Signed Sealed and Stamped? A reminder on the importance of stamping documents

All practitioners are, or should be, acutely aware of the need to stamp dutiable documents in a particular state or territory. However, it can be easy to overlook the issue, particularly if there is uncertainty as to whether the document is in fact required to be stamped. This difficulty is exacerbated by the differences in substantive provisions of the Duties Acts in each state and territory.

Two recent Federal Court decisions, Pitman v Johnson [2017] FCA 945 (Pitman) and 640 The Esplanade Pty Ltd v Splash Bay Pty Ltd (No 2) [2017] FCA 89 (640), serve to show the importance of ensuring documents are properly stamped and highlight the potential consequence that a document will be inadmissible in legal proceedings if it is not properly stamped.

 

Unstamped documents generally inadmissible in legal proceedings

Pitman case

Pitman concerned bankruptcy proceedings taken in South Australia. The applicants sought a declaration that certain gemstones in possession of the trustee in bankruptcy, known as the Rough Opal, were owned by the Andamooka Opal Stone Unit Trust (Trust). An affidavit was sworn by one of the applicants who purported to be a trustee of the Trust, annexing a number of trust documents indicating proof of ownership including: a distribution deed, indenture, deed of amendment and appointment of trust deed. These documents were not stamped.

The admissibility of both the content of the affidavit and the documents annexed to it was challenged. Section 22 of the South Australian Stamp Duties Act 1923 (SA Act) provides that no document chargeable with duty can be given in evidence unless it is duly stamped. The applicants contended that each of the documents were not chargeable with duty and that they should be admitted provisionally. Alternatively, the applicants sought a deferral of judgment until the liability to pay duty was determined by the Commissioner of State Taxation and if required, for the applicants to pay duty.

Justice Charlesworth rejected a deferral of consideration and held that the Court had the jurisdiction to determine whether the documents were chargeable with duty. Significantly, her Honour found that most of the documents annexed to the affidavit were dutiable under the SA Act. Therefore, since they had not been stamped, they were ruled to be inadmissible. This was fatal to the applicants' case in establishing ownership of the Rough Opal, resulting in its ownership being declared to be properly vested in the trustee in bankruptcy. In any case, her Honour also held that the bundle of documents was not relevant because the documents did not identify whether the asset which was being distributed was, in fact, the Rough Opal.

In considering whether it was appropriate to defer consideration of the matter until the documents could be stamped, Justice Charlesworth found that 'there was no reliable means to predict the period of time for which an adjournment might be necessary' and without any indication of the Rough Opal's true value, her Honour found that it could not be assumed that the assessment and payment of duty would be attended to in a short time.

640 case

Earlier this year, Justice Markovic handed down a decision, which amongst other issues, considered the admissibility of documents purporting to transfer units in a unit trust and whether those documents were valid as they were not stamped for duty in Queensland. The Court had previously made orders under s 487(2) of the Duties Act 2001 (Qld) (Qld Act) which allowed the documents to be stamped with the Commissioner and therefore the documents were subsequently permitted to be tendered in Court as evidence of the transfer. Justice Markovic also confirmed that s 487 of the Qld Act does not operate to render an instrument invalid, rather, that section is concerned with its use as opposed to its validity. This was previously the subject of conflicting Queensland authority.

The admissibility regime in other states and territories

Admissibility in State and Federal Courts

Other states have adopted a more flexible approach vis--vis South Australia in admitting into evidence documents not duly stamped; so long as the document is transmitted for stamping with the relevant authorities as a condition of receipt into evidence. Aside from the Northern Territory, each other state and territory provides a statutory mechanism through which the documents can be stamped, and duty paid, prior to their admission into evidence. Each of the provisions requires Court approval before the unstamped document is received into evidence. The table below sets out the relevant sections.

State or Territory

Provision

Queensland

s 487 Duties Act 2001 (Qld)

NSW

s 304 Duties Act 1997 (NSW)

ACT

s 250 Duties Act 1999 (ACT)

Victoria

s 272 Duties Act 2000 (Vic)

Tasmania

s 246 Duties Act 2001 (Tas)

WA

s 279 Duties Act 2008 (WA)

The Northern Territory allows unstamped documents to be admitted so long as the party pays the amount into Court, which is then passed on with the document to the Commissioner (s 96 Stamp Duty Act (NT)). While South Australia does not provide a statutory mechanism for receiving the document into evidence similar to the other states, the court may still order an adjournment so that the relevant document can be stamped.

In relation to Federal Court matters, Justice Charlesworth made clear in Pitman that s 9 of the Evidence Act 1995 (Cth) does not affect a law of a state or territory so far as the law provides for the admissibility of a document to depend on whether stamp duty has been paid.

Importantly, as noted in Cross on Evidence, objections to the admission of unstamped documents are taken by the Court and cannot be waived by the parties.

State and Federal Tribunals

Where unstamped documents are sought to be tendered in State or Federal Tribunals, such as the Queensland Civil and Administrative Tribunal, Administrative Appeals Tribunal, or equivalents, most practitioners would be aware that the usual rules of evidence do not strictly apply in these proceedings.

In New South Wales, the ACT, Victoria, Tasmania, and Western Australia, the inadmissibility rules under each relevant Duties Act apply equally to tribunals as the relevant section clearly states 'tribunal'. In Queensland and the Northern Territory, the position is unclear, given the relevant sections do not state explicitly that documents are inadmissible in a tribunal.

In the AAT, the position is even more uncertain, given that s 79 of the Judiciary Act 1903(Cth) does not apply to pick up the law of the State concerned, as the AAT does not exercise federal judicial power [1]. This is a vexed issue and one which may be relevant in objection proceedings, for example.

Conclusion

As with most things, prevention is better than any cure. While the undertaking to pay duty provided by the applicants in Pitman would have been sufficient in most other jurisdictions, and indeed may have been sufficient in South Australia had the amount payable been ascertainable, the decision is a reminder that the appropriate duties legislation in each state or territory should always be checked to ascertain the exact position.

On the transactional side of practice, practitioners should of course ensure that documents which are required to be stamped are stamped in a timely manner to ensure there are no adverse consequences. This is especially so if document has been or may be contentious. On the litigious side of practice, practitioners would be wise to check that any document which is or will be material to legal proceedings is stamped if it is required to be, and take the evidential point if it is proper to do so.

More Cleardocs information on related topics

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[1] See for example Re Taxation Appeals [1990] 21 ATR 3281 (9 March 1990) at [22], or s 6 of the Qld Act.