47 NSWLR 382 Reported Decision : 166 ALR 466 32 ACSR 604 New South Wales Supreme Court CITATION : CCSD v Paliflex [1999] NSWSC 889 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2881/98 HEARING DATE(S) : 19 and 27 August 1999 JUDGMENT DATE : 2 September 1999 PARTIES : Chief Commissioner of Stamp Duties (P) Paliflex Pty Ltd (D) JUDGMENT OF : Austin J M Sexton SC with I Mescher (P) COUNSEL : G Moore (D) D Bennett QC with A Buckland (Commonwealth of Australia) I V Knight, Crown Solicitor (P) SOLICITORS : Elliott Tuthill (D) Australian Government Solicitor (Commonwealth of Australia) CATCHWORDS : Constitutional law - places acquired by Commonwealth for public purposes - exclusive legislative power of Commonwealth Parliament - sale and transfer of Commonwealth place to private corporation - State stamp duties legislation held invalid to the extent that it purported to impose stamp duty on contract of sale and memorandum of transfer; Corporation - company - winding up summons for non-payment of stamp duty - plaintiff had no standing as duty held not to be payable. Constitution, ss 51(ii), 52 ACTS CITED : Corporations Law, ss 459E, 459R, 459S, 465B Stamp Duties Act 1920 (NSW), ss 4, 25, 26, 38, 41, 66 and Second Schedule Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630 Attorney-General for New South Wales v Stocks and Holdings (Constructors) Pty Ltd (1970) 124 CLR 262 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 Berkley v Poulett [1977] 1 EGLR 86 Chang v Registrar of Titles (1976) 137 CLR 177 Haque v Haque (No.2) (1965) 114 CLR 98 CASES CITED : KLDE Pty Ltd v Commissioner of Stamp Duties (1984) 155 CLR 288 Lysaght v Edwards (1976) 2 Ch D 499 Mt Newman Mining Co Pty Ltd v Commissioner of State Taxation (1994) 11 WAR 413 New South Wales v The Commonwealth (1990) 169 CLR 482 Reg v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 R v Phillips (1970) 125 CLR 93 Shaw v Foster (1872) LR 5 HL 321 Worthing v Rowell & Muston Pty Ltd (1970) 123 CLR 89 DECISION : Winding up summons dismissed; cross-claim successful THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J THURSDAY 2 SEPTEMBER 1999 2881/98 . CHIEF COMMISSIONER OF STAMP DUTIES v PALIFLEX PTY LTD JUDGMENT 1 HIS HONOUR: By a contract dated 5 September 1997 the defendant purchased the property at 97 Elizabeth Bay Road, Elizabeth Bay from the Commonwealth of Australia for $9 million. The defendant contended that no stamp duty was payable. After negotiations between the parties, the plaintiff released the memorandum of transfer of the property to the defendant in return for the defendant's undertaking to pay assessed stamp duty and interest. Completion of the sale took place on 30 January 1998 and the transfer in favour of the defendant was registered on 4 February 1998. 2 The plaintiff assessed ad valorem stamp duty on the contract as an agreement for sale in the sum of $480,490. After further negotiations, the plaintiff wrote to the defendant on 6 April 1998 demanding payment of the assessed duty and a 100% fine, totalling $960,980. When payment was not made the plaintiff served a statutory demand on the defendant under s 459E of the Corporations Law for approximately that amount. In my judgment delivered on 4 February 1999 ((1999) 17 ACLC 467) I held that the statutory demand was effectively served by the plaintiff on the defendant on 13 May 1998, although it did not come to the attention of the defendant's director until 1 July 1998. 3 Payment not having been made, on 19 June 1998 the plaintiff filed in this Court a summons for the winding up of the defendant. The defendant sought to resist the winding up summons by contending that no stamp duty was payable in respect of the contract of sale and transfer of the Elizabeth Bay property; that, consequently, the plaintiff was not a creditor of the defendant; and that the plaintiff therefore had no standing under s 459P of the Corporations Law to apply to the Court for the defendant to be wound up. The proceedings came before me for hearing on 10, 14 and 18 December 1998. 4 In my judgment of 4 February 1999 I held that the defendant could not make these contentions except by leave granted under s 459S of the Corporations Law. However, in the circumstances of the case I granted leave under that section. Since the defendant's contentions raised a matter under the Constitution or involving its interpretation, I directed the defendant to give the Commonwealth and State Attorneys-General notices under s 78B of the Judiciary Act 1903 (Cth). The Commonwealth of Australia has intervened in the proceedings under s 78A, though the Territories and the States other than New South Wales have chosen not to do so at this stage. 5 In consequence of my judgment of 4 February 1999, at least one and possibly two matters remained to be resolved in these proceedings. First, it is necessary to determine the defendant's contention, made pursuant to the leave granted by me under s 459S, that the amount claimed in the statutory demand is not a debt due and payable by the defendant to the plaintiff. I have now decided, for reasons which I shall set out below, that the defendant's contention on this point, supported by the Commonwealth, is correct. However, if the defendant's contention had failed then a second question would have arisen for determination, namely whether the defendant should be wound up in insolvency under s 459A. The defendant has sought to rely on evidence of solvency in order to rebut the presumption of insolvency which arose under s 459C because of its failure to comply with the statutory demand. Although the defendant has succeeded on the first matter, the presumption of insolvency under s 459C nevertheless remains and it would be possible for the Court to substitute another creditor as plaintiff in the winding up proceedings under s 465B. However, no such application has been made, and I therefore propose to dismiss the winding up summons. 6 A further hearing was fixed for 19 August 1999 for the determination of these remaining matters by me. Both the plaintiff and the Solicitor General for the Commonwealth, intervening, contended that no debt is owing because the Stamp Duties Act 1920 (NSW), in force at the relevant time, was outside the legislative competence of the New South Wales Parliament to the extent that its provisions purported to apply to a conveyance or agreement for the sale of a property which is, for the purposes of s 52(i) of the Constitution, a Commonwealth place. That contention was opposed by the Solicitor General for New South Wales, appearing on behalf of the plaintiff. In order to solve a possible procedural difficulty, the defendant applied with the consent of the plaintiff and the Commonwealth for leave to file a cross-claim seeking a declaration that the contract for sale is not dutiable under the Stamp Duties Act by reason of s 52(i) of the Constitution. I granted leave accordingly. The cross-claim separately identifies and articulates a matter arising under the Constitution or involving its interpretation. The thinking behind the cross-claim is that if there is an appeal from my determination of the constitutional matter, the separate articulation of that question in the cross-claim may be of some procedural assistance in identifying the subject matter of, and the proper parties to, the appeal. 7 The constitutional matter was the subject of full submissions at the hearing on 19 August 1999. The second matter, with respect to the solvency of the defendant, was not fully heard at that time, but the defendant sought leave to file in Court and rely upon some additional affidavit evidence with respect to its solvency. I decided, after argument, to grant that leave subject to an appropriate order as to costs, and subsequently the plaintiff sought an adjournment so that he could consider whether to reply to the new evidence. I granted an adjournment to a date to be fixed and stood the matter over for the making of directions as to the filing of affidavits, in the event that the second matter still needed to be determined after I had reached a conclusion as to the constitutional matter. 8 I have not made any order under Part 31 of the Supreme Court Rules for the resolution of the constitutional matter as a separate question. Although the possibility of my doing so was canvassed before the first hearing in December 1998, in the end neither party applied for such an order. I would be concerned that a consequence of such an order would be to delay unduly the determination of the winding up summons, contrary to the public policy reflected in s 459P of the Corporations Law, especially if there were to be an appeal on the separate question. Section 52(i) - Commonwealth's exclusive legislative power with respect to Commonwealth places 9 For relevant purposes, s 52(i) of the Constitution states: 'The Parliament shall, subject to this Constitution, have exclusive power to make laws for the peace, order and good government of the Commonwealth with respect to - (i) … all places acquired by the Commonwealth for public purposes'. 10 Before the High Court decided Worthing v Rowell & Muston Pty Ltd (1970) 123 CLR 89, the meaning of s 52(i) was unclear. There was a considerable body of opinion to the effect that general State laws would apply to a Commonwealth place unless the Commonwealth were to enact legislation specifically applying to the Commonwealth place and exhibiting an intention to override the State laws: see the summary in Allders International Pty Ltd v Commissioner of State Revenue (Vict) (1996) 186 CLR 630, 667-8. The majority in Worthing held that s 52(i) excluded the power of a State Parliament, even by a law of general application, to regulate the conduct of persons engaged in activity in a Commonwealth place: see Allders International at 668. Worthing was confirmed and applied by the High Court in R v Phillips (1970) 125 CLR 93. 11 Some implications of that decision were addressed by the Commonwealth Places (Application of Laws) Act 1970 (Cth), which applied State laws to Commonwealth places, but that Act did not apply any State law which had 'effect so as to impose any tax' (s 4(5)(a)). Consequently the Act did not apply State stamp duty laws to Commonwealth places. 12 After it was decided in Allders International that s 52(i) prevented the Stamps Act 1958 (Vict) from imposing stamp duty on a certain lease of part of a Commonwealth place to a commercial entity, the Commonwealth Places (Mirror Taxes) Act 1998 (Cth) ('Mirror Taxes Act') was enacted. Its purpose was to establish a structure under which certain applied laws, including State stamp duty legislation, would be applied with respect to Commonwealth places, effective after a stated date. However, the Mirror Taxes Act does not apply in the present case, for reasons which I shall explain later in this judgment. Stamp Duties Act 1920 (NSW) 13 The facts of the present case occurred prior to the commencement on 1 July 1998 of the Duties Act 1997 (NSW). Consequently stamp duty was payable, if at all, under the 1920 Act, as amended. By s 4 of that Act duty was charged in respect of the instruments and matters described in the Act and in the Second Schedule. The relevant matters for present purposes are those dealt with in ss 41 and 66 and in the Second Schedule (the item 'Agreement for the Sale or Conveyance (Including Exchange) of any Property', and paragraph (1) of the item 'Conveyances of Any Property'). The main provisions are as follows: 41(1) Every agreement for the sale or conveyance of any property in New South Wales shall be charged with the same ad valorem duty to be paid by the purchaser or any person to whom the property is agreed to be conveyed as if it were a conveyance of the property agreed to be sold or conveyed and shall be stamped accordingly. 66(1) Subject to the provisions of this Act every conveyance is to be charged with ad valorem duty in respect of the unencumbered value of the property thereby conveyed. 66(2)(a) A conveyance on sale of any property is to be charged with ad valorem duty on the amount or value of the consideration for the sale. Second Schedule: 14 Section 41(1) applies to 'any property in New South Wales'. Section 66 and the relevant Second Schedule provision apply to a 'conveyance', defined in s 65 to include a transfer whereby 'any property in New South Wales' is transferred to any person. A proprietary interest in land is situated where the land is located: Haque v Haque (No.2) (1965) 114 CLR 98; Westland Shopping Centre (Vic) Ltd v Commissioner of Stamp Duties (Qld) (1983) 83 ATC 4521. Land in New South Wales which has been acquired by the Commonwealth for public purposes is nevertheless property in New South Wales for the purposes of s 41(1), assuming that the land has not become part of a Commonwealth Territory. 15 The 'person primarily liable' was defined in s 3 to mean the person so specified in the Second Schedule. In the present case, the person so specified is the purchaser, the defendant. Although the purchaser was the person 'primarily liable', the Stamp Duties Act does not impose any general secondary liability: see D G Hill, Stamp Duties (LBC Information Services, looseleaf), para 1.160. 16 By s 25 the person primarily liable with respect to an instrument was required to cause it to be duly stamped. Thus, the statutory obligation to stamp the contract of sale and conveyance was imposed on the defendant as purchaser and not on the Commonwealth as vendor. Failure to cause the instrument to be stamped was an offence and a penalty could be payable under s 25(1A). In addition, the Chief Commissioner had the power to make a default assessment against the person required to cause the instrument to be stamped, under s 127B. But there were no provisions which permitted the Chief Commissioner to require the vendor in a sale of land to pay the stamp duty assessed on the contract or conveyance. 17 The person primarily liable was required by s 25 to cause a dutiable instrument to be duly stamped within six months after it was first executed, and if the instrument was not duly stamped within two months after it was first executed, a fine would be payable. 'First execution' was explained in s 26, according to which an instrument was deemed to be first executed the first time it was signed by any party thereto, but a contract made by acceptance of an offer contained in an instrument was deemed to be first executed when the offer is accepted. 18 The person primarily liable with respect to an instrument was personally liable to the Crown for payment of the duty immediately upon first execution, and could be sued for the amount of duty as for a debt due to the Crown: s 38(1). 19 Under s 29(1) an instrument executed in New South Wales or relating to property situated in New South Wales could not be admitted into evidence in civil proceedings unless it was duly stamped. However, if the instrument was tendered as evidence on behalf of a party other than the person primarily liable to duty, it could be admitted into evidence if the court was satisfied that the party tendering it would inform the Chief Commissioner of the name of the person primarily liable to duty and would lodge a copy of the instrument with the Chief Commissioner: s 29(4). The latter provision had the effect that the vendor of land, not being the person primarily liable to duty, could tender the contract or memorandum of transfer in evidence even though it has not been stamped, provided that the vendor was able to inform the Chief Commissioner of the purchaser's name and give the Chief Commissioner a copy of the contract and memorandum of transfer. Agreed facts 20 The parties have produced a statement of agreed facts which is in the following terms: '1. The property the subject of these proceedings is situate at 97 Elizabeth Bay Road, Elizabeth Bay and comprised in Folio Identifier 52/75888 ('the property'). 2. The property was acquired by the Commonwealth on 23 June 1922. 3. The property was acquired by the Commonwealth for the purposes of the Navy. 4. The property was sold by the Commonwealth (as vendor) to the defendant (as purchaser). 5. Contracts for the sale of the property were exchanged on 5 September 1997. 6. The contract for sale of the property was completed on 30 January 1998. 7. The relevant transfer of title from the Commonwealth to the defendant was registered pursuant to s 36 of the Real Property Act 1900 (NSW) on 4 February 1998. 8. The Commonwealth remained the registered owner of the property until 4 February 1998. 9. There is no arrangement in operation between the Governor of New South Wales and the Governor-General under s 9 of the Commonwealth Places (Mirror Taxes) Act 1998 (Cth) in relation to the State of New South Wales.' Submissions by the Commonwealth which are not contested by the plaintiff 21 The plaintiff has not contested three of the Commonwealth's written submissions on matters of law. I shall set out the matters not contested by the plaintiff and in each case, state my opinion on the law. The uncontested submissions relate to whether the Elizabeth Bay property was at relevant times a Commonwealth place, whether the making of the contract of sale and settlement of the sale caused the Elizabeth Bay property to cease to be a Commonwealth place, and whether the Mirror Taxes Act has any application in the present case. A place acquired by the Commonwealth for public purposes 22 Having regard to the agreed facts, the Commonwealth submitted that the Elizabeth Bay property was, at the time of sale and transfer to the defendant, a place acquired by the Commonwealth for public purposes within s 52(i) ('a Commonwealth place'). The plaintiff did not contest this conclusion. 23 It is clear from the agreed facts that the Elizabeth Bay property was acquired for public purposes, namely the purposes of the Navy. 24 A principle which emerges from Allders International (186 CLR at 675 per McHugh, Gummow and Kirby JJ) is that once land has been acquired by the Commonwealth for public purposes, it is subject to the exclusive legislative power conferred by s 52 of the Constitution as long as it remains 'in the ownership or possession of the Commonwealth'. In Worthing (123 CLR at 124-5) Windeyer J said that the expression 'places acquired by the Commonwealth' means places which, upon acquisition, the Commonwealth holds by virtue of a proprietary right or interest. 25 The Elizabeth Bay property remained in the possession of the Commonwealth until completion of the sale on 30 January 1998, and the Commonwealth remained the legal owner until registration of the transfer on 4 February 1998. It was therefore a Commonwealth place for the purposes of s 52(i) until at least 30 January 1998 and perhaps until 4 February 1998. There is an issue as to whether the creation of an equitable interest in the defendant as purchaser under the contract for sale affected this conclusion, which is the subject of another concession by the plaintiff to which I shall now turn. Commonwealth place - the effect of the contract of sale and the settlement of the sale 26 The plaintiff did not contest the proposition that Commonwealth land acquired for public purposes remains a Commonwealth place for at least as long as the Commonwealth retains legal title to the land; nor the proposition that the acquisition by a non-Commonwealth entity of an equitable interest under a contract of sale of the land does not entail that the land ceases to be a Commonwealth place. I agree with the second of these two propositions, but I find it unnecessary to decide whether the first is true as a categorical proposition. I wish to explain my opinion on this matter. 27 The constitutional reference to places 'acquired by the Commonwealth' expressly identifies an event (namely the acquisition) and impliedly identifies a state of affairs. The implied state of affairs was identified in Allders International (186 CLR at 675) as ownership or possession by the Commonwealth, and by Windeyer J in Worthing (123 CLR 124-5) as the Commonwealth's holding of a proprietary interest. Whatever precisely it may be, the implied state of affairs arises because s 52(i) cannot have been intended to confer exclusive legislative power on the Commonwealth with respect to a place which had once been acquired, but was later disposed of, by the Commonwealth. This proposition is consistent with the propositions accepted in Attorney-General for New South Wales v Stocks and Holdings (Constructors) Pty Ltd (1970) 124 CLR 262, to the effect that: · a State law will never apply to a place which was a Commonwealth place when the State law was enacted, even if the place is later disposed of by the Commonwealth; but · after the disposal by the Commonwealth the State is free to legislate with respect to the place. 28 If the Commonwealth enters into a transaction which changes the legal character of its interest in the place which it has acquired, the place may nevertheless continue to be a Commonwealth place for the purposes of s 52(i). For example, the land at Tullamarine Airport was acquired by the Commonwealth in 1961, and was subsequently vested in the Federal Airports Corporation on 1 January 1988 by virtue of s 23(2) of the Federal Airports Corporation Act 1986 (Cth), and s 29(1) of that Act provided that a place owned by the Corporation as a Federal airport is held by the Corporation for and on behalf of the Commonwealth. In Allders International (186 CLR at 675) it was held that that although the character of the Commonwealth's interest in the airport changed in 1988, the airport had retained its status as a Commonwealth place for the purposes of s 52(i). 29 Did the changes in the character of the Commonwealth's ownership of the property at Elizabeth Bay prior to registration of the transfer on 4 February 1998 cause the property to cease to be a Commonwealth place for the purposes of s 52(i)? There were two relevant changes in the character of the Commonwealth's ownership, occurring (respectively) by virtue of the making of the contract of sale and the subsequent settlement of the sale. 30 By entering into the contract of sale on 5 September 1997, the defendant acquired an equitable interest (Lysaght v Edwards (1976) 2 Ch D 499, 506-7), although the 'value' of an equitable interest acquired in such circumstances is commensurate only with the amount of purchase price paid: see Haque v Haque (No.2) (1965) 114 CLR 98, 124; KLDE Pty Ltd v Commissioner of Stamp Duties (1984) 155 CLR 288, 296-97; Mt Newman Mining Co Pty Ltd v Commissioner of State Taxation (1994) 11 WAR 413, 418-19. The existence of the purchaser's equitable interest does not imply that the vendor is a mere trustee once the contract for sale is entered into. The position was well summarised by Stamp LJ in Berkley v Poulett [1977] 1 EGLR 86, 93: 'But to say that it is the duty of the vendor as trustee for the purchaser to care for the property is to put the cart before the horse and may lead you into error. He is said to be a trustee because of the duties which he has, and the duties do not arise because he is a trustee but because he has agreed to sell the land to the purchaser and the purchaser on tendering the price is entitled to have the contract specifically performed according to its terms. Nor does the relationship in the meantime have all the incidents of the relationship of trustee and cestui que trust. That this is so is sufficiently illustrated by the fact that prima facie the vendor is until the date fixed for the completion entitled to receive and retain the rents and profits and that as from date the purchaser is bound to pay interest.' 31 In my opinion the property remained a Commonwealth place for the purposes of s 52(i) after 5 September 1997 notwithstanding the contract of that date. After the date of the contract the Commonwealth retained legal title to and possession of the property, and could not be characterised as merely a trustee for the reasons given by Stamp LJ. The purchaser's equitable interest depended on the validity and enforceability of the contract, and would evaporate if the contract were to be validly rescinded. The matter may be tested this way: if, after the date of the contract, the Commonwealth had entered into a short-term lease of the property for a rental calculated similarly to the rental in Allders International, it cannot plausibly be suggested that the High Court's decision in that case would be rendered inapplicable simply because of the existence of the contract of sale. 32 It is accepted in Australian law that when the purchaser of land has paid the purchase money, the vendor becomes a constructive trustee of the property sold: Chang v Registrar of Titles (1976) 137 CLR 177, 185 per Mason J and 189 per Jacobs J; see also Shaw v Foster (1872) LR 5 HL 321. There might be an issue, notwithstanding the plaintiff's concession, as to whether a property under Torrens title which the Commonwealth has sold remains a Commonwealth place during the period between settlement of the sale and registration of the transfer. However, in my opinion that issue does not arise for determination in the present case. 33 In the present case the question is whether the Stamp Duties Act of New South Wales encroaches upon the exclusive legislative power of the Commonwealth under s 52(i). To the extent that the Stamp Duties Act imposed stamp duty on the contract for sale, it did so at a point no later than the time of exchange of contracts. The agreement for sale was charged with ad valorem duty by ss 4 and 41; the contract was required to be duly stamped within a stated time after it was first executed (s 25); the liability to pay the duty, recoverable as a debt, arose on first execution (s 38); and first execution occurred no later than when the offer contained in a signed contract was accepted upon exchange of contracts (s 26). At the point of exchange of contracts for the Elizabeth Bay property, it was clear for the reasons already indicated that the property was a Commonwealth place. 34 The Stamp Duties Act also created a liability to pay duty with respect to the memorandum of transfer which was executed on behalf of the Commonwealth and the defendant prior to the settlement and handed over in exchange for the balance of purchase money when settlement occurred on 30 January 1998. As with the contract, the requirement to cause the duty to be paid under ss 25 and 26, and liability to pay the duty under s 38, arose at the point of first execution, defined on this occasion as the first time that the memorandum of transfer was signed by any party thereto. Under s 41(4)(a) a memorandum of transfer made in conformity with an agreement for sale was chargeable with duty of $2 rather than with ad valorem duty, provided that duty had been duly paid on the agreement for sale as required by s 41. In the present case duty had not been paid on the agreement for sale and consequently the Stamp Duties Act would, if valid, charge the memorandum of transfer to ad valorem duty on the amount or value of the consideration for the sale, by virtue of ss 4 and 66(2) and Second Schedule (item 'Conveyances of any Property', paragraph (1)). As the charge to duty arose upon first execution of the memorandum of transfer as a conveyance, an event which occurred prior to the payment of the consideration for the sale on 30 January 1998, the Stamp Duties Act purported to impose a liability to pay duty at a time before the Commonwealth became a constructive trustee by receipt of the purpose money on 30 January 1998. For the reasons already given the Elizabeth Bay property remained a Commonwealth place in the period from exchange of contracts to settlement, whatever effect the settlement of the sale may have had on the property's status as a Commonwealth place. 35 I therefore conclude that the Elizabeth Bay property was a Commonwealth place at the times when the Stamp Duties Act purported to impose the obligations to pay stamp duty on the relevant instruments, namely the time of first execution of the contract of sale and memorandum of transfer respectively. Inapplicability of the Mirror Taxes Act 36 The Mirror Taxes Act relates to 'excluded provisions', defined in s 6 as provisions of State taxing laws (including specified stamp duty laws) to the extent that their application to a Commonwealth place is excluded by s 52(i) of the Constitution. Section 6 states, subject to qualifications, that the excluded provisions of a State taxing law apply, and are taken to have applied at relevant times, to Commonwealth places. However, s 7 provides that these 'applied laws' do not have effect in relation to any amount which would have become due for payment before 6 October 1997 under the applied law. Section 7 also requires an assumption that obligations which arose before 6 October 1997 have been fully and promptly complied with. The Mirror Taxes Act has no application to the present case for at least two reasons. 37 The first reason relates to s 9 of the Mirror Taxes Act. At the initial hearing of this matter in December 1998 the parties made submissions on the assumption that arrangements had been made between the Governor-General of the Commonwealth and the Governor of New South Wales under s 9 of the Mirror Taxes Act. Unless such arrangements are made, the curative provisions of s 6 of the Mirror Taxes Act do not have effect (see s 6(6)). My judgment of 4 February 1999 reflected that assumption. However it is now an agreed fact that there is no arrangement in operation between the Commonwealth and New South Wales for the purposes of s 9. Therefore, s 6 of the Mirror Taxes Act does not have any effect in relation to Commonwealth places in New South Wales. 38 The second reason relates to the date of commencement of the Mirror Taxes Act. The Commonwealth submitted that even if the arrangements required by s 9 had been in place, the Mirror Taxes Act would not have operated to impose stamp duty on the contract for sale of the Elizabeth Bay property. The plaintiff did not contest this submission. By virtue of ss 4, 25, 26 and 41 of, and the Second Schedule to, the Stamp Duties Act, ad valorem duty under the contract of sale in this case became due for payment by no later than 5 September 1997 when counterparts of the contract of sale were exchanged. Section 7 (if otherwise applicable) would have required an assumption to be made that the defendant's obligation to pay duty, which arose before 6 October 1997, had been fully and promptly complied with. The memorandum of transfer made after 6 October 1997 would have been dutiable by virtue of the Mirror Taxes Act (had it otherwise applied), but by virtue of s 7 the transfer would be treated as made in conformity with an agreement upon which ad valorem stamp duty had been paid, and hence under s 41(4)(a) of the Stamp Duties Act the duty on the transfer would have been a nominal duty of $2. 39 The Mirror Taxes Act is an exercise of the exclusive legislative power conferred upon the Commonwealth Parliament by s 52(i) with respect to Commonwealth places, a power which has been described as 'plenary': Allders International at 679 per McHugh, Gummow and Kirby JJ. But the Act applies, consistently with that source of constitutional power, only where the direct application of a State taxing law is excluded by s 52(i) (see definition of 'excluded provisions' in s 6(1) of the Mirror Taxes Act). If the transaction in the present case is protected from the direct application of the Stamp Duties Act of New South Wales by s 52(i), it will not be rendered dutiable ad valorem by virtue of the Mirror Taxes Act, because the contract was made before 6 October 1997 and there is no arrangement in place for the purposes of s 9. Conversely, if the Stamp Duties Act were to apply directly with respect to the transaction in the present case notwithstanding s 52(i), stamp duty would be payable on the instruments which give effect to the transaction and the Mirror Taxes Act would be inapplicable for an additional reason, namely that it does not purport to apply unless State law is excluded by s 52(i). Laws of the Commonwealth 'with respect to' a Commonwealth place 40 Having regard to the agreed facts and the uncontested submissions of the Commonwealth to the extent that I have accepted them, the crucial issue is whether the provisions of the Stamp Duties Act 1920 (NSW) in their application to the Elizabeth Bay property should be regarded as intruding upon the Commonwealth's exclusive power to make laws for the peace, order, and good government 'of the Commonwealth with respect to' a Commonwealth place, in the sense in which the quoted words are used in s 52(i). With the support of the defendant, the Solicitor General for the Commonwealth has put forward three crucial propositions each of which has been contested by the plaintiff. The propositions are as follows: (1) a law that affects a Commonwealth place in a real and tangible way, or that has a direct, practical and real connection with a Commonwealth place, will be a law 'with respect to' that place within the meaning of s 52(i); (2) upon that principle, provisions of the Stamp Duties Act 1920 (NSW), to the extent that they apply to a conveyance or an agreement for the sale or conveyance of a Commonwealth place, are laws with respect to that Commonwealth place for the purposes of s 52(i); (3) to the extent that provisions of the Stamp Duties Act 1920 (NSW) are laws with respect to a Commonwealth place, they are outside the legislative competence of the New South Wales Parliament. In my opinion these three propositions are accurate, though in a summary way, and their application means that the amount claimed by the plaintiff for stamp duty and fines is not a debt due and payable by the defendant. I shall set out my reasons for reaching these conclusions. 41 It has been observed that a power to make laws 'with respect to' a specific subject is as wide a legislative power as can be created: Bank of New South Wales v The Commonwealth (1948) 76 CLR 1, 186 per Latham CJ. Those words 'should be construed with all the generality which the words used admit'; New South Wales v The Commonwealth (1990) 169 CLR 482, 498 per Mason CJ, Brennan, Dawson, Toohey, Gaudron and McHugh JJ, citing Reg v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207, 225; see also Deane J, 169 CLR at 506. Even so, there must be some degree of connection between the impugned State law and a Commonwealth place. The High Court considered the requisite degree of connection in a stamp duty context in the Allders International case. The Allders International case 42 The Commonwealth and the defendant rely on the Allders International case, 186 CLR 630. In that case the High Court held by majority (Brennan CJ, Gaudron, McHugh, Gummow and Kirby JJ, Toohey and Dawson JJ dissenting) that a lease of a duty free shop at Tullamarine Airport was not dutiable under the Stamps Act 1958 (Vict) by reason of s 52(i) of the Constitution. The dissenting judgments of Toohey and Dawson JJ were inconsistent with the majority judgments on important points of principle and do not, in my opinion, reflect the present law. 43 The land at Tullamarine Airport was acquired by the Commonwealth in 1961, and pursuant to the Federal Airports Corporation Act 1986 (Cth) the land was transferred in 1988 to the Federal Airports Corporation, which according to s 29(1) of that Act held the land 'for and on behalf of the Commonwealth'. The Commonwealth granted a lease to the appellant, a private corporation, for a term of eight years from 1 November 1992. Though for a term in excess of three years, it was not registered under the Transfer of Land Act 1958 (Vict). The rent reserved was a fixed sum of $12 per annum (if demanded) plus a variable component calculated according to formulae, the factors of which included the number of inbound and outbound international passengers and the average levels of their expenditure on goods to be sold by the lessee. 44 The Stamps Act imposed a duty on an instrument of lease, assessed ad valorem on the amount of rent. In a case where the rent could not be ascertained at the time of execution of the lease, the stamp duty was to be based on an estimate which would be recalculated on an annual basis. Thus in the Allders International case, the amount of duty eventually payable on the instrument of lease would depend upon the amount of rent in fact paid, which in turn would depend upon factors which included the number of passengers at the airport and their expenditure at the shop. 45 The majority judgments were a judgment of Brennan CJ and a joint judgment of McHugh, Gummow and Kirby JJ. Gaudron J agreed with their joint judgment, on the basis (contrary to her view) that s 52(i) of the Constitution is primarily a grant of legislative power rather than a provision primarily concerned with the exclusivity of powers found elsewhere in the Constitution (at 662). Brennan CJ's judgment 46 Brennan CJ (at 642) took the view that if the Stamps Act, by imposing stamp duty on the instrument of lease, placed a tax on the Commonwealth's disposition of a leasehold estate or upon the lessee's use of the premises, it would be invalidated by s 52(i); but if the connection between the tax and the transaction and use of the premises was so tenuous and distant that the Act could not be characterised as a law with respect to the airport or the demised premises, it would be valid and applicable to the lease. The characterisation of the tax by reference to these criteria was to be determined as a matter of substance rather than form. His Honour concluded that although the stamp duty was a tax upon the instrument, the 'substantial effect' of the tax was to burden the transaction which the instrument of lease was expressed to effect (at 643). He said it was impossible in any practical sense to separate the instrument from any effect which it was expressed to produce and in fact produced, since if the instrument failed to take effect as a lease because of lack of registration, it would have taken effect as an agreement for lease and would have been chargeable to the same duty (at 643). The State law thus operated on the transaction by which the Commonwealth demised or disposed of an interest in premises which were part of a Commonwealth place. A hypothetical Commonwealth law imposing tax on the creation of a leasehold interest in land within a Commonwealth place would have a direct and close connection with that place, and would be valid under s 52(i). The Stamps Act applied to a transaction affecting the ownership of proprietary interests in a Commonwealth place, because stamp duty under that Act purported to burden the demise or disposition of an interest in premises within a Commonwealth place (at 644). It therefore intruded upon the field of exclusive Commonwealth legislative power under s 52(i). 47 Brennan CJ's reasoning did not depend upon the fact that in the case before him, rent and therefore stamp duty varied according to the number of passengers and their level of expenditure in the shop, for he said that stamp duty would remain a burden on the demise or the disposition of an interest effected by the dutiable instrument even if the amount of duty had been calculable finally upon execution of the lease (at 644). He rejected the view that detriment to the Commonwealth is an essential criterion for determining whether a State law is invalidated by s 52(i), and therefore it did not matter to him that the tax was payable only by the lessee and not by the Commonwealth. It was enough that the tax burdened the demise or disposition, even if it did not burden the Commonwealth's use of a Commonwealth place (at 644). 48 Brennan CJ's reasoning was concerned with a lease rather than a sale and conveyance of property. Though he twice referred (at 644) to a demise or 'the disposition of an interest', suggesting reasoning wide enough to cover a sale and conveyance, in my opinion his reference to the disposition of an interest was to the Commonwealth's disposition of an equitable leasehold interest which, he said, was burdened by stamp duty imposed upon the instrument by which the disposition was effected (see 643). Nevertheless, the extension of Brennan CJ's reasoning from its leasehold context to a contract for sale and memorandum of transfer of land is not a large one. 49 A contract for the sale of land, being specifically enforceable, confers an equitable interest upon the purchaser, and a memorandum of transfer of land for valuable consideration is specifically enforceable as an agreement to transfer. Thus there is a close connection between these instruments and the transactions which underlie them. By imposing stamp duty on a contract for sale and its related memorandum of transfer, the Stamp Duties Act 1920 (NSW) burdens the transaction which the contract and conveyance are expressed to effect, namely the sale and disposition of the vendor's entire legal and equitable interest in the subject property. The stamp duty burdens the transaction because the instruments which are taxed are expressed to produce the effect that the disposition occurs. The assessment of the duty is based upon the amount of consideration for the sale or the unencumbered value of the property thereby conveyed. Therefore the State law in substance 'operates on' the disposition of the property, which is a Commonwealth place (see at 643). 50 A Commonwealth law taxing a contract for the sale of a Commonwealth place or a conveyance of the place upon sale would have a direct and close connection with the Commonwealth place, as the tax would burden the disposition effected by the contract and conveyance, and consequently such a law would fall within the grant of exclusive legislative power contained in s 52(i). The corollary, according to Brennan CJ, is that the Stamp Duties Act of New South Wales, which imposes a tax on instruments which burdens the disposition of a Commonwealth place effected by instruments, intrudes upon and is therefore invalidated by s 52(i). 51 My conclusion is that if Brennan CJ's approach correctly states the law, it is reasonably clear that the submissions of the Commonwealth and the defendant should succeed in the present case. The joint judgment of McHugh, Gummow and Kirby JJ 52 The judgment of McHugh, Gummow and Kirby JJ, which was supported by Gaudron J, expresses the relevant legal principles somewhat differently from Brennan CJ's judgment. The application of their reasoning to the present case is less clear cut than the application of Brennan CJ's reasoning. 53 For their Honours the test which fixes the boundary of the Commonwealth's exclusive legislative power requires characterisation of the State law and consideration of whether, so characterised, it is a law 'with respect to' the Commonwealth place (at 670). A State law may be 'with respect to' a Commonwealth place even though it is a law of general application (at 668, 676). A State law with respect to a Commonwealth place cannot validly apply to that place whether it was enacted before or after the Commonwealth acquired the place (at 673). 54 In their Honours' view, while stamp duty is charged upon an instrument rather than a disposition or transaction, a stamp duty law may affect both instruments and places. A useful test is to ask whether the Commonwealth Parliament could validly enact a law similar to the impugned State law and in the present case, there could be no doubt that a Commonwealth law could impose a stamp duty on an instrument of lease of land within a Commonwealth place (at 676). If, in reality and substance, a State stamp duty law is a law 'with respect to' a Commonwealth place, s 52(i) cannot be avoided by the device of designing the stamp duty as a tax upon instruments (at 677). Whatever its character for stamp duty purposes, the Stamps Act concerned a part of place acquired by the Commonwealth for public purposes, the connection being not 'tenuous or distant' but 'direct, practical and real', and affected the airport as a Commonwealth place in a 'real and tangible way' (at 677). 55 It was relevant to this conclusion that under the Stamps Act, the amount of duty depended upon the amount of rent paid. Similarly under the Stamp Duties Act of New South Wales, the amount of ad valorem duty on a contract for sale or conveyance varies depending upon the amount of the consideration payable or the unencumbered value of the property conveyed. Additionally, their Honours drew attention to the fact that the amount of rent, and hence the amount of duty payable, was determined by reference to the extent of the use of the Commonwealth place for the public purpose for which it was acquired (at 677). This latter feature lead them to observe that the State law imposed stamp duty by reference to the extent of the use of and economic activity at, part of the Commonwealth place. 56 It was unnecessary for their Honours to consider circumstances such as those of the present case, where the duty is fixed by reference to a characteristic of the Commonwealth place - namely its unencumbered value or the price paid for it - but not by reference to any factor concerning use of or any economic activity at the Commonwealth place. Nevertheless, the overall approach of the joint judgment suggests to my mind that the connection between the State law and use of or economic activity at the Commonwealth place was not an essential ingredient of their Honours' reasoning. The principle which the joint judgment espouses is that one must identify the true character of the State law in 'reality and substance', by assessing whether it affects the Commonwealth place in a 'real and tangible way' rather than in a 'tenuous or distant' way. 57 A connection between stamp duty and use or economic activity may, alone or in connection with other factors, supply the real and tangible connection which their Honours require, but the State law may be 'with respect to' a Commonwealth place even if the connection does not relate to use or economic activity. Their Honours observed (at 678) that the Stamps Act supplied the requisite connection with a Commonwealth place by varying the duty in accordance with the rent. This was so, even if one were to apply the approach of Walsh J in Worthing (123 CLR at 138-141) that a State law intrudes upon the Commonwealth's domain only if it has 'a direct and substantial connection' with the Commonwealth place, a view which their Honours described as narrower than their own. For present purposes, the significance of this passage is that it was the relationship between the amount of the duty and the amount of the rent which supplied the connection, rather than the relationship between the amount of duty and use or economic activity. On that reasoning, a State law which imposes stamp duty on a contract of sale or conveyance in an amount which varies depending upon the amount of consideration or the unencumbered value of the subject property has a direct and substantial connection with that property. 58 My conclusion is that the joint judgment adopts a principle which is capable of applying in a case where the amount of stamp duty is not fixed by reference to use of or economic activity at a Commonwealth place. While that principle does not dictate a solution to the problem in the present case, on balance it points in favour of the Commonwealth and defendant and against the plaintiff. However, before expressing a conclusion about the Allders International case I should advert to the plaintiff's detailed written submissions which purport to distinguish it. The plaintiff's submissions on Allders International 59 The plaintiff sought to distinguish the decision in Allders International, and also sought to raise three issues of legal principle. I shall first deal with the grounds relied upon to distinguish the case, and then with the questions of principle. The questions of principle relate to whether the joint judgment's 'useful test' is useful after all; whether the State law must be detrimental to the Commonwealth; and whether the State law must affect the Commonwealth's use of the place and the purpose of its acquisition. Is Allders International distinguishable? 60 The plaintiff relies upon three points of distinction between Allders International and the present facts. 61 First, the plaintiff pointed out that Allders International concerned stamp duty payable on a lease, whereas the present case concerns stamp duty payable on a contract for sale and a memorandum of transfer. However, it seems to me that Brennan CJ's judgment draws no relevant distinction between a lease and a conveyance, since in each case the instrument upon which the tax is imposed burdens the transaction which the instruments purport to effect. While part of the reasoning in the joint judgment is confined to stamp duty on an instrument of lease where rent and consequently duty varied depending upon use and economic activity, my opinion is that the principle of connection upon which their Honours relied is broader and if properly understood, would apply to a State law which imposes a tax on a contract for sale and memorandum of transfer with respect to a Commonwealth place. 62 Secondly, the plaintiff pointed out that the duty charged in Allders International was imposed by reference to the estimated rent of the premises, which in turn was affected by the extent of the use of the airport by passengers, and the duty was therefore directly referrable to the extent of economic activity engaged in at the Commonwealth place. In the present case, the plaintiff said, the duty charged is referrable only to the consideration, being a consideration not less than the unencumbered value of the property. However, in my opinion a law which imposes stamp duty in such circumstances is appropriately characterised as a law 'with respect to' a Commonwealth place, since the duty is imposed on instruments whose subject matter is the Commonwealth place, and the amount of the duty is related to the unencumbered value of that place. The amount of the duty would be affected, for example, by the value of improvements made by the Commonwealth to the Commonwealth place. 63 Thirdly, the plaintiff pointed out that in the present case there has been a conveyance of the land from the Commonwealth to a private corporation, the defendant, and thus there has been a total divestiture of Commonwealth ownership. In Allders International there was, at all material times, a continuance of Commonwealth ownership. But in my opinion the fact that the Commonwealth has disposed of the property which, until disposed of, was a Commonwealth place, does not entitle a State legislature to invade the Commonwealth's exclusive legislative domain by purporting to legislate with respect to the place prior to its disposal. I have pointed out that in the present case, the Stamp Duties Act purports to impose an obligation to cause instruments to be stamped, and a liability to pay the assessed stamp duty, at the time of first execution (ss 25, 26 and 38). At the time of first execution of the contract of sale and memorandum of transfer in this case, the subject of those instruments was a Commonwealth place, even though the process of disposal of the Commonwealth place had been commenced and, indeed, those instruments (and the registration of the latter) were the means of effectuating the disposition. If the Stamp Duties Act had purported to operate only after the disposal had occurred, its validity would have been beyond challenge (subject only to the principles in the Stocks & Holdings case). But it expressly purported to apply before the disposition could be fully effectuated, and therefore necessarily while the subject of the instruments was a Commonwealth place. 64 My conclusion, therefore, is that none of these points, separately or by their combined effect, distinguishes the majority decision in Allders International. The majority's 'useful tests' 65 Section 52(i) vests exclusive legislative power in the Commonwealth Parliament. It does not, in terms, invalidate State laws. However, the vesting of legislative power 'exclusively' in the Commonwealth implies that the State legislatures are incompetent to invade that exclusive legislative domain. As Menzies J said in Worthing (123 CLR at 113) 'the denial is measured by the grant' (see also Allders International, 123 CLR at 638-640 per Brennan CJ, and at 669-670 per McHugh, Gummow and Kirby JJ). 66 If a legislative subject is 'with respect to' a Commonwealth place then it is capable of falling within the exclusive province of the Commonwealth Parliament under s 52(i), and a State law on that subject is likewise capable of being invalidated by s 52(i). However, those consequences will not follow unless the legislative subject falls within the remaining words of s 52(i). 67 There are two possible limitations. One is that the vesting of exclusive power in s 52(i) is expressed to be 'subject to this Constitution'. In Allders International it was argued that the exclusive power conferred by s 52(i) was subject to the express limitation imposed by s 51(ii), namely that laws on taxation must not discriminate between States. McHugh, Gummow and Kirby JJ (at 678-680) rejected this argument, finding that the power to make laws under s 52 is plenary and separate from the concurrent powers conferred by s 51, and consequently separate from the limitations on those concurrent powers. Brennan CJ (at 640) found it unnecessary to decide this point. He observed that if the Commonwealth's exclusive legislative power under s 52 is qualified by s 51(ii), the legislative power of the States is not thereby enhanced. Presumably the point is that, even if the Commonwealth cannot enact a discriminatory tax law under s 52, it nevertheless possesses exclusive power to enact a tax law with respect to Commonwealth places, and therefore the States are prevented from enacting tax laws with respect to the Commonwealth places, whether those laws are discriminatory or not. 68 The other possible limitation is that the exclusive power conferred on the Commonwealth Parliament by s 52 is a power 'to make laws for the peace, order, and good government of the Commonwealth' with respect to the stated matters. Neither Brennan CJ (at 639-640) nor McHugh, Gummow and Kirby JJ (at 670) regarded the quoted words as qualifying the Commonwealth's exclusive power to legislate with respect to a Commonwealth place, or permitting a State to pass a law with respect to a Commonwealth place but not for the peace, order and good government of the Commonwealth. The majority judges in Allders International relied exclusively on a test of connection - if the legislative subject matter, realistically characterised, is sufficiently connected to the Commonwealth place that it is 'with respect to' the Commonwealth, then it falls within the Commonwealth's exclusive legislative domain and a State law dealing with that subject matter is invalid to the extent of the encroachment; and conversely, a State law on that subject matter is invalid if, realistically characterised, it is sufficiently connected with a Commonwealth place to be 'with respect to' that place. Having reduced the boundary between the Commonwealth and State laws to a question, in each case, of the sufficiency of the connection between the law and a Commonwealth place, both Brennan CJ (at 644) and McHugh, Gummow and Kirby JJ (at 676) reasoned that the impugned State law would be invalid if a similar Commonwealth law would be valid. In the joint judgment this was described as 'useful test' (at 676). 69 The plaintiff submitted, with due respect, that far from being useful, this 'test' is merely another way of articulating the problem which is to be solved. With hesitation as well as respect, I am inclined to have sympathy with this submission. Once it is accepted, as it appears to have been by McHugh, Gummow and Kirby JJ, that the words 'subject to this Constitution' and 'laws for the peace, order and good government of the Commonwealth' do not impose any qualification on the exclusive vesting of power made by s 52, the Commonwealth Parliament necessarily has exclusive legislative power under s 52 as long as the law is 'with respect to' a Commonwealth place. Conversely, a State law will be invalid in its application to a Commonwealth place, if that law is 'with respect to' the Commonwealth place. Analytically, the question about invalidity of the State law and the question about validity of the Commonwealth law raise the same issue, provided that the State law and the hypothetical Commonwealth law are not materially different. 70 Indeed, I wonder whether consideration of the validity of the impugned State law by reference to a hypothetical Commonwealth law may be dangerous rather than merely unhelpful. The danger is that in formulating the hypothetical Commonwealth law, one might inadvertently supply the connection with the Commonwealth place which it was the purpose of the inquiry to test. At the very least, I must say that I have not found the 'useful test' a helpful means of answering the question which I must consider in this case, since I am not sure whether the hypothetical Commonwealth law is to be regarded as confined to the Elizabeth Bay property, or applicable to all Commonwealth places, or applicable to property more generally. Detriment to the Commonwealth 71 The plaintiff observed that the Stamp Duties Act of New South Wales does not impose any form of duty to be paid other than by the purchaser on agreements for sale or the conveyance of any property. The Act does not impose liability upon the Commonwealth to pay any form of stamp duty as vendor. Indeed, says the plaintiff, the Act does not burden or cause detriment to the Commonwealth in any way. Hence the nexus is so tenuous or remote that the Act cannot be characterised as one with respect to a Commonwealth place. 72 One might add that under s 29, although a contract of sale or conveyance cannot be tendered in evidence unless stamp duty has been paid, the vendor's position is protected by s 29(4), and consequently the vendor cannot be said to suffer any significant detriment by virtue of the imposition and non-payment of the duty. 73 An argument to this effect was considered and rejected by Brennan CJ in Allders International (186 CLR at 644). In his view, the question was not whether the stamp duty burdened the lessor but whether it burdened the demise (or the disposition of an interest). It did so in that case, and it does so here. In his view, detriment to the Commonwealth is not an essential criterion for determining whether a State law is invalidated by s 52(i). 74 As the plaintiffs' submission notes, the other majority judges in Allders International did not expressly consider this issue. However, in my opinion, McHugh, Gummow and Kirby JJ did not require detriment to the Commonwealth as an ingredient of the application of s 52(i). Their Honours referred to the lessee's obligation to pay stamp duty at 664, but did not regard it as significant. For them the essential issue was whether there was a sufficient connection between the Stamps Act, realistically characterised, and the Commonwealth place. In considering that issue, they did not see fit to place emphasis on the fact that stamp duty was payable by the lessee and not by the Commonwealth. 75 Indeed, it would be inconsistent with the actual decisions in Worthing and Phillips to treat detriment to the Commonwealth as an essential ingredient for the application of s 52(i). Further, if it were correct that Commonwealth detriment is a necessary ingredient for the invalidity of a State law under s 52(i), it would follow, highly implausibly, that the Commonwealth's exclusive power to make laws under s 52(i) would be limited to laws detrimental to the Commonwealth. 76 I agree with the plaintiff that the question of Commonwealth detriment is a relevant factor to take into account in deciding whether there is a sufficient nexus between the State law and the Commonwealth place. By this I mean that if the State law, having regard to its 'real and substantial impact' (see 186 CLR at 677), operates to the detriment of the Commonwealth in its ownership, occupation or use of a Commonwealth place, that fact points to the applicability of s 52(i). However, s 52(i) may be applicable in a case where the operation of the State law does not lead to any such detriment, if there are other connections between the State law and the Commonwealth place which are real and substantial enough that the State law should be regarded as a law 'with respect to' the Commonwealth place. 77 I should add that in my opinion, the Stamp Duties Act, if it applies to the contract for sale and memorandum of transfer of the Elizabeth Bay property, would cause detriment to the Commonwealth with respect to that property. Although there is no specific evidence on the point, it seems to me incontestable that a purchaser will pay a higher price if the acquisition can be completed without liability to pay stamp duty. Consequently the price which the Commonwealth can obtain for sale of a Commonwealth place in New South Wales will be reduced, and consequently the Commonwealth will suffer detriment, if the Stamp Duties Act of New South Wales can impose duty on the instruments of sale and conveyance, even though the duty is payable by the purchaser rather than the Commonwealth. A State law unconnected with the Commonwealth's public purposes or use of the Commonwealth place 78 In Allders International Brennan CJ (at 639) said that the power which s 52(i) confers on the Commonwealth Parliament cannot logically be confined to the regulation of conduct and activities in and the use of a Commonwealth place. In his opinion, the power extends to the legislative control of any act, matter or thing that occurs or exists within a relevant locality (at 639). On this reasoning, the required connection between the State law and a Commonwealth place need not relate to the purpose for which the Commonwealth place was acquired or the use of the Commonwealth place in pursuit of that purpose. 79 However, there are some observations in the judgment of McHugh, Gummow and Kirby JJ which, according to the plaintiff, point in the opposite direction. Their Honours emphasised that the amount of duty payable under the Stamps Act depended upon the amount of rent payable under the instrument of lease, which in turn depended upon a formula which had regard to the number of passengers and their expenditure (which they refer to as 'economic activity' - see 677-8). That meant, as their Honours pointed out, that the amount of stamp duty was fixed by reference to the extent of use of the Commonwealth place for the public purpose for which it was acquired (at 677). For reasons which I have already given, I do not regard this part of their Honours' reasoning as an essential ingredient of the principle upon which their judgment was based. When rejecting a submission that the exclusive power conferred by s 52(i) was limited by other parts of the Constitution including s 51(ii), their Honours stressed that the power conferred by s 52 is plenary (at 679), and their reasoning implies that s 52 is not confined to laws with respect to enumerated subjects or purposes. To hold otherwise would be inconsistent with Worthing and Phillips, where the State laws which were held not to apply in relation to a Commonwealth place had no connection with the purpose for which the relevant land had been acquired. 80 In my opinion, therefore, it is irrelevant that in its operation, the Stamp Duties Act of New South Wales had no connection with the Naval purposes for which the Elizabeth Bay property was acquired by the Commonwealth, and no connection with any continuing or even temporary use of the property. I reject the plaintiff's submission to the contrary. The effect of s 52(i) on the Stamp Duties Act 1920 (NSW) 81 It follows, in my view, that the Stamp Duties Act was invalid under s 52(i) to the extent that it intruded upon the exclusive legislative power of the Commonwealth with respect to the Elizabeth Bay property as a Commonwealth place. It intruded on the Commonwealth's exclusive legislative domain because it purported to charge the contract for sale and memorandum of transfer of that property to stamp duty while the property was a Commonwealth place (ss 4, 41, 66 and the Second Schedule); and to impose an obligation on the purchaser of the property from the Commonwealth to cause those instruments to be stamped at the time of first execution of those instruments, at which time the instruments were with respect to a Commonwealth place (ss 25 and 26); and to impose liability on the purchaser to pay that duty at the time of first execution (s 38). 82 The plaintiff did not contend that these provisions of the Stamp Duties Act, though invalid with respect to the Elizabeth Bay property while it remained a Commonwealth place, could spring into life upon registration of the transfer to impose obligations and liability upon the defendant as purchaser thereafter. Nevertheless such a submission might be implied by or arise out of the submission that the Allders International case was distinguishable because Commonwealth ownership continued at all material times in that case, whereas in the present case the Commonwealth property has been conveyed away to a private corporation. I should therefore deal with this possibility. 83 In my opinion the argument, though attractive at first blush, is untenable. Where it applies, s 52(i) invalidates a State law to the extent that it intrudes upon the Commonwealth's exclusive legislative domain (Allders International, 186 CLR at 638 per Brennan CJ, 680 per McHugh, Gummow and Kirby JJ). It does not merely render the State law inoperative and capable of reviving automatically when the subject property ceases to be a Commonwealth place. 84 The relevant provisions of the Stamp Duties Act, especially ss 4, 25, 26, 38, 41, 66 and the Second Schedule, purported to impose obligations and liabilities with respect to the Elizabeth Bay property which were to be discharged and performed at times when that property was a Commonwealth place. To the extent that they purported to do so, those provisions were invalid. While some of the relevant provisions relate to a state of affairs, namely that certain instruments were charged with duty (ss 4, 41, 66 and the Second Schedule), those provisions did not purport to have any different or revived application after registration of the transfer of a kind which might be severed from the initial invalidity. Other provisions (ss 25, 26 and 38) imposed continuing duties and liabilities but again, the terms of the provisions do not suggest that registration of the transfer affected or revived the obligations. 85 Section 144 required that the Stamp Duties Act be read and construed so as not to exceed the legislative power of the State, to the intent that where any enactment would otherwise have been construed as being in excess of that power, it would nevertheless be a valid enactment to the extent that it was not in excess of that power. In my opinion s 144 cannot be used to validate the imposition of stamp duty as from the registration of the transfer in favour of the defendant, because the relevant provisions of the Act unambiguously purported to apply to create obligations and liabilities at times when the Elizabeth Bay property was a Commonwealth place, and therefore they were wholly invalidated by s 52(i) to the extent that they purported apply to the Elizabeth Bay property as a Commonwealth place. Conclusions 86 My conclusions are as follows: (i) the provisions of the Stamp Duties Act 1920 (NSW) are invalid by virtue of s 52(i) of the Constitution to the extent that they purport to impose stamp duty on the contract for sale of the Elizabeth property dated 5 September 1997 and the memorandum of transfer registered on 4 February 1998, and to create an obligation to cause those instruments to be stamped and a liability to pay stamp duty on those instruments; (ii) consequently the defendant is not indebted to the plaintiff with respect to the amount of stamp duty and fine claimed in the statutory demand served by the plaintiff on the defendant on 13 May 1998; (iii) further, the plaintiff is not, and was not at any relevant time, a creditor of the defendant with respect to the amount of stamp duty and fine claimed with respect to the Elizabeth Bay property; (iv) the plaintiff therefore has no standing under s 459P of the Corporations Law to apply to the Court for the defendant to be wound up; (v) there being no application by any other creditor of the defendant to be substituted as plaintiff in the winding up proceedings under s 465B, the winding up summons should be dismissed; (vi) the defendant as cross-claimant is entitled to the declaration sought in the cross-claim dated 19 August 1999, namely a declaration that the contract for sale of land dated 5 September 1997 between the Commonwealth of Australia as vendor and the defendant as purchaser is not dutiable under the Stamp Duties Act 1920 (NSW) by reason of section 52(i) of the Constitution. I shall hear submissions on the question of costs. * * * * * * * * * * Last Modified: 09/10/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.