Comptroller of Stamps (Vic.) v. Hutchins & Ors.

Judges:
Kaye J
Brooking J
Beach J

Court:
Supreme Court of Victoria (Full Court)

Judgment date: Judgment handed down 8 October 1984.

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Kaye, Brooking and Beach JJ.

The Comptroller of Stamps appeals against an order made by Hampel J. on 26 April 1984 [reported at 84 ATC 4390] whereby an appeal of the respondents from the decision of the Victorian Taxation Board of Review was allowed.

The respondents Peter Graeme Hutchins and Levart Pty. Ltd. (``Levart'') were the transferees of the share capital of Lomsix Pty. Ltd. (``Lomsix''), and the respondents Hutchins and Allied Technical Services Pty. Ltd. (``Allied'') were the transferees of the share capital of Kenco Transportation Services & Co. Pty. Ltd. (``Kenco''). Assessments of ad valorem duty under sec. 32 of the Stamps Act 1958 chargeable upon the transfers were made by the Comptroller on the basis that they fell within para. (a) of Heading IV(A) of the Third Schedule. Objections to her assessments made by the respondents were disallowed by the Comptroller. Upon reference of their objections, the Victorian Taxation Board of Review confirmed the assessments. It was from the Board's decision confirming the assessments that appeals were made by the respondents (the objectors) and heard by Hampel J. under sec. 33E(7) of the Act. By his order Hampel J. merely allowed the appeal, but the reasons for judgment show that in his Honour's view the assessments should have been varied on the basis that the transfers were each chargeable with only $1 duty. His Honour signed the order, so indicating that the appeal had been dealt with in Chambers. The result of O. 8 r. 16 of Chapter II is that the appeal should have been heard in Court. But no point has been made of this.

Lomsix and Kenco were companies incorporated in the State of Victoria and having their share registers in Victoria. The respondent Hutchins was a director of both Levart and Allied, which were controlled by him.

At the time of the transfers, the issued and paid-up capital of Lomsix comprised 10,000 ordinary $2 shares, of which 5,000 were held by the estate of Harry Bramwell Thomas deceased (in the evidence at times called Henry Bramwell Thomas) and 5,000 were held by Franklin Ennor Thomas. The issued and paid-up capital of Kenco comprised 600 $1 shares, of which 100 were held by each of six shareholders.

By standard transfer forms each bearing ``date of purchase 28 May 1980'', Franklin Ennor Thomas transferred 4,999 Lomsix shares

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to Levart and one Lomsix share to Hutchins, and the executors of the Will of Harry Bramwell Thomas transferred 5,000 Lomsix shares to Levart. By similar transfer forms bearing ``date of purchase 9 June 1980'', the Kenco shareholders transferred 599 shares to Allied and one share to Hutchins. The Comptroller assessed ad valorem duty on each of the transfers. The basis of the respondents' objection to the assessments was that the transfers of the shares were made to them as trustees for the transferors, who retained the beneficial ownership of the shares, the respondents having made declarations of trust either immediately before or simultaneously with the execution by the respondents of the transfers.

By agreement between the parties, the appeal before Hampel J. was conducted on the transcript of evidence taken before the Board of Review and the exhibits tendered to it. Hutchins was the only witness called on behalf of the respondents. Evidence given by Hutchins was in substance as follows:

On 28 May 1980 Hutchins attended a meeting of directors of Levart, who decided that Levart would sign transfers of Lomsix shares and execute a deed of trust whereby it would declare that it would hold Lomsix shares transferred to it for the benefit of the transferors. Exhibit C1, being minutes of a meeting of directors of Levart, was tendered, very belatedly. A deed, dated 28 May 1980, wherein Levart and Hutchins were referred to as ``the trustee'' and the estate of Harry Bramwell Thomas and Franklin Ennor Thomas as ``the owner'', was described by Hutchins as ``the trust deed''. This document was Exhibit A1. Transfers of the Lomsix shares, signed by the shareholders as transferors, were executed by Hutchins and Levart as the transferees simultaneously with the execution of the declaration of trust.

The same procedure was followed in respect of the transfers of the Kenco shares. Minutes of a meeting of directors of Allied in connection with Kenco shares were ultimately produced and became Exhibit C2. A deed dated 9 June 1980, wherein Allied and Hutchins were referred to as ``the trustee'' and the six shareholders of Kenco were referred to as ``the owner'', and which was described by Hutchins as a declaration of trust, was Exhibit A2. The transfers of Kenco shares were executed by him and Allied simultaneously with the declaration of trust. There was no consideration given for the transfers, either before or at the time of execution of the instruments, and there was no agreement for the sale and purchase of shares at that time. Three transfers of Lomsix shares were Exhibits B1 to 3, and seven transfers of Kenco shares were Exhibits B4 to 10.

The declarations of trust and transfers of the Lomsix and Kenco shares were executed by Levart, Allied and Hutchins pursuant to the resolutions of the directors of the two companies.

In answers to a series of questions addressed to him in evidence-in-chief by Mr. Reicher, counsel for the objectors (respondents), Hutchins swore that after the transfers and declarations of trust had been executed and while the same remained operative, the respondents would have acted as follows:

They would have transferred back the shares if requested by the beneficiaries to do so; they would have accounted to the transferors for any dividend declared by either Kenco or Lomsix; they would have held on behalf of the transferors, and accounted to the transferors for, any bonus share issues; they would have acted on and abided by any directions given by the beneficiaries to attend any meeting of shareholders of Kenco or Lomsix; they would have voted in accordance with instructions given by the beneficiaries, if requested by the beneficiaries to do so; they would have given to the beneficiaries proxies to attend shareholders' meetings; and they would have exercised options to purchase shares on behalf of the beneficiaries as directed by them. The respondents would have so conducted themselves because they held the shares on trust for the beneficiaries in accordance with the deeds of trust.

After the transfers and declarations of trust had been executed, it did not occur to Hutchins that he had purchased the beneficial interest in the shares, because no consideration had at that time been paid.

When cross-examined, Hutchins swore that the transfer of Lomsix shares and the associated declaration of trust took place in the course of negotiations for the sale and purchase of the shares, which he conducted with Duesbury, Johnston and Marks (``Duesburys''), chartered accountants acting for the Lomsix shareholders. During the course of negotiations, they

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discussed a formula for calculating the consideration for the sale of the shares.

On 30 May 1980 an agreement in writing for the sale of the Lomsix shares was executed in Darwin by an attorney or attorneys under power for the estate of Harry Bramwell Thomas and Franklin Ennor Thomas as vendors, Lomsix, Frederick Roy Neal and Franklin Ennor Thomas as directors and Levart as purchaser whereby the estate and Franklin Ennor Thomas sold their respective shareholdings to Levart for the sum of $229,717 payable to Duesburys' trust account. The original of the agreement was not produced, but an agreement in an unexecuted form, which was on the file of the Board, was identified by Hutchins. On 30 May the consideration for the sale of the Lomsix shares was paid.

Before transfer of the Kenco shares, Hutchins, on behalf of Allied, conducted similar negotiations for the sale and purchase of those shares with R.J. Barnett & Co., accountants acting for the six shareholders. On 10 June 1980 $239,506 was paid by Allied to the six shareholders for the sale of their 600 Kenco shares pursuant to an agreement in writing executed on 10 June 1980 and made between the shareholders as vendors and directors, Allied as the purchaser and Kenco. The agreement was executed in Darwin on 10 June 1980 by an unidentified person or persons as attorneys under power for all the parties to it. As in the case of the Lomsix shares, the original agreement was not produced; and agreement in an unexecuted form, which was in the possession of the Board, was identified by Hutchins.

Both agreements were in a standard form used by Levart and Allied for the purchase of shares in companies. It was on 29 or 30 May that the parties agreed on the consideration for the sale of the Lomsix shares. Hutchins was able to calculate the consideration upon receipt of the Lomsix financial statements from 1 July 1979 to 21 May 1980 and a copy of income tax schedules for the same period, which were enclosed with a letter dated 28 May 1980 from Duesburys, Exhibit D. Before entering into negotiations, Hutchins had informed Lomsix representatives that as a prerequisite to any transaction for the sale of shares he and Levart would require to hold the shares in trust in their own names on behalf of the shareholders, after which they would consider concluding the transaction for the sale and purchase of the shares.

Hutchins was unable to say whether at the time of the transfer of the Kenco shares the consideration had been agreed upon, but he denied that such a situation prevailed at the time of the transfer of the Lomsix shares. It was explained to the representatives of the shareholders that the reason for the requirement of a transfer of the shares in trust before the sale of the shares was ``that there was a possibility of transferring on a Darwin share register and hence allowing the costs as far as the vendor was concerned''. The minutes of the meetings of directors of Levart and Allied record a resolution that when the shares have been registered in the company's name the company requests their removal to a Northern Territory branch register.

The transferors had already executed the transfers when the same were delivered to Hutchins for execution. At a subsequent stage, Allied and Levart were released from their obligations under the deeds of trust.

Under re-examination, Hutchins swore that before the agreements were signed negotiations were still at a stage when either party could have withdrawn from the transaction. This might have occurred had the Treasurer, as he had done in previous years, made a public statement the effect of which would have been adverse to the proposed sale.

So much for the evidence of Hutchins.

Robert Ennor Thomas and Frederick Roy Neal, the executors of the will of Harry Bramwell Thomas deceased, were called on behalf of the Comptroller and their evidence in substance was as follows:

Duesburys were the accountants for E. Thomas Pty. Ltd., a company whose name was changed to Lomsix Pty. Ltd. on an undisclosed date. The executors were advised by one Courtney, who appears to have been one of the partners of the firm of Duesburys. When Thomas signed the transfer of the Lomsix shares, Courtney told him that they were transferring shares being sold. Thomas then believed that he and his co-executor were authorising the sale of the shares and that in return for the transfer of the shares the estate would receive money. He neither knew nor had any discussions with the Levart directors. Subsequently, from the contents of a statement

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of account dated 12 June (1980) from Blake & Riggall, solicitors for the estate, the executors learnt that the proceeds of the sale of the shares had been received.

Cross-examined, Thomas swore that he could not remember whether at the time he signed the transfer he was told that the shares were ``to be sold'' or whether the executors were ``just transferring the shares for money''. It was on the advice of Courtney that he signed the transfer.

Neal, when signing the transfers, understood that E. Thomas Pty. Ltd. shares were being sold to Lomsix. The significance to him of executing the transfer was that the shares were being sold in the course of the winding-up of the estate. When he signed the various documents, Neal understood from what the accountant told him that the shares were being sold.

In answer to Mr. Reicher's questions concerning his understanding of the date when the sale of the shares took place, Neal, from information contained in a paper which was in his possession, replied that the date of sale of the shares was 19 May 1980. It may well be that this was the date on which he or Duesburys received the transfers.

The following additional observations are made about the documents on which the respondents relied in support of their objections:

Resolutions recorded in the minutes of the meeting of directors of Levart, Exhibit C1, were said to be evidence of the company's intention to hold Lomsix shares on trust for the estate of Harry Bramwell Thomas and for Franklin Ennor Thomas. It is noted that the document does not contain the name of the other party, in addition to Hutchins, present at the meeting; Hutchins was described as its duly authorised representative. When, in the course of his evidence, he was asked who was the other director, Hutchins replied that he thought that it was Levart (Vic.) Pty. Ltd., adding that he and a company were the directors.

The first resolution records that the company (Levart) agrees to hold shares in its name as trustee, without identifying Lomsix shares. Included in what are referred to as ``the undermentioned shares'' appears ``Franklin Ennor Thomas to Peter Graeme Hutchins one (share)''. This provokes the question: how could Levart hold in its name as trustee a share transferred to Hutchins?

The date 30 May 1980, impressed by a date stamp at the head of the document, has been altered by striking out the figure 30 and substituting 28, the alteration evidently being initialled by Hutchins, whose signature appears confirming the contents as a true record. The minutes of the meeting of directors of Allied, Exhibit C2, record the company's agreement to hold shares in its name as trustee, without identifying the shares as Kenco shares. The particulars of the ``undermentioned shares'' include ``Lynette C. Konnertz to Peter Graeme Hutchins one (share)'', and again the question arises how the company could hold in its name as trustee a share transferred to Hutchins.

The date 10 June 1980 impressed by a date stamp at the head of the document has similarly been altered by striking out the figure 10 and substituting 6, together with initials, which again are presumably those of Hutchins. His explanation of the alteration and substitution in Exhibit C2 was that the date 10 June was subsequently found by reference to other documents to be incorrect.

The deed dated 28 May 1980, Exhibit A1, was described by Hutchins as a ``trust deed'' and as a ``declaration of trust''. The parties to it are Levart and Hutchins, referred to as ``the trustee'', and the estate of Harry Bramwell Thomas and Franklin Ennor Thomas, described as ``the owner''. The preamble to the deed recites:

``WHEREAS: IT WAS RESOLVED that the Trustee does hold in trust for the owner the following fully paid shares in Lomsix Pty. Ltd. in the following proportions:

                                                 No. of
           Owner                Trustee          Shares
      Estate of H.B.
         Thomas            Levart Pty. Ltd.       5,000
      Franklin Ennor
         Thomas            Levart Pty. Ltd.       4,999
      Franklin Ennor       Peter Graeme
         Thomas            Hutchins                   1
          

AND WHEREAS the Trustee has formally agreed.''

Although this does not identify by whom it was resolved, the recital no doubt was intended to be a reference to a resolution of directors of Levart. If that were intended, any resolution of the directors could not have bound Hutchins personally.

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By the operative provisions of the deed, ``the trustee'' bound itself to deal with the shares in the manner directed by the owner and to conform with the requests addressed to it by the owner in relation to the shares and to give the owner notice of particular matters concerning the shares. However, the deed does not contain an express declaration by Levart and by Hutchins that they hold the Lomsix shares on trust for those described as the owner.

The deed dated 9 June 1980 and made between Allied and Hutchins as the trustee and the six shareholders of Kenco shares as the owner is in identical terms with those contained in Exhibit A1, so that similar observations are pertinent to it.

The transfers, Exhibits B1-10, are in printed form. In each document, the name of the company, the number of shares, the name of the transferor, the name and address of the transferee and the words ``in trust'' (opposite the printed word ``consideration'') are in type, whereas the date inserted below the printed words ``date of purchase'' is handwritten. The printed words ``seller'' in parentheses under transferor and ``buyer'' in parentheses under transferee have not been struck out. The printed operative provisions of the transfer include the following:

``I/We the registered holder(s) and undersigned seller(s) for the above consideration do hereby transfer to the above name(s) hereinafter called the Buyer(s) the securities as specified above standing in my/our name(s) in the books of the above-named Company,...''

Apart from the words ``in trust'' alongside the printed word ``consideration'', the transfers contain nothing consistent with their having been made in connection with a declaration of trust.

The two sale of shares agreements are in similar but not identical terms. Recital B. reads:

``B. The Vendors are registered in the Register of Members of the Company as the holders of the shares in the capital of the Company set forth in the Seventh Part of the Schedule (hereinafter called `the Sale Shares') and the same represent the whole of the issued capital of the Company at the date hereof.''

By cl. 5 the vendors warrant that the recitals to the agreement are true and correct. By cl. 6 the vendors covenant and acknowledge that they and each of them will on the settlement date be the legal owners of ``the Sale Shares''. The two sale of shares agreements produced were not carbon copies but ``first strikes''. There is nothing to suggest that they are copies of executed instruments. No copies of signatures appear and the date of the agreement and date of settlement are left blank.

The Board of Review found that before 28 May 1980 there was on foot an oral agreement for the sale of the Lomsix shares. Its finding as to date was based on apparent acceptance of Neal's evidence that the agreement to sell was made on 19 May and on disclosure in Exhibit D that Lomsix's financial statements were prepared up till 21 May 1980. The Board accepted the executors' evidence that their belief and intention when executing the documents were that they were giving effect to a sale of the shares for a monetary consideration. It held that, the beneficial interest in the shares having passed to the transferees, para. (bb) under Heading IV(A) of the Third Schedule to the Stamps Act did not apply, and that, the executors having executed the transfer as a result of a contract for the sale of the estate's shares, the transfer did not fall within Exemption (6)(a).

As to the Kenco shares, the Board expressed an emphatic view that the objectors had not discharged the burden of proving that the assessment was excessive.

On appeal from the Board's decision, Hampel J., without hearing additional evidence, expressed his conclusions based on the evidence as recorded in the transcript in the following passage:

``In my view the findings of the Board cannot be supported by the evidence unless one were to start with the concept that the transaction which created the trust relationship was not what it appeared to be. Although it is true that the substance of the transaction intended to be effected is a determinant, there must be some evidentiary basis for the finding that the transaction is not what it appears to be on the face of the documents as explained by the circumstances and the evidence of those who are parties to the transaction. There is also some difficulty about the process of doubting

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the positive evidence of a witness and then coming to the conclusion that the opposite to what he said is correct. This is so even if the side calling the witness bears the onus of proof.

I agree with Mr. Reicher's submissions that Mr. Hutchins' evidence is all one way and the evidence of Mr. Thomas and Mr. Neal called on behalf of the Comptroller, although somewhat confusing, if anything supports Mr. Hutchins' evidence.''

His Honour continued that the respondents had discharged the onus of showing that the assessments were excessive. He found that the provisions of para. (bb) of Pt. IV(A) applied and that accordingly the duty on each transfer should be assessed at $1.

Where on appeal from the Board the only question of law is whether the decision of the Board was properly open to it on the evidence, it may be that the question for the Court is whether the Board could on the evidence come to the conclusion it did (
Buckland v. F.C. of T. (1960) 34 A.L.J.R. 60 at p. 62 per Windeyer J.), although it has been suggested that this restriction, if it exists, is confined to cases where no additional evidence has been called (
Krew v. F.C. of T. 71 ATC 4213 at p. 4216 per Walsh J.;
McCormack v. F.C. of T. 77 ATC 4543 at p. 4549 per Deane J.). But where, as in the present case, there is some other question of law to found the appeal, the task of the Court is to decide the facts (McCormack v. F.C. of T. 77 ATC 4543 at pp. 4544-4545 and 4549; on appeal 79 ATC 4111; (1979) 143 C.L.R. 284 at ATC p. 4116; C.L.R. p. 292 per Barwick C.J. and ATC p. 4122; C.L.R. p. 304 per Gibbs J.;
F.C. of T. v. Students World (Australia) Pty. Ltd. 78 ATC 4040 at p. 4045; (1978) 138 C.L.R. 251 at p. 260, per Mason J.), although the Court will give due weight to the Board's decision on questions of fact (
F.C. of T. v. Miller (1946) 73 C.L.R. 93 at p. 98 per Latham C.J.; Krew v. F.C. of T. 71 ATC 4213 at p. 4216 per Walsh J.; McCormack v. F.C. of T. 77 ATC 4543 at p. 4549 per Deane J.). Often, however, the Board's findings will be affected by its view on the credibility of some witness or witnesses called before it, and if the course is then adopted of treating the evidence given before the Board as the evidence for the purposes of the appeal, the ability of the Court to find the facts for itself is likely to be severely restrained.

The unhappy history of McCormack v. F.C. of T., supra, which went from the Board of Review to the Supreme Court and then to the Federal Court and then to the High Court, whence it was remitted to the Supreme Court for a rehearing, shows the danger of conducting an appeal without calling again all witnesses who gave evidence before the Board and whose credibility is important; compare the course adopted in
Moruben Gardens Pty. Ltd. v. F.C. of T. 72 ATC 4147; (1972) 46 A.L.J.R. 559 and referred to by Mason J. in F.C. of T. v. Students World (Australia) Pty. Ltd. 78 ATC 4040 at pp. 4045-4046; (1978) 138 C.L.R. 251 at pp. 260-261. Suggestions can indeed be found that where findings are affected by credibility and on appeal the evidence before the Board is merely adopted, the question for the Court is simply whether on the evidence the Board's findings were open to it; in the present case Hampel J. formulated the question in this way, while not referring to the problem of credibility. But this is, with respect, too extreme a statement of the position. Circumstances may arise in which, although the Court considers that the Board's findings were open to it, it nonetheless concludes, making due allowance for the fact that the Board had the advantage of seeing the witnesses, that those findings were wrong; this situation is more likely to arise where circumstantial evidence bulks large. The more the findings depend upon credibility, the greater will be the difficulty of departing from the view of the facts taken by the Board; compare the observations of Mason J. in F.C. of T. v. Students World (Australia) Pty. Ltd. 78 ATC 4040 at pp. 4045-4046; (1978) 138 C.L.R. 251 at pp. 260-261. The proceeding, although called an appeal, is not really one; but where credibility is important and the parties choose to do no more than place before the Court the evidence that was before the Board, the Court is in a position similar to that of an appellate Court, which can only in rare cases be satisfied that the trial Judge has reached a wrong decision about the credibility of a witness (
Benman v. Austin Motor Co. Ltd. (1955) A.C. 370 at p. 375 per Lord Reid). Generally speaking, it will be impossible for the Judge to differ from the Board's view that certain oral evidence was credible (
Charles v. F.C. of T. (1954) 90 C.L.R. 598 at pp. 610 and 612) or was not to be believed (McCormack v. F.C. of T. 79 ATC 4111 at p. 4122; (1979) 143 C.L.R. 284 at p. 304, per Gibbs J.). Indeed, it has been said that

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if the Board does not either expressly or by implication accept or reject the evidence of a witness, the Court may in a given case find itself unable to form any view on whether the evidence should be accepted and so may be unable to make any use of it (McCormack v. F.C. of T., supra, at ATC pp. 4129-4130; C.L.R. p. 317, per Jacobs J.); cases where the Court can say that the evidence of a witness on some important point must have been accepted merely because it is ``uncontradicted'' will probably not be common (compare
Taylor v. Ellis (1956) V.L.R. 457 at p. 465).

Strictly, the question for this Court is whether the decision of the learned Judge was correct. But since his Honour was asked to determine the matter simply on the evidence placed before the Board, so that his Honour had no advantage that is denied to this Court, it is for us to perform the same task as that which the learned Judge was required to perform, that is, to assess the evidence and decide whether the objectors have discharged the burden of proving that the assessments are excessive, subject to the limitation imposed by the failure to re-call witnesses for the purposes of the appeal; compare McCormack v. F.C. of T. 77 ATC 4543 at p. 4553 per Deane J. It may be noted that Hampel J. nowhere referred in terms to the need to consider what view the Board formed on the veracity and reliability of the sole witness called by the objectors. In addition, his Honour's reasoning commenced with the observation that the Board's findings could not be supported unless one began with the notion that the transaction which created the trust relationship was not what it appeared to be on the face of the documents. As to this, in our opinion the transfers were themselves quite equivocal, with their references to the date of purchase and to the buyer and seller and the bald and ambiguous statement ``Consideration: In trust'', and the documents generally were in a state such as to excite suspicion.

What view did the Board form of the credibility of Hutchins? In its reasons for decision nothing is said in terms as to his truthfulness or reliability or as to whether his evidence is accepted. Our impression is that the Board certainly did not regard him as reliable; whether the Board regarded him as deliberately dishonest is not so clear. At one point the Board referred to the showing of the date of the purchase on certain transfers as a ``fiddle''. The Board seems also to have been understandably not impressed by the evidence of Hutchins about the meetings of directors. His reference to ``a bit of uncertainty'' about the date of a meeting drew an adverse comment in the reasons for decision. Similarly, while views on credibility may be affected by subsequent argument and deliberation, it is worth noting that the Board, during the addresses, observed that in the ``discussions'' at the meetings of directors Hutchins must have communed with himself. The Board found that a contract for the sale of the Lomsix shares had been made before 28 May, although the consideration had still to be calculated by the purchasers. One possible view of the treatment of this matter in the reasons for decision is that the Board thought that Hutchins was not untruthful but merely mistaken in relation to a question of mixed fact and law. Be that as it may, to put the matter at its lowest, the Board is not affirmatively shown to have regarded Hutchins as an honest and reliable witness. But we would go further, and say that it is affirmatively shown that the Board regarded him as an unreliable witness and in addition had at least reservations about his veracity. We have concluded that the Board did have at least a serious doubt about the veracity of Hutchins after a careful consideration of its reasons as a whole, including in particular the following passage, which seems to us to be necessarily directed to the truthfulness of Hutchins: ``I am by no means confident that I have obtained the precise truth, much less all the facts, about what happened''. It is clear that the honesty of Thomas and Neal as witnesses has never been impugned.

So it was necessary, on the appeal from the Board, and is necessary now, to approach the evidence of Hutchins as that of an unreliable and quite possibly untruthful witness, putting the matter at its lowest from the Comptroller's point of view. Once this is appreciated it is, we think, impossible to mount a successful attack on the assessments. While it is no longer necessary under para. (a) of Heading IV(A) for the transfer to be made ``on a sale'', we would say, on the whole of the evidence, that in both cases we are not satisfied that the transfers were not executed by all parties thereto for the purpose of implementing a sale already made at a price representing the value of the shares. We say this notwithstanding the letter of 28 May from Duesburys. Quite apart from the view evidently formed by the Board itself of the credibility of

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Hutchins, it is clear from the transcript of his oral evidence and from the documents that there were very substantial grounds for mistrusting his evidence and the case which he sought to make. The transcript of his evidence gives the clear impression of a shrewd and capable man and, having regard to this impression and to what appears as to his occupation and the nature of his business activities, it is almost impossible to escape the conclusion that in speaking of ``discussion'' at directors' meetings he was trying to mislead the Board. His answer that the discussion about price was ``possibly on the basis of the shareholders' fund situation of Lomsix less a percentage related to portion of the reserves'' was manifestly uncandid. His evidence was that he told the vendors' representatives that the reason for requiring a transfer of shares in trust first was ``that there was a possibility of transferring on a Darwin share register and hence allowing the costs as far as the vendor was concerned''. Mr. Reicher was unable to suggest to the Court any sensible meaning for this answer, notwithstanding the supposed resolutions to seek removal of the shares to a Northern Territory branch register and the practice referred to in Tolhurst and Wallace on Stamp Duties, para. 14.39B. That practice was not to be followed in the present case. The alteration of the dates of the minutes is itself a highly suspicious circumstance. In one case the name of the corporate director was not inserted in the minutes. All transfers are undated in relation to execution by either party. Hutchins swore that both sale of shares agreements were executed in Darwin under ``power'' or ``powers'' of attorney. The copies of these agreements treated as put in evidence were incomplete as regards date of execution, settlement date and mode of execution; despite the evidence of Hutchins we would not be satisfied that any such agreements were ever executed. We would not accept his evidence as to the date of receipt or execution of any other document. The name of E. Thomas Pty. Ltd. was evidently changed to Lomsix Pty. Ltd., at the request (we would infer) of Hutchins, before the relative transfers, minute and deed of trust were prepared. The transfers (admittedly printed forms) give a ``date of purchase'' and throughout describe the transferor and transferee as seller and buyer respectively. Both Thomas and Neal believed that they were transferring on a sale. If the transfers were executed in order to implement a contract that had already been made for the sale of the shares at a price representing their value, they fell within para. (a) and did not fall within para. (bb) of Heading IV(A). We are not satisfied on the balance of probabilities that they were not executed in order to implement such a contract, and so the objectors have failed to persuade us that the assessments are excessive.

Even if the evidence of Hutchins were to be accepted, the transfers would be shown not to fall within para. (bb). For, taking the evidence of Hutchins in conjunction with the documentary evidence, one sees that the arrangement said to have been made was that the transfers were to be held by the objectors on the following basis: in the event that a contract was made for the sale of the shares to the proposed purchasers the transfer would be used to give effect to that sale and would accordingly be registered, and in the event that no such contract was made the transfer would be re-delivered to the transferor, for destruction or cancellation. On the case made by the objectors it was clear that the transfers were to be registered only if the sale which was in contemplation in fact took place. The written agreement for the sale of shares, which was said by Hutchins to be in the standard form used by his companies, recited that the vendors were registered as the holders of the shares and provided for delivery by the vendors to the purchasers of transfers executed by the holder of the particular shares. In theory the original transfers to the ``trustees'' could have been registered and transfers back from the ``trustees'' to the proposed vendors could have been registered by the time of the execution of the sale of shares agreement, with a view to the execution by the vendors of transfers on sale. But of course this was never in contemplation: the last set of transfers would have been chargeable with ad valorem duty. It is inconsistent with the whole tenor of the evidence of Hutchins. There is in addition a brief and tantalising passage in which Hutchins, asked by the Board whether the trust deeds were at any stage cancelled or otherwise disposed of, replied that, ``in accordance with the agreement, for want of a better word'', on the respective settlement dates ``Allied Technical and Levart were released from their obligations''. What he meant by this was unfortunately not explored, but it is clear enough that he was not saying that two further

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ATC 4829

sets of Lomsix and two further sets of Allied transfers were executed before or at settlement, being transfers by the ``trustees'' back to the ``beneficiaries'' and transfers by the former beneficiaries as vendors. Moreover, the evidence of Hutchins dealing with other transactions shows that transfers given by prospective vendors were not registered except to effectuate a sale. For he said that in other cases a sale had on occasions not resulted and that in those cases the transfers had been ``returned to the beneficiaries'' and that this would have happened if no sale had come to pass in the cases before the Board.

Once this position is reached it is impossible to say that the transfers were made by the transferors to a trustee or nominee to be held solely as trustee or nominee of the transferor without any change in beneficial ownership. It is unnecessary to attempt a precise analysis of the effect at law and in equity of what, on this view of the evidence, the parties had done. If the evidence of Hutchins is accepted it is clear that the deeds of trust were never intended to operate according to their tenor. Those deeds proceed upon the basis that the transfers have been, or at least are to be, registered, for they throughout treat the supposed trustees as having by registration become the holders of the shares. The intention of the parties was, however, that the ``trustees'' should not become the holders of the shares unless they had agreed to buy them and had paid the purchase price.

So far as Exemption (6)(a) is concerned, it would be enough to say that, whatever the scope of this exemption may on its proper construction be, it has not been shown by the objectors to be applicable, since they have failed to prove that the transfers were not executed in order to implement a contract that had already been made for the sale of the shares. But it should we think be said in addition that the exemption simply has nothing to do with this case. Stamp duty was first imposed on share transfers by the Stamps Act 1937 (No. 4509). As introduced at that time subpara. (a) of para. (6) of the exemptions read as follows:

``A transfer of any marketable security or right in respect of shares made to a new trustee on and in consequence of the appointment of such new trustee.''

We should have thought it clear enough that this original provision applied only to the appointment of a new trustee to perform a pre-existing trust and did not extend to the appointment of a trustee to perform a newly created trust. Sergeant and Sims on Stamp Duties, 7th ed., p. 81 takes this view of the head of charge ``appointment of a new trustee'', citing Re Potter (1889) W.N. 69 and Re Kennaway (1889) W.N. 70, where the Court was not required to form an opinion on the question. The Stamps Act 1957 (No. 6104) brought subpara. (a) to its present form. It is still limited to changes in trustees. The expression ``the appointment or retirement of any trustee'' is to be read ejusdem generis with ``other change in trustees''. The reference to vesting confirms this view. The provisions considered by the High Court in
D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commr. of Stamp Duties (N.S.W.) 82 ATC 4125; (1982) 40 A.L.R. 1 were very different.

This is enough to dispose of the exemption, but another point was argued. All sub-paragraphs of Exemption (6) are introduced by the words ``any transfer hereinafter in this paragraph specified which is in accordance with the provisions of section thirty-two of this Act stamped with a particular stamp denoting that the instrument is not chargeable with duty or which the Comptroller of Stamps by a notice published in the Government Gazette declares to be not chargeable with duty''. It seems impossible to resist the conclusion that in determining whether to affix the particular stamp (or, for that matter, in determining whether to declare the instrument by notice to be not chargeable) the task of the Comptroller is simply to consider whether the transfer in fact falls within one of the succeeding sub-paragraphs: it is not to be thought that some general discretion is conferred to determine whether to exempt transfers which do answer the description ``any transfer hereinafter in this paragraph specified''. Given, however, that the Comptroller's task is simply to determine whether the transfer falls within one of the exempted categories, the question arises whether the affixing of the particular stamp or the publication of the notice is made a condition of the exemption, as if the introductory words read ``Any transfer which the Comptroller of Stamps is satisfied is...''. Compare the present language of Exemption (4), and note that by the 1937 Act it began its life as an exemption which referred, not to the Comptroller's being satisfied, but to the instrument's being stamped

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ATC 4830

as not chargeable with duty.

The Stamps Act 1937, in exempting certain transfers, required in three places that the transfer be stamped not dutiable. This was done in Exemptions (4) and (5), and Exemption (6) introduced the lettered subparagraphs with the words which have ever since appeared in that exemption. The requirement that the transfers be stamped not dutiable was dealt with in the second reading speech and also by Colonel Cohen in the course of the debate in the Legislative Assembly (Hansard, Vol. 202 p. 478 and pp. 677-678 and Vol. 203 p. 1091). It is also worth noting that Exemption (2) in the 1937 Act spoke of certification by the Comptroller in the Government Gazette. In England it is common to provide, in dealing with exemptions, that ``no such instrument shall be deemed to be duly stamped unless either it is stamped with the duty to which it would but for this section be liable, or it has in accordance with the provisions of section twelve of'' the Stamp Act 1891 ``been stamped with a particular stamp denoting either that it is not chargeable with any duty or that it is duly stamped'', or to make some similar provision. See Sergeant and Sims on Stamp Duties, 7th ed., pp. 48-49, 57, 386, 389, 390, 406, 411 and 412.

Mr. Kaufman submitted that the introductory words of Exemption (6) had the effect of committing to the Comptroller the determination of the question whether a transfer fell within one of the sub-paragraphs and that the determination could not be challenged by attacking the assessment on objection or appeal under sec. 32(3) and the other provisions in that behalf. If the words did not have this effect it was, he said, difficult to see what purpose they served. As to this argument, a purpose that might be suggested is that of ensuring that the authorities should have the opportunity of scrutinizing every instrument purporting to fall within one of the subparagraphs, to see whether it is escaping the burden of the stamp law. See the judgment of Lord Greene M.R. in In
re Rob's Contract (1941) Ch. 463 at pp. 475-477, where his Lordship observed:

``There is nothing unreasonable in the legislature directing that, while certain classes of documents shall not be subject to charge, nevertheless they are to be produced to the commissioners for them to see whether or not they are exempt from chargeability.''

The effect of the English provisions and the history of the Victorian exemptions has not been the subject of argument, and we prefer to express no opinion concerning the effect of the introductory words of Exemption (6) and to say only that subpara. (a), being confined to changes in trustees, does not on any view apply to any of the present transfers.

The appeal must be allowed, with costs. The order of Hampel J. is set aside and in lieu thereof it is ordered that the appeal from the decision of the Board is dismissed and that the objectors pay the taxed costs of the appeal, including any costs reserved on the hearing of the summons for directions.

THE COURT ORDERS THAT:

(1) That the appeal be allowed and the respondents to pay the appellant's taxed costs of the appeal.

(2) That the order of Hampel J. be set aside and that in lieu thereof the appeal from the decision of the Victorian Taxation Board of Review be dismissed.

(3) That the objectors (being the respondents to this appeal), pay the taxed costs of the appeal including any costs reserved on the hearing of the summons for directions.