Brisbane Water County Council v. Commissioner of Stamp Duties (N.S.W.).

Judges:
Waddell J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 26 March 1979.

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Waddell J.: This is a case stated by the defendant Commissioner under sec. 124 of the Stamp Duties Act 1920 in relation to assessments of duty charged on two motor vehicle certificates of registration pursuant to sec. 84G. Under subsec. (2) of this section ``a motor vehicle certificate of registration is to be charged with ad valorem duty in respect of the value of the motor vehicle for which the certificate is issued at the rate specified in the second schedule''. Such a certificate is defined by subsec. (1) as meaning a certificate of registration issued in accordance with the provisions of the Motor Traffic Act 1909 whether pursuant to a new registration or a transfer of registration but as not to include a certificate issued on the renewal of a registration and certain other certificates which need not be mentioned. Subsection (3) provides: ``(3) For the purposes of this section and all the matter appearing under the heading `Motor Vehicle Certificate of Registration' in the Second Schedule to this Act, the value of a motor vehicle shall, subject to the provisions of paragraph (a) of subsection (5) of this section, be such amount as is stated in writing by the applicant for such certificate of registration in respect of such motor vehicle or the transfer thereof to represent the market value of such vehicle as at the time of making such application.''

Subsection (5) provides: -

``(5)(a) The Commissioner may, if he is not satisfied that the amount stated by the applicant as the market value of the motor vehicle is the true market value, require such applicant to furnish the Commissioner within the time specified by the Commissioner with such evidence as to the market value as at the time of making the application for a motor vehicle certificate of registration or transfer thereof as the Commissioner thinks fit.

(b) On receipt of such evidence it shall be lawful for the Commissioner to make a further assessment of the duty payable having regard to such evidence, to recover any additional duty so payable or to refund to the applicant any duty overpaid.

(c)...''

The defendant is the county council of a county district constituted under the Local Government Act 1919 for the purpose of the supply of electricity. Goods for use by it are exempt from sales tax: Sales Tax (Exemptions and Classifications) Act 1935 sec. 5; First Schedule, Item 78. Accordingly, it is able to purchase new motor vehicles for use by it from retailers at a price which does not include sales tax. A motor vehicle certificate of registration issued to the plaintiff is not exempt from stamp duty under item 19 of the General Exemptions from stamp duty in the second schedule to the Act in favour of local government councils because it is a trading undertaking. The main question raised by the stated case is whether, for the purpose of assessing the duty chargeable on a certificate of registration issued in respect of a vehicle, the sale value of which is exempt from sales tax, the ``market value'' for the purpose of sec. 84G should be taken to be the ordinary retail price or the retail price to a person, such as the plaintiff, whose proposal to use the vehicle gives rise to the exemption.

The facts relevant to this question are to be found in the stated case. Shortly before 10 October 1977 the plaintiff purchased two new motor vehicles for use and not for sale by it. Sales tax was not payable in respect of the vehicles. On that date the plaintiff applied for motor vehicle certificates of registration in respect of each vehicle. At the time of making the application the plaintiff stated the amount of $6,210 to represent the market value of one of the vehicles, a Toyota land cruiser, and the amount of $4,740 to represent the market value of the other, an XL Falcon 500 van. Each of these amounts represented, in effect, the retail price offered by the supplier less sales tax and in the case of the Toyota less a specified fleet owner's discount. The price at which the Falcon was offered no doubt reflected some such discount. Stamp duty was paid on the basis of these amounts. By letter dated 18 October 1977 the plaintiff wrote to the defendant and drew his attention to the fact that it declared the market value of the two vehicles as being ``the Council's tender or purchase price for the vehicles which do not attract sales tax''. It then enquired whether this procedure met the Department's requirements.

By letter dated 9 November 1977 the defendant stated that a submission had been made to him by the Local Government Electricity Association of New South Wales

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ATC 4053

claiming that the calculation of duty on motor vehicle registration certificates issued to county councils should be based on the purchase price exclusive of sales tax. He said that he could not support this submission. He asked the plaintiff to furnish him ``with a statement as to the normal market value, inclusive of sales tax, for each vehicle to enable (him) to issue an assessment for the unpaid duty''. The plaintiff replied saying that enquiries made of the suppliers suggested these values to have been $6,800 for the Falcon and $7,100 for the Toyota. The defendant admits that these amounts were the respective retail prices including sales tax of the two vehicles. By letter dated 30 December 1977 the defendant notified the plaintiff that he had assessed further duty on the certificate of registration of each vehicle. This duty reflected the difference between the market value stated by the plaintiff on the application and the ``normal market value'' furnished by the plaintiff to the defendant. The plaintiff thereupon required the defendant to state a case pursuant to sec. 124 of the Act. The questions asked by the case are, in effect, whether the market value of each vehicle was: (1) the amount stated by the applicant as having been paid by it or (2) the normal retail price, or (3) some other amount. In respect of this last question, evidence has been filed of facts and circumstances not set out in the case and to which reference will be made below.

It will be seen that the first two questions proceed upon the assumption that where an application is made for registration of a vehicle recently purchased as a new vehicle its market value for the purpose of sec. 84G is either the price paid by the applicant or, where the applicant has been able to purchase at a price below the ``normal retail price'', the latter price. The plaintiff, of course, contends for the former; the defendant for the latter.

It will be noted that while subsec. (2) of sec. 84G charges a motor vehicle certificate of registration with ad valorem duty in respect of the ``value'' of the motor vehicle, subsec. (3) provides, in effect, that such value is, subject to questioning by the Commissioner under subsec. (5), the amount stated by the applicant to represent the ``market value'' of the vehicle as at the time of making the application. In effect, therefore, ad valorem duty is to be charged in respect of the market value of the vehicle.

The plaintiff's main submission in relation to the first two questions is that for the purpose of sec. 84G the market value of its two vehicles is to be determined by reference to the market in which it acquired them and is the price which it paid in that market. This, it is said, is the market for new motor vehicles made up of buyers whose purchase and proposed use of vehicles attracts exemption from sales tax and sellers who deal with such buyers. Evidence led by the plaintiff establishes that there are each year a large number of purchases by county councils of new motor vehicles of all kinds. These councils would form part of the body of buyers in the market which the plaintiff submits should be regarded as having a separate existence from the general market in motor vehicles.

In support of this main submission the plaintiff says that significance is to be attached to the use of the term ``market value'' in sec. 84G as opposed to the term ``value'' used elsewhere in the Act, for example in sec. 66 and 105(1). ``Value'', it is said, when used alone, means ``real value''; ``market value'' may be something different. The expression ``real value'' is adopted from the decision of Williams J. in
Abrahams v. F.C. of T. (1944) 70 C.L.R. 23 at p. 29. His Honour contrasts the use of the term ``value'' in the Estate Duty Assessment Act 1914 sec. 8 with the directions contained in other legislation in New Zealand and England that the value of shares should be estimated to be the price which ``such property would fetch if sold in the open market at the time of the death of the deceased''. But it would seem from the remainder of his Honour's reasons and from other authority that ``real value'' and ``open market value'' are one and the same thing. His Honour cites authority which establishes that, when shares in a company the articles of association of which contain restrictions on transfer are to be valued, the test is the same. In
Ellesmere v. I.R. Commrs. (1919) 119 L.T. (NS) 568 Sankey J. expressed the view that ``the words `if sold in the open market' do not imply that there must be an actual market for the property liable to duty''. In
I.R. Commrs. v. Clay (1914) 3 K.B. 466

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ATC 4054

Swinfen Eady L.J. said at p. 475: ``A value, ascertained by reference to the amount obtainable in an open market, shows an intention to include every possible purchaser.'' The other members of the Court of Appeal expressed a similar view. These decisions point up, it is said, the distinction which should be made between ``value'' and ``market value'' and indicate that the latter term does not mean ``true value'' or ``open market value''.

In my opinion the ordinary meaning of the term ``market value'' is the best price which may reasonably be obtained for the property to be valued if sold in the general market. The cases cited indicate that where the ``value'' of an item of property is to be ascertained, this means its value in the general market with three qualifications. Firstly, if there is no general market, as in the case of shares in a private company, such a market is to be assumed. Secondly, all possible purchasers are to be taken into account, even a purchaser prepared for his own reasons to pay a fancy price. Thirdly, the value to be ascertained is the value to the seller: Abrahams v. F.C. of T., above, at p. 29. A requirement that something is to be valued on the ``open market'' also imports these qualifications. The requirement of sec. 84G that stamp duty be assessed with respect to the market value of the motor vehicle may well not import any of these qualifications. But if this is taken to be so, it does not, in my opinion, alter the ordinary meaning of the term ``market value'' as used in the section. Nor does it provide a reason to imply any restriction upon the market by reference to which the vehicle is to be valued.

The plaintiff next relies upon decisions which indicate that where the context or circumstances require the expression ``market value'' must be regarded as referring not to value as ascertained by reference to a general market but to a particular market. In
Charrington & Co. Ltd. v. Wooder (1914) A.C. 71 a London brewing company had demised a public house to a publican, who covenanted to deal exclusively with the lessors for beer, provided they should be willing to supply the same to him at a fair market price. It appeared that at the time London brewers supplied beer to tied houses at a somewhat higher price than to free houses. The Court of Appeal had held ``that the words `market price' made it impossible to look at the prices to tied houses, and must be taken to mean the prices in the open market'' (at p. 79). The House of Lords, however, took the view that: ``a contract about a market price cannot be correctly interpreted or applied without reference to the facts to which the contract relates'' (per Lord Kinnear at p. 80). Accordingly, the price referred to in the covenant was the price at which brewers supplied tied houses. In Commr. of
I.R. (N.Z.) v. Edge (1956) 11 A.T.D. 91, an income tax appeal, the taxpayer had purchased a farm as a going concern. The question was whether he had bought the stock included in the purchase for a consideration that was less than the market price. It was agreed that if the amount which the taxpayer paid were to be apportioned between the items making up the purchase, the amount which should be allocated to the stock was considerably less than the stock would have fetched if bought separately in the ordinary way. Henry J., relying upon Charrington & Co. Ltd. v. Wooder and Ellesmere v. I.R. Commrs., above, held that ``the market upon which (the) particular sale took place was by a public auction properly conducted, at which the livestock was sold as part of a farm as a going concern. Such a market for disposing of trading stock, either livestock or otherwise, is a well recognized market, and is a market which, in my opinion, is within (the relevant section)''. Accordingly, he held that the taxpayer had not paid less than the market price for the stock. On appeal: 6 A.T.D. 270, each member of the Court expressed agreement with this view although the actual decision went off on other grounds. In
Top Performance Motors v. Ira Berk (Qld.) Pty. Ltd. (1975) ATPR ¶40-004, the respondent was the sole wholesale distributor of Datsun motor vehicles for Queensland and the Northern Rivers District of New South Wales, it was held that for the purpose of sec. 46 of the Trade Practices Act 1974 there was a separate market for Datsun motor vehicles and that the respondent was in a position substantially to control that market. The Court did not determine the geographical limits of the market. In
Mouat v. Betts Motors Ltd. (1959) A.C. 71 at p. 72, for the purpose of assessing damages for breach of a covenant designed to enforce

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ATC 4055

import restrictions on motor vehicles in New Zealand, the Privy Council held that reference should be made to the ``surreptitious market which is fed by persons who have broken their covenants''. In
BSC Footwear Ltd. v. Ridgway (1972) A.C. 544 at p. 545, an income tax appeal, the House of Lords held that in the phrase ``cost or market value, whichever is the lower'', which expresses the well-known accountancy principle relating to trading stock, ``market value'' meant the price at which the stock could be expected to be sold in the market in which the trader sold.

The defendant adds to these cases a reference to
Orchard v. Simpson (1857) 2 C.B. (NS) 299. The plaintiff had agreed to make a large tent covering, the canvas to be used to be equal to pattern and of the market value of 11d per yard. It was held that ``market value'' in the contract meant the price in the market to an ordinary consumer and not the lower price at which the plaintiff was able to purchase a very large quantity.

All these cases bear out that where what is in question is the price of an item of property and the price is to be determined as a market price for the purpose of a legislative provision or of an agreement between the parties, the context or the circumstances may indicate that reference should be made to a particular market. No doubt the same may be said, as a matter of principle, where what is in question, as here, is the value of an item. But the word ``value'' points to something inherent in the item in question rather than to the price at which it might change hands in particular circumstances. It may be more difficult to read ``market value'' as meaning value in a particular market.

What there is in sec. 84G which indicates that the ``true market value'' of a vehicle is to be determined by reference to the market in which the applicant for registration acquired it. The plaintiff relies upon several considerations. Firstly, upon the distinction between ``market value'' on the one hand and ``value'' and ``open market value'' or similar expressions, on the other. I have already expressed the view that this distinction does not assist the plaintiff. Secondly, subsec. (3) of sec. 84G requires the applicant to state in writing the true market value of the vehicle. Section 129B(1)(d) provides that a person who furnishes a false statement is guilty of an offence and provides a penalty of not more than $500. The plaintiff asks how could an applicant reasonably be required to do more than state the value of the vehicle in the market in which he acquired it as established by the price which he paid. Is a county council required to find out and state the ordinary retail price of a new vehicle purchased by it? Is a fleet owner who buys at a fleet owner's discount required to do the same? Is the purchaser of a second-hand motor vehicle required to find out whether he paid more or less than the true market value? Thirdly, the evidence establishes the existence of a specialized retail market for new motor vehicles in which the buyers are persons who attract exemption from sales tax. The section, it is said, should be read as having been drafted deliberately to refer to such a specialized market. To these may be added the consideration that a certificate of registration is only chargeable if it has been issued pursuant to a new registration or transfer of registration, that is when, in the ordinary course of events, the applicant has recently purchased the vehicle.

I have set out the plaintiff's submissions at some length but when all has been said the question at issue is one of statutory interpretation as to which there are well established principles. In the Amalgamated Soc. of
Engineers v. Adelaide Steamship Co. Ltd. & Ors. (1920) 28 C.L.R. 129 at pp. 161-2, Higgins J. said: ``The fundamental rule of interpretation, to which all others are subordinate, is that a statute is to be expounded according to the intent of the Parliament that made it; and that intention has to be found by an examination of the language used in the statute as a whole. The question is, what does the language mean; and when we find what the language means, in its ordinary and natural sense, it is our duty to obey that meaning, even if we think the result to be inconvenient or impolite or improbable.''

If sec. 84G be approached in this way its meaning is, I think, clear. Duty is to be charged in respect of the market value of the vehicle as at the time of making the application for registration. In its ordinary and natural sense the expression ``market value'' means value on the general market and not in some particular market. In my

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ATC 4056

opinion there is nothing in the section or elsewhere in the Act which lends any support to the notion that the market value is to be determined with reference to the particular market in which the applicant is acquiring, or has acquired, the vehicle. It may be that to give the expression its ordinary meaning produces some inconvenience of the kind relied upon by the plaintiff in individual cases, but there is no evidence to suggest that this happens. The plaintiff had no difficulty in stating what was the ordinary retail price of the vehicles which it purchased. No authority has been cited to show that regard may be had to inconvenience of the kind relied upon in considering what meaning should be given to the expression. I do not think there is any. In my opinion neither the context nor the subject matter of the section provide any reason to give the expression ``market value'' any meaning other than that stated above.

Accordingly, the price which the plaintiff paid for each of the vehicles is not relevant to the question what was their value for the purpose of sec. 84G. The plaintiff's main submission fails and question 1 stated above should be answered in the negative. I turn to questions 2 and 3.

The answer to these two questions turns, in my opinion, upon the requirement in sec. 84G(3) that the value of the motor vehicle is to be the amount representing the market value of the vehicle as at the time of making the application for registration. No doubt in the great majority of cases this application is made by the retailer on behalf of the customer before title to the vehicle actually passes. In these cases there would seem to be little difficulty in saying that the market value of the vehicle at the time of making the application is its retail price because its owner is still the retailer. However, in the present case the plaintiff had acquired title to each of the vehicles when it made the applications for certificates of registration. It had called tenders for the purchase of the vehicles on 8 August 1977. It resolved to accept the successful tenders on 12 September 1977. The Falcon sedan was delivered to it on 21 September and the Toyota land cruiser on 7 October. It acquired title to these vehicles on these dates. Application for their registration was made, as already mentioned, on 10 October. The terms of the section clearly require that the market value of each of them should have been stated as at that date.

The plaintiff submits that there are two considerations which resulted in each of the vehicles having a lower value as at 10 October 1977 than their respective normal retail prices. Firstly, it is said neither of them could be described for the purpose of sale as a new vehicle without infringing the provisions of the Consumer Protection Act 1969 sec. 32 and of the Trade Practices Act 1974 sec. 53 prohibiting, among other things, the making of false representations as to goods. I do not think that it is necessary to decide whether this is so or not. The value of the vehicles should be determined upon the basis that their origin was accurately represented to purchasers. Secondly, although in each case the warranty given in respect of the vehicle was transferable to a purchaser, it is said that the elapsing of any portion of the period of the warranty would reduce the price which a purchaser would be prepared to pay.

The only evidence given of the value of the two vehicles was that of Mr. Perry, a valuer employed by the NRMA. In his affidavit he expressed the view that each vehicle should be valued by reference to the booklet known as Glass's Dealers' Guide for the month of October 1977. There was a separate guide for passenger vehicles and for commercial vehicles. The guide showed the ``current new price'' for various vehicles then on the market. This price included sales tax but did not include any amount payable for the cost of registering or insuring the vehicle in question or for delivery charges. The price was an average of the slightly differing prices charged by various retailers. Mr. Perry expressed the opinion by reference to these guides that the value of the Toyota was $6,770 and for the Falcon $6,816. These differ from the normal values stated by the plaintiff to the defendant in its letter of 18 October 1977 mentioned above and admitted to be the normal retail prices. He said that the mileage travelled by each vehicle for the purpose of delivery to the plaintiff in Gosford would not affect these values. In the course of cross-examination it was put to him that the value of the Falcon vehicle should be reduced because twenty days of its warranty period had elapsed. This suggestion clearly

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ATC 4057

raised what was for the witness a novel question but he took time to consider it. Later in the day he expressed the view that the reduction of the warranty period in the hands of a purchaser from the plaintiff should be reflected by a 5% reduction of the price, thus bringing the value of the vehicle down to $6,475. He was not prepared to reduce the value of the Toyota vehicle. In the result, the only evidence of the value of the two vehicles as at 10 October 1977 is that given by Mr. Perry and the admission mentioned above. There is no material upon which the Court would be justified in substituting any other value for either vehicle. Mr. Perry's values should be accepted. The value of the Toyota vehicle should therefore be determined at $6,770, less than that admitted, and of the Falcon at $6,475. Subject to a submission yet to be mentioned the value of duty chargeable in respect of each should be determined accordingly.

It is submitted for the plaintiff that the Commissioner's assessment of stamp duty was not properly made in the case of either vehicle and was a nullity and that, therefore, the Court has no power to determine what should have been the proper assessment. Particulars furnished by the defendant indicate that he had regard to the contents of the plaintiff's letters of 18 October and 14 November 1977, mentioned above, when he formed his opinion as to the ``market value'' of the two vehicles. In cross-examination he said that he formed the view that the amount stated in the original application for registration was not a correct statement on the market value on the ground that it was exclusive of the sales tax which would normally have been paid by an ordinary purchaser. His evidence includes the following question and answer:

``Q. Did you consider the question of what point of time a valuation had been arrived at?

A. Not to my recollection.''

He did not make any enquiries as to the state of the title to the Falcon. He formed his view of the value of that vehicle upon the basis of what he regarded as its normal retail price. It is submitted that the particulars and the defendant's evidence show that he addressed himself to the wrong question, namely, what was the normal retail selling price of each vehicle and not to the question of what was its value at the relevant date. Accordingly, it is said, on the material before him he was not in a position to be satisfied that the amount stated by the plaintiff was not the true market value of each motor vehicle, nor was he in a position to assess the market value of each vehicle as at the time of the making of the applications and thus able to make a valid further assessment of the duty payable.

In order to appreciate the material which was before the defendant it is necessary to quote the opening portion of the plaintiff's letter of 18 October 1977. This read:

``Council recently purchased two (2) new motor vehicles which were subsequently registered at the Gosford Motor Registry on 10 October 1977.

To determine the value of Stamp Duty applicable, the stated market value declared on the registration form was the Council's tender or purchase price for the vehicles which do not attract Sales Tax.''

Accordingly, the material before the defendant indicated that the vehicles had been purchased by the plaintiff before they were registered and that each had been purchased as a new vehicle. It cannot be doubted that the normal retail price of each vehicle furnished to the defendant by the letter of 14 November 1977 provided material which was relevant to an assessment of the value of each vehicle as at 10 October 1977. The defendant did not seek other material which has been shown in these proceedings to be relevant and to result in the case of both vehicles in a reduction of the value determined by him. In the result, the defendant made mistakes of fact in determining the values. However, it is not, in my opinion, shown that he did not address himself to the question of what was the value of each of the vehicles at 10 October 1977. His further assessment is not open to attack on this ground. Accordingly, this submission fails.

The foregoing reasons require that the questions in the stated case be answered as follows:

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ATC 4058

• (a) Whether for the purposes of sec. 84G of, and the second schedule to the Stamp Duties Act the true market value of the motor lorry is:
  • (i) $6,210; No.
  • (ii) $7,100; or No.
  • (iii) some other and, if so, what other amount? $6,770.
• (b) Whether, for the purposes of sec. 84G of, and the second schedule to the Stamp Duties Act the true market value of the motor car is:
  • (i) $4,740; No.
  • (ii) $6,800; or No.
  • (iii) some other and, if so, what other amount? $6,475.
• (c) Whether the duty properly chargeable in respect of the certificate of registration of the motor lorry is:
  • (i) $126; No.
  • (ii) $142; or No.
  • (iii) some other and, if so, what other amount? $136.
• (d) Whether the duty properly assessable in respect of the certificate of registration of the motor car is:

• (i) $96; No.
• (ii) $136; or No.
• (iii) some other and, if so, what other amount? $130.