Seepctew v "om in

High Court of Australia|1929-07-01|Before: Dixon JJ

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Stamp Duties (N.S.W.) - Agreement from racing club granting sole right to sell 44. ©, ov A,

refreshments on course - Implied use of club's premises - Neither " property" nor " conveyance " - Executory contract - " Saleof . . . right not before in existence"

Stamp Duties Act 1920-1924 (N.S.W.) (No. 47 of 1920 - No. 32 of 1924), secs. 3, 41 (1), 65, 71.

club, all the refreshments, eatables and drinkables to be sold or disposed Gavan Diy,

of within two reserves during race meetings to be held on the club's course

for a period of three years. All plant, &c,, was to be supplied by S.,

' and it was implied that he should have the use of the club's refreshment rooms. It was a term of the agreement that no subletting or assignment of interest would under any circumstances be allowed unless written permission be granted for same by the chairman of the club. The right was reserved by the club to enter and view the refreshment rooms at any time and to take such steps as appeared necessary from time to time to secure the proper management and control of the business. Y., with two other persons, entered into a joint and several bond with the club to secure the due perform- ance by S. of the contract. S, died, and by an agreement between Y, and the club it was arranged that Y. should carry out the terms of the original agreement in the place of S., the currency thereof being extended for a further three years, Held, that the agreement was not within sec. 41 (1) or sec. 65 of the Stamp Duties Act 1920-1924 (N.S.W.) because it was an executory contract giving rise to a mere personal right of selling refreshments with ancillary stipulations, Such a right was not " property " within the meaning of the Act, and therefore

Nor was the agreement within sec. 71, as there was neither a sale nor within the meaning of that section.

Decision of the Supreme Court of New South Wales (Full Court) affirme

Appear from the Supreme Court of New South Wales. A special case, which was substantially as follows, was stat the Commissioner of Stamp Duties for the opinion of the Suprem Court under sec. 124 of the Stamp Duties Act 1920-1924 (N.S.W,):

The Australian Jockey Club, an unincorporated body, owner in terms of sec. 9 of the Australian Jockey Club Act certain land situated at Warwick Farm near Sydney, and 1 the Warwick Farm Racecourse and thereon holds meetings fi purpose of horse-racing. 3
In the month of July 1925 the Club invited tenders for th right of selling refreshments in luncheon, oyster and tea rooms an bars within the grandstand reserve and the St. Leger reserve o said racecourse for the balance of the period of three years en on 31st December 1927.
On 20th July 1925 Charles Smith (now deceased) tendered f such right, and on 24th July 1925 the committee of the r Charles William Cropper, secretary of the Club, accepted tender.
Ad valorem conveyance duty at the rate of 15s. for every el and part of £100 of the consideration therefor was duly paid respect of the contract constituted by the said invitation to tende the said tender and acceptance.
By bond dated 4th August 1925 the above-named Smith (now deceased), Richard Gaut (now deceased) and Henry Yeend became, pursuant to the said contract, joint and severally bound in the sum of £500 to the chairman of t committee of the Club by way of security for the performance the said Charles Smith of the said contract.
Richard Gaut died on 10th April 1927 and probate of his | will was duly granted on 19th September 1927 by this Honouw bl Court in its probate jurisdiction to Perpetual Trustee Co. Ltd. a1 Rosanna Yeend.

Charles Smith died on 11th December 1927 and probate of his H- 0: or A-

last will was duly granted on 19th January 1928 by this Honourable Court in its probate jurisdiction to Georgina Evelyn Smith, the sole executrix and sole beneficiary therein named.

By agreement dated Ist March 1928 made between Charles Henry Yeend of the first part, Edgar Davies and Rosanna Yeend of the second part, Georgina Evelyn Smith of the third part and the chairman of the committee of the above-named Club of the fourth part, and intended to be annexed to and read with the said bond of 4th August 1925, it was recited that the said contract referred to in par. 4, which it had been agreed should be extended for three years from 1st January 1928, had been transferred to and was then vested in Charles Henry Yeend as contractor (as Georgina Evelyn Smith did thereby acknowledge), and it was further recited that it had been agreed between the parties thereto that Charles Henry Yeend should continue to carry out the contract in the place and stead of Charles Smith.

The said agreement dated 1st March 1928 stated that it was agreed that the term of the said contract referred to in par. 4 be extended for the further term of three years from Ist January 1928 upon such and the same terms and conditions and subject to the same provisions and agreements as were by the said bond and contract expressed and contained, and so that all such terms, conditions, provisions and agreements should remain in force and take effect in like manner as if the said contract had been originally entered into by Charles Henry Yeend as contractor for the full term expiring on 31st December 1930; and Charles Henry Yeend covenanted with the chairman of the Australian Jockey Club to carry out the said contract upon the terms and conditions set out therein.

The sum agreed to be paid for the right of selling refreshments in the said grandstand reserve and St. Leger reserve at the race meetings held in each year of the term of three years created by the agreement dated Ist March 1928 was £300 per meeting. In the year 1928 the number of race meetings held at Warwick Farm Racecourse was nine.

Ww Coxnms- SIONER OF Sramp Dorres (N.S.W.) v.

The Commissioner claimed that the agreement dated March 1928 was liable to ad valorem conveyance duty at the 15s. for every £100 and also for any part of £100 of the consid therefor, which he claimed to be the sum of £8,100, and a: duty accordingly at the sum of £60 15s.

Charles Henry Yeend duly paid the said sum of £60 15 under protest and, having duly paid the sum of £20 as security. costs, called upon the Commissioner to state this case.

Charles Henry Yeend claims that the agreement of Ist M 1928 is liable to the fixed duty of Is. only.

The questions for the decision of the Court were as follows - (1) Is the said agreement liable to ad valorem conveyance du (2) If not, is the said agreement liable to any other and,

what duty ? (3) How are the costs of this case to be borne and paid ?

The agreement made between the Australian Jockey Club at Charles Smith (the predecessor of Yeend) referred to in pars. 2 andi of the case stated provided that the successful tenderer was to hay the sole right of providing all refreshments, eatables or drinkal to be sold or disposed of within the grandstand reserve and St. Leger reserve during the meetings (approximately eight p annum) of the Club on the Warwick Farm Racecourse or any othe1 club to which the committee might sub-let the course for the of the agreement. The successful tenderer was to provide all p required for the business; eatables and drinkables were to be of the best description and in sufficient quantities, and were to b supplied to the public at prices imposed by the Club and as se out in the schedule. The Club reserved the right to enter and vie the refreshment rooms at any time, and to take such steps 3 appeared necessary from time to time to secure the proper ment and control of the business. It was also a term of the agre that no sub-letting or assignment of interest would, in any circum stances, be allowed, unless written permission be granted thereto b} the chairman for the time being of the Club. }

The Full Court answered question 1 in the negative, and qi 2 by saying that 1s. duty was sufficient. q

From that decision the Commissioner now, by special leave, appealed to the High Court.

Other material facts appear in the judgments hereunder.

Thompson, for the appellant. The matter is governed by sec. 41 (1) of the Stamp Duties Act 1920-1924. The only case where stamp duty is not payable is when the agreement is for the sale of goods, wares and merchandise. Here the transaction is a sale of rights, what is offered is a tender, and is " property" within the definition of the Act, which is the widest that could possibly be made and corresponds with the definition of "property" as appearing in the Conveyancing Act 1919 (N.S.W.). Although the licence granted in 'Conservators of River Thames v. Commissioners of Inland Revenue (1) was held not to be " property," that case is distinguishable because, unlike the New South Wales Act, the English Act contains no definition of " property," which doubtless accounts for the decision of the Court. The agreement between the parties here confers the right to assign, the right to oceupy and the right to sell, and, therefore, must be " property " within the meaning of the Act. Very specific property was involved in Limmer Asphalte Paving Co. v. Commissioners of Inland Revenue (2). Ifthe transaction does not come within sec. 41 of the Act, then, alternatively, it comes within sec. 71, as being the creation of a right not previously in existence within the meaning of that section. The right to enter land and sell goods is a right in the nature of property and is valuable. As to what is " property," see Encyclopedia of Forms and Precedents, 2nd ed., vol. xtt., p. 662.

Lamb K.C. (with him Alroy Cohen), for the respondent. It is obvious that some limitation must be placed on the wide words of sec. 65, and it is for the Court to say what that limitation should be. There is no difference between this particular contract and any ordinary catering contract, that is to say, a contract to cater for a dinner at a private house. The limitations should be those imposed by the Supreme Court. As to whether the right is an interest in land and therefore " property," see Frank Warr & Co. v. London

(1) (1886) 18 Q.B.D. 279. (2) (1872) LR. 7 Ex, 211,

County Council (1). Sec. 71 has no bearing on the matter excep to the form of the document. [He was stopped.]

Knox C.J., Gavan Durry, Ricn anp Drxon JJ. The questi raised by this appeal is whether an agreement in writing, bety a caterer and a racing club, relating to the supply of refreshm to the public, is liable to the ad valorem stamp duty specified by Second Schedule of the Stamp Duties Act 1920-1924 for " convey of any property." The agreement provided that the caterer, is the respondent, should have the sole right of supplying "all t] refreshments, eatables and drinkables to be sold or disposed of wit the grandstand reserve and the St. Leger reserve" during meetings to be held upon the Club's course for a period of th

years. The caterer was required to supply his own plant a provide the public with food and drink of the best quality sufficient quantities at prices specified in the agreement. It isimpl that he shall have the use of the Club's refreshment rooms. Th agreement regulates his duties in respect of some details, a provides that no "sub-letting or assignment of interest will ind any circumstances be allowed unless written permission be gi ante for same by the chairman " of the Club. It is quite clear that agreement does not entitle the caterer to obtain exclusive p of any part of the Club's premises for any time, however shot Besides undertaking the duty of providing for the public, the cater agreed to pay to the Club the sum of £300 in respect of every race' The appellant, the Commissioner of Stamp Duties, claims 1 ad valorem duty appropriate to a conveyance under one or 0 three distinct provisions of the Stamp Duties Act upon which ! telies. His first contention is that when sec. 65, which describes wha word "conveyance" shall include, is interpreted by the defini 0 of the word " property " contained in sec. 3, it applies to the writ

agreement in question. Sec. 3 defines the word "property" to H.C. or A.

include "real and personal property, and any estate or interest in 108,

any property real or personal, and any debt, and any thing in action, - Comans- and any other right or interest": a definition which was adopted "Que Durres ; : (N.S.W.) word " conveyance "' to include a catalogue of instruments " whereby wah EEND.

from the Conveyancing Act 1919. Sec. 65 defines the meaning of the

any property. . .is . . . vested in or accrues to any person." Applying to this provision the definition of " property," the Commis- sioner maintains that the agreement between the caterer and the

(Club is an instrument whereby a right or interest in New South Wales is vested in or accrues to the caterer. We think a safe way of ascertaining the meaning of sec. 65, as affected by the definition of " property " in sec. 3, is to read and interpret the section as if that definition were written at length into it. So reading it, sec. 65 would run: For the purposes of this Act the expression " convey- ance" includes any transfer, lease, assignment, exchange, appoint- ment, settlement, surrender, release, foreclosure, disclaimer, declaration of trust, and every other instrument (except a will), and every decree or order of any Court whereby any property in New South Wales including real and personal property, and any = « estate or interest in any property real or personal, and any debt, and any thing in action, and any other right or interest is transferred to or vested in or accrues to any person. Wide as must be the operation of a provision thus expressed, it seems unnatural to apply 'its words to a document which does no more than describe mutual promises although they result in contractual rights. In this case the document expresses an ordinary simple contract, executory on both sides. Each contracting party incurred obligations to the other. A "right" to the performance of those obligations was, of course, created in the other, subject to his readiness and willingness to perform his own obligations. But the section relates to instru- ments by which the right is vested in or accrues to a person. This

expression is appropriate enough to proprietary rights, but not one which may aptly be applied to the right to enforce an executory contract contained in the document. If this provision bore the wide meaning which the argument attributes to it, secs. 41 (1) and 71 would be superfluous. It is worth notice that, while decrees

and orders are included in the definition of " conveyance," judg are not. A decree or an order may vest property as that expr is ordinarily. understood. But a judgment ordinarily create right - a right to enforce the payment of a sum of money by person. The right is correlative to an obligation - a pe obligation. Such rights arise out of many relations, but it not be usual, when the relation is established by a document speak of such a right as one which was vested in or accrued | person by the instrument. Indeed, an inspection of the s

other than " conveyance " there specified might be brought the phrase if it received so extensive a meaning. We think ¢ if sec. 65 is read with the definition of " property " written ini no one would naturally understand the words " instrument whei any property in New South Wales including any right or i is vested in or accrues to any person" to apply to the m contractual right of a party to an executory contract in w Tt seems unnecessary and undesirable to attempt to formulate limitations which must be placed upon the generality of the la contained in the definition of " property." It is enough to say sec. 65 cannot by its aid be extended to such a contract as we have described.

The Commissioner's second contention was that the ins fell within sec. 41 (1). This sub-section provides:

Wales shall be charged with the same ad valorem duty to be pai by the purchaser or person to whom the property is agreed to 1 conveyed as if it were a conveyance of the property agreed to sold or conveyed and shall be stamped accordingly." provision relates to instruments, which do not themselves 0] to sell or "convey" "property" within the meaning given t that word by sec. 65, but which contemplate a future s conveyance. The contract between the Club and the cate contains nothing in the nature of an agreement for a

"conveyance," however large a meaning be given to the "conveyance." The words " every agreement for the sale. . + any property in New South Wales" although read as includi ga

43 C.L.R.] OF AUSTRALIA. 243 right or interest, appear to us quite inappropriate to describe the H.C. or A. contract between the Club and the caterer. The caterer's rights ee

would not ordinarily be described as rights arising under anagreement Comans- for their sale to him, nor would he be described as a purchaser. beret

The Commissioner relied for his third contention upon sec. 71. That section is as follows: '' Where upon the sale of any annuity or other right not before in existence such annuity or other right is

not created by actual grant or conveyance, but is only secured by Ga n Buity a.

bond, warrant of attorney, covenant, contract, or otherwise, the PJ.

bond or other instrument, or some one of such instruments, if there is more than one, is to be charged with the same duty as a convey- ance." The critical words in this provision are " where upon the sale of any . . . other right not before in existence." We think "sale of a right " is an expression which could not be properly used to describe the promises made by the Club, although part of the consideration for which they were given was a promise to pay sums of money. There was neither a sale, nor a right, within the meaning of the section.

For these reasons we think that the judgment of the Supreme

Court was right and that the appeal should be dismissed.

Isaacs J. The question for determination is whether an agreement dated 1st March 1928, and made between the Australian Jockey Club and the respondent, is liable to ad valorem conveyance duty or other duty under the Stamp Duties Act 1920 as amended by the Act of 1924.

By force of sec. 4 and of the Second Schedule to the Act, duty is chargeable in respect of every conveyance of any property. If otherwise than on sale or exchange, the duty is ad valorem simply ; if on sale or exchange, then the duty is primarily on the amount or value of the consideration, and if the value of the property conveyed is greater than the consideration, then - apart from shares - the duty is ad valorem. It is thus seen that there are two essentials: (1) conveyance and (2) property. The argument satisfies me that it is necessary to consider separately the two conceptions although the word " conveyance " connotes the presence of " property."

fF F r i] ' iJ ' ' : '' ' ' J ' : ' ' . ' f J Fe ' ' ft e F t PF F F ' ' Li F F ' . f F r ' Pe a e fe Fr i re F .' ij F F a E a Ff Fr & iz E

As to conveyance, sec. 65 is the main section, and by i term "conveyance" includes every instrument (except a whereby any property in New South Wales is " transferred t vested in or accrues to" any person. If an instrument answe description so far stated, it is a "conveyance." There supplementary but independent provision contained in s whereby agreements for sale or conveyance of property in South Wales are taxable as if they were conveyances. fundamental difference between an agreement to convey al conveyance is referred to by Lord Sumner in delivering the ment of the Privy Council in Stamps Commissioners v. Queei Meat Export Co. (1). Sec. 71 is another supplementary independent section applying to the "sale" of a non-pre- right, not created by actual grant or conveyance, but, of cour necessarily created in some way and only "secured" by sot collateral instrument. There the collateral instrument of s is chargeable with duty as if it were a conveyance. Sees. 41 71 are precautionary provisions to prevent mere departure from #l form of a conveyance enabling one to escape from the Act. neither of these sections is applicable here, because when te the terms of sec. 65 and Lord Sumner's judgment (2), the agt dated Ist March 1928, the instrument under consideration, isin f a "conveyance" within the meaning of the Act. No fu other instrument of title was contemplated or indeed possible to in the respondent the right sold to him. The only further le element necessary to constitute it a "conveyance" within t meaning of sec. 65 is that the right it vests should be " propert in New South Wales.

The crucial question then is: Is that subject matter " pro within the meaning of the Act? The definition is very wide, it "includes real and personal property, and any estate or int in any property real or personal, and any debt, and any thinginac and any other right or interest." From the fact that " propert is the matter defined, that the last word is "interest," and from careful inspection of the terms of the Second Schedule under t

(1) (1917) A.C, 624, at p. 628. (2) (1917) A.C., at p. 628.

light given by the use of the word "right" in sec. 71, it is clear to me that the word "right "' - which is the word relied on by the Commissioner in this case - must be confined to a right in the nature of property as ordinarily understood. Indeed, Mr. Thompson, in his courageous argument, frankly admitted so much. But he contended that the right of catering, to which the respondent became entitled under the agreement, was in the nature of property. 'The test in every such case must be whether the "right" which is either "transferred to" or "vested in" or "accrues to" the alleged taxpayer, is a personal right or a property right. It is not, in my opinion, material whether it is created by the agreement or not. That is not the standard. Sec. 71 confirms that view. The standard is the inherent nature of the right that is the immediate subject matter of the agreement. That subject matter may in a given case pre-exist or it may not, the only essentials are that it is " property" and that it is transferred to, vested in or accrues to some person. If it is not in itself property, attempted assignment carries it no further. Assignability is a consequence, not a test (see Sports and General Press Agency Ltd. v. "" Our Dogs" Publishing Co. (1). Without going back very far in the history of the matter, there are some very recent and quite decisive authorities. One is King y. David Allen & Sons, Billposting, Ltd. (2). A, in July 1913, made a contract with B, permitting the latter to affix posters and advertisements to the flank walls of a picture house to be erected on his property by a company to be formed for four years, at a rent of £12 a year, A agreeing not to permit any other person during the period to affix any advertisement to the walls. The company was formed, took a lease of the premises from A, with full knowledge of the agreement, and even agreed with him to take an assignment of the billposting agreement - but no actual assignment was executed, and the lease did not refer to the billposting agreement. The company entered into possession, built the picture-palace, and refused permission to B to post advertisements. The House of Lords had to consider whether the right conferred by A on B was

personal only or was an estate or interest in the land. Tt was to be "nothing but a personal obligation." That depended the construction of the agreement, and, as Lord Buckmaster | said (1), the matter does not depend on the terms attached to parties as "licensor and licensee " or as "lessor and lessee." substance of the agreement determines the result. On the ot} hand, the cited case of Sports and General Press Agency Ltd. v. Dogs'? Publishing Co. (2) in the Court of Appeal shows tha exclusive right of taking photographs is not a form of propert known to the law. And then there is the case of Joel v. Int national Circus and Christmas Fair (3) before the Court of Ap (Lord Sterndale M.R. and Warrington and Scrutton L.JJ.). 4 person applied for and obtained space in the fair at 6d. a frontage, and the nature of the agreement was construed by Eve as the primary Judge, and afterwards by the Court of Appes one giving the applicant an interest in the property. The of Appeal were of opinion that it was merely upon the true co: tion of the contract that the case depended, the claim being for: injunction in the way of specific performance. They disting (inter alia) Frank Warr v. London County Council (4) and oth authorities.

No doubt in the case of a personal right an injunction may | granted to prevent a breach of contract, but not in the wa specific performance (James Jones & Sons Ltd. v. Earl of Tankervill (5) ). The distinction is clear between the personal right and property right. The latter alone falls within the statute in h There is nothing intermediate, and ultimately the question di on construction of the instrument as to which category it co under. :

The agreement of 1st March 1928 confers a mere personal gl

tight which " vests in" or "accrues to" the respondents by th instrument. But since that right is not in the nature of proper!

but in the same category as King v. David Allen &

(1) (1916) 2 A.C., at p. 59. (3) (1920) 124 LT. 459. (2) (1917) 2 K.B. 125, (4) (1904) 1 K.B. 713. (5) (1909) 2 Ch. 440, at p. 443.

and the respondent succeeds. The appeal should be dismissed.

_ *Sec, 102 of the Stamp Duties Act 1920-1924 (N.S.W.) provides that " For 'the of the assessment and Payment of death duty . . . the estate of a deceased person shall be fleomed to include and consist of the

wing classes of property: - . . . (2)... (6) Any property comprised in

PERPETUAL TRUSTEE COMPANY LIMITED Responpenr. (SAXTON'S CASE.)

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

any gift made by the deceased within three years before hisdeath . . . includ- ing any money paid or other property conveyed or transferred by the deceased within such period in pursuance of a covenant or agreement made at any time by him without full consideration in money or money's-worth" &.

Billposting, Lid. (1) - the case is outside the definition of property, H.C. or A.

Stamp Duties (N.S.W.) - Dutiable estate - Gift made within three years before death 1. C. or A.

Shares in company issued to members of deceased's family - Payment therefor by company's cheque debited to deceased's account in company's books - Subsequent transfer of such debits to accounts of said members of deceased's family in said books - Retransfer thereof to deceased's said account within three years July 30, 31. of his death - Pro rata extinguishment of debts by pre-existing credit balance - Stamp Duties Act 1920-1924 (N.S.W.) (No. 47 of 1920 - No. 32 of 1924), sec.

S., who died on 30th September 1926, was a large shareholder in, and also Isaacs, Starke

if + " " ud Di Jd. life managing director of, a limited company which by its articles conferred

At a glance

Court

Decision date

Before

Source

Judgment (75 paragraphs)

Parties

Cases Cited (1)