EIE Ocean BV v Commissioner of Stamp Duties [1993] QSC 35

IN THE SUPREME COURT OF QUEENSLAND O.S. No. 5 of 1993 Brisbane Before The Hon. Mr. Justice Mackenzie [Re: Eie Ocean B.V.] BETWEEN: EIE OCEAN B.V. AND: COMMISSIONER OF STAMP DUTIES REASONS FOR JUDGMENT - MACKENZIE J. Judgment delivered on 26/02/1993 Applicant Respondent Counsel: R. Gotterson Q.C. and H. Alexander for Applicant K. Dorney Q.C. & Mrs. P. Wolfe for Respondent Solicitors: Mallesons Stephen Jaques for Applicant K.M. O'Shea, Crown Solicitor for Respondent Hearing Dates: 17-18 February 1993 -- 1 of 13 -- IN THE SUPREME COURT OF QUEENSLAND o.s. No. 5 of 1993 Brisbane Before The Hon. Mr. Justice Mackenzie [Re: Eie Ocean B.V.] BETWEEN: EIE OCEAN B.V. AND: COMMISSIONER OF STAMP DUTIES REASONS FOR JUDGMENT -MACKENZIE J. Judgment delivered on 26/02/1993. Applicant Respondent In consequence of the sale of shares in Riana Investments Pty. Ltd. to the applicant a default assessment was issued to the applicant by the respondent on the basis that the applicant was a landholder company to which the provisions of s.54 FA to 54 FO of the Stamp Act 1894 applied. The applicant was aggrieved by the assessment and the terms of a case stated under s. 24 of the Stamp Act had been under discussion between the applicant and the respondent for some time. Following a disagreement about the terms of the case stated the applicant filed an application for statutory order of review and application for review on 5 January 1 993. An application was also made for an order restraining the respondent from stating and signing or delivering the case stated in terms or substantially in terms of a case stated contained in Schedule A of the application. -- 2 of 13 -- 2 On 5 January 1993 Lee J. made an interim order, to remain in force until 4 p.m. on 7 January 1993 or earlier order restraining the respondent from stating, signing and delivering the case stated in terms or substantially in terms of the document contained in Schedule A and restraining him from stating, signing and delivering any other case stated in relation to the assessment without giving five days written notice accompanied by a copy of the proposed case. Lee J. also stayed all proceedings under any decision made·by the respondent to sign and deliver a case stated in relation to the assessment. The application for interlocutory relief was then adjourned from time to time by consent and has come on before me for determination. In the meantime the Commissioner filed a notice of motion seeking orders that the application for a statutory order of review and application for review be dismissed or alternatively stayed. The applications for review do not fall for consideration except to the extent that their viability is relevant to the granting of the interlocutory injunction. Under s.24 of the Stamp Act a person who is dissatisfied with the assessment of the Commissioner may appeal against the assessment to the Supreme Court and may for that purpose require the Commissioner "to state and sign a case setting forth the question or questions upon which his opinion was required and the assessment made by him." The factual context of the matter is that the applicant acquired all the share capital of Riana Investments Pty. Ltd. which alone or through subsidiaries owned land and other property -- 3 of 13 -- 3 comprising the Sanctuary Cove Resort. The Commissioner's assessment was based on his conclusion that the applicant was a landholder within the meaning of s.56 FL (2), the critical test being whether the full unencumbered value of all land to which the corporation is entitled is 80 per cent or more of the value of all property to which it is entitled. The acquisition of shares in a landholder company is dutiable at a higher rate than if the company is not a landholder company. Exhibits to the affidavits of Mr. Mann, Solicitor for the applicant show that the consideration for the purchase was $341 million. After detailed correspondence the Commissioner determined that items totalling only $46,348,136 of the property to which the corporation was entitled was not "land" with the result that the full unencumbered value of land to which Riana Investments Pty. Ltd. was entitled or deemed to be entitled was in excess of 80 per cent of all property to which the company was entitled. In correspondence with the Commissioner the applicant had provided a detailed submission in support of the proposition that part of what it had acquired consisted of trade marks, trade names and the concept and design of the resort valued in total at $79,280,000. A lesser sum of $54 million was mentioned at one time, apparently on the basis of a different factor that had been applied in an earlier valuation by another valuer, but the applicant's advisers described this figure as the absolute minimum and adhered to their opinion that the higher value was correct. It is the Commissioner's decision not to make any -- 4 of 13 -- 4 allowance in respect of these items that lies at the heart of the present application. Although, as I understood it, there was a complaint that it was not clear upon what basis the Commissioner had failed to make any deduction in respect of these i terns, the correspondence clearly enough indicates that he was of opinion that the assets described as "Concept Design Trade Name and Trade Mark" were not non-land assets and accordingly the value of the land for assessment purposes should not be reduced by their value whatever that value might be. It is also clear enough that, having come to that conclusion, the Commissioner did not decide what value, if any, those items had. It was submitted that he should have done so nonetheless. The appellant's application for a statutory order to review was based in the alternative on s.20 of the Judicial Review Act 1991 (if there was a "decision") and s.21 of that Act (if there was "conduct"). The grounds upon which relief was sought by way of review were under s.20(2)(b),(d),(e),(f) and (i) and s.21(2)(b),(d) 1 (e),(f) and (i). To the extent that sub-para.(e) was relied on in each case the particulars of improper exercise of power were drafted with s.23(b),(f),(g) and (i) in mind. There was also relief sought under s.30(1)(b) and (d), if there was a "decision", and under s. 30(2)(b), if there was "conduct". There is a threshold question, whether an interlocutory injunction can be granted in proceedings of this kind. Section 1 0 ( 1 ) of the Judicial Review Act provides that the rights conferred by the Act to make an application to the court in -- 5 of 13 -- 5 relation to a reviewable matter are in addition to any other rights that that person has to seek a review of the matter. That may not be concerned with this particular question. However in the case of an application under s.20, s.29 provides that the making of an application to the Court in relation to a decision does not affect the operation of the decision or prevent the taking of action to implement the decision. There is power for a judge upon application or on his own motion to suspend the operation of the decision and order a stay of any proceeding under the decision. Section 29 can only operate with respect to an application under s.20, so if s.21 is the operative provision because there is "conduct" but not a "decision", s.29 does not apply. Section 43 ( 2) envisages that an application for a declaration or injunction can be made in an application for a prerogative order or a prerogative injunction. It was agreed that there is no specific provision in the Judicial Review Act authorising the making of interlocutory injunctions. However even if there is no specific provision in that regard s.8 of the Judicature Act 1876 provides a general power to grant an injunction by an interlocutory order. Nothing was submitted that cast any doubt on the availability of this power in the absence of any other in an appropriate case. I will therefore act on the basis that if the appropriate tests are satisfied I am empowered to grant an interlocutory injunction. In view of the conclusions that I have reached that I should dismiss the Commissioner's application to dismiss or stay the application and grant the taxpayer's application for an interlocutory injunction, it is -- 6 of 13 -- 6 desirable that I not embark on any greater analysis of the issues that will be before the judge who hears the taxpayer's applications than is necessary to demonstrate that there are serious questions to be tried in respect of at least some of the matters which the taxpayer would wish to agitate. I turn first to the applicant taxpayer's applications for review. Dealing first with the balance of convenience, the applicant has paid the stamp duty applicable to the transaction. If any damages are suffered by the Commissioner, which seems unlikely, the under.taking as to damages will protect him. If the case stated were to be signed in a form that was insufficient and it were to be held by the Court of Appeal that it could not be remitted for amendment the applicant would be prejudiced. I am satisfied that the balance of convenience aspect must be decided in favour of the applicant. The major question in issue was whether there was a serious question to be tried. Broadly the applicant's submissions were that the indication by the Commissioner that he would sign a particular form of case stated was a "decision" of an administrative character under an enactment. Mr. Gotterson, Q.C. reli~d on Australian Broadcasting Tribunal v. Bond (1990) 170 CLR 321, 335-339, Whim Creek Consolidated v. Coglen (1991) 31 FCR 469, 480-481 and Westpac v. Commissioner of Stamp Duties (Old.) (unreported Ryan J., 1 December 1992). Alternatively it was submitted that it was conduct for the purposes of making a decision. Mr. Gotterson submitted that the Commissioner -- 7 of 13 -- 7 (a) had failed to apply the correct tests in determining the contents of the case stated; (b) had failed to take relevant considerations into account in drawing the case stated including - (i) that the questions for the opinion of the Commissioner were questions of value; (ii) that the questions of value could only be decided by evidence; and ( iii) that evidence of value furnished to the Commissioner required inclusion in the case stated; (c) had included irrelevant material in the case stated including non-representative extracts from valuations as the contentions of the applicant which the Commissioner described in the draft case stated as submissions; and (d) had failed to act fairly in the manner in which the case was stated by: (i) failing to fairly describe the nature of the assets, the subject of the dispute; and (ii) failing to include any findings or material as to the manner of acquisition of those assets, the cost of the assets or of the importance of those assets to the Sanctuary Cove Group. In relation to the principles applying to a case stated I was referred to the well-known passage in R. v. Rigby (1956) 100 CLR 146, 150-152. I was also referred to Francis v. Commissioner of Stamp Duties (NSW) (1954) 91 CLR 368, 400-401 where -- 8 of 13 -- 8 Fullagar J. discusses the nature of a stated case and to O'Sullivan v. Commissioner of Stamp Duties (Qld.) 1984 1 Qd.R. 212, 215 (Matthews J.). It was submitted that the Commissioner was under a duty to state the facts upon which his opinion was based and the manner in which he arrived at that opinion particularly where the formation of the Commissioner's opinion was a condition of the validity of the assessment. Particular reliance was placed on Cuming Campbell Investments Pty. Ltd. v. Collector of Imposts (1940) VLR 153, 164. It was common ground that, if the Commissioner's opinions of the value of the land and of the other property were ultimately findings of fact, even such findings of fact could be reviewed if they were vitiated by an error of law. J.A.W. & S. Property Management Nominees Pty. Ltd. v. Commissioner of Stamp Duties (1989) 1 Qd.R. 530, 538-539, 534-535 Allsene Pty. Ltd. v. FCT 89 ATC 5333, 5344, 5346, FCT v. Raptis 89 ATC 4994, 4996 and Edwards (Inspector of Taxes) v. Bairstow (1956) AC 14, 29. I have concluded that there are serious questions to be tried whether the Commissioner's decision or conduct, if those characterisations apply, are open to review under s. 20 or 21 and, in a case like this, what the content of the case stated should include. So far as prerogative orders are concerned, on the basis of the comments of Fullagar J. in Francis v. Commissioner of Stamp Duties (NSW) (1954) 91 CLR 368, 400-401, those of Matthews J. in O'Sullivan v. Commissioner of Stamp Duties (Old.) (1984) 1 Qd.R. 212, 215 and those of Macrossan J. in KLDE Pty. Ltd. v. Commissioner of Stamp Duties (Old.) (1984) 15 ATR 271, 290 it was -- 9 of 13 -- 9 submitted that an applicant may challenge the content of a case stated in mandamus proceedings. All of those statements are obiter and to that extent the matter remains unresolved. It is unnecessary to resolve it in these proceedings having regard to the fact that there is, independently of this aspect, a basis for an interlocutory injunction. One would not expect, on ordinary principles, that the Commissioner could 'be directed to prepare a case in a particular form of words, but if he were found not to have performed his duty in a proper way, to perform it according to law. Whether he has performed his duty according to law is the underlying issue. There is the question of the Commissioner's application to dismiss or stay the application for statutory order of review and application for review. It is based on ss.12 and 48 of the Judicial Review Act. It was submitted that although the amended application referred to both conduct and a proposed decision the grounds relied on only satisfied an application under s.21 of the Act. It was submitted that the procedure under s. 24 of the Stamp Act was a specific procedure for testing the correctness of the Commissioner's decision and that the matter should not go to judicial review. Reliance.was placed on Swan Portland Cement Ltd. v. Comptroller General of Customs (1989) 25 FCR 523, 530 and Yarmirr v. Australian Telecommunications Corporation (1990) 96 ALR 739, 750. It was submitted that the discretion to dismiss the application should be exercised because the applicant had sought a "review" of the matter by the Court of Appeal. It was submitted that even if "adequate provision" was a requirement of s.12 the Court of Appeal was itself sufficiently empowered to -- 10 of 13 -- 10 control what was essentially a procedural matter, namely the content of the case. Reliance was also placed on s.48(1) of the Judicial Review Act. It was submitted that the procedure by way of case stated has been set in train by the applicant and that the Court of Appeal is in as good a position as this Court to determine whether the ultimate facts in the case stated are sufficient. It was submitted that it is for the Court of Appeal itself to decide whether it has power to amend the case stated if facts are incomplete or to send the case back so that the Commissioner may provide further information. It was submitted that the application sought to take from the Court of Appeal what were essentially decisions as to its procedures, which should be left to it. The problem about these submissions is that it has not been settled by authority that the Court of Appeal ha~ any jurisdiction to amend the case stated or to send it back for clarification by the person whose duty it is to state the case. It was accepted that there was no express power to send a case back to the Commissioner (Westpac Banking Corporation v. Commissioner of Stamp Duties (Old.) 92 ATC 4571, 4582). However it was submitted before me that it was clearly recognised by that decision that there might be an inherent power in the Court enabling it to bring about or permit an amendment of the case stated. Reference was also made to the dissenting judgment of Brennan J. in KLDE Pty. Ltd. v. Commissioner of Stamp Duties (Old.) (1983) 155 CLR 288, 304-305. It was also submitted that it was implicit in the judgment of Matthews J. in O'Sullivan v. Commissioner of Stamp Duties (1984) 1 Qd.R. 212, 215. -- 11 of 13 -- 11 The fact that this issue remains unresolved is of itself a cogent reason for saying that it is inappropriate to stay the application or dismiss it. The result would be, if it were ultimately held that the Court of Appeal did not have power to send the case back or amend it, that the applicant would be seriously disadvantaged if the case did not raise all necessary issues adequately. It is my opinion that the Commissioner's application for a dismissal or stay should be dismissed. Having said that, I wish to reiterate what I said on two occasions during the hearing. It is difficult to see why negotiations ha've broken down to the extent that they have, in view of the obvious but not actually conceded inadequacy of the case in respect of disclosing the basis upon which the Commissioner refused to reduce the value of land, and the submission that the statement of the basis upon which the applicant relied to establish that the "trademark, trade name, concept and design" component was not "land", was inadequate for the purpose of adequately raising the nature of the taxpayer's contention. The case is one where one would have thought that it should not be impossible to reach a consensus so that the issue or issues between the parties could be presented to the Court of Appeal in a form which satisfied both parties. I should also say that nothing that I have said in what has gone before is intended to encourage a situation where the parties make no substantial effort to reach agreement on the contents of the case stated and then come to the Court with a view to having the Court influence the form of the case stated. This is a case presented as a real dispute as to what the Commissioner is legally required -- 12 of 13 -- 12 to include in the case stated. In most cases there will not be room to argue on legal grounds that the case ought to be reviewed. In such cases it can confidently be expected that resort to the Court will be futile. I make the following orders: 1. That upon the applicant by its counsel giving the usual undertaking as to damages, until determination of the applicant's application for statutory order of review and order for review or earlier order:- (a) the respondent be restrained from stating, signing and delivering a case stated pursuant to s. 24 of the Stamp Act 1894, in relation to the assessment made by the respondent as set out in ex. "JGM39" to the first affidavit of Jeffrey Gordon Mann sworn 5 January 1993, in terms, or substantially in terms of the document contained in Schedule A of the said application; (b) the respondent be restrained from stating, signing and delivering any other case stated in relation to the said assessment. 2. Liberty to apply. 3. The costs of the application be reserved. 4. The motion to dismiss or stay the application for statutory order of review and order for review be dismissed. 5. The costs of the motion be reserved. -- 13 of 13 --