Francis v Commissioner of Stamp Duties (NSW)

[1954] HCA 8

91 CLR 368

COMMISSIONER OF STAMP DUTIES (NEW

RESPONDENT.

SOUTH WALES)

ON APPEAL FROM THE SUPREME COURT OF Death Duty (N.S.W.) )--Assessment - and rate payable-Shares-Entitlement to

occupy flat-Valuation by Valuer-General-Acceptance by commissioner- Assessment-Payment-Sale of shares--Increased valuation-Further assess- SYDNEY,

ment-" Discovered "-Value as at death--Ascertainment-Facts-Issue- Trial before judge-Stated case-Stamp Duties Act 1920-1949 (N.S.W.) (Act Dec. 3, 4

No. 47 of 1920-No. 37 of 1949), 88. 124, 128.

M., who died on 13th May 1949, owned 3,600 shares of £1 each in the 1954,

Astor Pty. Ltd., the owner of a building in Macquarie Street, Sydney, known as "The Astor" and by virtue of the ownership of these shares, he was entitled to occupy a flat in that building at a rental. When M. died the shares were included in his estate at a value of £1 each, but the Commissioner of Stamp Duties required M.'s executor to obtain and file the Valuer-General's valuation of M.'s interest in " The Astor". On 6th October 1949, the com- missioner made an assessment of death duty payable by the estate and, for the purpose of assessment, the commissioner accepted the Valuer-General's valuation of £4,750. On 12th October 1949, M.'s executor paid the death duty assessed and, on 4th November 1949, the shares were sold at public auction for £12,100. The commissioner, on 20th January 1950, claiming to be author- ized to act under S. 128 of the Stamp Duties Act 1920-1949 (N.S.W.), made a further assessment of additional death duty based on the difference between the Valuer-General's valuation at the date of death and the amount realized by the sale of the shares. On a case stated by the commissioner under S. 124 of the Act the Supreme Court, by majority, held, in effect, that the commis- missioner was authorized by S. 128 to make a further assessment, but that the further assessment was not conclusive as to amount, and the court directed that the question whether any and what additional duty was payable should stand over for inquiry if the parties failed to agree.

91 CLR 369

Held by Dixon C.J. and Fullagar and Kitto JJ. (Williams and Taylor JJ. dissenting) that the decision of the Supreme Court was correct in substance, but that the order should be varied SO as to direct merely that an issue should be tried before a judge of the Supreme Court without a jury as to the value at the date of the death of the deceased of the shares held by him in the Astor Pty. Ltd.

Per Dixon C.J., and Fullagar and Kitto JJ.: The word " discovered" in S. 128 (1) of the Stamp Duties Act 1920-1949 (N.S.W.) requires merely that the commissioner shall have reached a bona fide conclusion on materials before him that the duty payable has not been fully assessed and paid.

In the Estate of Murdoch (1947) 48 S.R. (N.S.W.) 213 approved. Per Fullagar J.: Observations on the procedure by case stated in appeals against assessments of stamp duty.

Decision of the Supreme Court of New South Wales (Full Court), Francis V. Commissioner of Stamp Duties (1953) 53 S.R. (N.S.W.) 257 70 W.N. 69, subject to the above variation in the form of the order, affirmed.

APPEAL from the Supreme Court of New South Wales.

A case stated by the Commissioner of Stamp Duties (N.S.W.) under S. 124 of the Stamp Duties Act 1920-1949 (N.S.W.), at the request of Wilfrid Edwin Robert Francis, the executor of the will of Frank David Muller, deceased, involved the construction of S. 128 (1) of that Act. That section in effect provides that it shall be lawful for the commissioner at any time after assessment or payment of duty or statement by him that no duty is payable, if it is discovered that any duty payable has not been fully assessed and paid, to make a further assessment of the duty SO unpaid and to recover the same.

The case stated was substantially as follows :- 1. Frank David Muller (hereinafter called " the testator ") died on 13th May 1949 domiciled in the State of New South Wales.

2. Probate of the last will of the testator was subsequently granted to Wilfrid Edwin Robert Francis the sole executor therein named (hereinafter called the appellant").

3. Included in the property owned by the testator at the date of his death were 3,600 fully paid up shares of £1 each in "The Astor" Pty. Ltd. a company incorporated in the State of New South Wales.

4. That company was at all material times the owner of a building known as "The Astor" in Macquarie Street, Sydney, which contained a number of residential flats.

5. The articles of association of the company included the following :-

91 CLR 370

'8. The shares of the Company shall be held by members in groups of shares consisting respectively of 4,000, 3,900, 3,800, 3,600, 3,500, 3,360, 3,000 and 2,700 shares. The holding of one of each of the said groups of shares shall entail on the holder thereof during the period of his holding, the rental by him of one of the homes in the building erected by the Company in Macquarie Street, (N.S.W.).

Sydney, hereinafter specified as available for a holder of such group of shares at such rent as the Board may from time to time determine, but the said holder shall have the right of sub-leasing the said home to a tenant approved of by the Board.

The homes in the said building available for the holders of the aforesaid groups of shares shall be as follows: -For a holder of 4,000 shares-one of the homes facing Macquarie Street on the south-eastern corner of the said building and situated on the three lower floors thereof.

For a holder of 3,900 shares-one of the homes facing Macquarie Street on the north-eastern corner of the said building and situated on the twelve upper floors thereof. For a holder of 3,800 shares -the home on the seventh storey on the north-western corner of the Company's building.

For a holder of 3,600 shares-one of the homes facing Macquarie Street on the south-eastern corner of the said building and situated on the ten upper floors thereof, or one of those on the north-western corner of the said building and situated on the six upper floors thereof.

For a holder of 3,500 shares-one of the homes on the north- western corner of the said building and situated on the six lower floors thereof.

For a holder of 3,360 shares-the ground floor home on the north-eastern corner of the said building.

For a holder of 3,000 shares-one of the homes on the south- western corner of the said building and situated on the five upper floors thereof.

For a holder of 2,700 shares-one of the homes on the south- western corner of the said building and situated on the eight lower floors thereof".

6. It is agreed that on the hearing of this appeal reference may be made by either party to the memorandum and articles of association of the company as if the same had been incorporated in this case.

7. Prior to and at the time of his death the testator had occupied and was entitled to occupy (as the holder of the said shares) a flat in the said building being Flat No. 3 on the sixth floor thereof.

91 CLR 371

8. The appellant included in the inventory annexed to the stamp affidavit filed on his application for probate of the will of the testator the said 3,600 shares in the company which shares the appellant therein stated to be of the value of £3,600 Os. Od.

9. The Commissioner of Stamp Duties requested the appellant to file a Valuer-General's valuation of the testator's interest in

The Astor' as at the date of his death. 10. The appellant caused to be lodged with the Commissioner of Stamp Duties a valuation by the Valuer-General dated 22nd August 1949 of the Improved Capital Value at 13th May 1949 of the said Flat No. 3 on the sixth floor of the building known as

The Astor". The value of the said flat as therein certified was £4,750 Os. Od. A copy of the said valuation was annexed.

11. The Commissioner of Stamp Duties made an assessment of death duty payable on the estate of the testator on 6th October 1949. For the purpose of that assessment the commissioner included in the dutiable estate of the testator " his interest in The Astor at the value of £4,750. The amount of the death duty as SO assessed was £2,948 18s. Od.

12. Death duty as assessed as aforesaid was paid by the appellant on 12th October 1949.

13. On 4th November 1949 the said 3,600 shares were sold by the appellant at public auction for the sum of £12,100.

14. On the dates hereinafter mentioned other sales of shares in the company were made at the prices set forth below :-

16th February 1949

3,000 shares £3,000 9th September 1949

3,900 shares £13,100 30th September 1949

3,500 shares £4,500 23rd December 1949

3,000 shares £4,000 7th March 1950

3,600 shares £13,600 20th April 1950

3,900 shares £18,000 31st May 1950

3,600 shares £11,000 9th June 1950

3,900 shares £15,750 15. On 20th January 1950 the Commissioner of Stamp Duties claiming that he was authorized by S. 128 of the Stamp Duties Act 1920-1949 to re-assess the testator's estate made a further assessment of additional death duty payable on the estate of the testator. The basis of such assessment was that the final balance of the estate was treated as being £7,350 more than the final balance upon which the assessment mentioned in par. 11 hereof was made, the said sum of £7,350 being the difference between the sum of £4,750 mentioned in that paragraph and the sum of £12,100.

91 CLR 372

20. The questions for the opinion of the court were as follows - 1 Was it within the power of the Commissioner of Stamp Duties under the provisions of the Stamp Duties Act 1920-1949 to make the further assessment of death duty made by him on 20th January 1950 ?

(2) Was the Commissioner of Stamp Duties precluded from (N.S.W.).

making any further assessment of death duty on the basis that the shares were at the date of the testator's death of a value greater than £4,750 ?

(3) For the purpose of the assessment and payment of death duty, what was the value of the shares of the testator in the company at the date of his death ?

(4) What was the amount of death duty due and payable in respect of the estate of the testator ?

(5) How should the costs of this case be borne and paid ? The Full Court of the Supreme Court ordered that questions 1, 2 and 3 as hereinafter stated be substituted for questions 1, 2, 3 and 4 of the stated case :-

(1) On the facts and circumstances set out in the case stated was the further assessment dated 20th January 1950 for £1,497 7s. 8d. lawfully made and was the said sum lawfully recoverable by the commissioner ?

(2) Had the commissioner power in the facts and circumstances set out in the stated case to issue any assessment other than the assessment dated 6th October 1949 or to recover any further duty beyond that assessed in the said assessment ?

(3) If the answer to question 2 is in the affirmative what is the amount of this further duty ?

(4) How should the costs of the case be borne and paid ? The Full Court answered these questions as follows :-(1) Yes, but not as to the amount; (2) Yes (3) The amount of additional duty to stand over for inquiry if the parties fail to agree; and (4) The costs of the appeal to stand over until the conclusion of the inquiry (1).

From that decision the executor appealed to the High Court. W. J. v. Windeyer Q.C. (with him A. B. Kerrigan), for the appellant. The further assessment was not authorized by S. 128 of the Stamp Duties Act 1920-1949 (N.S.W.). The dissenting judgment of Owen J. in the court below was correct. The answers given to the questions in the stated case as amended were erroneous for the following reasons (i) it was not "discovered" that any

1(1953) 53 S.R. (N.S.W.) 257 ; 70 W.N. 69. 91 CLR 373

duty payable had not been fully assessed; (ii) if any additional duty was recoverable, which is not admitted, the amount claimed was wrong; (iii) on the true construction of the statute a changed opinion as to the value of an asset-or, if the value be regarded as a fact, a mistake as to that fact-can never be the ground of a further assessment under S. 128. A valuation can be reopened at the instance of the taxpayer but not at the instance of the commissioner. The commissioner, having chosen his method of valuation and made an assessment on the footing of such valuation, cannot, in the absence of fraud, reopen the valuation and (iv) even if the valuation can be reopened, yet, on the facts of this case the court had no jurisdiction to order an inquiry. As to reason (i). What was discovered ? The commissioner first said he had discovered " an additional asset ". He treated the difference between the price the shares realized and the Valuer-General's valuation as an additional asset and claimed not merely the addit- ional duty but also interest thereon according to S. 121. Later he alleged that the taxpayer had understated the value because he had accepted the Valuer-General's valuation which the commis- sioner had required. What really was discovered was that the valuation which was made in October as at 13th May may have been wrong. That is not such a discovery as S. 128 contemplates because (a) it does not follow that any duty has not been fully assessed, and (b) in any event the correct amount is not determined and a further assessment under S. 128 must be of the "duty SO unpaid " (Earl Beatty v. Inland Revenue Commissioners 1 ) and S. 125 of the Income Tax Act 1918 (Imp.) should be contrasted with S. 128 which postulates such a discovery as enables the duty to be assessed. That case has no direct bearing on this case, and very little is to be gained from it except what was gained by Owen J.

[TAYLOR J. Does not the view of Street C.J. in the court below that the Valuer-General's valuation may on inquiry prove to have been right mean that no discovery was made ?]

Yes, and it is contended that therefore an inquiry should not have been directed. Federal Commissioner of Taxation v. West- garth 2 arose from a different statute, that is the Estate Duty Assessment Act 1914-1942 and is not of any direct assistance to this Court. As to reason (ii). The onus is on the commissioner to show that his assessment is correct (McCaughey v. Commissioner of Stamp Duties (N.S.W.) 3 ). It, obviously, was not correct because

1(1953) 2 All E.R. 758, at p. 761. 2(1950) 81 C.L.R. 396. p. 207 : 62 W.N. 230. 3(1945) 46 S.R. (N.S.W.) 192, at 91 CLR 374

the sale price could not be, as the commissioner claimed, indis- putable evidence' of the value as at the date of death. It was notorious that values of real estate had increased considerably. The controls imposed by the Land Sales Control Act 1948 had ceased to operate. An inference cannot be drawn from the sale in November of what would have been paid in the previous May, because, on the evidence, prices paid for shares in 'The Astor" (N.S.W.).

greatly, the flats having a special value depending on occasional demands. The conclusion as to amount was not a justifiable inference from the facts. A mistake, or a changed opinion, as to valuation can never, in itself, provide grounds for a further assess- ment. As to reason (iii). ' Ascertainment of value and " assessment of duty' are throughout the Act referred to as distinct processes. Ascertainment of value precedes assessment of duty. Contrast the use of the word 'assess " as used in S. 8 of the Estate Duty Assessment Act 1914-1950 with that word as used in S. 117 (3) and S. 125 (3) of the Stamp Duties Act 1920-1949 (N.S.W.). The commissioner can choose the method of ascertaining value. He then assesses the duty and he is bound by his acceptance of the value. That construction accords with the provisions of the Stamp Duties Act 1920-1949 read as a whole and meets the need for finality essential in the administration of estates. If the commissioner can reopen an assessment because his view that the price realized indicates that his chosen valuer may have been mistaken, he can reopen for any other reason which makes him think the value he accepted was mistaken. The dicta in In the Estate of Murdoch 1 cut across that argument, although were not destructive of it. But Jordan C.J. was mistaken in putting in the same category omission of an asset, and inclusion of an asset at an under value. Where an asset is omitted it is not valued at all; there duty is never assessed in respect of it. Therefore when the omission is discovered it is discovered that duty has not been fully assessed. The commissioner is then entitled when the additional asset has been valued to issue a further assessment under S. 128. But it is otherwise where the asset was valued and an assessment made on the footing of that value. It is not contended that S. 128 of the Stamp Duties Act 1920-1949 is limited to correcting mathematical errors. It is conceded that it applies, e.g. to errors in assessments resulting from failures to apply the relevant schedules of duty or the concessional rates for widows and children etc., or due to a mistake as to the domicile of a deceased. Section 128 has an ample scope and purpose without disturbing the finality of valuations. The taxpayer can

1(1947) 48 S.R. (N.S.W.) 213, at p. 218; 65 W.N. 60, at p. 63. 91 CLR 375

challenge the commissioner's ascertainment of values: see S. 125 3 and S. 124 2 (6), because the taxpayer's dissatisfaction with an assessment (s. 124 1 ) may arise from a dispute as to values which by S. 125 (3) is always appealable under S. 124: Commissioner of Stamp Duties (N.S.W.) v. Pearse (1).

[WILLIAMS J. The last sentence in the majority judgment in that case directly supports your argument (2).]

As to reason (iv). The court below found the further assessment was wrong as to amount. Street C.J. said that an inquiry might show that the Valuer-General's valuation was correct. The commissioner therefore failed. His further assessment was wrong. He did not establish to the satisfaction of Street C.J. or of Owen J. that the original valuation was wrong. He cannot, by making an unfounded claim, obtain a valuation by the Supreme Court. It is not a valuation tribunal. It is not to act as part of the governmental machinery for collecting the revenue by undertaking valuation inquiries on behalf of the commissioner. It is only required to make valuations when the taxpayer disputes value as a preliminary fact to assess- ment: S. 124 (6). The inquiry directed was really to ascertain whether or not the Valuer-General's valuation was wrong. But unless it was first established that duty had not been fully assessed, S. 128 could not come into operation at all. The words of Rowlatt J. in Anderton &Halstead Ltd. v. Birrell (3) are significant. An earlier passage in that judgment was criticized in Commercial Structures Ltd. v. Briggs 4: see cases there referred to. But criticisms of the other passages are irrelevant to the present matter: see also SS. 101, 105, 113-115, 117, 124, 124A, 125, 125A, 125B, 126, 127, 127A.

G. Wallace Q.C. (with him A. C. Saunders), for the respondent. Additional asset" is a phrase used in a descriptive sense. It only means "additional value'' The scheme of the Act emerges from SS. 101, 105 and 125. Sections 102 and 107 are in point to a lesser extent. The ' final balance in S. 105 (1) is described as being of the estate. The value is an estimation. The assessment is equivalent to assessing duty at schedule rate on the estimated value of the dutiable estate. By virtue of S. 125 the commissioner may form his estimate by any means which he thinks fit. He may use his own knowledge, or he may himself value. An appeal may be on any question of value. Section 124 protects the taxpayer by giving him a right of appeal. On such an appeal questions may

3(1932) 1 K.B. 271, at p. 282. 2(1951) 84 C.L.R., at p. 523. 1(1951) 84 C.L.R. 490, at p. 518. 4(1947) 2 All E.R. 659 : (1948) 2 91 CLR 376

A. be put and the court is expressly charged with the duty of itself

assessing duty. The general intention of the legislature under S. 128 is to allow the commissioner to reopen where mistakes or inaccuracies have occurred. Any alteration must of necessity involve a further assessment. Section 128 1 involves the meaning of the word "discover", and in a given case of the expression " what he has discovered" "Discover" means (i) "find out (Inland Revenue (N.S.W.).

Commissioners v. Mackinlay's Trustees (1), cited in Commercial Structures Ltd. v. Briggs 2; (ii) "comes to the conclusion' R. v. Kensington Income Tax Commissioners 3; Williams V. Trustees of W. W. Grundy 4 (iii) if he honestly comes to the conclusion on information in his possession" (R. v. Bloomsbury Income Tax Commissioners 5 and Earl Beatty v. Inland Revenue Commissioners 6 ). "To ascertain " means "to find out " The phrase " any duty has not been fully assessed" includes a case where there has been a wrongful estimate of value, e.g. by (a) a wrongful exclusion of an asset, (b) a wrongful inclusion of an asset, and (c) a wrongful estimate of value. An estate cannot be correctly assessed unless there be a correct estimate of value. If the ascer- tainment of important estimates of value is wrong the matter properly comes within S. 128. In this case the important matter is to determine whether on the facts the commissioner was justified in having recourse to S. 128. The words if it is discovered incor- porate " in the opinion of the commissioner", or else, if the test be purely objective, they mean if the estimate of value is changed" If the commissioner changes the estimate of value then the assess- ment is wrong. The intention under S. 128 is to give the com- missioner a right to further assess where in his opinion there has not been a full assessment if he becomes aware of something for the first time. Although the facts are not clear in Earl Beatty V. Inland Revenue Commissioner 7, that case is not by any means unhelpful to the submission now made. The words "discover' and or has been undercharged were discussed in Commercial Structures Ltd. v. Briggs 8. In that case the discovery was the ascertaining that the suspicions were correct. The validity of the commissioner's resort to the sub-section should be examined by the court and if found to be incorrect or unreasonable the resort would be invalid. The form of the valuation was a factor. The subsequent sale of the shares was a factor in showing that the original estimate

1(1938) S.C. 765, at p. 771. 2(1948) 2 All E.R. 1041, at p. 1049. 3(1913) 3 K.B. 870. 4(1934) 1 K.B. 524, at pp. 531, 532. 5(1915) 3 K.B. 768. 6(1953) 2 All E.R., at p. 762. 7(1953) 2 All E.R. 758. 8(1948) 2 All E.R., at pp. 1044- 91 CLR 377

of value was incorrect. Land sales control was not an appreciable factor, if any. The value in May 1949 should not differ materially from the value in November 1949. There was not any outstanding reason for such an increase in value during the relevant period. The matter rests upon the assumption that it was reasonable for the commissioner to hold that there was some undervaluation which entitled him to have recourse to the sub-section. There is not any reason why one should single out the valuation from all other factors which go to make an assessment. The further assessment was lawfully made even if the amount was not correct. The mere fact that the claim is disputed or that it is open to comment cannot be said to invalidate the assessment. If the commissioner acting, prima facie, with some reason behind him changes his estimate of value however obtained, it must follow that the assessment is wrong. The legal position is that it is a discovery if the discovery relates to an opinion or estimate. The real inquiry under S. 124 is whether the assessment is correct. The court has the duty of making its own value. The intention of S. 128 is to give the com- missioner the right to further assess where in his opinion there has not been a full assessment. If a new asset were discovered then the question of its value would arise. According to the appellant the commissioner would have to be exactly accurate. The question of validity should be tested at the time when the commissioner makes the further assessment. The question whether there has been a discovery or not is a question closely allied to the issue of whether there has been an under assessment. The fact that the commissioner's assessment is wrong does not invalidate the further assessment: As to S. 124 it is perfectly correct in a stated case for the court to be asked to determine what is the correct amount to be assessed. It may well be the true construction of S. 128 that before any court can say that there has been a discovery there must be an issue of fact for some tribunal as to whether there has been such discovery, and it is not until that issue is determined that a further assessment can be made. The discovery by the commissioner can never be on the basis of undisputed facts. He claims to discover. The words SO unpaid refer to the amount which in the opinion of the commissioner represents the unpaid amount. It cannot be said at this stage that there has not been discovery.

W.J.V. Windeyer Q.C., in reply. The word assessment may sometimes refer to the ultimate result of assessing duty-the result which is reflected in the notice of assessment. But in the context " assess duty" or "make an assessment of duty the

91 CLR 378

process which occurs after values are ascertained is meant. Unless

the Court must under S. 124 (7) draw the inference that the Valuer- General's valuation was not a proper estimate of what a hypothetical prudent person would at the date of death have paid for the shares, then S. 128 never comes into operation. Moreover, if what was discovered was merely that there was some degree of under value, then the commissioner could not honestly simply add £7,350 to (N.S.W.).

the total value of the estate and assess duty accordingly. He must have believed that was in fact the true amount of the undervalue. There were not, however, any grounds for such a belief. The construction put by the appellant gives the statute a perfectly satisfactory operation, and one which is harmonious with the statute as a whole.

G. Wallace Q.C., by leave, referred to McEvoy v. Federal Com- missioner of Taxation 1.

Cur. adv. vult. The following written judgments were delivered :-

DIXON C.J. The procedure which the provisions of Pt. V of the Stamp Duties Act 1920-1949 (N.S.W.) appoint for litigating disputes with respect to death duty is little likely to ascertain the facts with precision or define the true issues with clearness. But it is at least certain in this case that the Commissioner of Stamp Duties, who is the respondent in the appeal, claims that the shares of Frank David Muller, deceased, in "The Astor' " Pty. Ltd. bore a value at his death of £12,100 and not £4,750 as he had at first assessed it and sought to enforce his claim by a further assessment upon the executor, who is the appellant, for the additional duty which resulted from the increase in the value assigned to the shares. It is equally certain that the executor denied the legal competence of the commissioner to make the further assessment. It is not quite SO clear, on the case stated, that if, contrary to this denial on the part of the executor, the commissioner were competent to make the further assessment, the executor contests the value now assessed and insists that in truth the shares possessed at the date of death no greater value than that first adopted by the commis- sioner. But, no doubt, it is safe to assume that the executor does

SO insist.

Accordingly two questions might seem to arise, one contingent upon the answer to the other, and they might seem otherwise to be entirely separate and distinct. The first is whether it is lawfully

1(1950) 9 A.T.D. 206, at p. 211. 91 CLR 379

competent for the commissioner to make the further assessment. If that be answered in the affirmative then, and then only, it might seem that there should come the second question, namely what is the true value of the shares as at the date of death; is it £12,100 or some other sum exceeding the value first assessed ? Like all other questions of valuation to be decided judicially it is simply a matter of fact and to be determined upon evidence.

But entirely separate and distinct as the two questions might be thought logically to be, the shadow of the second question seems ever to fall across the first and to obscure the answer to the inquiry into the competence of the further assessment. The cause of this is to be found in the use of the word "discovered" in S. 128 (1) of the Stamp Duties Act which confers the authority to make a further assessment. The sub-section provides that notwithstanding any assessment or payment of death duty or any statement that no duty is payable in respect of any person dying, it shall be lawful for the commissioner at any time thereafter, if it is discovered that any duty payable has not been fully assessed and paid, to make a further assessment of the duty SO unpaid. The further assessment is made by sub-s. (4) liable to appeal under S. 124. The appellant lays great emphasis on the word 'discovered" in the condition expressed in the words if it is discovered that any duty payable has not been fully assessed and paid which he says is a condition precedent to the exercise of the power further to assess. He asks-What was it that the commissioner discovered" It is a simple answer for the commissioner to give that he discovered that the duty had not been fully assessed because the value he had placed upon the shares was £7,350 too little. If it be true that at the date of death the shares were worth £7,350 more than the amount at which the commissioner had assessed them, I for one should have thought that when he found this out he had made a discovery.

Thus it is easy to see that the correctness of his conclusion as to the true value of the shares would naturally be taken up and controverted by the executor as a matter entering into the question what had the commissioner "discovered" for his denial of the competence of the further assessment rests upon the contention that there was no fulfilment of the condition expressed in the words

if it is discovered that any duty payable has not been fully assessed and paid But is it right to let the question of the correctness of the further assessment enter into the question whether the condition expressed by these words has been fulfilled ? An appeal is expressly given by sub-s. (4) of S. 128 from the further

91 CLR 380

assessment. The purpose of the appeal is to bring the claim for duty which the further assessment makes before the Supreme Court for determination. The procedure is by a stated case under S. 124 and sub-s. (4) of that section provides that on the hearing of the case the court shall determine the question submitted and shall assess the duty chargeable. Does S. 128 mean that the validity of the further assessment must depend upon its correctness If (N.S.W.).

SO its validity can be attacked collaterally. How does such a meaning fit with the notion that the question whether and how far it is correct is to be determined on appeal and the right duty assessed by the court ? The difficulty is not new with revenue provisions employing the infelicitous word discover " in conferring a power of further assessment or amendment. In relation to the provision which now stands as S. 125 of the Income Tax Act 1918 of the United Kingdom it was fully examined by Lord Reading C.J. in R. v. Bloomsbury Income Tax Commissioners 1. The material words were " if the surveyor discovers that any person SO chargeable has not made a full and proper or any return then he shall make an additional assessment" His Lordship described the history of the income tax law relating to further assessment and showed that when such expressions as a person chargeable" or " a person who ought to be charged" and if he (the surveyor) shall find or discover" were used, it was not intended to make the authority to assess dependent upon actual legal chargeability or upon legal proof of the conclusion embodied in the discovery. These were matters to be raised for determination by appeal from the assess- ment. The expressions referred to the finding or conclusion of the surveyor, not the objective fact. "The surveyor may be mistaken in the discovery', but if there is information before him upon which he could and did honestly believe the person to be liable to the duties the only remedy is by the appeal prescribed by the statutes " 2. Again his Lordship said-" I am therefore of opinion that it is for the Commissioners to decide whether or not a person assessed by the additional Commissioners, after discovery " by the surveyor, is in fact chargeable. But there must be informa- tion before the surveyor which would enable him, acting honestly, to come to the conclusion that a person is chargeable " 3. The case was one in which the distinction between fulfilment of the condition precedent and the right of appeal was all important. For the remedy sought was a writ of prohibition.

1(1915) 3 K.B. 768 7 T.C. 59. 2(1915) 3 K.B., at p. 782. 3(1915) 3 K.B., at p. 785. 91 CLR 381

In the same way it appears to me that S. 128 (1) should be interpreted as referring to a bona fide conclusion at which the commissioner has newly arrived on materials before him that duty payable has not been fully assessed and paid. To challenge the correctness of the claim made by the assessment that duty has not been fully assessed the party chargeable is put to his appeal.

It is clear enough that the commissioner in the present case adopted a new view as to the value of the shares and adopted it as a result of fresh information. It cannot be doubted that he reached a bona fide conclusion on materials that the value of the shares was £12,100 and not £4,750. But to say this is one thing; it is another thing on the same materials to pronounce his conclusion to be right judicially. It may well be right, but that can only be determined as an issue of fact upon evidence. The facts appearing from the stated case are simple enough. "The Astor' Pty. Ltd. is a company which owns a building containing a number of residential flats. Under the articles of association the shares which are of a denomination of £1, are grouped in certain numbers and a member must hold one of the groups. The holding of a group of shares confers upon the member a right, and imposes upon him the obligation, to become the tenant of a flat. The flats are classified and the number of shares in the group governs the shareholder's choice of the flat. The rent is as the board of directors determines but it represents only the due proportion of the expenses of owning, maintaining and managing the building. The deceased held 3,600 shares. The executor included them in his inventory at £3,600 but the commissioner requested him to file a valuation of the deceased's flat by the Valuer-General as if the shares were a title to realty. This disclosed a value of £4,750 and the commissioner adopted it as the value of the shares. A month after his assessment and six months after the death of the deceased, the executor sold the shares by auction. They fetched £12,100. On hearing of the sale the commissioner made a requisition that the increased price or value be disclosed as an additional asset and later wrote to the solicitors for the estate that the sale was " indisputable evidence " of the value of the shares. He eventually made the further assess- ment complained of. As against the "indisputable evidence " of the sale the executor points to some eight sales of groups of shares in the company in the year of the deceased's death and the following year exhibiting wide variations of price, and he also suggests that the expiry of the Land Sales Control Act 1948 on 19th September 1949, seven weeks before the sale, introduced a new factor. As the sale of the shares was not controlled by the Act the suggestion

91 CLR 382

must be that the price of the flats moved in sympathy with an upward movement of the prices of other flats and buildings which theretofore had been controlled.

The suggestion may deserve investigation and consideration on the hearing of an issue, or upon an inquiry, as to the real value of the shares at the death of the deceased. But how can the question whether the condition expressed by the words " if it is discovered (N.S.W.).

that any duty payable has not been fully assessed " be affected either by the variation in the prices obtained on the sales of other groups of shares or by the speculative inferences to be drawn from the lapse of land sales control? If the Court were to hold as a fact that the value of the shares as at death was not substantially more than the £4,750 assessed that would end the case, but for another reason, namely because the further assessment was wrong in substance. But short of that, such evidentiary matters as those mentioned must surely be put aside. They may throw a doubt on the correctness of the assessment, but even if the view already expressed is not right, viz., that it is enough to constitute a discovery that on materials the commissioner came newly to the bona fide belief that the shares had been undervalued, nevertheless such a doubt cannot affect the question whether the condition was fulfilled. Either the commissioner's assertion as to value must be assumed to be correct or it must be found to be wrong. If the view expressed in McCaughey's Case 1, that the burden of proof is on the commissioner were adopted it might perhaps be possible for the court to say that he has not proved his valuation to the satisfaction of the court. But it seems evident that the parties never contemplated submitting that issue for decision on the materials in the stated case, and that is why an inquiry has been ordered by the Supreme Court in default of agreement. Moreover when all is said and done the sale of the shares at £12,100 is a weighty piece of evidence as to their worth at the date of the deceased's death, although it occurred six months earlier.

The thing which must be "discovered" is that any duty has not been fully assessed and paid. Full assessment and full payment are the final legal consequences of the computation of liability. It is a shortcoming in the result assessed that must be " discovered" The cause of the shortcoming may lie in any mistake, misappre- hension or want of information on the part of the commissioner or mistake, misrepresentation or failure to give information on the part of the executor or administrator. It may involve matter of law or matter of fact only. Whatever the cause the condition

1(1945) 46 S.R. (N.S.W.) 192; 62 W.N. 230. 91 CLR 383

enabling the commissioner to make a further assessment is fulfilled if the consequent failure to assess the full duty is discovered. For the executor the contention was pressed that undervaluation of an asset included in an inventory was outside the conception in S. 128 1 of duty not having been fully assessed. Valuation it said was one thing; assessment of duty another. The distinction was drawn, SO it was urged, in a number of sections of Pts. IV and V of the Act and S. 128 (1) was not meant to extend to the correction of values placed upon assets. It is difficult to accept this interpretation of the provisions. Valuation of an asset or assets is of course a matter to be distinguished from other elements upon which the total liability in an amount of duty depends and this is recognized by the language of provisions referring to valuation. But all such matters are steps leading to the ascertainment of the liability in an amount of duty which results in the assessment. There is no evidence of any intention to contradistinguish assessment from valuation and to exclude the consequences of mistaken undervaluation, when discovered, from the operation of S. 128 (1).

In In the Estate of Murdoch (1), a contention was negatived that S. 128 (1) was limited to the correction of mistakes made in the act of assessing and afterwards discovered. Jordan C.J. said: The duty payable on the final balance of the estate may not have been fully assessed for any one or more of a number of reasons, for example, because an asset has been erroneously omitted or erroneously under- valued, or because a debt which was allowed as a deduction was not due and owing. Any of these is just as capable of preventing the duty payable on the final balance from being fully assessed as a mistake in making the assessment 2. This seems the natural view to take of the meaning and operation of S. 128 (1) and no sufficient reason appears for departing from it.

Another suggestion for limiting the operation of S. 128 (1) was that it should be interpreted as referring only to the discovery of something existing at the date of the assessment which, if it had been known or understood or correctly applied, would have meant an increased duty. As the sale of the shares took place after the assessment, the discovery of the price they brought was accordingly not within S. 128. This contention seems to confuse evidence with the ultimate facts on which liability depends. The ultimate facts may exist antecedently though the evidence showing what they are comes into being later. Here what we are concerned with is the value of the shares at the death of the deceased. But the sale

1(1947) 48 S.R. (N.S.W.) 213; 65 21947) 48 S.R. (N.S.W.), at p. 218 65 W.N., at pp. 63, 64. 91 CLR 384

made six months later and a month after the assessment may evidence that value and indeed the commissioner thought it indis- putable evidence showing what the value was at death.

Then it was said that the commissioner had merely changed his opinion about the value of the shares and a mere change of opinion was not a discovery. The source of this contention is the observation of Rowlatt J. in Anderton &Halstead Ltd. v. Birrell 1, about. (N.S.W.).

which it will be necessary to say something more. But clearly enough what moved the commissioner was the fresh information about the value of the shares afforded by the price given for them at the auction sale. With fresh information coming to his knowledge which in fact led him to believe that he had set down the shares at a great undervalue SO that the duty payable had not been fully assessed, the commissioner's conclusion might fairly be described as a discovery that the duty payable had not been fully assessed and paid. In the case mentioned of Anderton &Halstead Ltd. V. Birrell 2, Rowlatt J. had before him a case stated by General Commissioners who had confirmed additional assessments made under S. 125 of the Income Tax Act 1918 of the United Kingdom by a surveyor who conceived that he had discovered that certain deductions on account of a bad debt had been wrongly allowed in assessments made some years before when an estimated part of the debt had been written off. The debtor was a company whose share capital the taxpayer held almost entirely and in the meantime the taxpayer had continued to sell to the company and to give it ever mounting credit. Seeing this the surveyor concluded that the estimated part of the debt deducted as bad could not have been a bad debt. He therefore made the additional assessments. The General Commissioners were not satisfied that the debt was a bad debt and submitted in the case stated the question whether they were entitled on the evidence before them to hold that it was not a bad debt. In dealing with S. 125, a provision to which reference has already been made, Rowlatt J. made the statement on which the executor relies. He said: "The word discover does not, in my view, include a mere change of opinion on the same facts and figures upon the same question of accountancy, being a question of opinion' " 3. It will be noticed that his Lordship emphasizes as the basis of his statement the identity of the facts the figures and the question and its being a question of opinion. The passage has not escaped criticism but the grounds upon which his decision reversing the decision of the commissioners proceeds

1(1932) 1 K.B. 271, at p. 281 ; 16 2(1932) 1 K.B. 271 ; 16 T.C. 200. T.C. 200, at p. 208. 3(1932) 1 K.B., at p. 281. 91 CLR 385

show clearly enough that his observation excluded cases where the formation of a different opinion was due to a new and relevant factor coming to the surveyor's knowledge. Those grounds were in substance that the growth of the indebtedness afforded no evidence on which the General Commissioners could find that the debt was not properly regarded as bad in the original assessment and no ground for their holding that the surveyor had discovered the debt not to be allowable as bad. On the second point Rowlatt J. said that the only way in which it could be put was that the subse- quent growth of the indebtedness indicated that there must have been some fact at the earlier time which was not taken into account in the estimate of the value of the debt and would have made the estimate higher. But his Lordship thought that it was entirely guesswork in the circumstances of the case to infer that at the time there had been any reason to think the debt good. It is thus reasonably clear that if the surveyor had had before him materials capable of supporting a change of opinion Rowlatt J. would have regarded him as having 'discovered" enough to warrant an additional assessment, whatever the decision on the issue raised as to the propriety of allowing an estimated part of the debt as bad and deductible.

With this decision it is necessary to compare that of Finlay J. in Williams v. Trustees of W. W. Grundy 1, where his Lordship said that he did not find it possible to apply what Rowlatt J. had said to every case in the sense of reading it as meaning that an inspector can never make a discovery if the making of that dis- covery involves only a change of opinion. In that case the "discovery" was that on the true construction of a will an interest falling to an infant was contingent on his attaining full age and not vested, as the surveyor had originally interpreted the limitation. It was a change of opinion as to the legal effect of an instrument but it was held to be a discovery.

Another such case is Inland Revenue Commissioners v. Mackinlay's Trustees (2). The instrument was a partnership deed containing a clause as to what the estate of a partner dying during an accounting period should receive in lieu of profits. The sum was held by the commissioners not to be assessable as income, but some years later they formed the contrary opinion and made an additional assessment to surtax. The Court of Session held that this was a discovery within S. 125. The opinion of Lord Normand given as Lord President is now accepted in England as well as Scotland

1(1934) 1 K.B. 524. at pp. 533, (2) (1938) S.C. 765: 22 T.C. 305. 91 CLR 386

OF A. as authoritative: see per Wrottesley J. in Multipar Syndicate

V. Devitt 1, per Atkinson J. in Commercial Structures Ltd. V. Briggs 2, and per Tucker L.J. and Cohen L.J. 3 and cf. per Vaisey J. in Earl Beatty v. Inland Revenue Commissioners 4. Lord Normand remarks that according to the ordinary use of language "discover" may be taken simply to mean find out (N.S.W.).

His Lordship goes through the things mentioned in S. 125 as those to be found out and shows that an initial complete disclosure by the taxpayer is nothing to the point, if on the part of the revenue the effect of documents has been misunderstood, errors of law made, deductions allowed that ought not to have been made. These are matters which may be found out, "discovered"

In Steel Barrel Co. Ltd. v. Osborne 5, the taxpayer had agreed with the revenue authorities that a conventional figure representing old stock should be deducted from the opening and closing figures of stock over a specified period of years. The assessor did not make the same deduction from the opening figure of the year ensuing upon this period. Subsequently the surveyor came to the conclusion that he ought to have done so, rightly as the Court of Appeal held. His conclusion amounted to a "discovery"

In Commercial Structures Ltd. v. Briggs 6, the inspector who assessed, in taking into account a rent (payable by way of compen- sation), had failed to see the importance of a statutory provision requiring the addition of a sum equal to the cost of making damage good. How the significance of this came to his attention subsequently did not appear, but he had full information before him ab initio. He was held entitled to make an additional assessment as having discovered that the additional tax was chargeable. An oblique reference was made to the curious incident in the Court of Appeal in British Sugar Manufacturers Ltd. v. Harris 7, when the Attorney- General intervened SO that the court did not decide the question whether the surveyor had made a discovery in that case 8. Tucker L.J. said that the Court of Appeal had not the benefit of reading the opinion of Lord Normand. Atkinson J. had made the same point more fully in the court below 9 and it had been made also by Wrottesley J. in Multipar Syndicate Ltd. v. Devitt 10. It is

1(1945) 26 Tax. Cas. 359, at p. 368. 2(1947) 30 Tax. Cas. 477, at pp. 3(1947) 30 Tax. Cas., at pp. 491- 4(1953) 2 All E.R., at p. 762. 5(1947) 30 Tax. Cas. 73. 6(1947) 2 All E.R. 659 ; (1948) 7(1937) 21 Tax. Cas. 528, at pp. 8(1948) 30 Tax. Cas., at p. 493. 9(1948) 30 Tax. Cas., at pp. 485, 10(1945) 26 Tax. Cas., at p. 368.* 91 CLR 387

difficult, therefore, to treat the course which but for the Attorney- General the Court of Appeal would have taken as now possessing any significance.

In truth there is a succession of cases, of which the most recent is Earl Beatty v. Inland Revenue Commissioners 1, in which the surveyor has been held to have made a sufficient discovery when he has simply adverted to a liability which the materials before him disclosed but which he had not seen in due time. The tendency disclosed by the cases is against restricting the word 'discovery " whether in the manner indicated by Rowlatt J. or otherwise.

In the present case the facts seem to speak for themselves. Because of the sale of the shares the commissioner became aware that a buyer or buyers existed prepared to give two and a half times what the commissioner had estimated for the flat and SO far as he was concerned he saw no reason to doubt that this must have been SO at the time of death. He concluded that his value had been completely wrong and the right value was represented by the price given. If this were SO he had become aware for the first time that duty had not been fully assessed. It therefore comes back to the point that the correctness of his conclusion that duty had not been fully assessed is to be decided as the issue of substance raised by the appeal and not as a matter going to the question whether a discovery had been made. For, if his conclusion is right it seems almost inevitably to follow that it has been discovered that duty has not been fully assessed, at all events within the ordinary meaning of language.

The questions in the case stated are not very happily framed and no doubt it would be better if the answers given by the Supreme Court had been expressed in the formal order with more precision. But in substance I think the decision of the majority of the Supreme Court is right. Although not much harm would result from leaving the order as it stands I am prepared to assent to the order Fullagar J. proposes. Subject thereto I think the appeal should be dismissed.

WILLIAMS J. This is an appeal from an interlocutory order of the Supreme Court of New South Wales made in a case stated under S. 124 of the Stamp Duties Act 1920-1949 (N.S.W.) which raises a question of general importance relating to the administration of the estates of deceased persons. It arises in this way. The appellant is the executor of the estate of Frank David Muller who died on 13th May 1949, domiciled in New South Wales. Amongst his assets were 3,600 fully paid shares of £1 each in The Astor"

1(1953) 2 All E.R. 758. 91 CLR 388

Pty. Ltd., a company incorporated in New South Wales, which owns a building of several storeys situated in Macquarie Street, Sydney, containing a large number of residential flats. The articles of association of the company provide for the shares being held in certain aggregate numbers and for the holders of such aggregates becoming entitled to apply for a lease of a certain class of flat (N.S.W.).

in the building. They provide that the "homes" in the building available for a holder of 3,600 shares shall be one of the homes facing Macquarie Street on the south-eastern corner of the building and situated on the ten upper floors thereof or one of those on the north-western corner of the building and situated on the six upper floors thereof. The title to each flat is a lease granted by the company to the holder of the necessary aggregate number of shares, the rent of the lease being adjusted SO that the tenant of each flat pays a proportion of the expenses common to maintaining the building as a whole comprising the sums required to pay rates and taxes, repairs, painting, servicing the lifts and passage-ways etc.

The deceased was at the date of his death the tenant of one of the flats situated on the sixth floor available to a holder of 3,600 shares. For the purposes of State death duty the executor valued the shares at £1 each but the commissioner was not prepared to accept this value. He required a value by the Valuer-General. On 22nd August 1949, the Valuer-General valued the improved capital value of the flat at £4,750. He stated that the improvements comprised a flat containing two bedrooms, lounge room, dining room, entrance, vestibule, kitchen, bathroom, passage and balcony. The commissioner accepted this valuation as the value of the shares and on 6th October 1949 assessed the executor for death duty, the 3,600 shares in "The Astor" being valued for this purpose at £4,750. This method of valuing shares was certainly unusual but, as the real purpose of becoming a shareholder in "The Astor" is to become qualified to obtain a home and the rent is roughly equivalent to the annual outgoings that an owner of a dwelling would have to pay, the method does not on examination appear to be at all inappropriate to the particular circumstances. On 4th November 1949, the executor sold the 3,600 shares at public auction for £12,100. On 9th November 1949, the commissioner made a requisition requiring the executor to disclose the difference between the £4,750 and £12,100 as an additional asset. The executor refused to do SO and on 20th January 1950, the commissioner issued a notice of further assessment of death duty in which he increased the value of the estate by £7,350 alleging that the value of the shares in "The Astor " had been understated by this amount and

91 CLR 389

claiming interest on the amount of additional duty at eight per cent per annum from 13th November 1949, to date of payment (that is from six months after death). In correspondence preceding the further assessment the commissioner claimed that the sale of the shares for £12,100 was indisputable evidence of their value at the death.

Section 128 of the Stamp Duties Act provides as follows

(1) Notwithstanding any assessment or payment of death duty under this Act or of duty on the estate of any deceased person under any of the Acts hereby repealed, or any statement of the Commissioner that no duty is payable, in respect of the estate of any person whether dying before or after the passing of this Act, it shall be lawful for the Commissioner at any time thereafter, if it is discovered that any duty payable has not been fully assessed and paid, to make a further assessment of the duty SO unpaid, and to recover the same in the same manner as if no previous assessment or payment had been made.

The Commissioner may at his discretion at any time cause to be made all such alterations in or additions to any assessment as he thinks necessary in order to insure its completeness and accuracy and notify the administrator accordingly.

Where any alteration in an assessment has the effect of reducing the death duty any duty overpaid shall be refunded by the Com- missioner, but no refund shall be made unless application for the same is made by the administrator within three years from the date of the overpayment of duty.

(2) Except in the case of fraud an administrator shall not be personally liable for any death duty under any such further assess- ment by reason of having administered or distributed the estate of the deceased without retaining sufficient assets to satisfy the duty.

(3) Nothing in this section shall affect the operation of any settlement by way of composition under the next succeeding section.

(4) Any such further assessment shall be liable to appeal under section one hundred and twenty-four."

The executor disputed the power of the commissioner to make a further assessment and also the correctness of the amount and required the commissioner to state a case under S. 124 of the Stamp Duties Act. The material questions asked in the case stated (as amended) are as follows

1. On the facts and circumstances set out in the stated case was the further assessment dated 20th January 1950 for £1,497 7s. 8d. lawfully made and was the said sum lawfully recoverable

91 CLR 390

by the Commissioner 2. Had the Commissioner power in the facts and circumstances set out in the stated case to issue any assessment other than the assessment dated 6th October 1949 or to recover any further duty beyond that assessed in the said assess- ment 3. If the answer to question 2 is in the affirmative what is the amount of this further duty " The Supreme Court, Street C.J. (N.S.W.).

and Herron J., Owen J. dissenting, answered these questions as follows 1. Yes, but not as to the amount. 2. Yes. 3. The amount of additional duty to stand over for inquiry if the parties fail to agree.

At first sight it would appear that the answer to the first question presupposes that the majority of the court was satisfied on the facts stated in the case that the shares were undervalued in the original assessment. The only fact that could be material is that the shares were sold for an enhanced price six months after the death but there is no finding that this fact is sufficient to prove that the value of the shares at the death exceeded £4,750 and I do not think that their Honours intended to preclude the executor from proving at the inquiry, if he could, that the shares were fully valued at £4,750.

It is only lawful for the commissioner to make a further assess- ment under the first paragraph of S. 128, and it is on this paragraph that he relies, if it is discovered that any duty payable has not been fully assessed and paid. The section does not specify who must make the discovery but it is the commissioner who is author- ized to make the further assessment SO that it must be the com- missioner who makes the discovery or at least bona fide believes that he has done SO in the first instance. He then makes the further assessment. If an administrator appeals the onus must then lie on the commissioner to prove that what he claims to have dis- covered is in fact a discovery that duty has not been fully assessed and paid. The discovery must be the discovery alleged by the commissioner but it might be necessary to order an inquiry to ascertain whether the discovery showed that duty had not been fully assessed and paid and to determine the amount of duty still unpaid. It is a condition precedent to the validity of the further assessment that it should be discovered that any duty has not been fully assessed and paid. The mere discovery that duty might not have been fully assessed and paid is not sufficient. The meaning of the word "discovered" must itself be discovered and on that problem the English cases decided upon the meaning of the word "discovers" in S. 125 of the English Income Tax Act 1918 are helpful.

91 CLR 391

This section authorizes the issue of further assessments in certain cases. They are authorized by sub-s. 1 :-

If the surveyor discovers-that any properties or profits chargeable to tax have been omitted from the first assessments; or that a person chargeable has not delivered any statement, or has not delivered a full and proper statement, or has not been assessed to tax, or has been undercharged in the first assessments; or that a person chargeable has been allowed, or has obtained from and in the first assessments, any allowance, deduction, exemption, abatement, or relief not authorised by this Act".

It is unnecessary to refer to all these cases because the principal ones are discussed by the Court of Appeal in Commercial Structures Ltd. v. Briggs (1). The case closest to the present case on its facts is Anderton &Halstead Ltd. v. Birrell 2. The actual decision in that case has always been accepted as completely right. A sentence in the judgment of Rowlatt J. has, however, been questioned but only after a very literal meaning has been placed upon it. It reads as follows :-

"The word discover' does not, in my view, include a mere change of opinion on the same facts and figures upon the same question of accountancy, being a question of opinion' 3.

A sentence follows a few lines lower down to which no exception has been taken: 'Moreover, it is to be remembered that income tax is an annual tax for the service of the year, and when one finds a provision for an additional assessment within a period of six years one is led to expect machinery, not for a mere revision, but for the bringing in of something which had been overlooked" (3).

To my mind the former sentence should be read, like every other passage in a judgment, secundum subjectam materiam, and SO read does not appear open to criticism. The facts in Anderton's Case (2) were that the appellants had been assessed for two years on the basis of a writing down in each year successively of a doubtful debt. This was done by agreement with the inspector of taxes who had all the facts before him. Subsequently, by additional first assessments, the writing down of the doubtful debt was disallowed, on the ground that since the writing down of the debt was allowed, it had come to the surveyor's knowledge that the appellants had permitted the debtors to increase their indebtedness to them. The additional assessments were disallowed by Rowlatt J. His Lordship referred to r. 3 (1) of Cases I and II. He said: Rule 3 (i) is as follows: 'In computing the amount of the profits or gains

1(1948) 2 All E.R. 1041. 2(1932) 1 K.B. 271. 3(1932) 1 K.B., at p. 281. 91 CLR 392

to be charged, no sum shall be deducted in respect of and then after a list, ' (i) any debts, except bad debts proved to be such to the satisfaction of the commissioners and doubtful debts to the extent that they are respectively estimated to be bad What the statute requires, therefore, is an estimate to what extent a debt is bad, and this is for the purpose of a profit and (N.S.W.).

loss account. Such an estimate is not a prophecy to be judged by after events, but a valuation of an asset de praesenti upon an uncertain future to be judged with regard to its soundness as an estimate upon the then facts and probabilities. It is not over- thrown as an estimate in 1923 and 1924 by coming to the conclusion, as the General Commissioners have done, that in 1930 it had not been proved that the debts were to any extent bad " 1.

That was what Rowlatt J. thought would be a mere revision whereas S. 125 provided machinery for the bringing in of something which had been overlooked. In Anderton's Case 2 his Lordship was considering a claim to make an additional assessment because the surveyor on subsequent information considered that the debt had been originally undervalued. In the sentence criticized his Lordship was not considering whether an additional assessment could be made where income chargeable to tax had been omitted because the surveyor had placed a wrong interpretation upon the rights of a taxpayer under a deed or will or other document or under some statute. In Williams v. Trustees of W. W. Grundy 3, Finlay J. held that the additional assessments were justified because the income which a beneficiary derived from a share under a will had not been brought into charge because the surveyor wrongly considered that the share was vested in which case the income would not have been taxable whereas the share was only contingent and the interest was taxable. In Commercial Structures Ltd. v. Briggs 4 the premises of the taxpayer had been requisitioned under the Defence Regulations, and the taxpayer was entitled to compensation rent under the Compensation (Defence) Act 1939.

A sum of £4,940 was arrived at by agreement. In assessing this figure for tax purposes, the inspector of taxes made a statutory deduction of one-sixth from that sum, leaving £4,113 as the figure on which tax under Schedule A would be payable. Payment of tax on this basis was made until April 1945, when the inspector became aware that the compensation rent was not a rack rent, since, by the provisions of S. 2 (1) (b) of the Act of 1939, the Minister of Works was liable to pay a sum equal to the cost of making good

1(1932) I K.B., at p. 282. 2(1932) 1 K.B. 271. 3(1934) 1 K.B. 524. 4(1948) 2 All E.R. 1041. 91 CLR 393

any damage to the building during his occupation. In purported pursuance of the Income Tax Act 1918, S. 125 (1), the inspector thereupon made additional assessments, increasing the net assess- ment to £4,525. It was held that the inspector had made a discovery within the meaning of this section when he found that a mistake had been made with regard to the effect of the general law on a particular set of facts.

In the English cases in which additional assessments have been upheld some mistake had been discovered which showed that some item of assessable income had been omitted. In the present case there is no evidence that anything relating to the value of the 3,600 shares whether of fact or law was overlooked. The commis- sioner was fully aware of the rights conferred on shareholders by the articles of association of The Astor", of the terms of the leases under which shareholders including the deceased became tenants of the company, and of the size and situation and general amenities of the flat of which the deceased was a tenant at his death. The fact that the shares were sold for £12,100 six months after death could be cogent evidence that the shares were under- valued at £4,750 at the death. But intervening circumstances, and in particular the cesser of land sales control, might well establish that the subsequent sale threw little light on the value of the shares at the death. The claim of the commissioner that the sale for £12,100 was indisputable evidence that the shares were of this value at the death cannot be sustained. The commissioner is really seeking to revise his previous opinion and to correct a supposed error of judgment. He has not discovered any mistake of fact or law which would give the shares any element of value which was not taken into account in the original assessment.

Section 105 (2) of the Act provides that save as in the Act expressly provided, the value of the property included in the dutiable estate shall be estimated as at the date of the death of the deceased. Section 115 (1) provides that duty shall become due and payable on the assessment thereof by the commissioner, or if not duly SO assessed within six months from the death of the deceased then on the expiration of that period. Section 121 (1) provides that interest at the rate of eight per cent per annum shall become payable if the duty is not paid within six months after the death of the deceased. Section 117 requires an applicant for probate or letters of administration of the estate of any deceased person to lodge with his application an affidavit containing the prescribed particulars with respect to the dutiable estate and all allowances claimed in respect of debts owing by the deceased at the time of his death.

91 CLR 394

It also provides that the applicant shall furnish the commissioner with such other evidence, including valuations by competent valuers, as may be prescribed or as the commissioner may in any case require to enable him to ascertain all the property liable to death duty and the value thereof, and all allowances to be made in respect of debts owing by the deceased, and to assess the duty (N.S.W.).

payable. Section 125 provides that in every case in which the commissioner deems it necessary to ascertain the value of any property for the purpose of assessing duty under the Act he may ascertain such value by such means as he thinks fit and the com- missioner may assess the duty payable on the footing of the value

SO ascertained. So it is the duty of the commissioner to make an estimate of the value of the property included in the dutiable estate as at the date of death, and to make this estimate expedi- tiously and if possible within six months after the death of the deceased on the materials then before him. If all the material circumstances are then disclosed he is in a position to attribute to any asset all its elements of value and an estimate of value reached in these circumstances is, in my opinion, a full assessment of its value. The policy of the Act is illustrated by S. 125A which was inserted in the Act by Act 13 of 1931, S. 7 (a). This section provides "In every case in which it is necessary for the purpose of assessing duty under this Act to ascertain the value of any estate or annuity or interest for the life of any person or of any estate, annuity, or interest determinable on or subject to any contingency or the happening of any event or of any estate, annuity, or interest in remainder expectant on the death of any person or expectant on or subject to any contingency or the happening of any event, regard may be had in ascertaining the value of any such property as aforesaid to the death of the person having the life estate or annuity or interest or the happening of the contingency or event at any time before the assessment of duty under this Act is actually made '

The words " at any time before the assessment of duty under this Act is actually made " must refer to the original assessment of duty. By clear implication these words would prevent the commissioner making a further assessment under S. 128 because some contingency or event which happened after this assessment had shown the valuation of the particular interest on which he had based the assessment had turned out to be erroneous. The happening of the contingency or event would probably demon- strate this error whereas a subsequent sale of an asset for a price higher than the valuation would at most throw doubt on the accuracy of the original estimate. But, nevertheless, the value

91 CLR 395

of the interest could not be reassessed. In other words, the interest would have been fully assessed.

In my opinion the fact that an asset is subsequently sold at an enhanced value is not evidence of a discovery that any duty payable has not been fully assessed and paid. Duty is fully assessed unless some element of value has been overlooked. If every element of value has been taken into account and estimated as at the date of death in the original assessment the duty has been fully assessed. As Rowlatt J. said in one of the passages I have quoted "Such an estimate is not a prophecy to be judged by after events, but a valuation of an asset de praesenti upon an uncertain future to be judged with regard to its soundness as an estimate upon the then facts and probabilities 1. In Dodworth v. Dale 2 Lawrence J. held that S. 125 of the English Act did not authorize an additional assessment by reason of facts which arose after the year of assess- ment, cf. Multipar Syndicate Ltd. v. Devitt 3. Any other construc- tion would place the administration of every estate in jeopardy. The commissioner would have a complete power of revision from time to time of the value he had placed on every asset in an estate. Even if his primary estimate was challenged upon an appeal under S. 124 and the Court on an issue of fact decided the value, never- theless the commissioner, on finding that the asset had subsequently realised more than the value fixed by the Court, could issue a further assessment under S. 128 and no res judicata could operate to estop him from doing SO because S. 128 provides that the commissioner has power to make a further assessment of the duty unpaid and to recover the same in the same manner as if no previous assessment or payment had been made and he would therefore be exercising an independent power.

To my mind the issue on this appeal has already been decided mutatis mutandis by the last passage in the judgment of the majority of the Court in Commissioner of Stamp Duties (N.S.W.) Pearse 4. This judgment has recently been affirmed on appeal by the Privy Council. It is in the following words Lastly it was submitted that if the amount of profit costs exceeded the original estimate from time to time the Commissioner could re-assess the estate for further duty from time to time under S. 128 of the Act. But the bounty is an interest which is capable of valuation and must, subject to S. 125A of the Act, be actuarily valued as at the date of death. Once this has been done and duty

1(1932) 1 K.B., at p. 282. 2(1936) 2 K.B. 503. 3(1945) 1 All E.R. 298. 4(1951) 84 C.L.R. 490. 91 CLR 396

paid on that value, the duty has been fully assessed and paid and there is no room for the operation of S. 128 " 1.

We were referred to the decision of the Supreme Court of New South Wales in In the Estate of Murdoch 2, and particularly to the passage in the judgment of Jordan C.J. where his Honour said: "It has been contended that all this enables the Commis- (N.S.W.).

sioner to do is to make a further assessment, if he finds that a mistake has been made in the act of assessing which has prevented the full duty from being assessed and paid, for example, attributing to property given by the will to a privileged beneficiary a value lower than its true value. I see no reason for giving this restricted meaning to the section. The duty payable on the final balance of the estate may not have been fully assessed for any one or more of a number of reasons, for example, because an asset has been erroneously omitted or erroneously under-valued, or because a debt which was allowed as a deduction was not due and owing. Any of these is just as capable of preventing the duty payable on the final balance from being fully assessed as a mistake in the making of the assessment' 3.

The material statement in this passage for present purposes is the statement that the commissioner can issue a further assessment under S. 128 because an asset has been erroneously undervalued. If this statement is intended to cover the case where the commis- sioner seeks subsequently to revise an estimate on which he has based his original assessment without evidence that he has discovered some new element of value which he had previously failed to take into account because of some mistake as to the nature or attributes of the asset or its legal quality I am unable to accept it. But the statement could cover many cases where an asset had been errone- ously undervalued for one of these reasons and to that extent I agree with it.

Section 128 contains, of course, a second paragraph authorizing the commissioner to cause to be made all such alterations in or additions to any assessment as he thinks necessary in order to ensure its completeness and accuracy. This paragraph was not relied upon by the commissioner in the Supreme Court or before us and its meaning was not argued SO that I shall not express any concluded opinion upon it. It may well have a limited operation. It could not be intended to give the commissioner a wider power to make a further assessment than that conferred by the first para- graph of S. 128. It is a power to make alterations in or additions to

1(1951) 84 C.L.R., at p. 523. 2(1947) 48 S.R. (N.S.W.) 213; 65 218; 65 W.N., at pp. 63, 64. 3(1947) 48 S.R. (N.S.W.), at p. 91 CLR 397

any assessment and not to make the assessment itself and would appear to be incidental to the main powers of the commissioner to make assessments conferred by S. 117 (4) and the first paragraph of S. 128.

In conclusion let me say that I agree entirely with the statement in the judgment of Owen J. that: "Two conditions must be fulfilled before S. 128 1 can be brought into play. There must have been an omission to take into account some relevant circumstance existing at the date of the original assessment, and the circumstance must be of such a character that had the truth been known at the date of assessment the duty payable must have been greater than the amount in fact assessed " (1).

For these reasons I would allow the appeal.

FULLAGAR J. This is an appeal from a judgment of the Full Court of the Supreme Court of New South Wales, given on a case stated by the Commissioner of Stamp Duties under S. 124 of the Stamp Duties Act 1920-1949. The duty in question is death duty under Pt. IV of the Act on the estate of Francis David Muller, of whose will the appellant is the executor.

The general scheme of Pt. IV of the Act is of a familiar character. It is provided (s. 101) that on the death of any person death duty at the rate mentioned in the Third Schedule shall be assessed and paid upon the final balance of the estate of the deceased as determined in accordance with the Act. The 'dutiable estate' is to be ascertained in the manner prescribed, and the 'final balance" of the estate is to be computed (s. 105) as being the total value of the dutiable estate after making allowance for the debts of the deceased. The " value " (apart from immaterial exceptions) is to be estimated as at the date of death. The duty is to be assessed and collected by the commissioner (s. 113), and is to constitute a debt due and payable to Her Majesty out of the estate (s. 114). It becomes due and payable on assessment (s. 115). In the present case the commissioner made an assessment, the amount of which was duly paid by the executor. At a later date he made a further assessment which had the effect of increasing substantially the dutiable value of the estate. His power to do this, and the effect of the further assessment made, are the matters in question in this case. The questions depend on S. 128 of the Act, which occurs in Pt. v. but it will be convenient to postpone a reference to the terms of that section until the facts of the case have been briefly stated.

1(1953) 53 S.R. (N.S.W.) 257, at p. 269 ; 70 W.N. 69. 91 CLR 398

Mr. Muller died on 13th May 1949. His dutiable estate included 1953-1954.

3,600 fully paid shares of £1 in a company named "The Astor" Pty. Ltd. That company was the owner of a large building in Macquarie Street, Sydney, which contained a number of residential flats. Under the company's articles its shares were to be held by its members in "groups" consisting respectively of 4,000, 3,900, 3,800, 3,600, 3,500, 3,360, 3,000 and 2,700 shares. The holding of (N.S.W.).

any such group " entailed on the holder" the renting by him of one of the flats in the building, a particular class of flat being assigned to each group. The rent payable was calculated at a sum which was intended to spread equitably over all the tenants the cost of maintenance, cleaning, etc. The deceased occupied until his death Flat No. 3, which was a flat of the class assigned to a holding of 3,600 shares.

In his inventory for purposes of death duty the executor included the deceased's 3,600 shares as being of a value of £3,600. The commissioner required the executor to obtain and file " Valuer- General's valuation of deceased's interest in 'The Astor The Valuer-General certified " that at the date of death " the improved capital value of property being Flat No. 3 " in the company's building was £4,750. He went on to describe the improvements as "comprising a flat containing two bedrooms, lounge room", etc. Some confusion is apparent at this stage. The deceased's estate certainly included shares in "The Astor" Pty. Ltd. It may also have included a lease of a flat in "The Astor", the unexpired term of which we do not know. If it did, the value of the shares would be, in effect, conditioned by any value attributed to the unexpired term of the lease. If the shares were to be valued on the basis on which presumably they were ultimately sold, i.e. on the basis that they carried an immediate right to a lease of the flat, it would seem to be wrong to attribute any separate value to any existing lease. If, on the other hand, a value were attributed to the lease, the right which the shares carried would have to be treated as a reversionary right, and the value of the shares reduced accordingly. But what the Valuer-General seems to have been invited to value, and to have valued, was an interest in "The Astor", an interest in real property. His certificate was meaningless on any other view. The deceased had, of course, owned no such interest. It was on this certificate that the commissioner apparently acted, valuing an asset which did not exist at £4,750. The assessment was made on 6th October 1949, and the duty assessed was paid on 12th October 1949. On 4th November 1949 the executor sold the 3,600 shares by public auction for the sum of £12,100. This sale

1(1947) 48 S.R. (N.S.W.) 213 65 W.N. 60. 91 CLR 414

A. English cases was discussed in Commercial Structures Ltd.

Briggs 1. In the first instance Atkinson J. had held that the word "discovers' in S. 125 (1) of the Income Tax Act 1918 (Imp.), was appropriate to embrace a mere change of opinion on the part of the taxing authorities, the case stated being " silent about what led them to do so". In the course of his reasons Atkinson J. said (N.S.W.).

'It is plain on the admissions that the appellants were under- charged in the first assessments. The only point is Can the surveyor be said to have discovered this mistake ? Sometimes a surveyor learns some new fact which he did not know at the time of the first assessment. Sometimes a decision of the courts tells him that some view he has taken was wrong. There are instances of that kind where it could fairly be said that the surveyor had discovered something which he did not know before. But here the appellants' case is that there was a mere change of view. It is not, they say, suggested that there was any additional informa- tion which came to the surveyor, indeed it is found as a fact that full information as to the terms of the letting was reported to the inspector of taxes by the company's agents on Apr. 2, 1942. In other words, it is argued, the surveyor had everything before him then, and there is no suggestion of anything happening or anything being discovered which would indicate to him that he had made

mistake. I think, therefore, that this case has to be argued simply on the basis that the surveyor changed his mind without anything new coming to his attention or without his learning anything from other surveyors or those above him. On that it is said that the surveyor cannot say he has discovered anything" 2.

Thereafter his Lordship adverted to a number of previous decisions in which the problem of applying this word to different circumstances had arisen and then said: " Although I see the greatest force in Rowlatt J.'s view (in Anderton and Halstead Ltd. v. Birrell 3 ) that a mere change of opinion may well not be a discovery', I do not think it is necessary for me to express my own view, because I feel that, on the cases as they are, it is my duty to follow the decision of Finlay J. (in Williams v. Grundy Trustees 4 and in British Sugar Manufacturers v. Harris 5 and of the Court of Session (in Inland Revenue Commissioners V. Mackinlay's Trustees' 6 ) " 7.

The decision of Atkinson J. was upheld by the Court of Appeal. Considerable stress was there laid on the observations of Lord

1(1947) 2 All E.R. 659 ; (1948) 2 2(1947) 2 All E.R., at p. 661. 3(1932) I K.B. 271. 4(1934) I K.B. 524. 5(1938) 2 K.B. 220. 6(1938) S.C. 765. 7(1947) 2 All E.R., at p. 665. 91 CLR 415

Normand in the last-mentioned case, Tucker L.J. citing the following passages "Accordingly, it remains to consider whether in this case the commissioners are entitled to say that such a discovery has been made. In considering that question we have, of course, to assume pro veritate that the first assessment to sur-tax laid upon the trustees was mistaken, and that the additional assessment now laid on will be a correct assessment. The question therefore is whether a discovery that a mistake, essentially a mistake of law, has been made is a discovery within the meaning of S. 125. I think the word discover in itself, according to the ordinary use of language, may be taken simply to mean 'find out' What has to be found or found out is that any properties or profits chargeable to tax have been omitted from the first assessment. Now, it is clear that what has happened here is within the literal meaning of these words. If the additional assessment is a correct assessment, then it is plain that certain profits chargeable to tax have been omitted.

I go on to the next paragraph of S. 125 (1), which is an alternative to the first paragraph. There the discovery which must be made is stated in alternative forms of which the first is that a person chargeable has not delivered any statement or has not delivered a full and proper statement. There is an express finding in the case that a full and proper statement has been made. But then we have to go on and give effect to the alternative which follows

Or has not been assessed to tax, or has been undercharged

I think that, since these words must apply where the person charge- able has delivered a full and proper statement, they are apt to cover the case of a discovery of a mistake in the assessment caused by a mistake in the construction of the partnership deed or, it may be, caused by a mistake in the law applicable to such a deed, even where there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based.

I do not think it is stretching the word 'discovers' to hold that it covers the finding out that an error in law has been committed in the first assessment, when it is desired to correct that by an additional assessment

That again seems to me rather to point to the discovery that a deduction claimed upon a true representation of the facts has been allowed, although it is contrary to those provisions in the Act which authorise deductions to be made. That is to say that again that third paragraph appears to be intended to apply to the discovery of an error in law just as much as to an error in fact. Of course, if there were any reason in the context for restricting the word discover' to the discovery of an error in fact, that restriction would necessarily receive effect,

91 CLR 416

OF A. but, in my opinion, the context points, not to any such restriction,

but on the contrary to SO wide a meaning that the word ought to be held to cover just the kind of discovery which was made here, when the Special Commissioners found out that, by reason of a misapprehension of the legal position, certain of the profits charge- able to tax had been omitted from the first assessment" 1. (N.S.W.).

Thereafter his Lordship said "It is true that that opinion is not binding on this court, and that the Court of Appeal in 1938, in the British Sugar Manufacturers' Case 2, had not got the benefit of reading that opinion of Lord Normand. All I can say, with respect, is that what is there stated by Lord Normand appears to me completely to fit the present case, and I can do no more than say that the way he puts it convinces me that the argument of the Crown is the one which should be accepted by us. I can do no more than adopt the language of Lord Normand, and will not attempt to say the same thing in poorer language " 3.

It will be observed that Lord Normand's analysis of S. 125 of the Income Tax Act (Imp.) provided a cogent basis for his conclusion that the word discovers should be given a wide meaning and it was that analysis which led the Court of Appeal to say that the surveyors might, even without the discovery of any new fact or circumstance, discover that a person chargeable had been under- charged in the first assessment. But the same considerations do not present themselves upon a perusal of S. 128 of the Stamp Duties Act. Nevertheless in Murdoch's Case 4 Jordan C.J. said: As regards S. 128 (1), this provides that notwithstanding any assess- ment or payment of duty, etc., if it is discovered that any duty payable has not been fully assessed and paid, the Commis- sioner may at any time make a further assessment of the duty

SO unpaid, and recover the same as if no previous assessment or payment had been made. It has been contended that all that this enables the Commissioner to do is to make a further assessment, if he finds that a mistake has been made in the act of assessing which has prevented the full duty from being assessed and paid, for example, attributing to property given by the will to a privileged beneficiary a value lower than its true value. I see no reason for giving this restricted meaning to the section. The duty payable on the final balance of the estate may not have been fully assessed for any one or more of a number of reasons, for example, because an asset has been erroneously omitted or erroneously under-valued,

1(1948) 2 All E.R., at pp. 1047, 2(1938) 2 K.B. 220. 3(1948) 2 All E.R., at p. 1048. 4(1947) 48 S.R. (N.S.W.) 213 65 91 CLR 417

or because a debt which was allowed as a deduction was not due and owing. Any of these is just as capable of preventing the duty payable on the final balance from being fully assessed as a mistake in the making of the assessment. Further, since the rate of duty is graduated and increases with the amount of the final balance of the estate, and is also variable according to the relationship to the deceased of the beneficiaries, the only practicable way of making a further assessment of the duty unpaid is by making a complete re-computation and re-assessment on the correct basis, allowing credit for any duty already paid " 1.

The observation that duty payable on the final balance of an estate may not have been fully assessed

because an asset has been

erroneously under-valued" was relied upon by the commissioner as authority for the proposition that a mere change of opinion as to the value of property concerning which an original assessment has issued may form the basis for a discovery that duty has not been fully assessed. But his Honour's remarks were intended primarily to deal with the argument advanced in that case-as it was on this appeal-that valuation of the assets of a deceased person does not constitute part of the process of assessment of death duty on the final balance of the estate. This argument was rejected by his Honour and, notwithstanding the fact that some sections of the Act provide some ground for suggesting a distinction between valuation and assessment, it should also be rejected on this appeal. The language of S. 128 (1) is, in my opinion, obviously appropriate to cover the case of omitted assets and, this being so, is equally appropriate to cover the case where dis- closed assets have been undervalued. But it does not necessarily follow that every case where assets have been undervalued falls. within the scope of S. 128 (1). Whether any particular case will or will not must depend upon the significance of the word " discovered No doubt in cases where material facts are withheld from or other- wise not known to the commissioner at the time of the first valuation a 'discovery " of these facts will justify a reassessment. So, no doubt, would a "discovery" that the original valuation had proceeded from some error of fact. But is there any real justification for saying that duty has not been fully assessed or that that fact has been discovered when, duty having been assessed in accordance with the Act and with a full knowledge and appreciation of the relevant facts and law, the commissioner merely changes an opinion formerly held by him ? Whether it is said that the word discover" means 'find out " or some other such expression, it is difficult

1(1947) 48 S.R. (N.S.W.), at p. 218; 65 W.N., at pp. 63, 64. 91 CLR 418

to see that the section could have any operation in such a case. The assessment of death duties, it should be observed, depends, in the ultimate result, not upon the commissioner's opinion of the value of a deceased person's assets but upon their real value and in cases of dispute the latter falls to be determined judicially. From this it seems to me to follow that a mere change of opinion (N.S.W.).

on the commissioner's part following upon an original assessment cannot, of itself, constitute a discovery that death duty has not been fully assessed it is the fact that death duty has not been fully assessed which constitutes the basis for the operation of S. 128 (1). This may be shown by the discovery of omitted assets or the discovery of some error of fact or, possibly, of law in the valuation of disclosed assets. But in the circumstances of this case it is unnecessary to attempt the impossible task of specifying the multifarious circumstances which may be said to constitute a discovery that death duty has not been fully assessed.

In the present case no "relevant" discovery of any kind was made. Upon knowledge of the sale of the shares in question reaching the commissioner he caused a requisition to be sent to the appellant in the following terms:

" Ref. Schedule No. 1-3600 shares Astor Pty. Ltd.' These shares were included in the dutiable estate at a total value of £4,750 but it is understood that such shares were recently sold for £12,100.

Please disclose as an additional asset'' In answer the executor wrote saying that he did not intend to treat any part of the purchase money as an additional asset for the reason that the amount of £4,750 on which duty was assessed was the value of the asset at the date of the death of the deceased. The commissioner thereupon, on 9th December 1949, wrote to the appellant saying that: "It is considered the sale price of the shares in 'The Astor' Pty. Ltd. is indisputable evidence of their value and it is proposed to assess duty on that basis". The letter added that 'Authority to reassess is given by Section 128 of the Stamp Duties Act 1920-1940 Nothing could be clearer than that the assertion that the sale price of the shares, sold, as they were, on 4th November 1949, was indisputable evidence of their value at the date of the death of the deceased, is erroneous. The case stated shows that the prices paid for groups of these shares were subject to violent fluctuations at or about the relevant times, some of the reasons for which were adverted to in the reasons of the members of the Supreme Court. Street C.J. pointed out that the shares in question were of a very unusual nature and that

91 CLR 419

evidence of other sales which took place in September 1949 showed the difficulty of fixing a value in any particular instance. Thereafter he said: I think that the time which elapsed between the death of the testator and the sale of these shares was sufficiently proximate to permit the use of the amount realized on sale in order to test whether the original valuation was correct, and for the purpose of ascertaining what was the true value of the shares six months before, but I do not think that the matter can be determined by looking merely to those two figures and to nothing more. It may be that circum- stances intervened which completely changed the market value of this asset, and reference was made in Court to the lifting of the land sales control provisions which took place in September, 1949. Whether or not those regulations controlled the price of these shares as a matter of law, or whether they operated previous to their repeal to depress the price, would need investigation. It may be that the explanation for this apparent increase of 250 per cent on the estimated value could be due to the fact that these shares were sold in an open market, whereas at the date of the death of the testator they could only be sold in a restricted market, with limits as to the price which could be paid and accepted. If that were so, then a sale in November would not be an accurate guide to the value of the same shares in the previous May, and the Com- missioner would not be entitled then to increase the assessment by the amount which he had in fact added to the original. But there are not sufficient materials before this Court to enable an answer to be given to this question, and the Court would therefore need to direct an enquiry under S. 124 (6) before it could discharge the duty cast upon it by S. 124 (4) of assessing the duty properly payable 1.

Herron J., in commenting upon the evidentiary value of the subsequent sale, said

"The extent of the influence which the lifting of the controls in September had upon this sale is a matter which I am unable to decide on this appeal. I think it was open to the Commissioner to decide, as he did decide, that the sale indicated that the first assessment was not a full assessment, but to what extent this is

SO is a matter of evidence. It seems to me that the facts necessary to enable the questions submitted to be determined are not sufficiently set forth in the case and as they are in dispute an enquiry, in my opinion, should be directed in order to ascertain to what extent, if any, the purchase of the shares for the sum of £12,100 was affected

1(1953) 53 S.R. (N.S.W.), at p. 264 70 W.N. 69. 91 CLR 420

by facts and circumstances which operated subsequently to the

death of the testator" 1.

Street C.J. and Herron J. constituted the majority of the Full Court which answered favourably to the commissioner the questions ultimately raised by the case. These questions and answers were as follows:

1. On the facts and circumstances set out in the stated case (N.S.W.).

was the further assessment dated 20th January 1950 for £1,497 7s. 8d. lawfully made and was the said sum lawfully recover- able by the Commissioner ? A. Yes, but not as to the amount.

2. Had the Commissioner power in the facts and circumstances set out in the stated case to issue any assessment other than the assessment dated the 6th October 1949 or to recover any further duty beyond that assessed in the said assessment ? A. Yes.

3. If the answer to question 2 is in the affirmative what is the amount of this further duty ? A. The amount of additional duty to stand over for enquiry if the parties fail to agree.

4. How should the costs of the case be borne and paid ? A. The costs of the appeal to stand over until the conclusion of the enquiry".

Now it would be quite consistent with the views expressed by these members of the court if as a result of the inquiry contem- plated by the answer to Question 3 that question should be answered " nil ". This would be the answer if the value of the shares at the date of the death of the deceased should be found not to have exceeded £4,750 and the possibility of such a finding is distinctly conceded by the reasoning of both Street C.J. and Herron J. How then can it be said that the commissioner has discovered that duty has not been fully assessed and paid ? It may perhaps be said that the commissioner has become aware of a fact which has caused him to doubt whether the shares were fully valued for the purpose of the first assessment but mere suspicion does not call the provisions of S. 128 (1) into play. Nor, even if the formation of an opinion that the original valuation was erroneous constitutes a " discovery " that duty has not been fully assessed, can the formation of such an opinion be sufficient unless it is formed on proper grounds. The documents in the case show that the commissioner's view was that the sale price was indisputable evidence of the value of the shares. His letter of 9th December 1949, expresses this view and

I assume in his favour that he meant-though he omitted to say so-that the sale price represented the value of the shares at the date of the death of the deceased. The adjustment sheet which accompanied the new assessment showed that the basis of the

1(1953) 53 S.R. (N.S.W.), at p. 284 70 W.N. 69. 91 CLR 421

reassessment was the addition to the final balance of the estate, as previously ascertained, of £7,350 representing "3,600 shares

The Astor' Pty. Ltd.-included at £4,750 but sold for £12,100 " On the facts as disclosed by the stated case, including the sale of the shares for the latter sum, it is quite impossible to say whether the shares were undervalued originally or not and the reasons of the Full Court admit the possibility that an enquiry may establish that they were not. On the other hand it may establish that they were. But in the meantime can the commissioner be said to have discovered anything ? He has placed before the Supreme Court evidence which is quite incapable of establishing that the shares were undervalued in the first instance, or, that he has discovered that they were, and in those circumstances it should be held that he was not entitled to reopen the assessment. Nor is it to the point to say that an inquiry may establish that they were undervalued for no future judicial inquiry as to the value of the shares as at the date of the death of the deceased can be relevant to or disclose what the commissioner discovered before the second assessment. The plain fact is that the commissioner has not, on any view of the word, 'discovered" that any death duty payable has not been fully assessed and paid.

Although S. 128 (1) provides that in cases where that sub-section operates the further assessment may be made " in the same manner as if no previous assessment or payment had been made ,, it should be borne in mind that there is a marked distinction between an original assessment and a further assessment made under this section. The commissioner's power to make an original assessment is not open to question, but the preliminary question which arises in the case of a further assessment is whether the necessary condition precedent has been fulfilled. In the case of a further assessment this is a question which arises immediately where a case is stated under S. 124 which requires that the case stated shall set forth the facts before the commissioner on making the assessment". The vital question of fact in this case is whether the commissioner has discovered that any duty payable has not been fully assessed and paid. The case does not establish this and as I have already said the result of a future judicial inquiry as to the value of the shares in question will not and cannot establish that the commissioner discovered anything before making his further assessment. On this view of the matter it is, strictly, unnecessary to consider whether if, at any time after an original assessment made with full knowledge and appreciation of all the relevant facts, the commissioner merely changes his opinion as to the value of one or

91 CLR 422

some of the assets in a deceased's estate, he can be said to have discovered that duty has not been fully paid. That question, however, already appears to have been answered by the observations of the majority of this Court in Commissioner of Stamp Duties (N.S.W.) v. Pearse 1 where, speaking of the assessment of duty upon a testamentary gift constituted by a direction that a solicitor- (N.S.W.).

trustee should be entitled to charge professional costs for work done, it was said:

"Lastly it was submitted that if the amount of profit costs exceeded the original estimate from time to time the Commissioner could re-assess the estate for further duty from time to time under S. 128 of the Act. But the bounty is an interest which is capable of valuation and must, subject to S. 125A of the Act, be actuarily valued as at the date of death. Once this has been done and duty paid on that value, the duty has been fully assessed and paid and there is no room for the operation of S. 128

It is, I think, difficult, if not impossible, to say that once death duty has been assessed with a full knowledge and appreciation of all the relevant facts and without any mistake of law that it can thereafter be said that the duty was not fully assessed. Accordingly a very cogent argument should be required to induce the Court to depart from the view expressed in the passage last quoted.

For the reasons given I am of opinion that the appeal should be allowed.

Order of the Supreme Court discharged and in lieu thereof

order that an issue be tried before a Judge of the Supreme Court without a jury as to the value at the date of death of the deceased of the shares held by the deceased in "The Astor" Pty. Ltd. and that the costs of the proceedings up to and including the order of the Supreme Court be reserved to be dealt with by the Supreme Court. Subject to the foregoing order appeal to this Court dismissed with costs. Solicitors for the appellant, Rawlinson, Hamilton &Francis. Solicitor for the respondent, F. P. McRae, Crown Solicitor for New South Wales.

1(1951) 84 C.L.R. 490, at p. 523.