Federal Commissioner of Taxation v Westgarth

(1950) 81 CLR 396
24 ALJ 129
[1950] ALR 439

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(Judgment by: Williams J)

Between: Federal Commissioner of Taxation
And: Westgarth

Court:

Judges: McTiernan J
Latham CJ

Williams JWebb J
Fullagar J

Subject References:
Estate Duty (Cth)

Judgment date: 23 December 1949

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Judgment by:
Williams J

This appeal raises two questions of law of some importance in the assessment of estate duty under the provisions of the Estate Duty Assessment Act 1914-1942. It will be convenient to state a few facts before approaching them. The respondents are the administrators of the estate of Ina Mary Campbell, deceased, who died on 15th October 1945. One of the assets in the estate was a cottage situated in Kent Road, Rose Bay. In their estate duty return the respondents showed the cottage as an asset in the estate. They set forth the description of the cottage as "property No. 26, Kent Road, Rose Bay, being lot 24 'The Knoll' estate and under Old System Title 2,750 pounds 0s. 0d." This was the value of the cottage on 15th October 1945 shown in an accompanying certificate of valuation under the Valuation of Land Act 1916 (N.S.W.) dated 30th October 1945. (at p409)

The appellant accepted this value for the purposes of the original assessment, notice of which was given to the respondents on 28th May 1946. On 29th July 1946, the respondent sold the cottage for 3,200 pounds, the sale at this price being consented to by the delegate to the Treasurer under the provisions of the National Security (Economic Organization) Regulations. (at p409)

The appellant then amended the assessment increasing the value of the cottage for the purposes of estate duty from 2,750 pounds to 3,200 pounds and gave notice of the amended assessment to the respondents on 30th September 1946. The amended assessment stated that it had been amended

"on account of increased value of 26 Kent Street, Rose Bay to agree with consent price of the delegate of the Treasurer for the sale thereof. Previously assessed 2,750 pounds. Now assessed 3,200 pounds. Add: 450 pounds."

The respondents objected to this increase but the appellant decided against them. The respondents requested the appellant to refer his decision to the Board of Review which decided in their favour. The appellant appealed to this Court under s. 26 (9) of the Estate Duty Assessment Act. The appeal came on for hearing before McTiernan J. and was dismissed with costs. The appellant has now appealed to this Full Court. Before McTiernan J. evidence was given by two valuers that in their opinion the value of the cottage on 15th October 1945 was 3,200 pounds. (at p409)

The questions of law may now be approached. They arise under s. 20, sub-ss. (2) and (3) of the Estate Duty Assessment Act. The appellant very properly has made it clear that he is not of opinion that any avoidance of duty was due to fraud or evasion. But he contends that the respondents did not make a full and true disclosure of all the material facts within the meaning of s. 20 (2) necessary for making the original assessment and that he was therefore entitled to amend this assessment by making the alteration in the value of the cottage to correct a mistake of fact. He contends in the alternative that, if the administrators did make such a disclosure, he made a mistake of fact in valuing the cottage at 2,750 pounds and was entitled under s. 20 (3) to amend the assessment to correct this mistake. The respondents contend that the appellant fails on both grounds and that the amended assessment was not authorized by the Estate Duty Assessment Act and is void. (at p410)

Section 8 of this Act provides that, subject to this Act, estate duty shall be levied and paid upon the value, as assessed under this Act, of the estates of persons dying after the commencement of this Act. Section 10 (1) provides that for the purposes of assessment and levy of estate duty every administrator shall... prepare and furnish in the prescribed form... a statement setting forth a full and complete return of all the estate in Australia of the deceased. Section 10 (2) provides that the statement shall set forth the descriptions and values of the items comprising the estate before deducting any debts or other charges upon the estate, and shall also set forth in detail all the debts and other charges upon the estate, distinguishing between secured and unsecured debts and describing and valuing any security for any such debts. Section 20 (2) provides that where an administrator has not made to the commissioner a full and true disclosure of all the material facts necessary for the making of an assessment the commissioner may... within three years from the date upon which the duty became due and payable under the assessment make such alterations therein or additions thereto as he thinks necessary to correct... a mistake of fact. Section 20 (3) provides that where an administrator has made to the commissioner a full and true disclosure of all the material facts necessary for the making of an assessment, and an assessment is made after that disclosure, no amendment of the assessment increasing the liability of the estate in any particular shall be made except to correct an error in calculation or a mistake of fact, and no such amendment shall be made after the expiration of three years from the date upon which the duty became due and payable under that assessment. (at p410)

The first question is whether the respondents made a full and true disclosure of all the material facts relating to the cottage necessary for the making of the original assessment. It is contended for the appellant that they failed to do so because they declared that the value of the cottage at the date of death was 2,750 pounds whereas its true value was in fact 3,200 pounds. Apart from the provisions of s.10 (2) of the Act I should have thought it would only be necessary for an administrator to make a full and true disclosure of the descriptions of the items of property comprising the estate to enable the commissioner to make an assessment. But the administrator is required in his statement to set forth the descriptions and values of the items comprising the estate and this would seem to require him to make a full and true disclosure of the values as well as the descriptions of the items. Even so, an administrator can only make a full and true disclosure of facts which are capable of being ascertained and, in the case of values, he has to disclose, not an objective fact, but information which is only a fact so far as a matter of estimation and opinion can be a statement of fact. It is true, as Mr. Kitto said, that the value of property is often an issue in a court, and this issue has often been described as an issue of fact. But the contrast is between questions of law and issues of fact, and it is in this respect that an adjudication upon the value of property is an issue of fact. The task of the court in assessing compensation was described by Dixon J. in Minister of State for the Navy v. Rae (1945) 70 CLR 339 , at p 344 as follows:

"In reaching a conclusion as to compensation for the taking of a piece of property such as that now in question, it is necessary, or at all events wise, to pursue as many means of estimation as are open, to compare them, and then, as an exercise of judgment, to fix what, upon considerations this process suggests, appears to be a fair compensation."

In Hazeldell Ltd. v. The Commonwealth (1924) 34 CLR 442 , at p 452, Isaacs A.C.J. said,

"The value of land, where there is no market price, is always a matter of opinion."

In Secretary of State for Foreign Affairs v. Charlesworth, Pilling & Co. [1901] AC 373 , at p 391, Lord Hobhouse, delivering the judgment of the Privy Council, said: "It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others." The extent to which a statement of opinion is a statement of fact was discussed in Bisset v. Wilkinson (1927) AC, at pp 182, 183 and Fitzpatrick v. Michel (1928) 28 SR (NSW) 285, at pp 288, 289; 45 WN 69, at pp 70, 71. The administrator is not often a skilled valuer. He must usually rely on the valuations of experts. In my opinion, an administrator who makes a full and true disclosure of the description of each item of property comprising the estate, places a value on it which he honestly believes to be its true value, and makes a full and true disclosure of the expert valuations on which he relies, makes a full and true disclosure of its value for he discloses all that he knows or is capable of knowing of its value. This is what the administrators did in the present case and the appellant cannot therefore rely on s. 20 (2). (at p412)

It remains to consider whether the appellant can rely on s. 20 (3) and claim that the amended assessment was made to correct a mistake of fact. But it necessarily follows from what I have already said that, in my opinion, the appellant did not make a mistake of fact. He was in possession of all the facts and, if he placed a wrong value on the cottage, he made, as McTiernan J. said, an error of judgment and not of fact. In Noud v. Federal Commissioner of Taxation (1949) 66 WN (NSW) 186, Street J. held in a similar case that the commissioner had erred in forming his opinion which is to my mind another way of saying the same thing. I agree with the opinions of McTiernan J. and Street J. that the mistake was not a mistake of fact within the meaning of s. 20 (3). (at p412)

In my opinion the appeal should be dismissed with costs. (at p412)