Attorney General v Farrell
| Jurisdiction | England & Wales |
| Year | 1931 |
| Date | 1931 |
| Court | Court of Appeal |
Revenue - Estate Duty - Disentailing Deed and Resettlement under Joint Power of Appointment - Disposition of Tenant in Tail - “Property to be included in an account” - Discretionary Trust - Reservation of Interest -
By a resettlement dated September 27, 1894, made in exercise of a joint power of appointment reserved to A. and his mother by a disentailing deed of even date by which A. disentailed certain property with his mother's consent and she joined to convey her life interest, they resettled the property reserving to themselves an overriding joint power of appointment; and under the joint power of appointment they made another resettlement dated January 17, 1896, by which they appointed the property to trustees upon trust for the mother for life and after her death upon trusts for management during the life of A. and after payment of expenses to apply the net rents and profits for the benefit of any one or more exclusively of the other or others of A. and his wife and children or remoter issue as the trustees should in their absolute discretion think fit and (subject to this discretionary trust) to pay or apply the surplus of the rents and profits to the person or for the purposes to or upon which the same would be payable or applicable if A. were dead and after his death and in the events which happened the trustees were directed to hold the trust estate in trust for A.'s brother for life with remainders over.
The mother died in 1925 and estate duty was paid on her death on the settled property. A. died in 1926, having since his mother's death received 50l. a month from the trustees under the discretionary trust. The surplus profits, which were considerable, had been paid to A.'s brother:—
Held, (1.) that property settled in exercise of a power of appointment by deed is “property” within the meaning of s. 38, sub-s. 2 (c), of the Customs and Inland Revenue Act, 1881, as enacted in an amended form by the Finance Act, 1894, s. 2, sub-s. 1 (c).
(2.) that having regard to s. 22, sub-s. 2 (b), of the Finance Act, 1894, the dispositions made by the disentailing deed and resettlements to take effect after the death of the mother were dispositions made by A. as settlor for the purpose of the Finance Act, 1894.
(3.) that by making himself one of the possible objects of the discretionary trust, A. had reserved to himself an interest in the property settled within the meaning of s. 38, sub-s. 2 (c), of the Act of 1881 as re-enacted in an amended form in the Finance Act, 1894.
(4.) that the stocks representing the proceeds of sale of real estate in the Irish Free State subject to the trusts of the resettlement of 1896 were therefore property which must be deemed to have passed on the death of A. under the Finance Act, 1894, s. 2, sub-s. 1 (c), so as to be chargeable to estate duty.
APPEAL from the decision of Rowlatt J.F1 on an information filed by the Attorney-General on behalf of His Majesty.
By the will of Mathew Elias Corbally dated September 21, 1865, and in the events which happened, certain funds representing the proceeds of sale of real estate situated in the Irish Free State and other funds directed to be applied in the purchase of real estate in Ireland, were, at the date of the next mentioned disentailing deed (September 27, 1894), vested in trustees upon trust to pay the income to Lady Mowbray and Stourton (herein called “the Baroness”) for life with remainder to her second son Alfred (referred to throughout these proceedings as “the deceased”) in tail male with remainders over. The Baroness had power to charge the premises with sums not exceeding 5000l. for portions for her younger children.
By a disentailing deed dated September 27, 1894, the Baroness and the deceased conveyed all the freehold hereditaments comprised in the will, or purchased thereunder, to G. R. Dean free from the estate tail and all remainders taking effect thereafter to such uses and upon such trusts and with and subject to such powers and provisions as the Baroness and the deceased should by deed jointly appoint and the stocks and funds mentioned in the second schedule thereto and all other money stocks or funds liable to be laid out in the purchase of hereditaments to be settled as aforesaid were assigned to G. R. Dean (freed as aforesaid) upon such trusts and subject to such powers and provisions as the Baroness and the deceased should by deed jointly appoint.
By a resettlement dated September 27, 1894, the Baroness and the deceased in exercise of their powers under the disentailing deed appointed the manors, lands, tenements and hereditaments comprised in the disentailing deed upon trust during their joint lives to pay to the deceased the yearly sum of 500l. determinable on bankruptcy or alienation, and from the date of his marriage with the consent of the Baroness a further yearly sum of 300l. determinable in like manner, and subject thereto the trust estate was to be held on trust for such persons and purposes as the Baroness and the deceased should by deed jointly appoint and in default of appointment in trust for the Baroness for life in restoration of her life estate under the said will and the powers annexed thereto other than the power of appointing 5000l. for portions with remainder in trust for the deceased for life with remainder in trust for his first and other sons successively in tail male with divers remainders over. By the same resettlement the Baroness and the deceased in exercise of their powers under the disentailing deed, after appointing that the sums there mentioned should be raised in favour of the deceased and of younger children, declared that the trustees were to hold the residue of the trust funds as the Baroness and the deceased should by deed jointly appoint with further directions in default of appointment as therein mentioned so that the capital moneys should be impressed with a trust for the purchase of freehold hereditaments and should devolve as real estate.
By a resettlement dated January 17, 1896, the deceased in consideration of the application of 7000l. to be raised out of the trust funds in payment of his debts released the trust estate from the payment of the above annuities of 500l. and 300l. and the Baroness and the deceased appointed that the trustees should during their joint lives or until the bankruptcy of the deceased or any of the other events therein mentioned pay to the deceased an annuity of 300l. with a discretionary trust in the event of his bankruptcy or any other of the other events aforesaid and upon further trust if during the continuance of the annuity of 300l. the deceased should marry with the consent of the Baroness to raise and pay the further yearly sum of 300l. to be determinable in like manner and subject to these annuities and certain other payments the trustees were to hold the trust estate on trust for the Baroness for life in restoration of her life estate under the will and resettlement dated September 27, 1894, and after the death of the Baroness upon trust to take the profits of the trust estate and manage the premises during the life of the deceased and to apply the net profits after payment of expenses and costs of management for the maintenance or benefit of any one or more to the exclusion of the others of the following persons — namely, the deceased and his wife and children or remoter issue for the time being in existence and (if for the time being there should be no such wife or child or other issue) the other persons for the time being entitled in remainder in such manner in all respects as the trustees should in their absolute and uncontrolled discretion think fit and (subject to the said discretionary trust) to pay or apply the surplus of the rents and profits of the said trust estate to the person or persons or for the purposes to or upon which the net rents and profits would be payable or applicable if the deceased were dead and from and after the death of the deceased it was thereby directed that the trust estate should be held in trust (in the event which happened of the deceased dying a bachelor) for the third, fourth and every other younger son of the Baroness successively according to seniority during their respective lives with remainder in tail and after the death of each such younger son to his sons successively in order of seniority with remainders over. And the Baroness and the deceased in further exercise of the power in that behalf appointed that the trustees should hold the residue of the money stock funds and securities comprised in the resettlement of September 27, 1894, upon trust to raise the said sum of 7000l. and to pay the income of the residue of the trust funds to the Baroness during her life and subject to raising the further sums there mentioned after her decease to hold the ultimate residue for such persons and purposes and subject to such powers and provisions as would be applicable thereto if the same were the proceeds of sale of the trust estate.
The Baroness died on November 26, 1925, and estate duty was paid at the appropriate rate in respect of real estate to the value of 42,176l., being the property subject to the trusts of the two resettlements.
The deceased was adjudicated a bankrupt on December 31, 1903, and died a bachelor on November 14, 1926. At the death of the Baroness, her third son, Lieutenant-Colonel the Hon. Edward Plantagenet Joseph Stourton was the person entitled to the first vested equitable estate for life in the settled property expectant on the death of the deceased and such equitable estate...
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