UG Insurances Pty Ltd v Commissioner of Stamp Duties (NSW) [1973] HCA 31; (1973) 128 CLR 353 (29 August 1973)

HIGH COURT OF AUSTRALIA

U.G. INSURANCES PTY. LTD. v. COMMISSIONER OF STAMP DUTIES (N.S.W.). [1973] HCA 31; (1973) 128 CLR 353

Stamp Duties (N.S.W.)

High Court of Australia.
Barwick C.J.(1), Menzies(2), Gibbs(3), Stephen(4) and Mason(5) JJ.

CATCHWORDS

Stamp Duties (N.S.W.) - Credit arrangement - "Credit" - Agreement between dealer and financier to provide finance for dealer's customers - Payment of deposit by customer - Loan agreement made between customer and financier on security of goods bought - Payment by financier of balance of price to dealer - "Arrangement ... under &which when goods are purchased or where subsequent to the purchase of goods an option to pay by instalments is exercised" - Stamp Duties Act, 1920 (N.S.W.), as amended, ss. 75A (1), 75B.* * Infra, pp. 357-358.

HEARING

Sydney, 1973, March 29, 30; August 29. 29:8:1973
APPEAL from the Supreme Court of New South Wales.

DECISION

August 29.
The following written judgments were delivered:-
BARWICK C.J. These appeals arise out of cases stated by the Commissioner of (N.S.W.) (the Act) each of which relates to one of three separate transactions. The circumstances of all three are not precisely identical so I shall deal seriatim with each case stated. I have identified each by the name of the purchaser of the goods concerned in the transaction out of which the case has arisen. (at p354)

2. The first matter may be called Barnett's case. According to the case stated, a dealer on 28th April 1970 sold a tape recorder and a sewing machine to his customer for a total sum of $500. An amount of $50 was paid by the customer to the dealer on account of the price of the goods. The goods were thereupon delivered to the customer and, as stated in the case, the property in them passed to the customer. The contract of purchase contained no deferment of payment of the balance of the price which therefore was presently payable. (at p355)

3. At the time of making the contract for the purchase of the goods the customer signed an application to the appellant for a loan of $450 to enable him to pay to the dealer the balance of the price of the goods, the form of application for the loan being provided by the dealer. That application provided that, for the convenience of the intended borrower, the amount of the loan, if granted, might be "disbursed" by the appellant by payment to the dealer for or on account of the balance of the purchase price owing by the borrower to the dealer. (at p355)

4. The terms on which the customer offered to borrow $450 from the appellant, if his application were accepted, involved the payment by the borrower to the appellant of a sum greater than the amount of the balance of the price to be paid by the customer to the dealer (which in this instance was the "purchase price" for the purposes of the application of the definition of "credit arrangement" in s. 75A of the Act to which later reference will be made) plus interest at nine percent per annum as calculated under the statute. Thus the terms of the loan if granted would satisfy the financial segment of the statutory definition of a "credit arrangement". (at p355)

5. The dealer had a standing agreement with the appellant made in 1966 that he would be supplied by the appellant with forms of application to the appellant for loans and chattel mortgages; that he should not be in any way an agent of the appellant; that, in having the forms and placing them before his customers, he was "acting for the convenience of our" (the dealer's) "customers only and in the expectation that it will assist us in our business"; that if a loan application by a customer should be accepted by the appellant and payment made to the dealer of the moneys agreed by the appellant with the borrower to be paid to the dealer, the property in the goods purchased by the customer, if it had not already done so, should pass to the customer subject to the appellant's rights as mortgagee. But the appellant was under no obligation to the dealer to accept any application made to it by a customer of the dealer. (at p355)

6. By this agreement the dealer gave to the appellant a number of warranties in respect of accepted loan applications, namely, as to the due signature of the application, as to the absence of any misrepresentation to the borrower of suspected falsity, that the unencumbered property in the goods would pass to the customer, that the goods at the time of the acceptance of the application for a loan were in sound and serviceable condition, that a fair market value was represented in the trade-in and that no more than the disclosed balance of price was owing to the dealer in respect of the purchase of the goods. (at p356)

7. The dealer further entered into certain indemnities to the appellant in respect of loans made on accepted applications, unless the applications were expressly indorsed without recourse. There was also provision for the formation of a recourse fund by deduction from the amounts payable by the appellant to the dealer. (at p356)

8. This standing agreement between the appellant and the dealer had obvious advantages for both. In the case of the dealer it provided the possibility of finance for a customer who proposed, perhaps of necessity, not to find the whole purchase price for goods out of his own resources. No doubt this possibility, which in practical terms might be thought in many instances to be a probability, tended to increase the volume of business done by the dealer. It had the advantage of rendering it unnecessary for him to give credit to such a customer in respect of the purchase price of goods. On the other hand, the arrangement provided the appellant with opportunities to lend money at profitable rates. (at p356)

9. The appellant in due course, on 5th May 1970, accepted the customer's offer to borrow and thereafter paid the sum of $450 to the dealer. The application was within the terms of this standing agreement and thus on acceptance the promises of the dealer in the standing agreement became operative with respect to the application and the loan. But the customer was not in any sense conversant with, had knowledge of or was a party to that standing agreement, or to its application to the loan made to him. (at p356)

10. The contract of loan formed by the acceptance of the customer's application was lodged with the Commissioner of Stamp Duties for assessment of stamp duty. The Commissioner assessed the duty upon it at $5.62 being an amount of duty appropriate to a "credit arrangement" within s. 75A of the Act. The appellant claimed that it was dutiable as "an agreement under hand not otherwise specifically charged with any duty", namely $0.15. (at p356)

11. The questions asked in the case stated are:

(a) Should the duty upon the said instrument be assessed at
the sum of:- (i) $5.62; (ii) $0.15; (iii) some other and
if so what sum?
(b) Whether the costs of the appeal (i.e., the case stated)
should be paid by the appellant or the respondent. (at p356)

12. Section 75A and 75B of the Act so far as presently relevant provide as follows:

"75A (1) 'Credit arrangement' means an arrangement or
an offer to enter into an arrangement under which when goods
are purchased or where subsequent to the purchase of goods
an option to pay by instalments is exercised the amount payable
or paid is not less than the purchase price of the goods plus
interest at a rate exceeding nine per centum per annum, such
rate being calculated as hereinafter provided, and where the
purchase price is four hundred dollars or more.

'Instalment purchase arrangement' means a credit arrangement,
a credit purchase agreement or a hire purchase agreement.

'Purchase price' means, in the case of a credit purchase
agreement, a hire purchase agreement and a sale to which a
credit arrangement relates, the price at which the goods might
have been purchased for cash less any deposit or initial payment
made at the time of purchase and for this purpose the amount
allowed by way of a discount or a trade-in shall be deemed to
be a deposit or part thereof.
'Vendor' means -
(a) in the case of a credit purchase agreement and a hire
purchase agreement, the person by whom goods are let,
hired or sold or agreed to be let, hired or sold; and
(b) in the case of a sale to which a credit arrangement relates,
the person to whom payment is to be made.
(2) For the purposes of the definition of 'Credit arrangement'
in subsection one of this section the rate of interest
shall, irrespective of whether a rate of interest is or is not
expressed in the instrument constituting or evidencing the
credit arrangement, be calculated in accordance with the
provisions of the First Schedule to the Money-Lenders and
Infants Loans Act, 1941, as amended by subsequent Acts, and
in making that calculation a reference in that Schedule to
'principal' shall be construed as a reference to the purchase
price as defined in subsection one of this section.

75B (1) (a) Subject to the provisions of paragraph (d) of this
subsection a vendor shall make out an instrument: -
(i) in the case of a credit purchase agreement and a hire
purchase agreement, at the time of the making of the
agreement; or
(ii) in the case of a sale or an exercise of an option following
the sale as the case may be to which a credit arrangement
relates within seven days of each such sale or each exercise
of an option.
(b) Such instrument shall clearly and truly set out -
(i) the full name and address of the purchaser;
(ii) the full name and address of the vendor;
(iii) a description of the goods sufficient to indicate their
nature;
(iv) the total amount payable by the purchaser on any account
whatsoever under the instalment purchase arrangement;
(v) the total amount payable for or by way of interest or
insurance or any other charge under the instalment purchase
arrangement;
(vi) the purchase price.
(c) Such instrument shall -
(i) be marked 'Original Instrument' on the front or first
page thereof;
(ii) be stamped as an instalment purchase arrangement; and
(iii) be retained by the vendor for a period of twelve months
from the date of the last payment or instalment made
under the instalment purchase arrangement.
(3) Any person who contravenes or fails to comply with any
of the provisions of this section shall be liable to a fine for such
offence not exceeding two hundred dollars." (at p358)

13. By reason of s. 4 of the Act and the 2nd Sch. stamp duty was leviable at one and a quarter per cent of the purchase price upon instalment purchase arrangements and stamp duty was leviable on an agreement under hand at $0.15. (at p358)

14. The Supreme Court answered the questions favourably to the Commissioner of Stamp Duties (1972) 1 NSWLR 595 . It seems to me that the steps by which the Supreme Court reached its conclusion were as follows:
(1) that the loan agreement afforded "credit" to the borrower in the relevant sense;
(2) that the loan related to a sale and purchase because the borrower's avowed purpose in borrowing was to enable payment of the balance of the purchase price;
(3) that there were arrangements between the purchaser, the dealer and the lender. (at p358)

15. Holmes J.A. thought that the credit arrangement was made with the dealer. Accordingly it was concluded that the loan agreement was a credit arrangement under the definition in s. 75A (1). (at p358)

16. There is no definition of "credit" in the Act but "credit arrangement" is exclusively defined. It is to be an arrangement under which money is payable or is paid. I have no need here to trouble with the financial qualification in the definition for it is stated in the case that, if the loan agreement is otherwise a credit arrangement, the amount payable to the appellant exceeds the sum set by the definition as the floor above which the arrangement satisfies the definition. Also the purchase price of the goods was more than four hundred dollars. (at p358)

17. Thus to fall within the definition the arrangement must not only be one under which money is payable, the alternative "paid" being included, in my opinion, to embrace the case of an arrangement which has been executed in whole or in part, but an arrangement under which when goods are purchased or where subsequent to purchase an option to pay by instalments is exercised an amount of money is payable. I gain little assistance in deciding precisely what is meant by the definition of "credit arrangement" from the other definitions in the section. It may be said that the draftsman was endeavouring to cover by the definition of "credit arrangement" more than a credit purchase agreement or a hire purchase agreement. But that does not assist to illumine the murky areas of the definition with which we are here concerned. "Vendor" is exclusively defined "in the case of a sale to which a credit arrangement relates" as "the person to whom payment is to be made". (at p359)

18. It seems to me at the outset to follow from the requirement that there should be money payable under the credit arrangement and that the vendor for its purposes is the person to whom money is to be paid that the arrangement is to be an arrangement creating legal obligations at least so far as the payment of money is concerned: and no other significance of the arrangement beyond its upward financial limit and its contemporaneity with the sale of goods is mentioned in the definition. There is thus little profit in calling attention to the wide significance which the word "arrangement" may have in other contexts. (at p359)

19. Section 75B requires "a vendor" in the case of a sale, or of an exercised option, the option presumably being to pay by instalments, within seven days of the appropriate event to make out an instrument as required by sub-section (b). In considering the items to be set out in that instrument it must be borne in mind that the instrument is to be stamped as an instalment purchase arrangement. Credit purchase agreements and hire purchase agreements if already evidenced by instruments which have been duly stamped are excepted from the operation of s. 75B but otherwise are included in the provisions requiring the creation of an instrument which is to be stamped as an instalment purchase arrangement. The particulars to be set out in the instrument to be created by the vendor include "the total amount payable by the purchaser on any account whatsoever under the instalment purchase arrangement", which by definition includes a "credit arrangement". The definition purports to make an agreement made "when" goods are sold to pay a sum of money above a calculable limit, a credit arrangement. (at p359)

20. The elements in the calculation are the purchase price of the goods being $400 or more and interest on that sum. In one sense, it would matter little what name was given to the defined arrangements so long as its terms and circumstances fulfilled the definition. But in this case, something may be taken from the name given to the arrangement, and from its association with other provisions of the statute. (at p359)

21. Associated terms are "instalment purchase agreement", which is a genus, and "credit purchase agreement" and "hire purchase agreement" which are treated as other species. (at p360)

22. In the light of these considerations the word "credit" in the name of the arrangement must, in my opinion, be allowed some significance. Credit in the context of the statute should in my opinion be given its precise meaning of time being given to pay a financial obligation or of forbearance in respect of payment of an obligation. It cannot, in my opinion, be given the loose sense in which it is used by economists and financial writers, a sense which embraces financial accommodation of all kinds. Thus a vendor who agrees to accept his price by instalments can properly be said to give credit: but a mortgagee who lends money on the security of real estate cannot, even if the loan is not payable on demand. Again, a loan is not relevantly the giving of "credit" even if it is obtained as an alternative to seeking deferment of the payment of the price of goods. A bank affording overdraft accommodation to enable goods to be purchased does not in my opinion give credit to the customer in any relevant sense. To so confine the meaning of the word "credit" would, in my opinion, enable some sensible meaning to be given to the definition of "credit arrangement". Any wider and looser significance of the word would add nothing to the definition. (at p360)

23. If the presence of the word "credit" in its strict sense is regarded, as in my opinion it should be, as of significance in the description "credit arrangement" it can properly be said, in my opinion that an arrangement to satisfy the statutory definition must be one under which purchase money is payable by a purchaser to whom time to pay the purchase money or some part of it has been or is being given the forbearance carrying interest. Thus an assignee of a vendor's right to the unpaid purchase price who makes an arrangement with the purchaser at the time of the purchase of the goods for the payment to him of the assigned balance of the price will have made a credit arrangement. There may be other forms of arrangement which can be made with a purchaser when the goods are sold by a person who has not actually sold the goods for the payment of the unpaid part of the purchase money plus interest for the forbearance afforded in the deferred payment of the price or part of it: though such an instance does not readily come to mind. But whatever the form of the arrangement and howsoever arising, it must in my opinion to satisfy the definition be an arrangement under which purchase money for the payment of which time is being or has been given is payable to the person making the arrangement with the purchaser: that is to say, the money payable under a credit arrangement must, in my opinion, be payable as purchase money. (at p361)

24. In the present case, there was no time given for a payment of the price or of any part of it. In fact there was no agreement that a loan should be applied for or obtained though I do not regard that circumstance as in any way critical. Had the application for a loan been rejected in this instance the purchaser's obligation to pay would have remained and been presently enforceable. (at p361)

25. The appellant did not give to the borrower time to pay any part of the purchase price and the appellant did not make any arrangement with the purchaser in his capacity of purchaser. The relationship of the borrower and the appellant was precisely that of borrower and lender. There was, in my opinion, no tripartite agreement to which the appellant, the customer and the dealer were parties. There were three agreements, one of purchase, one of loan, and the standing arrangement. Indeed the standing agreement with the dealer had no relevant operative effect until the application for loan had been accepted, a matter which rested on the uncontrolled will of the appellant. The appellant, in my opinion, did not in any relevant sense give credit to the borrower. (at p361)

26. Although the purpose of the borrowing was to enable payment of the balance of the purchase price to be made, the loan agreement did not in my opinion relate to the sale of the goods. It was in truth what it purported to be - an agreement to lend and an agreement to repay with interest the money lent. (at p361)

27. It may be that read as I have read it, the definition will not cover a much larger area of transactions than is already embraced by other parts of the Act. But that is not the concern of a court which has the task of construing the words employed by the draftsman to express his meaning. The definition may have been drafted in all its obscurity in the hope of enmeshing in its net more than in my opinion its language warrants. It certainly does not, in my opinion, include loan agreements even if made for the purpose of discharging an obligation to pay the purchase price of goods or some part thereof. (at p361)

28. It will be seen from my analysis of the transactions in this case that, in my opinion, the Supreme Court was in error in each of the steps it took in reaching its conclusions. In consequence it was, in my opinion, in error in the answers given to the questions asked. The loan agreement, annexure "B" to the stated case, is, in my opinion, dutiable only as an agreement under hand at the sum of $0.15. (at p361)

29. Accordingly I would allow the appeal. (at p362)

30. The second case may be called Hennessy's case. (at p362)

31. In this case the agreement to purchase goods of a value of $470 was said by the case stated to be "conditional upon the application for loan" signed by the purchaser on the dealer's premises "being accepted by the appellant". Also, notwithstanding the delivery of the goods to the purchaser, the property was not to pass from the dealer to the purchaser until the acceptance of that application for a loan. The amount sought to be borrowed was the actual balance of the purchase price after payment of a sum of $48 by the purchaser to the dealer. (at p362)

32. The application for loan was subsequently accepted by the appellant and payment was made by the appellant to the dealer of the amount of the loan. Otherwise the facts and circumstances of the matter were the same as those of Barnett's case. (at p362)

33. The question is whether the conditional nature of the contract of purchase and the deferment of the passing of the property in the goods until the application for loan had been granted affords any valid distinction between this case and Barnett's case with which I have already dealt. (at p362)

34. All the features of the loan agreement remained the same in each case. That agreement is not dependent upon the purchase agreement, except in the sense that the borrower must be in a position to give or procure title to the goods. But this circumstance does not make the loan agreement to relate to the purchase of the goods, though it clearly contemplates that there has been a purchase and that upon the loan being made the title to the purchased goods will be available to the appellant. The standing agreement with the dealer will ensure this result. But the loan agreement remains, in my opinion, independent of an unrelated to the purchase agreement. Further, though the standing agreement operates to perfect the appellant's title to the goods, there is no tripartite arrangement involving the dealer in the terms of the loan agreement or the borrower in the terms of the standing agreement. (at p362)

35. The purchase agreement itself is conditional, in the sense that at least its performance if not its existence is conditional upon the acceptance of the loan application. But in either case this is to say no more than that the purchaser is only willing to make or carry out a purchase if he is able to obtain on loan enough money to enable him to pay the agreed purchase price. On the other side, the dealer is unwilling to part with the property in the goods without receiving the full purchase price, or without the appellant being able to pay him that balance because of an unaccepted application for a loan. (at p362)

36. In my opinion, these differences in the circumstances of the two cases do not require any change in the conclusions I expressed in Barnett's case. The loan agreement is what it purports to be, an agreement to lend money. It does not afford time to pay the purchase price. Nor does the purchase agreement by being conditional on the acceptance of the loan application afford any time to pay the price or any part of it. Unless the loan is granted, there is no obligation to pay the price. When the loan agreement is made the price is immediately payable. (at p363)

37. Thus, in my opinion, no credit in the sense of forbearance is involved in the transactions. They remain separate, the one a purchase agreement, albeit conditional on the making of the loan agreement and the other a loan agreement not dependent on the purchase agreement except in so far as the latter, with the aid of the standing agreement, makes it possible for the title to goods to be transferred to the appellant. (at p363)

38. I would therefore reach the same conclusion in this case as I have expressed in relation to Barnett's case. (at p363)

39. The third case may be called Considine's case. (at p363)

40. In this case the goods were not delivered to the purchaser on the making of the purchase agreement and the property in them remained with the dealer. The agreement to purchase was conditional on the acceptance of the application for loan, which was for an amount sufficient to pay the balance of the purchase price. Otherwise the facts and circumstances of this case were the same as those in Hennessy's case. (at p363)

41. Consequently what I have said in the latter case applies in this case. The same conclusions are appropriate and result, in my opinion, in the allowance of the appeal. (at p363)

42. Accordingly in each case the appeal, in my opinion, should be allowed. (at p363)

MENZIES J. These are three appeals by special leave from determinations by the Supreme Court of New South Wales in favour of the Commissioner on cases stated under the provisions of the Stamp Duties Act (N.S.W.). The Supreme Court held that the three contracts of loan made by the appellant fell within the description of "credit arrangement" as defined in s. 75A (1) of the Act and were dutiable accordingly (1972) 1 NSWLR 595 . (at p363)

2. In each case a customer purchased electrical goods from a dealer - New Era Furniture Pty. Ltd. The dealer and the appellant had entered into what was called a dealer trader agreement for the purpose of providing finance for customers of the dealer under which the dealer submitted loan applications to the appellant on behalf of the customer. If the appellant accepted such applications it would enter into a chattel mortgage with the customer and would pay the price of the goods with certain deductions to the dealer. (at p364)

3. In each case the customer purchased from the dealer goods at a purchase price of more than $400 and the amount payable was not less than the purchase price as defined "plus interest at a rate exceeding nine per centum per annum". A deposit of ten per cent was paid in cash at the time of the contract of purchase. At the time of making the purchase and on the dealer's premises the customer filled in an application for a loan from the appellant. The applications were subsequently accepted by the appellant. It entered into contracts of loan with each customer and paid the balance of the price of the goods to the dealer. In the case of the customer Barnett, the goods were delivered to him and the property in them passed immediately. In the case of the customer Hennessy, although the goods were delivered to him, the contract for the sale of the goods was conditional upon the application for loan being accepted by the appellant and it was agreed that no property in the goods would pass until this occurred. In the case of the customer Considine, the goods were not delivered to him until later. His contract for the sale of goods was conditional upon the application for loan being accepted by the appellant and upon the amount of that loan being paid by the appellant to the dealer. It was agreed that property in the goods would not pass until both these events took place. In the view which I have formed, nothing turns upon the differences between these three cases. (at p364)

4. The Commissioner of Stamp Duties assessed each contract for loan on the basis that it constituted a "credit arrangement" within the meaning of s. 75A (1) of the Act. The appellant claimed that the contract for loan was an agreement under hand not otherwise specifically charged with any duty. The cases stated deal only with the liability to duty of each contract for loan made by the appellant. It was not sought to assess duty on any arrangement resulting from the combined effect of the dealer trader agreement and a contract of loan. Accordingly, the only relevance of the dealer trader agreement is that it explains why the customer entered into a contract of loan with the appellant rather than with some other finance company. (at p364)

5. A "credit arrangement" is defined by s. 75A (1) as follows:

"... an arrangement or an offer to enter into an arrangement
under which when goods are purchased or where subsequent to
the purchase of goods an option to pay by instalments is
exercised the amount payable or paid is not less than the
purchase price of the goods plus interest at a rate exceeding nine
per centum per annum, such rate being calculated as hereinafter
provided, and where the purchase price is four hundred
dollars or more."

Section 75A is one of a number of sections which appear under the short heading "Instalment Purchase Arrangements". An instalment purchase arrangement is defined in s. 75A as being "a credit arrangement, a credit purchase agreement or a high purchase agreement". Each of these phrases is defined. Furthermore, it is provided by s. 75A that "vendor" means "(b) in the case of a sale to which a credit arrangement relates, the person to whom payment is to be made". The definition of "credit arrangement" does not itself refer to a "vendor" but the definition of vendor is given substance by the requirements of other sections, e.g. 75B and 75D. (at p365)

6. In all three cases there was, at the time of the making of the contract of purchase, no arrangement for credit - the contract of loan followed the contract to buy. This circumstance might itself occasion some difficulty for the Commissioner, particularly in Barnett's case, but I do not decide any of the matters upon such a narrow ground. In my opinion none of the loans which the appellant made was a "credit arrangement" as defined because to fall within the definition an arrangement must be one which concerns the amount paid or payable for the goods being purchased. This necessitates that the arrangement is with the person contracting to sell the goods. A contract by a third party to lend money with which to pay for goods is not, in my opinion, a credit arrangement within the definition. (at p365)

7. My conclusion rests upon the language of the definition, not upon any narrow conception of what is understood by the word "credit", for I have no doubt that in each case the purchaser here under consideration did, in a very real sense, obtain credit. That credit, however, was obtained from a third person outside the contract to purchase, not from New Era Furniture Pty. Ltd. by a "credit arrangement" with that company. (at p365)

8. It may be objected that my construction of the words "credit arrangement" would leave little room for the application of the special definition of the word "vendor". However, as I have said, that word does not appear in the definition. Moreover, I can envisage a case where it would have an application such as where there is a "credit arrangement" made by the owner of goods with a purchaser which provides that the amount payable should be paid to a person other than the owner, e.g. a person financing the owner. (at p366)

9. I would, therefore, in each case allow the appeal. (at p366)

GIBBS J. These three appeals from the Court of Appeal of New South Wales are concerned with the proper construction to be given to the words of the definition of "credit arrangement" in s. 75A of the Stamp Duties Act, 1920 (N.S.W.), as amended ("the Act") (1972) 1 NSWLR 595 . The appellant company had a standing arrangement with a retail trader ("the dealer") under which the dealer submitted to the appellant applications by customers who wished to borrow money to enable themselves to purchase goods from the dealer. Under this arrangement if the appellant accepted an application it would make payment direct to the dealer who agreed that the property in the goods should thereupon pass to the customer (if it had not already done so) and that the appellant would take a mortgage of the goods from the customer. In each of the cases now before us the customer ("the purchaser") agreed to buy goods from the dealer for a specified price and paid to the dealer a sum on account of the purchase price. The purchaser before leaving the dealer's premises completed and signed an application which the dealer transmitted to the appellant. The application was "for a loan of the amount set out in Items (3) (4) (5) & (6) Pt II of the schedule below to enable me to purchase from the above dealer the goods described in Pt I of the Schedule". In each case Pt I of the schedule gave what were called "Details of Goods Purchased" and Pt II of the schedule set out an amount described as "Cash Price of Goods" (item (1) ), deducted the amount which had been paid by the purchaser to the dealer and which was described as "Deposit" (item (2) ) and thus arrived at "Balance of Price" (item (3) ). Items (4) , (5) and (6) ("Freight", "Maintenance" and "Insurance") in each case were left blank as irrelevant. The schedule then set out the "Total amount to be paid by you on my behalf (being amount of principal of loan)" (item (7) ) which in the circumstances was the same amount as that shown as item (3) , and added "Terms Charges" (item (8) ) to give the "Total amount repayable" (item (9) ). The application contained an agreement by the purchaser to repay the total amount of principal and terms charges by twelve consecutive equal monthly instalments of which the first should be paid one month from the date of acceptance by the appellant of the purchaser's request, and the purchaser further agreed to give a mortgage over the goods as security for the loan. The application also provided that the appellant might "disburse the loan on the date of acceptance as implied in items (3) to (6) of Pt II of the schedule by credit to the dealer's account with you or by payment to the dealer or as directed by the dealer". It further provided that the purchaser's request should be deemed to be accepted, and that a binding contract should arise, when the appellant's officer signed the acceptance on the form of application. In each case the application was duly accepted about seven days after it was signed by the purchaser and the appellant then paid the requisite amount to the dealer. The only differences that existed between the circumstances of the three cases were the following. In the first case the property in the goods passed to the purchaser on the making of the contract between himself and the dealer and the goods were immediately delivered to the purchaser. In the second case, although the goods were delivered immediately, the contract was conditional upon the application being accepted by the appellant and it was a term or condition of the contract that notwithstanding delivery the property in the goods would not pass from the dealer to the purchaser until acceptance of the application by the appellant. In the third case the contract was conditional upon the application being accepted by the appellant and the amount of the loan thereby sought being paid over by the appellant to the dealer and the dealer did not in fact deliver the goods to the purchaser, and property in them did not pass, until after such payment had been made by the appellant. (at p367)

2. In each case the Commissioner assessed the instrument embodying the accepted application to duty at the rate fixed in respect of an "instalment purchase arrangement", a term which is defined by s. 75A of the Act to mean "a credit arrangement, a credit purchase agreement or a hire purchase agreement". All these terms are defined in s. 75A. It is not necessary to refer in full detail to the definitions of "credit purchase agreement" and "hire purchase agreement", but it is desirable to state their general effect, without reference to immaterial provisos and qualifications. The former expression means an agreement for the purchase of goods under which, irrespective of the time at which the property in the goods passes or is to pass, the purchase price or any part thereof is paid or payable not before the expiration of six months from the date of the agreement by not less than two instalments and under which any of the instalments are to be paid after the goods have been delivered to the purchaser. The latter expression includes a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments, but does not include an agreement whereby the property in the goods passes at the time of the agreement or upon or at any time before delivery. The definition of "credit arrangement" contained in s. 75A is as follows:

"'Credit arrangement' means an arrangement or an offer
to enter into an arrangement under which when goods are
purchased or where subsequent to the purchase of goods an
option to pay by instalments is exercised the amount payable
or paid is not less than the purchase price of the goods plus
interest at a rate exceeding nine per centum per annum such
rate being calculated as hereinafter provided, and where the
purchase price is four hundred dollars or more."

The expression "purchase price" which appears in this definition is itself defined as follows:

"'Purchase price' means, in the case of a credit purchase
agreement, a hire purchase agreement and a sale to which a
credit arrangement relates, the price at which the goods might
have been purchased for cash less any deposit or initial payment
made at the time of purchase and for this purpose the amount
allowed by way of a discount or a trade-in shall be deemed to
be a deposit or part thereof."

The person primarily liable to the duty payable on an instalment purchase arrangement is "the vendor" (see 2nd Sch. to the Act) and further obligations are cast on "the vendor" by s. 75B of the Act, the material provisions of which read as follows:

"75B. (1) (a) Subject to the provisions of paragraph (d) of
this subsection a vendor shall make out an instrument -
(i) in the case of a credit purchase agreement and a hire
purchase agreement, at the time of the making of the
agreement; or
(ii) in the case of a sale or an exercise of an option following
the sale as the case may be to which a credit arrangement
relates within seven days of each such sale or each exercise
of an option.
(b) Such instrument shall clearly and truly set out -
(i) the full name and address of the purchaser;
(ii) the full name and address of the vendor;
(iii) a description of the goods sufficient to indicate their
nature;
(iv) the total amount payable by the purchaser on any account
whatsoever under the instalment purchase arrangement;
(v) the total amount payable for or by way of interest or
insurance or any other charge under the instalment
purchase arrangement;
(vi) the purchase price."

"Vendor" is defined in s. 75A, for relevant purposes, as
follows:

"'Vendor' means -
(a) in the case of a credit purchase agreement and a hire
purchase agreement, the person by whom goods are let,
hired or sold or agreed to be let, hired or sold; and
(b) in the case of a sale to which a credit arrangement relates,
the person to whom payment is to be made."

"Purchaser" is also defined, and for relevant purposes means "the person to whom goods are let, hired or sold or agreed to be let, hired or sold". (at p369)

3. The Commissioner submitted that in the present case the appellant was the vendor within the above definition and therefore primarily liable to duty. In my opinion, if it were accepted that the instrument answered the description of a credit arrangement as defined in s. 75A no difficulty would be created for the Commissioner by the words "a sale to which a credit arrangement relates" which appear not only in the definitions of "vendor" and "purchase price" but also in s. 75B. The instrument, in my opinion, related to the sale of the goods; it was not only in fact connected with the sale, having been made only to enable the sale to be completed, but it contained a number of express references to the sale. If, therefore, the application was a credit arrangement, the sale of the goods was one to which that arrangement related. It would not, however, be so clear that the appellant was the person to whom payment was to be made within the definition of "vendor", since that definition suggests that what is meant is the person to whom payment is to be made for the purposes of the sale. (at p369)

4. Before considering further the definition of "vendor", it is convenient to turn to the definition of "credit arrangement". It was conceded that the principal sum lent in each case (the amount of the cash price less the deposit) exceeded $400 and that if the terms charges were to be regarded as interest on the purchase price the rate exceeded nine per cent per annum. However, the appellant submitted that the definition did not apply for two main reasons. First, it was said that an arrangement to make a loan is not an arrangement for the giving of credit within the ordinary meaning of the words. Even if that argument were correct, which I do not find it necessary to consider, it would not in my opinion follow that the instrument in the present case was not a "credit arrangement" within the meaning of the definition. To determine whether an arrangement is a "credit arrangement" it is unnecessary to inquire whether it was an arrangement to give credit in the ordinary sense of the term. The expression as used in s. 75A is purely artificial and its meaning can be found only by reference to the words which define it. Those words do not refer to "credit" and do not render it necessary to consider whether an arrangement sought to be brought within the definition could correctly be described as a "credit arrangement" within the ordinary sense of those words. (at p370)

5. The second submission of the appellant was that the definition contemplates an arrangement under which a sale is subsequently effected and under which the purchase price of the goods is paid or payable, that is, an agreement between a prospective vendor and a prospective purchaser, rather than an agreement between a prospective purchaser and a third person. The learned Solicitor-General, in contending that this construction should not be accepted, referred to the history of the legislation. The provisions now in question were inserted in the Act by the Stamp Duties (Amendment) Act, 1966. Before that amending Act was passed s. 75A referred only to "hire purchase agreements" which were defined in terms whose effect was similar to that of the present definition of "hire purchase agreement". The definitions of "hire purchase agreement" and of "vendor" in the Act before it was amended clearly showed that the section was limited to transactions between sellers and buyers, or prospective sellers and prospective buyers, in the ordinary sense. In the present Act two new classes of agreement are included. A "credit purchase agreement" is still an agreement between seller and buyer but it was submitted the definition of "credit arrangement", particularly when read in the light of the definition of "vendor", was introduced to include arrangements between persons who are not, and did not intend to be, parties to a contract of sale. It was pointed out that the section in defining "credit purchase agreement" and "hire purchase agreement" does not make any reference to an interest rate and this circumstance was said to provide some further support for the view that a "credit arrangement", unlike the other two categories, may extend to an arrangement made by a financier who is not a party to the contract of sale. (at p370)

6. It is clear enough that by the amendments made in 1966 the legislature intended to, and did, extend the classes of agreement and arrangement which would attract duty of this kind. It is clear too that the vendor under a sale to which a credit arrangement relates is not necessarily a vendor in the ordinary sense. However, to determine what transactions are "credit arrangements" it remains necessary to find the meaning of the words contained in the definition itself. (at p370)

7. If for convenience one puts aside the case of an offer to enter into an arrangement, and the case where subsequent to the purchase of goods an option to pay by instalments is exercised, it is apparent from the words of the definition that a "credit arrangement" must be an arrangement under which when goods are purchased the amount payable or paid is not less than an amount calculated in accordance with the definition. The Solicitor-General submitted, rightly in my opinion, that although the amount payable or paid is described by reference to a purchase price, the definition does not itself state that the amount should be or include the purchase price itself. In other words, the definition appears capable of referring to a case where an amount which could not itself be described as the purchase price is quantified by reference to the purchase price. The Solicitor-General went on to contend that the words "when goods are purchased" refer to the occasion of the payment and do not require that the purchase should be made under the arrangement. The provisions of s. 75B (1) (a) (ii), which require an instrument, which is to be stamped as an instalment purchase arrangement, to be made out within seven days of the sale to which a credit arrangement relates, suggest that what is contemplated is a credit arrangement that precedes, or is at latest contemporaneous with, the sale. That this is so is supported by the use of the words "when goods are purchased" in the definition of "credit arrangement". Those words cannot in my opinion be read as meaning "when goods have been purchased". In one of the judgments of the Court of Appeal reference was made to the words "subsequent to the purchase of goods". Those words do not in any way affect the conclusion that an arrangement to be within the definition cannot be one made after the purchase in a case (such as the present) where there was no exercise of an option to pay by instalments. In the case of an option the arrangement may be subsequent to the purchase but must precede or be contemporaneous with the exercise of the option. In its application to an arrangement which does not relate to the exercise of an option the definition refers to an arrangement under which an amount is payable or paid when goods are purchased on or after the making of the arrangement. This would be enough to justify a conclusion that the instrument in the first of the three cases before us was not rightly assessed to duty as an instalment purchase arrangement, because in that case the purchase of the goods preceded the making of the arrangement recorded in the instrument. The other two cases, however, could not be disposed of on this ground, for in those cases the effect of the condition in the contract may well have been that the goods were not purchased before the arrangement was made. (at p371)

8. It does not seem to me to be necessary finally to decide whether upon its proper construction the definition of "credit arrangement" requires that the purchase which is the occasion of the payment should be effected pursuant to the provisions of the arrangement. Indications that this is the effect of the definition are provided by the definition of "vendor", which suggests that the payment is to be made to a person who, although not the seller, is in some way connected with the sale itself, e.g., as a person mentioned in the contract of sale as the person to whom payment is to be made, and by the definition of "purchaser" which, with the provisions of s. 75B, shows that the amount is to be paid or payable by a person who is a purchaser in the ordinary sense. However, whether or not it is necessary that the purchase should be made under the arrangement, it is in my opinion made clear by the words of the definition that an arrangement can only be a "credit arrangement" if it provides for an amount to be paid or to become payable on a purchase of goods, which purchase, as I have already said, must take place immediately or in the future. In other words, the arrangement must itself stipulate that the purchase is the occasion on which the amount is to be paid or to become payable. This conclusion, that an arrangement, to come within the definition, must itself require the amount to be paid or to become payable when goods are purchased, is enough to dispose of the present appeal. In each case the accepted application related the payments simply to the date of acceptance of the application. It was immaterial to the arrangement recorded in the instrument whether the purchase to which it related had already been completed or would be completed immediately on acceptance or would not be completed until some later time in the future. The arrangement embodied in the instrument was not one under which any amount was paid or payable when goods were purchased. (at p372)

9. For these reasons I am unable to agree with the construction given by the learned members of the Court of Appeal to this obscure and difficult provision. I hold that the instrument was not stampable as an instalment purchase arrangement and it is common ground that in that event it attracted duty only at the rate provided for "an agreement or a memorandum of agreement, and not otherwise specifically charged with any duty - under hand only". (at p372)

10. I would allow the appeal and answer the questions in the stated cases accordingly. (at p372)

STEPHEN J. I have had the advantage of reading the reasons for judgment of Menzies J. and am in agreement with them. (at p372)

MASON J. I have had the advantage of reading the reasons for judgment prepared by the Chief Justice in these three matters. I agree with those reasons and that the appeals should be upheld. (at p372)

ORDER

Appeal allowed with costs. Order of the Supreme

Court answering the questions in the stated case
set aside and in lieu answer such questions as
follows:

(a) ...
(i) No
(ii) Yes
(iii) Unnecessary to answer.

(b) by the respondent.