Coats's Trustees v Lord Advocate
| Jurisdiction | England & Wales |
| Judge | Viscount Simonds,Viscount Dilhorne,Lord Morris of Borth-y-Gest,Lord Guest,Lord Donovan |
| Judgment Date | 24 February 1965 |
| Judgment citation (vLex) | [1965] UKHL J0224-2 |
| Date | 24 February 1965 |
| Court | House of Lords |
| Docket Number | No. 3. |
[1965] UKHL J0224-2
House of Lords
Viscount Simonds
Viscount Dilhorne
Lord Morris of Borth-y-Gest
Lord Guest
Lord Donovan
After hearing Counsel, as well on Wednesday the 13th as on Thursday the 14th, days of January last, upon the Petition and Appeal of Ian Pountney Coats, Carse, Tarbert, Argyll, and William David Coats, 115 St. Vincent Street, Glasgow, the Trustees now acting under the Ante-Nuptial Contract of Marriage dated 23d and 24th April 1920 and registered in the Books of Council and Session on 7th July 1920 between the late Thomas Heywood Coats sometime residing at Levernholme, Nitshill, Renfrewshire, of the first part and the late Mrs. Olivia Violet Pitman or Coats or Moxon (then Miss Olivia Violet Pitman) sometime residing at Openwood, Worplesdon, Surrey, of the second part, praying, That the matter of the Interlocutor set forth in the Schedule thereto, namely, an Interlocutor of the Lords of Session in Scotland, of the Second Division, of the 2d of June 1964, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Interlocutor might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of the Lord Advocate for and on behalf of the Commissioners of Inland Revenue, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal, in the Court of Parliament of Her Majesty the Queen assembled, That the said Interlocutor of the 2d day of June 1964, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the party entitled to the same within one calendar month from the date of the Certificate thereof, the Cause shall be, and the same is hereby, remitted back to the Court of Session in Scotland, or to the Judge acting as Vacation Judge, to issue such Summary Process or Diligence for the recovery of such Costs as shall be lawful and necessary.
My Lords,
By an Interlocutor of the 2nd June, 1964, the Second Division of the Court of Session sitting as the Court of Exchequer in Scotland dismissed an appeal brought by the Apellants against an assessment to estate duty made by the Commissioners of Inland Revenue in respect of the death of Thomas Heywood Coats, whom I will call Mr. Coats. Against that Interlocutor the Appellants, the trustees of an ante-nuptial contract dated the 23rd and 24th April, 1920, and made on the marriage of Mr. Coats and Miss Olivia Pitman, now appeal.
It is necessary to refer to the marriage contract at some length inasmuch as the argument before your Lordships has revolved round its meaning and effect. By it a trust was established to administer certain funds provided by Mr. Coats. I need not refer to clauses 1 and 2. Clause 3 provided for payment to Mr. Coats during his life of the free annual income of the funds for his alimentary liferent use. Clause 4 provided that in the event of the dissolution of the marriage by the death of Mr. Coats the trustees should pay to Mrs. Coats, as I will for the time being call her, the free annual income of the trust funds "subject to the provisions fifth underwritten for her alimentary liferent use allenarly during all the days of her life after such dissolution". The fifth clause I must state in full. It was as follows:
"In the event of the dissolution of the marriage by the death of the First Party and there being issue of the marriage and the Second Party at any time thereafter entering into a Second Marriage the Trustees shall from the date of such marriage pay to her the income of one-half of the Trust Funds for her alimentary liferent use allenarly and shall apply the income of the remaining half of the Trust Funds for the maintenance, education and upbringing of the issue of the marriage in such manner and in such proportions and shall pay the same to such person or persons for behoof of such issue or shall accumulate the balance of income not required for these purposes as the Trustees in their sole absolute discretion may see fit and in the event of there being no issue of the marriage or of all such issue pre-deceasing the date of vesting aftermentioned then the Trustees shall pay over to the Second Party the whole income of the Trust Funds;"
Clause 6 provided that the capital of the funds should be held in trust for the children of the marriage or their issue, a power of appointment among them being given to Mr. Coats or to Mrs. Coats if she should survive him, and failing such appointment amongst the children equally with the usual provision for the issue of children who died before acquiring a vested interest taking their parent's share and for vesting at the age of 21. It will be observed that the contract was in a usual form and no difficulty could have arisen as to its interpretation or effect but for the events which I now mention.
Mr. and Mrs. Coats were duly married on the 27th April, 1920, and there were three children of the marriage of whom the eldest attained the age of 21 on the 26th January, 1942. On the 18th December, 1931, Mrs. Coats obtained a decree of divorce against Mr. Coats on the ground of a matrimonial offence. Mrs. Coats remarried on the 1st September, 1932, and became Mrs. Moxon by which name I will now call her. Mr. Coats died intestate on the 20th December, 1958, and Mrs. Moxon died intestate on the 2nd November, 1959.
Upon the death of Mr. Coats the Commissioners of Inland Revenue claimed that by reason of the remarriage of Mrs. Moxon the income of one half of the trust fund had reverted to him and that estate duty was accordingly payable upon one half of the trust fund on a value of £62,118 19s. 0d. That assessment was upheld on appeal by the Second Division of the Court of Session, Lord Wheatley dissenting.
The ground of the Revenue claim has the merit of simplicity and can be stated in a few sentences. It is common ground that on her divorcing Mr. Coats his wife became entitled at any rate until her remarriage to the whole income of the trust fund by virtue of the rule of law which is thus stated by Lord Stair (1. iv. 20)—
"Marriage dissolved by divorce either upon wilful non-adherence (or wilful desertion) or adultery: the party injurer loseth all benefit accruing through the marriage … but the party injured hath the same benefit as by the other's natural death".
But while the parties agree that on the divorce taking place Mrs. Moxon was entitled to the whole income until her remarriage, they differ profoundly as to the consequence of that event. The Lord Advocate on behalf of the Commissioners contends that then the provisions of clause 5 of the contract operated with the result that her interest was reduced to one half and the other half reverted to Mr. Coats while the Appellants contend in the alternative that the provisions of clause 5 do not come into operation at all or that, if they do, they operate so as to advance the interests of the children of the marriage. The second of these alternatives was rejected unanimously by all four Judges of the Second Division, the first of them had the support of Lord Wheatley and was put in the front of his argument by learned counsel for the Appellants.
My Lords, the rule of law as stated by Lord Stair has been restated by every institutional writer on the law of husband and wife without any relevant variation and has been confirmed by numerous decisions of the highest authority including more than one decision of this House. From the consideration of these authorities it emerges beyond any possible doubt that the rule is one that applies only in relation to the interests of the spouses and can by no means be invoked to advance or enlarge the interests of the children of the marriage or any other party. I ask, therefore, how can the second alternative claim be supported? Under the terms of the contract the children of the marriage can take no interest except after the death of Mr. Coats: it is only by the importation of the rule that their beneficial interest can be advanced: but this is just what is not permitted. An argument which I did not find it easy to follow was urged on behalf of the Appellants to the effect that the children's interest was "carved out" of that of the mother and could therefore take effect without invoking the rule. I do not think that this expression, regarded either as a term of art or as popular language, is apt to describe the legal consequence of Mrs. Moxon's remarriage, but in any case, if it is "carved out" of her prior interest, I do not see how it can last longer than the interest out of which it is carved. I will say no more upon this alternative claim because the matter appears to me clear beyond a peradventure and I have added and can add nothing to the conclusive judgments of the learned Judges of the Court of Session.
I turn, then, to the other alternative claim which had pride of place in the Appellants' argument in this House though it previously held a subordinate position. It is, as I understand it, that clause 5 did not in the circumstances come into operation at all so that Mrs. Moxon, taking by virtue of the rule an immediate interest...
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