Jamieson v Federal Commissioner of Land Tax [1938] HCA 51; (1938) 60 CLR 760 (17 October 1938)

Jamieson and Another Appellants; and The Federal Commissioner of Land Tax Respondent.

This is a case stated by McTiernan J. under sec. 44M of the Land Tax Assessment Act 1910-1934.

The question raised in the case is, in substance, whether when joint owners partition the land of which they are co-owners sec. 42 of the Land Tax Assessment Act 1910-1934 can be applied to them, so that they remain joint proprietors and continue to obtain only one deduction of £5,000. In my opinion sec. 42 of the Act is not applicable to such a case. Each joint proprietor, whatever the form of conveyance or transfer, assures his undivided moiety to the other in the land the entirety of which is taken by that other under the arrangement for partition. I think that under sec. 38 of the Act the ownership must be actually joint and not artificially presumed to be joint in order to warrant taxation upon that footing. Mr. Mitchell attempted to support the assessment by means of the proviso to sec. 27 of the Act, but I think that there was no lease to the firm or its members.

In my opinion the questions in the case should be answered as follows: 1. No; 2. Yes.

The facts are stated at great length in the case, but I shall summarize those I regard as essential. For some time before 24th April 1928 the appellant Jamieson and one Albert Stanley Edward Hillas (whose executrix is the other appellant) were, according to the case, entitled to certain lands as tenants in common in fee simple. They grazed and agisted stock in partnership upon the lands, which did not, however, form part of the capital assets of the partnership. They were assessed to land tax as joint owners of the land for each of the financial years 1928-1929, 1929-1930, 1930-1931, 1931-1932, 1932-1933. On 24th April 1928 the appellants, however, executed an agreement for partition of the lands, whereby it was agreed that Hillas should take in severalty certain parcels of the land, and the appellant Jamieson should take in severalty other parcels of the land. The agreement was carried out, as to lands under the Real Property Act 1900, by means of transfers duly registered, and as to lands contained in what is called "old-system grants" by deed of partition, according to the case, filed in the office of the Registrar-General. On the same date, 24th April 1928, Jamieson and Hillas executed a deed, whereby they agreed to become partners in the business of graziers upon the lands already mentioned, which partnership should be deemed to have commenced on 1st July 1922 and should continue until determined by three months' notice. But it was expressly agreed that the lands should not be considered or taken in any way to be part of the assets or property of the partnership.

Two questions are stated for the opinion of the court, one only of which is really necessary:—1. Whether the respondent—the Commissioner of Land Tax—was justified in assessing Hillas and Jamieson as joint owners of the whole of the said lands for the financial year 1929-1930 with only one statutory deduction of £5,000 in respect of such year's assessment. It was not argued that Jamieson and Hillas were not co-owners in common of the land or "joint owners" within the meaning of that expression in the Land Tax Acts until the partition on 24th April 1928. But the former co-owners or "joint owners" did not after the partition own the lands jointly or in common so as to constitute them joint owners within the meaning of secs. 3 and 38 of the Land Tax Assessment Act. It required, in these circumstances, further provision under the Act to constitute them joint owners. Mant v. Deputy Federal Commissioner of Land Tax (Q.)[1] was mentioned. But the learned counsel who argued the case made little of the case. They pointed out that the taxpayers there were never co-owners of the land jointly or in common, and the court denied that the user of the lands in partnership constituted "joint ownership" under the Acts. The argument was really directed to the question whether sec. 42 of the Land Tax Assessment Act 1910-1934 did not constitute Hillas and Jamieson "joint owners" for the purposes of the Act: "Notwithstanding any conveyance, transfer, declaration of trust, settlement, or other disposition of land, whether made before or after the commencement of the Act, the person making the same shall, so long as he remains or is in possession or in receipt of the rents and profits of the land, whether on his own account or on account of any other person, be deemed (though not to the exclusion of any other person) to be the owner of the land."

In my judgment the language of the section is not appropriate to the case of a partition of lands by co-owners in common. The section contemplates the disposition in entirety of land, and not a division in severalty between co-owners. Notwithstanding the disposition of the land, the taxpayer making the same and retaining effective possession is deemed the owner, but it is as owner of an entirety in the lands and not as an owner of the lands divided in severalty. What Jamieson made over to Hillas was not the entirety but his moiety in the lands. And, similarly, in the case of Hillas, he made over to Jamieson not an entirety but only his moiety in the lands. But the partition of the land so divided in severalty amongst co-owners does not, in my opinion, attract the provisions of sec. 42. The dispositions coupled with the retention of possession did not, therefore, constitute Hillas and Jamieson joint owners of the land within the meaning of the Land Tax Acts. The provisions of sec. 27 of the Land Tax Assessment Act were referred to by the learned counsel who argued the case for the commissioner. But I am unable to agree that Jamieson and Hillas ever were the owners of any leasehold estate in the land.

The first question stated in the case should be answered in the negative and the second accordingly in the affirmative.

For the five financial years beginning on 1st July in years 1928 to 1932 the appellants have been assessed to land tax on the basis that A. S. E. Hillas, now deceased, and M. P. A. Jamieson were joint owners of the lands in question. During the period under assessment these two persons carried on in partnership the business of graziers. The business was conducted upon the lands in respect of which they have been assessed as joint owners. But the lands were not partnership property and were not vested in the partners as joint tenants or tenants in common. About half the area was vested in one of them as sole owner, and the remaining half in the other of them. The partnership articles expressed a covenant between them that they should "become and remain partners in the business of graziers upon or using lands lent and supplied for this purpose by both parties," and provided that the lands now in question should be used, occupied and agisted during the partnership in connection with the firm's business but should not be deemed part of the capital, and, again, that each of the parties was to allow the stock of the firm to be run and agisted on their respective lands free of charge to the firm, rates and upkeep being borne by the firm, but that the land should not be considered or taken in any way to be part of the assets or property of the partnership.

If the matter stood there, Mant v. Deputy Federal Commissioner of Land Tax (Q.)[2] would be conclusive to show that the partners were not joint owners of the whole but remained each the beneficial owner in severalty of the entirety in the land vested in him (Cp. Seymour Brothers v. Deputy Federal Commissioner of Land Tax (S.A.)[3]). But up till 24th April 1928 the partners had not been owners of the entirety of separate parts of the land. For some years they had been tenants in common in equal shares of the whole area. The legal title of one undivided moiety stood in the name of one in his own right and of the other moiety in the name of the other partner as an executor; but each was in fact entitled to his respective moiety beneficially. On 24th April 1928 they made an agreement of partition and executed transfers and conveyances one to another by which the entirety of each divided moiety of the partitioned area was respectively vested in the appropriate one of them. At the same time they entered into the partnership deed, making its provisions retrospective, however, over the period during which they had carried on the business.

The commissioner contends that this history brings the case within sec. 42 of the Land Tax Assessment Act 1910-1934. That section provides that, notwithstanding any conveyance, transfer, declaration of trust, settlement, or other disposition of land, the person making the same shall, so long as he remains or is in possession or in receipt of the rents and profits of the land, whether on his own account or on account of any other person, be deemed (though not to the exclusion of any other person) to be the owner of the land. It is said that the two co-owners were the person (or persons) making the conveyance or transfer.

Apparently the transfers of so much of the land as was under the Real Property Act were expressed as transfers by the joint proprietors to one or other of themselves and the conveyances of so much of the land as was under the general law were drawn as assurances from them as tenants in common of the one part to one or other of themselves of the other part. But I do not think that the words "conveyance, transfer, declaration of trust, settlement or other disposition of land" are concerned with the form of a document. They describe instruments according to their operation or legal effect. When a co-owner becomes by assurance the owner in severalty of the entirety in the whole or part of the lands, what is actually made over or assured to him is the undivided interest of the other co-owner or co-owners.

When A. S. E. Hillas became the owner in fee simple in severalty of the lands which he took on the partition, he obtained the entirety by an assurance of M. P. A. Jamieson's undivided moiety to him and M. P. A. Jamieson was, I think, "the person making the same" within the meaning of sec. 42. The land he conveyed or transferred was his undivided moiety, and sec. 42 cannot be applied to make him joint proprietor thereof with A. S. E. Hillas. These observations apply e converso to the lands of the entirety of which M. P. A. Jamieson became owner.

In my opinion, sec. 42 does not apply to a partition between joint proprietors, whose joint occupation continues, so as to make them joint owners within sec. 38. The operation of sec. 38 depends, as its language indicates, upon the existence in fact of joint ownership.

It was suggested that the proviso to sub-sec. 1 of sec. 27 might govern the case. This suggestion was based upon the view that under the articles the firm became owner of a leasehold estate in the lands which the partners had within the requisite period owned in fee simple. The firm is not a separate entity and the articles do not, in my opinion, contain a demise or operate as a lease to both or either of the members.

I think the first question in the case stated should be answered: No, and the second: Yes.

In my opinion the conditions necessary for the application of sec. 42 were not fulfilled in the present case. As these conditions were not fulfilled, the appellants did not continue to be joint owners according to the intention of the Act. Prior to the partition of the lands they were tenants in common. The result of the partition was to make each of them the beneficial owner in severalty of a part of the land. It is true that the form of conveyancing employed to effect the partition was that the tenants in common conveyed to each one of them the part of the land intended to be released to such transferee. But the operative effect of the conveyance in each case was that each one released to the other such interest as he had in that part of the land of which the other became the sole owner. It follows that the person who made the conveyance in each was not identical with the person who remained in possession. For in respect of one part of the land A was the person who made the conveyance, and in respect of the other part B was the person who made the conveyance; while in respect of both parts of the land A and B were the persons who remained in possession.

Solicitors for the appellants, E. F. Thomas & Brennock, Goulburn, by W. H. Hill & Co.

[1] [1915] HCA 46; (1915) 20 C.L.R. 564.

[2] [1915] HCA 46; (1915) 20 C.L.R. 564.

[3] [1918] HCA 61; (1918) 25 C.L.R. 303.

High Court of Australia

Jamieson v Federal Commissioner of Land Tax [1938] HCA 51; (1938) 60 CLR 760 (17 October 1938)

HIGH COURT OF AUSTRALIA