[1998] PNGLR 226

PAPUA NEW GUINEA

[national court of justice]

PLACER PACIFIC LIMITED

V

THE COMMISSIONER GENERAL OF INTERNAL REVENUE

waigani: sevua j
18 May and 18 December 1998

Stamp Duty – Finance Agreement – Executed between Appellant and another – Agreement executed out of Papua New Guinea – Non registration – Original not within country – Liability to duty – Photocopy or copy of document – Whether subject to duty – Copy document – Whether it is an instrument therefore subject to duty – Stamp Duties Act 1988.

words and phrases – "Instrument" Section 2 Stamp Duties Act 1988.

Facts

The appellant Placer Pacific Limited, and Placer (PNG) Pty Ltd executed a finance agreement on 7th July, 1990 in Hong Kong but the original agreement was not brought into Papua New Guinea. Sometimes in 1991 the Controller of Foreign Exchange (the Controller) at the Bank of Papua New Guinea registered a copy of the agreement. The appellant following that request forwarded a photocopy (the copy document) of the original agreement to the Controller, which the respondent used to assess duty pursuant to Section 20(1)(b) and Item 1 of Schedule 1 of the Stamp Duties Act.

The appellant paid the duty and later lodged an objection against the assessment of the respondent which objection the respondent disallowed. The appellant therefore appealed to the National Court against the respondents decision to disallow the appellants objection. Section 20(1)(b) of the Stamp Duties Act provides:

Assessment of Duties

20(1)	[Opinion of Collector] Where –

a person refuses or fails to deliver or lodge with the Collector of Stamp Duties as and when he is required to do so by or under this Act, a statement, return, instrument or other document on or in relation to which duty is chargeable under this Act; or …

Held

1.	Section 5A of the Stamp Duties (Budget Provisions) Act No. 43 of 1994 does not apply to the present case because it has no retrospective operative powers.

2.	In the absence or unavailability of the original copy, the definition of the term "instrument" includes a copy of the original document or its duplicate for purposes of assessment of duty.

3.	The copy of the original agreement which is outside the jurisdiction is an "instrument" as defined by s 12(b) of the Income Tax (International Agreement Amendment) Act (No. 12 of 1998) and is therefore subject to duty.

Case cited

Commissioner of Stamps (Qld) v Arnold Wienholt & Ors (1915) 20 CLR 531.

Counsel

P Payne, for appellant.
M Miva, for respondent.

18 December 1998

Sevua j. The appellant, Placer Pacific Limited, and Placer (PNG) Pty Ltd executed a finance agreement on 6th July, 1990, in Hong Kong. The original agreement has not been brought into Papua New Guinea, however, sometime in 1991 the Controller of Foreign Exchange (the Controller) at the Bank of Papua New Guinea registered a copy of the agreement. The appellant, following that request, forwarded a photocopy (the copy document) of the original agreement to the Controller.

Upon receipt of the copy document, the respondent, on 18th April, 1996, assessed duty on the copy document in pursuance of s 20(1)(b) and item 1 of Schedule 1 of the Stamp Duties Act (the Act). Duty was assessed at K120,160.21 with a penalty of K120,160.21 for late lodgement and interest on unpaid duty in the sum of K52,541.28. The duty was paid on 17th May, 1996.

The appellant lodged an objection against the assessment on 17th May, 1996; however the respondent disallowed the objection on 14th June, 1996. The appellant has therefore appealed to this Court against the respondent’s decision of 14th June, 1996, and such appeal is brought pursuant to s 21(1)(a) of the Act.

Mr Payne, counsel for the appellant, says the issue is whether the finance agreement executed between the appellant and Placer PNG Limited is subject to stamp duty as it was executed outside Papua New Guinea. In respect of this submission, Mr Payne said, the relevant provision of the Act in determining liability is s 5(2), which provides:

"Stamp duty chargeable on an instrument is payable when the instrument is first executed, or, in the case of an instrument that is first executed outside the country; when the instrument comes into the country".

Counsel also referred to s 5A of the Act, which is an amended provision in s 3 of Stamp Duties (Budget Provisions) Act, 1994, No. 43 of 1994, which came into force on 1st January, 1995. The new s 5A provides: 

"Subject to this Act, duty shall be chargeable in respect of an instrument that is outside Papua New Guinea if the instrument (irrespective of whether it was executed in Papua New Guinea or otherwise) relates to property situated, or any matter or thing done or to be done in Papua New Guinea".

Mr Payne submitted that the territorial nexus in that provision does not apply to the original agreement as it only apply to instruments executed after 1st January, 1995. Mr Miva, counsel for the respondent said that s 5A has no retrospective power, but he also said, basically that was "perhaps done to correct any loophole existing prior to 1994" Mr Payne relied on Commissioner of Stamps (Qld) v Arnold Wienholt & Ors (1915) 20 CLR 531, a decision of the High Court of Australia, which considered the terms of the relevant Queensland Stamp Duties legislation.

Without placing much reliance on the Queensland case, I am of the view that s 5A does not apply in the present case for the simple reason that it has no retrospective operative powers. Section 5A could not apply to a transaction which took place in 1990, since the amending Act did not become operative until 1st January, 1995.

There is another issue raised by the respondent, in fact, the respondent relies on that issue to have the appeal dismissed. The issue is whether the copy document is an "instrument", as defined in the Act. The respondent’s assessment was based on its interpretation of the word "instrument", and as I understand, the respondent considered that it was an "instrument" therefore liable to duty.

Whilst the respondent acknowledges that the original agreement is not liable to duty, until brought into the country, it argues that the copy of the agreement is an "instrument" therefore subject to duty.

The word "instrument" is defined in s 2 of the Stamp Duties (Amendment) Act (No 26 of 1988) as follows:

"(a)	docket, note, memorandum or any written or otherwise represented document, including a written, typed or printed document; and,

(b)	in a case where the original of an instrument is not available for production to the Collector of Stamp Duties --

(i)	a duplicate original thereof; or

(ii)	a copy of the original or the duplicate original, whether produced by the same process as the original or by a separate process and whether executed or not"

Under the same provision, the definition of "counterpart" includes a "duplicate".

Mr Payne submitted that unless the copy is a "duplicate" or "counterpart" of the original agreement pursuant to s 12 of the Act, the Act does not impose duty on a copy. He relies on the definitions of those two words. Stroud’s Judicial Dictionary, 5th ed. Vol 2, defines "duplicate" as a document which is essentially the same as some other document having precisely the like operation and effect. "Counterpart", is defined in Jowitt’s Dictionary of English Law, 2nd ed. Vol 1, as, "the corresponding part or duplicate".

Based on these definitions, Mr Payne submitted that the copy document is not liable to duty. He submitted that the definition of "instrument" only applies in circumstances where the original instrument is unavailable, for example, it has been destroyed or lost.

Counsel relies on Wienholts’ case, which is authority for supporting the appellant’s arguments that the original agreement is not liable to duty until brought into the country. He further submitted that the fact that the photocopy of the original, was brought into the country, should not result in the original agreement becoming liable to duty.

Counsel went on to discuss the difference between a copy and a duplicate or counterparts. I agree with the appellant’s agreement that, the copy or photocopy of the original agreement is not a duplicate or counterpart pursuant to s 12 of the Act.

However, I consider that the definition of "instrument" subjects the copy of the agreement to stamp duty. I specifically refer to paragraph (b) of the definition of "instrument" which states:

"(b)	in a case where the original of a instrument is not available for production to the Collector of Stamp Duties - 

(i)	a duplicate original thereof; or

(ii)	a copy of the original or the duplicate original whether produced by the same process as the original or by a separate process and whether executed or not"

The original agreement is not available in the country for production to the Collector of Stamp Duties. No reason has been given as to why it has not been brought into the country, but that’s not the issue here. The fact is, it is not available. I do not think I can accept Mr Payne’s submission that, the term, "not available" refers to circumstances like, it has been lost or destroyed. The Court would be inserting into the Act what the legislature did not, and that is not the function of the Court. The term, "not available" can include any circumstances of unavailability.

I am of the view that, the copy of the original agreement, which is outside the country, is an instrument pursuant to s 12(b) of the Act, therefore subject to duty. The Court has noted other submissions advanced by the appellant. However, in view of my construction of the word "instrument", it is not necessary to address those submissions.

The appeal is therefore dismissed with costs.

Lawyer for appellant: Blake Dawson Waldron.
Lawyer for respondent: Internal Revenue Commission.