Elder's Trustee & Executor Co Ltd v Commissioner of Taxation (Cth) (Higgins' Case) [1953] HCA 42

High Court of Australia Fullagar J. Elder's Trustee & Executor Co Ltd v Commissioner of Taxation (Cth) (Higgins' Case) [1953] HCA 42

ORDER Appeal dismissed with costs.

Cur. adv. vult.

July 30 Fullagar J. delivered the following written judgment:—

Elder's Trustee & Executor Co. Ltd. is the executor of the will of the late Christina Higgins, who died on 9th September 1951. The company appeals against the assessment of estate duty on her estate under the Estate Duty Assessment Act 1914-1950 Cth.. The relevant provision of the Act is contained in s. 8 (4), which provides, so far as material, that property which passed from the deceased person by any gift inter vivos made within three years before his decease shall for the purposes of the Act be deemed to be part of the estate of that deceased person. Under s. 8 (1) estate duty is to be levied and paid upon the value, as assessed under the Act, of the estates of persons dying after the commencement of the Act. The case is concerned with two sums of £5,000, each of which was paid by the deceased to her three sons within three years of her death.

The case came before me on an agreed statement of facts, which I will summarize. For many years before her death three sons of the late Mrs. Higgins, whom I will call the Higgins Brothers, were carrying on in partnership a pastoral business on certain freehold and leasehold lands in New South Wales. In the course of this business they dealt in a manner which is usual in Australia with a company named Elder Smith & Co. Ltd., which carried on (inter alia) the business of wool-selling brokers, and which I will call "the company". The course of dealing involved the maintenance in the books of the company of a current account, which was to all intents and purposes a banking account. To that account were credited (inter alia) the proceeds of sales of wool and stock sold by the partnership, and on that account drawings were made for payment of a great variety of outgoings of the partnership and also for payment of outgoings of the individual partners, such as income tax, children's school fees, &c. At the time of each of the payments now in question this account was in debit, that is to say, it showed a balance owing by the Higgins Brothers to the company. The indebtedness from time to time of the Higgins Brothers to the company was secured by mortgages of the freehold and leasehold lands on which the pastoral business was carried on, and also by a registered stock mortgage. The late Mrs. Higgins herself also had a similar current account with the company.