68
69
the
No. 16.
28
of the whole of the residue. In the case of the conditional annuity (ie., that Letter from conditioned on survivorship) the "notional or actual fund" necessarily remained Appellants subject to the settlement because the tenant for life, Elizabeth Booth, was entitled to the income thereof during her life as income of a part of the settled residue; while in the case of the annuity to commence immediately on the testator's death the "notional or actual fund" remained subject to the trusts of the settlement because the tenant for life was at once entitled to the income thereof (as income Hongkong of a part of the entire settled residue) if the annuitant should predecease her.
Solicitor to the Registrar of the Supreme Court
6th Febru- ary, 1936.
(Continued)
The Court did not draw any distinction, for the purposes of Settlement Estate Duty, between the natures of the "notional or actual funds" for the 10 immediate and the conditional annuities as parts of the entire settled residuary estate, and gave no indication whatsoever that it was otherwise than as parts of such entire settled residuary estate that either of the "notional or actual funds would attract Settlement Estate Duty.
The position was that there was no specific property set aside by the direction of the testator for the purpose of meeting the annuities (whereby a settlement would per se have been created of such property), but the trustees were empowered out of property already subjected to a settlement to set aside a slice to meet the annuities and such slice had accordingly to bear its due propor- tion of the duty.
In the following words which appear in the judgment (p. 356) there appears to be a clear recognition of the fact that Settlement Estate Duty had been paid on the "notional or actual fund" not as a fund set aside to meet the annuity given by the will or codicil but as a fund forming a part of an entire settled residuary estate :-
+
20
"He asserts that no settlement estate duty has ever in fact been paid in respect of the plaintiff's reversionary annuity. I agree that it was not so paid "in name; but the plaintiff's reversionary annuity was at the testator's death "part of the residue, and settlement estate duty was, in my opinion, as truly
paid in respect of it under that description as was settlement estate duty paid 30 "on the plaintiff's immediate annuity under the same description".
We shall be much obliged therefore if you will be good enough to transmit this letter, of which we enclose three copies for your use, to their Lordships the Members of the Full Court in order that, subject to their approval, they may give this case consideration and include it in the record.
The Registrar,
Supreme Court.
We have the honour to be, Sir.
Your obedient servants, Sd/ DEACONS,
40
29
No. 17. Judgment of the Chief Justice on the Appeal to the Full Court.
No. 17. Judgment of the Chief
to the Full
Court.
This is an appeal against the judgment of Sir Atholl MacGregor, C.J. Justice on dismissing an appeal by the present appellants, the Trustees of the Will of Sir the Appeal Catchick Paul Chater, deceased, against a decision of the Estate Duty Commis- sioner, the present Respondent, requiring payment of estate duty on the cesser 17th Febru of an annuity bequeathed by the Will to the deceased's wife Lady Chater, now also deceased.
As in the Court below the only question involved is a short, though not a simple one, namely whether or no the gift of the said annuity was a settle- 10 ment of property, or of an interest or estate in property, limited by way of succession" so as to enable the appellants to take advantage of the provisions of section 25 of the Estate Duty Ordinance, 1932. Counsel for the appellants has made two submissions in support of his contention that such a settlement was effected; firstly that in the Will itself can be found such a direction to appro- priate part of the estate to answer the annuity as constituted a settlement, and that therefore, although no appropriation was in fact made by the trustees, equity will regard that as done which ought to have been; and secondly, that the gift of an annuity simpliciter charged upon the residue of the estate was just as much a settlement as if the annuity had been charged upon a definite 20 portion of the estate.
As regards the first of these submissions, the material provisions of the Will are as follows:-
(5) "I bequeath the following annuities etc., etc.,
(a) To my wife during her life the sum of ten thousand pounds
sterling.
(8) Subject to the payment of my funeral and testamentary expenses etc., and subject to making provision for any annuities bequeathed by this my Will or by any Codicil thereto my Trustees shall invest etc.
(13) I declare that my Trustees shall be at liberty if they so think fit to 30 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 the 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 my Trustees shall be sufficient And I declare that when such appropriation has been made the said annual sums shall be wholly charged on the investments so appropriated in exoneration of the rest of my estate but that the capital of such appropriated investments may be resorted to in case at any time the income thereof is insufficient to pay any such annual sum or sums And I further declare that on the cesser of any of such annual sums such part of the appropriated investments 40 as shall not in the opinion of my Trustees be required for the payment of the other annual sum or sums for the time being payable under the trusts of this my Will shall revert to and form part of my residuary estate and that any surplus
ary 1936.