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Davidson v Chirnside

Davidson v Chirnside

Case [1908] HCA 65 9 October 1908

Appeal

Statutory Construction

Jurisdiction

Remedies

Tax Law

Statutory Interpretation

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7 CLR 324

DAVIDSON (COLLECTOR OF IMPOSTS) * CHIRNSIDE

ON APPEAL FROM THE SUPREME COURT OF

MELBOURNE, Stamp duty-" Deed of settlement -Settlement in pursuance of power in will- Sept. 25, 28,

Appointment of new trustee-New beneficial interest- Exemption- - Special 29, 30;

appointment-Stamps Act 1892 (Vict.), (No. 1274), secs. 27, 28, Schedule, Oct. 1, 9.

The question whether an instrument is or is not taxable under the Stamps Act 1892 (Vict.) must be determined by an examination of the instrument itself and not upon extrinsie evidence.

7 CLR 325

Any instrument which on its face purports to be the charter of future rights and obligations with respect to the property comprised in it, and which contains such limitations as are ordinarily contained in settlements, is a settlement or an agreement to settle within the meaning of Division VIII. of the Schedule to the Stamps Act 1892, whether those rights and obligations

An instrument may be a deed of settlement within Division VIII. although it does not create a new beneficial interest in any person.

The contrary principle laid down in Wiseman v. Collector of Imposts, 21 V.L.R., 743; 17 A.L.T., 257, overruled.

The words "power of appointment " in sec. 28 of the Stamps Act 1892 include any authority, in whatever form conferred, to make a disposition of property by deed or other writing, in order to give full effect to the will of the settlor or testator, and the words "instrument of appointment include any instrument by which such a disposition is made.

A testator by his will directed his trustees to set aside a fund on certain trusts, and he authorized them in their discretion to cause the fund to be settled upon trustees to be nominated by them upon trusts corresponding with those previously declared. The trustees of the will executed an inden- would, on execution of the deed by the other parties thereto, pay the fund to those other parties.

The indenture then witnessed that the trustees of the will appointed the other parties to be trustees of the fund, and that those trustees of the fund should hold the fund upon the trusts declared in the will and upon no other trusts whatever. The indenture then continued "it being the purpose and intent of these presents only to nominate or constitute trustees of the fund to hold the same upon the trusts in the said will declared concerning the same and not to create or affect any new or existing beneficial interests

Held, that the indenture was a deed of settlement within the meaning of Division VIII. of the Schedule to the Stamps Act 1892, but was also an instru- ment of appointment in favour of persons specially named in the will as the objects of a power of appointment within the meaning of sec. 28 of that Act, and that, as duty had been paid on the property in respect of which the power of appointment was given, the indenture was exempted…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Davidson v Chirnside

Details

AGLC: Davidson v Chirnside [1908] HCA 65
Case: [1908] HCA 65
Decision Date: 9 October 1908

CaseChat Overview and Summary

The case of *Davidson v Chirnside* involved an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria concerning stamp duty. The dispute arose from an indenture executed by the trustees of a will, appointing new trustees for a £40,000 fund that had been set aside for the testator's daughter, Margaret Fair Calvert. The Collector of Imposts assessed stamp duty on this indenture, viewing it as a deed of settlement, while the taxpayer argued it was merely an appointment of new trustees and thus exempt.

The central legal issues before the High Court were whether the indenture constituted a "deed of settlement or gift" within the meaning of Division VIII of the Schedule to the *Stamps Act 1892* (Vic.), and if so, whether it was exempt from duty under section 28 of the Act as an instrument of appointment. The Collector contended that the indenture created new trusts and was therefore a settlement, while the taxpayer argued that it did not alter the beneficial interests and was solely an appointment of trustees, with the original trusts declared in the will remaining in effect.

The High Court, in allowing the appeal, reasoned that the instrument's taxability must be determined by its face, not by extrinsic evidence. It held that any instrument purporting to be the charter of future rights and obligations regarding property, and containing limitations typically found in settlements, should be considered a settlement or agreement to settle under the Act, irrespective of whether it creates a new beneficial interest. The Court overruled the contrary principle established in *Wiseman v. Collector of Imposts*, stating that an instrument can be a deed of settlement even if it does not create a new beneficial interest. Furthermore, the Court interpreted "power of appointment" in section 28 broadly to include any authority to dispose of property by deed, and "instrument of appointment" to encompass any instrument making such a disposition.

The Court found that while the indenture appointed new trustees and declared that they would hold the fund upon the trusts of the will, it also served to settle the fund by establishing a new charter of rights and obligations. Crucially, the testator's will had authorised his trustees to settle the fund, and the indenture exercised this power. Although the beneficiaries' beneficial interests remained substantially the same, the instrument itself constituted a new settlement. However, the Court also determined that the indenture was an instrument of appointment in favour of persons specially named in the will as objects of a power of appointment, and as duty had already been paid on the property in respect of which the power was given, the indenture was exempt from further taxation under section 28. The decision of the Supreme Court was affirmed, but on different grounds.

Orders