Commissioner of Stamp Duties (NSW) v Henry [1964] HCA 4; (1964) 114 CLR 322 (25 February 1964)

HIGH COURT OF AUSTRALIA

COMMISSIONER OF STAMP DUTIES (N.S.W.) v. HENRY [1964] HCA 4; (1964) 114 CLR 322

Stamp Duties (N.S.W.)

High Court of Australia
Dixon C.J.(1), McTiernan(2), Kitto(3), Taylor(4) and Owen(5) JJ.

CATCHWORDS

Stamp Duties (N.S.W.) - Deed - Nature - Conveyance - Lease - Profit a prendre - Grant of right to mine together with use of plant, buildings and other facilities - Fee per ton payable for use of plant etc. - Royalty per ton of coal won - Liability of deed to stamp duty - Stamp Duties Act, 1920-1958 (N.S.W.), ss. 65, 66, 76, 79, Second Schedule.

HEARING

Sydney, 1963, April 10, 18;
Melbourne, 1964, February 25. 25:2:1964
APPEAL from the Supreme Court of New South Wales.

DECISION

1964, February 25.
The following written judgments were delivered: -
DIXON C.J. This is an appeal by special leave by the Commissioner of Stamp Wales determining certain questions raised by a case stated. The decision of the Supreme Court was against an assessment by the Commissioner of the stamp duty upon an instrument. The Court decided that the instrument should not be assessed as a conveyance on sale ad valorem or otherwise, but as a lease at the rate provided by par. (6) of the duties under the heading of "Lease", set out in the Second Schedule, viz. 1 pound 10s. 0d. The instrument in question is a deed made on 3rd February 1959, between the Vale of Clwydd Colliery Ltd. on the one part, and, of the other part, certain persons, five in number, who are described as, jointly and severally, the members of Brown's Gap Colliery Syndicate. (at p326)

2. The deed recites that the company is the holder in fee simple of certain land and the holder of certain leases, comprised in the Vale of Clwydd, wherein lie certain seams of coal, and that the company is the owner of certain pits, tunnels, mine workings, buildings, plant, machinery and stores which are upon the said land and that the syndicate has applied to the company for permission to get, work and win coal from the said land. The deed witnesses that the company thereby grants to the syndicate a licence to operate the mine and to use and operate the pits, tunnels, mine workings, buildings, plant and machinery now thereon for the purpose of getting, working and winning of coal. The deed states that the licence shall be for an initial term of five years, commencing on 1st January 1958. The deed goes on that the syndicate acknowledges having taken delivery of the buildings and certain other things listed in a schedule and that the syndicate should have custody thereof as bailee for the company, with the right of use for the purposes aforesaid. Next, it was provided that the syndicate should pay the company for all stores and pit timber used by it and upon the termination of the licence should deliver the residue to the company and pay for any deficiency. (at p326)

3. Then followed cl. 4, the chief part of which is as follows: "For the use of the facilities aforesaid and for the use of the company's land pits tunnels mine workings, buildings, plant and machinery the syndicate shall pay to the company fortnightly a fee at the rate of three shillings per ton and in addition a royalty of two shillings per ton for each and every ton of coal won by the syndicate from the said land and such fee and royalty shall be cumulative from fortnight to fortnight during the term of this licence and any extension thereof. The syndicate shall keep proper and accurate records of all coal won and shall render to the company fortnightly a return showing the production tonnage with payment appropriate to the amount of licence fee and royalty aforesaid payable to the company." (at p326)

4. Clause 5 imposed upon the syndicate duties incurred under the law by a person working a mine, including the payment of workers' compensation insurances, excise duty, pay-roll tax, rates and so on. (at p327)

5. There is a provision directed towards the continuance of the rights and obligations of the syndicate, nothwithstanding the death of a member. No explanation appears for the separation of the tonnage rate, five shillings, resulting from cl. 4 into a fee of three shillings per ton, and in addition a royalty of two shillings per ton. Notwithstanding the arguments of Mr. Stuckey and the use sought to be made of s. 65, I am unable to adopt the view that the deed is itself a conveyance on sale or the disposition of a profit a prendre. It must be steadily borne in mind that we are concerned with the liability to duty of the deed itself, and as at the time of execution. What this deed does is to confer a right for a period to work a coal mine as a going concern for a consideration consisting of five shillings a ton of the coal won, together with the reimbursements of some minor costs. A lease it may be under the provisions of the Stamp Duties Act, but it is not a conveyance, and there is no divisible grant of a profit a prendre. Section 79 (2) of the Stamp Duties Act says that where there is no possible means of discovering what is the maximum value of the consideration dealt with under a lease, then the duty payable in respect of such lease shall be a fixed sum of 1 pound 10s. 0d. in addition to the duty chargeable in respect of the rent and of so much of the consideration as is capable of being valued. Here there is no rent reserved and no consideration capable of being valued. The amount payable in respect of coal won is quite another matter. The syndicate are obviously working miners and the like, and the coal is their return. Sub-section (1) of s. 79 speaks of consideration for a lease consisting of a royalty payable, either in money or in goods, or any consideration other than a fixed sum of money. It appears to me that, however the result is reached, the conclusion of the Supreme Court is right. I would therefore dismiss the appeal. (at p327)

MCTIERNAN J. In my opinion the questions should be answered in the manner stated in the judgment of Owen J. (at p327)

KITTO J. This appeal arises out of a difference of opinion between the Commissioner of Stamp Duties and a syndicate as to the amount of duty payable under the provisions of the Stamp Duties Act, 1920- 1958 (N.S.W.) on a deed made on 3rd February 1959 between a company called Vale of Clwydd Colliery Limited of the one part and the members of the syndicate of the other part. The deed recited that the company was the registered proprietor of a parcel of land wherein lay certain seams of coal, and that it was the owner of certain pits, tunnels, mine workings, buildings, plant, machinery and stores on the land. It further recited that the syndicate had applied to the company for permission to get, work and win coal from the land. It then witnessed that the company thereby granted to the syndicate what was described as a licence to operate a certain mine on the land (shown on a plan annexed) and to use and operate the pits, tunnels, mine workings, buildings, plant and machinery then thereon for the purpose of the getting, working and mining of coal therefrom. (at p328)

2. The licence was granted for a term of five years commencing on 1st January 1958, with an option of renewal by the syndicate for a further five years. It was expressed to be determinable in certain events, and the company was to have the right at all times to enter on the land for any purposes other than those of the winning of coal. The syndicate acknowledged having taken delivery of the buildings, plant, machinery, stores, pit timber and other materials listed in a schedule, and was given the custody thereof as bailee for the company with the right of use for the purposes previously mentioned. The syndicate bound itself to pay the company for all stores and pit timber used by it from time to time during the term of the licence, agreeing that at the expiration or sooner determination of the licence it would deliver the residue to the company and pay for any deficiency. (at p328)

3. The principal provision of the deed as to payments to be made by the syndicate was that "for the use of the facilities aforesaid and for the use of the company's land pits tunnels mine workings buildings plant and machinery" the syndicate should pay to the company fortnightly a fee at the rate of three shillings per ton and in addition a royalty of two shillings per ton for each and every ton of coal won by the syndicate from the land. (at p328)

4. It will be noticed that the deed reserved no dead rent and provided for no payment as consideration for the grant of the rights it conferred as distinguished from the exercise of those rights. The only payment to be made to the company was the sum of five shillings for each ton of coal which the syndicate should win from the land. Why the sum was divided into two parts is not made clear; but what is clear is that the "fee" of three shillings per ton and the "royalty" of two shillings per ton, both to be paid by reference to the amount of coal won, were both for the use of "the facilities aforesaid" and of the land, pits, tunnels, mine workings, buildings, plant and machinery, all of which the lease granted "for the purpose of the getting working and winning of coal" from the land. It does not seem possible to draw any legal distinction between the "fee" and the "royalty". The whole five shillings per ton was to form the company's compensation for the enjoyment by the syndicate of the rights granted to it. They may be analysed into a miscellany of rights: rights to enter and traverse delimited portions of the company's land, to operate the already-opened mine, to extract coal therefrom, and for these purposes to make use of certain fixtures and chattels on the land. But the deed wrapped them all up together, described the exercise of them all as the "use" of facilities and of property, and bound the syndicate to pay the company for the use a sum measured by the weight of the coal the syndicate should win from the land. (at p329)

5. It is a possible conclusion from the terms of the deed, the character of the property it dealt with and the nature of the purpose which it contemplated the syndicate's pursuing, that the intention was to grant the syndicate not a mere profit a prendre but the exclusive possession of the land (or some part of it) for the agreed period. If so, it was a lease, in the common law sense of the word. But the point need not be decided, for the Stamp Duties Act defines "lease" for its own purposes to include inter alia any instrument (not being an instrument liable to ad valorem duty as a conveyance) whereby a right to use any property in New South Wales for any purpose whatever is conferred on or acquired by any person. The expression "a right to use . . . property . . . in New South Wales for any purpose whatever" would be too narrowly construed if it were confined to uses which leave property itself undiminished. It is at least wide enough to comprehend a right to use a coal mine, with its pits, tunnels, and workings and its associated buildings, plant and machinery for the winning of coal. Accordingly the deed in the present case is to be deemed a "lease" for the purposes of duty. (at p329)

6. The Commissioner, however, seeks to charge the deed with ad valorem duty as a conveyance. It is clearly not so chargeable by reason only of its being a "lease", notwithstanding that s. 65 defines "conveyance" to include a lease. The general liability of conveyances to ad valorem duty is qualified in s. 66 (1) by the expression "Subject to the provisions of this Act". Originally this read "Subject to the provisions of this Act as to the duty chargeable on particular instruments". The expression now used is wider and therefore less specific; but whatever else it does, at least it excludes from liability to ad valorem duty as a conveyance every instrument which the Act makes dutiable under a special category. It will have been observed that s. 76 in extending "lease" to include an instrument conferring a right of user, excludes an instrument liable to ad valorem duty as a conveyance; but that seems to mean only an instrument which, while it gives the right to use property, is a conveyance of that property by virtue of its giving a right or interest therein which is more extensive than the right of user. The words in brackets serve only to prevent the charging of two duties. (at p330)

7. It is true, however, that in one sense the deed here in question gives not only a right to use the property it describes but, by clear implication, a right to appropriate coal, when severed from the land, so as to make it the chattel property of the syndicate. These rights, regarded separately from one another, are different in kind: the one is a right to use property which nevertheless is to remain the company's, while the other is a right to take coal which is the company's at the moment of severance and thereby to cause the property in the coal to pass to the syndicate. If it were sound for the present purpose to consider each right by itself, no doubt the deed would be a lease by reason of granting the first right and a conveyance of an interest in the land by reason of granting the second; and on that footing s. 17 might properly be invoked to charge the deed separately and distinctly with duty in respect of each of the two matters it contains. But this is not how the Act looks at such a case. It recognizes, as the common law recognizes, that a lease which entitles the lessee to work a mine on the demised land is not two grants, but one; and it extends the conception to the wider class of instruments which by definition it treats as leases. This appears from s. 79, which I had better quote in full: - "s. 79 (1) Where the consideration for a lease is wholly or partly a royalty, payable either in money, produce, or goods, or any other consideration whatever other than a fixed sum of money, then, if it is stipulated that the amount of such money, or the value of such produce or goods, is to amount at least to or not to exceed a given sum, or where the lessee is specially charged with or has the option of paying after any permanent rate of conversion, the yearly amount of such money and value of such produce or goods is to be estimated at such given sum or according to such given rate. (2) Where there is no possible means of discovering what is the maximum value of the consideration dealt with under a lease, then the duty payable in respect of such lease shall be a fixed sum of one pound ten shillings, in addition to the duty chargeable in respect of the rent and of so much of the consideration as is capable of being valued." (at p330)

8. What is meant in sub-s. (1) by "the consideration for a lease" is obviously not, in the case of a lease in the common law sense, a consideration in the nature of a premium or foregift, but is the reddendum. Accordingly, in relation to an instrument which is not a lease at common law but is dutiable as a lease because it confers a right of user, "the consideration for a lease" must mean the recompense to the "lessor" for the "lessee's" enjoyment of the right of user. To provide, as in s. 79 (1), that a "lease" which provides for a royalty is to be charged with lease duty by reference to the royalty as well as the rent (if any) is to show plainly that a "lease" for the purpose of mining is not to be regarded because it entitles the "lessee" to take minerals from the land as relating partly to the right to take minerals and partly to the right to use the property for mining purposes. The evident intention is that the instrument is to be dutiable as a lease only, not as a lease and (separately) as a conveyance of a profit a prendre. (at p331)

9. That the Act should follow this course is only what might be expected, for the law has not been accustomed to regard the right of a lessee to take minerals from a mine as other than an incident of the lease: it regards the taking of the minerals as part and parcel of the use which the grant entitles the lessee to have without being guilty of waste. Thus Lord Coke (Co. Litt. 54 b) wrote in a passage which Kindersley V.C. quoted in Clegg v. Rowland (1866) LR 2 Eq 160, at p 165 and Lord Blackburn relied upon in Campbell v. Wardlaw (1883) 8 App Cas 641, at p 645: "A man hath land in which there is a mine of coales, or of the like, and maketh a lease of the land (without mentioning any mines) for life or for yeares; the lessee for such mines as were open at the time of the lease made, may digge and take the profits thereof. But he cannot digge for any new mine that was not open at the time of the lease made, for that would be adjudged waste. And if there be open mines, and the owner make a lease of the land, with the mines therein, this shall extend to the open mines onely, and not to any hidden mine: but if there be no open mine, and the lease is made of the land together with all mines therein, there the lessee may digge for mines, and enjoy the benefit thereof, otherwise those words should be void." (at p331)

10. Applying the views above expressed as to the relevant provisions of the Act, I am of opinion that the deed here in question is not a conveyance liable to ad valorem duty, and that it is dutiable only as a "lease" because it confers on the syndicate rights to use property in New South Wales for the purpose of mining for coal (including therein the right to take the coal), but does not transfer to or vest in or cause to accrue to them any more than those rights. (at p331)

11. The amount of duty payable is, in my opinion, to be ascertained under s. 79 (2). Sub-section (1) of s. 79 does not apply, because there is no stipulation for a minimum or maximum amount or value of the royalty, and the lessee neither is specially charged with nor has the option of paying after any permanent rate of conversion. It is sub-s. (2) that applies. There is no possible means of discovering what is the maximum value of the "fee" and the "royalty" which the syndicate is to pay. There is no rent reserved, and no consideration capable of being valued. Accordingly the duty payable, in my opinion, is 1 pound 10s. Od. (at p332)

12. I would dismiss the appeal. (at p332)

TAYLOR J. This is an appeal from an order of the Full Court of the Supreme Court which answered certain questions raised by a case stated by the appellant under the provisions of s. 124 of the Stamp Duties Act. The effect of the answers was to hold that the deed of 3rd May 1959, to which the respondents and Vale of Clwydd Colliery Limited were parties, was properly chargeable with duty pursuant to par. (6) under the heading in the Second Schedule to the Act - " Lease or Promise of/or Agreement for Lease or Hire of any property not being a ship or vessel". Paragraph (6) which follows a number of particular specifications of leases, refers to a lease "Of any other kind whatsoever" and the duty prescribed is one pound ten shillings. The contention of the appellant is that the deed is liable to ad valorem duty as a conveyance on sale for a consideration in money or money's worth of not less than the unencumbered value of the property and that the appropriate duty is one pound five shillings for every one hundred pounds and also for any fractional part of one hundred pounds of the consideration "for the period or term of the deed". Further reference will be made to this contention when the terms of the deed have been examined. (at p332)

2. By the deed the company purported to grant to the respondents a licence to operate the company's mines and to use and operate the pits, tunnels, mine workings, buildings, plant and machinery thereon for the purpose of the getting, working and winning of coal therefrom. As appears from the case stated the licence was to be for an initial term of five years commencing on the 1st January 1958 but it was subject both to termination and renewal as thereinafter specified. Acknowledgment was made by the respondents of the delivery to them of certain specified buildings, plant and machinery, stores, pit timber and other material and they agreed to pay the company for all stores and pit timber used by them during the term of the licence. Thereupon cl. 4 provided that "For the use of the facilities aforesaid and for the use of the company's land, pits, tunnels, mine workings, buildings, plant and machinery the syndicate (i.e. the respondents) shall pay to the company fortnightly a fee at the rate of three shillings per ton and, in addition, a royalty of two shillings per ton for each and every ton of coal won by the syndicate from the said land and such fee and royalty shall be cumulative from fortnight to fortnight during the term of this licence and any extension thereof". During the term of the licence the company was to have the right at all times to enter upon the said land "by its authorized officers and workmen for any purposes whatsoever other than the winning of coal". By cl. 8 the licence was determinable by the company at any time without notice either upon the ground that the respondents had failed to comply with any covenant or condition of the licence or upon the ground that, except when the respondents should be prevented from mining coal by reason of strikes, the average monthly licence fee paid by them over a period of three months had not exceeded the sum of 270 pounds. Clause 9 provided to the appellant an option to renew the licence for a further period of five years. (at p333)

3. It will be seen that the respondents were not bound to operate the mine and that the undertaking to pay fees and royalties, pursuant to cl. 4, was contingent only. Nevertheless, the licence was subject to the right of the company to determine it upon either of the grounds already specified. (at p333)

4. It is, I think, desirable, before coming to the relevant provisions of the Stamp Duties Act to consider the nature of the relationship which the deed created. For this purpose, and in view of the conclusion to which I have come, it is unnecessary to draw any distinction between the so-called fees and royalties prescribed by cl. 4 for the payment for which that clause provided was either on account of and for coal won pursuant to the agreement, or, partly on that account and partly on account of and for the use of the specified facilities for the purpose of winning coal. The deed did not, I think, amount to a demise of the mining property and neither party was disposed to argue that it did. But it was common ground both here and in the Full Court that it created a profit a prendre which constituted an interest in land and, therefore, property within the meaning of the Stamp Duties Act. This proprietary interest was subject to the respondents' obligation to make the payments specified in cl. 4 in respect of each and every ton of coal won from the land. Nevertheless, it was a "conveyance" for the purposes of the Act because s. 65 of the Act defines that term to include, inter alia, "every . . . instrument . . . whereby any property in New South Wales is transferred to or vested in or accrues to any person" (cf. Conservators of the River Thames v. Commissioners of Inland Revenue (1886) 18 QBD 279 But it was also a lease for the purposes of the Act as an "instrument . . . whereby a right to use at or during any time or times any property in New South Wales for any purpose whatever is conferred on or acquired by any person" unless it fell within the words of exception contained in s. 76 (1) - "not being an instrument liable to ad valorem duty as a conveyance". But such are the vagaries of the Act that if the deed is not, primarily, such an instrument it is a lease and since the definition of "conveyance" in s. 65 includes any lease it is, nevertheless, ultimately a "conveyance". (at p334)

5. It is the appellant's contention that the instrument is a conveyance as defined by s. 65 and, what is critical to his argument, that the consideration for the conveyance is constituted by the fees and royalties which the subsequent course of events may show have become payable pursuant to it. Fees and royalties to the extent of 9,766 pounds have been paid by the respondents and the appellant has assessed interim duty at the sum of 122 pounds 10s. Od. being at the rate of one pound five shillings per centum of the sum of 9,766 pounds. He, further, seeks to invoke the provisions of s. 42 (7) of the Act by claiming that the full amount on which ad valorem duty is payable cannot immediately be ascertained but will become payable as soon as it is ascertained or assessed. By this it is meant that duty will, from time to time, become payable at the rate above specified on such amounts of fees and royalties as, in fact, become payable, from time to time, under the deed. To say the least, the result contended for is curious for if the deed were chargeable as a lease it is quite clear that under s. 79 (2) the duty chargeable would be merely nominal. (at p334)

6. However, the instrument is clearly enough a conveyance within the extended meaning given to that term by s. 65. But it must be remembered that it is only in its capacity as a conveyance of property that it is chargeable pursuant to ss. 65 and 66. So much is clear from the provisions of s. 66. Sub-section (2) (a) makes it clear that in the case of a conveyance on sale of any property ad valorem duty is to be calculated on "the amount or value of the consideration for the sale". And this must mean the consideration for the sale of the property conveyed. Likewise, sub-s. (2) (b) provides that if the amount or value of the consideration is less than the unencumbered value of the property the duty is to be charged on the unencumbered value of the property ascertained in accordance with s. 68. Again, in this sub-section, the property must mean the property conveyed and the same notion is apparent in the other numerous sub-sections of s. 66. It is, therefore, necessary to enquire what "property" was conveyed by the deed and then to ascertain what, if any, consideration in money or money's worth was given for it. (at p335)

7. What was conveyed or granted by the deed was, as I have already said, a profit a prendre. But more particularly it was a right to operate the mining property and its appurtenances and to win coal therefrom. But it was not an absolute right to do so; it was a right to do this subject to the payment of a fee and royalty totalling five shillings per ton for each and every ton of coal won. Furthermore, it was subject to determination in the event of failure to pay such fees and royalties. In a very real sense, therefore, it may be said that the "property" conveyed was a right to operate the mine and win coal subject to the payment of five shillings per ton as aforesaid. The question then is - treating the deed as a conveyance - what consideration was provided by the deed for the conveyance of this interest? In my view the answer to this enquiry is that no consideration was provided. Clearly enough, payments pursuant to cl. 4, if and when made, cannot be regarded as the consideration for the grant of such a right; they constitute both in form and substance payment for the actual use of the "facilities . . . and . . . the Company's land, pits, tunnels, mine workings, buildings, plant and machinery" and for the coal actually removed. And although it may be said that the respondents' covenants, including that contained in the cl. 4, constituted consideration in a general sense, this could not be said to be the consideration for the conveyance of a right to operate the mine and win coal subject to the payment in respect thereof of five shillings per ton. In other words, the stipulated rate of payment was, in much the same way as rent under a lease, intended by the way of "retribution or compensation" for the use of the mining property and for the coal won and so, in part, it delimited the character and extent of the right conveyed. It is true that the provisions of the Act which deal specifically with leases do in a general way purport to identify the rent payable under a lease with consideration for the lease but the schedule draws a clear distinction between the rent reserved and "any consideration by way of premium, fine or foregift" in that, in the case of a lease "in consideration of a sum of money by way of premium, fine or foregift" the same duty is imposed as that imposed upon a conveyance on sale whilst, in the case where no premium has been given, the duty imposed is calculated at the specified rate upon the yearly rent only. Where the lease provides both for a premium and for rent two calculations are necessary to ascertain the total duty - one, by applying the specified rate to the yearly rent and one, treating the premium as the consideration for the demise, as upon a conveyance on sale. It would be a strange result if, in view of those provisions, the respondent should be held to be at liberty to treat a lease as a conveyance and, consistently with his contention in this case, assess ad valorem duty on the whole of the rent payable during the term as the consideration for the "conveyance". The reality of the matter is that the parties to the deed in question in this case were content to conclude an arrangement in the form which it took in the deed and no consideration was provided for the actual "conveyance" of such a conditional right. (at p336)

8. Accordingly, the deed, if it be regarded as a conveyance for the purposes of the Act, operated as a voluntary assurance of what may be called the conditional right which it created and, if chargeable as such, was chargeable as a conveyance made without consideration in money or money's worth. That is to say the duty chargeable would be calculated upon the value of the property conveyed. But if the rates of fees and royalties for which the deed provided were the best that could be obtained - and there is no suggestion that they were not - then the conditional right which the deed granted could have no independent value. In that event the deed would not be an instrument liable to be chargeable with ad valorem duty as a conveyance and, that being so, it would fall within the definition of lease in s. 76. As a lease it would be precisely covered by the provisions of s. 79 (2) and by those of item (6) under the heading in the Schedule - " Lease or Promise of or Agreement for Lease or Hire of any property not being a ship or vessel" - and the duty properly chargeable would, as prescribed by those provisions, be one pound ten shillings. Accordingly I am of the opinion that the appeal should be dismissed. (at p336)

OWEN J. The instrument produced to the appellant for stamping was a deed, dated 3rd February 1959, made between a colliery proprietor and the respondents whereby the former granted to the latter as from 1st January 1958 the right, on certain terms and conditions, to win coal from a mine upon the colliery proprietor's land and for that purpose to use and operate the plant and other mining facilities on that land. The deed did not impose any obligation upon the respondents to exercise the right so conferred but provided that, if they did exercise it, they were to pay the colliery proprietor a "fee" of three shillings per ton for the use of the plant and other facilities and a royalty of two shillings per ton for every ton of coal won. What was granted then was a profit a prendre coupled with a licence to enter and use the mining facilities on and under the surface of the land for the purpose of winning coal. The colliery proprietor reserved to itself the right at all times to enter upon the land for any purposes whatsoever other than the winning of coal and, apart from any relevant provisions in the Stamp Duties Act, the deed was not a lease. (at p337)

2. It appears that the respondents had in fact been working the mine and winning coal before the date of execution of the deed and it was no doubt for this reason that it was expressed to be operative as from 1st January 1958. Up to the date when the deed was produced for stamping, fees and royalties paid by the respondents to the colliery proprietary amounted to 9,760 pounds. (at p337)

3. The appellant claimed that the instrument was a "conveyance on sale" within the meaning of s. 66 of the Act. Section 56 (1) declares that every conveyance is to be charged with ad valorem duty "in respect of the unencumbered value of the property conveyed"; and by s. 66 (2) ad valorem duty on a "conveyance on sale" is to be charged on the "amount or value of the consideration for the sale" or, if the amount or value of the consideration is less than the unencumbered value of the property conveyed, the duty is to be charged on the unencumbered value of the property ascertained in accordance with s. 68. Section 68 provides machinery by which the Commissioner may ascertain the value of the property conveyed. (at p337)

4. In the present case the Commissioner took the view that the fees and royalties which would become payable if the respondents exercised the right which the deed conferred upon them were the consideration for the grant of that right and, since it was obviously impossible to ascertain the total amount of those fees and royalties until such time as the deed ceased to operate, he invoked the aid of s. 42 (7) and assessed interim duty at the rate of 1 pound 5s. Od. per centum on 9,760 pounds, that being the amount of the fees and royalties paid by the respondents to the colliery proprietor between 1st January 1958 and 31st December 1960. Section 42 (7) provides that: "In case the full amount on which ad valorem duty is payable cannot be immediately ascertained, the duty may be paid upon so much (if any) thereof as is ascertainable and the conveyance may be stamped accordingly and marked 'interim stamp only', and when so stamped shall be admissible in evidence. The balance of such duty shall be paid as soon as the same is ascertained or assessed by the Commissioner, and thereupon and upon payment of the fine (if any) the conveyance shall be stamped with the amount of such balance and shall be marked as duly stamped." (at p338)

5. Assuming for the moment that the deed is either a "conveyance" or a "conveyance on sale" within the meaning of s. 66, it was not open to the appellant, in my opinion, to act under s. 42 (7). As Brereton J. pointed out in the Supreme Court, that sub-section is intended to deal only with agreements for sale followed by conveyances made in the circumstances set out in the earlier sub-sections of s. 42 and is not of general application to all conveyances. For this reason alone I am of opinion that the present assessment cannot stand. (at p338)

6. The question then is under what provision of the Act is the deed brought to duty and how is the amount of duty to be ascertained. The profit a prendre which it created was undoubtedly "property" as defined by s. 3, and "conveyance" is defined by s. 65 to include, inter alia, " . . . . . every other instrument (except a will) . . . . . whereby property in New South Wales is transferred to or vested in or accrues to any person". The deed is therefore to be regarded as a conveyance of property for the purposes of s. 66. If it was a conveyance made without consideration, s. 66 (3) (a) provides the means of determining the amount on which the duty is to be assessed. If, however, it was a conveyance on sale, that is to say one made for a consideration in money or money's worth, then s. 66 (2) comes into operation. In such case the Commissioner must determine "the amount or value of the consideration" and he must also, it seems to me, ascertain what is the unencumbered value of the property conveyed because, if the amount or value of the consideration is less than the unencumbered value of the property conveyed, the duty is to be charged on that unencumbered value. (at p338)

7. The first question then is whether consideration was given for the conveyance of the right which the deed created and conveyed to the respondents and this, in turn, involves deciding what was the property conveyed. It was a conveyance of a right to win coal and use the mining facilities for that purpose conditionally upon payments being made calculated upon the amount of coal won in the event of the right being exercised. Any payments made were not the consideration for the conveyance of the right. They were payments for the use of the mining facilities and for the coal won in the event of the right granted by the deed being exercised. It was suggested, however, that the provision in the deed whereby the respondents covenanted to pay fees and royalties if they exercised their right to enter and win coal was to be regarded as consideration for the conveyance of the right. But I do not think this argument can be supported. The deed created and conveyed something less than an absolute right to enter and win coal. It was a right to do these things subject to conditions, one of which was that if they were done certain payments should be made. For the conveyance of that conditional right, there was, it seems to me, no consideration. (at p339)

8. Accordingly, I think the deed is to be regarded as a conveyance made without consideration and falls within s. 66 (3). Whether it is possible to ascertain the value of the property conveyed I do not know. If the value cannot be ascertained, or if it has no value, it follows that no ad valorem duty can be charged. In that event the deed would appear to me to fall under the heading in the Second Schedule of "Deed of any kind whatever not otherwise charged in this Schedule" and the amount of duty would be 1 pound 10s. Od. An alternative suggestion was made that if no ad valorem duty was chargeable the deed might be regarded as a "lease" within the definition in s. 76 (1) as being an "instrument (not being an instrument liable to ad valorem duty as a conveyance) whereby a right to use . . . . . any property in New South Wales for any purpose whatever is conferred on or acquired by any person . . . . . ". But the right of user granted by the deed relates only to the mining facilities, not to the winning of coal and that right of user seems to me to be merely ancillary to the right to win coal. In that event "there is no better established rule as regards 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": Limmer Asphalte Paving Co. Ltd v. Commissioners of Inland Revenue (1872) LR 7 Ex 211, at p 217 (at p339)

9. In the result, therefore, I am of opinion that the appellant should be given the opportunity to ascertain whether the property conveyed has any value and, if so, what that value is. If it has a value and the amount can be ascertained, then ad valorem duty determined in accordance with s. 66 (3) is payable. If the value of the property conveyed cannot be ascertained or is not ascertained or if the property conveyed is found to have no value, then the amount of duty payable is 1 pound 10s. Od. (at p339)

10. In these circumstances, I think the questions asked should be answered as follows:

1 (a). No.
(b). The deed is liable to be charged with ad valorem
duty as a conveyance made without consideration
if the property conveyed has a value which can be
and is ascertained.
2 (a). No.
(b). No.
3. No.
4. If the property conveyed has no value, or its value
cannot be or is not ascertained, the duty payable
is 1 pound 10. 0. (at p340)

ORDER

Appeal dismissed with costs.