53
No. 10. Judgment of the
Chief
Justice
on the
Petition.
27th June, 1935.
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No. 10. Judgment of the Chief Justice on the Petition.
This is an appeal by the trustees of the Will of Sir Catchick Paul Chater deceased against a decision of the Estate Duty Commissioner.
The material provisions of the will of the deceased are as follows:-
(5) I bequeath the following annuities all clear of death duties and income tax payable to the respective parties hereinafter enumerated com- mencing from my death by equal quarterly payments the first payment in each case to be made at the expiration of three months from my death. (a) to my wife during her life the annual sum of ten thousand pounds sterling.
(8) Subject to the payment of my funeral and testamentary expenses and debts and any legacies bequeathed by this my will or by any codicil hereto and the duty (if any) upon legacies and annuities bequeathed free of duty and subject to making provision for the payment of any annuities bequeathed by this my will or by any codicil hereto my trustees shall invest.
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(13) I declare that my trustees shall be at liberty if they so think fit to appropriate and set apart out of my residuary estate investments representing such a capital fund as shall at the time of appropriation be sufficient to produce annual sums directed to be paid by clause five of this my will with such a liberal margin for contingencies as in the opinion of 20 my trustees shall be sufficient.
Estate duty was paid on the whole of the estate of the deceased when probate was granted in 1926.
No fund was set aside by the trustees to meet the annuity to the widow of the deceased, which was paid out of the general income of the estate as and when each payment became due.
The annuitant, Lady Maria Christine Chater, died on 11th March, 1935, in these circumstances the trustees contend that no estate duty is payable by reason of the cesser of the annuity, and they base their contention on the provisions of section 25 of the Estate Duty Ordinance, 1932, which reads as 30 follows:-
25. (1) If estate duty has already been paid in respect of any settled property since the date of the settlement, upon the death of one of the parties to a marriage, no estate duty shall be payable on the death of the other party to the marriage unless such person was at the time of his or her death or had been at any time during the continuance of the settlement competent to dispose of such
property.
(2) For the purposes of this section, the term settlement means any deed, will, agreement for, a settlement, or other instrument, or any number of instruments, whether made before or after or partly before and 40 partly after the commencement of this Ordinance, under or by virtue of
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P
13
Judgment
which instrument or instruments any property, or any estate or any No. 10. interest in any property, stands for the time being limited to or in trust th for any persons by way of succession, and the term settled property means Chief the property comprised in a settlement.
Justice on the Petition.
1935.
The short point which I have to decide is whether on the facts of this 27th June, case there is or is not a settlement as defined in sub-section (2) of that section. (Continued)
Mr. Macnamara for the appellants relies on the decisions in A. G. V. Owen (1899) 2 Q.B. p. 253 re: Campbell (1902) 1 K.B. p. 113, re: Waller (1916) 1 Ch. p. 153 and A. G. v. Watson (1917) 2 K.B. p. 427.
In these cases the facts in the first three are clearly distinguishable from those with which we are here concerned. In each of these cases the testator had by express direction instructed his trustees to set aside out of the residuary estate a fund sufficient to meet the payment of the annuities. In each of these cases it was held that the fund so set aside was property settled by the testator's will, or to put it in another way, that by the will property, or an estate or interest in property, stood for the time being limited to or in trust for a person or persons by way of succession. It was with these facts, and these facts alone, that the Court in each of these cases was concerned, but an examination of the judgments shows how careful the learned judges were to make it clear that their 20 reasoning did not extend to the case of the simple gift of an annuity.
Thus in re: Campbell, Asquith K.C., and Pollard for the appellants, arguendo, state :
'The case contemplated by the Settled Land Act 1882, s.2, is the ordinary case of settlements in which a life estate or some such limited estate is followed by interests in remainder. A gift of an annuity is not a gift of such a life estate. An annuity is only a pecuniary legacy payable by instalments" and Sir R. B. Finlay A. G. and Vaughan Hawkins for the Crown argue thus "It is not necessary for the purposes of this case to consider how the matter would stand if there were merely the gift of an annuity by will in general terms, and no 30 provision for appropriation of any special fund to provide for it. Possibly such an annuity might be regarded merely on the footing of a pecuniary legacy payable by instalments". Stirling L. J. ends his judgment in these words only wish to add that it was admitted in argument that this decision does not conclude the case of a simple gift of an annuity in general terms where there is no such trust for payment of the annuity out of a particular fund as in the present case, I desire in giving judgment in this case to leave that case entirely untouched."
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The gift of the annuity In re: Waller, Sargant L. J. goes further simpliciter would not, in my opinion, at any rate I am not aware of any decision 40 to that effect, have rendered any part of the testator's estate a settled fund or have subjected the annuity to the payment of settlement estate duty--that is to say the principal gift of the annuity would not have rendered it liable to settlement estate duty at all.