Cairns City Council v Commissioner of Stamp Duties [1999] QSC 374 [2000] 2 Qd R 267

) ) ) ) 37511 SUPREME COURT OF QUEENSLAND CITATION: PARTIES: FILENO: DIVISION: Cairns City Council v Commissioner a/Stamp Duties [1999] QSC CAIRNS CITY COUNCIL (applicant) v COMMISSIONER OF STAMP DUTIES (respondent) No 5149 of 1997 Trial Division DELIVERED ON: 16 December 1999 DELIVERED AT: Brisbane HEARING DATE: 6 December 1999 JUDGE: Chesterman J ORDER: Application dismissed. No order as to costs. CATCHWORDS: TAXES AND DUTIES - STAMP DUTIES - WHAT TRANSACTIONS OR INSTRUMENTS ARE LIABLE - CONVEYANCE OR TRANSFER OR SALE - whether transfer of property to applicant for purpose of erecting sewer pump station, is exempt from stamp duty - whether applicant is "the Government", as defined in schedule 1 of Stamp Act. STATUTES ACTS OF PARLIAMENT· INTERPRETATION - whether local authority is "the Government", as defined in schedule 1 Stamp Act - whether "the Government" evokes a particular level of government or, rather, a body politic. ADMINISTRATIVE LAW JUDICIAL REVIEW LEGISLATION - GROUNDS FOR REVIEW OF DECISION - IMPROPER EXERCISE OF POWER - POWERS AND DISCRETION OF COURT - judicial review of respondent's decision not to allow applicant's objection to assessment of $7.50 stamp duty " whether statutory imperatives in s 51C(1) Stamp Act, regarding valuation of property, were complied with - whether commissioner, . relying on valuation known to be wrong, took an "irrelevant consideration" into account - whether s 48 Judicial Review Act should be applied considering paltry sum in dispute . . Acts Interpretation Act 1954, s 14B Administrative Decisions Judicial Review Act 1977 -- 1 of 10 -- COUNSEL: SOLICITORS: 2 Judicial Review Act 1991, s 20, s 48 Local Government Act 1993, s 25, ch 2 and, Pt 2 ofch 3 Stamp Act, s 49(1), s 51C(1) Statute Law (Miscellaneous Provisions) Act 1993, s 36 Valuation of Land Act 1944, s 3, s 72, s 74 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 French Guiana, 2 Dodson's Admiralty Report 151 Videto v Minister for Immigration and Ethnic Affairs (1985) 8 FCR 167 Mr H Alexander for the applicant Mr P Dutney QC for the respondent MacDonnells for the applicant Crown Solicitor for the respondent [1] CHESTERMAN J: This application must involve the smallest sum of money ever fought over in the Supreme Court of Queensland. The ratepayers of Cairns and the taxpayers of Queensland have funded their respective champions in a dispute over $7.50 which is the amount of stamp duty assessed upon an instrument of transfer of 146 square metres of land in a new residential subdivision south of Cairns. The applicant objected to the assessment but the respondent refused to alter it. Judicial review is sought of the respondent's decision of 13 May 1997 not to allow the objection. [2] To be fair to the applicant it saw in the dispute a point of principle which would be applicable to other local authorities throughout the State in their dealings with developers. I have decided that point against the applicant so that nothing of general interest arises in the litigation which remains, in substance as in form, a contest over an assessment of stamp duty for a paltry sum. [3] Late in 1995 the applicant approved the subdivision subject to a condition that" ... a pump station and associated control panel and rising [sewer] main ... be constructed ... to connect to the existing pump station ... ". Engineering drawings lodged by the developer with the applicant and approved by it on 29 August 1996 provided for the pump station and control panel to be located on the site of what became lot 200 on RP 905273. A further condition of approval for the subdivision was that the site for the pump station be transferred to the applicant. By mid October 1996 the pump station and associated works had been constructed on the site of the proposed lot. At about the same time the applicant executed and sealed the plan of subdivision "subject to lot 200 being transferred to the [applicant] for sewerage and drainage purposes". On 11 October 1996 the developer executed a transfer of lot 200. The stated consideration was "... the approval by the Transferee of the subdivision ofland including the land hereby transferred ... ". On 21 October 1996 the applicant, as transferee, executed the transfer. On the following day the instrument of transfer was lodged for assessment of stamp duty under cover of a letter from the applicant's solicitors which noted that the lot was -- 2 of 10 -- ) ) ) ) 3 being transferred "for a sewer pump station" and submitted that the land had no value and that ad valorem duty was not payable. [4] The respondent disagreed and assessed duty in the sum of$10.50 on the assumption the lot was worth $631.00. The applicant objected to the assessment by notice dated 31 October 1996. It relied upon a valuation it had commissioned from HTW Valuers which said that: "The land has been specifically set aside as a sewer pump station site and its only logical use is as such." and asserted that lot 200 had no market value. The respondent by letter of 12 November 1996 allowed the objection but did not accept the valuer's opinion that the land was worthless. [5] The respondent's officer, Ms Candlish, who was given responsibility for assessing duty on the transfer has explained that she, on behalf of the respondent, "determined to issue a further assessment of stamp duty based on an independent valuation by the Department of Natural Resources ... For the purpose of assessing the relevant stamp duty ... I contacted ... the Department of Natural Resources ... to inquire ... when the transfer of the Lot might be registered with that Department and a valuation by the Department issued ... I understood that it takes approximately three months for the Department of Natural Resources to perform valuations of land following the lodgement of relevant transfer documents." The plan of subdivision was registered in the Titles Office on 6 November 1996. In mid January 1997 Ms Candlish: " ... was informed ... that the Department's valuation of the Lot had issued. [She] then searched the Department's [integrated valuation and sale] Property Inquiry Screen to ascertain the ... valuation ... which was recorded as $500. [She] caused the same to be printed through the [respondent's] computer system ... Following receipt of the ... valuation ... [she] assessed stamp duty in respect of the Transfer of the Lot and issued an Assessment Notice assessing duty payable as $7.50." on I May 1997. On 6 May the applicant's solicitors objected to the assessment. On 13 May the respondent disallowed the objection. The stated reasons were: "The transfer ... is exigible to duty in terms of section 4, section 49(1) and paragraph 4(b) of the Conveyance or Transfer head of charge in the first schedule of the Stamp Act. The transfer is of the legal interest in fee simple. It evidences a transfer of property for a 'consideration of the approval by the Transferee ofthe subdivision ofland .. .'. The provisions of section 51 C allowed the [respondent] to obtain a valuation of the property from the Valuer Generals Office and an assessment issued based on such value i.e $500 . ... where the [respondent] is not satisfied with the evidence of value of the property, he may cause a valuation to be made by some person ... in this case the [respondent] was not satisfied with the valuation -- 3 of 10 -- ) ) ) ) [6] [7] [8] 4 made by HTW Valuers as it did not represent the full unencumbered value of the property and subsequently appointed the Valuer General to cause a valuation to be made on the subject property. The [respondent] considered this valuation a fair and reasonable value of the property and issued an assessment accordingly for $7.50. In terms of section 4(2)(b) duty is assessed on the Transfer as at the date of the instrument, based on the full unencumbered value of the property as at that date . ... your objection is dismissed and the assessment for $7.50 based on the value of $500 is confirmed." As I mentioned it is this decision which the applicant seeks to have reviewed pursuant to the Judicial Review Act 1991. Although the amended application runs to five pages and contains some 23 grounds for review, during the hearing, the points in issue were condensed to three. The first point taken is the one the applicant believed was of general application. It is that the transfer is made exempt from stamp duty by the terms of schedule 1 to the Stamp Act. The point arises in this way. By s 49(1): " 'conveyance' and 'transfer' include every instrument and every decree or order of a court- (a) whereby property is conveyed, transferred or assigned to or is vested in a person ... ". The head of charge in schedule 1, "Conveyance or Transfer", provides: "(4) Of any property ... (b) in any other case ... Duty calculated on the full unencumbered value of the property at the rates specified in this paragraph ... Exemptions 1. All conveyances or transfers of lands to the Government for public purposes." • The respondent accepts that the transfer of lot 200 to the applicant was for public purposes, namely the provision of sewerage services for the residents of the new subdivision. Argument turned upon whether the applicant is "the Government", or part of it, for the purposes of the exemption. [9] The applicant points out that the term is not defined in the Stamp Act itself nor in the Acts Interpretation Act 1954, and submits that it performs many of the traditional functions of government and is specifically designated a "local government" by the Local Government Act 1993, s 25 of which provides that local governments have jurisdiction to make local laws for and otherwise ensure the good rule and government of their territorial areas. There is said to be no warrant for reading the exemption narrowly so as to exclude from its beneficial operation local authorities which are truly organs of government, and designated as a unit of government by the Local Government Acr. Public policy, it is said, favours excusing local authorities from having to pay stamp duty on conveyances of land which they take for the purpose of providing a benefit to the public. -- 4 of 10 -- ) ) ) ) 5 [lO] An associated argument is that local governments are a manifestation of, or entity of, the State Government which delegates to them particular tasks and functions for the more efficient administration of society. The submission proceeds that "the Government", when the term appears in the exemption, evokes not a particular level or branch of government but a polity, or body politic, the means by which a community is organised and administered. Local governments are part of this overall governmental organisation and are therefore included in the exemption. [II] Technically I do not think it can be accepted that local governments are a manifestation of, or an entity of, the Government of the State. The provisions of ch 2 and ofPt 2 of ch 3 of the Local Government Act which respectively establishes a distinct system of local government and allows the State to intervene in the implementation of that system, are inconsistent with the notion of a single, though amorphous, unit of government with different manifestations. [12] Unhappily the idyllic notion that the exemption, when it speaks of "the Government", means the general authority by which society is ordered no matter what particular form that authority exhibits, cannot survive a closer examination of the relevant legislation. [!3] It is true that the term is not defined by the Stamp Act nor by the Acts Interpretation Act. However, prior to amendments made to the latter by the Statute Law (Miscellaneous Provisions) Act 1993, s 36 included among its definitions: "'Government' means the Government of Queensland". Section 43 of the Statute Law (Miscellaneous Provisions) Act omitted from s 36 a number of definitions, among them that of "Government". [14] It might be possible to infer that the omission was deliberate, so that from thenceforth "the Government", when found in an Act of parliament, was intended to mean something other than the government of the State. After the 1993 amendment the term, at least when found in the exemption, has no plain meaning and the context does not give it one. In this circumstance s 14B of the Acts Interpretation Act makes it permissible to consult an explanatory note relating to the bill, the enactment of which deleted the definition. The explanatory note provides this elucidation: "Amendment 43 omits a number of definitions from section 36 ... Apart from the definitions ... and 'Government', the definitions are replaced by Amendment 44. The definitions that have not been replaced are redundant because of section 35 [references to Queensland to be implied]." Section 35 provides: "(1) In an Act- (2) (a) a reference to an officer, office or entity is a reference to such an officer, office or entity in and for Queensland; and (b) a reference to a locality, jurisdiction or other thing is a reference to such a locality, jurisdiction or other thing in and of Queensland. " [15] Despite the confidence of the author of the explanatory note, s 35 does not make a definition of "the Government" unnecessary. It is, however, clear that the -- 5 of 10 -- 6 amendment to s 36 to delete the definition of that tenu was not intended to give the word a meaning different to that which it had prior to 1993. It was wrongly thought that the definition was redundant. Its omission was not meant to give rise to the inference I mentioned. [16] It follows that the exemption is limited to a conveyance or transfer of land to the government of the State and does not apply to such transfers to a local government. [17] The next two points are associated and may be considered together. They are specific to the particular decision of which review is sought. They give rise to no general principle. [18] It will be recalled that the respondent did not accept the applicant's valuer's opinion that the land was of no value. The transfer itself asserted that the consideration for the conveyance of the land was constituted by the applicant's giving consent to the subdivisional development, and did not record the payment of any money. Section 51 C( 1) of the Stamp Act provides that: "If, in a case of an instrument transferring or conveying property ... (a) there is no consideration; or (b) the cornmissioner is of the opinion that the consideration does not represent the full unencumbered value of the property; or (c) the commissioner is not satisfied with the evidence of value of the property; the commissioner may - (d) cause a valuation of the property to he made by some person appointed by the commissioner; or (e) accept a valuation of the property tendered by or on behalf of any party; and the commissioner may assess the duty payable on the footing of such valuation." [19] The respondent asserts that he has acted pursuant to subsection l(d) and assessed the duty "on the footing of" the valuation he caused to be made of lot 200. The applicant argues that the respondent did not, in truth, comply with the tenus of the subsection so that the respondent's decision to disallow the objection may be set aside pursuant to s 20 of the Judicial Review Act because: 1. procedures that were required by law to be observed in relation to the making ofthe decision were not observed; or 2. the decision was not authorised by the enactment under which it was purportedly made; or 3. that the making of the decision was an improper exercise of the power conferred by the enactment; or 4. the decision involved an error oflaw. Separately it is said that, in relying upon the valuation of $500, the respondent took an irrelevant consideration into account in the exercise of his powers with the result that his decision was an improper exercise of power - see s 23(a) of the Judicial Review Act. [20] To understand the arguments it is necessary to say something further about the process of valuation. -- 6 of 10 -- 7 [21] The Department of Natural Resources ("the Department") employs qualified people to conduct valuations of land from which assessments of land tax and rates can be made by appropriate authorities: see s 72 of the Valuation of Land Act .1944. Valuations are conducted on the basis that the lands valued are unimproved, that is, on the assumption that at the time of valuation any improvements on them did not exist: see s 3 and s 72 of the Valuation of Land Act. When the lots in the subdivision, of which lot 200 formed part, were created by the registration of the plan of subdivision the Department was obliged to value each lot, and it did so. Ms Candlish's affidavit recounts that she relied upon the Department's valuation of the lots in the subdivision to make the assessment of stamp duty. MrBowen was the valuer in the Department responsible for the valuation of the subdivision. He explained that ownership of lot 200 did not give rise to a liability to pay local authority rates or land tax so there was no requirement for his department to value it, "However it is Departmental practice to record a valuation on the Departmental valuation system, IV AS [Integrated Valuations and Sales], when a separate title issues for a parcel of land, even if the parcel would not be subject to ... rates or assessed for land tax ... ". Mr Bowen's affidavit went on: "Due to the small area of the Lot [being 146 m 2] and the circumstances outlined ... above, the Lot was assigned a nominal valuation ... It is Departmental practice to assign a nominal value to these types of parcels, ie [those] which are owned by a Local Authority and are of unmarketable size ... ". [22] I understood from this passage that the Department had not, in fact, conducted a specific valuation of the particular lot but had ascribed to it a nominal value of $500. Mr Bowen's oral testimony was confusing but, in the end, I think that my understanding correctly summarises the position. His evidence was: "So when the plan was actually [registered] for this particular subdivision we applied a value for each of the lots within the subdivision. This particular block we apportioned a value of $500.00 to the block." (T46.10). "I thought from paragraph 3 of your affidavit you were saying that the land wasn't in fact valued but a value was ascribed to it, to keep the paperwork in order. Isn't that what it says? - That's what it says Well, is that what happened? - That's what happened ... we apportion a value to each ... particular lot ... We record that lot then into our data base and there's a provision which allows that - its called a child ... record within the data base in that its a value has been apportioned to it ... " (T47.5-.20). Mr Bowen then said that all the land contained in the subdivision would have been valued on the basis that it comprised one parcel and the subdivided lots would each have been apportioned a value from the total. Lot 200 would have been included in the process. The allocation of value to individual lots is done by apportioning value in the ratio the area of the lot bears to the broad acre and which was subdivided. In accordance with that process a value of $500 was ascribed to lot 200 (T48.15). -- 7 of 10 -- · . 8 Mr Bowen's evidence leaves me unsatisfied that anyone in the Department actually valued lot 200 other than by allocating to it an arbitrary value based to some extent upon the relationship of its area to the area of other lots in the subdivision. [23] Mr Bowen confirmed that $500, ascribed as the value of lot 200, represented its value as unimproved land. At the time of the transfer part of a sewer, a sewer pump and a control panel had been constructed on the lot. [24] The first point is whether the valuation of lot 200, which appeared in the Department's database, was a valuation which the respondent "cause[ d] ... to be made by some person appointed by the [respondent]". It is quite clear it was not. If the ascription of $500 as the value of lot 200 amounts to a valuation, it is clearly not one which the respondent caused to be made by some person appointed by him. Section 51 C(1)(d) contemplates the respondent retaining somebody to value the property the subject of an instrument of transfer. The respondent causes a valuation to be made when he engages the services of the person to conduct the valuation. The valuation in question was performed by officers of the Department pursuant to distinct statutory duties imposed on them by the Valuation of Land Act. The valuation was not conducted because the respondent asked for it to be done. The respondent certainly did not cause the valuation to be made, nor did he appoint anyone in the Department to make it. He simply waited until departmental officers performed their statutory duties and made use of their work. The respondent could have requested the chief executive of the Department to conduct a valuation of lot 200 and specified the basis on which the valuation was to be made. The chief executive could have charged a fee for the service and would have issued a certificate of valuation: see s 74 of the Valuation of Land Act. This procedure was not used. [25] It is argued on behalf of the respondent that he was not obliged to accept the valuation made by the Department. It is pointed out that s 51 C provides that the respondent may assess duty payable on the footing of a valuation he obtains. He is not obliged to do so. I do not understand the relevance of this. The respondent did act upon the Departmental valuation. He had no other evidence of value. The applicant's material was that the land had no value. No monetary consideration appeared in the transfer. The respondent assessed duty in reliance on the only valuation which asserted the land had any value. It was not, however, a valuation which he caused to be made by somebody he appointed for the task. [26] The respondent did not comply with the statutory imperative in s 51C(1). That provision requires the respondent, when assessing duty on the basis of a valuation rather than, for example, the value appearing in the instrument which is or is deemed to be assessable, to base the assessment on: I. a valuation tendered by a party to the transaction; 2. a valuation which he has caused to be made. In this case the respondent assessed duty on the footing of a valuation which did not answer either description. It follows, in my opinion, that the respondent's decision to disallow the objection because the assessment had been properly made in the first place, was legally erroneous. On one or more of the grounds advanced the assessment was not authorised by the Stamp Act. -- 8 of 10 -- 9 [27] The associated point is that the respondent, in basing the assessment on the Department's valuation took an irrelevant consideration into account. The valuation is said to be irrelevant because it was wrong and because it was not a valuation of the type required by s 51 C(I). [28] The first ground urged for irrelevancy is problematic. When a person is empowered to make a decision and is given some discretion as to the evidence on which the decision can be based, it does not seem right to say that the decision was improperly made because a fact, taken into account, might be shown to be wrong if further, perhaps extensive, enquiries are made. In V-ideto v Minister for Immigration and Ethnic Affairs (1985) 8 FCR 167 at 178 Toohey J thought that "[a]s a broad proposition" the (Commonwealth) Administrative Decisions Judicial Review Act 1977 did not impose an obligation on a decision-maker to initiate enquiries. His Honour thought that much would "depend upon the nature of the material before the decision-maker, the importance of the decision to be made and its consequences for the person to whom [it] relates." In the Laws of Australia par 65 it is pointed out that there is conflict in the authorities on whether reliance on an incorrect fact will be treated as the consideration of an irrelevant matter. It is clear that in many cases an erroneous finding of fact will not invalidate a decision: see, eg Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321. To allow judicial review on this basis would be tantamount to conferring on an aggrieved person an appeal by way of rehearing of the facts. [29] The situation is different where the fact in contention is known by the decision- maker to be wrong or at least where grounds exist for thinking it questionable. In such a case, if the fact is to be relied upon, it is incumbent upon the decision maker to make enquiries and to take the fact into account only if, after enquiry, the fact appears accurate. [30] The respondent did have reason to suspect that the Department's valuation was not one on which he could rely for the assessment of duty. That assessment had to be made with respect to the actual worth of the particular property conveyed. Lot 200 at the time of its transfer to the applicant had built on it the items of sewerage infrastructure I have mentioned. It was clearly not unimproved land. What effect those improvements had upon the value of the land is open to serious debate as the evidence showed. What is not open to question is that the improvements must have had some impact on value. The Department was compelled by its statute to value lot 200 on the fiction that the sewer, the pump and the control panel did not exist. The respondent must be taken to have known this. It is notorious and a matter of law. [31] The respondent took into account, and indeed based its decision upon, a valuation which he knew was of property other than that which was the subject of the instrument of transfer. What was valued was unimproved land. What was transferred was land improved with part of a sewer network. A valuation on such a different basis was likely to be irrelevant and should have been known to be so. [32] Of course, if the Department's stab in the dark had hit the mark it could not be said that the respondent had acted upon an irrelevant consideration. Having heard the evidence I do not accept the applicant's contention that the land had no value. However, I am not satisfied that Mr Bowen made any worthwhile attempt to value -- 9 of 10 -- ) ) ) .' - ~ 10 the lot on the basis of what an adjoining owner would pay for the limited use ownership of it would provide. I am not satisfied that $500 represents the true value of lot 200. I would find it difficult to determine what value should be put on it, but it is not necessary that I do so. [33J The consequence of the respondent having ignored s 51 C and acted upon an irrelevant valuation would ordinarily mean that its decision should be set aside to allow him to reconsider the objection according to law. The time, effort and money involved in such a consequence is wholly disproportionate to the amount of duty. The applicant's real interest in the litigation was to obtain a determination on what it regarded as the point of principle, on which it has failed. It has no real interest in saving $7.50 at the cost of considerably more in valuers' and lawyers' fees, and expense it will incur itself. This appears a case in which the court should act under s 48 of the Judicial Review Act to dismiss the application on the ground that it is inappropriate for proceedings to continue. I was not asked to proceed on this basis but s 48(3) empowers the court to act on its own motion. The power to stay or dismiss an application because it is inappropriate for it to continue is very broadly expressed. Ordinarily the court would not act to withhold relief from an applicant who has made out one ofthe grounds specified in s 20. This case is exceptional and a proper one for the exercise of the power. The amount involved is far too small to justify further effort or expenditure by the respondent's officers. There is some precedent for such an approach. In 1817, sitting as the judge in Admiralty, Scott J asked rhetorically: "Has this court no prudence to discourage suits about mere trifles ... ", then answered: "The law will discourage such attempts, and the parties making them would be recommended to try other modes of application. The remedy might otherwise be worse than the disease." French Guiana, 2 Dodson's Admiralty Report 151 at 163-4. [34J Accordingly I order that the application be dismissed. In the circumstances it is proper to make no order as to costs. The applicant has demonstrated that the respondent acted unlawfully in disallowing its objection but has failed overall to ) obtain an order for review. -- 10 of 10 --