Baird v Federal Commissioner of Land Tax [1915] HCA 8; (1915) 19 CLR 490 (26 February 1915)

Baird and Others Appellants; and The Federal Commissioner of Land Tax Respondent.

The appellants are the six children of a testator who died before that day, leaving his real estate and the residue of his personal estate to trustees upon trust for realization with power of postponement, and after realization to stand possessed of the proceeds upon trust, in the events that have happened, for his children, his daughters (four) taking life interests only. Until realization the income from the land was to be deemed income from his residuary estate.

The questions for determination arise under the Land Tax Assessment Act as originally passed in 1910. Most of the provisions upon which they arise have since been altered or amended, and similar questions are not likely to arise in future.

The unimproved value of the land of the testator calculated according to the provisions of that Act was £50,588.

The first question submitted is whether the appellants were or are to be regarded as having been on 30th June 1910 joint owners of the land within the meaning of the Land Tax Assessment Act.

In my opinion this question should be answered in the affirmative. I do not think it necessary to give reasons at length for this conclusion. It is sufficient to say that on 30th June 1910, the relevant date, all the children were entitled to equitable life interests or greater interests in the land.

After their father's death the appellants became jointly entitled to other land the property of their mother, who died intestate on 11th January 1910. The unimproved value of this land was £1,326.

The second question submitted is whether under these circumstances the appellants are to be regarded as having been on 30th June 1910 joint owners within the meaning of the Act of the aggregate of the land held by the trustees of their father's will and of the land held by their mother's administrator.

In my opinion they must be so regarded. They were the equitable joint owners of both properties. By sec. 38 joint owners are to be regarded as a single person. The statutory single person is therefore the same with respect to both estates, and "all the land owned by him" is to be aggregated for the purpose of land tax (sec. 11).

The third proviso of sec. 33 of the Principal Act (since repealed) was as follows:—

The father's estate was clearly within the terms of this proviso, and in the assessment of land tax against the trustees they were entitled to the deductions allowed by it. We are informed that in the first instance they were assessed and paid the land tax on this basis. But the Commissioner now contends that they are deprived of the benefit of the proviso by reason of their beneficiaries being also equitable joint owners of the mother's estate. The object of the proviso was plainly to confer a privilege on the beneficiaries, not on the trustee. Sec. 35 provides that the owner of an equitable estate or interest in land is to be assessed and is liable as if he were the legal owner of the estate or interest. The words of the proviso, read literally, are exactly applicable to the case, for it can be predicated of the father's estate that it was vested in trustees upon trust for the benefit of a number of persons relations of the testator, in which case "for the purpose of ascertaining the taxable value of the land owned by him as such trustee" the deductions claimed were to be made. The land owned by him as trustee is the same land whether he s taxed or the beneficiaries are taxed in respect of it, and the Act, so far from saying that the taxable value is to be assessed on a different basis according to the person against whom the assessment is made, says by sec. 35 that it is to be taxed on the same basis. Having regard to the object of the proviso, as already pointed out, I am of opinion that in such a case the beneficiaries are not deprived of the benefit of it by reason of their joint ownership of other land. I am therefore of opinion that the third question, which is whether the deductions authorized by the proviso to sec. 33 should be made in their assessment as joint owners of land, should be answered in the affirmative.

The result is that the taxable value of their estate is £20,588 (that is, the total value of £50,588, as stated in the case, less six deductions of £5,000) plus £1,326, that is, £21,914. The claim for a further deduction of £5,000 obviously cannot be allowed. The result will be an addition of about £16 to the taxable value of the appellants' estate.

The Commissioner in this case contends that where "joint owners" within the meaning of the Land Tax Assessment Act 1910 are assessed under sec. 38 of that Act as originally framed, they have no right to the benefit of the third proviso to sec. 33 as that section then stood unless the land referred to in that proviso constitutes the whole of the land assessed under sec. 38. The argument was that under sec. 38 the assessment must be for all the land owned by the joint tenants, and that the special deduction under the third proviso to sec. 33 could not apply to land not the subject of the settlement.

But the main object of sec. 38 as it then stood, was to provide that in case of joint ownership all the land owned by joint owners should primarily not be regarded as divided into as many pieces as there were joint owners, but that their statutory joint ownership of the whole land should be regarded in its entirety. The section was framed without limitation of time. It assumed for the joint ownership one general deduction of £5,000. Separate interests were provided for by separate assessments, but as a secondary consideration. The section was of general application. Sec. 33, however, specially applying to trusts, did, by the third proviso, further contain a special provision as to time, and the central point to remember about this is, that it was to do what the legislature conceived to be justice to certain beneficiaries in relation to certain land. There is no dispute that the trustee validly claimed the special deduction. But for whose benefit? Not his own. And the proviso does not say that the deduction can only be claimed where the beneficiaries are not possessed of any other land. It was not denied that if the beneficiaries owned no other land than that comprised in their father's estate they would be entitled to the substituted deduction under the third proviso to sec. 33, notwithstanding their own assessment was made under sec. 38. That right would exist, because one rule for the construction of Statutes is that where a special provision and a general provision both cover a given subject, the special provision governs it (see per Quain J. in Dryden v. Overseers of Putney[1]). But if the right would attach in that case, what words take it away when there is other land? Provided the value of that other land is counted in, and no double deduction is allowed, I am of opinion that the special consideration allowed by Parliament to the specified instance, and admitted in the case of the trustee, cannot be refused to the persons whom the trustee represents and in whose interests it is allowed to him. As to whether the appellants are joint owners of the father's estate, I am of opinion they are covered by paragraph (b) of the definition of "owner" in the Act, because on assessment day they were jointly entitled in equity to receive the rents and profits of the land. With regard to the mother's land, they are joint owners for the reasons stated by Lord Macnaghten in Blake v. Bayne[2] following Cooper v. Cooper[3].

The same persons being joint owners of both the father's lands and the mother's lands are joint owners of the aggregate. The land itself is assessable under sec. 38 not the interests of the beneficiaries. They are regarded as joint owners of the land, and it is to be assessed (sec. 38 (2)) "without regard to their respective interests therein." So assessing it, I am not prepared to decide that by reason of any other provision in the Act the taxable value of the land belonging to the father's estate is less than £65,571, the unimproved value of the land itself. But as it has been assumed by both parties that the beneficiaries as joint tenants are taxable only on a basis of £50,588, the value of their interests, the Court is not called upon to give any decision on the point. I wish to guard myself from being supposed to decide that the assumption is correct.

In making the special deductions, the unimproved value of each share being more than £5,000, there is to be deduction of £5,000 for each of six shares, in all £30,000. The balance, plus £1,326, the value of the mother's estate, is £21,914, upon which the assessment should be made.

Questions answered:—1. Yes. 2. Yes. 3. Yes. 4. £21,914. Respondent to pay costs of special case. Case remitted.

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

[1] 1 Ex. D., 223, at p. 232.

[2] (1908) A.C., 371, at p. 384; 6 C.L.R., 178, at p. 188.

[3] L.R. 7. H.L., 53.

High Court of Australia

Baird v Federal Commissioner of Land Tax [1915] HCA 8; (1915) 19 CLR 490 (26 February 1915)

HIGH COURT OF AUSTRALIA