C.A. 1902. HANNAH

In April, 1901, Robert Hannah purchased certain land and buildings in Wellington from the Bank of New Zealand for £10,000-£5,000 to be paid in cash, and £5,000 to remain on mortgage to the bank at interest. The correspondence conOF STAMPS. tained no suggestion that R. Hannah was purchasing otherwise. than upon his own account.

v.

COMMISSIONER

On the 13th of April, 1901, R. Hannah left New Zealand for England, leaving a full power of attorney with general powers with his son, the appellant, J. A. Hannah. R. Hannah was absent from New Zealand at the time of the execution of the instruments afterwards referred to, but the case stated that these instruments and the transactions to which they gave effect were arranged by R. Hannah with J. A. Hannah, and the instructions given to their solicitors, before R. Hannah left for England.

On the 12th of July, 1901, the Bank of New Zealand executed a transfer of the property (which was under the Land Transfer Act) to J. A. Hannah. The transfer contained no statement on its face that it was made at the request of R. Hannah, and was expressed to be made in consideration of £10,000 paid to the bank by J. A. Hannah. £5,000 of this sum was paid as follows: J. A. Hannah drew a cheque under his power of attorney upon the account of his father, R. Hannah, for £5,000, and the cheque was paid out of his father's moneys. This cheque J. A. Hannah paid into his own account, and he then gave his own cheque for £5,000 to the Bank of New Zealand. For the balance of £5,000 he executed a mortgage of the property in favour of the bank.

On the 22nd of July, 1901, J. A. Hannah executed a memorandum of lease of the property to his father, R. Hannah, for the term of his life, at a yearly rental of one peppercorn.

On the same day, or previously, he also executed a second mortgage of the property in favour of his father, R. Hannah. This mortgage was dated the 13th of July, 1901, and was expressed to be subject to the mortgage to the bank and to the lease to R. Hannah for life. It recited that the property had been purchased by J. A. Hannah from the bank for £10,000, and that upon the treaty for the sale it had been agreed between J. A. Hannah and R. Hannah that the sum of £5,000 should he borrowed on mortgage from the bank, and that the balance of the purchase-money, £5,000, should be advanced to J. A. Hannah by R. Hannah, and should be secured by second mortgage over the property; and that during the currency of

C.A.

1902.

HANNAH

V.

COMMISSIONER

the lease to R. Hannah for life R. Hannah should pay to the bank all interest payable under the mortgage to the bank, but should not demand interest under the second mortgage to himself, and that R. Hannah should also during the same period pay all insurance, rates, taxes, assessments, and other out- OF STAMPS. goings. The instrument then witnessed that, in consideration of the sum of £5,000 lent and paid to J. A. Hannah by R. Hannah, J. A. Hannah covenanted, inter alia, to repay this sum to R. Hannah, and mortgaged the property to him as security.

J. A. Hannah also executed on the 22nd of July, 1901, a declaration of trust, reciting that he was registered as proprietor of the property, subject to the mortgage to the bank and to the lease to R. Hannah, and that the property had been purchased by him (J. A. Hannah) in his own name, but as trustee for and on behalf of and with moneys belonging to his father, R. Hannah. By this declaration of trust J. A. Hannah declared that he held the property, subject as aforesaid, in trust for such person or persons as his father, R. Hannah, should by any deed or writing under his hand, or by will or codicil, direct or appoint, and, in default of and until any such appointment, in trust for himself (J. A. Hannah) and his brothers (R. Hannah, jun., and G. Hannah) as tenants in common in equal shares. This instrument was executed by J. A. Hannah in his own name, and was in the form of a deedpoll made by himself.

The memorandum of transfer of the 12th of July, 1901, and the declaration of trust of the 22nd of July, 1901, were presented for stamping, and duty was assessed on them by the Deputy Commissioner of Stamps at Wellington, and, on appeal from him, by the Commissioner of Stamps, as follows:-Upon the transfer,

(a.) As upon a deed of gift of the property, less the sum of £5,000 remaining on mortgage to the Bank of New Zealand 10 per cent. on £5,000, less 5 per cent. allowance to children: £250.

(b.) As upon a conveyance on sale (see "The Stamp Acts Amendment Act, 1891," section 9): £75.

Upon the declaration of trust, 5s. per cent. on £5,000: £12 10s.

J. A. Hannah now appealed from this assessment.

The questions for the opinion of the Court were-1, whether the assessment of the Deputy Commissioner of Stamps was

C.A.

1902. HANNAH

v.

COMMISSIONER
OF STAMPS.

correct; and, 2, if not, in what manner should the duty upon the several instruments be assessed.

Skerrett and Levi, for the appellant:

It is admitted that there is a settlement, but denied that there is a deed of gift.

[Counsel for the appellant argued fully the question whether the transaction amounted in substance to a gift of the property, or of any interest in it, by R. Hannah. The Court during the argument raised the question whether there could be a deed of gift" within the meaning of the Acts unless there was some instrument executed by the donor, section 9 of The Stamp Acts Amendment Act, 1891," making the duty payable within one month after the execution of the deed of gift by the donor." Counsel submitted that there must be some instrument executed by the donor. That being the only point decided by the Court, the argument is reported only so far as it bore upon that point.]

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H. D. Bell, for the respondent:

The sole difficulty is that there is no document executed by Robert Hannah; but, the legal estate being in a bare trustee, he has to observe the equity, and, if he follows the direction of the cestui que trust, writing by the cestui que trust is not necessary. The declaration of. trust by the trustee, by direction of the cestui que trust, is a declaration by the cestui que trust, the owner. It is an instrument made directly or indirectly by the donor. The donor is the person making the deed of gift: Section 7 of the Act of 1891. Qui facit per alium facit per se. Section 7 of the Act of 1891 does not in its operative part refer to the donor, and a deed of gift may be by a person not defined as the donor. This is certainly an indirect disposition" by Robert Hannah within the meaning of the Act of 1895. As to what is a "disposition": Attorney-General v. Montefiore (1). As to what is a "gift" under

The Customs and Inland Revenue Act, 1889 " (England): Attorney-General v. Worrall(2). The business meaning of the transaction must be looked at: Attorney-General v. SmithMarriott (3). A settlement and a will together may constitute a "disposition": Attorney-General v. Dodington (4). The words of the statute cover the case, and should be followed: Earl Grey v. Attorney-General(5).

(1) 21 Q.B.D. 461.

(2) [1895] 1 Q.B. 99.

(3) [1899] 2 Q. B. 595.

(4) [1897] 2 Q. B. 373.

(5) [1900] A.C. 124, 126.

Skerrett, in reply:

The gift must be effected by deed or instrument. The deed or instrument must, under the statute, be executed by the donor. The words "directly or indirectly," in section 6 of the Act of 1895, qualify "conveys," not "person."

Bell referred to section 35 of "The Deceased Persons' Estates Duties Act, 1881," and asked the Court to consider whether it could be used on appeal, and the transaction declared an evasion.

STOUT, C.J.:—

Cur. adv. vult.

This is an appeal from the decision of the Commissioner of Stamps assessing a duty of £250 upon the transfer of land from the Bank of New Zealand to one James Alexander Hannah. There was also an assessment of £12 10s. on a declaration of trust, and £25 on the transfer as on a conveyance on sale. The only duty disputed is that of £250 on the transfer.

It was contended by the Commissioner that the transfer was a deed of gift in the meaning of "The Stamp Acts Amendment Act, 1891," section 7, as extended by "The Stamp Acts Amendment Act, 1895," section 6. The transfer from the Bank of New Zealand was on a sale. The bank made no gift. It was paid the full value of the property it transferred. What was submitted, however, was that the whole transaction, of which the transfer, the deed of trust, a memorandum of lease, and a mortgage were the instruments to effect it, must be looked at, and that if the effect of the instruments was to make a deed of gift, then duty would be assessable in the transaction. It does not seem to me that that is carrying out the provisions of the statutes. Duties are not assessed on gifts. A man may give to his son £10,000 in cash, and no daty is payable. The provisions in the Acts referred to deal only with "deeds of gift," and before any duty is payable there must be some instrument, or series of instruments perhaps, which can be called a "deed of gift" as defined in the statute. A deed of gift must have a donor, and before the duty is payable the donor must have executed the deed of gift: Section 9 of "The Stamp Act, 1891." It is said that in this case the donor is Mr. Robert Hannah, and that the donees are James Alexander Hannah, Robert Hannah, jun., and George Hannah. What, then, are the instruments? The land was bought by Mr. Robert Hannah's attorney, Mr. James Hai nah,

C.A.

1902.

HANNAH

V.

COMMISSIONER

OF STAMPS.

C.A. 1902. HANNAH

from the Bank of New Zealand, and in his own name. The result of that transaction would be that Mr. James Alexander Hannah would be a trustee for Mr. Robert Hannah: Driver COMMISSIONER v. Carson(1); Morrin v. Kissling(2). Mr. James Alexander OF STAMPS. Hannah is still the trustee. He has executed a lease to Mr. Robert Hannah for life, and he has executed a declaration of trust in which he declares that he holds the land, subject to

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66

66

a mortgage to the Bank of New Zealand, "in trust for such person or persons as my said father, Robert Hannah, shall "by any deed or writing under his hand, or by will or codicil, direct or appoint; and, in default of and until any such appointment being made by the said Robert Hannah as afore"said, then I do declare that I do hold the said land and "premises, subject as aforesaid, in trust for myself, the said "James Alexander Hannah, and my brothers, Robert Hannah, "junior, and George Hannah."

It cannot be said that this declaration of trust is signed by James Alexander Hannah as agent for Robert Hannah. It could only be signed by James Alexander Hannah, for he alone is trustee. No doubt a verbal request by Robert Hannah, who was entitled to the land which had been bought by his agent in the agent's own name, to declare the trust would free the trustee from responsibility; but it does not seem to me to make the person who executes the declaration of trust the "donor.". That is, I assume, why the assessment was made on the transfer as being the deed of gift. But, as already pointed out, the only deeds of gift taxable are those executed by the donor; and, in my opinion, no deed or instrument having ever been signed by Robert Hannah, or by any one in his name as his agent, no deed-of-gift duty is payable. The time fixed for the payment of duty is one month after execution of the deed of gift by the donor: Section 9, 1891 Act.

It is not necessary to consider whether the transaction comes within the mischief the Acts intended to remedy. It must come within the letter of the Act. Were, however, this transaction to be taxed there might be two payments of duty for one gift; and it cannot surely be suggested that that was the intention of the Legislature. The other points raised and the English cases cited do not help in the interpretation of our New Zealand statutes.

In my opinion, the appeal should be allowed as to the charge of £250, with costs on the middle scale.

(1) 7 N.Z. L.R. 134.

(2) 4 N.Z. Jur. N.S. C.A. 1.