Thurn v Federal Commissioner of Taxation

(1965) 112 CLR 432
39 ALJR 100

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(Judgment by: Taylor J.)

THURN
v FEDERAL COMMISSIONER OF TAXATION

Court:

Judges: Kitto

TaylorMenzies JJ.

Judgment date: 30 June 1965

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Judgment by:
Taylor J.

The question in this case is whether by virtue of s. 8 (4) (f) of the Estate Duty Assessment Act 1914-1957 four-sevenths of the moneys payable under a policy of assurance effected by the deceased upon his own life and subsequently assigned to his wife, Olive May Thurn, some two and a half years before his death should be regarded as part of his estate for the purposes of the Act. According to the policy the moneys payable thereunder were payable upon the death of the insured to his executors, administrators or assigns but after the registration of the assignment of the policy Olive May Thurn became the absolute owner thereof and the right to recover the policy moneys at the appropriate time vested in her by virtue of the provisions of Div. 2 of Pt IV of the Life Insurance Act 1945-1958 (Cth). The assignment was made for full value in the circumstances set out in the case stated. I do not need to re-state the facts therein appearing but it should be mentioned that the deceased paid the four annual premiums which became payable before the assignment, that his wife paid the three premiums which fell due thereafter and that the consideration given by the wife for the assignment was an amount equal to the sum of the four premiums paid by the deceased.

Section 8 (4) (f) is in the following terms: "(4) Property - . . . (f) being money payable to, or to any person in trust for, the widow, widower, children, grand-children, parents, brothers, sisters, nephews or nieces of the deceased under a policy of assurance on the life of the deceased where the whole of the premiums has been paid by or on behalf of the deceased, or, where part only of the premiums has been paid by or on behalf of the deceased, such portion of any money so payable as bears to the whole of that money the same proportion as the part of the premiums paid by or on behalf of the deceased bears to the total premiums paid, shall for the purposes of this Act be deemed to be part of the estate of the person so deceased".

It is the contention of the appellants that the money payable under the policy was not at the date of the death of the deceased money of the character described by the section. It was not, it was said, "money payable to . . . the widow . . . under a policy of assurance" though admittedly the policy was one of assurance on the life of the deceased and he had paid some of the premiums payable thereunder. The argument was that in order to determine whether the "money" was of the specified character, it was permissible to look only at the terms of the policy and that it was not permissible to have regard to the later assignment by virtue of which the policy moneys ultimately became payable to the assignee. I doubt whether this argument is tenable on the language of the sub-section.

But I agree with Kitto J. that the appellants should succeed and since I am of opinion that there is a more particular reason why they should succeed, I propose to say briefly why I have come to this conclusion. The situation which the section appears to me to contemplate is that there has been in existence a policy of insurance on the life of the deceased under which moneys are payable to, or, in trust for, some one or more of the specified classes and that the premiums payable thereunder or some of them, have, in his lifetime, been paid by the deceased. To me the phrase "where the whole of the premiums has been paid . . . or where part only of the premiums has been paid by or on behalf of the deceased" refers to the payment of premiums payable under a policy of assurance of the character already described in the paragraph, that is to say, a policy of assurance on the life of the deceased under which money is contingently payable to or in trust for some one or more members of the specified classes. Initially, and during the whole of the period during which the deceased paid premiums, the policy was not of this character; it was a policy under which moneys were contingently payable to the executors, administrators or assigns of the deceased and not to or in trust for his widow or any of the specified classes. At the best, from the respondent's point of view, no basis existed for regarding the policy as falling within this description until after the registration of the assignment and from that point of time no premiums were paid by the deceased. Accordingly I am of the opinion that no part of the policy moneys can be considered to have been property of the deceased at the time of his death.