Australian Rice Holdings Pty Ltd v Commissioner of State Revenue [2001] VSC 486

Supreme Court of Victoria|2001-12-13|Before: HARPER, J.

The appellant, Australian Rice Holdings Pty. Ltd., is the purchaser of a property near Echuca. It is known as "Madowla Park". The agreement for its acquisition was made on 24 May 1999. Its vendors were Mr. John Dorman Elliott and several companies with which he was (and perhaps still is) associated. It includes 936.2 hectares of irrigable land. Mr. Elliott, who was or was entitled to be registered as the owner of the property, grew rice on it, drawing water from the Goulburn River for that purpose: up to 88 megalitres per day, but no more than 5,618 megalitres per year for 10 years from 1 July 1994. That, at least, was what he was permitted to do by Diversion Licence No. 3004241 issued on 6 October 1994 by the Goulburn-Murray Rural Water Authority pursuant to ss.51 and 67 of the Water Act 1969. The first of these provisions deals with licences to take and use water, which may be granted by the Minister upon application made in the approved manner. The other provision, s.67, provides that a person may apply for the issue of a licence to construct, alter, operate, remove or abandon any works on a waterway, or a bore.

Mr. Elliott enjoyed another, but much less significant, right to draw water. On 13 August 1987, the Rural Water Commission of Victoria issued to him an annual permit under the Water Act 1958 to divert two megalitres of water (a maximum of .01 megalitres per day) from Deep Creek, a tributary of the Murray River, for stock use.

The agreement by which "Madowla Park" was acquired included a provision that the vendor assign to the purchaser the rights created by these two licences. Indeed, the appellant paid Mr. Elliott a considerable sum for the privilege. Of the total purchase price for the property of almost $8,287,000, more than half ($4,494,400) was allocated to the water rights. With the benefits which flow from them, the appellant as assignee from the vendor continues to use the land for the production of rice.

The appellant's entitlement to draw water from the Goulburn River and Deep Creek now rests not on its position as transferee from Mr. Elliott, but on relevant licences issued directly to it. On 27 July 1999, the Goulburn-Murray Rural Water Authority granted an annual diversion licence (No. 7087403) by which the appellant is authorised to take and use for domestic and stock-watering purposes a maximum of two megalitres of water per annum from Deep Creek. None of this water may be used for irrigation. On 8 October 1989, however, the Authority granted Diversion Licence No. 831220 by which the appellant is authorised to take and use, for the irrigation of a maximum of 936.2 hectares, a maximum of 5,618 megalitres of water per annum drawn from the Goulburn River. This licence expires on 30 June 2004: 10 years after the commencement of the period to which Mr. Elliott's Diversion Licence No. 3004241 referred.

The relevant transfers of land from vendor to purchaser were executed on 26 May 1999. They were lodged for stamping on 11 June; and on 1 June 2000 the assessments were issued. According to the Commissioner, the transaction attracted stamp duty of $274,000. Of that sum, $199,650 is in dispute. The appellant says that it was wrongly assessed, because the assessment took into account the value of the water rights. The respondent justifies the assessment on the basis that the inclusion of the value of those rights was appropriate. The proper outcome of this argument depends upon the correct construction of the relevant legislation.

The starting point is s.14 of the Interpretation of Legislation Act 1984. This is so because the Stamps Act 1958, pursuant to which the impugned duties were levied, was repealed by s.284 of the Duties Act 2000, which came into operation on 1 July this year. The new Act incorporated transitional provisions: see Schedule 2, cl. 3 of which provides that the Schedule does not (except where the contrary intention appears) "affect or take away from the Interpretation of Legislation Act". So far as is relevant for present purposes, s.14 of the latter Act provides that, where an Act is repealed, the repeal shall not (unless the contrary intention expressly appears) affect the previous operation of the repealed Act or anything duly done under it. Nor shall such repeal affect any obligation incurred under the repealed legislation.

By s.17(1) of the Stamps Act 1958, "there shall be charged for the use of Her Majesty upon the several instruments specified in the [Third] Schedule the several duties and additional duties therein specified." Under Heading VI of the Schedule, duty is payable upon the conveyance of real property, an expression defined in s.63(1) to include any estate or interest in real property. The effect of these provisions is that there is charged upon instruments of conveyance the amounts set out under Heading VI as being applicable to property of the value of that conveyed. In general, that value is to be taken as, and the amount of duty is to be assessed upon, the greater of (a) the consideration paid for it on sale or (b) the amount for which it might reasonably have been sold, free from encumbrances, in the open market.

As the sale from Mr. Elliott to the appellant shows, a transaction that in substance involves the sale and purchase of land may also include the sale and purchase of other assets - ancillary, but nevertheless of great importance. Water rights are an example. Furniture and fittings are another. So too is stock in trade. Livestock and implements sold with a property used for primary production are a further common instance.

The implications of this were doubtless plain enough for those who wished to avoid stamp duty on a conveyance of land. If ad valorem stamp duty is to be imposed on instruments by which land is conveyed, then the amount of duty will necessarily be determined either by the price paid or by some alternative means of valuation. If land is one part of a total package and assets of a different kind the other, then (subject to the imposition of different rates of duty according to the value of the property in question) the amount recovered by way of stamp duty that is assessed according only to the price paid for the land will decrease in proportion as the amount of the purchase price attributed to the land is decreased and the amount of the purchase price attributed to the other assets is increased.

By 1983, the Victorian Government decided that it would no longer tolerate what it described as the evasion of stamp duty by those who (a) attributed an unrealistically low value to the real property component of transactions involving the sale of land and other assets and (b) assigned an equally unrealistically high value to the remaining assets. The Government's intentions were conveyed to Parliament in the then Treasurer's budget speech on 21 September 1983. The Treasurer (Mr Jolly) said, among other things ("Hansard", Legislative Assembly, 21 September 1983 at 786):

"At present, stamp duty is payable only on the consideration for the real property, that is, for the building and land. This has encouraged avoidance and evasion of duty. The practice exists for the value of chattels sold with the property, and included in the overall consideration, to be inflated, thereby reducing, and evading, the duty payable. The effect on the revenue is two-fold. Firstly, duty is payable on a lesser value and, secondly, the ad valorem rate at which the duty is payable can be reduced. To overcome this method of evasion, the Stamps Act will be amended to impose duty on the transfer of personal property as well as real property." (My underlining).

The Government accordingly introduced into Parliament the Stamps (Further Amendment) Bill 1983. The Explanatory Memorandum which accompanied the Bill contained the following passage:

"The purpose of these amendments is to implement the budget announcement to take duty in respect of chattels that are transferred with real property. Clause 8(1) substitutes a new section 63 in the Act. Sub-sections (1) to (5) of section 63 have the effect that where real property is sold and chattels are sold as an integral part of that sale, duty will be taken on the combined value of chattels and realty. Special provision has been made to ensure that any stock, implements or other chattels held or used in connection with the use of real property for primary production, will not bear duty in respect of their value when the real property to which they relate is transferred."

(My underlining).

The Treasurer drew Parliament's attention to these considerations in his second reading speech: "Hansard", Legislative Assembly, 16 November 1983 at 1,992. The Treasurer then said:

"A ... widespread evasion practice outlined in the budget speech relates to stamp duty payable on transfers of real property. The value of, or the price paid for, chattels purchased with house and land is frequently overvalued for the specific purpose of decreasing the purchase price attributable to the real property so that the correct amount of stamp duty is not paid. A new scheme to overcome this practice is contained in clauses 8 and 9 of the Bill. Chattels involved with the sale of land used for primary production have been excluded from the scheme. If the evidence required to verify the value of chattels is not provided when the transfer of land is submitted for stamping, the Comptroller will be empowered to make an appropriate assessment of duty."

In due course, the Bill became the Stamps (Further Amendment) Act 1983. It came into operation on 9 December 1983. It substituted for s. 63 of the Principal Act a new s. 63. The new provision contained terms foreshadowed in the Explanatory Memorandum. By s.63(3), any reference in subdivision (6) - "Conveyance of Real Property and Land Transfer" - of Division 3 of Part 2 of the Act, and any reference in the Third Schedule under Heading VI, to "real property" now includes a reference to chattels that, "by reason of the sale of ... the real property", are either sold to the transferee or are transferred to that person pursuant to the transaction of which the sale forms part. Similarly, and in accordance with the general proposition put in paragraph [7] above, a reference in those places to the value of real property is a reference to the greater of (on the one hand) the sum of the consideration for (i) the sale and (ii) the transfer of the chattels included in the sale and (on the other) the amount which would have been realised on a sale of the land and chattels, free from encumbrances, in the open market on the date of sale. It is important to note, however, that s. 63 (3) opens with the words "Except as otherwise provided in this Act".

It follows that the water rights which are the subject of this litigation would be assessable under this provision if they are properly described as "chattels" within the meaning of that expression in s. 63 (3) and if no other provision in the Act is to the contrary. The appellant submits that the Commissioner fails on both counts. It contends that not only are water rights not "chattels" in the relevant sense but - even if they are - their exclusion from the assessment of stamp duty under s. 63 (3) is effected by the provision to the contrary in s. 63 (4). By that subsection, and notwithstanding s.63(3), where "in connection with a conveyance of real property used for primary production, there is a sale or transfer of stock, implements or other chattels held or used in connection with the use of the real property for primary production, the value of ... [those] chattels shall be disregarded". Real property used for primary production includes land used for "cultivation for the purpose of selling the produce of cultivation": s.63(1). As a rice growing property, "Madowla Park" fits this definition.

One aspect of these provisions is clear enough. Because "Madowla Park" is used for primary production, the Commissioner can only succeed if the water rights in question are chattels within the meaning of that word as used in s.63(3) but are not chattels within the meaning of the same word as used in s.63(4). This, of course, is the position for which the Commissioner contends and against which the appellant argues.

The expression "chattels" is not defined in the Stamps Act. It has its origin in the Norman word for cattle, and from there embraced first "live stock" and then, more generally, articles of property: see The Oxford English Dictionary (2nd ed., 1989), where one of the current meanings is given as "any possession or piece of property other than real estate or a freehold".

According to the Australian Legal Dictionary, property "is either real (that is, an interest or estate in land) or personal (that is, interests in things other than land including chattels and choses in action)." The Dictionary also records that the word "property" is one "which can be used to describe every type of right (that is, a claim recognised by law), interest, or thing which is legally capable of ownership and which has a value". "Ownership" in turn "includes the right to exclude others, the right to alienate and the right to use and enjoy." But "[i]nterests that are less than ownership may also be property." Thus "an incorporeal right such as an easement is a property interest."

The first issue for me to determine is whether the water rights now enjoyed by the appellant constitute such an interest. In Jack v. Smail,[1] a grocer's licence issued under the Licensing Act 1890 in respect of premises in High Street, Malvern, a Melbourne suburb, was held not to be "goods and chattels" so as to be subject to reputed ownership within the meaning of s.70(v) of the Insolvency Act 1890. This was despite the fact that it could be transferred to other premises within a designated area and was for a renewable term of 12 months "provided it has not been allowed to expire, and has not been forfeited or revoked or become void from any cause whatever": Licensing Act 1890, s.101. It was also capable of being sold and of holding considerable value: it entitled the licensee, being also a licensed spirit merchant, to sell and dispose of liquor in bottles provided that they were not drunk on or near the premises in respect of which the licence operated.

The appellant, Mrs. Elizabeth Jack, purchased the licence in August 1900 from the vendor to her husband of the High Street grocer's business. At the same time, an agreement was made between the appellant and her husband. By this agreement, she was to "let" to him and he was to "rent" from her the licence from year to year. The appellant was to keep the certificates, which were the documents of title to the licence, subject to her producing them when required for the purposes of the law. Mr. Jack then operated the business from the premises, which his wife also owned; he was therefore his wife's tenant. On his becoming insolvent, she as his landlord determined the lease, and the trustees of Mr. Jack's insolvent estate sought a declaration that the licence formed part of that estate. They failed, because the High Court held that it was not property, but "a personal right of the insolvent to carry on business in a particular place under conditions prescribed by law": at 705 per Griffith, C.J. In agreeing with the Chief Justice, O'Connor, J. said (at 714-715):

"The first question is whether the licence was property which passed to the trustees. I have no doubt whatever that it was not. The licence may be described as having two attributes each being absolutely distinct from the other. First, it is a personal licence to the husband to carry on this business, and secondly, it is a licence to carry on business in these premises. Therefore, carrying on business in accordance with the licence must necessarily imply a continuance in the premises in respect to which the licence is granted. If the husband loses possession of the premises, then the licence is absolutely of no value to him. Before he can remove the licence to other premises he has to get the consent of the Licensing Court to the removal. Apart from that, he has covenanted with his wife not to use the licence otherwise than in carrying on the business in her premises, and the trustees are in no better position than he is in this respect. On his losing possession of the premises the licence became, as it were, something in the air. Being a licence to carry on business in certain premises, of which he is no longer in possession, it lost all its value. But even if it had any value, the trustees could only have in it the same rights as the husband. Under the agreement with his wife he has no longer any property in it, and the trustees cannot be in a better position."

In Jack's case, Mr. Jack's lease had been terminated, and his licence thereby lost not only its value but also its character as property. I do not therefore read the judgments in that case as being authority for the proposition that a licence of the kind held by Mr. Jack could never amount to property. It is certainly not authority for the proposition that there can be no property in "a statutory licence to which a fit and proper person has a right and which relates to such an occupation as that of cab driver": Banks v. Transport Regulation Board (Victoria)[2].

In that case, the respondent had revoked Mr. Banks' taxi licence. He then obtained from this Court an order that the Board show cause before it why a writ of certiorari should not be issued to remove the order and decision of the Board into the Supreme Court for the purpose of quashing them. The proceeding thus instituted was ultimately heard by a Full Court, which discharged the order to show cause. From this decision Mr. Banks appealed to the High Court, claiming to be able to do so as of right. His licence was, he submitted, property; indeed, its sworn value was not less than $9,000. Section 35 of the Judiciary Act 1903 then provided that the appellant jurisdiction of the High Court with respect to judgments of the Supreme Court of a State shall extend to every judgment "which ... involves directly or indirectly any claim, demand, or question to or respecting any property ... amounting to the value of $3,000."

The Court accepted the appellant's submissions. In his judgment, the Chief Justice said (at 232):

"I find in the terms of such a provision [as s.35(1)(a)(2) of the Judiciary Act] no warrant for giving to the word 'property' any narrow or technical meaning. In my opinion, it includes ... 'property of whatsoever kind'. In my opinion, the licence granted under Part II, revocable only in the stated circumstances and transferable to a fit and property person, is property within the meaning of [the section]".

Likewise, in Pennington v. McGovern[3], the Supreme Court of South Australia held that an abalone licence issued under the Fisheries Act 1982 (S.A.) carried with it indicia of rights of property. The plaintiff claimed that he was its beneficial owner, the defendant being a mere trustee. He sought and obtained a declaration that the licence was his "property". An appeal was dismissed by the Full Court. The rights conferred on the licensee were transferable and were contemplated as having value. Accordingly, King, C.J. had (as his Honour said at 31) "no difficulty in reaching the conclusion that the rights conferred by the licence are propriety in character."

The Supreme Courts of New South Wales and Queensland have adopted a similar approach to the concept of "property" under the legislation which imposes stamp duty in their respective jurisdictions. In 2 Day FM Australia Pty. Ltd. v. Commissioner of Stamp Duties (N.S.W.)[4], the plaintiff was the purchaser of a licence issued under the Broadcasting and Television Act 1942 (Cth) for the commercial radio station known by the call sign "2 Day". The Commissioner assessed the agreement for sale as dutiable under s.41(1) of the Stamp Duties Act 1920 (N.S.W.), which imposes ad valorem duty on every agreement for the sale or conveyance of "any property in New South Wales". It was held that the Commissioner was entitled to do so. The Commonwealth legislation established a comprehensive scheme of licensing. A licence might be transferred with the consent of the Australian Broadcasting Tribunal, which also had power to grant a licence. It was an offence to operate a radio station unless licensed under the Broadcasting and Television Act. Accordingly, licences were valuable; indeed, the plaintiff paid an amount which the judge, Sully, J., estimated (at 4842) as "amounting in all probability to tens of millions of dollars." His Honour said, at 4844-5:

"It seems to me that the better view is that a licence ... confers upon the grantee a transferable personal right to use for the transmission of commercial radio broadcasts and to the exclusion of all other would-be users, the airwaves in the appointed area. Such a right is to be seen, I think, as having a real and an extremely valuable commercial existence ... Clause 21 of the agreement [of sale] implicitly recognises, and I think correctly so, that the agreement conferred upon the purchaser, as between the purchaser and the vendor, rights capable, in the absence of particular provision to the contrary, of being assigned by the purchaser. That consideration tends, in my opinion, to strengthen the view that the rights conferred upon the grantee of a ... licence are, in the sense now material, rights of property."

In the Queensland case of Suncoast Milk Pty. Ltd. v. Commissioner of Stamp Duties (Queensland)[5], the Queensland Dairy Industry Authority granted to the plaintiff both a licence to deliver milk and a "lease" of a milk delivery run. The Commissioner charged the "contract to lease" with ad valorem duty. The Queensland Court of Appeal upheld that assessment. It was held that that which the Authority had granted to the plaintiff - that is, a "right" to sell milk to a specified group of customers - was property.

The Water Act 1989 has a number of purposes, among them the provision of integrated management of all elements of the terrestrial phase of the water cycle; ensuring that water resources are conserved and properly managed for sustainable use for the benefit of present and future Victorians; the provision of recourse for persons affected by administrative decisions; and the continued existence and protection of all public and private rights to water: s.1. By s.51, licences may be issued to take and use water from a waterway. Such licences may be renewed (s.58) or transferred (s.62). Each of these steps requires the approval of the relevant authority (see ss.58 and 62); but a refusal to give that consent is subject to the review of the Victorian Civil and Administrative Tribunal: s.64 It is an offence, punishable by a fine or imprisonment, to take, use or divert water without lawful authority: s.63. It is plain that, without the appropriate licence, the appellant could not irrigate its land with water drawn from the Goulburn River, or use water drawn from Deep Creek for domestic or stock purposes.

The appellant submits that there is a relevant distinction between licences, such as a taxi or liquor licence, which carry with them an element of goodwill, and those - such as the licences assigned by Mr. Elliott - which (it is submitted) do not. It also points out that water rights do not confer any interest in land by reason only that they permit the holder of a relevant licence to draw water from a particular source. Running water is not part of the land over which, or within which, that water flows. Moreover, the right of a licensee is a right to water the licensee's land from waters drawn from the designated source. The right to the quiet enjoyment, and to the sole and exclusive use, of water only commences after the licensee brings the water onto his land. In the words of the Land Court (Queensland) in Shooter v. The Commissioner of Irrigation and Water Supply[6]:

"The licence gives no ... right to the water in the water course or stream but only a right to the licensee to water his land from a water course or stream owned by the Crown."

In my opinion, the licences assigned by Mr. Elliott to the appellant were property nevertheless. They had value. They could be renewed and transferred, albeit only after the requisite approval had been granted. They conferred rights which were defined. It was and is illegal to draw water as the appellant is now doing unless pursuant to an appropriate licence. In short, the indicia considered relevant by the Supreme Courts of South Australia in Pennington v. McGovern and of New South Wales in 2 Day FM Australia Pty. Ltd. v. Commissioner of Stamp Duties, and by the High Court in Banks v. Transport Regulation Board (Victoria) are present. So too are the indicia to which Lord Wilberforce referred in National Provincial Bank Ltd. v Ainsworth[7]:

"Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability."

Even assuming that the appellant's licences give only a right to water its land from the Goulburn River, or to draw water for domestic and stock use from Deep Creek, and do not carry with them any element of goodwill, nevertheless in my opinion they constitute property. The question therefore is whether the licences assigned by Mr. Elliott were also chattels for the purposes of s.63(3) of the Stamps Act; and, if they were, whether they remained chattels for the purpose of s.63(4) of that Act.

The appellant relies in this context on Parliament's failure to re-enact that provision in s.204 of the Water Act 1958 by which the right conferred by a licence issued under that section was to be "deemed to be a chattel interest". The appellant submitted that, because the Water Act 1989 contains no equivalent provision, a water licence issued under the legislation presently in force does not fall within the meaning of the word "chattel" in s.63(3) of the Stamps Act.

It will be remembered that the Oxford English dictionary gives as one of the current meanings of the word "chattel" "any possession or piece of property other than real estate or a freehold". This finds echoes in the judgment of Fry, L.J. in Robinson v. Jenkins[8]. The defendants in that case were stockbrokers. They were employed by the plaintiff to sell his shares in the Great Sheba Gold Mine Ltd. For that purpose he entrusted to them the relevant share certificate. Before the shares were sold, however, one Bebro claimed that they belonged to him. The defendants applied for an interpleader order. Fry, L.J. said, at 279:

"The circumstances of this case are such as to create some difficulty. The shares, which are undoubtedly the main matter in controversy, are choses in action, and are registered in the name of the plaintiff, and he has power and disposition over them. The certificate, which is prima facie evidence of title to the shares under the Companies Act 1862, and the transfer are both in the hands of the defendants, who received them as agents for the plaintiff. In that position of things Bebro gave the defendants notice that he claimed the shares, and they applied for an interpleader, which they obtained. I think the order so made was right. In the first place, the argument that there can be no interpleader in respect of choses in action is untenable because the first rule of Order 58 gives relief not only in respect of any debt, money or goods, but also in respect of chattels. This is one of the widest words known to the law in its relation to personal property."

Butterworths Australian Legal Dictionary (1st ed., 1997) defines the word "chattel" as follows:

"1. Personal property, as distinct from real property. 2. Any property which is not freehold land. The property may be a leasehold (chattel real) or a movable article of property such as household furniture and jewellery (chattel personal) ... As a matter of interpretation or construction, the word 'chattel' in appropriate contexts in deeds, wills, statutes and other instruments can include intangible property (choses in action) as well an tangible property."

The expressions "chattels real" and "chattels personal" are the subject of paragraphs 1203 and 1204 of volume 35 of Halsbury's Laws of England (4th ed. re-issue, 1994). The former "are interests concerning or savouring of realty, such as a term of years in land ... which have the quality of immobility which makes them akin to realty, but lack indeterminate duration." They are probably now confined to leaseholds. The latter:

"... are, strictly speaking, things movable, but in modern times the expression is used to denote any kind of property other than real property and chattels real. 'Personalty' or 'personal property' includes many kinds of property unknown to the common law, such as bills of exchange, bank notes and cheques, land improvement charges, copyrights, patents, shares in joint stock companies, debentures, government annuities and stock in the public funds, goodwill, and the exclusive right of burial in a particular place; but does not include title deeds relating to real estate, heirlooms in the strict sense, fixtures or wild animals, and does not always include growing crops or trees."

The very width of the expression "chattel" carries with it the necessity to examine the context in which it is found: In re Exmouth's Annuity[9]. There, Eve, J. had to decide whether consols purchased on the redemption of an annuity could (in his Lordship's words, at 284) "properly be held to be inalienable settled chattels" within s.5(5) of the Finance Act 1894. His Lordship continued (at 285):

"In my opinion the original annuity was inalienably settled by the Act creating it and the same attributes attached to the redemption moneys, but I cannot bring myself to hold that these moneys are chattels within the meaning of that word in the sub-section. No doubt 'chattels' is a word of wide signification and in certain circumstances has been held to cover every sort of personal property, including money, choses in action, and the whole of a testator's residuary personalty; but this very elasticity of meaning demands a close scrutiny of the context in which the word is used before its true meaning can be satisfactorily determined."

In Re Givan[10] the context was the Supreme Court Fees Order 1930 (U.K.) It provided, so far as is presently relevant, that a designated fee could be charged by the appropriate person on a court-directed sale of chattels. The question was whether shares were chattels for the purposes of the order. Buckley, J. held that they were. He said (at [1966] 1 W.L.R. at 1383, in a passage which differs - although not in substance - from that at [1966] 3 All E.R. at 397):

"In the present case, I can find no sufficient context to give 'chattels' other than what appears to me to be its primary meaning extending to any kind of personal property ... Accordingly, I reach the conclusion that, on the true construction of the relevant words in Schedule I to the Supreme Court Fees Order, 1930, the shares which were part of the subject matter of the sale in the present case were 'chattels' within the meaning of that order and that the fees are applicable in respect of the sale of shares."

It may be noted that his Lordship appears to give a primary meaning to the word "chattels" which differs from that which "strictly speaking" is (according to Halsbury) the meaning of the expression "chattels personal".

It might also be noted at this point that the applicable legislation imposes a tax. The courts now approach such legislation as being directed to the substance as well as to the form of transactions. To the extent that cases, formerly of high authority, such as Partington v. Attorney-General[11] and Inland Revenue Commissioners v. Duke of Westminster[12] stand in the way of this approach, they are no longer to be followed: Hepples v. Federal Commissioner of Taxation[13]. It nevertheless remains true that the intention to impose a tax or duty must be shown by clear and unambiguous language and cannot be inferred from ambiguous words: Brunton v. Commissioner of Stamp Duties[14]. It is also generally true that, where a taxing Act provides for an exception to the imposition of a charge, and where the construction of the exempting words is "seriously in doubt, the interpretation should favour those whose claims are based upon the exceptions": Burt v. The Commissioner of Taxation[15].

There is in my opinion every reason to suppose that Parliament intended to combine, with the value of the real property, the value of all other property included (to use the words of the Explanatory Memorandum) "as an integral part of [the] sale." The word "chattels" was adopted not because Parliament wished to restrict the property caught by the amendment to moveable articles such as household furniture but because "chattels" is the word which naturally comes to mind when one is considering the nature of the personal property that is most commonly included in and with the sale and purchase of land. But there is no sensible reason why Parliament would want to include for the purpose of assessment some categories of personal property, while excluding others, where in all cases the property in question was "sold as an integral part of [the] sale". Certainly, the mere adoption in s.63 of a word of such uncertain meaning as "chattels" gives no clear indication of the location of any line which might be drawn between some categories of personal property which, being "an integral part of [the] sale", should be assessed and other categories of personal property, although being equally integral, should not.

On the contrary, s. 63 (3) speaks of "chattels...that by reason of the sale of...real property...are sold...to the transferee". The licences transferred by Mr. Elliott to the appellant were without a shadow of a doubt sold by reason of the sale of "Madowla Park". The word "chattels" is capable of encompassing those licences. The fact that another word or expression might be more apt is in the circumstances no answer. This, I think, is particularly so given the then Treasurer's use of the expression "personal property" in the relevant passage in his budget speech.

Licences which confer rights to irrigate specified parcels of land, or to draw water for domestic and stock purposes being conducted on that land, have a direct an immediate impact on its value. When sold with the land they are necessarily as integral a part of the sale as anything could be which is not the land itself. I repeat: to exclude such property from the scope of s. 63 (3) merely because the word chosen to there describe it, while accurate in itself, is not as apt as another descriptive word or phase, would I think fly in the face of the will of Parliament.

The appellant submits that there is a relevant distinction between chattels which on the one hand are tangible and moveable and those which are on the other intangible and cannot be moved - at least not by the means in transporting physical objects. This distinction is, the appellant submits, given substance by the reference in s.63(3) to "chattels not being stock in trade held or used in connection with a business carried on or in connection with the real property". The words "held or used in connection with a business carried on or in connection with the real property", it is submitted, qualify not the expression "stock in trade" but the word "chattels". But "chattels not being stock in trade held or used in connection with a business carried on or in connection with the real property" are (the submission continues) necessarily physical objects. It must follow that intangible property such as water rights, if they constitute property at all (which, of course, the appellant submits they do not) are excluded from the operation of s.63(3) and, necessarily therefore, of s.63(4).

There are, it seems to me, two problems with this submission. First, if the water rights enjoyed by the appellant constitute chattels, then it could sensibly be said that they are chattels used in connection with the business of growing rice. Secondly, the expression "not being stock in trade held or used in connection with a business carried on or in connection with the real property" is not divided by punctuation from the word "chattels"; and it was inserted into the sub-section, as a single expression, by the Stamps Act 1984. Accordingly, it is surely more appropriate to link "stock in trade" rather than "chattels" to that which is "held or used in connection with a business carried on or in connection with the real property".

The form presently taken by sub-section (3) indicates to my mind an intention by Parliament to exclude from duty those objects known as stock in trade which, if they in reality form part of one transaction of which the sale of real property is another constituent part, do so not so much because they are sold as a package with the land but because they are sold as part of a business which is sold as a package with the land.

In this respect, they are analogous to the stock and implements sold in connection with a conveyance of land used for primary production. They are not connected with the land as are free-standing cupboards or wardrobes or soft furnishings or furniture. Their first connection is with a business - which (ex hypothesi) happens to be carried on or in connection with the land. Their exclusion from the assessment of stamp duty is explicable and logical on that basis.

Not so the rights attached to water licences. They are so intimately connected with the land that they directly affect the use to which it can be put and the profits which may be realised from that use. There is no logical reason why land to which rights of irrigation and the like are linked, and the value of which is increased thereby, should be taxed on a basis which differs favourably from that which applies to land with no better access to water than the rain which falls directly onto the land from the heavens. In other words, there is no reason why the farmer in a region of high and dependable rainfall should pay more duty than a farmer in a drought-prone region but who has access to a comparable supply of water (access to which is regulated by the Crown in the general public interest) from which his property may be successfully irrigated.

In my opinion, the Parliament intended to include in the calculation of stamp duty payable on instruments of transfer of land used for primary production not only household chattels such as detached wardrobes or unfixed floor coverings but also such intangible assets as water rights. Each, if part of the sale of the land, are an integral part of that sale - the water rights above all. None fall into the same category as stock or implements. The latter, like stock in trade, are sold as part of the business with which the land is associated. The former (that is, household chattels and water rights) are sold either for domestic use or as a constituent element in the land itself. It is true that water rights may well be vital to the use of real property for primary production; but they are vital in the way the land itself is vital. In this respect, their role in the scheme of things can I think be sensibly differentiated from that of stock or implements; and the reasons which prompted Parliament to exempt the latter from duty do not apply to the former. Indeed, water rights are such an integral part of a transaction involving properties used for primary production that Parliament may have thought it entirely appropriate that their value be included in any assessment of stamp duty. The use of the words "stock, implements or other chattels" in s.63(4) is compatible with this assessment of Parliament's intention.

These issues were considered by the Victorian Administrative Appeals Tribunal in Re Blazey Farms Pty. Ltd. v. Comptroller of Stamps[16]. In that case, the applicant ("Blazey Farms") purchased an almond-growing property with rights to draw water pursuant to licences issued (under the authority conferred by the Water Act 1958 on the Rural Water Commission of Victoria) to the vendor. The applicable provisions of the Stamps Act have not changed since Re Blazey was decided. The Administrative Appeals Tribunal held that although the licences fell within s.63(3), they did not fall within the exemption in s.63(4). Although the reasoning adopted by the Tribunal is somewhat different from that which I have set out above, it seems to me that Blazey Farms was properly decided.

For these reasons, the present appeal should in my opinion be dismissed.

[2] [1968] HCA 23; (1968) 119 C.L.R. 222 at 231 per Barwick, C.J.

[9] [1925] 1 Ch. 280 at 285 per Eve, J.

[12] [1936] A.C. 1 at 20, 24-25, 28 and 31

[15] [1912] HCA 74; (1912) 15 C.L.R. 469 at 482 per Barton, J.

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