COURT OF APPEAL

Otago Witness, Issue 4028, 26 May 1931, Page 56

COURT OF APPEAL

A FARM PARTNERSHIP ASSESSMENT OF DEATH DUTIES. WELLINGTON, May 22. The Court of Appeal to-day delivered judgment in the ease of J. A. Johnstone and W. I. Nichol, of Allanton, v. the Commissioner of Stamp Duties. The judgment was that the appeal should be dismissed with costs on the highest scale. Mr Justice Adams, in his judgment, held that from the time rent ceased to be payable the testator obtained benefit from the use and occupation of the lands which were given to George and William Nichol. The facts relating to the land transferred to James Nichol showed with equal clarity that from the date of transfer the testator, as a member of the partnership, received similar benefit from the use and occupation of land under the contract. This was evidenced by possession and by payment and acceptance of rent. Judgments to the same effect were delivered by Mr Justice Reed and Mr Justice Smith, Mr- Justice Ostler concurring.

The facts in this case were that George Nichol, late of Allanton, farmer, died on December 31, 1927, leaving a will dated February G, 1920. Prior to 1906 the testator carried on business in partnership with his brother, J. S. Nichol. In 1906 two sons of the testator—William Irvine Nichol and George Bruce Nichol—bought out the interest of J. S. Nichol in the partnership, and subsequently carried on the business as partners with their father, under the name of George Nichol and Sons. The business of the partnership was carried on in certain blocks of land owned by the testator, and one block of land formerly owned by the testator and his brother, J. S. Nichol equally, the latter’s half share being acquired by William Irvine Nichol and George Bruce Nichol in 1906. On November 12, 1919, the testator transferred to George Bruce Nichol some of the said land belonging to him, and to William Irvine Nichol other parts of the said land. He also transferred to another son, James Nichol, a further part of the said land. Gift duty was paid on all these transactions. On the same date partition was effected of the land which had formerly belonged to the testator and his brother, under which a portion was transferred to the testator as sole proprietor, and the balance to George Bruce Nichol and William Irvine Nichol, who had purchased the interest of J. S. Nichol in 1906 as tenants in common in equal shares. Notwithstanding these transactions the business continued to be carried on as before on all the said lands. In 1923 the partners verbally agreed that their shares in the partnership assets and profits should be altered, so that thereafter each partner should be entitled to one equal third share. No sum was at any time received by the testator in respect of one-sixth share in the partnership assets, this passing from him on the rearrangement on the death of the testator. The appellants being dissatisfied with the assessment of death duties, required the Commissioner of Taxes to state a case for the opinion of the Supreme Court, which he did, asking the court whether the following assets formed part of the dutiable estate of the testator:—(l) Lands transferred by the testator to his sons on November 12, 1919; (2) lands acquired by G. B. Nichol and W. I. Nichol under the arrangement of 1923. The case came before the Chief Justice on October 7 last. His Honor held that the commissioner’s assessment should be varied by 'excluding from the dutiable estate the one-sixth interest of the partnership assets, subject thereto. The assessment was upheld. The appellants then appealed from this decision.

QUESTION OF SUCCESSION AN APPEAL ALLOWED. WELLINGTON, May 22. The court also delivered judgment in the case of Rhodes-Moorhouse v. the Commissioner of Stamp Duties. The judgment of the court was delived by Mr Justice Adams, who held that ’ the answer to the question submitted to the court was that the estate tail did not vest in the deceased, and that the assessment made by the respondent in assessing estate duty in respect to the dutiable estate of the deceased William Barnard Rhodes-Moorhouse was wrong, and that the estate tail, not having vested in the deceased, was not liable for estate duty. The appeal was allowed with costs, 100 guineas, to the appellant. By the will of the Honourable William Barnard Rhodes, who died at Wellington on February 11, 1.878, his estates, knowm as Highland Park estate, Wellington, and Heaton Park estate, Rangitikei, were devised to trustees upon a trust after the death of the daughter of testatrix, Mary Ann Rhodes, for the first and every other son of his daughter in tail male. Miss Rhodes subsequently married Edward Moorhouse, the eldest child of their marriage being William Barnard Rhodes Rhodes-Moorhouse, an officer of his Majesty’s Forces, who was killed in France on April 27, 1915. He was survived by his wife, the present plaintiff, and a two-year-old son. Mrs Moorhouse, sen., died on Ap:ril 2 last year, so that the deceased, W. B. R. Rhodes-Moorhouse, had never entered

into possession of the estate tail, nor was he ever entitled to the income of such estate. The Commissioner of Taxes in assessing estate duty in respect of his estate included the estate tail in the unsold portions of Highland Park and in the proceeds of Heaton Park and portions of Highland Park sold. The plaintiff, who is the administratrix of her late husband’s estate, objected to the assessment, and a case stated was prepared for the opinion of the Supreme Court. This, however, was moved into the Court of Appeal for argument.