Cox v Deputy Federal Commissioner of Land Tax, Tasmania [1914] HCA 3; (1914) 17 CLR 450 (18 February 1914)

HIGH COURT OF AUSTRALIA

Cox and Others Appellants; and The Deputy Federal Commissioner of Land Tax, Tasmania Respondent.

H C of A

18 February 1914

Griffith C.J., Barton and Gavan Duffy JJ.

Waterhouse, for the appellants.

L. L. Dobson, for the respondent.

Waterhouse, in reply.

Griffith C.J.

The appellants in this case are the trustees of the will of John Claude Cox, who died in 1909. By his will he devised and bequeathed all his real and personal property to the trustees, and directed them to carry on his business of farmer and grazier on his real estate known as "Clarendon" until his eldest surviving son should attain the age of 21 years, and to pay the net profits arising from the business to his widow until that time. He further directed that the estate should be held upon trust for his eldest surviving son who should attain that age, and that if none of his sons should become entitled to the estate it should be held upon trust for his brother Trevor Cox. He also directed that until his eldest surviving son should attain the age of 21, his widow should be entitled to reside in and occupy his dwelling-house at Clarendon. The testator left two sons, one born in May 1902 and the other in July 1905. In 1911 the appellants duly made a return for the purposes of federal land tax, in which they claimed that upon the proper construction of the will the widow was a tenant for life without power to sell within the meaning of sec. 25 of the Act of 1910, and was entitled as such to the benefits of that section. This would have had the effect of reducing the assessable value of the estate from about £8,000 to about £1,400. Their contention was in the first instance accepted, and land tax, computed on that basis, was duly paid. Later in the same year an amended assessment was made by the Commissioner, in which he refused to give effect to this contention, and claimed that the value of the land should be assessed upon the footing of the widow being taxable as an absolute owner. The result was to increase the amount of the tax by something over £30. The trustees thereupon gave notice of appeal against that amended assessment on the ground that the widow was entitled to the benefit of sec. 25. The appeal was set down for hearing in this Court, but before it could come on for hearing the respondent gave notice to the appellants that he submitted to their contention. They thereupon gave notice to the Registrar that the appeal was withdrawn, and the respondent paid them their costs of the appeal, and refunded to them the excess amount which they had, as required by law, paid as soon as the amended assessment was made.

So the matter appeared to have ended. But in 1913 the respondent issued a notice purporting to be an amended assessment, in which he re-asserted his former claim of 1911. The trustees object that under the circumstances I have stated the respondent is precluded from doing so. They contend that the proceedings which took place upon the appeal of 1911 had the effect of a settlement of a matter in litigation between parties, and further that in effect the respondent is now seeking to recover from the appellants a sum of money which was paid by him to them under an alleged mistake of law, namely, thinking that the widow was entitled to the benefit of sec. 25 of the Act.

The first question submitted by the case is whether the respondent is so precluded. Though some doubt has occurred to my mind during the progress of the case, I have come to the conclusion that he is. The matter was in actual litigation between the parties in the manner prescribed by the Act. While that litigation was pending an agreement was come to by which the respondent submitted to the appellants' claim, paid their costs and paid the amount claimed from him. Under those circumstances it seems to me impossible to re-open the matter. Although it is not, strictly speaking, res judicata, the compromise followed by payment operates as an executed agreement for valuable consideration. No reason has been suggested why, having regard to the provisions of the Act as to appeal and the direction that money held by the Court to have been overpaid shall be refunded, such an agreement should not be binding on the Crown. I think the same effect should be given to this compromise as to a compromise of an action for the recovery of money paid under compulsion. An appeal under the Act is, in substance, such an action, and it would be strange, indeed, if in such a case, where the money claimed has been recovered by the action upon a settlement of it, the defendant should afterwards be allowed to bring another action to recover it back from the plaintiff. I think, therefore, that the first question should be answered to the effect that the respondent was precluded from issuing the notice of 22nd February 1913.

As to the other point I will say a few words, as it has been fully argued, and an expression of opinion upon it may be useful in other cases, although, under the law as it now stands, it cannot affect the extent of the appellants' liability to taxation in future. I have already stated the terms of the will. It was contended by Mr. Waterhouse—and for some time I was disposed to accept his contention—that, upon a proper construction of the will, the widow is a tenant for life according to the meaning of that term at common law. But on further consideration I have come to the conclusion that the true position of the widow is that she has an estate for years. It is true that estates for years are generally created by demises inter vivos. But there is no reason why they should not be created by will. If an estate for years is so created it is not, of course, an estate for life. In my opinion what was given to the widow was an equitable estate for a term the maximum duration of which was 21 years from the birth of the younger son, which was in July 1905, that term being subject to determination in either of three events: first, the earlier attainment of the age of 21 by the elder son; secondly, the death of both sons; and, thirdly, the death of the widow herself. It is settled that an estate created, by whatever means, for a fixed term or with a defined end subject to prior determination by the death of the grantee, is an estate for years, and not an estate for life. If it is determinable upon any other contingency it is none the less an estate for years, and not an estate for life. I think, therefore, that if the case had rested on the second point alone the respondent would not have been entitled to the benefit of sec. 25.

Barton J.

I agree in the conclusion at which the learned Chief Justice has arrived as to the first question, and for the same reasons. As to the second question, as the case is concluded by the answer to the first question it seems to me unnecessary to answer it, but I am inclined to the same view which the learned Chief Justice has taken.

Gavan Duffy J.

I agree with the answer which the learned Chief Justice has made to the first question for the reasons which he has given. In the circumstances, I think it unnecessary to make any judicial determination in respect of the second question.

The first question answered in the negative.

Solicitors, for the appellants, Ritchie & Parker, Launceston, by Simmons, Wolfhagen, Simmons & Walch.

Solicitor, for the respondent, Gordon H. Castle, Crown Solicitor for the Commonwealth, by Dobson, Mitchell & Allport.