Adams v Federal Commissioner of Land Tax [1919] HCA 42; (1919) 26 CLR 341 (12 August 1919)

HIGH COURT OF AUSTRALIA

Adams Appellant; and The Federal Commissioner of Land Tax Respondent.

H C of A

12 August 1919

Barton, Isaacs, and Rich JJ.

Campbell K.C. (with him Weston), for the appellant.

Leverrier K.C. (with him McTague), for the respondent.

Campbell K.C. in reply.

Barton J.

This question need not be dealt with at any length. The testator, as to his properties in Pitt and George Streets, left them to the trustees on trust to carry on the business in which he was engaged at the time of his death. He directed his trustees out of the net profits of the business and rents of the properties to pay certain "annuities or yearly sums of money" to named persons for their lives. Then followed a clause by which, "subject to the payment of the aforesaid annuities or yearly sums," he directed his trustees to pay the net profits annually to his nephew, the present appellant.

Now, it seems to me that subject to the payment of the annuities the appellant was to receive the whole of the rents and profits. In my opinion the appellant therefore came within the definition of in sec. 3. It is claimed that he and the annuitants are joint owners. For that to happen the annuitants must also fall within the definition of "owner." I cannot see any clause of it under which they can come. They are not entitled to the land for any estate of freehold in possession, nor are they entitled to receive, or in receipt of, or if the land were let to a tenant would they be entitled to receive, the rents and profits thereof. The terms of the will are against that contention. Nor do the annuitants come within the definition of "joint owners," because joint owners must be persons who "own" land jointly or in common, whether as partners or otherwise, or persons who have a life or greater interest in shares of the income from the land. The annuities given to them are not "shares" in the estate or in its income. There is not a vestige of any designation by which they can come within the definition. If we were to allow the claim of the appellant we should in my view be overruling Cochrane v. Federal Commissioner of Land Tax[1]. Not only do I speak with sole reference to the point actually decided in that case, for the reasoning of Griffith C.J., with which it was my lot to concur, seems to me to be decisive to show that annuitants for life, under circumstances sufficiently similar to these for the purpose of comparison, are not "owners." I see nothing in what Mr. Campbell has so strenuously and so carefully urged to differentiate that case from this. I am therefore of opinion that the appellant is the beneficial owner of the land and that the annuitants are not owners, and therefore cannot be joint owners with him, or he with them.

I am of opinion that the questions should be answered: (1) "No"; (2) "On the basis adopted by the Commissioner."

Isaacs J.

I agree, and wish to add only a few words. On the construction of the will the appellant is the equitable life tenant and he has that interest subject to the payment of the annuities. Those annuities do not constitute the takers of them owners of the land either within the meaning of the Act or apart from it. On two grounds I hold that that is so: first, because Cochrane v. Federal Commissioner of Land Tax[2] is decisive—this is an à fortiori case; and, secondly, because even apart from that case I arrive at the conclusion that the takers of the annuities, who on the construction of the will receive a gift not of an interest in the land or its rents and profits, but of an annuity out of the rents and profits, are not "owners" within the meaning of the Act.

Rich J.

I agree, and I have arrived at the same opinion as my brethren apart from the decision in the case which has been cited, basing my judgment solely upon the ground that the gifts to the annuitants are pecuniary legacies charged on the land and are not devises or interests in the land.

Questions answered as follows: (1) No; (2) On the basis adopted by the Commissioner.

Solicitors for the appellant, Sly & Russell.

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

[1] [1916] HCA 31; 21 C.L.R., 422.

[2] [1916] HCA 31; 21 C.L.R., 422.