Holt v Deputy Federal Commissioner of Land Tax (NSW) [1914] HCA 26; (1914) 17 CLR 720 (16 April 1914)

HIGH COURT OF AUSTRALIA

Holt Appellant; and The Deputy Federal Commissioner of Land Tax, New South Wales Respondent.

H C of A

16 April 1914

Griffith C.J., Barton, Isaacs and Powers JJ.

Knox K.C. (with him Harper), for the appellant.

Campbell K.C. (with him Pike), for the respondent.

Knox K.C., in reply.

Griffith C.J.

The question in this case is whether the appellant is a legal tenant for life within the meaning of sec. 25 of the Land Tax Assessment Act 1910-1911. That section provides that the owner of any freehold estate less than the fee simple shall be deemed to be the owner of the fee simple, with a proviso that "for the purpose of the assessment of a legal tenant for life of land, without power to sell, under a settlement made before 1st July 1910, or under the will of a testator who died before that day," certain privileges shall be granted, and the assessment is to be on a lower basis. The appellant's title is under the will of a testator who died in 1888, by which the land in question was devised to the testator's "Australian trustees and their heirs to the uses following that is to say To the use of my son Frederick Samuel Ellis Holt for his life without impeachment of waste with remainder to the use of" the appellant for his life without impeachment of waste, with remainder in tail. The appellant's father, F. S. E. Holt, is dead. The land is under the Real Property Acts and the appellant has not procured himself to be registered as proprietor of the life estate given to him by the will, as he might have done. The will itself cannot be registered under the Acts, so that the provisions relating to registered instruments have no application.

The first question to be considered is what is the true nature of the rights of the appellant under the will. The language of the will is within the Statute of Uses. The effect of that Statute, if applicable, apart from the Real Property Acts, is to vest the legal estate in the land in the appellant for his life. The trustees were merely devisees to uses. The Real Property Act 1862 repealed all laws inconsistent with its provisions, and, so far as relates to conveyances or transfers of land which has been brought under the Act, the provisions of the Statute of Uses have no application. But the Statute of Uses also applied to wills, and there is nothing in the Real Property Act inconsistent with it so far as it prescribed a rule for the construction of wills. The effect is that the land was given directly to the appellant for life, and under the Real Property Act he is entitled to be registered as the proprietor of a life estate in the land.

The question is whether he is a legal tenant for life. The Commissioner has held that he is an equitable tenant. The real question is what is the meaning of the expression "legal tenant for life" as used in sec. 25 of the Act.

As the Act originally stood the word "legal" was not included, and the proviso enured for the benefit of all tenants for life, legal or equitable, and this Court so held in Sendall v. Federal Commissioner of Land Tax[1]. Then the legislature amended the law by inserting the word "legal." In doing so what did they mean? The appellant is entitled to the land and is entitled also to be registered as the proprietor of an estate for life in it. No one else is entitled to be registered in respect of it as trustee or otherwise.

In my opinion the term "legal tenant for life" as used in the section imports a distinction between a legal and an equitable tenant for life. I accept Mr. Knox's definition of the term as meaning the person who holds his estate without the intervention of a trustee. That is the case of the appellant. There is no trustee, and there is no one else entitled to any estate or interest in the land. The appellant is certainly not an equitable tenant for life. In my opinion he is the legal tenant for life within the meaning of the section, and is entitled to the benefit of the proviso.

Barton J.

I am of the same opinion. I think that the matter is too clear to necessitate any further discussion by me.

Isaacs J.

I also agree that the appellant is a legal tenant for life. The contention that he is not is rested upon the Real Property Act, and that involves the further contention that he is an equitable tenant for life. I see no ground for holding him to be an equitable tenant for life. The contention is based, as it seems to me, upon a false analogy, which I shall presently indicate. The Real Property Act, in Part VII., prescribes certain rules as to dealings with land—transfers, mortgages, and incumbrances. Those are cases where a person who is a registered proprietor and has vested in him the legal estate purports to pass from himself to another that estate or portion of it. Sec. 41 applies to such a case when it says that "no instrument, until registered in manner hereinbefore prescribed, shall be effectual to pass any estate or interest in any land under the provisions of this Act, or to render such land liable as security for the payment of money, but upon the registration of any instrument in manner hereinbefore prescribed, the estate or interest specified in such instrument shall pass, or as the case may be the land shall become liable as security" &c. Sec. 39 prescribes that "the Registrar-General shall not register any instrument purporting to transfer or otherwise to deal with or affect any estate or interest in land under the provisions of this Act, except in the manner herein provided, nor unless such instrument be in accordance with the provisions hereof." That obviously could not refer to a will, and, if there were no other provisions in the Act, one would be constrained to say that sec. 41 did not apply to the present case. But there are other provisions in Part XI. which deals with transmissions. Now transmissions are a subject of a totally different nature. A transmission is where an estate passes by operation of law—at all events a transmission referred to in this Act, such as a transmission on bankruptcy, insolvency, death or marriage,—and the prohibition against an instrument passing an estate has no application to the case of an event, not being an instrument, having a legal operation and an estate passing, not by virtue of an instrument, but by operation of law.

It must not be forgotten that the whole scheme of this Act is based fundamentally on the Merchant Shipping Acts of England, and a distinction between transfers by acts of the parties and transmissions by operation of law has been established for over a century in regard to merchant shipping. The distinction is pointed out in Chasteauneuf v. Capeyron[2]. In my opinion the appellant could not be called an equitable tenant for life for this reason, that in ordinary cases an equity arises, not by the execution of an instrument of transfer, but by virtue of a relationship between the parties created in some other way—by contract, or declaration of trust, or something of that sort. It is not the instrument that makes a man an equitable tenant, but it is a relationship otherwise created, the instrument being to effectuate that purpose. But in this case no other relation existed but that created by the will, and the law comes in and says that the appellant, the person to whom the use is given, is the owner of the property.

With regard to the case of Little v. Dardier[3], I express no opinion upon it, and I should need further consideration before doing so.

Powers J.

I agree that the appellant is entitled to be assessed as legal tenant for life.

First question answered in the affirmative.

Solicitors, for the appellant, Cape, Kent & Gaden.

Solicitor, for the respondent, Gordon H. Castle, Crown Solicitor for the Commonwealth.

[1] [1911] HCA 75; 12 C.L.R., 653.

[2] 7 App. Cas., 127.

[3] 12 N.S.W.L.R. (Eq.), 319.