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High Court of Australia |
EASTGATE v. EQUITY TRUSTEES EXECUTORS AND AGENCY CO. LTD. [1964] HCA 14; (1964) 110 CLR 275
Probate Duty (Vict.) - Estate Duty (Cth)
High Court of Australia
Kitto(1), Menzies(2) and Owen(3) JJ.
CATCHWORDS
Probate Duty (Vict.) - Notional estate - Joint tenant with testatrix - Whether property "passed" from testatrix - Whether duty on notional estate recoverable by executor from surviving joint tenant or borne by residue - Expression of contrary intention - Administration and Probate Act 1958 (Vict.), s.122 (2) (3).*Estate Duty (Cth) - Whether surviving joint tenant "beneficially entitled" to estate and a "beneficiary" - Whether duty on notional estate recoverable by administrator from surviving joint tenant or borne by residue - Different disposition - Estate Duty Assessment Act 1914-1957 (Cth), ss. 35**, 35A.
HEARING
Melbourne, 1963, October 28; 1964, March 4. 4:3:1964DECISION
1964, March 4.2. The case comes before us on appeal from an order made by Adam J. in answer to the questions. It depends partly upon the construction of the respective Acts by which probate and estate duties are regulated and partly upon the construction of the will. I turn first to the Administration and Probate Act 1958 (Vict.) which provides for probate duty. It is a duty to be paid by the executor (where probate has been granted) and is calculated on and in relation to the final balance of the deceased person's estate: s. 116. The final balance is 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: s. 100. The property which is part of the estate comprises the deceased person's real and personal property in Victoria and his personal property situate elsewhere if he was at the time of his death domiciled in Victoria: pars. (a), (b) and (c) of s. 104(1). The property which is to be deemed to form part of his estate (called in the Act "notional estate": s. 122) consists of property falling within any of several descriptions in pars. (d) to (l) inclusive of s. 104(1). The property described in par. (d)(i) is any property the subject matter of any gift inter vivos by the deceased within three years immediately before the death of the donor, and the property described in par (e) is the beneficial interest held by the deceased person immediately prior to his death in any property (with an immaterial exception) as a joint tenant or joint owner with any other person. (at p281)
3. Where, as here, there is a will, the executor is required by s. 121(1) to pay the whole of the duty out of what is described as "the residue of the estate", that is to say the residue of the testamentary estate: see s. 121(4). Where there is no sufficient residue, he is to provide for the payment by making proportionate deductions from each devise, bequest and legacy under the will unless the testator has made a different provision as to the payment of the duty: s. 121(2). So far the incidence of the duty is wholly upon persons interested in the actual estate. But where there is any notional estate, s. 122 makes special provisions as to the ultimate incidence of the duty on that estate. These provisions apply unless there is a will in which a contrary intention appears: sub-s. (2). The principal provisions are, first, that, where duty on any notional estate has become payable by the executor, he may recover the amount of the duty on that notional estate from the person to whom it passed or may retain or deduct the amount out of or from any moneys in his hands belonging to that person: sub-s. (3); and, secondly, that the executor is required by sub-s. (6) to apply the net amount that he recovers under the section to make good any deduction that he has made for the payment of duty from devises, bequests or legacies or out of residue. (at p282)
4. Whether sub-s. (3) has any application in respect of notional estate consisting of an interest in a joint tenancy (I need not deal with joint ownership separately)- that is to say whether such an interest can be said to have "passed" to any person - is a question which suggests itself in view of the nature of a joint tenancy as conferring on each joint tenant an estate (or interest) per my et per tout. In Fadden v. Deputy Federal Commissioner of Taxation [1943] HCA 20; (1943) 68 CLR 76, at p 84 Williams J. quoted a passage from the speech of Lord Selborne in Earl of Zetland v. Lord Advocate, to be found in Hanson on Death Duties, 7th ed. (1925) p. 436; 9th ed. (1946) p. 606, in which his Lordship said, "Technically, joint tenants are originally entitled to all which they ever have; and when one joint tenant dies, the other does not succeed to his interest by devolution of law, but remains the sole owner, the property being discharged from the control of the other . . . it is not that the survivor succeeds to anything from the other". Lord Hatherley made the point by saying in the same case (1878) 3 App Cas 505, at p 516 : "when one (joint tenant) dies off the estate of the other naturally and necessarily becomes enlarged". In Halsbury's Laws of England, 3rd ed., vol. 32, p. 334, par. 519 it is said: "The death of one joint tenant creates no vacancy in the seisin or possession: his interest is extinguished". See also per Latham C.J. in Wright v. Gibbons [1949] HCA 3; (1949) 78 CLR 313, at p 323 . Such statements accurately reflect Blackstone's treatment of the subject: 2 Bla. Comm. pp. 183, 184 and may be accepted as technically precise. (at p282)
5. But it is true none the less that on the death of one of two joint tenants the survivor's interest ceases to be an interest per my et per tout. In a real sense it is correct to say that "the whole estate then vests at once" in him: Williams on Real Property, 23rd ed. (1920) pp. 145, 146. During the joint tenancy the joint tenants enjoyed equality of rights as between themselves. After the death of one the other has the property exclusively. Accordingly, even in contexts where technical precision may be expected, the change that happens when the right of survivorship takes effect is often referred to in terms appropriate to a passing of property. Thus the jus accrescendi is described in Wharton's Law Lexicon, 11th ed. (1711) p. 471, as "a general concentration of property from more to fewer, by the accession of the part of him or them that die to the survivors or survivor, till it passes to a single hand, and the joint tenancy ceases". Megarry and Wade, in their Law of Real Property, 2nd ed. (1959) p. 390, say: "On the death of one joint tenant, his interest in the land passes to the other joint tenants by the right of survivorship". Dr. Helmore in his book on Real Property in New South Wales (1961) refers to the jus accrescendi as meaning that "on the death of one joint tenant his interest passes to the surviving joint tenant or tenants automatically". Preston uses a similar expression, speaking of the estate devolving on the survivor: Essay on Abstracts of Title, vol. II, (1818) p. 57. The reconciliation between such expressions as these and the technical conception of a holding totum conjunctim et nihil per se separatim lies in the fact which Lord Coke pointed out in his note to Littleton's sec. 288: "And albeit they are so seised . . . yet to divers purposes each of them hath but a right to a moietie; as to enfeoffe, give or demise, or to forfeit or lose by default in a praecipe". 1 Co. Litt. p. 186a. As Challis remarks, 3rd ed. (1911) p. 367, "in one sense each has nothing, and in another sense each has the whole . . . In another sense, each has an equal aliquot share". Thus a joint tenant's interest may be considered in different aspects, and the operation of the jus accresendi may be variously described according as one aspect or another is uppermost in mind. Where the quantum of the interest in the subject property is the important aspect, it is essential to speak in such terms as those used by Lord Selborne in Earl of Zetland v. Lord Advocate. But where the legal advantages which the interest confers are the subject of attention it is more to the point to speak in terms which not only equate but actually identify the advantages accruing to the survivor with the advantages formerly available to the deceased joint tenant, and so to describe the latter advantages as "passing" to the survivor. Thus, Dixon J. in Craig v. Federal Commissioner of Taxation [1945] HCA 1; (1945) 70 CLR 441, at p 452 , referred to the beneficial interests of a deceased joint tenant as having "passed or accrued" to others on his death. A probate duty Act which requires in the case of a deceased joint tenant that the beneficial interest which he had immediately before his death be treated as part of his dutiable estate is concerned with the money's worth which the deceased had in his lifetime and which his fellow joint tenant gained by his death. Considered as money's worth, the interest he had before his death was chiefly important for the right of enjoyment and the right of alienation; and as to enjoyment and alienation he and his fellow each had, as Lord Coke would say, but a right to a moietie before he died, while his fellow had a right to the whole upon his death. It is with this in mind that I turn to s. 122 (3), where the word "passed" is used as a word of general import assumed to be capable of application to the change which the Act makes relevant in the case of each form of notional estate. I think the proper conclusion as to the beneficial interest of a deceased joint tenant is that it is within the description of notional estate which passed to the surviving joint tenant. It is true that no charge can be given over it under s. 122 (4), because it is no longer in existence to be charged; but I do not find in that fact a sufficient reason for holding that the case is outside s. 122 (3). (at p284)
6. In the present case I am of opinion that unless a contrary intention appears in the will the husband of the deceased is caught by s. 122 (3) as being the person to whom the deceased's former beneficial interest as joint tenant passed. (at p284)
7. The question then is whether the contrary intention appears in the will. The residuary disposition, which is contained in cl. 4 of the will, takes the form of a direction to the executor (called in the will "my Trustee") in these terms: "I direct my Trustee after payment of my just debts funeral and testamentary expenses and all death estate and succession duties - State or Federal - upon the whole of my dutiable estate to hold the residue . . . upon trust to divide the same . . . " The reference to "the whole of my dutiable estate" strongly suggests that the draftsman has had present to his mind the possibility of duty having to be paid on notional as well as actual estate. On behalf of the residuary beneficiaries it is said that the expression "after payment . . . " etc. is only a recognition of the necessity to pay the debts funeral and testamentary expenses and the duties as part of the process of administration, and that there is insufficient ground for inferring an intention to displace the liability under s. 122. On the other side it is said that if one thing is clear on the terms of the will it is that the testatrix intended the residuary beneficiaries to take only that which remains after payment of the debts funeral and testamentary expenses and the whole of the duties, not the residue so ascertained plus a reimbursement of the duty on notional estate. Notwithstanding the attraction of the latter argument at first sight there is, I think, a fallacy in it; for it omits to distinguish between, on the one hand, an intention to limit the benefit to be taken by residuary beneficiaries in the distribution of the testamentary estate and, on the other hand, an intention inconsistent with their receiving a benefit from another source in virtue of a statutory provision. The question is not one as to the extent of the testatrix's bounty towards the residuary beneficiaries. It is whether she has shown an intention that the prima facie rights which in general s. 122 gives residuary beneficiaries as against persons to whom notional estate has passed are not to be enjoyed in the particular instance. I see no ground for saying that she has. (at p285)
8. This was the opinion of the learned Judge. He was much influenced, and in my opinion rightly, by what was said in the majority judgments delivered in this Court in the case of Hill v. Hill (1). That was a case under s. 120 (1933) 49 CLR 411 of the Stamp Duties Act, 1920-1931 (N.S.W.), which imposed a liability upon a person in whom was vested any notional estate to pay the duty payable in respect thereof to the administrator. There was no provision in the section as to a contrary intention, and consequently nothing in the will could displace the liability; but a clear expression of a contrary intention could produce an equivalent result by entitling a person in whom notional estate was vested to have a sum applied out of the estate so as to discharge his liability. That would be in substance a legacy to him of an amount equal to the statutory liability: O'Grady v. Wilmot (1916) 2 AC 231, at p274 ; Permanent Trustee Co. of N.S.W. Ltd. v. Hill (1933) 33 SR (NSW) 222, at p 226 . Viewing the matter in this light, the majority of the Court considered that a will not significantly different from the will in the present case exhibited no intention to give the persons in whom notional estate was vested any relief against the liability which the statute cast upon them. The case establishes that while a direction for payment of duties serves "to define the content of the residuary bequest", it has by itself no relevance to a statutory right of the residuary beneficiaries to receive from strangers to the testamentary estate a reimbursement of a part of the duties paid. To a like effect is the New Zealand case of In re Rayner (1948) NZ LR 455 . In my opinion the judgment of Adam J. on this part of the case should be affirmed. (at p285)
9. The problem as to Federal estate duty is somewhat different. Estate duty is to be levied upon the value as assessed of the estate of a deceased person (s. 8 (1)) comprising his real and personal property in Australia and his personal property anywhere if he died domiciled in Australia (s. 8 (3)), and property of several descriptions which was not his at his death but for the purposes of the Act is to be deemed to be part of his estate (s. 8 (4)). The descriptions are contained in pars. (a) to (f) inclusive, and they include property which has passed from the deceased person by gift inter vivos or settlement made within three years before his decease (par. (a)) and property being the beneficial interest held by the deceased person, immediately prior to his death, in a joint tenancy or joint ownership with other persons (par. (d)). Where, as here, there is an "administrator" (an expression which is defined to include an executor), the duty (that is, the duty on the whole estate, both actual and notional) becomes after assessment due and payable by the administrator (s. 29), except in so far as he is relieved from liability under par. (a) of s. 35A by the making by the Commissioner of an apportionment of duty as between property which passed from the deceased person by gift inter vivos or settlement and the residue of the estate. There is no provision for a similar apportionment in relation to any other description of property which is to be deemed part of the estate under s. 8 (4). (at p286)
10. Where there is no apportionment under par. (a) of s. 35A, so that the whole duty is payable by the administrator, the administrator is enabled by par. (b) of that section to recover from any person to whom property passed by gift inter vivos or settlement the amount of the duty assessed in respect of that property, or to retain or deduct that amount out of or from any moneys in his hands belonging or payable to that person. But there is no corresponding provision with respect to duty assessed in respect of any other form of notional estate. This is important in the present case. The argument on the appeal appeared to assume that such a corresponding provision is made by s. 35; but all that that section does is to provide, subject to any different disposition made by a testator in his will, that the duty payable in respect of the estate (so far as not exempt) shall be "apportioned" by the administrator among "the beneficiaries". The section first describes the apportionment as "among the persons beneficially entitled to the estate". But it is to be an apportionment "in the following manner"; and the manner is set out in pars. (a) and (b). Paragraph (a) provides that in the first instance the duty is to be apportioned among "all the beneficiaries" in proportion to the value of their interests, and par. (b) provides that where there are any "beneficiaries under the will" each of whom takes only specific bequests or devises of a value not exceeding 200 pounds the duty which under par. (a) "would be payable" in respect of the interests of those beneficiaries is to be apportioned among "all the beneficiaries" in proportion to the value of their interests. (There is a proviso as to the interests of certain relatives but it contains nothing of significance for the present case). (at p286)
11. This section has been three times amended since it was considered by the Full Court of the Supreme Court of Victoria in In the Will of Harper (1922) VLR 512, at p 524 , but not in any respect which affects the operation attributed to it in that case. The Court there pointed out that there was nothing in the section to impose a liability upon a person to make a payment to the administrator or to give the administrator any right of action: see also Perpetual Trustee Co. Ltd. v. Adams (1923) 24 SR (NSW) 87, at p 103 . He is required to apportion the duty by reference to values. That is to say that as part of his work of administering the testamentary estate he is to arrange the burden of the estate duty as between the persons beneficially interested in that estate; by means of proportion sums based upon the values of the interests of the several "beneficiaries" he is to attribute a portion of the estate duty to each such interest as the duty payable in respect of that interest; and (by clear implication) in making his distributions he is to give effect to the attribution. But because his administration extends only to the actual estate of the deceased, the intended apportionment cannot be other than an apportionment of the whole duty amongst those who are to participate in the distributions of the actual estate. A person whose interest is in notional estate is not, in respect of that interest, one of the "beneficiaries" in any ordinary sense of the term, and (what is conclusive of the point) in the nature of things he cannot be affected by any process of apportionment which the administrator is in a position to carry out. Presumably it was because the limited operation of s. 35 had been pointed out in the two cases above cited that s. 35A was enacted in 1928. Why the latter section was so framed as not to apply in respect of all classes of notional estate is a matter for speculation; but its limited form must have been very deliberately determined upon. (at p287)
12. In my opinion, therefore, as to estate duty on the notional estate consisting of the deceased's interest as joint tenant or joint owner with her husband the question does not arise whether the will makes what s. 35 calls "a different disposition". No question was asked in the originating summons as to the estate duty on property given by the deceased inter vivos. (at p287)
13. I would vary the order of Adam J. by omitting the answers to Question 1A and substituting the following answers: (a) No; (b) No; (c) Does not arise; and by omitting the declaration of charge. Subject to that, I would dismiss the appeal. (at p287)
MENZIES J. This is an appeal from an order of Adam J. made upon originating summons whereby his Honour decided that the appellant, who was the husband of Grace Eastgate deceased, should bear the burden of the probate and estate duty payable by the executor of her will in respect of certain property forming part of her notional estate. Some of this property - viz. personal estate of a value of approximately 1,394 pounds - had been the subject of gifts inter vivos from the deceased to the appellant within three years of her death, but the most important item was the beneficial interest held by the deceased immediately prior to her death as joint tenant with the appellant in a factory property valued at 46,600 pounds . It was accepted that the value of the deceased's beneficial interest in this property immediately prior to her death was half this amount, viz. 23,300 pounds. There was other jointly-owned personal property. (at p288)
2. It is convenient at the outset to refer to the relevant statutory provisions. The Administration and Probate Act 1958 (Vict.) by s. 104 (1) (e) provides that "the beneficial interest held by the deceased person immediately prior to his death in any property . . . as a joint tenant . . . with any other person or persons" shall "be and be deemed to form part of the estate of a deceased person". An executor is required to file a statement for duty showing inter alia "all property which is or is deemed to form part of the estate of the deceased" (s. 108) and the duty assessed is payable by the executor. By s. 120 duty is to be paid "after payment of the testamentary and funeral expenses and in priority to all debts of the testator . . ." Section 121 (1) provides: "The executor . . . (unless a contrary intention appears in the will) . . . shall (subject to the provisions of . . . the next succeeding section) pay any duty payable . . . out of the residue of such estate". Section 122 applies "unless there is a will in which a contrary intention appears" (sub-s. (2)). Section 122 sub-s. (3) is as follows: "Where duty on any notional estate has become payable by the executor or administrator, he may recover the amount of the duty on that notional estate from the person to whom that notional estate passed or may retain or deduct the amount out of or from any moneys in his hands belonging to that person". (at p288)
3. The Commonwealth Estate Duty Assessment Act provides that estate duty shall be levied and paid upon the value of the estate of persons dying (s. 8 (1)). Property "being the beneficial interest held by the deceased person, immediately prior to his death, in a joint tenancy . . ." is deemed to be part of the estate (s. 8 (4) (d)). Section 35 deals with the apportionment of the burden of duty among beneficiaries and says, so far as is relevant for present purposes, that "subject to any different disposition made by a testator in his will" the duty payable shall "be apportioned among all the beneficiaries in proportion to the value of their interests." Section 35A deals with a particular case of property passing from a deceased person by gift inter vivos or settlement and provides for apportionment of the duty by the Commissioner between the property settled or given and "the residue of the estate" and imposes upon the donee liability for so much of the duty as is apportioned to the property settled or given to the relief of the executor and the beneficiaries. This is not in absolute terms, for it is provided that the duty apportioned to the property given "shall be payable by the same persons and in the same manner as it would have been payable if there had been no administrator of the estate". This is a reference to s.34(3) which in that event provides that the duty assessed shall be payable by the persons who receive the estate from the deceased person and makes particular provisions for the case of two or more persons holding as joint tenants any property forming the whole or part of the estate of the testator. In the event of the Commissioner not apportioning pursuant to s. 35A, an executor is given the right to recover as a debt from the donee the duty assessed in respect of the property that person has taken by gift inter vivos. Having regard to the scheme of ss.34, 35 and 35A, I am satisfied that the obligation imposed by s. 35A upon a person who has taken property by gift inter vivos to reimburse the executor is "subject to any different disposition made by a testator in his will". (at p289)
4. It is possible to consider now, independently of the will of the deceased, whether the foregoing statutory provisions impose any obligation upon a surviving joint tenant to reimburse an executor for duty paid on so much of the notional estate of a deceased person as consists of property "being the beneficial interest held by the deceased person, immediately prior to his death, in a joint tenancy" with the survivor. This was assumed before Adam J. The problem as to probate duty arises under s. 122(3) of the Administration and Probate Act and is whether the survivor is a person "to whom that notional estate passed". The problem as to estate duty arises under s. 35 of the Estate Duty Assessment Act and is whether the survivor falls within the description of a beneficiary entitled to an interest in the estate. (at p289)
5. Joint tenants hold per my et per tout and each has the whole and every part of the estate with benefit of survivorship and no devisable interest. Nothing passes to a survivor when, upon the death of one joint tenant, the estate that he had during his life comes to an end. The survivor remains as the sole owner. In strictness, therefore, a surviving joint tenant is not a person to whom the beneficial interest that the deceased joint tenant had immediately prior to his death "passed" nor is such a survivor a beneficiary entitled to the interest of the deceased that statute has made part of his notional estate. These considerations do not, however, dispose of the matter, for the real question is whether either statute, for its own purposes, treats a surviving joint tenant as in a situation different from that in which the general law in strictness places him. The starting point of the enquiry, so far as the Administration and Probate Act is concerned, is that, for the purposes of Pt. V of the Act, the beneficial interest as joint tenant which a deceased person had immediately prior to his death is deemed to be what it is not, viz. part of the deceased person's estate. In consequence, where there is in the Part a reference to the estate passing it could well, consistently with the fiction that s. 104(1) (e) creates, include the beneficial interest therein described. To this general consideration there may be added the weight of a particular provision, viz. s. 114 (5) which is as follows: "Where any property is vested in a deceased person jointly with another person, and on the death of the deceased the property passes or accrues by survivorship to such other person, no registration of the title of the survivor shall be made in the Office of Titles, or in any other office, without the production of a certificate of the Commissioner to the effect that the duty in respect of such property has been paid or that the Commissioner consents to the proposed registration". Here there is an indication that the Part does treat a surviving joint tenant as a person to whom "the property passes or accrues by survivorship". Coming now to s. 122 (3), which is the critical section for present purposes, I have reached the conclusion that, in the light of the provisions to which I have referred and having regard especially to the scheme of Pt V, a surviving life tenant does fall within the description of a person to whom notional estate passes. Once what does not "pass" at common law is regarded as something which does pass for the purposes of the Part, the common law no longer affords any helpful guidance about what passes for the purposes of the Part. (at p290)
6. The starting point of the enquiry so far as the Estate Duty Assessment Act is concerned is s. 8 (4) (d) deeming the beneficial interest of the deceased immediately prior to his death in a joint tenancy to be part of his estate for the purposes of the Act. Again the Act establishes a fiction for its own purposes which for consistency ought, so far as the language permits, to be carried into all its provisions. Then there is in s. 18A recognition that, even when the whole or part of the estate is an interest as joint tenant, that interest "passes by . . . right of survivorship". Again in the context that the Act has created a fiction for its own purposes and has treated an interest as passing upon the death of a joint tenant to the surviving joint tenant, there is, I think, sufficient indication that a surviving joint tenant is a beneficiary with an interest for the purposes of s. 35 (a). It is, of course, clear that the word "beneficiary" in s. 35 (a) is not used in the strict sense of a person taking part of the estate of the deceased by virtue of his will or upon intestacy, for it seems to me that many persons not beneficiaries in this sense have to be regarded as beneficiaries for the purposes of s. 35 (a). (at p291)
7. On the whole, I think it would be contrary to the scheme of each Act not to carry into all its relevant provisions, where possible, the fiction that there passes to the surviving joint tenant upon the death of a deceased joint tenant the interest that he held in the property as joint tenant immediately prior to his death. Accordingly, unless there is in the will a contrary intention, the executor here is entitled to recover from the appellant the probate duty paid upon the 23,300 pounds aforesaid (Administration and Probate Act, s. 122 (3)) and, unless there is a different disposition, the estate duty should be apportioned among the beneficiaries, including the appellant, "in proportion to the value of their interests", including the deceased's interest as joint tenant (Estate Duty Assessment Act, s. 35 (a)). The position is the same with regard to the other jointly-owned property and the gifts inter vivos. This brings me to the terms of the will. (at p291)
8. What is relied upon by the appellant are the opening words of par. 4- "I direct my Trustee after payment of my just debts funeral and testamentary expenses and all death estate and succession duties - State or Federal - upon the whole of my dutiable estate to hold the residue (hereinafter referred to as my 'residuary estate') upon trust" for four groups of people. These words follow five specific legacies and precede the naming of a niece, a brother and the children of a niece, a brother and his children, and a sister and a nephew as residuary legatees. Mr. Voumard contended that as the "residuary estate" to be held for the residuary legatees is what is left after the payment of "all death estate and succession duties - State or Federal", it would be contrary to the will to absolve the residuary legatees from the burden of any part of those duties because to do so would result in their getting the "residuary estate" and something more whereas all that the testatrix intended that they should receive is the residuary estate as she defined it, without more. I find this argument compelling. Upon the contrary view, the executor would be obliged to recover from the appellant, pursuant to s. 122 (3), part of the probate duty paid and then, pursuant to s. 122 (6), to divide what he so recovered between those who, upon my reading of the will, are only entitled to what remains after the payment of duty upon "the whole of my dutiable estate". It would be surprising if the provisions of the Act relating to the apportionment of duty were to be regarded as a means of adding to the clearly-limited bounty of the testatrix. All that is necessary to find is that the will should negative the operation of certain statutory provisions and I cannot imagine any clearer way of doing so than by saying directly that residuary estate should bear all duties, including that payable in respect of notional estate. I regard the testatrix's direction here as quite as strong as such a direction because the use of the word "dutiable" seems clear recognition that the duty to be paid as therein provided is not merely upon the actual estate. So far as actual estate is concerned, the legacies bequeathed in cl. 3 were given free of all duties and the only other actual estate disposed of to beneficiaries is the residuary estate. Where, therefore, the word "dutiable" was used, it was used as a word of extension and not of limitation. I am unable to find any real difference between a direction that duty, including duty upon notional estate, should be borne by residuary estate and a direction that, in ascertaining residuary estate, duty, including duty upon notional estate, should first be deducted. Furthermore, in each direction I find a clear expression of intention that duty upon notional estate should be borne by the actual estate which would otherwise go to the residuary beneficiaries. (at p292)
9. Similarly, I regard the provision in the will as a different disposition from the situation brought about by the Estate Duty Assessment Act, s. 35 (a) - that is, that duty should be borne by the beneficiaries pro rata; reading the word "beneficiaries" as including the appellant and the words "their interests" as including the interest which his deceased wife held immediately prior to her death as joint tenant with him. Treating the appellant as a beneficiary taking part of the dutiable estate, the will provides that duties upon the whole of the dutiable estate are to be paid before ascertaining the residuary estate to which the residuary legatees would become entitled. (at p292)
10. It would be contrary to the will for the beneficiaries to get any more than one quarter of the estate after inter alia the payment of all duties and I find nothing in either Act to overcome the provisions of the will. One thing that is clear is that the general provisions of each Act for the apportionment of duty must yield to the clearly-expressed intention of the testatrix. Such an expression I find in this will. (at p293)
11. There is one other provision in the will to which I should refer. It is cl. 7, wherein the testatrix declares "that I have made no provision for my said husband as he is amply provided for". It was suggested for the respondents that, if the appellant were to escape the burden of duties, it would be contrary to this cl. 7 for, so it was argued, he can escape only by virtue of what is tantamount to a legacy and this clause negatives any legacy. All the clause does, however, is to explain why the testatrix is not giving her husband anything. It would be in the highest degree artificial and remote from the testatrix's intention to treat, for instance, the expression of a contrary intention for the purposes of s. 122 of the Administration and Probate Act as being necessarily the equivalent of a legacy and then, using cl. 7 of the will, to deny the giving of any legacy. This very argument, however, indicates how misleading it can be to substitute words used in judgments for the words of the Act of Parliament which the judgments are concerned to interpret and then to apply them to the construction of different legislative enactments. (at p293)
12. There is one further comment to be made about cl. 4 of the will, which is perhaps implied in what I have already written. It is that, because cl. 4 of the will is clearly directed to the ascertainment of the residuary estate as well as its disposition, I am not able to read the direction about payment as amounting merely to a statement of what the testatrix desired should happen in the first instance, leaving the ultimate burden of the payments directed to be made as something left open for subsequent determination independently of the direction. (at p293)
13. Adam J., in reaching a decision that in this will there appeared no "contrary intention" for the purposes of the Administration and Probate Act, s. 122 (2), and no "different disposition" for the purposes of s. 35 of the Estate Duty Assessment Act, regarded himself as bound by Hill v. Hill [1933] HCA 45; (1933) 49 CLR 411 . This was a decision upon the Stamp Duties Act (N.S.W.) which, by s. 120, provided that: "Where any property which is or the value of which is included in the dutiable estate of a deceased person is vested in any person other than the administrator, the duty payable in respect thereof shall be paid by the persons entitled thereto according to the value of their respective interests therein, to the administrator". The facts were that during his life the testator conveyed property to trustees, as to part, for his benefit during his life and for the benefit of his wife and children after his death. By will he gave the residue of his estate, after certain legacies, to his trustees after conversion upon trust to pay therefrom inter alia testamentary expenses, including probate duty and estate duty, and to stand possessed of "the rest residue and remainder thereof" upon trust for division among four named persons. It was held that this provision as to the payment of duty did not indicate an intention by the testator to negative the statutory obligation imposed by s. 120 sub-s. (1). The basis of the decision was that the words were not clear enough to give the beneficial owners of the property passing under the settlement a legacy equal in amount to the duty charged upon that property and it was considered necessary that the will should go so far to negative the obligation imposed by s. 120: see Rich and McTiernan JJ. (1933) 49 CLR, at p 418 , Starke J. (1933) 49 CLR, at p 421 and Dixon J. (1933) 49 CLR, at p 424 . It was, however, recognized that the provision in question would suffice to throw upon residue estate duty "which otherwise would fall upon the general pecuniary legacies and the specific bequests and devise" pursuant to s. 35 (a): see Dixon J. (1933) 49 CLR, at p 423 . It is this part of his Honour's judgment that I find most useful for present purposes, for reading s. 35(a), as I have, to include the appellant as a beneficiary for the purposes of its application to him means that his position must be approximated as closely as possible to that of a beneficiary for all purposes of estate duty and any direction that would free a beneficiary from the burden of estate duty would, therefore, prima facie free the appellant too. On this footing I find, therefore, in what the present Chief Justice had to say in Hill v. Hill [1933] HCA 45; (1933) 49 CLR 411 support for the view that the appellant here should not have to bear the burden of estate duty upon the notional estate that he took. Furthermore, I consider that the Administration and Probate Act creates a situation very much closer to that created by the Estate Duty Assessment Act than by the Stamp Duties Act (N.S.W.). It is not surprising that Martin J. distinguished Hill v. Hill [1933] HCA 45; (1933) 49 CLR 411 in In re Myer (1939) VLR 77 on the ground of the difference between the relevant statutory provisions. (at p294)
14. It seems to me that the view I have taken with regard to the application of Hill v. Hill [1933] HCA 45; (1933) 49 CLR 411 to Commonwealth and Victorian legislation is not only contrary to that adopted by Adam J. in this case but differs from that adopted by Sholl J. in Re Joseph (1960) VR 550 and by Pape J. in Re Hoppe (1961) VR 381 . I need hardly say that I have formed a conclusion different from that of those learned judges only with some misgiving and after a good deal of hesitation. However, the close examination that we have had to make of the meaning of the words "to whom that notional estate passed" in s. 122 [1933] HCA 45; (1933) 49 CLR 411 of the Administration and Probate Act and the words "beneficiaries" and "of their interests" in s. 35(a) of the Estate Duty Assessment Act for the purpose of deciding whether a surviving joint tenant and what he obtains by virtue of his right of survivorship does fall within these provisions has, as I have already shown, brought me to the conclusion that the position of a person taking notional estate must, for the purposes of these Acts, be approximated as closely as possible to that of a beneficiary who takes part of the actual estate of a deceased person and, accordingly, that the distinction between "beneficiaries" on the one hand and "strangers to the actual estate" on the other, which was found to be so important in deciding the kind of provision in a will necessary to overcome the mandatory provisions of s. 120(1) of the Stamp Duties Act (N.S.W.), has not the same force in relation to either the Administration and Probate Act or the Estate Duty Assessment Act. For the purposes of New South Wales law, all that is necessary for liability to attach under s. 120 is that dutiable estate is vested in some person other than the administrator. Such a person is not regarded as a beneficiary whereas, for the purposes of s. 122(3) of the Administration and Probate Act, there must be a person to whom part of the "estate" has "passed" and, for the purposes of Commonwealth law, there must be some person who falls within the description of a "beneficiary" with an "interest" with respect to part of the "estate". It is a commonplace that decisions upon one Act can be applied to a different Act only with great circumspection and I have, for the reasons I have given, arrived at the conclusion that Hill v. Hill (3) does not govern this case and that the conclusions I have formed, based upon the lanuage of the Acts and the will in question, are not ones that its authority constrains me to abandon. (at p295)
15. I consider the appeal should be allowed and the questions asked in the originating summons answered as follows:-1. (a) Yes; (b) No; (c) Yes. 1A (a) Yes; (b) No; (c) Yes. (at p295)
OWEN J. I had prepared a judgment in this matter in which I expressed the view that the notional estate of a deceased person consisting of the beneficial interest held by him immediately prior to his death in any property as a joint tenant with any other person did not "pass" to the surviving joint tenant on the death of the deceased so as to bring s. 122(3) into play. But the judgment prepared by Kitto J., which I have had the opportunity of reading, has satisfied me that the view that I had formed on this point was wrong. I agree with the order which he proposes and the reasons for it. (at p296)
ORDER
Order of the Supreme Court varied by omitting the answers therein to questions 1A (a), (b) and (c) and substituting therefor the following answers:-
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