Commissioner for Probate Duties (Vic) v Mitchell [1960] HCA 54; (1960) 105 CLR 126 (10 August 1960)

HIGH COURT OF AUSTRALIA

COMMISSIONER FOR PROBATE DUTIES (VICT.) v. MITCHELL [1960] HCA 54; (1960) 105 CLR 126

Death Duties (Vict.)

High Court of Australia
Dixon C.J.(1), McTiernan(2), Fullagar(3), Menzies(4) and Windeyer(5) JJ.

CATCHWORDS

Death Duties (Vict.) - Dutiable estate - Notional property - Life assurance - Policy effected by husband containing expression of trust for absolute benefit of wife should he die in her lifetime - Premiums paid by husband - Husband predeceasing wife - Whether premiums or proceeds of policy to be included in dutiable estate - "Disposition of property" - "Gift inter vivos" - "Settlement" - The Constitution (63 & 64 Vict. c. 12), ss. 51 (xiv), 109 - Life Insurance Act 1945- 1953 (Cth), s. 94* - Married Women's Property Act 1928 (Vict.), s. 14 - Administration and Probate Act 1958 (Vict.), ss. 100 "Disposition of property"*, 104 (1) (d) (iii), (h), (i).

HEARING

Melbourne, 1960, February 22, 23, 24;
Sydney, 1960, August 10. 10:8:1960
APPEAL from the Supreme Court of Victoria.

DECISION

August 10.
The following written judgments were delivered: -
DIXON C.J. In my opinion this appeal should be dismissed for the reasons

McTIERNAN J. I agree in the reasons of Fullagar J. and therefore think that, subject to the variation proposed by him, the judgment of Herring C.J. should be affirmed and the appeal dismissed. (at p134)

FULLAGAR J. This is an appeal from an order of the Supreme Court of Victoria (Herring C.J.). That order answered certain questions raised by a case stated by the Commissioner for Probate Duties under s. 154 of the Administration and Probate Act 1928 (Vict.). The substantial question was whether certain moneys payable under a policy of life assurance were, or should be deemed to be, part of the estate of Hyman Bennett Grinblat deceased for the purposes of the Administration and Probate (Estates) Acts (Vict.), which are the Acts referred to in s. 1 (2) of Act No. 5895, and which impose a probate duty on estates of deceased persons. The learned Chief Justice answered that question in the negative, and the Commissioner appeals. (at p134)

2. The facts may be briefly stated. On 20th February 1933 the deceased made to the Mutual Life & Citizens' Assurance Co. Ltd. a proposal in writing for insurance on his own life. Annexed to the proposal and signed by him was a document which read : "I request that the policy to be issued in pursuance of my proposal dated 20th February 1933 be expressed so as to create a trust under the Married Women's Property Act (Vict.) 1928 for the absolute benefit of my wife Sarah Grinblat should any contingency assured against happen during her lifetime." The proposal was accepted and a policy issued on 16th March 1933, by which the company promised, on the happening of either of two "contingencies" to "grant to the Trustee or Trustees in terms of the 'Married Women's Property Act 1928 Victoria' for the benefit of the Beneficiary set forth in Endorsement hereon the Benefit or Benefits provided in the Schedule." The two contingencies were the death of the insured within twenty years from 15th January 1933, and the death of the insured after the expiration of that period. The benefits which were to accrue on the occurrence of the former event need not be enumerated. The benefit which was to accrue on the occurrence of the latter event was the right to immediate payment of the amount insured with declared bonuses. The so-called "endorsement" was in the following terms: "Beneficiary - The within written policy shall be for the absolute benefit of Sarah Grinblat wife of the assured should either of the within mentioned contingencies occur during her lifetime." The annual premium payable was 71 pounds 16s 8d. (at p135)

3. It was the second of the two contingencies that in fact occured, and it occurred during the lifetime of the wife of the deceased. He died on 7th March 1956, and she survived him. All premiums having been duly paid, the company paid to the executors of the will of the deceased (who are the respondents on this appeal) a sum of 2,925 pounds 10s 0d being the amount insured (2,000 pounds) with accrued bonuses (925 pounds 10s 0d). The Commissioner maintains, and the executors deny, that this sum of 2,925 pounds 10s 0d should be brought into account as part of the estate of the deceased for the purpose of assessing probate duty under the Victorian Acts. The relevant legislation is contained in Pt. VI of the Administration and Probate Act 1928 as amended by a number of Acts up to the date of the death of the deceased, but it will be convenient to refer to the consolidating Administration and Probate Act 1958, in which the material provisions appear without alteration, though the sections are differently numbered. Before going to that Act, however, it is necessary to consider the effect of the chose in action constituted by the policy. (at p135)

4. In the absence of any statutory provision the effect at law and in equity of a contract in similar terms might have been open to some doubt. The wife was not a party to the contract of insurance, and she could not have enforced that contract by action at law against the company: cf. Wilson v. Darling Island Stevedoring and Lighterage Co. Ltd. [1956] HCA 8; (1956) 95 CLR 43 . Nor could the personal representatives of the deceased have enforced by action at law payment to them, for the contract was not a contract to pay to them. Most probably the true position would have been that the wife could have enforced the contract by a suit in equity joining the company and the personal representatives of the deceased as defendants. But it could hardly be said that the position would have been clear: see, e.g., Vandepitte v. Preferred Accident Insurance Corporation of New York (1933) AC 70 . To make the position clear in such cases by providing a formula, the following of which would carry definite legal consequences, was, no doubt, the object, or one of the objects, which the Imperial Parliament sought to attain when it enacted s. 11 of the Married Women's Property Act 1882, and which the Victorian Parliament sought to attain when it enacted what was, at the time when the policy issued, s. 14 of the Married Women's Property Act 1928. The two sections were in practically identical terms. It was to this s. 14 that the proposal and the policy referred when they spoke of the Married Women's Property Act 1928 (Vict.). (at p136)

5. It is necessary at this point to mention that on 20th June 1946 the Life Insurance Act 1945 (Cth) came into force by virtue of a proclamation. (The Victorian Act was repealed by s. 8 (1) of the Marriage (Property) Act 1956, but that was after the death of the deceased). Section 94 of the Commonwealth Act was in substantially the same terms as s. 14 of the Victorian Act and it was expressed to apply to policies effected either before or after the commencement of the Act. Although, therefore, s. 14 of the Married Women's Property Act 1928 was not included in the list of State Acts which were, by virtue of s. 8 (1), superseded by the Commonwealth Act, the position was that s. 94 of the Commonwealth Act was inconsistent with s. 14 of the Victorian Act within the meaning of s. 109 of the Constitution (cf. Hume v. Palmer [1926] HCA 50; (1926) 38 CLR 441 ). It follows that the State section was deprived of operation by the Commonwealth section, and as from 20th June 1946 it was on the latter section and not on the former that the effect of the policy in the present case depended. If the question at issue were as to the construction of a contract, the position might be different. There is, of course, no reason why parties should not contract by reference to a statute in such manner that their rights should continue to be ascertainable by reference to that statute even after it has become inoperative by repeal or otherwise. The question in the present case, however, is not one of construction. It is a question of the legal effect to be attached to a particular kind of instrument, and we must find a statute operative at the relevant time to tell us what that effect was or is. I should perhaps add that, although in Insurance Commissioner v. Associated Dominions Assurance Society Pty. Ltd. [1953] HCA 94; (1953) 89 CLR 78, at p 85 , I adverted, in dealing with an argument of counsel, to the possibility of a constitutional attack on s. 94, it seems to me clear enough that it is a valid exercise of the power given by s. 51 (xiv) of the Constitution. (at p137)

6. In the view which the learned Chief Justice took, and which I take, the fact that the relevant statutory provisions are those of the Commonwealth Act and not those of the State Act is a matter of no practical importance. There is no material difference between the two sections. Section 94 (1) of the Commonwealth Act is in the following terms: "Subject to the Bankruptcy Act 1924-1933, a policy effected (whether before or after the commencement of this Act) by any man upon his own life, and expressed to be for the benefit of his wife, or of his children, or of his wife and children, or any of them, or by any woman upon her own life, and expressed to be for the benefit of her husband, or of her children, or of her husband and children, or any of them, shall create a trust in favour of the objects named in the policy, and the moneys payable under any such policy shall not, so long as any object of the trust remains unperformed, form part of the estate of the person whose life is insured, or be subject to his or her debts." The section goes on to provide, by sub-ss. (2) and (4) that the person whose life is insured may appoint trustees, and from time to time new trustees, of the moneys payable under the policy, and trustees or new trustees may, if it is expedient, be appointed by the High Court. Sub-section (3) provides: "If at any time there is no trustee, the policy shall vest in the person whose life is insured, and his personal representatives, in trust for the purposes referred to in, and subject to, subsection (1) of this section." (at p137)

7. There is a good deal of rather surprising confusion in the language of the proposal and of the policy in this case, but I agree with the learned Chief Justice that the policy is "a policy effected by a man upon his own life and expressed to be for the benefit of his wife". It may be suggested that what s. 94 requires is that the policy shall express presently and without qualification that it is for the benefit of the wife or child, and that a policy, which provides, as this policy does, that it is for the benefit of the wife only if she survives her husband, is not within the section. But to say this would, in my opinion, be to take too narrow a view. The policy is, and is quite truly expressed to be, "for the benefit of the wife", even though in a certain contingency neither she nor her estate will be entitled to receive any moneys under the policy. As Mann and Lowe JJ. said in a joint judgment in Re Reynolds; Reynolds v. Commissioner of Taxes (Vict.) (1931) VLR 254 , "Instances of such trusts which might be expressed in the policy are a trust in favour of unborn children, a trust for a life only, or a trust expressed to be contingent on surviving the assured, such as is contended for in the present case" (1931) VLR, at p 260 . In Re Reynolds; Reynolds v. Commissioner of Taxes (Vict.) (1931) VLR 254 the expression was "for the benefit of" a wife simpliciter, but it was contended that there was an implied condition that she should survive her husband. The Full Court rejected this contention, and held that on the death of the wife in the lifetime of her husband the beneficial interest in the policy passed to her personal representatives. A similar decision was reached on the English statute by the Court of Appeal in Cousins v. Sun Life Assurance Society (1933) Ch 126 . This also was a case in which the policy was expressed to be for the benefit of a wife simpliciter. But there are cases in which a policy has been held to fall within the section although it was expressed to be for the benefit of a wife or children only if she or they should survive the assured. In Re Equitable Life Assurance Society (1911) 27 TLR 213 Swinfen Eady J. said that, in his opinion, such a policy was for the benefit of the wife and children of the insured "and none the less that, in case of their death in his lifetime, it would be for his own benefit" (1911) 27 TLR, at p 214 . See also Cleaver v. Mutual Reserve Fund Life Association (1892) 1 QB 147 ; In re Browne's Policy; Browne v. Browne (1903) 1 Ch 188 ; In re Fleetwood's Policy (1926) Ch 48 and In re Gladitz; Guaranty Executor and Trustee Co. Ltd. v. Gladitz (1937) Ch 588 . In Fleetwood's Case (1926) Ch 48 Tomlin J. said: "In my view that section applies to this policy. The policy is, in the terms of the section, a policy of assurance effected by a man on his own life, and expressed to be for the benefit of his wife. It is true it is expressed to be for the benefit of his wife in a certain event only, but the fact that the benefit is of a limited or contingent character does not prevent it from being a benefit within the meaning of this Act. I think, therefore, that the policy creates a trust in favour of the wife, but only in the terms of the trust" (1926) Ch, at pp 53, 54 . (at p139)

8. The position is, in my opinion, accurately stated in this extract from the judgment of Tomlin J. Section 94 does apply to such a case as the present. And, if s. 94 does apply, its effect is not in doubt. It has been uniformly held that, where it operates, it operates to create an immediate trust of a chose in action "in favour of the object named" - in this case the wife, Sarah Grinblat. It is true, as Tomlin J. said, that the trust can take effect only in accordance with the terms of the policy. It is defeasible. The beneficial interest of the wife will be destroyed if she dies before her husband. But, unless and until that event happens, the beneficial interest in the policy belongs to her. The substance of the matter is that she is to be deemed to have an interest which is vested, though liable to be divested. (at p139)

9. It is necessary now to consider the claim of the Commissioner that the moneys paid under the policy form part of the dutiable estate of the deceased. Section 104 (1) (a), (b) and (c) of the Administration and Probate Act (Vict.) bring into charge what is commonly called the "actual" estate of the deceased. It is clear that the policy moneys were not part of the actual estate of the deceased. They were received by his executors subject to a trust in favour of Sarah Grinblat: his contingent beneficial interest ceased with his death in her lifetime. But the Victorian Act, like all statutes imposing death duties, brings into charge various classes of property which, though not part of the actual estate, are to be deemed to form part of the estate for duty purposes - "notional" estate, as it is commonly called. The Commissioner contends that the case falls within s. 104 (1) (d) (iii) or alternatively within s. 104 (1) (h) of the Act. (at p139)

10. Section 104 (1) (d) (iii) provides, so far as material, that any property the subject matter of any gift inter vivos by the deceased shall be deemed to form part of his estate, whenever it was made, if the donor after a date being three years before his death retains or has any interest in the property. During the three years before his death the deceased had a contingent interest in the policy, and, in view of the decision in Craig v. Federal Commissioner of Taxation [1945] HCA 1; (1945) 70 CLR 441 , this should probably be held to be an "interest" within the meaning of s. 104 (1) (d) (iii). But, in order that the case may be brought within this provision it is necessary first to find something that possesses the character of a "gift inter vivos". There is a definition of this expression in s. 100, to which I will refer in a moment. The other provision on which the Commissioner relies, s. 104 (1) (h), provides, so far as material, that property the subject matter of any settlement made by the deceased shall be deemed to form part of his estate. The term "settlement" also is defined by s. 100. (at p140)

11. The definitions in s. 100 of "gift inter vivos" and of "settlement" use the word "includes", but it is not suggested that, apart from those definitions, there is in this case either a gift inter vivos or a settlement. It is not necessary to set out either definition, because nothing is included in either definition which is not a "non-testamentary disposition of property". The expression "disposition of property" is also defined in s. 100, and it is on this definition that the question in this case really turns. It provides, so far as material, that the expression in question means: "(a) any conveyance, transfer, assignment, delivery, creation of a power of appointment payment or other alienation of property (whether by way of renunciation, disclaimer, declaration or creation of trust, mortgage, charge, encumbrance, creation of any estate or interest in property, or by any other means) and whether subject to any limitation or not; ... (d) any agreement, contract, obligation, engagement, transaction entered into or act done by any person whereby the value of his estate may be directly or indirectly diminished and the value of the estate of any other person increased." (at p140)

12. The chose in action created by the policy was, no doubt, "property", but the bringing into existence of that chose in action did not, in my opinion, amount to or involve any alienation of property within any reasonable meaning of that expression. It is clear, I think, that every one of the transactions mentioned in par. (a) of the definition denotes an act done by the deceased in his lifetime. In and about the issuing of the policy there was no conveyance or transfer or assignment or delivery of anything by him. He created no power of appointment. "Payment" I take to mean payment of money to or in trust for a donee. There was no such payment by the deceased. He paid a premium on the issue of the policy, and he paid many subsequent premiums. But Sarah Grinblat took no interest of any sort or kind in any premium paid. It seems to me to be out of the question to suggest that the payment of a premium was a "disposition of property". If it were, what ought to be brought into charge would be not the amount assured plus bonuses but the total sum of premiums paid. It may be said that the transaction involved a "creation of a trust" or of an "interest in property" - expressions which occur in the parenthesis in the definition. But the definition does not take into its scope creations of trusts or creations of interests in property. It takes in alienations of property by way of creations of trusts or of interests in property. There was no alienation of property by the deceased. (at p141)

13. With regard to par. (d) of the definition of "disposition of property", I must say that I find its language practically unintelligible. The language of its counterpart in the Stamp Duties Act of New South Wales comes a little nearer to being comprehensible, because it speaks of things done by a person with intent to diminish the value of his own estate and increase the value of the estate of some other person. I take the word "estate" to mean in each case "estate as at death", and I am quite unable to regard the words "may be" as meaning "may or may not be". Those words must, I think, have some connotation of purpose, or at least the act done must be calculated to produce the effect mentioned. The deceased here entered into no agreement, contract, obligation or engagement - he did not bind himself to pay premiums - and I have not succeeded in understanding what transaction entered into or act done by him can possibly be said to have been intended or calculated either to diminish the estate of which he would die possessed or to increase the estate of which his wife would die possessed, and the definition requires the presence of both elements. On the one hand, it was entirely uncertain whether, if she died first, the insurance would turn out to have increased or diminished the value of his estate or affected that value in any way: it would depend on how long he lived. On the other hand, if he died first, and she became entitled to the policy moneys, it was entirely uncertain whether those moneys or anything representing them would form part of her estate when she came to die. But in truth nothing that was done can be said to have been in any way concerned with, or related to, the increasing of the value of the estate which she would leave at her death. It is impossible, in my opinion, to maintain that the case falls within par. (d) of the definition. (at p141)

14. The strongest way of putting the Commissioner's case is, I think, by saying that the issuing of the policy by the company and the acceptance of it by the deceased involved, in substance, not one transaction but two, and that what really happened in 1933 was that the deceased (1) purchased a chose in action in the shape of the company's conditional contract to pay money, and (2) then settled that chose in action on his wife and himself, or made a gift to her of an interest in it. (at p141)

15. The argument has some force, but it is not, in my opinion, sound. The truth is, I think, as Herring C.J. has said, that he might have done what the argument asserts that he did do, and, if he had done so, he would have made a disposition of property, but he simply did not do what the argument says that he did do. It is at this point that the effect of s. 94 of the Life Insurance Act 1945 (Cth) becomes important. Section 14 of the Married Women's Property Act 1928 (Vict.) enabled him to achieve what he desired without making any disposition of property, and later s. 94 of the Commonwealth Act, replacing s. 14 of the State Act and speaking retrospectively, confirmed the effect of what had been done in 1933. He obtained a policy expressed in certain terms. That is all that he did. To the policy so expressed the statute gave a particular effect. The statute did everything that was desired. There was no disposition of property, because there was no need for any disposition of property. (at p142)

16. It should perhaps be added that the case cannot be brought within s. 104 (1) (i), because it follows from what has been said that no settlement was made by the deceased. (at p142)

17. For the above reasons I am of opinion that the decision of Herring C.J. was right. There are two matters to which I wish to refer briefly in conclusion. (at p142)

18. The first is a constitutional matter. So long as the effect of such a policy as we have here depended on State legislation, the question whether the proceeds of such a policy were brought into charge for death duty under other legislation of the State was a pure question of construction. The two statutes had simply to be read together, and in such a case any apparent inconsistency is commonly solved by the application of the maxim generalia specialibus non derogant. But, now that the effect of such a policy depends on Commonwealth legislation, the position is different, and, if inconsistency between that legislation and State legislation imposing a death duty is found to exist, the Commonwealth law prevails by virtue of s. 109 of the Constitution. The view which I have expressed above is based simply on construction of the two relevant statutes, and on that view no constitutional question arises. But, if I were wrong in that view, and if the State Act, on its true construction, did bring the proceeds of the policy into charge for purposes of death duty, I think that a serious constitutional question would arise. The Commonwealth Act says that the moneys payable under the policy "shall not . . . form part of the estate of the person whose life is insured or be subject to his or her debts". The State Act, if construed otherwise than as I have construed it, says that those moneys "shall be deemed to form part of the estate of" the person whose life is insured. I prefer to express no opinion on the question now, but I am not satisfied that an argument based on s. 109 is answered by saying that duty is imposed by s. 116 of the State Act on a "final balance" and that the policy moneys are merely an item to be taken into account in calculating the final balance. It is to be remembered that, as has been said more than once, the object of what is now s. 94 of the Commonwealth Act was to encourage life insurance, and, subject to the laws relating to bankruptcy and insolvency, to enable husbands and wives to make some safe and sure provision for one another and for their children. (at p143)

19. The other matter is this. Paragraph 20 of the case states that the Commissioner and the executors agree that, if the policy moneys are not to be deemed to form part of the estate of the deceased, then the sum of 215 pounds 10s. 0d. should be deemed to form part of his estate. This amount is the sum of the last three annual premiums paid by the deceased before his death, these being regarded as gifts made to the wife within three years before his death and therefore brought into charge by s. 104 (1) (d) (i) of the Act. The parties are, of course, bound by their agreement, but I think I should mention that it does not seem to me to be right to regard the payment of a premium as the making of a gift to the wife. The premiums were paid when it was uncertain which would be the survivor, and in any case, as I have said, the wife took no interest of any kind in them. (at p143)

20. The appeal should, in my opinion, be dismissed. (at p143)

MENZIES J. The question upon this appeal is whether insurance moneys, paid upon the death of a husband who insured his life under a policy creating a trust for the benefit of his wife upon his dying during her lifetime, are to be treated as forming part of his estate for the purposes of the assessment of probate duty under Pt. V of the Administration and Probate Act (Vict.) when he died during his wife's life. For convenience I refer to the Administration and Probate Act 1958 although the happenings with which we are here concerned occurred before that Act came into operation. Part V is, however, in the same terms as the legislation that was in operation when Hyman Bennett Grinblat died on 7th March 1956. (at p143)

2. The policy in question was taken out in 1933 by Grinblat with The Mutual Life and Citizens' Assurance Company Limited upon his own life. The proposal upon which the policy was issued was endorsed as follows: "I request that the Policy to be issued in pursuance of my proposal dated 20th February 1933 be expressed so as to create a trust under the Married Women's Property Act (Vict.) 1928 for the absolute benefit of my wife, Sarah Grinblat, should any contingency assured against happen during her lifetime." This endorsement was signed by the proposer. The policy that was issued contained this endorsement: "The within written Policy shall be for the absolute benefit of Sarah Grinblat wife of the Assured should either of the within mentioned Contingencies occur during her lifetime." The contingencies referred to are, in short, the death of the assured within or outside a period of twenty years from the date of the commencement of the risk. The obligation of the company upon the death of the assured during his wife's life was, subject to the completion of certain formalities, to "grant to the Trustee or Trustees in terms of The Married Women's Property Act 1928 (Vict) for the benefit of the Beneficiary set forth in Endorsement hereon the Benefit or Benefits provided", subject to the deduction of moneys owing to the company. No trustee was appointed and when the assured died the policy vested in his personal representatives in trust for his widow by virtue of either the Married Women's Property Act 1928 (Vict.), s. 14, or the Life Insurance Act 1945-1953 (Cth). The deceased died in 1956, and between 1933 and 1956 he paid annual premiums of 71 pounds 16s. 8d. each. Three of these, totalling 215 pounds 10s. 0d, were paid within three years of his death. Upon the death of the deceased the company paid to his executors as trustees for the beneficiary the sum of 2,925 pounds 10s. 0d., being the amount of the policy, 2,000 pounds 0s. 0d, plus bonuses. The executors did not include this 2,925 pounds 10s. 0d. as part of the estate of the deceased, but they did include 215 pounds 0s. 0d. as property the subject matter of a gift inter vivos made by the deceased within three years of his death. Herring C.J. decided that in this the executors were correct, and it is from his decision denying that the 2,925 pounds 10s. 0d. formed part of the dutiable estate of the testator that the Commissioner of Probate Duties has by special leave appealed to this Court. (at p144)

3. It is convenient in the first place to consider an argument advanced by the respondents which the learned Chief Justice did not find it necessary to consider but which, if accepted, would be decisive in the respondents' favour. It is that if the Administration and Probate Act does upon its proper construction require the policy moneys to be treated as forming part of the estate of the deceased for the purposes of Pt. V of that Act, it is inconsistent with s. 94 of the Life Insurance Act (Cth) and is to that extent invalid. That section provides that a policy effected (whether before or after the commencement of the Act) by any man upon his own life, and expressed to be for the benefit of his wife, shall create a trust in favour of his wife, and "the moneys payable under any such policy shall not, so long as any object of the trust remains unperformed, form part of the estate of the person whose life is insured, or be subject to his . . . debts". This provision in terms applies to the policy here in question, but I do not regard it as inconsistent therewith for a law of Victoria to provide that such policy moneys shall be deemed to form part of the estate of the deceased for the purpose of assessing the probate duty to be paid by the executors upon the final balance of the estate (s. 116). Such "final balance" means "the total value of all property which is or is deemed to form part of the estate less the total value of all items which are allowed as deductions". Any duty payable "shall be deemed to be a debt of the testator . . . to Her Majesty and shall be paid by any executor . . . out of the estate of the testator . . . after payment of the testamentary and funeral expenses and in priority to all debts of the testator . . . " (s. 120). The provisions to which I have referred do not seem to me to interfere with the performance of this trust in favour of the wife or to constitute the policy moneys assets of the estate, or to subject them to the debts of the deceased. They do no more than deal with the method by which duty payable out of the estate, but not the policy moneys, is to be calculated. Although I regard it as more open to question whether there is inconsistency between s. 94 of the Commonwealth Act and s. 122 of the Administration and Probate Act which enables an executor to recover from the person to whom anything which forms part of the notional estate of a deceased person has passed, the duty on that notional estate, I have reached the conclusion that there is no such inconsistency. The Commonwealth law does two things; it denies that the policy moneys form part of the estate of the person whose life was insured so long as the trust which the Act creates remains unperformed and it protects them from his debts. I do not think it goes further and protects them from the operation of a law of a State which imposes upon the recipient a liability which is not concerned with the debts of the person whose life was insured. Did it do so and attempt to protect the moneys after their receipt from the liabilities of the recipient arising out of the receipt of the moneys, it would be necessary to consider its validity. In any event, even if s. 122 of the State Act were regarded as inconsistent with s. 94 of the Commonwealth Act, its consequent invalidity would not involve the invalidity of so much of the State Act as imposes upon the executor of the estate of a deceased person the obligation to pay duty upon the final balance assessed in the manner provided. This obligation existed before s. 122 was introduced and can continue to exist if it be found that s. 122 was not validly enacted. It does not seem to me that the validity of the primary obligation is made to depend upon the validity of the right to reimbursement from the beneficiary; in other words, to the extent (if any) that s. 122 is invalid it is also severable. (at p146)

4. My conclusion that there is no inconsistency between s. 94 of the Commonwealth Act and any relevant provision of the Administration and Probate Act makes it unnecessary to consider the argument that s. 94 is outside the power conferred upon the Commonwealth Parliament by s. 51 (xiv) and (xxxix) of the Constitution. (at p146)

5. On this aspect of the case it is only necessary to add that if s. 94 did not validly apply to the policy here in question, then s. 14 of the Married Women's Property Act (Vict.), which was upon the statute book at the date of the death of the deceased and which was in all material respects the same as s. 94 of the Commonwealth Act, would have done so. It may even be that even if s. 94 of the Commonwealth Act applies, there would be some room still left for the operation of s. 14 of the Victorian Act - but this seems to me unlikely. It was argued for the respondents, however, that if and to the extent that s. 14 of the Victorian Act applied, the relevant provisions of the Administration and Probate Act should be construed as not applicable to the policy moneys, for otherwise the enactment of those provisions of the Administration and Probate Act would have resulted in a repeal pro tanto of s. 14 of the Married Women's Property Act or would at least have constituted a general law inconsistent with an existing particular law. My reasons for rejecting the argument that the provisions of the Administration and Probate Act should be read down to accommodate themselves to a particular construction of s. 14 are the same as those which have led me to the conclusion that there is no inconsistency between s. 94 of the Commonwealth Act and the provisions of the Victorian Act. In other words, the provisions of each Act can be given full force and effect according to their terms and there is no inconsistency between them. (at p146)

6. This brings me to the construction of Pt. V of the Administration and Probate Act. It is apparent that for the purposes of the assessment of probate duty the estate of a deceased person is constituted by what is actually part of his estate and by what is deemed to form part of his estate (s. 104); and anything that comes in as part of his estate, notwithstanding that he has disposed of it during his lifetime, obviously comes in under the latter head, as what is conveniently called "notional estate". In the events which have happened, the policy moneys are not part of the deceased's actual estate, but it was argued that they do form part of his notional estate either as the subject matter of a settlement (s. 104 (1) (h) or a gift inter vivos (s. 104 (1) (d) ). (at p147)

7. As a first step to understanding s. 104, it is necessary to go to the definition section in Pt. V of the Act - s. 100. There "settlement" is defined as including "every non-testamentary disposition of property made by any person to take effect or which may take effect upon or after the death of such person" made without "full consideration in money or money's worth". "Gift inter vivos" includes "any non-testamentary disposition of property" made without "full consideration in money or money's worth . . . not being a settlement". Where there is either a gift inter vivos or a settlement because the consideration is less than full consideration, the disposition is to be deemed a gift inter vivos or settlement, as the case may be, to the extent only to which the value of the subject-matter of the disposition exceeds the consideration given. The phrase "disposition of property", which occurs in both the above definitions, is itself defined as meaning not only any alienation of property but "(d) any agreement, contract, obligation, engagement, transaction entered into or act done by any person whereby the value of his estate may be directly or indirectly diminished and the value of the estate of any other person increased". (at p147)

8. It is to be observed that what is described by the definition as a "settlement" is not the technical conception of a non-testamentary settlement, viz. a disposition to secure the enjoyment of property by persons in succession, and it is sometimes difficult to determine whether, when the word "settlement" is used in Pt. V of the Act, it is used in what may be called the defined sense or with its technical meaning. In s. 104 (1) (h), however, it seems to me that the word is used in its defined sense. It is doubtful whether it is so used in s. 104 (1) (i) or (k), but this need not be determined here. Furthermore, I do not find it necessary to decide with what meaning the word is used in the definition of "gift inter vivos" in s. 100. (at p147)

9. The difficulties connected with par. (d) of the definition of "disposition of property" are not merely those of the construction of its terms. The initial problem is whether any actual alienation of property that falls within pars. (a), (b) and (c) of the definition in s. 100 is outside the scope of par. (d). I am disposed to think that it is and that par. (d) is concerned with property retained by the deceased but which has at the date of his death been diminished in value by some agreement or transaction, etc. to which he was a party, such as, for instance, the conversion of ordinary shares into preference shares as part of such a transaction. In Birks v. Federal Commissioner of Taxation (1953) 10 ATD 266 Kitto J. held that the dealings with shares with which he was there concerned fell within the scope of a similar provision. The fact that it is the value of the estate that must be the subject of diminution and not the property of the disponor seems to me to indicate that attention is to be paid to the value of what in the event forms part of the estate of a person who dies rather than to something alienated during his lifetime. It is not clear, however, whether the word "estate" is used in par. (d) of the definition with a constant meaning or what it was intended to comprehend even if it is confined to the property that a person has at the date of his death, e.g. the situs of the estate is something to which attention has not been paid. It is not necessary to attempt to resolve all these difficulties in this case; it is sufficient to examine the application of the section to the material facts here, which are that the deceased during his life took out the policy containing a trust effective by statute in favour of his wife and paid the premiums. Reading par. (d) as I do, I am not disposed to think that there is anything here that falls within its scope. Before the deceased died he had an interest in the policy but I do not regard it as an interest that was diminished in value by any agreement, etc., made during his life or, to put it perhaps more exactly, that he was party to any agreement, etc., that diminished the value of his estate. He never had any more than a right to the policy moneys contingent upon his surviving his wife and that was not diminished in value by any agreement, etc., that he made. If attention is directed to the premiums paid, I would myself think that to the extent they are "dispositions" it is as actual alienations of property and by virtue of par. (a) of the definition rather than par. (d), and that the property so disposed of was nothing more than the premiums paid. I agree with the Chief Justice of the Supreme Court in concluding that if there was any disposition here, it did not go beyond the payment of the premiums. If I am wrong, however, and it is possible to do as Mr. Gowans argued and with the assistance of par. (d) to regard the deceased's taking-out of the policy containing the trust that it did and the payment of the premiums as together constituting some disposition of rights under the policy, it seems to me that there are still insuperable difficulties in the way of bringing those rights into the calculation of the final balance for the purpose of assessing probate duty. I will proceed, however, to examine the appellant's further arguments on the assumption that in all that occurred there was something which amounted to a disposition by the deceased to his wife of the rights she obtained by virtue of the policy and the relevant legislation. (at p148)

10. If the rights under the policy are to form part of his estate by virtue of a settlement made by the deceased, it must be by virtue of s. 104 (1) (h) whereby it is provided that any property, the subject-matter of any settlement made by the deceased, whether it was so before or after the commencement of the Act, shall be deemed to form part of the estate of that person; but, if the transaction between the deceased and the insurance company already described was in any sense a disposition of rights under the policy or the moneys arising thereunder, it seems to me that it was not a disposition "to take effect or which may take effect upon or after the death" of the deceased as required by the definition. The trust - and the supposed disposition - took effect fully when the policy was issued and the death of the settlor was no more than the happening of the event upon which the policy moneys became payable by the company to the trustee. Mr. Gowans relied upon observations of Isaacs J. in Rosenthal v. Rosenthal [1910] HCA 47; (1910) 11 CLR 87, at pp 95, 96 , which do lend support to the view that an instrument, which deals with property so that its enjoyment depends upon the fact of the death of the person making it, takes effect upon the death of that person, but this was said in relation to a section which related to settlements containing trusts or dispositions taking effect upon death rather than a settlement so taking effect; in any case what was said may have been too widely expressed. In Commissioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. [1915] HCA 91; (1915) 21 CLR 69 there are observations to the same effect, but again these were made in relation to a section relating to the taking effect of trusts in a will or settlement and a clear distinction is apparent between the instrument taking effect and the trust taking effect and the decision depended upon the view that on death one trust came to an end and another took effect. What was said must be read in relation to these circumstances. Because this trust took effect when the policy was issued, s. 104 (1) (h) can have no application. (at p149)

11. Whether there was any gift inter vivos made by the deceased to his wife that could, on the assumption I am making, bring in as part of the notional estate of the deceased the policy moneys, or rights to the value of what was paid under the policy, depends upon s. 104 (1) (d). By that provision, any property, the subject matter of a gift inter vivos by the deceased, is to be deemed to form a part of his estate "if such gift was made - (i) within three years immediately before the death of the donor; or (ii) at any time, where in relation to such property bona fide possession and enjoyment was not assumed by the donee more than three years before the death of the deceased and thenceforward retained to the entire exclusion of the donor or of any benefit to the donor by contract or otherwise and whether or not such benefit arose directly out of such property or by reason of the relationship between the donor and the donee or however it arose, and whether or not such benefit was enforceable; or (iii) at any time, where the donor after a date being three years before his death retains or has any interest in the property or any right, whether enforceable or not, to payments or to any beneficial interest or benefit in any way connected with the property or any power which may affect the enjoyment of the gift by the donee". Assuming that there was here some gift by the husband to his wife during his lifetime of rights under the policy, there are two possible views of what in the circumstances of this case should be regarded as the "property the subject-matter of (the) gift" for the purposes of s. 104 (1) (d). One is that it is the right arising under the insurance policies to obtain payment of all moneys becoming payable thereunder in any circumstances so that the husband retained some right in respect of the subject-matter of the gift; the other is that it is only so much of that right as the widow obtained by virtue of the trust which the deceased created for her benefit, i.e. the right to the policy moneys if, but only if, she should survive her husband so that the husband retained no right in respect of the subject-matter of the gift. In my opinion, the latter is the correct view. It was that limited right that passed to the wife so that it was the only property that could be the subject-matter of the gift: see Oakes v. Commissioner of Stamp Duties N.S.W. [1952] HCA 22; (1952) 85 CLR 386 , per Dixon C.J. (1952) 85 CLR, at p 398 where it was said: "In the first place the property comprised in a gift of which the provision speaks is the estate or interest given. What you are to consider is the beneficial interest or interests created by the deceased. What he keeps back is no part of his gift. 'A person who declares trusts of property only gives the beneficial interests covered by the Trusts. Everything else he retains and does not give' (Hall's Case (1943) AC, at p 441 )". Taking now the three contingencies stated in s. 104 (1) (d), it seems clear that the first cannot operate to bring in the policy moneys as part of the notional estate of the deceased for the simple reason that although it may be correct to treat the payment of each annual premium as a gift by the husband to the wife of the amount, I regard it as impossible to treat each payment of an annual premium as a gift of the right to receive the policy moneys. The way in which Mr. Gowans put this was that on every occasion when the deceased paid an annual premium, he renewed the policy for a further period by preventing it from coming to an end and its benefits being lost so that the payment of premiums within three years of the death of the deceased amounted to a gift of the rights under the policy during that time. The short answer to this is that before the three-year period the widow had the same right to the policy moneys as she did upon the payment of each of three premiums. If there was any new gift, it could be no more than what was then paid and this can be demonstrated by pointing out that if, for instance, the last premium had not been paid, the only result would have been that the moneys paid to the trustees would have been reduced by the amount of that premium. In attempting to apply the second contingency, the words "such property" used therein must mean "property the subject-matter of (the) gift" and this, as I have already said, means at most the limited right to receive the policy moneys which the wife obtained when the policy was issued. The wife assumed the possession and enjoyment of this gift when the policy was issued and thenceforth retained it to the entire exclusion of her husband. It may perhaps have been otherwise if I had treated the "property the subject-matter of (the) gift" as a right to receive the policy moneys irrespective of the order of the deaths of the husband and wife. It was, however, the third contingency that Mr. Gowans relied upon particularly. His argument was that the deceased's right to the policy moneys in the event of his wife's pre-deceasing him was a right connected with the "property the subject-matter of (the) gift", because the rights were strictly alternative depending upon whether the husband or the wife died first. I do not regard this as being the kind of connexion referred to in the third contingency. The words "any right . . . connected with the property" seem to me to refer to the case where, although the donor has no right to what he gave away, he nevertheless has rights by virtue of which he can control or affect what he has given, for example, where a shareholder with a controlling interest in a company gives away some of his shares but has control over the disposition or value of those shares by virtue of the shares that he has retained. (at p151)

12. To summarize what I have written about the Victorian Act and its application here, I would say that in what occurred there was no disposition by the deceased of any rights under the policy; that if there were such a disposition nothing was disposed of beyond the equitable right which the wife obtained to obtain the policy moneys in the event of the deceased dying during her lifetime; that the equitable interest was disposed of (if at all) when the policy was issued; that upon such disposition (if any) the wife assumed enjoyment and retained it to the exclusion of the deceased; that the deceased had no interest in or right in any way connected with the property disposed of; that there was no settlement of any rights under the policy because any disposition that there was took place when the policy was issued and not upon the death of the deceased; and that the payment of the premiums amounted at most to a gift of what was paid. (at p152)

13. I conclude, therefore, that the appeal should be dismissed. (at p152)

WINDEYER J. I have had the benefit of reading the judgment of my brother Fullagar. I agree that, for the reasons he gives, the policy moneys did not form part of the dutiable estate of Hyman Bennett Grinblat deceased. A policy of the kind in question it has been said "operates as a declaration of trust, by force of the Act", now the Life Insurance Act 1945, s. 94, (Perpetual Trustee Co. (Ltd.) v. Tindal [1940] HCA 14; (1940) 63 CLR 232 , per Starke J. (1940) 63 CLR, at p 255 ). And the interest of the person for whose benefit it is expressed to be effected has been described as an equitable interest. This phraseology may naturally suggest that at some stage a man who effects such a policy gains a legal interest in a chose in action and that by the transaction he creates a trust of that property. But this is not so, as Herring C.J. makes clear in his judgment. The statute provides that the policy shall create a trust in favour of the named objects. Thus the rights under it when they come into existence are clothed with a trust - as Athena, child of Olympian Zeus and of Metis goddess of prudence and wise counsel, came into the world through her father's head, fully armed against adversaries. (at p152)

2. I entertain doubts similar to those Fullagar J. has expressed as to the meaning of par. (d) in the definition of "disposition of property" in s. 100 of the Administration and Probate Act 1958. I read it, as he does, as involving an idea of the purpose of the particular transaction being to diminish the value of the estate of one person and increase the value of the estate of another. (at p152)

3. I agree that the appeal should be dismissed. (at p152)

ORDER

Appeal dismissed with costs.