Interchase Corporation Ltd (in liq) v Commissioner of Stamp Duties [1993] QCA 485

Court of Appeal (Qld)|1993-12-03|Before: Davies J, Ambrose J, White J

[Interchase Corporation v. Commissioner of Stamp Duties]

This is an appeal by way of case stated against an assessment of stamp duty upon an instrument dated 6 October 1986 executed by Banway Pty Ltd ("Banway"), now called Interchase Corporation Limited, and Chase Corporation Limited ("Chase"), and addressed to Suncorp Insurance and Finance ("Suncorp"). On the same day Banway executed as purchaser a form of contract of sale of land in which Suncorp was shown as the vendor. Both instruments were tendered to Suncorp on 7 October and the contract was executed by it that day. That contract was stamped with ad valorem conveyance duty and no question arises of the correctness of that assessment.

It was common ground between the parties to the appeal that the sole question in the appeal is whether the instrument in question is a deed. The Commissioner conceded that the only basis for his assessment is that the instrument is a bond or covenant; and that if the instrument is not a deed, it is not a bond or covenant: The National Telephone Company Ltd v. Inland Revenue Commissioners [1900] A.C. 1 at 2; Comptroller of Stamps (Vic) v. Associated Broadcasting Services [1990] VicRp 31; [1990] V.R. 335 at 347. Because we are of opinion, for reasons which we will explain below, that the instrument is not a deed, it is unnecessary to consider whether, if it were, that would be sufficient to make it a bond or covenant.

The instrument was executed under the common seal of each of Banway and Chase. In the latter case, the execution clause had originally provided for it to be signed by Chase by its attorney. Apparently at the time of execution because the alterations were made by pen, that clause was crossed out and it was executed under its common seal. The contract of sale was also executed under the common seal of Banway.

All deeds are, of course, instruments either sealed or deemed to be sealed by s. 45(2) Property Law Act 1974 (Qld.). (Contrast Dean v. Lloyd (1990) 3 W.A.R. 235 which was decided under the Property Law Act 1969 (W.A.), s. 9(2) of which, unlike the Queensland provision, completely abrogates the common law requirement of sealing for deeds executed by individuals.) However, not all sealed instruments are deeds. This is especially so in the case of companies where execution under the common seal is a common way, and was once the only way, in which corporations may execute instruments. Such execution has an effect "similar to a signature by an individual": Northside Developments Pty Ltd v. Registrar-General [1990] HCA 32; (1990) 170 C.L.R. 146 at 160; and see the definition of "executed" in s. 2 of the Act. See also Manton v. Parabolic Pty Ltd (1985) 2 N.S.W.L.R. 361 at 369; Comptroller of Stamps (Vic) v. Associated Broadcasting Services at 341, 347.

The question whether an instrument under seal is a deed depends on whether it was intended to operate as the deed of the person executing it, that is whether it was intended to be immediately binding on that person in the sense that, whether it was intended to operate immediately or subject to a condition, it could not be recalled by that person. A deed, even one "delivered" conditionally, that is, as an escrow, is in this respect different from a contract. A contract is not binding on an offeror until acceptance by the offeree. A deed is binding on its maker, in the sense in which we have indicated, immediately upon its delivery: Alan Estates Ltd v. W.G. Stores Ltd & anor [1982] 1 Ch. 511 at 520-1, 523, 526-7; Ansett Transport Industries (Operations) Pty Ltd v. Comptroller of Stamps [1985] VicRp 7; [1985] V.R. 70 at 75; Monarch Petroleum NL v. Citco Australia Petroleum Ltd [1986] W.A.R. 310 at 357. Formerly "delivery" meant an act done evincing an intention to be bound. Now by s. 47(3) of the Property Law Act 1974 delivery is defined to mean the intention to be legally bound either immediately or subject to fulfilment of a condition; and sub-s. (2) provides that delivery may be inferred from any fact or circumstance, including words or conduct, indicative of delivery. Section 47(1) displaces a common law presumption that execution of an instrument in the form of a deed imports delivery: Ex p. Ryrie [1983] 2 Qd.R. 194 at 197. Nevertheless the section contemplates that a document may evince an intention that delivery should be inferred from execution.

The only act other than execution from which, either alone or together with that execution, delivery could have been inferred in the present case was the tendering to Suncorp, by Banway on behalf of Chase, of the instrument together with the form of contract of sale executed by Banway. The tender of the form of contract executed by Banway was the communication of an offer by Banway, capable of withdrawal until accepted by Suncorp. There is nothing to distinguish between the tender of the instrument and the tender of the form of contract. Consequently, the tender of the instrument with a contractual offer is more consistent, we think, with the view that it, too, is a contractual offer.

We think that the intention of Chase in this respect can be derived from the terms of the instrument itself. That also appears to be the main contention of each party. The appellant's contention is that it was intended to be no more than a contractual offer having the consequences we have mentioned. The respondent contends that Chase intended to be legally bound immediately or, alternatively, conditionally upon acceptance of Banway's offer by Suncorp.

Before going to the terms of the instrument it is convenient to dispose of a submission of the respondent that the backsheet of the instrument assisted in the determination of this question. On its backsheet the instrument is described as a "DEED ON INDEMNITY & GUARANTEE". It is also described on the backsheet as being between Banway as purchaser and Chase as guarantor. As appears from what we have already said, it was plainly not an instrument between Banway and Chase. That and the fact that it was described as a deed on indemnity and guarantee indicates that little care was taken in the drafting of the backsheet. There is no evidence of whether the backsheet was typed before or after execution. If it was typed before execution it would appear that the intention, at least so far as it can be gleaned from the terms of the instrument, was that the instrument be executed by Chase by its attorney; in which case it could not have been a deed. If it was typed after execution it is difficult to see how it could be relevant to the intention of Chase at the time of execution. In our view, therefore, the backsheet is of no assistance on this question.

The instrument is addressed to Suncorp. It then provides:

"IN CONSIDERATION of SUNCORP INSURANCE AND FINANCE ("the Vendor") agreeing to enter into the within Contract ("the Contract") with Banway PTY LTD of 18th Floor, 300 Queen Street, Brisbane in the State of Queensland ("the Purchaser") at the request of CHASE CORPORATION LIMITED of 5th Level, Reserve Bank Building, Adelaide Street, Brisbane in the State of Queensland ("the Guarantor") the Guarantor:-

1. Undertakes to indemnify the Vendor and to keep the Vendor indemnified against failure by the Purchaser to perform and observe the terms and conditions of the Contract whether or not the same are enforceable by the Vendor against the Purchaser.

2. Guarantees to the Vendor that the Purchaser will punctually perform and observe all the Purchaser's obligations under the Contract including the due and punctual payment of all moneys payable by the Purchaser under the Contract."

Then follow a number of other numbered clauses in which, also in consideration of Suncorp agreeing to enter into the contract, Chase "agrees" to a number of consequences. As the respondent relied upon two of these, cll. 10 and 13, we will set them out in full:

"10. Agrees that every covenant and obligation hereunder is given and undertaken by the Guarantor as a joint and several covenant and obligation."

"13. Agrees that the Guarantor shall pay to the Vendor upon demand all stamp duties paid or payable by the Vendor on these presents or arising from the transaction evidenced by these presents but not the Vendor's legal costs."

It is the use of the term "covenant" in cl. 10 upon which the respondent relied. Although the term is associated with deeds, read in context we think that it is surplusage. That is not surprising in an instrument which, on the whole, is not well drawn. In cl. 13 it is the phrase "these presents" upon which the respondent relied. This phrase, though more commonly found in a deed than in an agreement for consideration, is of only slight weight on this question. See, for example, Comptroller of Stamps (Vic) v. Associated Broadcasting Services Ltd (supra) where the relevant instrument which used the phrase in its testimonium was held not to be a deed. We think that the explanation for the use of this phrase also is more likely to be poor drafting. We add that the testimonium in the instrument the subject of this appeal is more consistent with an agreement for consideration than a deed, providing merely "DATED this 6th day of October 1986".

The most striking part of the instrument, in the present context, is the opening clause. The execution of the contract of sale by Suncorp is intended by Chase to provide the consideration for its obligations stated in the instrument. Of course, if the instrument were intended to operate as a deed no such consideration would be necessary. Mr Dorney Q.C., for the Commissioner, submitted that this clause was consistent with a deed being delivered conditionally upon the execution by Suncorp of the contract. But that is not what it says. And what it says is inconsistent with an intention that it should operate as a deed. We think that this clause is a much stronger indication of the intention of Chase than the presence in cll. 10 and 13 of technical words.

Nor is there anything in the instrument which, in our view, is inconsistent with an intention that the consideration for the obligations undertaken in it is the execution by Suncorp of the contract of sale. It is not expressed to be a deed and any terminology used in the instrument consistent with its being a deed, such as the use of the term "covenant" and the phrase "these presents" to which we have already referred, are more readily explicable by poor drafting.

The context in which the instrument was executed also supports the conclusion that it was intended to have contractual effect only. It was intended to be tendered with and support the offer of purchase by Banway. There was no need for a deed. Its only point would be to make its offer irrevocable, and there is no reason for thinking that Chase intended this.

In our opinion, therefore, the instrument is not dutiable under the above head of charge. The Commissioner concedes that if that is so it is not dutiable at all. The only other possibly relevant head of duty refers to an agreement "under hand only" and the Commissioner concedes that this, being an instrument under seal, is not of that kind. We therefore propose, pursuant to s. 24(4), to order repayment of the duty paid. Of course, if the instrument is not dutiable the penalty imposed was not payable and we propose to order its repayment also.

The other question sought to be argued on this appeal was, the duty assessed and penalty imposed having been paid in accordance with s. 24(1) of the Act, the interest to which the appellant is entitled on the amount of that duty and penalty from the date of payment until repayment by the Commissioner. Sub-sections 24(4) and (4A) of the Act provide:

"(4) If it is decided by the Court that the assessment of the Commissioner is erroneous, any excess duty which may have been paid in conformity with the erroneous assessment, together with any fine or penalty which may have been paid in consequence thereof, shall be ordered by the Court to be repaid to the appellant, and with such costs or without costs as the Court may, as hereinafter provided, determine.

(4A) Where the Commissioner is required to refund any duty, fine or penalty under sub-section (4) in respect of an appeal brought under this section on or after the commencement of section 4 of the Stamp Act Amendment Act 1989, the Commissioner shall pay interest at the prescribed rate on the amount to be refunded for the period from the date of payment of the duty, fine or penalty to which the refund relates until the date the refund is made."

At the date of the assessment, 18 May 1990, and at the date of payment, 5 July 1990, reg. 6A of the Stamp Duty Regulations provided that the prescribed rate of interest, for the purposes of this provision, was 14%. However, by Stamp Duties Amendment Regulation (No. 1) 1992 that regulation was replaced by a new regulation which prescribed a rate of interest at 5.5%.

The right of the appellant to a refund of the amount of duty and penalty paid arises only by reason of and upon the order of this Court made pursuant to s. 24(4). It is not in any sense a right which accrues before then. And the right to interest on that amount is dependent upon, and consequently arises only upon, the creation of the right to a refund. It is therefore a right to interest at the prescribed rate at the time of the order which this Court will make, which is 5.5%.

We therefore answer the questions asked in the case stated as follows:

(a) Is the Indemnity and Guarantee liable to be charged with duty under the heading designated "Mortgage, Bond, Debenture and Covenant" in the First Schedule to the Act?

(b) Is the Indemnity and Guarantee chargeable with duty under the Act in accordance with the assessment of the Commissioner of Stamp Duties?

(d) How should the costs of and incidental to the stating of this case and of the appeal be borne and paid?

that the amount of $319,203.20 be repaid by the Commissioner to the appellant.
that the Commissioner pay interest upon the said amount at the rate of 5.5% from 5 July 1990 to the date of repayment.
that the Commissioner pay the appellant's costs to be taxed.

[Interchase Corporation v. Commissioner of Stamp Duties]

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ANSWER THE QUESTIONS IN THE CASE STATED AS FOLLOWS:

(d) THE RESPONDENT SHOULD PAY THE APPELLANT'S COSTS.

THE AMOUNT OF $319,203.20 BE REPAID BY THE COMMISSIONER TO THE APPELLANT.
THE COMMISSIONER PAY INTEREST UPON THE SAID AMOUNT AT THE RATE OF 5.5% FROM 5 JULY 1990 TO THE DATE OF REPAYMENT.
THE COMMISSIONER PAY THE APPELLANT'S COSTS TO BE TAXED.

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CATCHWORDS: STAMP DUTIES - INSTRUMENTS LIABLE - Instrument of indemnity and guarantee executed under common seals of parties - Assessed to duty as a bond or covenant - Whether a deed - Whether intended to be immediately binding - Whether could infer delivery - Intention to be derived from terms of instrument and context in which executed - Whether terms of backsheet relevant

STAMP DUTIES - ASSESSMENT - Successful appellant only entitled to interest on duty and penalty

paid at rate prescribed at time of order for repayment

Property Law Act 1975 (Qld), ss. 2, 45(2), 47

Stamp Act 1894 (Qld), ss. 24(4), (4A), 1st Sch. ("Mortgage, Bond, Debenture, Covenant")

Stamp Duties Amendment Regulation (No. 1) 1992

Alan Estates Ltd v. W.G. Stores Ltd [1982] 1 Ch. 511

Ansett Transport Industries (Operations) Pty Ltd v. Comptroller of Stamps [1985] VicRp 7; [1985] V.R. 70

Comptroller of Stamps (Vic) v. Associated Broadcasting Services [1990] VicRp 31; [1990] V.R. 335

Dean v. Lloyd (1990) 3 W.A.R. 235

Manton v. Parabolic (1985) 2 N.S.W.L.R. 361

Monarch Petroleum NL v. Citco Australia Petroleum Ltd [1986] W.A.R. 310

National Telephone Co. Ltd v. I.R.C. [1900] A.C. 1

Northside Developments Pty Ltd v. Registrar- General [1990] HCA 32; (1990) 170 C.L.R. 146

Ex parte Ryrie [1983] 2 Qd.R. 194

Mr K.D. Dorney Q.C. with him Mr K.N. Wilson for the Respondent

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