Frazier v. Commissioner of Stamp Duties (N.S.W.).

Judges:
Lee J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 25 November 1985.

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Lee J.

This is a case stated by the Commissioner of Stamp Duties under sec. 124 of the Stamp Duties Act, 1920 (as amended) raising the question whether a sum of money, viz. $30,998, expressed to be paid as ``rent in advance as a lump sum'' in a lease of a home unit, is ``rent'' or ``premium'' for the purposes of duty under the Act. The Second Schedule to the Act provides for duty to be payable on a:

      ``LEASE OR PROMISE OF OR AGREEMENT FOR LEASE
      OR HIRE of any Property not being a Ship or Vessel -
      (1) Except as provided in paragraph (10) in respect of the
          total rent payable during the term without any
          consideration by way of premium, fine, or foregift -

          Where such rent -
          does not exceed $100 .........................................   0.35
          exceeds $100 - for every $100 and also for
          any remaining fractional part of $100 ........................   0.35
      

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ATC 4736

(2) In consideration of a sum of money by way of
    premium, fine, or foregift, without rent ............ } The same duty as on

(3) In consideration of a sum of money by way of ........     }conveyance under
                                                              }para-
    premium, fine, or foregift, and also of rent whether real }graph (1) under
    or nominal .............................................. }heading
                                                              `Conveyances of
                                                              }any Property'
                                                               herein.
    On the amount of premium ................................ }
    And on the rent                                   The same duty as on a
                                                      lease under paragraph (1)
                                                      hereof.
(4) to (10) not reproduced.''
      

Lease is defined in sec. 76(1) of the Act as follows:

``For the purposes of this Act the expression `lease' includes any promise of or agreement for a lease of any property, and includes any instrument (not being an instrument liable to ad valorem duty as a conveyance) whereby a right to use at or during any time or times any property in New South Wales for any purpose whatever is conferred on or acquired by any person (who shall be deemed to be the lessee), but does not include any clause in a mortgage providing for attornment by a mortgagor or a hiring arrangement as defined in section 74D of this Act.''

and sec. 3(1) provides that:

```Property' includes real and personal property and any estate or interest in any property real or personal, and any debt, and any thing in action, and any other right or interest.''

It follows that a ``lease'', for the purposes of duty, will include transactions other than those which are leases or agreements for lease of interests in land, and ``Lease or Promise of or Agreement for Lease'' in the head of charge applies also to transactions involving personal property. Instruments conferring ``a right to use... any property'' may relate to both real and personal property.

In the present case the Commissioner assessed duty under para. 3 of the head of charge, that is to say he regarded the transaction as being one in which the sum of $30,998 was a premium and that the agreement in providing for ``maintenance charges'' to be paid by the lessee amounted to a payment of rent by the lessee assessed at $4.50 per week. The plaintiff claims that the assessment should have been made under para. 1, that is that the duty payable should be 35 cents of the total rent payable which is made up of the $30,998 and the maintenance charges. The Commissioner's assessment gave rise to an amount of duty of $558.95. An assessment in accordance with the plaintiff's contention would bring duty of $124.95. The question is whether para. 1 or 3 applies to the transaction.

The lease under consideration, which is in the form of a deed, was made between the plaintiff and the trustees of the Autumn Lodge War Memorial Home, Armidale, and leased to the plaintiff residential unit 15 in the Autumn Lodge Retirement Village at Armidale. It recited that the lessor was the lessee of Crown Reserve No. 75912 for homes for the aged, Armidale, being land estate on which certain residential units had been constructed. It defined in cl. D(iii) ``the `Rent Payable in Advance as a Lump Sum' to mean the sum of $30,998''. It gave a comprehensive definition of maintenance charges, which need not be set out here, but which could be described as management costs, rates, taxes, repairs etcetera. Clause 1(a) is in the following terms:

``The Lessor for itself and its successors and assigns on behalf of the Autumn Lodge War Memorial Home Committee for the time being HEREBY LEASES the unit to the Lessee together with the common rights (as defined) in relation to the unit for a term of Twenty (20) years commencing on the 26th day of July 1982 and terminating on the 26th day of July 2002 upon the payment by the Lessee to the Lessor of the rent in advance as a lump sum (as defined) for the grant of this Lease upon the condition that the Lessee shall not during the term of the said Lease be required to pay any rental for the unit but subject to the covenants terms

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ATC 4737

and conditions as are contained in this lease.''

Before referring to any of the other clauses in the deed, it is convenient to consider the nature of the problem posed by the questions in the stated case.

The Stamp Duties Act itself provides no definition of ``premium'' or ``rent'' and, as I have said, the head of charge in the Schedule relates to transactions and leases other than leases of interest in land. It follows that the meaning ordinarily given to ``premium'' and ``rent'' in the case of leases of land need not necessarily coincide with the meaning of those words in the head of charge which includes for instance, leases, licences and instruments creating bailments. However, as the word ``premium'' and ``rent'' have been considered extensively by the courts in regard to leases of interests in real estate, it is proper to have regard first to those meanings in considering the present problem and then consider whether those meanings or analogous meanings should be applied to the words in the Schedule to the Act. (The words ``premium'', ``fine'' or ``foregift'' alone, or in combination, are found in the Conveyancing Act definition of ``fine'' sec. 7(1), in the Income Tax Assessment Act sec. 26AB(1) and also the Landlord and Tenant Amendment Act 1948 sec. 36.)

First, then, let me consider the meaning of ``premium'' in relation to a lease. In
Nixon v. Doney (1961) 61 S.R. (N.S.W.) 311, the Full Court of the Supreme Court of this State considered the words ``rent'', ``premium'' and ``bonus'' in sec. 35 and 36 of the Landlord and Tenant Amendment Act 1948 (as amended). The Court concluded, after reviewing the authorities, that the words ``premium'' and ``rent'' were each to be treated as having a meaning in law which distinguished one from the other, and that the distinction between the two was not to be controlled by the manner in which the parties themselves might describe the various payments. It went on to hold that the expressions ``bonus'' and ``premium'' on the one hand, and ``rent'' on the other, have often been used to designate no more than two components in the full or true rent of premises - one component which under the name of ``bonus'' or ``premium'' is made payable as a capital sum at the inception of a tenancy and another component which under the name of ``rent'' is made payable by periodical instalments throughout its duration. The Court referred at p. 316 to the observations of Warrington L.J. in
King v. Cadogan (Earl) (1915) 3 K.B. 485 at p. 492, where his Lordship said:

``I need not say anything about the meaning of the word rent but `premium' as I understand it, used as it frequently is in legal documents, means a cash payment made to the lessor, and representing or supposed to represent, the capital value of the difference between the actual rent and the best rent that might otherwise be obtained. It is a very familiar expression to everybody who knows the terms and powers of granting leases. It is in fact the purchase money which the tenant pays for the benefit which he gets under the lease.''

The Court went on to say:

``There is, however, another sense in which the expression `bonus' or `premium' may be used. In this sense it is to be distinguished not only from the periodic rent payable under the lease but also from such a capital sum as has just been referred to. `The conception of `requiring' some money payment as a `condition' of the grant of a tenancy is well understood. To my mind, there is a real distinction between such a requirement as a condition precedent to the grant of a tenancy (on any terms) on the one hand, and on the other hand, the provision in the lease or contract of tenancy for payment of some lump sum by way (as in the present case) of compounding of rent and in addition to the periodic rent. It is the former, and the former only, which is prohibited and made the subject of criminal proceedings' (that is, by the (English) Landlord and Tenant (Rent Control) Act 1949). `The latter, for reasons which I have already stated, if not in truth a disguised premium required as a condition of the grant, might, at least, be properly regarded as a disguised part of the rent' (
Woods v. Wise (1955) 2 Q.B. 29 per Lord Evershed M.R.). In this view of it, a premium is a `personal promise in consideration of the lease being granted' (Hill v. Booth per Scrutton L.J.), as distinct from rent which is a payment for the use of the land. Provision that the unpaid balance of a `premium' agreed to be paid by instalments is to become immediately due and payable in the

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ATC 4738

event of the term being determined by re-entry is an indication that the premium is `a consideration for which the lease itself is granted' (per Slesser L.J.); and in such a case the balance of the instalments remains payable notwithstanding the extinguishment of the term by merger. So too, there is a premium in this sense where the covenant to pay a premium by instalments is a purely personal covenant not running with the land, as appearing from a provision in the lease that, on assignment or underletting, it shall be a condition of the lessor's granting consent that all remaining instalments of premium are paid by the lessee to the lessor (Regor Estates Ltd. v. Wright). On the other hand, if there is provision whereby liability to pay a `premium' is to cease on determination of the lease prior to its expiring by effluxion of time - if the parties' intention was that `the `rent' and the `premium' were to march together' (Samuel v. Salmon and Gluckstein Ltd.) - or if there is a right in the lessee of pro tanto recoupment on premature determination of the lease (Woods v. Wise), these are indications that the sum in question is not really a premium but is in truth and substance an additional rent.''

The principle lastly asserted was applied by Walsh J. in
Ex parte Lathouras (1964-1965) N.S.W.R. 254.

I shall return to the meaning of ``premium'' in a moment but let me now consider the meaning of ``rent'' in a lease. The present day meaning of the word ``rent'' was considered by the House of Lords in
United Scientific Holdings Limited & Ors v. Burnley Borough Council (1978) A.C. 904 where a lease for a term provided for a yearly rent and although their Lordships expressed themselves in slightly different words, all gave to the word the meaning that it was a payment made by the lessee to the lessor for the use of the property leased. In an earlier decision of
C.H. Bailey Ltd. v. Memorial Enterprises Ltd. (1974) 1 All E.R. 1003 (to which Lords Diplock, Simon, Salmon and Fraser had referred with approval) Lord Denning M.R. had said at p. 1007:

``It is time to get away from the medieval concept of rent. That appears from a passage in Holdsworth's History of English Law (1925), vol VII, p 262, which was referred to by Evershed LJ in
Property Holding Co Ltd v. Clark (1948) 1 All ER 165 at 173, 1 KB 630 at 648:

• `... in modern law, rent is not conceived of as a thing, but rather as a payment which the tenant is bound by his contract to make to his landlord for the use of the land.''

The meaning given to the word ``rent'' by their Lordships in United Scientific Holdings Limited & Ors v. Burnley Borough Council shows that in a lease of land granted in present times, the old meaning has been replaced. The learned authors of Foa's General Law of Landlord and Tenant, 8th ed. (1957), had accurately forecast this development (see para. 163). I can see no reason why this meaning should not be given to the word ``rent'' in the case of modern leases being considered for duty purposes, and both counsel agree that it is appropriate thereto. It was applied by Lusher J. in
J.V. (Crows Nest) Pty. Ltd. v. Commr of Stamp Duties (N.S.W.) 85 ATC 4198. It is a meaning which can readily be adapted to transactions involving the ``leasing'' or ``licensing'' or ``hiring'' of personal estate - i.e. it has general application under the head of charge.

In the present case both counsel have also approached the problem upon the footing that the question whether the sum of $30,998 is premium or rent, is to be determined by deciding firstly whether it is a payment required as a consideration for the granting of the lease or whether it is a payment for the use and enjoyment by the lessee of the land, i.e. the second meaning dealt with in Nixon v. Doney (supra). In my view, this approach is the approach which the Court should take in the present case. In view of the fact that the lease provides for a lump sum payment of ``rent in advance'' but for no specific periodic rental, only maintenance charges (the parties agree for the purposes of this case that such charges can be treated as rent), the case plainly could not be brought within the definition of ``premium'' given by Warrington L.J. in King v. Cadogan (supra) and firstly referred to in Nixon v. Doney (supra), and the parties are agreed as to this. By applying the meaning of premium given in Nixon v. Doney, a meaning of ``premium'' known to the law at least in the case of lessor or lessee is posed. The meaning of ``premium'' being considered supposes a difference which puts ``premium'' and ``rent'' in contradistinction to each other according to their

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ATC 4739

respective natures, and apart from the fact that it provides what otherwise would not exist, i.e. a starting point from which to determine whether the lump sum paid was a ``premium'' or ``rent'', the very distinction it postulates is itself in fact suggested in the head of charge in the Schedule. It will be observed that the duty payable in relation to ``rent'' is 35 cents per $100 of the total rent. Where the sum is ``premium, fine or foregift'', the head of charge applies the duty provided in para. 1 in respect of a ``conveyance'' and that duty (ad valorem duty) is based upon the amount of the consideration paid (when it is not less than the unencumbered value). In other words, the Stamp Duties Act in the Schedule, has equated, for duty purposes, payments which constitute a ``premium, fine or foregift'' with the purchase price in the case of conveyances of property. (The definition of conveyance in sec. 65 of the Act includes ``lease'', but nothing turns upon this in this case - the duty upon a lease is to be assessed by reference to the specific provisions in Schedule 2 relating to lease:
Commr of Stamp Duties (N.S.W.) v. Henry (1963-1964) 114 C.L.R. 322, per Kitto J. at p. 329.)

Let me then now consider what factors in the evidence support a conclusion that the sum is a premium, that is, was paid as a consideration for the grant of the lease, or is rent, that is, is payment by the lessee for use of the premises being leased. It is to be observed that the ``rent payable in advance as a lump sum'' referred to in cl. D(iii) of the agreement and again in cl. 1(a), is not in any way related to any weekly or periodic amount of rent. The deed, for instance, is not saying that the $30,998 is intended to represent an amount of X dollars per week, per month, per year. It merely states a total amount of money. Evidence was put before me on behalf of the plaintiff (without objection) showing the manner in which the sum was arrived at, and also that the plaintiff was told by her solicitor that the sum of $30,998 was to cover rent for 20 years, and that portion would be refundable in certain events. This evidence, it was submitted, was admissible as evidence bearing upon the question whether what has been described as ``rental in advance'' is in truth such: Woods v. Wise (1955) 2 Q.B. 29, especially the judgment of Evershed M.R. at pp. 39, 40. Mr Hanlon, a real estate agent carrying on business in Armidale, furnished an affidavit in which he set out how he worked out the amounts of money to be charged as rent for the units forming the subject of the leases which the trustees were to grant. He said:

``From my knowledge of market rentals I formed the view that a fair market rental for the first unit if paid in advance at $24,000 per annum would equate to a 20 year term. In making this calculation I took the following matters into account: rental value of units in the city, the value to the trustees of rent in advance, and the security of tenure over and above the usual 12 month lease.

(5) After doing the said calculations I presented a report to the management committee early in 1978 and I said words to the following effect `If rent in advance is paid for a unit costing $24,000 a fair term is 20 years'.

(6) I have since performed calculations on the basis that rent would be paid in advance for 20 years and came to the conclusion that the sum payable relates fairly to the costs of building later units including in 1982 unit 15 and said to the committee then and on a number of occasions since `The building costs of units still relate fairly to rent in advance for a 20 year term under the provisions of our leases.'

(7) It was my opinion at the time that I carried out the calculations for unit 15 that the sum payable by way of advance rent was a calculation based upon the present day value of current rental values projected forward from (?) 20 years and I am still of the same opinion.''

From the evidence just set out it appears that Mr Hanlon fixed the term by reference to the cost of building and it is not entirely clear how this was done. He does however refer to ``current rental values'' and it has not been suggested that the amount could not, as rent, be regarded, commercially, as realistic. I find it difficult to see in Mr Hanlon's evidence anything which is a pointer, one way or the other, as to whether the payment should be regarded as a ``premium'' or ``rent'' in the way now being considered, and it is unnecessary to refer to it further, but I shall come back later to the fact that the no periodic rent is referred to.

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ATC 4740

Clause 1(a) provides ``HEREBY LEASES the unit to the lessee... for a term of twenty years... upon the payment by the lessee to the lessor of the rent in advance as a lump sum (as defined) for the grant of this lease...''. These words standing alone, would, in my view, point to the payment of the lump sum being made as a consideration for the grant of the lease and accordingly are of significance in this matter. But the whole of the circumstances must be looked at, for the question to be decided is whether in fact - and this involves the construction of the deed as well as other relevant evidence if any - this amount was paid as a consideration for the granting of the lease or whether it is a payment intended as rent for the use of the premises. Clause 2(a) incorporates into the lease the covenants there set out (with or without modifications) and it is to be noted that it incorporates the covenant as to payment of rent referred to in sec. 84(1)(a) of the Conveyancing Act with the proviso for abatement in the case of destruction or damage by fire, flood, lightning, storm tempest or war damage, when the premises become ``unfit for the occupation and use of the lessee'' in whole or in part. Now this proviso is wholly inapt to a payment of a lump sum in consideration of the granting of the lease but entirely apt, of course, to a payment of rent in advance. Its plain intention is to relieve the lessor of the burden, or the full burden, of the rent whilst the premises cannot be occupied and used. It is my view that under the proviso, the lessee, the plaintiff in the present case, would have an action to recover a portion of the rent paid, appropriate to the period during which the premises could not be used, and in this regard I am of the opinion that the decision of Markell D.C.J. in
Lampe v. Nowranie Pastoral Co. Limited (1933) 50 W.N. 235 - which seems to be the only decision in regard to the application of the proviso to a payment of rent in advance - is correct. The significance of the clause for present purposes is the fact that the very implication of the covenant unto the lease shows the clear intention of the parties that the amount paid is referable to the actual use and occupation of the premises by the lessee. Counsel for the Commissioner sought to contend that, because the lease provided for maintenance charges to be paid, and because cl. 2(b) expressly provided that ``The reference to `rent' in this clause and in sec. 84 and 85 of the Conveyancing Act 1919 shall be deemed to apply to the maintenance charges (as defined)'', that was the sole application of the clause, for had it been intended to cover the lump sum paid, it would have provided that ``The reference to rent in this clause... shall include the maintenance charges''. In the light of the terms of the whole deed I do not consider this to be a natural reading of the clause. There is thus, in my view at this point, from within the lease itself a clear pointer to the lump sum being intended to be a rental. Clause 6 of the lease is confirmatory of the inference to be drawn from cl. 2(a). Clause 6 (so far as is relevant) is as follows:

``(a) The Lessor shall have the right to require that this lease be surrendered in the event of any one or more of the following conditions

• (i) The death of the Lessee;
• (ii) That the Lessee has ceased or proposes to cease to reside in the unit or is forced for any reason to vacate the unit as a permanent residence;
• (iii) That the Lessee has failed to comply with any of the covenants terms or conditions contained in this lease and which failure remains unrectified after the expiration of Twenty-eight (28) days prior written notice has been given by the Lessor to the Lessee in accordance with this Lease;
• (iv) That the Lessee has been declared bankrupt or that any of the assets of the Lessee have been or are liable to be seized in execution of any judgment or that the Lessee has compounded with or entered into an arrangement with any of his creditors;
• (v) That the Lessee is a patient under the control of the Protective Commissioner of the Supreme Court of New South Wales; or
• (vi) That the Lessee is habitually unable to care for himself.

...

(c) In the event of the Lessor exercising its right to require a surrender of this lease then the Lessee shall be entitled to the compensation for the rent payable in advance as a lump sum for the unexpired term of this lease such sum to be the value

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which the Lessor or an arbitrator appointed by it may reasonably determine to be the value of the residue of the term as at the date of notice of surrender AND the Lessee or his legal personal representatives shall and does, hereby appoint the Lessor to be its attorney for that purpose to execute such documents as may be reasonably required to complete the surrender of this lease.''

This is a provision to enable the lessee, where she cannot herself enjoy occupancy for the whole of the term, to be compensated. The clause uses the words:

``entitled to the compensation for the rent payable in advance as a lump sum for the unexpired term of this lease...''

The word ``the'' before ``compensation'' may be regarded as otiose, but there can be no denying that what the plaintiff is to be compensated for is ``the rent payable in advance as a lump sum for the unexpired term of the lease''. Counsel for the Commissioner sought to contend that as the compensation was:

``to be the value which the Lessor or an arbitrator appointed by it may reasonably determine to be the value of the residue of the term...,''

the clause was not to be given the significance which first impression might suggest. He contended that the clause entitled the plaintiff, not to a refund, in effect, of a portion of the rent paid in advance, by reference to the total amount paid in relation to the unexpired portion of the lease, but to a sum which represented objectively ``the value of the residue of the term'', which might be more or less than a sum calculated by reference to the lump sum itself. Counsel for the Commissioner was unable to give a satisfactory explanation of why the lessor would wish to pay more than a sum calculated by reference to the lump sum, or why the lessee would wish to take an amount less than that. In my view the clause relates the compensation to be paid directly to the lump sum paid (as rent) and the unexpired portion of the term. But even if that were not the proper interpretation of the clause, the fact still remains that the clause plainly relates the lump sum rental to actual occupancy of the plaintiff under the lease, and provides for compensation when the term is foreshortened. Clause 7 is also to be noted. It is in the following terms:

``FURTHER LEASE ON EXPIRATION OF TERM:

7. The Lessee shall subject to the due observance and performance of the covenants terms and conditions contained in this Lease have the first right to take a further Lease of this unit upon the expiration of the current term in accordance with the policies and conditions current at the date of termination of the within lease and otherwise upon such terms and conditions as the Lessor may reasonably require at that time it being the intention of the parties to this Lease that the Lessee shall have the right in so far as may be reasonably possible to continue in residence in the unit PROVIDED THAT it is acknowledged that the rent payable in advance as a lump sum paid in accordance with this lease shall only grant to the Lessee the right to the use and occupation of the unit for the term hereby granted and that upon expiration of that term the Lessee may be required to pay a further sum representing rent payable in advance as a lump sum and/or rental or make such other payments as may be reasonably required as a consideration for the further occupation of the unit .''

There is, in this clause, a further clear indication from within the lease itself that the payment under consideration is a payment for the use of the unit. Given then that the lump sum was paid for the use of the unit should it be held that it is ``rent'' within the head of charge?

Notwithstanding a conclusion that the lump sum is referable to the lessee's use and occupation of the premises and not to a consideration for the granting of the lease counsel for the Commissioner submits that the very nature of the payment, that is a lump sum referable to a term of 20 years without reference to any periodic rental and not, it would seem, calculated by reference to a periodic rental, takes the case out of the concept of rent dealt with in United Scientific Holdings Limited & Ors v. Burnley Borough Council (supra) and requires that it be regarded as a ``premium, fine or foregift''. There can be no doubt that in the law of landlord and tenant the reference to periods of time in regard to rent is strongly ingrained. In the most recent edition

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(28th) of Woodfalls Law of Landlord and Tenant, para. 1-0679 it is stated: ``Rent (redditus) is a retribution or compensation for the lands demised. It is defined to be a certain profit issuing yearly out of lands and tenements corporeal''. This definition accords with the definition given by Coke (1 Inst. 1122). In modern times, rent is usually made payable in periods less than a year, e.g. weekly, monthly, etc. In some of the cases where a periodic rent has been ``commuted'' into a lump sum and paid in advance, judges have observed that such payments might be regarded as a ``premium'', and the submission is made here that where the payment in advance is not related to any periodic payment as in the present case, the payment cannot be held to partake of the character of rent even though it is expressed to be made for the use of the land. It is appropriate therefore to refer to the cases cited by counsel on this aspect. In
City Permanent Building Society v. Miller (1952) 1 Ch. 840, a document acknowledged the receipt of ``the sum of $228 being three years rent at thirty shillings per week in advance in respect of... certain premises'' and containing the words ``I agree to grant to (the tenant) an unfurnished tenancy of the above premises for three years from October 16 1950 and thereafter on a weekly basis at a rental of 30/- per week''. The tenant did not go into possession until some months later. At p. 847 Evershed M.R. referred to the fact that the payment could be regarded as neither a fine nor a premium within sec. 205 of the Law of Property Act (1925) Eng. (1919 New South Wales sec. 106), but went on to add:

``On the other hand, it was obviously a device expressed in a particular way, on the mortgagor's part to get a lump sum, and to substitute a lump sum for a recurring weekly payment during the period from October 16, 1950 to October 16, 1953. I do not wish to lend any encouragement to the consequences which might flow from a decision of this court that a lump sum paid like this so as to cover the financial obligations of the tenant for three years, was not capable of being regarded as a fine or premium and thereby to encourage persons of the mortgagor's calibre to enter into transactions of this sort.''

Jenkins L.J. at p. 853 suggested that at least in some circumstances such a payment could amount to a fine. Hodson L.J. at p. 855 expressed the view that it was a fine. Jenkins L.J. thought that when a payment such as that was made, the lease granted pursuant to it could not be regarded as a lease ``granted at a rent'' within sec. 70 of the Land Registration Act 1920. In Woods v. Wise (supra), Romer L.J. at pp. 55, 56 seems to suggest that a payment which amounted to a payment in advance of the whole of the rent for a term could be a premium and illegal under the Landlord and Tenant (Rent Control) Act 1949. In
Hughes v. Waite (1957) 1 All E.R. 603, Harman J. held that a lump sum payment in advance of the whole rent for a term of three terms, but before the lessees entered into possession or had any legal or equitable interest in the premises, could be regarded as a premium or foregift within the Law of Property Act 1925 sec. 99 - the Act (like the Conveyancing Act 1919 sec. 7) defined ``fine'' to include premium or foregift. In
Grace Rymer Investments Ltd. v. Waite (1958) 1 Ch. 831, it was held that whilst the lessors might be guilty of taking an illegal premium under the Landlord and Tenant (Rent Control) Act 1949 Eng., the lessees were none the less entitled to assert that the payment was a payment of three years rent in advance and the Law of Property Act did not operate so as to make the amount paid a premium under that Act. It is to be pointed out that the cases just referred to were decided by reference to the particular statutes giving rise to the problems being dealt with in those cases, and the judgments (except to an extent in Woods v. Wise, where the question was whether the prepayment was in fact ``commuted rent'') were not concerned with the particular problem being dealt with in the present case, namely the determination of the nature of a payment of a lump sum in advance by reference to the question whether it was paid as a consideration for the granting of the lease which was in fact granted, or as a payment for the lessee's use and enjoyment of the land under that lease. In my view as I have earlier said, that test is appropriate to be applied to the meaning to be given to ``rent'' and ``premium'' in the head of charge in the Schedule of the Stamp Duties Act under consideration in the present case, and the mere fact that a lump sum payment in advance, not quantified by reference to any periodical payment, but intended by the parties to the lease to be payment by the lessee to the lessor for occupation of premises over a fixed term is

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ATC 4743

called ``rent'', does not, in my view, do any violence to the common understanding of that word. The Stamp Duties Act is intended to apply to a variety of instruments used by persons in transactions some of which are a daily occurrence, and when in the head of charge it refers to ``rent'' in contrast to ``premium'', no reason appears why ``rent'' should not apply to any payment however calculated provided it is paid in full for the use of the land and not in consideration of granting the lease. I am of the opinion that the lump sum payment of $30,998 was a payment of rent within the head of charge under consideration. It follows that the Commissioner was in error in assessing duty upon the finding that it was a premium within para. 3 of the head of charge ``Lease or Promise of or Agreement for Lease or Hire of any Property not being a Ship or Vessel'' and it should have been assessed under para. 1 of that head.

I therefore answer question 10 in the stated case as follows:

      A       (1)       No
      A       (2)       Yes
      A       (3)       -
      B       (1)       No
      B       (2)       Yes
      B       (3)       -
      

The Commissioner is to pay the plaintiff's costs and the orders may be entered.