Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd [1989] HCA 19; (1989) 167 CLR 1 (16 March 1989)

HIGH COURT OF AUSTRALIA

COMMISSIONER OF STAMP DUTIES (N.S.W) v. PENDAL NOMINEES PROPRIETARY LIMITED
AND ANOTHER [1989] HCA 19; (1989) 167 CLR 1
F.C. 89/016

Stamp Duties (N.S.W)

High Court of Australia
Mason C.J.(1), Brennan(2), Deane(3), Dawson(3) and Toohey(4) JJ.

CATCHWORDS

Stamp Duties (N.S.W.) - Declaration of trust - Sale agreement containing covenant by nominee to hold on trust for purchaser - Purchaser trustee of unit trust - Instrument containing several distinct matters - Dutiable in respect of each matter - Whether nominee's covenant a distinct matter - Instrument declaring property "to be vested" in declarant to be held on trust - Whether property "to be vested" in nominee - Whether to be held in trust for purchaser or for unit holders - Whether nominee "apparent purchaser" - Whether property "conveyed" to purchaser by agreement - Stamp Duties Act 1920 (N.S.W.), s. 17(1), 2nd Sched., "Declaration of Trust".

HEARING

1988, September 14; 1989, March 16. 16:3:1989
APPEAL from the Supreme Court of New South Wales.

DECISION

MASON C.J. This appeal raises questions as to the operation of s.17 of the Stamp Duties Act 1920 (NSW) ("the Act") and certain provisions set out under the heading "Declaration of Trust" in the Second Schedule of that Act.

2. On 1 December 1976 the second respondent, BT Australia Limited ("BTA"), executed a trust deed ("the Trust Deed") which established a unit trust known as the BTA Property Trust. BTA declared in cl.4 of the Trust Deed that it would "hold the Fund upon trust for the Unit Holders subject to and upon the terms of" the deed. Clause 3(2)(i) defined the "Fund" to include the trust fund constituted by the Trust Deed and the investments from time to time of that fund.

3. Clause 10(4)(ii) provided that certain investments of the Fund should vest in BTA upon delivery of stamped transfers in favour of BTA or its nominee, subject to a solicitor acting for BTA certifying that the transfers were registrable. The reference to a nominee is explained by cl.29(j), which empowered BTA to cause any of the trust assets to be vested in its nominee and held by its nominee upon the trusts of the deed. BTA covenanted that "any nominee of the Trustee will duly observe and perform the covenants and obligations of this deed in the same manner as is required of the Trustee": cl.30(d). The Trust Deed made no express reference to the first respondent, Pendal Nominees Pty. Limited ("PN"). PN was at all material times a wholly owned subsidiary of BTA.

4. On 28 June 1983, various companies including BTA and PN executed a deed of sale ("the Sale Deed") pursuant to which BTA agreed to purchase certain shares from another party, RDC Holdings Limited ("RDC"). The exchange of counterparts took place on the same day, as did the sale pursuant to the Sale Deed.

5. The Sale Deed obliged BTA upon completion to pay to RDC the purchase price for the shares: cl.1.3. Further, cl.1.4 stated:
"RDC shall on completion deliver to BTA transfers
of the ... (s)hares in favour of PN and PN shall
hold such shares as nominee for BTA."
of PN along with relevant share certificates and corporate records. Clause 7 contained warranties given by BTA, RDC and certain other parties to the Sale Deed (not including PN), and cl.9 permitted the covenants and warranties contained in the Sale Deed to be enforced by "BTA (in its capacity as trustee of the BTA Property Trust), PN (both for itself and as nominee for BTA in its capacity as trustee of the BTA Property Trust), RDC" and other parties.

6. The Sale Deed was charged with ad valorem stamp duty as an agreement for the sale of shares. The respondents did not dispute that this document was properly so charged upon that basis. However, the Commissioner also assessed the document to further ad valorem duty upon the basis that it constituted a declaration of trust in respect of the shares within the terms of par.(2)(a) under the heading "Declaration of Trust" in the Second Schedule of the Act. The Commissioner relied upon the terms of cl.1.4, set out above. Paragraph (2)(a) is in the following terms:

"Any instrument declaring that any property vested
or to be vested in the person executing the
instrument is or shall be held in trust for the
person or persons or purpose or purposes mentioned
therein notwithstanding that the beneficial owner
or person entitled to appoint that property may not
have joined therein or assented thereto."

7. The respondents appealed against the Commissioner's assessment by way of case stated pursuant to s.124 of the Act. They alleged before Hunt J. in the New South Wales Supreme Court that the Sale Deed was not a document falling within par.(2)(a), or alternatively that it was a document falling within par.(1), which imposes nominal duty only. Paragraph (1) reads as follows:

"Any instrument declaring that a person in whom
property is vested as the apparent purchaser
thereof holds the same in trust for the person or
persons who have actually paid the purchase-money
therefor."

Hunt J. held that cl.1.4 did no more than record an obligation which was in any event imposed upon BTA by operation of the general law, and thus held that no duty was payable upon the Sale Deed beyond the undisputed ad valorem duty upon the agreement for sale of the shares. His Honour expressed the further view that in any case he would have held the Sale Deed to fall within par.(1) rather than par.(2)(a).

8. The Commissioner appealed against this decision to the Court of Appeal. Mahoney J.A. (with whom Kirby P. and McHugh J.A. agreed) held that the Sale Deed was a document within the terms of par.(2)(a) rather than par.(1), but went on to hold that the terms of par.(3)(b) were ultimately applicable. This paragraph, like par.(1), imposes only nominal duty, and refers to:

"Any such instrument as aforesaid by which ... the
trusts declared are the same trusts as those upon
or subject to which the same property was conveyed
to the person declaring the trust by an instrument
duly stamped with ad valorem duty under this Act
..."

9. The Commissioner now appeals against the decision of the Court of Appeal to the extent that it held that par.(3)(b) was applicable. The respondents in turn contend that the decision should be affirmed but on different grounds.

10. It was accepted by all parties, although the matter is perhaps not free from doubt, that if either of the provisions imposing nominal duty were to apply, then they would exclude the operation of the paragraph imposing ad valorem duty. So much can therefore be assumed in the construction of the legislation.

11. Before examining these charging provisions it is necessary to consider the effect of s.17(1) of the Act, which states:

"Except where express provision to the
contrary is made by this or any other Act, an
instrument containing or relating to several
distinct matters is to be separately and distinctly
charged with duty in respect of each of such
matters, as if each matter were expressed in a
separate instrument."

There being no "express provision to the contrary" in the present case, the question arises whether the Sale Deed deals with "several distinct matters" when it deals with the sale of shares and the provision in cl.1.4 that PN is to hold the shares as nominee for BTA. The effect of that provision is of central importance in answering this question.

12. If the second part of cl.1.4 were regarded as simply declaratory of the general law, it would be at least strongly arguable that it is not a matter distinct from the sale of shares and hence not independently dutiable. However, if it is determined that cl.1.4 operates to impose positive obligations upon PN additional to those it may have had imposed upon it under the general law, or seeks to impose certain obligations regardless of the form of other obligations which might be imposed by the general law, then it may be more readily concluded that there are two distinct matters involved.

13. On its face, the clause purports to impose an obligation upon PN to hold the shares on trust for BTA and would therefore amount to a covenant by PN. However, the respondents contended that the relevant part of the clause has no operative effect and merely states what would in any event be an obligation of PN imposed by the general law as a consequence of BTA having contributed the purchase money for the shares. It was argued before Hunt J. and the Court of Appeal that in this circumstance duty would not be payable, and reliance for this conclusion was placed upon Mullett v. Huchison [1828] EngR 349; (1828) 7 B & C 639 (108 ER 861); Lawrance v. Boston [1851] EngR 909; (1851) 7 Ex 28 (155 ER 842) and Annandale v. Pattison [1829] EngR 6; (1829) 9 B & C 919 (109 ER 342). However, as will appear below, in this Court this argument was advanced in the terms I have set out in the preceding paragraph.

14. Clause 1 contains several provisions whose purpose is to create covenants of the various parties to the Sale Deed enforceable by those parties. The word "shall" is repeatedly used in the clause to give effect to this intention. It seems to me that cl.1.4 likewise contains in its second part a covenant by PN which it is intended will be enforceable by the other parties to the Sale Deed. Indeed, this covenant appears to be one of the reasons for PN having been made a party to the document at all. Further, by creating an obligation for the benefit of and enforceable by the other parties (pursuant to cl.9), cl.1.4 is doing more than simply recording an obligation imposed by law, since the general law would not permit all the parties to enforce any trust it might impose. And cl.1.4 would be operative even if the circumstances giving rise to a resulting trust never occurred, for example if the purchase money were in fact paid by an entity other than BTA. Once it is recognized that cl.1.4 extends beyond the ambit of the general law, it becomes impermissible to regard the part of that provision which constitutes a declaration of trust as no more than a recitation of the general law not intended to create obligations between BTA and PN.

15. Had it been the intention of the parties to do no more than record an unwritten obligation, then it would not have been expressed in the same terms as provisions imposing covenants and the use of the mandatory form of expression would have been an inappropriate means of expressing what was intended. For these reasons, the second part of cl.1.4 amounts to a positive covenant of PN rather than a mere acknowledgment of an obligation arising under the general law.

16. Since two obligations are created by cl.1.4, it is necessary to decide whether these amount to "distinct matters" for the purposes of s.17(1).

17. The statutory concept of "distinct matters" has traditionally been associated with the rule enunciated by Martin B. in Limmer Asphalte Paving Co. v. Commissioners of Inland Revenue (1872) LR 7 Ex 211 in these terms (at p 217):

"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."

This rule has been described as a common law rule. It may be traced back as far as Pratt v. Thomas (1831) 4 C & P 554 [1829] EngR 163; (172 ER 822); sub nom. Price v. Thomas [1831] EngR 180; (1831) 2 B & Ad 218 (109 ER 1125) which was decided long before a provision in the form of s.17(1) first found its way into the United Kingdom Stamp Act of 1870 (33 & 34 Vict. c.97): see s.8 of that Act. But it should be noted that the Act of 1815 (55 Geo III c.184) contained a similar provision under the heading "Conveyance". It is likely that the common law rule was fashioned with this provision in mind. Be this as it may, the statutory provision seems to have been regarded as being consistent with the common law rule, no doubt on the footing that, in general, a provision that is merely accessory or merely ancillary to the principal transaction or obligation embodied in an instrument is not a "distinct" matter which attracts additional duty: see Freeman v. Commissioners of Inland Revenue (1871) LR 6 Ex 101; Hadgett v. Commissioners of Inland Revenue (1877) 3 ExD 46; Worthington v. Warrington [1848] EngR 250; (1848) 5 CB 635 (136 ER 1027). However, what must be recognized is that s.17(1) now provides the governing rule. The old common law rule, being entirely subservient to the statutory provision, cannot generate a life of its own. The utility of the old rule is limited; it conveys the idea, which conforms to the statutory concept of distinctness, that a provision which is merely accessory or merely ancillary to a particular transaction or obligation embodied in an instrument is not a matter "distinct" from that transaction or obligation. But, in judging what is merely accessory or merely ancillary, the court must always have regard to the statutory concept itself. The court cannot expand or confine that concept by attributing a narrow or broad operation to what is accessory or ancillary.

18. Once this is acknowledged, as it must be, it is impermissible to characterize an instrument by reference to a single broad purpose or object so that all obligations created by the instrument may be treated as subsidiary or accessory to that object or purpose. Neither the terms of the sub-section nor the authorities lend support to such a broad-brush approach. This does not, however, require that two matters which truly form part of the same transaction embodied in a document must necessarily be treated as "distinct" for the purposes of determining the liability to stamp duty of that document in relation to that transaction.

19. The correct approach was stated by Sugarman J. in Bambro (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties (1963) 80 WN (NSW) 1142 where he said (at p 1146):

"I see no reason for concluding that 'matters' may
not be 'distinct' in the sense now under
consideration even though in a contractual sense,
and in terms of the instrument which embodies them,
they are integrated and interlocked as parts of a
single larger transaction or bargain or agreement.
Matters contained in the same instrument are
distinct for the purposes of s.17(1) when it is
necessary to regard them separately in order to
assess the same amount of duty as would have been
assessable if each had been expressed in a separate
instrument, more particularly when each falls
within a different classification created by the
Act for the purpose of specifying the nature (fixed
or ad valorem) and amount or rate of the duty
payable."

This statement was approved by Andrews S.P.J. and Macrossan J. in Pagan v. Commissioner of Stamp Duties (1983) 2 Qd R 466; their Honours also observed (at p 469) that "the proper approach to interpretation of the document and (to the) applicability of (the Queensland provision equivalent to s.17(1)) lies outside any search for a principal or leading object".

20. The point, as Adam J. noted in Comptroller of Stamps v. Martin (1967) VR 369 (at p 375), is that to be "distinct" the matters "must be different from the point of view of the Stamp Act and taxation" and be, if they had been the subject of a separate instrument, separately and distinctly dutiable.

21. Each case will depend on its particular facts, and will necessarily involve questions of impression and degree, but in the present case, I consider that the two matters dealt with in cl.1.4 are distinct, and that it cannot be said that one is accessory to the other. Two separate and different matters are dealt with which would have been individually assessable for stamp duty had they been expressed in separate documents. Neither is merely ancillary to the other, especially in view of the fact that on its proper construction the second matter does not consist simply of a statement explaining the consequences under the general law of the effecting of the transfer described in the first matter. Their combination in cl.1.4 is thus an instance of the type of composite instrument to which s.17(1) is addressed. I would regard that provision as applicable accordingly. I note that the same view was taken by Sheppard J. of a contract of sale in which the purchaser was described as being "trustee for" a certain person, in Farrar v. Commissioner of Stamp Duties (1975) 5 ATR 364.

22. I referred earlier to the argument raised in the courts below invoking the alleged common law rule that, to the extent that provisions in a document do no more than record an obligation which is imposed regardless of those provisions by the general law, those provisions do not attract stamp duty. The respondents therefore contended that the Sale Deed could not be dutiable as a declaration of trust, for even if cl.1.4 contained enforceable covenants, that part which would have attracted duty as a declaration of trust did no more than record a general law obligation. On this argument, the fact that this obligation operates as a covenant in favour of third parties would not affect the document's liability to duty as a declaration of trust. In the present case, however, the common law proposition contended for could have relevance only indirectly, in so far as it relates to the question whether the second part of cl.1.4 is for stamp duty purposes "distinct" from the sale provision. It could not operate directly because par.(3)(b) (among other provisions) now extends over the field or part of the field covered by the suggested common law rule. Attention was not directed to this provision at first instance and the argument did not require consideration in the Court of Appeal. It must be concluded, as counsel for the respondents conceded before us, that the suggested rule could not operate in these circumstances without depriving par.(3)(b) of all meaning. It is therefore not necessary to decide whether the common law rule in fact exists or what may be its scope.

23. Turning to the liability of the Sale Deed to stamp duty as a declaration of trust, the central charging provision in this case is that contained in par.(2)(a), which is set out above. The provision imposes liability upon the person declaring the relevant trust or the person directing its declaration. The Commissioner asserts that PN made the declaration by cl.1.4 at the direction of BTA. It is not necessary to consider whether the Sale Deed amounts to a declaration of trust in the ordinary sense of that expression, so long as it falls within the terms of the description of "Declaration of Trust" in the Second Schedule of the Act: D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, at pp 437, 454-455, 471-472.

24. It is first necessary to determine whether the declaration in cl.1.4 relates to property "vested or to be vested" in PN. Depending on the meaning which is to be given to this phrase, it may then be necessary to consider the appropriate time for assessing the liability of the Sale Deed under this head of duty. For present purposes I shall assume that property concerned is not "vested" at the relevant time, and so it only needs to be considered whether it can then be said of the property that it is "to be vested".

25. The interpretation of the phrase "to be vested" in this context was considered in Tooheys Ltd. v. Commissioner of Stamp Duties (NSW) [1961] HCA 35; (1961) 105 CLR 602. Dixon C.J. said (at p 612):

"The words 'any property vested or to be vested'
seem to me to be directed simply to the two cases,
namely the case of the declaration of a trust of
property then vested in the person who declares the
trust and the second case of a declaration of trust
in advance of the vesting in the person who
declares it of property which it is intended to
make the subject of the trust."

His Honour also stated that par.(2)(a) (which at that time was simply par.(2)) did not require either a presently constituted trust or a trust in which the declarant had enforceable rights in the property still "to be vested". The other members of the Court did not directly address this question.

26. The phrase was again considered in D.K.L.R. Holding Co. The members of the Court on this occasion did not adopt a uniform approach to the meaning of the phrase or its interpretation by Dixon C.J. in Tooheys.

27. Gibbs C.J. regarded the words "to be vested" as importing mere futurity. His Honour, after referring to par.(2), said (at p 439):

"The words 'shall be vested' in this context
indicate mere futurity, although the very fact that
a declaration of trust is made in respect of
property not yet vested suggests that there exists
an expectation, if not an intention, that it will
become vested."

His Honour pointed out that although an expectation may be defeated in a particular case, this may equally happen despite the existence of a legal obligation to vest the property.

28. I was of the opinion that the words "to be vested" should be read as "intended to be vested" and stated (at p 456) that it is the intention of the declarant, "and perhaps that of the person directing the declaration, that is the relevant intention". I considered that when a declarant's intention is frustrated or changed the duty may subsequently be recoverable under the Act or regulations. Stephen J. (at p 446) expressed agreement with my judgment.

29. Aickin J. took a stricter view of the question. Referring to the second case mentioned by Dixon C.J. above, his Honour said (at p 468):

"The phrase speaks of property which is or 'shall'
be held in trust, not which may be held in trust.
Such an event can only be one which either must
happen as a matter of law in the circumstances
existing, or one which some person is under some
obligation to bring about or which by statute must
occur."

Later his Honour stated (at p 469):

"The words of the provision require certainty of
vesting, not possibility, probability or intention."

30. Like Gibbs C.J., Brennan J. considered that the words "to be vested" import mere futurity. His Honour said (at p 471):

"In my opinion, no notion of intention to vest is
imported into par.(2), and no enquiry into the
actual intention of any person is called for."

His Honour noted the potential injustice of this construction but, without deciding the matter, adverted to the possibility of a refund of duty in the case where an instrument fails in its intended purposes and remains void of legal effect.

31. Although there is a distinct difference between the views expressed by Gibbs C.J. and Brennan J. on the one hand and Stephen J. and myself on the other hand, I doubt that the difference could be of substantial practical significance. As Gibbs C.J. pointed out, the fact of the making of the declaration of trust will itself often suffice to demonstrate the presence of an expectation or intention. However, further reflection on the question has led me to the conclusion that the interpretation of par.(2)(a) favoured by Gibbs C.J. and Brennan J. should now be adopted. The liability of an instrument to duty should not call for an inquiry into the intention of the maker of the instrument. The fact that the maker takes the trouble to execute the instrument is enough to bring par.(2)(a) into operation. Actual intention or expectation is not a criterion of operation of the sub-paragraph.

32. On this view the property was property "to be vested" within the meaning of par.(2)(a). In any event in the present case the parties to the Sale Deed clearly expected and intended that PN would hold the shares on trust for BTA, and indeed received the benefit of a covenant by PN to that effect. If it be accepted that the time for assessment of duty is the time at which the exchange of counterparts took place, the view of all the members of the Court in D.K.L.R. Holding Co. would be satisfied, with the possible exception of Aickin J. The shares would then have been property "to be vested" in the declarant within the meaning of par. (2)(a).

33. However, s.38(1) of the Act provides that liability to stamp duty arises "upon the first execution" of an instrument, which in the present case meant, in the view of the Commissioner, that the Sale Deed should be assessed at the point at which PN executed its counterpart. Even at this earlier point PN had manifested an intention or expectation sufficient to satisfy the majority in D.K.L.R. Holding Co. and it is accordingly not necessary to determine the precise point at which liability to duty should have been assessed for the purpose of considering whether the property was "to be vested" in PN.

34. The next question which arises in the construction of par.(2)(a) is whether the declaration in the Sale Deed is in favour of "the person or persons or purpose or purposes mentioned therein". It is accepted that the references to purpose are not relevant to the present case. Counsel for the respondents contended that the shares were in effect to be held on trust by PN, not for BTA, but for the unit holders under the Trust Deed, who are not "persons mentioned" in the Sale Deed. If this contention were accepted it would then be necessary to consider the meaning of the word "mentioned" in par.(2)(a) and to decide whether the terms of the Trust Deed could for this purpose be incorporated into the Sale Deed. But in my view the contention cannot be accepted. It is not relevant that BTA as beneficiary of the trust declared by PN itself held the equitable interest in the trust property on trust for other persons. The fact remains that the shares were to be "held in trust" for BTA which is a person mentioned in the Sale Deed and accurately described as the beneficiary of the trust in question. There is no basis for "looking through" this trust as the respondents urged. Indeed, the Sale Deed itself does not contemplate that the unit holders, rather than BTA, should be able to call for the trust property and otherwise enforce the trust directly.

35. It follows that in my opinion cl.1.4 of the Sale Deed falls within the terms of par.(2)(a). However, as I have indicated, the case has proceeded upon the basis that pars (1) and (3)(b) have, in effect, paramount force, and so these provisions must also be considered.

36. The terms of par.(1) are set out above. The language of this provision is unmistakably different to that used in par.(2)(a). In particular, the words "or to be vested" which appear in the latter paragraph are absent from the former. The history of these provisions reveals that these words were specifically added to par.(2)(a) but that the legislature did not see fit to insert them in par.(1). A clear distinction was thus made and persuasive reasons would be needed to imply the presence in par.(1) of words which appear to have been consciously excluded. As I have not been able to identify persuasive reasons for making such an implication, I would be disposed to conclude that the shares were not "vested" in PN either at the point of first execution or at the point of exchange of the executed counterparts.

37. However, it is unnecessary to rest my decision on this ground because there is in my view a compelling ground for excluding the operation of par.(1) in this case, namely that PN cannot be said to be the "apparent purchaser" of the shares. Not only does the Sale Deed recite that BTA is the purchaser of the shares, but it is clear from its terms that BTA is to provide the purchase money and that PN is merely to be the transferee. PN is not the "purchaser" in the ordinary sense of the word and I see no reason to give the word any meaning in this context other than its ordinary sense.

38. Moreover, par.(1) is concerned with the situation in which a document reveals a certain person as the purchaser of property and does not reveal that another person has "actually paid the purchase-money", but contains a declaration of trust by the "apparent purchaser" in favour of that other person. This is not the situation in the present case. Furthermore, the situation envisaged by the paragraph is one in which the law would ordinarily impose a resulting trust in favour of the provider of the purchase money, and par.(1) is therefore concerned with a declaration which does no more than record the existence of such a trust: see Truskett v. Commissioner of Stamp Duties (NSW) (1976) 6 ATR 1. But this does not mean that every such declaration comes within the protection of the paragraph. Even if the second part of cl.1.4 were viewed as creating several different obligations, only one of which amounted to a declaration of trust for stamp duty purposes, the fact that such declaration may do no more than record the position under the general law would not suffice to bring the Sale Deed within the terms of the statutory exception. Paragraph (1) is not applicable on its terms.

39. The final question, and indeed the issue raised directly by this appeal, is whether par.(3)(b) is applicable to the Sale Deed. An initial difficulty faced by the respondents is that the person liable under this paragraph is the person declaring the trust (PN), but not the person directing the declaration of the trust (BTA). However, PN or BTA is liable under par.(2)(a), and there must be some doubt as to whether BTA could escape liability under par.(2)(a) by virtue of par.(3)(b). Nonetheless, it seems to have been accepted throughout this litigation that BTA could potentially avoid ad valorem duty under par.(2)(a) in this manner, and so it is appropriate to make that assumption for present purposes.

40. The Court of Appeal held that par.(3)(b) was applicable to the Sale Deed. The Commissioner has appealed on two grounds. The first is that it could not be said of the relevant property that it "was conveyed" to PN, because the conveyance was effected, not by the Sale Deed, but by the transfer of shares which was executed as part of completion as contemplated by the Sale Deed. Accordingly, so it was said, no conveyance had taken place at the time when duty fell to be assessed, whether upon first execution of a counterpart or upon exchange of counterparts.

41. On a literal reading of par.(3)(b), this argument has strong persuasive force. It gains added force from the judgment of Gibbs C.J. in D.K.L.R. Holding Co., where his Honour said (at pp 442-443):

"... the words 'was conveyed' in par.3(b) are in my
opinion deliberately used in the past tense, to
refer to a conveyance made before the declaration
of trust was executed."

However, in the same case Brennan J. pointed out (at p 475) that such a construction would deny par.(3)(b) any operation in relation to a declaration that property to be vested in the trustee shall be held by him in trust, despite the fact that par.(3) is expressed to apply to all declarations falling within par.(2). His Honour therefore took the view that:

"... if the declaration falls within par.(2), it
will nevertheless escape the ad valorem duty
charged upon it under that paragraph if, at the
time when it is stamped, the conveyance has already
been stamped with ad valorem duty." (at p 475)

The other members of the Court did not address this question, although Aickin J. observed (at p 469):

"There is no question of (the instrument) falling
within pars (1) or (3) ..."

This statement, along with the tenor of his Honour's judgment, might be taken to imply agreement with the more literal view of the Chief Justice.

42. In the result, however, it is unnecessary for me to decide upon the meaning and operation of the phrase. This is so, because in my view the property was not conveyed "by an instrument duly stamped with ad valorem duty". The instrument which was stamped with ad valorem duty was the Sale Deed, which conveyed only an equitable interest in the shares to PN, by virtue of the agreement for sale contained in cl.1.4. But the property in relation to which the declaration of trust was made, and thus the property referred to in par.(3)(b), was the legal interest in the shares. It cannot matter that at the time when the declaration of trust was made, PN did not possess this legal interest and could only pass an equitable interest in property to be acquired by it, because this is the very situation which the words "to be vested" in par.(2)(a) are intended to cover and which par.(3) deals with by the use of its opening words "(a)ny such instrument as aforesaid".

43. Therefore the trust property, to be vested in PN, was not conveyed to PN by the Sale Deed, but by the share transfer, which pursuant to s.41(4)(a) of the Act was stamped with nominal duty only, since the Sale Deed had been stamped as an agreement for sale. The legislature could, if it wished, have made reference in par.(3)(b) to agreements to convey, but it did not do so. A conveyance is stipulated. There is no conveyance of the trust property stamped with ad valorem duty. This fact is not altered by the circumstance relied upon by Mahoney J.A., that "ad valorem duty as on a transfer of the shares was paid, presumably upon the Sale Deed and/or upon the share transfers". The presumption mentioned is not sufficiently precise, since the proper test is not whether duty was paid "as on" a transfer. Paragraph (3)(b) is therefore not applicable to the Sale Deed.

44. The result is that the respondents are liable for ad valorem duty upon the Sale Deed as a declaration of trust, pursuant to par.(2)(a). While this may appear to some an arbitrary conclusion, given that a minor reorganization of the transaction or documentation may have produced a different result, the legislature has clearly created a wide ad valorem charging provision and some relatively narrow exceptions. In these circumstances, to extend the application of those exceptions on the basis of a supposed legislative policy against the imposition of double duty would not only undermine s.17(1), but would do considerable violence to the language employed under the heading "Declaration of Trust" and may have undesirable consequences for the interpretation of other parts of the legislation.

45. The Commissioner's figure of $47,620.80 was not challenged by the respondents. I would allow the appeal with costs and answer the questions asked in the stated case as follows:

(a) Whether the Share Sales Deed is chargeable
with stamp duty in accordance with the head of
charge "Declaration of Trust" in the Second
Schedule to the Stamp Duties Act 1920.
Answer: Yes.
(b) If the Share Sales Deed is chargeable with
duty in accordance with the head of charge
"Declaration of Trust", whether it is so
chargeable under
(i) paragraph (1); or
(ii) paragraph (2)(a)
of that head of charge.
Answer: Paragraph (2)(a).
(c) If the Share Sales Deed is chargeable with
duty under the head of charge "Declaration of
Trust" whether the correct amount of duty
thereunder is -
(i) $47,620.80
(ii) $6.00
(iii) some other and if so what sum.
Answer: $47,620.80
(d) By whom should the costs of those proceedings
be paid?
Answer: The plaintiffs to pay the defendant's
costs of the proceedings.

BRENNAN J. The material provisions of the Sale Deed and the Trust Deed are set out by the Chief Justice with whose judgment I am in general agreement. I see the resolution of this case as depending on the answer to the question: is the second part of cl.1.4 of the Sale Deed a declaration by PN of a trust for BTA? A covenant by PN to hold shares as nominee for BTA is, in my opinion, tantamount to a covenant to hold the shares as trustee for BTA. A "nominee" in this context is one who is appointed to take title, not beneficially but for the benefit of the person whose nominee he is. The fact that cl.1.4 is in the language of covenant does not deny it the character of a declaration of trust. By its terms, therefore, cl.1.4 purports to be a declaration of trust for BTA. It is not a declaration of trust of a mere expectancy. Clause 1.4 does not wait upon the vesting of the trust property before it has effect. By cl.9, PN acquires a right "both for itself and as nominee for BTA in its capacity as trustee of the BTA Property Trust" to enforce the agreement for the sale of the Seven Hills shares. If the shares are to be held on trust for BTA when vested in PN, PN's right to enforce the contract for the sale of the Seven Hills shares is also held upon trust for BTA. Clause 1.4 has an immediate operation. If cl.1.4 were not a declaration of the trust on which the Seven Hills shares are to be vested, the trust on which PN was to hold the shares would be a resulting or constructive trust. But a court of equity does not pass by a declaration of trust in a search for a resulting or constructive trust. In Commissioner of Stamp Duties (Qd) v. Jolliffe [1920] HCA 45; (1920) 28 CLR 178, Isaacs J. said (at p 188):

"If a trust is seriously declared in explicit and
direct terms, there is an end of the matter; for
the declaration is the 'creation of the trust'
referred to by Lewin, 12th ed., at p 88. There
is an exception to which I shall refer, but apart
from that the rule holds. It is the 'declaration'
of trust upon which equity fastens."

When there is no doubt that the declarant contemplates the creation of a trust - the point on which Isaacs J. dissented in that case but which is not open to doubt in this case - I respectfully agree that equity fastens on the declaration rather than searching for less certain indicia of intention in order to find a resulting trust. And if there is an express trust for BTA declared by PN, there is no room for imposing a constructive trust in favour of the unit holders under the Trust Deed unless, perhaps, the trust declared is inimical to the interests of the unit holders. For reasons presently to be mentioned, it is not.

2. It is argued that cl.1.4 is no more than a statement of the trust obligation otherwise imposed on PN. The trust obligation to which that argument relates is the obligation of a nominee referred to in the antecedent Trust Deed. PN was not a party to that Deed. The general rule in determining the liability of an instrument to stamp duty is that its purport "depends upon its contents, and not upon any extrinsic circumstance": per Dixon A.J. in Edwards, Dunlop & Co. Ltd. v. Harvey (1927) VLR 37, at pp 47-48, a judgment to which Dixon J. adhered in Commissioner of Stamp Duties (Q.) v. Hopkins [1945] HCA 14; (1945) 71 CLR 351, at p 378. But the purport of the instrument is not conclusive. In the last-mentioned case, Dixon J. adopted the qualification stated by the second edition of Halsbury's Laws of England:

"'... but the Court is not bound by the apparent
tenour of an instrument, and will decide
according to the real nature of the transaction,
receiving, if necessary, extrinsic evidence.'"

3. In my opinion, there is nothing in the Trust Deed which denies that the transaction to which the latter part of cl.1.4 relates is other than what it appears to be. Under the Trust Deed, BTA was obliged either itself to hold the assets constituting the Trust Fund upon the trusts of that Deed or to cause a nominee in whom those assets were vested to hold them upon those trusts. The fulfilment of that obligation by BTA is entirely consistent with the existence of the trust declared in the latter part of cl.1.4. In Timpson's Executors v. Yerbury (H.M. Inspector of Taxes) 1936 1 KB 645, Romer L.J. said (at p 664):

" Now the equitable interest in property in the
hands of a trustee can be disposed of by the
person entitled to it in favour of a third party
in any one of four different ways. The person
entitled to it (I.) can assign it to the third
party directly; (2.) can direct the trustees to
hold the property in trust for the third party
(see per Sargant J. in In re Chrimes (1917) 1
Ch. 36)); (3.) can contract for valuable
consideration to assign the equitable interest to
him; or (4.) can declare himself to be a trustee
for him of such interest."

The second and fourth modes of disposition are presently relevant. BTA may hold the beneficial interest vested in it by PN's declaration of trust as trustee under the Trust Deed (the fourth mode) or it may perform its obligation under the Trust Deed by giving PN a direction to hold the shares on the trusts of the Trust Deed (the second mode). Either of those means of ensuring that the trusts of the Trust Deed are impressed on the Seven Hills shares depends upon the efficacy of PN's declaration to vest in BTA the beneficial interest of which BTA disposes. There is no necessary incongruity between the provisions of the Trust Deed and PN's declaration of trust in cl.1.4. The purport of cl.1.4 is not denied by the extrinsic circumstances.

4. Once cl.1.4 is seen to be a declaration of trust, the relevant category under the "Declaration of Trust" head of charge in the Second Schedule to the Stamp Duties Act 1920 (NSW) falls for determination. Clearly enough, it falls within par.(2)(a). It does not fall under par.(1) because PN is not the apparent purchaser, as the Chief Justice points out. It must be acknowledged that it is anomalous that a declaration of trust should attract only nominal duty when the declarant is the apparent purchaser and the beneficiary is the person who has actually paid the purchase price while a declaration of trust by a nominee of the apparent purchaser who has actually paid the purchase price attracts ad valorem duty. The anomaly is, of course, the result of the drafting of the head of charge which is markedly different in the New South Wales Act from the "Declaration of Trust" head of charge in similar statutes in other States.

5. PN's declaration does not fall within par.(3)(b) because the conveyance of the Seven Hills shares was not stamped with ad valorem duty. The Court of Appeal was mistaken in thinking the conveyance was so stamped. Had the conveyance been stamped ad valorem, cl.1.4 may have fallen within par.(3)(b), even though the conveyance followed the execution of the Sale Deed. In D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, at pp 474-476, I explained my reasons for this view. For the reasons earlier given it would have been arguable - it is unnecessary to decide it for the purposes of par.(3)(b) - that the trust declared would have been the same as the trust subject to which the Seven Hills shares were conveyed. It may be noted that an instrument does not avoid ad valorem duty under par.(3)(b) if it is an instrument which would otherwise fall within par.(2) - being "(a)ny such instrument as aforesaid" - if the trust declared is not the same as the trust subject to which the property was conveyed to the declarant.

6. For these reasons, which should be read together with the reasons given by the Chief Justice, I would allow the appeal and answer the questions in the stated case as he proposes.

DEANE AND DAWSON JJ. The relevant facts and statutory provisions are set out in the judgments of the Chief Justice and of Toohey J. We shall avoid unnecessary repetition of them.

2. The Deed of Sale of 28 June 1983 ("the Sale Deed") incorporated agreements for the sale and purchase of two separate parcels of shares ("the Seven Hills Shares" and "the St. Ives Shares"). The sale of the Seven Hills Shares was by RDC Holdings Limited (the registered holder) to BT Australia Limited ("BTA"). The Sale Deed provided that, on completion, the transfer of those shares would be to Pendal Nominees Pty. Limited ("PN") which was a wholly owned subsidiary of BTA. The sale of the St. Ives Shares was by RDC Holdings Limited and RDC Properties Pty. Limited (the reigstered holders) to Suburban Centres (Seven Hills) Pty. Limited. The two sales were related; completion of the one was made conditional upon, and was to be contemporaneous with, completion of the other. It is common ground that the Sale Deed attracted ad valorem duty under the Stamp Duties Act 1920 (NSW) ("the Act") by reason of its predominant operation and character as an agreement for sale of the two parcels of shares and that it has been duly stamped with such duty.

3. The Commissioner's claim to a second lot of ad valorem duty calculated by reference to the value of the Seven Hills Shares is founded upon the statement in cl.1.4 of the Sale Deed that, after the delivery to BTA of transfers of the Seven Hills Shares in favour of PN, "PN shall hold such shares as nominee for BTA". The Commissioner submits that that statement, in a deed executed by PN, gave the Sale Deed a distinct character as an instrument of the kind described in par.(2)(a) under the heading "Declaration of Trust" in the Second Schedule to the Act, namely, as an "instrument declaring that ... property" (viz: the Seven Hills Shares) "to be vested in the person executing the instrument" (viz: PN) "shall be held in trust for the person ... mentioned therein" (viz: BTA). The Commissioner contends that, in the circumstances, s.17(1) of the Act is applicable with the result that there is payable the further ad valorem duty which would have been payable if PN had executed a separate instrument of the kind described in par.(2)(a). For their part, the respondents contend that the provision that PN shall hold the Seven Hills Shares as nominee for BTA did not constitute additional dutiable matter as a declaration of trust. That provision was not, when read in context, a "distinct" matter for the purposes of s.17(1). It was, so it was said, merely explanatory and at most recorded an obligation which was imposed aliunde (i.e. by the provisions of a separate trust deed or by operation of law). For that reason, so the argument continued, there was no declaration of trust but, even if there were, it was merely ancillary to the character and object of the Sale Deed as an agreement for the sale of two parcels of shares. The respondents also submitted that, if cl.1.4 did attract additional duty as a declaration of trust, the additional duty was nominal only for the reason that the applicable provision was par.(1) or par.(3)(b) (under the heading "Declaration of Trust") and not par.(2)(a). It is convenient to consider first the respondents' submission that, regardless of whether it amounts to a declaration of trust, the provision of the Sale Deed that "PN shall hold such shares as nominee for BTA" did not constitute a distinct matter so as to attract duty pursuant to s.17(1).

4. The respondents placed particular reliance upon the traditional rule "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" (see Limmer Asphalte Paving Co. v. Commissioners of Inland Revenue (1872) LR 7 Ex 211, at p 217, and Price v. Thomas [1831] EngR 180; (1831) 2 B & Ad 218; (109 ER 1125)). That rule cannot, however, operate as more than an aid to the construction of s.17(1) of the Act. The question posed by s.17(1) does not require the identification of the "leading and principal object" of an instrument. The fact that a provision serves a subordinate or non-leading "object" will not, of itself, necessarily preclude it from constituting a "distinct" matter for the purposes of s.17(1). That is not to say that the rule articulated in the Limmer Asphalte Paving Co. Case is irrelevant to the construction of provisions of the kind contained in s.17(1). The rule remains relevant in its disregard of the merely "accessory". A provision in an instrument will not properly be seen as a "distinct" matter for the purposes of s.17(1) if it is merely accessory or ancillary to an operation or character of the instrument which brings it within a particular category of dutiable instruments under the Act. Thus, in the present case, the operation and character of the Sale Deed as an agreement for sale of shares bring it within a particular category of dutiable instrument under the Act. If the provision of cl.1.4 is properly to be seen as merely accessory or ancillary to that operation and character, it cannot, in our view, properly be seen as constituting a "distinct" matter for the purposes of s. 17(1).

5. The Act itself contains several indications that a declaration of trust by a person in whom property is, upon purchase, vested as trustee should be seen, for stamp duty purposes, as an incident of, or ancillary to, the agreement for sale or the conveyance of the relevant property. Thus, par.(1) under the heading "Declaration of Trust" in the Second Schedule imposes only nominal duty upon an instrument declaring that an apparent purchaser of property holds it in trust for the person or persons who actually paid the purchase price. Again, par.(3)(b) imposes only nominal duty upon an instrument declaring the same trusts as those upon or subject to which the same property was conveyed to the person declaring the trust by an instrument stamped with ad valorem duty. In the first case (i.e. par.(1)), the agreement for sale under which the trustee was the apparent purchaser and the separate instrument containing a declaration of trust would, when read together, incorporate both the purchase in the name of the trustee and the declaration by the trustee of the trusts upon which the legal estate was acquired. Yet only one lot of ad valorem duty would be payable (i.e. on the agreement for sale), presumably on the basis that the declaration of trust was ancillary to the agreement for sale which would attract ad valorem duty. In the second case (i.e. par.(3)(b)), the conveyance and declaration of trust would, if read together, effect the purchase in the name of a trustee and incorporate a declaration by the trustee of the trust upon which the legal estate was held. Again, only one lot of ad valorem duty would be payable (i.e. on the conveyance), presumably on the basis that the declaration of trust was ancillary to the conveyance. In each case, the declaration of trust can be seen as identifying the legal and equitable interests acquired. In that statutory context, it may be arguable that a provision in an actual agreement for sale to the effect that the legal owner on completion will hold the property purchased as trustee for a nominated beneficiary should not in any circumstances be treated as a matter distinct from the transaction of sale for the purpose of s.17(1) of the Act. Such a provision may be seen as an incident of the actual sale in that it identifies the prospective proportions and interests (legal and equitable) acquired by the individuals involved in the purchase. It is, however, unnecessary to go so far in the circumstances of this case because here, even if it were otherwise possible that the relevant provision might constitute a distinct matter, the context of that provision clearly points to the conclusion that it is merely accessory or ancillary to the operation and character of the Sale Deed as an agreement for the sale of shares.

6. The Sale Deed expressly stated that BTA had agreed to purchase the Seven Hills Shares "in its capacity as trustee of the BTA Property Trust". The Trust Deed governing that Trust appointed BTA as Trustee and provided (cl.4) that the assets of the Trust ("the Fund") were to be held by the Trustee "upon trust for the Unit Holders subject to and upon the terms of this deed". Clause 29(j) of that Trust Deed authorized the Trustee to "cause all or any of the assets constituting the Fund to be vested in a nominee of the Trustee to be held by such nominee upon the trusts of this deed" (emphasis added). By cl.30(d), the Trustee covenanted that "any nominee of the Trustee will duly observe and perform the covenants and obligations of this deed in the same manner as is required of the Trustee" (emphasis added). Those provisions of the Trust Deed lend support for the view that, in a case where assets of the Fund are vested in a nominee of the Trustee pursuant to the terms of the Trust Deed, the effect of the Trust Deed is that the nominee holds the assets so vested directly in trust for the Unit Holders (i.e. "upon the trusts of this deed") and not in trust for BTA in its capacity as Trustee. Be that as it may, what is important for present purposes is that it is clear that a person in whom assets of the Fund are vested as a nominee of the Trustee pursuant to the provisions of the Trust Deed will, in the absence of some countervailing equity, hold them "upon the trusts of" that Deed as properly construed whether directly or through BTA.

7. The statement in cl.1.4 of the Sale Deed that PN would hold the shares "as nominee for BTA" could not properly be seen as intended to override the applicable provisions of the Trust Deed. As has been said, the Sale Deed expressly recorded that BTA was acting in its capacity as Trustee of the BTA Property Trust. That being so, the statement that PN would hold the shares as nominee for BTA represented no more than an acknowledgment of the plain fact that PN held the shares as BTA's nominee under the provisions of the Trust Deed. The terms upon which PN was bound to hold the shares were those of the trusts declared by the Trust Deed itself. If, upon the proper construction of the Trust Deed, a nominee of a Trustee holds Fund property directly for the Unit Holders, the statement in cl.1.4 of the Sale Deed that PN held the shares as nominee for BTA could not properly be construed as a declaration of a trust for BTA as distinct from the Unit Holders. If, upon the proper construction of the Trust Deed, such a nominee holds Fund property in trust for the Trustee, PN would nonetheless hold the Seven Hills Shares, as the Trust Deed expressly requires, upon the terms of the trusts of that Deed.

8. In these circumstances, the provision in cl.1.4 of the Sale Deed that PN would hold the shares as nominee for BTA was not an independent or overriding declaration of trust. In a context where the Sale Deed expressly acknowledged that BTA was acting in its capacity as Trustee of the BTA Property Trust, it correctly identified the respective roles of PN and BTA in the actual purchase and represented no more than an acknowledgment of the fact that, after transfer, PN would hold the shares as BTA's nominee under the Trust Deed. It was merely accessory or ancillary to the operation and character of the Sale Deed as an agreement for the sale and purchase of the two parcels of shares and did not attract additional duty as a "distinct" matter under s.17(1) of the Act. That being so, it is unnecessary to consider the alternative submission, advanced on behalf of the respondents and upheld in the Court of Appeal, to the effect that, if such additional duty was payable, it was nominal only.

9. We would alter the answers given by the Court of Appeal to the first three questions asked in the stated case so that they accord with the answers given to them by Hunt J. at first instance. So altered, the answers to those three questions would read: Question 1: No; Questions 2 and 3: Unnecessary to answer. Otherwise, we would dismiss the appeal with costs.

TOOHEY J. This matter came before Hunt J. in the Supreme Court of New South Wales by way of case stated pursuant to s.124 of the Stamp Duties Act 1920 (NSW) ("the Act"). The primary question for determination was whether a share sale deed was chargeable with stamp duty in accordance with the head of charge identified as "Declaration of Trust" in the Second Schedule to the Act.

2. Hunt J. answered the question "No": see (1986) 18 ATR 218. The Court of Appeal answered it "Yes" but held that, in the circumstances, only nominal stamp duty was payable: see (1987) 19 ATR 712. The Commissioner of Stamp Duties ("the Commissioner") challenges the view taken both by Hunt J. and by the Court of Appeal.

3. Paragraph (2)(a) of Declaration of Trust imposes ad valorem duty on:

"Any instrument declaring that any property vested
or to be vested in the person executing the
instrument is or shall be held in trust for the
person or persons or purpose or purposes
mentioned therein ..."

4. The person made primarily liable for the duty is "The person declaring the trust or the person directing the declaration of the trust." The Commissioner contends that, by reason of the share sale deed, the first respondent Pendal Nominees Pty. Limited ("Pendal") declared a trust and that the second respondent B.T. Australia Limited ("B.T.A."), originally called Ord-B.T. Co. Limited, directed the declaration of the trust. It follows, in the Commissioner's submission, that ad valorem duty is payable pursuant to par.(2)(a).

5. The facts, so far as a recital is necessary to a determination of this appeal, are as follows. On 1 December 1976 B.T.A. executed a deed of trust which established a fund known as the Ord-B.T. Property Trust, later known as the B.T.A. Property Trust. The beneficial interest in the fund was divided into units, to be issued to unit holders, and B.T.A. declared that it "shall hold the Fund upon trust for the Unit Holders subject to and upon the terms of this deed" (cl.4). By cl.29(j) of the trust deed, B.T.A. was empowered to "cause all or any of the assets constituting the Fund to be vested in a nominee of the Trustee to be held by such nominee upon the trusts of this deed; and ... for all purposes of this deed investments vested in a nominee ... of the Trustee shall be deemed to be investments or property held by the Trustee".

6. Clause 10 vested authorized investments in B.T.A. By cl.10(4)(ii) such investments, other than land, were deemed to vest in B.T.A. as soon as transfers in favour of B.T.A. or its nominee had been delivered to it or to the nominee. By cl.30(b) B.T.A. declared that it held the fund "as trustee for the Unit Holders entitled thereto upon the terms of this deed". By cl.30(d) B.T.A. covenanted that "any nominee of the Trustee will duly observe and perform the covenants and obligations of this deed in the same manner as is required of the Trustee".

7. Pendal was at material times a wholly owned subsidiary of B.T.A. and was the company ordinarily used by B.T.A. to hold assets of the Trust as its nominee. Pendal is not mentioned in the trust deed. On 28 June 1983 B.T.A., Pendal and other companies executed a deed whereby B.T.A. agreed to buy all the shares in Suburban Centres (Seven Hills) Pty. Limited ("Seven Hills"). The deed expressly identified B.T.A. as buying the shares in its capacity as trustee of the B.T.A. Property Trust. It is this share sale deed with which the litigation is concerned. The respondents do not dispute that ad valorem stamp duty was appropriately charged on the deed for the reason that it was an agreement for the sale of shares: see s.41(1) of the Act. However, the Commissioner assessed the deed to further ad valorem stamp duty upon the basis that it was also a declaration of trust in respect of those shares and so fell within par.(2)(a) of Declaration of Trust in the Second Schedule. That further assessment was challenged by the respondents.

8. By the terms of the share sale deed R.D.C. Holdings Limited ("R.D.C.") agreed to sell all its shares in Seven Hills to B.T.A. The purchase price, $7,936,791, was to be paid by B.T.A. to R.D.C. on completion. By cl.1.4 "RDC shall on completion deliver to BTA transfers of the Seven Hills Shares in favour of PN and PN shall hold such shares as nominee for BTA." PN is of course Pendal. B.T.A. and other parties to the deed gave various warranties but none was given by Pendal. Clause 9 acknowledged that the deed had been entered into "with the intention that the benefit of the covenants, agreements, obligations and warranties" given by various contracting parties "shall enure to and the provisions thereof shall be enforceable by BTA (in its capacity as trustee of the BTA Property Trust), PN (both for itself and as nominee for BTA in its capacity as trustee of the BTA Property Trust) ...".

9. In contending that the share sale deed constituted a declaration of trust, the Commissioner pointed in particular to cl.1.4. The scope of the dispute was narrowed somewhat by agreement between the parties that the question for determination by Hunt J. was whether the share sale deed fell within the statutory description given by par.(2)(a), not whether it amounted to a declaration of trust according to the general law: see Tooheys Ltd. v. Commissioner of Stamp Duties (NSW) [1961] HCA 35; (1961) 105 CLR 602, at p 611. In the courts below the Commissioner did not challenge the proposition that provisions in a document which do no more than record an obligation which is in any event imposed by operation of general law do not attract duty: see Mullett v. Huchison [1828] EngR 349; (1828) 7 B & C 639, at pp 641-642 [1828] EngR 349; (108 ER 861, at p 862); Lawrance v. Boston [1851] EngR 909; (1851) 7 Exch 28, at p 35 [1851] EngR 909; (155 ER 842, at pp 844-845); Annandale v. Pattison [1829] EngR 6; (1829) 9 B & C 919 (109 ER 342). Before this Court the Commissioner submitted that there was no principle consistent with the language of the Act that stamp duty is not attracted to a document which does no more than record an obligation in any event imposed by operation of general law. He did, nevertheless, concede that an instrument recording an obligation imposed by operation of the general law that was accessory to the leading or principal object of the instrument would not be liable to duty. This exclusion from liability arose, not because the obligation was imposed by the general law but because there was no distinct matter within the meaning of s.17. Having regard to my view of the matter discussed below, it is unnecessary to express an opinion as to the correctness of the respondents' proposition that duty is not attracted to a document which does no more than record an obligation in any event imposed by operation of the general law. Finally, within the area of agreement, the parties accepted that no other document existed whereby Pendal was nominated by B.T.A. to hold the shares as its nominee or whereby Pendal declared that it did so as trustee.

10. Hunt J. concluded that, by its terms, cl.1.4 was a statement by both R.D.C. and Pendal of the obligations imposed upon them and that in consequence there was a declaration of trust by Pendal. But, in his Honour's view, the clause did no more than record an obligation that was in any event imposed upon Pendal by operation of the general law. This conclusion, his Honour said, was enough to take the document outside the description given by par.(2)(a).

11. The Court of Appeal approached the matter somewhat differently. Kirby P. and McHugh J.A. agreed with the judgment delivered by Mahoney J.A. Having explored a number of matters, Mahoney J.A. concluded that cl.1.4 of the share sale deed fell, not only within par.(2)(a), but also within par.(3)(b) of the head of charge Declaration of Trust. Paragraph (3) reads:

"Any such instrument as aforesaid by which (a) ...
or (b) the trusts declared are the same trusts as
those upon or subject to which the same property
was conveyed to the person declaring the trust by
an instrument duly stamped with ad valorem duty
under this Act or (c) ..."

In those circumstances nominal duty of ten dollars is imposed and the person primarily liable is the person declaring the trust. It was common ground between the parties that where an instrument falls within pars (1) or (2) of Declaration of Trust and also within par.(3) the consequence is that duty is imposed only in accordance with the latter.

12. Mahoney J.A. concluded that the relevant documents "were executed and exchanged and settlement took place on the same occasion" and that in those circumstances "the intention or expectation was that the shares were to be vested in PN". It followed that the shares were property "to be vested" within par.(2)(a) of Declaration of Trust: see D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431. His Honour further held that the shares were to be held in trust for B.T.A., hence there was a "person ... mentioned therein" in terms of par.(2)(a).

13. Mahoney J.A. rejected an argument that the share sale deed fell within par.(1) which imposes nominal duty on "Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase-money therefor." He did so because Pendal, being the person declaring the trust, was not the purchaser of the shares. But Mahoney J.A. upheld a submission that cl.1.4 of the share sale deed fell also within par.(3)(b), on the ground that the shares were transferred to Pendal "by an instrument duly stamped with ad valorem duty under this Act". He considered that ad valorem duty had been paid because the shares were conveyed and that the duty paid was "appropriate to a conveyance and/or transfer of shares".

14. In this Court the Commissioner challenged the decision of the Court of Appeal that cl.1.4 of the share sale deed fell within par.(3)(b) of the head of charge Declaration of Trust in the Second Schedule to the Act. The Commissioner submitted that, at the time the instrument became chargeable as a declaration of trust under par.(2)(a), the property had not been conveyed to the person declaring the trust. Additionally, it was argued that at no time was the instrument by which the property was conveyed stamped with ad valorem duty as required by par.(3)(b). In opposing the appeal Pendal argued, by notice of contention, that the Court of Appeal was in error in concluding that cl.1.4 operated as a covenant by Pendal to hold the shares when transferred to it as nominee for B.T.A. and in not finding that, where duty is charged upon an instrument having a particular description, no charge for duty arises unless and until all parties have executed the instrument or there has been an exchange of counterparts. It was further said that the Court of Appeal erred in holding that the person for whom Pendal was to hold the shares in trust was B.T.A. and not the beneficiaries under the trust deed and in holding that Pendal was not a person "in whom property is vested as the apparent purchaser thereof" to which par.(1) of the relevant part of the Second Schedule applied. Finally it was said that the Court erred in not finding that the agreement by Pendal to hold the shares as trustee did no more than record an obligation which was in any event imposed upon it by operation of the general law and accordingly that the deed was not liable to ad valorem duty as a declaration of trust.

15. There can be no doubt that cl.1.4 of the share sale deed imposed upon Pendal an obligation, once it accepted a transfer of the shares, to hold the shares as trustee for B.T.A. and to act at the direction of B.T.A. On acceptance the shares were then vested (or at any rate were to be vested) in Pendal. "Vested" looks to the case of a declaration of trust of property then vested in the person who declares the trust. "To be vested" looks to a declaration of trust, in advance of the vesting in the person who declares it, of property which, in the view of Mason J., with whom Stephen J. agreed, in D.K.L.R. Holding (see at pp 456 and 446 respectively), it is intended to make the subject of the trust. In the view of Gibbs C.J. and Brennan J. the words import mere futurity (see at pp 439 and 471 respectively). In the circumstances of the present case the distinction is of no real importance for the share sale deed clearly contemplated that Pendal would hold the shares on trust for B.T.A. Pendal did not assume an obligation to act at the direction of the unit holders. As Mahoney J.A. expressed it:

"The fact that BTA itself held the shares subject
to other equitable obligations or, as it was put,
on trust for other persons, including itself, is
not, for this purpose, relevant. BTA was, for
the purposes of the trust declared, the cestui
que trust."

16. Paragraph (2)(a) of Declaration of Trust is therefore, in its terms, applicable to the share sale deed.

17. The Court of Appeal was right in concluding that par.(1) of Declaration of Trust was inapplicable. Pendal was not the purchaser of the shares nor was it the apparent purchaser. It was B.T.A. which answered those descriptions; the share sale deed identified it as the purchaser and as the entity which paid the purchase price. Further, the deed obliged Pendal to hold the shares as nominee for B.T.A. It may be noted that s.73(1) of the Act excludes from liability for ad valorem duty as a conveyance various instruments, including:

"(e) A conveyance whereby the apparent purchaser
of property that is vested in him upon trust
for the person who was the real purchaser and
who has actually paid the purchase money
therefor, conveys the same to the real
purchaser."

18. As already mentioned, the Court of Appeal concluded that the share sale deed fell also within par.(3)(b) of Declaration of Trust and that as a consequence nominal duty only was payable. The reasoning which led the Court of Appeal to that conclusion is encapsulated in the following sentence from the judgment of Mahoney J.A.:

" The property was conveyed to PN by an
instrument duly stamped with ad valorem duty
under this Act."

His Honour elaborated this statement by saying that ad valorem duty as on a transfer of the shares had been paid, presumably upon the share sale deed. He then noted that par.(3)(b) does not specify the nature of the ad valorem duty to which it refers. Nor does it specify the document or transaction in respect of which the ad valorem duty is to be paid. It was enough, therefore, if ad valorem duty had been paid upon the instrument even though the duty had not been paid in respect of the declaration of trust. Mahoney J.A. then concluded that in the present case "the ad valorem duty is paid because the property 'was conveyed' and the duty is appropriate to a conveyance and/or transfer of shares".

19. But, with respect to his Honour, that is not so. The shares were conveyed to Pendal by a form of transfer which was stamped with nominal duty of $1.00, being a transfer of property pursuant to an agreement for the sale of that property which itself had been stamped with ad valorem duty as a conveyance (see s.41(4)(a) read with s.41(1)). That does not necessarily conclude the matter against the respondents. It may be, for instance, that if duty is paid in accordance with s.41(4) on a conveyance made pursuant to an agreement stamped in accordance with s.41(1), the conveyance may be regarded for the purposes of par.(3)(b) as stamped with ad valorem duty.

20. Before turning to that question, however, it is necessary to deal with a submission by the Commissioner that the trust declared by Pendal was not the same trust as that upon or subject to which the shares ("the same property") were conveyed to Pendal. The appropriate time at which the question must be answered, so the argument runs, is the time when the share sale deed was first executed by Pendal for that is when Pendal became liable for the payment of duty (s.26 read with s.38(1)). But at that time the shares had not been conveyed and therefore the deed did not meet the relevant requirement of par.(3)(b). That submission should be accepted. Section 26 provides:

" For the purposes of this Act an instrument is
deemed to be first executed the first time that
it is signed and sealed, or signed (as the case
may be) by any party thereto".

Section 38(1) renders every person primarily liable with respect to an instrument mentioned in the Second Schedule personally liable for the payment of the duty chargeable on the instrument "immediately upon the first execution thereof". Upon the first execution of the share sale deed Pendal therefore became liable for the payment of duty thereon. At that time the shares had not been conveyed; they were not conveyed earlier than delivery of a transfer of the shares to Pendal, an event which occurred on 28 June 1983. As Gibbs C.J. observed in D.K.L.R. Holding, at pp 442-443, "the words 'was conveyed' in par.3(b) are ... deliberately used in the past tense, to refer to a conveyance made before the declaration of trust was executed". Here, at the time Pendal declared the trust in the share sale deed, that property had not been conveyed to it; hence par.(3)(b) could not apply.

21. The respondents submit that the "leading and principal object" of the share sale deed for which it was dutiable was as an agreement for sale in which the shares were to be transferred from R.D.C. to Pendal. Clause 1.4, it was said, was merely accessory to that object and was not dutiable, falling within the words of Martin B. in Limmer Asphalte Paving Co. v. Commissioners of Inland Revenue (1872) LR 7 Exch 211, at p 217:

"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."

That cl.1.4 was merely accessory to the principal object of the share sale deed could be seen, the respondents argued, from the fact that it did no more than record an obligation already imposed by the general law. Being accessory to the principal object of the deed, cl.1.4 was not a distinct matter within the meaning of s.17 of the Act. Section 17(1) reads:

" Except where express provision to the contrary
is made by this or any other Act, an instrument
containing or relating to several distinct
matters is to be separately and distinctly
charged with duty in respect of each of such
matters, as if each matter were expressed in a
separate instrument."

22. This submission must be rejected. Clause 1.4 constitutes a declaration of trust. There are therefore two distinct matters involved within the meaning of s.17: an agreement for sale, and a declaration of trust. In this regard see the judgment of Sheppard J. in Farrar v. Commissioner of Stamp Duties (1975) 5 ATR 364, at p 368. In any event I do not think it right to say that cl.1.4 imposes no obligation on Pendal which was not imposed on it by operation of general law, in other words that the clause merely recorded an obligation which otherwise existed. No doubt, a transfer to Pendal of the Seven Hills shares would, in the circumstances, require Pendal to hold the shares as trustee for B.T.A. But cl.1.4 imposed an obligation on Pendal to take, and contained an undertaking by Pendal that it would take, the shares as nominee for B.T.A. The consequence is that cl.1.4 imposed on Pendal an obligation that went beyond any imposed on it by the general law at the time the deed was executed. And, whatever B.T.A.'s obligations under the trust deed and whatever the position of a nominee of the trustee under that deed, it was by cl.1.4 of the share sale deed that Pendal expressly undertook to hold the shares as nominee for B.T.A.

23. In the light of what has been said thus far it would follow that the appeal should be upheld. From the respondents' point of view that result can only be avoided if it be accepted that in truth the transfer of shares had been "duly stamped with ad valorem duty" because it was executed pursuant to an agreement which had been so stamped. There are difficulties in acceding to this view of the matter, not the least of which is that it fails to give effect to the language of par.(3) and indeed of the Act. The transfer of shares was duly stamped but it was not duly stamped with ad valorem duty. And the reason it was not so stamped is that s.41(4)(a) exempted it from this form of duty. Section 41(4)(a) expressly provides that, in the circumstances with which it is concerned, the conveyance "shall not be chargeable with ad valorem duty". In the light of this express command, how can it be said that the transfer was duly stamped with ad valorem duty?

24. It may be argued that the share sale deed was itself a conveyance and that, it having been stamped with ad valorem duty, no further such duty is payable. Section 65 defines "conveyance" to include:

"any transfer, lease, assignment, exchange,
appointment, settlement, surrender, release,
foreclosure, disclaimer, declaration of trust,
and every other instrument (except a will) ...
whereby any property ... is transferred to or
vested in or accrues to any person ..."

Wide though the range of those words is, they generally carry with them the notion of the passing of the legal estate. The distinction between agreement for sale and conveyance is evident in the Act and in the Second Schedule. Here, a conveyance to Pendal was not effected by the share sale deed; it was effected by the transfer of shares which was stamped with nominal duty only. The share sale deed, the instrument stamped with ad valorem duty, was an agreement for the sale of shares to Pendal. But the declaration of trust contained in cl.1.4 of that agreement was a declaration in respect of the legal estate passed to Pendal by transfer of the shares. And it was the legal estate in the shares which was, in the circumstances, the "property" to which par.(3)(b) of the head of charge Declaration of Trust referred. In consequence the share sale deed made with B.T.A. and others attracted ad valorem duty as an agreement for sale and the declaration of trust made by Pendal in regard to those shares, a distinct matter, attracted ad valorem duty on that declaration.

25. The appeal should be allowed.

ORDER

Appeal allowed with costs.

Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales dated 23 December 1987 and in lieu thereof allow the appeal to that Court with costs.

Set aside the orders of Hunt J. dated 7 November 1986 and in lieu thereof order:

The questions set out in par.14 of the Stated Case be answered as follows:
(a) Whether the Share Sales Deed is chargeable with
stamp duty in accordance with the head of charge
"Declaration of Trust" in the Second Schedule to
the Stamp Duties Act 1920.
Answer: Yes
(b) If the Share Sales Deed is chargeable with duty in
accordance with the head of charge "Declaration of
Trust", whether it is so chargeable under -
(i) paragraph (1); or
(ii) paragraph (2)(a)
of that charge.
Answer Paragraph 2(a)
(c) If the Share Sales Deed is chargeable with duty under
the head of charge "Declaration of Trust" whether
the correct amount of duty thereunder is -
(i) $47,620.80
(ii) $6.00
(iii) some other and if so what sum.
Answer $47,620.80
(d) By whom should the costs of those proceedings be paid?
Answer The plaintiffs to pay the defendant's costs
of the proceedings.