Fadden v Deputy Federal Commissioner of Taxation

The parties to this matter were Arthur William Fadden and Patrick Collins, the executors of the estate of James Simpson Love deceased, and the Deputy Federal Commissioner of Taxation. The dispute concerned the assessment of Federal estate duty on the deceased's estate, specifically whether certain bonds deposited in joint bank accounts in London should be included in the dutiable estate. The case was heard by Williams J. in the Supreme Court.

The court was required to determine whether the deceased had made valid gifts of a joint interest in the bonds to his three daughters, and if so, whether these gifts were perfected during his lifetime. Further, the court had to ascertain whether the deceased held a beneficial interest in a joint tenancy in these bonds immediately before his death, and if so, what proportion of their value was subject to estate duty under section 8(4)(d) of the *Estate Duty Assessment Act 1914-1928*.

Williams J. reasoned that the deceased intended to benefit his daughters and that these intentions were manifested by the creation of joint accounts with the banks. The court found that the gifts were perfected by the delivery of the bonds to the banks for placement in these joint accounts, establishing a joint and several tenancy. Although the deceased retained the right to withdraw the bonds during his lifetime, this did not invalidate the perfected gifts. The court held that the deceased held a beneficial interest as a joint owner immediately prior to his death. Applying section 8(4)(d) of the Act, the court determined that the value of the deceased's beneficial interest in the joint ownership was equal to one-half of the value of the bonds at the date of his death, after conversion to Australian currency.

The appeal was allowed in part. The court set aside the existing assessment and directed the respondent to re-assess the estate duty by including one-half of the value of the bonds in the three joint accounts at the date of death, converted into Australian currency. The respondent was ordered to pay the appellants' costs of the appeal.