Stamp duty - Transfer of licensed premises - Subsequent dispute resulting in Tomlin Order - Whether liable to duty as conveyance - Contract - Rectification - Amendment of Tomlin Order

Stamp Act 1921 (WA)

Anthoness v Anderson (1887) 14 VLR 127

Australian National Airlines Commission v Commissioner of Stamp Duties (Qld) (1987) 87 ATC 4218

Burns Philp Trustee Co Ltd v Ironside Investments Pty Ltd [1984] 2 Qd R 16

Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581

Casella v Commissioner of State Taxation (WA) (1996) 32 ATR 426

Castelmaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468

Christie v Commissioners of Inland Revenue (1866) LR 2 Exch 46

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

Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd [1995] HCA 44; (1995) 184 CLR 453

Commissioner of Taxation v Murry [1998] HCA 42; (1998) 72 ALJR 1065

DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431

Freeth v Burr (1874) LR 9 CP 208

Issa v Berisha [1981] 1 NSWLR 261

Jack v Smail [1905] HCA 25; (1905) 2 CLR 684

Jericho Nominees Pty Ltd v Dileum Pty Ltd (1992) 6 WAR 380

Limmer Asphalte Paving Co v Commissioners of Inland Revenue (1872)] LR 7 Exch 211

McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457

Ogle v Camboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444

The Progressive Mailing House Pty v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17

The Rosehill Racecourse Co v The Commissioner of Stamp Duties (NSW) [1905] HCA 57; (1906) 3 CLR 393

Shevill v The Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620

Sibbles v Highfern Pty Ltd [1987] HCA 66; (1987) 164 CLR 214

The West London Syndicate Ltd v The Commissioners of Inland Revenue [1898] 2 QB 507

1 In 1991 interests associated with the Villanova family and interests associated with the King family engaged in a swap of tavern businesses. In essence, the Villanova family sold the Wanneroo Villa Tavern to the Kings, taking in exchange the Ashfield Tavern. Associated land was either leased or acquired.

2 For a while all was well but by mid-1993 differences had occurred between the parties culminating in Federal Court action by the King interests against the Villanova interests.

3 In August 1993 the parties settled all their differences by agreeing in substance to unravel all transactions and put the parties back to the 1991 position before they entered into the swap.

4 The terms of their agreement were annexed to an order of Lee J as a Tomlin Order. Subsequently the agreement was rectified in a material respect.

5 When the unamended Tomlin Order was presented for stamping, to the perturbation of the Villanova family, the Commissioner for State Taxation, pursuant to the Stamp Act 1921, s 73, assessed duty on the order as a conveyance. The Commissioner took into account goodwill and issued an assessment on the transfer of both businesses. In the appellants' case this amounted to $33,392.

"EXTOS PTY LTD, ANTHONY LEON VILLANOVA, JUDITH LOUISE VILLANOVA, ANTONIO VILLANOVA and LORNA VILLANOVA ('the Objector') hereby object to the assessment of Stamp Duty issued the 15 February 1994 in the sum of $66,334.50 in respect to an order made the 19 August 1993 ('the order') in the Federal Court of Australia in proceedings WAG84 of 1993 between PURDAT PTY LTD, ANTHONY KING and JOAN KING and the Objector and submit that the part of the agreement in the order which related to the business and/or goodwill of the Wanneroo Villa Tavern is not assessable for duty upon the following grounds:-

There was no reconveyance of the Wanneroo Villa Tavern business or termination of the lease of the Wanneroo Villa Tavern effected by the order. The lease of the Wanneroo Villa Tavern was terminated by default or repudiation or rescission. Any goodwill in the business attached to the liquor licence which was the property of the lessor.

The Commissioner overruled the objection and so the appellants have appealed to this Court.

7 The Wanneroo Tavern is at 18 Dundebar Road, Wanneroo. The land is owned by Mr Antonio and Mrs Lorna Villanova [the Villanovas senior].

8 The business of the Wanneroo Tavern was owned by Extos Pty Ltd ("Extos"), Anthony Leon Villanova and Judith Louise Villanova whom it will be convenient to refer to jointly as the appellants, while Anthony Villanova will be referred to separately as Mr Villanova.

9 Extos held the liquor licence and was the registered as the proprietor of the business name Wanneroo Villa Tavern.

10 By written agreement dated 6 April 1991 between the Appellants and Purdat Pty Ltd ('Purdat') the trustee for the King Family Trust, the business of the Wanneroo Villa Tavern was sold by the appellants to Purdat for $1,440,000.00 plus stock ("the Wanneroo purchase agreement").

11 The business of the Wanneroo Villa Tavern included the plant and equipment which was listed in the inventory annexed as Sch 'B' to the Wanneroo lease. Contrary to the claims of Extos over the business name, by cl 5.02 of the lease granting Purdat a licence to use the name during the currency of the lease, the Villanovas senior asserted ownership of the name.

12 On or about 19 June 1991 the Wanneroo purchase agreement was lodged with the respondent for assessment with the following breakdown:

13 The purchase agreement was subject to a lease of the land by the Villanovas senior to Purdat.

14 On 18 June 1991 a lease of the Wanneroo Villa Tavern was entered into between the Villanovas senior as lessors, Purdat as lessee, and King as guarantor, for a term of five years together with four options to renew of five years each ("the Wanneroo Lease").

15 The Wanneroo Villa Tavern liquor licence was transferred from Extos to Purdat effective as from 20 June 1991.

16 The business name "Wanneroo Villa Tavern" was transferred from Extos to Purdat effective as from 21 June 1991.

17 At the time of the Ashfield business purchase agreement and the Ashfield land purchase agreement, the Ashfield Tavern had been leased to Redmond by Purdat pursuant to the terms of a least dated 11 December 1989 ("the Ashfield lease") which lease was assigned by Redmond to Stuart Wragg ("Wragg") pursuant to deed of assignment of lease dated 11 December 1989.

18 By written agreement dated 6 April 1991 between the appellants and Redmond Pty Ltd ('Redmond'), the appellants purchased the goodwill, licences, fixtures and plant and equipment of the business of the Ashfield Tavern from Redmond for $380,000.00 ("the Ashfield business purchase agreement"). It was a special condition of the Ashfield business purchase agreement that the appellants acknowledged that the Ashfield Tavern was leased and that they were satisfied with the terms and conditions of the lease.

19 By written agreement dated 6 April 1991 between the appellants and Purdat the appellants purchased the land at 41 Pearson Street, Ashfield and all improvements ("the Ashfield land") thereon from Purdat for $820,000.00 ("the Ashfield land purchase agreement"). The Ashfield Tavern is situated on the Ashfield land.

20 On or about 19 June 1991 settlement took place on the Wanneroo purchase agreement, the Ashfield business purchase agreement and the Ashfield land purchase agreement.

21 By an undated deed stamped on 25 June 1993 between the appellants, Redmond and King:

(a) Redmond agreed, in the event that Wragg defaulted in terms of the Ashfield lease and the appellants requested Redmond to enter into a substitute lease, to forthwith enter into a substitute lease in terms of the Ashfield lease;

(b) King agreed to guarantee the obligations of Redmond under any such substitute lease; and

(c) King further agreed to enter into any such substitute lease in the event that Redmond was wound up or in the process of being wound up at the time of the appellants requesting Redmond to enter into the substitute lease.

22 Wragg defaulted under the Ashfield lease and the appellants re-entered the Ashfield Tavern premises on or about 22 April 1993.

23 Redmond had been deregistered on or about 8 December 1992.

24 By letter dated 3 May 1993 the appellants requested King to enter into a substitute lease of the Ashfield Tavern in accordance with the deed referred to above.

25 King did not enter into a substitute lease of the Ashfield Tavern and the appellants decided to try and sell the Ashfield land at auction.

26 The auction of the Ashfield land was advertised in "The West Australian" newspaper on 19 June 1993.

27 The auction of the Ashfield land took place on 22 July 1993. The Ashfield land did not sell at the auction.

28 The Federal Court proceedings instituted by Purdat and King are at the heart of the matter. On 21 June 1993 Purdat and King issued application number WAG 84 of 1993 in the Western Australian District Registry of the Federal Court of Australia against the appellants and the Villanovas senior ("the Federal Court proceedings").

29 The claim was in equity, alternatively under the Trade Practices Act (Cth), s 87, for a declaration that the sale agreement of 6 April 1991 for the sale of the Wanneroo Villa Tavern business be set aside and that the appellants repay all monies back to Purdat and the Kings.

30 The statement of claim, in short, alleged misrepresentations as to the profit and turnover figures of the business.

31 At the time when Purdat and King commenced the Federal Court proceedings the rental due under the Wanneroo lease for the month of June 1993 ($25,083) remained unpaid.

32 On 7 July 1993 the Villanovas senior served a default notice on Purdat. In accordance with the terms of the Wanneroo lease, the default notice requested the payment of the rent for the month of June 1993 and the production of turnover figures for the three month period immediately preceding 21 March 1993 and advised that if such matters were not remedied within 14 days after delivery of the notice it should be lawful for the Villanovas senior to re-enter the premises of the Wanneroo Villa Tavern.

33 To prevent the Villanovas senior from re-entering and taking possession of the Wanneroo Villa Tavern, Purdat and King filed a notice of motion in the Federal Court proceedings on 14 July 1993 seeking an injunction restraining the Villanovas senior from "enforcing the provisions of the lease ... or re-entering or attempting to re-enter the Wanneroo land pursuant to the provisions in relation to the payment of rental of the lease or otherwise". Purdat and King also sought an injunction restraining the appellants from selling the Ashfield land.

34 The first return date of the notice of motion was 16 July 1993.

35 Upon undertakings by the appellants not to dispose of their interest in the Ashfield land, and by the Villanovas senior to not enforce the provisions of the Wanneroo lease or re-enter the Wanneroo land, the notice of motion was adjourned.

36 On 20 July 1993, Lee J made orders, inter alia, restraining the Villanovas senior from re-entering the premises of the Wanneroo Villa Tavern until 28 July 1993 unless further restrained by further order and the motion filed by Purdat and King was adjourned to 28 July 1993. Lee J dismissed the motion for restraint of the auction of the Ashfield land.

The settlement between the Villanovas and the Kings

37 By letter dated 27 July 1993 from Jackson McDonald (solicitors for Purdat and King) to Finlay Philips (solicitors for the appellants and Villanovas senior) Purdat and King purported to rescind all relevant agreements between the parties being the Ashfield business purchase agreement, the Ashfield land purchase agreement, the Wanneroo purchase agreement and the Wanneroo lease, and gave notice that Purdat would vacate the Wanneroo Villa Tavern premises on 22 August 1993. Jackson McDonald stated in the letter that on 22 August 1993 their clients would hand over the plant, equipment, goodwill and licences of the Wanneroo Villa Tavern in return for the payment of the purchase price of $1,440,000, or alternatively, in return for the transfer to them of the Ashfield land, the Ashfield Tavern business and the sum of $240,000.

38 On 28 July 1993 Lee J made orders that Purdat and King have until 8 August 1993 to vacate the Wanneroo Villa Tavern premises. Lee J made an order that Purdat and King were to vacate the Wanneroo Villa Tavern premises by 8 August 1993 if they had not vacated the premises by that day. Lee J directed that the parties should use their best endeavours to arrange for the delivery up and resumption of possession of the Wanneroo Villa Tavern premises. He also made directions in relation to the substantive proceedings between the parties including directions for the filing of pleadings and discovery of documents.

39 By letter dated 3 August 1993 from Jackson McDonald to Finlay Phillips, Jackson McDonald asked whether the Villanovas senior would agree to defer re-entry of the Wanneroo Villa Tavern premises until 29 August 1993.

40 By letter dated 3 August 1993 from Finlay Phillips to Jackson McDonald, Finlay Phillips advised that the appellants and the Villanovas senior regarded the purported rescission of the Wanneroo lease in the letter of 27 July 1993 as a repudiation. Finlay Phillips advised that if the repudiation had not already been accepted it was accepted by the letter of 3 August 1993. Finlay Phillips advised that the Villanovas senior were not prepared to allow Purdat and King to remain on the premises beyond 8 August 1993.

41 By letter dated 5 August 1993 from Jackson McDonald to Finlay Phillips, Jackson McDonald advised Finlay Phillips that Finlay Phillips would shortly be served with an application to restrain the Villanovas senior from re-entering the Wanneroo Villa Tavern premises until 29 August 1993.

42 A notice of motion in the Federal Court proceedings dated 4 August 1993 was served on Finlay Phillips. The notice of motion sought an order that the appellants and the Villanovas senior be restrained from re-entering the Wanneroo Villa Tavern premises until 29 August 1993. The return date of that motion was 6 August 1993.

43 On 5 August 1993 a meeting was held at the office of Jackson McDonald. Judith Villanova and King attended together with Mr Goldfinch from Finlay Phillips and Ms Bartlett from Jackson McDonald.

44 At that meeting a heads of agreement was entered into between the appellants, the Villanovas senior, Purdat and King.

45 Pursuant to the heads of agreement the parties agreed:

(b) to use their best endeavours to effect whatever transfers were necessary to give effect to (a);

(c) that a stocktake would take place of the stock-in-trade at the Wanneroo Villa Tavern and the Ashfield Tavern;

(d) that the following amounts be deducted from the amount due to King for the stock-in-trade at the Wanneroo Villa Tavern:

(ii) the liquor licence fee due and owing for the Wanneroo Villa Tavern from 1 July 1993 until settlement;

(iii) the amount due and owing for the stock-in-trade at the Ashfield Tavern;

(iv) the adjustment after settlement for the liquor licence fee paid in advance for the Ashfield Tavern;

(e) to otherwise release each other and their servants and agents from all claims, suits, damages or otherwise arising out of the agreements referred to in (a) and the undated deed stamped 25 June 1993.

46 On 6 August 1993 the notice of motion dated 4 August 1993 came on for hearing in the Federal Court. On the undertaking of the Villanovas senior not to re-enter the premises of the Wanneroo Villa Tavern on or before 11 August 1993, Lee J varied the order of 28 July 1993 to give Purdat and King until 11 August 1993 to vacate the Wanneroo Villa Tavern premises.

47 On 11 August 1993 Purdat and King vacated the Wanneroo Villa Tavern premises.

48 The Wanneroo Villa Tavern business was carried on by Purdat until 11 August 1993 and from 11 August 1993 it was carried on by the appellants. Up until 11 August 1993 Purdat employed approximately 30 staff, including management, at the Wanneroo Villa Tavern. At the time Purdat vacated the Wanneroo Villa Tavern, Purdat dismissed all its staff. When the appellants took possession of the Wanneroo Villa Tavern they asked all of the former staff of Purdat, except staff employed in management, to apply for jobs at the Wanneroo Villa Tavern. Some of the former Purdat staff were employed by the appellants to work at the Wanneroo Villa Tavern. None of the persons formerly employed by Purdat in management were employed by the appellants.

49 On 10 August 1993 the Villanovas senior executed a notice of application for protection order in relation to the Wanneroo Villa Tavern. The notice of application for protection order was lodged with the Director of Liquor Licensing on 11 August 1993.

50 On 11 August 1993 the Director of Liquor Licensing granted a protection order in respect of the Wanneroo Villa Tavern to Extos as the nominee of the Villanovas senior.

51 On 19 August 1993 Purdat executed a notice of application for approval of transfer of the Wanneroo Villa Tavern liquor licence to the appellants. The notice of application was lodged with the Director of Liquor Licensing on 24 August 1993.

52 On 19 August 1993 Purdat executed a statement of change in certain particulars of business name transferring the business name "Wanneroo Villa Tavern" to Extos effective from 11 August 1993. The statement was lodged with the Commissioner for Corporate Affairs on 29 September 1993.

53 Also on 19 August 1993 Lee J made the Tomlin Order.

54 On 21 August 1993 the appellants as lessee and the Villanovas senior as lessor entered into a lease of the Wanneroo Villa Tavern for a four-year term commencing on 10 September 1993 together with five options to renew of three years each.

55 On 22 August 1993 a deed was executed by the appellants, Purdat and King whereby Purdat transferred the fixtures, plant and equipment of the Wanneroo Villa Tavern to the appellants. Purdat also acknowledged in the deed that it had no estate or interest in the Wanneroo Villa Tavern business comprising the building premises, the goodwill, the liquor licence and the business name Wanneroo Villa Tavern.

56 On 10 September 1993 the Wanneroo Villa Tavern liquor licence was transferred to the appellants effective as from 10 September 1993.

57 On 23 September 1993 Extos executed a statement of change in certain particulars of the business name adding the other appellants, Mr and Mrs Villanova junior, as persons carrying on the business of Wanneroo Villa Tavern effective as from 10 September 1993. The statement was lodged with the Commissioner for Corporate Affairs on 29 September 1993.

58 The heads of agreement were subject to the approval of the parties' lenders. Following the meeting on 5 August 1993 there were discussions and various draft orders and agreements were prepared. The final agreement reached between the appellants, the Villanovas senior, Purdat and King was contained in a schedule to the orders Lee J made by consent in the Federal Court proceedings on 19 August 1993:

"1. All further proceedings brought by the applicants against the respondents be stayed upon the terms of the agreement set out in the schedule hereto save for the purpose of enforcing the said terms with liberty to apply for such purpose.

2. Upon compliance by parties of their joint and several obligations contained in the agreement set out in the schedule the appellants have leave to discontinue the action.

A. By application filed the 21 June 1993 in the Federal Court proceedings no. WAG 84 of 1993 ('the Federal Court proceedings") and amended on 19 July 1993 the applicants, on the grounds more fully particularised in their amended statement of claim filed the 19 July 1993 sought (inter alia) declarations that the following agreements were void ab initio and orders for reconveyance of the property the subject thereof under Section 87 of the Trade Practices Act:

(a) the sale agreement dated 6 April 1991 and made between the first respondents as Vendors and the first applicant as Purchaser ('the Wanneroo sale agreement') in respect of the business known as the Wanneroo Villa Tavern ('the Wanneroo business') situate at 18 Dundebar Street, Wanneroo;

(b) the lease dated 18 June 1991 and made between the second respondents as lessor, the first applicants as lessee and the second applicants as guarantors ('the Wanneroo lease') of the premises at 18 Dundebar Street, Wanneroo and being part of Lot 62 on Plan 11072 and being the whole of the land comprised in Certificate of Title Volume 1577 Folio 166;

(c) the sale agreement dated 6 April 1991 and made between the first applicant as Vendor and the first respondents as Purchasers ('the Ashfield land sale agreement') of the Ashfield Tavern situate at 41 Pearson Street, Ashfield being;

(i) Lot 9 on Diagram 44755 and being the whole of the land comprised in Certificate of Title Volume 1348 Folio 447 and

(ii) Lot 10 on Diagram 44755 being the whole of the land comprised in Certificate of Title Volume 1348 Folio 448 ('the Ashfield land').

B. By letter dated 27 July 1993 the applicants rescinded or purported to rescind the Wanneroo agreement, the Wanneroo lease and the Ashfield sale agreement.

C. By an agreement in writing dated 6 April 1991 and made between Redmond Pty Ltd ('Redmond') as vendor and the first respondents as purchasers ('the Ashfield business agreement') Redmond sold the Ashfield business to the first respondents and by an undated Deed ('the undated deed') stamped on 25 June 1991 (sic) and made between the first respondents of the one part, Redmond and the second part and the second applicants and another of the third part Redmond and the second applicants undertook certain obligations in relation to the lease of the Ashfield land.

D. The first respondents claim to be entitled to relief as against the applicants and Redmond arising out of the Ashfield business and land sale agreements and the undated deed.

E. Redmond was deregistered on or about the 8 December 1992.

F. The parties have agreed to settle all claims which they may have or have had against each other arising out of the subject matter of the Federal Court proceedings or in any way related to the Wanneroo sale agreement, the Wanneroo lease, the Ashfield land and business sale agreements and the undated deed on the conditions and in accordance with the terms herein.

1. The applicants do take such steps as are necessary to reconvey, free of encumbrances, the Wanneroo business and all plant and equipment listed in annexure 'B' to the Wanneroo lease to the first respondents in like condition save for fair wear and tear and all licences attaching thereto.

2. The Wanneroo lease be and is hereby terminated and the applicants and the second respondents hereby release each other from all obligations arising thereunder save and except as provided for in this agreement.

3. The Ashfield land be reconveyed to the first applicant free of encumbrances and the first respondents do take such steps as are necessary to effect such reconveyance of the Ashfield land and to convey to the first applicant all plant and equipment therein in like condition save for fair wear and tear and all necessary licences free of encumbrances.

4. The applicants undertake liability in respect of all amounts payable for Land Tax, Metropolitan Regional Improvement Tax, Water Rates and Sewerage Rates (including excess water), Local Authority Rates and Strata Title outgoing ('the outgoings') due and payable under the Wanneroo lease up to 30 June 1993.

5. The first respondents undertake liability in respect of all outgoings due and payable in relation to the Ashfield land up to the 30 June 1993.

6. There be a stock take of the stock in trade of the Wanneroo business and the first respondents will pay to the first applicant the value of the stock in trade at the Wanneroo business and stock in trade will be transferred to the first respondents free of encumbrances.

7. There be a stock take of the stock in trade at the Ashfield tavern business and the first applicant will pay to the first respondent the value of the stock in trade and the stock in trade will be transferred to the first respondents free of encumbrances.

8. The following sums shall be deducted from the amount due by the first respondents to the first applicant for the stock in trade of the Wanneroo business:

(ii) the Liquor Licence fee due and owing for the Wanneroo business in respect of the period from the 1 July 1993 to settlement date together with any penalty and/or interest payable on the Liquor Licence fee by reason of the delay by the first applicant in the payment thereof

(iii) the value of the stock in trade of the Ashfield tavern

(iv) that part of the Liquor Licence fee for the Ashfield tavern applicable to any period following settlement date which has been paid in advance

(v) any amounts payable for outgoings in relation to the Wanneroo business or lease up to the 30 June 1993

9. The balance due and owing by the first respondents to the first applicants for stock in trade at the Wanneroo business is to be paid within 14 days of the date of possession

10. Any balance due and owing by the first applicant to the first respondents for stock in trade at the Ashfield tavern is to be paid within 14 days of the date of possession.

11. Each party will bear its own costs in relation to the Federal Court proceedings and the settlement thereof.

12. Subject to each party satisfying their respective obligations under this agreement the parties hereby release and forever discharge each other, their agents, successors and assigns from any and all actions, claims, sums of money, suits, costs and demands whatsoever which the parties have or but for this agreement may have had in relation to the subject matter of the Federal Court proceedings, the Wanneroo sale agreement, the Wanneroo lease, the Ashfield land and business sale agreements and the undated deed.

13. The applicants hereby indemnify the first respondents from all actions, claims, sums of money, suits or demands which Redmond and or its successors and assigns may have or have had arising out of the Ashfield business agreement.

14. Each of the parties shall sign and execute such further documents and do all such further acts as shall be reasonably necessary or desirable to give effect of the provisions of this agreement.

16. The terms of the agreement cannot be amended or varied in any way save where such amendment or variation is reduced to writing and signed by or on behalf of the parties.

17. The agreement is subject to the approval of the Bank of Singapore (Australia) Limited which approval the respondents will use their best endeavours to obtain.

18. The agreement is subject to the approval of the Commonwealth Development Bank of Australia."

59 On 24 August 1993 the consent order was lodged for assessment.

60 A year later, in October 1994, the appellants and the Villanovas senior applied to the Federal Court to amend par 1 and par 2 of the consent order.

61 A further year later, on 15 September 1995, a minute of consent orders was filed in the Federal Court.

62 On 17 October 1995 Lee J made the orders by consent. Paragraphs 1 and 2 of the Schedule were amended to read as follows:

"1. The applicants do take all steps as are necessary to transfer free of encumbrances all the plant and equipment listed in Annexure 'B' to the Wanneroo lease to the first Respondents in like condition save for fair wear and tear.

2. The Wanneroo lease has been terminated and the applicants and the second respondents hereby release each other from all obligations arising thereunder save and accept as provided for in this agreement."

The basis of the assessment of the consent order for stamp duty

63 On 24 August 1993 the consent order was lodged with the Commissioner for assessment under the Stamp Act 1921 by Jackson McDonald, solicitors for Purdat and King, under cover of a letter dated 24 August 1993.

64 On 15 February 1994 the Commissioner issued a notice of assessment on the basis that par 1 of the agreement conveyed the business of the Wanneroo Villa Tavern to the appellants and the consent order was therefore chargeable with duty under s 73 of the Stamp Act 1921 ("the assessment").

65 The goodwill was valued by the Valuer General at the request of the respondent. Applying valuation principles the Valuer General valued the goodwill at $710,000.

66 The Commissioner determined that the value of the goodwill of the business of the Wanneroo Villa Tavern ("the goodwill") was $710,000 as at 19 August 1993.

67 The fixed plant and equipment was valued by the Commissioner in the following manner:

(i) Purdat's financial statements for the year ended 30 June 1992 included $539,376 for plant and equipment (fixed and movable) at the Wanneroo Villa Tavern;

(ii) To value the plant and equipment as at August 1993 the Valuer General depreciated the value of such plant and equipment (fixed and movable) to $425,000;

(iii) On the basis of the values attributed to each item of plant and equipment in the inventory attached to the Wanneroo lease and on the basis that the total value of plant and equipment (fixed and movable) was $425,000 as at August 1993, the Commissioner determined that the value of the items of fixed plant and equipment was $180,990 at August 1993.

68 The amount of the assessment was therefore based on dutiable consideration of $890,990 made up as follows:

69 The Commissioner determined that the value of the items of fixed plant and equipment was $180,990 as at August 1993.

71 The assessment was made pursuant to the Stamp Act 1921, s 73 and item 4(1) of the Second Schedule. The amount of the assessment was calculated as follows:

72 The appellants have paid the stamp duty pursuant to the assessment.

73 The notice of assessment also included an assessment of $32,925 in relation to the transfer of the Ashfield land and the Ashfield Tavern business to Purdat.

74 As previously set out, the appellants objected to the assessment.

75 On 13 May 1994 the Commissioner disallowed the objection.

76 On 26 May 1994 the appellants requested that the objection be treated as an appeal.

77 There are a number of issues which arise from the deceptively simple desire of the Villanovas and the Kings to return to their 1991 status with the least fuss and expense.

78 The Stamp Act 1921 imposes a duty on documents, not upon transactions.

79 Generally the duty is imposed upon instruments: Stamp Act 1921 s 16.

80 Relevantly to this case however, Stamp Act 1921, s 73, provides:

"... every decree or order of any court, whereby any property on any occasion ... is transferred or vested in any person ... is chargeable with duty as a conveyance or transfer of property."

81 In the opening sentence, the Stamp Act 1921 s 73 distinguishes between an instrument and a decree or order. In the closing sentence the section equates a decree or order with a conveyance or transfer of property for the purposes of assessing duty.

82 To determine the proper construction of the order it will be necessary to examine the effect of the amendment of the order by consent in October 1995.

The nature of the order by Lee J: The Tomlin Order and the subsequent amendment

83 The consent order of 10 August 1993 was an order of the type commonly known as a Tomlin Order after Tomlin J who proposed such orders in 1927 (Practice Direction (1927) WN 230).

84 The schedule is not part of the order. It is the record of the compromise reached between the parties: Horizon Ltd v Lucky Wealth Ltd [1992] 1 WLR 24 at 29.

85 Once a compromise has been achieved and its terms drafted into a schedule of a Tomlin Order, the schedule supersedes the contract or arrangements which were the subject of the dispute between the parties.

86 It is possible to amend a schedule to a Tomlin Order, probably in the inherent power of a court, to reflect the true record: Islam v Askar (1994) TLR 516. The parties consented to an amendment which was perfected by the order of Lee J on 17 October 1995. This Court has no power to go behind an order of the Federal Court. The power to amend an order includes the power to amend the schedule setting out the agreement of the parties. If the schedule does not set out the true agreement, the court by amending the schedule is rectifying the agreement so that it is a true record of the court.

87 The order to be construed for the purposes of assessing duty is the amended order. The effect of the amendment was to rectify the agreement to reflect, not a new arrangement, but the actual arrangement which was entered into between the parties in August 1993 which through error, had not then been properly recorded.

88 The initial order and schedule presented to the Commissioner for stamping, did not reflect the true nature of the agreement between the parties.

89 It appears that the amended Tomlin Order was not put to the Commissioner and the objection and the appeal certainly lodged well before the amendment was effected. The objection was based in part on the argument that the lease had been terminated prior to the Tomlin Order and the only effect of the Tomlin Order was to reconvey the stock, plant and equipment of the Wanneroo Villa Tavern back to the appellants.

90 If the amended agreement was not put before the Commissioner, it is difficult to complain that the Commissioner did not take it into account.

91 The appellants have contributed to the difficulty in the resolution of this case by failing to put the amended Tomlin Order to the Commissioner for consideration prior to stamping or at all.

92 Nevertheless, the order liable for duty (if any) must be the amended Tomlin Order. The original order did not reflect the true intention of the parties. If the purpose of allowing an amendment to a Tomlin Order is to correct the court record so that the true agreement is recorded, it follows that the order which attracts duty, if any, must be the amended order reflecting the proper record of the court. To ignore the effect of rectification for the purposes of a taxing statute but for no other purposes, would lead to an odd result.

The construction of the amended Tomlin Order: The lease

93 The appellants argue that the lease had already been terminated or the contract between the parties had been repudiated.

94 However, I consider the true position prior to August 1993 was that the parties were in dispute over the lease and a range of other matters. It may be that the appellants would ultimately have been proved right in their assertions as to repudiation.

95 What happened instead was that the Tomlin Order and schedule defined the new legal relationship between the parties. Consequently, it is only to the amended Tomlin Order that regard may be had. Preamble F of the schedule to the Tomlin Order expressly acknowledges the basis of the new relationship entered into for settlement of all matters in issue.

96 The schedule to the amended order acknowledged that the lease was terminated.

97 The Tomlin Order did not reconvey the land. The termination of the lease, whenever it occurred, had the effect of placing the Villanovas senior back into possession of their own land.

98 The amended Tomlin Order posited that termination, for whatever reason, had occurred. The Tomlin Order was not a conveyance of the Wanneroo lease.

The construction of the amended Tomlin Order: The business

99 A liquor licence is a personal licence, but attaches to specific premises. It is incapable of assignment, person to person. However, a licence in respect of premises may be transferred from one person to another upon the approval of the Director of Liquor Licensing.

100 On 11 August 1993 the Director granted a protection order to the Villanovas senior. Mr Villanova became the approved manager.

101 The amended Tomlin Order did not purport to reconvey the Wanneroo Tavern business, to the appellants. The question is whether it did so in substance. I am of the opinion that it did not.

102 This was an unusual transaction. On the sale of a business or even the buy-back of a business, one would expect goodwill to be transferred.

103 In this case however, each party simply walked away from the businesses which they had been conducting and re-entered the businesses they had previously owned. The Wanneroo lease having been terminated, there was really no business which King and Purdat could convey. Nor was it intended that they should.

104 The Commissioner argues that all the indicia are that the Tomlin Order intended to transfer the goodwill to the appellants.

105 However, to give effect to the amended Tomlin Order it was not necessary that goodwill should be transferred - a positive movement one to the other. The reality was that each party walked away from one business and back to their first business.

106 The financial considerations which were present in 1991 included payment for goodwill. In 1993 there was no attempt, in a financial sense for the parties to account for the goodwill of either the Wanneroo or the Ashfield businesses.

107 In the particular and unusual circumstances of this case, I am of opinion that the amended Tomlin Order reflecting the true agreement between the parties should be construed as a transfer of property only:

"(a) in respect of the fixtures and fittings set out in Annexure B to the Wanneroo lease - Tomlin Order schedule, par 1;

(b) in respect of the Ashfield land - Tomlin Order schedule, par 2."

108 In respect of these paragraphs of the amended Tomlin Order, I am of opinion that each constitutes an order of a court whereby property is transferred to a person: Stamp Act, s 73. No challenge is in fact brought in relation to the Ashfield land. The responsibility for payment of duty in respect of that transaction devolved on King and Purdat. The Tomlin Order should be construed as effecting no transfer:

(d) of the business and goodwill of the Wanneroo Tavern."

109 Despite the appellants' failure to refer to the Commissioner the amended Tomlin Order, I am nevertheless of opinion that, on the basis of the amended Tomlin Order, this appeal must succeed in part.

110 The answers to the questions of law and fact which the Commissioner considers should be determined are:

"(a) did the Consent Orders in substance if not in form transfer to or vest in the appellants to the Wanneroo Villa Tavern Business?"

"(b) did the Consent Orders in substance if not in form transfer to or vest in the appellants the goodwill and liquor licence of the Wanneroo Villa Tavern Business?"

"(c) were the Consent Orders dutiable for any and if so what amount of duty?"

"(d) what effect (if any) did the subsequent amendment of the Consent Orders have upon the dutiability of the Consent Orders?"

"(e) did the Consent Orders in conjunction with the Amended Orders in substance if not in form transfer to or vest in the appellants the Wanneroo Villa Tavern Business and in particular the goodwill and the liquor licence?"

"(f) how are the costs of the appeal to be borne and paid?"

111 I will hear the parties on the question of costs once they have read these reasons.

112 In accordance with these reasons I order the Commissioner to refund to the appellants the sum of $28,265, being the difference between the amount of duty paid ($33,392) and the amount which ought to have been assessed ($5127).