Collector of Imposts (Vic) v Cuming Campbell Investments Pty Ltd [1940] HCA 17; (1940) 63 CLR 619 (19 August 1940)

HIGH COURT OF AUSTRALIA

The Collector of Imposts (Victoria) Respondent, Appellant; and Cuming Campbell Investments Proprietary Limited Appellant, Respondent.

H C of A

On appeal from the Supreme Court of Victoria.

19 August 1940

Latham C.J., Starke, Dixon, Evatt and McTiernan JJ.

Fullagar K.C. and A. D. G. Adam, for the appellant.

Ham K.C. (with him H. Walker), for the respondent.

Adam, in reply.

The following written judgments were delivered:—

Aug. 19

Latham C.J.

The question which arises upon this appeal from the Supreme Court of Victoria is whether a transfer of certain lands by the executors of the late Edward Campbell to the respondent company expressed to be in consideration of the sum of £50,000 is dutiable under the Victorian Stamps Act 1928 as a conveyance or transfer on sale of real property under div. VI. (A) of the Third Schedule to the Act or as a deed of gift under div. IX. (1) of that schedule. Upon a case stated by the Collector of Imposts it was held by Gavan Duffy J. that the instrument was dutiable as a transfer and not as a deed of gift.

The late Edward Campbell on 17th September 1931 made an agreement with the respondent company, which was a proprietary company entirely under his own control, whereby he agreed to sell and the company agreed to purchase certain land and other property. In a schedule the sale price of the land was stated at £50,000 and of the other property at £30,000. On the same day he executed three deeds in which he declared in favour of his three sons trusts of sums of £10 paid to the trustees and of other property which he might thereafter vest in the trustees. On the same day 80,000 shares in the company were allotted to Edward Campbell. On the same day also the trustees of each of the three several deeds agreed to purchase from Edward Campbell 25,000 shares in the company at a price of 5s. a share. It is not disputed that the value of the shares was more than 5s. a share. Edward Campbell died on 7th December 1931. The main asset in his estate was a debt of 5s. a share shown as owing to him on the 75,000 shares in the company sold to the trustees. On 28th July 1937 the surviving executors and trustees of Edward Campbell executed an instrument of transfer to the company of all the land specified in the schedule to the agreement of 17th September 1931. It is stated as a fact in the case that the true value of the land on 17th September 1931 was £89,515: See Cuming Campbell Investments Pty. Ltd. v. Collector of Imposts[1]. It is also stated as a fact that the true value of the land at the date of the transfer was £101,718. The question which arises is whether the instrument of transfer is chargeable with duty under the Stamps Act 1928, and, if so, with what amount of duty. It was held by the Supreme Court that the instrument was chargeable as a transfer upon the amount of £50,000, the consideration stated therein, and not as a deed of gift. The Collector of Imposts appeals to this court from that decision.

The Stamps Act 1928, sec. 17, imposes duties upon the instruments specified in the schedule. Sec. 78 and following sections relate to the duties chargeable upon deeds of settlement and deeds of gift under div. IX. of the Third Schedule. That division, so far as it is relevant, is in the following terms:—"Settlement or Gift, Deed of—(1) Any instrument other than a will or codicil whether voluntary or upon any good or valuable consideration other than a bona-fide adequate pecuniary consideration whereby any property is settled or agreed to be settled in any manner whatsoever, or is given or agreed to be given in any manner whatsoever, such instrument not being made before and in consideration of marriage. Where the value of the property does not exceed £1,000—10s. per cent" &c.

Under Act No. 4430 (which is applicable to the transfer in question) the rates of duty chargeable begin at one per cent, rising to five per cent where the value of the property exceeds £100,000. The duties imposed upon conveyances and transfers under div. VI. are ten shillings for each £50 of the amount or value of the consideration for the sale. Thus the duties imposed upon deeds of gift (where the value of the property exceeds £1,000) are much heavier than those imposed upon transfers.

The courts have not succeeded in finding any satisfactory meaning for the provisions of div. IX., which have often been described as confused and almost unintelligible. The sections of the Act (e.g., sec. 78) and the heading of the division refer to deeds of settlement and deeds of gift, but it has been decided that the subsequent words in the first sub-clause of the division produce the result that documents which are not deeds are nevertheless subject to duty under the division: See Howard-Smith v. Comptroller of Stamps[2]. This decision is in accordance with long-established practice.

In Castlemaine Brewery Co. Ltd. v. Collector of Imposts[3] it was held by a'Beckett J. and by the Full Court of Victoria that the words of the heading, "Settlement or Gift, Deed of", constituted a "governing description" and that no instrument was dutiable thereunder unless it could "by reasonable intendment be brought within the definition of Settlement or Gift, Deed of." It was said that sub-clause 1 did not "create new subjects of taxation which cannot, by any reasonable intendment, come under the description of deeds of settlement or gift": See the report[4]. This decision was approved in the case of Collector of Imposts (Vict.) v. Peers[5], but it was there interpreted as deciding not that the heading controlled the first sub-clause, but, on the contrary, that the sub-clause extended and enlarged the meaning of the words in the heading so as to make those words cover documents which they would not ordinarily include[6]. This must be so in some sense, because div. IX. under the heading of "Deeds of Gift" does include instruments which are given upon valuable consideration if that consideration is not bona fide, adequate, and pecuniary. It is plain that such transactions cannot be described in any ordinary sense as gifts, although the legislature says that in some manner or in some degree instruments giving effect to them are to be taxed as if they were gifts.

Sub-clause 1 of div. IX. excludes wills and codicils and instruments made before and in consideration of marriage. The sub-clause includes cases where valuable consideration is given for a transfer of property (real or personal) made by an instrument unless the consideration is bona fide, adequate, and pecuniary. It is difficult to reconcile some of the decisions with the words of the sub-clause. For example, in Atkinson v. Collector of Imposts[7] the consideration for a transfer of land was the compromise of a contested will case, including the withdrawal of a caveat. Such a consideration was plainly not pecuniary, but nevertheless it was held that the instrument was not a deed of gift within the meaning of div. IX. If that division applies to transfers of property upon any consideration which is not pecuniary, the decision was plainly wrong. In fact, the decision went upon the ground that there was no benevolence in the transaction—a ground which it is now impossible to maintain after the decision in Collector of Imposts v. Peers[8].

But the acceptance of the proposition that a transfer for consideration is a gift is only one of the difficulties presented by sub-clause 1. The words of the sub-clause further require (wherever there is a pecuniary consideration) a decision as to whether the consideration is bona fide. Even if a consideration is adequate and pecuniary, so that full value is given for the property transferred, but in some sense the transaction is not bona fide, then the transfer may possibly be dutiable as a deed of gift. It is difficult to conceive a transaction consisting in a transfer of property for adequate pecuniary consideration which can be described as not bona fide in any sense relevant to a revenue Act. It may, however, possibly be the case that the legislature intends to penalize, by a specially high rate of duty, transactions which have associated with them some kind of fraudulent intent, even although full pecuniary consideration should be given for any property transferred.

The presence of some, or even of some substantial, pecuniary consideration plainly does not relieve an instrument transferring property from dutiability under div. IX. Even if there is a pecuniary consideration, but it is not adequate, the instrument may be charged under sub-clause 1. In Kelly v. Collector of Imposts[9], a father transferred to his son a piece of land the admitted value of which was £9,000. The consideration for the transfer was the payment of about £5,500 to the father and a verbal promise to pay £400 to a brother of the transferee and to maintain an aged father for his life. The transaction was held to be bona fide; there was a pecuniary consideration, but the pecuniary consideration was not adequate. It was, on this ground, held by the Full Court of Victoria that the instrument of transfer was dutiable under sub-clause 1 of div. IX. In In re Officer's Transfer[10] the Full Court of Victoria dealt with a case where land of the value of £15,284 was transferred in consideration of £14,000 and of natural love and affection. On the admitted facts the pecuniary consideration was not adequate, and it was held upon this ground that the instrument of transfer was dutiable under div. IX. and not under div. VI. In each case duty was charged upon the full value of the property transferred.

It has been said, on the authority of Davidson v. Chirnside[11], that the question whether an instrument is dutiable under div. IX. must be determined by an examination of the instrument itself and not upon extrinsic evidence. This rule was enunciated in the case cited in relation to the question whether the provisions of an instrument were such as to bring it within the word "settlement" in the schedule. It is obvious that, in order to determine whether a consideration is bona fide or adequate, it is necessary to go beyond the terms of the instrument, and that, for this purpose, extrinsic evidence must be admitted.

In the present case it is stated as a fact in the case that the value of the land transferred was, at the date of the agreement to transfer, £89,515, and at the date of transfer, £101,718. The consideration for the transfer was a pecuniary consideration, namely, £50,000. According to the decisions in Kelly's Case[12] and Officer's Case[13], and according to the plain meaning of the words of the sub-clause, the pecuniary consideration was not in this case an adequate consideration. It has nevertheless been held in the Supreme Court that the transfer is not dutiable as a deed of gift under div. IX. If div. IX., however, applies to all transfers of property if they are made for a pecuniary consideration which is not adequate, then I am unable to concur in the view that the decision of the Supreme Court is correct.

There is really no meaning in describing as a gift the transfer of property for consideration unless the consideration is merely illusory. Accordingly, the words of div. IX., as they have hitherto been construed, contain an inherent contradiction in terms. The question arises whether it is not possible to adopt an interpretation of the words which does not involve self-contradiction and which will produce a result which is more reasonable than that brought about in, for example, Officer's Case[14]. In that case a deficiency in price as compared with value (and not a very great deficiency) exposed the parties to a bona-fide transfer of property to duty upon the full value of the property at a much higher rate than would have been applicable if the transaction had been treated either as a transfer, or partly as a transfer and partly as a gift. In my opinion it is possible to interpret the words in such a manner as to avoid these results in the case of deeds of gift.

The difficulty arises from the introduction of words relating to gifts into a provision which was originally drafted for the purpose of dealing with settlements and settlements only. Div. IX. first appeared in the Stamps Act 1892. It was evidently based upon the English Stamp Duties Act 1870 (33 & 34 Vict. c. 97), and taken from the New-Zealand Stamp Act 1882, Third Schedule. By the New-Zealand statute duty was imposed under the head of "Settlement, Deed of" upon "(1) any instrument whether voluntary or upon any good or valuable consideration other than a bona-fide pecuniary consideration whereby any property is settled or agreed to be settled in any manner whatsoever." Such a provision is quite intelligible in a scheme for the taxation of settlements. In Victoria, however, the words from the New-Zealand Act, which were based upon words in the English Act of 1870, were applied also to gifts, and they at once became very difficult to interpret because they are quite inapt to describe gifts. The reference to gifts was inserted in the heading, and words were added to the first sub-clause so as to make it apply to instruments whereby property "is given or agreed to be given in any manner whatsoever." It was suggested in the case of Peers v. Collector of Imposts[15], in the judgment of the Full Court of Victoria, that the words "a bona-fide adequate consideration" applied specially to settlements and agreements for settlements, as they appeared to be "redundant to gifts and agreements for gifts." Instead of the words "redundant to" I should have preferred to use the words "inconsistent with the nature of" or some similar words. When the case came before the High Court this suggestion was not developed, although there it was apparently agreed that in the case of any gift "the donor must not receive consideration from the donee"[16]. In my opinion it will never be possible to obtain a coherent meaning for the words of div. IX. as far as deeds of gift are concerned so long as they are interpreted as applicable to all transfers of property where there is consideration, but not pecuniary consideration, or where there is pecuniary consideration but not adequate consideration, or where there is adequate pecuniary consideration but it is not bona fide.

In my opinion the difficulty has arisen by failure to give full effect to the words "given or agreed to be given." Reference has been made to the importance of these words in the Castlemaine Case[17] and Atkinson's Case[18], but no real effect has been given to them in decisions of the courts. In my opinion it is possible to get rid of the difficulties and inconsistencies which I have mentioned by regarding these words as the most important part of the sub-clause.

Div. VI. of the schedule deals with conveyance or transfer on sale of any real property, and div. IX. deals with deeds of settlement and deeds of gift of any property whether real or personal. The duty in the case of div. VI. is imposed upon "the amount or value of the consideration for the sale." In div. IX. the duty is imposed upon "the value of the property" at a percentage rate. What is the property the value of which determines the amount of duty? Surely the property settled or given. It is only in so far as property is settled or given by an instrument that duty under div. IX. is imposed. An illustration will, I think, help to make this clear. If, by the same instrument, certain chattels were sold for a stated price and certain other chattels were declared to be given by a donor to a donee, surely the position would be that duty under div. IX. would be charged upon the value of the latter chattels only. No duty would be chargeable upon the value of the chattels sold, because there is no provision in the Act which imposes duty in the case of sale of chattels. In such a case it would probably be conceded that duty under div. IX. was chargeable on the instrument only to the extent to which the instrument operated by way of gift. If this be so, then it must be admitted that duty is chargeable on any instrument as a deed of gift only to the extent to which property is given by the instrument.

Hitherto the courts have proceeded upon the basis of an assumption that a document may be a transfer (div. VI.) or a deed of gift (div. IX.), but that it cannot be both. Surely the contrary is the case. For example, in the Queensland Gift Duty Act of 1926, sec. 2, it is provided that if a disposition of property is made for a consideration in money or money's worth, which consideration is determined by the commissioner or on appeal to be inadequate, the disposition shall be deemed to be a gift to the extent of that inadequacy, and gift duty is assessable accordingly. This provision affords an illustration of the proposition that there is no inherent difficulty in determining in any particular case the extent to which a single transaction dealing with a single property is a transaction by way of gift and the extent to which it is a dealing for consideration.

In my opinion div. IX. can be interpreted, and the court should now interpret it, as meaning that, in so far as property is given (that is, by way of benefaction—a term which is not identical with "benevolence") by an instrument, that instrument is dutiable under div. IX., but that, in so far as property is not so given by the instrument, the instrument is not dutiable under that division. If the property with which the instrument deals is real property it may be that the instrument is dutiable under both div. VI. and under div. IX. If, for example, a father, being minded to benefit his son, transfers to him for £4,000 land admittedly worth £10,000, then the transaction takes the form of a sale for £4,000. The transaction is a transaction of sale because it is a transfer of property for a money price, though for a very low and very inadequate price. The instrument is accordingly dutiable under div. VI. on the amount of the pecuniary consideration for the sale, that is, upon £4,000. But there is also an element of benefaction in the transaction which the instrument effectuates. Property to the value of £6,000 has been given, and not sold, to the son. Div. IX. imposes a duty—a very much higher duty than in the case of a sale—upon the instrument in relation to the element of gift which it records, that is, upon £6,000, which is the value of the property and the whole value of all the property which is given by the instrument.

There is no actual decision that this method of interpreting div. IX. is wrong, though many cases have been decided upon an unargued and unexamined assumption that such an interpretation is not open. The method which I now suggest of applying the provisions of div. IX. is more intelligible and is fairer than that which has hitherto been adopted. It is more intelligible because it removes the contradiction involved in treating as a gift, and only as a gift, a transaction in which value is given for the property transferred—a transaction which, therefore, is obviously not a gift. But it also provides a rational explanation for exacting duty as upon a gift in some cases notwithstanding the presence of consideration. That explanation is provided by the fact that, though there may be consideration for a transfer, there may also be an element of gift in the transfer. It limits the application of div. IX. to gifts of property, just so far as they are gifts of property, and imposes duty accordingly. The view suggested is fairer than that hitherto adopted because it avoids the result that a small inadequacy of consideration in a bona-fide transaction exposes a party to a very heavy rate of duty upon the whole value of the property without any satisfactory reason.

It is, in my opinion, a mistake to regard div. VI. as applying only to cases where adequate value is given for property and div. IX. as applying to all cases where the value given is not adequate. Not all persons are moved solely by the impulses of the economic man, who sells only at a maximum price and buys only at a minimum price. This fact was recognized by Cussen J. in Davies v. Collector of Imposts[19], where it was held, as I think rightly, that there could be a sale without any preliminary higgling or bargaining. (The contrary view had previously been taken by a court of which Cussen J. was a member in Kelly v. Collector of Imposts[20]—see end of judgment.) Whenever an instrument gives effect to a transaction which is a sale in fact, even though it is shown that the seller might, if he had tried, have extracted a higher price from some buyer, div. VI., in my opinion, applies, but if the transaction is shown to be in fact a gift, and simply a gift, then div. IX. and not div. VI. applies. If the transaction is only in part a gift, then div. IX. applies to the relevant instrument by imposing a duty upon the value of the property which is given, and div. VI. applies by imposing a distinct duty at a lower rate upon the amount or value of the consideration for any real property which is sold or agreed to be sold by the same instrument.

As at present advised I can see only one substantial objection to the view which I have suggested. That objection is that, even upon that view, it would be necessary to impose duty under div. IX. upon the full value of any property transferred for a good or valuable consideration which was not pecuniary, even though that consideration were admittedly a fully adequate consideration, because such a transaction would be a "gift" within the meaning of sub-clause 1. I agree that this would be the result upon the words of sub-clause 1 if such a case could ever be found. The objection is, I think, answered by the fact that no such case could ever be found, because it ought to be held in such a case that no property was given or agreed to be given by the instrument. If, for example, land worth £5,000 were transferred in exchange for sheep worth £5,000, there would be no element whatever of gift in the transaction, and no duty should be imposed under div. IX. Duty should be paid under div. VI., not upon the "amount" of consideration, because there would be no pecuniary amount of consideration, but upon the "value of the consideration" in accordance with the explicit terms of div. VI.

I now proceed to apply these principles to the present case. The instrument in question is a transfer, under the Transfer of Land Act, of land in consideration of the sum of £50,000. In my opinion it is quite immaterial that the vendor agreed (as he did) to accept the consideration in the form of shares. His subsequent dealings with those shares are also, I think, quite immaterial. If a man sells land for £100 the dutiability of the instrument of transfer cannot depend upon what he may do with the £100 after he receives it. The transfer is a transfer upon sale. The sale was a real sale, that is, the title to the property was intended to be transferred, and actually was transferred, to the purchasing company. The instrument is accordingly dutiable under div. VI. upon "the amount of the consideration," namely, upon £50,000. The transfer was made in pursuance of a prior agreement for a sale. At the time when the transfer was executed the value of the land was £101,718. The consideration for the sale expressed in the agreement, and not the value of the property at the time of transfer, is the consideration which is to be regarded in assessing stamp duty under a provision such as div. VI. (The Crown v. Bullfinch Pty. (W.A.) Ltd.[21])—and see J.C. Williamson's Tivoli Vaudeville Pty. Ltd. v. Federal Commissioner of Taxation[22].

As the value of the land was over £89,000 and the consideration was only £50,000 it is clear that the pecuniary consideration was not adequate. As I have already said, in my opinion this fact is not in itself sufficient to bring the instrument within div. IX. But the facts stated in the case show that the owner of the property was engaged in making an arrangement to benefit his sons. There is clear evidence of an intention to make a benefaction to the extent of the difference between the expressed consideration of £50,000 and the real value of the property. The case is not simply a case of a sale at a low price. Such a transaction would fall under div. VI. and not under div. IX., not because the consideration was deemed to be adequate, though inadequate in fact, but because the transaction was really a sale and because no element of benefaction was involved. But in the present case the element of benefaction is clearly present. The transaction includes, in the transfer in question, a deliberate disposition of property for less than its full value with the intention of conferring a benefit on the sons of the transferor. The transferor is a donor—See Stamps Act 1928, sec. 78—as well as a transferor. The property was not merely transferred; it was to the extent of £39,515 given to the company for the purpose of making a gift. To the extent of £39,515, therefore, the instrument should be charged with duty under div. IX.

Accordingly, in my opinion, the appeal of the Collector of Imposts should be allowed and the questions asked in the case should be answered by stating that the instrument of transfer is chargeable with duty and that the amount of duty with which it is chargeable is, in accordance with the rates fixed by Act No. 4430, £500 under div. VI. of the Third Schedule of the Act (10s. per £50 of the consideration of £50,000), and £1,185 9s. under div. IX. of the Third Schedule (£3 per cent where the value of the property given, viz., £39,515, exceeds £25,000 and does not exceed £50,000).

Starke J.

Appeal from a decision of the Supreme Court of Victoria upon a case stated by the Collector of Imposts pursuant to sec. 33 of the Stamps Act 1928 of the State of Victoria.

Edward Campbell owned certain properties, shares and investments. About the year 1931, Campbell was minded to make provision for his family and also, I should think, to avoid the burden of death duties; both perfectly legitimate objects. The steps he took to achieve these objects were as follows:—

The collector on these facts stated for the opinion of the court the question whether the instrument of transfer of the properties from the executors and trustees of Campbell to the company "in consideration of the sum of £50,000" was chargeable with any and what amount of duty under the Stamps Act 1928.

The contest between the parties to this appeal is whether the transfer should be charged with stamp duty under the Act as a conveyance or transfer on sale of any real property (Third Schedule, item VI.) or as a settlement or gift, deed of (Third Schedule, item IX.) under which heading is included "Any instrument other than a will or codicil whether voluntary or upon any good or valuable consideration other than a bona-fide adequate pecuniary consideration whereby any property is settled or agreed to be settled in any manner whatsoever, or is given or agreed to be given in any manner whatsoever, such instrument not being made before and in consideration of marriage."

The substance of the various transactions which have been mentioned is that Campbell transformed or changed his properties and investments into shares of the company and then handed over shares to trustees for his family for a nominal sum which had no relation to the value of the shares and which was not paid by them but remained a debt at the time of his death. In short, he made provision for his family without receiving any adequate pecuniary consideration therefor. But he achieved his end by several steps. The first was by a sale to the company of his properties, shares and investments and the completion of that sale, so far as it included real properties, by means of an instrument of transfer. The transaction was not a sham; Campbell intended and made a sale. The instrument of transfer effectuated and completed that sale. According to its legal operation and effect the instrument was a transfer on sale and prima facie so dutiable.

But the collector contends that the instrument of transfer is nevertheless dutiable as a gift (which carries a higher duty) because of the explicit provision of the schedule already mentioned. According to this contention, any instrument (with certain exceptions which are inapplicable to the present case) upon good and valuable consideration other than a bona-fide adequate pecuniary consideration whereby property is given or agreed to be given in any manner whatsoever falls within the description "Gift, Deed of" in the Third Schedule, item IX. The case states that the true value of the properties transferred was on the date of the agreement of sale £89,515 and on the date of the instrument of transfer £101,718.

It is not easy to suggest any limitation upon the words of the schedule. But limitation it must have, otherwise the disposition of property in the ordinary course of business, other than for an adequate pecuniary consideration, would fall within the terms of the schedule. Parties who genuinely negotiated the sale of property would fall within the description if it appeared that the consideration was not a pecuniary one or was not in fact adequate. That view is opposed, I think, to the opinion given by this court in Collector of Imposts (Vict.) v. Peers[23], and clearly to the decision of Hood J. in Atkinson v. Collector of Imposts[24], which was approved in Peers' Case[25]. It was decided in Atkinson's Case[26] that the transfer there in question was not an instrument of gift, though the consideration was not a pecuniary one. It bore no resemblance, said Hood J., to what is ordinarily known as a deed of gift.

However, the words of the Act are controlling and if explicit they must prevail. The schedule to the Act, though, is not very explicit. It uses the words "gift" and "given" or "agreed to be given," which point to a transference of property from one person to another voluntarily and without any valuable consideration. But the words in the schedule widen the legal conception of a gift to the transference of property for a consideration that is not bona fide, adequate and pecuniary. Still, the dominant words of the schedule suggest an instrument whereby some benefaction is intended and conferred. "The real meaning of the schedule is," as Hood J. said in Atkinson's Case[27], "that a deed of gift shall not escape taxation merely because there is some good or valuable consideration therefor." "In some cases the absence of a good bona-fide adequate pecuniary consideration may be evidence that the transaction is in reality a gift." It cannot be pretended that this conclusion is satisfactory, for it affords no clear rule and requires the consideration of the facts of each particular case. Thus the third step taken by Campbell in the present case, the handing over of 75,000 shares to the trustees under the deeds already mentioned for a nominal sum of five shillings per share, may perhaps constitute a gift for the purposes of the schedule and be dutiable. But that is a matter for further consideration if it ever arises.

In my opinion, for reasons already appearing, no gift or benefaction was intended or conferred by the instrument of transfer from Campbell to the company: it completed a genuine sale of real property and was in fact and in law a transfer on sale and is so dutiable.

The decision of Gavan Duffy J. in the Supreme Court was right and should be affirmed.

Dixon J.

The Victorian Stamps Act 1928, Third Schedule, par. IX., gives an artificial definition of the expression "Deed of Settlement or Gift" and imposes a high stamp duty upon instruments falling within it. The definition was adopted nearly fifty years ago and many attempts have been made to explain its meaning and effect. But to apply it remains often difficult. The reason for this is plain enough. The definition seeks to enlarge the denotation of the word "gift" by a partial denial of an attribute which to many seems indispensable to the conception. The definition includes gifts notwithstanding that they are not voluntary but are made upon a good or valuable consideration unless it be a bona-fide adequate pecuniary consideration. Blackstone distinguishes gifts from grants by the absence or presence of consideration. "Gifts are always gratuitous, grants are upon some consideration or equivalent" (Blackstone's Commentaries, vol. 2, p. 440). But the essential idea of gift is the transfer of property by way of benefaction, and benefaction may be the intended effect of an assurance of property, notwithstanding that the transferor receives some benefit or recompense. Revenue legislation, for that reason, sometimes requires "that property shall be treated as taken under a gift, although such gift may have been made under a contract by which the donor takes the benefit" (Attorney-General v. Johnson[28]). No doubt to allow any transaction for value to be placed under the category of gift is to abandon a definite discrimen and to make the classification depend upon matters of degree and perhaps to compel an inquiry into purpose. But the difficulty is not a new one. Roman law faced it in distinguishing between the institution of donatio and those of emptio venditio and locatio conductio. In the latter it was necessary that the price should be real. "This rule was intended to prevent evasion of rules on donatio by making the transaction look like a sale. It was no sale if the price was named, but there was no intention to exact it; it was donatio governed by the rules of donatio. There was some difficulty where the price was absurdly low. Where the price was derisory, nummo uno or the like, there was, no doubt, no sale but a masked donatio, but this is not stated for sale, though it is for locatio. But where the price was merely low here, whatever the object, it was sale, if the price was to be exacted unless the parties were husband and wife, when it was more severely scrutinized. ... There was no rule that the price must be adequate" (Buckland, Text Book of Roman Law, 1st ed. (1921), p. 483).

The present appeal seems to me to be based upon a contention on the part of the Collector of Imposts to the effect that the Victorian Stamps Act does lay down a rule that, for a transaction to be dutiable as a sale and not as a gift, the price must be adequate. In this he is, in my opinion, mistaken. The only rule it lays down as to the adequacy of consideration is the contrary. It says that if the consideration for the transaction is pecuniary, adequate and bona fide, then the instrument which embodied it cannot be dutiable as a gift. I need not set out the statutory definition. It is the first clause of it that contains the material part and what it does may be stated thus. It puts on one side wills and codicils and instruments made before and in consideration of marriage. They are excluded. Then, as I understand the paragraph and the construction which has been placed upon it, a test or criterion of its application is expressed by the words "any instrument ... whereby any property is settled or agreed to be settled ... or is given or agreed to be given." That is to say, the transaction must come within the general conception of "settlement or gift," whether executed or executory; otherwise the instrument is not dutiable under that heading. But the conception of gift or settlement intended is a wide one. The words "in any manner whatsoever" are added to show that no unexpressed conditions are implied. A parenthesis is introduced in order to exclude mere absence of consideration as a criterion:—"any instrument whether voluntary or upon any good or valuable consideration other than a bona-fide adequate pecuniary consideration." I understand this parenthesis as meaning that the existence of consideration is consistent with the transaction being a gift; that it may be a gift notwithstanding that the instrument is made upon a good or valuable consideration, provided that it is not a bona-fide adequate pecuniary consideration. But I do not understand the parenthesis as meaning that the transaction must be a gift unless the instrument is made upon a bona-fide pecuniary consideration.

The provision was construed in the way I have stated in Collector of Imposts (Vict.) v. Peers[29]. "In our opinion, the effect of clause IX. (1) is to enlarge the meaning of the phrase deed of gift so as to make it cover transactions which it would not ordinarily include. In order to render an instrument taxable under it, it is necessary to establish that the instrument does not depart from the nature of a deed of settlement or a deed of gift further than is permitted by the words of the sub-clause" (per Knox C.J., Gavan Duffy and Starke JJ.[30]). Those learned judges quote from the judgment of Hood J. in Atkinson v. Collector of Imposts[31] a passage which includes the following:—"The real meaning of the schedule is that a deed of gift shall not escape taxation merely because there is some good or valuable consideration therefor. But the instrument, to be taxable, must be one by which property is given, though it is not easy to reconcile the idea of a gift with there being good or valuable consideration." Then their Honours say: "We agree to this statement, and we think that the only effect of sub-clause 1, so far as deeds of gift are concerned, is to include in that category instruments which might otherwise have been excluded from it because of the existence of some consideration"[32]. The instrument in Peers' Case[33] was a transfer made by a husband to a wife after marriage, in pursuance of an oral agreement between them entered into on the treaty for the marriage that he would transfer the land to her on the solemnization of the marriage. Decisions of the Supreme Court had attached to the words "gift" or "given" a meaning by which they implied "benevolence or something akin to it." Acting upon these decisions the Supreme Court had held that the transfer was not dutiable as a deed of gift "since there was nothing in the nature of benevolence, either in the original oral agreement or in the transfer made in pursuance of it"[34]. The High Court reversed this decision. Knox C.J., Gavan Duffy and Starke JJ. referred to the expression found in earlier decisions of the Supreme Court, "the gift must be an act of benevolence or something akin to it," and said: "The phrase ... is not very precise, but if it means more than this—that the donor must not receive consideration from the donee—we cannot accept it. There may be a good gift although no feeling of benevolence exists between donor and donee, a gift is no less a gift because by its means the donor intends to compass the moral or physical destruction of the donee"[35].

This statement plainly excludes, as essential attributes of gift, kindness or goodwill towards the donee as the motive. But it goes no further. Indeed, the reference to the donor's not receiving consideration from the donee appears to concede that there can be no gift where recompense or consideration from the transferee forms the basis or foundation of the transaction. The ground of their decision is expressed by their Honours in a sentence. They refer to the view of the Supreme Court as to the absence from the transaction of anything in the nature of benevolence and say: "This is a somewhat harsh criticism on the transaction, but it is enough to say that, had there been no consideration of marriage, the instrument would undoubtedly have been a deed of gift in the ordinary acceptance of that term, and as it is not executed before the marriage the effect of sub-clause 1 is to make it taxable as a deed of gift notwithstanding the presence of such consideration"[36]. The actual decision thus expressed does not touch the present case, but the observations I have quoted appear to me to govern it. For the transfer now under consideration carries into effect a business transaction, one of a not unfamiliar kind, and it has nothing about it to suggest a gift or settlement.

An owner of land and investments decided to form a company, transfer to it the land and investments in exchange for the issued share capital of the company and to parcel out the shares among his sons. He registered a company with articles of association giving him control of its management. He entered into an agreement with the company for the sale to it of the land and investments for the sum of £80,000. The agreement apportioned the purchase money among the various items of property and fixed £50,000 as the consideration for the land.

In satisfaction of the total purchase money the company issued and allotted to him 80,000 shares of £1 each. At the same time he executed documents by which trusts were declared of nominal sums of money in favour of his sons and other members of his family, and the trustees of the respective trusts agreed to buy the £1 shares in the company from him at a price of five shillings each. All this was done on the same day as the registration of the company.

The object of the whole transaction is said to have been to confer a benefit on the sons. The documents constituting the trustees and parcelling out the shares to them as on a sale of five shillings only, may or may not have formed a cloak for a transaction by way of bounty. If it amounted to a settlement or gift perhaps some of the instruments carrying it out may have been liable to stamp duty as a deed or deeds of settlement or gift. But this seems quite irrelevant to the question whether the transfer of the land to the company is a deed of settlement or gift. That document transfers the land to the company and expresses the consideration as £50,000, that is to say, it carries out the agreement. The documents constituting the trusts and purporting to sell the parcels of shares to the trustees are concerned with the shares. The question whether a settlement or gift of the shares was effected in favour of the sons does not seem to me to affect the question whether a gift of the land was made to the company within the meaning of the definition. One object of forming a company may possibly have been to obtain shares so that they could be distributed for the benefit of the family. But if so this makes it more likely, not less likely, that the company would be required to issue shares to the value of the assets it receives and that the assets would not be "given" to the company.

The real ground upon which the collector claims that the transfer is said to amount to a gift is that the consideration is stated at £50,000 whereas, according to the statement of the collector, the land transferred was worth £89,515 at the date of the agreement and £101,718 at the date of the transfer nearly six years later. The collector considers accordingly, that there is not an adequate pecuniary consideration for the transfer, and for that reason says that it falls within par. IX. (1) of the schedule defining deed of settlement or gift. For the reasons given in the beginning, I am of opinion that the ground is insufficient to support the conclusion. Neither the transfer nor the transaction to which it gives effect bears any resemblance to a gift or to a settlement.

The instrument is dutiable as a transfer on sale and not as a deed of settlement or gift.

A further question has arisen. Is the amount of stamp duty to be calculated on the money sum of £50,000 expressed as the consideration of the transfer or on some greater amount representing the value of the shares? As an alternative to his main contention the collector puts forward the view that the transfer should be regarded as made in consideration of the 50,000 shares and not of the money sum expressed therein. The case stated does not appear to be pointed to this question and I do not think that it contains facts which really raise it. For it all depends upon the suggestion that the true value of the shares as marketable securities substantially exceeded their face value. There is nothing to support this suggestion except the collector's statement as to the value of the land. The date at which it would be necessary to inquire into the value of the shares is September 1931. Even assuming that we can make inferences, it would indeed be a rash conclusion that because the land was, according to the opinion of the collector, of greater value than stated, therefore at that date the value of the shares of the company as marketable securities were substantially above par.

In my opinion the decision of Gavan Duffy J. is right and the appeal should be dismissed.

Evatt J.

I have read the judgment of my brother Dixon and agree with it.

McTiernan J.

In my opinion the instrument of transfer is not dutiable as a deed of settlement or gift within the meaning of part IX. of the Third Schedule of the Stamps Act 1928 of Victoria.

The schedule applies to any voluntary instrument (not made before or in consideration of marriage) whereby property is settled or agreed to be settled or is given or agreed to be given and to any such instrument not voluntary but made upon any good or valuable consideration other than a bona-fide adequate pecuniary consideration. Two classes of instruments are embraced by these provisions: first, instruments of settlement or gift properly so called and instruments which though made for consideration yet are not made for a bona-fide adequate consideration. But to attract the schedule it is not enough that an instrument should be made upon a consideration other than a bona-fide adequate pecuniary consideration. The instrument must still be one whereby property is settled or agreed to be settled or is given or agreed to be given. In the case of Collector of Imposts (Vict.) v. Peers[37] their Honours quoted with approval the following explanation of the schedule which Hood J. gave in Atkinson v. Collector of Imposts[38]: "The real meaning of the schedule is that a deed of gift shall not escape taxation merely because there is some good or valuable consideration therefor. But the instrument, to be taxable, must be one by which property is given, though it is not easy to reconcile the idea of a gift with there being good or valuable consideration." Whatever may be said of the result of the whole arrangement in the present case, it cannot be truly said, in my opinion, that the instrument of transfer, made as it was in pursuance of the contract of sale of 17th September 1931, is one whereby the transferor settled or agreed to settle property on the transferee or gave or agreed to give property to the transferee.

The case stated does not contain any material which would, in my opinion, enable the court to say that the value of the shares—if that was the true consideration for the transfer of the land—exceeded the sum of £50,000, which is the amount therein expressed.

In my opinion the appeal should be dismissed.

Appeal dismissed with costs.

Solicitors for the appellant, Frank G. Menzies, Crown Solicitor for Victoria.

Solicitors for the respondent, Cook & McCallum.