Commissioner of Stamp Duties (NSW) v Perpetual Trustee Co Ltd [1926] HCA 26; (1926) 38 CLR 272 (27 August 1926)

HIGH COURT OF AUSTRALIA

The Commissioner of Stamp Duties (New South Wales) Appellant; and The Perpetual Trustee Company Limited Respondent.

H C of A

On appeal from the Supreme Court of New South Wales.

27 August 1926

Knox C.J., Isaacs, Gavan Duffy, Rich and Starke JJ.

Flannery K.C. (with him S. A. Thompson and Nicholas), for the appellant.

Jordan, for the respondent.

Flannery K.C., in reply.

The following written judgments were delivered:—

Aug. 27

Knox C.J.,

Gavan Duffy and Starke JJ.

The Stamp Duties Act 1920 of New South Wales as amended by the Act of 1924, sec. 66 (1), enacts as follows: "Subject to the provisions of this Act every conveyance is to be charged with ad valorem duty in respect of the value of the property thereby conveyed." The expression "conveyance" includes a settlement. Sec. 73 (1) (b) of that Act provides that the following instruments are not to be charged with ad valorem duty as conveyances, namely, "a conveyance under which no beneficial interest passes in the property conveyed, or made to a beneficiary by a trustee or other person in a fiduciary capacity under any trust (whether expressed or implied) and not made for valuable consideration."

In this case one Quigley was beneficially entitled to certain real and personal property subject only to a life interest in part of it which was vested in his step-mother. In November 1925 Quigley executed a deed of settlement whereby "he conveyed the property to the Perpetual Trustee Co. in trust for himself for life with certain remainders over in favour of others." The instrument, in our opinion, falls within the provision of sec. 66 (1) and the property thereby conveyed includes the life interest limited to the settlor (Davidson v. Chirnside[1]; Commissioner of Stamp Duties (Q.) v. Chaille[2]).

The learned Judges of the Supreme Court, however, were of opinion that the life interest limited to the settlor was within the exemption contained in sec. 73 (1) (b) of the Act, because it was a beneficial interest that had previously existed and in substance remained unaffected; but this is inaccurate unless the limitation of a life interest to the settlor is regarded as a reservation to himself of that interest out of the property conveyed by him to the trustee upon the trusts of the settlement. Neither in form nor, in our opinion, in substance did the settlor make any such reservation. He granted and assigned unto the trustee the whole of his property, and then proceeded to create new interests including a beneficial interest for himself. He held that interest under the settlement and under no other title. The settlement is what Griffith C.J. termed the charter of his rights and obligations in respect of that interest. Consequently, in our opinion, the judgment of the Supreme Court should be reversed, and the question in par. 9 (2) of the special case answered as follows: The deed of settlement is liable to ad valorem duty on the value of the whole of the property thereby settled.

Isaacs J.

The Commissioner, in my opinion, is entitled to succeed.

The instrument is within sec. 66 (1) of the Stamp Duties Act, as amended. That provision says: "Subject to the provisions of this Act every conveyance is to be charged with ad valorem duty in respect of the value of the property thereby conveyed." The view taken by the Supreme Court was that where and to the extent that an instrument, being a "conveyance," purports to transfer beneficial interests already in substance existing, it is not dutiable, because exempted by sec. 73. This view was rested on sub-sec. (1) (b) of sec. 73, it being thought that otherwise there would be no additional operation of sub-sec. (1) (c). That conclusion was urged before us for the respondent. It does not appear to me to represent accurately the force of those two sub-sections of sec. 73.

In sec. 66 (1) the word "property" is important. It is a word of variable import, depending here either on context or on statutory definition. In this Act it is defined thus: "Property includes 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" (Act No. 16 of 1924, sec. 2). It may, therefore, for the purposes of the Act mean either a tangible object—res—or some intangible right or rights—jura—which exist in relation to the res. Consequently, pursuant to sec. 66 (1), unless some other provision is found in the Act to the contrary, the whole of the "estate and interest" of the settlor in the real and personal property dealt with by the settlement is the "property" conveyed, and therefore dutiable ad valorem. Henceforth the settlor's source of title and measure of rights are found in the settlement.

Par. (b) of sub-sec. 1 of sec. 73 refers, in my opinion, to a conveyance that either does not purport to transfer a beneficial interest at all, or, if it does, is made by a person in a recognized fiduciary position under a trust in favour of the transferee. Obviously that provision does not include the present instrument.

With respect to the next paragraph, par. (c), a different class of instrument is at all events primarily and mainly intended. That paragraph contemplates some instrument by which the beneficial interest purports to pass or to be admitted to have passed, and which is made, not by a trustee properly so called but by some one otherwise bound, or thinking himself bound, to execute it in favour of the transferee as an acknowledgement of an existing right.

The settlement is consequently not relieved from the prima facie liability created by sec. 66 (1), and so the appeal should be allowed.

Rich J.

I agree that the appeal should be allowed.

Appeal allowed. Order appealed from discharged. Questions answered:—(1) Yes. (2) On the full value of the whole of the property thereby settled. (3) £504, exclusive of fines. Respondent to pay costs in Supreme Court and of this appeal.

Solicitor for the appellant, J. V. Tillett, Crown Solicitor for New South Wales.

Solicitors for the respondent, Davenport & Mawby.

[1] [1908] HCA 65; (1908) 7 C.L.R. 324.

[2] [1924] HCA 24; (1924) 35 C.L.R. 166.