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No. 17. Judgment of the Chief Justice on the Appeal to the Full
Court.
17th Febru- ary, 1936.
(Continued)
Section 25 of the Estate Duty Ordinance, 1932, reads as follows:-
(1) If estate duty has already been paid in respect of
settled property any 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 10 partly after the commencement of this Ordinance, under or by virtue of which instrument or instruments any property, or any estate or interest in any property, stands for the time being limited to or in trust for any persons by way of succession, and the term settled property means the property comprised in a settlement.
In my view s.s. (2) must be read to mean that a Will or other instrument is a settlement only if it directs the appropriation of certain specific property, or an estate or interest in certain specific property, to, or in trust for, any person for life. Ilere the Will directed no such appropriation.
This view is supported by statements in Hanson's Death Duties (8th 20 Edition) at p. 105 "an annuity simpliciter would not apparently be settled property." in Harman's Finance Act (4th Edition) at p. 79 an annuity charged on corpus with power to set aside a fund to answer the annuity is not, it is submitted, settled property. The test seems to be whether the annuity is equivalent to a life interest, ie. is to be paid only out of the income from a fund directed to be set aside for the purpose which goes over on the cesser of the annuity"; and also by the cases cited by Mr. Potter for the Respondent, In re Earl of Carnarvon's Settled Estates, (1927) 1 Ch. 139, and re Lord Alington and the London County Councils Contract, (1927) 2 Ch. 253, which decided that the existence of a rent charge or jointure, charged on an estate in an owner in 30 fee, had not made the estate a settled estate.
Since the above judgment was written my attention has been drawn by the legal advisers of the appellants, with the consent of those of the respondent, to a further case-Re Booth, Pleace v. Booth (1916) 1 Ch. 349. In that case the testator had by his will settled his residuary estate upon his executors for A for life and then for other persons subject to the payment to B out of the income of an annuity commencing on A's death, and had by a codicil given also an immediate annuity to B payable out of the same income." It was agreed that B had to bear her proportionate share of the settlement estate duty paid in respect of the whole settled residue on the testator's death, and it was further held by the 40 Court that she must also bear her proportionate share of the estate duty payable on the death of A, she being regarded as enjoying the income from an actual or notional part of the settled estate. In my view, however, this decision does not help the appellants since the reason for B's liability to pay a proportionate share
Judgment of
of the duty was not that her interest in the estate was in itself settled property No. 17. or that her notional or actual slice of the estate was property settled upon the Chief herself, but that her slice being itself part and parcel of the settled residue has Justice on accordingly to bear its share of the duty.
the Appeal to the Full Court.
For these reasons I am of opinion that this appeal fails and must be 17th Febru- dismissed with costs.
ary, 1936. (Continued)
Sd/ R. E. LINDSELL,
Chief Justice,
17.2.36.
10
No. 18. Judgment of Puisne Judge on the appeal to the Full Court.
No. 18. Judgment of
Judge on the
Court.
I concur. I have had the privilege of reading the Judgment of the the Puisne President of the Court which has just been delivered and as I am in agreement Appeal to with the views therein expressed including his views as to the reason for the the Full decision in Re Booth (1916) 1 Ch. 349, to which our attention was drawn after 17th Febru- the hearing of this Appeal, I shall not deal in detail with the cases referred to ary 1936. by Appellants' Counsel but confine myself to a consideration of the two grounds on which Mr. Macnamara submits this appeal should be allowed.
As regards the first ground I consider before the equitable maxim can be applied in the present case the will of the testator must contain a clear and 20 imperative direction to set apart a fund to pay the annuity in question. This would appear to be the view taken by the learned Judges of the Court of Appeal in Re Twopenny's Settlement (1924) 1 Ch. 522 as Pollock M. R. in his Judgment said at p. 529;
30
(4
The words quoted above-- imperatively and definitely must be found appropriate to describe the effect of the instrument".
Warrington L.J. stated at pp. 532–533;
The doctrine that in equity land may be converted into money and money into land at the will of a settlor depends upon the principle that a Court of equity will not permit the default of a trustee to perform a duty imposed upon him to affect the nature of the interests conferred upon the beneficiaries, and therefore treats as actually done that which ought to have been done. Accordingly, if money is directed to be invested in the purchase of land to be settled upon certain uses that money, though not actually so invested, will devolve according to the provisions of the settlement exactly as the land would have devolved had it been purchased therewith.
It is obvious that, having regard to the principle upon which the doctrine of conversion is founded, there must be a paramount obligation binding the trustees to invest in the purchase of land, and therefore if