Hoystead v Commissioner of Taxation

JurisdictionUK Non-devolved
Judgment Date1926
CourtPrivy Council

Estoppel - Estoppel by Judgment - Admission in previous Litigation - Matter fundamental to previous Judgment - Land Tax Assessment Act, 1910–1916 (Aust.), s. 38, sub-s. 7.

Under a will the annual income from an estate in Australia was divisible by the trustees between the testator's daughters. The trustees objected to an assessment for the financial year 1918–1919 under the Land Tax Assessment Act, 1910–1916, of Australia; they claimed under s. 38, sub-s. 7, of the Act a deduction of 5000l. in respect of the share of each daughter. A case was stated for the opinion of the Full Court of the High Court upon the questions: (1.) Whether the shares of the joint owners, or of any and which of them, in the land were original shares within s. 38; (2.) How many deductions of 5000l. the respondent should make. The Full Court answered these questions as follows: (1.) The shares of the six children surviving at the date of the assessment; (2.) Six. Judgment upon the objection was entered accordingly. Upon the assessment for 1919–1920 the Commissioner allowed only one deduction of 5000l., contending that the beneficiaries were not joint owners within the meaning of the Act. Upon a case stated the Full Court upheld that view, and held that the Commissioner was not estopped by the previous decision:—

Held, that the Commissioner was estopped, since although in the previous litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, the matter so admitted was fundamental to the decision then given.

Carter v. James (1844) 13 M. & W. 137 and Howlett v. Tarte (1861) 10 C. B. (N. S.) 813 explained.

Judgment of the High Court reversed.

APPEAL (No. 3 of 1925) by special leave from a judgment of the High Court of Australia in its appellate jurisdiction (November 2, 1923) affirming a judgment of Starke J. (October 16, 1923) pursuant to a judgment of the Full Court of the High Court (December 16, 1921) upon a case stated by Starke J. under s. 46, sub-s. 3, of the Land Tax Assessment Act, 1910–1916, of the Commonwealth.

The appellants were trustees under the will of Charles Campbell, deceased, a station owner resident in Melbourne. The questions arising upon the appeal were: (1.) whether upon an assessment for land tax for the financial year 1919–1920 under the above-mentioned Act the appellants were entitled under s. 38, sub-s. 7, to deduct 5000l. in respect of the share of each surviving daughter of the testator in the income derived from working the testator's station, or (as was held in Australia) to deduct only one sum of 5000l.; and (2.) whether the respondent was estopped from denying that the said beneficiaries were taxable as joint owners within that sub-section, having regard to the judgment of the High Court as to the assessment for the financial year 1918–1919.

The facts, and the material provisions of the Act, appear from the judgment of the Judicial Committee. The said judgment proceeded entirely upon the question of estoppel above mentioned.

The Full Court (Knox C.J., Starke and Higgins JJ.) held that the beneficiaries were not taxable under the Act as joint owners, and that only one deduction of 5000l. could be made; further (Higgins J. dissenting) that the Commissioner of Taxation was not estopped by the judgment with regard to the assessment for 1918–1919. The decision of the Full Court upon the case stated is reported at 29 C. L. R. 537. The decision upon the case stated upon the objection to the 1918–1919 assessment is reported at 27 C. L. R. 440.

1925. Oct. 22, 23, 26, 27. Clauson K.C., W. A. Greene K.C. and du Parcq for the appellants contended that under the Act the beneficiaries were taxable as joint owners; further, that the respondent was estopped by the decision as to the 1918–1919 assessment. In support of the latter contention reference was made to cases mentioned in the judgment of the Bench, also to: In re South American and Mexican Co.F1; Cooke v. RickmanF2; Jones v. LewisF3; Reg. v. Inhabitants of HartingtonF4; Reg. v. Hutchings.F5

Sir John Simon K.C. and Hon. Geoffrey Lawrence K.C., for the respondent, contended that no estoppel arose, as the question whether the children of the testator were joint owners under the Act was not litigated in the previous proceedings; they referred to: Duchess of Kingston's caseF6; Blackham's caseF7; Outram v. MorewoodF8; Carter v. JamesF9; Boileau v. RutlinF10; Goucher v. ClaytonF11; Irish Land Commissioners v. RyanF12; Kennedy v. KennedyF13; Cromwell v. County of SacF14; and New Orleans v. Citizens' Bank.F15

Clauson K.C. replied.

Dec. 17. The judgment of their Lordships was delivered by

LORD SHAW. This is an appeal by special leave from two judgments of the Full Court of the High Court of Australia given on December 16, 1921, and November 2, 1923. The first judgment was given upon a special case which had been stated for the opinion of the Full Court by Starke J. upon the hearing of an appeal by the appellants against their assessment by the Commissioner of Taxation for the purpose of land tax for the financial year 1920–1921. That learned judge, giving effect to the answers made by the Full Court to the questions in the special case, dismissed the appellants' appeal and, on November 2, 1923, the Full Court affirmed his judgment. The substance of the appeal has reference to the correctness of the answers given to the questions in the special case. These questions and answers will be afterwards stated.

Mr. Charles Campbell, a merchant and station owner, resident in Melbourne, died on September 13, 1905, possessed of considerable real and personal estate in Australia. Seven children survived him. By his will he devised and bequeathed his station properties and the stock, etc., thereon upon trust to carry on and work the properties until twenty-one years from his death. The income was to be enjoyed by his children, and should any child predecease him, leaving issue, the issue was to enjoy the parent's share of income. There are various provisions as to the particular dates and periods from and during which annual income should be reckoned. In the view taken in this case these points are immaterial. Upon the expiration of the twenty-one years the trustees were directed to sell the properties and stock, etc., and to divide the proceeds equally among such children as should be living at the expiration of the twenty-one years, grandchildren again taking their parent's share.

As mentioned, the seven children named in the will were alive at the testator's death; but one married daughter died in January, 1912, leaving two children. A question was raised in the proceedings after mentioned as to the rights of these grandchildren, and it was held that they were not entitled to what is termed in the statute an “original share in the land,” they not having a “first life or greater interest …. in the land or income therefrom.” This question is frequently referred to in the course of the case: but the judgment upon it was accepted at their Lordships' Bar; and that matter is accordingly no longer in issue. The appeal may be, therefore, treated as an appeal by the six children of the testator named in his will and still surviving. The question in the case has reference to the taxation to be imposed upon the estate, or upon various portions of or interests therein, under Mr. Campbell's will.

This depends upon the construction to be given to certain sections and sub-sections of the Land Tax Assessment Act, 1910–1916.

The relevant provisions of the Act are as follows:—

“10. — (1.) Subject to the provisions of this Act, land tax shall be levied and paid upon the unimproved value of all lands within the Commonwealth which are owned by taxpayers, and which are not exempt from taxation under this Act.

“11. — (1.) Land tax shall be payable by the owner of land upon the taxable value of all the land owned by him. ….

“(2.) The taxable value of all the land owned by a person is …. (b) in the case of an owner …. the balance of the total sum of the unimproved value of each parcel of the land, after deducting the sum of 5000l.

So far for the simplest case — namely, that of owners.

The case of joint owners is specifically dealt with in s. 38. The sub-sections thereof which are material to the question in the appeal are:—

“(1.) Joint owners of land shall be assessed and liable for land tax in accordance with the provisions of this section.

“(2.) Joint owners (except those of them whose interests are exempt from taxation under s. 13 or s. 41 of this Act) shall be jointly assessed and liable in respect of the land (exclusive of the interest of any joint owner so exempt) as if it were owned by a single person, without regard to their respective interests therein or to any deductions to which any of them may be entitled under this Act, and without taking into account any land owned by any one of them in severalty or as joint owner with any other person.

“(3.) Each joint owner of land shall in addition be separately assessed and liable in respect of: (a) his individual interest in the land (as if he were the owner of a part of the land in proportion to his interest), together with (b) any other land owned by him in severalty, and (c) his individual interests in any other land.”

Sub-ss. 7 and 8, in the construction of which arises the true subject of controversy in the appeal, are as follows:—

“(7.) Where, under a settlement made before July 1, 1910, or under the will of a testator who died before that day, the beneficial interest in any land or in the...

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