions. However, it was not entirely clear as to whether the plaintiff would be seeking specific performance or as to the nature of the terms to which the plaintiff might submit if it succeeded in its claim.

20 I made it clear to counsel for the plaintiff that he should clarify his stance in that regard and any discussion between the parties directed to narrowing the matters in issue should give attention to this aspect of the matter also.

21 In the course of these exchanges counsel for the defendant foreshadowed that the defendant would resist any application by the plaintiff to amend its prayer for relief and seek specific performance expressly.

22 It emerged during the course of these preliminaries that in seeking to narrow the issues the plaintiff was of the view that the dispute could be reduced to three central issues. First, the court would have to determine whether the plaintiff had discharged its obligations under the contract in respect of settlement with the result that it could not be characterised as a party in default.

23 Second, in the event of it being held that the plaintiff was in default, a question arose as to whether the contract had been validly rescinded by the defendant's first notice of default.

24 Third, if the contract remained on foot notwithstanding the first notice of default, a further question arose as to whether the contract was then rescinded with the contractual obligations of the parties being brought to an end by the defendant's second notice of default.

25 In the course of the discussion about these matters counsel for the defendant made it clear that the defendant was not minded to make any concessions and would rely upon all the matters raised by way of defence in its pleaded case, and would continue to press its counterclaim.

26 It was against the background of these preliminaries that the opening of the trial was adjourned for a short period to allow for further exchanges between the parties concerning the stamp duty issue and the collation of documents bearing upon the case to be presented on behalf of the plaintiff.

27 When the hearing resumed on the second day of the three days listed for the trial I was informed by counsel for the plaintiff that the stamp duty issue on his submission could be sufficiently covered by the handing up of a signed undertaking by the plaintiff. This was dated 25 August 2009. It was an undertaking to the effect that the stamp duty would be paid pursuant to the arrangement made with the Department of Treasury and Finance by letter dated 12 May 2009 (mentioned earlier). I will set out the terms of the signed undertaking and related letter in due course.

28 On the other hand, counsel for the defendant submitted to the court a letter to the Commissioner of State Revenue dated 26 August 2009 which was said to constitute sufficient compliance with the ameliorating regime allowed for by s 27(3)(b)(ii) of the Stamp Act in respect of parties to a transaction not liable to pay the duty.

29 All of these documents were submitted to the court by consent and upon the basis that they were to form part of the evidentiary materials before the court.

30 I made it clear to the parties that I was not immediately persuaded that the requirements of the Stamp Act had been complied with. A ruling on the stamp duty issue was clearly required because the question of whether the plaintiff was at liberty to plead the subject contract and seek to enforce it depended upon the admissibility of the offer and acceptance and related conditions. However, it was equally clear from the decided cases that had been touched upon during the course of discussion that the issue was one of some complexity.

31 I then canvassed various alternatives. On the one hand, as both parties were ready to proceed to trial and had their witnesses in attendance it might be open to me as the presiding judge to reserve my ruling on the question of whether the subject contract was admissible in evidence or could be relied upon by the parties in their pleadings or in any other way.

32 I pointed out that if the ruling upon admissibility was reserved in that manner it would have to be clearly understood that both parties were at risk of the contract ultimately being held to be inadmissible. The contract when tendered would simply be marked for identification and any reference to it by witnesses, or by counsel or by the court itself, should not be taken as a tacit acceptance or ruling that it was admissible.

33 An alternative course was for the stamp duty issue to be ruled upon immediately. However, in that event, owing to the complexity of the issue, and the likelihood that the parties would wish to be afforded an opportunity to make submissions in regard to the matter, it would be necessary for the trial to be adjourned so that proper consideration could be given to the matter.

34 After a further short adjournment, and some further discussion, I came to the conclusion that the stamp duty issue must be ruled upon before the trial proceeded further.

35 There were various factors bearing upon that conclusion. First, it was preferable for the parties to know exactly where they stood in regard to this fundamental issue of admissibility before calling all their witnesses. Second, if a ruling was made on the stamp duty issue which was thought by either party to be adverse to the interests of that party, it would possibly be open to that party, or either party, to stamp the document (albeit subject to payment of penalties) before the trial proceeded. In this way there was a greater prospect that the other issues in controversy would be fully debated and resolved.

36 In other words, if the stamp duty issue was left to be resolved in conjunction with the other issues in the case to the intent that a final ruling was to be made in respect of all issues, one or other of the parties might arguably have been prejudiced in not having been afforded an opportunity to rectify any omission in respect of stamp duty.

37 Third, by the time these issues had been fully debated it was apparent that a sizeable portion of the period set aside for the trial had been occupied by debate about this and other matters with the result that an adjournment of the trial was probably likely to occur in any event. It would therefore be better for the ruling upon the admissibility issue to be made while further trial dates were being set. It emerged also that the plaintiff was now minded to amend its statement of claim in order to include a claim for specific performance of the contract.

38 For all these reasons the trial was adjourned to a date to be fixed upon the basis that prior to the resumption of the trial a ruling would be made upon the stamp duty issue beforehand. The trial has now been listed to resume in a few days' time on Tuesday, 8 September 2009 with the result that the parties have not been seriously inconvenienced by what has proved to be a short adjournment only.

39 Let me now return to the documents submitted to the court.

40 Counsel for the plaintiff made it clear to the court that he was not instructed to provide an undertaking on behalf of the plaintiff in his own right as a legal practitioner or as an officer of the court.

41 Counsel said that, after full consideration, the undertaking to be provided was an undertaking by the plaintiff in terms of the document dated 25 August 2009 which reads as follows:

ACEMOUNT PTY LTD HEREBY UNDERTAKES to the Court to pay Stamp Duty on the Contract the subject matter of this action in accordance with the attached arrangement with the Department of Treasury and Finance, dated 12 May 2009, or alternatively by settlement of the Contract whichever first occurs.

Department of Treasury and Finance

Government of Western Australia

Office of State Revenue

Your Reference:

Client ID: 2473902

Bundle ID: 2353868

Enquiries: Miss K Knight

Telephone: 92621121

Facsimile: 9481 0756

ACEMOUNT PTY LTD

448 LORD STREET

MOUNT LAWLEY WA 6050

STAMP ACT 1921

TAXATION ADMINISTRATION ACT 2003

I refer to your fax dated 8 May 2009 requesting a further extension of time to pay the outstanding stamp duty liability.

Your proposal has been approved subject to the following terms and conditions:

• Payment of instalments as detailed in the attached schedule when due;
• Interest at the current prescribed rate of 12.00 percent per annum will be calculated daily and imposed in accordance with section 47(3) of the Taxation Administration Act when instalment payments are receipted;
• The estimated total amount payable under this arrangement is $317,162.14;
• The Commissioner may amend this arrangement by giving 14 days written notice;
• This arrangement will be finalised on 31 October 2009,

Should you forward payment(s) prior to the due date interest will be reduced over the term of the arrangement and reflected in the final instalment.

Failure to meet these terms and conditions will result in revocation of the arrangement and commencement of further action to recover the total amount payable. Any costs so incurred with this legal action will be added to the claim.

Should you have further queries regarding this matter, please contact the undersigned.

Yours faithfully

K Knight Received

For COMMISSIONER OF STATE REVENUE 20/05/09

12 May 2009

43 The schedule of instalment payments referred to in the letter refers simply to one instalment of $317,162.14 (described as 'estimated instalment payment') with the 'due date' being given as 31 October 2009.

44 The letter submitted to the court by counsel for the defendant is a letter to the Commissioner of State Revenue from Su & Co as the solicitors on the record for the defendant. It is dated 26 August 2009 and reads as follows:

TS1926:TS:BM

26 August 2009

The Commissioner of State Taxation

200 St George's Terrace

PERTH WA 6000 BY HAND

Dear Sir/Madam

Sale of 88-90 Guildford Road, Mt Lawley ('Property')

Sunlong Holdings Pty Ltd as Acemount Pty Ltd and/or Nominee

Notice Under Section 27(3)(b) of the Stamp Act 1921 (WA) ('the Act')

We refer to the above matter and advise that we act for the registered proprietor of the Property, Sunlong Holdings Pty Ltd.

By way of Contract of Sale dated 8 March 2005 ('Contract'), our client agreed to sell the Property to Acemount Pty Ltd and/or nominee, the nominee being named in the Contract as Newriver Holdings Pty Ltd. We believe that the Contract has been lodged with the Office of State Revenue in Bundle ID 2353868. However, as referred to below, we here enclose by way of lodgement a further copy of the Contract.

We advise that the Contract is currently subject of proceedings in the Supreme Court in matter CIV 2366 of 2005 (the 'Proceedings'). Our client is the defendant (and counterclaimant) in the Proceedings. The Court has noted that the purchaser (being the plaintiff in the principal proceedings) has not, in accordance with the Stamp Act 1921 (being the Act applicable to this instrument), had the Contract stamped by the Office of State Revenue.

Our client has pleaded the terms and conditions of the Contract and wishes to rely upon the document in the Proceedings. As the party to the Contract not liable to pay duty in respect to the Contract, our client:

1. gives notice under section 27(3)(b) of the Act that the party liable to pay the duty in respect of the Contract is Acemount Pty Ltd (ACN 097 293 359) or its elected nominee Newriver Holdings Pty Ltd (ACN 112 794 215) the postal address for both of these parties is 448 Lord Street, Mt Lawley, Western Australia 6050; and
2. pursuant to section 27(3)(b)(ii) of the Act here lodges a copy of the Contract.

Please do not hesitate to contact Brett Molony of our office should you have any queries.

Yours faithfully

SU & CO

45 For present purposes, there is no need to set out the full terms of the offer and acceptance referred to in the letter as the essence of it has been described by me in earlier discussion.

46 It will now be useful to refer to provisions of the Stamp Act 1921 (WA) as it stood on 3 March 2005 when the subject offer was made, being the initial step in the transaction. I note in passing that the Stamp Act was amended extensively in 2003 and in later years. I will look at that aspect of the matter in due course.

The Stamp Act 1921

47 Section 16 of the Stamp Act provides that the duties to be charged for the use of the Crown shall be the duties specified in the Second Schedule. Item 4 in the Second Schedule refers to a conveyance or transfer on sale of property and specifies the purchaser as the person liable to pay duty at the ad valorem rates set out in the schedule. By s 17(1) the person liable to pay duty on any instrument is said to be the person specified in the Second Schedule. That person is liable also to pay any penalty tax, interest or other amount payable under a stamp Act in connection with the duties.

48 By s 17A the liability to pay duty on an instrument arises when the instrument is first executed or if the instrument is a dutiable statement, on the occurrence of the transaction or event to which the statement relates. By s 17A(2) the duty is payable within one month after the date of the assessment notice. However, by s 17A(3) the requirement to pay within one month does not apply in a particular case if a provision of a stamp Act specifies that in that particular case duty is payable at, or within, a different time or period. By s 17B a person who is liable to pay duty on an instrument must lodge the instrument with the Commissioner within two months after the date on which it was first executed.

49 Section 17C(1) of the Stamp Act reads as follows:

17C. Instrument to be endorsed when duty paid etc.

(a) duty is paid on an instrument;

(b) penalty tax or any other amount payable under a stamp Act in respect of an instrument is paid;

(c) the payment of duty payable on, or penalty tax or any other amount payable under a stamp Act in respect of, an instrument is waived;

(d) the Commissioner assesses an instrument as being not chargeable with duty;

(e) the Commissioner exempts an instrument from duty; or

(f) the Commissioner allows a reduction of the duty payable on an instrument,

(g) endorse the instrument accordingly; or

(h) if the instrument is dealt with under a special tax return arrangement - issue a stamp duty certificate in accordance with the arrangement.

50 It appears from s 17C(2) that an endorsement under the preceding provision must be made in a prescribed manner. By s 17C(5) an endorsement of an instrument, or on a copy or memorandum of an instrument, in a prescribed manner is prima facie evidence of the matters noted in the endorsement. By s 17C(7) a reference to endorsing an instrument is to be read as including a reference to issuing a stamp duty certificate in relation to the instrument under subs (1)(h).

51 The Stamp Regulations 2003 (WA) made under the Stamp Act 1921, which came into operation on the date on which the Stamp Amendment Act 2003 (WA) came in to operation, contained a regulation prescribing the manner in which an endorsement is to be made. Regulation 6(1) was in these terms:

The endorsement of an instrument for the purposes of s 17C(1)(g) is to be effected by the notation on the instrument of sufficient information to indicate -

(a) which of the events referred to in s 17C(1) has occurred;

(b) ...; and

(c) that the endorsement is made by or on behalf of the Commissioner.

52 Section 20 of the Stamp Act provides that the amount of duty payable on an instrument is reduced by the amount of the full duty payable in respect of a matter included in the instrument if the Commissioner is satisfied that (a) the matter has not been, and will not be, carried into effect; (b) the taxpayer has not received, and will not receive, a benefit in respect of the matter; and (c) the reason the matter was not, and will not be, carried into effect is not merely to enable a replacement transaction to be entered into.

53 Importantly, for present purposes, s 27(1) of the Stamp Act reads as follows:

Except as otherwise provided by a stamp Act no instrument chargeable with duty and executed in Western Australia, or relating, wheresoever executed, to any property situate or deemed to be situate or to any matter or thing done or to be done in Western Australia, shall, except in criminal proceedings, be pleaded or given in evidence or admitted to be good, useful, or available in law or equity, unless it is stamped in accordance with the law in force at the time when it was first executed.

54 The term 'stamped' is defined by s 4 of the Act. This provides that 'stamp' when used as a verb in relation to an instrument, means to endorse the instrument in accordance with s 17C. I note in passing that it was recently held by the Court of Appeal in this State in Investments (WA) Pty Ltd v Hatton [2007] WASCA 110 that a court is not required to enquire into the question of whether the duty payable has been correctly calculated. It seems that the crucial question is whether the instrument has been endorsed or whether some exception applies.

55 I note in passing that in 1995 the basic rule set out in s 27(1) of the Act was amended to remove an inequity which prevented a person who was not liable for the payment of stamp duty from tendering the subject document in evidence unless it was stamped. This reform is reflected in s 27(3) which, in summary, provides that the basic rule does not apply if the person not liable to pay the duty informs the Commissioner of the name of the person liable to pay and provides a copy of the instrument. More particularly, the defendant's solicitors in their letter to the Commissioner, mentioned earlier, refer to s 27(3)(b) of the Stamp Act. I will have more to say about this later.

56 Section 31 of the Stamp Act provides that an instrument that has been stamped or is taken to have been stamped is admissible in evidence and except in proceedings under pt 4 of the Taxation Administration Act 2003 (WA) the endorsement of the instrument is conclusive evidence that the assessment is correct. Section 4(1aa) of the Stamp Act provides that the Taxation Administration Act is 'to be read with this Act as if they formed a single Act'.

57 The Taxation Administration Act is described as an Act to provide for the administration and enforcement of legislation dealing with state taxation. Section 3 of the Act sets out a list of taxation Acts which includes the Stamp Act. By s 7 the Commissioner of State Revenue has the general administration of the taxation Acts and may do anything necessary or convenient to be done for that purpose. By s 10 the functions of the Commissioner can be delegated or performed through an agent.

58 By s 45(1) of the Act tax is due for payment on the date fixed by or worked out in accordance with the relevant taxation Act. Section 47(1) of the Act reads as follows:

(1) The Commissioner may approve an arrangement (with or without amendment) -

(a) extending the time for paying tax; or

(b) providing for the payment of tax in specified instalments.

59 By s 47(3) a tax payment arrangement may include conditions for the payment of interest. This provision was referred to in the Commissioner's letter dated 12 May 2009 in the present case.

60 It appears to follow from s 4(1aa) of the Stamp Act (whereby the Taxation Administration Act is to be read with the Stamp Act as if they formed a single Act) that an arrangement made pursuant to s 45(1) of the Taxation Administration Act, can arguably be regarded as a provision of the Stamp Act. To echo the opening words of s 27(1) of the Stamp Act it can certainly be regarded as the provision of 'a stamp Act'.

61 Let me now turn to certain decided cases bearing upon these provisions.

62 In Re Coolgardie Goldfields Ltd [1900] 1 Ch 475 Cozens-Hardy J dealt with the admissibility of an unstamped document. At that time s 14 of the Stamp Act 1891 (UK) provided that no unstamped document was to be received in evidence until the whole of the stamp duty and any penalties had been paid. He made these observations at 477:

Notwithstanding the express language of s 14 of the Stamp Act, 1891, it is the settled practice to allow an unstamped document to be used upon the personal undertaking, not of the parties to the action, but of solicitors who are officers of the Court, to stamp it and to produce it so stamped before the order is drawn up.

63 Cozens-Hardy J went on to say that he had endeavoured to ascertain the origins of this practice. He was unable to provide any clear rationale for what was characterised by him as a rule of convenience in that 'it would be in the last degree inconvenient and undesirable to direct an action to stand over in the middle of the trial in order that a document might be stamped'. He observed that 'such an undertaking given by officers of the court should not be released without the consent of the person or persons for whose benefit the undertaking was given. Those persons in the present case are the Commissioners of Inland Revenue'.

64 In Dent v Moore (1919) 26 CLR 316 the High Court was of the view in a joint judgment delivered by Isaacs J that an unstamped instrument is in the eye of the law a nullity. This case and some of the other early cases touch on a distinction arguably to be found in the key statutory provision between dealing with the inability of the agreement to be put in evidence and the dealing with the essential validity or efficacy of the instrument.

65 Subsequently, in Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 it was said in regard to the provision under notice that instruments which are stamped, or in respect of which unpaid duty and fine payable are paid to the appropriate officer in court during the course of a civil proceeding, are as efficacious from their execution as if they had never infringed the relevant provisions. Dixon J observed at 384 that the courts have uniformly acted upon the view that instruments, which may upon payment of a fine be stamped at any time, are to be received in evidence and enforced, although duly stamped after the commencement of the proceedings. A number of instances have occurred in which a party has been non-suited because the deed under which he claimed a right of action has had an insufficient stamp, but it has never been contended that after a valid stamp has been put upon it he has not, by retrospection, a good right of action.

66 The retrospective effect of stamping is relevant to and appears to underlie the practice that grew up of the court permitting an unstamped document to be tendered in evidence on the undertaking of the solicitors for the party seeking to tender the document that they would stamp it.

67 In that regard, in Kia Ora Gold Corp NL v Washer [1982] WAR 306 Kennedy J made these observations at 308:

Notwithstanding the apparently clear language of the legislation it has been accepted in this State, as it has elsewhere, that an unstamped document may be admitted into evidence simply upon an undertaking being given by a legal practitioner to pay the duty. The history of this practice has been traced by Cozens-Hardy J in Re Coolgardie Goldfields Ltd [1900] 1 Ch 475.

68 His Honour Justice Kennedy went on to observe at 309 that the settled practice is not to allow any party to undertake to stamp documents but only to allow solicitors, who are officers of the court, to do so, although, no doubt, a solicitor giving such an undertaking is entitled to an indemnity upon the party on whose behalf he was acting. The practice is undoubtedly more convenient than an adherence to the statutory provisions. The court looks to its own officer, and leaves that officer to claim indemnity from his own client. The practice does not exist for the benefit of the other party. It is 'a rule of convenience' which, at the same time, protects the revenue.

69 In Acclaim Holdings Pty Ltd v Vlado Pty Ltd (1989) 1 WAR 128 the respondent instituted proceedings pursuant to a written agreement which remained unstamped and in due course entered judgment upon default of appearance. It was held by the Full Court that the default judgment should be set aside because an unstamped instrument for the purposes of s 27 of the Stamp Act was a nullity in the eyes of the court. Kennedy J was of the opinion that the judgment, even if it otherwise be regular, should be set aside, for, unless the document is stamped, the respondent could not succeed in its action.

70 In Sangora Holdings Pty Ltd v Dunstan (1996) 16 WAR 552 the appellant sought to recover payments due under guarantees provided by the respondents. The appellant pleaded two variation agreements which were unstamped, but for which the appellant was not liable to pay stamp duty. The second respondent admitted the two variation agreements and claimed they provided a valid defence.

71 It was held that s 27(1) of the Stamp Act prevents any party to the action from pleading or giving in evidence an unstamped document. Therefore, the appellant's pleading of the two unstamped variation agreements had to be struck out. Section 27 also precluded the unstamped variation agreements from being 'good, useful or available' to the respondents.

72 The court held further that s 27(3) of the Stamp Act does not permit an unstamped document to be pleaded by any party. The right to use an unstamped document provided in s 27(3) can only be utilised at the point where the document is tendered in evidence, prior to which the prohibition on the use of an unstamped document expressed in s 27(1) continues to apply.

73 In the course of a dissenting judgment Rowland J made these observations at 555:

In Acclaim Holdings Pty Ltd v Vlado Pty Ltd (1989) 1 WAR 128, Kennedy J traced the history of s27 as it was prior to the 1995 amendment. His Honour noted the earlier English legislation on which the WA Stamp Act is based, which tended to limit the restrictions imposed in the legislation to those where the instrument was to be used in a court. This changed in England when it was appreciated that use was often made of unstamped documents outside the court. The importance of this change is that while the earlier legislation existed to restrict the use of a document in court, the practice grew up of the court permitting an unstamped document to be tendered in evidence on the undertaking of the solicitors for the party seeking to tender the document that they would stamp it. This practice in fact continued in many States in Australia, even though the words of limitation to its use in court had not been followed in most of the Australian legislation. The practice in this Court, when I first commenced to practise, was that the Judge would usually allow an unstamped document to be tendered in evidence on the undertaking of counsel for the person tendering the document that it would be stamped, and at least one Judge insisted on the stamped document being produced before he would deliver judgment in the action. Kennedy J discussed the practice generally in Kia Ora Gold Corporation No Liability v Washer [1982] WAR 306, at 308-310.

74 In Osborne Cold Stores WA Pty Ltd v Novacastrian Nominees Pty Ltd (1991) 6 WAR 350 an application was made for an injunction to restrain the defendants from commencing winding up proceedings against the plaintiff. The action arose after the defendant served a written demand on the plaintiff in respect of an alleged unpaid purchase price payable on settlement which had not taken place. The plaintiff said that the defendant's demand was baseless because it arose out of an unstamped contract and that there was a bona fide dispute in the case. An injunction was granted. It was held to be well arguable that pursuant to s 27 of the Stamp Act a demand founded on an unstamped contract cannot be effective.

75 Justice Anderson made these observations at 352:

It seems to me to be plainly arguable that such an instrument cannot be relied on as the foundation for a money claim unless and until it is stamped. It is not to the point that once stamped it will be treated as good ab initio. On the authority of Acclaim Holdings Pty Ltd v Vlado Pty Ltd (1989) 1 WAR 128, until it is stamped it is a 'nullity': see especially per Wallace J. As things stand the contract relied on by the defendants as creating the debt, being unstamped, is a nullity.

I consider it to be well arguable that in the light of the Stamp Act, s 27, a demand founded on an unstamped contract cannot be effective to create a statutory insolvency under s 460(2)(a) of the Corporations Law.

76 In St Andrew Property Holdings Pty Ltd v Gull Petroleum (WA) Pty Ltd (1991) 6 WAR 325 Master Bredmeyer held that he should strike out the statement of claim in question as disclosing no reasonable course of action in that the contracts for sale relied upon were not stamped or properly endorsed as not chargeable with stamp duty under s 31 of the Stamp Act. In the course of his judgment he made these observations at 330:

The case of M & W Holdings Pty Ltd v Exbea Pty Ltd and Anor (1989) 89 ATC 4335 is relevant. The defendants sought to rely on it and the plaintiff sought to distinguish it. In that case a contract of sale was made for the sale of land and the deposit, in the form of opals, was paid. The purchaser was unable to complete the contract and the vendor sought to forfeit the deposit. As the deposit had been paid to a stake holder and not to the vendor direct, it was necessary for the vendor to sue in order to obtain it. Thus the vendor was the plaintiff, unlike the present case, where the purchaser is the plaintiff. The contract in that case bore an endorsement by the Commissioner of State Taxation in the same terms as the endorsement in this case:

Stamp Duty has not been paid (sic) in respect of this instrument in view of information obtained that the transaction was not carried into effect and no person has obtained or will obtain any significant benefit in respect of the instrument.

Nicholson J thought that the plaintiff in seeking to obtain a declaration that it was entitled to forfeit the deposit, sought to obtain a benefit pursuant to the contract, and he raised with counsel the question of whether he could receive the contract into evidence as it was unstamped. As a consequence of that, an adjournment was granted and the plaintiff resubmitted the contract to the Commissioner, together with advice that litigation had been commenced seeking a declaration that the deposit should be forfeited. The Commissioner then issued an assessment in respect of the contract. The duty was not paid and no undertaking was given by counsel that duty would be paid. Accordingly, the unstamped contract was excluded from evidence and the plaintiff's application for summary judgment failed.

77 A number of these cases refer to what was said by Isaacs J in Dent in speaking of an unstamped document as being a nullity. However, a characterisation of this kind appears to give insufficient weight to the later decision of the High Court in Shepherd's case in which it was established that once stamped a document is to be regarded as fully efficacious from the outset.

78 To my mind, the true position was put more exactly in Re Dehy Fodders (Aust) Pty Ltd (1973) 4 SASR 538 by Bray CJ at 538. His Honour said that once the unstamped instrument has been received in evidence it must be received as good for all purposes as from the date of its execution. If it had been intended that it would only be valid as from the time that the duty was paid that would surely have been stated expressly.

79 In Rothwells Ltd (in liq) v Connell (1993) 119 ALR 538 this view was quoted with approval by McPherson JA who went on to observe that s 27(1) of the Stamp Act does not in its terms affect to render an unstamped instrument either void or invalid. He suggested that the provision was not attempting to regulate the formal validity of instruments but was no more than a penal device which uses form as a means to secure the State's interest in protecting its revenue.

Execution is thus the occasion rather than the reason for imposing the requirement of form, which in any event operates independently of whether or not the transaction is otherwise immediately binding as a contract or obligation. ... Above all, in this collocation of reasons for doubting that the statutory requirement is genuinely one of form, it is important to notice that the disqualifying consequence of failure to stamp can be removed simply by paying the duty under ss 29 or 30 or s 17(2)(a) without first satisfying the obligation under the Act of stamping the document. That is scarcely distinctive of a true requirement of form.

For all these reasons it is in my opinion not possible to classify s 27(1) of the Western Australian Stamp Act as a provision prescribing a form of execution which, if omitted, affects the intrinsic validity, or the existence, or even the efficacy of the deed, considered as a contract or a covenant that it is now sought to enforce in Queensland. The statutory disqualification or disability is therefore properly to be considered as one going only to enforceability and thus to procedure, rather than to the substance of the obligation.

81 As to the rule of convenience or practice of admitting an unstamped document pursuant to an undertaking, these observations were made by Manning J in handing down the principal judgment of the Full Court in New South Wales in Dimmock v Whymark [1964-5] NSWR 1557 at 1558:

In Ralston v South Greta Colliery Co (1912) 13 SR (NSW) 6, the Chief Justice said, at p 13: 'From the earliest times the Courts have treated an undertaking by a solicitor of the Court that the duty shall be paid as a sufficient preliminary for admitting the document in evidence'.

It is beyond doubt that this practice has prevailed since Stamp Duties were first imposed, and the Stamp Duties Acts have been repealed, re-enacted, and amended on almost innumerable occasions since, in full knowledge of the construction thus adopted.

Any counsel would be brave indeed who sought to contend that the practice should be set aside. Yet Mr May did not resile from his submissions, notwithstanding his acceptance of the fact that this was what was involved.

It is sufficient to say that even if I thought the practice was irregular, which I do not, I would not be prepared to set my view against the many and weighty authorities by which it has been established.

82 In Davis v Federal Commissioner of Taxation (1989) 86 ALR 195 Hill J observed at 218 that the practice of accepting an undertaking seems to have evolved out of the inherent jurisdiction of the court to regulate its own proceedings in that an undertaking was more convenient than adjourning the case.

83 Let me now look briefly at the course of legislation in the State of Western Australia as this will be of assistance in understanding the issue presently before the court.

84 It seems that the imperial stamp laws were consolidated in 1891 and most of the States of Australia proceeded to consolidate their Stamp Acts. In Western Australia the process of consolidation was effected by the Stamp Act 1921 (WA). In later years various amendments were made in order to address changing commercial practices and administrative issues. It is not necessary for present purposes to address the various changes in any detail. Suffice it to say, for present purposes, that since the vesting of uniform tax powers in the Commonwealth of Australia a complex history surrounds the collection of stamp duty as an important source of State revenue in the post war era.

85 It seems that competition policy and other national issues set the scene for a programme of tax review in this State in comparatively recent times. Reforms in 2003 were partly concerned with allowing a degree of latitude for payment of stamp duty in respect of certain types of conditional contracts. The objects of the arrangements were to address cost of compliance issues concerning special contracts of that kind. This gave rise to a need for extensions of time to pay and to cancel contracts that did not proceed.

86 The Taxation Administration Act 2003 (WA) marked an endeavour to address a range of matters including issues concerning payment and refund of tax. Thus, for example, s 47(1) (mentioned in earlier discussion) provided that the Commissioner may approve an arrangement (with or without amendment) (a) extending the time for paying tax; or (b) providing for the payment of tax in specified instalments.

87 A need for a significant rewrite of the Stamp Act was recognised as part of the 2003 review process. The principles on which the Stamp Act were based were thought to reflect commercial practices of earlier times and in many cases were out of date and did not reflect modern commercial practices or sufficiently address the emergence of avoidance practices. Moreover, there were cases where a stamp duty liability was imposed inadvertently or inequitably, as the legislation was applied to circumstances that were unlikely to have been contemplated by the parliament when the legislation was enacted.

88 These various factors had resulted in a patchwork of amendments leading over time to an erosion of the coherent and logical structure of the Act. Moreover, it was thought that the Stamp Act was inconsistent with the conceptual basis of the duties legislation operating in most other jurisdictions where the occurrence of a transaction was viewed as the trigger for a duty liability, rather than the execution of an instrument. Reform proposals were directed to replacing the confusing conveyance provisions with a landholder model so as to reform the treatment of unit trust interests and other indirect interests in land, putting in place a new restructuring provision to replace the existing corporate reconstruction exemption and enacting a new general anti-avoidance provision to ensure that the revenue base was protected. It was thought that by broadening the tax base provision could be made for the reduction of certain duties.

89 It was against this background that the Duties Act 2008 was enacted in conjunction with the Duties Legislation Amendment Act 2008 with a view to establishing a new duties regime to replace the outdated stamp duty arrangements reflected in the provisions of the Stamp Act 1921. The new legislation made provision for amendments to the Stamp Act and the Taxation Administration Act.

90 The aim of the new legislation was to ensure that the Stamp Act no longer applied to transactions that would be subject to duty under the Duties Act as from 1 July 2008. However, the amendments were designed to ensure also that certain obligations under the Stamp Act were to remain for instruments executed, or transactions occurring, prior to 1 July 2008.

91 More particularly, s 16 of the Stamp Act was amended to achieve this end. As I indicated in earlier discussion, by s 16(1) of the Stamp Act the duties to be charged for the use of the Crown are said to be the duties specified in the Second Schedule to the Stamp Act. I note in passing that cl 4 to cl 12 of the Second Schedule are directed to conveyancing instruments, including transfers of land and leases or agreements for lease. The effect of the new legislation was to amend s 16 so as to introduce new subpars (5) to (7) which read as follows:

(5) Despite anything to the contrary in this Act, duty is not chargeable on an instrument -

(a) specified in any of items 4 to 12, 14A, 15, 17 or 19 of the Second Schedule; and

(b) first executed on or after 1 July 2008,

unless it is a continuing instrument.

(6) The reference in subsection (5) to an instrument specified in an item of the Second Schedule includes a reference to an instrument that would, but for this section, be chargeable with duty as if it were such an instrument.

(7) In subsection (5) -

'continuing instrument' means

(a) an instrument of conveyance or transfer that replaces another instrument for the conveyance or transfer of the same property where the replaced instrument was first executed before 1 July 2008; or

(b) an instrument of conveyance or transfer where -

(i) the conveyance or transfer of property is made in accordance with an arrangement made on or after 28 November 2007; and

(ii) the sole or principal purpose of the arrangement was to defer the conveyance or transfer of the property until 1 July 2008 or later so that the rates of duty applicable under the Duties Act 2008 would apply to the conveyance or transfer.

92 It is not necessary for present purposes to run through all the details of the new regime established by the Duties Act 2008, the Duties Legislation Amendment Act 2008 (and the consequential amendments to the Stamp Act 1921 and the Taxation Administration Act 2003). Suffice it to say in general terms that ch 1 of the Duties Act dealt with preliminary matters such as interpretation and establishes that administration and enforcement of the Act is provided for by the Taxation Administration Act. Chapter 2 deals with transfer duty, commencing with s 10 of the Act whereby duty is imposed on dutiable transactions. Section 11 sets out a list of 'dutiable transactions' on which transfer duty is imposed. These transactions include a transfer of dutiable property, such as a transfer of land.

93 Chapter 3 to ch 5 of the Duties Act deal with other types of duty (being landholder duty, insurance duty and vehicle licence duty). Chapter 6 contains exemptions concerning the restructuring of certain entities. Chapter 7 addresses the anti-avoidance position and ch 8 deals with general matters including enforcement.

94 As to enforcement, s 276 of the Act prohibits a person from registering or recording certain dutiable transactions unless the dutiable transaction is duty endorsed. This means, under s 272, that a transaction record for a dutiable transaction is endorsed by the Commissioner, or endorsed or certified under a special tax return arrangement to indicate that an amount of duty has been paid or is payable or that duty is not chargeable.

95 Importantly, s 279 of the Duties Act 2008 deals with receipt of transaction records in evidence. This provision can be regarded as a reform or refinement of the law concerning the use of instruments in legal proceedings previously dealt with by s 27 of the Stamp Act (and continuing to be dealt with by that provision in respect of transactions entered into prior to 1 July 2008).

96 Section 279 of the Duties Act 2008 reads as follows:

Receipt of transaction records in evidence

(1) A transaction record for a dutiable transaction -

(a) is not available for use in law or equity for any purpose; and

(b) cannot be presented in evidence in a court exercising civil jurisdiction,

unless it is duty endorsed.

(2) Despite subsection (1), a court may admit in evidence a transaction record that is not duty endorsed -

(a) where the person that produces the transaction record is the person liable to pay the duty -

(i) if the transaction record has been transmitted to the Commissioner; or

(ii) if the court is satisfied that the transaction record will, after its admission, be transmitted to the Commissioner in accordance with arrangements approved by the court;

or

(b) where the person that produces the transaction record is not the person liable to pay the duty -

(i) if the name and address of the person so liable and the transaction record have been transmitted to the Commissioner; or

(ii) if the court is satisfied that the name and address of the person so liable and the transaction record will be transmitted to the Commissioner in accordance with arrangements approved by the court.

(3) A court may admit in evidence a duty endorsed duplicate of a transaction record for a dutiable transaction.

(4) Despite subsection (1), a court may admit in evidence an unexecuted copy of an instrument that effects a dutiable transaction or an instrument that evidences a dutiable transaction if the court is satisfied that a transaction record for the dutiable transaction is duty endorsed.

97 It emerges, then, that s 27 of the Stamp Act (which prohibits the use in evidence of any instrument chargeable with duty unless it is stamped) applies to transactions entered into before 1 July 2008. However, for transactions entered into after that date, s 279 of the Duties Act 2008 applies. That provision requires that a transaction record cannot be presented in evidence in civil proceedings unless it is duty endorsed. However, the provision contemplates that a transaction record that is not duty endorsed can be admitted in evidence subject to certain safeguards designed to protect the revenue, for example, if the court is satisfied that the transaction record will be transmitted to the Commissioner.

98 It might be thought that s 279 of the Duties Act gives statutory effect to the rule of convenience referred to in Kia Ora Gold Corp NL v Washer and related cases whereby an unstamped instrument, notwithstanding s 27(1) of the Stamp Act, could be admitted in evidence subject to a sufficient undertaking being given to have the document stamped. Implicit in this approach to the evidentiary issue is an acceptance of the reasoning in Shepherd's case that once stamped it will be treated as efficacious from the outset.

99 I remind myself that the present transaction was effected in mid 2005 (and thus prior to the coming into force of the Duties Act 2008). The new regime constituted by the Duties Act and the Duties Legislation Amendment Act 2008 (WA) (and consequential amendment to s 16 of the Stamp Duty Act) made express provision in s 16(5) of the Stamp Act for s 27 of the Stamp Act to remain in force in respect of a transaction consummated in mid 2005.

100 However, it is material to keep in mind that the case law as at mid 2005, including Kia Ora Gold Corp NL v Washer and related cases, contemplated that an instrument such as the offer and acceptance in the present case could be admitted into evidence subject to a sufficient undertaking to pay the duty. It emerges from my observations about s 279 of the Duties Act that this approach was subsequently given statutory effect when the new regime was introduced in 2008. This suggests that the former rule of convenience was thought to be apt and consistent with contemporary commercial realities.

101 I am conscious also that, as a consequence of an arrangement made by the plaintiff with the Commissioner for payment of the duty in question by instalments, being an arrangement which is allowed for under the new regime by s 47 of the Taxation Administration Act and s 279 of the Duties Act, the plaintiff cannot be said to be presently in a state of default in regard to his liability to pay duty in respect of the document comprising the contract.

102 Let me now proceed to some general observations concerning the plaintiff's case.

General observations re the plaintiff's claim

103 It emerges from my review of the statutory provisions that the question of whether the plaintiff can rely upon the subject offer and acceptance (which has been lodged with the Commissioner) in its pleaded case or in evidence must be determined by reference to the Stamp Act because the provisions of the Duties Act and related provisions of the new regime do not apply to instruments executed before 1 July 2008.

104 The crucial point of reference is s 27(1) of the Stamp Act. Put shortly, the effect of this provision is that no instrument chargeable with duty shall be pleaded or given in evidence unless it is stamped; that is, endorsed by the Commissioner in accordance with s 17C of the Act.

105 It is common ground in the present case that the offer and acceptance comprising the contract sought to be specifically enforced by the plaintiff as purchaser has not been stamped, although an arrangement has been made pursuant to s 47 of the Taxation Administration Act for payment of the duty and accrued interest by instalments. Thus, at first blush, the basic rule reflected in s 27(1) of the Act seems to require that the contract cannot be pleaded or given in evidence by the plaintiff, being the position contended for by the defendant.

106 However, it is important to keep in mind certain matters that bear upon the application of the s 27(1) rule in the circumstances of the present case.

107 First, s 4(1aa) of the Stamp Act provides that the Taxation Administration Act is to be read with the Stamp Act as if they formed a single Act. Section 17B of the Stamp Act provides for the contract to be lodged with the Commissioner by the plaintiff as the person (in this case the purchaser) liable to pay duty. By s 47 of the Taxation Administration Act the Commissioner may approve an arrangement for the payment of tax by instalments. Such an arrangement has been made.

108 Second, the s 27(1) rule is qualified by the opening words of that provision, namely, 'except as otherwise provided by a stamp Act', no instrument chargeable with duty is to be pleaded or given in evidence unless it is stamped. The term 'a stamp Act' means the Stamp Act or the Taxation Administration Act. In other words, the opening words of s 27(1) contemplate that there may be other provisions which create an exception and have the effect of displacing the basic rule so that an unstamped document can support a pleading or be given in evidence. This is recognised by s 31 of the Stamp Act which refers to an instrument being admissible in evidence if it has been stamped or is 'taken to have been stamped'.

109 One example of an exception to the basic rule is to be found in s 27(3) of the Stamp Act which, in its original form, was introduced by the Stamp Amendment Act 1995. The stated purpose of the amendment was to create an exception whereby a party not liable for the duty (such as the defendant/vendor in the present case) could rely, subject to conditions concerning notification to the Commission, on an unstamped document.

110 I note in passing that the new provision was then amended by the Revenue Laws Amendment (Assessment) Act 1997 (WA) to rectify a technical deficiency but without altering the basic objective, namely, to prevent the injustice which might otherwise occur under the s 27(1) rule if a person who was not liable to pay the stamp duty could not rely on the document in court proceedings because the other party, who was so liable, had failed to pay the duty.

111 This view of the matter was confirmed by the reasoning of Malcolm CJ in Mackwell v Petkovic (Unreported, WASC, Library No 990070A, 18 February 1999. His Honour made these observations:

It follows that s27(3) is available to any person who is a party to a transaction, not being the party liable to pay the duty, but who wishes to rely on an unstamped document. Such a person is required to inform the Commissioner of the identity of the person liable to pay the duty in respect of an instrument or statement, and is required to lodge the relevant instrument or document with the Commissioner, but not a statement of the kind contemplated by s31B where that provision is relevant.

In my opinion, it follows that when this case came before the learned Magistrate, while the document could not be tendered in evidence unless and until the court was satisfied that arrangements contemplated by 27(3) had been made, appropriate undertakings which were offered could have been accepted and the case allowed to proceed. (21)

112 His Honour went on to suggest that compliance with s 27(3) would permit the document to be tendered in evidence with the implication that it could then be relied on generally in the action. He observed also that what may be pleaded and what may be tendered in evidence are matters of procedure and legislation which is concerned with matters of procedure has retrospective effect in that it applies to pending proceedings: Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 at 267.

113 Before leaving this aspect of the matter I must also note in passing that the s 27(1) rule applies to an instrument that is 'chargeable with duty'. Such an instrument cannot be pleaded or given in evidence unless it is stamped.

114 It is true that s 16 of the Stamp Act speaks of the duties to be charged 'on or in respect of the instruments specified in the Second Schedule'. However, it is clear from s 17 that the liability to pay duty 'on an instrument' is attached to a specified person, being, in the case of a transfer of land, the purchaser.

115 It follows from this that there cannot literally be an instrument 'chargeable with duty' (being the words used in the s 27 rule). The words can be referring only to an instrument which is 'chargeable' in the sense of there being an instrument in respect of which a liability by a specific person to pay duty arises. This might arguably suggest that if the liability to pay duty in respect of the instrument has been attended to by payment or by arrangement the instrument has ceased to be an instrument affected by the rule.

116 This brings me to a third point. The decided cases, and especially the analysis of McPherson JA in Rothwells Ltd v Connell establish that the s 27(1) rule is not a rule regulating the formal validity of instruments. It is a penal device which uses form as a means of protecting the State's revenue. An unstamped instrument has the capacity, upon stamping, to be efficacious from the outset. It cannot properly be characterised as a nullity in that, prior to stamping, it nonetheless has the potential to be effective ab initio and can be used defensively to underpin a plea concerning a collateral issue.

117 Fourth, because the s 27(1) rule is not a substantive rule bearing upon the form or validity of an instrument, but rather a procedural rule providing a mechanism to ensure that duty is paid, the s 27(1) rule falls to be considered in conjunction with other procedural rules referable to the court's inherent jurisdiction to control its own proceedings. These procedural rules include the so-called rule of convenience whereby, in the manner described by Cozens-Hardy J in Re Coolgardie Goldfields Ltd and by Kennedy J in Kia Ora Gold Corp NL v Washer, an unstamped instrument can be admitted in evidence subject to the provision of a suitable undertaking to have the relevant document stamped and to pay the duty (and any penalty).

118 The decided cases indicate that the undertaking is to be given personally by a party's legal practitioner as an officer of the court, but a consistent theme running through the decided cases is that the undertaking is provided essentially with a view to ensuring that the revenue is protected. It seems that the rationale for this rule has not been fully explored.

119 The s 27(1) rule is a rule of procedure forming part of the tax administration regime. It seems to have been created essentially as an aid to enforcement. It does not exist to regulate the validity of instruments or to govern the substantive rights of the parties to a transaction. As Cozens-Hardy J observed in Re Coolgardie Goldfields Ltd an undertaking provided in order to secure compliance with the obligation to pay duty is provided for the benefit of the Commissioner.

120 It follows from my review of the relevant statutory provisions that in the circumstances of the present case the liability for ad valorem stamp duty payable by the plaintiff as purchaser in respect of the subject contract has been secured to the Commissioner's satisfaction in that the instrument has been lodged for assessment and an arrangement has been made of the kind allowed for by s 47 of the Taxation Administration Act (which can be regarded as a provision of the Stamp Act, or, at least, a provision of 'a stamp Act'). Moreover, s 28 of the Stamp Act prevents the land affected by the contract from being transferred to the plaintiff without the contract held by the Commissioner being stamped. The proposed undertaking is consistent with the arrangement.

121 It might be said that if the court insisted that an undertaking be given by the plaintiff's counsel or solicitor as an officer of the court providing for immediate payment of the duty, the court would be taking on the role of an enforcement agent with power to override a considered decision by the Commissioner to allow for payment of the duty by instalments. This would be not only unwise but, inconsistent with the precept evident in Investments (WA) Pty Ltd v Hatton, mentioned earlier, that a court is not required to inquire into the question of whether the duty payable has been correctly assessed.

122 These prefatory remarks bring me to the opening words of the s 27(1) rule and the circumstances of the present case. The document sought to be adduced in evidence is a copy of the contract to be tendered under and by virtue of s 73A of the Evidence Act 1906 (WA), which modifies the best evidence rule. The contract itself is presently held by the Commissioner upon the basis that the duty payable in respect of it will be covered by a permissible arrangement. The arrangement has been made pursuant to s 47 of the Taxation Administration Act and is therefore an arrangement 'provided by a stamp Act'. This phrase forms part of the opening words of s 27(1) of the Stamp Act which allow for exceptions to the basic rule.

123 It follows from this, in my view, that the contract has ceased to be an instrument chargeable with duty because the liability on or in respect of the instrument has crystallised and been provided for pursuant to the arrangement. The purpose underlying the s 27(1) rule, namely, protection of the revenue, has been fulfilled.

124 I pause here to underline an observation made in earlier discussion. The s 27(1) rule refers to an 'instrument chargeable with duty'. However, the reality is that this can only be properly construed as a reference not only to the document but also to the related circumstances giving rise to or in respect of which a liability to pay duty arises. By s 17 of the Stamp Act the liability to pay duty is attached not to the document but to a designated person.

125 In that regard it is material to note that by s 20(6) of the Taxation Administration Act the validity of an assessment and the liability to pay tax do not depend upon the availability of an instrument. This reinforces my view that the reference to an instrument 'chargeable with duty' is directed essentially to the question of liability for payment. These words, which condition the operation of the basic rule, have to be narrowly construed, having regard to the purpose of the rule.

126 It has been described as a rule enacted not to affect the substantive rights of the parties to a transaction but as a procedural rule provided for the benefit of the Commissioner. According to McPherson JA in Rothwells Ltd v Connell it is a penal device which uses form as a means to secure the State's interest in protecting its revenue. It follows that if the Commissioner's requirements have been met by the making of an arrangement which covers the relevant liability the document cannot be characterised as an instrument 'chargeable with duty'. It had that characteristic initially but once the person liable to pay has been determined, with payment being then made or responsibility for payment being accepted pursuant to an arrangement or undertaking thought to be sufficient, the purpose or essential requirement of the s 27(1) rule has been complied with.

127 To my mind, this view is reinforced by two well-known rules of statutory interpretation. First, s 18 of the Interpretation Act 1984 (WA) provides a construction that would promote the purpose or object underlying the written law (whether that purpose or object is expressly stated in the written law or not) shall be preferred to a construction that would not promote that purpose or object. Second, as Malcolm CJ observed in Mackwell v Petkovic, in the context of legislation imposing a tax or duty, any doubt concerning the interpretation of an exemption or exception should be resolved in favour of the person who would otherwise be disadvantaged, being in this case the plaintiff.

128 It is of interest to note also, although this is not material to the interpretation issue, being simply an aside, that the conclusion I have come to is consistent with the new regime constituted by the Duties Act and related legislation in that, by s 279 of that Act, a transaction record that is not duty endorsed can be admitted in evidence not only by a person not liable to pay the duty (pursuant to requirements akin to s 27(3) of the Stamp Act) but also by a person liable to pay the duty (such as the plaintiff in the present case) if the name and address of the person liable and the transaction record is transmitted to the Commissioner. In other words, the purpose of the rule replacing the s 27(1) rule, like the s 27(1) rule itself, is not to involve the court in the process of enforcement but to ensure that steps are taken which will facilitate enforcement by the Commissioner.

129 It follows from this conclusion that, in my view, in the particular circumstances of this case, the s 27(1) rule does not apply to the subject contract at the trial of the action to prohibit any use being made of the contract in pleading or in giving evidence. The making of the arrangement is analogous to the provision of a sufficient undertaking in the manner allowed for by the decided cases with the result that, pursuant to the reasoning of the High Court in Shepherd's case, the contract can now, at trial, be regarded as good ab initio for all purposes. However, if it be held, contrary to the conclusion I have come to that the s 27(1) rule does apply to the contract, it becomes necessary to determine whether the contract can be utilised by the plaintiff in its pleading and in evidence pursuant to the proposed undertaking.

130 The defendant's position as to this issue is that the proposed undertaking is defective in that it is not in the conventional and required form described by Kennedy J in Kia Ora Gold Corp NL v Washer. It is not provided by an officer of the court and does not amount to a clear undertaking to pay the duty. That being so, the unstamped contract or a copy of it cannot be utilised pursuant to the undertaking.

131 It is true that the undertaking is not in the conventional form. However, in the particular circumstances of this case where (unlike the previously decided cases mentioned earlier) a permissible and apparently valid arrangement to pay the duty has been made, I am not persuaded that any departure from the conventional form is fatal.

132 It emerges from earlier discussion that the s 27(1) rule can be characterised as a procedural rule. It must be considered in conjunction with a procedural 'rule of convenience' referable to the inherent jurisdiction of the court to control its proceedings whereby an undertaking that the duty will be paid is treated as a sufficient preliminary for admitting the document in evidence. The rule is well-established, as Manning J noted in Dimmock v Whymark (albeit referring to an undertaking by a solicitor in the conventional form) although he was unable to cast further light on the underlying rationale for the rule. It is so well-established, his Honour indicated that it cannot be ignored.

133 In the end, I am of the view that in circumstances where the court is dealing essentially with the inter-relationship between two procedural rules, the precise form of any undertaking to be given must be determined by the court having regard to the purpose of the statutory provision and the requirements and circumstances of the particular case.

134 In the present case, where, as I have held, the purpose of the provision is to protect the revenue, and the arrangement made as affirmed by the proposed undertaking is consistent with that purpose, it is difficult to see in what way the provision of an undertaking in the conventional form by an officer of the court would add further substance or anything extra to the proposed undertaking. The effect of the undertaking to pay the duty in accordance with the arrangement must be regarded by the court as sufficient to protect the revenue, in the same way that an undertaking in the conventional form has been regarded as sufficient in the past.

135 For that reason I am of the view that, in any event, as a finding in addition to the conclusion I have previously expressed, the proposed undertaking is sufficient and the contract or a copy of it, can be utilised by the plaintiff at trial upon the basis that sufficient arrangements have been made for payment of the duty. It is to be treated as good ab initio and available for use in pleading and to be admitted in evidence.

136 This brings me now to my conclusion concerning the defendant's counterclaim.

137 This aspect of the matter can be disposed of quickly. To my mind, it follows from the conclusion I have come to that the contract can be relied upon by the defendant in support of its pleaded case and given in evidence. In the absence of any finding that the s 27(1) rule operates to exclude the contract in the particular circumstances of the present case, the contract can be utilised by both parties for all purposes. Support for this view is to be found in the observations of Malcolm CJ in Mackwell v Petkovic mentioned earlier.

138 Further, and in any event, I am of the view that the defendant has complied with the notice and lodgement requirements of s 27(3)(a) and s 27(3)(b) of the Stamp Act which permits a party not liable for the payment of duty to use the document at trial after giving the prescribed notification to the Commissioner. I consider, and so find, that the defendant is now entitled to rely upon the contract for the purpose of prosecuting its counterclaim; that is, to refer to the contract in its pleading and to tender the contract as evidence in support of its counterclaim.

139 For the reasons given previously, the plaintiff's proposed undertaking will be received and acted upon by the court. For the reasons I have given the parties are at liberty to rely upon the contract in their pleadings and to have the same admitted in evidence subject to the application of any other relevant rules of evidence.