CO129-557-12 Armstrong and Turner v. Estate Duty Commissioner- appeal to Privy Council 18-5-1936 - 2-10-1936 — Page 52

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No. 10.

Judgment of the Chief Justice

on the Petition.

The case of A. G. v. Watson decided no more than this: that an annuitant whose annuity was to be paid out of the residuary estate, as in the present case, without any provision for setting aside a fund to meet the annuity payments had an interest in the testator's residuary estate within the meaning of the relevant sections of the Finance Act 1894, and that upon the annuitant's death estate duty became payable in respect of the benefit which accrued to the (Continued) residuary estate upon the death of the annuitant by tne cesser of the annuity. Were that principle not accepted the appellants in this case would not have been driven to rely on the provisions of section 25 of the Ordinance, but I can find nothing in the report of that case which in any way supports Mr. Macnamara's 10 contention regarding the correct interpretation of that section.

27th June, 1935.

Mr. Potter has drawn my attention to the cases of Re: Earl of Carnarvon's Estates (1927) 1 Ch. p. 138 and Re: Lord Alington and the London County Council's Contract (1927) 2 Ch. p. 253. With these authorities I do not propose to deal at length: I shall confine myself to one passage from the judgment of Russell J. in Lord Alington's case:

In re Campbell was not cited to Romer J. but when that case is looked at all that is decided was that where a fund was set aside out of a mixed residue to provide by the income thereof certain annuities, upon the cesser of which the persons entitled to residue would be entitled to the 20 fund, settlement estate duty was payable on so much of the residue as had been set aside. It was held that the fund was limited in trust for persons by way of succession. That decision does not justify the pro- position that the existence of a jointure charged on an estate vested in an owner in fee made, under the old law, the estate a settled estate. If it did the whole of the residuary estate would have been subject to settlement estate duty. I must further point out that Stirling L.J. carefully confines the decision to the case of a fund being set aside to provide an annuity, and keeps open the case of a simple gift of an annuity where there is no trust for its payment out of a particular fund.

It is possibly the fear that a successful argument might render the whole of the residuary estate subject to settlement estate duty that has restrained persons in the position of the appellants from advancing in the High Court of Judicature such an argument as I have listened to in this case.

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In my opinion the appeal fails so far as this ground of appeal is concerned. The appellants in their statement of grounds of appeal further contend : (8) The trustees further contended (in paragraph 10 of the said Account) that if estate duty were payable by reason of the circumstances which had happened such estate duty should be calculated in accor- dance with the Third Schedule of Ordinance No. 3 of 1932 but that 40 having regard to the fact that section 13 (5) of Ordinance No. 16 of 1915 and the explanatory clause of the Third Schedule of Ordinance No. 16 of 1915 had not been incorporated in Ordinance No. 3 of 1932 such duty was impossible to calculate and was therefore not payable.