Commissioner of Stamp Duties (NSW) v Jones
2 ATR 641(1971) 125 CLR 511
(1971) 46 ALJR 50
[1971] AEGR 66,086
[1971] HCA 67
(Judgment by: Windeyer J)
Commissioner of Stamp Duties (NSW)
vJones
Judges:
Barwick CJ
McTiernan J
Menzies J
Windeyer JOwen J
Case References:
Carapark Holdings Ltd v Federal Commissioner of Taxation - (1967) 115 CLR 653
Barclays Bank Ltd v Attorney-General - (1944) AC 372
Wayne v Commissioner of Stamp Duties - (1966) 85 WN 301; (1966) 2 NSWR 309
Barclays Bank Ltd v Attorney-General - (1944) AC 372
Lever Bros and Unilever Ltd v Inland Revenue Commissioners - (1945) 1 All ER 145
Commissioner of Stamp Duties (NSW) v Perpetual Trustee co Ltd - (1926) 38 CLR 12
Commissioner of Stamp Duties (NSW) v Gale) - (1958) 101 CLR 96
Wayne v Commissioner of Stamp Duties - (1966) 85 WN 301; (1966) 2 NSWR 309; (1969) 91 WN (NSW) 51
Gould v Curtis - (1913) 3 KB 84
The National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation - (1959) 102 CLR 29
Barclays Bank Ltd v Attorney-General - (1944) AC 372
Wayne v Commissioner of Stamp Duties - (1966) 85 WN 301; (1966) 2 NSWR 309
Judgment date: 9 December 1971
Judgment by:
Windeyer J
Death duty in New South Wales is, pursuant to the Stamp Duties Act, levied at rates prescribed upon the final balance of the estate of a deceased person. S 102 describes various forms of property which for this purpose are included in his dutiable estate. The primary item, s 102(1)(a) is "all property of the deceased which is situate in New South Wales at his death". Then s 102(2) by its several paragraphs brings into the estate property of various kinds which did not belong to the deceased at his death. In the argument a generalization was suggested of these provisions which attract so-called "notional estate" to duty. They all, it was said, designated property, of one kind or another, which had belonged to the deceased but which he had parted with in his lifetime by some form of disposition as described in the statute. This description - derived from what Isaacs J said in Watt's Case (Commissioner of Stamp Duties (NSW) v Perpetual Trustee co Ltd (1926) 38 CLR 12, at p 32 as discussed by Dixon CJ in Gale's Case (Commissioner of Stamp Duties (NSW) v Gale) (1958) 101 CLR 96, at pp 106-109- is no doubt apt for many cases of gifts, settlements and other dispositions as described in various paragraphs of s 102(2). But it is not apt for para (h) with which we are concerned. It seems to me that the only common characteristic of the various paragraphs is that created by the Act itself. Each describes a form of property - remaining in existence after the death of the deceased, or coming into existence upon his death, and having some connexion with his affairs during his life - which the legislature has said is to be aggregated with property that was actually his at his death in order to determine the value of his dutiable estate. Thus the effect of any paragraph is not dependent upon any presupposition of a policy of s 102(2) but upon whether or not some property answers the relevant description.
The words of para (h) that are here in question are: "Any money payable to any person under a policy of assurance on the life of the deceased where the whole of the premiums have been paid by the deceased or a part of that money in proportion to the premiums paid by him where part of the premiums have been paid by some other person. This subparagraph shall not apply in any case where the deceased has been fully reimbursed in money or money's worth in respect of the premiums paid by him at any time, or to any moneys payable under a policy which are liable to duty by reason of subpara (a) of para (1) of this section." In the stated case submitted to the Supreme Court it was said that the Commissioner, relying on the decisions in Wayne v Commissioner of Stamp Duties (NSW) (1966) 85 WN (Pt 1) (NSW) 301; (1966) 2 NSWR 309; and (1969) 91 WN (NSW) 51- contended that, if no property were brought to charge under any other provision of the Act, para (i) would apply, and duty be assessable in accordance with it. But the Supreme Court did not deal with any other provision than para (h) and the question on this appeal was confined to it. I therefore say nothing as to para (i), except that it does not follow that if the proceeds of an insurance policy are not brought to charge by para (h) they are necessarily caught by the words "other interest" in para (i).
The relevant facts are sufficiently set out in other judgments. I need not repeat them in detail. I mention only some salient aspects. The trust, by which a fund was established to be known as the David Jones Ltd Special Staff Superannuation Plan, was constituted by deed made in 1956 between David Jones Ltd ("the company") and trustees. The deed recited that it originated because the company was "desirous of assisting certain of its employees to provide individual benefits for themselves and/or their dependants on retirement and of fully securing the rights of such employees and/or dependants to receive such benefits". The deed provided for the trustees receiving periodically contributions from those of the company's employees who being of the class eligible to become members of the "plan" had elected to do so,tandualsoscorresponding contributions from the company. From thetcontributions the trustees thus received and the investment thereofutheyswere required (by cl 14 of the deed as later amended) ton"effectoand keep on foot a policy with the Society (scil. the AustralianoMutual Provident Society) on the lives of members whichishallnprovide a benefit in respect of each member at death or at the date hereinafter provided of an amount at least equal to thrice his annual salary calculated at the date of his becoming a member". By cl 15 the policy effected by the trustees was to "secure that the benefits thereunder for any member shall be provided on the sixty-fifth birthday in the case of a male member and the sixtieth birthday in the case of a female member". The trustees, pursuant to their obligations under the deed, duly took out a policy described as a group endowment assurance policy with the Society. This policy covers the members collectively: but each member is called in the policy an "assured person", and "assured person" means "an employee of the company whose life is assured under this policy". For each assured person the premium is separately stated and "the sum assured" in respect of each is determined. David Lloyd Jones, who died in 1961, was then and had been for some years an employee of the company. He had been a member of the superannuation plan from its inception Contributions amounting to half the premiums payable to the Society which, in the words of the trust deed, were "required to provide for him his benefit under the plan" were regularly deducted by the company from his salary and, with other similar deductions, paid periodically to the trustees. Pursuant to the deed, the company duly contributed to the trustees the balance of the amount of the premiums required in respect of all the members to enable the policy to be kept on foot. When David Lloyd Jones died the proceeds, amounting to $76,854, of the policy attributable to his life as an assured person were paid by the Society to the trustees of the plan. They paid this sum to his widow, she being his "designated beneficiary" to receive them pursuant to the trust deed. The Commissioner for Stamp Duties claims that half this sum, being he says an amount attributable to the half of the premiums which by deduction from his salary was contributed by the deceased, forms part of his dutiable estate by virtue of s 102(2)(h). The Supreme Court (Court of Appeal Division), by majority, rejected this claim (1971) 1 NSWLR 106. Hence this appeal.
The first question that arises is whether the sum that the Society paid to the trustees on the death of the deceased was "money payable" to them "under a policy of assurance on the life of the deceased", within the meaning of the words of s 102(2)(h). I do not think that it can be said that it was not on the ground that the policy was a collective one covering several assured persons and described as a group endowment assurance policy. It can, I think, be regarded as a separate insurance in respect of each assured person according to its terms. But this does not mean that the trustees hold the moneys they receive as contributions on a series of separate trusts. And when they pay to the Society the amount due for the premium payable under the policy they are not paying any parts thereof as agents for the assured persons severally considered. Those considerations, however, do not affect the primary question whether the policy, considered solely in relation to the deceased, was for the purposes of the statute a policy on his life. I turn to that.
The policy can in relation to the deceased be called a life policy. It would unquestionably answer that description in other contexts. For example, the definition in the Commonwealth Life Insurance Act 1945-1965 defines "life policy" in terms that are a reflection, with modifications, of the definition in s 30 of the Assurance Companies Act, 1909 (UK) of "policy on human life". This definition is wide enough to cover various kinds of life policies: - whole life policies, endowment assurances of various kinds, pure endowments, and term policies. An endowment policy can be properly called an insurance on the life of a specified person. That has not, I think, been questioned since the decision in Gould v Curtis (1913) 3 KB 84. This Court has recognized it: see The National Mutual Life Association of Australasia Ltd v Federal Commissioner of Taxation (1959) 102 CLR 29, at pp 41-46. But in this case the critical words are in an enactment relating to the dutiable estate of a deceased person for the computation of death duty. In this context it seems to me that the words "any money payable to any person under a policy of assurance on the life of the deceased" mean money that is the proceeds of a whole of life policy payable on the death of the life assured. It may be that the proceeds of an endowment assurance in common form - by which the sum assured becomes payable upon survival of the life assured to a certain age or date or upon death before that date - would be included in the description in para (h) of s 102(2) if death occurred before the maturity date. But the paragraph does not extend to catch moneys that had become payable under an endowment policy that had matured before death. That is because s 102 by describing property that the estate of a deceased person "shall be deemed to include" looks to the date of death and to the effect of death. The result is consolidated by the words "money payable" as distinct from "money paid", death being, as I read the words, taken as the event on which money is "payable" under the policy.
Endowment policies are a form of life insurance because, whether they be term policies, pure endowments, or endowment assurances of the more usual form, they are predicated upon the duration of a life beyond a given date or its termination within a given time. In The National Mutual Life Association's Case (1959) 102 CLR 29, I explained the essential distinction, as I see it, between life insurances of all forms and insurances upon other contingencies. I shall not repeat that here. Under an endowment policy, of the kind that life companies now commonly issue, moneys become payable on the happening for the life assured of either of two event: living to a given date or dying before that date. In either case the contingency upon which the moneys are payable is simply the duration of a life. But the "group endowment assurance policy" that we have before us is not of that simple kind. Whether it was "a policy of assurance on the life of the deceased" within the meaning of s 102(2)(h) must depend upon its terms, not upon conventional descriptions of other kinds of life policies. If conventional descriptions are to be regarded, it would I think be ordinarily called an employees' superannuation policy.
Superannuation schemes for the benefit of employees of large business organizations are well known today. Sometimes participation by an employee is compulsory as an incident of his service. Sometimes it is voluntary. Contributions to superannuation funds are allowable deductions, subject to relevant statutory requirements, in the assessment of income for the purposes of income tax. The trust deed in the present case was obviously drawn with the provisions of the Income Tax Assessment Act, s 66, in mind, as witness the recital that the benefits that members of the plan should receive were to be "fully secured". An insurance policy covering the obligations under a superannuation scheme may well be, as in this case, an essential part of the scheme. Moneys payable under a superannuation policy are generally, as in this case, payable in full when a person assured reaches the retiring age and leaves the employer's service, or on his service being terminated by his death - the surrender value being payable in certain circumstances if he retires from the service before reaching the retiring age, when in respect of him the policy is cancelled. A policy of that kind is no doubt a complex and composite form of life insurance partaking of the older forms of a term policy and an endowment policy with continuance in the employer's service until death or reaching the prescribed age as contingencies of its maturity. Such a policy answers to Bunyon's classic definition of life insurance, frequently accepted by courts, as a contract "in which one party agrees to pay a given sum upon the happening of a particular event contingent upon the duration of human life". But that such a policy is a form of life policy, commonly written by life companies, is not enough to bring it within the terms of s 102(2)(h). So far as I know, the death benefit under employees' superannuation schemes insured by life policies has not up till now been said to be, or generally considered to be, part of the dutiable estate of a deceased employee. It seems to me to be far removed from the words of para (h), read in relation to their subject matter, the contents of a dutiable estate. If I be wrong as to this, I would still say that in this case the Commissioner's claim must fail because I consider that the premiums on the policy were not paid wholly or in part by the deceased, as is required to bring the proceeds of the policy received by the trustees of the superannuation plan to charge as part of the dutiable estate of a deceased member of the plan. On that aspect I have nothing to add to what has been said by Menzies J and Owen J.
I would dismiss the appeal.