Union Trustee Company of Australia Ltd v Federal Commissioner of Taxation [1941] HCA 23; (1941) 65 CLR 29 (7 August 1941)

HIGH COURT OF AUSTRALIA

Union Trustee Company of Australia Limited Appellant; and The Federal Commissioner of Taxation Respondent.

H C of A

7 August 1941

Rich A.C.J., Starke, McTiernan and Williams JJ.

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

Alroy M. Cohen, for the respondent.

The following judgments were delivered:—

Rich A.C.J.

The question submitted in the case stated is whether by virtue of the provisions of the Estate Duty Assessment Act 1914-1928 the policies mentioned in the case or their proceeds are deemed to be part of the estate of James Frederick Maslin deceased for the purposes of the Act.

James Frederick Maslin died on 11th January 1940. He was survived by his wife Alice Thornton Maslin.

By deed dated 30th January 1925 the deceased settled two policies of insurance effected on his life and their proceeds and thereby directed the trustee to hold the same upon trust for his wife for an absolute interest with a proviso that if she predeceased him the policies should be held by the trustee upon trust for himself. Mr. Alroy Cohen on behalf of the commissioner submitted that the proceeds of the policies are part of the estate of the deceased for the purposes of duty under the Federal Estate Duty Assessment Act 1914-1928, basing his contention on two grounds.

In the first place he said that the settlement contained an interest in the policies for the life of the settlor within the meaning of sec. 8 (4) (c) of the Act. In my opinion this is unsound. The only interest which the deceased had depended upon his surviving his wife, and this was not an interest of any kind for his life. The only life mentioned in the settlement was that of his wife, but even she did not have an interest of any kind for life. Her interest was an absolute interest with an executory gift over to the settlor absolutely in the event of her death in his lifetime. No life estate of any kind was therefore created by the deed.

In the next place he argued that the settlor had a beneficial interest in the policies or their proceeds which passed by virtue of the settlement after his decease to his wife (sec. 8, sub-sec. 4 (e)). But it is plain that his wife did not acquire any new interest on his death. Her interest was created at the date of the deed, and although his death caused that interest to become indefeasible it did not bring into existence any new estate (Bakewell v. Deputy Federal Commissioner of Taxation (S.A.)[1]; Commissioner of Succession Duties (S.A.) v. Isbister[2]).

In my opinion the answer to the question should be: No.

Starke J.

I agree.

McTiernan J.

I agree.

Williams J.

I agree.

Question answered in the negative. Costs costs in the appeal.

Solicitors for the appellant, Norman C. Oakes & Sagar.

Solicitor for the respondent, H. F. E. Whitlam, Commonwealth Crown Solicitor.

[1] [1937] HCA 11; (1937) 58 C.L.R. 743.

[2] [1941] HCA 2; (1941) 64 C.L.R. 375.