Commissioner of Stamp Duties (NSW) v Henry

[14]

It is true, however, that in one sense the deed here in question gives not only a right to use the property it describes but, by clear implication, a right to appropriate coal, when severed from the land, so as to make it the chattel property of the syndicate. These rights, regarded separately from one another, are different in kind: the one is a right to use property which nevertheless is to remain the company's, while the other is a right to take coal which is the company's at the moment of severance and thereby to cause the property in the coal to pass to the syndicate. If it were sound for the present purpose to consider each right by itself, no doubt the deed would be a lease by reason of granting the first right and a conveyance of an interest in the land by reason of granting the second; and on that footing s. 17 might properly be invoked to charge the deed separately and distinctly with duty in respect of each of the two matters it contains. But this is not how the Act looks at such a case. It recognizes, as the common law recognizes, that a lease which entitles the lessee to work a mine on the demised land is not two grants, but one; and it extends the conception to the wider class of instruments which by definition it treats as leases. This appears from s. 79, which I had better quote in full: - "s. 79 (1) Where the consideration for a lease is wholly or partly a royalty, payable either in money, produce, or goods, or any other consideration whatever other than a fixed sum of money, then, if it is stipulated that the amount of such money, or the value of such produce or goods, is to amount at least to or not to exceed a given sum, or where the lessee is specially charged with or has the option of paying after any permanent rate of conversion, the yearly amount of such money and value of such produce or goods is to be estimated at such given sum or according to such given rate. (2) Where there is no possible means of discovering what is the maximum value of the consideration dealt with under a lease, then the duty payable in respect of such lease shall be a fixed sum of one pound ten shillings, in addition to the duty chargeable in respect of the rent and of so much of the consideration as is capable of being valued."

[21]

By the deed the company purported to grant to the respondents a licence to operate the company's mines and to use and operate the pits, tunnels, mine workings, buildings, plant and machinery thereon for the purpose of the getting, working and winning of coal therefrom. As appears from the case stated the licence was to be for an initial term of five years commencing on the 1st January 1958 but it was subject both to termination and renewal as thereinafter specified. Acknowledgment was made by the respondents of the delivery to them of certain specified buildings, plant and machinery, stores, pit timber and other material and they agreed to pay the company for all stores and pit timber used by them during the term of the licence. Thereupon cl. 4 provided that "For the use of the facilities aforesaid and for the use of the company's land, pits, tunnels, mine workings, buildings, plant and machinery the syndicate (i.e. the respondents) shall pay to the company fortnightly a fee at the rate of three shillings per ton and, in addition, a royalty of two shillings per ton for each and every ton of coal won by the syndicate from the said land and such fee and royalty shall be cumulative from fortnight to fortnight during the term of this licence and any extension thereof". During the term of the licence the company was to have the right at all times to enter upon the said land "by its authorized officers and workmen for any purposes whatsoever other than the winning of coal". By cl. 8 the licence was determinable by the company at any time without notice either upon the ground that the respondents had failed to comply with any covenant or condition of the licence or upon the ground that, except when the respondents should be prevented from mining coal by reason of strikes, the average monthly licence fee paid by them over a period of three months had not exceeded the sum of £270. Clause 9 provided to the appellant an option to renew the licence for a further period of five years.

[26]

What was conveyed or granted by the deed was, as I have already said, a profit à prendre. But more particularly it was a right to operate the mining property and its appurtenances and to win coal therefrom. But it was not an absolute right to do so; it was a right to do this subject to the payment of a fee and royalty totalling five shillings per ton for each and every ton of coal won. Furthermore, it was subject to determination in the event of failure to pay such fees and royalties. In a very real sense, therefore, it may be said that the "property" conveyed was a right to operate the mine and win coal subject to the payment of five shillings per ton as aforesaid. The question then is - treating the deed as a conveyance - what consideration was provided by the deed for the conveyance of this interest? In my view the answer to this enquiry is that no consideration was provided. Clearly enough, payments pursuant to cl. 4, if and when made, cannot be regarded as the consideration for the grant of such a right; they constitute both in form and substance payment for the actual use of the "facilities and the Company's land, pits, tunnels, mine workings, buildings, plant and machinery" and for the coal actually removed. And although it may be said that the respondents' covenants, including that contained in the cl. 4, constituted consideration in a general sense, this could not be said to be the consideration for the conveyance of a right to operate the mine and win coal subject to the payment in respect thereof of five shillings per ton. In other words, the stipulated rate of payment was, in much the same way as rent under a lease, intended by the way of "retribution or compensation" for the use of the mining property and for the coal won and so, in part, it delimited the character and extent of the right conveyed. It is true that the provisions of the Act which deal specifically with leases do in a general way purport to identify the rent payable under a lease with consideration for the lease but the schedule draws a clear distinction between the rent reserved and "any consideration by way of premium, fine or foregift" in that, in the case of a lease "in consideration of a sum of money by way of premium, fine or foregift" the same duty is imposed as that imposed upon a conveyance on sale whilst, in the case where no premium has been given, the duty imposed is calculated at the specified rate upon the yearly rent only. Where the lease provides both for a premium and for rent two calculations are necessary to ascertain the total duty - one, by applying the specified rate to the yearly rent and one, treating the premium as the consideration for the demise, as upon a conveyance on sale. It would be a strange result if, in view of those provisions, the respondent should be held to be at liberty to treat a lease as a conveyance and, consistently with his contention in this case, assess ad valorem duty on the whole of the rent payable during the term as the consideration for the "conveyance". The reality of the matter is that the parties to the deed in question in this case were content to conclude an arrangement in the form which it took in the deed and no consideration was provided for the actual "conveyance" of such a conditional right.

Commissioner of Stamp Duties (NSW) v Henry - [1964] HCA 4 - HCA 1964 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (39 paragraphs)

Parties