Daly v Victoria [1921] HCA 41; (1921) 29 CLR 491 (17 October 1921)

The testator, John Daly, had at the time of his death property both in New South Wales and in Victoria. The value of his New South Wales property was £40,584 and of his Victorian property £5,797. By his will he bequeathed a number of legacies payable on the death of his wife. Among these were legacies of £500 to the Little Sisters of the Poor, Northcote, Victoria, £500 to St. Vincent's Hospital at Melbourne, and £750 to St. Augustine's Orphanage at Geelong. It is admitted for the purpose of this case that these three legacies are public charitable bequests within the meaning of sec. 130 of the Administration and Probate Act 1915. The will contained no direction as to the fund out of which these legacies were to be paid.

The defendant claimed duty on the sum of £5,797—the net value of the testator's assets in Victoria. The plaintiffs paid the amount claimed under protest as to £61 7s. 7d., contending that by virtue of sec. 130 of the Act the sum of £1,023, being the present value of the three charitable bequests mentioned above, was exempt from liability to duty. The question is whether duty is payable in respect of the whole sum of £5,797. The decision of this question depends on the interpretation of sec. 130 of the Administration and Probate Act 1915. The material portion of that section is as follows:—(1) "No duty shall be payable under this Act in respect of any public charitable bequest or public charitable settlement, whether the public institution in whose favour such bequest or settlement is made is or is not in existence at the time of the making of the bequest or settlement. (2) In this section the term public charitable bequest means a devise bequest or legacy of real or personal property of whatever description to or for any public institution situate in Victoria and being" of certain specified classes. The enactment in sub-sec. 1 extended by taking in the definition of the expression "public charitable bequest" contained in sub-sec. 2 reads as follows: "No duty shall be payable under this Act in respect of any devise bequest or legacy of real or personal property of whatever description to or for any public institution situate in Victoria" of the classes specified in the subsequent portion of sub-sec. 2. In order to sustain their contention the plaintiffs must establish that the bequests above mentioned are "bequests of real or personal property" within the meaning of this section.

It is clear from the words of sub-sec. 1 that the object of the section is to exempt from liability to duty property in respect of which duty would, but for the provisions of the section, have been payable under the Act. It follows that in order to bring a bequest within the exemption it must be a bequest of property in respect of which but for the section duty would have been payable. Now, duty is only payable under this Act in respect of Victorian property (Blackwood v. The Queen[1]), and consequently the only bequests which can be brought within the exemption given by sec. 130 are bequests of Victorian property. The question therefore is whether the three bequests above mentioned are bequests of Victorian property. Under the terms of the will the executors are at liberty to pay these bequests out of either the New South Wales or the Victorian property of the testator; and neither the provisions of the will nor the circumstances of the estate require that they shall be paid wholly or in part out of the Victorian property. While the executors may, if they choose, properly pay these legacies out of the Victorian property, they are not bound to do so. On this state of facts I am of opinion that the legacies are not bequests of the Victorian property of the testator. A similar question arose on another provision of the Act in R. v. Butler[2]. The decision in that case was that the words "property devised or bequeathed to the widow of a testator" in sec. 129 relate to property in Victoria and, strictly construed, would justify a reduction of the percentage chargeable for duty only in cases where property in Victoria is specifically devised or bequeathed to the widow, but where it can be proved that a general legacy is necessarily payable either wholly or in part out of the proceeds of property in Victoria a reduction in the duty may be allowed. Where a legacy to a widow is not specific and it appears that there is property outside Victoria from which it might be paid, the burden of proving that the duty is subject to a reduction lies upon the executor. Mr. Latham, for the defendant, did not challenge the correctness of that decision, and it is therefore unnecessary to consider whether it was not unduly favourable to the executors. Accepting it as correct, I think it is in point in the present case. In that case as in this the executors might lawfully have satisfied out of the Victorian property of the testator the bequest in respect of which they claimed to be entitled to a reduction of duty, but in that case as in this neither the provisions of the will nor the circumstances of the case compelled them to do so.

In my opinion the exemption conferred by sec. 130 extends only to cases in which it is necessary for the executors either by reason of the provisions of the will or by reason of other circumstances to resort to the Victorian property of the testator in order to pay the charitable bequest.

For these reasons I am of opinion that the question submitted should be answered in the affirmative, and that judgment should be entered for the defendant with its costs of defence and the special case

I concur in the opinion that the question should be answered in the affirmative. Under sec. 128 duty is payable on the "final balance" of assets over liabilities—that is to say, Victorian assets over Victorian liabilities, as decided in Blackwood's Case[3]. But under sec. 130 no duty is payable "in respect of any public charitable bequest"; and "public charitable bequest" means "a devise bequest or legacy of real or personal property of whatever description to or for any public institution situate in Victoria" of certain specified kinds. The executors cannot, therefore, bring themselves within the exemption of sec. 130 unless they can show that the assets—Victorian assets—for which they seek exemption are devised, bequeathed or given to such an institution. This does not depend on presumptions as to construction, but rests on the plain, necessary intendment of the Act. Here we cannot find that any Victorian assets are devised, bequeathed or given to these institutions. These legacies, under the will, may be paid out of the New South Wales assets, as well as the numerous similar legacies given to New South Wales institutions. None of the Victorian assets are ear-marked or dedicated to the Victorian institutions. The exemption provided by sec. 130 is not an exemption of assets everywhere of testators who give legacies to such Victorian institutions: it is an exemption of Victorian property only which would be liable to duty but for the fact that it is given to Victorian public charitable institutions. Sec. 130 is an exception to sec. 128; and sec. 128 refers to Victorian assets only. As the Chief Justice says, the same point, substantially, was decided in the case of R. v. Butler[4]. There the Act provided a lower rate of duty for assets given to a widow than for assets given to strangers; and it was held that the lower rate did not apply to a gift to a widow unless there were a specific devise or bequest of Victorian property to the widow, or, at the least, unless it were shown that in the circumstances of the estate Victorian property had necessarily to be used in order to satisfy the legacy. The words of the section in that case corresponded closely with sec. 129 (4) of the present Act—"When other persons are entitled under such will the duty shall be calculated so as to charge only one-half of the percentage mentioned in the Seventh Schedule upon the property devised or bequeathed to the widow of a testator" (see sec. 116 of the Administration and Probate Act 1890). The words are different from the words of the present Act, but counsel have not been able to point out any such difference in the words as would justify the application of a different construction.

I may add that our construction of the Act will not make one penny difference to the institutions concerned, as the will directs that all the legacies are to be paid free of State and Federal estate duties. The general residue bears all the burden of duty.

[1] 8 App. Cas., 82.

[2] 18 V.L.R., 239; 13 A.L.T., 291.

[3] 8 App. Cas., 82.

[4] 18 V.L.R., 239; 13 A.L.T., 291.

High Court of Australia

Daly v Victoria [1921] HCA 41; (1921) 29 CLR 491 (17 October 1921)

HIGH COURT OF AUSTRALIA