Commissioner of Succession Duties (SA) v Isbister

The Commissioner of Succession Duties (South Australia) appealed to the High Court of Australia against a decision of the Supreme Court of South Australia. The Supreme Court had allowed an appeal by the trustees of two deeds poll executed by the late Sir John Langdon Bonython, setting aside an assessment of succession duty made by the Commissioner. The deeds in question settled certain bonds and stock upon trust to pay the income to Sir John's daughter, Edith Annie Bonython, for her life, with further trusts thereafter. Crucially, Sir John had reserved to himself a power to revoke these trusts and appoint new ones, a power he did not exercise before his death.

The central legal issue before the High Court was whether the deeds constituted "settlements" within the meaning of section 4 of the *Succession Duties Act 1924-1936* (S.A.), specifically whether they contained "trusts or dispositions to take effect upon or after the death of the settlor." The Commissioner contended that the daughter's interest, being defeasible during the settlor's lifetime due to the power of revocation, became indefeasible upon his death, thereby constituting a trust or disposition taking effect at that time.

The High Court, affirming the decision of the Supreme Court, held that the deeds did not contain trusts or dispositions to take effect upon or after the settlor's death. The Court reasoned that the trust in favour of the daughter took effect immediately upon the creation of the deeds, not upon the settlor's death. The power of revocation was a power to destroy an existing trust, not to create a new one. The cessation of this power upon the settlor's death did not create a new trust or disposition; rather, it rendered the existing trust indefeasible. This change in the defeasibility of the interest, while increasing its value, did not equate to a trust or disposition taking effect at the moment of death.

Consequently, the High Court dismissed the Commissioner's appeal, upholding the Supreme Court's decision to set aside the assessment for succession duty. The property settled by the deeds was therefore not chargeable with duty as a "settlement" under the Act on the settlor's death.