BETWEEN : CALTEX AUSTRALIA PETROLEUM PTY LTD Formerly known as AUSTRALIAN PETROLEUM PTY LTD

CALTEX STORES PTY LTD Formerly known as OASIS CONVENIENCE STORES PTY LTD

BETWEEN : CALTEX AUSTRALIA PETROLEUM PTY LTD Formerly known as AUSTRALIAN PETROLEUM PTY LTD

Stamp duty - Whether a franchise agreement is an instrument of security - Whether an amount payable as a percentage of profits is ascertainable

Practice and procedure - Argument on point not raised in Court below

Stamp Act 1921 (WA), s 16, s 83, Second Schedule Item 13

Babaniaris v Lutony Fashions Pty Ltd [1987] HCA 19; (1987) 163 CLR 1

Caltex Oil (Australia) Pty Ltd v Best [1990] HCA 53; (1990) 170 CLR 516

Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd [1989] HCA 19; (1989) 167 CLR 1

Commissioner of Stamp Duties (Qld) v Hopkins [1945] HCA 14; (1945) 71 CLR 351

Commissioner of Stamp Duties of New South Wales v Simpson [1917] HCA 69; (1917) 24 CLR 209

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297

Durham County Electrical Power Distribution Co v Commissioners of Inland Revenue [1909] 1 KB 737

Esso Australia Ltd v RT & MI Abela Pty Ltd [1989] FCA 523; (1989) 91 ALR 476

Inland Revenue Commissioners v Duke of Westminister [1936] AC 1

John v Federal Commissioner of Taxation [1989] HCA 5; (1989) 166 CLR 417

Kenworthy Homes (1971) Pty Ltd v Commissioner of State Taxation (1975) 5 ATR 311

Linton Nominees Pty Ltd v Commissioner of State Taxation (1977) 8 ATR 99

Mark Stephen Holdings v Garlick, unreported; SCt of WA (Pidgeon J); Library No 6549; 8 December 1986

National Mutual Life Association of Australia Ltd v Commissioner of State Taxation (1996) 96 ATC 4615

Project Blue Sky Inc & Ors v Australian Broadcasting Authority [1998] HCA 28; (1998) 153 ALR 490

Richards v Golden Fleece Petroleum Ltd (1983) 49 ALR 337

1 PIDGEON J: I agree with the reasons of McKechnie J.

2 The word security is capable of a wide meaning. In Jowitt's Dictionary of English Law, 1st ed, 1604 it is defined as something which makes the enjoyment or enforcement of a right more secure or certain. A history of cases as to how the word when used in Item 13 of the Second Schedule of the Stamp Act 1921 (WA) is contained in the reasons of Virtue J in Neon Signs (Australia) Ltd v Commissioner of Stamps [1963] WAR 167. I do not consider the subsequent amendments to Item 13 in any way shows an intention to alter the principles stated in that case. Originally there were different rates of duty for primary securities and collateral securities. The deletion of this terminology from Item 13 intended to do no more than accommodate the fact that duties are no longer assessed in this manner. I consider the documents were properly assessed as a security under Item 13.

3 It is submitted, in the alternative, that the documents initially are to be assessed under Item 13 but that there is a modification to the amount of duty payable by reason of the operation of s 83. This section is limited to moneys due upon an account current and the section provides the method of stamping when a bank or other lending institution agrees to make available to a borrower a future advance on the borrower's current account. The lender may initially specify the limit of the moneys to be so advanced. If this is done, then the duty to be paid is assessed under subsection (1) of s83 and is the duty payable under Item 13 on the amount so limited. If the amount to be made available is not limited then duty under subsection (2) is initially only nominal. However the lender is precluded by ss (3) from enforcing the security for a greater amount than that for which it has been stamped. If it is intended to increase the amount of the security it is open to stamp it further. The section provides a simple mechanism for common banking practice. The section has no application to the present agreement as it has no provision whereby money becomes due on an account current.

5 MURRAY J: I have had the advantage of reading in draft the reasons for judgment to be published by McKechnie J. I respectfully agree with them and with his Honour's conclusion that the appeals should both be dismissed.

6 I also agree with the supplementary reasons published by Pidgeon J. There is nothing I could usefully add to what their Honours have written.

7 McKECHNIE J: This appeal principally raises for consideration the interpretation of the Stamp Act 1921 (WA), Second Schedule Item 13. For brevity I shall refer to this provision hereafter as Item 13. It also raises the question whether the Stamp Act s 83 has any application to the facts, and if so, whether it be s 83(1) or s 83(2).

8 As the same points arise in each appeal, they have been heard together.

9 As is common in appeals under the Stamp Act s 33, the matter proceeded on the statement of agreed facts. Anderson J found it convenient to refer to all the appellants as "Ampol" and where appropriate, I shall do the same. The statement of agreed facts in FUL 48/99 was as follows:

"1. Helmac Holdings Pty Ltd ('Helmac'), Sportscall Pty Ltd ('Sportscall') and the First Appellant entered into a Franchise Agreement dated 21 May 1996 which granted Helmac and Sportscall the right to use the Ampol franchise system to operate an Ampol service station at Lakeside Joondalup Shopping Centre, Joondalup Drive, Joondalup Western Australia ('the Franchise Agreement').

2. By an agreement dated 28 November 1997 made between Helmac and Sportscall as sub-licensors, the Second Appellant as sub-licensee and the First Appellant ('the Sub-Licence Agreement'), the Second Appellant agreed to take a licence of the rights granted to Helmac and to Sportscall under the Franchise Agreement on the terms and conditions set out in the Sub-Licence Agreement.

3. The term of the Sub-Licence Agreement was from 1 December 1997 until May 2001 unless earlier terminated with a right to extend the term of the Sub-Licence Agreement until 18 May 2006 contingent upon the renewal of the Franchise Agreement by the Sub-Licensor (Clause 2.1).

4. The Sub-Licence Agreement required the Second Appellant to pay:

(a) firstly, $4,300.00 per month to ANZ Banking Group Ltd to reduce the debt owing to ANZ until 19 September 2001 (Clause 2.2.1);

(b) secondly, the amount of $2,482.95 per month to Esanda Finance to reduce the debt owing to Esanda until 17 May 2001 (Clause 2.2.2);

(c) 50% of the net profit derived by the business in any quarter (after taking various matters into account) to Helmac and Sportscall (Clause 2.2.3); and

(d) finally, the prescribed payments due by Helmac and Sportcall [sic] to the First Appellant under the Franchise Agreement (Clause 2.2.4).

5. By a notice of assessment dated 19 January 1998 the Respondent initially assessed the Sub Licence Agreement to duty under Item 13 of the Second Schedule on the amount of $691,860 as follows:

6. The First Appellant objected to the assessment dated 19 January 1998 by a letter dated 19 February 1998.

7. The Respondent allows the objection in part and issued a modified notice of assessment dated 13 March 1998 in an amount of $302,084 as follows:

8. By letter dated 2 April 1998 the First Appellant requested that the objection dated 19 February 1998 be treated as an appeal."

10 The statement of agreed facts on FUL 49/99 was as follows:

"1. By an agreement dated 30 June 1997 made between the First Appellant and the Second and Third Appellants, the First Appellant granted a franchise to the Second and Third Appellants to use the Ampol Franchise System to operate an Ampol service station at the corner of Ranford Road and Wilfred Road, Canning Vale ('the Agreement').

2. The Agreement had a term of 5 years commencing on 1 July 1997 and expiring on 30 June 2002, subject to provision for earlier termination, and the renewal for a further 5 year term (Clause 1.1 and 1.2).

3. Pursuant to Clause 4.1 of the Agreement the First Appellant granted to the Second and Third Appellants a non-exclusive licence for the term to:

4. Clause 16 of the Agreement required the Second and Third Appellants to pay to the First Appellant;

(b) the service fees (Item 14, 15 and 16 of the Schedule)

(c) the licence fees (Items 17, 17A and 17B of the Schedule) and, where applicable;

(d) the deferred franchise fee, the assignment administration fee and the cooling off administration fee (Items 13, 22 and 23 of the Schedule).

5. In addition the Second and Third Appellants were required to pay for Ampol petroleum products, reimbursement of sums paid by Ampol for franchising obligations not met, reimbursement of sums paid by Ampol to repair the premises and Ampol delivery costs.

6. The service fees include the ShopStop fee and the motor fuel fee and the AMS service fee.

7. The licence fees include the General Licence Fee, the workshop fee and the AMS Facilities fee.

8. Clause 18.1 of the Agreement provided that the following payments were to be made to the First Appellant on execution of the Agreement:

(c) the workshop fee and AMS facilities fee for the first month;

9. The service fees comprising the AMS service fee, the workshop fee and the AMS facilities fee were to be paid to the First Appellant monthly in advance by direct debit (Clause 18.2).

10. The service fees comprising the ShopStop fee and the motor fuel fee were to be paid to the First Appellant weekly in arrears by direct debit (Clause 18.3).

11. Payment for petroleum products was to be made in accordance with the First Appellant's ruling method and terms of payment (Clause 18.4).

12. The general rental fee for years 2 and 3 was to be paid to the First Appellant in advance on the respective anniversary dates (Clause 18.7).

13. The franchise fee was the amount of $100.00 (Item 12).

14. The ShopStop Fee was to be calculated as 10% of ShopStop sales up to the value of nominated target sales and 7% on sales exceeding the target sales (Item 14).

15. The motor fuel fee was to be calculated as 15% of the motor fuel margin (Item 15).

16. The AMS service fee for a single console was $400.00, for a dual console $575.00 and for a triple console $750.00 (subject to increases in accordance with CPI for the previous year) (Item 16 and Annexure III).

17. The general licence fee was $17,000 for the first 12 months (payable on execution), $18,000 for the second 12 months and $19,000 for the third 12 months (Item 17).

18. The workshop fee was $1250.00 per bay per month for the first 2 bays and $800.00 per bay per month for any additional bays (Item 17A).

19. Annexure 1 to the Schedule marked 'Licensed Premises - Plan' indicates three workshop bays.

20. The AMS facilities fee was $250.00 payable monthly (Item 17B).

21. The assignment administration fee and the cooling off administration fee were each an amount of $1000.00 (Items 22 and 23 respectively).

22. By notice of assessment dated 22 September 1997 the Respondent initially assessed the Agreement to duty under Item 13 of the second schedule on the amount of $790,167 comprised as follows; general fee of $54,000, the workshop fee of $198,000 and ShopStop fee of $538,167.60.

23. The First Appellant objected to the assessment dated 22 September 1997 by letter dated 3 November 1997.

24. The Respondent issued a modified notice of assessment dated 17 November 1997 in an amount of $254,000.00 which amount excluded the ShopStop component.

25. The modified notice of assessment was varied by a further assessment dated 12 February 1998 which assessed the Agreement to duty on amount of $231,700 comprised as follows:

The amount of $231,700 was calculated after allowing for the payments made on execution of the Agreement referred to at paragraph 7.

26. By letter dated 16 December 1997 the First Appellant requested that the objection dated 3 November be treated as an appeal."

11 Pursuant to the Rules of the Supreme Court (WA) O 77 r 6(1)(d) the Commissioner considered the following question arose for determination on appeal in respect of FUL 48/98:

"(a) was the Respondent correct in determining that:

(i) the Sub-Licence Agreement was an instrument of security for the purposes of Item 13 of the Second Schedule to the Stamp Act;

(ii) despite the fact that amounts payable under the Sub-Licence Agreement include both ascertainable and unascertainable amounts an amount ultimately payable can be ascertained for purposes of Item 13(1)(a) of the Second Schedule to the Stamp Act;

(iii) the amount ultimately payable under the instrument was an amount of $302,084.00.

(iv) Section 83(2) of the Stamp Act was not applicable to the Sub-Licence Agreement;

(b) If the answer to (a)(i) (ii) or (iii) is no, was the Sub-Licence Agreement dutiable for any and if so what amount?

(c) how shall the costs of the appeal be borne and paid?"

12 In respect of FUL 49/98, the Commissioner considered the following question arose for determination on appeal:

"(a) was the Respondent correct in determining that:

(i) the Franchise Agreement was an instrument of security for the purposes of Item 13 of the Second Schedule to the Stamp Act;

(ii) despite the fact that amounts payable under the Franchise Agreement include both ascertainable and unascertainable amounts an amount ultimately payable can be ascertained for the purposes of Item 13(1)(a) of the Second Schedule to the Stamp Act;

(iii) the amount ultimately payable under the instrument was an amount of $231,700.00.

(iv) Second 83(2) of the Stamp Act was not applicable to the Franchise Agreement;

(b) If the answer to (a)(i) (ii) or (iii) is no, was the Franchise Agreement dutiable for any and if so what amount?

(c) how shall the costs of the appeal be borne and paid?"

13 The first ground of appeal, common to both appeals, asserts that the learned Judge erred in law in:

"1. Not holding that the instrument was a licence which was:-

1.1 not a mortgage (as defined in s.81(1) of the Stamp Act 1921 ('the SA')), a security within the meaning of s.83(1), an instrument of security within the meaning of s.83(2) or an instrument within any of the classes specified in the heading to Item 13 of the Second Schedule to the SA; and

15 The appellants expressly conceded before the trial Judge that the documents were instruments of security as that term is expressed in Item 13. As Anderson J noted in his judgment:

"It is not in dispute that both the franchise agreement and the sub-licence is a 'security for the payment or repayment of money' within the meaning of s 83(1) and 'an instrument of security' within the meaning of s 83(2)."

16 Before this Court, the appellants sought leave to raise the point in ground 1, notwithstanding the concession made before the trial Judge.

17 A party is ordinarily bound by the manner in which it chooses to conduct its case in the trial court. If an Appeal Court readily allows points to be raised and argued on appeal which were not argued at trial, there is a potential for injustice to arise. A party may tactically hold back on a point in order to subsequently give himself or herself at least one ground of appeal.

18 The principle that a party is bound by its conduct at trial has greater application where, as in this case, the parties were represented by counsel.

19 There is a further disadvantage in having a point raised on appeal for the first time. Necessarily, the Full Court is deprived of the assistance which the trial Judge would give in an analysis of the issues.

20 Ultimately, an Appeal Court has a discretion whether to allow a point to be argued which had not been argued in the court below, or which had been conceded or abandoned in that court.

21 The principles and the authorities are gathered together by Malcolm CJ in Western Australian Land Authority v Simto Pty Ltd, unreported; FCt SCt of WA; Library No 980560; 25 September 1998 at 25 - 28.

22 In the present case the court has permitted argument on the ground, notwithstanding the concession at trial. In granting permission the court had in mind O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 per Mason J at 319:

"In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided ..."

23 In this case the facts have been agreed between the parties. The point at issue is construction of the Stamp Act. In the construction of Item 13, single Judges of this Court have followed a line of authority commencing in this Court with Neon Signs (Australia) Ltd v Commissioner of Stamps [1963] WAR 167. Item 13 has not been previously considered by the Full Court.

24 In the circumstances it is expedient in the interests of justice that this Court pronounce upon the interpretation of Item 13.

25 I am fortified in that conclusion by the history of the interpretation of Item 13. In National Mutual Life v Commissioner of State Tax (1991) 4 WAR 226. Wallwork J had to consider whether a hire agreement of a business upon the payment of a monthly licence fee was assessable for ad valorem duty under Item 13(1)(b).

26 After considering the authorities referred to in Neon Signs (supra). His Honour concluded at 233:

"It was submitted that item 13 only levies duty in this case if the distinct matter for the purpose of levying duty is the obligation to make payment; that that obligation is not a distinct matter in its own right; it is an ancillary obligation.

In my view, to come to that conclusion would require this Court to depart from the reasoning in the English authorities to which I have referred. I think it is too late now for a single judge of this Court to depart from the reasoning in those earlier decisions."

27 The Stamp Act s 16 imposes an obligation to stamp instruments in terms of the Schedule.

28 It is the appellants' contention, in part, that the definition of "security" in Item 13 accepted by Virtue J in Neon Signs (supra) was different from the usual popular meaning of the word. In light of amendments to Item 13 it is now appropriate to construe the term "security", when it appears, more narrowly.

29 To put that submission in context it is necessary to trace, to some degree, the legislative history of Item 13.

30 In 1963, at the time of Neon Signs, the forerunner to Item 13 read as follows:

"BOND, COVENANT, OR INSTRUMENT of any kind whatsoever-

1. Being the only or principal or primary security for any annuity (except upon the original creation thereof by way of sale or security and except a superannuation annuity), or for any sum or sums of money at stated periods not being interest for any principal sum secured by a duly stamped instrument, nor wages or salary, nor rent reserved by a lease-

For a definite and certain period so that the total amount to be ultimately payable can be ascertained ... ... ...

For the term of life or any other indefinite period -

For every $10 and also for any fractional part of $10 of the annuity or amount payable annually ...

(2) Being a collateral or auxiliary or additional or substituted security for any of the abovementioned purposes where the principal or primary instrument is duly stamped-

Where the total amount to be ultimately payable can be ascertained ... ...

For every $10 and also for any fractional part of $10 of the annuity or amount annually payable ...."

31 A similar provision was considered by the House of Lords in Independent Television Authority & Associated Rediffusion Ltd v Inland Revenue Commissioners [1961] AC 427. There, the House had under consideration an agreement to provide programmes for broadcast over a period of 10 years. Associated Rediffusion Ltd was to pay Independent Television Authority a fee.

"It is not denied that an instrument may constitute a security even though it is itself the original and only source of the obligation to pay periodical sums of money which is the basis of the ad valorem charge of duty."

"What is necessary is that it should be possible to ascertain from the agreement that there is some specified sum agreed upon as the subject of payment which may perhaps fairly be called the prima facie or basic payment."

34 This decision was relied upon by Virtue J in Neon Signs Ltd (supra). He said at 168:

"These authorities make it clear that the term 'security' as used in the particular part of the Schedule, is used in a wide and not limited sense: and that it includes an instrument which creates a liability to make periodic payments as well as a document which is merely collateral to a previously existing obligation."

35 Item 13 was amended by the Stamp Act Amendment Act 1979 (WA) No 37 of 1979.

"13. MORTGAGE (LEGAL OR EQUITABLE), BOND, DEBENTURE, COVENANT, BILL OF SALE, GUARANTEE, LIEN OR INSTRUMENT OF SECURITY OF ANY OTHER KIND WHATSOEVER:

(1) An instrument referred to in the heading to this item, which instrument sets out the only or principal or primary security for any sum or sums of money at stated periods, being neither interest for any principal sum secured by a duly stamped instrument nor wages or salary or rent reserved by a lease-

(a) for a definite and certain period so that the total amount ultimately payable can be ascertained-

for every $100 and also for every fractional part of $100 ... ...

(b) for a term of life or any other indefinite period-

for every $100, and also for every fractional part of $100, of the amount payable annually ...

(2) An instrument referred to in the heading to this item, which instrument sets out the only or principal or primary security for the payment or repayment of money-

for every $100, and also for every fractional part of $100, of the amount payable ...."

37 Importantly, the words "INSTRUMENT OF SECURITY OF ANY OTHER KIND WHATSOEVER" were added to the preamble to the definition.

38 Liability was affixed to an instrument referred to in the heading.

39 Item 13 was further amended in 1984 by the Stamp Act Amendment Act 1984 (No 81 of 1984):

"13. MORTGAGE (LEGAL OR EQUITABLE), BOND, DEBENTURE, COVENANT, BILL OF SALE, GUARANTEE, LIEN OR INSTRUMENT OF SECURITY OF ANY OTHER KIND WHATSOEVER:

(1) An instrument referred to in the heading to this item for the payment or repayment of any sum or sums of money at stated periods, being neither interest for any principal sum secured by a duly stamped instrument nor wages or salary-

(a) for a definite and certain period so that the total amount ultimately payable can be ascertained-

for every $100 and also for every fractional part of $100 ... ...

(b) for a term of life or any other indefinite period-

for every $100, and also for every fractional part of $100, of the amount payable annually .. ...

(2) An instrument referred to in the heading to this item for the payment or repayment of money-

for every $100, and also for every fractional part of $100, of the amount payable ...."

40 It can be seen that this amendment to Item 13 deletes the words "which instrument sets out the only or principal or primary security" and substitutes the words "for the payment or repayment of". The explanation for the deletion can be found in the second reading speech by the Acting Premier for Wednesday 15 August 1984, where he says:

"Another proposal arises from the consolidation of the 1979 review of the 'mortgage' and 'bond' heads of charge in the second schedule. Certain words left in the consolidated head of charge are considered restrictive in that they relate to 'only the principal or primary security', and 'rent reserved by a lease'. These words are creating uncertainty as to which instrument is the 'principal' or 'primary' security and which 'rents' are not chargeable as a security in any event. The amendments propose to remove these uncertainties but will have no effect on the revenue."

41 Finally, for completeness, the present form of Item 13 is as follows:

"13. MORTGAGE (LEGAL OR EQUITABLE), BOND, DEBENTURE, COVENANT, BILL OF SALE,

GUARANTEE, LIEN OR INSTRUMENT OF SECURITY OF ANY OTHER KIND WHATSOEVER

(1) An instrument referred to in the heading to this item for the payment or repayment of any sum or sums of money at stated periods, being neither interest for any principal sum secured by a duty stamped instrument nor wages or salary-

(a) for a definite and certain period so that the total amount ultimately payable can be ascertained-

(a) does not exceed $35 000 ........... 0.25 for every

(b) exceeds $35 000 .................... (i) $87.50;

Should the words "INSTRUMENT OF SECURITY OF ANY OTHER KIND WHATSOEVER" be now construed more narrowly than in the past?

42 The appellants argue that the change in wording now makes it appropriate to give to the word "security" its primary, and not extended, meaning. It is argued that the so-called primary meaning of security can be ascertained from authorities such as Singer v Williams [1921] 1 AC 41 and Handevel Pty Ltd v Controller of Stamps (Victoria) [1985] HCA 73; (1985) 157 CLR 177.

43 At issue in Singer v Williams (supra), was whether shares in a foreign trading company were foreign possessions or foreign securities under the provisions of the Income Tax Act 1842.

"My Lords, the normal meaning of the word 'securities' is not open to doubt. The word denotes a debt or claim the payment of which is in some way secured. The security would generally consist of a right to resort to some fund or property for payment; but I am not prepared to say that other forms of security (such as personal guarantee) are excluded. In each case, however where the word is used in its normal sense some form of secured liability is postulated."

45 In Handevel Pty Ltd v Controller of Stamps (Victoria) (supra) the issue was whether a deed and charge whereby a company agreed to purchase shares if the issuing company failed to redeem them, charging certain land as securities for its obligations, was a "mortgage" within the meaning of the Stamp Act.

46 At 196 the majority of Mason, Wilson, Deane and Dawson JJ said:

"The word 'security' is susceptible of more than one meaning. It may mean a debt or claim, the payment of which is in some way secured, either by a right to resort to some fund or property for payment or by a guarantee (Singer v Williams); or it may mean an instrument which creates or acknowledges an obligation to pay a sum of money, even though it is the original source of the obligation and the obligation is executory: Independent Television Authority and Associated Rediffusion Ltd v Inland Revenue Commissioners; Ansbacher. Kitto J described the first of these meanings as the primary meaning. ..."

47 In Independent Television Authority & Associated Rediffusion Ltd v Inland Revenue Commissioners [1961] AC 427 and Inland Revenue Commissioners v Ansbacher [1963] AC 191 it was held that security bore the second of these two meanings under the first schedule to the Stamp Act 1891 (UK).

48 It is submitted that when Virtue J considered the provision, the section referred to an instrument "being security", whereas now, the heading requires there to be "an instrument of security".

49 On the appellants' submission, the primary purpose of the agreement is not as an instrument of security, but as a franchise agreement. Reference is made to the Petroleum Franchise Agreement Act 1980 (Cth) to support this and other submissions. The appellants submit that almost any agreement will require the payment of money and that fact itself cannot determine the issue. That Item 13 refers to an instrument for the payment of money at stated periods says nothing about whether the instrument is an "instrument of security of any other kind whatsoever."

50 I am unable to accept the appellants' contentions.

51 No legislative intention has been evinced to restrict the instruments upon which duty may be levied under Item 13(1). Clearly, the Acting Premier in introducing the amendments, did not consider that there would be a restriction of instruments, because he noted that the amendments would remove uncertainties but have no effect on the revenue.

52 The words "instrument of security of any other kind whatsoever" are to be given a wide interpretation. They are not to be interpreted ejusdem generis with the other instruments mentioned in the heading. It is plain that Parliament intended to give them wide effect. The other instruments mentioned however are not irrelevant. They do provide a general indication as to the meaning of the expression.

53 At the time of enactment of the amendment in 1984 an unbroken line of authority from Jones v Inland Revenue Commissioners [1895] 1 QB 484 through National Telephone Co v Inland Revenue Commissioners [1900] AC 1, Independent Television Authority & Associated Rediffusion Ltd v Inland Revenue Commissioners (supra) and Neon Signs (Australia) Ltd v Commissioner of Stamps (supra) had all held that an instrument for the payment of money in the nature of this franchise agreement was an instrument of security for that money.

54 In National Telephone Co Ltd v Inland Revenue Commissioners [1899] 1 QB 250, A L Smith LJ said at 257:

"I was at first somewhat taken by the case, put by the appellants' counsel in the course of his argument, of a simple contract for the hire of a carriage. He asked whether such contract could be properly called a security. The question, however, is, not what in ordinary parlance could be called a security but what is the meaning of the word 'security' in this taxing Act; and it seems to me that, when the Act is fully considered, the meaning of the word as used therein is fairly defined by the Act itself."

"... or Instrument of any kind whatsoever (1.) being the only, or principal, or primary security ... or for any sum or sums of money at stated periods. ..."

"Those words, in my opinion, cover a contract in writing, such as this, for the payment of a sum of money at stated periods. I cannot sever the word 'instrument' from the words 'bond' and 'covenant' which accompany it; and, as a bond or a covenant for the payment of a sum of money at stated periods within the Act, I cannot see how I can hold that a contract in writing to the same effect is not within it. ... I think that the word 'security', as used in the Act, clearly includes an instrument by which the obligation to pay is originally created."

56 The effect of the amendments to Item 13 have not altered the meaning of the words "instrument of security of any kind whatsoever" where they appear. Whatever may be the so-called primary meaning of the word "security", I adopt the reasoning of A L Smith LJ. The Stamp Act is a taxing statute. The proper approach is to determine the meaning of the definition within the Stamp Act not a meaning in unrelated matters.

57 I do not consider that Parliament intended to effect a wholesale change of Item 13. The drafter would have been aware of the consistent interpretation of the term "security", to which I have referred, and continued to use the term with that interpretation in mind.

58 It is significant that following the passage already quoted from the speech of Viscount Cave in Singer v Williams (supra), Viscount Cave continued:

"No doubt the meaning of the word may be enlarged by an interpretation clause contained in a statute ... or the context may show, as in certain cases relating to the construction of wills (In Re Raynor; In Re Gent and Eason's Contract (2)), that the word is used to denote; in addition to securities in the ordinary sense, other investments such as stocks and shares."

59 In Glenepping v The Commissioner of Stamp Duty (1985) 3 NSWLR 635, Lee J had to construe a similar provision in the New South Wales Stamp Duties Act 1920. He concluded that a bare covenant to repay a loan is a "loan security".

60 Lee J considered the various authorities to which I have referred and then continued at 645:

"It will be seen from the foregoing that the meaning given to the word 'Security' in England is acknowledged in the judgments to be not the popular meaning, but the meaning required by the terms of the relevant provision, and in the present case the essential question is whether or not the construction placed on the head of ..."

61 The various legislative changes to Item 13 have not altered the meaning of the term "security" from that used in the authorities analysed and followed by Virtue J in Neon Signs. Therefore the appellants' first contention fails.

Is the Franchise Agreement a "Security", Narrowly Defined

62 By urging this Court to adopt a more narrow definition of "security", the appellants argue that the franchise agreement is not a security within the narrow definition of that term. Although I have rejected the appellants' argument that the narrow definition applies, I will nevertheless deal with the submission.

63 The appellants cited in support the passage of the judgment by Lord Cave in Singer v Williams at 49 which I have already set out.

64 In Brick and Pipe Industries v Occidental Life Nominees Pty Ltd & Ors [1992] VicRp 68; (1992) 2 VR 279 at 371 the Victorian Full Court said of the word "security":

"It can be used to comprehend a personal security such as a guarantee or indemnity. As the learned Judge pointed out, the notion of security usually conveys that rights exercisable against some property are given."

65 In my opinion, even if the definition of "security" as postulated by Viscount Cave in Singer v Williams is accepted, the application of such a definition leads to the same result.

66 The retail franchise agreement in respect of both appellants is in similar form.

67 It provides for a number of matters including the grant of the franchise, the grant of licences to use trademarks and intellectual property and various other matters.

68 One important part of the franchise agreement is Part D. This part is headed "Payments" and consists of five headings, all in plain English, as follows:

69 The consequences of the failure to pay are particularised in six paragraphs as follows:

"20.1 If you fail to pay Ampol money owed under the Agreement, Ampol will be entitled to recover the money as a debt together with interest.

20.2 You agree to pay Ampol interest at the rate equivalent to the current maximum overdraft rate being applied by the Commonwealth Trading Bank of Australia (or any successor) at the due date plus two percent (2%) per annum on any monies unpaid by the due date by you to Ampol on any account whatsoever under this Agreement (whether or not any formal or legal demand for the money owed has been made). Such interest is to be calculated on the sum of the debt from the due date for payment until payment of the debt in full.

20.3 Ampol may at any time withhold and retain any monies due or owing to you by Ampol and apply this money in reduction of money due or owing by you to Ampol.

20.4 You will not be entitled to withhold any monies due or owing to Ampol by you. Further, you may not plead any set-off, defence or counterclaim or otherwise attempt to reduce your liability to make payments under this Agreement.

20.5 Your failure to pay will be a breach of this Agreement giving Ampol the right to terminate in accordance with the provisions of clause 67.

20.6 A certificate signed by any manager or nominated representative for the time being of Ampol and stating the balance of sums due by you to Ampol under the Agreement will be prima facie evidence of the amount of your indebtedness to Ampol under this Agreement at the date of the certificate and of all particulars contained in such certificate."

70 In my judgment, an integral part of the franchise agreement is to provide for security for the payment of monies owed to Ampol under the agreement.

71 There is potential for Ampol to have resort to a fund under 20.3 and other requirements to pay under 20.1.

72 It is argued that the principal purpose of the instrument must be considered for taxing purposes: Limmer Asphalte Paving Co Ltd v Inland Revenue Commissioners (1871-2) LR7 Exch 211. So much may be accepted. This is a franchise agreement. Comprehensively it provides for a set of circumstances including the security for payment of money beyond a simple personal obligation to pay. In my judgment it is at one and the same time a franchise agreement, a lease of premises, and an instrument of security. There is no greater purpose in one or the other.

73 In consequence, the instrument was correctly assessed under Item 13.

74 Ground 2 of the appeal challenges the Judge's conclusions when he held that s 83(1) was applicable, or more accurately, that s 83(2) was inapplicable. The ground is alternative to ground 1.

75 The objection raised by the appellants was that the total amount as payable under the agreement is not ascertainable as the payments required under cl 2.2.3 and 2.2.4 cannot be ascertained. As the total amount secured cannot be ascertained, s 83(2) requires that the duty be assessed on the amount of $2000 where the duty payable would be $5.

76 The Commissioner upheld the objection in part, but said:

"However, that part of the objection which relates to the Stamp Act s 83(2) is disallowed.

As s 83(1) relates to securities for the payment or repayment of money to be lent, advanced, or paid, or which may become due upon an account current either with or without money previously due, it is considered that s 83(2) relates to the same types of securities.

The sub-licence is not a security for the payment or repayment of money to be lent, advanced, or paid, or which may become due upon an account current and accordingly, s 83(2) is not applicable."

77 Before the trial Judge the appellants advanced the argument that s 83(1) is inapplicable as the total amount secured ought to be ultimately recoverable and that the instruments cannot be said to be "in any way limited" within the meaning of the subsection.

78 In respect of that argument, the trial Judge held:

"In my opinion, 'limited' in subss 83(1) and (2) is not synonymous with 'ascertainable'. An amount may be limited, but not ascertainable. The provision in an agreement for payment of a percentage of profits is an example. The total amount recoverable is limited to the percentage of profits, but it is not ascertainable because the profits are not ascertainable at the time of execution of the agreement. In my opinion, both instruments are chargeable in accordance with s83(1). It is true that not all fees are ascertainable as to the total amount recoverable under the instruments. This does not affect the question of the application of s83(1)."

"Security for future advances, how to be charged

A Security for the payment or repayment of money to be lent advanced or paid, which may become due upon an account current either with or without money previously due is to be charged, where the total amount secured or to be ultimately recoverable is in any way limited, with duty under item 13 of the Second Schedule as a security for the amount so limited."

"... when the total amount secured or to be ultimately recoverable by or under an instrument of security is not in any way limited, the instrument concerned shall be chargeable with ad valorem duty at the rate set out under item 13(2) of the Second Schedule on

(a) the total amount secured or to be ultimately recoverable thereunder; or

81 Under the franchise agreement relating to FUL 49 of 1999, the dutiable components of the assessment were:

82 Under the sub-licence agreement relating to FUL 48/1999, ad valorem duty was charged in respect of the payments of $4300 per month payable to ANZ Banking Group Ltd and $2482.95 per month payable to Esanda.

The sums of money you must pay to Ampol, or as Ampol directs, include:

(c) the Licence Fees specified in Items 17, 17A and 17B of the Schedule. ..."

"General Licence Fee $17,000 for the first 12 months payable

85 Clause 17A provides for the payment of a workshop fee as follows:

"Workshop Fee $1250** per Bay per month for the

86 The focus of attention must be whether the total amount secured is in any way limited. If the total amount secured is limited, then Item 13 applies. If it is not in any way limited, Item 13(2) applies.

87 In the way in which the matter was argued before Anderson J, it was necessary for him to deal specifically with the relevance of the Act, s 83.

88 It may be that it is unnecessary to go to the Act, s 83, in respect of these agreements.

89 The agreements in respect of the general licence fee and the workshop fee appear to be instruments for the payment of sums of moneys at stated periods. They are not interest on wages or salary. The amounts are for a definite and certain period so that the total amount payable can be ascertained.

90 The payments appear to me to fall precisely within the description given by Lord Keith in ITA v Inland Revenue Commissioners at 453:

"It does not appear to me to matter whether sums payable at stated periods are maximum sums capable of decrease or minimum sums capable of increase under the terms of an agreement. They are still sums the total of which are capable of ascertainment, unless they are payable for life or for an indefinite period."

91 The ascertainable amount was assessed in one case under appeal as $302,084 in FUL 48/99 and in the other case at $231,700 in FUL 49/99.

92 In these circumstances, there does not seem to be any need to have recourse to s 83, as the instruments of security fall directly under Item 13 and are taxable pursuant to s 16.

93 Section 83, does not at first blush appear to be dealing with the concepts within the franchise agreement at all, but rather is dealing with aspects akin to banking practice.

94 This reading comes about through the conjunction of words within s 83 such as "payment or repayment" and "to be lent, advanced or paid".

95 However Anderson J had to deal with the interpretation of s 83. Arguably it may have application. It is the subject of specific grounds of appeal. I will therefore consider whether s 83(1) or s 83(2), applies to the present cases.

96 In my opinion Anderson J was right to draw a distinction between the concept of an amount which may be ascertainable and an amount which may be limited.

97 They are in fact two different concepts as the drafter of s 83, and also Item 13 recognised.

98 A security which is limited is one where there is a ceiling on the potential liability of the obligor.

99 In most cases that ceiling will be known. It may be specified in dollar terms or it may depend upon calculations to be made in the future or upon the occurrence or non-occurrence of certain events. In these cases the ceiling is able to be calculated and is therefore ascertainable.

100 In some cases, the security may be one in which there is no ceiling on the potential liability of the obligor.

101 The potential liability of a name at Lloyds as to an insurance risk is an example which comes to mind where the liability is said to extend "down to and including your cufflinks."

102 The liability may be unascertainable in that it is at any particular time incalculable.

103 Section 83(1) deals with securities where liability is limited. If there is such a security, then duty is to be calculated pursuant to Item 13.

104 If liability is unlimited, then calculations as to duty payable at first instance are made pursuant to s 83(2). When subsequent events crystallise the indebtedness, s 83(3) provides a mechanism for up stamping to the extent of the indebtedness even though the liability remains unlimited.

105 If s 83 has application, I would hold that the franchise agreements are securities within s 83(1) not s 83(2) because the total amount secured is limited by the terms of the security to a maximum figure calculated over a fixed period.

107 In the present case Anderson J concluded that the Commissioner had been correct in determining "that the total amount secured or to be ultimately recoverable" was ascertainable for the purposes of the Stamp Act then Item 13(1)(a) applied, notwithstanding that amounts payable under the franchise agreement included both ascertainable and unascertainable amounts.

108 He reached this conclusion because, in respect of s 83(1):

"...if the amount recoverable is limited in any way, the instrument is chargeable as a security for so much of that amount, ie the amount so limited, as can be ascertained."

109 In my opinion this statement accords with authority on the interpretation of Stamp Acts. It promotes the overall purpose of the Stamp Act and is sensible.

110 In Coventry City Council v Inland Revenue Commissioners (1979) 1 Ch 142, Brightman J after discussing the authorities said at 149:

"To sum the matter up, the existence of a contingency or condition in relation to money payable periodically ... or a security for any sum or sums of money at stated periods (the 'Bond, Covenant or Instrument' head of charge) or security for the payment or repayment of money (the 'Mortgage, Bond, Debenture, Covenant' head of charge) is of no relevance in assessing ad valorem duty under those particular classifications."

111 Reference may also be made to Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps (Vic) [1981] VicRp 5; [1981] VR 35 per Tadgell J at 46.

112 The appellants drew support for their argument to the contrary from Lend Lease Development Pty Ltd v Commissioner of Stamp Duties (1986) 86 ATC 4,427. A close reading of that case does not support the appellants' contentions. The instrument there under consideration was a deed of charge between Lend Lease Development Pty Ltd and a number of banks.

113 The case largely turned on the definition of "secured monies" within the charge. Property was mortgaged to secure the payment of the secured monies.

114 The relevant statue was The Stamp Duties Act 1920 Second Schedule. The schedule used the expression "limited to a definite and certain sum of money."

115 It was contended for the respondent in that case that if attention was focussed exclusively on the deed of charge, then the requirements of the Second Schedule were not fulfilled. Rogers J was not able, as a matter of construction, to determine a prima facie or basic amount secured. That case is clearly distinguishable. The definition of "secured moneys" had no limits. In this jurisdiction the case would fall under the Stamp Act s 83(2).

116 In my opinion the trial Judge's reasons do not disclose error. The point raised on appeal for the first time should not succeed. I would dismiss the appeals.