Bank of Queensland Ltd, Re [1996] QCA 367 [1997] 2 Qd R 129

IN THE COURT OF APPEAL [1996] QCA 367 SUPREME COURT OF QUEENSLAND Appeal No 2691 of 1996 Brisbane [Commr. Stamp Duties v. Bank of Qld] BETWEEN: THE COMMISSIONER OF STAMP DUTIES (Respondent) Appellant AND: BANK OF QUEENSLAND LIMITED (Applicant) Respondent Davies JA McPherson JA Byrne J Judgment delivered 4/10/96 Separate reasons for judgment by each member of the Court each concurring as to the orders made. APPEAL ALLOWED WITH COSTS. ORDER OF PRIMARY JUDGE SET ASIDE. IN LIEU, APPLICATION DISMISSED WITH COSTS. CATCHWORDS: CIVIL Debits Tax Act 1990 (Qld) – meaning of “account” within s 3(1) Debits Tax Administration Act 1982 (Cth) – cheques drawn on savings account through transfer account – effect of amalgamation of Bank of Queensland Ltd and Bank of Queensland Savings Bank Ltd – s 8 Bank Integration (Bank of Queensland) Act 1993 (Qld. Counsel: Mr PR Dutney QC with him Mrs DG Mullins for the appellant Mr IDF Callinan QC with him Mr TDOJ North for the respondent Solicitors: Crown Solicitor for the appellant Minter Ellison for the respondent Hearing Date: 26 April 1996 -- 1 of 21 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 2691 of 1996 Brisbane [Commr. Stamp Duties v. Bank of Qld] BETWEEN: THE COMMISSIONER OF STAMP DUTIES (Respondent) Appellant AND: BANK OF QUEENSLAND LIMITED (Applicant) Respondent Davies J.A. McPherson J.A. Byrne J. Judgment delivered 04/10/1996 Separate reasons for judgment by each member of the Court each concurring as to the orders made. APPEAL ALLOWED WITH COSTS. ORDER OF PRIMARY JUDGE SET ASIDE. IN LIEU, APPLICATION DISMISSED WITH COSTS. CATCHWORDS: CIVIL Debits Tax Act 1990 (Qld) - meaning of "account" within s.3(1) Debits Tax Administration Act 1982 (Cth) - cheques drawn on savings account through transfer account - effect of amalgamation of Bank of Queensland Ltd. and Bank of Queensland Savings Bank Ltd. - s.8 Bank Integration (Bank of Queensland) Act 1993 (Qld). Counsel: Mr. P.R. Dutney Q.C., with him Mrs. D.G. Mullins for the appellant Mr. I.D.F. Callinan Q.C., with him Mr. T.D.O.J. North for the respondent Solicitors: Crown Solicitor for the appellant Minter Ellison for the respondent Hearing Date: 26 April 1996 -- 2 of 21 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 2691 of 1996 Brisbane Before Davies J.A. McPherson J.A. Byrne J. [Commr. Stamp Duties v. Bank of Qld] BETWEEN: THE COMMISSIONER OF STAMP DUTIES (Respondent) Appellant AND: BANK OF QUEENSLAND LIMITED (Applicant) Respondent REASONS FOR JUDGMENT - DAVIES J.A. Judgment delivered the 4th day of October 1996 This is an appeal by the Commissioner of Stamp Duties from a declaration made in Chambers by a Supreme Court Judge that where an account holder of a savings account with the respondent, of the kind described in the evidence, was also an account holder of a transfer account as so described, to which the respondent debited payments made by it on cheques drawn by the account holder the savings account was not an "account" within the meaning of s.3(1) of the Debits Tax Administration Act 1982 (Cwth). The respondent bank offers its customers both savings and cheque accounts; and indirectly, by means of a transfer account, it allows customers to fund cheque payments from their savings accounts. This facility is described in the documents which contain the terms of the contract between the bank and its customer as a "Saver's Check Facility". To obtain this facility an applicant who is already the holder of a savings account must sign a "Request to Establish a Saver's Check -- 3 of 21 -- 2 Facility" and a request to establish a transfer account. These documents authorise the bank to open, in the name of the applicant, a transfer account and authorise the account customer to draw cheques. The bank undertakes to honour each cheque drawn provided that it is signed by the holder of the savings account, that it is encoded with the number of that account, that the account holder has a balance in the savings account of an amount equal to or exceeding the amount of the cheque and that funds are transferred by the bank to the applicant's transfer account. The bank has no obligation to pay any cheque for which funds are not provided in the applicant's transfer account by way of transfer from the savings account. It appears to be implicit from these terms that the cheque is drawn on and paid from the transfer account and that, upon the drawing of a cheque on the transfer account, the bank is authorised by the account holder to transfer sufficient funds from the savings account to the transfer account to fund the account to meet payment of the cheque from that account. The Bank of Queensland Limited is the successor of the Bank of Queensland Limited and the Bank of Queensland Savings Bank Limited; prior to 31 August 1994 the business of the trading bank and the savings bank were conducted by these two separate but related entities. The existence of a transfer account dates from that time, the Bank of Queensland then offering a cheque facility in this way to account holders of the savings bank. Prior to 31 August 1994 there could be no doubt that, pursuant to such a facility, cheques were drawn on and paid from the transfer account and the account holder indemnified the savings bank against all suits, claims, demands or losses arising in relation to the debiting of the savings account with the value of cheques drawn against the transfer account. -- 4 of 21 -- 3 After the statutory merger of the two entities the relevant contractual documents were altered only slightly so as to offer a similar facility to account holders of a savings account. In the process, however, the indemnity which is and was before 31 August 1994 contained in both the application for savings account and the request to establish a Saver's Check Facility was altered in such a way as no longer to be clearly an indemnity in respect of the value of cheques drawn against the transfer account but to be arguably an indemnity against the value of cheques drawn against the savings account; see the Request to Establish a Saver's Check Facility exhibit DHJ4. For reasons which appear below it is unnecessary to resolve that question of construction. The question before the learned primary Judge and this Court arises under the Debits Tax Act 1990 (Qld) which applies, as the law of Queensland, the substantial part of the Debits Tax Administration Act 1982 (Cwth). Its effect is to impose tax on taxable debits to taxable accounts. The question is whether, on payment by the bank of a cheque drawn pursuant to the above facility, a debit made to a savings account of the value of that cheque is a taxable debit. That question arises because the appellant, which is the relevant taxing body, when a transaction such as this is entered into, seeks to tax the savings account. The answer to the question depends in part on the legal effect of the above transaction and in part on the construction of the definition of "account" in the Commonwealth Act. That is in the following terms: "An account kept with a bank, being an account to which payments by the bank in respect of cheques drawn on the bank by the account holder or by any one or more of the account holders, may be debited." -- 5 of 21 -- 4 For the savings account to be such an account either it is or it may be debited with payment of the cheque; or the acts done to effect the transfer of funds from the savings account to the transfer account must constitute a payment by the bank in respect of a cheque drawn on the bank. The only payment by the bank in respect of a cheque drawn by the account holder of a saver's check facility is the payment of that cheque by the bank to the holder of the cheque. The transfer of money from the savings account to the transfer account is not a payment by the bank. It is no more than a bookkeeping exercise in respect of a chose in action, the bank's debt to the account holder represented by the credit shown in the savings account from time to time. Whether the savings account is debited with payment of a cheque drawn on the bank pursuant to a Saver's Check Facility depends, in my view, on the correct analysis of the transaction. No doubt when the savings account and the transfer account were with separate entities, as they were before 30 August 1994, it could be seen that a cheque was drawn against the transfer account with one entity and that that account was reimbursed, to the value of that cheque, from the savings account with the other. But since 30 August 1994 the account of the account holder with the paying bank which is, in reality, debited with payment of a cheque drawn on the bank is the savings account. The creation of the transfer account is a bookkeeping exercise used to give effect to the transaction in a way which most closely resembles the form of transaction which existed before 30 August 1994. But it has no legal effect. Payment by the bank of the account holder's cheque reduces the amount to which it is indebted to the account holder by the amount of that cheque. It follows, in my view, that the savings account is debited with payment of that cheque and that, consequently, it is an account within the meaning of s.3(1). I have had the advantage of reading the reasons given by McPherson J.A. for deciding that the conclusion is unaffected by s.8 of the Bank Integration (Bank of Queensland) Act 1993 (Qld) and agree with them. For those reasons I also agree with the orders proposed by his Honour. -- 6 of 21 -- 5 -- 7 of 21 -- 6 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 2691 of 1996 Brisbane Before Davies J.A. McPherson J.A. Byrne J. [Commissioner of Stamp Duties v. Bank of Queensland Ltd.] BETWEEN THE COMMISSIONER OF STAMP DUTIES (Respondent) Appellant AND BANK OF QUEENSLAND LIMITED (Applicant) Respondent REASONS FOR JUDGMENT - McPHERSON J.A. Judgment delivered the 4th day of October 1996 Section 2.1(a)¨ of the Debits Tax Act 1990 (Qld.) imposes a tax in respect of "each taxable debit of not less than $1 made to a taxable account". Section 3.1 provides that a financial ¨ Inevitably, s.2 of the Act has, in the latest statutory reprint, recently been renumbered, and is now s.4. However, it is convenient to continue to refer to it as s.2, which is the section number by which it was identified in the proceedings below and also before us in this Court. -- 8 of 21 -- 7 institution with which a "taxable account" is kept, and the account holder or holders, are jointly and severally liable to pay the tax imposed on a taxable debit made to the account. To discover the meanings of words used in these provisions, it is necessary to consult the Debits Tax Administration Act 1982, which is a Commonwealth statute which, with some amendment, is applied by ss.1.3 and 3.2 of the Queensland Act as the law of Queensland. By s.3(1) of the Commonwealth Act, the expression "taxable debit" means "a debit ... made to an account". The word "account" is, so far as relevant, defined to mean: "(a) an account kept with a bank, being an account to which payments by the bank in respect of cheques drawn on the bank by the account holder ... may be debited; Before going further, some preliminary observations are called for. First, although the definition in terms refers to "cheques drawn on the bank", it must, I think, be taken to refer to cheques drawn on a balance standing to the credit of an account with the bank, for which the expression in the definition is simply a legitimate form of shorthand. Secondly, the word "payment" is a very wide term, which in the context of banking is, generally speaking, to be taken as including a payment made by a simple transfer in an account without any money passing or cash changing hands: see Re Hardman (1932) 4 A.B.C. 209, at 210. Finally, it may also be noticed that the definition of "account" appears, plainly enough, to require that only one bank be involved in all stages of the various transactions referred to in the definition; that is to say, that the account be one that is kept with the same bank as that on which the cheques are drawn, and by which payments in respect of cheques are made. The respondent to this appeal, which was the applicant in the proceedings below, is the Bank of Queensland (BQL), which is a bank and therefore a "financial institution" within the meaning given to that expression by the Commonwealth Act. BQL is an amalgam of two entities, BQL itself and the Bank of Queensland Savings Bank Limited (BQSBL), which under legislation enacted for that purpose was amalgamated with BQL on 31 August 1994 ("the succession day"). Before the -- 9 of 21 -- 8 amalgamation BQSBL conducted a savings bank business. In doing so, it provided its customers with a "saver's cheque facility" under which a customer with a savings account was able to draw cheques on that account with BQSBL through the medium of an account which was called a "savings transfer account". To obtain this facility a prospective customer of BQSBL signed a printed "Application for Account" (ex DHJ 1) addressed to BQSBL. The context shows that what was contemplated was a savings account, which was presumably the only form of account offered by BQSBL. The form of application (ex DHJ 1) in the appeal record incorporates a statement by the customer to the effect that, where the savings account has a "Savers check (sic) facility": "I, having established a transfer account with the Bank of Queensland Limited [BQL], hereby indemnify you [BQSBL] against all claims ... in relation to the debiting of my savings account with the value of cheques drawn against the said account and in the event of misuse of cheques or cheque forms issued in pursuance of this agreement ...". In addition, a prospective customer was required to sign another printed document also addressed to BQSBL entitled Request to establish a Saver's Check facility (ex DHJ 2). It requested BQSBL to establish a savers check facility "on the above account in my name", and it repeated the terms of the indemnity in ex DHJ 1. The material in the record does not explain why BQSBL adopted the procedure of establishing a transfer account as well as a savings account. Probably, however, it was that, until the statutory distinction between savings and trading banks was reduced in 1986, it was, with some exceptions, legally impermissible for cheques to be drawn on a savings bank account. See Banking (Savings Bank) Regulations; Cth. Statutory Rules 1960 No. 6, reg.7. Whatever the reason, the evidence here discloses that, in the case of each customer of BQSBL who had the cheque facility, two accounts each with the customer's number were always maintained. One, which was the customer's savings account (ex DHJ 12), recorded details of debit entries in consequence of cash withdrawals over the counter as well as debits resulting from payment of cheques, which were -- 10 of 21 -- 9 identified by using the abbreviation TFR, meaning transfer. The other account, entitled savings transfer account (ex DHJ 13), recorded only the withdrawals effected by cheque, which took the form of entries showing debits of the amount of each cheque paid, followed in each instance by another entry recording a credit to that account of a sum of equivalent amount transferred from the savings account. It may be doubted whether transactions or entries invariably took place or were recorded in precisely the chronological sequence or order suggested by those accounts; but it is legitimate to regard the process as involving payment by BQL of a cheque drawn by the customer, followed or perhaps accompanied by reimbursement to BQL of the amount of the cheque effected by debiting that amount to the balance standing to the credit of the customer in the savings account with BQSBL. After the merger of BQSBL with BQL, the process assumed a somewhat different appearance. Until then, the statutory definition of "account" would not have been applicable because, before the merger, two distinct banking entities were involved in the process of paying cheques. The savings account was kept with BQSBL, but the cheques were drawn on and paid by BQL. Although by 1994, the statutory prohibition against drawing cheques on savings bank accounts had been repealed (See Banking (Savings Banks) Regulations (Amendment); Cth. Statutory Rules 1984 No. 168, reg.7¨ ¨ ), a person wishing to open a savings account providing a cheque facility with the amalgamated entity BQL was still required to sign both the printed Application for Account (now described as Application for Savings Account) and the Request to establish Saver's Check facility. They were in the same form as before the amalgamation; but with the difference that the Application for Savings Account (ex DHJ 3) and the Request to establish Savers Check facility (ex DHJ 4) were now being addressed to BQL. Previously, as has been noticed, they had both been directed to BQSBL. The accounting procedure nevertheless remained ¨¨ Reg. 7: "A person authorised to operate on an account maintained with a savings bank may be permitted by the bank to draw cheques on that account." -- 11 of 21 -- 10 as it was before the amalgamation; that is to say, the amount of a cheque drawn by a customer was paid and debited to the transfer account (ex DHJ 14), and then "reimbursed" by debiting the customer's savings account (ex DHJ 15) and crediting the transfer account (ex DHJ 14). Although, however, the same procedure was retained, the amalgamation of the two banking entities tended to invest it with an appearance of artificiality. In relation to a cheque transaction, it had previously been possible to regard BQL as paying the cheque and then being reimbursed for it by BQSBL, by debiting the customer's savings account with the amount of that payment and transferring a credit of the same amount to BQL. After amalgamation on 31 August 1994, the procedure was that BQL paid the amount of the cheque and correspondingly reduced the amount of the customer's credit in the savings bank account now being kept with BQL itself. Once BQSBL merged with BQL, there ceased to be any discernible reason for maintaining a separate transfer account at all. The question remains whether after the amalgamation the customer's savings account can, within the terms of the definition in s.3(1)(a), be considered "an account to which payments by the bank in respect of cheques drawn on the bank by the account holder ... may be debited". At first instance the learned judge held that the saving account was not an "account" within the meaning of that definition. In essence his reasons for that conclusion were as follows: "If the proper construction of the arrangements between the applicant and the customer is that funds are to be transferred to the transfer account before the cheque is honoured, then it cannot be the payment of the cheque which is so debited because at that time there has not yet been a payment. The debit is rather of a transfer in anticipation of such payment. If, on the other hand, the proper construction is that the applicant is to honour the cheque and then recoup the funds from the saving account, then certainly, the debit to the latter account arises as a result of the applicant's payment of the cheque, but it is not a debit of the payment. Clauses 4 and 6 contemplate that payment being debited to the transfer account. There is no authority to debit it to the savings account. The debit to that account is of the transfer of the amount necessary to discharge the customer's debit to the applicant created by the payment." -- 12 of 21 -- 11 His Honour went on to stress that, in speaking of "payment by a bank in respect of a cheque", the definition of "account" in s.3.1(a) was referring to the action of the bank in paying the holder of the cheque; and, further, that the words "in respect of" governed the relationship between payment by the bank and the cheque, and not that between payment and the corresponding debit. For my part, I cannot see that it makes a difference whether the debit entry in the transfer account or the savings account is recorded after or before the cheque is met by payment. In either event, the savings account is invariably debited with the amount of the cheque paid. The expression "in respect of" is very wide, and is "intended to convey some connexion or relation between the two subject-matters to which the words refer": State Government Insurance Office (Qld.) v. Crittenden (1966) 117 C.L.R. 412, at 416. There plainly is a vital connection or relation between payment of the cheque and the corresponding debit entry in the savings account. It may be that, as the learned judge accepted, the words "in respect of" literally govern the relationship between payment by the bank and the cheque, and not that between payment and the corresponding debit. But, in my respectful opinion, that consideration does not deprive those words of their relational force, as can be seen if, adopting what was said in Crittenden's case, the words "in connection with" are substituted for "in respect of". If that is done, the relevant portion of the definition of "account" in s.3(1)(a) falls to be read as saying: "an account to which payments [in connection with] cheques ... may be debited." I do not think it possible to doubt that, subject to a qualification or reservation that will be mentioned, the savings account satisfies that description. The same point could with equal force be made by supposing that the relevant debit entries in the savings account had been designated by the word "cheque" or "cheque payments" instead of by the abbreviation TFR. In that event, the relationship between debit entries and cheque payments would have been more readily apparent. It would then have been difficult to resist the impression that payments made by the bank in respect of -- 13 of 21 -- 12 cheques were being debited to the savings account, which, in consequence, would satisfy the definition of "account" in s.3(1)(a). The savings account was in fact an account to which payments in connection with cheques were debited. The question for determination can scarcely be left to depend on the designation which the bank chooses or chose to apply to a particular entry in the statement of account. Such a statement is, after all, nothing more than the bank's version of the state of its current indebtedness to the customer on that account, which consists of a record in chronological sequence of debit and credit entries that are used to give effect to the banking transactions from which a balance results. As such, it operates as an admission, even if only provisionally so, by the bank, and so constitutes prima facie evidence of the balance due from the bank to the customer. See Holland v. Manchester & Liverpool District Banking Co. (1909) 14 Com.Cas. 241, at 245-246; and also Capewell (1994) 74 A.Crim.R. 228, at 231, 235. The appellant Commissioner cannot be bound by the character or legal effect ascribed by the bank to transactions recorded in it. The contrary was not suggested on the appeal. It is convenient now to turn to the reservation mentioned earlier. In order to introduce it, it is necessary to revert to the passage set out above from the reasons of the learned primary judge. In the course of what his Honour said there, a reference is made to cll.4 and 6 as contemplating that payments by the bank of cheques presented to it are to be debited to the transfer account. Those clauses appear in both versions of the forms of Application for Account or Savings Account (exs. DHJ 1 and DHJ 3) and of the Request to establish a Savers Check facility (exs DHJ 2 and DHJ 4). It may be accepted that, as his Honour also said, no authority is conferred to debit such payments to the savings account; or, as I would be inclined to express it, to debit them directly or immediately to the savings account. The question is whether that makes any difference to the result. As a general proposition, where a customer has two accounts with a bank, either the bank or the customer is entitled to treat those two accounts, or the combined indebtedness on both of -- 14 of 21 -- 13 them, as one. See Re European Bank, Agra Bank Claim (1872) 8 Ch.App. 41, where James L.J., in a passage which was referred to by Clyne J. in Re Deague (1951) 15 A.B.C. 197, at 202, said: "In truth, as between banker and customer, whatever number of accounts are kept in the books, the whole is really but one account, and it is not open to the customer, in the absence of some special contract to say that the securities which he deposits are only applicable to one account." As the statement by James L.J. suggests, the principle applies in relation to cases in which the bank holds securities for one only of two accounts. It also applies where one of the accounts is overdrawn and the other in credit, in which event the bank or the customer is entitled to "combine" the two accounts for the purpose of arriving at the balance of the indebtedness on both: see Halesowen Presswork & Assemblies Ltd. v. Westminster Bank Ltd. [1971] 1 Q.B. 1, at 14, 34, 40; and also at 46, per Buckley L.J., whose dissenting judgment in relation to the particular question in that case was later upheld on appeal ([1972] A.C. 785). But, although the principle applies primarily to cases of that kind, its scope is wider than that. This can be seen from the decision of the Privy Council on appeal from New South Wales in Prince v. Oriental Bank Corporation (1878) 3 App.Cas. 325, where a transfer between separate branches of the same bank, effected by making entries in accounts at each of those branches, was viewed as the equivalent of, and as having no greater effect than, an actual transfer of money between the two branches. "They are", said Sir Montague Smith in giving the opinion of the Judicial Committee (3 App.Cas. 325, at 331) "entries and transactions only by and between the respective officers of the same bank". The relevance of these principles to the present appeal lies simply in this; that, after the amalgamation of BQSBL with BQL on 31 August 1994, there ceased to be two separate legal entities between which it was possible to make a transfer that did not have the limited character attributed by the Privy Council to the transfer between branches considered in Prince v. Oriental Bank Corporation. After 31 August 1994, BQL was the only bank involved in any of the -- 15 of 21 -- 14 transactions with the customer. It paid cheques drawn on the customer's account when they were presented to it, first debiting and then crediting the transfer account; and, in doing so, it also debited the customer's savings account which it maintained. Those entries and transactions were recorded, albeit in separate places, but they were so recorded by officers (and perhaps in reality by the same officer) of the same bank. It is, of course, possible for a single customer, with the consent of the bank, to require separate accounts to be kept with the same bank, and even with the same branch of that bank. Re Deague (1951) 15 A.B.C. 197 is an instance of that kind. See also Matthews v. Geraghty (1986) 11 A.C.L.R. 229, at 233. That a customer may maintain separate accounts at the same bank was recognised in Halesowen Presswork v. Westminster Bank [1971] 1 Q.B. 1, at 46, where Buckley L.J. said that when there is a running account between the parties, which in other respects is governed by the "single indebtedness" principle under discussion, "a particular transaction or series of transactions can by agreement be segregated from the other dealings between the parties so as to give rise to a separate indebtedness which is not to be taken into account in arriving at the balance on the general running account between them". It may have been these observations of Buckley L.J. that fostered the original idea of setting up a transfer account to provide for a cheque facility of the kind originally established by BQSBL. If so, it is, in my opinion, doubtful whether the procedure was capable of surviving the amalgamation of BQSBL with BQL creating a single banking entity BQL, which, after amalgamation, not only made the cheque payments but also recorded the entries on both accounts now maintained by it. Indeed, it seems to me to be doubtful whether, at least after 31 August 1994, it was possible to regard the transfer account as, in any relevant sense, possessing the character of an account of the customer or "account holder". It is true that, presumably for purposes of identification, it always bore the customer's savings account number; but no statement of account was ever issued to the customer in respect of it; and it must be open to question whether the customer could at any time have -- 16 of 21 -- 15 intervened to claim as his or her own property any credit balance appearing, however briefly, in that account. From the time of the amalgamation, the transfer account more closely resembled a private journal of the bank, which was subsidiary to the savings account, and which functioned simply as an internal book or record of the kind considered by the High Court in Manzi v. Smith (1975) 49 A.L.J.R. 376. If that is so, it may well have ceased to be an account "kept with a bank" by the "account holder" within the terms of the statutory definition. I have considered these matters at somewhat greater length than perhaps is merited by their significance or relevance to the outcome of the appeal. I have done so, however, out of deference to the carefully considered reasons of the primary judge. As mentioned, however, I am for my part satisfied that the savings account is, within the meaning of the definition of account in s.3(1)(a), an account to which payments by the bank in respect of (or in connection with) cheques drawn on the bank may be debited. The only remaining question is whether this conclusion is affected by s.8 of the Bank Integration (Bank of Queensland) Act 1993 (Qld.). Section 8 provides: "8. Tax is not payable under a law of the State in respect of - (a) the operation or effect of this Act or the Commonwealth Act in its application to the vesting of the business with BQSBL in BQL; or (b) anything done for a purpose connected with, or arising out of, that operation or effect." It is necessary to read this provision in conjunction with ss.5 and 6 of the 1993 Act. The effect of s.5 is that on the "succession day" (which as I have said was 31 August 1994) BQL became "the successor in law" of BQSBL. According to s.6(b), on the succession day, all liabilities of BQSBL became liabilities of BQL. On behalf of the respondent BQSBL, it was submitted that in consequence of the 1993 Act, on and after the succession day: (1) BQSBL ceased to operate any savings accounts; (2) BQL took over those savings accounts; and (3) a relationship was created between the savings and transfer -- 17 of 21 -- 16 accounts, which was the same as that existing between those accounts before the amalgamation, which (it was said) had the effect that thereafter customers' cheque transactions were processed in precisely the same way as they had been before except that BQL was now substituted for BQSBL. The first matter to be noticed is that the respondent's submission on this point could at best affect only existing savings account customers who had the saver cheque facility at the moment of the amalgamation. It could have no application to new customers of BQL after the succession date. Their position resulted not from any operation or effect of the 1993 Act, but simply from the fact that they and BQL had in terms of exs DHJ 3 and DHJ 4 agreed that they should become savings bank customers having the use of a cheque facility offered by BQL. No attempt has been made to segregate those "new" customers from those who were formerly customers of BQSBL; but, if the respondent's submission on this point is correct, it would be essential to do so. In any event, I do not consider that the respondent's submission is sustainable. It was not, within the meaning of s.8(a) of the 1993 Act, the "operation or effect" of that Act "in its application to the vesting of the business of BQSBL in BQL" that made debits tax payable under the Debits Tax Act 1990. What attracted the tax was the fact that customers used the cheque facility by drawing cheques that were presented and paid. Drawing and presenting those cheques was not, within s.8(b) of the 1993 Act, "anything done for a purpose connected with or arising out of" the operation or effect of the 1993 Act. The cheques were drawn not for any purpose of that Act, but because the customers who drew them wished to pay the drawees of the cheques. If no cheques had been drawn or presented, the Debits Tax Act could not have operated on the accounts of individual customers to which the amounts of those cheques were debited. In my opinion the appeal should be allowed with costs. The order made below should be set aside, and the application should be dismissed with costs. -- 18 of 21 -- THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 2691 of 1996 Brisbane Before Davies JA McPherson JA Byrne J [Commissioner of Stamp Duties v. Bank of Qld] BETWEEN: COMMISSIONER OF STAMP DUTIES (Respondent) Appellant AND: BANK OF QUEENSLAND LIMITED (Applicant) Respondent REASONS FOR JUDGMENT - BYRNE J. Judgment delivered : 04/10/1996 I gratefully adopt the exposition of the facts and statutory provisions set out in the reasons of McPherson JA. The decisive question is whether a "savings account" with the respondent ("the Bank") is "an account to which payments by the bank in respect of cheques drawn on the bank by the account holder ... may be debited". In the "Request to Establish a Savers Check Facility" (Ex. DHJ 4), the customer agrees to indemnify the Bank against "all ... claims, demands, or losses ... howsoever arising in relation to the debiting of my/our savings account with the value of cheques drawn against the said account". The only account previously mentioned anywhere in the document is the savings account. This Request, which matured into a contract upon acceptance of the customer's proposal, is consistent only with a right in the Bank to debit the savings account with the amount of paid cheques. It follows that the accounts of those customers whose relations with the Bank are regulated by -- 19 of 21 -- 2 the "Request" are accounts to which s.4.1(a) of the Debits Tax Act 1990 applies. It is presently immaterial that the Bank, pursuant to another request relating to the transfer account, may be entitled to debit that account also. The Bank's Deputy Chief Executive, Mr Jeffries, has deposed to the "mechanism" controlling the cheque facility now operated in conjunction with a savings account. According to him, since the amalgamation the procedure has invariably involved a "Request to Establish a Savers Check Facility". It therefore seems that the documents signed by pre-amalgamation customers have no continuing significance. However, in case these older accounts remain influenced by the former arrangements, something should be said of them. Accounts with the Bank of Queensland Savings Bank Limited were based on the terms of an "Application for Account" (Ex. DHJ 1). This form stipulated for an indemnity by the customer "in relation to the debiting of" the savings account "with the value of cheques drawn against the ... transfer account". If this arrangement still matters, the question is whether, notwithstanding the reference in the form to the transfer account, the Bank may debit the savings account with the amount of paid cheques. In other words, can the customer lawfully resist the Bank's claim if it chooses to debit the savings, rather than the transfer, account immediately? I cannot discern any ground on which a pre-amalgamation customer could resist such a claim. Nothing in the form in terms prohibits an initial debit to the savings account. It is not suggested that the legislation which effected the amalgamation is an impediment to that course. And that the form expressly permits a debit to the transfer account does not necessarily imply that the Bank may not debit another of the customer's accounts. Nor is there otherwise a basis for concluding that the arrangements operate as a constraint upon the ordinary, implied -- 20 of 21 -- 3 right of recourse to the customer's credit balance1 to satisfy the customer's pecuniary obligation to the Bank that arises on payment of a cheque. A savings account with the Bank attracts the tax. I agree with McPherson JA concerning s.8 of the Bank Integration (Bank of Queensland) Act 1993. I would allow the appeal with costs, set aside the primary judge's order, and instead order that the application be dismissed with costs. 1 cf. W.S. Weerasooria, Banking Law and the Financial System in Australia, 4th ed (1996), p. 531. Absent a special arrangement, a bank is impliedly authorised to debit the amount of a paid cheque against the bank's indebtedness to the customer evidenced by a credit balance. This right is contractual. So it does not matter if there is not otherwise a right at law to set these mutual debts off: see, generally, Walker v. Department of Social Security (1995) 56 FCR 354. -- 21 of 21 --