Patterson v Farrell - [1912] HCA 43

PATTERSON FARRELL

ON APPEAL FROM THE SUPREME COURT OF Vendor and Purchaser--Contract -- of Sale-Provision for apportionment of federal

land tax - Validity-Interpretation-Land - Tax Assessment Act 1910 (No. 22 of 1910) sec8. 37, 63. MELBOURNE, June 18, 19.

The owner of certain land, sold it shortly before the coming into operation of the Land Tax Assessment Act 1910, and the purchaser entered into posses- sion shortly after that date. One of the conditions of the contract of sale provided that the purchaser should be liable for "all rates and taxes and insurance premiums accruing or falling due from and after the date of posses- sion" but that "all annual outgoings and insurance premiums in respect of the property sold " should be " apportioned between the vendor and pur- chaser up to such date. The vendor, who also owned other land, having paid the federal land tax in respect of the whole of his land including the land so sold for the year during which the purchaser went into possession,

Held, that the federal land tax was an annual outgoing within the meaning of the condition that the agreement that the land tax for that year should be apportioned was not affected by sec. 63 of the Act; and, therefore, that the vendor was entitled to recover from the purchaser a sum which would repre- sent a portion of the federal land tax payable in respect of land whose un- improved value was equivalent to that of the land sold proportionate to the period of the year during which the purchaser had been in possession.

Held, further, that the purchaser was not liable to pay at the higher rate at which the vendor was liable to pay because of his owning other land.

14 CLR 349

Decision of the Supreme Court of Victoria (Madden C.J.), (1912) V.L.R., 17; 33 A.L.T., 149, reversed.

APPEAL from the Supreme Court of Victoria.

On 12th October 1910 Daniel Whittle Harvey Patterson and John Farrell entered into a written contract for the sale by Patterson to Farrell of a certain freehold property called Melton Park containing 4,125 acres. By the conditions it was provided that the purchaser should pay £2,000 on the signing of the con- tract, £6,500 on any day between 1st and 8th December 1910, and £35,000, the balance of the purchase money, on 8th June 1911, with interest thereon or on SO much as from time to time might be unpaid at 6 per cent. per annum payable half-yearly until payment, subject to a proviso that, SO long as interest should be paid within seven days after becoming due, the balance should not be called in as to £1,000 before 12th October 1911, as to another £1,000 before 12th October 1912, and as to the residue before 12th October 1920.

It was also provided that the pur- chaser should be entitled to possession on payment of the said sum of £6,500. Clause 13 of the conditions then provided…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Patterson v Farrell

Details

AGLC: Patterson v Farrell [1912] HCA 43
Case: [1912] HCA 43
Decision Date: 19 June 1912

CaseChat Overview and Summary

This case concerned an appeal from the Supreme Court of Victoria regarding a dispute over the apportionment of federal land tax between a vendor, Mr. Patterson, and a purchaser, Mr. Farrell, of a property known as Melton Park. The contract of sale, entered into before the commencement of the *Land Tax Assessment Act 1910*, stipulated that the purchaser would be liable for rates and taxes accruing from the date of possession, but that all annual outgoings would be apportioned up to that date. Mr. Patterson, having paid the federal land tax on all his land, including Melton Park, sought to recover a portion of this tax from Mr. Farrell, who had taken possession of the property.

The legal issues before the High Court were whether the federal land tax constituted an "annual outgoing" within the meaning of the contract, and if so, whether the contractual provision for its apportionment was rendered void by section 63 of the *Land Tax Assessment Act 1910*. Additionally, the Court considered whether the purchaser was liable for the higher tax rate applicable to the vendor due to his ownership of other land.

The High Court held that the federal land tax was indeed an annual outgoing within the contemplation of the contract. The Court reasoned that the clause intended a fair apportionment of such taxes based on the period of possession, and that this apportionment did not alter the incidence of the tax in a manner prohibited by section 63 of the Act. The primary liability for the tax remained with the owner, but the contract simply regulated the financial responsibility between the vendor and purchaser for the period of their respective enjoyment of the property. The Court further determined that the purchaser was not liable for the higher tax rate applicable to the vendor's total landholdings, but rather for a proportion of the tax calculated on the unimproved value of the land sold.

Consequently, the appeal was allowed, the judgment of the Supreme Court of Victoria was discharged, and judgment was entered for the plaintiff, Mr. Patterson, for the proportion of land tax attributable to the period from Mr. Farrell's possession until 30 June 1911, calculated on an assessable value of £24,870, with costs.

Orders