OCEANIC LIFE LIMITED & ANOR v CHIEF COMMISSIONER OF STAMP DUTIES

COUNSEL : R A Conti QC/M M Macrossan - Appellants H R Sorensen - Respondents SOLICITORS : Abbott Tout - Appellants I V Knight - Respondent CATCHWORDS : INSURANCE - stamp duty payable - whether policy was a policy of life insurance pursuant to s86 (1) of the Stamp Duties Act 1920 Insurance Acts 1932 (Cth) ACTS CITED : Life Insurance Act 1945 (Cth) Stamp Act 1891 Stamp Duties Act 1920 Ausfield Pty Ltd v Leyland Motor Corp of Australia Ltd (No 2) (1977) 14 ALR 457 Bambro [No 2] Pty Ltd v Commissioner of Stamp Duties (1963) SR (NSW) 522 Butler v Johnston (1984) 55 ALR 265 Carlill v Carbolic Smokeball Company [1893] 1 QB 256 Colakovski v Telecommunications Corporation (1991) 100 ALR 111 Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 Fountain v Alexander (1982) 150 CLR 615 General Accident Assurance Corporation Ltd v Commissioners of Inland Revenue [1906] 8 SC 477 Hatfield v Health Insurance Commission (1987) 77 ALR 103 In re Commonwealth Homes & Investment Company Ltd (1943) SASR 211 IRC v Maple & Co (Paris) Ltd [1908] AC 22 CASES CITED: Joye v Beach Petroleum NL & Cortans Ltd (In Liq) (1996) 137 ALR 506 Limmer Asphalt Paving Co v Commissioners of Inland Revenue [1872] LR 7 Ex 211 Marac Life Insurance Ltd v Commissioners of Inland Revenue (1986) 1 NZLR 694 N M Superannuation Pty Ltd v Young (1993) 41 FCR 182 National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29 National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation (WA) (1996) 96 ATC 4615 Perlman v Perlman (1984) 51 ALR 317 PMT Partners Pty Ltd (In Liq) v ANPWS (1995) 131 ALR 377 Re Carter deceased (1963) QdR 45 Re Dinigjan; ex parte Wagner (1995) 128 ALR 81 Secretary, Department of Foreign Affairs & Trade v Boswell (1992) 108 ALR 77 Tooheys Ltd v Commissioner of Stamp Duties ( NSW) (1961) 105 CLR 602 DECISION : Appeal dismisssed with costs

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40154/98 ALD 30125/96 SHELLER JA BEAZLEY JA FITZGERALD JA OCEANIC LIFE LIMITED & ANOR v CHIEF COMMISSIONER OF STAMP DUTIES

The appellant issued insurance policies. These policies offered general insurance benefits for loss of use, specific injuries, accidental death and allowed for a refund of premiums if no claim on the policy was made over a ten year period (the refund benefit).

Pursuant to s88B of the Stamp Duties Act 1920 (the Act), the appellant lodged returns with the respondent in respect of the premiums paid under the policies. Under the Act, insurance was divided into Class 1 insurance, Class 2 insurance, life insurance and exempt insurance. The amount of stamp duty payable on the premiums varied depending upon which category the policy fell under.

In relation to the appellant's policy of insurance, the respondent determined that 33 per cent of the premium paid was referable to the loss of use and specific injury benefits (Class 2 insurance) and 67 per cent to the accidental death benefit (Class 1 insurance).

In 1994 the appellant applied for a refund under s35C(1) of the Act in relation to these returns submitting that the refund benefit was a policy of endowment, and therefore of life insurance within the meaning of s86(1) of the Act, and as such was a distinct matter which should be assessed separately. The respondent determined that the refund benefit was not a policy of insurance, either general or life, and that the whole of the premium should be apportioned between Class 1 and Class 2 insurance in the same proportion as the general insurance benefits.

The appellant objected to this determination. The respondent disallowed the objection, then approved the appellant's request to appeal to the Supreme Court.

The appellant submitted that the policy contained several distinct matters, one of which was life or endowment insurance, and that pursuant to s17 of the Act this matter should have been separately charged with duty as if it were expressed in a separate instrument. The Judge at first instance, while holding that s.17 did apply to instruments of insurance, dismissed the proceedings. The appellant appealed from this decision.

The respondent filed a notice of contention against the conclusion of the trial Judge that s17 of the Act applied to instruments of insurance.

Held: By Sheller JA, Beazley JA agreeing: (1) To an extent, the determination of whether a policy of insurance was a life policy depended upon impression. Carlill v Carbolic Smokeball Company [1893] 1 QB 256 referred to. (2) It was well established that an endowment policy was a form of life insurance. National Mutual Life Association of Australasia Limited v Federal Commissioner of Taxation (1959) 102 CLR 29 referred to. (3) The only suggestion that the appellant's policy was an endowment policy was the description of the 100 per cent refund benefit. On its face this benefit amounted to an inducement not to allow the accident policy to lapse and not to make a claim under it. Such a provision did not invest an accident policy with the character of a life insurance policy. The reliance by the appellant on the general words of definition of life insurance was an attempt to disguise the true nature of the policy. In re Commonwealth Homes and Investment Company Limited (1943) SASR 211 referred to.

Per Fitzgerald JA: (1) The common law has long accepted that a policy of insurance which provided for payment by the insurer either on the death of the insured or on his or her survival to or past a nominated date was a policy of life insurance. Likewise, a policy of insurance which provided for a payment by an insurer on the survival of an insured to or past a nominated date was a policy of life insurance within the meaning of the definition of 'life insurance' in the Act. (2) The operation of the phrase "relating to" is determined by the statutory context and purpose. Butler v Johnson (1984) 55 ALR 265 and Hatfield v Health Insurance Commission (1987) 77 ALR 103 referred to. (3) An insured's survival for the ten year period was not an "event or contingency" on which the appellant became liable to pay the insured. The "event or contingency" on which that liability arose was the completion of a period of ten years at the end of which the insured was not only alive but had made no claim for any benefit under the policy in that period. The critical feature of that "event or contingency" was the absence of a claim for a benefit under the policy. Such an "event or contingency" would not have been properly described as "relating to or depending on a life" within the meaning of ss 86(1) of the Act. Legislation: Insurance Acts 1932 (Cth) Life Insurance Act 1945 (Cth) Stamp Act 1891 Stamp Duties Act 1920

Cases: Ausfield Pty Ltd v Leyland Motor Corp of Australia Ltd (No 2) (1977) 14 ALR 457 Bambro [No 2] Pty Ltd v Commissioner of Stamp Duties (1963) SR (NSW) 522 Butler v Johnston (1984) 55 ALR 265 Carlill v Carbolic Smokeball Company [1893] 1 QB 256 Colakovski v Telecommunications Corporation (1991) 100 ALR 111 Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 Fountain v Alexander (1982) 150 CLR 615 General Accident Assurance Corporation Ltd v Commissioners of Inland Revenue [1906] 8 SC 477 Hatfield v Health Insurance Commission (1987) 77 ALR 103 In re Commonwealth Homes & Investment Company Ltd (1943) SASR 211 IRC v Maple & Co (Paris) Ltd [1908] AC 22 Joye v Beach Petroleum NL & Cortans Ltd (In Liq) (1996) 137 ALR 506 Limmer Asphalt Paving Co v Commissioners of Inland Revenue [1872] LR 7 Ex 211 Marac Life Insurance Ltd v Commissioners of Inland Revenue (1986) 1 NZLR 694 N M Superannuation Pty Ltd v Young (1993) 41 FCR 182 National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29 National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation (WA) (1996) 96 ATC 4615 Perlman v Perlman (1984) 51 ALR 317 PMT Partners Pty Ltd (In Liq) v ANPWS (1995) 131 ALR 377 Re Carter deceased (1963) QdR 45 Re Dinigjan; ex parte Wagner (1995) 128 ALR 81 Secretary, Department of Foreign Affairs & Trade v Boswell (1992) 108 ALR 77 Tooheys Ltd v Commissioner of Stamp Duties ( NSW) (1961) 105 CLR 602 ORDERS Appeal dismissed with costs. *****

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40154/98 ALD 30125/96 SHELLER JA BEAZLEY JA FITZGERALD JA OCEANIC LIFE LIMITED & ANOR v CHIEF COMMISSIONER OF STAMP DUTIES JUDGMENT

During the period up to 31 August 1990 the appellant, Oceanic Life Limited (Oceanic), issued policies as part of what was called "The RSL Cash Accident Programme" in a form which can conveniently be referred to as version 1. Thereafter from September 1990 to 31 August 1993, as part of the same programme, it issued policies in the form conveniently referred to as version 2.

Forms of Policy 2 In the form version 1, Oceanic agreed: "subject to the conditions of this Policy, to pay you the appropriate Benefit whenever an Accident (as defined) results in Hospital Confinement, Loss of Use or death while this Policy is in force. This Policy, including the Application for it, constitutes the entire contract of insurance."

Cover under the policy commenced on the date of issue provided that the initial premium was paid on or before "the Effective Date". Under the heading "Guaranteed Renewability" appeared as follows: "At the end of each 10 years, and provided that you have not obtained Age 75, you are guaranteed the right to renew this Policy for a further 10 years. To renew, you must pay the Premium due within 31 days of the end of the 10 year period at the rates prevailing at the time of renewal."

The policy was stated to have no surrender value. 3 One page of the form was as follows: "DAILY HOSPITAL CASH BENEFIT

If an Accident results in your Hospital Confinement we will pay periodically the Daily Hospital Cash Benefit specified in the Schedule during the continuance of such Hospital Confinement for a maximum period of 400 days. DAILY INTENSIVE CARE BENEFIT If an Accident results in your Hospital Confinement in an Intensive Care Unit we will pay periodically the Daily Intensive Care Benefit specified in the Schedule during the continuance of your Confinement in the Intensive Care Unit for a maximum period of 400 days. ACCIDENTAL DEATH BENEFIT If an Accident results in your death, the Accidental Death Benefit will be payable. LOSS OF USE BENEFIT If an Accident results in your Loss of Use, the Loss of Use Benefit will be payable. REPEATED HOSPITAL CONFINEMENT If Daily Benefits have become payable under this Policy and while the Policy is in force you are again confined to a Hospital due to the same Accident, the subsequent period of Hospital Confinement shall be considered a continuation of the prior period and Benefits will be subject to the 400 day maximum period. LIMITATION OF BENEFIT The maximum Benefit payable under this Policy for Loss of Use and/or death will be limited to $10,000. 100% PREMIUM REFUND BENEFIT If this Policy is maintained in force during your lifetime and throughout the next 10 years and no claim for any Benefit is made, we will pay you a lump sum equal to 100% of all Premiums you have paid during such 10-year period."

The obscure meaning of the condition in the last clause was no doubt a cause for its amendment in version 2. 4 Premiums were "due and payable on the Effective Date of this Policy and on each subsequent anniversary". Premiums might be paid monthly, half-yearly or yearly. Thirty-one days of grace were allowed for the payment of each premium after the first payment, during which time the policy remained in force. There was provision for lapse, in case of non-payment of the premium within the time allowed for payment, and for re-instatement. 5 The wording of version 2 was different. The guaranteed renewability clause was as follows: "You are guaranteed the right to renew this Policy for a further period of ten (10) years at the end of each ten (10) year period, provided you have not then attained age eighty (80). To renew, you must pay the premium due within thirty-one (31) days of the end of the ten (10) year period at the premium rates prevailing at the time of renewal."

6 Oceanic's obligation to pay was now set out in the benefits sheet which was as follows: " DEATH BY ACCIDENT BENEFIT If you suffer Death by Accident we will pay the Death by Accident benefit shown in the Schedule. PARTIAL LOSS OF USE BENEFIT If you suffer Partial Loss of Use we will pay the Partial Loss of Use benefit shown in the Schedule. TOTAL LOSS OF USE BENEFIT If you suffer Total Loss of Use we will pay the Total Loss of Use benefit shown in the Schedule. SPECIFIC INJURY BENEFIT If you suffer a Specific Injury we will pay the amount as shown in the Table of Specific Injuries. In the event of more than one Specific Injury resulting from the one accident, we will pay only the highest amount to which you are entitled for any one Specific Injury. 100% PREMIUM REFUND BENEFIT If this Policy is maintained in force for a period of ten (10) years and no claim for any Benefit is made, we will pay you a lump sum equal to 100% of all Premiums you have paid during that ten (10) year period. LIMITATION OF BENEFIT The maximum Benefit payable for any one accident under the Policy will be limited to the maximum Benefit payable for Total Loss of Use."

7 The lapse and re-instatement clause was different. There was a new clause "General Conditions" as follows: "This Policy has no surrender value and does not participate in our profits. All moneys received by way of premium are paid into our No. 1 Statutory Fund."

The Court was told that this referred to a statutory fund established under Part III Div 3 of the Life Insurance Act 1945 (Cth), then in force, by companies carrying on life insurance business in Australia in respect of such business.

Stamp Duties Legislation 8 Section 4 of the Stamp Duties Act 1920 (the Act) (compare now the Duties Act 1997 ss 314 and 315 and Schedules 1 and 2) charged in respect of instruments and matters described or mentioned in the Act and relevantly in the Second Schedule thereto the duties at the rates in the Act and schedules specified. Included under the heading "Nature of Instrument" in the Second Schedule were: "Nature of Instrument Amount of Duty Persons primarily liable $ c POLICIES OF LIFE INSURANCE

(1) Upon every policy (other than a ) temporary or term insurance policy) ) where the sum insured exceeds $100 ) and does not exceed $2,000: ) ) For every $200 and also for any ) fractional part of $200 of the sum ) insured…… 0.10 ) ) Where the sum insured exceeds $2,000: ) The company For every $200 of the first $2,000 of ) or person such amount ….… 0.10 ) issuing ) the policy. And in addition thereto, for every $200 ) and also for any fractional part of $200 ) in excess of the first $2,000…… 0.20 ) ) (2) Upon a temporary or term insurance ) policy Five per centum ) of the first year's ) premium on the ) policy. )"

9 In Pt 3 of the Act headed "Duties on Instruments", appeared "Division 24 - Policies of insurance etc". The following sections are taken from Div 24. Section 86 (1) defined "Class 1 insurance", "Class 2 insurance" and "life insurance" as follows: " 'Class 1 insurance' means insurance, other than: (a) Class 2 insurance; or (b) life insurance; or (c) exempt insurance; 'Class 2 insurance' means: ……… (c) disability income insurance, being insurance effected by a policy of insurance under which an amount is payable in the event of disablement of the insured by accident or sickness; …….. (g) hospital and ancillary health benefits insurance, being insurance covering liability incurred in respect of fees or charges for hospital treatment, or for health care ancillary to hospital treatment, if the liability is not covered by an organisation registered under Part VI of the National Health Act 1953 of the Commonwealth; 'life insurance' means insurance on a life or lives or on any event or contingency relating to or depending on a life or lives, but does not include insurance for any payment agreed to be made on the death of a person only from accident or violence or otherwise than from a natural cause or as compensation for personal injury;"

10 The definition of life insurance accords with the common understanding of persons conversant with insurance. In N M Superannuation Pty Limited v Young (1993) 41 FCR 182 at 195 Hill J said: "Although a policy of insurance against death by accident may be said to be a policy relating to the life of a person insured, such a policy has never been seen as being a policy of life insurance: see Re Farley; Holden v Johnson [1933] VLR 271; Re Kerr [1943] SASR 8; Re Packer (1958) 18 ABC 97."

11 In Re Carter deceased (1963) QdR 45 at 52 Gibbs J, as his Honour then was, after referring to a number of cases, said: "The distinction between life assurance and accident insurance is a real one and is clearly recognised in Australia - see the National Mutual Life Association of Australasia Limited v Federal Commissioner of Taxation (1959) 102 CLR 29 at 42-47 and also 39-40."

The statutory definition and these cases demonstrate that whether a policy is one of life insurance cannot always accurately be determined by words of general definition. 12 Section 88A (1) of the Act provided that a person must not in New South Wales carry on or hold out that the person carries on insurance business (not being life insurance business) unless the person was registered under Div 24. Subsection (4) provided that a person who carried on life insurance business might apply to the Chief Commissioner in the approved form for registration under Div 24. 13 Section 88B, so far as material (we are not concerned with "life insurance riders"), provided as follows: "(1) A registered person must, on or before the twenty-first day of each month: (a) lodge with the Chief Commissioner a return in the approved form verified in the approved manner showing: (i) the total amount of all premiums for Class 1 insurance received by or on behalf of the person in the preceding month (other than premiums for exempt insurance or insurance to which section 88 applies); and (ii) the total amount of all premiums for Class 2 insurance received by or on behalf of the person in the preceding month (other than premiums for exempt insurance or insurance to which section 88 applies); and ………; and (b) pay to the Chief Commissioner as stamp duty on the return: (i) an amount equal to 11.5 per cent of the total amount of the premiums for Class 1 insurance; and (ii) an amount equal to 2.5 per cent of the total amount of the premiums for Class 2 insurance; and (iii) the amounts determined in accordance with the Second Schedule in respect of the policies of life insurance issued by or on behalf of the person in the preceding month; and ………; and (c) in respect of each contract or agreement for life insurance effected by or on behalf of the person in the preceding month, make out and execute a policy of insurance and endorse on that policy the words 'stamp duty' followed by the serial number issued to the registered person under section 88A. (2) A policy of life insurance endorsed in accordance with this section is to be taken to be duly stamped. (3) A person (other than a registered person) who endorses on a policy of life insurance any words or numbers suggesting or implying that the policy is duly stamped under this section is guilty of an offence."

14 Section 88C provided as follows: "If the Chief Commissioner is not satisfied that the premium paid in respect of a policy of insurance which effects any 2 or more of the following types of insurance, namely: (a) Class 1 insurance; (b) Class 2 insurance; (c) life insurance; (d) exempt insurance; (e) insurance referred to in section 88, has been properly apportioned for the purposes of a return under section 88B or 88D having regard to the property or risk concerned, the Chief Commissioner may determine the apportionment, reassess the liability to duty of the return and charge duty accordingly."

Application for Refund, Disallowance and Appeal 15 In respect of policies issued during the relevant periods the appellant lodged returns with the respondent Chief Commissioner on the basis that the premiums received were either for Class 1 insurance, that is to say, in one case the accidental death benefit, in the other the death by accident benefit, or Class 2 insurance, the other benefits under the policies. Howie AJ found that the Chief Commissioner had determined that 33 per cent of the premium paid was referable to the Loss of Use and Specific Injury Benefits (Class 2 insurance) and 67 per cent to the Accidental Death Benefit (Class 1 insurance). Oceanic paid stamp duty "on the returns" accordingly. 16 By letter dated 7 January 1994 Oceanic applied for a refund under s35C (1) of the Act "principally in relation to the December 1991 return but …also… to cover subsequent returns to and including November 1993." In a letter of 30 March 1994 to the Chief Commissioner, Oceanic said: "As the variation between the two policy versions is only in presentation and not in benefit structure, the apportionment of premiums is the same as that in the actuarial certification dated 23 July 1993: Benefit Type % of each premium Accidental death Benefit 14.1 [sic] Loss of use and specified injury benefits 7.1 Refund Benefit 78.5 100.0" 17 On 5 September 1995 the Chief Commissioner wrote to Oceanic as follows: "Your request for a refund was calculated on the basis of apportionment of premium between the different types of insurance covers offered by this policy, Accidental Death Benefit 14.4% of premium Loss of use and specified injury benefits 7.1% of premium Refund Benefit 78.5% of premium A review of this basis of apportionment was examined and legal opinion was obtained. Following this review it was concluded that the 'Refund (survival) Benefit' was not a policy of insurance, either general or life, and that the whole of the premium should be apportioned between Class 1 insurance and Class 2 insurance in the same proportion that 14.4% and 7.1% would relate to the total premium, respectively (ie 67% and 33% respectively). That is that premium previously allocated to the refund benefit has to be apportioned between general insurance benefits."

18 An extension of the time to object was granted and on 1 December 1995 Oceanic furnished grounds of objection under s124 of the Act. Oceanic contended that the Refund (survival) Benefit was a policy of endowment and therefore of life insurance within the meaning of s86 (1) of the Act. An alternative suggestion has not been pressed. 19 On 23 May 1996 the objection was disallowed. On 7 November 1996 the respondent Chief Commissioner approved Oceanic's request to appeal to the Supreme Court. That appeal came before Howie AJ who, on 27 February 1998, dismissed the proceedings. Oceanic and the second appellant, Tyndall Life Insurance Company Limited "As Successor to the Rights and Liabilities of Oceanic Life Limited" appeal from the whole of Howie AJ's decision. 20 Oceanic's argument is that the RSL Cash Accident Programme form is a policy of insurance which effects several types of insurance within the meaning of the Act namely, Class 1 insurance, Class 2 insurance and life insurance. The determinative question in the present appeal is whether it effects life insurance.

Distinct Matters 21 Oceanic submitted that the policy contained or related to several distinct matters, one of which was life or endowment insurance, and that this matter should have been separately and distinctly charged with duty as if it were expressed in a separate instrument. For this submission Oceanic relied upon s17 (1) of the Act which provided: "Except where express provision to the contrary is made by this or any other Act, an instrument containing or relating to several distinct matters is to be separately and distinctly charged with duty in respect of each of such matters, as if each matter were expressed in a separate instrument."

22 The Chief Commissioner submitted that s17 did not apply to the charge of duty under Div 24 and in particular pointed to the provisions of s88B whereunder a registered person is obliged to pay to the Chief Commissioner amounts as stamp duty "on the return". Howie AJ considered that s17 did apply in relation to instruments effecting insurance as much as it did to instruments concerned with other matters which attracted the payment of duty. His Honour said that the conclusion as to whether an instruments effects two or more types of insurance depends upon the operation of s17 and the proper construction of the instrument. Against this conclusion the Chief Commissioner, by leave and with the consent of Oceanic, filed a notice of contention.

The Test 23 The Chief Commissioner relied principally upon General Accident Assurance Corporation Limited v Commissioners of Inland Revenue [1906] 8 SC 477. This case decided by the First Division of the Court of Session concerned the stamp duty chargeable on a policy, which primarily provided compensation for the consequences of sickness or accident including death resulting from injuries by accidental means. By a clause of the policy under the heading "Return of Premium" the insurer agreed that so soon as the assured should reach the age of 65, or in the event of the previous death of the assured, the insurer would return to the assured 50 per cent of all premiums which had been paid to the insurer under the policy up to a certain amount, provided that no payment had had to be made for death from injury or for loss of a limb. The Commissioners of Inland Revenue were of the opinion that the instrument was not only an accident insurance policy but also a life insurance policy. The insurer argued that the instrument was properly chargeable as an accident insurance policy only. 24 The Stamp Act 1891 (UK), s4 (a) of which was in substance the same as s17 (1), applied. Section 4 (a) is not mentioned in the report and was not, apparently, relied on. At 482 after referring to definitions in the Act of "Policy of insurance" and "Policy of life insurance" the Lord President (Lord Dunedin) said: "……the general scheme of the Stamp Act may be said to charge duties upon different instruments of a certain known character, and if an instrument falls within that character, then the duty that is in the schedule is to be charged upon it, and, in general, no other duty. I can best explain by what I mean by the following example. As your Lordships are very well aware, there is a sixpenny duty for any agreement, but supposing a particular instrument falls under a category that is denoted in the schedule and is stamped with an appropriate stamp under its provisions, nobody ever supposed that you could thereafter go on and say that it must always also be stamped with a sixpenny agreement stamp, because, as a matter of fact, in the instrument there are many things which, taken by themselves, might be said to be, and indeed are, agreements. Accordingly the first thing that I think we have to discover is what is the general character of this instrument before us. As to that, I do not think there can be any doubt. There is no doubt that it is an accident policy, and indeed the Inland Revenue concede that, because they proposed that it should be stamped with a penny stamp. Now, I am not for one moment saying that you might not have upon the same piece of paper some other instrument so tacked on or incorporated that while it was on the same piece of paper, yet it would not lose its distinctive character; and that a company or individual could contract with another person in one deed by which they should effectuate both a policy against accident and also a policy of life insurance, I do not doubt. But the point is, has that been done here? I cannot think of any better test than to take the second so called contract and see if it would stand alone; that is to say, to use the current expression, whether it would stand upon its own feet. Looking at what is said to be the contract of life insurance here, and testing it by that test, I have no hesitation in saying that it would not. The clause which I have read would be a meaningless contract of life insurance if it were not for what had gone before, and accordingly, the result on my mind is this, that that clause does not, in any true sense of the word, constitute a contract of life insurance at all, and that it is merely a stipulation for a reduction of the premiums in certain events." 25 Lord McLaren, who gave separate reasons, said at 483: "If the same policy were to insure a ship against the perils of the sea, and also to insure the fidelity of the master or the supercargo, I should not doubt that these two obligations were separately stampable; but there are, in almost every deed, collateral obligations incidental to the main purpose of the deed, which, if one could conceive of them standing alone, might fall under some other denomination of liability to stamp duty. Now, it follows, therefore, that what we have to consider here is whether there is a separate and independent contract of life insurance, or whether we have merely a provision which may benefit the party during his life, but which is truly incidental. I agree with your Lordship that the latter is the true view of this instrument, and for the reasons which your Lordship has stated. I was specially influenced by this, that the provision upon which the Board of Inland Revenue found is a provision for a return of a proportion of the premiums at a definite age, provided that no claim has previously been made against the company in respect of death, sickness or accident. That condition would have no meaning apart from the main purpose, and therefore I must hold that it is collateral to that purpose, and that it is not intended as a separate and independent obligation."

26 Oceanic submitted that the General Accident Assurance Corporation case should no longer be followed in New South Wales because of the decision of the High Court in Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Limited (1989) 167 CLR 1. That decision turned upon s17 (1) of the Act and the meaning of a clause in a deed of sale of shares whereunder the purchaser was obliged upon completion to pay to the vendor the purchase price for the shares. The deed of sale went on to state that the vendor should on completion deliver to the purchaser transfers of the shares in favour of Pendal Nominees and that Pendal Nominees should hold the shares as nominee for the vendor. The Commissioner charged the document as an agreement for the sale of shares and also a declaration of trust in respect of the shares. 27 At 10 Mason CJ observed that the statutory concept of "distinct matters" had traditionally been associated with the rule enunciated by Martin B in Limmer Asphalt Paving Co v Commissioners of Inland Revenue [1872] LR 7 Ex 211 at 27, namely that an instrument should be stamped for its leading and principal object and that this stamp covered everything accessory to that object. At 11 his Honour said: "However what must be recognised is that s17 (1) now provides the governing rule. The old common law rule, being entirely subservient to the statutory provision, cannot generate a life of its own. The utility of the old rule is limited; it conveys the idea, which conforms to the statutory concept of distinctness, that a provision which is merely accessory or merely ancillary to a particular transaction or obligation embodied in an instrument is not a matter 'distinct' from that transaction or obligation. But, in judging what is merely accessory or merely ancillary, the court must always have regard to the statutory concept itself. The court cannot expand or confine that concept by attributing a narrow or broad operation to what is accessory or ancillary. Once this is acknowledged, as it must be, it is impermissible to characterise an instrument by reference to a single broad purpose or object so that all obligations created by the instrument may be treated as subsidiary or accessory to that object or purpose. Neither the terms of the subsection nor the authorities lend support to such a broad-brush approach. This does not, however, require that two matters which truly form part of the same transaction embodied in a document must necessarily be treated as 'distinct' for the purposes of determining the liability of stamp duty of that document in relation to that transaction."

28 The Chief Justice accepted as correct the approach stated by Sugerman J in Bambro [No 2] Pty Limited v Commissioner of Stamp Duties (1963) SR (NSW) 522 at 527 when his Honour said: "I see no reason for concluding that 'matters' may not be 'distinct' in the sense now under consideration even though in a contractual sense, and in terms of the instrument which embodies them, they are integrated and interlocked as parts of a single larger transaction or bargain or agreement."

29 Brennan and Toohey JJ agreed with the Chief Justice that the two matters dealt with in the term to which I have referred were "distinct" for the purposes of s17 (1) of the Act. Deane and Dawson JJ dissented. See also National Mutual Life Association of Australasia Ltd v Commissioner of State Taxation (WA) (1996) 96 ATC 4615 at 4624.

Part 24 30 In my opinion, the duty payable must be resolved by having regard to the scheme imposed by ss 88B and 88C. Each month a registered person must lodge a return in the approved form. In that return the registered person must show the total amount of all premiums for Class 1 insurance and Class 2 insurance received by or on behalf of the person in the preceding month. While the registered person is not required to show in the return the premiums on life insurance, the person is required to pay to the Chief Commissioner as stamp duty on the return an amount equal to 11.5 per cent of the Class 1 insurance premiums, an amount equal to 2.5 per cent of the total amount of the premiums for Class 2 insurance and: "The amounts determined in accordance with the Second Schedule in respect of the policies of life insurance issued by or on behalf of the person in the preceding month."

31 Though we have not seen them, I would assume in accordance with the findings of Howie AJ which I have set out, that the returns showed the total monthly premiums for Class 1 and for Class 2 insurance separately and Oceanic paid stamp duty on the returns accordingly. Now Oceanic claims that account should be taken of the fact that some of the premiums were "in respect of policies of life insurance issued by or on behalf of Oceanic". The question for the Court is whether this was so. In Commissioner of Stamp Duties v Pendal Nominees Limited Brennan J said at 20-21: "But the purport of the instrument is not conclusive. In the last-mentioned case ( Commissioner of Stamp Duties (Queensland) v Hopkins (1945) 71 CLR 351 at 378), Dixon J adopted the qualifications stated by the second edition of Halsburys Laws of England : '…….but the Court is not bound by the apparent tenour of an instrument, and will decide according to the real nature of the transaction, receiving, if necessary, extrinsic evidence.' "

In a reliance upon this statement Oceanic tendered evidence by an actuary which supported the apportionment of premium referred to in Oceanic's letter of 30 March 1994 to the Chief Commissioner. 32 The actuary's report was dated 23 July 1993 and based on Oceanic's claims and lapse experience between, in the one case, 30 June 1991 and 30 June 1993 and, in the other, 30 June 1992 and 30 June 1993. In a sense, if Oceanic's returns divided the total amount of all premiums for these policies between Class 1 and Class 2 insurance, this is an attempt to re-write history. 33 With due respect I do not think the actuarial material on this basis or any other assists in determining whether, in the language of the Lord President in the General Accident Assurance Corporation case, there was incorporated in either version 1 or version 2 of the RSL Cash Accident Programme a policy of life insurance. Nor do I think s17 (1) assists in determining this. 34 To an extent the determination depends upon impression. In Carlill v Carbolic Smokeball Company [1893] 1 QB 256 the defendant vendor advertised a 100 pound reward to be paid by it "to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions". The defendant argued that this constituted a policy of insurance on the happening of an uncertain event (p258), an argument which Lindley LJ at 261 disposed of by saying: "You have only to look at the advertisement to dismiss that suggestion." 35 It is well established at least since the decision of the High Court in the National Mutual Life Association of Australasia Limited v Federal Commissioner of Taxation (1959) 102 CLR 29 that all forms of endowment policy, that is to say policies whereunder payment is to be made upon the happening of an event contingent upon the duration of human life - in the case of a pure endowment, survival until the maturity date - in the case of a modern endowment, survival to the maturity date or earlier death, are life insurances according to common parlance among persons conversant with insurance; see generally Windeyer J at 42 - 45. Such policies fall easily within the definition in s86 (1) of the Act, being insurance on any event or contingency relating to or depending on a life or lives, that is to say depending either on the extinction of life or its continuance. 36 The only suggestion in the whole of either version 1 or version 2 of the RSL Cash Accident Programme that it is in any part an endowment policy is found beside the description "100% premium refund benefit". The benefit is not expressed to be payable on any event or contingency relating to or depending on a life or lives but upon the policy being maintained in force, in the one case "during your lifetime and throughout the next 10 years", and, in the other, "for a period of 10 years" and no claim for any benefit being made. The contingencies are the continuance of the policy for a period and no claim during the period. The benefit upon the happening of the event or the fulfilment of the conditions is a refund of the premiums, paid for the policy and for the benefits under it, if during that period the insured is accidentally injured or killed. 37 In In re Commonwealth Homes and Investment Company Limited (1943) SASR 211 at 231 Mayo J said of bonds issued by a company and acquired by subscribers in consideration of payment of premiums, that in so far as the bond contracts provided for the payment of a fixed sum to the holder at the date of maturity and for payment or refund of the premiums paid, if death previously occurred, that they were not life policies within the meaning of the Insurance Acts 1932 (Cth). His Honour went on: "Doubtless the refund of premiums is 'payment of money on death', but an undertaking to make that payment, if death occur, does not constitute a policy, or contract, 'insuring' such payment, any more than a condition in a mortgage requiring the mortgagor to repay the principal sum on death of the mortgagee could be so described. To be a 'policy insuring' payment of a sum of money there must be something more."

38 On its face the 100 per cent premium refund benefit amounts to an inducement not to allow the accident policy to lapse and not to make a claim under it. If the insured meets these conditions he or she will receive in retrospect 10 years free accident insurance. The argument that such a provision invests an accident policy with the character of a policy of life insurance uses, impermissibly, the general words of definition of life insurance in an attempt to disguise the true nature of the policy. In my opinion the Chief Commissioner rightly refused Oceanic's application to reduce the amount of duty paid and refund any money which had been paid in respect of the policies for the periods in question.

Order 39 The appeal should be dismissed with costs. 40 BEAZLEY JA: I agree with Sheller JA. 41 FITZGERALD JA: The reasons for judgment of Sheller JA, with which Beazley JA has agreed, permit me to confine my observations. 42 The appellant is an insurance company. At material times, it issued insurance policies It was not disputed that the material contracts were policies of insurance. called "The RSL Cash Accident Programme". Broadly stated, benefits were payable under the material policies if an "accident" as defined caused hospitalisation, loss of use of a limb, loss of sight or death. Provision was also made in the policies for a "100% Premium Refund Benefit". The material clause in one version of the policy was expressed in the following terms: "If this Policy is maintained in force during your lifetime and throughout the next 10 years and no claim for any Benefit is made, we will pay you a lump sum equal to 100% of all Premiums you have paid during such 10-period."

Other versions of the policy used slightly different wording which the parties agree was to relevantly identical effect. 43 At the material time, the stamp duty payable in respect of policies of insurance was governed by Part 3 Division 24 of the Stamp Duties Act 1920 ("the Act") and the Second Schedule headings "POLICIES OF LIFE INSURANCE not being a policy of life insurance", "POLICIES OF LIFE INSURANCE" and "LIFE INSURANCE RIDERS". See also s 4 of the Stamp Duties Act , 1920. By subs 86(1) of the Act, "life insurance" in Part 3 Division 24 and the Second Schedule meant "insurance on a life … or on any event or contingency relating to or depending on a life …". 44 As an insurer, the appellant was required to be registered under s 88A of the Act, and was required by s 88B to lodge monthly returns showing the total amount of all premiums for different classes of insurance received in the preceding month. Subsection 88B(1)(b) required stamp duty to be paid "on the return" . Subsections 88B(1)(b)(iii), (c) and (2) provided: "88B(1) A registered person must … … (b) pay … as stamp duty on the return: … (iii) the amounts determined in accordance with the Second Schedule in respect of the policies of life insurance issued … in the preceding month; and

… (c) in respect of each contract or agreement for life insurance effected … in the preceding month … make out and execute a policy of insurance and endorse on that policy the words 'stamp duty' followed by the serial number issued to the registered person under s88A. (2) A policy of life insurance endorsed in accordance with this section is to be taken to be duly stamped." 45 As earlier noted, it was not disputed that the appellant's "… RSL Cash Accident Programme" contracts were policies of insurance. The "100% Premium Refund Benefit" was an independent component of those policies involving a separate contractual promise by the appellant. Broadly stated, an undertaking by an insurer, in consideration of the payment of premiums, to pay a sum of money on the occurrence of a specified contingency is a contract of insurance. The "100% Premium Refund Benefit" met that description. I doubt whether the reference to a "Refund" and the circumstances that the sum payable on the specified contingency was equivalent to the aggregate of the premiums which had been received by the appellant during the material period and that the appellant's undertaking is dissimilar from common types of insurance are sufficient to deny the "100% Premium Refund Benefit" provision the character of insurance. 46 The respondent's principal submission, which was upheld in the Administrative Law Division, was that a "100% Premium Refund Benefit" was not a policy of life insurance within the meaning of the Act because the appellant's undertaking in that provision was "meaningless" without reference to the other benefits and the premiums payable under the "… RSL Cost Accident Programme" policy and/or the "100% Premium Refund Benefit" was merely "collateral" to the other benefits for which the policy provided. General Accident Assurance Corporation Limited v IRC (1906) 8 SC 477. 47 The appellant's essential response was that a "100% Premium Refund Benefit" was a "distinct matter" within the meaning of subs 17(1) of the Act from the other benefits provided for by the appellant's policies and was not "meaningless" because subs 17(1) looks to the substance, not the form, of "distinct matters" in an instrument, and does not require the notional "separate instruments" which it contemplates to contain only a literal transposition of each "distinct matter" contained in an actual instrument. 48 The respondent submitted that subs 17(1) is immaterial, since it is concerned only with instruments chargeable with duty, and the appellant's policies, although instruments, were not chargeable with duty. Duty payable in respect of such policies was not payable on the policies but on the monthly returns required by subs 88B(1). If I understood the respondent's argument correctly, the significance of that submission was that the "distinctiveness" of the "100% Premium Refund Benefit" for stamp duty purposes does not fall to be decided by reference to the test prescribed by subs 17(1) of the Act Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1. but by reference to the common law test. Limmer Asphalt Paving Co v IRC [1872] LR 7 Ex 211, 217 per Martin B. The tests are different. Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1. 49 The appellant's answer was that its material policies were chargeable with duty in the sense that duty was "charged … upon and in respect of" its policies, Stamp Duties Act 1920, s 4. notwithstanding that it was the monthly returns, not the policies, which were stamped. See also subs 88B(1)(c) and (2). If a "100% Premium Refund Benefit" had been "expressed in a separate instrument", Stamp Duties Act , subs 17(1). (and necessary verbal changes made to give effect to its substance), it would have attracted separate and distinct duty, albeit on "the return" under s 88B, not the instrument. The stamping of the return, not the policy, was merely an "administrative process". 50 Since the Act has been repealed and it is unnecessary to decide those issues, I do not propose to comment on all or any of them. 51 The appellant's entire case was founded on the largely undeveloped premise that a contract in terms of the "100% Premium Refund Benefit", expanded to identify the benefits which must not have been claimed during a material ten year period, was a policy of life insurance within the meaning of the Act because the "insurance" was payable by the appellant "on a life … or on any event or contingency relating to or depending on a life …" within the meaning of the definition of "life insurance" in subs 86(1) of the Act. 52 The common law has long accepted that a policy of insurance which provides for payment by the insurer either on the death of the insured or on his or her survival to or past a nominated date is a policy of life insurance. See, for example, Marac Life Insurance Ltd v Commissioners of Inland Revenue (1986) 1 NZLR 694, 704; NM Superannuation Pty Ltd v Young (1993) 41 FCR 182. It is not presently significant that the "100% Premium Refund Benefit" might not be an endowment policy at common law because the sum payable on the survival of an insured for a ten year period did not exceed the aggregate premiums paid in that period. 53 The respondent did not dispute that, likewise, a policy of insurance which provides for a payment by an insurer on the survival of an insured to or past a nominated date is a policy of life insurance within the meaning of the definition of "life insurance" in the Act. 54 The other members of the Court consider that the contingencies on which the "100% Premium Refund Benefit" was payable were "… the continuance of the policy for a period and no claim during the period" Reasons for judgment of Sheller JA, paragraph 36. . While that is so, I did not understand the parties to dispute that an insured was only entitled to a "100% Premium Refund Benefit" if he or she survived to the end of a material ten year period, so that the contingency on which the appellant became liable to pay its insured related to that extent to his or her survival. The provision with respect to a "100% Premium Refund Benefit", which is set out above, made express reference to the insured's "lifetime" as well as a ten year period, but the drafting is inelegant and the reference to the insured's "lifetime" appears to be surplusage. 55 So far as presently material, the definition of "life insurance" in subs 86(1) of the Act required "insurance on … [an] event or contingency relating to or depending on a life …". 56 The width of the phrase "relating to" is undoubted. Lord Macnaghten stated that "[t]here is no expression more general or far-reaching", IRC v Maple & Co (Paris) Ltd (1908) AC 22, 26. See also Fountain v Alexander (1982) 150 CLR 615, 629; Colakovksi v Telecommunications Corporation (1991) 100 ALR 111; Secretary, Department of Foreign Affairs & Trade v Boswell (1992) 108 ALR 77; PMT Partners Pty Ltd (in liq) v ANPWS (1995) 131 ALR 377, 398. although the addition of the words "or depending on" was presumably intended to give the combined phrase "relating to or depending on" a wider operation than "relating to". The difficulties of construction presented by such language have also been noted. Taylor J observed that "… the expression 'relating to' … is … vague and indefinite …" and "… leaves unspecified the plane upon which the relationship is [to be] sought and identified." Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602, 620. One area of debate has been whether, in particular legislation, a relationship need or need not be "direct" or "direct and immediate". See, for example, Ausfield Pty Ltd v Leyland Motor Corp. of Australia Ltd (No.2) (1977) 14 ALR 457, 460, 462; Re Dingjan; ex p Wagner (1995) 128 ALR 81, 110, 115; Joye v Beach Petroleum NL & Cortans Ltd (in liq) (1996) 137 ALR 506, 514. See also Perlman v Perlman (1984) 51 ALR 317. Overall, the position judicially adopted has been that the operation of the phrase "relating to" is determined by the statutory context and purpose. Butler v Johnston (1984) 55 ALR 265, 268; Hatfield v Health Insurance Commission (1987) 77 ALR 103, 106-107. 57 The critical requirement in the definition of "life insurance" in subs 86(1) of the Act is that there be insurance "on … [an] event or contingency relating to or depending on a life …" (emphasis added). An "event or contingency relating to or depending on a life …", for example, survival to the end of a specified period, must not only be a prerequisite to an insurer's obligation to make payment but must be the "event or contingency" which creates that obligation. 58 While the appellant came under no obligation to pay a "100% Premium Refund Benefit" to an insured who did not survive the material ten year period, an insured's survival for that period was not an "event or contingency" on which the appellant became liable to pay the insured. An insured's survival for that period did not oblige the appellant to pay a "100% Premium Refund Benefit". The "event or contingency" on which that liability arose was the completion of a period of ten years at the end of which the insured not only was still alive but had made no claim for any benefit under the policy in that period. I do not consider that the continuance of the policy "at the end of the material period" or the payment of premiums throughout that period are of present significance. Those are "contingencies" of general application to insurance policies, including life insurance policies. The critical feature of that "event or contingency" was the absence of a claim for a benefit under the policy. 59 In my opinion, such an "event or contingency" would not have been properly described as "relating to or depending on a life" within the meaning of subs 86(1) of the Act. 60 Accordingly, I am of opinion that the "100% Premium Refund Benefit" was not a policy of "life insurance". 61 The appeal should be dismissed, with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.