Tec Desert Pty Ltd & Anor v Commissioner of State Revenue [2006] WASC 300

Tec Desert Pty Ltd & Anor v Commissioner of State Revenue [2006] WASC 300 - WASC 2006 case summary — Zoe

[311]

(a) the relevant item of property shall hereby be deemed to not to have been included ab initio in the Sale Assets and therefore not included in the sale and purchase under this Agreement, the Purchase Price shall be recalculated ab initio by excluding the value allocated to that item of property in this Agreement, and the amount so excluded from the Purchase Price shall (subject to this clause 3.4) be refundable by the Vendor to the Purchaser;

(b) there shall hereby be deemed to have been added ab initio to the Licence Fees payable in respect of such one or more of the Licence Agreements as is appropriate, having regard to the location of that item of property, an amount calculated in accordance with clause 2.2(b) of the relevant licence, being an amount that is intended to ensure that, calculated as at the date of the relevant Roll Over, the present value of all Licence Fees thereafter payable by the Purchaser to the Vendor under all Licence Agreements (including both once only and permanent adjustments thereto effected as a consequence of that Roll Over), when added to the Purchase Price adjusted in accordance with clause 3.4(a) in respect of that Roll Over, equals the aggregate of the amounts specified in clauses 3.2(c)(i) and 3.2(d).

(c) the Vendor may, at any time prior to refunding to the Purchaser the amount determined under clause 3.4(a) as the amount by which the Purchaser Price is to be reduced, and in addition to any other rights the Vendor may then have to require the pre-payment of the whole or any part of the Licence Fees payable in respect any of the Licence Agreements, require the Purchaser to pre-pay the present value, calculated as at the date of the relevant Roll Over, of all additional Licence Fees payable under the relevant licence as a consequence of that Roll Over, provided that, for the avoidance of doubt, and to the intent that this clause 3.4(c) shall prevail over the relevant licence despite any provision in this Agreement or the relevant licence to the contrary, if the amount of the prepayment so calculated is different from the amount refundable by the Vendor to the Purchaser under clause 3.4(a), the amount of the prepayment shall, by operation of this clause 3.4(c), be adjusted so as to be equal to the amount refundable under clause 3.4(a); and

(d) any amounts payable by one Party to the other under this clause 3.4 may be set off against any amounts owed to that Party by the other under this clause 3.4."

[403]

"An instrument is a settlement because it creates trusts and contains limitations which restrict or affect alienation and transmission, according to the course provided by law for estates in fee simple or a full ownership ... It is true that trusts cannot come into operation until the trustee obtains title to a control of the trust property. But the vesting of the trust property in the trustee may be regarded as a condition of the operation of the settlement, rather than as an essential characteristic of the 'settling' of the property. Apparently that was the view taken in Davidson v Chirnside [(1908) [1908] HCA 65; 7 CLR 324]. But, however that may be, the condition was fulfilled on 22nd May 1907 before the indenture was executed by the settlor. When the settlor executed the instrument, he confirmed and authenticated his intention to create the trusts amounting to a settlement and, because the property had then been vested in the trustee, the settlement was operative.

To the objection that this view involves looking outside the instrument, it may be answered that to ascertain the operation of the instrument some facts must always be taken into account, as, for instance, the existence and identity of the parties, and of the objects and subjects referred to. The very sweeping statements on this matter in Gatty v Fry [(1877) LR 2 Ex D 265] go too far. Some years ago I had occasion to examine the subject with which that case deals, and I adhere to what I then said: Edwards, Dunlop & Co. Ltd. v. Harvey [(1927) VLR 37], at pp. 47-54.

The rule is very carefully stated in par. 955 of the second edition of Halsbury's Laws of England, vol. 28, p. 447, as follows: 'The question whether an instrument is duly stamped, or as to what stamp is required, is in general determined by what appears upon the face of it to be its legal operation when first executed so as to be capable of that operation, but the Court is not bound by the apparent tenor of an instrument, and will decide according to the real nature of the transaction, receiving, if necessary, extrinsic evidence.'

Examples will be found in the authorities referred to in the notes. But, in any event, it seems to follow inevitably from the authorities to which I have referred that it is proper to look outside the instrument assessed as a settlement to ascertain whether the trust property has been vested in the trustee."

[423]

"Apart from the above line of reasoning there is another way of reaching the same conclusion accepted by all the judges in the Full Court in Ex parte Henry; Re Comr of Stamp Duties (NSW), supra. It is to be found primarily in the judgment of Brereton J at 1094-1095. After referring to Littlewoods Mail Order Stores Ltd v IR Comrs [1961] Ch 210, his Honour adopted Lord Simon's definition of 'sale' from Benjamin 8th Ed p 2 where it is said to involve the transfer 'of the absolute or general property in a thing'. What was granted in that case, it is said, was less than the absolute or general property in two senses namely it was not the whole of the grantor's interest either in point of duration or in point of content. His Honour concluded that the transaction was not a sale because the whole of the grantor's estate in the thing did not pass. A mortgage or a bill of sale or a lease is not a sale. That is the exact position in this case for here Menchetti has not conveyed to the respondent the whole of his interest in the quarry area but obviously retains the reversion upon the expiry of the licence. Furthermore, there is I think in the very provisions of s 63 support for this view as it will be noted that it is worded to include 'a transfer or assignment of a lease of any land'. On the definition of 'sale' accepted by Lord Simon the transfer or assignment of a lease would be the transfer of the lessee's absolute or general property in the lease and that is why s 63 makes express mention of a transfer or assignment of the lease, and because the lease itself is not a conveyance on sale, the Act makes express provision in ss 77-79 (incl) in respect of the stamp duty to be imposed on leases, where there, and in the schedule, a distinction is drawn between stamp duty on the amount payable as rent compared to stamp duty payable in respect of the consideration for the granting of the lease in the form of a fine or premium. That distinction I think might also be relevant to the distinction made above between the consideration payable for the conveyance of the profit a prendre compared to the consideration payable in respect of the limestone and lime sands quarried and carried away."

[427]

"Section 19 of the Act provides that any instrument containing or relating to several distinct matters is to be separately and distinctly charged, as if it were a separate instrument with duty in respect of each of the matters. Section 75 provides that any conveyance or transfer operating as a voluntary disposition inter vivos shall be chargeable with stamp duty at the rate provided in the second schedule under the heading 'Settlement, Deed of, or Deed of Gift'. By subs (2)(a) it is further provided that any conveyance or transfer (not being a disposition made in favour of the purchaser in good faith and for valuable consideration) shall be deemed a conveyance or transfer operating as a voluntary disposition inter vivos, and the consideration for any conveyance or transfer shall not for this purpose be deemed to be valuable consideration when the Commissioner is of opinion that by reason of the inadequacy of the sum paid as consideration, or other circumstances, the conveyance or transfer confers a substantial benefit on the person to whom the property is conveyed or transferred. In Limmer Asphalte Paving Co Ltd v IR Comrs (1872) LR 7 Exch 211 at 217 it was said in the judgment of the court, 'There is no better established rule as regard stamp duty than that all that is required is, that the instrument should be stamped for its leading and principal object, and that this stamp covers everything accessory to this object'. Section 19 does not in any way alter that rule, for all it is directed to is an instrument in which there are several distinct matters, that is to say, not one principal object but several principal objects. In the High Court in [Henry (supra), per] Owen J at 339, when considering the application of this established rule to the deed in that case, remarked that the right of user granted by the deed seemed to be ancillary to the right to win coal. Kitto J at 330 also considered what was the principal object, if any, of the deed and reached the conclusion that there was only one principal object. In my view there is again nothing to distinguish of significance this agreement with the deed in question in Henry's case and I reach the same conclusion therefore, that the principal object of this agreement was to win limestone and lime sands and the right of user of the quarrying area was ancillary to that purpose. It would therefore follow that the provisions of s 75 have no application. But even if the conveyance of the right of user did amount to a voluntary conveyance under s 75 it would not, I think, be chargeable with duty on the reasoning of Taylor J at 336 in Henry's case that, though the duty chargeable would be calculated upon the value of the property conveyed, the right of user granted could have no independent value for the Commissioner could not look to the probate amount payable in respect of the limestone and lime sands won as constituting value for the conveyance."

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Judgment (535 paragraphs)

Tec Desert Pty Ltd & Anor v Commissioner of State Revenue [2006] WASC 300 (21 December 2006)

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Legislation Cited (13)

Cases Cited (21)