Commissioner of Taxes (Vic) v Currie [1916] HCA 6; (1916) 21 CLR 157 (24 February 1916)

The Commissioner of Taxes for Victoria Defendant, Appellant; and Currie and Others Plaintiffs and Defendant, Respondents.

The only question arising for consideration in this case is as to the construction of sec. 112 of the Administration and Probate Act 1890. That section is included in Part V. of the Act which is headed "Duties on Deceased Persons' Estates," and deals entirely with that subject. Part V. is a re-enactment of earlier provisions which were first found in a Statute of 1870.

The general scheme is that executors and administrators must make statements giving particulars of the estates of deceased persons, which are to be examined by an officer of the Court. Duty on the value as ascertained by him at the rate fixed by the Act is payable by the executors or administrators before the grant of probate or administration. It was decided in Blackwood v. The Queen[1] that under those provisions duty is payable only on property which is subject to the legislative authority of the Parliament of Victoria. Immediately following upon those provisions is sec. 112, of which I will read the material parts. "Every settlement of any property made on or after the 16th day of December 1870" (which is the date of the commencement of the original Act of 1870) "by any person containing trusts or dispositions to take effect after his death, shall upon the death of the settlor be registered within the prescribed time ... and no such trusts or dispositions shall be valid unless such settlement be so registered ... No settlement shall be registered unless the trustees or some other person interested under the settlement have filed a statement setting forth the nature of the property comprised in such settlement and the value thereof. ... The trustees of any such settlement or some other person shall pay the duty mentioned in the Seventh Schedule to this Act ... If any such settlement be not registered within the prescribed time ... the Master may assess in the prescribed manner the duty payable under this Part of this Act in respect of such settlement, and if such duty be not paid within the prescribed time ... the Master or any person interested may apply to the Court" (that is, the Supreme Court of Victoria) "which may order that a sufficient part of the property included in such settlement be sold and the proceeds of such sale applied in payment of the duty and of the order and sale and consequent thereon." The rate of taxation fixed by the Act of 1890 was exactly the same as in the case of probate or administration, but it has since been altered by the Administration and Probate Act 1903.

It must be observed, in the first instance, that the settlement to be registered is a settlement subsisting at the death of the settlor. Its original date is quite immaterial, provided it is after the date mentioned in the section. It is equally immaterial to consider what property was originally comprised in the settlement. The only question is what is the property subject to the trusts of the settlement at the death of the settlor.

The next question is what is the meaning of the words "any property"? According to ordinary rules of construction those words must be limited to property in respect of which the Parliament of Victoria has power to legislate. I do not cite authority for that position, as none is needed. Further, the reasoning in Blackwood v. The Queen[2] is exactly applicable to this case, and no reason can be suggested for imputing to Parliament a different intention in respect of settled property from that which they had with respect to property passing to executors or administrators. The word "property" in the phrase "the property comprised in such settlement" must be read in the same sense.

If there were any room for doubt as to the intention of the Legislature, it is, in my opinion, removed by the provision in the last paragraph of sec. 112 for the recovery of the duty. The obligation to pay the duty is not imposed upon any particular person, but if it is not paid the Supreme Court has jurisdiction given to it to dispose of a sufficient part of the property to pay it. It is inconceivable that the Legislature intended to enact a futile provision that property not subject to the jurisdiction of the Supreme Court might be ordered by it to be sold. Hood J. was of that opinion. He expressed it by the declaration which he made, namely, that "duty is payable in respect of such property comprised in the said settlements at the date of the death of the settlor as would have been liable to probate duty had it belonged to the settlor at that time." As the subject matter of taxation is the same in both cases, that is, the case of a settlement and the case of a will or intestacy, that is a convenient formula for describing the property in respect of which the duty is payable.

This appeal gives rise to two questions—the first is the true scope and meaning of sec. 112 of the Administration and Probate Act 1890 as amended by the Act of 1903, and the second is the application of the section, when properly construed, to the facts of this case.

Sec. 112.—The provision was originally introduced in its main form in 1870 in the Statute No. 388 and called the "Duties on the Estates of Deceased Persons Statute 1870." That Act, actually assented to on 29th December 1870, provided, by sec. 1, that it should come into operation on and from 16th December 1870. It provided for duties on probate of wills and letters of administration (sec. 8), and in respect of settlements of property made after 15th December 1870 to take effect after the death of the settlor (sec. 20). From the outset, therefore, the second set of duties was complementary to the first, and part of the same scheme. The consolidation Act of 1890 made no change. The Act No. 1815, passed in 1903, extended the scope of the enactment as to settlements, altered the scale of taxation, and made some subsidiary provisions.

Looking at its language as applied to the subject-matter and at its history, and bearing in mind the primary rule of construction that legislation is primarily territorial (Cooke v. Charles A. Vogeler Co.[3] and Blackwood's Case[4]), the meaning of sec. 112, in my opinion, may be thus stated. On the death of any person, which is the common feature in the case of wills, intestacies and settlements, the question arises whether there then takes effect any settlement made by him in any part of the world on or after 16th December 1870 of property which, by reason either of its actual corporeal situation or its legal attribute of locality (see Commissioner of Stamps v. Hope[5] and Payne v. The King[6]), is, at the time of the settlor's death, in Victoria. The local attribution of locality is entirely independent of the domicile of the settlor (Blackwood's Case[7]). If there is a settlement which then takes effect as to such property, the settlement must be registered; otherwise it is, as to the trusts and dispositions of such property, but not further, inoperative in Victoria. Registration of the settlement in Victoria is thus made essential to title, and so placed on the same footing as the grant of probate of a will or the issue of letters of administration.

Similarly, also, a statement of the property comprised in the settlement, that is, then comprised in the settlement, is required both as to nature and value. And when the Commissioner certifies that statement as correct, duties are collected as directed by the Schedule. The Schedule says "on all settlements of property both real and personal" &c.; then follow the graduated rates. The crux of the matter is what is meant by "property real and personal"? Does it mean property in Victoria only, as the respondents contend; or does it mean, as the appellant contends, either property in Victoria originally settled and continuing in the same form down to the settlor's death, or property anywhere else in the world provided it is subject to the settlement as representing in a changed form originally settled Victorian property?

The appellant's interpretation is met by the rule of territorial construction already referred to. The words "property real and personal" in the Schedule mean primarily property in Victoria, and there are no words to extend them to property outside Victoria.

The decision in Blackwood's Case[8], it is true, was concerned with probate of a will and administration in intestacy whereby the local Legislature authorized dealing with local property; and it is true the present case deals with an instrument of a party which might affect property anywhere. But the Legislature, by making title depend on local registration also, is affecting the title to property which must on ordinary principles of legislative authority be in Victoria. Indeed, in Blackwood's Case, one of the reasons given by the Judicial Committee was expressed in these terms[9]:—"Their Lordships think that, in imposing a duty of this nature" (probate), "the Victorian Legislature also was contemplating the property which was under its own hand, and did not intend to levy a tax in respect of property beyond its jurisdiction." I cannot suppose in a case really complementary of that, where registration of an instrument is made the analogue of the probate of a will or the issue of letters of administration, that the Legislature has changed its intention and brought into its taxing and invalidating provisions property not within its jurisdiction. Not only is this improbable on the face of it, but the enforcing provisions by sale in sec. 112 itself and by vesting order in sec. 114 are consistent only with an intention to apply them to property within the territory, if the full validity of the enactment is to be maintained. The transmutation argument is based on the notion that the settlor's Victorian property once settled becomes forthwith charged, so to speak, with the duty, payable when the settlor dies, and thus the duty cannot be evaded. But as it is conceded that the statement of property is to contain only the substituted property, and that the value of that substituted property is to govern the amount of duty paid, it is evident that the dutiable value has no relation whatever to the value of the original property and may be more or less than that value. Indeed, if before the settlor's death all the trust property has vanished, there is nothing payable, however great the property originally settled. In Rosenthal v. Rosenthal[10] I said of a settlement:—"Events may affect its operation so that the person who might have taken the property under it does not take any interest by virtue of the settlement. In that case the consequence is that there is nothing to invalidate, that registration is unnecessary, and that the words of the taxing Schedule would not apply to the case." I adhere to that now. But if there is substituted trust property, the new property, having been substituted in the lifetime of the settlor by persons he has placed in a position to do so, may well be regarded as settled by him instead of the original property, and it is really the settled interest in the substituted property which passes on his death to the beneficiary, and is taxable, provided it is Victorian.

The second question is how to apply those doctrines to the settlement now under consideration. It is accepted by both sides that the property comprised in the settlement at the settlor's death consisted of the eleven items enumerated in par. 4 of the affidavit of the respondents (plaintiffs). The matter is therefore free from any controversy as to breach of trust calling for determination as to the real trust property, and is to be determined precisely as if it were a case of probate in respect of the enumerated properties, and without reference to the history of the transaction or transactions by which that property became subject to the trust.

I agree. In my opinion the general intention of the Legislature was to enforce the registration of settlements containing trusts to take effect after the death of the settlors in order that property which then would have been liable to pay probate duty if the settlements had not been made might not escape taxation. It is probable that the Legislature assumed that the property originally settled would always remain unchanged in its nature from the time of the making of the settlement till the death of the settlor, at all events I can find nothing in the Statute sufficient to establish the proposition which was submitted to us by Mr. Weigall with his accustomed lucidity, and which may be stated thus: If property originally settled be such that had the settlor died immediately before the date of the settlement it would have been liable to pay probate duty, then so much of such property and of the proceeds thereof arising through realization and reinvestment as is comprised in the settlement at the death of the settlor remains liable to taxation under sec. 112 of the Administration and Probate Act 1890. I therefore think that the judgment appealed from is right, and the appeal should be dismissed.

[1] 8 App. Cas., 82.

[2] 8 App. Cas., 82.

[3] (1901) A.C., 102, at p. 107.

[4] 8 App. Cas., 82.

[5] (1891) A.C., 476.

[6] (1902) A.C., 552, at p. 560.

[7] 8 App. Cas., 82.

[8] 8 App. Cas., 82.

[9] 8 App. Cas., at p. 98.

[10] [1910] HCA 47; 11 C.L.R., 87, at p. 96.

High Court of Australia

Commissioner of Taxes (Vic) v Currie [1916] HCA 6; (1916) 21 CLR 157 (24 February 1916)

HIGH COURT OF AUSTRALIA