Robbins v Federal Commissioner of Taxation [1974] HCA 58; (1974) 129 CLR 332 (4 September 1974)

HIGH COURT OF AUSTRALIA

ROBBINS v. FEDERAL COMMISSIONER OF TAXATION. [1974] HCA 58; (1974) 129 CLR 332

Estate Duty (Cth)

High Court of Australia.
Walsh J.(1)
Menzies(2), Gibbs(2), Stephen(2) and Mason(2) JJ.

CATCHWORDS

Estate Duty (Cth) - Estate of deceased - Assets - Sale of property - Purchase price repayable by annual instalments - Vendor entitled to give notice under his own hand requiring payment of price in full - Death of vendor without giving notice - Valuation - Whether whole of outstanding balance or actuarial value thereof at death included in estate - Estate Duty Assessment Act 1914-1970 (Cth), s. 8.

HEARING

Perth, 1973, June, 27;
Sydney, 1973, August 7. 7:8:1973
Perth, 1974, September 4. 4:9:1974
APPEAL from Walsh J.

DECISION

1973, August 7.
WALSH J. delivered the following written judgment:-
The matter in dispute between the parties to this appeal is the value which deceased). The executors of the deceased's estate (the appellants) requested the Commissioner of Taxation (the respondent) to treat an objection made by the appellants to his assessment of estate duty as an appeal to this Court pursuant to s. 24 (4) (b) of the Estate Duty Assessment Act 1914 (Cth), as amended. The ground of the objection was that excessive values had been placed by the respondent upon the rights of the deceased under certain agreements made by him. There is no dispute as to the facts and the decision of the appeal depends upon the construction to be given to certain provisions of the agreements. (at p333)

2. Two of the agreements which need to be considered were made on 19th August 1969. A week earlier the deceased had made a will appointing his wife, his daughter Diane Mary Coxon and his son Gordon Howard Robbins his executors and trustees. By the will he gave his residuary estate upon trust for his wife during her life and after her death upon trust for all his children, subject to their surviving him for twenty-eight days. He died on 1st February 1970 without having altered or revoked the will. His widow and the son and the daughter named above are the executors of the will and are the appellants. As well as the son and daughter named as executors, another daughter and another son took shares in the residuary estate. (at p334)

3. By one of the agreements made on 19th August 1969 (herein called the first August agreement) the deceased agreed to sell to his wife and to his four children in equal shares a half share in certain property at Mandurah in Western Australia for the sum of $65,000, of which $20,000 was to be paid by way of deposit. The balance of $45,000 was to be paid on demand. No interest was payable on the balance of purchase money for the time being owing. The agreement was expressed to be made (omitting the addresses and occupations of the parties) between:

"Cyril Howard Robbins...(hereinafter called 'the Vendor'
which expression shall include his executors administrators and
transferees) of the one part and Ethel Mary Robbins...Diane
Mary Coxon...Gordon Howard Robbins...Helen Kaye
Boyd...and Lindsay Brian Robbins...(hereinafter called
'the Purchasers' which expression shall include their respective
executors administrators and transferees) of the other part." (at p334)

4. On 19th September 1969 that agreement was varied by another agreement between the same parties (herein called the first September agreement). It was recited that "the parties hereto have mutually agreed to vary the terms of payment in manner hereinafter provided". Clause 1 of this agreement provides:

"The said balance of purchase money or so much thereof as
shall at the expiration of the Notice hereinafter referred to
remain owing (hereinafter referred to as 'the said Consideration')
shall be paid in full by the Purchasers to the Vendor
on the expiration of thirty days' written notice given by the
Vendor to the Purchasers under his own hand requiring the
Purchasers to pay in full the amount of the said Consideration." (at

p334)

5. Clause 2 provides that subject to cl. 1 the purchasers shall pay to the vendor annual instalments of not less than $600, the first to be paid on 1st September 1970 and subject to cl. 1 each subsequent annual instalment to be paid on the first day of September in each successive year. Clause 3 provides that should the purchasers, having been required to pay the said consideration pursuant to cl. 1, fail to do so, simple interest at seven per centum per annum shall be payable in respect of the period, commencing on the date of expiration of "the aforesaid written notice" and ending on the date when the said consideration is paid in full to the vendor. Clause 4 provides that subject to the preceding clauses the purchasers shall have the right to pay the said consideration in full at any time. Clause 5 provides that the principal agreement shall be read and construed and take effect as altered by this agreement. In this agreement the same provisions are contained as to what shall be included in the expression "the Vendor" and the expression "the Purchasers" as in the first August agreement. (at p335)

6. Under the other agreement made on 19th August 1969 (herein called the second August agreement) the deceased agreed to sell the remaining half of the Mandurah property to a company at the price of $65,000, of which $6,000 was to be paid by way of deposit, leaving a balance of $59,000. The balance was to be paid as to $4,000 on 1st February 1970 and as to the remaining $55,000 by half-yearly instalments of $1,250 and the balance on 1st August 1979. In this agreement it is stated that "the Vendor" shall include his executors administrators and transferees and "the Purchaser" shall include its successors in title and transferees. (at p335)

7. Another agreement was made on 19th September 1969 (herein called the second September agreement) under which the deceased agreed to sell to his wife and to his four children in certain stated proportions (a) his interest in the second August agreement stated to be valued at $59,295 being $59,000 balance of purchase money and $295 interest and (b) his half share in another property at Mosman Park in Western Australia, for a total price of $73,795, apportioned as to $59,295 in respect of item (a) and as to $14,500 in respect of item (b). The consideration was to be paid to the vendor under conditions similar to those in the first September agreement. Clause 2 of the second September agreement is for all relevant purposes identical with cl. 1 of the first September agreement. Clauses 3, 4 and 5 are in similar terms to those of cll. 2, 3 and 4 in the first September agreement. Clause 6 provides for certain remedies that may be exercised "by the Vendor" if the purchasers shall in any respect fail to comply with the terms of the agreement and "such default shall continue for twenty-eight days after written notice to the Purchasers to remedy same". No distinction is made in this clause between default in compliance with cl. 2 and default in compliance with cll. 3 or 4. In this agreement the parties are described in the same way as in the other agreements made between those parties. (at p335)

8. The deceased did not give any notice to the purchasers requiring payment either under cl. 1 of the first September agreement or under cl. 2 of the second September agreement. (at p335)

9. The question at issue is whether, as the appellants contend, the rights to give notice requiring payment in accordance with cl. 1 of the first September agreement and cl. 2 of the second September agreement were available only to the deceased himself or were, as the respondent contends, rights which were exercisable also by his executors after his death. It is agreed for the purposes of this appeal that if the former contention should be upheld the discounted value as at the date of the deceased's death of the debt payable by instalments under the first September agreement was $8,858 and the value of the debt payable by instalments under the second September agreement was $16,874. It is not disputed on behalf of the appellants that, if the respondent's contention is upheld, the values at the date of the death of the deceased of the debts payable under the two agreements were correctly assessed by the respondent by reference to the whole of the outstanding balances, which were $45,000 and $73,795. (at p336)

10. As stated above three of the persons who became indebted to the deceased as a result of the agreements are the three appellants, who were appointed executors by his will. In this appeal it has not been argued that this fact has any effect upon the amount of estate duty payable on the estate. The objection of the appellants to the assessment was confined to the contention that the values of the debt due to the estate should be ascertained on the footing that they were payable only by the instalments specified in the agreement and that no notice requiring early payment could be given after the death of the deceased. It is unnecessary, therefore, to consider here the operation of the rule that at common law a debt is extinguished if the debtor becomes an executor of the creditor. This rule is discussed in Bone v. Commissioner of Stamp Duties (N.S.W.) (1972) 2 NSWLR 651 , a case to which I shall refer again. I mention it in order to make it clear that no reliance has been placed upon it. I am not to be taken as suggesting that the appellants could have based any valid argument upon it. (at p336)

11. The appellants contend that the debts should be given a discounted value. They submit that upon the true construction of the expression "written notice given by the Vendor to the Purchasers under his own hand" which appears in the notice clauses, the agreements provide for two modes of payment, one being by payment in full after notice requiring such payment and the other (which is subject to the first) being by instalments, that any notice requiring payment of the outstanding amount in full could be given only by the deceased in his lifetime, and that after his death the only mode of payment provided by the agreements was payment by relatively small instalments over a long period. It is said that the consequence is that the rights of the estate of the deceased to receive the payments must be given discounted values. The appellants rely on the decision of Owen J. in Bray v. Federal Commissioner of Taxation [1968] HCA 56; (1968) 117 CLR 349 in which it was held that a provision for the repayment of a loan in full upon the expiration of ninety days' written notice "given by the Lender under his own hand to the Borrower" should be construed as applying only to a written notice given by the lender himself, the right to give it being personal to him. (at p337)

12. It may be surmized that in fact the advisers of the parties to the agreements made by the deceased and the members of his family wanted to take advantage of the decision in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 . But I do not think that any such consideration can affect the construction of the agreements. (at p337)

13. The respondent contends that the expression "under his own hand" does not warrant a construction that precludes the executors from calling in the outstanding amounts by giving notices in accordance with the notice clauses, but merely prevents such a notice being given by an agent. It is contended, therefore, that the debts should be given their face values. It is submitted for the respondent that the present case is distinguishable from Bray's Case [1968] HCA 56; (1968) 117 CLR 349 . The respondent relies, also, on the decision of the Court of Appeal of the New South Wales Supreme Court in Bone v. Commissioner of Stamp Duties (N.S.W.) (1972) 2 NSWLR 651 , in which the decision of Owen J. was not followed and the contrary view was adopted. (at p337)

14. In both those cases loan agreements were under consideration. In both cases the agreements were expressed to be made between a named person thereinafter called the "lender" and another named person thereinafter called the "borrower". The clause (cl. 2), referring to a notice requiring payment in full of the debt, was in each case in the same terms, except that in Bone's Case (1972) 2 NSWLR 651 the agreements contained the words "under her own hand". In Bray's Case (1968) 117 CLR, at p 350 , the clause was as follows:

"The loan debt shall be paid in full by the Borrower to the
Lender upon the expiration of ninety (90) days written notice
given by the Lender under his own hand to the Borrower
requiring the Borrower to pay in full the amount of the said
loan debt."

All the agreements contained provisions (cl. 3) (not found in the present case), to the effect that if the lender assigned the debt in accordance with s. 12 of the Conveyancing Act, 1919-1954 (N.S.W.) the assignee should be entitled to obtain payment in full of the debt in the same manner as the lender could have obtained payment thereof in pursuance of cl. 2. They contained provisions that subject to cll. 2 and 3 the borrower should pay to the lender in reduction of the debt annual instalments of specified amounts. The agreements did not contain any definition or expansion of the meaning of the terms "lender" and "borrower". (at p338)

15. I am of opinion that in the agreements considered in those two cases, if the clauses referring to the giving of notice requiring payment in full had not contained the words "under his own hand" or "under her own hand", it would have been correct to treat the rights conferred by them as available to the executors or administrators of the lenders. Prima facie the right to the debt and any right incidental to or associated with that right would vest in the personal representatives of the creditor. To the authorities dealing with this question mentioned by Hope J.A. in Bone's Case (1972) 2 NSWLR, at pp 664-665 , I add a reference to Tolhurst v. Associated Portland Cement Manufacturers (1903) AC 414, at pp 420, 423 . The authorities just mentioned relate to the passing to personal representatives of the rights conferred by options to purchase or to take a lease of property. But the principle underlying them is no less applicable to the construction of a loan agreement or an agreement for the sale and purchase of land. On the contrary, I think that it may be applied more readily to the latter classes of contract. The benefits of such contracts are benefits of a kind which may be thought to be more likely to be intended to be transmissible to the personal representatives, on the death of the person entitled to receive payment, than the benefit of an option. But no absolute rule is applicable to the question which arose in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 and in Bone's Case (1972) 2 NSWLR 651 and which arises here. The question is not whether the deceased person in each case had any transmissible right to receive payment of the debt. It is whether the particular right to call up payment in full was transmissible or was personal. Such a question is to be decided in each case according to its circumstances and to the terms in which the agreement is expressed: see Carter v. Hyde [1923] HCA 36; (1923) 33 CLR 115, at pp 120-121, 124, 125 . (at p338)

16. As I have said I am of opinion that if the words "under his own hand" or "under her own hand" had not been used, that right ought to have been held in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 and in Bone's Case (1972) 2 NSWLR 651 to be transmissible. There is nothing in the judgment of Owen J. in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 which is inconsistent with this view. It was because of the presence of the words "under his own hand" that his Honour considered that the intention was that the right should be exercisable only by the deceased in his lifetime. In Bone's Case (1972) 2 NSWLR 651 , however, the opinion prevailed that similar words ought not to be regarded as expressing an intention that the right should be personal. Their Honours attached importance to the circumstance that in other provisions of the agreements it appeared that the term "lender" was intended to include the personal representatives and they held that it should be given the same meaning in the provisions relating to the giving of a notice by the lender. They treated the words "under her own hand" as operating only to exclude the giving of a notice by an agent. (at p339)

17. If the agreement now under consideration had not been different in any significant respect from those considered in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 and in Bone's Case (1972) 2 NSWLR 651 , it would have been necessary to decide which of those cases I should follow. In that event I should have been disposed to follow the decision given in this Court, the correctness of which was assumed in a later case relating to the same agreement: see Bray v. Federal Commissioner of Taxation (No. 2) [1971] HCA 8; (1971) 123 CLR 348 . I am not convinced by the reasons given by the Court of Appeal in Bone's Case (1972) 2 NSWLR 651 that the decision of Owen J. was clearly wrong and, therefore, I think it would have been proper for me to follow it. I do not propose to examine those reasons in this judgment, but in so far as they attached importance to the meaning which the term "the lender" appeared to have in other provisions of the agreement (a consideration that would clearly be relevant in the present case), the comment may be made that a conclusion that the same expression was used in a different sense in other parts of the agreement is not necessarily destructive of the construction adopted by Owen J. If the context in which the expression was used in the provision as to the giving of notice appeared to indicate that the right to give a notice was intended to be a personal one, it might properly be so construed, although in other provisions of the agreement the term "the lender" had a wider meaning. There is no rule of general application that the same meaning ought to be given to an expression in every part of the document in which it appears: see Watson v. Haggitt (1928) AC 127 . (at p339)

18. But it is unnecessary, in my opinion, to express a concluded view as to the correctness of the decision in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 . The reason is that I cannot regard the inclusion of the words "under his own hand" in the relevant clauses of the agreement now under consideration as a sufficient ground for holding that the express statement in each agreement that the expression "the Vendor" shall include "his executors administrators and transferees" is to be disregarded when reading those clauses. Let it be assumed that in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 it was correctly decided that in a clause in which the only person expressly named as the person having the right to give a notice was the lender (Mr. T. H. Bray), so that the availability of that right to his executors, if it was available to them, depended upon an implication, the words "under his own hand" indicated an intention that the right should be personal to Mr. Bray. In the present case there is a difference which I regard as very important. If one reads cl. 1 of the first September agreement having regard to the express statement which the parties have made as to the use of the expressions "the Vendor" and "the Purchasers", it is difficult to find any sufficient reason for holding that the reference to "written notice given by the Vendor" does not include a reference to a written notice given by his executors. The direction that the expression "the Vendor" is to include the executors (and others) is not stated to be subject to the context in which the expression is used or to be limited in any other way in its application. (at p340)

19. It may perhaps be argued that, even in the absence of any express direction, the words "the Vendor" would be taken prima facie to have the same meaning as if there had been such a direction (see Tolhurst's Case (1903) AC, at p 420 ), and that, therefore, the inclusion in the agreements of that direction is not important. But I am of opinion that the express assignment by the parties of a meaning to the expression "the Vendor" which includes his executors is of significance and requires a construction of the words in cl. 1 providing for the giving of a notice different from that which might have been appropriate if no such express provision had been made. It is much more difficult, in my opinion, to regard the words "under his own hand" as displacing the meaning expressly attached to the words of the definition than it would be to regard them as displacing a prima facie meaning that would otherwise be attached to the words relating to the giving of notice, by means of an implication based upon the general law or derived from a conclusion as to what was probably intended, although not expressly stated, by the parties. (at p340)

20. In my opinion, there is no valid reason for denying the application of the direction that the words "the Vendor" are to include the executors to those words where they are used for the second time in cl. 1. Its application to those words does not produce a capricious or an absurd result. Nor does it mean that no effect at all can be given to the words "under his own hand" in that clause. (at p340)

21. The use of the pronoun "his" in the expression "under his own hand" does not stand in the way of giving effect to that view. Even apart from any statutory provision, I think that there would be no difficulty in construing "his" as including, where necessary or appropriate, the plural or the feminine equivalent of that pronoun. However, s. 8 of the Property Law Act 1969 (W.A.) requires such a construction to be adopted unless the context otherwise requires. (at p341)

22. If the clause is read as authorizing the giving of notice by the executors the words "under his own hand" (modified as required by the circumstances) can be properly regarded, I think, as operating to exclude the giving of notice by an agent, even if that would not have been taken to be its intended meaning, if the provisions requiring consideration had been identical with those in Bray's Case [1968] HCA 56; (1968) 117 CLR 349 . (at p341)

23. The same considerations apply to the construction of cl. 2 of the second September agreement as to that of cl. 1 of the first September agreement. (at p341)

24. I am of opinion, therefore, that the respondent is correct in the contention that the right to give a notice requiring payment in full of the outstanding amounts could have been and can be given by the executors of the will of the deceased. I do not think that the fact that the right to receive payment is vested in three of the persons who are under the obligation to pay should lead to a different conclusion as to the proper construction of the agreements. (at p341)

25. The appeal should be dismissed and the assessment confirmed. (at p341)

ORDER

Appeal dismissed with costs. Assessment confirmed.
The appellants appealed from the judgment and order of Walsh J. to the Full

Court.

E.F. Downing Q.C. and D.K. Malcolm, for the appellants.

J.L. Toohey Q.C. and M.C. Lee, for the respondent.

1974, September 4.

The judgment of the COURT was delivered by MENZIES J.:-
The Court, having considered the judgment of Walsh J. and having noted the

criticisms made of it by counsel for the appellant, is of the opinion that that judgment is correct and that appeal should be dismissed. (at p341)

2. The appeal is dismissed with costs. (at p341)

ORDER

Appeal dismissed with costs.