Scottish Court of Session Decisions

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Cite as: [1904] SLR 41_357, [1904] ScotLR 41_357

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SCOTTISH_SLR_Court_of_Session

Page: 357↓

Court of Session Inner House Second Division.

Tuesday, March 1. 1904.

41 SLR 357

Harris's Trustees

v.

Harris.

Subject_1Revenue
Subject_2Estate-Duty
Subject_3Settlement Estate-Duty
Subject_4Raising Amount of Estate-Duty by Bond on Lands — Petition for Authority to Charge — Finance Act 1894 (57 and 58 Vict. cap. 30), sec.9 (5) — Expenses.

Process — Petition to Charge — Petition to Charge Estate with Estate-Duties Competently Presented to Inner House.
Facts:

Trustees acting under a last will and testament made up a title to the heritable estate of the truster and paid the estate and settlement estate-duties payable under the Finance Act 1894. Thereafter they presented a petition to the Court for authority to burden the estate with the amount of these duties and the expenses incurred in settling the duties and the expenses of the application. They averred that there was no power to borrow contained in the trust-deed, and that no lender could be found willing to advance the money unless the authority of the Court was received.

The Court, while of opinion that the trustees were entitled in terms of section 9 (5) of the Act to charge the estate with the duties without any authority, authorised the trustees to burden the estate by way of bond and disposition in security for the amount of the duties paid and the expenses incurred in setting these duties, but not the expenses of the petition to the Court.

Held that a petition by trustees for authority to burden an estate with the amount of the estate-duties paid under the Finance Act 1894 was an appeal to the nobile officium of the Court, and had been competently presented to the Inner House.

Headnote:

Section 9 of sub-section (5) of the Finance Act 1894 enacts—“A person authorised or required to pay the estate-duty in respect of any property shall, for the purpose of paying the duty, or raising the amount of the duty when already paid, have power, whether the property is or is not vested in him, to raise the amount of such duty, and any interest and expenses properly paid or incurred by him in respect thereof, by the sale or mortgage of, or a terminable charge on, that property or any part thereof.”

Colonel Henry William Harris, who died on 14th November 1899, left a last will and testament dated 30th July 1892, by which he conveyed to trustees for certain trust purposes his whole means and estate, including the lands and estate of the Cairnies.

The trustees made up a title to the Cairnies by notarial instrument, recorded 13th February 1902, and paid estate, succession, and settlement estate-duties due under the Finance Act 1894, amounting to £1079, 11s. 11d., and obtained official certificates for the said duties.

Thereafter the trustees presented a petition to the Court for authority to burden the estate of the Cairnies with the amount of the duties, together with the expenses incurred in respect thereof, including the expenses of the application.

Answers to the petition were lodged by Miss Edith Maud Winifred Harris and Miss Hilda Muriel Harris, who were conditional institutes to the fee of the estate under the will. They maintained (1) that the petition should be refused as unnecessary, and (2) that even if the petition was granted the prayer should be refused so far as it craved authority to burden the estate with the expense incurred in settling the amount of the duties and the expenses of the petition.

The petitioners stated that there was no power to borrow contained in the truster's will, and that they were unable to lend or borrow on account of the doubts entertained as to whether they were entitled to burden the estate without obtaining the authority of the Court.

They argued—(1) The petition was competently presented in the Inner House. It was an appeal to the nobile officium of the Court— Laurie, infra. (2) In the circumstances above stated the Court should grant the petition. In doing so they would follow the example of the First Division in Laurie, February 22, 1898, 25 R. 636, 35 S.L.R. 496. There was no distinction between the present case and Laurie; an heir of entail was in the same position as a fee-simple proprietor burdened with conditions. (3) It was proper that expenses incurred in settling the duties and the expenses of the petition should be charged against the heritable property and not against the general estate. In order that they might be so charged they must be included in the bond granted under authority of the Court.

Page: 358↓

Argued for the respondents—(1) The petition should have been presented in the Outer House. (2) The trustees being vested in a fee-simple estate were entitled, in terms of section 9 (5) of the Finance Act 1894, to raise the amount of the duties paid, and the expenses properly incurred by him in respect thereof, by the mortgage of part of the estate, and no authority was required to enable them to do so. The case of Laurie, supra, was different from the present, as in that case the property was entailed. The only case where the Court was empowered by the Act of 1894 to grant such authority as was here required was where the property was not vested—Section 23 (18). (3) In any event the expenses of the petition should not be charged against the estate. They were expenses unnecessarily incurred, and the estate should not be charged with the expenses incurred in the settlement of the duties. These expenses were not allowed to be charged in Laurie, supra.

At advising—

Judgment:

Lord Trayner—The Finance Act 1894 makes provision in section 23, sub-section 18, for the manner in which (in Scotland) a person who has paid estate-duty on any property, “and in whom the property is not vested,” may operate his relief by obtaining from the Court (1) an order for the sale of the property or part thereof, or (2) an order on the person in whom the property is vested to grant a bond and disposition in security over the property for the amount of the duty paid. These provisions do not avail the present petitioners, for they are themselves vested in the property in respect of which duty has been paid. By section 9, sub-section 5, however, it is provided that any person who pays the duty shall be entitled to sell or mortgage the property for the amount of the duty paid, “and any interests and expenses properly paid or incurred by him in respect thereof.” I should have thought, in view of that provision, that the petitioners would not have had any difficulty in borrowing upon the security of the estate the amount of the duty and interests and expenses (if any) connected therewith. I do not at present see why a lender should not have been satisfied with such a title as the petitioners under statutory authority are authorised to grant. The petitioners, however, state that they cannot get the necessary loan unless the authority of the Court now craved is granted, and in these circumstances no good reason occurs to me why the Court should not lend its aid to the petitioners. I think therefore the prayer of the petition should be granted except in so far as it asks that the amount to be borrowed should include the expenses of the present application. I think these are not within the “expenses” contemplated by section 9 (5), but these expenses may fairly be charged by the petitioners against the trust estate as expenses incurred in its due administration.

It was suggested that this application could only competently be presented to the Junior Lord Ordinary, but I think we may competently deal with it as an appeal to the nobile officium of the Court.

Lord Moncreiff—I am also of opinion that we are justified in granting the authority asked for in this petition. My only doubt is as to whether the authority of the Court is required. I am disposed to think that under sub-section (5) of section 9 of the Finance Act of 1894 the trustees are entitled to charge the property with the succession duties without any authority. This view receives support from the terms of section 23, which provides that where any person in whom the property is not vested is authorised by the Act to raise the estate-duty paid by him for such property by the sale or mortgage of the property, he may do so by means of an application to the Court.

The present petition has, however, come before us under peculiar circumstances. I understand (1) that there is no authority to borrow in the trust-deed, and (2) that no lender can be found willing to advance the money unless the authority of the Court is obtained. I therefore think that the Court is justified in granting the authority asked. In doing so we shall follow the example set in the case of Laurie. In that case the First Division of the Court adopted the present course, although, as here, it was doubtful whether their authority was required. It might have been said in that case that the provisions of the Finance Act over-rode the prohibition against contracting debt in the entail, just as in this case it is said that they supply a power to borrow on the security of the estate which is not contained in the trust-deed.

I am also of opinion, with Lord Trayner, that the expenses of the present application should not be included in the amount authorised to be charged on the estate.

The Lord Justice-Clerk concurred.

Lord Young was absent.

The Court pronounced this interlocutor—

“Authorise the petitioners as trustees of the deceased Henry William Harris to burden the estate of The Cairnies with the sum of £1079, 11s. 11d., being the amount of estate-duty, succession-duty, and settlement estate-duty paid by them in respect of the said estate, and the further sum of £26, 6s. 1d., being the amount of the expenses incurred in settling the said duties, amounting together to the sum of £1105, 18s., and to grant a bond and disposition in security or bonds and dispositions in security in ordinary form for the said sum of £1105, 18s. over all and whole the lands described in the prayer of the petition, and here held as repeated brevitais causa, and that in favour of such person or persons as may advance the said sum, and decern.”

Counsel:

Counsel for the Petitioners— Sandeman. Agent— F. J. Martin, W.S.

Counsel for the Respondents— Laing. Agents— Forbes, Dallas, & Company, W.S.
1904