Chief Commissioner of State Revenue v Platinum Investment Management Ltd

Court of Appeal (NSW)|2010-11-30|Before: Campbell JA, Macfarlan JA, Gzell J

, 6th ed (2006) LexisNexis Butterworths Category: Principal judgment Parties: Chief Commissioner of State Revenue (A) Platinum Investment Management Ltd (CAN 063 565 006) (R) Representation: Counsel: N Hutley SC and E Bishop (A) B Sullivan SC and M Richmond SC (R) Solicitors: I V Knight, Crown Solicitor (A) Pricewaterhouse Coopers (R) File Number(s): 08/277081 Decision under appeal Citation: [2010] NSWC 1 Date of Decision: 2010-02-02 00:00:00 Before: Gzell J File Number(s): SC 1140/08

HEADNOTE On 4 April 2007 the shareholders in an unlisted company, by deed, sold their shares in exchange for shares in the buyer to be allotted to the taxpayer as their nominee. The shares came into existence when they were allotted on 6 April 2007. The Commissioner assessed the deed to ad valorem duty both as an agreement for the sale of dutiable property and as a declaration of trust and the second assessment was challenged. It was common ground that the deed contained "several distinct matters" within s 294 of the Duties Act . Duty fell to be assessed as at the date of first execution when the shares did not exist. Gzell J held that the deed was not liable to ad valorem duty as a declaration of trust because the property "to be vested" in the taxpayer as nominee did not then exist, and he allowed the taxpayer's appeal. On further appeal by the Commissioner: HELD (1) By majority, Macfarlan JA dissenting, the deed was liable under ss 8 and 9 of the Duties Act to ad valorem duty as a declaration of trust because at the date of its first execution the future property "to be vested" in the taxpayer as nominee could be identified and was not a mere expectancy; (2) Future property can be valued; (3) The transfer of the shares to the buyer was consideration provided by the sellers which moved the declaration of trust by the taxpayer in their favour; (4) The taxpayer was not "the apparent purchaser of the shares" and the declaration of trust was not exempt from ad valorem duty under s 55 of the Duties Act ; (5) By a majority the appeal, should be allowed and the assessment of the declaration of trust to ad valorem duty should be restored.

Judgment 1CAMPBELL JA: I have had the advantage of reading in draft the judgment of Handley AJA. I would prefer to give my own reasons why the Share Sale Deed contained a declaration of trust that was liable for ad valorem duty. The relevant facts, and most of the relevant provisions of the legislation, are set out in the judgment of Handley AJA, and I will not repeat them. I will also use the same defined terms as Handley AJA has used. 2In construing the definition of " declaration of trust" in s 8(3) of the Act I would prefer not to place particular reliance upon the way in which the somewhat analogous provisions in the 1920 Act were construed. The Second Schedule to the 1920 Act related to " any property vested or to be vested ... " whereas the definition of declaration of trust in s 8(3) of the Act relates to " any identified property vested or to be vested ... ". The additional word " identified" has been inserted into the Act and is therefore presumed to have work to do. 3If the Commissioner's contention that the Deed contained a "declaration of trust" were correct, duty would be charged on it by the combined effect of s 9 of the Act and the extract from the Table that Handley AJA set out at [55]. 4At the time the Deed was entered s 12 of the Act provided: "(1) A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs. (2) However, if a transfer of dutiable property is effected by a written instrument, liability for duty charged by this Chapter arises when the instrument is first executed." 5The Act has since been amended when the State Revenue Legislation Amendment Act 2010 added to s 12: "(3) A liability for duty in respect of a dutiable transaction that is charged with duty as if it were a transfer of dutiable property arises even if the dutiable property is not in existence at the time that the transfer is taken to have occurred, or the instrument effecting the transfer is first executed, as the case requires." 6That amendment might bear upon the value of the present decision as a precedent. However, the present case must be decided by reference to the state of the Act when the Deed was first executed. 7If the Commissioner were right in contending that the Deed was a "declaration of trust" , the combined effect of s 9(2)(c) of the Act, and the portion of the Table set out in Handley AJA's judgment at [55] would be that the transfer of dutiable property was taken to have occurred when the declaration was made. Thus, both s 12(1) and (2) would have the effect that liability for duty would arise when the Deed was first executed. 8That in turn would require that one could tell, at the time the Deed was first executed, whether it satisfied the definition of "declaration of trust" in s 8(3). 9Because of the words "vested or to be vested" in that definition, the definition could be satisfied if the property in relation to which the trust is declared is not then vested in the person making the declaration, provided that the property in question is to be vested, at some stage in the future, in the person making the declaration. Because of the words "is or is to be held in trust" in the definition, it is not necessary for a declaration to be to the effect that at the time the declaration is made the property the subject of it is held in trust. Rather, it suffices if the declaration is that the property is, at some stage in the future, to be held in trust. There is no occasion to construe these words in the definition in any different way to that in which the High Court construed identical words in the 1920 Act in DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties (New South Wales) (1982) 149 CLR 431 and Commissioner of Stamp Duties (New South Wales) v Pendal Nominees Proprietary Limited (1989) 167 CLR 1, as explained by Handley AJA at [77]-[83]. 10However, there are no analogous words of futurity in the definition concerning identification of the property. The definition is not "any declaration ... that any identified or to be identified property vested or to be vested in the person making the declaration is or is to be held on trust ..." . The property must be " identified property" at the time of first execution of the putative declaration of trust, and it does not suffice that the property referred to in the declaration might become "identified property" at some later time. 11The Consideration Shares did not exist at the time the declaration of trust was made. 12I would accept that the specific contemplation in the definition in s 8(3) and in the Table that a " declaration of trust" might be of property " to be vested" in the declarant, where that property is " to be held in trust" by the declarant does not of itself necessitate a conclusion that the property the subject of the declaration could be property not in existence at the time of making the declaration. However, the presence of those forward-looking words in the definition and the Table are consistent with " identified property" possibly extending to property not in existence at the time of the declaration. 13Identification involves establishing that two things are the same. The root of the word is the Latin " idem " (meaning, "the same" ). Clearly, one way in which it makes sense to talk of "identified property" is when the property in question is described in such a fashion that, by comparing a particular presently existing item of property with the description, one can tell that it is the property that meets the description. However, it can sometimes also be legitimate to talk about "identified property " even if the property does not exist at the time the words are used. One circumstance in which such a usage would be legitimate is when the property is described by reference to characteristics that are sufficient, at the time of speaking, to be able to single out the property in question, once it comes into existence, from other property in existence at that future time, and to single it out in such a way that it is possible at the time of speaking to make an itemised list of every individual piece of property that will fall within the description. It is unnecessary to decide whether this is the only way in which property not presently existing might be " identified property " within the definition in s 8(3) of the Act. 14In the law of assignment of future property, there can be an effective assignment of property by using words that describe the property in quite a general way. The assignment is effective if that one can tell, once a particular item of property comes into existence, whether it meets the description. Thus, there can be an effective equitable assignment of "any real estate my father might leave me in his will" , at a time when the assignor's father is still alive. That is because, once the father has died, and the terms of his will are known, one can tell whether any particular item of real estate meets the description. The property is identifiable , once the occasion has come for deciding whether it is caught by the assignment. However, it is not possible, at the time of the assignment, to list the items of property that will fall within the assignment. It would be out of keeping with ordinary use of language to say, at the time of the assignment, that any particular item of real estate is "identified property" that is the subject of the assignment. 15In the present case, the property to which cl 2.2 related was the Consideration Shares. Clause 1.1 of the Share Sale Deed included: " Consideration Shares means the number of ordinary shares in the capital of the Buyer set out adjacent to each Seller's name in schedule 1 to be issued by the Buyer to the Nominee for the benefit of each Seller on Completion." 16Schedule 1 was a table that included, for each of the Sellers, the name, the purchase price of the shares being sold, and the number of Consideration Shares received. Thus, at the time of entry of the Deed, the characteristics by which the property that would be held on trust was described were the characteristics set out in the definition of Consideration Shares, as supplemented by Schedule 1. That definition is quite precise about the property that was to be held on trust - a specific number of shares, of a specific class, in the capital of a particular company, issued by that company to a particular person, and at a particular time. When described with that degree of specificity, they were " identified property " within the meaning of s 8(3) of the Act. A Difference Between the Act and the 1920 Act 17Section 19 of the Act provides: "Duty is charged on the dutiable value of the dutiable property subject to the dutiable transaction at the relevant rate set out in Part 3 ." 18The relevant portion of Part 3 fixed the rate of duty concerning transfer of property taking the form of unlisted shares is set out in s 32(1), which relevantly provides: Dutiable value of the dutiable property subject to the dutiable transaction Rate of duty ... More than $1,000,000 $40,490 plus $5.50 for every $100, or part, by which the dutiable value exceeds $1,000,000

19In other words, the amount of duty that is charged has a precise mathematical relationship to the dutiable value. When the whole point of those provisions of the Act that charge ad valorem duty is to levy and collect duty on certain transactions, the dutiable value of the dutiable property that is the subject of the dutiable transaction must be ascertainable, at the time at which the liability for duty arises. The Act properly construed requires this by implication, as a practical necessity, arising from the manner in which the amount of duty is to be ascertained. 20That practical necessity might, in some circumstances, provide a limit on the circumstances in which property not in existence at the time could, as a matter of construction of the Act as a whole, fit within the type of property that is within the definition of " declaration of trust " in s 8(3). It was through such an implication that Mason J in DKLR at 455 contemplated that the class of declarations brought to duty under the 1920 Act was limited to property " which is capable of identification at the time of execution of the instrument so that it is then possible to compute the duty which would be payable on the conveyance of that property" . For the reasons given by Handley AJA, the dutiable value is ascertainable in the present case, and hence the type of limitation by implication that Mason J contemplated in DKLR does not operate. 21However, now that the Act specifically requires the subject of a " declaration of trust" as defined to be " identified property" , it is due to the specific words of the statute, not due to an implication from the practicalities of assessing the duty, that it is necessary for the property the subject of a " declaration of trust " to be identified property. This means that under the Act there will be less occasion than there was under the 1920 Act for operation of the type of implied limitation that Mason J contemplated. It is unnecessary to decide whether there is now no occasion for such an implied limitation to ever operate. Nexus with NSW - "Dutiable Property" 22The Commissioner contended that the " dutiable property " within the meaning of s 11 of the Act that gave rise to the liability to pay duty was the type of property described in s 11(1)(d), namely: "Shares ... in a NSW company ..." 23The Dictionary to the Act provides that: "NSW company means: (a) a company incorporated or taken to be incorporated under the Corporations Act 2001 of the Commonwealth that is taken to be registered in New South Wales for the purposes of that Act, or (b) any other body corporate that is incorporated under an Act of New South Wales." 24The Consideration Shares were shares in the Buyer. The Buyer was incorporated in New South Wales under the Companies (New South Wales) Code . Pursuant to s 1378 Corporations Act 2001 in the form it had when the Deed was first executed, after the Corporations Act 2001 came into force the registration of the Buyer under the previous NSW legislation had effect "as if it were a registration of the company under Part 2A.2 of this Act ..." . Pursuant to s 1378(4) Corporation Act 2001 the Buyer is taken at the commencement of the Corporations Act 2001 to be registered in New South Wales. 25It is possible under s 119A(3) Corporations Act to change the state or territory in which a company is taken to be registered. Therefore, there was the theoretical possibility that the Buyer might change its state of registration between the date on which the Deed was executed and the date on which the Consideration Shares were issued. However, that does not affect the liability of the Deed to duty as a declaration of trust. That is because any such change would take place after the date as at which the liability of the Deed for stamp duty must be ascertained. At the date of execution of the Deed, the Buyer was a " NSW company " as defined in the Act. The shares that cl 2.2 of the Deed said would be held on trust were shares in the Buyer. Thus the shares to be held in trust were shares that were within the definition of " dutiable property " at the date of first execution of the Deed. It would still be shares in the same company that would be held in trust pursuant to cl 2.2, even if the Buyer thereafter changed its state of registration. Thus the possibility that the Buyer might change its state of registration does not prevent the shares referred to in cl 2.2 of the Deed from being " identified property " , which is also a species of dutiable property. 26I agree with [94] and following in the judgment of Handley AJA, and with the orders that His Honour proposes. 27MACFARLAN JA : I have had the advantage of reading the judgment of Handley AJA in draft. I gratefully adopt his Honour's description of the issues that arise on this appeal, the legislative context in which they arise and the principal authorities relied upon by the parties. 28The declaration of trust in the present case related, at the time of its execution, to shares yet to be issued, that is, to property that was not then in existence. In my view this had the consequence that the declaration was not chargeable under s 8(1)(b)(ii) of the Duties Act 1997 to ad valorem duty. 29That provision charges duty on "a declaration of trust over dutiable property". Subject to the effect of the words "to be vested" in the definition in s 8(3) of "declaration of trust" (to which I shall return), it is in my view clear that the reference in this provision to "dutiable property" is to property existing at the time of the declaration. This follows from the legislation's use of the word "property" and the absence of any legislative indications that the word should bear any meaning other than its ordinary meaning: in ordinary parlance something is not property if it does not exist. A mere expectancy, as distinct from an existing right or title is not therefore property (see for example Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation [1948] HCA 24; (1948) 77 CLR 1 at 26-7 per Dixon J). As in the legislation under consideration in Hepples v Federal Commissioner of Taxation [1992] HCA 3; (1992) 173 CLR 492, "the most natural reading" of the word "property" in the present case is that it refers to "an existing, and not future, form of property" (see McHugh J at 541). 30This view is consistent with the following definition of "property" in s 21 Interpretation Act 1987: " property means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description, including money, and includes things in action". 31The words in parentheses in this definition do not indicate otherwise. As pointed out by Templeman J in The Bell Group Ltd (in liq) v Westpac Banking Corporation (1995) 22 ACSR 337 at 343 in relation to a similar definition in the Corporations Law, "the words 'present or future' qualify the words 'estate or interest': not 'property'". The words in parentheses do not therefore indicate that the property referred to includes future property, that is, property that does not presently exist. 32Contextual considerations led to a broader meaning of the word "property" being adopted in the decisions in the field of corporate law in Elfic Ltd v Macks [2001] QCA 219; [2003] 2 Qd R 125, Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849; (2007) 25 ACLC 208 and Achieve Foundation Ltd v Acnewco Ltd [2010] FCA 382; (2010) 88 ACSR 673 but similar considerations are not in my view present in this case. 33The definition of "dutiable property" in s 11 Duties Act reinforces the view I have taken. The items identified in the definition as constituting "dutiable property" are types of existing property with no indication that they are to include future property. In particular, the second limb of the reference to "shares" is in the present tense, referring to shares that " are kept on the Australian register kept in New South Wales" (emphasis added). 34The appellant's case that future property is included within the concept of "property" in s 8(1)(b)(ii) rests upon the words "to be vested" contained in the expression "vested or to be vested" in the definition of "declaration of trust" in s 8(3) (see also the Table in s 9). 35However, in my view those words do not indicate that a declaration of trust is dutiable even if it relates only to future property. They indicate that the property need not be vested in the declarant at the time of the declaration, but that is different from an indication that the property need not be in existence at that time. The words have a sensible meaning if (as their express terms suggest should occur) they are read as being concerned with the vesting of property and as saying nothing about whether the property need be existing. That latter topic is dealt with by the legislature's use of the word "property" in the Act's description of the transactions that are dutiable. As a consequence, a declaration of trust is dutiable if it relates to existing property that is "to be vested" in the declarant, but not if it relates to the future vesting in the declarant of property that is not in existence at the time of the declaration. 36I consider that the effect of the words "to be vested" is confined in this way, assuming that they are given their literal meaning. As that literal meaning is not a nonsensical one and there are no contextual indications that a broader meaning should be adopted, there is in my view no reason to depart from the literal meaning. This is particularly so as the words are ones used in a taxing statute. As said by Gibbs J in Western Australian Trustee Executor and Agency Co Ltd v Commissioner of State Taxation of WA (1980) HCA 50; (1980) 147 CLR 119 at 126, if the words of a statute "do not reveal a clear intention to [impose a tax] the liability should not be inferred from ambiguous words" (see also D C Pearce and R S Geddes, Statutory Interpretation in Australia , 6 th ed (2006) LexisNexis Butterworths at [9.33]-[9.35]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [55] - [57]). 37Handley AJA concludes that "there is no compelling reason for holding that the general language of the definition [of 'declaration of trust'] does not apply where the identified dutiable property must come into existence on or before [the] future vesting" (see [85]). I would approach the matter in a different fashion. In my view the correct question to be asked in the present context is whether the words "to be vested" appearing in ss 8 and 9 compel the conclusion that the Act does not use the word "property" with its ordinary meaning but, rather, uses it in a manner that embraces future property. For reasons that I have given, I do not consider that they do. The words "to be vested" certainly contain an element of futurity but that is as to vesting and not as to the existence of dutiable property. 38As is apparent from Handley AJA's discussion of relevant cases, there is no authority that governs the present case. As his Honour points out, the Court in Tooheys Ltd v Commissioner of Stamp Duties may have assumed that the point made by the appellant in the present case was correct (see [64]). However it is clear that the point was not argued in that case. That decision therefore does not constitute a binding determination of the point ( CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1 at [13]). 39For these reasons I accordingly consider that the declaration of trust in question was not dutiable and that the appeal should be dismissed with costs. 40On this view, other questions with which Handley AJA deals do not arise. Nevertheless, I indicate my agreement with what his Honour says about them. 41HANDLEY AJA: This appeal from the decision of Gzell J [2010] NSWSC 1 concerns the Commissioner's claim to double duty on a Share Sale Deed (the Deed). It was common ground that the Deed was liable for ad valorem duty as an agreement for the sale of dutiable property. The Commissioner claimed that the Deed also contained a declaration of trust liable for ad valorem duty on the value of the shares to be allotted by the buyer to the taxpayer as the vendors' nominee. 42Section 294 of the Duties Act 1997 (the Act) provides: "An instrument that contains or relates to several distinct matters for which different duties are chargeable under this Act is to be separately and distinctly charged with duty in respect of each such matter, as if each matter were expressed in a separate instrument." 43It was common ground that s 294 applied if the Commissioner was otherwise correct. The corresponding section in the 1920 Act was applied in Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd [1989] HCA 19, 167 CLR 1 ( Pendal ) where the Commissioner's assessment of a share sale agreement to additional ad valorem duty as a declaration of trust was upheld. 44Gzell J allowed the taxpayer's appeal and set aside the assessment. He held that the Deed was a declaration of trust within the relevant definition but ad valorem duty was not payable because the shares to be allotted did not exist when the Deed was first executed and could not be dutiable property within s 11. 45On 4 April 2007 Mr Andrew Clifford, his wife Jane, and the other parties executed the Deed. By cl 2.1 the Cliffords sold their substantial holdings in the unlisted shares of McRae Pty Ltd to Queens Hill Pty Ltd (the Buyer) in exchange for shares to be allotted by the Buyer to the taxpayer, described as the Nominee. The sale was one of the steps taken to enable the Buyer to be listed on the Stock Exchange. Clause 2.2 provided: "(a) Unless otherwise agreed between the Buyer and the Sellers, all Consideration Shares will be issued to and registered in the name of the Nominee, which shall hold the Consideration Shares on behalf of the Sellers (who shall each be absolutely entitled to their respective Consideration Shares as against the Nominee)." (b) The Nominee shall also retain custody of the share certificates in respect of the Consideration Shares unless otherwise instructed by the Seller on whose behalf it holds an individual parcel of Consideration Shares." 46The Buyers' obligations were defined in cl 3.3: "As soon as practicable after Completion the Buyer must: (a) issue the Consideration Shares to the Nominee to be held by the Nominee for benefit of the Sellers; (b) register the Nominee as the holder of the Consideration Shares; (c) deliver share certificates in respect of the Consideration Shares to the Nominee; and (d) deliver or cause to be delivered to the Shareholder 1 signed copy of the Acknowledgement of Trust executed by the Nominee." 47Acknowledgement of Trust was defined in cl 1.1 as "an acknowledgement of trust pursuant to which the Nominee acknowledges and declares that it holds Consideration Shares on behalf of a Seller who is absolutely entitled to the Consideration Shares." The Acknowledgments were assessed to fixed duties. It was not argued that anything turned on this. 48Completion took place later on 4 April 2007. Gzell J found that the Consideration Shares were not issued and did not come into existence until 6 April. These findings were not challenged. However the Cliffords became contractually entitled to the Consideration Shares on exchange. Their rights to have those shares allotted to their nominee could have been enforced by specific performance. 49Dutiable property as defined in s 11(1) and (2) includes unlisted shares in New South Wales companies. Shares, as defined in the Act's Dictionary, include "rights to shares". The Cliffords acquired rights to shares on exchange. 50Gzell J held that the trust created by cl 2.2 of the Deed did not cover the rights to the Consideration Shares and this finding has not been challenged. The rights were vested in the Cliffords, not in the taxpayer. 51Section 8(1)(b)(ii) provides: "(1) This Chapter charges duty on: (a) ... (b) the following transactions: (i) ... (ii) a declaration of trust over dutiable property. (iii) ..." 52A declaration of trust is defined in s 8(3) as follows: "Declaration of trust means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration ...". 53The duty on declarations of trust is charged under s 9 which relevantly provides: "(1) The duty charged by this Chapter on a dutiable transaction referred to in section 8(1)(b) is to be charged as if each such dutiable transaction were a transfer of dutiable property. (2) Accordingly, for the purpose of charging duty under this Chapter, in relation to a dutiable transaction specified in Column 1 of the following Table: (a) the property specified opposite the dutiable transaction in Column 2 is taken to be the property transferred ..., and (b) the person specified opposite the dutiable transaction in Column 3 is taken to be the transferee of the dutiable property ..., and (c) the transfer of the dutiable property is taken to have occurred at the time specified opposite the dutiable transaction in Column 4 ...". 54The Table relevantly provides: "Column 1 Column 2 Column 3 Column 4 declaration of Trust the property vested or to be vested in the declarant the person declaring the trust when the declaration is made "

55Section 12 provides that liability for duty arises when the instrument is first executed, and the relevant entry in Column 4 of the Table provides that this occurs when the declaration of trust was made, that is, was executed by the intended trustee. 56Gzell J, having held that the shares issued to the taxpayer in trust for the Cliffords did not exist when the declaration of trust was first executed, held that there was then no "property" vested or to be vested in the taxpayer and ad valorem duty was not payable. This followed his earlier conclusions that dutiable property as defined must be existing property, and "the property" specified by s 9(2)(a) and in Column 2 of the Table: "vested or to be vested in the declarant" must exist at the relevant time. 57In this Court and below the Commissioner relied on the elements of futurity in the definition of declaration of trust in s 8(3) and the charge of duty in s 9 and its Table. A declaration of trust as defined must relate to "any identified property vested or to be vested in the person making the declaration" and declare that it "is or is to be held in trust" for the persons or purposes mentioned (emphasis supplied). 58Section 9 (2)(a) relevantly provides that "the property specified" in Column 2 "taken to be transferred" is "the property vested or to be vested in the declarant" (emphasis supplied). Section 9 (1) ("as if each such dutiable transaction were a transfer of dutiable property") and (2)(a) ("is taken to be the property transferred") create statutory fictions. 59The Act brings to charge declarations of trust relating to property not yet vested which is to be vested in the declarant provided it is identified. The identified property must exist before it can be vested in the declarant. The question is whether it must also exist when the declaration is made. 60The text does not required this in terms, but the taxpayer argues, and Gzell J. has held, that the references to property in s 8(1)(b)(ii), s 8(3), s 9(1), 9(2)(a), (b), (c) and the Table, and to shares in s 11(1)(d) are to property in existence at the relevant time. 61Section 58(1) charges a fixed duty of $200 on a declaration of trust over property in New South Wales which is not dutiable, and subs (2) charges the same duty on declarations of trust executed in New South Wales in respect of unidentified property to be vested in the declarant. 62The Deed is not chargeable with the fixed duty under these provisions. A declaration of trust with respect to identified but future property, is either chargeable with ad valorem duty as claimed by the Commissioner or it is not chargeable with any duty under the Act. This may either be a casus omissus , overlooked by the drafter, or there may be no gap in the statutory scheme for the taxation of declarations of trust. 63The relevant sections are based on corresponding provisions in the 1920 Act considered in Tooheys Ltd v Commissioner of Stamp Duties (NSW) [1961] HCA 35, 105 CLR 602; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14, 149 CLR 431; and Pendal's case [1989] HCA 19, 167 CLR 1. 64The High Court did not consider the present question, although in Toohey's case it may have assumed an answer favourable to the Commissioner. Apart from Toohey's case the earlier cases relied on by the taxpayer did not deal with declarations of trust taxable under comparable provisions. Some of the cases concerned expectancies which could not be identified or valued at the relevant date. In my judgment they are all distinguishable. 65However J.V. (Crows Nest) Pty Ltd v Commissioner of Stamp Duties (NSW) (1985) 85 ATC 4198 calls for further comment. A franchise agreement was assessed to duty as a lease, the service fees payable by the franchisee being treated as rent. The Commissioner relied on the franchisee's right to use future industrial property developed by the franchisor. Lusher J said of this provision at p 4204: "... industrial property can be property within the terms of the section. Here ... [the] reference in clause 4(g) of the Deed is to future industrial property. Since there is none in existence there was no property within ... section 76 ...". 66Lease was defined in s 76 (1) as including any promise of or agreement for a lease of any property, and any instrument whereby a right to use at or during any time any property in New South Wales is conferred on or acquired by any person. Lusher J held that the service fees were not rent and found (at p 4204) that "on the facts there is no material to suggest that ... the fee ... contained any component referable to industrial property." There is no reason to doubt the correctness of this decision, but it cannot govern the construction of the special provisions relating to declarations of trust. 67Toohey's case concerned in the liability to duty of a superannuation trust deed. This provided that the fund was to consist of an initial contribution by the company of 50,000 "at the date hereof" and other moneys or property paid or transferred to the fund. It was common ground before the High Court, but not before the Full Court, that it was some time before the 50,000 was paid to the trustees (ibid at 609). 68Section 4 and the Second Schedule brought to charge: "Any instrument declaring that any property vested or to be vested in the person executing the same is or shall be held in trust for the person or persons or purpose or purposes mentioned therein ...". 69Dixon CJ said (105 CLR at pp 611-2): "... it might well be said that when the 'declaration' expressed in the Deed now in question was made no property was vested. But the Commissioner replies that, be that as it may, the money intended to form the fund was 'to be vested' within the meaning of the paragraph. This reply the appellants contest as insufficient to cover the present case. It must be borne in mind that the only beneficiaries of the trusts declared are the members of the fund when and if they are admitted. At the time when the deed was executed and presented for consideration of the Commissioner of Stamp Duties no property or money had been vested in the trustees, no members had been admitted and the trust deed, so it is argued, had nothing to operate upon and had in truth no force. If property had been vested in the trustees, there might, until members were admitted to the fund, have been a resulting trust in favour of the company. But as it was at the critical point of time there was neither beneficiary nor trust property and therefore no trust then operating ... The words 'any property vested or to be vested' seem to me to be directed simply to the two cases, namely the case of the declaration of a trust of property then vested in the person who declares the trust and the second case of a declaration of trust in advance of the vesting in the person who declares it of property which it is intended to make the subject of the trust. Here the first payment to be made is stated and quantified: no objection is possible on the ground that there is no property that can be identified or ascertained." 70Kitto J appears to have agreed with Dixon CJ on these questions (ibid at p 616), while Taylor, Menzies and Windeyer JJ agreed with the judgment of Walsh J in the Full Court: (1960) 60 SR 539. Walsh J acted on the basis that the 50,000 had been paid to the trustees before the deed was executed (ibid at 541). He said at pp 545-7: "... the description of an instrument contained in par. (2) under the heading 'declaration of trust' ... is not so phrased as to be confined to declarations which create or ... evidence a trust which is thereby or has already been completely constituted in such a way that property is then irrevocably subjected to the trust. ... Because of the inclusion of the words 'vested or to be vested' and the words 'is or shall be held in trust', the description extends to cases where no property is as yet vested in the proposed trustee, and it extends to cases in which no trust presently operative is declared ... The question is not, therefore, whether this deed is, in the ordinary sense of the term, a declaration of trust, but whether it satisfies the statutory description ... the deed does satisfy the definition contained in par. (2). ... It is executed by the persons whom it describes as trustees, and by it they declare that property, namely that which the Deed calls the fund, ... is to be held by them in trust. ... Mr Staff has submitted ... that par. (2) ... should be confined to cases where there is at the date of the document, a pre-existing trust which is thereby acknowledged, or there is a trust which is, at that date, operative to confer immediate beneficial interests. In my opinion it is sufficient to say that the language used in par.(2) makes it impossible to restrict the documents which it describes in the manner proposed in this submission." 71There is no relevant difference between the reasoning of Dixon CJ and Walsh J. Dixon CJ held that the deed was dutiable as a declaration of trust although there was no presently existing trust fund or enforceable trust. Walsh J held (p 545) that an instrument could be dutiable as a declaration of trust although "no property is as yet vested in the proposed trustee," and "no trust presently operative is declared." 72Neither Dixon CJ nor Walsh J considered that there was an express or implied covenant by the company to pay 50,000 to the trustees. Dixon CJ, with the benefit of the further information, held that there was no existing trust fund, and that must mean that there was no completely constituted trust of a voluntary covenant. 73In Tooheys case the Deed was charged with ad valorem duty although property had not been vested in the trustees, they did not hold a cheque for the initial payment and the cheque did not exist. 74Leading counsel for the taxpayers took the point that there was no existing trust fund, but not the point that the property to be vested in the trustees was not in existence. 75In DKLR Holding [1982] HCA 14, 149 CLR 431 the majority followed Toohey's case, and held that the relevant declaration of trust was liable to ad valorem duty. It is not necessary to refer to these parts of the judgments. 76DKLR Holding is also authority for propositions which are not covered by Toohey's case or Pendal's case. The Court rejected a submission for the taxpayer (ibid at 438) that "the words 'to be vested' only apply where there is a legal obligation on the part of some third party to vest the property in the trustee, or a legally enforceable right or power in the trustee to have the property vested in himself." 77Gibbs CJ (at p 439) held that the words "to be vested" and "shall be held" indicated "mere futurity". He added "there must be property 'comprised in the instrument'. That property must be identifiable or ascertainable." 78Mason J, with whom Stephen J agreed, came to the same conclusion (at p 455). He added: "... the paragraph [par 2] looks to a declaration affecting property which is capable of identification at the time of execution of instrument so that it is then possible to compute the duty which will be payable on the conveyance of that property. The expression 'the property comprised therein' is certainly apt to refer to a declaration which identifies a particular parcel or piece of property whether it is then vested in the declarant or whether it is intended to be vested in him sometime thereafter, even though in the latter case he has not then acquired any enforceable legal or equitable right to it." 79In Pendal's case [1989] HCA 19, 167 CLR 1 Mason CJ and Brennan J accepted the views of Gibbs CJ and Brennan J in DKLR Holding that the words "to be vested" in para (2) "imported mere futurity", and liability to duty "should not call for an inquiry into the intention of the maker of the instrument" (per Mason CJ at p 15, per Brennan J at p 19). 80The other members of the Court did not express a view on this question. This Court should follow the views of Gibbs CJ, Mason CJ, and Brennan J (as he then was). 81The case is instructive for another reason. A deed containing an agreement for the sale of listed shares for a cash consideration provided in cl 1.4 that on completion the vendor should deliver transfers of the shares in favour of Pendal, a subsidiary of the buyer, "and [Pendal] shall hold such shares as nominee for [the buyer]". 82The deed was assessed to ad valorem duty as an agreement for the sale of shares, and the Commissioner's claim for further ad valorem duty on the instrument as a declaration of trust was upheld by a 3:2 majority. It will be necessary to return to the judgments when considering an issue raised in the taxpayer's notice of contention. 83The Court should apply these decisions and the contrary was not argued. The words "to be vested" in the definition of declaration of trust in s 8(3) and in the relevant part of the Table to s 9, and the words "to be held in trust" in s 8(3) simply import futurity. The requirement for the relevant property to be "identified", recognised in the decisions, is now incorporated in the definition in s 8(3). 84The Consideration Shares were identified property "to be vested" in the taxpayer when issued "to be held in trust" for the Cliffords. The Deed did not purport, in terms, to do the impossible by declaring trusts to take effect in the future in respect of property which would not then exist. 85The definition of declaration of trust includes instruments which will take effect when property is vested in the declarant. In such cases vesting can only occur, and the trusts can only take effect, when existing property becomes vested in the declarant and bound by the instrument. When these events must occur in the future there is no compelling reason for holding that the general language of the definition does not apply where the identified dutiable property must come into existence on or before that future vesting. 86The first limb of the definition ("vested ... in the person making the declaration") can only apply to property in existence when the instrument is first executed. The second limb ("to be vested") can only apply to property in existence when vesting occurs. The property to be vested must be identified when the instrument is first executed, but there is no requirement in terms that it then be in existence. 87The taxpayer's argument does not require the implication of "existing" before property. Property, in its ordinary meaning, is existing property. Something which does not exist cannot be property, and can only be property when it comes into existence. On the other hand the Commissioner's argument does not require the implication of "future" before property either. It is sufficient for his purposes that the identified property must exist before it is vested in the declarant. 88The Commissioner's submission on this question should be accepted because of the other elements of futurity in the definition and in the Table to s 9. The Deed was therefore a declaration of trust within ss 8(3), 9, and its Table although the Consideration Shares did not exist when it was first executed by the taxpayer. The Deed was within those sections because the shares, as dutiable property, would be in existence when the contemplated vesting occurred. 89If declarations of trust in respect of property which did not exist were outside these provisions there would be a large gap in the scheme of taxation. Dutiable property which could come into existence after first execution of a declaration of trust could include interests in land carved out of the fee simple such as leases, mortgages, undivided interests, and interests under contracts of sale. It could also include shares, interests in shares, debentures, units in unit trusts, and options over dutiable property. 90I am confirmed in my conclusion by Toohey's case where ad valorem duty was payable although the trust property had not vested and did not exist when the instrument was first executed. 91Taxing statutes are not "to be construed ... to maximise the recovery of revenue": per French CJ in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41, 239 CLR 27, 35. Construing the references to property "to be vested" to cover property which comes into existence after first execution is, in my opinion, a far cry from the approach which the plurality in Alcan criticised at p 48. "The general purpose of the Act to raise revenue is insufficient to support an intention to exclude a clearly expressed definition and to substitute a quite different meaning." 92Gzell J said: [100] that he did not have to determine whether the dutiable value of the Consideration Shares was $193,969,800 or some lesser amount and he did not do so. However he had said earlier: [45] "An estimate of the value of future property can be, and is commonly, made. But it is only an estimate. Until the property comes into existence its unencumbered value cannot be ascertained." 93It seems from para [100] that this was only dicta and the taxpayer took the precaution of asserting in its notice of contention that the value of the Consideration Shares at the date of first execution was nil. 94There was valuation evidence in written form from Mr Wayne Lonergan for the taxpayer, and Mr Mark Bryant for the Commissioner and both were extensively cross-examined. Mr Lonergan said that the Consideration Shares had a nil value on 4 April 2007, while Mr Bryant said that they were worth $193,969,750. 95The distinction drawn by Gzell J in par [45] between estimation and valuation is not supported by authority. In FCT v St Helen's Farm (ACT) Pty Ltd [1981] HCA 4, 146 CLR 337, 374 Mason J said: "Valuation is not an exact science, but an exercise in estimation." This is supported by Lord Hobhouse's analysis of the valuation process in Secretary of State for Foreign Affairs v Charlesworth Pilling & Co [1901] AC 373, 391 where he refers to the inferences, conjectures, and guesswork that may be involved. 96Thus I would not wish to give any support to the proposition that future property cannot be valued. Although the Consideration Shares did not exist on 4 April 2007 the Cliffords had more than a mere expectancy. They had an enforceable right to have the shares issued to the taxpayer as their nominee, and it was practically certain that they would come into existence within a few days. 97The value of the Consideration Shares as future property was subject to contingencies, theoretical rather than real, and the benefits of ownership were postponed for an indeterminate but very short period. These matters would affect their value on 4 April but one would think the discount would be modest if not nominal. It seems to me, without expressing a final view, that a valuer could value the future shares by valuing the existing rights to those shares. 98Future interests which presently exist, but are not vested in possession, can be, and are valued. Examples include interests in remainder or reversion subject to life or other interests, leases with an option of renewal, and freehold reversions. These interests have a present value but normally become more valuable when they vest in possession. 99In my opinion this Court should not attempt to make findings on disputed valuation evidence when it does not have the benefit of the views of the trial Judge, and it is not necessary to do so. It is not necessary in this case because the Commissioner's alternative submission that ad valorem duty can be calculated on the consideration should be accepted. 100The Commissioner submitted that the transfer of the Sale Shares was consideration for the declaration of trust. Section 21(1) provides: "(1) The dutiable value of dutiable property that is subject to a dutiable transaction is the greater of: (a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and (b) the unencumbered value of the dutiable property." 101Consideration in this context has a special meaning recognized, if not established, by Dixon J in Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28, 77 CLR 143. That taxpayer transferred assets in specie to its shareholders in satisfaction of a reduction in its capital . The Commissioner assessed the transfers to Sixth Schedule duty as transfers without consideration. The High Court held that the transfers were for full consideration as the shareholders had a legal right to the assets pursuant to their shares, the contract of membership, the special resolution for the reduction, and its confirmation by the Court. The assessments were set aside. 102Dixon J said at pp 152-4: "In the context I think that the word 'consideration' should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contract ... the consideration is rather the money or value passing which moves the conveyance or transfer ... The reduction involving the payment off of part of the paid up share capital must ... be considered an effectuation of a provision of the contract of membership ... It is an effectuation or realisation of the rights obtained by the acquisition of the shares in the same way as is the distribution of a dividend. The consideration given is the payment up of the share capital in satisfaction of the liability for the amount of the share incurred on allotment ... the shareholder in satisfaction of his proportionate 'interest' in the assets, an interest consisting of a congeries of rights in personam takes an aliquot part of the assets. There is an equivalence not only from a logical but from a realistic point of view. The reduction in both the amount and value of the share affords an adequate consideration in money and in money's worth." 103The principle has been maintained in later decisions of the Court: Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW) [1958] HCA 22, 100 CLR 392, Toohey's case [1961] HCA 35, 105 CLR 602, and Chief Commissioner Of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3, 221 CLR 496. 104Under the general law a declaration of trust creates equitable interests in the beneficiaries or for charitable purposes, and there may be a resulting trust. A declaration of trust by the owner of the trust property creates equitable interests but does not otherwise change the title of the settlor. In other cases the transaction involves vesting the trust property in the trustee. That is this case. 105In Toohey's case [1961] HCA 35, 105 CLR 602 the taxpayers argued that acceptance of the trust by the trustees constituted full consideration for the declaration of trust and transfer of the trust property. There were no beneficiaries in the pension fund and consideration could not move from that source. 106The Full Court (Walsh J) and the High Court (Dixon CJ) rejected that argument. Dixon CJ said (at p616): "The company as the party directing the creation of the trust and the trustees as the parties creating the trust by the declaration of the trust obtained no consideration in money or money's worth. The placing of the trust fund in the trustees' hands was no consideration for the present or future equitable interests created. 107His analysis leading to that conclusion (at pp 615-6) is instructive: "... you are required to treat the person declaring the trust as imparting property to the objects or purposes of the trust and to consider whether in that capacity ... the party declaring the trust obtained full consideration ... the person directing the declaration of trust may as an alternative be a person who may obtain the full consideration. ... what the material clauses in the second schedule contemplate is the use of a declaration of trust to impart an equitable interest instead of a conveyance of a corresponding legal ... or ... equitable interest. A consideration in money or money's worth must be furnished, perhaps it does not matter whence or by whom, but it must be furnished for the declaration of trust in the sense of the creation of the trust which gives the equitable interest ... consideration must come from some source for the creation of this trust if the transaction ... is to escape the rate given by the sixth schedule." 108This analysis did not differ in substance from that of Walsh J in the Full Court (above) at p 548. 109The Cliffords directed the declaration of trust by the taxpayer when they executed and exchanged the Deed. Consideration for the declaration could be provided by them as directing parties or as beneficiaries. The only consideration could be the transfer of the Sale Shares to the Buyer. This was the consideration which "moved" the Buyer's allotment of shares to the taxpayer. Was it also the consideration which "moved" the taxpayer's declaration of trust? 110Archibald Howie established that performance of a contract could constitute consideration which moved a transfer. Toohey's case established that consideration for a declaration of trust could come from the person directing the declaration or the beneficiaries. In my judgment where the party directing the declaration of trust is the only beneficiary and value is not transferred to anyone else, receipt of the beneficial interest is consideration which moves the declaration of trust. In the words of Dixon J in Archibald Howie at p 154: "There is an equivalence not only from a logical but from a realistic point of view." 111In my judgment therefore the Sale Shares provided consideration for the declaration of trust of the Consideration Shares. The value of the Consideration Shares has not been determined, but the highest value supported by the evidence of Mr Bryant was less than the value of the consideration. Accordingly duty was properly calculated on the consideration. 112The remaining issue is the claim, raised by the taxpayer's notice of contention, that the instrument was only liable for the fixed duty imposed by s 55(1)(a). This provided: "(1) Duty of $10 is chargeable in respect of: (a) a declaration of trust made by an apparent purchaser in respect of identified dutiable property: (i) vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or (ii) to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or (iii) ..." 113Section 55 (2) provides that in this section purchase includes allotment. 114The instrument does not fall within s 55(1)(a)(i) because dutiable property had not been vested in the taxpayer when it was first executed. It can only fall within subpara (ii) if the taxpayer was "the apparent purchaser" of the Consideration Shares. 115This claim is denied by Pendal [1989] HCA 19, 167 CLR 1. Under the sale deed in that case the buyer agreed to purchase shares for cash payable on completion. Clause 1.4 provided (ibid at 7) that the vendor would on completion deliver transfers of the shares in favour of Pendal "which shall hold such shares as nominee for" the buyer. The nominee claimed exemption from ad valorem duty under para (1) of the item Declaration of Trust in the Second Schedule which provided: "Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase money therefor." 116Mason CJ said at pp 16-17: "... there is ... a compelling ground for excluding the operation of par (1) in this case, namely that [Pendal] cannot be said to be the 'apparent purchaser' of the shares. Not only does the sale deed recite that B.T.A. is the purchaser of the shares, but it is clear from its terms that B.T.A. is to provide the purchase money and that [Pendal] is merely to be the transferee. [Pendal] is not the 'purchaser' in the ordinary sense of the word and I see no reason to give the word any meaning in this context other than in its ordinary sense. Moreover, par (1) is concerned with the situation in which a document reveals a certain person as the purchaser of property and does not reveal that another person has 'actually paid the purchaser money' but [concerns] a declaration of trust by the 'apparent purchaser' in favour of that other person. This is not the situation in the present case." 117Brennan J said at p 21: "[The declaration of trust] does not fall under par (1) because [Pendal] is not the apparent purchaser, as the Chief Justice points out." 118Toohey J, the other member of the majority, said at p 32: "The Court of Appeal was right in concluding that par (1) of Declaration of Trust was inapplicable. Pendal was not the purchaser of the shares nor was it the apparent purchaser. It was B.T.A. which answered those descriptions, the share sale deed identified it as the purchaser and as the entity which paid the purchase price. Further, the Deed obliged Pendal to hold the shares as nominee for B.T.A." 119Deane and Dawson JJ who dissented did not consider this issue (at p 26). 120The Deed described the Cliffords as the Sellers, Queens Hill Pty Ltd as the Buyer, and the taxpayer as the Nominee, and is relevantly indistinguishable from the deed in Pendal . In these circumstances the taxpayer was not the apparent purchaser and it is not necessary to consider whether the exemption applies to an exchange where "money for the purchase" does not change hands. 121The result in my opinion in that the Commissioner has sustained his claim to double duty. This may appear anomalous, even harsh, but in my judgment it flows from the application of the Act and relevant decisions of the High Court. The Cliffords had sound commercial reasons for interposing the taxpayer to hold the Consideration Shares on their behalf (blue 1/385). 122The situation was the same in Pendal where Mason CJ said at p 19: "The result is that the respondents are liable for ad valorem duty upon the sale deed as a declaration of trust ... While this may appear to some an arbitrary conclusion, given that a minor reorganisation of the transaction or documentation may have produced a different result, the legislature has clearly created a wide ad valorem charging provision and some relatively narrow exceptions." 123Brennan J added at pp 21-2: "It must be acknowledged that it is anomalous that a declaration of trust should attract only nominal duty where the declarant is the apparent purchaser and the beneficiary is the person who has actually paid the purchase price while a declaration of trust by a nominee of the apparent purchaser who has actually paid the purchase price attracts ad valorem duty . The anomaly is, of course, the result of the drafting of the head of charge ...". 124The Commissioner did not rely on, and counsel did not refer the Court to, Pt 5 of Ch 3 which appears, at first sight, to charge duty on an allotment of unlisted shares by direction as if it was a transfer of those shares (s 144). If this section were applicable the transaction may have attracted double duty in any event. 125In my judgment therefore the appeal should be allowed and the following orders should be made:

ORDERS: (1) Appeal allowed with costs. (2) Judgment of Gzell J of 2 February 2009 set aside. (3) In lieu thereof order that the appeal from the Commissioner's assessment of 16 April 2007 instituted by summons dated 1 February 2008 be dismissed with costs, and that the assessment be confirmed. (4) The respondent to have a certificate under the Suitor's Fund Act if qualified.

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