Deputy Commissioner of Taxation (NSW) v Brown [1958] HCA 2

High Court of Australia Dixon C.J. McTiernan, Williams, Kitto and Taylor JJ. Deputy Commissioner of Taxation (NSW) v Brown [1958] HCA 2

ORDER Judgment upon the demurrer for the defendant. The suit to be dismissed. Costs of the demurrer to be paid by the plaintiff.

Cur. adv. vult.

The following written judgments were delivered:—

Mar. 11, 1958 Dixon C.J.

In this suit, brought in this Court in the name of the Deputy Commissioner of Taxation for the State of New South Wales of the Commonwealth of Australia, it is sought to recover amounts of tax ascertained by an assessment and by amended assessments duly notified. It is sought to recover it against the defendant in a personal judgment. The defendant is not the person assessed, nor the person notified. The assessment is upon the executors of a deceased person. They had fully administered the estate before the assessment and amended assessments were made. The claim against the defendant is based upon the fact that as a person entitled in a distribution of the deceased's estate she received from the executors in various forms enough to cover the tax assessed upon the executors. It is not alleged that when she did so she had notice of any impending assessment or claim by the commissioner. The proceeding is not one to follow a fund in her hands. It is a suit based on the equitable liability under which a beneficiary may come, in an appropriate case, when an unpaid creditor of the estate is able to show that a distribution of assets has been made to the beneficiary without due provision for the debt, the assets being no longer traceable and the debt being otherwise incapable of recovery. In other words the defendant is sued upon an alleged equitable debt.

In my opinion the suit has no basis.

Liability for federal tax must arise from federal law. It must arise from some exercise of the legislative power conferred by s. 51 (ii.) of the Constitution aided perhaps by the legislative power contained in s. 51 (xxxix.). I can find no federal law which imposes the liability upon the defendant. There is certainly no provision in the Income Tax and Social Services Contribution Assessment Act 1936-1952 which does so expressly. I shall later give reasons for denying that any implication doing so can be found in that Act.