JUDGMENT OF: Gleeson CJ Handley JA Sheppard AJA

* Respondent: I V Knight, Crown Solicitor's Office

STAMP DUTIES - loan security - advance of money - forbearance

STAMP DUTIES - mortgage - grant on consideration of transfer of property

PRIME WHEAT ASSOCIATION LTD & ANOR v CHIEF COMMISSIONER OF STAMP DUTIES

STAMP DUTIES - loan security -advance of money - forbearance

STAMP DUTIES - mortgage - grant on consideration of transfer of property

The New South Wales Government agreed to sell its shares in NSW Grain Corporation Holdings Ltd. Under the share sale agreement the beneficial interest in the shares was to pass upon completion but the balance of the purchase price was payable over 20 years by instalments with interest. The share sale agreement bound the purchaser to grant various mortgages to secure payment of the balance of the purchase money. The Commissioner assessed the sale agreement as an agreement for sale and also for ad valorem duty as a loan security. The assessment of ad valorem duty as a loan security was upheld on appeal. On further appeal:

HELD: (Allowing the appeal): (1) The share sale agreement was not a loan security as it did not secure the repayment of money. The agreement provided a form of financial accommodation, but there was no loan of money to be repaid. Rabone v Deane [1915] HCA 78; (1915) 20 CLR 636; Handevel Proprietary Ltd v Comptroller of Stamps (Vic) [1985] HCA 73; (1985) 157 CLR 177 and Chow Yoong Hong v Choong Fah Rubber Manufactory [1962] AC 209 applied. (2) The debt arose under the agreement and was only ever payable in accordance with its terms. Accordingly there was no forbearance by the creditor to require payment. (3) Per Handley JA, Sheppard AJA, Gleeson CJ dissenting: The mortgages were loan securities because they were granted in consideration of the conveyance or transfer of property within para (a) of the definition of mortgage in s 83(1). (4) As there had been no advance of money, the mortgages were not liable to ad valorem duty under s 84(3) but only to the fixed duty of $5.

(3) Declare that the share mortgage and the real estate mortgage referred to in the cross-claim are each liable to a fixed duty of $5.

(4) Order that the balance of the duty and any fine paid under the assessment be repaid to the appellant together with interest in accordance with the statute.

(5) The respondent to pay the appellant's costs of the proceedings in the Administrative Law Division.

PRIME WHEAT ASSOCIATION LTD & ANOR v CHIEF COMMISSIONER OF STAMP DUTIES

GLEESON CJ: This appeal raises issues as to the meaning and effect of certain provisions of Division 21 of Part 3 of the Stamp Duties Act 1920, which deals with loan securities.

There are three relevant instruments: a Share Sale Agreement; a Share Mortgage; and a Real Property Mortgage. It is common ground that the first of those three instruments attracted liability for duty as an agreement for the sale of shares. Such duty has been assessed and paid. However, the Chief Commissioner also contends, and Dunford J at first instance held, that the same instrument also attracted liability for duty as a loan security. The amount of such duty was assessed at $435,941. On that basis the second and third instruments were to be stamped as collateral securities, the duty being $5 in each case. Alternatively, the Chief Commissioner contends, and the appellants deny, that if the first instrument is not also a loan security, then the second and third instruments attracted liability to ad valorem duty as loan securities. Dunford J found it unnecessary to decide that, but expressed the view that, if it had been necessary to decide it, the issue should have been resolved in favour of the Commissioner.

The appellants submit that none of the three instruments attracted liability to duty as a loan security. Alternatively, they argue that, if the first instrument is not a loan security, but the second and third instruments are loan securities, they only attract duty in the sum of $5.

A stamp duty is a tax upon instruments, not upon transactions (Minister of Stamps v Townend [1909] AC 633 at 639). The characterisation of an instrument for the purpose of the Stamp Duties Act may require an understanding of the transaction from which the instrument emanates. Nevertheless, what is to be determined is the legal nature and effect of the instrument in question. The principal criticism which the appellants make of the reasoning of Dunford J is that he appears to have allowed irrelevant considerations of economic equivalence to affect his reasoning.

Another principle is that duty becomes payable immediately upon the first execution of an instrument and liability is determined at that point (Stamp Duties Act, 1920, ss5, 38). This, it is submitted, appears to have been overlooked by Dunford J at certain points in his judgment.

It is against that background that it is necessary to consider the transaction, and the three instruments, in question.

As part of a process of privatisation, the Crown in right of the State of New South Wales agreed to sell to the appellants (it is unnecessary to distinguish between them) the Crown's shares in NSW Grain Corporation Holdings Limited (NSWGC). The amount payable for the shares was made up of three elements: what was described as the "purchase price" of $90 million; what was described as "additional purchase price", being the present value, up to a maximum of $20 million, of additional annual payments based upon grain tonnages received; and interest on the purchase price and additional purchase price at a specified rate over the period of the financial accommodation given to the purchases (twenty years).

The Share Sale Agreement, which effected the sale of shares, recited:

"B. The Vendor has agreed to sell the Shares to the Purchaser and the Purchaser has agreed to purchase the Shares from the Vendor and the Vendor is to provide financial accommodation to the Purchaser on the terms outlined below".

The instrument was dated 4 September 1992. The completion date was 30 September 1992. Beneficial ownership of the shares in NSWGC was to pass to the Purchaser on completion. However, payment for the shares was to be made by instalments over twenty years. A deposit of $1 million, which was payable on the date of the agreement, was to be deemed, on completion, to have been received in part payment of the purchase price. The remainder of the consideration payable for the shares (purchase price, additional purchase price and interest) was to be paid in specified instalments over twenty years.

There were a number of conditions precedent to completion. They included the making of a certain proclamation, relevant to privatisation, under the New South Wales Grain Corporation Holdings Act 1992, the furnishing of evidence of certain matters, and the execution and delivery of certain securities, including the Share Mortgage and the Real Property Mortgage, which were to secure the indebtedness resulting from the financial accommodation described above.

The first issue in the appeal concerns the application of the provisions of Division 21 of Part 3 of the Act to that instrument.

The securities called for by the Share Sale Agreement included the Share Mortgage, which obliged the appellants to deposit with the Crown the certificates to title to, and transfers of, the shares in NSWGC, and which granted an equitable mortgage to the Crown to secure payment of the secured moneys. This was an "all moneys" security. The term "secured moneys" meant all moneys and damages which the appellants were or became liable to pay the Crown on any account whatever, including, but not limited to, the purchase price and the additional purchase price.

The securities called for also included a Real Property Mortgage, which was a mortgage by the appellants of certain real estate owned by them to secure payment of the secured moneys. The expression "secured moneys" had the same meaning as in the Share Mortgage.

There is also an issue in the appeal concerning the application of the provisions of Division 21 of Part 3 of the Act to those two instruments.

Section 4 and the Second Schedule of the Act impose duty on loan securities.

"'Advance' includes the provision or obtaining of funds by way of financial accommodation.

`Debenture' includes debenture stock, bonds, notes and any other document evidencing or acknowledging a debt owed by a corporation in respect of money that is, or may be, deposited with, or lent to, the corporation, whether or not payment of the debt is secured by a charge on property of the corporation, but does not include: ............

(e) a document, not being an acknowledgment of indebtedness of a corporation in respect of money that is deposited with or lent to the corporation, that does not create a debt.

(a) funds provided by means of a loan or funds provided or obtained by means of a bill facility; and

(b) funds provided under any other obligation except an obligation imposed by a lease or a hiring arrangement within the meaning of section 74D.

(b) money paid for or on account of or on behalf of or at the request of any person; and

(c) a forbearance to require payment of money owing on any account whatever; and

(d) any transaction (whatever its terms or form) which in substance effects a loan of money.

(a) a mortgage or debenture executed in New South Wales, ......

`Mortgage' includes, without limiting the meaning of the expression in section 3(1) of this Act: ......

(a) a security by way of mortgage or charge given in consideration of the conveyance or transfer of any estate or interest in any real or personal property,

(d) any agreement, contract or covenant (being an agreement, contract or covenant relating to documents of title or accompanied with the deposit of any documents of title or instruments creating a charge on any property) for making a mortgage or any such other security, transfer or conveyance of any estate or interest in real or personal property whatsoever comprised in such documents, or for pledging or charging any such property as a security;"

"'Mortgage' includes a security by way of mortgage or charge:

(a) for the payment of any definite and certain sum of money advanced or lent at the time or previously due or owing, or forborne to be paid, being payable; and

(b) for the repayment of money to be thereafter lent, advanced or paid, or which may become due upon an account current together with any sum already advanced or due, or without, as the case may be."

"(2) A loan security for the payment or repayment of money to be lent, advanced, or paid, or which may become due upon an account current either with or without money previously due (not being a mortgage otherwise chargeable with duty as a loan security) is to be stamped, where the total amount secured or to be ultimately recoverable is limited to a definite and certain sum of money (whether or not it is expressed to be so limited), with the same duty as a loan security for that total amount.

(3) If the total amount secured or to be ultimately recoverable by or under a loan security is not expressed (whether in the loan security or otherwise) to be limited to a definite and certain sum of money, the loan security is to be stamped with duty of $5 and, if an advance, or the total or an advance and one or more additional advances made under or secured by the loan security, exceeds $16,000, additional duty of $4 for every $1,000 or fractional remaining part of $1,000 of the total amounts advanced under or secured by the loan security in excess of $16,000 shall be payable."

The primary basis upon which Dunford J held that the Share Sale Agreement attracted liability to duty as a loan security was that it was a debenture. In reaching that conclusion Dunford J said that it was necessary to consider whether there was a debt owing by the purchasers of the shares to the vendor in respect of money lent to the purchasers. He answered that question in the affirmative.

Dunford J observed that, under the Share Sale Agreement, title to the shares was to pass to the purchasers on completion, and the continuing obligations of the purchasers to pay the balance of purchase price, in addition to the additional purchase price, were to be secured by mortgages of the shares in NSWGC and other assets. With the passing of title the purchaser became liable for the whole of the purchase price, and a present debt was established which was payable over a future period; "debitum in praesenti, solvendum in futuro".

Referring to McDonald v Dennys Lascelles Limited [1933] HCA 25; (1933) 48 CLR 457, Gasparin v Federal Commissioner of Taxation [1994] FCA 1057; (1994) 121 ALR 179 at 182, and Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 at 528, Dunford J said that the transaction in question was substantially in the nature of what is sometimes referred to as a mortgage back transaction, in which the contract is executed, title and the right of possession pass to the purchaser, and the vendor has no further obligations to perform under the contract.

In Stern v McArthur the High Court was concerned with an instalment purchase contract under which title did not pass to the purchasers until all the instalments had been paid. For the purpose of considering principles of law relating to relief against forfeiture it was observed, at the page to which Dunford J referred, that the contract "was essentially an arrangement whereby the appellants undertook to finance the respondents' purchase upon the security of the land".

There is no doubt, in the present case, that the transaction in question was one under which the vendor of the shares provided financial accommodation to the purchasers, or that the instrument in question made provision for such financial accommodation. It does not follow, however, the form of financial accommodation agreed between the parties was by way of loan. To describe the transaction as being substantially one which involved a mortgage back to the vendor does not provide an answer to the critical questions in the case, and, as was submitted on behalf of the appellants, carries a risk of resolving the issue by reference to considerations of economic equivalence rather than by reference to an accurate characterisation of the instrument under consideration.

The definition of debenture was altered following the decisions in Burns Philp Trustee Co Ltd v Commissioner for Stamp Duties (NSW) (1983) 83 ATC 4477 and Handevel Proprietary Ltd v Comptroller of Stamps (Vic) [1985] HCA 73; (1985) 157 CLR 177. It is, in certain respects, both wider and narrower than the previous definition. It is reasonable to infer that the new definition was intended to pick up the reference, at p196 of the judgment in Handevel, to a document which makes provision for the repayment of a loan to be made thereafter. Nevertheless, the relationship between the reference in the definition to money that may be lent to a corporation and the language of the exclusionary provision in paragraph (e) is unclear, and the existence of the conditions precedent to completion in the present case gives rise to a problem that was not addressed by Dunford J. However, I find it unnecessary to resolve that problem because I am unable to accept the primary basis of his Honour's reasoning on this issue.

Dunford J, as was noted earlier, identified as the main issue the question whether there was, or was to be, a debt owing by the purchasers of the shares in NSWGC to the vendor in respect of money "that is, or may be, ... lent" to the purchasers. That, subject to the fulfilment of the conditions precedent, there was to be a debt is clear. That the debt was to be part of an arrangement for financial accommodation is also clear. But where is the loan?

Not all forms of financial accommodation are loans. (See, for example, Chow Yoong Hong v Choong Fah Rubber Manufactory [1962] AC 209). The fact that the transaction in question could (subject, perhaps, to constraints of which we are unaware) have been set up in a form involving a loan of money from the vendor to the purchasers is beside the point. The parties, (including, be it noted, the Crown), chose to give their arrangements a certain form, and that form did not involve a loan of money.

Dunford J held that each of paragraphs (a), (c) and (d) of the definition of "loan" applied to the present case. In my view none of them fits the case.

Here there was no advance of money. There was, as required by the language of the definition of advance, financial accommodation, but that is not sufficient. An agreement for sale which allows credit to a purchaser does not, on that account alone, involve an advance of money. (Rabone v Deane [1915] HCA 78; (1915) 20 CLR 636 at 640). Dunford J said that what was involved was an advance "because the transfer of title without waiting for the actual receipt of the full purchase price constituted a form of `financial accommodation'." However, it did not constitute a form of financial accommodation that involved an advance of money; what was involved was a granting of time to pay. Ultimately, there was a debt, but no loan.

There was here no forbearance to require payment of money owing. The meaning of forbearance in a context such as the present was explained in Tozer Kemsley & Millbourn (Australasia) Pty Ltd v Point (1961) 78 WN (NSW) 250 at 258. There was from the outset (leaving to one side the matter of the conditions precedent) an agreement between the parties as to time and amounts in which the purchase price was to be paid. The vendor did not exercise any forbearance. The vendor simply observed the mutually binding contractual obligations.

Paragraph (d) of the definition of loan does not have a meaning which renders everything else in the definition superfluous. The definition had its origin in money lending legislation. There is ample authority to establish that the paragraph does not entitle a court to disregard the legal nature and effect of the instrument in question, or to treat all forms of financial accommodation as loans. (See Pannam, The Law of Money Lenders in Australia and New Zealand, pp30-31, Hill, Stamp Duties, 1996 pp1844-1855). A sale on terms giving the purchaser time to pay is not a disguised loan. The essence of a loan is an obligation of repayment. Here what was involved on the part of the purchasers was payment, not repayment (cf Handevel Pty Ltd v Comptroller of Stamps (Vic), above, 157 CLR at 193-4).

The Share Sale Agreement was not a debenture. However, Dunford J held it was also a mortgage, and it is necessary to address that issue.

The basis upon which the Chief Commissioner contended, and Dunford J accepted, that the agreement was a mortgage was that it fell within paragraph (d) of the definition of mortgage in s83(1) being "an agreement ... accompanied with the deposit of (some) documents of title ... for making a mortgage". This, it was said, was because the various securities contemplated by the agreement were to be executed and delivered as a condition precedent to completion.

Dunford J correctly accepted that the agreement did not fall within the definition of mortgage in s3, because it did not itself constitute a security by way of mortgage or charge. However, he said that because of what is provided about the execution and delivery of securities it satisfied the definition in s83(1) in the manner outlined above.

The principle that the question is to be considered as at the date of execution of the instrument is of importance here, especially having regard to the conditions precedent to completion.

I cannot accept that this instrument was, at the relevant time, "accompanied with the deposit of ... documents of title". It was not.

In holding that the Share Sale Agreement was "an agreement ... for making a mortgage", Dunford J made no reference to Lucia Heights Pty Ltd v Comptroller of Stamps (Vic) [1985] VicRp 35; (1985) 16 ATR 326, which held that an agreement which is not specifically enforceable, and which does not create an equitable mortgage, does not fall within the relevant part of the definition.

The instrument did not satisfy either aspect of the language of paragraph (d) relied upon by Dunford J.

The Share Sale Agreement was not a mortgage within the meaning of the relevant statutory provisions.

For those reasons the appellants are correct in contending that the Share Sale Agreement did not attract liability to duty as a loan security.

Dunford J reasoned as follows. Each of these instruments fell within the definition of "mortgage" in s3. They were therefore both loan securities. Because they were "all moneys" securities they fell within s84(3). However, for the reasons earlier given there had been, on completion of the Share Sale Agreement, an advance by way of financial accommodation in the sum of $89 million. Therefore, if the Share Sale Agreement had not itself attracted liability for loan security duty, the Share Mortgage would have attracted liability for duty in the sum of $335,941 and the (collateral) Real Property Mortgage would have attracted liability in the sum of $5.

This reasoning is, at a number of points, influenced by his Honour's view that what was involved here was a loan or an advance of money by the vendor to the purchasers, and an obligation of repayment; a view with which, as has been indicated, I am unable to agree. Furthermore, the reasoning does not appear to take account of the fact that the two Mortgages were executed and delivered prior to completion of the Share Sale Agreement, and that liability to duty is to be assessed at date of execution.

There was here no money advanced or lent, or forborne, and no obligation of repayment of money to be lent, advanced or paid. Dunford J's decision that the Mortgages fell within the definition in s3 depended upon his view of the substance of the transaction, and cannot survive the rejection of that view.

The Chief Commissioner, without filing a Notice of Contention, has also placed reliance on paragraph (a) of the definition of mortgage in s83(1).

This argument was only put very briefly. In the respondent's written submissions it was left as a one-line assertion. The reason for this emerged when the Court sought amplification of the argument. As the argument for the respondent was put, unless the case involved an advance or advances, success on this point would only give rise to liability for duty in the sum of $5. However, if the case involved an advance, then the respondent would rely primarily on the earlier argument.

Counsel for the respondent contended that the Share Mortgage fell within paragraph (a). (He did not explain why, if that be correct, the Real Property Mortgage did not also fall within the paragraph). I will return to that contention below. He then accepted that, if that be so, the amount of duty was to be determined by reference to s84(3). (He disclaimed independent reliance on s4 and the Second Schedule). Since the instrument was an all-moneys mortgage, liability to ad valorem duty depended upon there being an advance or additional advances. (He accepted that the instrument, when executed, attracted only $5 duty, but said it should have been upstamped on completion of the share sale transaction). For the reasons earlier given, I do not consider that this transaction involved any advance.

Nor do I accept the first step in the argument, which was that the Share Mortgage fell within paragraph (a) of the definition of "mortgage" in s83.

In the Share Sale Agreement, the consideration for the transfer of title to the NSWGC shares was said to be the purchase price, and additional purchase price. That gave rise to an indebtedness to the Crown, which was the subject of the financial accommodation earlier described. In the Share Mortgage, the consideration for the security was said to be the financial accommodation provided by the vendor to the purchasers. The security was not expressed to be given in consideration of the transfer of the shares. The consideration for the transfer of the shares was the price to be paid for them. The security was given in consideration for the financial accommodation extended by the vendor.

We are here concerned with a tax upon an instrument, and it is the legal effect and character of the instrument which is to be examined. The transfer of the NSWGC shares was part of the transaction in the course of which the Share Mortgage was executed. Without it, the mortgage would have been neither necessary nor effective. In a commercial sense, it may be said that the quid pro quo of the transfer on shares was not merely the agreement to pay for them but also the agreement to secure the debt by a mortgage over the shares as well as a mortgage over other property. However, cases decided in the context of s66 of the Act, concerning the adequacy of consideration for the purpose of assessing duty or conveyances do not seem to me to require that, in the present context, a court should look for a consideration beyond that expressed in the instrument or instruments in question (cf Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28; (1948) 77 CLR 143, Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW) [1958] HCA 22; (1958) 100 CLR 392).

It is therefore unnecessary to address the further question, which would otherwise have arisen, of the relationship between paragraph (a) of the definition of "mortgage" in s83 and the definition of "mortgage" in s3 (into which, for reasons already given, the present case does not fall).

3 The decision of the respondent disallowing the first appellant's Notice of Objection to Assessment dated 8 March 1993 is set aside.

4 Declare that no loan security duty is payable under Division 21 of Part 3 of the Stamp Duties Act 1920 (the Act) on the Share Sale Agreement dated 4 September 1992 referred to in the Notice of Objection.

5 Declare that the Share Mortgage dated 30 September 1992 between the first appellant as Mortgagor and the State of New South Wales as Mortgagee over all the issued shares in the capital of Grain Services Australia Limited is not a "loan security" for the purposes of Division 21 of Part 3 of the Act.

6 Declare that the Mortgage dated 30 September 1992 between the second appellant as mortgagor and the State of New South Wales as mortgagee, over the whole of the land the subject of Folio Identifier 10/81965 is not a "loan security" for the purposes of Division 21 of Part 3 of the Act.

7 Order that the respondent repay to the appellants any duty paid by them as duty on any loan security constituted one or other of the above instruments together with interest thereon at the prescribed rate under section 124C of the Act.

8 The respondent is to pay the costs of the appellants of the proceedings at first instance and of this appeal.

PRIME WHEAT ASSOCIATION LTD & ANOR v CHIEF COMMISSIONER OF STAMP DUTIES

HANDLEY JA: In this appeal I have had the advantage of reading the judgment of the Chief Justice in draft form. I agree with his judgment on all issues, except that raised under para (a) of the definition of Mortgage in s 83 (1). This provides:

"Mortgage includes, without limiting the meaning of that expression in s 3 (1) of this Act:

(a) A security by way of mortgage or charge given in consideration of the conveyance or transfer of any estate or interest in any real or personal property; ...".

Under the agreement for sale, the purchaser was entitled to a transfer of the shares on completion (cl 7.2 (1)(a) and (b)) in favour of its nominated transferee, Grain Services Australia Ltd (GSAL), without payment of the balance of the purchase price. Clause 7.5 provided that, subject to the securities agreed upon by the parties, unencumbered legal and beneficial title to the shares should pass to GSAL on the effective date defined as 1 October 1992, or such other date as the parties might agree.

The agreement for sale bound the purchaser, on completion, to grant or procure the grant to the vendor of various securities. These included mortgages over a number of freehold and leasehold properties owned by GrainCorp, and its interest in a licence from the Maritime Services Board (the "Key Property Interests" cl 1.1). The relevant provision was cl 10.1, which provided:

"To secure the full performance of the Purchaser under this Agreement and otherwise, the Purchaser shall grant the Vendor (and where appropriate procure the grant of) the following securities as from completion ... :

(2) A first priority mortgage over GSAL's shareholding in GrainCorp in the form annexed as "K";

(4) First priority registered mortgages over the Key Property Interests in the forms respectively annexed as "M", "N", "O", and "P" together with the insertion of full title particulars;

The real estate mortgages and the share mortgage secured payment to the Vendor of the purchase price with other monies. Clause 2.1 of the real estate mortgages provided:

"The Mortgagor has entered into this Deed for valuable consideration from the Mortgagee and receipt of the consideration is acknowledged".

"B. The Mortgagee has agreed to provide certain financial accommodation to the Debtors in consideration of which the Mortgagor has agreed to provide this Deed in favour of the Mortgagee".

"The Mortgagor has entered into this Deed for valuable consideration from the Mortgagee and receipt of the consideration is acknowledged".

The question is whether the real estate mortgages and the share mortgage were given "in consideration of" the transfer of the shares. The mortgages do not refer in terms to such a consideration, but this is not conclusive. Extrinsic evidence is admissible to prove the existence of consideration in addition to that referred to in a deed. This was established in Clifford v Turrell (1841) 1 Y & C [1841] EngR 1212; (62 ER 826) where Knight Bruce V.C. said, at 148-9, (830):

"It is clear, even in cases where the Statute of Frauds does not apply, that the rules of law may exclude parol evidence where a written instrument stands in competition with it; but it has long been settled that it is not within any rule of this nature to adduce evidence of a consideration additional to what is stated in the written instrument ... the rule is that where there is one consideration stated in the deed, you may prove any other consideration which existed, not in contradiction to the instrument; and it is not in contradiction to the instrument to prove a larger consideration than that which is stated".

This passage was approved in Frith v Frith [1906] AC 254 at 258-9. These mortgages were granted pursuant to the share sale agreement, and the Court can refer to that agreement to identify the consideration for the mortgages.

The share sale agreement recited that the Vendor "is to provide financial accommodation to the purchaser on the terms" in that agreement which included the right to pay the balance of the purchase price with interest by instalments over 20 years (cll 3.1, 3.5).

The share sale agreement did not provide for an ordinary terms sale because title was to be transferred on completion after only the deposit had been paid. The financial accommodation provided was not merely time to pay the balance of the purchase money, but time to pay after transfer of the title to the shares which gave control of GrainCorp.

Because this consideration appears on the face of the share sale agreement which created the obligation to grant these mortgages, there is no infringement of the principle that stamp duty is a tax on documents and not transactions. See Commissioner of Stamp Duties v Hopkins [1945] HCA 14; (1945) 71 CLR 351.

The meaning of consideration in stamp duty legislation was considered in The Crown v The Bullfinch Pty Ltd [1912] HCA 71; (1912) 15 CLR 443 (consideration for conveyance on sale) and in its context in s 66 of the NSW Act in Archibald Howie Pty Ltd v Commissioner of Stamp Duties [1948] HCA 28; (1948) 77 CLR 143 and Davis Investments Pty Ltd v Commissioner of Stamp Duties [1958] HCA 22; (1958) 100 CLR 392. In the latter cases the court had to determine whether a conveyance or transfer had been made upon a consideration in money or money's worth which was not less than the unencumbered value of the property conveyed. Such a question commonly arises in relation to conveyances or transfers executed "in effectuation of the contractual rights created by (an) agreement". See Davis Investments at 420 per Taylor J.

"In the context I think that the word `consideration' should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts. The difference is perhaps not very material because the consideration must be in money or money's worth. But in the law of simple contracts it is involved with offer and acceptance: indeed properly understood it is perhaps merely a consequence or aspect of offer and acceptance. Under s 66 the consideration is rather the money or value passing which moves the conveyance or transfer".

The context in para (a) is concerned with conveyancing rather than simple contracts and favours the wider meaning of consideration. The relevant mortgages were given pursuant to or "in effectuation of" rights created by the share sale agreement, but this would be normal and should not take the case outside para (a). Ad hoc transactions falling within the paragraph would be rare. The existence of other consideration does not matter because the consideration for a mortgage would always include the mortgage debt itself.

If a mortgage back is given to the vendor for part of the "purchase price" which is deemed to have been paid (e.g. by an acknowledgment of receipt in a transfer or conveyance) that mortgage would be a loan security as defined.

Where, as in the present case, the purchase money is not paid on settlement, but title is transferred and security taken for the unpaid balance of the purchase money, what "moves" the mortgage is the transfer of title without payment of the purchase price.

Such a view tends to give the Act a consistent operation, whether the vendor takes a true mortgage back having been (notionally) paid in full or, as in this case, takes a mortgage for the unpaid balance of the purchase price.

In my opinion therefore these mortgages were mortgages as defined in par (a) (and therefore loan securities) and fall within s 84 (3). They are not liable for ad valorem duty under that provision because, as the Chief Justice explains, there was no "advance of money" to the appellant. The Commissioner did not seek to support an assessment of ad valorem duty by reliance upon s 4 and the text of the heading "Loan Security" in the Second Schedule. In these circumstances the Court, in my opinion, should allow the appeal against the assessment of ad valorem duty and substitute assessments on the share mortgage and the real estate mortgage referred to in the cross-claim for the fixed duty of $5 provided for in s 84 (3) and the Second Schedule.

(3) Declare that the share mortgage and the real estate mortgage referred to in the cross-claim are each liable to a fixed duty of $5.

(4) Order that the balance of the duty and any fine paid under the assessment be repaid to the appellant together with interest in accordance with the statute.

(5) The respondent to pay the appellant's costs of the proceedings in the Administrative Law Division.

SHEPPARD AJA: In this matter I have had the advantage of reading the judgments to be delivered by the other members of the Court. Except in one respect, I am in agreement with the judgment of the Chief Justice. My disagreement arises in relation to the question whether the share mortgage and the mortgage of real estate are mortgages for the purposes of the definition of "mortgage" in s.83(1)(a) of the Stamp Duties Act 1920. I have reached the conclusion that each of the instruments in question is such a mortgage. My reasons for this conclusion are as follows.

Clause 10.1 of the share sale agreement provides that, to secure the full performance of the purchaser, securities specified in the clause will be granted or procured by the purchaser. The securities include a first priority mortgage over the purchaser's shareholding in Grains Services Australia Limited and first priority registered mortgages over what are described as "Key Property Interests" in the forms annexed as M, N, O and P to the share sale agreement. The Commissioner's cross-claim specifies the two instruments claimed to be mortgages as a share mortgage dated 30 September 1992 and a mortgage under the Real Property Act 1900 dated 30 September 1992 from NSW Grain Corporation Limited to the Crown. Both the share mortgage and the Real Property Act mortgage refer to consideration in clause 2.1 of each security. Each clause provides that the mortgagor has entered into the deed (or the mortgage of real estate) for valuable consideration from the mortgagee. Receipt of the consideration is acknowledged.

Section 83(1)(a) of the Stamp Duties Act defines "mortgage" as a security by way of mortgage or charge given in consideration of the conveyance or transfer of any estate or interest in any real or personal property. The definition is inclusive and does not limit the meaning of the expression "mortgage" in s.3(1) of the Act. Nevertheless, nothing turns on the definition not being an exhaustive one nor on its not limiting the meaning of "mortgage" in s.3. Accordingly, the question is whether the two securities were given in consideration of the conveyance or transfer of an estate or interest in real or personal property.

The two mortgages are part of the documentation of the overall transaction. The various documents make up a whole as a result of which the intended transaction is effected. The central document is the share sale agreement. On ordinary principles, the consideration referred to in clause 2.1 of each of the mortgages is to be identified by reference to the share sale agreement, particularly clause 10. If one reads clause 2.1 of each of the mortgages instructed by the provisions of clause 10.1 of the share sale agreement, it becomes clear that, in order to secure the full performance of the purchaser under the agreement, the purchaser is to grant or procure the securities including the two mortgages. The purpose of the mortgages is thus to secure the performance of the contract by the purchaser. The purchaser is the purchaser of shares from the vendor: see clause 2.1 of the share sale agreement. In this way each of the mortgages is a security given in consideration of the conveyance or transfer of an estate or interest in personal property, namely the shares. Each mortgage is, accordingly, within the provision. Each thus becomes a "Loan security" within the meaning of s.83(1), and s.84(3) becomes applicable. No ad valorem duty is payable under s.83(1)(a) because the total amount secured is not expressed. The amount of duty on each security is a fixed duty of $5.00.

In the result I would agree with the orders proposed by Handley JA.