Commissioner of Stamp Duties (NSW) v Thomson

Aff

TTiomjort V

Comnussw

394 HIGH COURT

[1927.

[HIGH COURT OF AUSTRALIA.]

THE COMMISSIONER OF STAMP DUTIES

Appellant;

FOR NEW SOUTH WALES . .

AND

THOMSON AND OTHERS

R espo n d en ts .

ON APPEAL PROM THE SUPREME COURT OF

NEW SOUTH w a l e ;.

H . C. o r A. Stamp Duty—Settlement— Exclusion of settlor from any benefit— Trust to take effect

1927. after death of settlor— Stamp Duties Act 1898 (A'.S. IF.) [No. 27 of 1898), secs, 49 (2) (b ) (6), 58*—Stamp Duties (Amendment) Act 1914 {N.S.IF.) (No. 3 of

Sy d n e y ,

1914), sec. 36*—Real Property Act 1900 (N.S. W.) (No. 25 of 1900), secs. 42, 43.

Nov. 16, 17 ;

Dec. 10.A testator owned certain land in New South Wales and held certain

K qox C.J., conditionally purchased and conditionally leased lands there, the whole Isaacs. Higgins,

forming two station properties on which he and a partner carried on business

Gavan Duffy

and Powers JJ .as pastoralists under a deed of partnership executed in April 1896, under

which the partnership was to continue for a term of seven years and the capital of the partnership was to consist of the lease of the lands comprised in the stations and certain stock and plant. In August 1896 the testator transferred the lands comprised in the station to his wife; and on the same day * Sec. 49 (2) (b ) of the Stamp Duties forth retained to the entire exclusion of

Act 1898 (N.S.W) as amended by sec. the donor or the maker of the convey

36 of the Stamp Duties (Amendment)

ance or of any benefit to him of whatso

Act 1914 (N.S.W.) provides tha t duties ever kind or in any way whatsoever.

shall be charged and chargeable upon Sec. 58 (1) of the Act provides that

and in respect of (inter alia) “ All real “ within six months after the death of

estate (including chattels real) passing any person who has executed a settle

under a deed of gift or voluntary ment containing any trust to take

conveyance, whenever made by any effect after his death, . . . notice

person dying after the commencement of such settlement shall be lodged by

of the Stamp Duties (Amendment) Act

the trustee thereof . . - together

1914, of which bona fide possession and with a declaration specifying the pro

enjoyment has not been assumed by the perty thereby settled and the value

donee or person to whom such conveythereof, and duty shall thereupon be

ance has been made immediately upon payable on such value ” &c.

the gift or conveyance, and thence

40 C.L.R.] OF AUSTRALIA.

395

executed an indenture of settlement by which he and his wife declared that

H. C. O F A.

the wife should hold the lands upon trust, that the wife should either retain

1927.

and manage the lands so long as the husband should think fit during his

COMMIS-

life and so long as the trustees of the settlement should think fit after his

SIONEK OF

death, or at his request during his life and after his death at the discretion St a m p

of the trustees sell and invest the proceeds of sale, his consent being required D u t ie s

(N.S.W.)

to any investment during his lifetime. The settlement then provided that

during the joint lives of the testator and his wife she should retain for her sole

T h o m s o n .

use and benefit the whole of the rents and profits of the lands and investments and that after the death of either of them the trustee should pay one-fifth of the rents and profits to each of their five daughters during her life, with remainder over as to the corpus in favour of their children. The trustees were also empowered to grant leases to the testator either solely or jointly with others, but in the event of a lease to the testator the trustees were to fix the rent to be paid. Three weeks after the execution of the settlement the testator’s wife granted a lease of the lands to the testator and his partner for seven years. The testator died in 1914 and his wife died in 1923. The testator’s wife received the whole of the rents and profits of the lands from the execution of the settlement until the testator’s death, and after his death they were paid to the five daughters.

Held, by Knox C.J., Higgins, Gavan Duffy and Powers JJ . (Isaacs J. dissent ing), that bona fide possession and enjoyment of the property passing under the settlement was immediately assumed by the testator’s wife and was thenceforth retained by her to the exclusion of the testator or of any benefit to him, and therefore that the property was not dutiable under sec. 49 (2) ( b ) of the Stamp Duties Act 1898 (N.S.W.) as amended by sec. 36 of the Stamp Duties (Amendment) Act 1914 (N.S.W.).

Held, also, by Isaacs, Higgins and Powers J.J. (Knox C. J. and Gavan Daffy J. dissenting), that the settlement contained a trust to take effect after the death of the testator, namely, a trust to take effect after the death of the testator if he should die before his wife, and therefore that the property comprised in the settlement was taxable under sec. 58 of the Stamp Duties Act 1898.

Decision of the Supreme Court of New South Wales (Full C ourt): Thomson v. Commissioner of Stamp Duties, (1927) 28 S.R. (N.S.W.) 195, reversed.

Appeal from the Supreme Court of New South Wales.

A case for the opinion of the Supreme Court was stated by the Commissioner of Stamp Duties of New South Wales, which was substantially as follows :—

1. Archibald Currie (hereinafter referred to as the said Archibald

Currie) died on 3rd September 1914, ha\dng first duly made his will and a codicil thereto, probate whereof was granted by the Supreme

396 H IG H COURT

[1927.

C. OF A. Court of this State to Jessie Currie, Archibald Currie, Ian Rollo 1927.

Currie and William Herald Thomson, the executrix and executors

Co m m is

therein named.

s io n e r

Sta m p 2. By an indenture of partnership dated 1st April 1896 and

D u t ie s

(N.S.W.)

made between the said Archibald Currie and one Andrew Wilham

T h o m s o n .Smith, after reciting tha t the two several parties thereto had agreed

to enter into partnership for the purpose of carrying on the business of sheep-breeders, farmers, graziers and squatters upon the terms thereinafter mentioned, it was witnessed tha t each of them, tlie said Archibald Currie and Andrew Wilham Smith, agreed that they would become partners for the purpose and period and under and subject to the stipulations and provisions thereafter mentioned. 3. By indenture of settlement, dated 4th August 1896 and made between the said Archibald Currie of the one part, and Jessie Currie, his ^vife, of the other part— after reciting tha t the said Archibald Currie was desirous of making provision for his said wife and his five daughters, Ehza Currie, Jessie Currie, Katherine Annie Currie, Isabel Margaret Currie and Edith Rollo Chirrie, and their issue, in manner thereinafter appearing, and tha t the said Archihald CJurrie had by certain instruments and memoranda of transfer transferred to the said Jessie Currie all those freehold, conditionally purchased and conditionally leased lands set forth in the first schedule there under written and intended to transfer all those conditionally purchased lands set forth in the second schedule thereimder written and which said lands comprised the stations or runs known as North Wakool and Rankeilour, on which the said Archibald Currie was then carrying on the business of sheep-breeding, farming, squatting and grazing in conjunction with the said Andrew Wilham Smith, to the intent tha t the said Jessie Currie should hold the same and the income and proceeds thereof upon the trusts and subject to the powers, provisoes and declarations thereinafter declared and contained—it was witnessed tha t for effectuating the said desire of the said Archibald Currie and in consideration of the natural love and affection which he the said Archibald Currie had for his said wife and daughters and for other good consideration he the said Archibald Currie and also the said Jessie Currie did thereby respectively declare tha t she the said Jessie Currie, her executors

40 C.L.R.l OF AUSTRALIA.

397

or administrators, should either retain and m anage the said lands C.

o f a .

as thereinafter provided so long as the said Archibald Currie during

__J

his life and after the death of the said Archibald Currie so long as Cojiius-

SIOKER o r

the trustees or trustee for the time being of those presents should

Sta m p D u t ie s

think fit or should a t the request in writing of the said Archibald

(K.S.W.)

Currie during his life and after the death of the said Archibald Currie

T h o m s o n ..

at the discretion of the trustees or trustee for the time being sell the said lands either together or in parcels and either by pubhc auction or private contract and upon such terms as to the payment of the purchase-money and with or without taking a mortgage over the property sold to secure the unpaid portion thereof and a t such rate or rates of interest as the said Archibald Currie during his hfe and after the death of the said Archibald Currie as the trustee or trustees for the time being should think fit, and either with or without any special or other stipulation as to title or evidence of title or otherwise, and might buy in and rescind or vary any contract of sale without being answerable for loss occasioned thereby and might for the purposes aforesaid or any of them execute and do all such assurances and things as the said Archibald Currie during his life and after the death of the said Archibald Currie as the trustees or trustee for the time being should think fit, and should by and out of the moneys which should arise from any such sale pay the expenses incurred in or about the sale or otherwise in or about the execution of any of the trusts or powers of those presents and should invest the residue of the same moneys in the name or names of the trustee or trustees for the time being of those presents with the consent in writing of the said Archibald Currie during his life and after the death of the said Archibald Currie a t the discretion of the trustees or trustee upon the securities therein mentioned or during the life of the said Archibald Currie only and with his consent in writing in the purchase of any real or personal property and might with such consent vary or transpose such investments or securities into or for others of the nature thereby authorized And the said Jessie Currie should during the joint lives of the said Archibald Currie and Jessie Currie retain for her own sole use and benefit as her separate estate and without power of anticipation the whole of the rents and profits, interest, dividends and income of the

398 H IG H COURT

[1927.

H. C. OP A,

said land, moneys, stocks, funds, investments and securities and

1927.

after the death of either of them the said Archibald Currie or Jessie

Co m m isCurrie the trustees or trustee for the time being should pay one-fifth

s io n e r

Sta m p part of the rents and profits, interest, dividends and income of the

D u t ie s

(N.S.W.)

said land, moneys, stocks, funds, investments and securities unto

T h o m s o n .each of the said five daughters of the said Archibald Currie during

her life for her separate use and without power of anticipation and (subject to the rights of the said Jessie Currie) after the death of each one of the said daughters of the said Archibald Currie should stand possessed of one-fifth part of the said principal trust premises upon trust for all or such one or more exclusively of the others or other of the issue of such daughter by any husband to be born during the life of such daughter as such daughter should appoint and in default of such appointment for all the children or any the child of such daughter who being a son or sons should attain the age of twenty-one years or being a daughter or daughters should marry under tha t age Provided always and it was thereby agreed and declared tha t it should be lawful for the trustees or trustee for the time being to manage the said land so transferred as aforesaid and also any land which might for the time being form part of the trust premises in such maimer as they or he but subject to the consent of the said Archibald Currie during his life should think fit with full power to lease the same including any lease or leases of the same or any part thereof to the said Archibald Currie either solely or jointly with any other persons or person the trustees or trustee for the time being should fix and determine the rent to be paid in respect of such lease or leases Provided further and it was thereby agreed and declared tha t it should be lawful for the trustees or trustee for the time being to retain and apply out of the principal or income of the said trust money so much thereof as they should deem to be necessary or expedient for the due management of the said stations and also for the purpose of ma,king any payments to the (Drown in respect of the said land which the said Archibald Currie, his heirs, executors or administrators, should fail to make as they became due And it was thereby agreed and declared that in the event of the said Jessie Currie surviving the said Archibald Currie the said Jessie Currie should forthwith appoint two new trustees

40 C.L.R.] OF AUSTEALIA.

399

to act with her Provided always tha t the said Jessie Currie should

H . C. o f a .

appoint the above-named William Herald Thomson and one William

.__ '

COMMIS- sioNEB o r

Benson if they should be alive and willing to act

And it was

provided also that the trustees or trustee for the time being should

Sta m p D u t ie s

with the consent of the said Archibald Currie during his hfe and

(N.S.W.)

after the death of the said Archibald CHirrie a t their discretion be

T h o m s o n .

at liberty to exchange the said lands for other lands as they might deem fit And it was provided tha t the said Archibald Currie for himself, his heirs, executors and administrators, did covenant with the said Jessie Currie, her heirs and assigns, tha t he the said Archibald Currie would as soon as conveniently may be transfer to them or the smvivors or survivor of them the conditionally purchased lands set forth in the said second schedule And it was further provided that the said lands set forth in the said second schedule and any other lands thereafter acquired by the said Archibald Currie and used in connection with the business of the said stations or runs and which the said Archibald Currie might transfer thereafter to the said Jessie CHirrie or other the trustees or trustee for the time being of those settlements should be deemed to be the subject of the trusts thereinbefore contained And it was further provided and the said Archibald Currie for himself, his heirs, executors and administrators, did covenant with the said Jessie Currie, her heirs and assigns, that he the said Archibald Ciurie would pay the balance due to the Crown in respect of the conditionally purchased and conditionally leased lands as well as all rents which might become due to the Crown in connection with the land then or thereafter held in connection with the said stations or runs and would hold and keep indemnified the said Jessie Currie or other the trustees or trustee for the time being of those presents against all claims and demands in respect of such balances, interest, rents and other moneys payable in respect of the said land.

4. The lands described in the said first and second schedules are

situated in the Deniliquin district of this State and are the lands described in the said indenture of partnership, the lease of which said lands fornung {inter alia) the capital of the said partnership. The lands described in the second schedule to the said indenture

400 HIGH COURT

[1927.

H. C. or A.

were duly transferred to the said Jessie Currie by the said Archibald

1927.

Currie in accordance with the provisions of the said indenture.

COMMIS- 4a . Such of the lands described in the said first schedule as were

SIONEE OF

Sta m p

under the Real Property Acts then in force were transferred by

D u t ie s

(N.S.W.)two several memoranda of transfer in the form prescribed by sucb

V.Acts by the said Archibald Currie to the said Jessie Currie, both

T h o m s o n .

dated 4th August 1896. Such of the lands described in the said first schedule as were conditionally purchased and conditionally leased lands were transferred by twenty-three several transfers in the form of transfer prescribed imder the Crown Lands Acts then in force by the said Archibald Currie to the said Jessie Currie, each being in consideration of the sum of ten shillings and dated 4th August 1896. No reference was made in any such transfer to any lease or agreement for lease or other interest in favour of the said Archibald Currie or any other person. No lands in the second schedule were transferred until after the death of the said Archibald Currie, and thereafter aU such lands were transferred to the new trustees of the said indenture of settlement. All instruments of transfer referred to in this paragraph were duly registered in the appropriate offices as provided by law.

5. By indenture of lease made between the said Jessie Ciurie, the said Archibald Currie and the said Andrew William Smith, and dated 25th August 1896, it was witnessed in consideration of the rent thereby reserved and of the covenants by the lessees therein contained the lessor did thereby demise unto the said Archibald Currie and Andrew William Smith the lands therein described being the lands then in the occupation of the said lessees, being the lands more fully described in the first and second schedules to the said indenture of settlement.

6. Prior to the date of the said indenture of settlement the said Archibald Currie had agreed with the said Amdrew WiUiam Smith tha t the said lands should be leased to the said partnership and the said Jessie Currie executed the said indenture of lease in accordance with the said arrangement.

7. From and after the execution of the said indenture of settlement and until the death of the said Archibald Currie the said Jessie Currie received for her own use under the terms of the said indenture

40 C.L.R.] OF AUSTRALIA.

401

the whole of the rents and profits of the said lands the subject of H . C. or A.

1927.

the said indenture ; from and after the death of the said Archibald

Currie such rents and profits were paid to his five daughters in the CoMins-

SIONEK OF

said indenture mentioned. ^Stamp

D u t ie s

8. The said Jessie Currie died on 13th July 1923. The said William

(N.S.W.)

Herald Thomson and George Edwin Emery are now the trustees

T ho m son .

of the said settlement and the said Wilham Herald Thomson, Archibald Chirrie and Ian Rollo Currie are the executors of the said will.

9. The property subject to the said indenture is valued as at the death of the said Archibald Currie a t £63,622 ; and the total value of the estate of the said Archibald Currie hable to duty in New South Wales is £230,496.

10. No duty was paid in respect of the said property until 21st December 1926 ; and the Stamp Commissioner has claimed that duty is payable on the said property subject to the said indenture under the provisions of secs. 58 and 49 (2) (a ) (e) and (b ) of the Stamf Duties Acts 1898 and 1914, and has claimed interest on the sum so claimed to be payable at the rate of 5 per centum per annum from the expiration of six months after the date of the death of the said Archibald Currie.

11. The Commissioner accordingly assessed the duty a t £9,543 6s., being at the rate of 15 per centum on the said sum of £63,622, and the interest a t £5,631 13s. 6d., being a t the rate of 5 per centum on the said assessed amount of the said duty.

12. The said trustees of the said indenture have accordingly paid the sum of £15,194 19s. 6d. under protest, being the sum of £9,543 6s. for duty, £5,631 13s. 6d. for interest, and £20 as security for costs on behalf of themselves and the said executors of the said wdl, and have called upon the Commissioner to state this case for the opinion of this Honourable Court.

13. The questions for the opinion of the Court are :—

(1) Whether or not duty is payable on the property under the said indenture of settlement on any one or more of the following grounds: (a) that the said settlement is a voluntary settlement whereby an interest in the settled property or the proceeds of sale thereof for life or for any

VOL. XL.

402 H IG H COURT

[1927.

H.C.OF A.other period determinable by reference to death is reserved

1927.

to the se ttle r; (b) tha t the said property is real estate

Co m m ispassing under a voluntary conveyance made by a person

s io n e r

Sta m p

dying after the commencement of the Stamp Duties

D u t ie s

(N.S.W.){Amendment) Act 1914 of which bona fide possession and

V.enjoyment has not been assumed by the donee or person

T h o m s o n .

to whom such conveyance has been made immediately upon the gift or conveyance and thenceforth retained to the entire exclusion of the donor or the maker of the conveyance or of any benefit to him of whatsoever kind or in any way whatsoever; (c) tha t the said settlement is a settlement containing a trust to take effect after the death of the settler.

(2) What is the duty payable thereon ?

(3) How the costs of this case are to be borne and paid.

The indenture of partnership contained provisions that the partnership should be deemed to have commenced on 1st January 1896 and should continue for the term of seven years from that date ; tha t “ the capital of the said partnership shall consist of the lease of the freehold conditionally purchased and leasehold lands forming the stations known by the names of North Wakool and Rankeilour . . . also the right of occupancy for the term of this agreement of all other lands included in the above stations ” ; and tha t “ the said partners shall pay to out of the partnership moneys the rent payable to the owners of the said stations under the hereinbefore mentioned lease ” &c.

The provision in the indenture of settlement relating to the power of the trustees or trustee to manage and to lease the lands comprised in the settlement was in the following words : “ Provided always and it is hereby agreed and declared tha t it shall be lawful for the trustees or trustee for the time being to manage the said land so transferred as aforesaid and also any land which may for the time being form part of the trust premises in such manner as they or he (but subject to the consent of the said Archibald Currie during his life) shall think fit with full power to make improvements repairs additions or alterations of any description or to carry on the business of sheep breeding farming squatting and grazing thereon and for

40 C.L.R.] OF AUSTRALIA.

403

that purpose to purchase or otherwise acquire any sheep stock C. o r A.

chattels and implements they may deem necessary or expedient for

the due management of the said stations or runs or carrying on of

COMMIS-

SIOUTER OF

the said business and to make or incur any outlay out of the

Sta m p D u t ie s

principal or income of the trust moneys for any such purpose or (N.S.W.)

T h o m so n .V.

for the insurance or otherwise for the protection or benefit of the

property and to grant or renew leases of any description and upon any terms of the said premises or any part or parts thereof (including any lease or leases of the same or any part or parts thereof to the said Archibald Currie either solely or jointly with any other person or persons provided that in the event of a lease or leases to the said Archibald Currie either solely or jointly with any other person or persons the trustee or trustees for the time being shall fix and determine the rent to be paid in respect of such lease or leases) and to enter into any agreements of any description for or in relation to the tenancy or occupation of the same premises or any part or parts thereof and to accept surrenders of leases and agreements (either in contemplation of renewed lease or tenancy or otherwise) or alter the terms of tenancy or occupation under the same respectively and to make any allowances to or agreements with tenants or occupiers or intending tenants or occupiers of the same premises and either to prosecute or to postpone or forbear or to compound or submit to arbitration or settle in any other manner or if thought proper altogether to give up and release any remedies or demands against tenants or occupiers of any other person or persons whomsoever in relation to the premises.”

The case was heard by the Full Court, which made an order tha t the questions submitted should be answered by saying tha t duty was not chargeable on any of the grounds mentioned in the case: Thomson v. Commissioner of Stamp Dniies (1).

From that decision the Commissioner of Stamp Duties now appealed to the High Court,

Other material facts are stated in the judgments hereunder.

E. M, Mitchell K.C. (with him Nicholas and Kitto), for the appellant. The property is dutiable under sec. 49 (2) (b ) of the Stamp Duties Act 1898 as amended by .sec. 36 of the Stamp Duties

(1) (1927) 28 S.R. (N.S.W.) 195.

404 H IG H COURT

[1927.

H.C.OF A.{Amendment) Act 1914. The gift to Mrs. Currie was a gift of an

1927.

absolute interest in the land and immediate possession and enjoyment

Co m m is was not taken by her to the exclusion of the settlor and the section

s io n e r

St a m i" apphed

{Lmig v. Webb (1) ). The proper inference is that when

D u t ie s

(N.S.W.)

the settlement was made there was no enforceable agreement for a

lease to the settlor and Smith.

Unless there was, the gift to Mrs,

T h o m s o n .

Currie could not have been a gift of a reversion, as the Supreme Court held it was. There could not be such an enforceable agreement, for one person could not a t the time the settlement was executed grant a lease to himself and another. The circumstances were such that the lease the partners were intended to have was the lease which Mrs. Currie afterwards granted. The effect of the settlement was tha t the settlor had during his lifetime a power of vetoing the granting of leases by Mrs. Currie and th a t he was put in such a position as to be able to enforce a lease to himself on any terms he chose. That amounted to a retention by him of a substantial benefit. Under the settlement the settlor’s consent was necessary to all acts of management, including the prosecution of any remedies against lessees; so tha t he wms in a position to prevent the enforcement of any of the terms of the lease to himself and his partner. That also amounted to a retention by the settlor of a substantial benefit. If the settlement is not within sec. 49 (2) (b ), then it is dutiable under sec. 58 ; for it contains a trust to take effect after the death of the settlor. The fact that the trust is contingent upon his surviving his wife is immaterial (see Commissioner of Stamp Duties (iV.d.lF.) V. Perpetual Trustee Co. (2) ; Rosenthal v. Rosenthal (3); In re Simpson’s Settlement (4) ; Attorney-General v. Fairley (5) ).

Flannery K.C. (wdth him S. A. Thompson), for the respondents. Under sec. 58 the trust must be one which necessarily takes effect upon the death of the settlor {Rosenthal v. Rosenthal (3) ). Here the trust would not take effect on the death of the settlor unless he died before his wife. As to sec. 49 (2) (b ) as amended, the Supreme Court was right in its determination that, looking at the transaction as a whole, the property settled was a reversion upon an existing

(1) (1912) 13 C.L.R. 503.(3) (1910) 11 C.L.R. 87.

(2) (1915) 21 C.L.R. 09.

(4) (1892) 10 N.Z.L.R. 743.

(5) (1897) 1 Q.B. 698.

40 C.L.R.] OF AUSTRALIA.

405

lease. The powers which the settlor had under the settlement

C. o f A

were fiduciary powers to be exercised for the benefit of everyone

concerned and could not be exercised mala fide.

The benefit which

COMOTS-

SIONER OF

the section contemplates is something in the nature of ownership

Stamp D u t ies

and enjoyment of the property settled; and it is not some problematic

(X.S.W.)

advantage which the settlor may have over a stranger which may

T h o m s o n .

result in the settlor getting a lease instead of someone else, [Counsel

also referred to Attorney-General v. Worrall (1).]

[Isaacs J. referred to Attorney-General v. Seccombe ( 2 ) ; Earl

Grey v. Attorney-General (3).]

F. M. Mitchell K.C., in reply.

Cur. adv. vult.

The following written judgments were delivered :—

Dec. 10

K nox C.J. This is an appeal from a decision of the Supreme Court of New South Wales on a special case, stated by the appellant, raising the question whether duty is chargeable on certain property passing under a settlement dated 4th August 1896 made by Archibald Currie, who died on 3rd September 1914.

In the Supreme Court the claim of the appellant tha t duty was chargeable was founded on three grounds, namely, (1) tha t the settlement was a voluntary settlement whereby an interest in the settled property for life was reserved to the settlor (sec. 49 (2) (a ) (e) of the Stamp Duties Act 1898) ) ; (2) tha t the property was real estate passing under a voluntary conveyance made by a person dying after the commencement of the Stamp Duties {Amendment) Act 1914 of which bona fide possession and enjoyment has not been assumed by the donee inunediately upon the gift or conveyance and thenceforth retained to the entire exclusion of the donor or of any benefit to him (sec. 49 (2) (b ) of the Act of 1898 as amended by sec, 36 of the Act of 1914) ; (3) that the settlement was a settlement containing a trust to take effect after the death of the settlor. The Supreme Court held that duty was not chargeable on any of these

(1) (1895) 1 Q.B. 99.

(2) (1911) 2 K.B. 688.

(3) (1900) A.C. 124.

406 H IG H COURT

[1927.

H.	C. OF A. grounds ; and it is from that decision that this appeal is brought.

___ On the appeal the first ground was not pressed by counsel for

Com m is

the appellant.

sio n e r

Stamp As to the second ground the learned Chief Justice of New South

D u t ies

(N.S.W.)

Wales, who delivered the judgment of the Supreme Court, held

T hom son . tha t the transaction was really and in substance a settlement of the

reversion expectant on the determination of a lease for seven years

Knox C.iT.

to the partnership firm of Currie and Smith, which was at the date of the settlement in occupation of the whole of the land passing under the settlement and the documents executed in pursuance thereof. On this view of the transaction he held further that bona fide possession and enjoyment of the property passing under the settlement was immediately assumed by the donee within the meaning of the sub-section and was thenceforth retained by her to the exclusion of the settlor or of any benefit to him.

On the third ground the learned Chief Justice held that, as the death of the settlor was not a necessary condition precedent to any of the trusts of the settlement taking effect, the settlement did not within the meaning of sec. 58 contain any trust to take effect after the death of the settlor.

I agree with the learned Chief Justice not only in his conclusion on each of these grounds but also in the reasoning by which his conclusions were supported, and I cannot usefully add anything on either ground.

In my opinion the appeal should be dismissed. tha t the judgment appealed against is right though he does not adopt all the reasons relied on by the Judges of the Supreme Court.

I saacs J . Two separate questions have been argued. They are whether duty is payable by virtue of either (1) the final paragraph of sec. 49 of the Stamp Duties Act of 1898 as amended by sec. 36 of Act No. 3 of 1914, or (2) sec. 58 of the Act of 1898. The decision of this case must govern many others. The Supreme Coiut has unanimously held tha t duty is not payable under either provision. The majority of my learned colleagues agree with that conclusion so far as sec. 49 is concerned, which, to my mind, is the main section

40 C.L-R-] OF AUSTRALIA.

407

in this case.

With regret and sincere deference I am compelled to H. C. o f A.

take a different view of tha t section. I t is, however, no small

‘

consolation to me to find, so far as I can discover, tha t a t no single

CoMias-

SIOJSTEK O F

decisive point is my reasoning in conflict with tha t of more than

Stamp D u t ie s

one of ray learned colleagues. As far as sec. 58 is concerned, my

(X.S.W.)

conclusion, as will be seen, is to some extent dependent on the

T homson.

validity of my method of approach to the issue as to sec. 49.

Isaacs J.

1 entertain no doubt tha t in these matters a Court is bound to regard substance rather than form. That is a familiar principle. If it is a question of the effect of a settlement, then the Court regards the substance of the settlem ent; if it is a question of the effect of a composite transaction, then the Court regards the substance of the totaUty of circumstances comprising the transaction. But, in doing so, I do not understand that the Court is at liberty to apply a rule of thumb or to disregard positive law or the recognized principles of evidence, or to leave out of consideration any of the relevant circumstances, or to employ conjecture in the place of inference, or, most dangerous of all, to substitute as an equivalent some other transaction or other circumstances which did not occur for the actual transaction or circumstances which did, and then treat the imaginary equivalent as the only real and actual transaction.

Deahng with sec. 49, the substance of the transaction as it actually occurred appears to me to be plain beyond dispute. Archibald Currie transferred to his wife, Jessie Currie, his whole unencumbered fee simple estate and interest in certain lands by way of voluntary conveyance according to stated trusts for her and children, at the same time stipulating that she should, out of the estate so transferred, grant to him and his partner, Andrew William Smith, a lease for seven years ; and the stipulation was duly carried out, the lessees occupying and enjoying the land for the term granted and paying the agreed rent. If that be the correct view, it appears to me hardly arguable that the case does not fall within sec. 49 (2). That section was first enacted in April 1914 in the Stamp Duties (Amendment) Act 1914, with a number of other amendments of the Act of 1898. Inference strongly points to the origin of the sub-section

408 H IG H COURT

[1927,

H. 0 . or A.

being the case of the Commissioner o f Stamp Duties v. Byr nes (1), in

1927.

which it was held tha t a gift of realty by a father to his sons was not Co m m istaxable under the Stamp Duties Act merely because the sons thereafter

s io n e r

o r

Sta m p

permitted the father to have the benefit of all the profits of the land.

D u t ie s

(N.S.W.)Two days after tha t case was decided Lord Sumner (then Hamilton J.)

V.decided Attorney-General v. Seccombe (2). The new paragraph of

T h o m s o n .

sec. 49 is an adaptation to gifts inter vivos of sub-sec. 3 of sec. 2 of

Isaacs J.

the Finance Act 1894 (57 & 58 Viet. c. 30). As ex facie a suggestion of Lord Sumner was adopted it is desirable to see what was held under corresponding words in Seccombe's Case. I t was held: (1) tha t the “ exclusion ” of the grantor was “ not limited to a reservation ” by him “ out of the property passing under the gift.” I t included, subject to some following words, aU possession and enjoyment of the property, having the same extension as “ assumed ” ; (2) tha t there was no “ contract or honourable understanding ” tha t the donor should not be excluded but he relied on the will of the donee for any voluntary benefit; (3) that “ benefit" includes (a) benefit conferred by the deed of gift, (b) benefit issuing out of the property conveyed, (c) benefit issuing out of some other property and (d) benefit given by some separate and independent con tract; (4) tha t “ by contract or otherwise ” meant by contract or any other transaction enforceable a t law or equity. With the exception of (4) there was prior authority for the law so enunciated. The learned Judge said as to the last point : “ The enactment might have stopped a t the words ‘ or of any benefit to him ’ or it might have said ‘ of any benefit to him of whatsoever kind.’ ” The Parhament of New South Wales not only followed that suggestion but strengthened it, apparently being of the over-optimistic opinion tha t by employing the clearest and strongest of language all doubt would be avoided. The words are “ any benefit to him of whatsoever kind or in any way whatsoever.” To state my view of the sub-section in a nutshell, the Legislature, in view of the obvious difficulties of testing the reality and completeness of gifts of land inter vivos, so as to prevent evasion of taxation of conveyances for value on the one hand and evasion of probate duties on the other, made objective and outward facts the test. If the donor received any benefit

(1) (1911) A.C. 386. (2)

(1911) 2 K.B. 688.

40 C.L.R.] OF AUSTRALIA.

409

whatever for or in connection with his gift, whether reserved by his

H. C. or A.

1927.

deed or not, and in any of the ways mentioned in Seccombe’s Case

(1), and whether by enforceable obligation or not, the sub-section CoMjns-

•SIONER o r

apphes. Unless he is from the time of the gift utterly excluded

Sta m p D u t ie s

front, all possession and enjoyment of the property given (see per (X.S.W.)

T h o m s o n .V.

Duff J. for Supreme Court of Canada in Alberta v. Cowan (2) ), the

section applies. Unless the requirements of the sub-section are

Isaacs J.

complied with, the law says, in effect, for the purposes of the Act the gift was not made, and the property remains part of his estate at death, although for other purposes the gift is unquestionable. A lease by the donee to the donor, whether stipulated for in the conveyance or not, entitling him to the exclusive possession and enjoyment of the land for an interest included in the estate passing by the gift, seems to me so clearly to fall within the negative provisions of the sub-section that no reasoning on the m atter is able to assist. He could not be said to be entirely excluded from possession and enjoyment. He would take the produce of the land or he might sub-let a t a higher rent. Archibald Currie conveyed as his “ real estate ” the full fee simple, or his full proprietary right in the Crown lands. There was then no lease. There cculd not be a lease by A to A and B, even under the Real Property Act. That allows a proprietor of any existing estate or interest to transfer it to himself and another. But there is no provision allowing him to lease to himself and another. For reasons to be later stated, that

is an impossibility.

.4n attempt so to demise would instantaneously

merge his lesser interest in his freehold interest. On the state of facts I have assumed the Commissioner should succeed under sec. 49. The \uew presented by the respondents and acted on by the Supreme Court is that “ in substance ” all tha t was given was (1) the donor’s estate in the land as owner, less a seven years’ term, (2) his interest as landlord in the lease granting tha t term, leaving always in him an interest which never passed to Jessie Currie, namely, an interest as co-lessee with Smith, and leaving also in Smith an interest as co-lessee with Archibald Currie. There are, in my opinion, four obstacles in the way of this view. I state them in the order of their general importance. They are : (1) The actual

(1) (1911) 2 K.B. 088.

(2) (1926) 1 D.L.R. 29.

410 H IG H COURT

[1927.

H.c. OF A. transfers and deed of settlement;(2) their legal effect; (3) the

1927.

legal impossibility of the imaginary lease or agreement for lease

Co m m is by Archibald Currie ; (4) the absence of any evidence to support

s io n e r

Sta m p its existence in fact.

D u t ie s

(N.S.W.)

(1) The transfers were of Currie’s full and complete proprietorship,

T h o m s o n .no encumbrance or lease being excepted or noted in the register.

The transfers were registered according to law, and Mrs. Currie got

Isaacs J.

thereby what is known as a clean certificate. No reservation or exception appears in any shape or form in the transfers or registered title. The settlement recites the transfers, and states exphcitlv tha t they were made “ to the intent tha t the said Jessie Currie should hold the same and the income and proceeds thereof upon the trusts and subject to the powers provisoes agreements and declarations hereinafter declared and contained.” There is not a syllable in tha t document to support the inference necessary to sustain the respondents’ position. Sec. 10 (1) of the Act of 1893 provides plainly, in order tha t those who frame such documents and rely on them shall not be entitled to rely on stipulations omitted r “ Every fact and circumstance affecting the liabihty of any instrument to duty, or the amount of the duty with which any instrument is chargeable under this Act, shall be fully and truly set forth in such instrument.” In face of tha t provdsion I am of opinion that no relaxation, by way of inference, of the provisions of that document or of the transfers can be made in favour of the respondents. As a fact, however, there is much in the settlement to repel the suggested inference. Without referring in detail to the minute provisions of the settlement the result is tha t during Currie’s life, and beginning instanter, Mrs. Currie is to act in relation to the property so transferred as he directs. That, in the absence of any mention of an existing lease or right to a lease, excludes it. The completeness of Currie’s control gives to the scheme a very close resemblance to a will.

(2) The effect of the registered transfers does not appear to me to be doubtful. Two statutes apply—the Rm l Property Act and the Crown Lands Consolidation Act. With respect to the first statute the law is now definitely settled. Whatever interests existed in Currie himself were transferred to his wife, and whatever equities

40 C.L.R.]

OF AUSTRALIA.

existed in others were shut out from affecting the land, Before C. o r A.

1927.

registration equities, if they existed, could be protected by caveat or

CoMins-

suit and by restraining registration except subject to them [Barry

SIONEK OF

V. Heider (1) and Great Western Permanent Loan Co. v. Friesen

Sta m p D u t ie s

(2)). But once registration is effected, then as to all interests

(JV.S.W.)

adverse to the transferee, equitable or otherwise, up to tha t time T h o m so n .

existing, the statute law is distinct and imperative and no

Isaacs J.

Court can override it. A registration taken in trust is quite a different matter. The distinction is brought out by Lord Lindley in Assets Co. v. Mere Roihi (3) ;—“ Then it is contended that a registered owner may hold as trustee and be compelled to execute the trusts subject to which he holds. That is true; for, although trusts are kept off the register, a registered owner may not be beneficially entitled to the lands registered in his name. But if the alleged cestui que trust is a rival claimant, who can prove no trust apart from his own alleged ownership, it is plain that to treat him as a cestui que trust is to destroy all benefit from registration.” The recent case of Waimiha Saw Milling Co. v. yiaime Timber Co. (4) is very much to the point here, in view of the almost identical similarity of the sections there dealt with and secs. 42 and 43 of the New South Wales Real Property Act. That case decided that, notwithstanding a prior existing contract affecting the laud and even notwithstanding knowledge of tha t contract, the subsequent registration prevailed, there being no fraud in the sense of moral turpitude. This conclusion was reached on the mere words of the Act, nothing turning on whether the new registered proprietor was one for value or a volunteer. Value with notice is in ordinary equity as useless as voluntariness without notice. I t is therefore now beyond controversy that by force of registration IVIrs. Currie took all her husband’s estate free from any bargain or arrangement previously made with Smith, unless she was guilty of fraud, which no one ventmes to suggest. Then as to the Crown Lauds Acts :— As to the Crown Lands Acts, registration is declared (sec. 259) to give to all transfers the protection which registration confers imder the Registration of Deeds Act 1897. In the absence of bad faith on

(1) (1914) 19C.L.R. 197.(3) (1905) A.C. 176, at pp. 204-205.

(2) (192-)) A.C. 208.

(4) (1926) A.C. 101.

412 H IG H COURT

[1927.

H. C. OF A. her part the registered party has priority over all others. Indeed, having regard to the provision of the Crown Lands Consolidation Co m m isAct and Regulations, I think it would be a fraud on the Act to

s io n e r

St a m p

represent to the Minister by the form of transfer tha t “ aU estate

D u t ie s

(N.S.W.)and interest whether a t law or in equity ” was sought to be transferred

V.to Mrs. Currie, and to obtain the Minister’s sanction to that would

T h o m s o n . Isaacs J.

be a fraud on the Act, if it were not absolutely true (see Roach v.

Bickle (1) ). I have pursued the inquiry as to the effect of the statutes, only because of the stress placed on the supposed bargain embodied in par. 6 of the case stated. That paragraph was pressed as establishing a prior contract for a lease between Currie and his partner, Smith, a contract said to be enforceable against him had he not transferred his property, and therefore one which left him shorn of so much equitable interest in the land as was required to satisfy the bargain. The result of the inquiry is that, even assuming the arrangement to have been of the character in fact and law attributed to it, still the statute law left the new title clear and remitted the immediately contracting parties to their personal relations and remedies. In the result the whole estate of Currie “ passed ” under the instruments.

(3)

Assuming, however, the conclusion of fact to be sustained as

to the arrangement stated in par. 6, i t had no legal vahdity or recognition, even as between the parties. In order to understand tha t paragraph we must look a t the deed of partnership. That deed, dated 1st April 1896, was for a partnership between Currie and Smith for seven years ending 31st December 1902. Clause 4 of the deed described the capital of the partnership. I t began with what it called “ the lease ” of the freehold leasehold lands, and the right of occupation for the “ term of this agreement ” of other lands. The term, rent and covenants, &c., of “ the lease ” are all left unmentioned and uncollectable from the deed (see Marshall v. Berridge (2)). Clearly the term “ the lease ” was referential; and,

if so, to what ?

Apart from the lease actually given, there is no

guide and certainly none which would extend its term beyond 1902. Par. 6 of the case says : “ Prior to the date of the said indenture of settlement the said Archibald Currie had agreed with the said

(1) (1915) 20 C.L.R. 663.

(2) (1881) 19 Ch. D. 23.3.

40 C.L.R.] OF AUSTRALIA.

4 ia

Andrew William Smith that the said lands should be leased to the

H. C. OF A.

1927.

said partnership and the said Jessie Currie executed the said indenture

W v -ifc /

of lease in accordance with the said arrangement.” The vague Co m m is

s io n e r OF

initial agreement is simply a repetition of clause 4 of the partnership

Sta m p D u t ie s

deed, unless the concluding words extend the agreement to include

(N.S.W.)

a different term. Those concluding words make it perfectly plain

T h o m s o n ..

to me that the agreement between Currie and Smith was tha t the

Isaacs J.

lease which the partnership was to have was the precise lease, executed by Mrs. Currie, that is, a lease wherein she was to be landlord and the partners the tenants. If that be so, the case falls within sec. 49 (2). But if that were not so, if we could assume there was originally an agreement between Currie and Smith while Currie was owner that Currie should give the firm a lease on certain terms, how would that stand in law ? I t would be an agreement that Currie should enter into a binding contract of tenancy with himself and Smith—for a “ firm ” is not an entity—with mutual rights and obligations, and a t the same time create a demise of the land to himself and Smith for seven years, ending 31st December 1902. First we must remember tha t the only sense in which equitable interests in land under the Act exist by virtue of a contract is, in the words of Lord Parker of Waddington in Howard v. Miller (1), “ if and so far as a Court of equity would under all the circum stances of the case grant specific performance of the contract.” Nothing is clearer than that neither equity nor conunon law would recognize such a bargain as that suggested. An agreement between A and B that A shall contract with A and B is, in point of law, nonsense. In Henderson v. Astwood (2) Lord Macnaghten, for the Privy Council, said :—“ A man cannot contract with himself. A man cannot sell to himself, either in his own person or in the person of another.” If he cannot sell he cannot lease. In Ellis V. Kerr (3) Lord Warrington (then Judge of first instance) held that neither at law nor in equity can a man contract with himself or with himself and another. He confirmed this ruling in Napier v. If dliams (4); and the comphcation of title and interests where a lease is actually granted in such circumstances can be seen a t

(1) (191.i) A.C. 318, at p. 32(j.(3) (1910) 1 Ch. 529.

(2) (1894) A.C. 1.50, at p. 158.

(4) (1911) 1 Ch. 361.

414 H IG H COURT

[1927.

H. C. O F A.

pp. 363 and 369 of the report.

Obviously equity, even apart from

1927.

the Beal Property Act, could not enforce the bargain suggested

Co m m is

here, if it were made and insisted on.

s io n e r

o r

Sta m p (4) No such inference can be rightly drawn, because it would be

D u t ie s

(N.S.W.)

an inference of a useless bargain and because in fact there is nothing

T h o m s o n .to suggest it, and again because the natural meaning of the concluding

words of par. 6 is tha t what the two partners agreed to was that

Isaacs

when Mrs. Currie became registered proprietor she should do exactly what she did do. Why the term was to begin six weeks later and end six weeks after the partnership is not stated. That is one of the circumstances within the exclusive knowledge of the parties interested, and the Commissioner is obviously dependent on them for information. But the fact of the overlapping shows that the lease was granted out of the property intended to be given, and which according to the instruments and statute was given in full to Mrs. Currie, and which she, having personally accepted it on trusts, was bound to hold on those trusts.

For these reasons I am of opinion tha t the appeal should be allowed and the question as to sec. 49 answered in favour of the Crown.

As to sec. 58, I am further of opinion tha t if the same method of approach to sec. 58 be adopted as is contended for by the respondents in relation to sec. 49, namely, the rough eventual result, there was such a retention in fact of dominion by Currie until his death as to make the trust one to take effect after his death. The practical position was tha t as long as he lived the beneficiaries could get no more than he permitted the property to produce after expending what he considered proper. The trust technically created was nominal except to the extent tha t he considered desirable. He could

use up every penny in the management.

I am not sure that even

technically this was not the result. But if my view is wrong as to sec. 49 for the reasons relied on by the respondents, then I am of opinion tha t they should for the hke reasons fail under sec. 58.

H iggins J. The Commissioner of Stamp Duties for New South Wales has claimed and received duty on the property comprised in this settlement on three separate grounds; and the Full Supreme

40 C.L.R.] OF AUSTRALIA.

415

Court has decided against him—has decided tha t duty is

not H. c. or A.

chargeable on any of the groimds, and has ordered tha t the duty

1927.

paid be refunded. One of the grounds is tha t stated in

CoMins-

SIONEB or

sec. 49 (2) ( a ) (e) of the Stamp Duties Act 1898 ; but the Commis

Sta m p D u t ie s

sioner has now abandoned this ground on this appeal. A second

(N.S.W.)

T h o m s o n . V.

ground is that stated in sec. 49 (2) (b) (6), a ground which was

added by the Stamp Duties {Amendment) Act 1914 (sec. 36): “ AU

Higgins J.

real estate (including chattels real) passing under a deed of gift or voluntary conveyance, whenever made by any person dying after the commencement of the Stamp Duties {Amendment) Act 1914, of which hona fide possession and enjoyment has not been assumed by the donee or person to whom such conveyance has been made immediately upon the gift or conveyance, and thenceforth retained to the entire exclusion of the donor or the maker of the conveyance or of any benefit to him of whatsoever kind or in any way whatsoever.” The Commissioner stiU persists tha t the facts bring this case within this clause ; and it may weU be conceded th a t the facts fit this clause, except as to the words beginning “ of which bona fide possession and enjoyment has not been assumed ” &c. In my opinion, the decision of the Full Court is right in its conclusion as to this groimd, though I cannot accept all the reasoning. The freehold lands were duly transferred to the settlor’s wife by transfers accepted and registered under the Real Property Act 1900, transfers dated 4th August 1896 ; and the conditionally purchased and leased lands were duly transferred to her in pursuance of the Croion Lands Act on the same date ; but the trusts on which the wife was to hold aU these lands were declared by the indenture of settlement of the same date. I cannot regard the settlement as being a mere settlement for a reversionary in terest: in my opinion, the whole estate of the settlor passed in the lands—whatever estate he had on 4th August.

I propose now to examine the meaning of sec. 36 and its application to the facts of this case on the assumption tha t we are not constrained by the authority of certain English cases which have been cited, cases decided under an Act containing similar words—similar, but with a significant difference ; and I propose to examine these cases subsequently. I t is to my mind obvious tha t when the clause

416 H IG H COURT

[1927.

H.C. OF A. speaks ofbona fide possession and enjoyment being assumed by

1927.

the person to wliom such conveyance has been made,” it means

Co m m ispossession and enjoyment according to the nature of the property

s io n e r

Sta m p

conveyed, and the possession and enjoyment must be immediate

D u t ie s

(N.S.W.)possession and enjoyment—immediate on the conveyance. As

V.Lord Fitzgerald said, in Lord Advocate v. Young (1), “ by possession

T h o m s o n .

is meant possession of tha t character of which the thing is capable ”

Higgins J

(and see p. 553). Applying this view to the facts of this case, it is clear from the case stated (par. 7) th a t immediately upon the execution of the conveyance in August 1896 the wife of the settlor began to receive for her own use the whole of the rents of the land conveyed ; and that she received the rents for her own use until the settlor’s death in 1914 ; and tha t then the daughters received the rents, as provided by the settlement. So that, prima facie, a t all events, possession and enjoyment was assumed and retained immediately on the conveyance, and was retained to the exclusion of the settlor or of any benefit to him of any kind or in any fashion. What other possession or enjoyment was the thing capable of ? No difficulty arises as to the fact of enjoyment; but it has been urged tha t Mrs. Currie did not get “ possession,” for the land was occupied by the jiartnership of Currie and Smith—the settlor and another person. The settlement recites this fact of occupation. But sec. 36 of the Act does not make it a condition of exemption from the tax tha t the person to whom the conveyance is made shall get vacant possession, possession free from any tenant or occupier. Even if we mast, in applying this section, find “ possession ” in the strict legal technical sense, Mrs. Currie got such possession. In these days we are too apt to lose sight of the old principles of land tenure, and statutes frequently use words in a popular sense ; but there is no doubt tha t Mrs. Currie obtained immediate actual possession—seisin—of the lands, even if there were tenants working the lands. The possession of a tenant is the possession of his landlord ; and since the statute of Anne there is no need of attornment (4 & 5 Arme c. 16, sec. 9). As stated by Mr. Challis, in his book on Real Property, 3rd ed. :—“ When . ■ ■ lands are in the possession, or rather, in the occupation, of a tenant

(1) (1887) 12 App. Cas. 544, at p. 556.

40 C.L.R.]

OF AUSTRALIA.

for years, or from year to year, entry is not necessary in order to

H. C. O F A.

convert a seisin in law into a seisin in deed, or actual seisin ” (p. 236).

1927.

“ The existence of a prior term of years does not prevent the first Co m m is

s io n e r OF

vested estate of freehold from being an estate of freehold in Sta m p

(N.S.W.)D u t ie s

possession ” (p. 99). “ During the continuance of a prior term,

the first estate of freehold is properly described, not as being a

T h o m so n .

remainder of freehold expectant upon the term of years, but as

Higgins J.

being the freehold in possession subject to the term ” (p. 100).

The position correctly appears in the ordinary form of a defence by a landlord in an action for possession of land—“ the defendant is in possession by his tenant AB.” Moreover, the law is luminously explained by the Justices of the King’s Bench in Bushby V. Dixon (1). There A, seised in fee simple, died, the land being in the possession of his tenant. B was A’s heir, bu t received no rent, as it was supposed tha t the land was devised by will. B died leaving C his heir. An action of debt was brought against C, on B’s bond; and C pleaded no assets by descent. But it was held that B was seised in fact of the land—not merely seised in law— and that the land descended to C, and was assets liable to the bond debt. Abbott C.J. said (2): “ The possession of a tenant for years, being a rigl^tful possession, is considered in law as the possession of the heir, and therefore gives him a seisin in fact.” Bayley J. said (3): “ When there is a tenant, his possession becomes tha t of the heir immediately on the death of the ancestor.” Littledale J. said (4): “ At the moment o f ” A’s “ death,” B “ did become actually seised, for the possession of the tenant for years is the possession of the owner of the freehold.” I t would take a long time to discuss the origins of aU this technical law ; but it is sufficient to say that, a t common law, a tenant for years was not regarded as having an estate of which there could be seisin (possession), but was regarded as in the nature of a bailiff or servant.

I am not at all sure that such a disquisition on the technical meaning of that much abused term “ possession ” is necessary, when we consider the nature and object of sec. 36. I rather think that the word “ possession ” was used in contradistinction to

(1) (1824) 3 B. & C. 298.

(3) (1824) 3 B. & C., a t p. 305.

(2) (1824) 3 B. & C., at pp. 304-305.

(4) (1824) 3 B & C., a t p. 307

VOL. \L .

418 H IG H COURT

[1927.

H.C. or A. “ remainder ” or “ reversion ” ; as when we speak of a tenant for

1927

life in possession as distinguished from a tenant in remainder;

C o m m isand tha t the word “ possession ” in the section is not restricted to

s io n e r

Sta m p

land, but is applicable to the total beneficial property given by

D u t ie s

(N.S.W.)the settlement, whether the land or the proceeds. Indeed, if the

V .argument for the Commissioner be accepted, it means that every

T h o m s o n .

settlement of land is taxable unless the settlor give “ vacant ”

Higgins J

possession to the donee or the trustees of the settlement—unless

all tenants are cleared o u t ; a most improbable meaning.

But the question still remains, was the testator entirely excluded from the property conveyed—did he retain any “ benefit ” out of the property or in any way ? W hat is the meaning of the final words in the section ?

To answer this question, we have to consider the object of the Act, and its scope. Part. III. of the Stamp Duties Act. 1898 is primarily devoted to the taxation by stamp duty of assets which belonged to any testator or intestate a t his death (sec. 49). But, of course, various devices are used by owners for the purpose of avoiding such taxation ; and one device is to settle property before death so th a t it cannot be said to belong to the testator at his death or be included in the statement of assets for duty. If the executors say “ this property was not owned by the testator at his death,” the Legislature accepts the position, provided that the testator passed all his interest in the property by the settlement. The object of this sec. 36 is to make such a provision in definite terms; and, in insisting on bona fide possession and enjoyment being assumed immediately by the beneficiaries and retained by them, it insists also th a t the settlor shall not directly or indirectly retain any benefit of any kind from or under the settlement, so far as regards the property the subject of the settlement. I take it, therefore, th a t the “ benefit ” referred to means a tangible benefit from the property, a commercial benefit—not necessarily vendible, perhaps, but not a mere sentimental benefit such as may be incident to the honour of being a trustee, or a person who has to be consulted in the administration of property for the benefit of others. The “ benefit ” referred to in the section may, however, be of any character—“ of whatsoever kind ” ; and it may come “ in any

40 C.L.R.] OF AUSTRALIA.

419

way whatsoever ”— whether by exception or condition or stipulation H. C. of A.

at the time of the settlement or otherwise howsoever. But the

_̂_J

Commis

benefit must be a benefit as of right—an enforceable benefit— sion er o r

not a benefit dependent on the courtesy of the owner, as tha t of

Stamp D u ties

entering the house. Moreover, there is nothing to prevent the settlor

(X.S.W.)

from acquiring a new right or benefit by a subsequent independent T homson.

transaction, without rendering the property liable to the tax.

Higgins J .

There is no indication of any intention to interfere with freedom of contract; and a married woman may now contract even with her husband {Married Womerds Property Act 1901, sec. 3 (2) ). The settlement in question took effect on 4th August 1896 ; and Mrs. Currie, the trustee for the time being, gave a lease of the property to the settlor and another for seven years on 25th August. This does not involve any “ retaining ” of benefit; such rights as the lease gave were newly acquired under the lease, a lease which she was free to give or to refuse. Therefore, in my opinion, this settlement does not come within sec. 36 so as to render the property taxable, as the settlor has not retained for himself in respect of the property settled some benefit which is inconsistent with the full possession and enjoyment of the property on the part of the beneficiaries—as he here did not keep back for his own benefit any interest in the property. This is the view taken of the words in the Mortmain Acts (9 Geo. II. c. 36, &c.), from which the phrasing of sec. 36 seems to be mainly taken (see Attorney-General v. Munby (1) ; Doe d. Graham v. Hawkins (2) ).

In order to test this question, did the settlor retain any benefit for himself out of the property which he affected to give, it is necessary to fix one’s eyes steadily on the position on 4th August 1896, the date of the settlement. The settlor was giving away his freehold lands, his conditional purchases and leaseholds, &c., all of which were in the actual occupation of the partnership. Whatever may he said as to the legal difficulties in the way of Currie making a lease to a partnership of which he was himself a member, there IS no doubt that the partners were not trespassers ; they were in occupation with the consent of the registered proprietor, Currie himself. Mrs. Currie did not give a lease to the partners till 25th

(1) (1816) 1 Mer. :127.

(2) (1841) 2 Q.B. 212, at p. 217.

420

H I G H

COURT

[1927.

H. C. or A. August, three weeks after the settlem ent; but on 4th August,

when Mrs. Currie came into enjoyment of the property, Currie

Co m m iswas under a binding agreement with Andrew William Smith

s io n e r

Sta m p which is expressed in par. 6 of the case stated. The settlement

D u t ie s

(N .S .W .)

itself recites tha t the partnership was then actually carrying

on the partnership business on the lands. According to par. 6 Currie had agreed with the said Andrew' William Smith that

T h o m s o n .

Higgins J.

the lands should be leased to the partnership; and Mrs. Currie executed the lease “ in accordance with the said arrangement ” (sic). The length of the term agreed to, and the rent, are not otherwise stated in the case; but probably, as the lease granted by Mrs. Currie was “ in accordance with ” the arrangement made, we should take it tha t the rent, £1,875 per aimum, and the term, seven years, were settled, so far as Currie and Smith were concerned, before 4th August. But there was no stipulation before the settlement between Mr. and Mrs. Currie that she should grant a lease to the partners. At all events, as there was an “ agreement,” Smith was entitled to get from Currie, the proprietor, a lease for some term and a t some rent. Specific performance of this agreement could have been enforced by Smith against Currie; and although we have not been shown, a t all events as to the Crown lands (conditional purchases and conditional leases), that the Court could have directed a lease from Currie to Cunie and Smith, it could have directed a lease which would be substantially the same in substance (e.g., a lease to Smith with a declaration of trust on the part of Smith in favour of the partnership) (see Frg on Specific Performance, 6th ed., pp. 467-470). Mrs. Currie was not faced with the same technical difficulty in exercising her power to lease to Currie and Smith ; and, as trustee of the settlement, she was allowed “ to grant or renew leases of any description and upon any terms . . . (including any lease . . . to the said, Archibald Currie either solely or jointly with any other person) ” ; but she, and she alone (not with her husband’s assistance), was to fix and determine the rent. The lease which she executed was for a term of seven years from 15th February 1896 ; but the first payment by way of rent was to be calculated as from 28th March 1896 to 30th June 1896 ; and this first payment, as well as the

40 C.L.R.] OF AUSTRALIA.

421

rent from 30th June to 4th August, went to herself (not to Currie).

H. C. OF A .

1927.

Certainly, so far as the lease is concerned, there was no benefit that

Wy—'

came to Currie out of the property settled, no benefit accruing to COMMIS-

SIONEE OF

the settlor by the provisions of the settlem ent; what Currie got

Sta m p D u t ie s

was by virtue of a subsequent, independent agreement made freely

(N.S.W.)

by Mrs. Currie, who was both trustee and tenant for life ; and, T h o m so n .

under the New South Wales law, a married woman can (as I have

HiggiM J.

said) make a contract with her husband, or with her husband and

another.

But counsel for the Commissioner has pressed us to consider the large powers conferred on the settlor during his wife’s trusteeship imder the settlement. The wife, under the settlement, had to sell all the lands if her husband told her ; the husband could dictate the rate of interest on any unpaid purchase-money, had power to refuse consent as to any investment, to refuse consent to any purchase of land or effects, to refuse consent to any mode of managing the land, to refuse consent to any improvements, repairs, &c., or to the purchase of sheep deemed necessary for the “ management ” of the station and of carrying on the business, &c. But this does not confer any “ benefit,” in the legal sense, on the settlor ; it merely reflects the usual conceit of husbands tha t they can manage business affairs better than their wives, and the usual desire of husbands that those dependent on them do not suffer from inexperience. When it becomes necessary to consider a lease or the renewal of a lease to the partnership of Mr. Currie and Mr. Smith, the trustee or trustees are to act alone in fixing and determining the rent. I have come to the conclusion, indeed, tha t the power of hlr. Currie to consent or refuse consent to the exercise of the power of the trustee or trustees to manage “ as they think fit,” ends just before the words “ and to grant or renew leases.” The form of the words now in question—“ but subject to the consent of the said Archibald Currie during his life ”—is appropriate to the phrase in the middle of which they actually are inserted, giving to the trustee or trustees full discretionary power to manage the land “ as they or he shall think fit ” ; they are not appropriate or relevant to a power in which they are not inserted. But whether this is a correct view or not, I agree with the Full Court tha t no

422 HIGH COURT

[1927.

H. C. or A.

“ benefit ” in the sense of sec. 36 of the Act has been conferred on

1927.the settlor by the terms of the settlement.

COMMI.S- I shall now deal with the cases which are said to be at variance

SIONBB OF

Sta m pwith the view of the Supreme Coiu't. In

Attorney-General v.

D u t ie s

(N.S.W.)

Worrall (I) the Court of Appeal had to deal with estate duty under

the Customs and Inland Revenue Act 1889, sec. 11 (1).

According to

T h o m s o n .

the words of the section, duty had to be paid on “ property taken

Higgins J.

under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift and thenceforward retained, to the entire exclusion of the donor, or of any benefit to him by contrad or otherwise.” In WorralVs Case there was such a contract; for the father, who gave a mortgage debt to his son, was to be paid under the settlement an annuity of £735 during his hfetime; and the Court held tha t the property was Hable to duty. I t was argued tha t there was no benefit retained by the donor out of the subject m atter of the gift, and tha t therefore the case did not come within the sub-section; bu t the Court felt coerced by the express words “ by contract or otherwise,” to hold the contrary. Any contract for a benefit to the settlor brought the settlement ■within the A c t; and the Court was impressed by the fact that the sub-section was in substitution for a pre’vious Act of 1881 which made gifts come under the duty only if there had been a reservatim out o f the subject matter of the gift. There are no such words as “ by contract or otherwise ” in this New South Wales sub-section; the words after “ or of any benefit to him ” are “ of whatsoever kind or in any way whatsoever,” and these words are quite susceptible of an interpretation which maintains what I regard as the main principle of the sub-section—if you affect to give a property otherwise than by -will you must give it all, not hold back part like Ananias and Sapphira. The same sub-section was the subject of a decision of Hamilton J. (now Lord Sumner) in Attorney-General v. Seccomhe (2). There a farmer made a voluntary conveyance of his farm and stock to his grandnephew, who lived with him. The farmer had no other property except an annuity of £15 chargeable upon land of the grandnephew’s. The farmer continued to reside on the

(1) (1895) 1 Q.B. 99.

(2) (1911) 2 KB. 688.

40 C.L.R.] OF AUSTRALIA.

423

land for years, and was m aintained by the grandnephew’, who tl. C. or A.

. r

1927.

retained the annuity ; but there was no agreement tha t the farmer

Co m m is s io n e r

should be permitted to remain in the house or be maintained.

I t

o r

was held that the duty was not payable.

Hamilton J . (1) referred

Sta m p D u t ie s

approvingly to a Scottish case {Lord Advocate v. Stewart (2) ):

(N.S.W.)

“ The principle there laid down, as I understand it, is tha t the T h o m so n .

possession and enjoyment or benefit from which the Act contemplates

Higgins J.

that the cedent or donor must be entirely excluded must be derived from some enforceable right, a benefit, as the Lord President said (3), ‘ which was part of his property before the cession ’ ” (or gift), “ and therefore not merely a benefit which is derived from his being present for a greater or less time in the old house by leave and licence of the donee.” There was no contract tha t in considera tion of the gift the donor should be permitted to reside and be maintained by the donee. The words “ by contract or otherwise ” are aimed at any contract between the parties or with third parties having the effect of conferring a benefit on the donor, and any transaction enforceable a t law’ or in equity, although not in the form of a contract (such as a lien). In Lang v. Webb (4) we have a decision of our own Comt, on practically the same words, including “ by contract or otherwise.” So far as the decision is binding on UB, it was merely a decision that there had been no bona fide possession or enjoyment assumed immediately on the conveyance ; for, on the same day as that on which the conveyances were executed by the mother in favour of the sons, the sons executed leases to her. But Griffith C.J. agreed with the opinion of the Lord President and of Hamilton J. stated in Seccombe’s Case, that the benefit intended is a benefit which w’as part of the property before the gift. Barton J . puts it tha t there was a stipulation at the time of the gift that the donee was to have an immediate lease ; and he quotes aptly Lord Halsbury’s words in Earl Grey v. Attomey- General (5): “ What the Act . . . intended to prevent was that what has been described as a gift inter vivos should nevertheless reserve to the settlor some benefit, or some part of tha t which purported

(1) (1911)2 K.B., at p. 700(3) (1906) 8 F., a t p. 595.

(2) (190(1) 8 F. .579.

(4) (1912) 13 C.L.R. 503.

(5) (1900) A.C., a t p. 126.

H IG H ' COURT

[1927.

H. C. OF A.

to be given inter v i v o s . I s a a c s J. was evidently influenced m his

1927.

decision by the words “ by contract or otherwise ” (see Lang v. Co m m isWebb (1) ). But, as I have said before, the words in the Act before

s io n e r

St a m p us are “ benefit to him of whatsoever kind

or in any way whatsoever ” ;

D u t ie s

(N.S.W.)

and full meaning can be given to these words without doing violence

T h o m s o n .to what is otherwise the plain object of the section—to prevent a

settlor from avoiding the tax while taking a benefit which was part

Hif’f'ins .1

of the property before the gift. “ A benefit of whatsoever kind ” refers to the character of the benefit—money, right of residence, use for pasture, & c.; and “ a benefit in any way whatsoever ” refers to the mode in which the benefit comes—by exception, or reservation, or condition or otherwise.

Therefore I am of opinion tha t the Commissioner fails on his second ground.

But having had the privilege of reading the judgment of my brother Isaacs, I desire to add a few remarks

(1) I think I should agree with my learned brother if the case stated any stipulation—-I mean stipulation between Mr. and Mrs. Currie before or a t the settlement—th a t she should as to the lands transferred grant a lease to the settlor and Smith. There is no such stipulation alleged in the case ; the only agreement made was between Currie and Smith, made before Currie settled the lands. The essential position is th a t from 4th August 1896 onwards, Mrs. Currie was absolutely free either to grant or to refuse a lease to the partners. Currie could no longer fulfil his contract with Smith. Mrs. Currie could have made a demand of possession on the partners as tenants a t w ill; but she preferred to exercise her power to grant them a lease for seven years a t £1,875 per annum. If an action had been brought by Smith on the agreement, for specific performance or damages, Currie would have had no vahd defence. (2) I t is quite true tha t on 4th August there was no lease in existence either registered or in writing. Under the Iteal Property Act of New South Wales a lease for less than three years need not be registered. But there was a contract between Currie and Smith tha t a lease should be given by Currie, the registered proprietor at the time, to the partnership; and tha t agreement was (as I have

(U (1912) 13 C.L.R., a t pp. 515-517.

40 C.L.R.]

OF AUSTRALIA.

already stated) binding on Currie and enforceable by an order for

H. C. O F A.

1927.

specific performance or, in the alternative, by damages. There is

nothing illegal in such an agreem ent; and a Court of equity would

CoMJns-

•SIONEB or

not be baulked in enforcing specific performance thereof in substance,

Sta m p D u t ie s

even though it could not direct a lease to be made by A to A and B.

(M.S.W.)

It cannot be that an honest agreement by a landowner to grant a T h o m s o n .

lease to a partnership of which he is a member must be rejected

Higgins J.

as being no agreement a t all.

Equity would merely have to prescribe

in its decree the mode of performance.

(3)

Sec. 42 of the Real Property Act, when examined, is directed

against estates or interests claimed as prior to the certificate of title (Josephson v. Mason (1) ; Morrissy v. Clements (2); Hood V. Cullen (3); Gibbs v. Messer (4) ). That is to say, people can deal with the registered proprietor freely and confidently, without regard to possible prior estates or interests ; but the section does not hinder the registered proprietor from making contracts, &c., or from thereby creating, as between himself and the party dealing with him, equitable estates or interests. Sec. 43 shows tha t persons (leafing with him may ignore even deafings subsequent to the certificate that are not protected by registration or by caveat.

But the third groimd is to my mind much more serious—that this is a settlement as to which duty must be paid under sec. .58. There have been some cases cited before us as bearing on the subject, under analogous Acts ; but, before examining these cases, it is well to consider the section closely, and see how far it fits the facts of thi.' case on the assumption that there are no authorities which should induce us to give it a meaning other than tha t which it bears on its face. The section is : “ Within six months after the death of any person who has executed a settlement containing any trust to take effect after his death . . . notice of such settlement shall be lodged by the trustee thereof or by .some person interested thereunder, together with a declaration specifying the property thereby settled and the value thereof, and duty shall thereupon be payable on such value a t the rates specified m the Third Schedule hereto.” Now, it is not contended tha t the settlement in this case

(1) (1912) 12 S.R. (N.S.W.) 249.

(3) (1885) 6 N..S.VV.L.R. (Eq.) 22.

(2) (1884) 11 V.L.R. 13; 6 A.L.T. 107.

(4) (1891) A.C. 248, at p. 2.54.

426 HIGH COURT

[1927.

H. c. or A.

is not a settlem en t w ithin th e m eaning of th is section, a voluntary

__ settlement (see interpretation sec. 3).

I t contains trusts, some of

Co m m is

which operate immediately, some in the fu tu re ; but among those

s io n e r

St a m p to operate in the future are trusts, “ to take effect ” after the settlor’s

D u t ie s

(N .S .W .)

death—including in particular a trust tha t “ after the death of

ti.

T h o m s o n . either of them the said Archibald Currie ” (the settlor) “ or Jessie

Currie ” the trustees are to pay one-fifth of the rents or income unto

Higgiiis

J .

each of the five daughters of the said Archibald Currie during her hfe for her seperate use ; remainder to each daughter’s children. If the settlor die before his wife (as has actually happened in this case), it is clear tha t the daughters take upon and after his death. This satisfies the words “ settlement containing any trust to take effect after his death.” The words used are not “ settlement to take effect after his death.” But it is objected for the respondents that if the wife had happened to die before the settlor, the trust for the daughters would not take effect after his death but before his death. One answer to this objection is surely tha t though there is in the settlement a trust if the wife die first for the income to go to the daughters a t once, yet there is also a trust if the settlor die first for the payment of the income to the daughters from the time of his death. The words of the section are not “ settlement containing trusts all of which must take effect after his death,” or “ settlement containing trusts which in fact under all circumstances take efiect after his death ” ; it is enough, for the purpose of the section, that the settlement contain any trust intended to take efiect after his death. The governing purpose of the section seems to be overlooked. It occurs in Part III. of the Act, which is primarily directed to the payment of duty on the estates of testators or intestates (sec. 49). Sec. 49 (2) ropes in for duty property subject to general powers as well as property actually belonging to the deceased, property voluntarily given within twelve months before the death, property which comes to a person by survivorship on the death of a joint owner, &c. ; but provision had yet to be made for the purpose of making subject to duty property which has been settled by deed where a will would have achieved the intention of the testator equally w ell; for a will is an instrument which always takes efiect upon and after the death of the testator. Sec. 58 effectuates this

40 C.T..R.]

OF AUSTRALIA.

purpose. In my opinion, it means simply that if the owner of H. c. of a .

property does not, by his settlement, divest himself of the settled

property immediately, but postpones the benefit of any of his trusts Co m m is

s io n e r OF

till his death, he shall be treated as if he had made a will.

But there

St .\m p D u t ie s

is a difference—that the duty is levied on the whole settled property,

(N.S.W.)

not on the executors. If the duty on the settled property be not

T h o m s o n .

paid, the Commissioner can, on apphcation to the Court, get an

Higgiiis J.

order for sale and for apphcation of the proceeds in payment of the

duty and costs (sec. 58 (2) ).

There is nothing that I can find in the cases cited to us which prevents us from giving to sec. 58 this natural, obvious, interpretation. It is all a question as to the meaning of the A c t; and it is our duty to give effect to the meaning of the Act, however harsh its operation may seem to us. Everyone holds his property a t the mercy of the State; and if the State has enacted tha t duty must be paid as to property under a settlement, if the settlement in any way usurp the function of a will by containing any trust to take effect first after the settlor’s death, and not before, the duty is payable.

Reliance has been placed on the Third Schedule to the Act of 1898 for an argument that the words of sec. 58, “ containing any trust to take effect” are to be read as if they were merely taking effect after the death of the settlor. This argument seems to me to be futile ; the Third Schedule merely shows the rates a t which duty is to be paid; and the words used there are merely like a finger post to guide readers to sec. 58 of the A c t:—“ Part II. 2. Settlement of property taking effect after death of settlor—same duties as under Part I.” These words are obviously an abbreviated expression. In any case, the Schedule must yield to the sections, not the section to the Schedule {In re Baines (1) ; R. v. Baines (2); Dean v. Green (3) ). k& for the cases, they really favour the view which I have put, although the Victorian Act, under which they were decided, is not so explicit in favour of the Commissioner as this Act of New South Wales. The Victorian Act (sec. 112 of the Administration and Probate Act 1890 ; sec. 147 of the same Act as consohdated in 1915) provides th a t: “ Every settlement of any property made on or after

(1) (1840) Cr. & Ph. :ii.

(2) (1840) 12 A. & E. 210, a t p. 227.

(3) (1882) 8 P.D. 79, at p. 89.

428 HIGH COURT

[1927.

H. C. OF A. the sixteenth day of December one thousand eight hundred and

seventy by any person containing trusts or dispositions to take effect

COMMIS- after his death, shall upon the death of the settlor be registered,” &c.

SIONEB, OF

Sta m pI t was certainly arguable tha t under these words

all the trusts

D u t ie s

(N.S.W.)

and dispositions must be such as to take effect after the death; but

T h o m so n .the cases show tha t the words are to be treated as if they were, as

in the New South Wales Act, “ any ” such trusts. In R. v. Austin (1) it was held tha t a settlement which immediately divested the settlor of aU interest in the property and contained no provision dependent on the settlor’s life or death, did not come within the section to make the property taxable. In Whiting v. Thompson (2) a station was settled in trust for sale, and the income of the proceeds was to be paid to the settlor for hfe, and after his death there was to be a trust of the proceeds for his sons (subject to an annuity to the widow). I t was held tha t although in the gift of the income to the settlor for hfe and otherwise there was some immediate disposition of the property, the fact th a t there was a trust for the sons to take effect on the settlor’s death rendered the property taxable. This clearly imphes tha t the learned Judge (the late dBeckett J.) treated the property as taxable even if some of the trusts were not to take effect on the settlor’s death. In Whiting v. McGinnis (3) there was a trust of the property for the settlor’s wife for hfe, and after her death for the settlor for hfe, and after the death of the survivor upon trust for the children. The settlor died before his wife, and the trust for the children did not arise till both the parents were dead. The Judges all held the property was taxable, but apparently for different reasons. The view' taken by Hodges J., however, wms tha t the word “ after ” in the section did not necessarily mean “ upon,” or immediately a fte r; and that therefore the trust for the children, as it arose after the inevitable death of both the settlor and his wife, came within the section; and this view was adopted by this Court on an appeal in Rosenthal v. Rosenthal (4). In this case of Rosenthal v. Rosenthal the settlement gave the income to the wife for hfe, then to the settlor

Higgins J

(1) (190.3) 29 V.L.R. 82 : 25 A.L.T. 7.

(3) (1909) V.L.R. 250 ; 30 A.LT.

(2) (1900) 29 V.L.R. 89; 21 A.L.T.

207.

231.(4) (1910) 11 C.L.R. 87

40 C.L.R.] OF AUSTRALIA.

429*

for his life, then to the children. The settlor died first, and the

H. C. OF A..

1927.

children did not take the corpus tiU the wife’s life ended ; and it

was held, in accordance with the view of Hodges J. in Whiting v. Co m m is

s io n e r OF

McGinnis (1), that as the children’s interest arose after, though not

Sta m p D u tfes

immediately after, the settlor’s death, the property was taxable.

(N.S.W.)

Afterwards, in 1914, there came another case before the Supreme

T h o m s o n .̂

Court (In re Dick's Settlement (2) ).

The settlement gave the income

Higgin» J..

to the wife for life, then to the son until he attained twenty-one, and the corpus was to be transferred to the son a t tha t age. The son attained twenty-one in 1901 ; the wife died in 1908 ; the settlor died in 1913 : so the corpus became payable to the son in 1908, when his mother died. But there was in the settlement an alternative trust, providing for an event which did not occur—that if both mother and son should die during the life of the settlor, the income was thenceforward to be paid to the settlor for his life, and then the corpus to his nephews. dBeckett A.C.J., after referring to the previous cases, said (3) : “ Although the trusts to arise upon or after ” the settlor’s “ death are contingent only, and the contingency never happens, these trusts are sufficient to bring the settlement within the definition.” This shows clearly tha t the section apphes if there is any trust intended to take efiect after the settlor’s death. I t is true that, under the special circumstances— the corpus having been absolutely vested in the son twelve years before the settlor’s death and payable to him five years before— it was held that the property was not taxable. I t was an exceptional position ; for the trust for the settlor and his nephews was very similar to a resulting trust for the settlor if his purpose failed—his purpose to benefit his wife and his son. But without presuming to decide, without argument, whether the facts of this case justified the result, I have no doubt tha t the learned Judge did not mean to overrule his own decision in Whiting v. Thompson (4). There is not, therefore, anything in these decisions to militate against the view which I have suggested as being the natural, unsophisticated meaning of the New South Wales Act, sec. 58—

(1) (1909) V.L.R. 2,-)0 ; 30 A.L.T 207.

(3) (1914) V.L.R., a t p. .543;

(2) (1914) V.L.R. .540; 30 A.LT. 73.

A.L.T., a t p. 75.

(4) (1900) 29 V.L.R. 89; 21 A.L.T. 231.

430 HIGH COURT

[1927,

H.0. OF A.that if the settlement contains any trust to take effect after the

1927.

death of the settlor, if any trust is conditioned on his death,

Co m m is although in a certain event (the previous death of his wife) it may

s io n e r

Sta m p come into force

before his death, the property is taxable.

D u t ie s

(N.S.W.)

On this third ground, therefore—the ground set out in sec. 58—1

T h o m s o n .am of opinion tha t this property is taxable.

Powers J.

P o w e r s J . This is an appeal by the Commissioner of Stamp Duties (N.S.W.) from a judgment and order of the Full Court of the Supreme Court of New South Wales on the hearing of a case stated to tha t Court for its opinion. The case was stated under the Stamp Duties Acts 1898 to 1914. The Stamp Commissioner claimed tha t stamp duty was payable on the property subject to the indenture of settlement (referred to in the case stated) and interest thereon a t the rate of 5 per cent per annum from the expira tion of six months after the date of the death of the donor, Archibald Chirrie. The claim is made under the provisions of secs. 58 and 49 (2) (a ) (e) and sec. 49 (2) (b ) (b) of the Stamp Duties Acts 1898 and 1914 added to by sec. 36 of the Stamp Duties (Amendment) Act of 1914.

The questions submitted to the Supreme Court for its opinion were as follows :—[The questions asked in par. 13 of the case were here set out.]

The Supreme Court determined th a t question 1 should be answered in the negative ; question 2, th a t no duty is payable ; and question 3, tha t the costs of the respondents should be paid by the Commis sioner. This appeal is against th a t determination. The Commis sioner has abandoned the ground of appeal set out in 1 (a); and this Court has only to consider grounds 1 (b) and 1 (c) and questions 2 and 3.

I t was contended for the respondents that (1) the real nature of the transaction was tha t the gift was not a gift of an estate in possession, it was a gift of a reversionary interest only or in the alternative ; (2) the real nature of the transaction was a gift of an estate in possession free from legal encumbrances without any stipulation or condition, and the lease in question, granted after the property had been transferred to her and after she was entitled to

40 C.L.R.l O F AUSTRALIA. 4.‘U

possession and enjoyment, was a lease by the trustee as a matter of R- C- of A.

business which she was authorized to grant under the trust or which

she could refuse to grant if she thought fit. I t was contended for Co m m is

s io n e r OF

the Commissioner (3) tha t Currie transferred to his wfife (Jessie

Sta m p D u t ie s

Currie) his whole unencumbered estate and interest in certain lands

(X .S .W .)

by way of voluntary conveyance according to stated trusts for her T h o m s o n .

and her children, a t the same time stipulating tha t she should out

Powers J.

of the estate so transferred grant to him and his partner, Andrew

Wilham Smith, a lease for seven years of the property in question.

Deahng with the third contention first. I agree tha t if a t the time that Currie transferred to his wife, Jessie Currie, his whole unencumbered estate and interest in the land by way of the voluntary conveyance in question there was a stipulation tha t she should, out of the estate so transferred, grant to him and his partner, Andrew William Smith, a lease for seven years of the property in question or any other less important benefit, then the case would fall witliin sec. 49 (2) ( b ) as amended. My brother Isaacs holds tha t there was such a stipulation ; but after carefully considering the facts set out in the case stated and the documents attached as part of the case, I fail to see the proof of any such stipulation or of any agreement or condition binding on her to grant any lease to the settlor or the settlor and his partner. I t was optional with the trustee, Jessie Currie, who was not bound by any arrangement made between Archibald Cmrie and his partner, to give or refuse to give the lease in question. The settlement authorized but did not compel her to grant any lease to himself and his partner. This Court is bound by the facts set out in the case stated and the documents attached as part of the case. The settlement is the only document or arrangement Jessie Currie was a party to. That settlement and the transfers gave to her his whole unencumbered estate and interest free of any condition or stipulation whatever not contained in the settlement or transfer.

As to the first contention, the Supreme Court held tha t the real nature of the transaction was in substance a settlement of the reversion upon a lease for seven years to the partnership, and that at the time the settlement was executed the partnership firm of Cume and Smith was already in possession and occupation of the

432

H IG H COURT

[1927.

H.	c. OF A. property under an agreement for a lease for seven years which was

1927.

binding on the settlor. The Supreme Court also held : “ In this

COMMIS- case the gift was not a gift of an estate in possession—it was a gift

SIONBB OF

Sta m pof a reversionary interest only.” I do not agree, for the reasoas

D u t ie s

(N.S.W.)

already mentioned in dealing with the third contention, that the

T h o m s o n .gift was in this case a gift of a reversionary interest only. I also

hold tha t the agreement by the settlor for a lease to himself and

Powers J,

his partner (referred to in the case stated) was not legally binding and certainly was not binding in any way on Jessie Currie or a charge on the land.

As to the second contention, I have come to the conclusion, on the facts stated in the case and on the documents attached thereto, tha t Currie transferred to his wife his whole imencumbered estate and interest in the lands in question as an estate iu possession free from any legal encumbrance or any condition or stipulation binding on her not set out in the settlement or transfers in question, and tha t on 4th August 1896 she was legally free to grant or to refuse any lease she thought fit or any request made by the settlor to grant him any benefit affecting the property transferred.

For the reasons mentioned I hold tha t sec. 49 (2) (b) as amended does not apply, and tha t the appeal so far as tha t claim is concerned should be dismissed.

The only other question to decide is whether the settlement is a settlement as to which duty must be paid under sec. 58 (1)—question 3 in the case stated. Sec. 58 is as follows : “ (1) Within six months after the death of any person who has executed a settlement containing any trust to take efiect after his death, or within such further time as the Commissioner may allow, notice of such settle ment shall be lodged by the trustee thereof or by some person interested thereunder, together with a declaration specifying the property thereby settled and the value thereof, and duty shall thereupon be payable on such value a t the rates specified in the Third Schedule hereto.” In this case there was a trust in the settlement—a very important one—which did take effect on the death of the donor, but the Supreme Court decided that under the settlement in question the trusts could have taken effect before hh death. The settlement provided tha t the rents and profits should be paid to his daughters and not to his wife after death of either of

M) C.L.R.] OF AUSTRALIA.

433

them the said Archibald Currie or Jessie Currie. As the Supreme

H. C. O F A.

1927.

Court pointed out (1):—“ If Jessie Currie had died in his hfetime,

the trusts in favour of the children would have come into operation

COMMIS-

SIOJCER OF

at once. His death therefore was not a necessary condition precedent to, and was not an essential factor in, the effectuation of the

Sta m p D u t ie s

(N.S.W.)

dispositions in favour of his children.” The Court added as its

T h o m s o n .

opinion (1):—“ The section does not refer to trusts which may or

Powers J.

may not take effect in a settlor’s hfetime but only contemplates trusts which cannot do so.” We do not think tha t “ the settlement in this case comes within it.” The donor died before his wife; the trust took effect on his death. The question is an important one, and “ is one of construction primarily of the words of the section and then of those of the instrument sought to be brought within its reach.” The section in question uses the words “ of any person who has executed a settlement containing any trust to take effect after his death.” The settlement did contain a trust to take effect after his death and which did take effect after his death, and I see no reason why this Court should not hold tha t the settlement is one which falls within the section. If it is held tha t the section does not apply if the trust could possibly take effect before the donor’s death, a donor, AB, could evade liability to duty by constituting a trust to take effect “ after the death of either of them the said AB or CD his grandson.” I have had the privilege of reading the judgment of my brother Higgins on this ground, and I agree with him, and for the reasons he has given, tha t the property in question is taxable under sec. 58, and tha t the appeal should be allowed on that ground.

Appeal allowed. Questiori answered as follows :

“ Duty is payable on the said property

under the provisions of the Stamp Duties Act 1898.” Costs in High Court and

Supreme Court to be paid by respondents.

Solicitor for the appellant, J. V. Tillett, Crown Solicitor for New South Wales.

Solicitors for the respondents, Norton, Smith & Co.

B. L.

(1) (1927) 28 S.R. (N.S.W.), a t p. 206.

V O L . X L .

[1927] HCA 57

10 December 1927