Coutts & Company v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | Earl Jowitt,Lord Porter,Lord Reid |
| Judgment Date | 05 February 1953 |
| Judgment citation (vLex) | [1953] UKHL J0205-1 |
| Date | 05 February 1953 |
| Court | House of Lords |
[1953] UKHL J0205-1
House of Lords
Earl Jowitt
Lord Porter
Lord Reid
Lord Asquith of Bishopstone
Upon Report from the Appellate Committee, to whom was referred the Cause Coutts and Company against Commissioners of Inland Revenue, that the Committee had heard Counsel, as well on Monday the 19th, as on Tuesday the 20th and Wednesday the 21st, days of May last, upon the Petition and Appeal of Coutts and Company, whose registered office is at 440 Strand, in the County of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal of the 20th of June 1951, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case 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 Order of His late Majesty's Court of Appeal of the 20th day of June 1951, complained of in the said Appeal, be, and the same is hereby, Reversed: And it is hereby Declared, That on the true construction of the Deed of Appointment and Resettlement made the 8th day of August 1935 by Robert Bingham Brassey of Cottesbrooke Hall, Cottes-brooke in the County of Northampton Captain late 17th Lancers of the first part, Hugo Bulkeley Brassey of 16 Davies Street, Berkeley Square in the County of London Esquire of the second part, Coutts and Company of 440 Strand in the County of London and Sir Henry Leonard Campbell Brassey of Apethorpe Hall in the County of Northampton Baronet of the third part, and in the events which have happened, estate duty did not become payable on the death of the said Robert Bingham Brassey on the capital value of the slice of the trust funds comprised in the said Deed of Appointment and Resettlement which was required by the income thereof to pay the premiums of the policies: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
I have had the advantage of reading the Opinions about to be delivered by my noble and learned friends, Lord Porter and Lord Reid. I agree with them, and have nothing to add.
I beg to move that the Appeal be allowed.
My Lords,
The circumstances of this case are stated in the Opinion about to be delivered by my noble friend, Lord Reid, and need not be repeated, but for clarity's sake it is desirable to set out one or two salient facts. The dispute concerns the right of the Crown to estate duty on the death of Captain Brassey. On his death those entitled to his estate, so far as concerns the claim in this case, were one Hugo Brassey, who was immediately interested. In certain events, however, the estate would pass to his three sisters, daughters of Captain Brassey. It is admitted that at the death these ladies had a vested right in the property. Part of that property consisted of four policies, for £40,000 in all, upon the life of Captain Brassey, and all of it was the subject of a trust of which the Appellants were trustees. By the terms of that trust they were directed to and did in fact purchase the policies for £11.000 as representing, or approximately representing, their surrender value at the date of purchase and were also directed to pay and did pay the premiums necessary for keeping on foot the four policies, but were not to be responsible for any omissions or neglect to keep up or restore them.
Under the provisions of the trust both Captain Brassey and Hugo Brassey had certain powers of disposition which might have put an end to the ladies' interest. Hugo, however, never exercised his powers and though Captain Brassey did exercise his by will, thereby substituting a testamentary interest in the ladies in lieu of their previous interest, it may be stated with sufficient accuracy for the determination of the matter now in issue that Hugo Brassey was entitled to the present enjoyment of the income of the estate but, inter alia, subject to a liability to pay the premiums on the policies, amounting to £1,976 13s. 4d. a year. In these circumstances no doubt the ladies could have applied during Captain Brassey's life to the appropriate Court to compel performance of the obligation to pay the premiums and to maintain the policies, an application to which, in a proper case, the Court would no doubt have acceded, though whether they would have done so in the present case is a matter of controversy. I will, however, assume that it would have done so.
The position, therefore, before Captain Brassey's death was that Hugo Brassey was entitled to the whole of the income subject to certain obligations which are immaterial to the present case, but was under a liability to pay the yearly premiums in favour of the cestuis que trustent who, for this purpose, consisted of himself and the three ladies.
After the death he was entitled to the whole income discharged from such a liability.
In these circumstances the Crown claims estate duty under the terms of section 2 (1) ( b) of the Finance Act, 1894 calculated in accordance with the provisions of section 7 of that Act.
If the Crown is right, admittedly the sum due must be ascertained in accordance with the provisions of section 7, and no more need be said about it except that the result would be that the maintenance of the policies would, in a monetary sense, result in an obligation to pay estate duty far in excess of the insurance money recoverable.
Whether the Crown's claim is or is not justified, depends upon the correct construction of section 2 (1) ( b) in the light of the facts of the case. That section reads as follows:—
"Property passing on the death of the deceased shall be deemed to include the property following, that is to say:—
. . . . . . . .
( b) property in which the deceased or any other person had an interest, ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest …"
If it is to succeed, the Crown must establish that there is property in which some person had an interest and that the interest ceased on the death of the deceased.
In the present instance the other persons are the three ladies, and undoubtedly they had an interest in certain property, but what that interest was and whether it had ceased on Captain Brassey's death is a matter of dispute.
The Crown say that the property is the whole property included in the trust, and that the interest is the right to have the premiums paid thereout, that the ladies are interested in the payment because without it the policies would lapse, that that interest ceased on the death of the assured and, therefore, under the plain terms of the Act, the Crown is entitled to claim and receive estate duty.
The Appellants, as I understand them, agree that the property is that whole property but contend that the interest is the right to receive the sum insured and that the payment of the premiums is merely incidental to that interest. What the sisters are interested in is, they maintain, the sum assured and nothing else, the right to receive that sum in certain events always...
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