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02 Dec 1010 Partnership retirement deed a conveyance for stamp duty purposes - Henschke

The High Court (French CJ, Gummow, Hayne, Heydon and Kiefel JJ) has held that a deed under which one member (Mrs Doris Henschke) of a four member partnership retired, and under which the remaining three partners continued in partnership, was a conveyance on sale for the purposes of the Stamp Duties Act 1923 (SA).

The High Court said, at para 28:

"The Retirement Deed operated with respect to the interest of Mrs Doris Henschke, which was a presently existing equitable chose in action against the other partners to effect an accord and satisfaction, by her acceptance of the payment under cl 2 in place of that chose in action against the other partners. The Retirement Deed further provided for the creation of a second partnership to conduct the business previously conducted under the [original] Partnership Agreement...Pursuant to and by virtue of the provisions of the Retirement Deed, there were vested in the members of the second partnership the equitable choses in action representing their present partnership interests as described by Mason J in United Builders. As already stated, the Retirement Deed thus was a conveyance within the meaning of s 60 of the Act."

The High Court continued, at para 29:

"The respondents sought to avoid that outcome by reliance upon MSP Nominees Pty Ltd v Commissioner of Stamps (SA). This was in support of the submission that the assets of the first partnership remained under the control of the "continuing partners" comprising the second partnership, and "once they had the release from Mrs [Doris] Henschke there was no need for a conveyance". But the present significance of MSP Nominees is found in the proposition in the reasons of the Court to the effect that an essential characteristic of the "release" of an equitable interest, such as that of Mrs Doris Henschke, is the enlargement of the interests of the "continuing partners" in the assets to be applied by them in the conduct of the business of the second partnership." (Footnotes omitted.)

Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43 (High Court; French CJ, Gummow, Hayne, Heydon and Kiefel JJ; 1 December 2010).

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