Commissioner of State Taxation (W.A.) v. West Australian Trustee Executor and Agency Company Limited

Members: Lavan SPJ

Wallace J
Brinsden J

Tribunal:
Supreme Court of Western Australian (Full Court)

Decision date: Judgment handed down 16 June 1980.

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Wallace J.

This appeal involves the construction to be placed upon certain provisions of the Death Duty Assessment Act, ``the Act''. It was assented to originally on 21 December 1973. By Div. 3 headed ``Allowances and Rebates'', sec. 22 then provided that where property comprised in the estate of a deceased person passed to the widow or widower thereof the Commissioner shall ``deduct an amount of twenty thousand dollars from the value of that property for the purpose of, and before, assessing the duty payable in respect of that property;''. (My emphasis.) In 1976 the allowance of $20,000 to which I have just referred was increased to $50,000. In 1977, the Act was further amended to add to the relevant divisional heading the word ``Exemption'' in front of the word ``Allowances'' and by re-enacting sec. 22 as follows:

``22. Where property comprised in the estate of a deceased person for the purposes of this Act passes to the widow or widower of the deceased person -

• (a) no duty shall be assessable or payable in respect of that property;''

Section 5 subsec. (3) defines the word ``passes'' as follows:

``Without limiting the generality of the term `passes', where used in this Act in relation to property that forms part of the estate of a deceased person for the purposes of this Act, that term, unless the contrary intention appears, includes the taking of a limited interest in that property under any will or non-testamentary disposition.''

By his will the deceased gave his residuary estate to the respondent upon trust to the deceased's wife for life and after her death for his daughter, absolutely. There were remainder provisions which are not important. The appellant assessed duty on the residuary estate by excluding the actuarial value of the widow's life interest and charging duty on the balance of the value of the residuary estate on the basis that the daughter was the absolute remainderman. Before the learned trial Judge the respondent successfully argued that the word ``property'' in sec. 22 refers to specific assets the subject of the life interest to the widow. The appellant unsuccessfully contended that the word ``property'' referred to the life interest therein which passed under the will. His Honour had regard to various provisions of the Act wherein the term ``property'' is referred to and concluded that sec. 5(3) made it clear that the term ``property'' referred to in sec. 22 represented the asset items constituting the residue of the estate.

The issue is whether for the purposes of the Death Duty Assessment Act and the Death Duty Act the whole of the residuary estate in which the widow had a life interest is property that passed to her or whether merely the life interest so passed. As his Honour reasoned, were it not for the provisions of sec. 5(3) he would have held that merely the life interest passed but that upon a proper construction of the two sections read together the property in which the life interest was created by deceased's will included the taking of a limited interest in

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ATC 4320

that property under the will as provided for in sec. 5 subsec. (3). The appellant contends that his Honour was wrong in law in the construction he placed upon:

• (i)``property comprised in the estate'' which occur in sec. 22 of the Act and the words ``property that forms part of the estate'' which occur in sec. 5(3) of the Act, in their application to the facts;
• (ii) the term ``passes'' which occurs in sec. 5(3) and in sec. 22 of the Act and in Table 1 of the Schedule of the Death Duty Act, 1973-1977, in its application to the facts;
• (iii) the words ``the taking of a limited interest in that property'' in sec. 5(3) of the Act, in their application to the facts; and
• (iv) that his Honour was wrong in law and in fact in the construction and application of sec. 5(3) in failing to attribute any value to what he described as ``the successive interests to follow''.

The learned Solicitor-General has been at pains to take us through the various provisions of the two statutes. He has done that to emphasise that wherever the term ``property'' is expressed it comprehends not only realty and personalty but all manner of interest or estate in any piece of realty or personalty, e.g. sec. 39 relating to the duty on limited interests payable out of corpus and sec. 38 dealing with the adjustment of duty to be assessed on various bequests, devises, legacies or gifts. Thus it follows that the use of the term ``property'' in sec. 22 includes a limited interest therein. If that be the argument, it must be conceded that sec. 5(3) has no operation at all in the instant case. To determine otherwise, however, would be to disregard the use of the term ``property'' throughout the two Acts. By having regard thereto the life interest in itself is property and it passes without reference to sec. 5(3). That subsection will not apply where the contrary intention appears in the legislation and its history and connotation demonstrate that it should not apply.

On the other hand, Mr. Kennedy has pointed out that the use of the term ``property'' throughout the statute is not consistent, that where Mr. Parker has referred to a life interest comprised in the estate of a deceased person that is not the case because what the statutory provision provides is property comprised in the estate of a deceased person. That is so, of course, but the relevant division of the Act within which sec. 22 appears covers exemptions, allowances and rebates and is not used other than for that purpose. Section 10 covers dutiable property and that of course would include the deceased's realty.

In my opinion the contrary intention is apparent in the legislation and for this reason sec. 5(3) cannot be applied and read with sec. 22 in order to exempt the property the subject of a life interest entirely from duty. This is the narrow point of the appeal. In construing the statute one must have regard to its terms as a whole and not to part thereof. See Maxwell on Interpretation of Statutes, 12th ed., p. 58 and the authorities therein relied upon. Since 1973, widows have received allowances ranging from $20,000 to $50,000 from the value of the property passing to them. When sec. 22 was amended to provide an exemption in 1977, the exemption related to the value to be placed upon the property passing to her. For the purpose of assessing duty the value of all items comprising a deceased person's property was aggregated and, inter alia, reduced by the value of the property passing to the widow under the will of a deceased person. That property could only be described as the life interest and the value thereof is capable of calculation. In my opinion, therefore, sec. 5(3) cannot apply for the purpose of identifying the property the subject of the life interest. For these reasons this appeal should be allowed.