Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue

• Jurisdiction: Australia Federal only
• Judge: French CJ.,Hayne,Heydon,Crennan,Kiefel JJ
• Judgment Date: 30 September 2009
• Neutral Citation: 2009-0930 HCA B,[2009] HCA 41
• Court: High Court
• Docket Number: D7/2009
• Date: 30 September 2009

[2009] HCA 41

HIGH COURT OF AUSTRALIA

French CJ Hayne, Heydon, Crennan And Kiefel JJ

D7/2009

Alcan (Nt) Alumina Pty Ltd

Appellant

and

Commissioner of Territory Revenue

Respondent

Representation:

D J S Jackson QC with P G Bickford for the appellant (instructed by Clayton Utz Lawyers)

A H Slater QC with T W Anderson for the respondent (instructed by Solicitor for the Northern Territory)

Interpretation Act (NT), ss 62A, 62B.

Taxation (Administration) Act (NT), Pt III Div 8A, ss 4(1), 56N, 56R.

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue

Taxes and duties — Stamp duty — Transactions resulted in acquisition of all shares in corporation which held Crown leases containing options to renew — Section 56N(2)(b) of Taxation (Administration) Act (NT) (‘Act’) requires valuation for assessment of duty of ‘all land’ to which corporation is entitled at time of acquisition — Section 4(1) of Act provides ‘land’ includes ‘a lease of land’ but that ‘“lease” … does not include … an option to renew a lease’ — Whether ‘land’ in s 56N(2)(b) includes option to renew lease.

Leases — Definition — Whether lease includes option to renew.

Statutes — Interpretation — Definitions — Whether definition contained in general definition provision displaced by contrary intention.

Words and phrases — ‘land’, ‘lease’.

French CJ.

Introduction

1 In November 2005, the Commissioner of Territory Revenue (‘the Commissioner’) assessed for stamp duty two transactions by which Alcan (NT) Alumina Pty Ltd (‘Alcan’) acquired all of the shares in Gove Aluminium Ltd (‘GAL’). The assessment was based in part upon the value of a Special Mineral Lease and Special Purpose Leases (‘the Leases’) held by GAL and the value of its goodwill. In making the assessment the Commissioner relied upon s 56N of the Taxation (Administration) Act (NT) (‘the Act’) 1, which renders the acquisition of shares in a corporation dutiable by reference to the value of its landholdings where that value exceeds 60% of the value of all of its property. Section 56R provides for the dutiable value of the shares acquired to be assessed by reference to the same proportion of the unencumbered value of the corporation's land as the proportion of the corporation's shares acquired. The Court of Appeal of the Northern Territory held, contrary to the conclusion of the primary judge 2, that the value of the Leases should be assessed by taking into account options to renew them 3. The definition of ‘lease’ in s 4(1) of the Act expressly excludes ‘an option to renew a lease’. The factual and procedural history and the provisions of the relevant legislation are set out in the joint judgment 4. I agree, for the reasons expressed in that judgment and the reasons that follow, that the options to renew the Leases should not have been taken into account by the Commissioner. I agree with the proposed orders allowing the appeal.

The constructional questions

2 The issue which is determinative of the appeal is whether the assessment of the dutiable value of the Leases requires that the Commissioner take into account options to renew contained in them.

3 The two constructional questions raised are:

The resolution of the first question involves determination of the question whether the definitions of either or both ‘land’ and ‘lease’ in s 4(1) are displaced in ss 56N and 56R by a contrary intention. The resolution of the second question involves the application, in those sections, of the exclusion of renewal options from the definition of ‘lease’.

• 1. Whether, properly construed, ss 56N and 56R in their application to leases as a species of land pick up the definition of ‘lease’ in s 4(1).

• 2. Whether, properly construed, the exclusion of ‘an option to renew a lease’ in the definition of ‘lease’ in s 4(1) precludes consideration of such an option in assessing the value of a lease as land for the purposes of s 56N(2) and s 56R(2).

Whether the statutory definitions of ‘land’ and ‘lease’ are displaced

4 The starting point in consideration of the first question is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaudron J in Corporate Affairs Commission (NSW) v Yuill5 as:

‘dictated by elementary considerations of fairness, for, after all, those who are subject to the law's commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage.’

In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy 6.

5 The provisions of the Interpretation Act (NT) (‘the NT Interpretation Act’) as they stood at the time of the relevant transactions have to be taken into account. Section 62A of the NT Interpretation Act requires a construction promoting the purpose or object underlying the statute to be preferred to a construction that does not do so 7. Section 62B authorises recourse to extrinsic materials in the interpretation of statutes 8. The NT Interpretation Act has no

equivalent of s 15AB(3) of the Acts Interpretation Act 1901 (Cth) (‘the Commonwealth Interpretation Act’), which requires regard to be had to ‘the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act’. Despite the lack of such a provision in the NT Interpretation Act, the established common law approach, which begins with the ordinary grammatical meaning of the text having regard to context and purpose, applies to like effect. The Court of Appeal in this case construed the Act by reference to an imputed legislative intention reflecting a revenue-maximising approach to taxing statutes 9 which paid insufficient regard to the clear words of the Act.

6 In the present case the displacement of the definitions in s 4(1) of the Act is expressly conditioned upon the appearance of a ‘contrary intention’. This kind of provision, like that in the present s 18 of the NT Interpretation Act 10, has been described as ‘a standard device to spare the drafter the embarrassment of having overlooked a differential usage somewhere in his [or her] text’ 11. The ninth edition of Craies on Legislation calls it 12:

‘a general gloss of a kind that would have to be inferred in any event, where a provision elsewhere in the legislation to which the definition purported to apply showed by express provision or necessary implication that the definition was not intended to apply there.’

The exclusion of a particular definition where a ‘contrary intention’ appears would be implied in any event 13. A contrary intention may appear from context or legislative purpose. But, as Pearce and Geddes observe 14:

‘A good drafter will indicate “the contrary intention” clearly.’

7 If the definition of ‘land’ in s 4(1) was displaced in ss 56N and 56R, then the definition in s 19 of the NT Interpretation Act as it stood at the relevant time would apply, namely:

‘“land” includes all messuages, tenements and hereditaments, corporeal and incorporeal, of any tenure or description and whatever may be the estate or interest therein’.

That definition dates back to Lord Brougham's Act 15 and was included in the Interpretation Act 1889 (Imp) 16. It found its way into colonial interpretation statutes in Australia 17, and into s 22(c) (now s 22(1)(c)) of the Commonwealth Interpretation Act. It includes ‘freehold and leasehold, corporeal and incorporeal interests of every description.’ 18 It is to be read with the definition of ‘estate’ in s 19 which ‘includes any estate or interest, charge, right, title, claim, demand, lien or encumbrance at law or in equity’. It would no doubt pick up, within the meaning of ‘leasehold interests’, options to renew incorporated in the grant of such interests.

8 At common law an option to renew a lease is ‘an incident of the lease’ 19. It is a present interest running with the land and is ‘intertwined with the lease itself’, which, it has been suggested, is probably why it did not attract the rule against perpetuities at common law 20. A lease obtained by the exercise of an

option to renew is a new lease and the option is ‘merely an irrevocable offer, but beyond that there is no contract for a further term, unless and until the offer is duly accepted, by exercising the option.’ 21 That characterisation was relied upon by Hill in commentary on the definition of ‘lease’ in s 76 of the Stamp Duties Act 1920 (NSW) 22:

‘Where a lease for a term grants to the lessee the option for a further term, the term of the lease does not include the term of the renewal and hence duty is charged without reference to the rent payable during the renewal. See Hand v Hall (1877) 2 Ex D 355. The option for renewal is not itself stampable as a lease within the definition since until exercise it does not amount to an agreement for lease, nor does it confer upon the tenant the right to use property. It is considered that an option for renewal of a lease is subsidiary to the main object of the instrument and thus covered by the stamp on the lease itself … In practice such options are not separately stampable.’

And in the seventh edition of Sergeant and Sims on Stamp Duties and Capital Duty, published in 1977, the following observation was made 23:

‘A lease for a definite term of x years, with an option to the tenant to renew for a further y years, is chargeable as a lease for x years not as a lease for x + y years; see Hand v Hall ...