2. If so, should any deduction be made on account of the benefits derivable under the said will by the said Elizabeth Alice Girling, Emily Millicent Girling, and Florence Girling? If any deduction should be made, how ought such deduction to be estimated or arrived at? If the said deed is not liable to deed-of-gift duty, upon what basis is stamp duty payable under the said deed? Skerrett for the appellants (W. B. Girling & Co.). H. D. Bell for the Commissioner. STOUT, C.J.: — Cur. adv. vult. This is a case stated pursuant to section 55 of "The Stamp Act, 1882," and section 17 of "The Deceased Persons' Estates Duties Act 1881 Amendment Act, 1885." The question is, what duty should be paid on a deed of partnership entered into by the children of a testator, Elizabeth Ann Girling? The testator left certain freehold property, a drapery business, furniture, &c. By her will she gave part of her freehold to her three daughters; and another part, with her furniture and effects in her dwellinghouse, to her son W. J. Girling. The residue of her property, consisting of freehold property and the drapery business, was given to her two sons F. T. Clarke and W. J. Girling, subject to a legacy of £100 to her niece. Her son W. J. Girling and her daughters are under age. They have agreed to a disposition of the property different from that provided in the will, and they have entered into a deed of partnership, a copy of which is annexed to the case. The daughters have agreed to give their brother W. J. Girling the freehold property devised to them, and they are to get a half-share in the drapery business. The Commissioner-even if deceased persons' estate duty is payable does not seem to me to properly assess that duty. What is done is this: The value of the residue is said to be £3,236 16s. 4d., half of which belonged to Mr. Girling and half to Mr. Clarke. This total sum is brought in as partnership capital. The profits of the partnership are to be divided as follows: One-quarter to Mr. Clarke, one-quarter to Mr. C.A. 1901. COMMISSIONER v. GIRLING & Co. C.A. 1901. COMMISSIONER OF STAMPS V. GIRLING & Co. Girling, and one-sixth to each of the daughters-that is, that each of the brothers gives half of his share of the residue to the sisters. The half given to the Misses Girling is £1,618 88. 2d.-that is, Mr. Clarke gives £809 4s. 1d. and Mr. Girling £809 48. 1d. But Mr. Girling gets land worth £528. If he got nothing else, the duty would, if the Commissioner is right in allowing any deductions, be assessed thus: £809 4s. 1d., less £528; that would leave £281 4s. 1d. on which it is said duty would be assessed-that is, £281 4s. 1d., less £100-that is, £181 48. 1d.. at 2 per cent., or a sum of £4 10s. 3d. for duty. The other one-quarter, £809 4s. 1d., which belonged to Mr. Clarke, would, if deceased persons' estate duty is payable, have to be separately assessed. The partnership deed provides that Mr. Clarke is to have a salary of £250 a year at least. The partnership is to last for ten years. £150 is to be paid to Mr. Girling, but it is to be charged against the profits coming to Mr. Girling and the Misses Girling-that is, £37 10s. each. For this sum Mr. Girling is to board his sisters at his residence. There are the usual clauses in partnership deeds. The Commissioner claims that deed-of-gift duty is chargeable, and in the following way : Capital value of partnership business £ 8. d. 3,236 16 4 ... 1,618 8 2 528 0 0 Amount on which gift duty is chargeable... 1,090 8 2 I have pointed out that, even if gift duty is chargeable, this mode of computing is not accurate. But is any chargeable? "The Stamp Acts Amendment Act, 1891," enacts that “There shall be payable in respect of any property comprised "in any deed of gift the same duties that are payable under "The Deceased Persons' Estates Duties Act, 1881,' and any "amendment thereof, in respect of property comprised in any "settlement of which the trusts and dispositions take effect ' after the death of the settlor." 66 66 "Deed of gift" is defined in section 7 of this Act thus: "Deed of gift' shall mean and include every deed of gift or instrument by way of gift transferring or purporting to transfer property absolutely, and every conveyance, trans"fer, or other disposition of property containing trusts or dispositions to take effect during the life of the donor, and "not being made before and in consideration of the marriage of the donor, or in favour of a bona fide purchaser, or encumbrancer for valuable consideration or money, and "whether or not the property comprised in such deed is sub"ject to any limitation." 66 Reliance is not, however, placed on this definition. It is admitted this deed of partnership is not a deed of gift under section 7 of the 1891 Act; it is contended, however, that it is a deed of gift under subsection 1 of section 6 of "The Stamp Acts Amendment Act, 1895." It was not contended that the section meant to charge all deeds conveying property by one blood relation to another. For example, if one brother sold to another a farm for £2,000, and paid him the consideration money which was the true value of the farm, and executed a conveyance, it could not be said that the conveyance was a deed of gift liable to duty under the Deceased Persons' Estates Duties Act. At first sight the words of subsection 1 of section 6 of the 1895 Act seem wide enough to cover even a transaction of this sort. It would, however, be an abuse of language to call such a transaction a "deed of gift." The aim and object of the statute must be looked at. It was to prevent persons settling property so as to escape duty. It was not meant to penalise ordinary business transactions between relatives. And when this transaction is examined it will be seen that no person can call it a gift. A statute may, however, declare that a sale is a gift. The words must be explicit, however, before such a declaration is accepted by any Court. That it is not a gift so far as Mr. W. J. Girling is concerned will appear if the transaction is carefully considered. C.A. 1901. COMMISSIONER OF STAMPS v. GIRLING & Co. C.A. 1901. COMMISSIONER V. GIRLING & Co. He gives to his sisters property worth £809 4s. 1d. The pro- So far as Mr. Clarke is concerned, be gives up £809 4s. 1d. of property, and for that he gets a partnership for ten years, and a salary of at least £250 a year. It seems to me this would in all probability pay him better than were the drapery business to be wound up and he was to realise his £1,618 8s. 2d. a sum that would probably be inadequate to start a drapery business. From a purely business point of view it may be, and I should think it is, a good bargain for him. But it is said these business transactions come under the definition of a "deed of gift deed of gift" in subsection 1 of section 6 of the 1895 Act. The words relied on are, "The definition of "deed of gift' is extended to include every deed 66 66 66 or instrument whereby any person directly or indirectly conveys, transfers, or otherwise disposes of property to or for the "benefit of any person connected with him by blood or marriage, in consideration or with the reservation of any benefit or advantage to or in favour of himself or any other person, "whether by way of rent-charge, or life or any other estate or interest in the same or any other property, or by way of "annuity or other payment, or otherwise howsoever." It will be noticed that the definition of the 1891 Act is not repealed, so that deeds in consideration of marriage, or in favour of a bonâ fide purchaser or encumbrancer, still, I suppose, remain exempt from duty-that is, subsection 1 of section 6 of the 1895 Act must be read subject to the exemptions in section 7, 1891 Act. Implied repeals are not favoured, and very explicit words must be proved before the exemptions in section 7 will be deemed to be repealed. 66 If these transactions are to be included, then I do not see why the deduction is made in the assessment of the Commissioner. The section says, "In assessing the duties payable "in respect of such property, no deduction shall be made in respect of such benefit or advantage." The section referred to was passed to prevent gifts (with some reservations or collateral advantages) being exempted from duty. That is not this case. No reservation is made to Mr. Girling. His sisters gave him what seems to me a fair exchange for his surrender of his fourth interest in the residue, and Mr. Clarke also gets a fair equivalent, a ten-years partnership and a ten-years engagement at £250 a year, Mr. Girling and his sisters taking the risk of partners in the business. There are none of the considerations or reservations expressly mentioned in the section, and the words "or otherwise howsoever" cannot be construed to mean any consideration, for, if so, then an ordinary sale at full value would be included. The section must be reasonably construed, keeping in view the subject-matter of the law, and the mischief the 6th section was passed to remedy. There may be transactions put in the form of a partnership deed that may fall within subsection 1 of section 6, but in my opinion this is not one of them. The recitals of the deed were invoked to show that the transaction was a gift. I do not think that they show more than they state-viz., that, instead of distributing the property as the will directs, the family agree to enter into partnership, so that the business carried on by the testator should be continued. Such an agreement does not necessarily mean that any one is giving to another a gift of property. There are good and valuable considerations given, and the terms are for the mutual benefit of all. If deed-of-gift duty is not payable, what duty is, then, payable on the deed? The conveyances of land mentioned in the deed will have to be made when the son Girling and the daughters are of age. I presume there will be deeds of exchange, and duty assessed on them, as is provided under the sub-title "Exchange" in the Third Schedule of "The Stamp Act, 1882." This deed of partnership cannot, in my opinion, C.A. 1901. COMMISSIONER |