Hicks' Trustees v Lord Advocate
| Jurisdiction | Scotland |
| Judgment Date | 19 April 1973 |
| Docket Number | No. 17. |
| Date | 19 April 1973 |
| Court | Court of Session (Inner House - Second Division) |
SECOND DIVISION,
Revenue—Estate duty—Aggregation of property passing on death—Property in which deceased "never had an interest"—"Estate by itself"—Life assurance policy effected by deceased for benefit of wife should she survive him, otherwise for daughter—Vesting—Finance, Act, 1894 (57 and 58 Vict. cap. 30), sec. 4.
Vesting—Life assurance policy held on trust for benefit of truster's wife should she survive him, otherwise for daughter—Postponed vesting.
The Finance Act, 1894, enacts by sec. 4: For determining the rate of estate duty to be paid on any property passing on the death of the deceased, all property so parsing in respect of which estate duty is leviable shall be aggregated so as to form one estate, and the duty shall be levied at the proper graduated rate on the principal value thereof: Provided that any property so passing, in which the deceased never had an interest … shall not be aggregated with any other property but shall be an estate by itself, and the estate duty shall be levied at the proper graduated rate on the principal value thereof …"
Three years before his death a deceased took out a policy of assurance on his life. The sum assured was to be payable to himself, his wife and his solicitor as trustees. In terms of an endorsement to the policy it was declared that the policy was effected for the benefit of the wife should she be living when the sum assured was payable otherwise for the daughter of the deceased absolutely; and that the policy was effected under the Married Women's Policies of Assurance (Scotland) Act 1880. At the time of submitting a proposal for the policy the deceased had sent a memorandum to the insurance company in which he stated, inter alia, that he understood that he should have no beneficial interest in the assurance. The deceased was survived by his wife and his daughter.
Upon the death of the deceased it was contended by the Crown that the proceeds of the policy fell to be aggregated by virtue of sec. 4. The trustees under the policy contended that having regard to the terms of the endorsement and of the memorandum the policy had vested at the inception of trust in the daughter subject to defeasance in favour of the wife in the event of her being alive at the deceased's death, and accordingly that the policy was property in which the deceased never had an interest.
Held that in the events which had occurred vesting in the policy took place on the death of the deceased and that during his lifetime he retained a radical right in the policy which constituted an interest for purpose of sec. 4.
Opinions that for the purpose of determining whether the deceased had an interest in the policy it was not admissible to have regard to the terms of the memorandum which preceded the policy.
Dictum of Lord Strachan in Dickson's Trustees v. ElliotUNK, 1949 S.L.T. 359, that "there cannot be a vested right in a conditional institute so long as there is an ascertained prior institute in existence" approved andfollowed.
Mrs Mary Lindsay Crichton Or Hicks And Another, as the surviving trustees nominated and appointed by the late Thomas Hicks with reference to a policy of assurance in his name with the Sun Life Assurance Society appealed to the Court of Session under section 10 of the Finance Act, 1894, against an assessment to estate duty made by the Commissioners of Inland Revenue.
On 17th April 1964 the late Thomas Hicks being desirous of effecting a policy of assurance on his own life notified the Sun Life Assurance Society Limited in a memorandum in the following terms:
"Sun Life Assurance Society Limited.
Referring to the proposal dated 17th April, 1964 for an assurance on my life, I hereby notify the Sun Life Assurance Society that I desire that the proposed assurance should be effected under the provisions of the Married Women's Policies of Assurance (Scotland) Act, 1880 for the benefit of and in trust for my wife Mary Lindsay Crichton or Hicks should she be alive at the date upon which the sum assured becomes payable but otherwise for my child Joyce Lindsay Wilson Hicks or Hood absolutely and I understand that I shall have no beneficial interest in the assurance.
I hereby appoint my said wife, myself and James Lawrence Tait, Solicitor of 2 Wellington Square, Ayr, trustees of the money payable under the policy and I request that this appointment be recorded in the policy.
(Signed) Thomas Hicks, 17th April, 1964."
Thereafter the Sun Life Assurance Society issued a policy on the life of the deceased, the date of commencement of the assurance being 7th May 1964. An endorsement attached to the policy provided, inter alia, as follows:
It is hereby declared that this policy of assurance is effected for the benefit of and upon trust for Mary Lindsay Crichton or Hicks, the wife of the life assured, should she be living on the occurrence of the event upon which the sum assured is payable otherwise for the benefit of and upon trust for Joyce Lindsy Wilson Hicks or Hood, a daughter of the life assured, absolutely. It is further declared that (1) This policy is effected under the provisions of the Married Women's Policies of Assurance (Scotland) Act 1880.
The late Thomas Hicks died on 4th June 1967, survived by his wife and his only child, the said Joyce Lindsay Wilson Hicks or Hood.
After sundry correspondence the Registrar, Estate Duty Office, informed the appellants' solicitors by letter dated 26th January, 1972 that estate duty of £4,000 was claimed on the proceeds of the said policy on the basis that the said proceeds fall to be aggregated with all other aggregable property passing on the deceased's death for the purpose of determining the rate of estate duty to be paid. By letter dated 22nd February 1972 the appellants delivered a written appeal to the Commissioners of Inland Revenue against the said determination in accordance with the provisions of the Finance Act 1894, section 10, and Rule of Court 294 (a). By letter dated 28th February 1972 from the Registrar, Estate Duty Office, the appellants' solicitors were informed that the Commissioners had determined to adhere to the said assessment.
The appellants' contentions in the grounds of appeal were as follows: The appellants contend that the determination of the Estate Duty Commissioners is erroneous. They contend that upon a proper construction of the terms of the trust created by the deceased immediately upon the granting of the policy the beneficial interest therein vested in the said Joyce Lindsay Hicks or Hood, subject to defeasance only in favour of the deceased's wife, the said Mary Lindsay Crichton or Hicks, in the sole event of her being alive at the date of death of the deceased. The appellants accordingly contend that the deceased at no time had a beneficial or contingent interest in the said policy or the proceeds thereof, that no beneficial interest accrued or arose on the death of the deceased in respect of the said policy such as to form a proper charge to estate duty under section 2 (1) (d) of the Finance Act, 1894, and that the proceeds of the said policy do not fall to be aggregated for estate duty purposes with the deceased's own estate.
The respondent answered the appellants' contentions as follows: (i) that the said policy and the proceeds thereof were, to the extent of any beneficial interest accruing or arising on the death of Thomas Hicks, property deemed by virtue of section 2 (1) (d) of the Finance Act, 1894 to be included in the property passing on his death, the interest thereby created being an interest purchased or provided by him; (ii) that the beneficial interest in the said proceeds accrued or arose on the said death, vesting thereof having been postponed, in the events which occurred, until that date; (iii) that the property passing as aforesaid was not, for the purposes and within the meaning of section 4 of the Finance Act, 1894, property in which the said Thomas Hicks never had an interest; but was property in which he had an interest (vesting having been postponed as aforementioned) at all times prior to his death; (iv) that the property passing as aforesaid is not an estate by itself for the purposes of the said section 4, but is in terms thereof aggregable with other property so passing; and (v) that the said policy and endorsement are to be construed, and the date of vesting ascertained, without reference to the memorandum or notification referred to in article 1 of the appeal.
The case was heard before the Second Division (without Lord Kissen) on 15th March 1973.
At advising on 19th April 1973,—
LORD JUSTICE-CLERK (Wheatley).—The appellants are appealing against an assessment dated 25th January 1972 made by the Commissioners of Inland Revenue to estate duty upon the proceeds of a policy of assurance in respect of the death of the late Thomas Hicks. On 7th May 1964 the Sun Life Assurance Society issued a policy for £10,000 on the life of the said Thomas Hicks. The sum became payable on the death of the life assured. The persons to whom the sum assured was payable were Mr Hicks, his wife and his solicitor, trustees appointed by Mr Hicks in the memorandum hereinafter mentioned, as described in an endorsement to the policy. This endorsement was in the following terms. "It is hereby declared that this policy of assurance is effected for the benefit of and upon trust for Mary Lindsay Crichton or Hicks, the wife of the life assured, should she be living
on the occurrence of the event upon which the sum assured is payable otherwise for the benefit of and upon trust for Joyce Lindsay Wilson Hicks or Hood, a daughter of the life assured, absolutely. “It is further declared that (1) This policy is effected under the provisions of the Married Women's Policies of Assurance (Scotland) Act 1880 …" On 17th April Thomas Hicks had sent to the Assurance Society what was described as a memorandum in the following terms...To continue reading
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