City Mutual Life Assurance Society Ltd v Commissioner of Taxation (Cth) [1948] HCA 40

High Court of Australia Williams J. City Mutual Life Assurance Society Ltd v Commissioner of Taxation (Cth) [1948] HCA 40

ORDER Appeal dismissed with costs.

Cur. adv. vult.

J. Williams delivered the following written judgment:—

Dec. 13 Williams J

The question at issue on this appeal is the extent to which the appellant is liable to pay land tax on the unimproved value of land in Brisbane on which is erected Lennon's Hotel. The material year is that which ended at midnight on 30th June 1944, and it is admitted that the appellant was the owner in fee simple of the land at that time. The appellant became the owner of the land in fee simple in the following manner. The previous absolute owner of the land, which is held under the provisions of The Real Property Act Q., was one, J. Kouvelis. He mortgaged the land to the appellant by a registered bill of mortgage dated 2nd September 1938 to secure the sum of £104,500 and further advances. The terms of the mortgage were subsequently varied in certain respects to which it is unnecessary to refer. On 19th November 1941, the mortgage debt having then increased to about £344,441, the appellant and Kouvelis made an agreement in writing whereby, in consideration of the appellant releasing Kouvelis from his personal liability to repay the mortgage debt and certain other considerations, Kouvelis agreed to the appellant entering into possession of the mortgaged premises, to waive his rights to mortgagee's accounts, and to release and discharge the appellant from all liability to account as mortgagee in possession in respect of the rents and profits and of the proceeds of sale of the mortgaged premises.

On 5th November 1942 the Full Supreme Court of Queensland held that the effect of this agreement was that the mortgagor had lost his right of redemption, and that, having regard to the real nature of the transaction, the agreement was a conveyance within the meaning of s. 49 of The Stamp Acts 1894 to 1940 Q.. On 2nd December 1942 Kouvelis in consideration of this agreement executed a memorandum of transfer of the land to the appellant and the appellant became the registered proprietor of the land for an estate in fee simple. On 25th September 1942 the appellant made an agreement with Mrs. Byrne, which was still current on 30th June 1944, whereby Mrs. Byrne, who became the licensee of the hotel under The Liquor Act Q., agreed to manage the hotel on the terms and conditions therein contained. On 30th June 1944 the whole of the building erected on the land was being used for the purposes of the hotel except three shops which were let to tenants. The respondent assessed the appellant for land tax upon the whole of the unimproved value of the land.