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In the Matter of the Stamp Act 1894-1974

 

[1975] FC 26

 

Appeal no. 25 of 1975

IN THE MATTER of The Stamp Act 1894-1974

-and-

IN THE MATTER of an Appeal by FRANK SAMPSON PTY. LTD. and FRANK SAMPSON against an Assessment of Stamp Duty by the Commissioner of Stamp Duties of an Agreement in writing dated the Twelfth day of April 1973.

FRANK SAMPSON PTY. LTD. and FRANK SAMPSON

Appellants

-and-

COMMISSIONER OF STAMP DUTIES

Respondent

_____________________

STABLE J.

DOUGLAS J.

KNEIPP J.

_____________________

Judgment delivered by Kneipp, J. on 25th September, 1975

Stable, J. and Douglas J. concurring

_____________________

“APPEAL ALLOWED. THE QUESTIONS ANSWERED AS INDICATED THAT IS THAT THE COMMISSIONER IS NOT ENTITLED TO ASSESS THE DOCUMENT TO DUTY UNDER THE HEAD OF ‘CHARGE, CONVEYANCE OR TRANSFER’ COSTS OF THE CASE STATED AND OF THE APPEAL TO BE PAID BY THE COMMISSIONER”

_____________________

IN THE SUPREME COURT OF QUEENSLAND

Appeal No. 25 of 1975

IN THE MATTER of The Stamp Act 1894-1974

- and -

IN THE MATTER of an Appeal by FRANK SAMPSON PTY. LTD. and FRANK SAMPSON against an Assessment of Stamp Duty by the Commissioner of Stamp Duties of an Agreement in writing dated the Twelfth day of April 1973.

FRANK SAMPSON PTY. LTD. and FRANK SAMPSON

Appellants

-and-

COMMISSIONER OF STAMP DUTIES

Respondent

JUDGMENT - KNEIPP J.

This is an Appeal by way of Case Stated pursuant to Section 24 of the Stamp Act 1894-1974, the question in issue being the correctness of the Commissioner's assessment of stamp duties payable on a document to which the Appellants are parties.

The document is referred to in the opening paragraph as “This Agreement”, the parties being Frank Sampson Pty. Ltd. and Frank Sampson (called the vendors) and A.J. Blue Metal Quarry Pty. Ltd. (called the purchaser). The document recites that the vendors are the owners as tenants in common of certain parcels of land “on which ..... is located a quantity of basalt metal and other minerals and materials”. Provisions which follow must be set out in full-

AND WHEREAS the Vendors have agreed to sell to the Purchaser and the Purchaser has agreed to purchase a certain quantity of such metal

NOW IT IS HEREBY AGREED by and between the Vendors and the Purchaser and this Agreement WITNESSETH as follows:—

  1. The Vendors agree to sell to the Purchaser and the Purchaser agrees to purchase subject as hereinafter provided two million four hundred thousand (2,400,000) cubic yards of such metal and other minerals and materials on the above-described land on the following terms and conditions:—
  1. (i)
    For the first four hundred thousand (400,000) cubic yards of metal taken the price shall be Forty thousand dollars (40,000) such amount to be paid by equal quarterly instalments of Five thousand dollars ($5,000) the first of such instalments to be paid on the Eighth day of April One thousand nine hundred and seventy three and the taking of the said quantity of metal shall “commence on or after the first day of January One thousand nine hundred and seventy three. The total quantity of two million four hundred thousand (2,400,000) cubic yards of such metal shall be taken at the rate of fifty thousand (50,000) cubic yards per quarter. All payments for metals and materials taken in any one quarter are to be made within seven (7) days after the end of each quarter.
  1. (ii)
    The price for the next one million (1,000,000) cubic yards of metal shall be as agreed between the parties on or before the First day of December One thousand nine hundred and seventy five the parties taking into consideration the amount paid by the Main Roads Department for basalt metal and other materials extracted from the said land and in the event of a price not being agreed then the price shall be fixed by a duly qualified person nominated for that purpose by the President for the time being of the Queensland Law Society Incorporated whose decision shall be final and binding on both the Vendors and Purchaser but the amount shall be not less than One hundred thousand dollars ($100,000). The said quantity of one million (1,000,000) cubic yards shall be taken at the rate of fifty thousand (50,000) cubic yards each quarter such taking to commence on the First day of January One thousand nine hundred and seventy five and continue until the Thirty first day of December One thousand nine hundred and seventy nine and shall be paid for by equal quarterly instalments free of interest. The first of such instalments shall be paid on the Eighth day of April One thousand Nine hundred and seventy five and further payments within seven (7) days of the end of each quarter.
  1. (iii)
    The price for the next one million (1,000,000) cubic yards of metal shall be as agreed between the parties on or before the First day of December One thousand nine hundred and seventy nine the parties taking into consideration the amount paid by the Main Roads Department for basalt metal and other materials extracted from the said land and in the event of a price not being agreed then the price shall be fixed by a duly qualified person nominated for that purpose for the President for the time being of the Queensland Law Society Incorporated whose decision shall be final and binding on both the Vendors and Purchaser but the amount shall be not less than One hundred thousand dollars ($100,000). The said quantity of one million (1,000,000) cubic yards of metal shall be taken at the rate of fifty thousand (50,000) cubic yards each quarter such taking to commence on the First day of January One thousand nine hundred and eighty and continue until the Thirty first day of December One thousand nine hundred and eighty four and shall be paid for by equal quarterly instalments free of interest. The first of such instalments shall be paid on the Eighth day of April One thousand nine hundred and eighty and further payments within seven (7) hays of the end of each quarter.
  1. (iv)
    Should the Purchaser at any time during the continuance of these presents desire to purchase any additional quantity or quantities of metal the Vendor hereby agrees to sell the same to it on a royalty basis the price being the actual price per cubic yard paid for the hereinbefore mentioned metal at the time the Purchaser takes the said additional metal and payment of such additional metal shall be made on the next quarterly date set down for payment for the bulk quantity “hereinbefore mentioned and nothing in this agreement shall be construed so as to limit the maximum amount of basalt metal and other minerals or materials which may be extracted.
  1. Nothing hereinbefore contained shall be construed so as to oblige or compel the Purchaser to extract take or purchase the said quantities of fifty thousand (50,000) cubic yards each quarter and if in any quarter during the continuance of these presents the Purchaser takes less than fifty thousand (50,000) cubic yards of metal the Purchaser may require the Vendors to rebate a proportionate part of the price to the extent of the quantity not taken or alternately may elect to extend the period for taking any such balance until the next quarter PROVIDED that no extension shall be allowed beyond the Thirty first day of December One thousand nine hundred and eighty four for the taking of metal or materials PROVIDED that the Vendors will permit the Purchaser within a period of six (6) calendar months thereafter (if all covenants and conditions on its part herein contained shall have been duly performed and observed) to make merchantable and remove the basalt metal and other minerals which shall have been got and also any fixtures and articles in the nature of the purchaser's fixtures which the Purchaser may by law be entitled to remove.
  1. The Vendors shall contemporaneously herewith grant to the Purchaser a Lease of the necessary part of the said land at a rental of One dollar ($1) per annum if demanded to permit the Purchaser to enter upon those lands for the purpose of removing the said metal and treating the same such Lease to be stamped and registered at the expense of the Vendors but each party shall pay their or its own professional costs in respect thereof.
  1. Possession of the said metal shall be deemed to pass as and when it is removed by the Purchaser from the ground.”

There follow further provisions which I need not refer to. The document bears the seals of the two companies, but is signed only, and not sealed, by the other party, Sampson: For reasons which will be apparent later, the absence of any sealing by Sampson may raise problems as to the effectiveness of the document. However, in the view which I take of the matter, it is not necessary to discuss these. I will deal with the matter on the basis that the document is fully effective to carry out the intentions of the parties.

The Commissioner assessed the document to stamp duty as a “Conveyance or Transfer” (Sch. I), a “Conveyance or Transfer” being “an instrument...... whereby any property or any estate or interest in property is transferred to or vested in any person” (Section 49). He applied paragraph (2) of the head of charge “Conveyance or Sale” in the Schedule, which is:—

“(2) On the sale of any property...... For every $100 and also for any fractional part of $100 of the consideration for the sale......

Duty

 

$1.25

The Commissioner took “the consideration for the sale” as being $240,000, this being the total amount of royalties which would be payable under the agreement in respect of the removal of 2,400,000 cubic yards of metal, and thus assessed the duty as being the sum of $3,000.

The first task is to consider the effect of the document. The language of its opening provisions would suggest that it was an agreement for the rule of metal to be extracted from the land. But Clause 2 of the document makes it quite clear that the so-called purchaser is not bound to extract or take any metal from the land. In the absence of any obligation to sever any material from the land, the document does not constitute an agreement for sale: see the definition of “goods” in Section 3 of the Sale of Goods Act, and Amco Enterprises -v- Wade ((1968) Qd. R. 445). In these circumstances Counsel were in agreement, and I also agree, that the document constituted the grant of a profit a' prendre. If authority for the correctness of this view is required, it is to be found in the judgments of a majority of the High Court in Commissioner of Stamp Duties (N.S.W.) -v- Henry (114 C.L.R. 322), to which I will refer in detail in a moment.

Assuming that there was a grant of a profit a' prendre, Counsel for the Appellants argues that there was not any consideration for the grant, and that the document therefore could not be assessed as a Conveyance or Transfer, because such an assessment must be based on “the consideration for the sale”. He relied on Commissioner for Stamp Duties (N.S.W.) -v- Henry (supra), to which now turn. I take the relevant facts from the headnote:

“A mine owner by deed granted to a mining syndicate for an initial term of five years with a right of renewal for a like term a licence to operate the mine and to use and operate the pits, tunnels, mine workings, buildings, plant and machinery thereon for the purpose of winning coal therefrom. No obligation to exercise the rights conferred was imposed upon the syndicate by the deed, but it did require payment to the owner fortnightly of a fee at the rate of 3s. perton for the use of the land, plant and other facilities and of a royalty of 2s per ton for every ton of coal won. No rent was reserved by the deed, which conferred upon the owner the right at all times to enter upon the land for any purpose whatsoever other than the winning of coal. The Commissioner of Stamp Duties levied ad valorem duty on the deed as a conveyance on sale, claiming that the fees and royalties which would become payable were the consideration for the grant of the right.”

It was held by all five members of the Court that the basis of the commissioner's assessment was wrong. Much of the discussion in the judgments is related to the effect of particular provisions of the New South wales Act and is not relevant here, and there was a division of opinion as to how the matter should be disposed of. But a majority of the Court came to conclusions as to the construction of the deed which are relevant, and I refer now to the relevant passages in the judgments.

It is convenient to turn first to the judgment of Taylor J. At p. 335 of judgment the following passage occurs:

“What was conveyed or granted by the deed was, as I have already said, a profit ‘as prendre. But more particularly it was a right to operate the mining property and its appurtenances and to win coal therefrom. But it was not an absolute right to do so; it was a right to do this subject to the payment of a fee and royalty totalling five shillings per ton for each and every ton of coal won. Furthermore, it was subject to determination in the event of failure to pay such fees and royalties. In a very real sense, therefore, it may be said that the ‘property’ conveyed was a right to operate the mine and win coal subject to the payment of five shillings per ton as aforesaid. The question then is - treating the deed as a conveyance - What consideration was provided by the deed for the conveyance of this interest? In my view the answer to this enquiry is that no consideration was provided. Clearly enough, payments pursuant to c. 4, if and when made, cannot be regarded as the consideration for the grant of such a right; they constitute both in form and substance payment for the actual use of the ‘facilities..... and.....the company's land, pits, tunnels, mine workings, buildings, plant and machinery’ and for the coal actually removed. And although it may be said that the respondents' covenants, including that contained in the cl. 4, constituted consideration in a general sense, this could not be said to be the consideration for the conveyance of a right to operate the mine and win coal subject to the payment in respect thereof of five shillings per ton. In other words, the stipulated rate of payment was, in much the same way as rent under a lease, intended by the way of ‘retribution or compensation’ for the use of the mining property and for the coal won and so, in part, it delimited the character and extent of the right conveyed.”

Later (at p. 336) he said:

“Accordingly, the deed, if it be regarded as a conveyance for the purposes of the Act, operated as a voluntary assurance of what may be called the conditional right which it created and, if chargeable as such, was chargeable as a conveyance made without consideration in money or money's worth.”

Owen J. after referring to the terms of the deed, said at p. 337, that “What was granted, then was a profit a 'prendre coupled with a licence to enter and use the mining facilities on and under the surface of the land for the purpose of winning coal”. At p. 338 and 339 of his judgment the following passage appears:

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

This was a dissenting judgment, in the sense that His Honour disagreed with a majority of the Court as to the correct basis on which the assessment should be approached, but his dissent reflected only a difference of opinion on the application of the legislation, and in my view did not affect the validity of His Honour's view as to the effect of the deed at Common Law.

McTiernan J. agreed with Owen J. (to be quite accurate he agreed that the questions in the Case stated which was before the Court “should be answered in the manner stated in the judgment of Owen J.”, but the answers were such that agreement with them could only imply agreement with the reasons on which they were based).

Kitto J. thought (p. 329) that the grant was either of a profit a' prendre or of a lease. He did not find it necessary to decide which it was, because he thought that in either event it fell within a definition of a lease contained in the Act, and decided the matter on that basis. But there are passages in the judgment, particularly at p. 328, which strongly suggest that, had he thought that there was a grant of a profit only, he would have considered that it was made without any consideration. Dixon C.J. Stated briefly that he could not adopt the view that the deed was either a conveyance on sale or a profit a' prendre, and he decided the matter by reference to the definition of lease contained in the Act.

In the result, I think that it is clear that a majority of the Court decided that the deed constituted the grant of a profit a' prendre, and that the grant was made without consideration. I cannot find any relevant distinction between the terms of the deed in that case and those of the document in this case. It follows that the appellants should succeed, subject to consideration of an argument put forward for the Commissioner.

Counsel for the Commissioner sought to distinguish Henry's lease (supra) on the ground that in that case the agreement was “in form” a licence to operate the mine, with a provision for payment for the minerals taken; whereas, he said

“Here, in form and on its face, the agreement is for the sale of 2,400,000 cubic yards of basalt metal and other minerals. The consideration for the sale and purchase of that quantity of basalt can be demonstrated on the face of the agreement to be not less than $240,000 and that is the amount which the Commissioner has chosen as the consideration payable for this right.”

He went on to submit that it did not matter that the total price payable was not ascertainable until it was known how much metal had been taken; and on this aspect he relied as being analogous on a series of English decisions relating to the head of charge “Bond Covenant or Charge” in the Schedule to the Stamp Act 1891 (Imp: cf. The same head of charge in the Schedule to the Queensland Act.)

I think that this argument fails simply because there is not any agreement for the sale and purchase of any metal, for reasons which have already been given. Nor do I think that the English decisions are relevant. I think that their effect is correctly summarised in the headnote to the report of the last of them, Independent Television Authority and Associated-Rediffusion Ltd. -v- Inland Revenue Commissioners ((1961) A.C. 427):

“That where it appeared on the face of a deed, being a security within the meaningof the Stamp Act 1891 under the head of charge ‘Bond, Covenant, or Instrument,’ that there was a specific sum payable then, notwithstanding that such specific sum might on the happening of a contingency, be increased or reduced in part or to nothing, the deed was liable to be charged to stamp duty calculated on such specific sum;”

In the present case, it does not appear on the face of the document, on a proper analysis of it, that any specific sum is payable: what appears is that the appellants have a right to extract metal if they wish, paying for it, if they exercise the right, at specified rates.

In the result, I think that the appeal should be allowed.

In his assessment the Commissioner, in addition to the sum of $3,000, assessed as being payable on the document some other small amounts, and the questions in the case stated are so framed as to refer to these small amounts as well as to the $3,000. No argument was addressed to us in relation to the small amounts. Subject to any submissions by the parties, I think that it is sufficient to answer the questions by stating the Commissioner is not entitled to assess the document to duty under the head of charge “Conveyance or Transfer”, and that the costs of the case stated and of the appeal should be borne by the Commissioner.

Close

Editorial Notes

  • Published Case Name:

    In the Matter of the Stamp Act 1894-1974

  • Shortened Case Name:

    In the Matter of the Stamp Act 1894-1974

  • MNC:

    [1975] FC 26

  • Court:

    QSC

  • Judge(s):

    Stable J, Douglas J and Kneipp J

  • Date:

    25 Sep 1975

Litigation History

No Litigation History

Appeal Status

No Status