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SUPREME COURT OF NEW ZEALAND

EDGAR & FAY RE ESTATE OF C S DONALD v INLAND REVENUE COMMISSIONER (NZ)

SOMERS J

25 July, 29 November 1977 - Christchurch

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Somers J    Mr Cecil Sydney Donald (the deceased) died domiciled in New Zealand on 27 August 1973 leaving a will dated 23 December 1971 probate whereof was granted to the objectors, the executors therein named. In accordance with the obligation cast upon them by s 46 of the Act the objectors furnished a statement to the Commissioner declaring the final balance of the deceased's estate to be $431,255.66. Of that total a sum of $10,068.62 represented one half of a sum of $20,137.23 (including interest to date of death) which it was said stood to the credit of the deceased and his wife, Mrs Rona May Donald (the wife) in a Post Office Savings Bank Account. In fact that total excludes $2000 drawn by the wife immediately after death.

   The Commissioner apparently made enquiries of the objectors concerning (inter alia) this account, for annexed to the case are three letters, respectively dated 25 February 1974, 23 April 1974, and 9 July 1974, from the objectors' solicitors to the Commissioner. These are referred to in the Commissioner's decision to reject the objectors' objection. That decision was conveyed by letter of 12 August 1975. From those letters the Commissioner abstracts the following facts which are set out in para 4 of the case:-

   "(a) The said account was opened with a deposit of £1350 belonging to the deceased.

   "(b) The purpose and/or reason for putting the money in the joint names was to enable a sum of money to be available for either party if required.

   "(c) All deposits in the said account were provided by the deceased.

   "(d) All withdrawals up to the date of death were solely for the benefit of the deceased.

   "(e) A withdrawal of $2000 on the date of death was made by the widow in case cash was needed for any immediate purpose.

   

"(f) The widow had authority to operate on the said account during the deceased's lifetime."

   The Commissioner considered (and I repeat the ipsissima verba of para 5 of the case) that the whole of the balance in the said account should be included in the dutiable estate of the deceased pursuant to s 15(1)and (4) of the Estate and Gift Duties Act 1968. He thereupon added to the final balance as returned a further sum of $10,068.61 together with the sum of $2000 drawn by the wife from the account on the day of, but after, death, and which was not included in the original return. These additions with others not in dispute brought the total final balance of $714,253.20. The amended assessment was made on 24 July 1975.

   The objection to the amended assessment, made on 12 August 1975, was that "by virtue of the account being a joint account estate duty is payable only on the beneficial interest of the deceased. In this case this would mean a half share of the credit in the account as at the date of death." There followed a request for the "specific reasons" for including the deceased's share in the notional estate. The letters (the disallowance of the objection) suggest that the amended assessment did not indicate the section of the Act on which the Commissioner relied in making it. That impression is reinforced by the events at the hearing.

   The difficulties which may arise when the basis of assessment is unknown can readily be seen. An objector has one month from the date of assessment to object. That objection must be in writing stating shortly the grounds of the same: s 90(1) of the Act. The Commissioner is to consider the objection and disallow or allow it wholly or in part: s 90(3) of the Act. If the objector is dissatisfied with the decision of the Commissioner on an objection concerning the exercise by the Commissioner of a discretion he may require the objection to be heard and determined by a Taxation Review Authority ( s 91), and, in the case of dissatisfaction with the decision as being erroneous in law or in fact, may require the Commissioner to state a case for the opinion of the court ( s 92). The objector is limited to the grounds stated in his objection: s 36 Inland Revenue Department Act 1974. The burden of proof is also cast upon the objector by that section. But if the objector does not know the basis of the assessment he cannot intelligently or relevantly object. And the Commissioner cannot reach or purport to reach any real decision when the grounds of objection may in the event have no relation to the circumstances. The Authority or the court may find themselves in like difficulty. This is the sort of point that I think Windeyer J had in mind in McClelland v FC of T (1967) 41 ALJR 226 at 230-1; 10 AITR 454 at 460-2; 14 ATD 529 at 533-6. Commonly, of course, there is no difficulty, for the objector will by reason of previous intimation or even by concurrent advice know exactly how the Commissioner has gone about the matter.

   In the present case the grounds of assessment were conveyed in the letter of 20 August 1975. That of course was after assessment and objection. That letter is described in para 7 of the case as a notice of disallowance. In the course of it the Commissioner asserted the establishment of certain facts including in para 3: "It was the deceased's intention that the account would pass to Mrs Donald. The account does pass to Mrs Donald by survivorship." (The emphasis is the Commissioner's.)

   After summarizing the facts the letter continued:-

   "From these facts I think it is clear that any interest acquired by Mrs Donald in the POSB account was a legal interest only and that at all times she was acting as her husband's agent. The beneficial ownership was at all times retained by deceased until he died when it passed to the widow by survivorship. At no time did the widow operate on the account for her own benefit except, possibly, when she withdrew the $2000 after her husband's death.

   "In your letter dated 21 May 1974 you state that no new right was given to Mrs Donald by virtue of her husband's death but I respectfully disagree.

   "Until deceased's death the beneficial interest in the POSB account remained entirely with him alone and it was only on his death that the beneficial interest accrued to his widow. In these circumstances the legal interest of the widow was replaced by a beneficial interest which vested in her directly as a result of deceased's death. This indefeasible vesting of the beneficial interest falls squarely within the ambit of section 15(1)and (4) of the Estate and Gift Duties Act 1968 and forms part of deceased's notional estate.

   "Furthermore, it has been confirmed that the moneys in the POSB account were to be available to either party 'if required'. From this it seems clear that the 'requirement' is a condition precedent to a change in the beneficial ownership. The withdrawals were all required by deceased and resulted in no change to the beneficial ownership. Consequently the balance in the account from time to time remained the property of the deceased until he died when it vested beneficially in his widow.

   

"Because of the foregoing facts it seems clear that the whole of the balance in the POSB account belonged to deceased when he died and that it was in the joint names of deceased and his wife purely for the sake of convenience and not as a true joint tenancy."

   All this, I think, is an assertion that the wife obtained a beneficial interest on the death of the deceased and that liability arose under s 15 of the Act. And as I have already mentioned para 5 of the case expressly states that the assessment was made under that section.

   If, as is the usual practice, the objectors were asked to formulate their grounds of objection for inclusion in the case, there can be no doubt as to how they viewed the matter. Paragraph 8 of the case provides: "The objectors contend that the Commissioner was wrong in law in including the whole or any part of the moneys standing to the credit of the deceased and Mrs Rona May Donald in the said account for the purpose of assessment of death duty pursuant to the provisions of the Estate and Gift Duties Act 1968upon the grounds that the moneys are not an annuity or other interest purchased or provided by the deceased before or after the commencement of the Act either by himself or alone or in concert or by arrangement with any other person and further that no beneficial interest accrues or arises by survivorship or otherwise on the death of the deceased."

   Paragraph 9 sets out the Commissioner's contentions in this way: "The Commissioner contends that the deceased was at all relevant times the beneficial owner of all moneys in the said account and accordingly at the date of his death the whole of the credit in the said account formed part of his dutiable estate."

   Paragraph 10 is as follows: "The questions for the determination of this honourable court are whether the Commissioner acted incorrectly in making the estate duty assessment referred to in para 5 hereof and, if so, then in what respect should such assessment be varied."

   At the hearing, Mr Keane, counsel for the Commissioner, desired to argue that the moneys in the account were beneficially the deceased's at all times and passed to his executors upon his death. Only as an alternative did he rely on s 15.

   This is not a case where the Commissioner wishes to assert additional grounds supporting an assessment under s 15. The first question therefore is whether such argument or justification of the assessment is open to the Commissioner at all.

   I have already indicated the scheme of Pt VII of the Act relating to objections. Two things seem to me to emerge from it. First, it is the objection which the Commissioner is to consider and it is dissatisfaction with the Commissioner's decision upon that objection which affords the justification for approaching the court. The opinion the court is to express can I think only involve a determination of the validity of the objection. The court is not concerned with a general appeal against the assessment in the sense of determining whether it may be justified on some grounds. Secondly, if the Revenue are entitled in proceedings on a case stated to maintain the assessment by reference to a provision in the Statute which was not its foundation, how may an objector protect himself or be heard? He is limited to the grounds of his objection which, ex hypothesi, must necessarily relate to the assessment as it was originally expressed to be made. That is how the matter seems to me to stand.

   The Revenue is not by the Act expressly confined to the ground of assessment as the objector is to his grounds of objection. But I think the reason is that the scheme of the Act necessarily involves that limitation. And if it be suggested that the Commissioner has a statutory duty to collect revenue properly payable under whatever section liability exists then it may be said that the Act in Pt VII is dealing only with objections and the Revenue have, subject to time limits, powers to amend assessments. Nor do I think the provisions of s 92(5) of the Act assist. That sub section relates in my view to matters of fact and warrants the calling of evidence whether or not in support of a reply.

   There is not a great deal of authority on the point. All so far as I am aware relates to income tax procedure. Such cases are however relevant, for the provisions as to objection in the Land and Income Tax Act 1954 indicate a scheme of assessment, objection, and resort to the court similar to that in the Act and in many respects in identical language.

   The Australian cases are referred to in Volume 5, Australian Income Tax Law and Practice (Mannix & Harris) para 190/2. The discussion there follows s 190 of the Australian income tax legislation which limits the taxpayer to the grounds stated in his objection and puts the burden of proof that an assessment is excessive on the taxpayer.

   In Danmark Pty Ltd & Forestwood Pty Ltd v FC of T (1943) 2 AITR 517; 7 ATD 333 HC (FC) the Commissioner assessed the appellants (in the second group of appeals) under s 31B of the Income Tax Assessment Act 1922-1934 (see at 544-5; 344 which set out the form of assessment). He then sought to support the assessment under s 31D. Latham CJ said that it was not necessary to determine whether the Commissioner was so entitled. That was because the objections raised by the taxpayers showed that it was understood that the Commissioner was seeking to impose a tax under s 31D and accordingly no injustice was done.

   At first instance the cases were in fact fought on the basis that the Commissioner contended s 31D applied. But Latham CJ made some observations about the Commissioner's contention: "I draw attention to the fact that the Income Tax Assessment Act 1922-1934, s 50(1), requires an objecting taxpayer to state 'fully and in detail the grounds on which he relies'. If the Commissioner disallows the objection the taxpayer may request the Commissioner to refer the decision to a board of review (s 51) or to a court (s 51A). In either case the taxpayer is limited upon the review or the appeal to the grounds stated in his objection ( ss 51(2), 51A(3))). When a taxpayer receives an assessment which purports to be made under a particular provision of the Income Tax Assessment Act he is entitled to ask a Board of Review or a court to deal with the assessment in relation to the particular provisions under which the Commissioner professes to have made the assessment and in respect of which he has framed his objections. If an assessment is made by the Commissioner under one section and the taxpayer lodges objections in relation to the assessment as so made, and if he is limited upon a review or an appeal to the grounds stated in his objections, it would be manifestly unfair to allow the Commissioner to support the assessment upon the basis of provisions other than those which the Commissioner has stated to be the basis of the assessment. If the objections lodged by the taxpayer are effective in relation to the assessment as actually made, in my opinion, as at present advised, it would be wrong for the court to allow the Commissioner to support the assessment by reference to provisions in relation to which the taxpayer has had no opportunity of raising any objections (at 545; 344).

   Starke J said (at 554; 352) that he would be prepared to disallow the assessment upon the ground taken by counsel, namely, that the assessments were made under s 31B and not s 31D, but he found that in any case there was no liability under either section. Williams J did not deal with the point.

   In FC of T v Wade (1951) 5 AITR 214; 9 ATD 337, HC (FC) Kitto J referring to the observations of Latham CJ, and Starke J in the Danmark case said: "I do not understand those observations to mean more than this, that where there are two provisions of an Assessment Act, each giving the Commissioner a power to make an assessment, and each creating a liability to tax in the event of the power it confers being exercised, an assessment made in exercise only of the power given by one of those sections cannot be supported as effective under the other" (at 224; 344).

   The views so expressed in Australia were of course in relation to the provisions of the Income Tax Assessment Act in force in that country at the material times. But the relevant provisions of that Act (as to which see Volume 5, Australian Income Tax Law & Practice) including s 166 (the Commissioner's duty to assess tax); s 185 (allowing objections in writing against the assessment stating fully and in detail the grounds upon which the objector relies); s 186 (the duty of the Commissioner to consider the objection); s 187 (the right of a dissatisfied objector to refer the decision to a Board of Review or to treat his objection as an appeal and forward it to the court); and s 190 (upon reference or appeal (a) the taxpayer shall be limited to the grounds stated in his objection and (b) the burden of proof that the assessment is excessive, shall lie upon the taxpayer) are in pari materia, and in some cases virtually identical, with the relevant provisions of the New Zealand enactment with which I am concerned.

   In Louisson v Comr of Taxes [1943] NZLR 1 CA some reference was made to the taking of a new point. It is clear from the joint judgment of Myers CJ and Northcroft J at 6, that the Revenue's general contention was that s 79(1)(b) of the Land and Income Tax Act 1923 applied and that what it sought to do was to raise a contention not expressed in the case to support the application of that section. It was not a case where an assessment based on one section of the Act was sought to be supported by a reference to a wholly different section. There was found to be no prejudice. Blair J at 11, treated the matter as one of fairness and as a pleading point.

   In James v IR Comr (NZ) [1973] 2 NZLR 119; 3 ATR 505 Cooke J discussed the issue. In that case the question before the court was whether certain interest payable by a company to a family trust established by the objector was properly assessed to tax as income of the objector under s 105 of the Land and Income Tax Act 1954. When the case was called the Commissioner desired to rely as well on new grounds. It is enough to say that one of them was that the transactions into which the objector entered were not effective in law to achieve their apparent object. That was a contention of a wholly different character from the assertion that although so effective the income was to be treated as the objector's under s 105. Cooke J did not I think reach any final conclusion on the point I have to decide but he expressed the view that there may be a distinction between the case of an assessment made under one section which the Commissioner later seeks to support under another section, and the urging in respect of the section under which the assessment was made of grounds supporting the application of that section other than those first submitted by the Commissioner. I accept that distinction as an appropriate and proper one.

   The observations in the Danmark case illustrate I think the first case and Louisson's case is an example of the second. If the Commissioner purports to assess under one section it seems to me that he is entitled to rely upon any contentions which tend to support the application of that section. In some cases particulars may be ordered (cf Louisson v Comr of Taxes [1943] NZLR 1 at 11; and Bailey v FC of T (1977) 7 ATR 251 HC (FC); an adjournment may be required to prevent an injustice; or leave given at a late stage to call evidence which would not have been necessary had the contention been properly advanced in the first instance. There is nothing, I think, in the judgment of Cooke J contrary to the view I have formed in the present case. Indeed, there is much, as I think, to support it.

   I am of opinion that it is not open to the Commissioner in the present case to advance the contention that the assessment may be upheld upon the ground that the beneficial interest in the moneys in question was solely that of the deceased and passed to his executors upon his death.

   I would in any event had the matter been one of discretion declined leave. It was certainly not plain to the objectors that the point was to be taken and indeed the provisions of paras 10 and 5 of the case suggest the contrary. The contentions of the objectors are framed in relation to the basis upon which the assessment was made, viz under s 15 of the Act.

   When the case opened Mr Willy, counsel for the objectors, said that he did not propose to call evidence. He addressed me upon the application of s 15 of the Act but intimated that he had been told by Mr Keane (and I took that intimation as having been made that morning) that the latter intended to rely on s 7 of the Act. When Mr Keane opened for the Revenue the point finally emerged in the way I have stated it. I took a short adjournment while counsel discussed the position. I was told by Mr Willy that the objectors had framed their submission on the basis that it was a case under s 15 of the Act and he accordingly submitted that the Crown was not entitled to raise s 7. He indicated in response to my request that he did not desire to call evidence even if the Crown were permitted to raise s 7. In the light of that intimation I heard argument upon the point from Mr Keane. I think Mr Willy was right in adopting the view he did and I think I should not have offered, and Mr Willy was right to refuse, the opportunity to call evidence.

   Finally, I think it unlikely para 9 of the case stated read as part of the whole case extends to cover the point Mr Keane wanted to argue. The narrative in paras 5, 9 and 10 does not suggest this. I do not decide upon that footing, however, for the point was not argued.

   I preface a consideration of the application of s 15 of the Act by reference to five matters. First, Mr Keane expressly conceded that if the account was a true joint account that section has no application. By that I took him to mean that s 15 did not apply if the deceased and the wife were beneficially joint tenants of the account. It was upon the footing that the account was so held that Mr Willy relied on behalf of the objectors. Mr Keane's concession was perhaps made on the apprehension that in such case Mrs Donald had a beneficial interest in the whole fund prior to death and no change in the nature or quality of that interest as opposed to its value arose upon the death of the testator. (D'Avigdor-Goldsmid v IR Comrs [1953] AC 347; [1953] 1 All ER 403 HL; Comr of Stamp Duties (NSW) v Bradhurst (1950) 81 CLR 199). Secondly, no reliance was, nor as the assessment was made could be, placed upon ss 11or 12 of the Act. Thirdly, while in the light of the view I have already expressed no adjudication between the parties as to whether the account was beneficially the testator's and so passed to his personal representatives is called for, a consideration of the character of the account necessarily involves that issue. To ascertain the nature of the account, in the end a matter of intention, involves a finding of what it was not. Fourthly, Mr Keane confessed to difficulty in formulating a statement as to the nature of the account which would bring it within the ambit of s 15 . I take the Revenue's position to be that the deceased provided all moneys in the account and that while during the joint lives of the deceased and the wife they were legal owners of the account and that in law upon the deceased's death it devolved upon the wife yet her interest during the joint lives was less than, or of a different nature to, the full beneficial interest which by survivorship arose at death. I think the difficulty Mr Keane felt arose from the right of the wife, if it existed, to draw upon the account during the joint lives. Fifthly, s 15 is a curiosity in an Act which in general is intended to levy duty once and for all on the property of a deceased at his death. It can apply even although the beneficial interest in property may have passed from the deceased years before his death. It is in short a provision suitable to a system which makes duty exigible upon property passing on death-the system for example employed in England from whose statutes-s 2(1)(b) of the Finance Act 1894-it was uplifted. In New Zealand gift duty seems the natural solvent in such a case and ss 11and 12 cover cases where there are interests reserved to the deceased and hence property in a wide sense-passed from the deceased on his death.

   It is convenient next to refer to the Post Office Savings Bank Regulations 1944 (Reprint 1975/256) which contain several provisions about joint accounts. Regulation 8 provides that an account may be opened in the name of any individual with money which is the absolute property of that individual by the depositor in person if he is (inter alia) of the age of 7 years and upwards and subject to no disability save infancy. Regulation 9 provides that an account may be opened in the joint names of two or more persons entitled to be depositors. Read together those two regulations indicate that a lawful deposit by two in a joint account must be of money the absolute property of the two. The case establishes that initial deposit was of the deceased's moneys. No point was taken on the regulations and I do not think I should treat them as per se making the initial deposit the property of both. Regulation 10 provides for accounts in the name of a trustee or trustees for another whose name is also to be entered on the account. Regulation 18 provides for the procedure on the making of deposits. The account having been opened on 3 December 1964 reg 30A applies to withdrawals. It provides that an application to withdraw may be made by either of the joint depositors if there are but two. Regulation 37 provides that a depositor may appoint an agent to receive a particular payment or generally.

   The resolution of this matter depends primarily upon the intention of the deceased. In the circumstances of this case, there being no declaration of intent, such intention is to be discovered upon a consideration of the nature of the property, the circumstances relating to the opening of the account, its operation during the joint lives of husband and wife and any other admissible circumstances shedding light upon that intent.

   It is convenient to clear the ground by referring first to the submission that the moneys were at all times the beneficial property of the deceased and passed to his executors. That is the point which the Crown is precluded from asserting as a foundation of liability. It is material however in a consideration of whether an interest arose at death and whether the account was held in joint tenancy. If the executors are entitled no interest arose at death and s 15 of the Act cannot apply whatever the end result may be. I had the advantage of argument (but not of evidence) on the point in case I found the Crown was entitled so to support the assessment.

   It has its foundation in Marshal v Crutwell (1875) LR 20 Eq 328. In that case a husband, who had for some time been in failing health and frequently unable to attend to business, on 12 November 1874 drew a cheque closing his own account and with it opened an account in the joint names of himself and his wife remarking at the same time to the bank manager that the balance would belong to the survivor. Thereafter he paid in other moneys but never drew cheques himself. His wife by his direction drew on the account. The proceeds of such drawings were applied in payment of household and other expenses. The husband died in April 1875 and the issue was whether the wife was entitled to the balance standing to the credit of the account. Sir George Jessel MR said at 330:-

   "Now in the present case the husband, being in failing health, goes to the bank and says, 'Change the account from my own name into the name of myself and my wife, and I authorize you to honour the cheques of either of us.' The bank manager says (but I cannot rely on loose conversations, of which he has evidently no specific recollection), that he said also 'the balance of the account will belong to the survivor'. Whether he said so or not, I think is not very material because the word 'belong' is an ambiguous word, and no real conclusion can be drawn from that.

   

"What afterwards occurred was this: The man's health not improving he never drew a cheque. His wife drew all cheques against the account and she applied the proceeds to household purposes, and I suppose small sums to her own use. All the sums afterwards paid in by the husband were carried to the credit of the account in the joint names. Of course the theory is, that not only the sum transferred, but all the sums paid in from time to time, would go to the wife. Now, in all the cases in which a gift to the wife has been held to have been intended, the husband has retained the dominion over the fund in this sense, that the wife during the lifetime of the husband has had no power independently of him, and the husband has retained the power of revoking the gift."

   The case did not I think involve any assertion that the wife had any beneficial interest in the moneys during her life. The Master of the Rolls continued at 330-1: "In transferring a sum of stock there is no obvious motive why a man should put a sum of stock into the name of himself and his wife. She cannot receive the dividends; he can and must, and it is difficult to see any motive of convenience or otherwise which should induce a man to buy a sum of stock, or transfer a sum of stock (if there is any difference between the two) in or into the names of himself and his wife, except the motive of benefiting her in case she survives. But here we have the actual fact, that the man was in such a state of health that he could not draw cheques, and the wife drew them. Looking at the fact that subsequent sums are paid in from time to time, and taking into view all the circumstances (as I understand I am bound to do), as a juryman, I think the circumstances show that this was a mere arrangement for convenience, and that it was not intended to be a provision for the wife in the event which might happen, that at the husband's death there might be a fund standing to the credit of the banking account. I take into account the circumstance that the wife could draw upon the fund in the husband's lifetime, so that it would not necessarily be a provision for her after his death; and also the circumstance that the amount of the fund at his death must be altogether uncertain; and, having regard to the rule which is now binding on me, that I must infer from the surrounding circumstances what the nature of the transaction was, I come to the conclusion that it was not intended to be a provision for the wife, but simply a mode of conveniently managing the testator's affairs, and that it leaves the money therefore still his property."

   Marshal v Crutwell has been frequently referred to: see eg Re Harrison (1921) 90 LJ Ch 186; Young v Sealey [1949] 1 Ch 278; [1949] 1 All ER 92; Re Bishop dec'd [1965] 1 Ch 450; [1965] 1 All ER 249; and most recently I think in Re Figgis dec'd [1969] 1 Ch 123. The case is sometimes said to indicate that circumstances may rebut the presumption arising from the putting of property by a husband into the joint names of himself and his wife or more particularly that the right to take beneficially by survivorship can be so rebutted. I would prefer to treat Marshal v Crutwell as a case indicating that the circumstances are the appropriate guide to the intention of the deceased particularly in relation to a chose in action such as a bank account. That preference is founded in part on the present standing of the presumption of advancement, as to which see Pettitt v Pettitt [1970] AC 777 at 793, 811, 824; [1969] 2 All ER 385 at 388-9, 404, 415. (It is not affected in this case by s 4(2) of the Matrimonial Property Act 1976 by reason of the relevant dates. See too s 4(5).)

   The facts in the present case are exiguous. Thus, I have no evidence of the circumstances attendant on the opening of the account and I do not know who had custody of the bank-book needed to withdraw from the Post Office. Nor do I know how, as between husband and wife, interest was treated, other than that it was not separately withdrawn, or whether the deceased had any, and if so what, other banking accounts of his own. Having regard to the size of his estate, the fact that he was a farmer, and the fact that from the opening of the account to the time of death only five withdrawals were made I think I can infer that he did have some other account.

   The circumstances do not seem to me to indicate an intention on the part of the deceased to exclude the wife from beneficial ownership upon his death. I think they indicate the contrary. The matters which lead me to that conclusion include (i) the improbability of a Post Office account being the vehicle of an account of convenience; (ii) the period during which the account was in existence-it was opened on 3 December 1964; (iii) the use to which withdrawals were put-they were for large items and do not exhibit any features of an account opened for the deceased's convenience. The fact that withdrawals were for the benefit of the deceased alone is primarily relevant to the contention that the deceased alone might benefit during his life; (iv) the infrequency with which the account was in fact used; (v) the fact, stated in para 4(b) of the case, that "The purpose and/or reason for putting the money in the joint names was to enable a sum of money to be available for either party if required." I am of opinion that the deceased intended his wife to have the benefit of the account if she survived him.

   That expression of opinion however, while consistent with the Crown case under s 15 of the Act, does not touch on the nature of the wife's interest in the account during the joint lives of the parties. I can exclude the possibility that there was a gift of capital to the wife if she survived, the deceased being entitled to the income during his life. There are no facts which would support such an inference. The income-interest-was simply left in the account and the moneys from time to time withdrawn exceed such interest. The Revenue, rightly, does not so submit.

   The wife, I think, had the right to withdraw moneys during the joint lives. That I infer from the fact that the reason or purpose for putting the money in the joint names was to enable a sum of money to be available for either party if required. I think the word "required" means wanted. Although some point was made as to the prerequisite of requirement in the notice of disallowance of objection reliance on that point was disclaimed by Mr Keane.

   While I do not assert that it is impossible, the notion that this account was held by the deceased and his wife as joint tenants seems to me to be somewhat incongruous. Such a concept may readily be applicable in the case for example of real property. One party cannot dispose of the whole during the joint lives without the concurrence of the other and cannot deal with it without severance of the joint tenancy. In this case the wife, supposing her to have the Post Office passbook, could reduce the whole to possession by a withdrawal. I put the matter that way because it touches on another difficulty. If the deceased and his wife were joint tenants of the moneys in the Post Office the question arises whether the deceased made a gift to the wife of all or some part of the amount with which the account was opened and a like gift on each and every deposit. As he had a like right of withdrawal such a gift if then made might have to be viewed as upon a contingency or subject to a defeasance. The presence of any such contingency marches ill with the notion of joint tenancy.

   No reference to the notion of joint tenancy of a bank account appears in any of the recognized texts on banking. See eg Paget's Law Of Banking (7th ed), Weaver and Craigie's Banker and Customer Law in Australia, Bright's Banking Law and Practice in New Zealand. This is perhaps not surprising for those texts are concerned generally with the rights and obligations of bankers vis-a-vis their customers and because joint tenancy has in general no place in commerce.

   As between the deceased and the wife on the one hand and the Post Office on the other it may be that the steps the deceased took along with his wife were such as to give her the right to withdraw and that as between the parties that represented the character of the benefit he conferred on her. Her beneficial right to the moneys in the account on that footing would arise upon her withdrawing the same or any part for her own benefit.

   This was a transaction between husband and wife. I think it unlikely it was ever intended to have immediate legal consequences during the marriage save that if the wife made a withdrawal for her own purposes she was entitled beneficially to the amount so withdrawn or the property represented by its expenditure. And as I have already indicated I think the wife was intended to take beneficially if she survived whatever balance there might be in the account. As between husband and wife I do not think each was a joint tenant of the chose in action constituted by the rights of the holders of the account against the Post Office. In short, it was a joint account in the sense that either might draw on it for his or her own purposes but it was not a joint tenancy. There is I think a distinction between a right to draw conferred by the husband, or perhaps more precisely by the act of the husband with the wife as affected by the Post Office Regulations, and a beneficial interest in the moneys in the account while they remained undrawn.

   I turn to the authorities to see whether any principle emerges which should govern this matter or affect the views I have expressed.

   I begin with Re Young (1885) 28 Ch D 705 in which a husband and wife opened a joint account on which each had the power to draw. The moneys credited to the account were chiefly (which I infer means not solely) derived from the wife's separate income. That the husband may have contributed, although a fact distinguishing the case from the present, does not seem to me to have been regarded as material by Pearson J. The account was used to a great extent for household expenses but some moneys were drawn by the husband and invested in his own name and some moneys were applied to the purchase of investments in the joint names. There was no dispute that the moneys invested in the husband's name were his alone. It was held that the account was joint and that the investments in the joint names were also held jointly owned deriving that characteristic from the nature of the account. Pearson J observed at 708-9: "To my mind the moment you come to the conclusion that the joint account was kept in order to be used by either party (each party having perfect confidence in the other that it would be used with perfect propriety) without any distinction as to the sources from which it arose, it is very difficult to suppose that any purchase made from it was to have a different nature." While Pearson J described the account as joint I think he was using that term to describe compendiously the right each had to withdraw. I do not think his mind was directed to the point I have to determine, namely, whether there was a joint tenancy in the juridical sense of that term. If he did intend to go that far-he said, at 708: "I think that just in the same way as the joint account was in every sense joint, with power to each party to draw and free from any idea of separate estate, so the joint investment was subject to the ordinary incidents of a joint investment"-the circumstances and the mode of operation of the account are sufficiently different from those in the present case as to distinguish it. In Re Harrison (1921) 90 LJ Ch 186, a husband had what was called a drawing bank account which I take to be a current account. That account was transferred by him to a joint account in the names of himself and his wife with power for either to draw. The deceased alone paid moneys into the account. The wife was told of the account by the bank manager when shortly before his death the husband was unable to attend to business matters. She drew only one cheque upon it. The question was whether the wife, as survivor, was entitled to the balance in the account. (There was also a fixed deposit account to which I need not refer for the Post Office account in the present case is by reason of the ability to withdraw upon it nearer to a current account.) It was held that the husband intended that the moneys standing on current account should belong to the survivor. Marshal v Crutwell (supra) was distinguished for there was no motive of convenience and an absence of circumstances of the sort relied on in that case. Re Harrison does not I think touch on the point in issue in this case.

   Russell v Scott (1936) 55 CLR 440 HC clearly recognizes that the creation of a joint account by one whose money alone went to support it and who was entitled to the exclusion of the other during his life is not inconsistent with an intention of conferring a benefit upon that other if the latter survives: see Starke J at 449; Dixon and Evatt JJ, at 451 and 455; McTiernan J at 457. In that case all the members of the court recognized that the non-contributing party, a nephew of the deceased, was in the character of a trustee during the joint lives. Thus in the joint judgment of Dixon and Evatt JJ, it is said at 454-5: "Doubtless a trustee he was during her lifetime, but the resulting trust upon which he held did not extend further than the donor intended; it did not exhaust the entire legal interest in every contingency. In the contingency of his surviving the donor and of the account then containing money, his legal interest was allowed to take effect unfettered by a trust." Nothing was said in the judgments as to a withdrawal which the surviving nephew made during the life of the deceased and claimed for himself. In view of his declared status at that time he was presumably accountable. It may however have represented a separate gift free from the resulting trust to which the learned judges referred. Again, Russell v Scott only marginally touches on the problem before me.

   The next case, Young v Sealey [1949] 1 Ch 278; [1949] 1 All ER 92 is in part concerned with the question whether to give beneficial effect to survivorship by a non-contributor to a joint account who could not draw upon the account during the joint lives is contrary to the provisions of the Wills Act 1837. It was held that it was not and the decision accords therefore with Russell v Scott which was not mentioned but where the point had been determined in the same way. In Young v Sealey the deceased, who died in 1941, opened a deposit account in 1927 in the joint names of herself and the defendant. I think the account was one which could be described as a cheque account. Certainly the bank's authority form referred to payment to the order of either or both. The defendant made no payments into the account nor withdrew anything from it. The issue, so far as relevant to this case, was whether the balance in the deposit account formed part of the estate of the deceased or was held beneficially by the defendant. Romer J held, at 283, that the deceased wished to save death duties and at the same time to benefit members of her family and "only what was left at her death was to go to the co-depositor who was never expected to pay anything into the account and was not, so long as she was alive, to draw anything out for herself.": at 284. Accordingly, he held after considering the point I have mentioned that the defendant was entitled to and was intended to take beneficially whatever might be left of the funds at the death of the deceased. And so that case too does not afford assistance in the present circumstances.

   In Gage v King [1961] 1 QB 188; [1960] 3 All ER 62 Diplock J was concerned with a claim to certain expenses incurred as a result of personal injuries to a wife most of which had been paid by the husband out of a bank account in the joint names of husband and wife. That account was fed by income by the husband's business and interest on the wife's investments. Both drew on the account for housekeeping and personal expenses but there was no evidence of any agreement between them as to the ownership of any balance standing to the credit of the account. The question was whether the expenses were special damages of the wife. Diplock J said, at 193; 64 that he did not think that such an arrangement between husband and wife was meant to be attended with legal consequences while the marriage was still subsisting. Her right to draw upon the joint account was subject to no legal limitation. That was to view the matter as being within the ambit of Balfour v Balfour [1919] 2 KB 571; [1918-19] All ER Rep 860.

   In Re Bishop dec'd [1965] 1 Ch 450; [1965] 1 All ER 249 husband and wife opened a joint account at the National Provincial Bank in 1946 and transferred to it the separate balances of their two separate accounts. The account was fed by dividends on shares owned by husband and wife and the sales of investments also owned by them separately. It was drawn upon by them at will for the purposes of themselves or either of them. The questions which arose were whether the survivor, Mrs Bishop, was entitled to any beneficial interest in investments purchased in the name of the husband from moneys in the joint account or any investments purchased in her own name from moneys in the joint account and in the balance of the account at death. Stamp J held that investments bought by either husband or wife out of the moneys in the joint account belonged to the one into whose name such investments were put and that the balance of the moneys in the account passed to the survivor. At two places in the case Stamp J enunciated the principle which he applied: "Where a husband and wife open a joint account at a bank on terms that cheques may be drawn on the account by either of them, then, in my judgment, in the absence of facts or circumstances which indicate that the account was intended, or was kept, for some specific or limited purpose, each spouse can draw upon it not only for the benefit of both spouses but for his or her own benefit. Each spouse, in drawing money out of the account, is to be treated as doing so with the authority of the other and, in my judgment, if one of the spouses purchases a chattel for his own benefit or an investment in his or her own name, that chattel or investment belongs to the person in whose name it is purchased or invested; for in such a case there is, in my judgment, no equity in the other spouse to displace the legal ownership of the one in whose name the investment is purchased" (at 456; 252). After referring to Re Young (1885) 28 Ch D 705 he said, at 458-9; 253-4: "That case seems to me to establish the principle that in the absence of some circumstances or some evidence of intention that the joint account was to have a limited operation or was set up and kept up for some special purpose, each spouse has power to draw on the joint account not only for the benefit of the spouses but for his or her own benefit. In the absence of some circumstances from which one infers an agreement to the contrary, one must treat the joint account as truly a joint account, a joint account on which each party has power to draw to take the money out of the ambit of the joint account and to employ it as he or she thinks fit either for his own purposes or not, and if he does draw money out and invests it in his own name I see no room for any inference that he holds that investment on trust for himself and his wife either in equal shares or in any other shares." Stamp J then observed that Marshal v Crutwell constrained him to examine the facts to ascertain whether there is anything in relation to the particular transactions he had to consider which took them outside the general statement of law laid down in Re Young.

   The circumstances of Re Bishop dec'd differ of course from the present in at least two respects. First, here the wife did not in fact draw and second, she did not contribute. I do not think the point as to contribution is in any way decisive. In Re Young the moneys credited to the joint account were chiefly, though not wholly, derived from the wife's separate income and as I have observed that factor was not an express element in the reasoning in that case. In so far as one circumstance can be divorced from all others I am inclined to think that the wife's right to draw for her own benefit is a more important factor. I do not, however, place too much weight upon Re Bishop dec'd for the remarks of Stamp J must necessarily be read in relation to the facts upon which his decision was based. In particular his reference to the account being a "truly joint account" seems to me from Stamp J's own exegesis of that phrase to involve the right to draw but not necessarily an assertion that husband and wife were joint tenants of it.

   There were several issues involved in Re Figgis dec'd [1969] 1 Ch 123. Two of them are material to the present case. The first was whether moneys at bank in the joint names of husband and wife at the death of the husband passed by survivorship or otherwise to the wife. The joint account in question was a current account and was opened in 1917. The husband was a man meticulous in money matters to the stage that even during his last illness he persisted in trying to make out and sign necessary cheques. He operated the joint current account as if it were his own and the wife, with two exceptions, left the account severely alone. The first exception arose while the husband was on active service during the First World War. Megarry J thought it probable that the wife then operated a joint current account and that the purpose in opening the account was to enable her to draw money while he was away. Second, during the husband's last illness the wife was told by the bank manager that she could sign cheques and she did so. After considering Marshal v Crutwell and a number of other cases, the learned judge reached the conclusion that the balance standing to the credit of the joint account formed part of the wife's estate, she having died subsequently to the husband. It was not necessary for him to determine whether the wife had any beneficial interest during the husband's life and he did not expressly do so.

   The second issue in Re Figgis dec'd touches more closely on the point with which I am concerned. That was whether under cl 7 of the husband's will any estate duty payable at his death in respect of such moneys as were referred to in cl 7 should be paid out of the husband's residuary estate. The will provided materially (see at 138): "I direct that any estate or other duties payable by reason of my death on any gifts made by me in my lifetime to my wife or Margaret shall be paid out of my residuary estate and not by my wife or Margaret." Megarry J (at 146-150) considered the difficulties involved in such a direction where there is a joint account fed by moneys paid in, as the fact was, by the husband, saying at 146: "In the case of an advancement consisting of a certain and unchanging asset there will usually be no difficulty of this kind. But an active bank account is very different. Moneys are paid in and moneys are drawn out. Nobody has suggested anything but that what the wife could take by way of advancement would be the balance remaining at the husband's death. When, then, is such an advancement made? Were the gifts or the balances 'gifts made by me in my lifetime'?" The submission of counsel for the wife's estate was that as soon as a cheque was paid into the joint account it thereupon constituted a gift to the wife though being a gift liable to be diminished by the husband exercising his power to draw on the account so that in the end the wife would get only the balance remaining.

   The learned judge referred in particular to two observations in Russell v Scott (1936) 55 CLR 440, the first was that of Starke J who said: "A person who deposits money in a bank on a joint account vests the right to the debt or the chose in action in the persons in whose names it is deposited, and it carries with it the legal right to title by survivorship … The vesting of the right and title to the debt or chose in action takes effect immediately, and is not dependent upon the death of either of the persons in whose names the money has been deposited. In short it is not a testamentary disposition" (55 CLR at 448-9; at 149 of Figgis).

   The second was that of Dixon and Evatt JJ in their joint judgment who said: "… by placing the money in the joint names the deceased did then and there by that act give a present right of survivorship" (55 CLR at 455).

   Those observations were of course directed to the question of whether the gift by survivorship found to be without benefit during life was contrary to the provisions of the Wills Act. Megarry J, in Re Figgis, considered it unreal to regard each deposit in the account as an advancement subject to diminution by the drawing of subsequent cheques. He said, at 149: "It may be that the correct analysis is that there is an immediate gift of a fluctuating and defeasible asset consisting of the chose in action for the time being constituting the balance in the bank account. But whether that is right or wrong (and the subject is worthy of academic disputation), I am happy to regard it as a problem that I need not attempt to resolve in this case." He continued, at 150: "I cannot believe that when the husband paid money into the joint account he regarded himself as making a gift to the wife, any more than he regarded himself as diminishing gifts already made whenever he drew a cheque on that account. Nor do I think that moneys which became indefeasibly the wife's only eo instanti with the husband's death can fairly be said to fall within the phrase 'gifts made by me during my lifetime'." Those points have some significance to the present case.

   The suggestion of Megarry J in Re Figgis that the topic is worthy of academic disputation bore fruit in an article by Mr M C Cullity in (1969) 85 LQR 530. It is concerned as far as is material to this case with the right of the non-contributor to the joint account to retain beneficially moneys withdrawn or property acquired by such withdrawal. The learned author observes, at 541: "The decisions in these more recent English cases seem to rest on the assumption that, where a bank account is opened on the terms that either spouse may make withdrawals, it is reasonable to suppose that the parties did not intend that their respective rights to benefit from the account should be ascertained and delimited strictly according to the legal principles governing joint property. As between themselves the arrangement is best presumed to have been one of mutual trust or confidence rather than one creating legal rights and duties. It is respectfully submitted that this view is sound and is applicable to the same extent in the case where only one party contributes to the account as it is where deposits are made by each party." That view is supported primarily by reference to Gage v King [1961] 1 QB 188 at 192.

   The topic is also touched on in Dimond's Death Duties (14th ed) pp 348, 349, 353. Hanson's Death Duties (10th ed) para 599, and Green's Death Duties (7th ed) pp 180-4. It was suggested by Mr Keane that the practice referred to in Hanson of not claiming duty on the severable share of a non-contributor in a true joint tenancy unless the deceased provided the property within five years of his death had some application. That practice is recorded in respect of the combined effect of s 38(2)(b) of the Customs and Inland Revenue Act 1881, s 11(1) of the Customs and Inland Revenue Act 1889 and s 2(1)(c) of the Finance Act 1894, namely, that property passing on the death of the deceased is deemed to include any property to which the deceased having been absolutely entitled thereto, caused to be transferred to or vested in himself and any other person jointly so that the beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person. (See Hanson para 598;  Green p 179.) Those provisions lossely correspond with s 13 of the Act relating to joint property and the concession referred to as a matter of practice has application only in the case of joint property. But even there in my experience there is no such practice in New Zealand.

   I need say little about the presumption of advancement other than to refer to the speeches in Pettitt v Pettitt [1970] AC 777; [1969] 2 All ER 385; Lord Reid at 793, 388-9 observed that under present social conditions the strength of the presumption must have been much diminished. Lord Hodson, at 811; 404 said that where there are no living witnesses to a transaction and inferences have to be drawn there may be no other guide to a decision as to property rights than by resort to the presumption of advancement. Lord Upjohn, at 813; 406 considered that if there is no available documentary or parol evidence as to intention the presumptions come into play. Lord Diplock, at 824; 415, considered that in the present social climate the presumption has little or no place. There is some variance in these views. But in disputes between spouses both of whom are living there is little scope for its application. The presumption is I think likely to have its greatest force in respect of investments and real property. Its existence however does not detract from the case of the wife in respect of her rights upon survival. I find it, however, of little assistance in the resolution of the rights of the wife during the joint lives of husband and wife.

   There is I think nothing in the cases or textbooks to which I have referred which adversely reflects upon the view of the facts which I have expressed. The views of Diplock J in Gage v King [1961] 1 QB 188; [1960] 3 All ER 62 although relating to an account whose use was of a different nature, tend to support them. The observations of Megarry J in Re Figgis dec'd may be viewed as possibly favourable to the objectors. They were however obiter and were not directed to the question of joint tenancy.

   In my view the deceased intended to confer on his wife the right to draw upon the account during his life but did not ever intend to create a joint tenancy of that account or of the moneys from time to time standing to its credit. I do not think that during the joint lives he intended that the wife should have a beneficial interest in the whole account or in any aliquot part of it.

   It was submitted by Mr Willy that no "interest" within the meaning of that word in s 15 was provided by the deceased. He submitted that what the deceased provided was an interest in a joint account and not in the moneys in that account and that the "interest" was not within the class of property predicated by the word "annuity" in the phrase "annuity or other interest" in s 15. It is well settled that the term "other interest" is not to be read eiusdoem generis with annuity: see eg D'Avigdor-Goldsmid v IR Comrs [1953] AC 347; [1953] 1 All ER 403; Westminster Bank Ltd v IR Comrs [1958] AC 210. And in my view the deceased did provide an interest. He provided a fund of money, empowered the wife to draw upon it during the joint lives, and provided that the beneficial interest in those moneys and the account should pass to his wife upon his death if she survived. That in my view answers the first limb of s 15.

   Liability to duty arises to the extent of the beneficial interest accruing or arising by survivorship on the death of the deceased. If the view I have expressed is correct then the wife acquired upon the death of the husband a full beneficial interest in all of the moneys in the account and the chose in action representing the account itself. And that was an interest of a different nature or quality to that which she had before his death. For while the deceased was alive she had not the full or indeed any beneficial interest. She had at most a right to draw.

   If the expression of opinion of Megarry J in Re Figgis dec'd [1969] 1 Ch 123 at 149 is correct, namely, that the deceased made a gift of a fluctuating and defeasible asset consisting of the chose in action for the time being constituting the balance in the account and that the wife as a consequence had a beneficial interest in the account immediately before death the question arises whether the cesser of the defeasance by the death of the deceased caused a beneficial interest to arise. I do not think it necessary to go into that point. It was not argued. It turns upon the issue of whether the interest of the wife after death was of a different kind from that which existed before death and not merely more valuable: D'Avigdor-Goldsmid v IR Comrs [1953] AC 347 at 375; [1953] 1 All ER 403 at 415. It is referred to in Adamson v A-G [1933] AC 257, IR Comr (NZ) v Taylor [1961] NZLR 923 at 938, Comr of Stamp Duties (NSW) v Bradhurst (1950) 81 CLR 199 at 274, and Comr of Succession Duties (SA) v Isbister (1941) 64 CLR 375. It is suggested in Adams & Richardson's Law of Estate and Gift Duties (4th ed) para 15 /17 that a change from defeasibility to indefeasibility constitutes the accrual or arising of a beneficial intent. The point is not I think as yet finally concluded.

   The determination of the court is therefore that the Commissioner acted correctly in making his amended assessment. I will hear counsel on costs if they cannot be agreed. As at present advised I think something less than the usual figure is appropriate, having regard to the course of the hearing.