Wedge v Acting Comptroller of Stamps (Victoria)

64 CLR 75
1941 - 0228A - HCA

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(Decision by: Williams J)

Between: Wedge
And: Acting Comptroller of Stamps (Victoria)

Court:

Judges: Rich ACJ
Starke J

Williams J

Subject References:
Succession
Stamp duty
Transfer of trust property under will to beneficiary
Undertaking to hold property subject to trusts

Legislative References:
Stamps Act 1928 (Vic) No 3775 - Third Schedule, Heading IX

Hearing date: 18 February 1941
Judgment date: 28 February 1941

Melbourne

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Decision by:
Williams J

Charles Upton Wedge, hereinafter called the testator, died on 7th June 1922, leaving him surviving his widow, Marie Josephine Wedge, and one child, a son, Ian Charles  Wedge.  This son attained the age of twenty-five years on 23rd May 1939.  By his last will, dated 24th October 1921, and a codicil thereto, dated 28th November 1921, the testator appointed the Trustees Executors and Agency Co  Ltd  his executor and trustee, and, after providing certain benefits for his widow, directed that, subject to the trusts in her favour, his trustee should stand possessed of his residuary estate for such of his children as should survive him and attain the age of twenty-five years and, if there should be only one such child, then upon trust for such child.  The testator directed his trustee to appropriate out of the capital of the residue a sum not exceeding PD1,200 in order to purchase a house and land in one of the suburbs of Melbourne for the use and enjoyment of the widow during her life or widowhood, subject to the payment by her of certain outgoings, and to pay to her out of the income of the residue an annuity of PD234, to be reduced to PD78 if she remarried.  The will gave the trustee power to appropriate a sum out of the capital of residue to satisfy the annuity and to pay thereout any extraordinary expenses which the widow might incur on account of a serious or prolonged illness.   By the codicil the testator empowered his trustee, until such an appropriation, to pay such expenses out of the income of residue.  The will contained a trust for conversion, and, pending the same, to lease the real estate; and also power to invest any moneys liable to be invested under the will in certain prescribed investments, including fully-paid-up preference shares in any banking or trading company in  Australia.  When the son attained the age of twenty-five years the only beneficiaries still interested in the estate of the testator were himself and the widow.  On 25th October 1939 they executed the following document, which bears date 6th December 1939:

"I Ian Charles Wedge of Werribee in the State of Victoria theological student being of the full age of twenty-five years and entitled to the residuary estate under the last will of Charles Upton Wedge deceased, subject only to the bequests therein provided for the benefit of my mother Marie Josephine Wedge in consideration of her agreeing to the transfer by the executor and trustee of the said will to me of the whole of the residuary estate undertake to hold same subject in every respect to the trusts of the said will contained for her benefit and further to execute all assurances reasonably required for that purpose."

Pursuant to clause ll of the will, the trustee had purchased a home for the widow at 185 Union Road, Surrey Hills, Melbourne.  The assets in the estate at the date of the document consisted of personalty valued at PD4,230 and realty, including the home, valued at PD6,165.  The document was presented to the trustee, which proceeded to transfer the assets to the son.  An instrument of transfer of the land, including the home, was executed by the trustee to the son at the request of the widow, the instrument being  signed by the trustee, the widow and the son.  The transfer was stated to be in consideration of an arrangement made between the widow and the son whereby he was entitled to be registered as the proprietor of an estate in fee simple in the land.

It is to be noted that the document dated 6th December 1939 only referred to the residuary estate of the testator, but, in view of the inclusion of the land purchased for the home in the instrument of transfer and the fact that upon the cesser of the widow's interest it would fall into the residue, it is evident that this land was treated as part thereof.  The Acting Comptroller of Stamps claimed that the document came precisely within the words of part IX. of the Third Schedule to the Stamps Act of 1928 and was an instrument other than a will or codicil "whereby ... property is settled or agreed to be settled ... such instrument not being made before and in consideration of marriage." His claim was upheld by the Supreme Court of Victoria.  The son has now appealed to this court against the decision of the Supreme Court.

In my opinion the appellant is entitled to succeed.

In Massereene v  Commissioner of Inland Revenue ^[F10] Palles C.B. said:

"It is essential to such an instrument that there shall be:

1,

such free property, by which I mean property which then is not, according to our jurisprudence, subject to the trusts in question;

2,

a settlor, who either is, or appears on the face of this instrument to be, competent to subject that free property to trusts which, until the execution of the instrument, did not bind it; and

3,

an imposition by the instrument of such trusts upon such property."

The document was executed by the widow as well as the son, but the undertaking which it contained was that of the son.  He was therefore the only possible settlor, but he did not purport to settle or to agree to settle any property of his own for the benefit of the widow.  He only acknowledged she had certain rights in the property under the trusts of the will and undertook to hold it subject to those trusts.  He and the widow, as only persons interested in the property, were entitled to call upon the trustee to transfer it according to their directions.  As a result of the transfer he only acquired the same beneficial interest in the property as he already had under the will.  He could only create new trusts of his own property.  As he did not acquire an absolute interest in any of the property which was transferred to him he could not and did not purport to create new trusts affecting such an interest corresponding to the trusts of the will.  His undertaking was a mere recognition  of existing trusts.  The case is therefore distinguishable from that of Davidson v  Chirnside. ^[F11]   In that case the instrument, which was held liable to duty, contained such limitations as are ordinarily contained in settlements, was executed by a settlor, namely, the trustees of the will, and settled property, namely, a sum of money which the trustees had been authorized by the testator to settle.  As Griffith C.J. pointed out, ^[F12] the rights conferred or declared by the settlement were, in a real and substantial sense, new rights.  Isaacs J. said that the new trusts, although they corresponded to the trusts of the will, were not trusts of the will. ^[F13]

The appeal should be allowed.