DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties

The questions at issue in this case are whether the appellant, D.K.L.R. Holding Co. (No. 2) Pty. Ltd. ("D.K.L.R.") is liable to the payment of ad valorem duty on either or both of two instruments, dated 1 June 1976, viz. a memorandum of transfer of certain land from 29 Macquarie (No. 14) Pty. Ltd. ("29 Macquarie") to D.K.L.R. and a deed poll by which D.K.L.R. declared that it would hold the land on trust for 29 Macquarie. It is convenient to refer to the latter instrument as the declaration of trust, although whether it answers that description is one of the questions in the case.

Until the instruments in question were executed, 29 Macquarie was the registered proprietor of an estate in fee simple of certain land. The unencumbered value of the land in question on 1 June 1976 was $3,500 and the land was subject to a mortgage which secured the sum of $3,203. On 1 June 1976 at a meeting of directors of 29 Macquarie it was resolved to request D.K.L.R. to act as trustee for it of the land "on the terms of a declaration of trust which unexecuted was tabled for approval at the meeting". The minutes of the meeting go on to state that "(i)t was specifically resolved that the proposed Trustee would hold only the legal estate to the land there being no intention on the part of the Company to part with beneficial ownership of the land". A meeting of the directors of D.K.L.R. (who were the same persons as the directors of 29 Macquarie) was then held and it was resolved that upon request having been made to the company that it act as trustee absolutely on behalf of 29 Macquarie, the company execute a declaration of trust in favour of 29 Macquarie. The directors of 29 Macquarie then met again and resolved that the company "affix its seal to a transfer of the bare legal estate" in the land. After the meetings had been held, the declaration of trust was executed on behalf of D.K.L.R. Omitting formal parts it read as follows:

To all to whom these presents shall come D.K.L.R. Holding Co. (No. 2) Pty. Limited a Company duly incorporated and having its registered office at 48 Macquarie Street, Parramatta sends greetings: Whereas the Company has undertaken to act as Trustee absolutely for lands listed in the Schedule hereto on behalf of 29 Macquarie (No. 14) Pty. Limited Now be it known to all men by these presents that the Company declares that it will hold the lands listed in the Schedule hereto upon trust absolutely for the said 29 Macquarie (No. 14) Pty. Limited and that the Company will make execute and do all such instruments acts and things as shall be necessary to vest the lands back in the name of the said 29 Macquarie (No. 14) Pty. Limited and further shall deal with the lands solely as the said 29 Macquarie (No. 14) Pty. Limited shall direct and appoint. The land in question was described in the schedule. A memorandum of transfer of the land from 29 Macquarie to D.K.L.R. was then executed on behalf of both companies. The memorandum is in the usual form and the material words stated that 29 Macquarie "in consideration of Nominal [sic] (the receipt whereof is hereby acknowledged), paid to the transferor by [D.K.L.R.] hereby transfers to [D.K.L.R.] an estate in fee simple in the land described in the following schedule"; the schedule specified the land in question. The memorandum of transfer did not contain any memorandum of the mortgage to which the land was subject. However, the parties did not seek to base any argument upon what appears to have been an oversight.

The Commissioner of Stamp Duties (the present respondent) believed that the memorandum of transfer had been executed before the declaration of trust. He assessed ad valorem duty on the memorandum of transfer under s. 66(3)(a) of the Stamp Duties Act 1920 N.S.W., as amended ("the Act") at $50.16, and assessed duty on the declaration of trust at $6.00 pursuant to par. 3(b) of the description of "Declaration of Trust" in the second schedule to the Act. If the Commissioner had known that the instruments had been executed in the reverse order, he would have assessed ad valorem duty of $50.16 on the declaration of trust and duty of either $1.00 or $6.00 on the memorandum of transfer. A case was stated under s. 124 of the Act for the opinion of the Court on the questions what duty was payable on the memorandum of transfer and on the declaration of trust. Subsequently, the Commissioner, having discovered that the declaration of trust was executed before the memorandum of transfer, declared his intention under s. 37 of the Act to call on D.K.L.R. to pay further duty on the declaration of trust. By summons, D.K.L.R. then sought a declaration that the declaration of trust is liable to duty in the sum of $6.00 and no more, and an injunction restraining the Commissioner from calling on D.K.L.R. to pay any additional duty. The questions raised by the summons had in substance already been raised by the stated case. The two matters were heard together by Sheppard J., who held that the duty assessable in respect of the memorandum of transfer was $50.16 and that assessable in respect of the declaration of trust was $6.00. On appeal to the Court of Appeal it was held (by a majority) that both the memorandum of transfer and the declaration of trust attracted ad valorem duty, and that $50.16 was assessable in respect of each instrument. The present appeals are brought from that decision.

It seems to me necessary to consider separately, in the order in which the instruments were executed, the question whether each was dutiable. The first instrument to be executed was, as I have said, the declaration of trust. When it was executed the memorandum of transfer of the land had not yet been executed. No trust could attach to the land, until, a few minutes later, the memorandum of transfer was signed. It is unnecessary to consider whether the document described as a declaration of trust was properly so called in the ordinary sense of that expression if it falls within the description of "Declaration of Trust" in the second schedule which extends to instruments that do not immediately subject any property to a trust.

By s. 4 of the Act the duties specified in the schedules are charged upon and in respect of the instruments described in the second and third schedules. By s. 5 the duties are deemed to be debts due to the Crown from every person liable to the payment of the same. Among the instruments included in the second schedule are "Conveyances of Any Property" and "Declaration of Trust". By s. 65, the expression "conveyance" includes any declaration of trust. Clearly enough, however, if an instrument comes within one of the descriptions of "Declaration of Trust" specifically set out under that heading in the schedule, it will attract the duty specified in the schedule in respect of the relevant kind of declaration of trust when that differs from the duty attracted by "Conveyance of Any Property". Paragraph 2 under the heading "Declaration of Trust" is as follows:

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 notwithstanding that the beneficial owner or person entitled to appoint such property may not have joined therein or assented thereto. The amount of duty payable in respect of a declaration of trust of the kind described in par. 2 is stated to be: "The same duty as if the instrument was a conveyance of the property comprised therein". Paragraph 3 under the heading "Declaration of Trust", so far as it is material, provides as follows: Any such instrument as aforesaid by which

(b) the trusts declared are the same trusts as those upon or subject to which the same property was conveyed to the person declaring the trust by an instrument duly stamped with ad valorem duty under this Act

The amount of duty payable on a declaration of trust within par. 3 is $6.00. If the declaration of trust in the present case comes within the description contained in par. 2 alone, it will be liable to ad valorem duty as if it were a conveyance. If, however, it comes within the description contained in par. 2 and the description contained in par. 3(b), duty of $6.00 only will be attracted. If it is not within par. 2 and is not a declaration of trust in the ordinary sense, it will attract duty of $6.00 as a "Deed of any kind whatever not otherwise charged in this Schedule".

The declaration of trust in the present case is an instrument which declares that the property to which it refers shall be held in trust for the person mentioned therein. In my opinion the property as to which that declaration is made is property "to be vested" in D.K.L.R. within the meaning of those words in par. 2. The argument on behalf of D.K.L.R. was that the words "to be vested" only apply when 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. This was the view which Sheppard J. took in Nev. Ham Nominees Pty. Ltd. v. Commissioner of Stamp Duties [1] and in the present case, and which was accepted by Mahoney J.A. (dissenting) in the present case. The words "to be", before a past participle, and used in relation to a noun, can express obligation, intention, possibility or simple futurity; the sense must in every case depend on the context in which the words appear. With all respect to those who take the contrary view, I can see nothing in the context of par. 2 to suggest that the words "to be vested" connote an obligation on the part of a third party to vest the property or a right in the trustee to have it vested. In par. 2 the contrast between "vested" and "to be vested" suggests that it is intended to refer both to property which at the date of the instrument is vested in the person executing it and to property which, although not presently vested, becomes vested in that person in the future. The instrument described is one by which the person executing it declares that the property comprised in it, if presently vested, is held on trust and, if not presently vested, will be held on trust when it becomes vested. The words "shall be vested" in this context indicate mere futurity, although the very fact that a declaration of trust is made in respect of property not yet vested suggests that there exists an expectation, if not an intention, that it will become vested. The declaration of trust in the present case seems exactly the sort of instrument described by par. 2 in its application to property to be vested. It was argued that to construe the paragraph in this way would render it uncertain in that it is not clear what is "to be vested", and unjust, in that duty would be charged on an instrument which might never take effect, because the property referred to might never become vested. No uncertainty seems to me to result from the construction which I favour. On any view there must be property "comprised in the instrument". That property must be identifiable or ascertainable. An instrument which declares a trust in respect of property which, although not presently vested in the person executing the instrument, can be identified or ascertained, seems clearly to satisfy the words of par. 2, but is not rendered uncertain by the fact that the property is not vested in the declarant. It does not seem to me that injustice is any more likely to result from this construction than from any other. It is hardly likely that many persons will execute declarations of trust in respect of identifiable or ascertainable property not yet vested in them without having a reasonable expectation that the property will become vested. Although it may happen that such an expectation may be defeated in a particular case, it may equally happen that the property may not become vested even though there was a legal obligation to vest it, for not all obligations are satisfied and not all rights can be enforced. It does not seem to me necessary to consider whether, under s. 15 of the Act and reg. 30 of the Regulations thereunder, an allowance for "spoiled stamps" might be made when duty had been paid in respect of a declaration of trust which failed in its intended operation because the property "to be vested" never became vested.

1. [1978] 1 N.S.W.L.R. 259; 8 A.T.R. 396; 78 A.T.C. 4,095.

The conclusion at which I have arrived is supported by the judgment of Dixon C.J. in Tooheys Ltd. v. Commissioner of Stamp Duties (N.S.W.) [2] . In that case a deed provided for a pension scheme for the employees of a company and £50,000 was paid to the trustee by the company for that purpose. It was argued by counsel for the appellants that the deed was not a declaration of trust within par. 2 because when the deed was executed the sum of £50,000 had not been paid and no property had become vested in the trustees. The report of the argument for the appellants in that case [3] , includes the following: "The words "property to be vested" in par. (2) mean "property which under the document shall be vested". That is not the case here." The whole Court held that the deed fell within par. 2, although there was a difference of opinion on another aspect of the case. Dixon C.J. said [4] :

It was said for the appellants that the schedule, in defining the instrument called a declaration of trust, introduced the words "or to be vested" to cover cases where a presently operative declaration of trust applies to some property or rights existing in the trustees but nevertheless property remains to be vested in them In my opinion the argument unduly restricts the meaning and application of the paragraph. 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. The case is distinguishable from the present, because the deed there contained a provision obliging the company to make the payment of £50,000. Nevertheless Dixon C.J. did not rely on that circumstance in holding that the words "to be vested" were applicable. He treated it as sufficient that there was a declaration, in advance of vesting in the person who declared the trust, of property which it was intended to make the subject of the trust. No doubt an intention to make the property the subject of the trust would be unlikely to be formed unless it was intended, or at least expected, that the property would in future be vested in the person who declared the trust. His remarks however contain no suggestion that there should exist any duty to vest the property, or any right to have it vested. 1. (1961) 105 C.L.R. 602. 2. (1961) 105 C.L.R., at p. 606. 3. (1961) 105 C.L.R., at pp. 611-612.

We were referred by counsel for the appellant to Marquis of Chandos v. Commissioners of Inland Revenue [5] . That case concerned a section of an Act which imposed ad valorem duty on a conveyance on sale and which included the following words:

And where any lands or property shall be sold and conveyed subject to any mortgage, wadset, bond or other debt, or to any gross or entire sum of money, to be afterwards paid by the purchaser, such sum of money or debt shall be deemed the purchase or consideration-money, or part of the purchase or consideration-money, as the case may be, in respect whereof the said ad valorem duty is to be paid. It was held that the words "to be paid by the purchaser" referred only to cases where the purchaser had agreed to pay the sum, and not to cases where he might pay it although he was not bound to do so. The decision depended entirely on the quite different context of the statute there in question, and provides no assistance in the present case. 1. (1851) 6 Ex. 464 [155 E.R. 624].

The decision of Sheppard J. in Nev. Ham Nominees Pty. Ltd. v. Commissioner of Stamp Duties was upheld by the Court of Appeal [6] but the majority of that Court rejected the view that it is necessary that there should be a legally enforceable obligation or right before property can be regarded as "to be vested" within par. 2. They held that it is sufficient if the persons who must be parties to the decision that the relevant property be vested in the person declaring the trust (including that person himself) intend, at the time when the declaration is executed, to vest the property in the trustee. In other words, they considered that not only the person who declares the trust, but also the person in whom the property is at that time vested, must have the intention. With all respect, I cannot agree. In my opinion it is enough that the person making the declaration shall have the expectation or intention that the property in question shall be vested in him, and unnecessary that the present owner should have any such intention. In the present case of course both 29 Macquarie and D.K.L.R. did have the necessary intention.

It was next submitted on behalf of the appellant that even if the case fell within par. 2 no duty was payable, because the property comprised in the declaration was no more than the bare legal estate, or, alternatively, that the consideration for the declaration should be regarded as the transfer of the land and that there was therefore full consideration for the declaration. Neither of these arguments is correct. The property comprised in the declaration of trust was the entire property in the land in question. Before the transfer was executed 29 Macquarie was the legal owner of the land; it had the whole right of property in the land, but had no separate equitable estate in it, for its equitable estate was absorbed in the legal estate. Assuming, as we must, for the purposes of the case, that there was an effective transfer of the fee simple to D.K.L.R., the latter company then became obliged to hold the land for the benefit of 29 Macquarie. However, the property as to which the trust was declared - the property comprised in the declaration - was the whole right of property in the land, and not the bare legal estate, for it was not until the declaration of trust became operative that any separate equitable estate was created. 29 Macquarie did not transfer to D.K.L.R. the bare legal estate; indeed it could not declare itself a trustee for itself, and then transfer the bare legal estate to another. The alternative argument, that there was full consideration for the declaration of trust, is really only another way of contending that only the bare legal estate was transferred. Further, the transfer of the land to D.K.L.R. was not consideration for the creation of the trust in respect of that land. In Tooheys Ltd. v. Commissioner of Stamp Duties (N.S.W.) it was held, to use the words of Dixon J. that "(t)he placing of the trust fund in the trustees' hands was no consideration for the present or future equitable interests created" [7] . In the Supreme Court, whose decision was affirmed in this Court, Walsh J. had dealt with the same question and said [8] :

An acceptance of a trust and an agreement to hold the trust property upon the terms of the trust and to administer it accordingly, do not constitute the giving of consideration by the trustees for the property so accepted. If it were so, every trust would have to be regarded as created for full consideration. 1. (1961) 105 C.L.R., at p. 616. 2. [1960] S.R. (N.S.W.) 539, at p. 548.

The question then arises whether the declaration of trust comes within par. 3(b) of the description in the second schedule. In my opinion it does not, for two reasons. First, the words "was conveyed" in par. 3(b) are in my opinion deliberately used in the past tense, to refer to a conveyance made before the declaration of trust was executed. The framers of the Act no doubt intended that if the transfer to the person declaring the trusts had attracted ad valorem duty, a subsequent declaration of the trusts upon or subject to which the property was transferred should escape it. Similarly, as will be seen, if the declaration of trust was the first of the documents to be executed, and attracted ad valorem duty, a subsequent transfer might escape duty. The second reason for reaching the conclusion that par. 3(b) is not applicable is that, for the reasons I am about to give, the memorandum of transfer did not attract ad valorem duty; in those circumstances obviously the provision does not apply.

For these reasons I conclude that the declaration of trust is liable to the same duty as if it were a conveyance, and since, as I have said, there was no consideration for it, it was right to charge it to ad valorem duty under s. 66(3)(a) of the Act.

The question which must then be considered is whether the memorandum of transfer was liable to ad valorem duty. The first submission on behalf of the appellant was that the property conveyed by the transfer was valueless. The submission was that before the memorandum of transfer was executed, 29 Macquarie had the full rights of a beneficial owner of the land, and after the execution of the transfer, when the declaration of trust took effect, it had the same beneficial rights. This is a variant of an argument which I have already rejected. I have pointed out that 29 Macquarie had the whole right of property in the land and transferred it to D.K.L.R. The fact that on the very instant when the transfer took effect the declaration of trust became effective does not mean that the real effect of the transfer was any different from its apparent effect. The transfer did what it purported to do, i.e., to transfer the whole property in the land to D.K.L.R. Before the transfer there had been no severance of the legal and equitable interests in the land. It was only when the declaration of trust took effect, which of course was immediately after the transfer, that there was a severance of the legal and equitable interests.

The present case bears a close analogy to Commissioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Quigley's Case) [9] . In that case Q., who was beneficially entitled to certain property subject only to a life interest of one K. in part of it, conveyed the property to a trustee in trust for himself for life, with certain remainders over in favour of others. It was held that the instrument was liable to ad valorem duty in respect of the whole of the property thereby settled, including the life interest limited to Q. Counsel in that case submitted an argument similar to that which was advanced in the present case, saying, "The beneficial interest during the lifetime of the settlor was not conveyed. It remained after the conveyance where it was before" [10] . This argument was rejected. Knox C.J., Gavan Duffy and Starke JJ. said [11] :

"He" [the settlor] "granted and assigned unto the trustee the whole of his property, and then proceeded to create new interests including a beneficial interest for himself. He held that interest under the settlement and under no other title." In the present case 29 Macquarie transferred the whole of the land to D.K.L.R., which then created a new equitable interest in favour of 29 Macquarie. 1. (1926) 38 C.L.R. 272. 2. (1926) 38 C.L.R., at p. 276. 3. (1926) 38 C.L.R., at pp. 277-278.

The appellant relied on the decision of the House of Lords in Wm. Cory & Son Ltd. v. Inland Revenue Commissioners [12] . In that case an option to purchase shares provided that with a view to protecting the rights of the optionee (a company) the shareholders should forthwith transfer the shares to it but that no such transfer should operate or be deemed to operate to pass any beneficial interest in the shares. Provision was made for the re-transfer of the shares in the event of the lapse of the option. Subsequently the shares were transferred and thereafter the options were exercised. It was held that the transfers were not assessable to ad valorem stamp duty as conveyances on sale. Before us, counsel for the appellant submitted that it must have been thought that the transfers conveyed no beneficial interest, but the ratio of the decision was that there was no sale at the time when the transfers were effected. On identical facts it was held in New Zealand in Farm Products Co-operative (Tararua) Ltd. v. Commissioner of Inland Revenue [13] that the transfers of the shares were liable to ad valorem duty as "instruments of conveyance". The difference in result depended upon the difference between the statutory provisions in the two jurisdictions. The cases are clearly distinguishable from the present and it is unnecessary to examine them further.

The final question for consideration is whether the memorandum of transfer comes within the provisions of s. 73(2A) of the Act which provides as follows:

A conveyance made for nominal consideration upon the appointment or the retirement of a trustee (whether the trust is expressed or implied) is to be charged with the duty of one dollar. This question falls within a narrow compass but is not free of difficulty. In the present case the transfer was a conveyance, made for a nominal consideration, upon - in the sense of at the same time as, or on the occasion of - the declaration of trust. The question is whether the declaration of trust can be regarded as the appointment of a trustee within the meaning of sub-s. (2A). There is no doubt that when the declaration of trust took effect a trust was created and D.K.L.R. was constituted a trustee. It would in my opinion be too narrow a view to hold that D.K.L.R. was not thereby appointed a trustee within the meaning of the sub-section. There is nothing in sub-s. (2A) to suggest that its provisions should be limited to an appointment of a trustee to fill a vacancy caused by the death or retirement of the trustee of a pre-existing trust; unlike s. 73(1)(a)(i), it does not refer to the appointment of a new trustee. The words of sub-s. (2A) are undoubtedly wide enough to include a trustee appointed at the time when a trust is first created. Further, the word "appointment" is capable of referring to the act by which a person is placed in the position of trustee, even though the act takes the form of a declaration of trust by the person concerned; in other words, a person may appoint himself to be a trustee. Construed broadly rather than narrowly, the sub-section has the effect of preventing the exaction of ad valorem duty on two instruments which are brought into existence for the purpose of conveying property to a person who declares that he will hold it on trust. If the memorandum of transfer had been executed first, and had attracted ad valorem duty, par. 3(b) of the description of "Declaration of Trust" would have prevented ad valorem duty from being attracted by the declaration. The conclusion that ad valorem duty should be payable only once in circumstances such as the present seems consistent and just. For these reasons I consider that sub-s. (2A) should be given the broader meaning of which it is capable and that the duty payable on the memorandum of transfer is one dollar.

I would answer the questions asked in the stated case as follows:

whether the said memorandum of transfer dated 1 June 1976 in respect of the said land between 29 Macquarie (No. 14) Pty. Ltd. and the plaintiff is a conveyance made for nominal consideration upon the appointment of a trustee.

whether the duty properly assessable in respect of the said transfer is: (i) $50.16; or (ii) $1.00; or (iii) $6.00; or (iv) some other, and if so, what other amount.

whether the said declaration of trust dated 1 June 1976 is a declaration of trust liable to duty pursuant to paragraph 3(b) under the heading "Declaration of Trust" in the second schedule to the said Act.

whether the duty properly assessable in respect of the said declaration of trust is: (i) $6.00; or (ii) some other, and if so, what other amount.

by whom should the costs of this stated case be paid?

I would accordingly allow appeal no. 66 of 1980 in part, and would dismiss appeal no. 67 of 1980.

I have had the advantage of reading the judgment of Mason J. I am in agreement with it and with the answers which he proposes to the questions in the case stated.

The issues in this appeal relate to the liability for duty under the Stamp Duties Act 1920 N.S.W. ("the Act") of an instrument described as a declaration of trust and another instrument which is an executed form of a memorandum of transfer. The appellant claims that each instrument is liable to a nominal duty while the Commissioner claims that each instrument is liable to ad valorem duty calculated by reference to the value of the land which is the subject of the instruments.

The circumstances and transactions which gave rise to this appeal were summarized by Hope J.A. in the New South Wales Court of Appeal in this way. 29 Macquarie (No. 14) Pty. Ltd. ("29 Macquarie") is the registered proprietor for an estate in fee simple of the land comprised in certificate of title registered vol. 5723 fol. 131. On 1 June 1976 meetings of the directors of 29 Macquarie and of the appellant were held and certain resolutions were passed. Sheppard J. in the Administrative Law Division, who heard the matter at first instance, found that the times at which the meetings were held as recorded in the minute book were incorrect. He found that the true order of events was as follows:

(1) At a meeting of the directors of 29 Macquarie the following resolution was passed: Resolved that the Company request D.K.L.R. Holding Co. (No. 2) Pty. Limited to act as Trustee for it of the land in Certificate of Title Volume 5723 Folio 131 being Lot 11 in Deposited Plan 6764 on the terms of a declaration of trust which unexecuted was tabled for approval at the meeting. It was specifically resolved that the proposed Trustee would hold only the legal estate to the land there being no intention on the part of the Company to part with beneficial ownership of the land.

(2) A few minutes later a meeting of the directors of the appellant was held at the same place. The following resolution was then passed: Resolved that upon request having been made to the Company that it act as Trustee absolutely on behalf of 29 Macquarie (No. 14) Pty. Limited as to the real estate known as Volume 5723 Folio 131 the Company execute a Declaration of Trust in favour of the said 29 Macquarie (No. 14) Pty. Limited.

(3) Shortly afterwards a further meeting of the directors of 29 Macquarie was held. This resolution was then passed: Resolved that the Company affix its seal to a transfer of the bare legal estate in the whole of the land in Certificate of Title Volume 5723 Folio 131 to D.K.L.R. Holding Co. (No. 2) Pty. Limited.

After these meetings the document described as a declaration of trust referred to in the resolution of the directors of 29 Macquarie was executed by the appellant. It was in this form:

To all to whom these presents shall come D.K.L.R. Holding Co. (No. 2) Pty. Limited a Company duly incorporated and having its registered office at 48 Macquarie Street, Parramatta sends greetings: Whereas the Company has undertaken to act as Trustee absolutely for lands listed in the Schedule hereto on behalf of 29 Macquarie (No. 14) Pty. Limited Now be it known to all men by these presents that the Company declares that it will hold the lands listed in the Schedule hereto upon trust absolutely for the said 29 Macquarie (No. 14) Pty. Limited and that the Company will make execute and do all such instruments acts and things as shall be necessary to vest the lands back in the name of the said 29 Macquarie (No. 14) Pty. Limited and further shall deal with the lands solely as the said 29 Macquarie (No. 14) Pty. Limited shall direct and appoint. The Schedule referred to the land in certificate of title vol. 5723 fol. 131.

After the appellant had executed the declaration of trust, both it and 29 Macquarie executed a form of memorandum of transfer in respect of the land. This transfer was in the prescribed form, and described the consideration as "Nominal". The land was the subject of a registered mortgage to secure the repayment of $3,203.00, but this mortgage was not referred to as an encumbrance subject to which the transferee was to take. As Hope J.A. pointed out, the transfer was thus not only unregistered, it was unregistrable until appropriately altered (Brunker v. Perpetual Trustee Co. (Ltd.) [14] ), though the Registrar-General had a discretion to register the instrument, notwithstanding the omission from the memorandum of prior incumbrances in breach of s. 46 of the Real Property Act 1900 N.S.W. - see s. 39(2) of that Act. It is not suggested that anything turns on the fact that the transfer has not been registered and that it may not be registrable.

The Commissioner assessed duty on the form of memorandum of transfer pursuant to s. 66(3)(a) of the Act in a total sum of $50.16, this sum being made up of the sum of $41.25 in respect of the amount of the encumbrance on the property, namely $3,203.00, and the sum of $8.91 in respect of the difference between $3,203.00 and the value of the land, $3,500.00, namely $297.00, at the rate provided for in the sixth schedule to the Act. Duty was assessed on the declaration of trust at $6.00 pursuant to par. (3)(b) under the heading "Declaration of Trust" in the second schedule to the Act. Before this provision can apply, the declaration must be one which comes within par. (1) or par. (2). The Commissioner claimed that the declaration came within par. (2) as an instrument declaring that property "to be vested" in the person executing the instrument, the appellant, shall be held on trust for the person mentioned in the instrument, 29 Macquarie.

Upon a case stated pursuant to s. 124 of the Act, Sheppard J. held that the defendant was correct in assessing the form of memorandum of transfer for duty pursuant to s. 66(3)(a) and in regarding it as falling outside s. 73(2A). However, applying an earlier decision of the Court of Appeal in Nev. Ham Nominees Pty. Ltd. v. Commissioner of Stamp Duties (N.S.W.) [15] he held that the declaration of trust did not fall within the provisions in the second schedule under the heading "Declaration of Trust" but was a deed "not otherwise charged" described in the schedule and accordingly was liable to a fixed duty of $6.00. From this decision the appellant appealed and the Commissioner cross-appealed to the Court of Appeal. The Court of Appeal, by majority (Hope and Glass JJ.A., with Mahoney J.A. dissenting), though affirming Sheppard J.'s finding that the memorandum of transfer was liable to ad valorem duty under s. 66(3)(a), held that the declaration of trust was liable to ad valorem duty and was, like the memorandum of transfer, liable to duty in the sum of $50.16.

Stamp Duty is Computed on the Property Conveyed in a Conveyance and the Property Comprised in a Declaration of Trust.

Before I examine the liability to stamp duty on each of the two instruments, I should deal with a submission which is placed at the forefront of the appellant's case. Its principal target is the declaration of trust, though it is by no means confined to the declaration and claims the instrument of transfer as the secondary target. The submission is that in ascertaining what is the property conveyed by the transfer and what is the property comprised in the declaration of trust we should look for the purpose of computing duty primarily, if not exclusively, to the situation of 29 Macquarie before and after the transactions and conclude that the difference in its situation truly reflects the estate or interest which it conveyed to the appellant and which was comprised in the declaration of trust. Before, 29 Macquarie was the registered proprietor of an absolute estate in fee simple; after, it was the absolute owner of an equitable estate in fee simple, the legal estate residing in the appellant. Suggested conclusion: a bare legal estate only was conveyed by the transfer and comprised in the declaration of trust.

It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transactions to which they give effect (Commissioner of Stamp Duties (Q.) v. Hopkins [16] ). As we shall see when we come to consider the liability to duty on each of the instruments, in the case of a conveyance the statutory command is that it attracts duty on the property conveyed; in the case of the declaration it attracts duty on "the property comprised therein". Consequently the issues are: (1) What was the property conveyed by the transfer?; and (2) What was the property comprised in the declaration? The decision on these issues hinges on the interpretation of the two instruments, that is, on the description given by them of the relevant estate or interest as applied to the facts of the case. It is a matter of ascertaining what is the property with which each instrument deals, according to its terms.

We cannot substitute for the issues presented by the statute a different issue having no foundation in the statutory provisions. Nor can we substitute for the property which the parties have chosen by their instruments to convey and make the subject of a declaration of trust the interest in property which in a practical sense represents the alteration in 29 Macquarie's position brought about by the combined operation of the two instruments.

The unacceptable consequences of the appellant's argument are illustrated by two examples, the first of which I take from the judgment of Hope J.A. A. conveys an absolute estate in fee simple to B. and takes from B. a lease back for fifty years. If the appellant is correct, A. has conveyed, not an absolute estate in fee simple, but the reversion expectant on the determination of a lease for fifty years and the conveyance is to be assessed for duty on this footing. How the lease is to be assessed on this approach does not emerge. Fortunately we do not have to solve this problem for the true position is that each instrument is to be separately assessed, the conveyance being assessed to duty on the property conveyed, viz. an absolute estate in fee.

The second example is closer to the present case. A. conveys an absolute estate in fee simple to B. who executes a declaration of trust acknowledging that he holds as trustee for A. absolutely. The appellant says, contrary to the fact, that the property conveyed is a bare legal estate. At common law A. might have conveyed a bare legal estate, but in the example given he has not done so and therefore duty is to be assessed on the footing that an absolute estate in fee was conveyed.

The decision in Commissioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Quigley's Case) [17] strongly supports the proposition that we should look to the legal operation of the particular instrument, not to the net result of the transactions. There a person who was beneficially interested in real and personal property, subject only to a life interest of another person in part of it, executed a deed of settlement whereby he conveyed the property to a trustee on trust for himself for life with certain remainders over in favour of others. The question was whether the deed of settlement was liable to duty under s. 66(1) of the Stamp Duties Act 1920-1924 N.S.W.. It was argued that the deed did not convey the beneficial interest during the lifetime of the settlor because it remained after the conveyance where it was with him before and that, accordingly, the value of that beneficial interest should be deducted from the value of the property conveyed. The argument was rejected by the Court. Knox C.J., Gavan Duffy and Starke JJ. said of the argument [18] :

this is inaccurate unless the limitation of a life interest to the settlor is regarded as a reservation to himself of that interest out of the property conveyed by him to the trustee upon the trusts of the settlement. Neither in form nor, in our opinion, in substance did the settlor make any such reservation. He granted and assigned unto the trustee the whole of his property, and then proceeded to create new interests including a beneficial interest for himself. He held that interest under the settlement and under no other title. 1. (1926) 38 C.L.R. 272. 2. (1926) 38 C.L.R., at pp. 277-278.

Consequently, pursuant to sec. 66(1), unless some other provision is found in the Act to the contrary, the whole of the "estate and interest" of the settlor in the real and personal property dealt with by the settlement is the "property" conveyed, and therefore dutiable ad valorem. Henceforth the settlor's source of title and measure of rights are found in the settlement.

Par. (b) of sub-sec. 1 of sec. 73 refers, in my opinion, to a conveyance that either does not purport to transfer a beneficial interest at all, or, if it does, is made by a person in a recognized fiduciary position under a trust in favour of the transferee. Obviously that provision does not include the present instrument.

The decision in Wm. Cory & Son Ltd. v. Inland Revenue Commissioners [20] turned on different statutory provisions and on different instruments executed in very different circumstances. In that case there was no subsisting contract of sale when the transfers were executed. As the transfers did not themselves effect a sale, having been executed for security purposes only, they did not constitute a conveyance of sale within the meaning of the Stamp Act 1891 U.K.. It seems that Pennycuick J. at first instance and Diplock L.J. who dissented in the Court of Appeal, whose judgments were upheld in the House of Lords, as well as the members of the House of Lords, thought that the transfers were not dutiable because no beneficial interest passed. Section 74(6) of the Finance Act 1909-1910 U.K. exempts from duty a conveyance or transfer under which no beneficial interest passes in the property conveyed or transferred (see Sergeant on Stamp Duties, 4th ed. (1963), p. 220). This result is in conformity with a decision in Albert Martin v. Commissioners of Inland Revenue (1930) which is reported in Sergeant at pp. 392-395. There Rowlatt J. held that a conveyance of property of trustees, which became effective before the deed defining the trust was executed, conveyed a bare legal estate, but no beneficial interest, there being a resulting trust to the settlor. I do not regard the decisions in either of these cases as throwing light on the effect of the instruments in the present case. In Farm Products Co-operative (Tararua) Ltd. v. Commissioner of Inland Revenue [21] , the New Zealand Court of Appeal distinguished Wm. Cory & Son Ltd. on the ground that the New Zealand stamp duty legislation, which is in relevant respects similar to the New South Wales Act, differed from the Stamp Act 1891.

The issue in Stanyforth v. Inland Revenue Commissioners [22] , also relied upon by the appellant, was not one of identification of the property conveyed or transferred, but of valuing property the subject of a deed poll effecting a partial resettlement. In valuing that property it was held that regard must be had to the existence of the powers of revocation and new appointment reserved in the original settlement and in the resettlement, as the exercise of these powers could drastically affect or destroy the property rights created by the deed poll.

Although the transfer has not been registered, the argument presented assumes that it will be altered so as to include a note of the mortgage in the memorandum of prior incumbrances, that the transfer will then be registered and that upon registration it will vest a bare legal estate in fee, if not an absolute estate in fee, in the appellant. As the liability of the instrument to stamp duty is to be determined upon its execution, it is to be determined on the footing that it will on registration vest an estate in the appellant.

The transfer was a conveyance within s. 65 and was expressed to be for nominal consideration. Does it come within s. 73(2A)? That sub-section provides:

A conveyance made for nominal consideration upon the appointment or the retirement of a trustee (whether the trust is expressed or implied) is to be charged with the duty of one dollar.

The majority in the Court of Appeal took the view that s. 73(2A) applies where a conveyance in some form is necessary to transfer the title to trust property upon the appointment or retirement of a trustee and where, though not necessary, a transfer is used to transfer title in these instances. However, their Honours thought that the subsection had no application where no trust exists until the conveyance takes effect, reading "upon" as "consequent upon". Although Hope J.A. considered that there was a difficulty in regarding "upon the appointment of a trustee" as meaning "when the conveyee, as the result of the conveyance, will hold as trustee", I think that this is the correct interpretation. As s. 73(1) specifically deals with the appointment of a new trustee and of an additional trustee, as well as an instrument by which a trustee retires, I find it very difficult to read the reference in s. 73(2A) to "the appointment of a trustee" as being confined to the appointment of a new trustee. The word "upon" should be understood as meaning "on the occasion of". And I agree with Mahoney J.A. that the term "appointment" is not limited to appointment by a formal declaration and that it covers the case "where, as here, the parties intend that a trust should arise by virtue of what they do".

The transfer was therefore liable to duty in the sum of $1.00 and, accordingly, I have no need to consider in this respect whether the transfer conveyed the bare legal estate or the absolute estate in fee.

Section 4 of the Act provides that there shall be charged upon the instruments described or mentioned in the Act in the second and third schedules the duties specified in the Act and schedules, subject to the exemptions contained in the Act and the schedules and in any other Act.

The second schedule under the heading "Declaration of Trust" describes three classes of instruments, making provision in each case for the duty payable and specifying the person primarily liable. The three classes of instruments are:

(1) Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person of persons who have actually paid the purchase-money therefor.

(2) 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 notwithstanding that the beneficial owner or person entitled to appoint such property may not have joined therein or assented thereto.

(3) Any such instrument as aforesaid by which (a) the same trusts are declared as have been declared in respect of the same property by an instrument duly stamped with ad valorem duty under this Act or (b) the trusts declared are the same trusts as those upon or subject to which the same property was conveyed to the person declaring the trust by an instrument duly stamped with ad valorem duty under this Act or (c) the same trusts are declared as have been declared by a will in respect of the same property and any death duty payable in respect of that property by reason of the death of the testator who made such will has been paid.

Opposite pars. (1) and (3) the amount of duty specified is $6.00, with "The person declaring the trust" being the person primarily liable. Opposite par. (2) it is provided that the amount of duty is "The same duty as if the instrument was a conveyance of the property comprised therein". In this case the person primarily liable is designated to be "The person declaring the trust - or the person directing such declaration".

In terms par. (2) appears to describe the instrument executed by the appellant. The majority in the Court of Appeal so found, holding that the words "to be vested" refer to property intended to be vested in the declarant by those persons whose intention would be necessary to effect the vesting, viz. 29 Macquarie and the appellant in the circumstances in this case. Hope J.A., noting that the words necessarily generated an issue of fact, described the intention in this way:

It must be an intention at the time when the declaration of trust is executed, and it must relate to identified property, or property which is identifiable at the time of the declaration, for it is by reference to circumstances at that time that liability to duty is to be determined. Hope or expectation are not enough. If the state of mind of the person in whom the title is vested is that he may or may not vest the property, then he has no intention to vest it, and it cannot be said that the property is to be vested. If on the other hand he does intend to vest the property, and the declarant of the trust intends to accept the property upon the terms of the declaration, the property fulfils the description.

According to Mr. Bainton, for the appellant, the apparent simplicity of par. (2) is illusory. He argues, first, that the word "declaring" in par. (2) is used in its technical sense to connote a declaration which completely constitutes a trust, and secondly, that the words "to be vested" refer to property which is in the course of becoming vested in the person making the declaration so that he has an enforceable right to acquire the property.

When a statute speaks of a declaration of trust it is naturally taken as referring to a declaration of trust in its technical sense, that is, to an instrument which is effective to create a trust by operating upon property then vested in the declarant or, in the case of property thereafter vested in the declarant, at the time when it becomes so vested. With a statute imposing stamp duty there is a difference. The general rule is that the liability of an instrument to stamp duty is to be ascertained by reference to the circumstances which exist when the instrument is executed, though the court can have regard to subsequent events in order to discover the true position at the time of execution (Wm. Cory & Son Ltd. [23] , per Lord Reid). In other circumstances the general rule might require us to narrow the category of instruments falling within par. (2), confining it to declarations effective on their execution to create trusts. But the express references in par. (2) of the statutory description to property "to be vested" and which "shall be held" make it clear that the operation of the paragraph cannot be so limited.

However, it does not follow that par. (2) applies to all declarations capable of creating a future trust. The description of trust property in a declaration of trust may be in perfectly general terms, viz. "Any property that I may hereafter acquire". A declaration which so describes the trust property is good and effective to create a trust when property of the class described is acquired by the declarant, despite the fact that at the time of the execution of the declaration the property is unidentified and the declarant did not then intend to acquire the particular parcel of property to which the trust ultimately attaches. Yet the class of declarations in par. (2) cannot embrace every declaration capable of operating as an effective declaration of trust in the technical sense. We have already noted that the liability of the instrument to duty is to be ascertained upon its execution. More importantly the amount of duty is equated to the amount of duty payable on a conveyance of "the property comprised therein". This indicates that the paragraph looks to a declaration affecting 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. 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. Does it also refer to a declaration which does not itself identify the property when specific property can be identified as the trust property by reference to the intention of the declarant or the person directing the declaration at the time of execution? Is specific property so identified "the property comprised therein", i.e. in the declaration of trust?

For the purposes of deciding this case it is unnecessary to answer these questions. However, in response to the objection that it is unusual that liability to stamp duty should be made to depend on the intention of a party not expressed in the instrument itself, it is relevant to refer to the remarks of Dixon J. in Hopkins [24] . His Honour noted that: " to ascertain the operation of the instrument some facts must always be taken into account, as, for instance, the existence and identity of the parties, and of the objects and subjects referred to" and concluded that it was proper to look outside the instrument assessed as a settlement to ascertain whether the trust property had been vested in the trustee.

The principal objections to the construction that "to be vested" means "intended to be vested", at least when the declaration identifies the trust property, are based on the consequences which are said to flow from it. It is said that the instrument becomes liable to duty even though it may for any one of a variety of reasons fail to become effective to create a trust - the declarant may not acquire the property. This may occur for reasons within or beyond the control of the declarant. It is his intention, and perhaps that of the person directing the declaration, that is the relevant intention. It may well be that, although the declarant intends to acquire Blackacre from X. with the result that his declaration of trust will apply to it on acquisition, X. decides that he will retain Blackacre or sell it to Y. Even so, on the construction now under consideration the declaration was liable to ad valorem duty. This, it is said, is hardly fair unless the duty can be recovered once the declarant's intention is frustrated or changed.

Whether the duty can be recovered turns on reg. 30 of the Stamp Duties Regulations 1934 N.S.W.. So far as it is relevant it provides:

Subject to the production of such evidence, by declaration or otherwise, as the Commissioner may require, and to such further Regulations as may from time to time be issued in that behalf, allowance for spoiled stamps may be made in the cases hereinafter mentioned, that is to say: -

(7) An instrument which, in the opinion of the Commissioner has failed in its intended operation and has become useless.

(a) in all cases the stamp, stamped material, or stamped form shall be given up to the Commissioner;

(b) in the case of a signed instrument the application for allowance shall be made within twelve calendar months from the date when the stamp was spoiled, and in the case of unsigned instruments and forms or adhesive stamps within twelve calendar months from the date when they were rendered useless.

Section 15(1) enables the Commissioner to allow a refund to a "person possessed of any spoiled or unused stamps". Section 15(2) enables the Governor in Council to prescribe inter alia the classes of cases in which the allowance may be made and the time within which application for it is to be made. In the absence of any statutory definition of "spoiled", I think that it should be understood as signifying not only stamps which are defaced, but also those that have become useless as, for example, when the instrument to which they relate itself "has failed in its intended operation and has become useless" within the meaning of reg. 30(7). These words then appropriately apply to a case in which the declarant fails to acquire the property on which the declaration of trust was intended to operate. Of it one can accurately say that it has failed in its intended operation and has become useless. The question arising under the proviso (b) to reg. 30 - What was the date when the stamp was spoiled? - may in some cases be difficult to determine, but that is not a matter that presently concerns us.

The appellant urges that there is some difficulty in calculating the duty payable on a declaration of trust in the cases of property "to be vested" when the duty is equated to that payable on the conveyance "of the property comprised therein". The difficulty is by no means apparent. The statute proceeds upon the fiction or footing that the declarant imparts an equitable estate or interest to the beneficiary. Dixon C.J. in Tooheys Ltd. v. Commissioner of Stamp Duties (N.S.W.) [25] observed: " that in applying the rates appropriate to a conveyance to a declaration of trust, you are required to treat the person declaring the trust as imparting property to the objects or purposes of the trust ". Here the statute has an unusual operation because it is the beneficiary who conveys the property to the trustee so as to enable the trust to come into operation. Once the basis on which the statute operates is understood the amount of the duty payable on a conveyance of the property can be readily ascertained, even though the amount of duty depends upon various factors, such as the presence or absence of full consideration in money or money's worth and the value of property disposed of by the transferor in the preceding twelve months.

That the words "to be vested" should be read as "intended to be vested" is supported by the decision of this Court in Tooheys and especially by the judgment of Dixon C.J., notably at p. 612. In that case a deed was executed between the appellant and trustees. It provided for the establishment of a pension fund for the benefit of the appellant's employees and their dependants. Although it provided that the fund was to consist initially of a contribution of £50,000 made by the appellant "at the date hereof", the sum was not paid until some time thereafter. Employees were eligible to become members on admission by the trustees. The Court unanimously held that the deed fell within par. (2) of "Declaration of Trust" in the second schedule to the Act on the footing that the sum of £50,000 was "to be vested" in the trustees.

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. 1. (1961) 105 C.L.R., at p. 612.

The true import of the Chief Justice's observations is made apparent by his statement of the appellant's argument [27] . There his Honour said:

At the time when the deed was executed and presented for the 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. It was said for the appellants that the schedule, in defining the instrument called a declaration of trust, introduced the words "or to be vested" to cover cases where a presently operative declaration of trust applies to some property or rights existing in the trustees but nevertheless property remains to be vested in them. His Honour rejected this argument by saying that the words "to be vested" made it clear that par. (2) was not looking to a completely constituted trust or to one in which the declarant had some enforceable rights in the property still "to be vested in them". 1. (1961) 105 C.L.R., at p. 611.

The suggestion is made that in reality Tooheys was a case in which property rights were vested in the trustees - that the trustees had the benefit of a covenant or promise to pay £50,000. However, as we have seen, Dixon C.J. treated it as a "to be vested" case, not as a case in which property was vested in the trustees. Kitto J. [28] merely agreed on this point, whether with the reasons of Dixon C.J. or of the Supreme Court of New South Wales is not stated. Taylor, Menzies and Windeyer JJ. agreed with the judgment in the Court below which had been prepared by Walsh J. [29] . The Court there stated [30] "it is not clear from the deed that, at the moment of its execution, the trustees already held any property to which a trust could attach". The Court went on to say [31] :

For the description of an instrument contained in par. (2) under the heading "declaration of trust" in the schedule is not so phrased as to be confined to declarations which create or which 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, and that the trusts are thenceforth immediately enforceable. 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. Thus it extends, in my opinion, to instruments which would not be classified, in the ordinary language of an equity lawyer, as being declarations of trust. 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. It is only to be expected that this description would go beyond the ordinary sense of the term, since "ordinary" declarations of trust are included in the definition of "conveyance" and are thus chargeable without recourse to the provision now under consideration. So much then for the suggestion that the Court dealt with the case on the footing that the property was vested in the trustees. There is perhaps something to be said for the appellant's contention that, as Hopkins [32] indicates, there was a little more in the argument that rights to property were vested in the trustees than the judgments in Tooheys appear to acknowledge. Be that as it may, the judgments in Tooheys certainly do not proceed on this footing. 1. (1961) 105 C.L.R., at p. 616. 2. [1960] S.R. (N.S.W.) 539. 3. [1960] S.R. (N.S.W.), at p. 545. 4. [1960] S.R. (N.S.W.), at pp. 545-546. 5. (1945) 71 C.L.R., esp. at pp. 367-369.

One matter remains to be mentioned before we can conclude that the declaration of trust falls within par. (2). Ordinarily a declaration of trust signifies a declaration which operates to create a trust - it is made by a person who holds or will hold a beneficial interest at least commensurate with the beneficial interest sought to be brought into existence by the trust. There is the possibility here that the declaration is made by the appellant as a person who will acquire no more than a legal estate and who will quite apart from the declaration be a bare trustee for 29 Macquarie. At common law a conveyance by the absolute owner of a bare legal estate in fee will constitute the conveyee a trustee of Blackacre for the conveyor without the need for a declaration of trust. There is a resulting trust of the equitable estate which has not been disposed of. Of course a resulting trust may also arise when the entire estate is conveyed to the trustee but the dispositions of the equitable estate or interest fail so that it comes back to the settlor. For a discussion of the difference between the two categories of resulting trust see the judgment of Megarry J. in In re Vandervell's Trusts [No. 2] [33] . With that difference we have no present concern except to note that at common law a bare legal estate may be conveyed by an absolute owner and the question whether a conveyance is of a bare legal estate or of an absolute estate in fee is one of intention (Vandervell v. Inland Revenue Commissioners [34] , per Lord Upjohn; cf. the judgment of Diplock L.J. in the Court of Appeal in that case [35] ).

1. [1974] Ch. 269, at pp. 288-293. 2. [1967] 2 A.C. 291, at p. 311. 3. [1966] Ch. 261, at p. 287.

Perhaps it may be otherwise with transfers of land under the Real Property Act 1900 N.S.W.. A transfer in statutory form of an estate in fee simple may on registration operate to vest in the transferee the whole of the registered estate. But I do not need to decide this question. The appellant does not, as I understand his case, argue that a declaration by a holder of the bare legal estate takes the declaration outside par. (2), no doubt for the sound reason that such a declaration literally answers the description contained in the paragraph.

Having concluded that the declarant falls within par. (2), I turn to consider the question: How is the amount of duty to be computed on the footing that the declaration is a conveyance? This brings me to s. 66 and back to the appellant's contention, already discussed, that the declaration is to be regarded as a conveyance of the bare legal estate, having a nominal value only. Section 66(1) subjects every conveyance to ad valorem duty in respect of the unencumbered value of the property "thereby conveyed". It follows that duty on a par. (2) declaration of trust is to be computed on the footing that it is a conveyance of the property the subject of the declaration, whether that property is vested or "to be vested" in the declarant. In the case of a conveyance on sale, s. 66(2) substitutes for the value of the property the consideration for the sale, unless the consideration is less than that value as ascertained in accordance with s. 68. We may put to one side s. 68 which authorizes the Commissioner to require, in the case of every conveyance, a valuation of the property "comprised in such instrument". Section 66(3) provides for the amount of duty payable on conveyances without consideration in money or money's worth. They are liable to ad valorem duty on the value of any encumbrances at the rate in the second schedule and on the value of the property conveyed at a rate specified in the sixth schedule. In this instance duty is levied on an amount equal to the aggregate of the value of the property comprised in the conveyance and the value of certain other property. I agree with Hope J.A. that, since the value of the incumbrances has already been charged to duty, the expression "property conveyed" here means the property subject to incumbrances, i.e. the property which the conveyance has the effect of conveying from the conveyor to the conveyee.

As we have seen, it is not to the point to say that after the declaration of trust and the conveyance, 29 Macquarie had only an equitable estate whereas before it had a legal estate entitling it to beneficial ownership and to conclude from this that in a practical sense 29 Macquarie parted with a bare legal estate. Duty on the declaration is to be ascertained by reference to the duty payable on a conveyance of the property comprised in the declaration and that consists of the entire equitable estate.

The appellant then contests the Court of Appeal's conclusion that the declaration was not made for full consideration in money or money's worth. This argument, a variation on the earlier theme, is that 29 Macquarie parted with a legal and beneficial interest and received back the entire beneficial interest having an equivalent value. The answer is that if, as we have already seen, the statute requires us to treat the declarant as imparting property to the beneficiary only, then the question is whether the declarant or the person directing him to declare the trust received full consideration in money or money's worth (see Tooheys [36] , per Dixon C.J.). The appellant received no consideration. 29 Macquarie did not direct the declaration of trust. A par. (2) declaration is aimed at the case in which the holder of a beneficial interest directs his trustee to hold that interest on trusts to be declared by the trustee.

I would allow the appeal in part. I would answer the questions asked in the case stated: (a) Yes; (b) $1.00; (c) No; (d) $50.16.

The material facts are set out in the reasons for judgment of my brother Mason and I do not need to repeat them.

Two separate questions arise, the first being whether the memorandum of transfer dated 1 June 1976 by which 29 Macquarie (No. 14) Pty. Ltd. ("29 Macquarie") conveyed the relevant land to D.K.L.R. Holding Co. (No. 2) Pty. Ltd. ("D.K.L.R.") was a conveyance "made for nominal consideration upon the appointment of a trustee" within the meaning of the Stamp Duties Act 1920 N.S.W., as amended ("the Act") and at what amount of duty such a memorandum of transfer should be charged. The second question is whether the declaration of trust of 1 June 1976 is liable to duty pursuant to par. (3)(b) under the heading "Declaration of Trust" in the second schedule to the Act and, if so, at what amount of duty is it properly assessable.

The sequence of events as found by the trial judge (Sheppard J.) is not in dispute and may be summarized as follows.

Prior to any of the relevant events, 29 Macquarie was the registered proprietor for an estate in fee simple of certain land in New South Wales being the whole of the land contained in certificate of title vol. 5723, fol. 131 registered under the Real Property Act 1900 N.S.W. subject to a registered mortgage. On 1 June 1976 meetings of the directors of 29 Macquarie and of D.K.L.R. were held. The first of those meetings was of directors of 29 Macquarie at which it was resolved as follows:

[T]hat the Company request D.K.L.R. Holding Co. (No. 2) Pty. Limited to act as Trustee for it of the land in Certificate of Title Volume 5723 Folio 131 being Lot 11 in Deposited Plan 6764 on the terms of a declaration of trust which unexecuted was tabled for approval at the meeting. It was specifically resolved that the proposed Trustee would hold only the legal estate to the land there being no intention on the part of the Company to part with beneficial ownership of the land. It was also resolved: [T]hat the proposed trustee would hold only the legal estate to the land there being no intention on the part of the company to part with beneficial ownership of the land. Shortly thereafter there was a meeting of the directors of D.K.L.R. at which it was resolved as follows: [U]pon request having been made to the Company that it act as Trustee absolutely on behalf of 29 Macquarie (No. 14) Pty. Limited as to the real estate known as Volume 5723 Folio 131 the Company execute a Declaration of Trust in favour of the said 29 Macquarie (No. 14) Pty. Limited.

There then followed a further meeting of the directors of 29 Macquarie at which the following resolution was adopted:

[T]hat the Company affix its seal to a transfer of the bare legal estate in the whole of the land in Certificate of Title Volume 5723 Folio 131 to D.K.L.R. Holding Co. (No. 2) Pty. Limited.

After those meetings had been held the instrument described as a "declaration of trust" was executed by D.K.L.R. It was as follows:

To all to whom these presents shall come D.K.L.R. Holding Co. (No. 2) Pty. Limited a Company duly incorporated and having its registered office at 48 Macquarie Street, Parramatta sends greetings: Whereas the Company has undertaken to act as Trustee absolutely for lands listed in the Schedule hereto on behalf of 29 Macquarie (No. 14) Pty. Limited Now be it known to all men by these presents that the Company declares that it will hold the lands listed in the Schedule hereto upon trust absolutely for the said 29 Macquarie (No. 14) Pty. Limited and that the Company will make execute and do all such instruments acts and things as shall be necessary to vest the lands back in the name of the said 29 Macquarie (No. 14) Pty. Limited and further shall deal with the lands solely as the said 29 Macquarie (No. 14) Pty Limited shall direct and appoint. After that document had been executed both companies executed the usual form of memorandum of transfer of land under the Real Property Act. That memorandum of transfer provided that 29 Macquarie "In consideration of Nominal" paid to it by D.K.L.R. thereby transferred to D.K.L.R. "an estate in fee simple in the land described in the following schedule".

A preliminary argument advanced on behalf of D.K.L.R. was that the transfer of the land to it by 29 Macquarie was effective to transfer only the "bare legal estate" and to leave remaining in 29 Macquarie the entire beneficial interest. It was said that immediately prior to the transfer 29 Macquarie held both the unincumbered legal estate and the entire equitable interest in that property and that all that it had done was to transfer the legal estate. In my opinion this argument is based upon a fundamental misconception as to the nature of legal and equitable interests in land or other property. If one person has both the legal estate and the entire beneficial interest in the land he holds an entire and unqualified legal interest and not two separate interests, one legal and the other equitable. If he first holds the legal estate upon trust for some other person and thereafter that other person transfers to him the entire equitable interest, then again the first-named person does not hold two separate interests, one the legal and the other the equitable estate; he holds a single entire interest - he is the absolute owner of an estate in fee simple in the land. The equitable interest merges into the legal estate to comprise a single absolute interest in the land. It is a fundamental principle of both the common law and of equity that the holder of an estate in fee simple cannot be a trustee of that fee simple for himself for what he holds is a single estate, being the largest estate in land known to the law.

The authorities for this proposition go back a long way but it is sufficient for present purposes to refer to In re Douglas [37] ; In re Selous; Thomson v. Selous [38] ; and In re Cook [39] . See also Lewin on Trusts, 16th ed. (1964), p. 4 and Scott on Trusts, 3rd ed. (1967), vol. II, pp. 795-797.

1. (1885) 28 Ch.D. 327, at p. 331. 2. [1901] 1 Ch. 921, at p. 922. 3. [1948] Ch. 212, at pp. 214-215.

It is true that the common intention of both parties to the transfer was that no beneficial interest should be held by D.K.L.R. That fact excludes any possibility of rebutting the ordinary inference that a resulting trust arose in favour of the transferor 29 Macquarie but it does not deny that what was transferred was the entire interest in the land. It is of the nature of a resulting trust that it arises when the entire interest is vested in the transferee and at the very moment it becomes so vested.

In the present case it is not necessary to consider whether 29 Macquarie could by an appropriate form of transfer have reserved to itself and thus retained, the entire equitable interest in the land. The instrument of transfer is not so expressed and indeed is inconsistent with an intention to reserve any interest to the transferor.

In what I have said above I have not referred to the registered mortgage as it seems convenient for present purposes to assume that, on compliance with the requirement of registration, the unincumbered legal estate would have vested in D.K.L.R. The absence in the transfer of any reference to the existence of the registered mortgage might have prevented registration or required the consent of the Registrar before registration could be effected, but that is a complication which can be ignored as having no material effect on the issues.

The argument with which I have dealt above was directed both to the question of the value of what was transferred and thus the quantum of stamp duty and to one aspect of the question whether the instruments were dutiable and, if so, at what rate.

The material provisions of the Stamp Duties Act are the definition of the term "Declaration of Trust" which I quote below and the following sections:

Section 65 defines "conveyance" and "convey" as follows:

For the purposes of this Act the expression "conveyance" includes any transfer, lease, assignment, exchange, appointment, settlement, surrender, release, foreclosure, disclaimer, declaration of trust, and every other instrument (except a will) and every decree, judgment or order of any court whereby any property in New South Wales is transferred to or vested in or accrues to any person ; and "convey" has a meaning corresponding with that of "conveyance." "Conveyance on sale" includes every instrument and every decree, judgment or order of any court whereby any property on the sale thereof is conveyed to a purchaser or other person on his behalf or by his direction. Section 66 is as follows:

(1) Subject to the provisions of this Act every conveyance is to be charged with ad valorem duty in respect of the unencumbered value of the property thereby conveyed.

(a) A conveyance on sale of any property is to be charged with ad valorem duty on the amount or value of the consideration for the sale.

(b) If the amount or value of the consideration is less than the unencumbered value of the property the duty is to be charged on the unencumbered value of the property ascertained in accordance with section 68.

(a) Notwithstanding anything in this Act (other than section 73) contained a conveyance made without consideration in money or money's worth (not being a gift or instrument referred to in paragraph (b) of this subsection) shall be charged with ad valorem duty as follows: -

(i) duty shall be charged on the amount or value of all encumbrances (whether certain or contingent) subject to which the property is conveyed as aforesaid at the rate of ad valorem duty provided in the Second Schedule to this Act for a conveyance of property similar to that conveyed on a sale for a consideration in money or money's worth of not less than the unencumbered value of the property; and in addition,

(ii) duty shall be charged on the value of the property conveyed by such conveyance at the rate of duty specified in the Sixth Schedule to this Act for an amount equal to the total amount obtained by aggregating together -

(a) the value of the property comprised in such conveyance; and

(b) the value of all property in New South Wales whatsoever (not being property comprised in a gift or instrument referred to in paragraph (b) of this subsection) conveyed by the same conveyor to any person whomsoever on the day of but executed by him prior to such conveyance or at any time within the period of three years preceding the date of such conveyance without consideration in money or money's worth; and

(c) the unencumbered values of all property in New South Wales whatsoever (not being property comprised in an instrument referred to in paragraph (b) of this subsection) conveyed by the same conveyor to any person whomsoever on the day of but executed by him prior to such conveyance or at any time within the said period of three years upon a consideration in money or money's worth of less than the unencumbered value of the property so conveyed after deducting the value of the consideration in money or money's worth therefor ascertained in accordance with this Act;

(3b) Notwithstanding anything in this Act (other than section 73) contained a conveyance made upon a bona fide consideration in money or money's worth of not less than the unencumbered value of the property conveyed shall be charged with ad valorem duty on the amount or value of the consideration ascertained in accordance with this Act at the rate of ad valorem duty provided in the Second Schedule for a conveyance of property similar to that so conveyed on a sale for a consideration in money or money's worth of not less than the unencumbered value of the property.

(3c) Any conveyance, being a gift or instrument referred to in paragraph (b) of subsection (3) of this section, shall (but without prejudice to the operation of any other provision of this Act) be charged with ad valorem duty on the value of the property conveyed at the rate of duty provided in the Second Schedule to this Act for a conveyance of property similar to that so conveyed on a sale for a consideration in money or money's worth of not less than the unencumbered value of the property.

(1) The following instruments are not to be charged with ad valorem duty as conveyances, namely: -

(ii) an instrument appointing an additional trustee; or

(iii) an instrument by which a trustee retires from a trust without any new trustee being appointed in his place; or

(iv) a declaration by an executor under section 11 of the Trustee Act, 1925.

(2a) A conveyance made for nominal consideration upon the appointment or the retirement of a trustee (whether the trust is expressed or implied) is to be charged with the duty of one dollar.

(3) Nothing in this section shall be deemed to exempt any of such instruments from liability to any other duty to which it is or may be liable under this Act, or to extend to any instrument referred to in paragraph (2) of the matter appearing in the Second Schedule under the heading "Declaration of Trust."

It will be convenient first to deal with the declaration of trust. That instrument did not declare a trust which was immediately operative on its execution by D.K.L.R. It provided that D.K.L.R. "will hold the lands listed in the Schedule hereto upon trust absolutely for the said" 29 Macquarie, i.e. that if and when the lands were transferred to it, it would hold them on trust. The instrument itself did not create or declare any trust and no trust arose until the instrument of transfer was executed and delivered to D.K.L.R. Until then the declaration was no more than a written offer to act as trustee for 29 Macquarie. The declaration itself neither created any new rights nor effected any alteration in any existing rights; it was simply without legal operation. In my opinion such an instrument is not a "declaration of trust" within the meaning of the Stamps Act and could not have been a "conveyance" within the meaning of s. 65.

It is however desirable that I should deal separately with the argument that it fell within par. (2) of the heading "Declaration of Trust" as being:

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 notwithstanding that the beneficial owner or person entitled to appoint such property may not have joined therein nor assented thereto. Leaving aside the view that the document had no legal operation upon its execution, it would, if it answered the description in par. (2), have been chargeable with the same duty as if it were a conveyance of the property referred to therein. The question which arises is whether, assuming the instrument to be a declaration of trust, there is a declaration that any property "vested or to be vested in the person executing the same is to be held in trust for the person mentioned therein". There was no property vested in D.K.L.R. to which the declaration applied or could have applied. The question is whether there was property "to be vested" in D.K.L.R.

Reliance was placed on Tooheys Ltd. v. Commissioner of Stamp Duties (N.S.W.) [40] , and on the observations of Dixon C.J. at pp. 611-612 where he said:

what matters for the purposes of the argument now in hand is that when the instrument was presented for the determination of the Commissioner there were no members of the fund. In my opinion the argument unduly restricts the meaning and application of the paragraph. 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. The second category is not expressed in terms capable of including property "which may be vested", or "which it is hoped or expected will be vested" or which some other person "intends to vest" in the trustee. The phrase speaks of property which is or "shall" be held in trust, not which may be held in trust. Such an event can only be one which either must happen as a matter of law in the circumstances existing, or one which some person is under some obligation to bring about or which by statute must occur. An example is provided by a deed of settlement by which a settlor covenants with the trustees to transfer to them the property listed in a schedule to be held by them for the beneficiaries and upon the trusts set out in the deed. The obligation in such a case may perhaps be imperfect, depending on the view taken of the observations of Eve J. in In re Pryce [42] , but it is not necessary to embark on that problem. For present purposes it is enough to say that the property in such a case could properly be described as property that "to be vested" in and shall be held by the trustees. Such an instrument would go beyond a mere intention. 1. (1961) 105 C.L.R. 602. 2. [1917] 1 Ch. 234.

In considering the significance of Toohey's Case it is necessary to bear in mind the provisions of the trust deed, which are rather more fully set out by Walsh J. delivering the judgment of the Full Court of the Supreme Court of New South Wales [43] . Clause 4 provided that the fund shall consist of "An initial contribution of £50,000 by Toohey at the date hereof for the purpose of establishing the fund" and of certain other funds. Clause 6 provided that Tooheys and other associated companies "shall make contributions as determined in accordance with the rules". Rule 6 provided as follows:

Tooheys and/or each associated company in such proportions between them as they shall from time to time determine shall pay to the trustees: - (a) Such amount as shall be certified by the actuary as necessary to provide on a proper actuarial basis for the anticipated entitlements of members or their dependants having regard to the respective years of service of members with Tooheys and/or associated companies prior to the constitution of the fund. (b) Such further amounts as shall be certified by the actuary from time to time as necessary for the proper maintenance of the fund. Walsh J. paraphrased Rule 8 as follows: Rule 8 provides that the amount payable under rule 6(a) shall be paid by instalments in the years ending 31st July, 1959, 1960, 1961 and 1962. The first two such instalments are to be each of £50,000 but the initial contribution referred to in clause (a) shall be taken as on account of the first instalment. Those are provisions which created an obligation on Tooheys to make the specified payments to the trustees in the years referred to. That instrument was not a statement merely of intention or of contemplated action. The words used in the judgments must be related to the words of the instrument in question and, so read, they do not indicate that Dixon C.J. regarded a mere intention to vest property as sufficient to bring a document so expressed within the provision. The context provided by the document itself demonstrates that that was not the situation with which he was dealing. 1. [1960] S.R. (N.S.W.) 539, esp. at pp. 540-543.

In my opinion the observations of Dixon C.J., which I have quoted above, go no further than that and were not intended to do so.

Suggestions that the phrase means "is likely to be vested" or "is expected to be vested" are to be rejected for they do not convey the essential requirement, that it "is to be vested". The words of the provision require certainty of vesting, not possibility, probability or intention. Any other view would be calculated to work injustice and is in my opinion an intention unlikely to have been entertained. I do not understand the passage in Dixon C.J.'s judgment which I have quoted to mean that the words cover cases of mere intention, whether subjective or expressed. I should add that I do not think that regulations subsequently made as to refunds in respect of "spoilt stamps" throw any light on the proper construction of the provision.

I do not consider that the legislation applies, or was intended to apply, to an instrument which has no legal operation at all - but which was expected or thought likely to have such an operation at some future time. I do not regard the words used by Dixon C.J. saying anything to the contrary.

In the result therefore, I am of opinion that the instrument in question does not fall within par. (2) under the heading "Declaration of Trust". There is no question of it falling within pars (1) or (3) of that heading. The only heading in the schedule which is capable of applying to the declaration of trust is "Deed of any kind whatever not otherwise charged in this Schedule". For such a deed, stamp duty of $6.00 is prescribed.

I turn now to the question whether the instrument of transfer is liable to be stamped as dutiable and if so for what amount. The first question is whether it was a "conveyance" within the meaning of s. 65. The fact that it did not immediately transfer the legal estate to the transferee, and could not do so until registration does not take it outside the range of s. 65 because that section covers transfers of equitable interests as well as transfers of legal estates. It was undoubtedly a transfer of property in New South Wales and therefore a "conveyance". There is equally no doubt that it was made for a "nominal consideration". Was it made "upon the appointment of a trustee"? That expression is appropriate in its context to include the initial appointment of a trustee. Section 73(1) deals expressly with the appointment of a "new trustee" (i.e. by way of replacement of a former trustee) and of an "additional trustee". It is then both proper and necessary to regard s. 73(2A) as including at least the initial appointment of a trustee. The term "appointment" includes more than a formal appointment by deed; it is apt to include any instrument which is intended to constitute the person in question a trustee and is intended by the parties to have that effect. There is no doubt in this case that the parties did so intend. In the result the instrument of transfer is dutiable under s. 73(2A) in the sum of $1.00.

In my opinion the appeal should be allowed and the questions in the case stated answered as follows: (a) Yes; (b) $1.00; (c) Yes; (d) $6.00.

The facts of this case are set out in the judgment of Mason J. The liability to charge of the declaration executed by D.K.L.R. Holding Co. (No. 2) Pty. Ltd. ("D.K.L.R.") and of the memorandum of transfer executed by 29 Macquarie (No. 14) Pty. Ltd. ("29 Macquarie") is to be determined according to the circumstances which existed at the time of execution of each instrument (Wm. Cory & Son Ltd. v. Inland Revenue Commissioners) [44] and upon examination of the terms of each instrument from which its legal operation in or upon those circumstances is in general to be gathered (Commissioner of Stamp Duties (Q.) v. Hopkins [45] ; Commissioner of Stamp Duties (N.S.W.) v. H. Small & Co. Pty. Ltd. [46] ).

1. [1965] A.C. 1088, at p. 1105. 2. (1945) 71 C.L.R. 351, at pp. 360-361, 378. 3. (1950) 80 C.L.R. 177, at p. 184.

At the time when the declaration was made, D.K.L.R. had no interest in the property listed in the schedule thereto nor any right to acquire an interest in it; there was accordingly no property upon which the declaration might take effect, and the instrument could not operate at that time as a declaration of trust. Nevertheless, it was assessed to duty on the footing that it fell under the head of charge "Declaration of Trust" in the second schedule to the Stamp Duties Act 1920 N.S.W. ("the Act"), par. (2) of which brings 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 notwithstanding that the beneficial owner or person entitled to appoint such property may not have joined therein or assented thereto. The amount of duty chargeable upon such an instrument is - The same duty as if the instrument was a conveyance of the property comprised therein. The property "to be vested" is the property "comprised therein". The phrase "to be vested" imports futurity, in contrast with "vested". "Vested" speaks of property presently vested in the declarant, "to be vested" speaks of property to be vested in him in the future. In Tooheys Ltd. v. Commissioner of Stamp Duties (N.S.W.) [47] , Dixon C.J. said of this provision: 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. 1. (1961) 105 C.L.R., at p. 612.

Neither the words of par. (2) nor the judgment of Dixon C.J. suggest that anything more than futurity of vesting is imported by the words "to be vested". The intention referred to by Dixon C.J. is not an intention to vest the property in the declarant but to make the property the subject of the trust when vested. That intention, expressed by the declarant in the instrument, is the only intention imported into par. (2) and it is imported by the words "shall be held in trust" not by the words "to be vested". In my opinion, no notion of intention to vest is imported into par. (2), and no enquiry into the actual intention of any person is called for. "The stamp duty legislation", Lord Wilberforce said in Lap Shun Textiles Industrial Co. v. Collector of Stamp Revenue [48] , "generally proceeds by way of stamping documents according to their nature and effect, and not by references to parties' intentions, and any departure from this principle would require clear indication."

Instruments which have no legal operation as well as instruments which are effective declarations of trust are brought to charge by par. (2) if their terms answer the statutory description. It is not necessary to enquire as to the likelihood of the property becoming vested in the declarant, or as to the intentions or expectations of the declarant or of the person in whom the property is presently vested. It follows that an instrument which declares that property comprised in the instrument shall be held in trust by the declarant is chargeable, for unless the property comprised in the instrument is presently vested in the declarant, it must be property to be vested in him. Construing par. (2) in this way, the terms of the instant declaration answer the statutory description and the instrument is brought to charge accordingly.

It is a curious, perhaps an unjust, consequence of this construction that duty is charged upon an instrument which is devoid of legal effect at the time when it is executed and which may fail in its intended purposes and so remain devoid of legal effect. If the property comprised in the instrument should never become vested in the declarant, so that his intention to hold the property in trust fails and the declaration remains devoid of legal effect, it may be that reg. 30(7) of the Stamp Duties Regulations, 1934 N.S.W. authorizes the making of an allowance for spoiled stamps. It is not necessary now to determine the scope and operation of reg. 30(7), for it cannot aid the construction of par. (2) and no question of spoilt stamps has arisen in respect of the instruments to which these proceedings relate.

The duty charged upon a declaration of trust within par. (2) is the same duty as would be payable if the declarant conveyed the property comprised in the declaration to the beneficiary of the trust. The declarant or the person directing the declaration is the person primarily liable. In Toohey's Case, Dixon C.J. said [49] :

It is evident enough that in applying the rates appropriate to a conveyance to a declaration of trust, 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 treating it as analogous to conveying property the party declaring the trust obtained full consideration. It is clear enough that 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 interest or for that matter of a corresponding equitable interest. Treating the declarant as the conveyor and the object of the trust as the conveyee, duty is charged as if the property comprised in the declaration were conveyed by that instrument. The duty chargeable on conveyances is governed principally by s. 66. The general rule is that a conveyance is to be charged with ad valorem duty in respect of the unencumbered value of the property conveyed (s. 66(1)), but particular rules govern the amount of duty when the conveyance is on sale (s. 66(2)), or made without consideration in money or money's worth (s. 66(3)), or made upon a consideration in money or money's worth of less than the unencumbered value of the property (s. 66(3A)), or made upon a bona fide consideration in money or money's worth of not less than the unencumbered value of the property (s. 66(3B)). 1. (1961) 105 C.L.R., at p. 615.

"Consideration in money or money's worth" in s. 66 is "the money or value passing which moves the conveyance or transfer": per Dixon J. in Archibald Howie Pty. Ltd. v. Commissioner of Stamp Duties (N.S.W.) [50] . When s. 66 is applied to declarations of trust falling within par. (2) it is necessary to ascertain whether the money or value which passes to the declarant (or to the person directing the declaration) has been "furnished for the declaration of trust in the sense of the creation of the trust which gives the equitable interest" (Toohey's Case [51] , per Dixon C.J.). What money or value moved, or was to move, the declaration in the present case? The answer to that question waits upon an examination of the memorandum of transfer. The transfer of property to D.K.L.R. must furnish the consideration, if any there be, for the purposes of s. 66. The memorandum of transfer not only effected the vesting of the property to be held in trust; it also furnished whatever consideration there was for declaring the trust upon which the property was to be held. Of course, when the declaration was made the memorandum of transfer had not been executed, but it was to be executed in order to vest the property in D.K.L.R. When an instrument is brought to charge by par. (2) in respect of property to be vested, the consideration to be ascertained for the purposes of s. 66 must be the consideration for the declaration which is to take effect with respect to that property. In the present case, it is necessary to ascertain what passed to D.K.L.R. by virtue of the memorandum of transfer.

1. (1948) 77 C.L.R. 143, at p. 152. 2. (1961) 105 C.L.R., at p. 616.

The memorandum of transfer was not registrable when it was delivered to and accepted by D.K.L.R., for it lacked the necessary endorsements relating to encumbrances upon the land, but it is common ground that nothing should turn on that circumstance. It is to be assumed that 29 Macquarie had done what was necessary to vest title to an estate in fee simple in the land mentioned in the transfer in D.K.L.R. However, it was submitted that the property transferred was the bare legal estate, and that 29 Macquarie remained throughout the beneficial owner of the land. This conclusion was said to follow from the fact that it was the common intention of transferor and transferee that, upon the transfer, D.K.L.R. should hold the land in trust for 29 Macquarie. Yet the interest which 29 Macquarie had after the transfer was not the same as it had before. Before the transfer it did not hold legal and equitable estates in the property: it held the legal estate alone. There was no equitable estate, for a person cannot be trustee for himself alone (In re Selous; Thomson v. Selous [52] ; In re Cook; Beck v. Grant [53] ; Re Heberley (dec.) [54] ; Lewin on Trusts, 16th ed. (1964), p. 4). After the transfer, D.K.L.R. held the legal estate, and it held it as trustee, and 29 Macquarie had as against D.K.L.R. what Maitland calls "the benefit of an obligation" (Equity , 2nd ed. (1947), p. 112). By virtue of the transfer, D.K.L.R. acquired the property which it holds in trust for 29 Macquarie; by virtue of the declaration 29 Macquarie became the holder of the equitable estate in that property. The declaration was not ineffectual to create the equitable estate held by 29 Macquarie merely because 29 Macquarie was the owner of the property before the transfer to D.K.L.R. (see Commissioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Quigley's Case) [55] ). 29 Macquarie could not except or reserve an equitable estate from the property transferred by it to D.K.L.R., nor could D.K.L.R. become a trustee of an interest excepted or reserved from the transfer. A transferee does not become a trustee by failing to acquire an interest in the property transferred; a trustee holds on trust only such interest as he acquires. An equitable interest is not carved out of a legal estate but impressed upon it. It may be convenient to say that D.K.L.R. took only the bare legal estate, but that is merely to say elliptically that 29 Macquarie transferred to D.K.L.R. the property in respect of which D.K.L.R. had declared that it would be trustee. The charter of 29 Macquarie's interest was D.K.L.R.'s declaration, not the memorandum of transfer; and D.K.L.R.'s declaration was moved by the transfer to it of the property to be held on the trust declared.

1. [1901] 1 Ch. 921, at p. 922. 2. [1948] 1 Ch. 212, at p. 214. 3. [1971] N.Z.L.R. 325, at pp. 333, 346. 4. (1926) 38 C.L.R. 272.

For the purpose of determining the duty upon the declaration if it falls under par. (2), the value of the equitable estate which was to be taken by 29 Macquarie would have to be compared with the value of the property which was to be transferred as "consideration in money or money's worth". The value of the property to be transferred by 29 Macquarie was worth not less than the value of the equitable estate to be taken by it, and therefore ad valorem duty upon the value of the property comprised in the declaration would be charged upon the memorandum of transfer in accordance with sub-s. (3B) of s. 66.

However, par. (3) under the heading "Declaration of Trust" in the second schedule imposes a duty of $6.00 upon "any such instrument as aforesaid by which (b) the trusts declared are the same trusts as those upon or subject to which the same property was conveyed to the person declaring the trust by an instrument duly stamped with ad valorem duty under this Act " The declaration made by D.K.L.R. is, for the reasons given, an instrument described in par. (2) and it is therefore "such instrument as aforesaid". There is some difficulty, however, in applying par. (3)(b) to an instrument described in par. (2) as an instrument declaring a trust of property "to be vested". Paragraph (3)(b) refers to the trusts "upon or subject to which the property was conveyed", and a question arises as to whether that phrase connotes only a conveyance which vests property in a trustee prior to the making by the trustee of an instrument falling within par. (2). If par. (3)(b) applies only to a declaration of trust made by a trustee after a conveyance to him of trust property upon or subject to the trust ultimately expressed in the declaration, it could not apply to a declaration that property to be vested in the trustee shall be held by him in trust. Moreover, if par. (3)(b) applies to a declaration that property to be vested in the trustee shall be held by him in trust, its application would be deferred until the conveyance to the trustee had been "duly stamped with ad valorem duty". That would have the consequence of altering the duty first charged upon the declaration to $6.00 once the conveyance was stamped with ad valorem duty. Yet par. (3) is expressed to apply to "any such instrument as aforesaid", and therefore to apply to all declarations falling within par. (2).

Two constructions are open: either par. (3)(b) is read literally to apply only to declarations confirming the trusts upon which property has been conveyed antecedently to the making of the declaration, or par. (3)(b) applies to all declarations falling within par. (2) and relieves them of a charge to ad valorem duty contingently upon the conveyance being stamped with ad valorem duty. I prefer the latter construction. The trusts "upon or subject to which property was conveyed" are the same trusts as the trusts declared, and if par. (3)(b) were restricted in its application to cases where the property is conveyed before the declaration is made, it would in practice be restricted to cases where a declaration made express a trust that had hitherto been implied or resulting. But the manifest purpose of par. (3) is to ensure that when two instruments are executed in order to convey property to a trustee and to declare the terms of a trust, only one of those instruments will attract ad valorem duty. To give that operation to par. (3)(b) it is necessary to hold that, if the declaration falls within par. (2), it will nevertheless escape the ad valorem duty charged upon it under that paragraph if, at the time when it is stamped, the conveyance has already been stamped with ad valorem duty. The translation of a declaration from par. (2) to par. (3) may therefore occur after it is made and before it is stamped. Though a variation in duty after the making of a dutiable instrument is unusual, the variation is required by the condition expressed in par. (3)(b) that another instrument, the conveyance, should be stamped with ad valorem duty. In my opinion, par. (3)(b) applies to D.K.L.R.'s declaration if the memorandum of transfer by 29 Macquarie, which conveyed to D.K.L.R. the property to be held upon the trust declared by it, is charged with ad valorem duty and is stamped accordingly.

The memorandum of transfer is a "conveyance" within the definition of that term in s. 65 and duty upon it is to be charged in accordance with s. 66 unless it falls within s. 73(2A) which provides:

A conveyance made for nominal consideration upon the appointment or the retirement of a trustee (whether the trust is expressed or implied) is to be charged with the duty of one dollar. The memorandum of transfer, expressed to be made for a nominal consideration, was executed before the trust was constituted. At the time of its execution, the property to which it related was not trust property. It did not become trust property until the memorandum of transfer was delivered to and accepted by D.K.L.R. In my opinion, s. 73(2A) does not relate to a conveyance of property which is to become trust property by virtue of the conveyance to the trustee; it relates to a conveyance of property which is trust property. A conveyance of the former kind, in conveying the legal estate to the trustee, gives rise to and may dispose of a beneficial interest in the property conveyed according to the nature and terms of the trust upon which the property is held by the conveyee. A conveyance of the latter kind, in conveying the legal estate, leaves the beneficial interest in the property unaffected. The distinction is of importance to the scheme of the Act. Of course, the trust upon which the property was conveyed in the present case created an equitable estate in the conveyor but, upon the construction of s. 73(2A) for which D.K.L.R. contends, it would make no difference to the duty charged upon the memorandum of transfer if the trusts expressed in the declaration had been in favour of third parties.

I do not think that that is the true meaning of s. 73(2A). It complements s. 73(1)(a), which relates to instruments for the appointment and retirement of trustees, by providing for a nominal duty upon instruments conveying trust property when there is a change in trustees. It relates to conveyances of trust property by existing or retiring trustees to new or continuing trustees. The sub-section does not apply to the memorandum of transfer, the duty upon which is to be ascertained under s. 66.

The consideration stated in the body of the memorandum of transfer as the consideration for the transfer is "nominal". Paragraph 2 of the stated case reads:

By a Memorandum of Transfer dated 1st June, 1976 29 Macquarie (No. 14) Pty. Limited transferred the said land for a nominal consideration to D.K.L.R. Holding Co. (No. 2) Pty. Limited the plaintiff herein. I understand this paragraph merely to recite the consideration stated in the body of the instrument. But consideration for the purpose of s. 66 is not necessarily the consideration stated in the instrument; it is the money or value which moves the conveyance, and evidence of extrinsic circumstances is admissible to show in what that consideration consists. I would agree with respect with the dictum of Latham C.J. in his dissenting judgment in Collector of Imposts (Vict.) v. Cuming Campbell Investments Pty. Ltd. [56] : It is obvious that, in order to determine whether a consideration is bona fide or adequate, it is necessary to go beyond the terms of the instrument, and that, for this purpose, extrinsic evidence must be admitted. 1. (1940) 63 C.L.R. 619, at p. 631.

In the present case, it is clear that the consideration which moved the conveyance by 29 Macquarie to D.K.L.R. was not in truth "nominal", but was the undertaking by D.K.L.R. to hold the property conveyed on trust for 29 Macquarie. There was, so to speak, an exchange of property: 29 Macquarie parted with the property conveyed by it and received the entire equitable estate in that property under the trust declared by D.K.L.R. The values of both interests were the same, for no value can be attributed to the bare legal estate. The memorandum of transfer thus falls within sub-s. (3B) of s. 66 and is chargeable with ad valorem duty upon the value of the consideration ascertained in accordance with the Act as though the transfer were a conveyance on sale.

There is a difference between a conveyance of property to a bare trustee who declares that he holds the property on trust for the conveyor, and a conveyance to a bare trustee who declares that he holds the property on trust for another object. In the former case, the conveyor gets substantially what he gives; in the latter case, the conveyor gives without getting, and the other object gets without giving. The consideration which moves the conveyance and the declaration in the former case is absent in the latter. And thus the present case is to be distinguished from Toohey's Case [57] , where it was the employees of the company who were the objects of the trusts declared.

To assess the duty charged upon the memorandum of transfer, a value is to be put upon the consideration for the conveyance to D.K.L.R. Leaving out of account the encumbrances, the duty upon the memorandum of transfer should be assessed at $43.75, that is, at $1.25 per cent upon the value of the equitable estate being $3,500, the same as the value of the property. I leave out of account the value of the encumbrances (but cf. Baker v. Inland Revenue Commissioners [72] ) in the absence of any argument that it should be taken into account. Duty upon the transfer was in fact assessed at $50.16 (under sub-s. (3)(a)), and the instrument was stamped accordingly.

Thereupon the conditions in par. (3) were satisfied and the declaration fell into par. (3) so that duty upon it should have been assessed at $6.00. I would answer the questions in the case stated pursuant to s. 124 of the Act as follows: (a) No; (b) $43.75; (c) Yes; (d) $6.00; (e) No order as to costs. I would therefore allow in part appeal no. 66 of 1980 and allow appeal no. 67 of 1980.