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United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Inland Revenue v. Macalister [1924] UKHL 482 (10 April 1924)
URL: http://www.bailii.org/uk/cases/UKHL/1924/61SLR0482.html
Cite as: [1924] UKHL 482, 61 ScotLR 482
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SCOTTISH_SLR_House_of_Lords
Page: 482↓
House of Lords.
(Before
(In the Court of Session, February 22, 1923 S.C. 495, 60 S.L.R. 344.)
v.
Subject_Revenue — Succession Duty — Succession Arising under a Disposition — “First Succession” — Finance (1909–10) Act 1910 (10 Edw. VII, cap. 8), sec. 58 (1) and (4).
Facts:
The Finance (1909–10) Act 1910, section 58, enacts—“(1) Any legacy or succession duty which under the … Succession Duty Act 1853 or any other Act … is payable at the rate of 5 per cent. or 6 per cent. shall be payable at the rate of 10 per cent. on the amount or value of the legacy or succession.… (4) This section shall take effect in the case of legacy duty only where the testator by whose will the legacy is given … dies on or after the 30th day of April 1909 … and, in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date.”
A testator who was beneficially entitled to certain heritable property in fee, subject to the liferent interest of his mother, died in 1900, leaving a testamentary disposition by which he disponed his estate to his mother in liferent and to a cousin in fee. The liferentrix died in 1910, and thereupon the cousin became entitled to the property, and succession duty became payable upon it.
Held ( aff. the judgment of the First Division) that for the purposes of section 58 (4) of the Act of 1910 the succession to the property arose on the testator's death in 1900, and that accordingly the rate of succession duty payable by his cousin was only 5 per cent.
The case is reported ante ut supra.
The Lord Advocate (on behalf of the Commissioners of Inland Revenue) appealed to the House of Lords.
At delivering judgment—
The succession arose in this way. Major Wallnutt (whom I will call the testator) was beneficially entitled under the marriage contract of his parents to the property in question in fee subject to the liferent
Page: 483↓
But for the Finance (1909–10) Act 1910 the duty would plainly have to be calculated at the rate of 5 per cent. on the value of the succession, that being the rate fixed by section 10 of the Succession Duty Act 1853, in cases where the successor is a first cousin of the predecessor. By section 58 (1) of the Act of 1910 the 5 per cent. duty is increased to 10 per cent., but sub-section (4) of the same section provides that “this section shall take effect … in the case of a succession arising under a disposition only if the first succession under the disposition arises on or after” the 30th April 1909. It is common ground that the succession in question arose under a disposition, namely, the will of the testator, and was the first and only succession arising under that disposition; but on the question whether for the purposes of section 58 (4) the succession “arose” before or after the 30th April 1909 the parties are at issue, the respondent contending that it arose on the death of the testator on the 6th January 1900 and accordingly before the date specified in the Act, and the Commissioners maintaining that it arose after that date, that is to say, on the 16th June 1910, the date of the death of the liferentrix. The Lord Ordinary (Lord Blackburn) and the First Division of the Court of Session (Lord Cullen dissenting) have decided this point in favour of the respondent, and it is against that decision that the present appeal is brought.
I feel no doubt that if the word “arising” in section 58 (4) of the Act of 1910 is to be read in its ordinary and natural sense, the succession arose on the death of the testator. Under the provisions of section 2 of the Succession Duty Act 1853 any disposition of property by reason whereof any person becomes beneficially entitled to property upon the death of any other person, either immediately or after an interval, is deemed to confer a succession on the person so entitled; and the Act (by section 10) imposes succession duty on every such succession, and (by section 42) makes that duty a first charge on the interest of the successor in the real property in respect of which it is assessed. By section 20 of the Act the duty so imposed is made payable at the time when the successor becomes entitled in possession to his succession; but this section only defers the time for payment, in cases where the successor is not entitled to immediate possession, until the right to possession matures, and the duty is none the less imposed and charged at the moment when the succession is conferred—that is to say, at the date of entitlement—see Wolverton v. Attorney-General, L.R. 1898, A.C. 535, per Lord Herschell at p. 548. This being so, it appears to me that, notwithstanding the provisions of section 20 of the Act of 1853, the succession “arises”—that is to say, is created and comes into being—at the date when under the provisions of section 2 it is “conferred,” that is to say, at the date of entitlement and not later; and that the intention and effect of section 58 (4) of the Act of 1910 is that, when once a succession has been so conferred by a disposition and the rate at which succession duty will be payable has been ascertained, the rate shall not for the purposes of the disposition be increased under the provisions of the section.
The above construction, which appears to me to be the natural construction, of subsection (4) of section 58 of the Act of 1910, derives support from the language of the earlier sub-sections of the same section. Sub-section (2) enacts that the 1 per cent. duty thereby imposed shall not be levied when the principal value of the property passing on the death of the deceased in respect of which estate duty is payable does not exceed £15,000; and by sub-section 3 it is provided that the word “deceased” means “in the case of a succession arising on a disposition the person on whose death the first succession thereunder arises.” Now the person here referred to as the “deceased” is (as Lord Sands pointed out) the person upon whose death the disposition becomes operative, in this case the testator Major Wallnutt; and if it is on his death that the succession arises for the purpose of sub-section (3), it must surely be held for the purposes of sub-section (4) to arise at the same time.
Against this it is pointed out on behalf of the Crown that a succession is defined by section 1 of the Act of 1853 as denoting “any property chargeable with duty under the Act,” and it is said that the use of the term “arising” as applied to property is somewhat awkward. But the awkwardness exists whether the term “arising” is to be referred to the date of entitlement or to the date of possession; and if (as Lord Davey suggested in Duke of Northumberland v. The Attorney-General, L.R. 1905, A.C., p. 416) the expression “property” in the definition clause may be read as meaning “estate” or interest in property,” then the word “arising” is not inappropriate.
A further argument on behalf of the Crown was founded on the concluding words of section 58 (4) of the Act of 1910, “in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date.” It was said that the expression “first succession” assumes that several successions under a disposition may arise at different dates, and that as all the successions conferred by a disposition must be conferred at one and the same time, the word “arising” cannot refer to the date of entitlement but must refer to the date of possession. This argument appears to me to be misconceived.
Page: 484↓
As to the authorities cited, Lord Advocate v. Hamilton ( 1918 S.C. 135, [1920] A.C. 50), so far as it goes, supports the decision of the Court of Session in this case. Lord Cullen (as Lord Ordinary) referring to the words “a succession arising under a disposition” as used in section 58 of the Finance Act 1910, said (1918 S.C. at p. 138)—“I think, as I have said, that these words bear reference to the Succession Duty Acts, and that, in consonance with the language of the Act of 1853, they fall to be construed as designating an occasion on which property subject to duty under that Act is conferred and began under a disposition within its meaning.” And on the appeal to the First Division, Lord Mackenzie dealt with the same point as follows (at p. 141):—“The meaning of succession arising as used in section 58 (4) of the 1910 Act and of succession conferred in section 2 of the Act of 1853 appears to me to be the same.” On the appeal to your Lordships' House, the judgments of the Lord Ordinary and of the learned Judges of the Court of Session were adopted and confirmed, and no objection was taken to the above-quoted statements of the law.
On the other hand, in Attorney-General v, Anderton ( [1921] 1 K.B. 159), Mr Justice Rowlatt held that upon the true construction of the words in section 18 (1) of the Finance Act 1894, “a succession to real property arising on the death of a deceased person,” the word “arising” is to be referred to the date when the successor to real property comes into possession of the property and not to the date when he acquires a title to it. That decision is not precisely in point in the present case, as it was given upon the Act of 1894 and not upon the Act of 1910; but if and so far as the reasoning of the learned Judge may be taken to apply to the Act of 1910, I am disposed to think that it is contrary to the decision of this House in Lord Advocate v. Hamilton (which does not appear to have been cited to Mr Justice Rowlatt) and cannot be supported.
For the above reasons I am of opinion that the decision of the Court of Session was right and should be affirmed, and that this appeal should be dismissed with costs.
Their Lordships ordered that the interlocutor appealed from be affirmed and the appeal dismissed with costs.
Counsel for the Appellant—The Attorney—General ( Sir Patrick Hastings, K.C.)—The Lord Advocate ( Macmillan, K.C.)— Sir Douglas Hogg, K.C.— Harman—Skelton. Agents—The Solicitor for Scotland of the Board of Inland Revenue—The Solicitor for England of the Board of Inland Revenue.
Counsel for the Respondent— Mackay, K.C.— Russell. Agents— Shepherd & Wedderburn, W.S., Edinburgh— Waltons & Company, London.