Vicars v Commissioner of Stamp Duties (NSW) [1945] HCA 24

Vicars v Commissioner of Stamp Duties (NSW) [1945] HCA 24 - HCA 1945 case summary — Zoe

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heads of notional property. Section 102 (2) (ba) included " the value (to be ascertained as at the date of the gift) of any property comprised in the gift." In effect, it said it mattered nothing that the money was spent, regard was had to the amount of money given at the date of the gift. Sub-section 2a of s. 102, introduced by Act No. 30 of 1939, is an exhaustive code as to when the estate situate outside New South Wales of a deceased person domiciled in New South Wales shall become liable to duty under the notional provisions. It restricts the liability to property situate outside New South Wales at the date of death and to that existing there at that date. The view, broadly expressed on the facts of the present case, is that the money should be deemed, in s. 102 (2) (b), to be a gift of money and that that money ceased to exist almost instanter. It was not in existence at the date of death and therefore duty was not payable. The sum of £40,000 was a gift of the money to the trustee or the beneficiaries. It was a gift from any point of view followed by a sale of shares. Section 102 (24) applies mutatis mutandis to all the sub-paragraphs in s. 102 (2). Where the critical date is the date of the transaction, s. 102 (2a) (c) applies to the notional situation at the date of the transaction. It applies to all transactions. Section 102 (24) was intended to be a complete code. The interpreta- tion placed upon s. 102 (2a) by Davidson J. in the Court below is correct. Section 102 (2a) has the primary operation of an extension of s, 102 (2) generally. The appellants therefore get the benefit of the amendment to s. 102 (2) (b) by s. 102 (2) (ba) with a mandate that money shall be regarded as money and not as converted into shares : See Lrustees Executors and Agency Co. Ltd. v. Federal Commissioner of Taxation (1). There was some extension by s. 102 (2) (ba) but then, having been so extended, the legislature cut down the liability to cases where property was still situate outside New South Wales at the date of death. Section 102 (2a) is to apply to persons domiciled in New South Wales provided only that the property the subject of the transaction is in existence at the date of death and is outside New South Wales. There cannot be any controversy that there took place at Canberra (a) the creation of a trust, (b) the payment of moneys to be held upon the terms of a trust, and (c) in every sense of the expression, a sale by the deceased of shares to the trust company. The shares were, in law and in fact, sold by the deceased and not given by him to the trust company or to the beneficiaries : See Inland Revenue Commissioners v. Duke of Westminster (2). Tt was a settlement of money and a purchase by the trustee in the open market of the shares. The same transaction cannot very well

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parties. Even if there had not been a sale of shares, s. 102 (2) (ba) prevents the Court treating the transaction as a gift of shares. It prevents the gift being treated as a gift of shares or as a gift of anything except money. If s. 102 (2) (ba) applies, the Court is prevented from going one step further with the shares. Section 102 (2a) eliminates the money as dutiable because it did not continue to exist as money at the date of death. Section 102 (2) (ba) was applicable to gifts of money from 1931 onwards and, unques- tionably, was so applicable from the time of the 1939 amendment onwards. 'The decision in Watt's Case (1) is not applicable to this case by reason, inter alia, of the additional matter added to s. 102 (1) (a) in 1931, although it continued to apply in respect of people who died outside New South Wales. If s. 102 (1) (a) had been enacted in 1920 in the form in which it was amended in 1931 the decision in Trustees Executors and Agency Co. Ltd. v. Federal Com- missioner of Taaation (2) would have been applicable. The Court should accept the view that s. 102 (2a) brought this matter into line with the decision in Trustees Executors and Agency Co. Ltd. v. Federal Commissioner of Taxation (2) and that therefore the interim period does not concern the appellants. Section 102 (2) does not apply to transactions as to property situate outside New South Wales at the date of the transaction, if that be the relevant date, or at the date of death, if that be the relevant date. The primary view is that in 1939 s. 102 (2) did not relate to the gift of money at Canberra, it only related to the gift in 1939 if the money at Canberra continued in existence after the date of death in New South Wales. In re Payne's Declaration; In re Payne; Poplett vy. Attorney-General (3) is a decision upon an entirely different Act and is utterly inapplicable to this case. All that was decided in Attorney-General for Ontario v. National Trust Co. Ltd. (4) and Lord Strathcona v. Inland Revenue Commissioners (5) was that there being no dispute between the parties the value was to be as at date of death.

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money and a sale of shares is to overlook the fact that each act done was merely a step in a concerted piece of business the object and result of which were to settle the deceased's shares ; (ii) that trans- action was entered into by the deceased with the intent mentioned in par. e of the definition, and was therefore a "disposition of property"; (iii) by the transaction the deceased disposed of the shares and received nothing therefor, thus the disposition of the shares was made by him " without full consideration in money or money's worth," and, accordingly, was a "gift" of the shares; (iv) the shares were therefore " property comprised in a gift made by the deceased within three years before his death"; and (v) the shares were situate in New South Wales at all material times. Alternatively, the money paid by the deceased to the company by means of his cheque is deemed to be included in his dutiable estate by virtue of s. 102 (2) (b), because (i) the payment was a gift ; (ii) the fact that the payment was made at Canberra is irrelevant ; (iii) if the correct view as to the situation of the money at the time of the gift is that it was at Canberra, that fact is irrelevant, because the Act does not expressly or impliedly make the local situation of the property at the date of gift material to the question of duti- ability. The only date at which the local situation is material to that question is the date of death (Watt's Case (1) ) ; (iv) but in any case the money given was in New South Wales at the date of gift, because there was no effectual gift of money by the deceased other- wise than by incurring a liability to the bank at the moment of, and by reason of, its honouring his cheque; the subtraction from his estate consisted of the incurring by him of a liability to the bank for money lent, and that liability, like any simple contract debt, was from its inception situate where the debtor resided, namely New South Wales ; (v) the requirement of Watt's Case (2) was satisfied, because the money was in New South Wales at the death of the deceased, not in its original form, but in a concrete identifiable form (In the Estate of W. O. Watt (Deceased) (3), Re Grice (4), Trustees Baxecutors and Agency Co. Ltd. v. Federal Commissioner of Taaation (5), Com- missioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Sazton's Case) (6) ). Unless it be conceded that the "property comprised in the gift " means the property which at the death of the deceased is the property originally given, either in its original form or in some other identifiable form, Saaton's Case (6) was wrongly decided, and there is no liability to duty in any case of a gift of

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Section 102 (2) includes within the dutiable estate property which had belonged to the deceased but of which he had disposed in a particular way, or which he had so owned that upon his death another person, e.g. a joint tenant with him, derived a benefit. Such property is "notionally"" regarded as part of the estate. In the case of such notional property, the legislature has not included, either originally or in 1931 (when s. 102 (1) (a) was amended in the manner already stated), any provision relating to the situation of property such as is now included in sub-s. 1 (a). The application of sub-s. | is relatively easy, applying as it does only to property which is in existence and which belonged to the deceased at his death. Sub-section 2, however, raises many difficulties. It relates in certain cases, particularly in par. b and par. ba, to property which had belonged to the deceased, but which he had disposed of by gift, so that it no longer belonged to him. The terms of the provisions are so general as to apply to all persons anywhere in the world, and to dispositions made anywhere in the world of property anywhere in the world, even though the person and property concerned may have no association whatever with New South Wales. The legis- lature of New South Wales has not unlimited powers of legislation. Tt can only pass laws for the peace, welfare and good government of New South Wales: Constitution Act 1902 (N.S.W.), s. 5; Barcelo y. Electrolytic Zinc Co. of Australia Ltd. (1) ; Commissioner of Stamp Duties (N.S.W.) v. Millar (2); Trustees Executors and Agency Co. Lid. v. Federal Commissioner of Taxation (3); Wanganwi-Rangitiket Electric Power Board vy. Australian Mutual Provident Society (4) ; Attorney-General vy. Australian Agricultural Co. (5). Accordingly, if the legislation is to be held to be valid, some limitation (in this case other than a limitation depending upon domicile) must be placed upon the general words of the various provisions of s. 102 (2). It is necessary to consider in each case what limitation, if any, is proper.

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taxable under a provision added to s. 102 (2) (b) in 1939. This addendum follows the principal provision in s. 102 (2) (b) already quoted, and is in these terms : - " Where the property comprised in any such gift consists of money, or money is paid as aforesaid in pursuance of any such covenant or agreement the property to be included in the estate pursuant to this sub-paragraph shall be the actual amount of the money given or paid." It is contended for the Commissioner that in the present case if money was given the adden- dum produces the result that the actual amount of the money given is to be included in the estate. This argument regards the addendum as intended to deal with the case of a gift of money which can no longer be found as money in New South Wales at the time of death. If it could be so found the principal provision in s. 102 (2) (b) would be applicable because that money would itself be property comprised ina gift made by the deceased. It would be in existence in New South Wales and so would be included in the dutiable estate by virtue of the principle laid down in Watt's Case (1). I agree that the addendum applies to the case of a gift of money which, if the money were in existence in New South Wales at the time of the death, would have been included in the estate, though the money has disappeared. But the addendum cannot, if it is to be regarded as valid, be held to have a universal application to all gifts of money, wherever the money was situated at the time of gift, made by any persons at any place in the world. Some territorial limitation must be implied in order to uphold the validity of the provision as New South Wales legislation. For reasons which I have already stated, neither the domicile of the donor nor the place where the gift is made can be implied as a territorial limitation. In this case, as in the case of s. 102 (2) (ba), the only limitation which appears to be available for adoption is a limitation depending upon the place where the money is when the gift is made. Upon any other construc- tion, the provision would apply to all persons in any part of the world who made gifts at any time of money at any place, and whether or not the persons or the money had any connection or association with the State of New South Wales. Thus, in my opinion, this provision must, in order to be valid, be treated as limited to gifts of money situated in New South Wales at the time of the gift. In this con- clusion, I agree with the view of Jordan C.J. The result is that, as the money when given was not in New South Wales, this provision has no application in the present case. I repeat that, though the shares were at the time of death in New South Wales, the shares in my view were never the subject of a gift, but only of a sale.

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tion s. 125 ; Seat of Government Act 1908, No. 24; Seat of Government Acceptance Act 1909, No. 23; R. v. Bamford (1)). And there the deed of settlement was executed. The scheme for achieving the purposes mentioned was carefully considered and worked out with much care. Sir William drew a cheque on his banker in Sydney for £40,100 and paid the same to the credit of an account in his own name at the branch bank of his banker in Canberra. He then drew a cheque for £40,100 upon the branch bank at Canberra and paid it to the credit of Ngarita Pty. Ltd. (the trustee of the settlement) at the branch to be held upon trust and in expectation that the money would be applied in acquiring shares in John Vicars & Oo. Pty. Ltd. The trusts, so far as material, were to hold the trust funds upon trust at the discretion of the trustee to invest the same in any investments authorized by the settlement with power to vary the same and to hold the trust funds and investments for the time being representing the same upon trust for his family declared in the deed. The power of investment included the purchase of shares in John Vicars & Co. Pty. Ltd. The trustee thereupon purchased a considerable number of shares from Sir William which he held in John Vicars & Co. Pty. Ltd. for £40,000 the market value of the shares. Transfers of the shares were duly executed and Sir William received a cheque for £40,000 from the trustee drawn upon the account in its name at Canberra, and paid the same into his account at Canberra and ultimately transferred the credit to his account in Sydney thereby closing his Canberra account. The sum of £100 was applied in pay- ing stamp duty on the transfers of the shares to the trustee. The various operations which have been detailed were but the machinery adopted by Sir William Vicars to give effect to his scheme. The various operations cannot be treated separately but must be treated as a whole and their interaction considered. As was said in another connection in W. R. Moran Pty. Ltd. v. Deputy Commissioner of Taaa- tion for New South Wales (2): "The separate parts of a machine have little meaning if examined without reference to the function they will discharge in the machine." The legal effect and operation of the scheme created a trust fund, which could be, and was invested in shares of John Vicars & Co. Pty. Ltd.

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to the credit of an account opened by this company in the same branch. In the course of the visit he and the representative on behalf of the company executed in Canberra an indenture of settle- ment made between himself as settlor and the company as trustee (subsequently ratified by the company) whereby, after reciting that he desired to make provision for his wife, daughter, son-in-law and grandchildren and with that object had paid the sum of £40,100 (thereinafter referred to as " the trust funds ") to the company, the settlor declared that the trustee should invest the trust funds at its discretion in any investments thereby authorized and hold the trust funds and the investments for the time being representing the same upon the trusts for his wife for life and after her death for his daughter, son-in-law and grandchildren as therein mentioned. By the inden- ture, the trustee was authorized to invest the trust funds, inter alia, in the purchase of or upon the security of shares or debentures of any bank or company (including John Vicars & Co. Pty. Ltd. or any company associated or anialgamated therewith). The board of directors of the trustee company had already resolved at a meeting, at which the settlor was present, to invest the sum of £40,100 when received in the purchase of the settlor's shares in John Vicars & Co. Pty. Ltd., and, pursuant to this resolution, the settlor, while still at Canberra, executed a transfer of these shares to the trustee company, and the trustee company paid the sum of £40,000 to the settlor by drawing a cheque on its account at Canberra for that amount, the proceeds of which the settlor applied in reduction of his overdraft: at the head office of his bank. The sum of £100, the balance of the sum of £40,100, was applied by the company in paying stamp duty on the transfers of the shares. At the date of the settlor's death, the shares, which were still held by the trustee company on the trusts of the settlement, were worth £40,000.

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in New South Wales or elsewhere, and wherever domiciled, death duty shall be assessed and paid on the final balance of the estate as determined in accordance with the Act. Section 102 describes the property to be included in the dutiable estate. This falls into two main categories, namely property actually owned by the deceased at the date of death, and property notionally made part of his estate for the purposes of duty. Section 102 (1) (a) provides that the actual estate shall consist of the property of the deceased situate in New South Wales at his death. The categories of property notionally made part of the dutiable estate are enumerated in s. 102 (2), but this sub-section does not contain any provision corresponding to that contained in sub-s. | (a) restricting the notional estate to property situate in New South Wales at the date of death. But the Inter- pretation Act of 1897 (N.S.W.), s. 17, provides that in an Act all refer- ences to localities, jurisdictions and other matters and things shall, unless the contrary intention appears, be taken to relate to such localities, jurisdictions and other matters and things in and of New South Wales. These vague words appear to be intended to give statutory effect to the rule of construction that, in the interpretation of statutes, the courts will presume, so far as the language admits, that general words should be read subject to accepted rules of inter- national law, and therefore as not intended to apply to persons or things to which in accordance with those rules they should not be made to apply (Polites v. The Commonwealth (1)). An example of the application of this presumption to taxation laws will be found in Colquhoun vy. Brooks (2). Although the general words of s. 102 (2) are wide enough to apply to notional property at all times situate outside New South Wales and to persons dying anywhere whether domiciled in New South Wales or not, such an extended meaning would not only infringe the provisions of s. 17 and be opposed to this tule of construction but would place the legislation beyond the constitutional power of the State Parliament : Commissioner of Stamp Duties (N.S.W.) y. Millar (3). But the general words could not, in view of s. 101, be restricted to cases where the deceased was domiciled in New South Wales at the date of death, so that the only limitation open was a limitation to property situate in New South Wales at some appropriate date. In the case of gifts made within three years of death, there was a choice between the date of gift and the date of death. But the latter date was the only appropriate date for other categories of notional property included in the sub-section. Other

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will, whether with or without any instrument in writing, without full consideration in money or money's worth, and " disposition of property " to mean, inter alia, " any payment," " the creation of any trust," and "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," whether in any of these cases the disposition is effected with or without an instrument in writing. The disposition for which there was no consideration and which diminished the value of the estate of the settlor in the present case was the payment of the money to the trustee company. The sale of the shares was for full consideration, and so was not a gift within the meaning of the section. The property comprised in the gift was, therefore, at the date of the gift situate outside New South Wales. But the crucial date is the date of death, and I can see no reason why, although the property comprised in a gift made within three years of death was then situate outside New South Wales, the transaction should not fall within s. 102 (2) (b) if the property was in New South Wales at the date of death. There is nothing in the judgments in Watt's Case (1) to suggest that the property must be in New South Wales at the date of gift as well as at the date of death. And I do not think that the addition of par. ba to s. 102 (2) altered the construction of s. 102 (2) (b). Tt would seem that par. ba was added to the Act to bridge the gap disclosed by the decision in Watt's Case (1), so that, since the property there in question was situate in New South Wales at the date of gift, the legislature presumably only had in mind, and was intending only to provide for, cases where property situate in New South Wales at that date could not be included in the dutiable estate, because at the date of death it had ceased to exist in any identifiable form in New South Wales, or, being still in an identifiable form, it was then situate outside New South Wales. The present gift, s ince it was a gift of property then situate outside New South Wales, is not therefore within s. 102 (2) (ba), and the question is whether it is within s. 102 (2) (b). Subject to the effect of the paragraph added by the Act of 1939 to s. 102 (2) (b), the answer to this question depends upon whether the shares which were purchased with the money and which were situate within New South Wales at the date of death can be described as " property comprised in the gift." If this expression is given a precise meaning, it would only apply to the exact property given, but it is the property comprised in a giff made at any time within a period of three rs before the date of death which at that date has to be identified, valued and

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