Federal Broom Co Pty Ltd v Semlitch - [1954] HCA 34

91 CLR 1

[ ]

PERMANENT TRUSTEE COMPANY OF

NEW SOUTH WALES LIMITED

THE COMMISSIONER OF STAMP DUTIES

RESPONDENT.

OF NEW SOUTH WALES

[DAVIES' CASE]

ON APPEAL FROM THE SUPREME COURT

OF NEW SOUTH WALES. Death Duty (N.S.W.)--Property dutiable-Assets notionally included in estate-

Deceased not entirely excluded from benefit-Gifts by deceased in lifetime Settlement--Loans to deceased from trust fund-Appeal-Method-Stated case -Quaere, satisfactory-Findings of fact-Inference-Stamp Duties Act 1920- 1940, ss. 102 (2) (d), 124.

By a settlement made in 1924 various assets owned by D. were vested in a company on trust to apply the whole or part of the income in such manner as it might think proper for the maintenance, education and general support of D.'s daughter until she should attain the age of thirty years or marry with the written consent of her parents or the survivor of them. The daughter, on attaining thirty years, was to be entitled to the corpus. The daughter lived with D. until 1st July 1938, when, at the age of twenty-eight years, she married and went to live abroad. Her parents' consent to the marriage was not evidenced in writing. From 1926 to 1931, when the daughter attained twenty-one years, the company made payments to D. out of the trust income for the maintenance, education and general support of his daughter. From 1931 to June 1937, the company, at the daughter's request, made further annual payments to D. and between November and the date of her marriage, the company paid £1,548 out of the trust income to D's daughter. Throughout the whole of the period from 1926 to the date of her marriage, the daughter was maintained, educated and supported by D. In December 1938, D., with

91 CLR 2

his daughter's consent and approval, opened an account with a bank in her name and paid in £5,025 of his own money; D., on the same day, drew out £5,000 by a cheque signed by his daughter. In a letter to the bank, the daughter authorized D. to draw cheques and to operate on the account. In January 1939, the daughter instructed the company by letter to pay into the account any money coming in from my trust ". Between February 1939 and April 1943, D., from time to time, drew moneys out of the account by way of loan and deposited the moneys in his own account, thus reducing his overdraft, and in this way he borrowed £10,940, including the opening loan of £5,000. All these moneys except the £5,000 were drawn from the account by cheque signed by D. under the authority given him by his daughter. At his death in (N.S.W.).

January 1946, D. still owed his daughter £8,926 18s. 7d. Apart from the opening deposit of £5,025 the moneys which were paid into the account throughout the whole of the period came from the trust funds. The Com- missioner of Stamp Duties claimed that the value of the trust assets at the date of D.'s death and…

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.

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Details

Case: [1954] HCA 34
Decision Date: 19 August 1954

CaseChat Overview and Summary

The case of *Federal Broom Co Pty Ltd v Semlitch* concerned an appeal to the High Court of Australia from the Supreme Court of New South Wales. The dispute arose from the Commissioner of Stamp Duties' assessment of death duty on the estate of Arthur Henry Davies. The Commissioner sought to include the value of assets held under a settlement created by Mr. Davies in 1924, as well as a sum of £5,025 gifted by Mr. Davies to his daughter, within the dutiable estate. The executor of Mr. Davies' estate disputed the inclusion of the trust assets, arguing they were not part of the dutiable estate.

The primary legal issue before the High Court was whether the value of the trust assets settled by Mr. Davies was includible in his dutiable estate under section 102(2)(d) of the *Stamp Duties Act 1920-1940* (N.S.W.). This section pertains to property that a deceased person has disposed of but has not been entirely excluded from the benefit of. A secondary issue concerned the deductibility of interest on a debt owed by the deceased to his daughter.

A majority of the High Court (Webb, Kitto, and Taylor JJ., with Dixon C.J. and Fullagar J. dissenting) held that the value of the trust assets was not includible in the dutiable estate. Their reasoning was that the daughter, by directing the trustee to pay the trust income into her own bank account, had acquired full control over its disposition. The subsequent withdrawal of these moneys by the deceased as a loan, even without interest, was not considered a benefit that impinged upon the daughter's possession and enjoyment of the trust property. The Court distinguished this case from *O'Connor v. Commissioner of Succession Duties (S.A.)* and noted that the method of appeal by case stated under section 124 of the Act was discussed. The Supreme Court's decision was reversed.

Orders