Commissioners of Inland Revenue v Broadway Cottages Trust; Commissioners of Inland Revenue v Sunnylands Trust
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SINGLETON,LORD JUSTICE JENKINS |
| Judgment Date | 26 July 1954 |
| Judgment citation (vLex) | [1954] EWCA Civ J0726-1 |
| Date | 26 July 1954 |
| Court | Court of Appeal |
[1954] EWCA Civ J0726-1
The Supreme Coinurt of Judicatures,
Court of Appeal.
Lord Justice Singleton
Lord Justice Jenkins
Lord Justice Hopson
MR GEOFFREY CROSS, Q.C., MR J.H. STAMP and SIR REGINALD HILLS (instructed by the Solicitor of Inland Revenue, Somerset House, Strand, W.C.2) appeared as Counsel for the Commissioners of Inland Revenue.
MR JOHN PENNYCUICK, Q.C., and MR P.J. BRENNAN (instructed by Messrs Boxall & Boxall, 22, Chancery Lane, London, W.C.2, Agents for Messrs Wilson & Wilson, Kettering) appeared as Counsel for Broadway Cottages Trust and the Sunnylands Trust.
The judgment which Lord Justice Jenkins will deliver is the Judgment of the Court.
These are appeals by two charitable institutions, known respectively as the Sunnylands Trust and Broadway Cottages Trust, from two Orders of Mr Justice Wynn-Parry both dated the 11th March, 1954, allowing appeals by the Commissioners of Inland Revenue from decisions of the Special Commissioners to the effect that the Sunnylands Trust in the one case and Broadway Cottages Trust in the other case were entitled to exemption from Income Tax for the year 1950/51 and 1951/52 under the provisions of Section 37(1)(b) of the Income Tax Act, 1918, in respect of certain sums of money received by them respectively from the Trustees of a Settlement dated the 14th July, 1950, and made between Alan Geoffrey Timpson (hereinafter called "the Settler") of the one part and the Settlor, William Drake Lee, and Peter Thomas Matthew Wilson (hereinafter called "the Trustees") of the other part. The charitable character of the two appellant institutions and their consequent right to exemption from tax on their income under the provisions of Section 37(1)(b) are not in dispute. The sole question in each of the two appeals is whether the sums of money received by the appellant institution from the Trustees, and admittedly paid by the Trustees out of the income of the fund comprised in the Settlement, were income of such institution. The answer to that question depends wholly on the further question whether the relevant provisions of the Settlement had the effect contended for by the appellant institutions of creating a valid trust of income in favour of those institutions amongst other objects, in which case the appeals must succeed, or, as contended by the Commissions of Inland Revenue and held by Mr Justice Wynn-Parry, created no such valid trust, in which case the appeals must fail.
The Settlement comprised a sum of £80,000 made over to theTrustees by the Settlor, and in addition to administrative clauses as to investment and so forth it included the following provisions: "(1) In this Settlement the following expressions "shall where the context so admits have the following respective "meanings and shall be construed in the following manner". Then (c): " 'The appointed period' means a period beginning on "the date hereof and continuing until terminated under the power "hereinafter contained or if not so terminated until Twenty "years after the death of the last survivor now living of the "issue of his late Majesty King George V. (d) 'The Beneficia " 'ries' mean the persons specified in the schedule hereto and " 'beneficiary' means one of the Beneficiaries. (4) The Trustees " shall hold all such investments as aforesaid and the varied "investments and property and interests in property from time to "time representing the same and all other investments and "property and interests in property (if any) from time to time "subject to the trusts hereof (all of which are hereinafter "included in the expression 'the Trust Fund') UPON TRUST for "such of the Beneficiaries as shall be living or (being a "charitable trust) existing at the termination of the appointed "period and if more than one in equal shares. (5) The interest "to be taken under the last preceding clause hereof by any "beneficiary at the termination of the Appointed Period shall "be absolute interest. (6) PROVIDED ALWAYS that the Trustees "at any time or times not being less than six years after the "said day of Declaration … if in their discretion they "think fit so to do may by deed declare the appointed period to "be terminated either as to the whole of the Trust Fund or as to "any aliquot or specific part thereof to the intent that the "Trust Fund or (as the case may be) the part thereof to which "such declaration relates and the income of the same may be "held upon the trusts and subject to the powers and provisions "upon and subject to which the same would at the date of such"declaration be held if the appointed period had then been ter-"minated by efflux ion of time and such declaration shall be "effectual. (7) AND if all the beneficial trusts hereinbefore "declared shall fail … then the Trust Fund and the income " thereof shall be held upon charitable trusts to be declared "by the Trustees … to the intent that neither the Donor "or any Wife or Widow of his shall in any event whatsoever take "any interest by way of resulting trust or otherwise in the "Trust Fund or the income thereof or any accretions thereto or "in any part of the same. (8) During the Appointed Period the "Trustees shall hold the income of the Trust Fund from the date "or respective dates from which the Trustees shall become entitled "to such income UPON TRUST to apply the same for the benefit "of all or any one or more of the Donor's said Wife and the "beneficiaries in such shares proportions and manner as the "Trustees in their discretion from time to time think fit (and "so that such moneys as the Trustees may from time to time think "fit to apply for the benefit of any of the Beneficiaries who "shall have attained the age of twenty one years be paid to him "or to her on his or her receipt which shall be a complete dies "charge to the Trustees). (9) PROVIDED ALWAYS that the Trustees "shall have the power from time to time at their discretion to "capitalise the said income or any part thereof either by "investing the same and treating such investments as part of "the capital of the Trust Fund or in any other mode of "capitalisation which may appear to the Trustees to be expedient and pending such application as aforesaid of such income "the Trustees may temporarily invest or place on deposit the "same and all income thereby produced shall be treated as the "income of the Trust Fund. (10) The Trustees shall also have "power during the Appointed Period to apply the whole or any "part of the capital of the Trust Fund in their discretion "for the benefit of all or any one or more of the Beneficiaries"either by way of advancement on account of his or her or their "share or shares or not as the Trustees may in their discretion "think fit and notwithstanding in the case of any beneficiary "that the total amount so applied for the benefit of such "beneficiary may exceed the share to which he or she is con "stringently entitled to any share in the capital of the Trust "Fund… (15) Every discretion hereby conferred on the "Trustees shall be an absolute and uncontrolled discretion and " may (if and so far as circumstances permit) be exercised from "time to time."
Then there is the Schedule: "1. All persons (other than "the Settlor and any wife of his and any infant child of his) "who have been in the past or (as the case may be) at the date "of these presents or subsequently thereto at any time during "the period ending on the 31st day of December 1980 or during "the Appointed Period whichever shall be the shorter employed "by:- (a) The Settlor (b) The wife of the Settlor (c)William "Timpson deceased (father of the Settlor and who died on the "20th day of January 1929) (d) Katherine Chapman Timpson "deceased (mother of the Settlor and who died on the 16th day "of December 1940) (e) William Timpson Limited or by any other "limited company which may succeed to the business of William "Timpson Limited (f) Any other limited company of which the "Settlor is a Director at the date of these presents". Then paragraph 2: "The Wives and widows of any such persons as is "specified in Clause 1 of this Schedule".
Then follow the further paragraphs 3 to 12, but I will not take up time by reading them in detail. They include the issue however remote of the Settlor's father and of the father of the Settlor's wife, and a number of named persons, including in some cases their spouses and issue. Finally, in paragraph 12 there is "Broadway Cottages Trust and Sunnylands Trusts (both "being Charitable Foundations)".
It will be seen that the operative provisions of the Settlement as regards capital comprise (in clause 4) a trust for such of the beneficiaries as shall be living or (being a charitable trust) existing at the termination of the appointed period and if more than one in equal shares; (in clause 6) a power to the Trustees to declare the appointed period to be terminated as regards the whole or any part of the Trust Fund so as to bring into immediate operation the trust declared by clause 4 as if the appointed period had terminated by efflux ion of time; and (in clause 10) a power to the Trustees during the Trust period to apply capital for the benefit of beneficiaries or any of them.
It is further to be observed that clause 7 which precedes the trust of income declared by clause 8 contains a gift over upon charitable trusts "if all the beneficial trusts herein-"before declared shall fail". It is common ground that this clause, preceding as it does the trust of income during the appointed period, has no application to the failure of that trust.
It should next be noted that the only disposition of income during the settlement period (apart from the power of capitalising income...
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