CO129-557-12 Armstrong and Turner v. Estate Duty Commissioner- appeal to Privy Council 18-5-1936 - 2-10-1936 — Page 64

70

30.

No. 17. Judgment of the Chief Justice on the Appeal

to the Full Court.

income arising from the appropriated investments shall be applied as income of my residuary estate."

The trustees never made the appropriation allowed by Clause (13). Had they done so it may be that a settlement as defined by s. 25 (2) of the Estate 17th Febru- Duty Ordinance, 1932, would have been effected and no estate duty would have

been leviable on the cesser of Lady Chater's annuity.

ary, 1936.

(Continued)

Mr. Macnamara however contends that the words in Clause (8) of the Will "subject to making provision for any annuities bequeathed by this my Will" are per se operative to require the Trustees to make an appropriation to answer Lady Chater's and the other annuities, and that the provisions of Clause 10 (13) are mere machinery allowing postponement of appropriation in the discretion of the trustees.

He then proceeds to argue that despite the failure of the trustees to appropriate and set aside any part of the estate, equity will come to their rescue and that of the residuary legatees by deeming that to have been done which ought to have been done. He also relies on Harbin v. Masterman, (1896) 1 Ch. 351, as showing that a residuary legatee has the right to have part of the deceased's estate appropriated and set aside to answer an annuity given by the Will.

In support of his second submission, Mr. Macnamara contends that, even 20 if no appropriation was made or deemed in equity to have been made, yet the bequest of Lady Chater's annuity was a settlement as defined by s. 25 (2) of the Estate Duty Ordinance in that it gave her an "interest in property which stood for the time being limited to her by way of succession." He does not contend that her interest extended to the whole of the residuary estate but merely to an undivided share thereof large enough to answer her annuity and therefore sufficiently ascertainable to become settled property.

He has drawn our attention to a number of authorities, all of which he cited in the Court below, and in particular to A. G. v. Watson, (1917) 2 K. B. 42, and argues that although those cases do not specifically establish that the 30 gift of an annuity simpliciter is a settlement, yet they leave the point open, the remarks thereon of Sargant J. in In re Waller (1916) 1 Ch. 153 at p. 158 being merely obiter; and that the judgment of Lush J. in A. G. v. Watson decides that an annuity is not at any rate a legacy payable by instalments but an interest in the estate which passes on the annuitant's death to others, i.e. such an interest as is within the meaning of s. 25 (2) as of s. 5 (2) of the Ordinance.

With the first of these submissions I am not in agreement.

I can find no direction whatever in the words "subject to making provision for any annuities bequeathed by this my will" in Clause (8) of the Will requiring the trustees to set aside any part of the residuary estate to 40 answer the annuities. The whole object of this clause is to provide for the distribution of the testator's residuary estate, and the words quoted are no more