Carnation Australia Pty Ltd v Commissioner of Stamp Duties [1993] QCA 218 [1994] 2 Qd R 366

IN THE COURT OF APPEAL [1993] QCA 218 SUPREME COURT OF QUEENSLAND Appeal No. 178 of 1992 Brisbane Before The President Mr Justice Pincus Mr Justice Davies [Carnation Australia Pty. Ltd. v. Commissioner of Stamp Duties] BETWEEN: CARNATION AUSTRALIA PTY. LTD. Appellant - and - COMMISSIONER OF STAMP DUTIES Respondent REASONS FOR JUDGMENT - THE PRESIDENT Judgment delivered 15/06/93 This is an appeal by way of case stated from an assessment of stamp duties by the respondent pursuant to the Stamp Act 1894 as amended. The assessment relates to an agreement dated 24 October 1989 whereby the appellant agreed to purchase from three other companies the "Assets" defined in the agreement for the purchase price there specified. The recitals to the agreement were in the following terms: "RECITALS: A. The Vendors own the Assets, Stock, Real Property and Licensed Premises, and employ the Employees. B. The Vendors occupy the Leasehold Premises under the Property Leases. C. The Vendors use the Assets, Employees and Leased Equipment to conduct the Business from the Real -- 1 of 37 -- 2 Property, Leasehold Premises and the Licensed Premises. D. The Vendors and Purchaser have agreed that, subject to satisfaction of the Conditions Precedent:- (i) the Vendors will sell and the Purchaser will buy the Assets and Stock; (ii) the Vendors will licence the Purchaser to occupy the Licensed Premises; (iii) the Vendors will assign the Property Leases and Equipment Leases to the Purchaser; (iv) the Purchaser will employ the Employees; and (v) the Purchaser will own and conduct the Business; on the terms and conditions set out in this Agreement." Clause 1.1 contained the following definitions which were expressed to apply unless the context otherwise indicated: " ... `Assets' means:- (a) the Equipment; (b) the benefit (to the extent they may be assigned) of the Business Arrangements, Equipment Leases and the Property Leases; (c) the goodwill in and attaching to the Business; (d) the Intellectual Property; and (e) all other items located on the Real Property, Leasehold Premises and Licensed Premises on the Completion Date and used in connection with the Business (except the Stock and except any fixtures in the Leasehold Premises which have become the property of the Property Lessors, and any other items expected from the definition of `Equipment'); ... `Business' means the business of the manufacture, packaging and wholesale distribution of pet food and related pet products in Australia owned and conducted by the Vendors from the Real Property, Leasehold Premises and Licensed Premises; ... `Business Names' means those business and trade names under which the Vendors conduct the Business, including those names listed in Schedule 7, but excluding the Licensed Business Names; ... -- 2 of 37 -- 3 `Deeds of Assignment of Trade Marks' means the deeds under which the Trade Marks will be assigned, from those parties referred to in the deeds as the vendors, to the Purchaser on the Completion Date, in the form set out in Schedule 3; ... `Intellectual Property' means the intellectual property and proprietary rights (whether registered or unregistered), in relation to which the Vendors have full rights of ownership and which are used in the conduct of the Business including: (a) the Trade Marks; (b) the Business Names; and (c) works (including artwork) in which copyright subsists, inventions, know-how, technology, confidential information, trade secrets, and customer and supplier lists; ... `Purchase Price' means $36,003,645.00, which is apportioned as follows:- (c) so much of the Equipment as is non integral plant and machinery located at the factory/warehouse premises in Campsie, Shepparton and Ballarat - $ 4,554,205.00 (d) the balance of the Equipment - (and as further apportioned between each item according to the respective values assigned to each item in Schedules 5 and 11, being written down tax values as at 30 September 1989) $ 7,672.053.00 (e) goodwill of the Business apportioned as follows:- (i) as to that part of the goodwill related to canned pet food - $ 5,000.000.00 (ii) as to the remainer of the goodwill $ 7,982,387.00 (f) Intellectual Property and Trade Marks - (and as further apportioned between each Trade Mark, according to the respective values assigned to each mark in Schedule 13) $10,795,000.00 -- 3 of 37 -- 4 Purchase Price $36,003.645.00 ... `Trade Marks' means those marks listed in Schedule 13, and any other trade or service marks used by the Vendors in the conduct of the Business, but excluding the Licensed Trade Marks; ... ." Clauses 1(iv) and 2 of the Case Stated were as follows: "1.(iv) The said Agreement was made in New South Wales. 2.(i) Save for those trademarks to which a nominal value of $1.00 was ascribed, the trademarks set out in Schedule 13 of the said Agreement ("the said trademarks") were used by the vendors at all material times in the vendor's business. That business was the "Business" defined in clause 1.1 of the said Agreement and referred to in paragraph 1 hereof. It was carried on in Queensland and in the other States and Territories of the Commonwealth. 2.(ii) At all material times: (a) the said trademarks were registered under the Trade Marks Act 1955 as amended; (b) the Register of Trade Marks kept pursuant to the Trade Marks Act was located in the Trade Marks Office in Canberra in the Australian Capital Territory." It was common ground between the parties that the agreement did not operate as a conveyance or transfer of the trademarks, and that it contained provision for separate deeds of assignment to be executed and delivered. It was also common ground that the agreement was liable to duty by reference to the value of the trade marks only if such a liability was imposed by section 54 or section 54A of the Act. Sections 54 and 54A of the Stamp Act are in the following terms: "54. Certain contracts to be chargeable as conveyances. (1) Any contract or agreement for sale of any property or any contact or agreement whereby a person becomes entitled or may provided the terms and conditions thereof are met, become entitled to the conveyance or transfer of any property shall be charged with the same duty as if it were an instrument of conveyance of the property. (2) Subsection (1) does not apply to a contract or -- 4 of 37 -- 5 agreement for sale of any property (other than any equitable estate or interest in any property) which is property outside Queensland or which is solely comprised of any goods, live stock wares or merchandise. (3) Where an agreement which creates an option or right of purchase of any property provides that such property, or any part thereof, shall be conveyed or transferred to any person pending the exercise of the option or right of purchase, or where, in connection with such an agreement, such property, or any part thereof, shall be, or be agreed in any other manner to be, so conveyed or transferred, the agreement creating the option or right of purchase shall, for the purpose of this section, be deemed to be an agreement for the sale of the whole of the property the subject of the option or right of purchase. The determination of such option or right of purchase shall be deemed to be a rescission of an agreement for sale. In order to obtain a refund of the duty on the rescission of any such agreement, the application for the refund of duty may be made at any time within the time limited by subsection (7) of this section or within six months after the date of such rescission whichever period is last to expire. Where any property has been conveyed or transferred pursuant to, or in connection with, the agreement, no refund of duty shall be made pursuant to the said subsection (7) unless evidence is produced satisfactory to the Commissioner, that the property has been reconveyed or retransferred to the person by whom it was so conveyed or transferred and there shall be deducted from any such refund of duty, the duty which would have been paid on the consideration for such option or right of purchase but for the provisions of this subsection. (4) If a company incorporated in Queensland or a corporation registered in Queensland acquires for a consideration in money or money's worth any property in Queensland and a contract or an agreement for the sale or an instrument of conveyance of the property is not executed or, being executed, is not duly stamped with ad valorem duty, then - (a) in the case of a company incorporated or a corporation registered in Queensland, the memorandum of association of such company or the copy memorandum of association registered in Queensland of such corporation, (b) * * * * * shall be deemed to be the instrument of conveyance of such property and, for the purposes of section 4B to have been signed or executed by the company or corporation and shall be chargeable accordingly with ad valorem conveyance duty. (5) Where any property locally situate in Queensland -- 5 of 37 -- 6 is acquired for a consideration in money or money's worth and the whole or any part of the conditions of sale are set out or referred to in any instrument executed subsequently by any of the parties thereto, such instrument shall, unless a contract of sale or other instrument relating to the acquisition of property, duly stamped, is produced, be chargeable with ad valorem conveyance duty in respect of the said sale, in addition to any other duty payable on the said instrument. (6) Where duty has been duly paid in conformity with the foregoing provisions, the conveyance or transfer or conveyances or transfers made to the purchaser shall upon production of the contract or agreement or contracts or agreements, duly stamped not be chargeable with any duty, and the commissioner, upon application, either shall denote the payment of the ad valorem duty thereto. The foregoing provisions of this subsection do not apply in respect of a conveyance or transfer made to a person other than the person named as purchaser in the contract or agreement for sale to which the conveyance or transfer is intended to be pursuant unless the Commissioner is satisfied that at the time the contract or agreement for sale was executed the person named therein as purchaser was acting in the transaction evidenced by such contract or agreement as agent for the person to whom the conveyance or transfer is made (either as a general agent or in relation to the particular transaction) and was so acting under authority given to him by such person in writing executed prior to the execution of the contract or agreement for sale. The Commissioner shall not be satisfied for the purposes of the preceding paragraph solely on the basis of a document which purports to be an authority given to the purchaser by the transferee in writing executed prior to the execution of the contract or agreement for sale. Where the purchaser under a contract or agreement for sale is expressed to be a named person or his nominee, then for the purposes of this subsection the purchaser named therein shall be taken to be such named person. (7) Ad valorem duty with which a contract or agreement would otherwise be chargeable shall not be claimed in any case where there is produced to the Commissioner evidence satisfactory to him that such contract or agreement was rescinded within 30 days after its execution. If ad valorem duty has been paid on a contract or agreement which is at any time afterwards rescinded such duty shall be refunded to the person entitled thereto if- (a) there is produced to the Commissioner evidence satisfactory to him that the contract or agreement has been so rescinded; -- 6 of 37 -- 7 and (b) the application or the refund of duty paid is made - (i) in the case of a contract or agreement executed prior to the commencement of the Stamp Act Amendment Act 1975, within 12 months after the date of execution of the contract or agreement; (ii) in the case of a contract or agreement executed after the commencement of the Stamp Act Amendment Act 1975, within six months after the date of such rescission or within such extended period as the Commissioner allows in a particular case (he being empowered to allow such extension of time if he is satisfied that there are special circumstances that warrant such extension). (8) For the purposes of subsection (7) and without limiting its meaning, a contract or an agreement which has been rescinded includes a contract or agreement under which all rights and obligations are at an end and the parties to the contract or agreement have been returned to the original positions in respect of the property the subject of the contract or agreement which they held prior to the execution of the contract or agreement: The term does not include a contract or agreement which is at an end because the vendor has entered into or has agreed to enter into a further contract or agreement with a person nominated, introduced, substituted or otherwise by the purchaser in the original contract or agreement or some other person pursuant to that original contract or agreement or some other person pursuant to that original contract or agreement or a related document. 54A. Liability to account for duty upon transfer of business. (1) An acquisition or an agreement to acquire a business shall, for the purposes of this section, be deemed to include all goods, livestock, vehicles and other movable chattels, and all leases, tenancies, and licences, and the goodwill appertaining to the business, which are acquired or agreed to be acquired from the owner of the business whether the same are included in the transaction by which the business is acquired or agreed to be acquired or are the subject of another transaction or other transactions. (2) Every person who acquires or agrees to acquire a business that exists in Queensland shall, within one month after he does so, deliver to the Commissioner a statement in duplicate in the prescribed form verified in the prescribed manner and showing the prescribed information. (3) Where subsequent to delivering to the Commissioner a statement under subsection (2) in respect of a -- 7 of 37 -- 8 business the person acquiring or agreeing to acquire the business enters into another transaction or other transactions referred to in subsection (1) then he shall, within one month after he enters into that transaction, deliver to the Commissioner a statement in duplicate in the prescribed form verified in the prescribed manner and, in respect of that other transaction or those other transactions, showing the prescribed information. (4) A person who fails to deliver to the Commissioner a statement in duplicate in compliance with the requirements of subsection (2) or subsection (3) of this section shall be guilty of a continuing offence against this Act and liable - (a) to a penalty not exceeding $5000; and (b) to a further penalty of not more than twice the duty upon the statement less any amount imposed under this provision (b) on any other person who failed to so deliver the statement in duplicate. Upon convicting a person for an offence under this section the Court shall, in addition to any penalty it may impose; order him to pay the duty payable pursuant to this section in respect of the statement the subject of the conviction. (4A) If proceedings for an offence are not taken against a person referred to in subsection (4) a penalty may be imposed by the Commissioner. (4B) Subject to subsection (4C), the penalty is - (a) 3% of the duty chargeable on the statement in relation to the first month, or part of the first month, after the end of the period during which the statement was required to be lodged; and (b) 2% for each subsequent month or part of a month until the statement is lodged. (4C) If, apart from this subsection, the penalty would be less than $10, the penalty is $10. (4D) The Commissioner, after considering the circumstances, may reduce or waive the penalty. (5) A statement under subsection (2) or subsection (3) of this section shall be charged with duty under this Act as if it were a conveyance or transfer of the property to which the statement relates for a consideration equal to the full unencumbered value of such property and the person delivering that statement shall be liable accordingly. (5A) For the purposes of calculating the duty to be charged upon a statement under subsection (2) or (3), sections 55B and 55C apply as if the statement were an instrument conveying or transferring the property to which the statement relates. (6) The Commissioner shall set off against the duty charged upon any statement under this section any amount of that duty which has been paid in respect of some other instrument. -- 8 of 37 -- 9 (7) For the purposes of this section the expression `business' includes - (a) any business, profession, calling, vocation or other occupation carried on by a person on his own behalf or in partnership with any other person; (b) any interest or any part of an interest held by a partner in a business; and (c) any interest or any additional interest acquired as a partner in a business. For the purposes of this section the expressions `acquisition of business' and `agreement to acquire a business' include any transaction or transactions by which, although the whole of the assets of a business are not acquired or agreed to be acquired, sufficient of those assets are acquired or agreed to be acquired to enable the person acquiring the same to carry on the business. (8) Where, other than by reason of the acquisition or agreement to acquire the whole of a business or any interest or any additional interest as a partner in the whole of a business, any real property or in the case of any land held from the Crown for a leasehold estate, any such leasehold estate, any lease, any tenancy or any licence appertaining to a business is acquired or agreed to be acquired then such real property, leasehold estate, tenancy or licence and, if any other property appertaining to the business is acquired or agreed to be acquired therewith, such other property shall be deemed to be a business for the purpose of this section. (9) Where any real property, or in the case of any land held from the Crown for a leasehold estate, any such leasehold estate is acquired by one or more persons and, at the time of or prior to or subsequent to the acquisition of such real property, or leasehold estate, any other property (real or personal) that, in the hands of the person from whom it is acquired, is or was being used in a business conducted on such real property, or land held from the Crown, is acquired by any person or persons such that there exists a relationship between the first-mentioned person or persons and the last-mentioned person or persons or there exists any circumstance which in either case makes it likely that such other property acquired will be used in conducting a business on such real property or land held from the Crown, being a business that is of the same or substantially the same description as the business conducted thereon by the person from whom such other property is acquired, then it shall be deemed that such real property, or, as the case may be, leasehold estate and all such other property is a business for the purposes of this section. Provided that if such property is acquired prior to the acquisition of the real property or the leasehold estate in land held from the Crown on which was being -- 9 of 37 -- 10 conducted the business in which such other property was being used and the Commissioner is satisfied that the acquisition of such other property is a transaction unrelated to the acquisition of the real property or leasehold estate, the foregoing provisions of this subsection shall not apply. In a case to which the provisions of this subsection apply, the person or persons who acquire or agree to acquire the real property or leasehold estate in land held from the Crown shall be the person or persons who acquire or, as the case may be, agree to acquire the business, for the purposes of subsections (2), (3) and (4). (10) For the purposes of this section a business shall be deemed to exist in Queensland if - (a) it is conducted on or from any place in Queensland; or (b) its conduct consists wholly or partly of offering to supply land or any interest therein, money, credit, or goods or any interest therein or to tender any service, by way of offers directed to persons (generally as a class or individually) ordinarily resident in Queensland. (11) Where a business acquired consists partly of a business that, pursuant to subsection (10), is to be deemed to exist in Queensland the provisions of subsection (2) shall be taken to apply only in respect of the acquisition of that part of the business that is to be so deemed to exist in Queensland and for the purpose of that application, should the case require it, a true apportionment shall be made of the value of all things, which pursuant to subsection (1) are deemed to be included in an acquisition of such business, and of the consideration of the acquisition, between the value of such things as are held in connexion with the part of the business so deemed to exist in Queensland and the consideration therefor, and the value of such things as are held in connexion with the part of the business not so deemed to exist in Queensland and the consideration therefor." The appellant submitted that section 54 does not apply because the trademarks are "property outside Queensland" within the meaning of sub-section 54(2). Against this is the absence from that phrase of the word "solely" which is used later in the section in connection with another category of excluded property, namely, "property ... solely comprised of any goods, live stock, wares or merchandise." On the other hand, there is a basis for thinking that the section may proceed on the assumption that "property" will always be situated wholly within or wholly outside Queensland, with -- 10 of 37 -- 11 "no intermediate limbo": cf English Scottish and Australian Bank Ltd. v. IRC (1932) AC 238, 256. Such an assumption, if made, is incorrect. Registered trade marks are "locally situate in Australia, but cannot be regarded as locally situate in any State or Territory of the Commonwealth." In Re Usines De Mell and Firmin Boinot's Patent (1954) 91 CLR 42,49 (Fullagar J.). Although the matter is far from clear, the better view seems to be that sub-section 54(2) is concerned to exclude from ad valorem duty transactions with respect to property which is not "locally situate in Queensland": cf ss.54(5). Perhaps the most compelling reason for this conclusion is the consequence which would otherwise ensue. It is difficult to accept that it might have been intended by the legislature that full ad valorem duty should be payable in respect of property which is located, in the legal sense, throughout Australia, irrespective of the parties' liability to duty in other parts of Australia where the property is also situate. However unintelligible, the apportionment provisions in section 54A strongly suggest to the contrary of such a view. A similar purposive approach to section 54A operates less favourably to the appellant. It was submitted that the reference to "goodwill" in subsection 54A(1) does not encompass registered trade marks. Nonetheless, assuming that to be so, the underlying premise of sub-sections (1), (2) and (5) is that they apply to all the assets of a business (to which the section is applicable) which are acquired or agreed to be acquired in the material transaction, as well as specified categories of assets of the business which are deemed by subsection (1) to be included whether or not included in the transaction. The property deemed to be included by subsection (1) is expansive, not exhaustive, and does not exclude other assets of such a business which are acquired or agreed to be acquired in the material transaction. These seem intended to be covered however poorly the section is drafted: cf Cooper Brookes -- 11 of 37 -- 12 (Wollongong) Pty. Ltd. v. F.C.T. (1981) 147 CLR 297. Similarly, in my view, subsection (5) proceeds on the basis that duty will be assessed by reference to a duly completed form. However, this provides only a starting point. It is necessary to turn to later provisions of section 54A to determine what duty is payable in respect of the acquisition of a business that is conducted in Queensland and elsewhere. Subsection (5) provides for ad valorem duty on the statement required to be lodged under subsection (2) in respect of the full value of the assets. However, that is cut down by subsequent provisions where the business is not confined to Queensland. Subsection (10) deems a business which is conducted in Queensland to exist in Queensland. Then, subsection (11) proceeds on the footing that subsection (10) deems part (and part only) of a business to exist in Queensland if the business is conducted in Queensland and elsewhere. On that basis, it provides for the statement required under subsection (2) and dutiable under subsection (5) to be provided only in respect of the Queensland "part of the business". Where necessary for that purpose, a true apportionment is required by subsection (11) to be made of the "value of all things ... and of the consideration for the acquisition". The apportionment directed is between "the value of such things as are held in connexion with the part of the business so deemed to exist in Queensland and the consideration therefor, and the value of such things as are held in connexion with the part of the business not so deemed to exist in Queensland and the consideration therefor." The words omitted from the quotation from subsection (11) in the first sentence of the previous paragraph refer back to subsection (1) of section 54A. However, that reference does not have a limiting effect if, as has been indicated, subsection (1) is based on the premise that subsections (1), (2) and (5) apply to all the assets of a -- 12 of 37 -- 13 business (to which the section is applicable) which are acquired or agreed to be acquired in the material transaction as well as other assets deemed to be included. The material trademarks were a subject of the Agreement for Sale and thus are required to be included in the statement lodged under subsection (2) without any reliance upon the deeming provision in subsection (1) or the reference back to that provision in subsection (11). There is no suggestion that, if applicable in the instant case, section 54A would have an impermissible extra- territorial reach beyond the legislative competence of the Queensland Parliament and no submission was made by the appellant that trademarks were not "things" within the meaning of subsection (11). The remaining issue, therefore, is whether they were "things ... held in connexion with the part of the business so deemed to exist in Queensland" or "things ... held in connexion with the part of the business not so deemed to exist in Queensland". As appears from subsection (10), the part of the "business ... deemed to exist in Queensland" is the business conducted in Queensland. Unlike s.54, s.54A does not require that property be solely attributable to Queensland or some other location. The trademarks were held in connexion with both the Queensland business and the business outside Queensland. Accordingly, duty is payable and calculated on the proportional basis indicated by the subsection which requires the full value and consideration in respect of the trademarks to be taken into account on both sides of the equation. The questions asked in the case stated were as follows: "(a) Is the said Agreement for the Sale of a Business chargeable with duty under the Stamp Act 1894- 1990 in accordance with the assessment of THE COMMISSIONER OF STAMP DUTIES? (b) If "no" to (a), is any other amount, and if so, with what amount of duty is the said Agreement for Sale of a Business Chargeable? (c) How should the costs of and incidental to the stating of this case and the hearing thereon be -- 13 of 37 -- 14 borne and paid?" At the hearing, however, we were told of other questions which the parties had formulated as well as an agreement between the parties that, if question (a) is answered in the negative, the answer to question (b) is $287,271.75. It was also assumed by both parties that, if question (a) is answered in the affirmative then, irrespective of which of sections 54 and 54A applies, the respondent was correct in assessing duty by reference to the trade marks on the basis of the proportion which goodwill associated with the business conducted in Queensland bore to goodwill associated with the business on an Australia-wide basis. While neither party could point to any provision which supported such a course, the Court was informed that it is common in practice in Queensland. There are at least two difficulties in the parties' approach. The first is that, under section 54A, it is not the Agreement for Sale which is dutiable but the form which the section requires to be delivered to the Commissioner which, in this case, included no reference to the trademarks. The second is that, under section 24 of the Act, the Court is required to determine the questions submitted "and, if the instrument in question is in the opinion of the court chargeable with any duty, shall assess the duty with which it is chargeable". Here, the instrument identified by the Case Statement is the Agreement for Sale, not the form. No amendment was sought to the Case and the Court should not, itself reformulate the questions but should answer those set out in the Case Stated. It will remain open to the Commissioner to subject an appropriate form under section 54A to duty in accordance with that provision. I would answer question (a) in the negative, and question (b) by reference to the agreed amount of $287,271.75. The Commissioner should pay the appellant's taxed costs of and incidental to the stated case and the hearing. -- 14 of 37 -- 15 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 178 of 1992 Brisbane Before Fitzgerald P. Pincus J.A. Davies J.A. [Carnation v. Commissioner of Stamp Duties] BETWEEN: CARNATION AUSTRALIA PTY. LIMITED Appellant AND: COMMISSIONER FOR STAMP DUTIES Respondent JUDGMENT - PINCUS J.A. Delivered the 15th day of June 1993 This is an appeal against a stamp duty assessment which the Commissioner has sought to justify under s.54A or, in the alternative, s.54 of the Stamp Act 1894. The appeal is brought under s.24 of the Act, which requires (sub-s.(2)) the Commissioner to state and sign a case on which the Court must determine the questions submitted - "and, if the instrument in question is in the opinion of the court chargeable with any duty, shall assess the duty with which it is chargeable". There is authority tending to support the view that the Court's obligation is to give its opinion as to the proper duty, whether or not that accords with the contentions of -- 15 of 37 -- 16 either party: Finance Corporation of Australia Limited v. Commissioner of Stamp Duties [1981] Qd.R. 493 at 514, referred to in Westpac Banking Corporation v. Commissioner of Stamp Duty (No. 54 of 1992, Court of Appeal, 11 September 1992). The statute requires the Court to assess the duty. Here, the arguments advanced are based on assumptions as to the proper operation of the provisions in question, assumptions common to both parties. It is common enough for courts to decide litigation on the basis of facts which are wholly or partially agreed, but this Court has no jurisdiction under s.24 to make an assessment at a higher or lower figure than the law requires simply because the parties have agreed on an erroneous construction of the Act. If it matters, such a practice might be inconvenient as well as unlawful; the Court's decisions on disputed stamp duty questions are, if incorrect, liable to mislead. It is therefore desirable to decide the proper assessment first and then deal with the way in which the questions posed should be answered. As to the latter, the parties desire, not answers to the questions submitted in the stated case, but rather answers to questions which they have agreed to substitute for those submitted; but no amendment of the case which the Commissioner has stated has been sought. The Act in question is not commonly regarded as one which is well drawn, but the Court should, in my opinion, do -- 16 of 37 -- 17 its best to read it so as to give effect to the apparent, not always impeccably expressed, intention of the legislature; that appears to accord with the terms of s.14A of the Acts Interpretation Act 1954. There must be a limit, however, to the extent to which one can apply some reconstructed provision, instead of the language actually used. The problem is the recurring one of the Act's application to a transaction involving States other than Queensland. In many instances, as this case illustrates, the Act treats that problem in an obscure way. It has always done so, but the deficiency is now more damaging than it was when the Act was first passed. Under the agreement annexed to the case, vendors agreed to sell and purchasers to buy assets which, by reason of certain definitions, included trademarks listed in a schedule to the agreement. Under cl.12.4, the parties promised that there would be executed and delivered on the completion date certain deeds of assignment of trademark. Most of the deeds deal with Australian registrations, but there are also deeds of assignment of marks registered in some foreign countries. What the Commissioner has done - and this aspect of the assessment is not challenged - is to claim duty on the basis that the total amount the parties apportioned to the trademarks ($10,795,000) is further -- 17 of 37 -- 18 apportioned, territorially. The basis of the further apportionment is that which was agreed in respect of goodwill, namely the proportion $1,849,180 (the value applicable to Queensland) bears to $12,982,387 (the value of the total goodwill). On that basis, the value of the "Queensland portion" of the trademarks is set at $1,537,613.60. The Commissioner wrote to the appellant's solicitors to ask for a declaration in form S(a) to be provided showing, among other things, "details of Queensland proportion of consideration for intellectual property and trademarks". A form S(a) was sent in, but it included no explicit reference to trademarks. The significance of that form is that it is required to be used under s.54A(2) and it is on s.54A that the Commissioner primarily relies to support his assessment. The section is set out in full in the President's reasons; I will make a summary of part of it. Sub-section (1) says, in effect, that an acquisition or agreement to acquire a business is deemed to include certain sorts of property "appertaining to the business", whether or not they are included in the transaction under which the business is acquired or are the subject of another transaction; the apparent intention is that, for the purposes of s.54A, the taxpayer is to gain no advantage by splitting an acquisition of a business into a number of separate transactions. Under sub-s.(2), a person who acquires or agrees to acquire a business "that exists in Queensland" has to deliver a -- 18 of 37 -- 19 statement in the prescribed form; that form is the one I have just mentioned, S(a). The form requires that there be set out "full details of all assets including leases, tenancies and licences appertaining to, or in any manner connected with the business whether acquired in one transaction or in more than one". So far as the form refers to the possibility of a business being acquired in more than one transaction, it seems to be complementary to sub- s.(1). However, the sorts of assets specifically mentioned in the form are not the same as those mentioned in sub- s.(1); further, the form requires that full details of all assets be set out, whereas sub-s.(1) does not refer to all assets or use any equivalent expression. One encounters the general problem referred to above: it seems possible that this lack of correspondence between the two provisions is a drafting mistake, but one must question whether the content of the prescribed form could justify reading sub-s.(1) as if it referred to all assets, instead of only certain kinds of assets. Sub-section (3) provides for the delivery of a supplementary statement and the details of that do not require to be discussed. Sub-section (4) has the effect that failure to deliver a statement in compliance with sub- s.(2) or sub-s.(3) is an offence. On conviction, the person convicted may be ordered to pay a penalty of not more than twice the duty "upon the statement". This is oddly expressed, since there must be no statement or a defective -- 19 of 37 -- 20 one; but presumably the intention is that the Court may order payment of not more than twice the duty which would have been payable if a proper statement had been delivered. Under sub-s.(5), the statement is charged with duty as if it were a conveyance of the property to which the statement relates. That property is I think to be identified by examining the statement, interpreting it in the light of the other relevant documents. It is critical to an understanding of s.54A to note that it is the statement which is taxed, not the transaction which it purports to reflect. Duty is not exigible on the statement as if it were a conveyance of the property to which the statement should, according to the proper construction of the section, relate. We were I think invited to give sub-s.(5) such an expansive construction as to treat the statement as if it were not one conveyance, but a series of separate conveyances, each dealing with a different species of property. Counsel informed us that the view taken is that in a case of this sort, s.15(a) applies: "Except where express provision to the contrary is made by this or any other Act: (a) an instrument containing or relating to several distinct matters is to be separately and distinctly charged as if it were a separate instrument, with duty in respect of each of the matters". -- 20 of 37 -- 21 Section 54A(5) requires one to treat the statement as if it were a conveyance, for duty purposes; it is an "instrument" within the definition in s.2. It is not by any means clear that the deemed conveyance is one containing or relating to several distinct matters. In paragraph 6 of the statement form there is required to be set out details of the assets and apportionment of the true value in various categories. The only one which might be thought to include the trademarks is "goodwill", the value of which is stated to be $1,849,180. The documents show, however, that that item does not in truth include the trademarks, which are separately apportioned in the agreement for sale. The difficulty which arises then is that the statement, which is the dutiable instrument, does not mention trademarks nor, if one looks at the other documents, does it "relate" to them, in a broad sense. The statement was drawn up on the basis that the trademarks were not dutiable under s.54A. Not only does the statement not relate to trademarks as a "distinct matter" within the meaning of s.15(a); it does not relate to them at all. There is therefore no justification for assessing the statement under s.54A as the Commissioner claims the right to do, on the basis that it is to be treated as a conveyance of the trademarks. I have referred above to sub-s.(4), which appears to have the effect that where a defective statement is -- 21 of 37 -- 22 delivered and the person who delivers it is convicted, then the Court may order a payment of duty. Alternatively, the Commissioner, if he asserts that a statement is defective, may it appears alter it and charge duty on the altered statement: s.22A(2). That was done in this case with respect to motor vehicles, but no alteration was made to include the trademarks. The assessment ultimately issued charged no duty on the form S(a). The intellectual property which is in issue was charged with duty as forming part of the property dealt with by the agreement for sale and presumably that is the explanation for the trademarks not having being included, by the Commissioner, in the form S(a). I agree with Davies J.A. that, no duty having been assessed on the form S(a), that form is not the "instrument in question". It appears to me convenient, although I am by no means confident that I should so do, to consider the matter further, on the basis upon which it was argued, as if the trademarks were included in the form S(a). To solve the problems raised in the argument requires assigning a meaning to s.54A(11), which is an obscure provision. The principal mistake made in drafting it was that the draftsman failed to notice that sub-s.(10), to which sub-s.(11) is ancillary deems the business to which it applies, not merely part of it, to exist in Queensland. Sub-section (10) reads as -- 22 of 37 -- 23 follows: "For the purposes of this section a business shall be deemed to exist in Queensland if - (a) it is conducted on or from any place in Queensland; or (b) its conduct consists wholly or partly of offering to supply land or any interest therein, money, credit, or goods or any interest therein or to render any service, by way of offers directed to persons (generally as a class or individually) ordinarily resident in Queensland". Sub-section (11) is drawn as if, where a business is conducted partly in Queensland and partly elsewhere, the Queensland part of it only is deemed to exist in this State. Further, sub-s.(11) assumes, wrongly, that sub-s.(10) identifies or provides a means of identifying that part of the business which is deemed to exist in Queensland. Sub- section (11) reads as follows: "Where a business acquired consists partly of a business that, pursuant to subsection (10), is to be deemed to exist in Queensland the provisions of subsection (2) shall be taken to apply only in respect of the acquisition of that part of the business that is to be so deemed to exist in Queensland and for the purpose of that application, should the case require it, a true apportionment shall be made of the value of all things, which pursuant to subsection (1) are deemed to be included in an acquisition of such business, and of the consideration for the acquisition, between the value of such things as are held in connexion with the part of the -- 23 of 37 -- 24 business so deemed to exist in Queensland and the consideration therefor, and the value of such things as are held in connexion with the part of the business not so deemed to exist in Queensland and the consideration therefor". The expression "... a business that, pursuant to subsection (10), is to be deemed to exist in Queensland" accurately reflects the effect of sub-s.(10), but the expression "that part of the business that is to be so deemed to exist in Queensland" does not. The key to ascribing a meaning to this language, in my opinion, is to notice that sub-s.(11) has the purpose of alleviating what might otherwise be the harsh effect of sub-s.(10). If there is a sale of an Australia-wide business whose conduct consists partly of offering to supply goods to Queensland residents, then the effect of sub-s.(10) is to deem the business to exist in Queensland. Then sub-s.(2) requires delivery of a statement by the acquirer of that business, in form S(a). It will be noted that the statement contains no provision for a territorial apportionment. If one reads sub-s.(11) generously, however, it can be seen to show an intention to which the Court should if possible give effect of applying sub-s.(2) only to the Queensland part of the business. The latter part of sub- s.(11) requires an apportionment between the Queensland part and the non-Queensland part. It, too, makes an erroneous assumption about the effect of sub-s.(10), but nevertheless is consistent with the general intention I have stated. -- 24 of 37 -- 25 Another apparent mistake in sub-s.(11) is that it indicates that only the property mentioned in sub-s.(1) is to be the subject of an apportionment; it makes no practical sense to exclude from the process of apportionment any of the assets forming part of the business sold - for example freehold land. Although it is a considerable straining of the language to do so, in my view the apportionment contemplated by sub-s.(11) should be taken to apply to all the property mentioned in the prescribed form, whether or not within one of the categories in sub-s.(1). The argument for the appellant was that the apportionment provision should be taken to relate only, as sub-s.(11) at first sight indicates, to sub-s.(1) property and it was said that trademarks are not within sub-s.(1). The purpose of that argument appeared to be to show that sub-s.(11) does not permit apportionment of the value of the trademarks; if so, sub-s.(10) applies, which is not to the advantage of the appellant. The construction I have put on sub-s.(11) is that it should be taken to require a territorial apportionment in respect of property the subject of the obligation mentioned in s.54A(2), so that a person delivering a form S(a) should deal in it only with the Queensland part of the business. It has to be conceded that in many instances - the present is an example - there may be much room for argument about the mode of apportionment; but here the parties are agreed -- 25 of 37 -- 26 upon the apportionment and there is no need to discuss the validity of the basis of their agreement. The consequence is that, in my opinion, no s.54A duty is chargeable with respect to the trademarks, because the form S(a) does not relate to them. However, it should have done so and, assuming the agreed apportionment to be correct, should have included reference to the sum apportioned to Queensland in respect of the trademarks, which sum would then have been chargeable with duty under s.54A. It should be added, perhaps superfluously, that s.54A requires to be carefully redrawn; particularly insofar as it seeks to impose a tax upon the sales of businesses whose scope extends beyond Queensland, its operation is uncertain. It remains to consider s.54, on which the Commissioner alternatively relies. The central problem here is the same as that arising under s.54A, namely to what extent, if at all, is the section expressed so as to catch sales of businesses which operate partly in Queensland and partly elsewhere? The relevant provisions are fully set out in the reasons of the President. In summary, sub-s.(1) charges duty on an agreement for sale of property as if it were a conveyance and sub-s.(2) excludes from sub-s.(1) agreements for sale of property "which is property outside Queensland". -- 26 of 37 -- 27 The Commissioner's argument is that trademarks are not "property outside Queensland" and therefore the exclusion is irrelevant. The appellant contends, principally on the authority of English, Scottish and Australian Bank Limited v. The Commissioners of Inland Revenue [1932] A.C. 238, that one should read s.54(2) as requiring "an affirmative decision to be made as to the location of the property in question. It is either outside Queensland or it is not". Counsel for the Commissioner also contended, rather faintly, that one may apportion the consideration between that part of the property which is located in Queensland and that part which is not, under s.54(2). But Mr. Gotterson Q.C., who put this submission, himself gave the answer to it: sub-s.(2) does not exclude from duty the property which is outside Queensland, but rather the agreement for its sale. In my opinion, sub-s.(2) is so drawn as to make an agreement to which it relates wholly dutiable or not dutiable at all. That is an important conclusion and one which brings about an inconvenient construction. If the agreement for sale relates to a matter whose principal value, insofar as one can rationally apportion it, is outside this State, such as a trademark used Australia-wide, then the choice the construction offers is between charging no duty at all under s.54, and charging duty on the whole sum. But in contrast to s.54A(11), s.54 gives no indication that there is power -- 27 of 37 -- 28 to apportion on a territorial basis and one can hardly read in such a power, simply on the ground of convenience. The question may be said to be whether one reads in "wholly" after the word "property" in s.54(2) or rather "wholly or partly" and it is one on which my mind has fluctuated. The more natural reading may be thought to favour the Commissioner. But that would, in many cases, operate in an unreasonable way which could hardly have been intended: to exact duty on the whole of the property included in a single sale, where only a small part of the property is in Queensland. I have arrived at the view that the appellant's argument on this point should be accepted, so that the assessment under s.54(2) cannot stand. That conclusion makes it unnecessary to discuss, in this context, the validity of the course the parties appear to have agreed on, namely to treat the agreement as an instrument relating to the trademarks as a "distinct matter": s.15(a). It should be added that since the enactment of Act No. 65 of 1982, s.4(2) has become the provision of the Act which prescribes, at least presumptively, the Act's extraterritorial operation: Westpac Banking Corporation v. Commissioner of Stamp Duties (above). If one ignored the effect of s.54(2), then the question would arise whether the agreement for sale was caught by s.4(2) as relating to -- 28 of 37 -- 29 "property situated or to any matter or thing done or to be done in Queensland". That is so because the instrument was not executed in Queensland. However, it is unnecessary to discuss that point further. I would not give any answer to the questions in the document the parties sought to substitute for the questions in the case stated. I agree with the answers proposed by Davies J.A., to the latter questions. -- 29 of 37 -- 30 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 178 of 1992 Brisbane Before The President Mr Justice Pincus Mr Justice Davies [Carnation Australia Pty Limited v Commissioner of Stamp Duties] BETWEEN: CARNATION AUSTRALIA PTY LIMITED Appellant - and - COMMISSIONER OF STAMP DUTIES Respondent REASONS FOR JUDGMENT - DAVIES J.A. Judgment delivered 15/06/1993 This is an appeal by way of case stated against an assessment of ad valorem stamp duty of $348,079.75 upon an agreement for sale of a business dated 24 October 1989. The assessment, a copy of which is part of the stated case, appears on its face to have been made in reliance upon s. 53 of the Stamp Act by aggregating the consideration payable under that agreement and the consideration payable pursuant to a contract of sale of land dated 24 October 1989; and apportioning duty between those instruments. However, in -- 30 of 37 -- 31 his stated case the Commissioner says that he relied also on the heading in the First Schedule "Conveyance or Transfer" and ss. 4, 49, 54 and 54A. There is no appeal against the assessment upon the contract of sale of land or the way in which duty was apportioned between the two instruments. The stated case asks the following questions: "(a) Is the said Agreement for the Sale of a Business chargeable with duty under the Stamp Act 1894-1990 in accordance with the assessment of THE COMMISSIONER OF STAMP DUTIES? (b) If 'no' to (a), is any other amount, and if so, with what amount of duty is the said Agreement for Sale of a Business chargeable? (c) How should the costs of and incidental to the stating of this case and the hearing thereon be borne and paid?" At the commencement of the hearing of the appeal, counsel for the appellant told the Court that the parties had agreed that the questions in the case stated might be refined in a particular way to identify more closely what is really at issue between the parties, and with that in mind he handed to the Court a document containing four questions which, he said, each party saw as requiring an answer. They were: "(1) Did the trademarks constitute 'property outside Queensland' for the purposes of s. 54(2)? (2) If 'no' to (1), was the Commissioner correct in apportioning to trademarks the sum of $1,537,613.60? (3) (a) Does an acquisition of a business for the purposes of s.54A(1) comprehend only the species of property specified in sub- -- 31 of 37 -- 32 section (1) thereof? (b) If 'yes' to (a), did the trademarks fall within 'goodwill appertaining to the business' which was agreed to be required for the purposes of s. 54A? (4) If 'yes' to (3), (a) was that business deemed to exist in Queensland pursuant to s. 54A(10)? (b) If 'yes' to 4(a), was the Commissioner correct in apportioning to goodwill appertaining to that business an additional sum of $1,537,613.60 pursuant to s. 54A(11)?" It can be seen that, of the questions contained in the document handed up by counsel, questions (1) and (2) relate to the assessment under appeal, whilst questions (3) and (4) do not, but ask questions with respect to the dutiability under s. 54A of a statement in form S(a) upon the sale of the business the subject of the agreement for sale. Prior to making the above assessment, the appellant had, at the request of the Commissioner, delivered to the Commissioner a statement in form S(a) in respect of the sale of the business which included most, but not all, of the property the subject of the agreement for sale. However, it does not appear, or at least does not appear clearly, that that statement which, by s. 54A(5), is chargeable with duty under the Act as if it were a conveyance or transfer of the property to which it relates, was assessed to duty under that section. The case stated asserts only that the agreement for sale was assessed. The copy assessment refers -- 32 of 37 -- 33 to the form S(a) but does not record any duty as having been assessed on it. In the place where one might expect to see a statement of the amount of the consideration upon which duty was assessed on the form S(a) appears the notation "Duty accounted/or on contract". It may mean that, having chosen to assess the agreement, the Commissioner elected not to assess under s. 54A; or it may mean that, although he has assessed the form S(a) to some unspecified amount of duty, the aggregate of the amounts assessed on the agreement for sale and the contract of sale of land, which are required to be set off against the amount of duty charged on the statement pursuant to s. 54A(6), exceed that amount. No attempt was made either in the case stated or in the course of argument before us to explain the meaning of that notation or to explain how, in this appeal, the Court is required to answer any questions with respect to s. 54A. Section 24(3) requires the Court to determine the questions submitted, but this plainly refers to the questions submitted in the case stated pursuant to sub-s.(2), not the questions which the parties jointly agreed upon as a "refinement" of those questions at the commencement of the hearing. The sub-section goes on to provide that, if the instrument in question is, in the opinion of the Court, chargeable with any duty, it shall assess the duty with which it is chargeable. The instrument in question is, in my view, plainly the agreement for sale. The appeal is only against the assessment of duty on that instrument and the -- 33 of 37 -- 34 questions asked in the case stated relate only to the duty with which that instrument is chargeable. In my opinion, therefore, it is not open to this Court to express an opinion upon the duty which might properly be chargeable upon the statement in form S(a). There is, in any event in my view, an additional reason why the question sought to be argued with respect to s. 54A cannot be determined on this appeal. That question was whether an amount of $10,795,000, being the amount apportioned in the agreement for sale to trademarks which are locally situate in Australia but not in any State or Territory of the Commonwealth (Re Usines de Melle and Firmin Boinot's Patent (1954) 91 C.L.R. 42, 49 per Fullagar J.), or part of that amount, ought to be included in the amount upon which duty was chargeable on the statement in form S(a). The reason is, as Pincus J.A. has pointed out in his reasons for judgment, that the form S(a) did not include, and consequently relate to the trademarks: s.54A(5). The appellant did not include them in the statement when it delivered it to the Commissioner and the Commissioner did not alter the statement to include them, as he could have, pursuant to s. 22A(2). It is therefore unnecessary to consider the construction of s. 54A, difficulties in which are discussed in the reasons for judgment of Pincus J.A. Those reasons demonstrate respects in which, without a good deal of imaginative -- 34 of 37 -- 35 reconstruction, the section is unintelligible. It is most unfortunate that a provision which is of such importance to the commercial community and to the Government should be so incompetently drafted. I agree that the section requires redrafting as, indeed, do so many sections of the Stamp Act. Of the sum of $10,795,000, the amount apportioned in the agreement for sale as the consideration for the trademarks, the Commissioner included the amount of $1,537,613.60 in the amount upon which he assessed duty. That sum was arrived at by apportioning as the Queensland portion of the consideration the same proportion as the appellant had accepted as the proportion of Queensland goodwill of the total amount apportioned to goodwill. The appellant agreed that that was the correct amount if, contrary to its submission, any amount in respect of the trademarks was required to be included in the consideration upon which duty was assessed. However, there is no basis for apportionment of the consideration upon which an agreement for sale of property is assessed, between that part of the property which is within Queensland and that part which is not. Neither s. 53 nor s. 54 provides for any such apportionment: contrast s. 54A(11) which, whatever it means, provides for apportionment of the consideration upon which an assessment under that section is made, between Queensland and non- Queensland assets. Section 54(2) provides that sub-s. (1), the charging -- 35 of 37 -- 36 provision, does not apply to an agreement for sale of any property which is property "outside Queensland". The question is whether the trademarks which, as I have said, are locally situate in Australia but not in any State or Territory of the Commonwealth, are property outside Queensland. This depends upon whether the phrase "outside Queensland" means "wholly outside Queensland" or "not wholly inside Queensland". Although the answer to that question is by no means clear, I am inclined to accept the argument of the appellant that the phrase "outside Queensland" in sub-s. (2) is used in contrast with the phrase "property locally situate in Queensland" in sub-s. (5). The trademarks are not property locally situate in Queensland because they have an Australia-wide location. Consequently, I would conclude that they are property outside Queensland within the meaning of that phrase in sub-s. (2). I agree with the President and Pincus J.A. that it is unlikely that the legislature could have intended the consequences of the alternative construction. It follows that the trademarks are excluded from property dutiable under s. 54 and consequently under s. 53. Accordingly, I would answer the questions in the case stated as follows: (a) No. (b) $287,271.75. (c) The Commissioner should pay the appellant's costs of and incidental to the stating of the case and the -- 36 of 37 -- 37 hearing thereon. -- 37 of 37 --