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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Special Case - Lord Advocate v. Nisbet's Trustees [1878] ScotLR 15_508 (4 February 1878)
URL: http://www.bailii.org/scot/cases/ScotCS/1878/15SLR0508.html
Cite as: [1878] ScotLR 15_508, [1878] SLR 15_508
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SCOTTISH_SLR_Court_of_Session
Page: 508↓
Court of Session Outer House.
v.
Facts:
Held by Lord Curriehill and acquiesced in, that trustees who had made up titles to heritage under a trust-deed which gave them power to “gift away, convey, and dispone the residue and remainder” of the truster's estate, “heritable and moveable, to any person or persons for any purpose or purposes” they should think proper, but had not themselves taken any benefit under the deed, were not successors in the meaning of the
Page: 509↓
Succession-Duty Act, nor yet donees of a power of apportionment, but that, as they had sold all the heritable estate for the purpose of distributing it, the duty exigible was legacy-duty upon the amount realised, including proceeds to the date of the account.
The late Mr David Nisbet, who died in 1853, left a trust-disposition and settlement appointing certain trustees, who were to hold his estate for the ends that should be specified in a separate writing under his hand, “and failing any such writing being found, then and in that case my said trustees and their foresaids have full power hereby committed to them, after payment of all my just and lawful debts, and the expense of carrying these presents into effect, to gift away, convey, and dispone the residue and remainder of my said estate, heritable and moveable, to any person or persons, and for any purpose or purposes, as they or the survivor of them may in their or his discretion think proper.” The truster left no writing under his hand bearing reference to the said trust-disposition. There were found in his repositories, besides that deed—(1) a document titled on the back “Memorandum of Paternity, ” &c., holograph of the truster, and signed by him on 30th June 1843; and (2) a jotting holograph of the truster, but unsigned and undated, which he had apparently framed with the view of preparing instructions to his trustees as to the disposal of his estate. The accepting trustees made up titles to the estate, paid the truster's debts, let the heritable, and invested the personal estate. They made suitable payments for the maintenance and education of two illegitimate children (a boy and a girl) of the truster, and their mother, named in the memorandum of paternity referred to. In 1869, the son being anxious to set up in business as a stock farmer, and the daughter, who was imbecile, being under treatment in the Asylum for Idiots at Earlswood, Surrey, the trustees executed a deed of declaration of trust declaring that the whole estate was vested in them for these purposes, viz., to pay certain small legacies, and to make provision for the maintenance of the truster's daughter and her mother, and also to set up the truster's son in a farm; by the sixth purpose it was declared that the whole free residue of the trust-estate should be held in trust for the alimentary behoof of the truster's son; and, in the event of his leaving a widow, for payment to her of an alimentary annuity equal to one-half of the free income of the residue on the average of the three years preceding his death; and in the event of his leaving lawful children, for division of the residue among them, share and share alike. Failing children, it was declared that the residue should be divided, subject to such conditions as the trustees should think fit, as follows, viz.:—one-half to the Royal Infirmary of Edinburgh, and the other half equally, or in such other proportions as the trustees should consider more expedient, among the nineteen charitable institutions therein specified. The son died without issue on 29th April 1874, in the thirty-fourth year of his age, leaving a widow, whom he appointed his sole legatee and executrix, and whose alimentary annuity, in terms of the deed of declaration, has been fixed at £270 a year. Thereafter the trustees sold the heritable estate, and divided half of it as they had provided, retaining the other half for the payment of the liferent and alimentary provisions. The trustees in 1851 paid legacy-duty on the personal estate of the truster, and succession-duty on the heritable estate as if they were themselves the beneficiaries.
The Lord Advocate maintained now that legacy-duty was payable on the whole value of the estate, including all the proceeds arising from the heritable estate since the truster's death till the lodging of the account.
The trustees maintained that the succession-duty paid by them, amounting to £707, 11s. 10d., was all that could be required of them, in respect that, although not successors, they were donees of a power of appointment in the sense of the fourth section of the Succession-Duty Act 1853.
“ Edinburgh, 4th February 1878.—The Lord Ordinary having heard the counsel for the parties and considered the special case—(1) Finds that the residue account passed in 1857 must be held as settling the duty on the personal estate of the deceased David Nisbet, architect in Edinburgh, and that the duty of £436, 16s. 5d. then paid by his trustees is all that can be demanded in name of legacy-duty or otherwise in respect of the said personal estate in respect of the death of the said David Nisbet, and the facts and circumstances as disclosed in the case: (2) Finds that the heritable property of the deceased was not liable in succession-duty, and that the sum of £707, 11s. 10d. paid by the said trustees in 1857 as succession-duty was erroneously paid: (3) Finds that in respect of the discretionary powers conferred upon the trustees to sell and distribute the estate of the deceased David Nisbet, and of their exercise of the said power of sale, the heritable property of the deceased was converted into moveable property, and is therefore liable in legacy-duty: (4) Finds that the said duty is chargeable at the rate of £10 per cent., and is to be paid by the said trustees upon the value of said property and the proceeds thereof as realised by them from and since the death of the testator, including the capital sums, if any, paid by the said trustees out of the said property and proceeds so realised to the beneficiaries under the deed of declaration mentioned in the Special Case, and interest thereon at the rate of four per cent, from the respective dates of payment of said capital sums, but always under deduction of all debts of the testator, and all necessary charges and expenses affecting the said property and proceeds thereof, and under deduction of the sum of £707, 11s. 10d. erroneously paid in name of succession-duty in 1857, with interest thereon at the rate of £4 per cent, from the date of said payment; reserving to the said trustees any claims competent to them to recover from the said beneficiaries or their representatives the proportions of said duty effeiring to the capital sums paid to them, and interest thereon as aforesaid; and before further answer, appoints the case to be enrolled, in order that the precise sum now payable in name of legacy-duty may be ascertained.
Note.—The trustees of Mr Nisbet were not his “successors” within the sense and meaning of the Succession-Duty Act. They had no beneficial interest in the succession; they were merely Mr Nisbet's disponees in trust for behoof of other parties, and although they had a discretionary power to select the beneficiaries, they were not donees of a power of apportionment within the meaning of section 4 of the Act. It was therefore, in my opinion, a mistake to demand and levy from them succession-duties on the value of Mr Nisbet's heritable property as on a beneficial succession to which they were individually entitled, as seems to have been done in 1857. If the case had been one for succession-duty at all, the duty should have been demanded and paid either in 1857 or subsequently, in respect of the succession of the parties taking the estate beneficially.
But I am satisfied that the case is not one falling under the Succession-Duties Act at all. The trustees had the most ample discretionary power to convert the estate into money, and to distribute it among such objects as they might select. They accordingly selected the objects in 1869, and declared that the property should ultimately be distributed among these objects in different proportions, the trustees, however, continuing to hold the property for behoof of some of the beneficiaries in liferent and others in fee. And in pursuance of their deed of declaration the trustees have from time to time converted the whole heritable property into cash, and have, in consequence of the failure of one of the life-renters, paid the portion of the fee thereby liberated to the charitable institutions named asfiars in the deed of declaration.
The case therefore appears to me to be one for legacy-duty as on a moveable succession, and to fall under the rule established by the case of the Advocate-General v. Hamilton, 22d February 1856, 18 D. 636. It was there held that where trustees with discretionary powers of sale exercised the power, they thereby converted the heritage of the deceased into moveable succession, and rendered the proceeds liable to legacy-duty. This being so, the duty must be computed according to the rule now well settled by many cases—viz., upon value of the property as at the date of the account being given in, with all the proceeds from the death of the testator, or, where payments have been made to legatees, then upon the amounts so paid, with interest from the date of payment. (See Attorney-General v. Cavendish, 23d July 1870, Wightwick Rep. p. 82; Thomas v. Montgomery, 3 Russ. 502; Advocate-General v. Oswald, 20th May 1848, 10 D. 969, and 31 and 32 Vie. c. 124, sec. 9.) In the present case there can be no difficulty in adjusting the amount—(first), because the rate of duty is here the highest rate, viz., £10 percent., as all the beneficiaries are strangers in blood to the deceased; and (second) because most of the payments of capital to the beneficiaries prior to 1874 appear to have been made out of the personal estate of the deceased.
It is conceded by the Crown, and even without such concession I should without difficulty have decided, (1) that the residue account passed in 1857 must be held to be a final settlement of all duties demandable in respect of the personal estate of the deceased; and (2) that in settling the duties now payable for the converted heritage credit must be given for the amount of £707, 11s. 10d. erroneously paid by the trustees in name of succession-duty in 1857. The case is ordered to the roll in order that the amount of duty now payable may be ascertained before a final answer is given to the questions which the Court is asked to decide.”
Parties acquiesced in this judgment.
Counsel for the Lord Advocate— Rutherfurd. Agent— David Crole, Solicitor of Inland Revenue.
Counsel for Nisbet's Trustees—Pearson. Agents— Mitchell & Baxter, W.S.