D'Avigdor-Goldsmid v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | Viscount Simon,Lord Porter,Lord Morton of Henryton,Lord Reid,Lord Asquith of Bishopstone |
| Judgment Date | 05 February 1953 |
| Judgment citation (vLex) | [1953] UKHL J0205-2 |
| Court | House of Lords |
| Date | 05 February 1953 |
[1953] UKHL J0205-2
House of Lords
Viscount Simon
Lord Porter
Lord Morton of Henryton
Lord Reid
Lord Asquith of Bishopstone
Upon Report from the Appellate Committee, to whom was referred the Cause D'Avigdor-Goldsmid v. Commissioners of Inland Revenue, that the Committee had heard Counsel, as well on Wednesday the 10th, as on Thursday the 11th, Monday the 15th, Tuesday the 16th, Wednesday the 17th and Thursday the 18th, days of December last, upon the Petition and Appeal of Sir Henry Joseph D'Avigdor-Goldsmid. Baronet, D.S.O., M.C., of Somerhill, Tonbridge, in the County of Kent, 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 16th of July 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 Petitioner 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 16th day of July 1951, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Vaisey of the 20th day of December 1950, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellant the Costs incurred by him in the Court of Appeal and also the Costs incurred by him 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,
This is an Appeal from an Order of the Court of Appeal (Sir Raymond Evershed, M.R., Jenkins and Birkett, L.JJ.) which discharged an Order dated December 20th, 1950, made by Mr. Justice Vaisey in the matter of a policy of assurance on the life of the Plaintiff's father, Sir Osmond D'Avigdor-Goldsmid. Bt., deceased, on an Originating Summons wherein the Appellant was the Plaintiff and the Respondents were the Defendants. The question at issue in this Appeal is whether estate duty should be paid on a sum of money amounting to £48,765, which was received in discharge of a life policy taken out by the deceased on the 3rd May, 1904, for a sum of £30,000 with profits, under annual premiums of £695. At the time when the deceased took out the policy he was unmarried, but on his marriage in 1907 he brought into his marriage settlement the policy, together with certain freehold estates and investments. By the settlement the policy, with all bonus additions, was assigned by the deceased to Trustees upon trust to receive the policy moneys at maturity and hold the same upon the Trusts therein declared, and the deceased covenanted with the Trustees to pay the premiums upon the said policy, which he did, as long as he had any interest in it. By subsequent dispositions, which it is not necessary to set out, the Appellant, who was his eldest son, became absolutely entitled to the policy as from November 10th, 1934, more than five years before the death of his father, which occurred on April 14th, 1940. The Appellant paid out of his own moneys the premiums under the policy from the time he became absolute owner of it.
The Crown claimed estate duty on the £48,765, either under section 2 (1) ( c) of the Finance Act, 1894, or under Section 2 (1) ( d). As regards the first claim, Mr. Justice Vaisey decided that no estate duty arose; the Court of Appeal came to the same conclusion, and this conclusion is not now challenged by the Respondents. But on the alternative claim to duty under Section 2 (1) ( d) of the Act of 1894, the Court of Appeal reversed the decision of Mr. Justice Vaisey that no duty was payable and held that the sum in question was property which must be deemed to pass on the death of the deceased within subsection ( d).
Subsection ( d) brings within the charge of estate duty "any annuity or other interest purchased or provided by the deceased, either by himself alone or in concert or by arrangement with any other person, the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased". Assuming, therefore, that the life policy is covered by the words "other interest" in ( d), it lies upon the Crown to prove that it was "provided by the deceased" and also that a "beneficial interest" in the policy accrued or arose on the death of the deceased. The policy was taken out and kept up by the deceased and assigned to the Appellant with other assets in circumstances which made it the absolute property of the Appellant in 1934 and onwards, and it may therefore be regarded as an "other interest … provided by the deceased".
The crucial question in the case is whether a beneficial interest in the policy arose at the deceased's death. The Appellant contends that it did not, and if he is right the Crown's claim must fail.
A life policy is a piece of properly which confers upon the owner of it the right, if certain conditions continue to be satisfied, to claim and be paid the policy moneys on the death of the person whose life is assured. These rights therefore belonged to the Appellant from 1934 and were the beneficial interest in the policy which belonged to him from that moment. When the death occurred, he held these rights, and the quality of these rights was not changed by the death, which was merely the occasion when the rights were realised. There was therefore no new or additional beneficial interest in the policy which arose on the death of the Appellant's father. For six years past, he had had absolute and unfettered ownership of the policy. As Mr. Justice Vaisey pointed out, he "could have sold it, mortgaged it, given it away, destroyed it, settled it, or (being a policy on his father's life) he could have surrendered it at the moment when his father was in extremis at the point of death". If he had done any of these things, the Crown could not have claimed to aggregate the policy moneys with the rest of the estate for the purposes of duty. It follows that no estate duty is payable on the £48,765, for no beneficial interest in the policy accrued or arose on the death of the deceased.
I prefer to base my decision on this simple ground by taking the words of the statute and seeing whether the Crown brings the case within the Section. We were referred to a large number of previous decisions which were alleged to throw light on the problem raised. It is enough to say that the Scottish decision of Lord Advocate v. Hamilton's Trustees [1942] S.C., 426, is in line with the conclusion at which I have arrived, and the argument in Lord Wark's Opinion sets out a course of reasoning which I accept and apply in the present case. The judgment of Palles C. B. in A. G. v. Robinson [1901] 2 I.R., 67, has received the close attention which is proper to be given to any pronouncement of that very learned Judge, and the Chief Baron nine years later thought it right in Richardson v. Commissioners of Inland Revenue [1909] 2 I.R., 597, at p. 624, to add some observations upon his decision in Robinson's case on the ground that it had been misapprehended.
I confess that I do not find it easy to grasp the Chief Baron's argument and in particular do not appreciate the meaning of his statement at the top of p. 90 as to "an exact description of money secured by a policy of insurance". The liability of the subject under a taxing statute ought not to be arrived at by a course of subtle and sophistical argument and, even in the case of the most learned judicial pronouncements, it is well to recognise that on rare occasions bonus dormitat Homerus.
I move that the Appeal be allowed with costs.
My Lords,
I have had an opportunity of reading the opinion which the noble Lord on the Woolsack has just delivered. I agree with it and have little to add.
It is plain that the Court of Appeal reached their conclusion by following the reasoning of Chief Baron Palles in Attorney-General v. Robinson (1901) 2 I.R., 67, a case which has, I think, influenced a number of decisions in this country, but has not been the subject of any direct approval in your Lordships' House. Indeed, in Tennant v. Lord Advocate (1939) A.C. 207. Lord Russell of Killowen expressly leaves open the question whether it correctly construes the language of the relevant Acts.
He says at p. 213, "For myself I am not prepared to accept without some further consideration the correctness of the first step. Three authorities were cited as establishing it, namely, Attorney-General v. Dobree (1900) 14 B. 442, Attorney-General v. Robinson (supra) and Inland Revenue v. Scott's Trustees (1918) S.C. 720. No doubt language is used in some of the judgments in those cases which might give colour to the view that what passed on the death was the cash, and not the policy or the value of the policy; but in none of those cases was it material that any such question should be decided."
The property referred to in those cases was a policy or policies of life insurance, and the first step to which the noble Lord referred was the proposition that the property which was subject to the duty consisted of the policy monies, i.e. of the cash payable and...
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