Brett v Barr Smith [1919] HCA 4

OF AUSTRALIA. 87

(HIGH COURT OF AUSTRALIA.]

BRETT AND ANOTHER . 5 : ' . APPELLANTS : PLAINTIFFS, : AND ; BARR SMITH AND ANOTHER J é . ResPonDENT: : DereNDanNts,

ON APPEAL FROM THE SUPREME COURT OF VICTORIA.

Income Tax—Mortgage—Covenant imposing on mortgagor obligation to pay income H. C. ov A. tax in respect of interest—Income Tax Assessment Act 1915-1916 (No. 34 of 1919. 1915—No. 39 of 1916), sec. 54, —~

MELBOURNE,

By a mortgage executed before the passing of the Income Tax Act 1915 the yy. 7. 17

mortgagors covenanted to pay interest at 5} per cent. per annum with a proviso that if they should, within a certain time after the dates fixed for a oa ey the payment of interest, pay interest at such a rate as, after deducting (inter Gavan Dufly JJ. alia) the income tax payable by the mortgagee in respect of a specified sum

amounting to 4} per cent. on the mortgage debt, would leave a clear remainder

of 44 per cent. per annum, the mortgagee would accept interest at such reduced

rate,

Held, by Isaacs and Higgins JJ., Gavan Duffy J. doubting, that the proviso was not and did not contain a covenant or stipulation which had or purported to have the purpose or effect of imposing on the mortgagors the obligation of paying income tax on the interest to be paid under the mortgage within the meaning of sec. 54 of the Income Tax Assessment Act 1915-1916, and therefore that the mortgagors were liable to pay interest at the rate of 5} per cent. reducible as prescribed by the proviso.

Decision of the Supreme Court of Victoria: Brett v. Barr Smith, (1918) V.L.R., 476; 40 A.L.T., 136, affirmed,

- Appra from the Supreme Court of Victoria. Tn an action brought in the Supreme Court by Frank Pilkington Brett and Arthur Frederick Hooper against Tom Elder Barr Smith

H. C. or A. 1919,

eS)

Brerr v.

Barr Smirn.

HIGH COURT