Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW) [1958] HCA 22

'Dised Appl a . hief Comr of

Blige

Appl Chics Comr of

State Revenue

an tone. vBckSam® Recrons Bg HRN SRRAE Gorene Elke! bes SWER 567 ; 392 HIGH COURT 1957-1958, [HIGH COURT OF AUSTRALIA.] DAVIS INVESTMENTS PROPRIETARY ka HIMEDHDE aA: ojo. eee ema ot pe APPELLANT, AND COMMISSIONER OF STAMP DUTIES (N.S.W.) . RESPONDENT, RESPONDENT,

H.C. oF A. 1957-1958.

== SypNey,

1957, Dec. 3-5; 1958, May 9.

Dixon C.J.,

McTiernan Webb. Kitto and Taylor JJ.

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Company—Sole shareholder in another company—Other company possessed of assels

consisting of valuable shares—Agreement to transfer shares to sole shareholder at par value—Par value substantially less than real value—Consideration moving transfer—Whether transaction one of sale at a price or satisfaction of rights of shareholder—Stamp Duties Act 1920-1949 (N.S.W.), 8. 41 (1), 66 (3a).

The appellant company owned all the shares in another company which had among its assets three parcels of shares, fifty-seven shares in all, in other com- panies. The appellant company made an agreement with the other company to purchase those shares for a total price of £57: they were all fully paid up £1 shares but in fact of a total value of £54,382. The question upon the appeal was under which sub-section of s. 66 of the Stamp Duties Act 1920-1949 (N.S.W.) the agreement fell. The answer depended on whether the transfers were made without consideration (sub-s. 3), or, if there was a bona fide considera- tion in money or money's worth, whether they were made upon a consideration which was (sub-s. 34) or was not (sub-s. 38) less than the unencumbered valuo of the shares.

Held, by Dizon C.J., McTiernan and Taylor JJ., Webb and Kitto JJ. dis- senting, that although the relationship of the companies doubtless explained the transaction, it was not one for which the company law provides for the effectuation of the rights and duties subsisting between shareholder and company but a transaction of purchase and sale; so that although the value of the shares the appellant held in the other company dropped correspondingly the transaction should be considered as a transfer for a price and the considera- tion must be confined to the price expressed in the agreement : accordingly the agreement fell under s. 66 (3a).