Federal Commissioner of Taxation v Westgarth
(1950) 81 CLR 39624 ALJ 129
[1950] ALR 439
(Judgment by: Latham CJ)
Between: Federal Commissioner of Taxation
And: Westgarth
Judges:
McTiernan J
Latham CJWilliams J
Webb J
Fullagar J
Subject References:
Estate Duty (Cth)
Judgment date: 23 December 1949
Judgment by:
Latham CJ
June 8.
The following written judgments were delivered:-
This is an appeal from a judgment of McTiernan J. on an appeal from a review of an assessment by a Board of Review under the Estate Duty Assessment Act 1914-1942. (at p405)
The administrators of the estate of Ina Mary Campbell deceased made a return under the Act setting forth as required by s. 10 (2) the description and values of the items comprising the estate. A house belonging to the deceased was included in the return at a value of 2,750 pounds as at the date of the death of Miss Campbell, 11th October 1945. Attached to the return was a certificate of the Valuer-General of New South Wales stating that the value of the property on that date was 2,750 pounds. On 29th July 1946 the house was sold for 3,200 pounds, the delegate of the Treasurer having consented under the National Security (Economic Organization) Regulations to a sale at that price.
The commissioner then amended the assessment by increasing the value of the house to 3,200 pounds. This amendment was made on 30th September 1946 and was therefore made within three years from the date when the duty became due and payable under the original assessment. The amendment increased the liability of the estate to duty. The amended assessment stated -
"Amended on account of increased value of 26 Kent St., Rose Bay, to agree with consent price of delegate to the Treasurer for sale thereof Prev. Ass'd 2,750 pounds. Now Ass'd. 3,200 pounds. Add: 450 pounds." (at p405)
There was evidence before the learned judge upon the appeal that the value of the house on 11th October 1945 was 3,200 pounds. (at p405)
The commissioner contended that the amendment of the assessment was authorized under s. 20 (2) or, alternatively, s. 20 (3) of the Act. (at p405)
Section 20 (1) provides that, subject to the section, the commissioner may amend assessments. Section 20 (2) is as follows:
"Where an administrator has not made to the commissioner a full and true disclosure of all the material facts necessary for the making of an assessment, and there has been an avoidance of duty, the commissioner may -
- (a)
- where he is of opinion that the avoidance of duty is due to fraud or evasion - within twelve years - from the date upon which the duty became due and payable under the assessment; and
- (b)
- in any other case - within three years from the date upon which the duty became due and payable under the assessment -
amend the assessment by making such alterations therein or additions thereto as he thinks necessary to correct an error in calculation or a mistake of fact or to prevent avoidance of duty, as the case may be." (at p405)
There is no suggestion of fraud or evasion. The commissioner contends that the administrators did not make the full and true disclosure of material facts referred to in the section because they did not in their return state the true value of the house, and that therefore he was entitled under par. (b) to amend the assessment to correct a mistake of fact therein, namely a wrong statement as to the value of the house. (at p406)
Section 20 (3) is as follows:
"Where an administrator has made to the commissioner a full and true disclosure of all the material facts necessary for the making of an assessment, and an assessment is made after that disclosure, no amendment of the assessment increasing the liability of the estate in any particular shall be made except to correct an error in calculation or a mistake of fact, and no such amendment shall be made after the expiration of three years from the date upon which the duty became due and payable under that assessment." (at p406)
Alternatively with the argument already mentioned the commissioner contends that, if it should be held that full and true disclosure was made, nevertheless in making the amendment he corrected a mistake of fact, namely a wrong statement as to the value of the house. (at p406)
McTiernan J. agreed with the Board of Review in holding that there had been a full disclosure of all the material facts necessary for the making of the assessment and that the amendment of the assessment by the commissioner was not a correction of a mistake of fact. (at p406)
If either argument for the commissioner is correct, the commissioner may at any time within the specified period of three years increase the assessed value of any item in an estate if he thinks fit to do so. The result would be that in relation to any question of value, whether or not there had been full and true disclosure of the material facts, the commissioner would be at liberty to change his mind at any time within the three years mentioned in the section. If this is the case an estate could not be distributed with safety to the executors and beneficiaries until the expiry of three years from the date when duty became due and payable under an assessment. The object of the section to secure some certainty and security as to the amount of duty payable would therefore largely be defeated. (at p406)
I propose to deal in the light of these considerations first with the subject of diclosure, and then with the meaning of the word "fact" in s. 20. (at p406)
The information which the Act requires to be disclosed is information relating to the description of the property included in the estate and the value thereof: s. 10 (2). In the present case it is not disputed that the administrators fully and truly stated what they knew as to the items constituting the estate and what their opinion was as to the value of the house. It is contended, however, that a material fact is the true value of the estate so that if a return does not state what may ultimately be found to be the true value of any item in the estate it follows that there has not been a full and true disclosure, even though the administrators did not know what that true value was. Section 20 refers to "disclosure" of material facts and not to statement of material facts. Where the word "disclose" is used with reference to information to be provided it should in my opinion be understood as requiring a statement of the relevant information which is in the possession of the person who is required to make the disclosure for a particular purpose or to bring himself within some particular statutory or other provision. In other words, a person cannot be said to fail to disclose something which he never knew. In the present case it is not contended that the administrators did not disclose everything that they knew or that they believed which was relevant. There is no evidence that the administrators either knew or believed that the value of the house at the date of death was more than 2,750 pounds. (at p407)
It is now necessary to consider whether a non-disclosure of actual true value, if there is such a non-disclosure, is a non-disclosure of a fact and whether an amendment which substitutes true value - or alleged true value - for another value is a correction of a mistake of fact. (at p407)
In some contexts questions of fact are questions which are to be distinguished from questions of law, as, for example, when it is asked whether a question is to be determined by a judge or by a jury or when it is asked whether a case stated has been stated upon what is truly a question of law. In this sense a determination of value is a determination of fact: see, e.g. Chesterman v. Federal Commissioner of Taxation (1923) 32 CLR 362 . (at p407)
But in some contexts a relevant distinction is that between a matter of fact and a matter of opinion. The existence of an opinion is itself a matter of fact, but the distinction between a statement of fact and a statement of opinion is well recognized, not only in law (Bisset v. Wilkinson [1927] AC 177 ), but also as a matter of every-day experience. (at p407)
When, as in this case, a choice has to be made between two competing interpretations of a statute, either of which is open upon the words used, it is proper to take into account the object of the statute as disclosed by its terms. It is evident that the object of s. 20 is, while securing what is considered to be adequate protection against fraud, to attain certainty in the determination of the amount of taxation payable in respect of the estates of deceased persons if the condition of full disclosure of material facts is satisfied. Even when there has not been such disclosure some degree of protection is given to administrators and beneficiaries if there has not been any fraud - s. 20 (2). For the purpose of assessing estate duty two matters are relevant - the items of which the estate consists and their respective values. On the contention for the appellant the result would be that, however honest and careful an administrator had been in making his return, the commissioner could always increase assessed values at any time within three years of an assessment. This result is avoided if the section is interpreted as requiring, in order that s. 20 (3) should come into operation, "disclosure" of facts only as distinguished from "disclosure" of law, and, as to values, disclosure of opinions in fact held as to value and not "disclosure" of what has been called in argument "the true value" - a "value" which can ultimately appear only as an end result and not as a preliminary premise. (at p408)
In my opinion, therefore, the distinction between fact and opinion as well as that between fact and law should be recognized in the application of sub-ss. (2) and (3) of s. 20. The material facts to which s. 20 (2) and (3) refer are, so far as values are concerned, facts known to the administrators. The value of land must be determined as a matter of fact and not as a matter of law, but it is nevertheless necessarily determined as the result of an estimate or opinion as to value. Any such estimates and opinions must be fully and truly stated in order to make a full and true disclosure. In the present case there was no fraud or any form of dishonesty. All the material facts known to the administrators were stated. It is not suggested that they did not truly state their opinions. When the commissioner made the amendment of the assessment he was not, in my opinion, correcting a mistake of fact, but was recording a change of mind. In my opinion, therefore, the decision of the learned judge was right and the appeal should be dismissed. This conclusion, I agree with my brother Fullagar, produces the result that the commissioner cannot, in favour of the taxpayer, use s. 20 (4) to reduce an over-valuation merely upon the ground that there has been an over-valuation. It might be thought proper that this provision should receive the further attention of Parliament. (at p409)