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TMI Blog1954 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Donald Lamond. Clause 5 of the deed provided that the capital of the partnership (thereinafter called the capital) should consist of the then existing assets of the partnership. Their Lordships pause here to observe that the parties agreed that despite this definition the expression "the capital," so far as the question now at issue is concerned, meant the capital as at the date of the death of Mr. Thomas. Clause 6 defined the interests of each partner in the capital and allotted to Mr. Thomas 19½ per cent. thereof. Clause 8 provided that the net profits of the business should be divided between the partners in proportion to their respective shares from time to time in the capital. Clause 9 provided that the partnership should not be dissolved by the death or retirement of any of the partners, and contained provisions defining as regards each partner what was to happen in the event of his or her death or retirement. So far as Mr. Thomas was concerned, the clause conferred options on the surviving or continuing partners, other than Donald Lamond, to purchase Mr. Thomas' share in the capital in specified proportions, the details of which are not material to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll." Clause 14 gave a person exercising an option the right to pay the purchase money by instalments, and provided for interest at the rate of £ 5 cent. per annum on any balance for the time being unpaid. It also provided that on the exercise of any opinion the purchaser should be deemed to have acquired the interest in respect of which the option had been exercised as from the date that such option shall have been given or deemed to have been given-in the present case in the event which happened, as from the date of the death of Mr. Thomas. Clause 19 fixed the end of each accounting year of the partnership as February 28. The terms of the supplementary agreement are not material to any issue their Lordships have to decide. Mr. Thomas having died on January 28, 1944, the partners who survived him duly exercised the options conferred on them. The purchase price was ascertained in accordance with the provisions of clause 12 of the partnership deed and was fixed at £ 156,217 11s. 3d. In accordance with the last sentence of that clause no sum was added or taken into account for goodwill. The purchase price was duly paid. It will be convenient at this stage to refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant duty made a return pursuant to section 10 on June 20, 1944. In the statement of assets annexed thereto there appears the following entry, "Interest in a partnership as per balance sheet and valuations as per Schedule 9' £ 156,217 11s. 3d.'" Schedule 9 is in the following terms:- "Interest in a partnership Value of deceased's 19½ interest in the partnership known as Maples...£ 156,217 11s. 3d." (The amount set out is the amount at which the executor of the deceased is obliged to sell the deceased's interest in the said partnership pursuant to partnership deed dated December 22, 1939, under which all but one of the surviving partners have the option of purchasing the interest of the deceased.) On February 14, 1947, the respondent served notice of assessment on the appellant together with a federal estate duty alteration sheet which showed the alterations made in the assessable value shown in the return lodged. These included the following additions:- "Interest in partnership of Maples undervalued £ 36. ...... Proportion of goodwill in Maples, section 8(4)(e) £ 20,000." The last addition was, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction which were in the following terms: "That as at the date of his death the interest of the deceased was a right to receive the purchase price payable upon the exercise of the options contained in the articles of partnership in respect of the said firm, dated the twenty-second day of December 1939 as amended by indenture dated the fourth day of December 1940 made between the partners of the said firm, and on the exercise of the said options no amount was payable in respect of goodwill. that the interest of the deceased in the assets of the partnership ceased at the date of death of deceased conditionally upon the exercise of the said options and payment of the purchase price which options have been exercised and which purchase money has been paid. That the estate of deceased is not dutiable in respect of any proportion of goodwill of the said firm of Maples pursuant to section 8(4)(e), or any other provision, of the Estate Duty Assessment Act." On January 29, 1948, the respondent disallowed the objection. On March 14, 1948, the appellant required the respondent to treat the objection as an appeal and to forward it to the High Court. The appeal came before Williams J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine the controversy between the parties, and in deciding the case they may include a statement of principle which it is the duty of that court and of all subordinate courts to apply in cases to which that principle is relevant. Continuity and coherence in the law demand that, particularly in this court, which is the highest court of appeal in Australia, the principle of stare decisis should be applied, save in very exceptional cases. "The court is not bound by its previous decisions so as absolutely to preclude reconsideration of a principle approved and applied in a prior case but, as was stated in Cain v. Malone [1942] 66 C.L.R. 10], the exceptions to the rule are exceptions which should be allowed only with great caution and in clear cases. Barton J. in The Tramways case[1914] 18 C.L.R. 54], which has been referred to by Mr. Tait, said Ibid. 69: 'I have never thought that it was not open to this court to review its previous decisions upon good cause. The question is not whether the court can do so, but whether it will, having due regard to the need for continuity and consistency in judicial decision.' His honour proceeded to say: 'Change sin the number of appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to receive the purchase price payable by the survivors." The reasons advanced by the respondent in support of the judgment in the court below were intended primarily to support the judgment of the majority in Milne's case[1944] 69 C.L.R. 270], but in paragraph 25 of his case the respondent intimated his intention of advancing in the alternative the following contention; "(i) That the deceased had at his death an undivided share in all the assets of the partnership. (ii) That the concluding words of the proviso to clause 12 of the partnership deed did not have the effect of divesting the deceased on his death of his share in the goodwill as one of those partnership assets. (iii) That, consequently, the deceased's said undivided share of the goodwill was as much part of his personal property within the meaning of section 8(3) (b) of the Act as was his undivided share in any other asset of the partnership, and, on the subsequent purchase of his share in the partnership, his undivided share in the goodwill passed to the purchasers in the same way as did his undivided share in all the other assets of the partnership. (iv) That in assessing, pursuant to section 8( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first and third of which were as follows: "(1) Whether the dutiable estate of the testator included any and if any what interest in the goodwill of the said partnership. (3) Whether the testator had at the time of his death any beneficial interest in the said goodwill which by virtue of the said indenture of partnership passed or accrued on or after his death or devolved on or after his death on any of the said surviving partners of the said firm of Sanderson & Co." It is clear from the judgments that the Full Court treated the first question as asking whether the interest of the deceased in goodwill was dutiable under section 8(3). All the judges answered question 1 in the negative except Rich J., who found it unnecessary to answer the question. The majority answered question 3 in the affirmative. IT is clear from their judgments that all the judges, with the possible exception of Rich J., proceeded on the basis that the deceased's estate never became entitled to a share in the value of the goodwill and that the majority regarded the deceased's share in goodwill as something severable from his interest in the other assets of the partnership and passing or acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual shares subject only to their paying out to his representatives the value of his share as at the date of his death ascertained by proper valuation without any valuation of or allowance for goodwill. The Crown claimed duty under section 2(1)(b) of the Finance Act, 1894, on the footing that the deceased's interest in goodwill was property in which the deceased had an interest ceasing on the death of the deceased. The defendant claimed that the share in goodwill passed on the death of the deceased under section 1 of the Finance Act, 1894, and therefore could not fall within the ambit of section 2 in view of the decision of the House of Lords in Earl Cowley v. Inland Revenue Commissioners[1899] A.C. 198]. They submitted, however, that it was really unnecessary to decide this point since the transaction between the father and his sons fell within the ambit of section 3(1) of the Act, which exempts from duty property passing on the death of a deceased by reason only of a bona fide purchase from the person under whose disposition the property passes where such purchase was made for full consideration in money or money's worth paid to the vendor for his own use and benefit. Hami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. 270] to prevail, the first of these alternatives seems the most probable, but their Lordships were informed that there was some correspondence relating to the agreement which was not available to their Lordships. In these circumstances their Lordships are not prepared to say more than that it would obviously be improper for them to hold that the appellants are precluded by the agreement from succeeding on this appeal. On the second point their Lordships need not spend any time in examining the appellant's case, for their Lordships are satisfied that if the contention advanced by Mr. Cross was within the ambit of the notice of objection, it is sufficiently covered by their third reason, to which their Lordships have already referred. If, however, it was not within this notice of objection a question of jurisdiction would arise since section 27(3) of the Estate Duty Assessment Act, 1914-42, limits the objection to grounds stated in his objection. Had the appellant confined his notice of objection to stating as his ground that (see paragraph 26 of the notice of objection), "the estate of deceased is not dutiable in respect of any proportion of goodwill of the said firm of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partnership deed which respondents the utmost the estate can ever receive; alternatively, (b) that if it is open to the respondent to go behind the figure thus ascertained, the existence of the option must be taken into account in arriving at the value of Mr. Thoma's interest in the partnership assets. Both these points were raised before their Lordships, but in view of the advice which their Lordships propose to tender to Her Majesty, their Lordships express no opinion thereon. For these reasons their Lordships will humbly advise her Majesty to allow the appeal and set aside the orders of Williams J. and of the Full Court and to declare that the share and interest of the late Frederick Charles Henry Thomas in the assets of the firm or partnership carried on under the name or style of "Maples", including the goodwill thereof, was part of his estate within subsection (3) of section 8 of the Estate Duty Assessment Act, 1941-42, and that no part of such share on interest is to be deemed to be part of his said estate under subsection (4) of the said section, and to refer this matter back to the High Court of Australia to reconsider the objection of the appellant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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