Commissioner of Stamp Duties (NSW) v Perpetual Trustee Company Limited

The Commissioner of Stamp Duties (NSW) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the imposition of stamp duty under the *Stamp Duties Act 1898* (NSW) on a marriage settlement executed by Harold Walter Fairfax. The Commissioner sought to levy duty on the value of the property settled, arguing that the settlement contained a trust to take effect after the settlor's death. The trustees of the settlement, Perpetual Trustee Company Limited, contended that no such trust existed for the purposes of the Act.

The legal issues before the High Court were whether a trust created by a marriage settlement, which provided income to the settlor's wife during their joint lives and then to the survivor for life, constituted a "trust to take effect after his death" within the meaning of sections 49 and 58 of the *Stamp Duties Act 1898* (NSW). Specifically, the court had to determine if the wife's life interest, structured as an initial interest during the joint lives followed by a contingent interest upon the settlor's death, should be viewed as a single, continuous life estate from the date of the settlement, or as distinct interests, one of which took effect only after the settlor's death.

A majority of the High Court, comprising Isaacs, Gavan Duffy, and Rich JJ., held that the trust in favour of the settlor's wife after his death was indeed a trust to take effect after his death and was therefore taxable. The majority reasoned that the settlement created two distinct trusts: one for the wife during the joint lives of the settlor and his wife, and another for the survivor of them for life. As the wife's entitlement to income after the settlor's death was contingent on her surviving him, this latter trust was considered to take effect only upon his death. The court rejected the argument that the two provisions should be viewed as a single, unified life estate from the date of the settlement, emphasizing the legal distinction between the two provisions and the intention of the Act to capture property dispositions that become effective upon death.

The appeal was allowed, and the decision of the Supreme Court of New South Wales was overturned. The High Court ordered that stamp duty was payable on the value of the property settled in accordance with the provisions of the *Stamp Duties Act 1898* (NSW).