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[1929] HCA 27
High Court of Australia
1929-07-01
Dixon JJ, Starke J
Original judgment source is linked above.
and the respondent succeeds. The appeal should be dismissed.
_ *Sec, 102 of the Stamp Duties Act 1920-1924 (N.S.W.) provides that " For 'the of the assessment and Payment of death duty . . . the estate of a deceased person shall be fleomed to include and consist of the
wing classes of property: - . . . (2)... (6) Any property comprised in
PERPETUAL TRUSTEE COMPANY LIMITED Responpenr. (SAXTON'S CASE.)
ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.
any gift made by the deceased within three years before hisdeath . . . includ- ing any money paid or other property conveyed or transferred by the deceased within such period in pursuance of a covenant or agreement made at any time by him without full consideration in money or money's-worth" &.
Billposting, Lid. (1) - the case is outside the definition of property, H.C. or A.
Stamp Duties (N.S.W.) - Dutiable estate - Gift made within three years before death 1. C. or A.
S., who died on 30th September 1926, was a large shareholder in, and also Isaacs, Starke
if + " " ud Di Jd. life managing director of, a limited company which by its articles conferred
upon him unfettered authority over its affairs. The company had p lend and borrow money, and S., his wife, his daughter and each of his sons had personal accounts in its books, 8, operated upon his perscnal ac as upon a banking account. 'The capital of the company was in June 1920 by the issue of 50,000 £1 shares - 40,000, on which each had been paid, being allotted to the wife and children of s,, 1 expressed his intention of making a gift of such shares, the re 10,000, on which nothing had been paid, being allotted to H. On 29th: 30th November 1920 cheques for various amounts were drawn on the com banking account for the £49,000 due in respect of the shares, and the amount was on 30th November 1920 debited to S.'s personal account with tl company, which immediately prior to this transaction was in credit te extent of £19,091 17s. 3d. 'Three of these cheques of the company, amount to £36,262, and six cheques of three of s.'s children, amounting to £12,7% were handed to the company either by or on behalf of the allottees shares. Cheques of the company totalling £12,738 were paid into the b accounts of the three children in order to meet their cheques for that ot Scrip was duly issued to each of such applicants, who were also enteres the register of members in respect thereof. All this was done on both sid the instruction of S. On 1st July 1921 S. changed his intention and caused sum of £30,000 to be credited to his own account and debited to the respec accounts of his wife and of his five sons in proportion to the number of issued to them, which transactions were effected without the knowledge of hi and/or children. On 30th September 1922 S. caused the sum of £9,450, the difference between par and interest earned on 10,000 shares, to" debited to the account of one of his children and credited to his account. The debits then appearing in the accounts of the wife an children with the company at that time totalled £39,450, which amow was reduced by credits of dividends and by the transfer of 3,500 sh from one of the children to S., and on 3ist May 1925 stood at sum of £27,098 2s. 7d. On 7th September 1925 S, caused his the company's books to be debited with this sum, for which he took the ¢ pany's cheque. He paid this cheque into his bank account, upon whi¢ drew his own cheques for a corresponding total amount. These were p the company either directly by him or through his children to meet the appearing in the accounts of the wife and children, His personal account ¥ then in credit to an amount greater than £27,098 2s. 7d., and at the d his death was still in credit. a Held, by Knox C.J., Isaacs and Dixon JJ. (Starke J, dissenting as to qu only), that the amount of £13,232 3s. 7d., mentioned below, formed p of the dutiable estate of S, as being property comprised in a gift m by him within three years before his death within the meaning of 102 (2) (b) of the Stamp Duties Act 1920-1924 (N.S.W.). The d £49,000 made in s.'s acccunt on 30th November 1920 operated extinguishment of the then existing credit of £19,091 3s, 7d. and attempt to create an indebtedness as to the balance of £29,908 2s. 9d. extinguishment lawfully operated to pay the calls upon the shares p
'The amount outstanding in respect of shares issued to the wife and children must be deemed paid up ratably out of the credit of £19,091 3s. 7d, in the proportion that £39,000 bears to £49,000, that is, to the extent of £15,195 Us. 3d. No subsequent change of intention on the part of S., or the company, could undo this payment, for paid up capital could not be returned. From the sum of £15,195 1s. 3d. should be deducted the sum of £1,329 128, 3d., being the amount which it included as paid up on the 3,500 shares taken over by S. The balance of £13,865 19s, was the additional amount which had in law been paid up on the shares allotted to the wife and five children and the difference of £13,232 3s, 7d. between that amount and £27,098 : 2s, 7d. represented the amount which by the credit of that figure and its extinguishment was actually paid up on those shares.
Clayton's Case, (1816) 1 Mer. 572; 35 E.R. 781, distinguished.
Per Knoe C.J. and Dion J.: Whether with or without a filed agreement, a company may not extinguish the shareholder's liability, with all its peculiar incidents, by merely accepting in its place a liability for a simple contract debt.
Per Isaacs J.: It is ultra vires of a company to accept as payment of share liability the substitution of another promise to pay that liability.
Decision of the Supreme Court of New South Wales (Full Court): Perpetual Trustee Co. v. Commissioner of Stamp Duties, (1929) 29 S.R. (N.S.W.) 153, reversed.
_ Appear from the Supreme Court of New South Wales. Pie A special case, which was substantially as follows, was stated by _ the Commissioner of Stamp Duties for the opinion of the Full Court of the Supreme Court under sec. 124 of the Stamp Duties Act 1920- 1924 (N.S.W.) : 1, Alexander Charles Saxton, late of Sydney in the State of New South Wales, died on 30th September 1926, having made his will, _ probate whereof was granted by the Supreme Court in its Probate Jurisdiction on 1st April 1927 to Perpetual Trustee Co. (Ltd.), the executor therein named. The said deceased was at the date of his death fifty-eight years of age and was accidentally drowned. 2. The said Trustee Company included in the affidavit of value filed by it in pursuance of sec. 117 of the Stamp Duties Act 1920- 1924 the following item: "Gifts of any kind whatever, made within three years preceding date of death, as per schedule No. 10, £29,055 12s. 10d."
Conmns- SIONER OF Samp Dustes (N.S.W.) v. PerrervaL TRUSTEE Co. Lrp.
statement has been prepared. (f) At a subsequent date, namely, on Ist July 1921, Mr. Saxton changed his ideas and arranged with the Company to advance the parties set out hereunder the moneys
set opposite their respective names, such to be secured on the shares *
that were allotted to them on the date first above mentioned. These were as follows : - Mrs. Janet Saxton, £10,000; Harold Saxton, £4,800; A. W. Saxton, £4,400; C. D. Saxton, £4,000; Geoffrey Saxton, £3,300; M. N. Saxton, £3,500: £30,000. (g) Mr. Saxton then had an entry passed in the Company's books debiting the above individuals with the amount set opposite their respective names and crediting his personal account with £30,000. In the Company's books each individual account was headed with the name of the party with the addition of the words " Advance Account." (h) At a subsequent date the above shares of Malcolm Nevitt Saxton, together with others, amounting in all to 20,000 shares, which he held, were repurchased by Mr. Saxton during his trip to America, and Malcolm Nevitt Saxton from that point disappeared from the transaction, the shares so transferred still being registered in Mr. Saxton's name at the date of his death. (j) Dividends from time to time as received were credited by the Company against the Advance Accounts of the individuals named above. (k) Before proceeding further, however, it is necessary to state that while Mr. Saxton made a gift to Miss Janet Cuthbertson Saxton of the 10,000 shares allotted on 21st June 1920, he subsequently altered this, and on 30th November 1922 the Company advanced to Miss Janet Cuthbertson Saxton the sum of £9,450 against the security of those shares. This sum of £9,450 was arrived at by taking the original sum of £10,000 which Mr. Saxton had paid on her behalf and which he always referred to as a gift, and taking therefrom such dividends as he had received between the date of the gift and the date of the taking over of the liability by the Company, and which said dividends amounted to £550, so that on 30th November 1922 in the Company's books an entry was passed debiting Miss Janet Cuthbertson Saxton's Advance Account with £9,450 and crediting Alexander Charles Saxton's personal account with £9,450. (1) From this point onwards various dividends and other amounts were duly received by the Company, and the Advance Accounts were reduced to the following
Saxton, £2,767 12s. 3d.; Geoffrey Saxton, £2,434 10s. 1d.; Janet Cuthbertson Saxton, £7,970 7s. 3d. : £27,098 2s. 7d. (m) Saxton informed Mr. Heath that he wished to clear these del from the Company's books, and stated that he would like to mal a gift to the various parties concerned of the outstanding amour He therefore paid to the Company his cheque for the amounts d on Advance Account and drew from the Company, in order to himself in funds to meet these cheques, a similar sum, the tra being a cheque drawn on the Company's bank and banked by Saxton to his private banking account and the debt being to hi personal account in the Company's books. These cheques w duly passed on 7th September 1925. (n) At the same time he d that Miss Janet Cuthbertson Saxton should cease to be a sharehold in the Company, as he stated to Mr. Heath that, in view of the tru st already existing covering 10,000 shares in the Company and the fe that he was making other provision for her, he thought his five should have the shares. He desired, however, that the sons regard to this particular 10,000 shares) should be treated as te over the liability which he had discharged to the Company o account of Miss Janet Cuthbertson Saxton and amounting £7,970 7s. 3d. (0) Mr. Russell was consulted; and this amount divided into five equal parts, was made the consideration for tl transfer of 1,594 shares to each of the five sons, transfers bei signed by Miss Janet Cuthbertson Saxton as transferor and 1 sons as transferees, the remaining 406 shares to each son bei transferred by Miss Janet Cuthbertson Saxton to the sons for nominal consideration of 10s. The first set of transfers went thro on 16th November 1925, and the second set on 11th December 19 although the cash paid by Mr. Saxton to discharge Miss Janet' debt in the Company's books was actually paid to the Company ' 7th September 1925. (p) In the Company's books when the chequé were received from Mr. Saxton they were entered and credi ed i accordance with the figures set out above , but the cheques draw i 4 Mr. Saxton were only drawn in favour of Mrs. Janet Saxton, Mes
Harold, Alexander Wilson, Charles Donald, Malcolm Nevitt and Geoffrey, for the amount of their advance due to the Company plus one-fifth of the amount due by Miss Janet, thus bringing the respective cheques handed over up to the following figures : - Harold Saxton, £5,129 12s. 2d.; A. W. Saxton, £4,738 ls. 5d.; ©. D. Saxton, £4,361 13s. 8d.; Geoffrey Saxton, £4,028 11s. 7d.; M. N. Saxton, £1,594 1s. 6d.; Mrs. Janet Saxton, £7,246 2s. 3d.: £27,098 2s. 7d. In other words, the dissection of the amount of the cheque is more clearly seen from the following statement : -
Vasrorae adrateeal Amount advanced!' paid Company | Total Name. paid Company Account Cheque. own debt. J.C, Saxton. Beta de ig Umer eta, de Harold Saxton... 3,535 10 9 1,894 15, 5,129 12 2 Alexander W. Saxton. 3,144 0 0 1,594 1 5 4,738 1 5 Charles D, Saxton is 2,767 12 3 1,594 1 5 4,361 13 8 Geoffrey Saxton... 2,434 10 1 1,594 1 6 4,028 11 7 Miss J.C.Saxton.. 7,910 7 3 _ Mrs, Janet Saxton Pe 7,246 2 3 7,246 2 3 27,098 2 7 Malcolm Nevitt Saxton .. nil 1,594 1 6 1594 1 6 £27,098 2 7 £7,910 7 3 | £27,098 2 7
_ (q) As far as Mr. Heath has been able to ascertain to date no receipt or document of any kind was taken by Mr. Saxton at the time he _ made the payments to clear the Advance Accounts to the Company, and he expressed himself quite clearly to Mr. Heath that he wished _ the debts to be wiped out.
to his private account, and the debit being to his personal account in the Company's books. These cheques were duly passed on 7th September 1925." 6. The Trustee Company, having taken counsel's opinion, sul quently contended that the gifts made by the deceased were cor on 30th November 1920, and that no moneys were thereafter 01 by the said members of his family in respect of the said transacti either to the said Mr. Alexander Charles Saxton or to the sai Company. a 7. The Trustee Company has supplied the following additiona facts as supplementing and modifying the statements contained it the said memorandum and in the said case for opinion : - (i.) applications mentioned in par. (b) of the memorandum were duly signed by the persons whose names appeared therein, and immediatel after the allotment of the said shares as mentioned in par. (c) sc for the said respective shares was duly issued to and in the name of the respective applicants and the applicants were duly en in the share register of the Company as holders of the shares had respectively applied for. (ii.) The shares were issued as fu
a series of cheques, particulars whereof are as follows : - On
June 1920 the sum of £1,000 was deposited to the Company's eurre
account as shown in its Cash Book and credited to Sundry Shi
holders' Account, thus reducing the debit to £49,000. This £1,
was made up by cheques as follows : - Cheque on A. C. Saxton
Sons Ltd. (which said cheque was debited to A. C. Saxton's pri
account), £357 10s. ; cheque on Harold Saxton's own bank account,
£267 10s. ; cheque on Alexander Wilson Saxton's own bank account
£245; cheque on Charles Donald Saxton's own bank accoun
£130: £1,000. In the case of Harold Saxton, Alexander Wil
Saxton and Charles Donald Saxton, cheques of the Company fo
similar amounts were handed to them respectively and debited t
their respective personal accounts with the Company, and
then banked in their own respective personal bank accounts.
balance of the £49,000 was received by the Company on 3
November 1920 and was made up of four items, namely, £4,267 10s.
out above were paid into the Company's banking account, the H.C. or A.
cheques comprising each deposit being made up as follows : - Item aa
£4,267 10s. was represented by cheque from Alexander Wilson Comms-
Saxton, £2,040 ; cheque from Harold Saxton, £2,227 10s. : £4,267 108. © gmrayrr
Ttem £34,732 10s. was composed of cheque from Charles Donald wew) Saxton, £1,890; cheque from A. C. Saxton & Sons Ltd., £3,200 ; Para
cheque from A. C. Saxton & Sons Ltd., £29,642 10s. : £34,732 108. Trustee Item £5,440 was made up by a cheque drawn on A. C. Saxton & pen Sons Ltd. in favour of Alexander Charles Saxton for £3,420 and a cheque from Charles Donald Saxton, £2,020: £5,440. Item £4,560 was made up by cheques from Harold Saxton, £2,380, and Alexander Wilson Saxton, £2,180: £4,560. Cheques on the Company's account for the whole of the amounts set out above were drawn on 29th and 30th November 1920, and the total sum of £49,000 was debited to Alexander Charles Saxton's personal account with the Company on that date. The cheques of the said Harold Saxton, Alexander Wilson Saxton and Charles Donald Saxton for the individual amounts in the lists set out above paid by the said Harold Saxton, Alexander Wilson Saxton and Charles Donald Saxton respectively to the Company were exchange cheques for cheques of similar amounts drawn on the Company in their favour and debited __ to Alexander Charles Saxton's personal account with the Company. __ At a meeting of the directors of the Company held on 1st December __ 1920 the secretary reported that the whole of the moneys due on the issue of 50,000 shares had been paid and banked to the credit of the Company's account. (iii.) From the time that the said respective applicants were registered as holders of the said respective shares, the dividends payable in respect thereof have been paid to the said respective shareholders by being credited to their personal
cash accounts with the said Company save in the case of Miss Janet Cuthbertson Saxton as set out in par. (k), who was a minor, and the said respective shareholders have paid income tax in respect thereof.
(v.) The matters mentioned in sub-pars. (i.) and (ii.) hereof were carried out with the knowledge and consent of Mr. Alexander Charles Saxton. (vi.) With regard to the transaction mentioned in pars. (f) and (g) of the memorandum the same in so far as it was carried out consisted of the making of entries in the books of the
Commns- SIONER OF Srame Duries (N.S.W.) e. Perrervat TRUSTEE Co. Lrp.
Company by which entries the aggregate sum of £30,000 was debite in different proportions to the following members of his namely, Harold Saxton, A. W. Saxton, C. D. Saxton, Ge Saxton, M. N. Saxton and Mrs. Janet Saxton; and at the same time Mr. Alexander Charles Saxton's personal account was credited the sum of £30,000. After this credit, the amount of the latter's d with the Company was £1,003 5s. No money nor property of kind passed, nor were any cheques drawn nor documents executed in connection with this transaction, the only record thereof the entries in the Ledger and the Journal of the Company. transaction was carried out and the entries made without knowledge or consent of the said Harold Saxton, A. W. 8 C. D. Saxton, Geoffrey Saxton, M. N. Saxton or Mrs. Janet (vii.) Subsequently, some time between the months of May November 1922, the personal account of Alexander Charles Sa with the Company became in credit. (viii.) Miss Janet Cuthb Saxton attained the age of twenty-one years on 3rd April 1928. _
Annexed to and forming part of the case is a copy of the memorandum and articles of association of the said A. 0. Saxton & Sons Ltd. as they stood at all times material to this case.
Upon the deceased's acquiring the shares held by Malcolm Nevitt Saxton as mentioned in par. (h) of the said memorandum, the amount of £3,500 debited against the said Malcolm Nevitt Saxton in his account as mentioned in par. (f) of the said memor- andum was transferred to the account of the deceased.
Save as in this case mentioned, the shares allotted on 2lst June 1920, as mentioned in pars. (b) and (c) of the said memorandum, remained vested in the respective persons therein named at the death of the deceased. 1
The deceased's personal account with the Company was in credit at the date of his death. 5
The Commissioner claims that the said sum of £27,098 2s. 7d. forms part of the dutiable estate of the deceased.
The Trustee Company now claims that the said sum does not form part of such dutiable estate, and that no duty is payabl by it in respect of the said transactions or any of them.
The final balance of the estate of the deceased in accordance with the above stated claim of the Commissioner is £188,808, upon which the Commissioner assessed the death duty at £37,761 12s., being at the rate of 20 per cent.
The Trustee Company duly paid the said £37,761 12s., and, being dissatisfied with the said assessment, paid the sum of £20 as security for costs and called upon the Commissioner to state this ease,
The questions for the decision of the Court were as follows : -
(1) Does the said sum of £27,098 2s. 7d., or any part thereof, form part of the dutiable estate of the deceased ?
(2) What is the death duty payable in respect of the estate ?
(3) How are the costs of this case to be borne and paid ?
By clause 3 (12) of the memorandum of association one of the objects for which the Company was established was "to negotiate
The Full Court answered question 1 in the negative: Perpetual Prustee Co. v. Commissioner of Stamp Duties (1).
From that decision the Commissioner now appealed to the High Court.
Other material facts are stated in the judgments hereunder.
Flannery K.C. (with him Kitto), for the appellant. A company cannot purchase its own shares, and it is doubtful whether a company can advance loans on the security of such shares (Palmer's Company Law, 12th ed., pp. 68, 69). The advance by the Company to the deceased was altra vires, therefore the shares were not paid for on 30th November 1920 (In re Birkbeck Permanent Benefit Building Society (2); Murray v. Scott (3); Sinclair v. Brougham (4) ). They Temained unpaid for until September 1925, when the deceased paid to the Company by cheque the sum of £27,098 2s. 7d. The money 80 paid to the Company was money provided by the Company 'through the deceased. A company cannot, under a general power in its memorandum of association to lend money, advance money
(1) (1929) 29 8.R. (N.S.W.) 153. (3) (1884) 9 App. Cas, 519. (2) (1912) 2 Ch. 183. (4) (1914) A.0. 398.
Commas- SIONER OF STame Duttes (N.S.W.) v. PERPETUAL Truster Co. Lap.
H.C. or A. for the purpose of permitting the borrower to purchase its own shan
man The Court should look at the transaction as a whole and should n Comms- deal with it in sections. SIONER OF
Dories Maughan K.C. (with him Hooton), for the respondent. eee) events of 30th November 1920 created a complete gift by the pinay deceased in favour of his wife and children, who thereupon beeai Co.Lrp. absolute owners both at law and in equity of fully paid-up sh a the Company which they had applied for in June 1920. So fi the deceased was concerned the gift was irrevocable. The amow
of £31,000 which remained owing in respect of shares allotted t
the wife and children of the deceased was under the rule in Clayt
Act. With regard to the sum of £27,098 2s. 7d. which the Comm sioner contends was owing to the Company in September 1925 the wife and children of the deceased, they could not without wish and knowledge be debited with any moneys, and theref were not indebted to the Company in the amount stated. assuming that the transactions in September 1925 created g they are not liable to stamp duty because the subject matter is no longer in existence (Commissioner of Stamp Duties (N.S. ; Perpetual Trustee Co. (Watt's Case) (2)). Here, so far as there' a substitution of liability it was not a substitution of a liabil sounding in damages only (In re Richmond Hill Hotel Co. ; Ex pa Pellatt (3); Gardner v. Iredale (4) ). The Company did not gi up its right to receive payment in cash, nor did it release the sh holder from his obligation to pay money or money's-worth Wragg Ltd. (5)). Under its memorandum of association the Compi had ample power, prima facie, to lend money to the deceased. ; question is whether it had power to lend money to be app payment for its own shares. The question in In re Birkt Permanent Benefit Building Society (6) was only whether a comp
(1) (1816) 1 Mer, 572; 35 E.R. 781. (4) (1912) 1 Ch. 700.
(2) (1926) 38 C.L. (5) (1897) 1 Ch. 796, (3) (1867) 36 LJ. (6) (1912) 2 Ch. 183.
formed under special statutes had power to engage in the business of banking (Sinclair v. Brougham (1)). If there was a debt as between the Company and the wife and children of the deceased, it was by the book entries transferred to the deceased (Bodenham y. Purchas (2) ).
Flannery K.C., in reply. Calls made in respect of shares cannot be satisfied by paying to the Company its own cheques. The ordinary business of the Company is not the providing of money for the purchase of its own shares. The general power to lend money referred to the other powers of the Company. The intention of the testator was that his wife and children should become share- holders of the Company and that the shares should be paid for in cash. The transactions in November 1920 were merely book entries, and were the first step in a scheme which was not complete
until the cash was paid in September 1925. The rule in Clayton's Case (3) does not apply in the circumstances of the present case.
The following written judgments were delivered : - Knox ©.J. anp Dixon J. Alexander Charles Saxton, who died on 30th September 1926, was managing director for life of a company "called A. C. Saxton & Sons Ltd. Under the Company's articles of association he had an unfettered authority over its affairs. The books of the Company contained '"' Advance Accounts" in the name of his wife, his daughter and each of his five sons. According to these accounts, as balanced to 31st May 1925, his wife, his daughter and four of these sons were indebted to the Company in "sums which together amounted to £27,098 2s. 7d. The deceased "himself also had an account in the Company's books. On 7th "September 1925 he caused this account to be debited with the 'sum of £27,098 2s. 7d., for which he took the Company's cheque. He paid this cheque into his bank account, upon which he drew his own cheques for a corresponding total amount. These were paid tothe Company either directly by him or through his children.
H.C. or A. His personal account was then in credit to an amount greater tha 128; £97,098 2s. Td., and at the date of his death the account was
Comus- in credit. The Commissioner of Stamp Duties claimed that th fraup sum of £27,098 2s. 7d. was " property comprised in a gift made by aw) the deceased within three years before his death" within see. 1 ee (2) (b) of the Stamp Duties Act 1920-1924, and liable acco Truster to be included in the estate for the purposes of the assessm CosteD) death duty. If no further facts appeared, there would be no doub Knox CJ. as to the correctness of this contention. Sec. 100 defines th " gift" by reference to the expression " disposition of prope
which it also defines. These definitions combine to give sec,
(2) (6) a meaning wide enough to include such a transaction as 1
entries purport to effect or to narrate. But further facts do ap
and the deceased's executor (who is the respondent upon
appeal) relies upon them as affording an answer. It says thi
in spite of these entries in the Company's accounts, the s
£27,098 2s. 7d. was an amount which the wife and these ch
did not owe to the Company, but which the deceased hi
owe to the Company. The executor therefore maintains th
the debit of £27,098 2s. 7d. to the deceased's personal acco
did not result in the discharge of any indebtedness to the
but his own. And the fact was that this amount represented
residue or balance of sums which in 1921 and 1922, without th authority of his wife and children, the deceased had caused 0
credited to his account with the Company and to be debit
various amounts to their respective accounts. On 30th Sep
1922 the deceased had caused his daughter's account to be debi
and his own to be credited with £9,450. On Ist July 1921 he}
caused his own account to be credited with £30,000, and his wi
to be debited with £10,000, his son Harold's with £4,800, Alexander Wilson's with £4,000, his son Charles Donald's ¥
by the transfer of the debit against the fifth son, Maleolm N and on 31st May 1925 stood at the sum of £27,098 2s. 7d. V
on Ist July 1921 and 30th November 1922, he caused these entries to be made, the deceased intended to reverse, pro tanto, a debit to his account of £49,000 which had been made at his instance on 30th November 1920. This debit was made in order to pay up in full 50,000 shares of £1 in the Company. Upon 40,000 of these shares 6d. had been paid up, and 19s. 6d. was due and owing for calls. Upon 10,000 of them nothing had been paid, and the whole amount was due and owing. The 50,000 shares had been allotted by the Company as follows: 10,000 shares had been allotted to the deceased's wife, 10,000 to his daughter, 4,800 to his son Harold,
4,400 to his son Alexander Wilson, 4,000 to his son Charles Donald,
3,300 to his son Geoffrey, 3,500 to his son Malcolm Nevett and
10,000 to an accountant and business associate named Heath.
Tf on 1st July 1921 and 30th November 1922 it were open to the
credits and of the debit to himself as related to his wife, daughter
and sons and the shares allotted to them, then doubtless the calls
The respondent, the deceased's executor, says that, as a result.
effect the testator borrowed money from the Company and gave it to the applicants to pay for the shares" (1). This view assumes that
the deceased intended to make a final and not a provisional
appropriation for the advantage of his family when he caused his
account to be debited with £49,000, and cheques to be issued and
ceived by the Company. No doubt his subsequent conduct may
est the contrary. But the question whether he did so intend (1) (1929) 29 S.R. (N.S.W.), at p. 161,
is one of fact. The proceedings are by way of case stated und sec. 124 of the Stamp Duties Act, and the Commissioner has the fullest advantage of the fact that sub-sec. 2 requires hi do no more than state the facts " before him on making the ment." He has contented himself with setting out what alle the taxpayer made to him from time to time, without stating wl he considers the real facts to be. No steps were taken un sub-sec. 6, but the Supreme Court decided the case upon its o1 view of the effect of the taxpayer's statements. Although very unsatisfactory to determine the matter upon such mat eri the character of the case stated ought not to be allowed to o per against the taxpayer, who is not, in law, responsible for statement of the case. Accordingly, unless it were now ¢ necessary to exercise the powers given by sub-sec. 6, any as to what the facts are should be resolved in the taxpayer's fay Adopting this method of dealing with the facts, it seems to I that the deceased should be treated as having intended the tra action of 30th November 1920 to be final and irrevocable. this view the precise steps which it involved must be consid: After the allotment of 40,000 shares to the deceased's wife children and payment thereon of 6d. a share (by means which not be discussed) and the allotment of 10,000 shares to Heath, calls were made as a result of which 19s. 6d. per share was October 1920 due and owing by the holders of these 40,000 and apparently £1 per share on his 10,000 shares by Heath. 29th and 30th November 1920 cheques on the Company's banl account were drawn for the whole £49,000 thus due, but in vat amounts, and the total sum was debited to the deceased's pers0 account with the Company. Three of these cheques of the amounting to £36,262, and six cheques of three of the d sons, totalling £12,738 (the balance of £49,000), were h the Company either by or on behalf of the allottees of the Cheques of the Company totalling £12,738 were paid banking accounts of these three sons in order to meet their for that sum. All this was done on both sides upon the ins of the deceased.
The Company's objects include a power "to negotiate loans and to advance and lend moneys upon such terms or security as may be arranged." On the assumption that when the £49,000 was debited to the deceased's personal account it was not in credit to that or any amount, the Supreme Court considered that the debiting and the issue of cheques constituted a loan made in exercise of this power. In Spargo's Case (1) Mellish L.J. says : - * Nothing is clearer than that if parties account with each other, and sums are stated to be due on one side, and sums to an equal amount due on the other side of that account, and those accounts are settled by both parties, it is exactly the same thing as if the sums due on both sides had been paid. Indeed, it is a general rule of law, that in every case where a transaction resolves itself into paying money by A to B, and then handing it back again by B to A, if the parties meet together and agree to set one demand against the other, they need not go through the form and ceremony of handing the money backwards and forwards." The decision under appeal held that in this way the shares were paid up in cash out of the proceeds of a loan made by the deceased.
The provision contained in sec. 25 of the English Companies Act 1867 is in force in New South Wales: it is sec. 55 of the New South
| Wales Companies Act 1899. Therefore, in the absence of a filed agreement providing for some other form of payment, shares must _ be paid up in cash. It is, of course, well settled that when the
(1) (1873) 8 Ch. App. 407, at p. 414. (4) (1873) 8 Ch. App. 407. (2) (1897) A.C. 358, at p. 365. (5) (1873) 8 Ch. App. 270. (3) (1899) A.C. 263. (6) (1897) A.C. 358,
only for the purposes of sec. 25, and only where there is
be repaid to the Company in discharge of the liability up shares. The liability upon shares cannot be discharged unless Company obtains in funds or assets that: which is, or is suppose be, a real equivalent to the capital represented by the s
to him is undoubtedly payment, yet probably it is not compe to a Company to incur a voluntary liability for the p enabling such a set-off to be had. (See the thetorical question Lord Macnaghten in Famatina Development Corporation Ltd. v. Bi ().) Further, it seems clear that, with or without a filed agret a company may not extinguish the shareholders' liability v its peculiar incidents, by merely accepting in its place a liab for a simple contract debt. There appears to be no express de exactly to this efiect but it seems a necessary consequence of t principles. In Pellatt's Case (2) Turner L.J. was of opinion apart from the special circumstances under which the direc might possibly legally contract with a tradesman for him to' shares, and for goods furnished by him to be set off again made on his shares, such a contract would be generally ultra of the directors, since under such a contract the company's 8 remedy for breach of the agreement would be an action for bi contract, on which they could recover merely as for simple cont debt, whereas, under the usual contract to take shares, calls ot shares were given by the Act the rank of specialty debts." this is the practical result of the transaction of 30th Novem 1920. For, after the exchange of the cheques, the Compan] merely the personal liability of the deceased, and for that it to relinquish the shareholders' specialty debt for calls wit peculiar statutory incidents. Is it possible to justify this 1 by disintegrating the transaction? Can it be treated as if Company, in the bona fide exercise of its powers to lend, h money to the shareholders so that it became part of their
(1) (1910) A.C. 439, at p. 442. (2) (1867) 2 Ch. App. 527.
resources and the shareholders had out of their resources so H- ©. or A.
replenished, paid, independently, their debts for calls? The answer is found in the facts of the transaction. It never was intended that the Company should put any funds under the control of the supposed borrowers, nor even incur an obligation to do so. The Company after issuing its cheques remained entitled to recover back the very cheques or their proceeds. It was one inseverable transaction which could not, and was not intended to, increase the total assets of the Company. The Company was to obtain nothing. The purpose of the operation was to substitute the simple contract indebtedness of the deceased for the shareholders' liability for calls. Whatever may be the position when a company receives back from a shareholder in payment for calls money which it advances to him generally and not specifically for the purpose of paying them, such a transaction as that attempted by the entries made on 30th November 1920 and by the exchange of cheques is ineffectual and void; always upon the assumption that the debit of £49,000 was not made against an existing credit. On this supposition, therefore, the liability for calls would have temained unsatisfied, and the deceased would have been at liberty to reverse the credit and debit for £49,000. It would follow upon this supposition that at that time the shares of Heath would be wholly unpaid, and those of the deceased's wife and children would be paid up to sixpence only. But this supposition is not wholly true. In fact, on 29th November 1920 the deceased's account was in credit £19,091 17s. 3d. On the following day the £49,000 was debited to this account. Two other items were also debited on this date but, in the absence of proof to the contrary, it must be presumed that the £49,000 was the first debit against the credit of £19,091 17s. 3d. When'this debit was made to the account so in credit, the transaction did not operate simply as an attempt to create an indebtedness in this sum. It operated as an extin- guishment of the amount of £19,091 17s. 3d. and as an attempt to create an indebtedness as to the balance, namely, £29,908 2s. 9d. This extinguishment might and did lawfully operate to pay the
The question, however, at once arises how the amount of | payment should be appropriated among the various sharehold namely, Heath, the deceased's wife, his daughter and his five son The solution of this question must, on the facts, be independent of t] intention of the deceased and the Company. They contemplai total sum of £49,000 and did not advert to any smaller sum. asingle payment is made on account of a total sum compo: several liabilities and there is no appropriation, it must be to reduce them ratably (see Ellis v. Emmanuel (1) and Black: Bank v. Hill (2)). Tt follows that Heath's shares must be t1 as paid up proportionately out of the £19,091 17s. 3d. shares together numbered 10,000. Upon the facts to be coll from the special case it must be taken that £1,000 had alres been paid up in respect of the shares of the deceased's wife a children leaving a liability thereon of £39,000, and that £10,0 of the £49,000 credit was attributable to Heath's shares. shares of the wife, the daughter and the five sons concerned ¥ the alleged gift in 1925 therefore numbered 40,000, and the amoun unpaid on them was £39,000. This amount of £39,000 must b considered as paid up ratably out of the £19,091 17s. 3d. amount so paid up would be that proportion of £19,091 1s. s which £39,000 bears to £49,000. This is £15,195 lls. 3d. subsequent change of intention on the part of the deceased or Company could undo this payment ; for paid-up capital could be returned. It follows that on 30th November 1920 only £3 0 less this sum of £15,195 11s. 3d., or £23,804 8s. 9d., remained unp upon the shares of the wife and these children.
It was argued for the executor that, under the rule in Case (3), credits made to the deceased's account after this dat and before 1st July 1921, when £30,000-was debited, must be tak as discharging pro tanto the further liability upon the shares. 1 answer is that the deceased and the Company intended to the debit of £49,000 by the credit of £30,000 so far as the £49 related to the shares of the deceased's wife and sons. This is so, because the corresponding debit was made to their a
(1) (1876) 1 Ex. D, 157, at p. 163, (2) (1830) 10 Pickering 129, at p. 133 per Blackburn J. (3) (1816) 1 Mer. 572; 35 ER. 781.
Inasmuch as no actual liability of the deceased was represented H. C. or A. by the residue of the £49,000 and the shareholders had no right to oe have any different appropriation made, there is no room for the Comams- application of the rule in Clayton's Case (1). (See per Lord Atkinsonin ""Qrxvn Deeley v. Lloyds Bank Ltd. (2).) Tt was likewise argued that the rule wea) in Clayton's Case operated upon the account in respect of the pee residue of the £49,000 after the credit of £30,000. Again the answer Trusree is that the item of £49,000 was reversed pro tanto and taken out oo of the account. Similarly the credit of £9,450 on 30th November pelt 1922 must be referred to the credit of £49,000.
The result is that, when the deceased in 1921-1922 attempted to revoke the transaction by which he had intended the shares of his wife and family should be paid up, he was not in a position to do so as to £15,195 11s. 3d. If on 30th November 1925 the amount of £27,098 2s. 7d. with which he debited his account had telated to all the shares originally allotted to his wife and children, and had represented the amounts remaining unpaid upon those shares, then to ascertain the extent to which that debit and its subsequent extinguishment operated in law to satisfy the liability upon those shares, it would be necessary only to deduct the sum of £15,195 11s. 3d. which had been paid up in 1920 from the sum of £27,098 2s. 7d. But in fact the sum of £27,098 2s. 7d. represented only the amount then unpaid upon the shares originally allotted to his wife, his daughter and to four sons; for the deceased had already himself taken over the 3,500 shares of his son Malcolm Nevitt.
It is therefore necessary to reduce the amount of £15,195 11s. 3d. by the sum which it includes representing an amount paid up on these shares. This is £1,329 12s. 3d. The balance, namely, £13,865 19s. is the additional amount which had in law been paid up on the shares allotted to the wife, daughter and four sons. If this be deducted from the £27,098 2s. 7d., the balance represents the amount which, by the credit of that figure and its extinguish- ment, was actually paid up on those shares. This is £13,232 3s. 7d.
The answer to question 1 in the case stated should, therefore, be: "The sum of £13,232 3s. 7d. forms part of the dutiable estate
(1) (1816) 1 Mer. 572; 35 E.R, 781. (2) (1912) A.C. 756, at pp. 771-772.
' the argument of the appeal the parties did not refer to it,
should be discharged and question 1 answered accordingly.
Question 2 presumably involves a mere calculation, but y case should be remitted to the Supreme Court to carry out thi judgment. é
It was necessary for the executor to appeal to the Supreme Com in order to obtain relief from the payment of the death duty respect of the full sum of £27,098 2s. 7d., and by so appealing has gained a substantial reduction of this amount. It should therefore, have the costs in the Supreme Court. On the othe hand, it was necessary for the Commissioner to appeal to this Cour in order to secure his right to include the balance of that sum i the estate, and he should, therefore, have his costs of this appe Costs to be set off.
Isaacs J. The two competing contentions are these: Th Commissioner maintains that the sum of £27,098 2s. 7d. did x become a gift until 7th September 1925; the respondent': being that the gift was complete in November 1920, and alternatiy in 1921 and 1922. 5
The material facts are as follow: - In June 1920 the wife a1 several children of the deceased, shortly referred to hereafter the family, agreed to become members of an incorporated compat limited by shares, and were duly entered as such on the reg the Company in respect of 40,000 shares of £1 each. On 30th the shares were partly paid up in cash. On 30th November 1920 the family being already the holders of the shares, and liabl individually to the Company in respect of the unpaid capit certain transactions took place to which the Company, the d and the family were all parties. These transactions constit first general ground relied on by the respondent as constitutit the gift in question. Before stating them, it is necessary to obser that, besides the primary object of the Company, which was # acquisition as a going concern of a specific general timber busines the memorandum of association included objects of the most vari and practically unlimited, character. It is sufficient to say
par. 12 of clause 3 sets out an object which, when read in connection H.C. or A.
with the rest of the document, it is impossible to limit in the way suggested for the Commissioner (see Cotman v. Brougham (1) ). It is plain that, unless expressly restricted, a power to advance or lend moneys to strangers connotes that the borrower may - unless he chooses to contract otherwise - use the money for his own purposes. He may use it to pay for shares, and none the less that the Company lending the money to him rather than to another, profits by the pay- ment. To deny this would be to rob the power of lending of all business sense. An ordinary bank, formed under the Companies Act, lending money to a customer and perhaps on excellent security, surely does not act wltra vires if it knows the loan is for the purpose of paying up uncalled capital on its own shares. And for the present purpose no distinction can be drawn between that case and the case in hand. If, for instance, in November 1920 the Company under its power to lend had genuinely lent in bank-notes £49,000 on personal account, though for the very purpose of paying share capital, and then out of that sum £40,000 had been at once paid over to the Company to discharge their share liability, the sole indebtedness for the personal account being assumed by the deceased, I should have no doubt the gift was then complete. So far from this being an intended breach of the Companies Act, it would in that case have been a resolute compliance with it. If the loan, as a loan, is intra vires the Company, the intended application of the money is prima facie the business of the borrower. If he has bound himself to apply it to the benefit of the Company, so much the better for the Company. The borrower may be a shareholder ; he may be a stranger. The loan may be secured by unquestionable assets, or it may rest on personal credit. So long as it is genuine, it is intra vires in presence of a power to lend such as exists here.
It is established law that a payment in cash does not require that the formality of handing over actual cash shall take place, so long as what is done is virtually payment in cash. If A owes B £1,000 for cattle, and B owes A £1,000 for a house, mutual receipts for indebtedness would in law be payment in cash on both sides.
Tn Larocque v. Beauchemin (2) Lord Macnaghten for the Judicial
Committee, applying the doctrine of Spargo's Case (1), poin the necessity of independent agreement, each requiring an imm payment of money down, in order that the setting off of the demands should amount to a payment in cash. The question, therefore, is whether what took place on 3 November 1920 was the setting off of two cross independent to instant payment of money. If it was not, the shares were by reason of the exchange of cheques, paid for in cash, and the in law not at all. The consequence, in my opinion, when I con to apply to the circumstances the judgment of Lord Macna in Larocque's Case (2), is that the respondent's first con' cannot be supported. Now, the transactions of 30th November 1920 were There was a tripartite agreement between the Company, the and the family, that the Company would give its own chequ £32,842 10s. to the deceased to be applied as part payment for! shares, and would accept those cheques and certain other ch drawn by various members of the family in full payment of share liabilities of the family and of Heath, and that the amount, namely, £49,000, should be debited to the personal accout of the deceased. This was done. There is no doubt that th cheques accepted for the share liability were so given and acce that in transactions between individuals such an arr: could be regarded as a discharge of liability. But in my o it is a fatal circumstance that, to begin with, it was not paym "in cash." 'Two opposite possibilities may be contrasted. Sup the Company had really arranged to lend the deceased £49,0 and had given him its cheque for that amount genuinely payal
authority of Larocque v. Beauchemin (2), have been in law equi to a payment in sovereigns. I need hardly add that, in the abst of the independent object of lending, such an arrangement wo! be ultra vires of the Company, because in patent violation of the It would not have been payment, but a mere substitution of anot
promise to pay the same liability. It would not have been what Sargant J. in Hong Kong and China Gas Co. v. Glen (1) calls a discharge "either by the meal of cash or by the malt of property, services, or the like." It would not have been a discharge giving something which, to borrow the expression of Malins V.-C. in Schroder's Case (2) with reference to bonds, "they could have turned into money any day they thought fit." On the other hand, notwithstanding the existence of the lending power, if one cheque of a member of the family had been accepted as payment of the share account, the cheque not being payable at once, but chargeable to the personal account of the deceased, then, unless and until that cheque was. actually paid, the shares would not be paid for. No one could reasonably regard the transaction as an independent loan and an independent payment. To that state of circumstances Larocque v. Beauchemin (3) would have no application, except to deny the efficacy of the transaction as payment in cash.
The arrangement actually made in this case was plainly entire ; 'though, of course, the allocation was separate. It is impossible to place the Company's cheques on any different footing from that of the family cheques. There was no Separate exercise in reality 'of the ending power of the Company. There was no undertaking 'to lend, nor any loan in fact, and there was no independent debt of the Company which could be set off against the debts to the Company 'of the family in respect of their share accounts. The attempt, in fact, to pay for the shares, by exchange of cheques, fails, because, as Lindley L.J. says in In re Wragg Ltd. (4), it was ultra vires the Company. Therefore the shares were not so paid for. But when the cheques for £49,000 were debited to the deceased's personal account, the fact was that he had therein about £19,000 to his credit. The legal result of the cross-entries, in the absence of contrary intention, was to absorb the amount of £19,000 so pro tanto to pay off the £49,000 debit (see per Parke J. in Smith v. Ure (5)). To that extent, the Company then obtained payment for the shares.
(1) (1914) 1 Ch, 527, at p. 540. (4) (1897) 1 Ch. at p. 829, (2) (1870) 11 Eq, 131, at p. 141. (5) (1833) 2 Knapp 188, at p. 195; (3) (1897) A.C. 358. 12 E.R. 451.
ComMIs- SIONER OF Stamp Durms (N.S.W.) v PrRPETUAL TRUSTEE Co. Lrp.
In July 1921, it is said in the case stated, Mr. Saxton chang his ideas and arranged with the Company to advance the sufficient to pay for their shares, debiting them with £30,000 at the same time increasing the credit side of his personal account by £30,000. This was all done without the knowledge or con of the family, and was ineffectual as between them and the Compa or as between them and the deceased. But it was effectual, between Saxton and the Company, in negativing any intention paying off this indebtedness by credits in his personal a Sc As at 31st May 1925, there appeared in the Company's books, against the family, on '"' Advance Accounts "* - not Share Ace:
deceased by giving his cheque for that sum on 7th September 1925 as for " cash paid" to him. He then had over £30,000 to his cre and therefore there was instant payment, and the ledger a shows this. The Company was then fully paid its claims the family, which in truth were in respect of share liability.
conclusion to which they come. The gift, therefore, so far as it was made within the taxa
period, was made on 7th September 1925, and was a gift of £13,23
Srarxe J. The Stamp Duties Act 1920-1924 of New S$ Wales imposes a death duty upon the estates of deceased perso It provides that the estate of a deceased person shall be de to include and consist of any property comprised in any gift by the deceased three years before his death, and whether mad before or after the passing of the Act, including any money
such period in pursuance of a covenant or agreement made at: time, without full consideration in money or money's-wor "Gift" means any disposition of property made otherwise # by will, whether with or without an instrument in writing, ¥
full consideration or money's-worth. And a "disposition of property," means, inter alia, any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own estate and to increase the value of the estate of any other person. As to this latter provision, " what is hit at by the statute is a transaction which the person entering into it intends to have the effect stated in the sub-section. It is not enough merely to prove that the result which is stated in the sub-section accrued " (Finch v. Commissioner of Stamp Duties (1) ).
Alexander Charles Saxton died on 30th September 1926, and the matter before the Court arises in connection with the issue of shares in A. C. Saxton & Sons Ltd. in the names of his wife and family, and one Heath (who held under an agreement, creating, apparently, some trust for the family of the deceased), and payments or credits in respect of those shares. A case has been stated under sec. 124 of the Act, but it is most unsatisfactorily stated. Questions have been propounded for decision upon memoranda presented to the Commissioner by the respondent, the executor of the deceased, and a ledger account of the deceased with A. C. Saxton & Sons Ltd. The Court is at liberty, under the Act, to draw from facts and documents stated in the case any inference, whether of fact or law, which might have been drawn therefrom if proved at a trial (see sec. 124 (7) ). But the Commissioner has not stated which of the statements in the memoranda he finds as facts, or what inferences (if any) he draws from the statements and the ledger account submitted to him. The Supreme Court thought it right, and my brethren think it right, to treat the case as "setting forth the facts before the Commissioner on making the assessment" of the estate of the deceased for the purpose of death duty. I propose to follow the same course, though with much misgiving. But I think it necessary to state the facts of the case as they present themselves to me : - (1) In 1920, A. C. Saxton & Sons Ltd. resolved to obtain further capital by the issue of 50,000 shares of £1 each.
_ (2) Applications were invited for shares, and shares were allotted
as follows: Mrs. Janet Saxton 10,000 shares, Miss Janet Saxton
Commrs- SIONER OF Stamp Durtes (N.S.W.) v. PERPETUAL TRUSTEE Co. Lx.
10,000 shares, Harold Saxton 4,800 shares, Alexander W. Saxto 4,800 shares, Charles D. Saxton 4,000 shares, Malcolm Neyit Saxton 3,500 shares, Geoffrey Saxton 3,300 shares, A. E. He 10,000 shares. Mrs. Saxton was the wife of the deceased, Heath took up his shares under the agreement already mention The other allottees were children of the deceased. (3) Acco to the books of the Company the sum of £1 has been entered paid in respect of each of these shares. The Companies Act 18 of New South Wales, sec. 55, provides that every share shall. deemed and taken to have been issued and to be held subject t the payment of the whole amount thereof in cash unless the mod of such payment has been otherwise determined -by a cont1 duly made in writing and filed with the Registrar at or before t issue of such share. No such contract was ever made or filed (4) Neither the family of the deceased nor Heath paid anything
cash was paid by them to the Company. (5) The deceased stat that the shares taken up by his family were to be a gift from h to them, and Heath's shares were dealt with in accordance the agreement mentioned. So the deceased arranged that sun
debit of Heath's account also), in respect of the shares, shou transferred to him. In any event, it is clear that on 25th Jun 1920 a sum of £357 10s. was debited to his personal account: "1 cash re sons A. C. Saxton and Sons Ltd."; and on 30th Novemt 1920 a sum of £49,000 was debited to him: "To cash paid y Cheques were drawn on the Company to represent these sums, al the total amount was debited to the personal account of t deceased. But no moneys passed: book entries were mad crediting the accounts affected and debiting the deceased. (6) 0 30th November 1920 the account of the deceased with the Compa excluding these amounts of £357 10s. and £49,000, stood in a1 to an amount of £18,269, in round figures. (Dr. - £53,793 Is £49,357 10s. (£357 10s. and £49,000): £4,435 lls. Cr- £22,1
lls. 3d.) (7) Various entries in the books establish that this sum of £18,269 was applied - if not directly, still indirectly - in liquidating the amount due in respect of the 50,000 shares. (8) There was left, however, a sum of £31,731 on the shares in respect of which the Company had not been paid cash and which, despite the entries in the Company's books, was still due and payable to the Company. (9) On 21st July 1921 the following debits and credits were made in the Company's books : - Dr. - Mrs. Janet Saxton £10,000, Harold Saxton £4,800, Alex. W. Saxton £4,400, Chas. D. Saxton £4,000, Geoffrey Saxton £3,300, Malcolm N. Saxton £3,500: £30,000. Cr. - A. C. Saxton (the deceased) - By sundry persons £30,000. These entries were made because the deceased changed his mind, and arranged with the Company to debit the parties with £30,000 as an advance on the shares allotted to them, and credit him with the amount. The entries were made without the knowledge or consent of the persons debited with the amounts, totalling £30,000. (10) But in my opinion these entries establish the intention of the deceased of throwing upon these persons the obligation - an existing obligation and one that the Companies Act imposed upon them - of providing for the shares taken up by them respectively, and of not discharging that obligation for them. They also establish, in my opinion, the appropriation by the Company and the deceased of the £18,269 in and towards the discharge of the obligation arising out of the allotment of 10,000 shares to the daughter and to Heath respectively. (11) The deceased took over M. N. Saxton's shares, and the debit to the latter's advance account was transferred, about November 1922, to the deceased. (12) About November 1920 the deceased altered the arrangement as to his daughter's shares. A sum of £9,450 was debited to the daughter's Advance Accdunt in the Company's books, and a credit of £9,450 passed to the deceased's personal account. This sum of £9,450 represented the amount paid or payable in respect of the 10,000 shares allotted to the daughter, less a sum of £550 paid in dividends. The daughter thus assumed a responsibility to the Company for an advance of £9,450 which was credited to her father, the deceased. The daughter does not appear to have dissented
from this arrangement. (13) In May 1925 the balances at de of the Advance Accounts of the deceased's wife and children, af crediting various dividends and other amounts, stood as follows: Mrs. Janet Saxton £7,246 2s. 3d., Harold Saxton £3,535 10s. Alex. W. Saxton £3,144, Chas. D. Saxton £2,767 12s. 3d., Saxton £2,434 10s. 1d., Miss Janet Saxton £7,970 7s. 3d.: £27,098 2s. 7d. (14) About this time the deceased made a further a ment as to his daughter's shares: he arranged to transfer her s to his sons, in view of other provisions made for her benefit, that the sons should take over her liability in respect of ady on her shares by the Company. (15) This arrangement was out, and the sons took over the daughter's shares, and with the her liability. (16) About the same time (May 1925) the decease resolved to clear these debits, amounting to £27,098, and to mak
amounts outstanding, and the deceased was debited, on 3 September 1925: 'Cash paid you £27,098 2s. 7d."; and thi amount was ultimately liquidated in account with the Com (18) All parties concerned appear to have acquiesced in
deceased was a legitimate debit by the Company in respect of a obligation due by them in respect of the shares allotted to then whether it be called the amount due upon the shares al to them or an advance. And if this is so, the debits, amoun to £27,098 2s. 7d., made to the accounts of the wife and s 1925, were all legitimate debits to their respective accounts.
2s. 7d. in May 1925, he made a gift of this amount to his wife: sons within the meaning of the Stamps Duties Act. ig
cannot be supported, and the first question stated should be ans Yes, the whole. The respondent should pay the costs here and below. r
Appeal allowed. Order of Supreme Court dis- H- ©. or A.
The sum of £13,232 3s. 7d. forms part of - Comms- the dutiable estate of the deceased. Case ""gXP® 0F remitted to Supreme Court to carry out this (ew) susanar: Punrervan
Solicitor for the appellant, J. V. Tillett, Crown Solicitor for New pry
South Wales. Solicitors for the respondent, Sly & Russell.
J.B. rom ecg Oded fies tie QR? CaaS (HIGH COURT OF AUSTRALIA.) MoGEOCH é c - he J 3 . APPELLANT;
Land Tax - Assessment - Improvements - Clearing land and keeping free from prickly H. C. or A. __ pear - " Improvements thereon" - Unimproved value - Method of ascertaining - 1929, Land Tax Assessment Act 1910-1924 (No. 22 of 1910 - No. 32 of 1924), secs. = G~ 3, 10 - Land Tax Assessment Act 1910-1926 (No. 22 of 1910 - No. 50 of 1926), SypNev, secs. 3, 10, Aug. 6.
; Held, by Knox C.J. and Dizon J. (Isaacs J. dissenting), that the eradication, Metpourne, destruction and removal of prickly pear plants which would otherwise spread Oct, 28, and deprive the land of its utility and value are 'improvements on" the land
"a Ki CJ., within the meaning of the Land Tax Assessment Acts 1910-1924, 1910-1926, __Isunes and
Dixon JJ. Morrison v. Federal Commissioner of Land Tax, (1914) 17 C.L.R. 498, and Jowett v. Federal Commissioner of Taxation, (1926) 38 C.L.R. 325, followed.
Toohey's Ltd. v. Valuer-General, (1925) A.C. 439, considered.
Held, also, by Knox C.J. and Dixon J, (Isaacs J. dissenting), that the unimproved value of land should be ascertained by considering what the land