LIVINGSTON v COMMISSIONER OF STAMP DUTIES (QUEENSLAND)
107 CLR 411(Judgment by: KITTO J)
Between: LIVINGSTON
And: COMMISSIONER OF STAMP DUTIES (QUEENSLAND)
Judges:
Dixon CJ
Fullagar J
Kitto JMenzies J
Windeyer J
Subject References:
Conflict of laws
Assessment of succession duty
Wife entitled to share in residue under husband's will
Husband's estate not fully administered
Assets in New South Wales and Queensland
Legislative References:
Succession and Probate Duties Act 1892 (Qld) - the Act
Judgment date: 16 December 1960
SYDNEY
Judgment by:
KITTO J
The late Mrs. Coulson was a beneficiary under the will of a former husband, Hugh Duncan Livingston the elder. By the will, the proceeds of all policies of assurance on the testator's life were bequeathed to Mrs. Coulson, and the real estate and the residue of the personal estate were devised and bequeathed to the trustees of the will, subject to the payment thereout of the debts funeral and testamentary expenses and all death estate and other duties, upon trust as to one-third thereof for Mrs. Coulson absolutely and as to the remaining two-thirds thereof for other persons.
In Mrs. Coulson's lifetime the estate was apparently cleared of unsecured debts, funeral and testamentary expenses, and the greater part of the duties. But the proceeds of the life assurance policies had been absorbed in the process, and there was still some New South Wales death duty to be assessed and paid. In other words, the estate was still not fully administered. The assets as they stood at the time included real and personal property in Queensland, as well as property in New South Wales. The husband had died domiciled in New South Wales, and the executors and trustees of his will were there. Probate had been granted in New South Wales; but not until some two years after Mrs. Coulson's death was the grant resealed in Queensland. Mrs. Coulson herself died intestate and domiciled in New South Wales. Letters of administration of her estate have been granted in that State, but there has been no grant or reseal in Queensland.
In these circumstances the respondent Commissioner has claimed that both Queensland succession duty and Queensland administration duty became payable, upon Mrs. Coulson's death, in respect of an interest in the Queensland assets of the husband's estate; and the object of the proceedings out of which these appeals arise is to test the validity of the claims.
The two duties are provided for in the one collection of Acts, The Succession and Probate Duties Act of 1892 (Q.) and a dozen or more amending Acts. Into this dark jungle, full of surprises and mysteries, it is our duty to peer.
The succession duty is imposed, primarily, by s. 12. It is to be levied and paid "in respect of every such succession as aforesaid". The word "succession" here refers not to the passing of property from one person to another on the death of the former, but to the property itself: s. 3. The duty is in respect of the property to which the Act refers. It is payable when a "successor" becomes entitled in possession to "his succession" or to the receipt of the rents and profits thereof: s. 20. There are two ways in which a person may become a "successor" and property a "succession": first, the making of a disposition by reason of which a person becomes beneficially entitled to any property or its income upon a death, and secondly, a devolution by law of a beneficial interest in property or its income, upon the death of a person, to any other person: s. 4. In the present case, no one became beneficially entitled on Mrs. Coulson's death to any property or income by virtue of her husband's will; but whatever beneficial interests in property Mrs. Coulson had at the time of her death devolved by the law of intestate succession, and they therefore became by her death a "succession" to which the person or persons upon whom they devolved must be considered the "successor". Before the commencement of the amending Act of 1895 (59 Vic. No. 28), s. 4 was to be construed as referring only to devolutions by virtue of Queensland law, that is to say the municipal law of Queensland. The devolution of immovables in Queensland was thus within the section, but the devolution of movables, even though they were in Queensland, was not within the section unless the deceased had died domiciled in Queensland, for if he had died domiciled elsewhere the Queensland rules of private international law would apply the lex domicilii as the law governing the devolution: Harding v Commissioners of Stamps for Queensland. [F113] By s. 2 of the 1895 Act, however, it is declared that succession duty is chargeable in respect of all property within Queensland, although the testator or intestate may not have had his domicile in Queensland. "Within Queensland" means, of course, (in the case of corporeal property) actually situate in Queensland, or (in the case of incorporeal property) regarded in law as situate in Queensland. By making the rule mobilia sequuntur personam irrelevant for the purposes of the Act, the amendment ensured that s. 4 should operate as if "devolution by law" had been defined to mean devolution either by the municipal law of Queensland or by the municipal law of another country as applied in Queensland by the Queensland rules of private international law.
Administration duty, on the other hand, is provided for primarily by s. 55. That section, considered by itself, makes duties payable at the rates mentioned in the Schedule in respect of every grant of probate or letters of administration made in respect of the estate of any person dying after the time appointed for the commencement of the Act; and the Schedule refers to the net value of the property of the deceased person in respect of which the grant of probate or letters of administration is made. Then s. 2 of the amending Act of 1935 (26 Geo. V No. 27) declares that duties at the rates in the Schedule are payable in respect of any real property of a less tenure than an estate of freehold or any personal property whatever in Queensland or any interest therein "belonging to any person" taken possession of or in any manner administered without the grant in Queensland of probate or administration or the reseal of a grant made elsewhere. The duty is, therefore, a duty on property which belonged to the deceased and is included in the deceased's estate.
It follows from the foregoing that the central question to be considered in regard to succession duty is whether any beneficial interest under Livingston's will which was the subject of a devolution by law upon Mrs. Coulson's death is to be considered as having been then situate in Queensland; and in regard to administration duty it is whether any property, consisting of an interest under Livingston's will, which belonged to Mrs. Coulson and formed part of her estate at her death is to be considered as having been then situate in Queensland.
Mrs. Coulson's rights as one of the residuary legatees under Livingston's will may be described in two ways, each of them correct. They may be described by saying that she was entitled to have the administration of the estate completed, and one-third of the residue, when ultimately ascertained, paid or transferred to her. They may also be described by saying that she was entitled at her death to have every individual asset which at that time was comprised in the estate dealt with in a due course of administration. Both descriptions recognize that she was entitled to have a process carried out; but while the one emphasizes the purpose of the process and its ultimate benefit to her, the other directs primary attention to the property presently available for the carrying out of the process. Which description is to be used on a given occasion is a question of appropriateness to the purpose in hand; but it is important always to remember that there is only the one set of rights that is being referred to. I venture to think that for the purpose of solving a concrete legal problem with respect to such a set of rights, more hindrance than help is likely to come from an attempt to classify them according to Austinian terminology as rights in personam or rights in rem. More than forty years ago those distinguished jurists Prof. A. W. Scott and Prof. Harlan F. Stone (as he then was) learnedly disputed as to whether the rights of a cestui que trust were in rem or in personam, the former being able to invoke such great names as Maitland and Holland, the latter Salmond and Pound: Columbia Law Review, Vol. XVII (1917) pp. 269, 467; but it may be doubted whether much illumination was provided for a case like the present. Dr. Hanbury strongly opposed the "realist" theory in his Essays in Equity (1934) pp. 16 and following, 23 and following I must confess, however, that I incline to the view of Mr. R. W. Turner, who wrote in his book The Equity of Redemption (1931) p. 152: "It is a moot question whether the whole discussion raised by these arbitrary classifications borrowed from Roman law and distorted to fit in with new facts is not a mere academical tourney with no real bearing upon the practice of the law, and, being faulty in hypothesis and unsatisfactory in result, would be better abandoned altogether".
Since one way of describing Mrs. Coulson's interest as a residuary legatee is to say that she had a right in respect of each individual asset of the Livingston estate that that asset should be dealt with, and dealt with only, in a due course of administration so that she might receive her share in the ultimate distribution, it is in accordance with the ordinary terminology of English law, and with the terminology of the Act we have here to consider, to say that among the beneficial interests which devolved by law on Mrs. Coulson's death was a beneficial interest in the Queensland assets of Livingston's estate, and that that interest was property which belonged to her at her death. To maintain that a residuary legatee has no beneficial interest in the individual assets of the estate, or has no such interest in them as itself constitutes property, would be, I think, to deny to the word "interest" its accepted meaning in the law. The interests of the beneficiaries under a general residuary gift must absorb the whole beneficial interest in the assets not otherwise disposed of (subject of course of their diminution by the discharge of liabilities and other payments in the course of administration); for the legal personal representatives as such have no beneficial interest, those who would take on intestacy are excluded, and it is axiomatic that, with the one exception provided by the law of charities, the whole beneficial interest in property must reside in some individual or collection of individuals: Pearson v Lane; [F114] Glenn v Federal Commissioner of Land Tax. [F115] Hence the law of resulting trusts. That a residuary beneficiary has a beneficial interest in each asset not disposed of otherwise than by the residuary gift is the proposition for which cases such as Cooper v Cooper; [F116] Attorney-General v Watson; [F117] Skinner v Attorney-General; [F118] and Smith v Layh, [F119] are authority. A clear example of its application is found where land is among the assets included in a residuary disposition, and a question arises while the administration is still incomplete, and while the land remains in the estate, as to whether a residuary beneficiary has, as such, an interest in land. The answer is plainly, Yes: Horton v Jones. [F120]
But the existence of a beneficial interest is one thing, and the nature of it is another. If a question arises as to whether a particular asset "belongs" to the residuary legatee within the meaning of some statute or other instrument, the answer cannot be reached without consideration of the precise rights of which the residuary interest consists. Similarly, if the question is where should the interest be considered in law as locally situate, the rights which it comprehends must be clearly understood before an answer can be given. After all, the expression "beneficial interest" is a nomen generale, not to say generalissimum; and the label is not sufficiently informative to enable such questions as these to be answered. In Baker v Archer-Shee [F121] the difference of opinion which arose among the members of the House of Lords who sat on the case was simply upon the question whether the rights of a cestui que trust in respect of the income of a trust fund were such as to justify a description of that income as belonging specifically to her, and as for that reason falling within a particular statutory provision. That the cestui que trust had a beneficial interest in the income no one doubted; but the question could not be answered save by consideration of the rights of which the interest consisted. Again, in Barnardo's Homes v Special Income Tax Commissioner, [F122] the question whether, so long as a testator's estate is not fully administered, the income produced by its assets is income of the residuary beneficiaries was decided in the negative upon consideration of the rights which constituted the beneficiaries' interests in that income. It was because those rights were adjudged not to be sufficiently direct and exclusive that a negative answer to the question was returned. The point which the lastmentioned case emphasizes is that the rights of residuary beneficiaries while administration is incomplete stop short of entitling them to any of the assets in specie, or to any of the income in specie, or to any property or any part or share of property into which either the assets or their income may be converted. The beneficiaries are entitled only to receive, eventually, a share of whatever turns out to be left when the administration is complete; and that may not include any of the existing assets or their income, or anything representing either, for conceivably an asset may be sold and its proceeds used up in the process of administration, and the income may be similarly absorbed. Of course the beneficiaries' rights are rights with respect to, or "in", or ad each specific asset for the time being in the estate; but the important point to notice is that each such asset is liable, in the very working out of those rights themselves, to disappear from the estate. In other words, the nature of the beneficiaries' interests in the particular assets necessarily accords with the nature of their interests in the residue as a whole.
We are, of course, considering interests which, being intangible property, cannot possess geographical situation. For some purposes, for the exercise of probate jurisdiction for example, or for the application of statutes which depend upon local situation, the law must attribute a notional locality to such property. It does so by fixing upon a place with which the property has, by reason of its nature, a special connection. For the more common classes of property the special connection, and consequently the criterion of locality, have become defined by authority; though it may be observed that in a particular instance the circumstances may require a deviation from a general rule: see R. v Lovitt; [F123] New York Life Insurance Co v Public Trustee [F124] (as to which, see In re Claim by Helbert Wagg & Co Ltd [F125] ). An interest in property is no doubt often so much more closely connected with the place where the property itself exists than with any other place that it is naturally to be considered as situate there; but generalization on the point is, in my opinion, unwarranted, for it denies the prime necessity to take account of the nature of the rights which are comprised in the interest under consideration in the particular case. The interest of a residuary beneficiary in an asset of an unadministered estate, consisting as it does of rights with respect to that asset which form an integral part of the beneficiary's rights with respect to the whole estate, possess most substantial connection with the place of the appropriate forum for enforcing the due administration of the estate; and the law, if I understand it correctly, for that reason accords to the interest in the individual asset, no less than to the interest in the whole estate, a local situation at that place.
This is what I understand to be laid down in Lord Sudeley v Attorney-General. [F126] It is true that expressions used by some of their Lordships in the course of their ex tempore speeches in that case have been understood at times as meaning that residuary beneficiaries have no interest of any kind in the individual assets of an unadministered estate; and those who have so understood what was said have not unnaturally exhibited signs of shock at the apparent contradiction of the considered pronouncements of Lord Cairns and other great lawyers in Cooper v Cooper: [F127] see e.g. McCaughey v Commissioner of Stamp Duties. [F128] With others, incredulity at such seeming apostasy has led to interpretation; though not all have felt so badly about the need for that process as to join in the acid comment of Holmes L.J., that "Lord Cairns, in addition to great knowledge and experience, was such a master of language and logical exposition that he has perhaps an unfair advantage when his judgments are compared with those of lawyers of equal learning.": Tevlin v Gilsenan. [F129] Bearing in mind what has been said of Lord Sudeley v Attorney-General [F130] in cases decided since, I think that the judgments in that case should be understood as meaning that in considering the application of a statute which is concerned with "the estate and effects of the deceased" in England to the interest of a deceased residuary beneficiary, it is not to the point to refer to the locality of individual assets of the head estate. The beneficiary in his lifetime had no "proprietary" interest in those assets (to use the expression of Lord Russell of Killowen in Skinner v Attorney-General [F131] ) if by that is meant such an interest that he might have said of any of the assets "This is mine. Hand it over to me": Vanneck v Benham; [F132] In re Cunliffe-Owen; [F133] and there is no logical or legal justification for subdividing the mass of his rights as residuary beneficiary so as to separate his rights with respect to each asset from his rights with respect to the others and attribute to each set of rights a separate local situation derived from the situation of the separate assets. You must, according to the law as laid down in Lord Sudeley v Attorney-General, [F134] attribute a local situation to the totality of rights, fixing on the place with which the totality is specially connected; and there is no need to go further in order to attribute their proper situation to the rights which exist as to the particular assets.
Similar reasoning applies, I think, to an interest in a trust fund of inherently variable composition. In re Smyth; Leach v Leach [F135] and Favorke v Steinkopff, [F136] provide clear examples. The interest to be located in the latter case was the interest of an annuitant in a fund which was vested in trustees on trust to pay annuities. The fund stood invested, at the time when the question arose, in a German State loan; but as Russell J. pointed out, the investment could be altered from time to time. The right of the annuitant being simply to have the fund properly administered, his interest in the fund as it stood for the time being was held to be not where the German State loan investments were situate, but where the proper forum for the enforcement of the trusts was situate. See also Commissioner of Stamp Duties v Perpetual Trustee Co Ltd (Watt's Case). [F137] I must not be understood, however, as holding that where Blackacre is vested at law in X upon trust for Y absolutely, Y's interest is situate anywhere but where Blackacre is. As at present advised, I think that the fixed nature of Y's rights with respect to Blackacre should be considered the decisive factor in determining their locality.
An analogy may be seen also in the case of a partner's interest in the partnership assets. That he has a beneficial interest, which the law will recognize and enforce, in every piece of property which belongs to the partnership is clearly established: In re Holland; Brettell v Holland; [F138] Manley v Sartori; [F139] In re Fuller's Contract; [F140] and none the less so because the nature of the interest is peculiar in that his share in the partnership, by virtue of which the interest in a given asset exists while the asset belongs to the partnership, consists not of a title to specific property but of a right to a proportion of the surplus after the realization of the assets and payment of the debts and liabilities of the partnership: In re Ritson, Ritson v Ritson; [F141] Bakewell v Deputy Federal Commissioner of Taxation; [F142] that is to say, not a "definite" share or interest in a particular asset, no "right to any part" of it, but an interest which "can be finally ascertained only when the liquidation has been completed, and ... consists of his share of the surplus": Rodriguez v Speyer Brothers. [F143] Yet, the local situation of the interest in the partnership as a whole being considered in law to be where the business is carried on, so also is the partner's interest in a partnership asset: In the Goods of Ewing. [F144] In the leading cases of Laidlay v Lord Advocate; [F145] Beaver v Master in Equity [F146] and Stamp Duties Commissioner v Salting, [F147] it occurred to no one to distinguish for the purposes of locality between the interest in the partnership and the interest in the assets; and indeed in Beaver v Master in Equity [F148] the emphasis given by the Privy Council to the fact that the business of the partnership in Melbourne was a distinct business from others which the partnership carried on in London and Adelaide indicates that the partner's interest in the Melbourne assets would not have been treated as situate there if there had been only a single business and that had been carried on in London. There is a case in the Supreme Court of Canada in which the contrary view was taken by a majority of the Court, but, with respect, I would prefer the dissenting judgment of Anglin J: Boyd v Attorney-General for British Columbia. [F149]
For these reasons I am of opinion that neither succession duty nor administration duty was payable in this case. The learned judges of the Supreme Court thought otherwise, but they considered that in any event the appeals should be dismissed on the ground that although the Act provides for an appeal as to quantum where succession duty is admittedly payable, it does not provide for an appeal as to succession duty in which all liability for the duty is denied, and it does not provide for any appeal at all in respect of administration duty. This conclusion their Honours reached with an evident reluctance which no doubt was all the greater because over a long period of time appeals denying that any duty was payable, and relating to each kind of duty, have been entertained and decided by the courts, and in that period the Queensland Parliament, though frequently engaged in amending the Act, has never seen fit to put an end to the practice.
The only provision which gives a right of appeal is to be found in s. 50. The right is given to "any accountable party dissatisfied with the assessment of the Commissioner". The expression "the assessment of the Commissioner" refers back to s. 47 which, as the Act stood originally, empowered the Commissioner (I shall speak of the Commissioner though until 1918 it was the Commissioners) to assess succession duty in a limited class of cases only. He was not expressly given any power to make an assessment of administration duty, and the cases in which he might assess succession duty were those only in which persons described as "the persons hereby made accountable for the payment of duty ... or some of them" had performed the obligation, which the section in its first paragraph cast upon them, of giving notice to the Commissioner of their liability to such duty and delivering to him a full and true account of "the property for the duty whereon they are respectively accountable" and of the value thereof, and the deductions claimed by them, together with other particulars. A second paragraph required verification of the account, and a third conferred the power of assessment. The power was limited to two cases: if the Commissioner were satisfied with the account and estimate as delivered, he might assess the duty on the footing thereof; and if he were dissatisfied with the account and estimate, he might take his own account and estimate and assess the duty on the footing thereof, "subject to appeal as hereinafter provided".
I share the view of their Honours that it is extremely difficult to see how the Act, while it stood thus, could have been read as giving a right of appeal against liability, as distinguished from quantum, in the case of succession duty, or as giving a right of appeal at all in the case of probate or administration duty. The expression in s. 50 "the assessment of the Commissioner" must have meant the assessment of succession duty, made on the footing either of the account delivered, or of the account taken by the Commissioner himself upon his being dissatisfied with the account delivered; and the account delivered must have been delivered by some or all of the persons made accountable for the payment of succession duty. Moreover, the prescribed locus standi for an appellant consisted in being "any accountable party"; and "accountable" is a word which was frequently used in fiscal statutes of the nineteenth century to refer, as indeed may be seen clearly enough from s. 47 itself, to accountability, i.e. liability, for duty, and not to liability to deliver an account of dutiable property. The persons so accountable for succession duty are the "successor" (s. 43) and certain other persons (s. 46).
But in 1918 an amending Act (9 Geo. V No. 16) made an important change. By inserting additional words in the third paragraph of s. 47, it provided for a second case in which the Commissioner might make an assessment of succession duty on the footing of an account and estimate of his own, namely, the case where no account and estimate had been delivered. The words "subject to appeal as hereinafter provided" thus came to apply to assessments made where no account had been delivered; and an amendment made to the words in the fourth paragraph referring to appeal reinforce the conclusion that this was intended. The most obvious case in which no account and estimate would be delivered is the case where the persons who would be accountable for payment of the duty if it were payable deny liability in toto. Since 1918, therefore, there has been nothing in s. 50, except the expression "any accountable party", to limit the right of appeal to cases where an assessment had been made after an account submitted by persons accountable for the payment of duty. This was not because the meaning of any of the words of s. 50 had been changed, but because the words "appeal against such assessment" had acquired a more extended application. The referential word "such" was sufficient to give consequential effect to the enlargement of the power of assessment in s. 47; and the result was that the appeal that was spoken of came to include an appeal against an assessment which had been made notwithstanding that everyone who, according to the Commissioner, was accountable for payment of duty denied that any duty was payable. Was there, then, no necessary implication as to the expression "any accountable party"? To extend a right of appeal so that it will exist in a new class of cases seems necessarily to imply that the persons who are the proper appellants in a case of the new class may be appellants notwithstanding any limitation formerly arising from words by which competent appellants have been described. In my opinion s. 50 should be read, since the 1918 amendment, as if it began "any accountable party or party who would be accountable if the assessment were correct".
As regards administration (or probate) duty, again it must be conceded that as the Act stood originally there would have been much difficulty in maintaining that a right of appeal was conferred. But once more amending legislation seems to me to imply that s. 50 is to be read as if words extending its application had been expressly inserted. There is no difficulty about the word "accountable" as applied to administration duty. True, the word does not occur in the Act in relation to that duty, but it is not a technical word of succession duty law: it refers only to liability to make a payment, and a person liable for administration duty is quite aptly described as an accountable party. The difficulty which did exist, however, was that the expression "the assessment of the Commissioner" referred back, as I have mentioned, to s. 47, and had no application at all in respect of administration duty. But the 1918 amending Act altered this by inserting a new s. 47A in the following terms: "If, within two years after any assessment of succession or probate duty has been made or any such duty has been paid it is discovered that the account and estimate as originally delivered disclosed a less amount than the true value of such property at the time the succession took effect, or that for any reason too little duty has been paid, the Commissioner may take a further account and estimate and reassess the duty on the footing of such further account and estimate subject to appeal as hereinafter provided, and recover any further duty payable on such reassessment, together with the whole or any part of the expenses incident to the taking of such last-mentioned account and estimate.". In my opinion it is unsound to treat the references in this section to probate duty as inserted by mistake. The draftmanship is careless in the extreme, but the intention is too plain to be missed. Running the two duties together in the one provision, Parliament has indicated, in my opinion, that if the Commissioner in fact makes an assessment of probate duty (the omission to mention administration duty is of no significance, for the description obviously refers to the duty under s. 55 whatever it may be called), or such duty has been paid without assessment, and within two years thereafter it is discovered that for any reason too little duty has been paid, the Commissioner may take an account and estimate of his own and reassess the duty, but the reassessment is to be "subject to appeal as hereinafter provided". The only provision to which the words quoted can refer is s. 50. The implication is surely plain that s. 50 is to be read as applying to "probate" duty; and if that be so, any verbal alteration of s. 50 which may be necessary for its application to such duty must be treated as impliedly made.
In my opinion, therefore, both petitions to the Supreme Court were competent and should have succeeded. I would accordingly allow the appeal in respect of succession duty, and grant special leave and allow the appeal in respect of administration duty.