Ansett Transport Industries (Operations) Limited v. Comptroller of Stamps (Vic.).

Judges:
McGarvie J

Court:
Supreme Court of Victoria

Judgment date: Judgment handed down 13 October 1982.

---

McGarvie J.

The appellant, Ansett Transport Industries (Operations) Pty. Ltd., appeals under sec. 33B of the Stamps Act 1958, against an assessment by the Comptroller of Stamps that a mortgage executed in the Australian Capital Territory is chargeable with Victorian stamp duty.

At the time of execution, sec. 17(4) of the Stamps Act, introduced in 1980 by sec. 2 of Act No. 9413, provided:

``Where a mortgage relating to property in Victoria or to any matter or thing done or to be done in any part of Victoria is executed and held in some place outside Victoria the provisions of this Act shall extend and apply to the mortgage notwithstanding that the mortgage is not in Victoria in all respects as if the mortgage were executed in Victoria.''

The first issue is whether this mortgage is one ``relating to... any matter or thing... to be done in Victoria''. If it is, the second issue is whether the subsection is within the constitutional power of the Victorian Parliament.

The appellant agreed with banks in the United States to borrow $U.S.12,200,000 to assist in its purchase of a Boeing 727-200 aircraft and related spare parts and equipment. The aircraft, spare parts and equipment were in the United States until after the execution of the mortgage. The Commonwealth of Australia, which guaranteed repayment of the borrowed money and interest, required the appellant to execute the mortgage, giving security over the aircraft, its spare parts and equipment. It was executed on behalf of the appellant and the Commonwealth on 8 September 1980. The aircraft, spare parts and equipment were delivered to the appellant in the United States on 10 September 1980, brought to Australia and used in its airline operations.

Dr. Sundberg for the Comptroller submitted that a mortgage is one relating to a matter or thing to be done in Victoria if it requires something to be done in Victoria, or contemplates that something probably would be done in Victoria or if it otherwise relates to something that probably would be done in Victoria. In support of his submission he relied on the statement of Lord MacNaghten, who said of a reference in a Stamps Act to instruments relating to certain subjects: ``There is no expression more general or far

---

ATC 4645

reaching than that''.
I.R. Commrs. v. Maple & Co. (Paris) Ltd. (1908) A.C. 22 at p. 26.

Pursuant to an order, the Comptroller provided particulars of each matter and thing to be done in Victoria, on which it was intended to rely. Within those particulars Dr. Sundberg relied on a number of matters and things as satisfying the test he advanced.

Dr. Sundberg submitted, and I find, that when the mortgage was executed the probability was that the aircraft would from time to time fly to Victoria in the course of its airline operations, land at a Victorian airport and fly there to other destinations.

While it was in Victoria the appellant was bound by the general provisions of the mortgage to comply with the Air Navigation Act 1920, regulations and orders made under it and other laws (cl. 6(g)); and to maintain protect and house the aircraft (cl. 6(a), (b) and (h)). The appellant was bound by these provisions whether the aircraft was in Victoria or not.

Two sections of the Companies Act 1961 were relied on. It was argued that because cl. 3(2) of the mortgage obliged the appellant, on request of the Commonwealth, to lodge the mortgage or a verified copy, for registration in accordance with the laws of each jurisdiction where any part of the mortgaged property may from time to time be located, the mortgage contemplated something that would probably be done in Victoria. Section 107 of the Act obliged the appellant to keep a copy of the mortgage at its registered office. It was put that the mortgage was therefore one which contemplated or at least related to that being done. At the time of execution of the mortgage it was, in my opinion, probable that a verified copy of the mortgage would be registered in Victoria and that another copy would be kept at the appellant's registered office in Victoria.

Reliance was placed on certain administrative acts connected with the mortgage. It was argued that, as at the time of execution of the mortgage, the probability was that those administrative acts would be performed or partly performed in Victoria. It was stressed that the central control and management of the appellant was in Victoria. From the terms of the affidavit sworn on behalf of the appellant some time after the particulars were given on behalf of the Comptroller, I infer that central control and management of the appellant was in Victoria. It was submitted that the administrative steps included repayment to the lenders of the amount borrowed and interest (cl. 2(1)); payment to the Commonwealth of amounts of indemnity if the Commonwealth made payments to the lenders as guarantor; allowing Commonwealth officers access to its financial accounts (cl. 6(h)); and the giving or receipt of notices (cl. 16).

I am satisfied that at the date of execution of the mortgage the probability was that administrative acts would be done in Victoria in the course of making repayments to the lenders and that, while there was not a probability that the other administrative acts would be done, the probability was that, if they were done, they would be done in Victoria.

Mr. Liddell Q.C., appearing with Mr. Archibald for the appellant, put alternative submissions.

His first submission relied strongly on the fact that the subsection applied at the relevant time only to mortgages and not to other instruments. He argued that the section, on its proper construction, applied to mortgages which have one or both of two particular connections with Victoria. It was put that the application of the section depended on the mortgage having a security connection or a contractual connection with Victoria. He submitted that a mortgage relating to property in Victoria is one which gives security over property in Victoria. By a similar approach, he argued that the subsection only applies to a mortgage, where the money, repayment of which is secured, has been or is to be advanced and repaid in Victoria and the mortagage is to be discharged in Victoria. He acknowledged that it may be enough that one of those basic parts of the mortgage transaction has been done or is to be done in Victoria. The argument is that a mortgage relating to something done or to be done, means relating to something done or to be done as a basic part of the transaction in which the mortgage is made.

I start from the proposition that the expression ``relating to'' is wide enough to

---

ATC 4646

cover any of the matters and things relied on here by the Comptroller. It can be demonstrated that in one way or another most things are related to most other things. See David Hume, A Treatise of Human Nature (1739) Book 1, Part 1, sections 4 and 5. That however is only the first step in the process of construction.

``To construe the words of a statute does not mean to find the dictionary meaning of the words out of context. To construe the words of a statute means to find the legal meaning or effect of the words in the context in which they are found and in the context of the law.''

E.A. Driedger, The Meaning and Effect of the Bill of Rights: A Draughtsman's viewpoint (1977) 9 Ottawa Law Review 303 at p. 308. In my opinion Parliament did not intend the words to have their widest possible meaning and it is necessary to ascertain what limited meaning they have in the context.
Compare State Government Insurance Office v. Rees (1979) 144 C.L.R. 549 at pp. 553-554, and 560-561.

The submission for the appellant is based on the traditional view of a mortgage. In
Quarrel v. Beckford (1816) 1 Madd. 270 at p. 278; 56 E.R. 100 at p. 103, Plumer Vice-Chancellor said:

``What is a mortgage? Everybody knows, it consists of two things: it is a personal contract for a debt secured by an estate, and, in equity, the estate is no more than a pledge or security for the debt; the debt is the principal - the estate is the accident.''

The concept of a mortgage within sec. 137D of the Stamps Act 1958 is not far removed from that. See
Ansett Transport Industries (Operations) Pty. Ltd. v. Comptroller of Stamps 80 ATC 4323; (1981) V.R. 35.

In my view Parliament enacted sec. 17(4) to ensure that where a mortgage transaction had a basic connection with Victoria the instrument of mortgage would not escape Victorian stamp duty by being executed and held outside Victoria. I consider that a mortgage transaction has the required basic connection with Victoria if the mortgaged property is in Victoria or if the act, which brings the secured debt into existence or which discharges the secured debt and the mortgage, is done or to be done in Victoria. In the ordinary case the debt will be created by an advance of money and the debt and mortgage will be discharged by repayment.

There are of course many possible variations in the basic parts of mortgage transactions which it is not necessary to discuss now. I treat the mortgage transaction as extending, if necessary, beyond the mortgage instrument. The contractual obligation to make the secured repayment, may arise under a contract which is separate from the mortgage. In such a case the contract would be part of the mortgage transaction.

I think that two considerations support this limited construction of the word ``relating''. The first is that there is a great deal to be said for construing this recent legislative provision in its popular sense. In
Grenfell v. Commrs. of I.R. (1876) 1 Ex. D. 242 at p. 248 Pollock B. said:

``As to the construction of the Stamp Act, I think it was very properly urged that the statute is not to be construed according to the strict or technical meaning of the language contained in it, but that it is to be construed in its popular sense; meaning, of course, by the words `popular sense' that sense which people conversant with the subject matter with which the statute is dealing would attribute to it.''

There is a sense of the word ``relates'', commonly used, for example when a witness is asked to what a document, a conversation or a statement related or relates. In answer to the question the witness would be expected to say what its substance, its subject was - what it was about. The witness would not on that broad question be expected to deal with what, philosophically, the document, conversation or statement could be said to relate. Nor would the witness be expected to deal with the incidental as distinct from the substantial effect of the document, conversation or statement. If, for example, a lease in a common form obliged the tenant to pay the rates, the question to a witness as to what the lease related would not, without further probing, be expected to evoke the answer that it related to the payment of rates by the tenant, although that answer would, in a more detailed sense, strictly be a correct one.

---

ATC 4647

The subsection is describing a mortgage which relates to property situated in, and to acts which take place in, Victoria. A person conversant with the concept of a mortgage as a personal contract for a debt secured by an interest in property, if asked as to what property this mortgage relates, would be expected to refer to the property the subject of the mortgage. The person would be expected to identify the aircraft, spare parts and equipment, not items of property to which the mortgage could be said to be related merely in a philosophic or incidental way.

The same person, asked to what acts this mortgage relates, would be expected to refer to the acts which were in substance the subject of the mortgage - to the matters or things in respect of which the mortgage was given. Knowing that the component subjects of a mortgage are a property interest and a debt, the person would be expected to refer to the essential acts necessarily implied by the present or future existence of a debt which is to be repaid. The acts so implied are the act which brings into existence the secured debt and the act which discharges it. In the ordinary mortgage the person would be expected to refer to the acts of advancement and repayment of the secured money. The person would not be expected to refer to acts to which the mortgage would be said to be related merely in a philosophic or incidental way.

The other consideration which supports the limited construction is the nature of stamp duty itself. The duty is on instruments and, in general, liability to duty is determined by looking at the instrument. Of course, neither the Comptroller nor a Court is limited to that. It may be necessary to look outside the instrument to find, for example, the true nature of the transaction. See
Commr. of Stamp Duties (Old.) v. Hopkins (1945) 71 C.L.R. 351 at pp. 360 and 378;
Comptroller of Stamps v. Buckland (1959) V.R. 517. See also sec. 24, 34(1) and 36 of the Act. However the basic scheme of the Act is that duty ought to be assessable upon an examination of the instrument. In my opinion the amendment brought about by the introduction of sec. 17(4) should not be taken to alter the basic approach to the assessment of stamp duty. There would be a great alteration in approach, if it were necessary now, as it would be if the Comptroller's submissions were accepted, to make the detailed investigations and findings of probabilities, relied on in the Comptroller's case.

I regard sec. 24(1) of the Stamps Act as of importance. It provides:

``All the facts and circumstances affecting the liability of any instrument to ad valorem duty or the amount of the ad valorem duty with which any instrument is chargeable shall be fully and truly set forth in the instrument.''

While it would be practicable to comply with that provision on the construction I have adopted, it would not, I consider, be practicable on the construction advanced for the Comptroller.

I consider that the words in the subsection ``to be done... in Victoria'' mean expressly or impliedly required by the mortgage or another part of the mortgage transaction to be done in Victoria. In the context of a mortgage transaction the words ``to be done'' import a sense of obligation.
Compare Chandos v. I.R. Commrs. (1851) 6 Ex. 464; 155 E.R. 624;
D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commr. of Stamp Duties 80 ATC 4279; (1980) 1 N.S.W.L.R. 510. It does not seem at all natural for those words to mean that, viewed as at the time of execution, the matter or thing would probably be done in Victoria. It seems alien to the approach of the Stamps Act to have liability to duty depend on a later assessment of the objective probability of an occurrence, as at the time of execution. On that approach, presumably, evidence of what had in fact occurred would be admissible as indicating what was the earlier probability.

The result is that this mortgage does not have the required security connection with Victoria because it gave security over property which at the time of the execution of the mortgage and the time when the security took effect, was not in Victoria. It does not have the required contractual connection because it is not part of the Comptroller's case that the act which would bring into existence the secured debt, or the act which would discharge the debt and mortgage, was required to be done in Victoria. For these reason the appeal succeeds.

---

ATC 4648

I mentioned that Mr. Liddell relied on an alternative argument. I will shortly express my view on it. In doing so I assume, contrary to my opinion, that the words in the subsection ``any matter or thing'' are not confined to acts which are basic parts of the mortgage transaction. Mr. Liddell's alternative argument was that to fall within the subsection the matter or thing must be one which there is an absolute contractual obligation to do in Victoria. It was not sufficient, he argued, if the obligation was merely a conditional or potential one. I consider that the affect of the words ``to be done'' is to limit matters or things to those expressly or impliedly required by the mortgage or another part of the mortgage transaction, to be done in Victoria. My reasons are similar to those mentioned above. As the liability of the instrument to duty is to be determined as at the time when the instrument is executed, the question must be whether at that time there is an express or implied requirement that a matter or thing be done in Victoria. There is not such a requirement where the obligation is conditional or potential. Such a requirement can only come into existence at a later time when the event occurs which changes the conditional or potential obligation to an absolute one.

In this case, at the time when the mortgage was executed, none of the matters and things relied on by the Comptroller was required absolutely by the mortgage or another part of the mortgage transaction to be done in Victoria.

On the alternative argument, on the assumption I have made, I would regard the appeal as entitled to succeed.

The appeal is allowed.