Horsfall v Commissioner of Taxes (Vic)

The case of *Horsfall v Commissioner of Taxes (Vic)* concerned an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria. The dispute arose between the executors of the estate of John Sutcliffe Horsfall and the Commissioner of Taxes for Victoria regarding the dutiability of property transferred by Mr. Horsfall under two indentures of settlement executed shortly before his death. The Commissioner sought to include the settled property in Mr. Horsfall's dutiable estate under section 143 of the *Administration and Probate Act 1915* (Vic), which dealt with gifts made within twelve months of death.

The central legal issue before the High Court was whether the two indentures of settlement, which established trusts for various annuitants, life tenants, and remaindermen, constituted "an immediate gift inter vivos" within the meaning of section 143(a) of the *Administration and Probate Act 1915* (Vic). This section deemed property conveyed, assigned, gifted, delivered, or transferred to be chargeable with duty as part of the donor's estate if made within twelve months of death, provided it purported to operate as an immediate gift inter vivos and the donee did not assume bona fide possession and enjoyment to the entire exclusion of the donor.

The Court reasoned that the phrase "an immediate gift inter vivos" in section 143(a) referred to a gratuitous alienation of property, other than by testamentary disposition, where the donor immediately and completely divested themselves of their beneficial interest. The Court held that the indentures, by settling property on trustees for the benefit of multiple classes of beneficiaries, purported to operate as an immediate gift inter vivos in respect of all these beneficiaries. Consequently, the property within Victoria to which the indentures related was liable to duty as part of the donor's estate, given the donor's death within one year of the execution of the indentures.

The Court further determined which specific assets settled by the indentures were subject to duty. The bank shares and debts owing under contracts under seal were considered property situated within Victoria at the time of death for the purposes of section 143. However, a debt arising from a contract not under seal was held not to be property situated within Victoria, and therefore not subject to duty under that section, with one judge dissenting on this point. The decision of the Supreme Court of Victoria was accordingly varied.