Archibald v Commissioner of Stamp Duties (Qld) [1930] HCA 34; (1930) 44 CLR 243 (16 October 1930)

HIGH COURT OF AUSTRALIA

Archibald Appellant; and The Commissioner of Stamp Duties (Queensland) Respondent.

H C of A

On appeal from the Supreme Court of Queensland.

16 October 1930

Isaacs C.J., Rich and Starke JJ.

Macgregor, for the appellant.

Macgroarty A.G. for Q. and Fahey, for the respondent.

Macgregor, in reply.

The following written judgments were delivered:—

Oct. 16

Isaacs C.J. and

Starke J.

On 8th March 1927 Robert John Archibald insured his life with the Australian Mutual Provident Society for £10,000, at a yearly premium of £508 6s. 8d., and paid the first premium. On 15th March 1927 he insured his life with the Mutual Life and Citizens' Assurance Co. Ltd. for £5,000, at a yearly premium of £247 5s. 10d., and paid the first premium. By two several indentures, dated respectively 15th March 1927 and 16th March 1927, he assigned and transferred to the Queensland Trustees Ltd. the two policies of insurance and all moneys to become payable in respect thereof, to hold the same (subject to any appropriation of surrender value towards overdue premiums and interest penalties or other lawful charges thereon) upon certain trusts.

That policies of insurance fall within the expression "property" in the statutory definition of in sec. 2 of the Gift Duty Act, is definitely settled by Caldwell v. Dawson[1] and Potter v. Commissioners of Inland Revenue[2].

The first, second, third and fourth trusts of the instruments were to pay Commonwealth and State succession, estate, probate and other duties, and then it was declared that the assignments were "Subject as aforesaid:—(a) Upon trust for Lilian Amy Archibald the wife of the assured should she become his widow, failing which then (b) upon trust for all or any of the children or child of the assured who being male attain the age of twenty-one years or being female attain that age or marry and if more than one in equal shares as tenants-in-common And (c) in so far as there shall be a failure of the trusts aforesaid then upon such trusts and with and subject to such powers and provisions as the assured shall from time to time by deed or deeds revocable or irrevocable or by his last will and testament direct limit or appoint and failing any such direction limitation or appointment then to pay the said moneys in respect of which there shall be a failure of the trusts aforesaid to the executors or administrators of the assured as part of his estate." No other portions of the instruments are material to this case. Each instrument in respect of the trusts quoted is both an "instrument of gift" under the Gift Duty Act of 1926, and also a "settlement" or "deed of gift," that is, operating only as a gift under the consolidated Stamp Acts 1894 to 1926. It is unnecessary to say whether they are settlements for common law reasons.

Sec. 10 of the first mentioned Act says: "(1) Notwithstanding anything to the contrary in the Stamp Acts 1894 to 1918, or any Act amending or in substitution for the same, the stamp duty chargeable on any instrument of gift in respect of which gift duty is payable shall be ten shillings, but this stamp duty shall be in addition to and not in substitution for any other stamp duty to which the instrument is liable so far as it operates otherwise than exclusively as an instrument of gift."

This case concerns only stamp duty, and therefore it is clear that whether either of the instruments in question is chargeable with any stamp duty beyond 10s., depends entirely upon whether "it operates otherwise than exclusively as an instrument of gift." That means otherwise than as "an instrument of gift" within the meaning of the Gift Duty Act; that is to say, whether it is called an "instrument of gift" or "a settlement" or "a deed of gift," its true operation is by way of gift only. Neither instrument in question operates "otherwise than exclusively as an instrument of gift" (sec. 10), and consequently it follows that the instruments are not chargeable with stamp duty beyond 10s.

The first and third questions should therefore be answered in the negative. The second and fourth are each answered, Ten shillings. As to the fifth question, the Commissioner should pay the taxed costs of the appellant.

This appeal should be allowed, the judgment of the Supreme Court of Queensland be discharged, and the questions in the appeal case answered as above stated.

Rich J.

The decision in this case depends upon sec. 10 (1) of the Gift Duty Act of 1926. The object of this section is to adjust the incidence of stamp duty under the Stamp Acts 1894 to 1926, and of gift duty in respect of the same transaction. Sec. 10 (1) is necessarily referential because it relates to the operation of the Stamp Acts and the meaning and application of referential legislation is notoriously dark and difficult. Unfortunately the difficulty has not been lessened and the darkness illuminated by the form in which sec. 10 (1) is expressed. It says: "Notwithstanding anything to the contrary in the Stamp Acts 1894 to 1918, or any Act amending or in substitution for the same, the stamp duty chargeable on any instrument of gift in respect of which gift duty is payable shall be ten shillings, but this stamp duty shall be in addition to and not in substitution for any other stamp duty to which the instrument is liable so far as it operates otherwise than exclusively as an instrument of gift." Apparently the words "so far as it operates otherwise than exclusively as an instrument of gift" although they are a mere qualification of the statement that stamp duty shall not be substitutional but additional are an incomplete expression of an affirmative provision to the effect that an instrument which does operate exclusively as an instrument of gift shall not be exposed to stamp duty because in that case gift duty and the stamp duty of 10s. imposed by sec. 10 (1) are substitutional for it. It is, I think, clearly implied that the stamp duty of 10s. imposed by sec. 10 (1) is substitutional for the stamp duty imposed by the Stamp Acts in the case of an instrument liable to gift duty so far as it operates exclusively as an instrument of gift. The question in this case is whether certain instruments purporting to transfer life policies upon trusts first to pay the transferor's succession, probate and estate duty on his death and next for relatives are liable to be stamped as settlements with ad valorem duty pursuant to sec. 59 (1) of the Stamp Acts 1894 to 1926. Plainly they are so liable unless they obtain the immunity conferred by the provision of sec. 10 (1). The first step is, therefore, to consider whether the instruments are chargeable with gift duty and so come within the liability imposed by sec. 10. This depends upon the question whether they contain or express a gift. "Gift" is defined by sec. 2 of the Gift Duty Act in very wide terms. It means and includes "any disposition of property which is made otherwise than by will (whether with or without an instrument in writing) without fully adequate consideration in money or money's-worth passing from the disponee to the disponor." The expression "disposition of property" is also very widely defined. It means and includes (inter alia) "any ... settlement or other alienation of property; ... the creation of a trust of property;" and "the grant or creation of any ... interest in property." "Property" includes "personal property and every interest in property" and therefore includes policies of life insurance (Caldwell v. Dawson[3]; Potter v. Commissioners of Inland Revenue[4]). Although the instruments in question purport to assure the legal interest in the policies to the trustees, sec. 41 of the Life Assurance Companies Act of 1901 deprives it of any efficacy as an assignment of the policies. The policies were, however, assigned in the statutory form by an indorsement and thus the property subject to the trust declared by the instruments was formally vested in the trustees. If no trusts were declared by these instruments or otherwise, the trustees who took the legal interest by these indorsed statutory assignments would hold the policies upon a resulting trust for the assignor. It follows that the specification and declaration of the trusts upon which the policies so assigned were to be held operated to create the equitable interests and impart them to the cestuis que trust. This was done, but these trusts were declared, and declared only by the instruments. It follows that in so far as the trusts were in favour of persons other than the assignor these instruments alienated property, created a trust of property, and granted or created an interest in property. I think also they were settled property. In Duke of Northumberland v. Inland Revenue Commissioners[5] Hamilton J. (as he then was), speaking of the English Stamp Act of 1891, says:—"No definition of settlement is given anywhere. In the Schedule the word settlement is the index word to a paragraph which imposes tax upon any instrument whereby any definite and certain principal sum of money is settled or agreed to be settled. The test of settlement and settled appears to be what is done, not the classifications of conveyancers. Is it an instrument whereby any definite and certain principal sum of money is settled? The definition of settlement which is a statutory one, in the Settled Land Act of 1882, sec. 2, proceeds upon the same methods: A deed or other instrument is a settlement under or by virtue of which instrument or instruments any land, or any estate or interest in land, stands for the time being limited to or in trust for any persons by way of succession, though a settlement within the Stamp Act 1891 is a term applying to instruments of very much wider scope than the instruments within the Settled Land Act of 1882."

In the present case, after providing for payment of his succession, probate and estate duty, the assignor directed that the balance of the proceeds of his policies, which necessarily did not mature until his death, should be held upon trust for his widow or, failing that, upon trust for such of his children who attained twenty-one years or, being female, married, if more than one as tenants in common in equal shares, and upon failure of these trusts upon such trusts as he should appoint by will or deed. This, I think, is a settlement within the common understanding of conveyancers. Fully adequate consideration in money or money's-worth did not pass from these disponees nor, of course, from the trustees. It follows that the instruments come within the liability to stamp duty imposed by sec. 10 as instruments of gift in respect of which gift duty is payable. The question remains whether they operate exclusively as an instrument of gift within the meaning of the concluding part of sec. 10 (1) which excludes from the general stamp duty instruments of gift so far as they operate exclusively as instruments of gift. This question appears to involve an inquiry whether, when all the indicia or elements which bring the instruments within the statutory definition of gift contained in sec. 2 of the Gift Duty Act are put on one side or eliminated from consideration, the remaining characteristics which the instruments exhibit would suffice to expose them to stamp duty as settlements. No real definition of settlement is contained in the Stamp Acts 1894 to 1926. For that which occurs in sec. 2 merely extends the description of instrument by which property is settled or agreed to be settled. Now, while in general it is not difficult to say whether a particular instrument is or is not a settlement it is by no means so easy to single out and define the attributes which make a given instrument a settlement. But on the whole it appears to me that the elements in the instruments under discussion which go to make them settlements are these: (1) they constitute trustees of property intended to be assured to them; (2) there is an absence of valuable consideration; (3) there are alternative trusts which take effect at a future time in respect of the balance of the policy moneys. In law the trust to pay probate, estate and succession duty must be considered as one in respect of which the settlor is himself the beneficiary. For although it arises upon his death it is for the discharge of the liability imposed upon his estate, which his executors would be obliged to meet out of his assets. A living man's executors are contained within himself. But the three elements I have selected as the indicia by reason of which the instrument is a settlement are substantially identical with those which brought the transaction within the definition of gift duty. It is true that the definition is multifarious and its descriptions are cumulative, but they must be taken collectively in considering whether an instrument to which they apply in combination operates exclusively as an instrument of gift. Indeed, it might be enough to say that, by virtue of the definition of the expression "disposition of property," the word "gift" included a settlement of property without consideration passing from the disponee to the disponor, and it was only because the instruments in the present case answered this description that they fell within the expression "settlement" in the Stamp Acts 1894 to 1926. But in any case if the factors which make the transaction expressed in the instruments gifts are all excluded from consideration the remaining characteristics of the instruments could not expose them to stamp duty as settlements under the Stamp Acts 1894 to 1926. It follows that sec. 10 (1) operates to relieve the instruments of the duty which would otherwise be incurred under the Stamp Acts 1894 to 1926.

The result is that, in my opinion, the order of the Full Court of the Supreme Court of Queensland should be discharged, and in lieu thereof an order should be made answering the first and third questions No. The second and fourth questions inquire in the case of each instrument what amount of stamp duty is chargeable thereon. Counsel for the Commissioner did not contend before us that they were dutiable under the Stamp Acts 1894 to 1926 under any category but settlements. These questions should therefore be answered, Ten shillings. Costs both here and below should be paid by the Commissioner of Stamp Duties.

Appeal allowed. Judgment of the Supreme Court discharged. The first and third questions answered in the negative. The second and fourth questions each answered, Ten shillings. The respondent to pay the costs of the appellant in the Supreme Court and the High Court.

Solicitors for the appellant, Thynne & Macartney.

Solicitor for the respondent, H. J. H. Henchman, Crown Solicitor for Queensland.