29 Dec 1938 - Forfeiture of Income

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Thu 29 Dec 1938 - Nepean Times (Penrith, NSW : 1882 - 1962)
Page 1 - Forfeiture of Income

Forfeiture of Income

MR. COLIN SMITH'S APpjEAL^

UNSUCCESSFUL

Line 2.0.0The Full Court COhief Justice Sir
Line 2.0.1F rederick. Jordan, Mr Justice HalEe
Line 2.0.2Rogers, and Mr J"stice Stephen), on
Line 2.0.3Friday, gave judgment on the appeal
Line 2.0.4of Mr CQlin Smith against a decision
Line 2.0.5by Mr Justice Nicholas in a suit in
Line 2.0.6situated fcv the Perpetual Trustee Co,
Line 2.0.7ty which his Honor declared tliat the
Line 2.0.8share, oi inc ome to which Mr Smith
Line 2.0.9became entitled under the trusts of
Line 2.0.10his father's will had lapsed. The share
Line 2.0.11of income amounted to over £7,000 a
Line 2.0.12year.

Line 2.1.0The will contained a clausa provid
Line 2.1.1ing that if any beneficiary should
Line 2.1.2"assign or charge his or her respect
Line 2.1.3ive benefits under this my will or any
Line 2.1.4part thereof or if any. other event
Line 2.1.5shall happen .... whereby although
Line 2.1.6the same were payable to him or her
Line 2.1.7such benefits would be by his or her
Line 2.1.8act or default or by operation of lav/
Line 2.1.9co disposed of as to prevent his or her
Line 2.1.10personal enjoyment thereof then and
Line 2.1.11in any such cases such legacy annuity
Line 2.1.12share or benefit shall lapse or cease
Line 2.1.13qs the case may * be as if he or she
Line 2.1.14were dead.''

Line 2.2.0The will then directed that any
Line 2.2.1share or benefit thus lapsing should be
Line 2.2.2held in discretionary trusts for the
Line 2.2.3maintenance of the beneficiary and
Line 2.2.4the beneficiaries in remainder, who in
Line 2.2.5respect of the gift to Mr Colin Smith
Line 2.2.6were his children.

Line 2.3.0Mr Smith In 1934 was in arrears
Line 2.3.1with payments of income and other
Line 2.3.2taxes to the extent of £34,000. On
Line 2.3.3February 8, 1935, an agreement was
Line 2.3.4executed under which Mr Smith, who
Line 2.3.5had meanwhile returned to Australia
Line 2.3.6from abroad, entered Into certain
Line 2.3.7undertakings directed to liquidation of
Line 2.3.8this indebtedness. The deed recited
Line 2.3.9that in consideration of the Commis
Line 2.3.10sioner of Taxation forbearing to take
Line 2.3.11proceedings against him for recovery
Line 2.3.12of the debt and permitting him to
Line 2.3.13leave Australia, Mr Smith undertook
Line 2.3.14to arrange for payment to the Com
Line 2.3.15missioner of half his income as it was
Line 2.3.16paid by the trustee to his attorney,
Line 2.3.17such payment not to be less than
Line 2.3.18£1,OCO every threo months. He alsc
Line 2.3.19undertook to irrevocably instruct the
Line 2.3.20trustee of the will to pay the whole of
Line 2.3.21his income to his attorney as it be

came payable and not to.Revoke the

^Commissioner,

or appoint any other attorney without

euch consent.

Line 2.8.0The question before Mr Justice
Line 2.8.1Nicholas was as to the legal effect of
Line 2.8.2what took place between the Commis
Line 2.8.3sioner and Mr Smith's attorney and
Line 2.8.4the Commissioner, Mr Smith, and the
Line 2.8.5trustee. Ills Honor held that the
Line 2.8.6agreement of February 9, 1935, worked
Line 2.8.7a forfeiture in accordance with the
Line 2.8.8provisions o<! the will and declared ac
Line 2.8.9cordingly. It was against this that
Line 2.8.10Mr Smith appealed.

Line 2.9.0It was contended on behalf of the
Line 2.9.1appellant thr,t the undertaking of
Line 2.9.2iFebruary 8 was a mere piece of mach
Line 2.9.3inery, intended by the parties to im
Line 2.9.4plement an independently transacted
Line 2.9.5arrangement bv which the appellant
Line 2.9.6was to appoint an attorney to act dur
Line 2.9.7ing his absence from Australia, but to
Line 2.9.8act exclusively as the appellant's agent
Line 2.9.9and so as to confer upon the Comnus
Line 2.9.10sioner no rights with respect to the
Line 2.9.11income receivable by the appellant
Line 2.9.12from his father 's estate. For the re
Line 2.9.13spondent remainder men it was sub
Line 2.9.14mitted that the undertaking constit
Line 2.9.15uted an agreement by the appellant
Line 2.9.16and supolieu evidence of an agreement
Line 2.9.17bv the Commissioner, in terms of the
Line 2.9.18document, vesting in the Commissioner
Line 2.9.19an equitable right in rem in one-half
Line 2.9.20of the income receivable by the ap
Line 2.9.21pellant from the estate.

Line 2.10.0The Full Court held that the order
Line 2.10.1appealed from was correct and dis
Line 2.10.2missed the appeal. In the course of
Line 2.10.3judgment, the Chief Justice said that
Line 2.10.4he was unable to see that the docu
Line 2.10.5ment of February 8 was susceptible of
Line 2.10.6any' othe- construction than that the
Line 2.10.7appellant definitely agreed, for valu
Line 2.10.8able consideration, that half his in
Line 2.10.9come should be paid to the Commis
Line 2.10.10sioner. It seemed to have been thought
Line 2.10.11or hoped bv the appellant and the
Line 2.10.12Commissioner that the device of pro
Line 2.10.13viding that, in the first instance, the
Line 2.10.14attorney should receive the whole in
Line 2.10.15come .on the appellant's behalf and of
Line 2.10.16the attorney then paying over half of
Line 2.10.17what he received, would prevent the
Line 2.10.18transaction from operating as a charge
Line 2.10.19upon the appellant's interest. But
Line 2.10.20the contract was clearly a contract to
Line 2.10.21arrange tor payment to the Commis
Line 2.10.22sioner of half the Income received by

Line 3.0.0the appellant from his father's estate,
Line 3.0.1aod to do so through the .mediumsof
Line 3.0.2his attorney. He (his Honor), could
Line 3.0.3come to r.o other conclusion than that
Line 3.0.4the agreement constituted an equitable
Line 3.0.5assignment or charge by the appellant
Line 3.0.6of fcis interest under the will . That
Line 3.0.7being so, no desire on the part of the
Line 3.0.8parties to have the benefits of an as
Line 3.0.9signment without incurring any of
Line 3.0.10tha inconveniences attendant on crea
Line 3.0.11tion of an assignment in such a cae.>
Line 3.0.12as the present, could prevent ;the
Line 3.0.13transaction from being what in law
Line 3.0.14it was and from producing its .. iricW
Line 3.0.15dental, and most' unwished-for, .^by
Line 3.0.16product. .' : , ,

Line 3.1.0Costs of all parties as between sol
Line 3.1.1icitor and client out of the incomn
Line 3.1.2over which the trustee has discretion

ary powers.

Line 3.3.0Mr Mason, K.C., and Mr P. Myers
Line 3.3.1(instructed by Messrs Laurence and
Line 3.3.2Laurcnce) appeared for the appellant:
Line 3.3.3Mr Dudley Williams, K.O., and Mr V.
Line 3.3.4G. Wcsche (instructed by Messrs
Line 3.3.5Fisher and Macansh) for the benefic
Line 3.3.6iaries in remainder; and Mr Officer
Line 3.3.7(instructed by Messrs Stephen, Jaques,

and Stephen) for the Perpetual

Trustee Co. ?; <

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