O'Connor v Commissioner of Succession Duties (SA) [1932] HCA 28

O'Connor v Commissioner of Succession Duties (SA) [1932] HCA 28 - HCA 1932 case summary — Zoe

[16]

a Marist Brother the appellant had entered into what is termed in the constitution of the Institute the "simple vow" of poverty. This vow did not prevent him from becoming the owner of property, but it debarred him from keeping the administration, the usufruct and the use of the property. He had to cede these advantages to other persons, and might do so to whomsoever he pleased, but subject, it appeared, to the permission of his lawful superiors. The testator was aware that the appellant had made this vow. The _ appellant, however, obtained the necessary permission to accept the gift, and, when his father executed the transfers, he also signed them as transferee. The testator did not make any reservation of an interest in the property; he received no consideration for the transfer, and there was no arrangement between him and the _ appellant that he was to have any benefit from the property. After the transaction, the mortgages and scrip certificates, the subject matter of the gift, which were in the custody of Messrs. Denny & Daly, were retained by them on behalf of the appellant, and they collected the dividends and interest, and generally administered the property according to his directions. He authorized them to pay to his father such reasonable amounts as he might require, and also to make payments towards the support of his mother, who was in poor circumstances, and he received some small amounts himself, _ which he applied principally for the benefit of the boys who were under the care and tuition of the Brotherhood. The remainder of the income was capitalized and invested by Messrs. Denny & Daly in the name of the appellant. On Ist February 1924 the testator, who had not divested himself of the whole of his property, sailed for Ireland with the intention of residing there. The appellant saw him off at the steamer, and asked him what he should do with the property. The testator replied "You can do what you like with it: it is your own," - adding that he thought the family would _ Squander it, and that, if the appellant had it, he would look after it

[23]

all the transfers had been registered (Milroy v. Lord (1) ; Anning v. Anning (2)), and that although the appellant had assumed the beneficial interest and possession of the various items of the property comprised in the disposition, by Denny & Daly's acknowledgment that they held the documents of title for him (Dublin City Distillery _ Lad. v. Doherty (3) ), and by their subsequently administering the property on his behalf, he allowed the testator to appropriate for his own use and benefit, from July 1926 until his death, substantially _ the whole of the income from the property. This was not pursuant to any reservation made by the testator at the time of the disposition, but was a purely voluntary act on the part of the appellant. The question, therefore, is whether under these circumstances the disposition is caught by sec. 18, sub-sec. 3, of the Succession Duties Act Further Amendment Act 1919, and rendered chargeable with ~ succession duty under that section. . . . The crucial question for _ my decision, therefore, is whether it is possible to say that from the time when the disposition of the property given to the appellant by his _ father became complete, the appellant had assumed the beneficial interest and possession of the property and retained such interest and possession to the entire exclusion of his father. In my judgment, _ itisimpossible for me so to hold, in view of the facts that the appellant authorized his father to administer the property as his attorney, and allowed him to appropriate to his own use, without requiring him to account, and without protest or objection, from July 1926 down to the time of his death, so much of the income of the property as the testator thought fit. So far from this being an entire exclusion of the testator from the beneficial interest of the property, it appears to me to amount to actual enjoyment of the greater part of it. I think, therefore, the disposition was caught by the Act, and that the appeal must be dismissed, but I wish to say that I find nothing in the conduct of the appellant in relation to the transaction which 'was not entirely creditable to him " : - In re O'Connor ; O'Connor v. Commissioner of Succession Duties (4).

[26]

Rollison and Christie, for the appellant. Sec. 10 (3) of the Succes- sion Duties Act Further Amendment Act 1923, which is the relevant provision, appeared for the first time in South Australia in 1923. The relevant documents were handed over in 1923 and the donor did all that was necessary to make a valid disposition of his property. The testator died on 23rd September 1928 and this assessment was made on 28th February 1929. The Chief Justice found that the disposition was bona fide; that it was made without reservation ; that there was no benefit retained by the donor, but that the appellant was caught by the words "retain such interest and possession to the entire exclusion of the person making such disposition." In April 1925 the appellant sent his father a full power of attorney to manage all his affairs in South Australia, and in 1926 the father was permitted by the appellant to use for his own benefit the interest derived from this property. This was done voluntarily by the appellant. The owner had done all that he could to dispose of his interest within Anning v. Anning (1). The purpose of the section was to catch colourable transactions in which the donor retained some benefit. As no benefit was retained by the transaction of 1923, it was not attached by the transaction of 1926. 'What was given to the father was given as a matter of grace, and not as an enforceable interest. If the donor has done everything that is necessary for him to do to make a complete disposition, that is sufficient (Milroy v. Lord (2)). In order to escape from the section the donee must " thenceforward retain" the gift as of right, and what he did in 1926 did not constitute a parting with such right to possession. The words "and thenceforward . . . by contract or otherwise " mean " and thenceforward retained as of right free of any enforceable claim" (Attorney-General v. Seccombe (3) ). The Chief Justice distinguishes Seccombe's Case, but any enjoyment retained by the donor would be caught by the section. The Chief Justice finds that the act of the appellant was a voluntary allowance on the part of the son, and was not made pursuant to any reservation on the part of the testator. '' Benefit" means some enforceable

[55]

the disponor, one Mrs. Ommanney M'Taggert, remained as a licensee or guest. Lord Dunedin, who was then Lord President, said (1) : - ''I hold it clear that the benefit from which the cedent must be excluded must be a benefit which was part of his property before the cession. Any other reading would I think drive the clause mad ; because it would mean that if the cedent was after the cession even allowed again to set foot on the ceded property, the whole transaction for the purpose of the duty is held as non-existent. It therefore in the end comes to be a question of fact, whether the occupation of the bedroom and other rooms of the house which Mrs. Ommanney M'Taggert had after the cession is in truth the same as that she had before. It seems to me that the admissions in the joint minute show conclusively that it was not. Before the session her occupation was one of the incidents of her proprietorship ; after, it was only the privilege of a guest. To say in general terms, as was said in the argument for the Crown, that she ' got the good of the estate' as much after the cession as before, seems to me to beg the question. Very likely her actual enjoyment of life was not made less because she no longer pocketed the rents, or sat at the head of the table. I do not think one can analyse existence in such a fashion. Two of the prime necessities - air and sunshine - never depended upon her proprietary rights. The question seems to me always to revert to a simple question of fact, namely, after the cession was she the old proprietrix retaining a benefit of her old estate ; or was she a guest getting as a guest what the new proprietrix chose to give her? As a juryman reading the minute of the admissions, I pronounce unhesitatingly for the latter view." In Attorney-General v. Seccombe (2), which was decided by Lord Sumner (then Hamilton J.), the donor was again a licensee or guest. Lord 'Sumner expressed his agreement with the principle of Lord Advocate v. Stewart (3), and said (4): "The principle there laid down, as I understand it, is that the possession and enjoyment or benefit from which the Act contemplates that the cedent or donor must be entirely excluded must be derived from some enforceable right, a benefit, as the Lord President said, ' which was part of his property

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Judgment (77 paragraphs)

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