Osborne v Federal Commissioner of Taxation [1921] HCA 10; (1921) 29 CLR 169 (13 April 1921)

HIGH COURT OF AUSTRALIA

Osborne and Others Appellants; against The Federal Commissioner of Taxation Respondent.

H C of A

13 April 1921

Knox C.J., Gavan Duffy and Rich JJ.

Leverrier K.C. (with him J. A. Browne), for the appellants.

Weston (with him Braddon), for the respondent.

The judgment of the Court, which was delivered by Knox C.J., was as follows:—

Knox C.J.,

Gavan Duffy and Rich JJ.

The questions submitted by this case turn entirely on the construction of section 8 (4) (a) of the Estate Duty Assessment Act 1914-1916, and that section must be construed in the light of the provisions of the Act taken as a whole. This Court has laid down in several cases, including the case of Jackson v. Federal Commissioner of Taxation[1], to which my brother Rich has referred, that the scheme of the Act was to tax the estate of a deceased person in respect of all property which that person owned at the date of his death, and also in respect of all property which he had previously owned but had disposed of under circumstances which, in the opinion of the Legislature, indicated that he had disposed of it in order to avoid payment of the duty which would have been payable if he had retained it up to the time of his death. We are satisfied that that is the scheme of the Act, and, if the words of the section under consideration can fairly be read consistently with that scheme, it is proper so to read them.

The sub-section itself is not from any point of view very artistically expressed. Mr. Weston very fairly admits that on his construction of the sub-section the words "being property" are redundant. We see no reason why, having regard to the scope and object of the Act, the words "which passed from the deceased person," which are found at the beginning of the sub-section, should not govern, as we think they were intended to govern, both the property mentioned in the latter part of the sub-section and that mentioned in the former part. As a matter of grammar they are capable of being read in this way, and so reading them the sub-section falls into line with the rest of the Act. Where a life tenant does not dispose of his life estate before his death no duty would be payable in respect of the life interest under this Act, but to put upon the sub-section the construction contended for by Mr. Weston would lead to the absurd result that if the life tenant during the last year of his life made a voluntary disposition of his life interest his estate would be liable to pay duty not merely on the value of his life interest but also on the capital value of the settled property of which he was not in any sense the owner.

For these reasons we think that the corpus of the property comprised in the settlement is not liable to duty under the Act, and that the questions should be answered: (1) No; (2) No; (3) Yes.

Questions answered accordingly.

Solicitors for the appellants, Wilkinson & Osborne.

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

[1] [1920] HCA 27; 27 C.L.R., 503.