Maclean's Trustees v McNair
| Jurisdiction | Scotland |
| Judgment Date | 21 November 1968 |
| Docket Number | No. 8. |
| Date | 21 November 1968 |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
Succession—Legacies—"Free of all duty"—Bequest of property situated abroad—Whether legacy free of foreign inheritance and succession tax.
A testatrix bequeathed to two beneficiaries "free of all duty all my interest in Lima, Peru." Her property in Lima consisted of shares in a company registered in Peru and was subject to Peruvian inheritance and succession tax.
Held that there was no presumption that the words "free of all duty" related only to United Kingdom duties; that they had their ordinary meaning; that, so construed, they included the Peruvian duties; and therefore that the legacy must be paid free of these duties.
In re Goetze, [1953] Ch. 96, not followed.
Mrs Christina May Fairweather or Maclean died on 30th April 1965 leaving a trust disposition and settlement dated 15th April 1962, whereby she conveyed her whole means and estate to trustees for the purposes therein set forth. After directing payment of her debts and the expenses of the trust, the testatrix provided, inter alia, as follows:—"(Second) I bequeath the following specific legacies, in each case free of all duty, namely:—[There followed bequests of clothing, furniture and jewellery to three legatees.] (Third) I direct my trustees to make payment of the following pecuniary legacy, free of all duty, as soon as convenient after my death, namely, a legacy of fifty pounds to Mrs Jean Phillips, Monkton, Ayrshire: (Fourth) I bequeath free of all duty all my interest in Lima, Peru, equally share and share alike between James M'Nair, gas manager, Skipton, Yorkshire, and his sister, the said Agnes M'Nair or Wright, or to the survivor of them: and (Fifth) I direct my trustees to realise the whole rest and residue of my means and estate, heritable and moveable, and to pay and make over the same to the Scottish Society for the Prevention of Cruelty to Animals …"
On the death of the testatrix the trustees paid United Kingdom estate duty on the trust estate and in addition Peruvian inheritance and succession tax on the interests in Lima, Peru.
Questions having arisen as to the construction of the words "free of all duty," and in particular whether the bequest of the interest in Peru was to be conveyed without deduction of Peruvian inheritance tax and succession tax, a special case was presented for the opinion of the Court of Session.
The first parties were the testatrix's trustees. The second parties were the beneficiaries entitled to the Peruvian legacy. Thethird parties were the residuary legatees.
The contentions of the parties were stated as follows:—
"The first parties submit no contention.
"The second parties contend that the words “free of all duty” as used in purpose (Fourth) were intended by the testatrix to include freedom from payment of Peruvian estate duty (sic)and should be so construed, and that accordingly the second parties are entitled to receive in full without deduction of Peruvian or United Kingdom estate duty the value of the testatrix's property in Peru.
"The third parties contend that the words “free of all duty” as used in purpose (Fourth) were intended by the testatrix to confer upon the second parties the benefit of freedom from payment of United Kingdom estate duty but not freedom from payment of Peruvian inheritance tax or succession tax, and should be so construed, and that accordingly the second parties are entitled to receive the value of the testatrix's property in Peru under deduction of the Peruvian inheritance and succession taxes paid thereon without, or alternatively with, the benefit of the United Kingdom estate duty which would have required to be paid on the Peruvian property but for double taxation relief."
The question of law (as amended at the bar) was:—"On a sound construction of the said trust disposition and settlement are the first parties bound to pay to the second parties the property which falls to be disposed of under said purpose (Fourth) without deduction of Peruvian inheritance tax and succession tax?"
The case was heard before the First Division on 20th November 1968.
At advising on 21st November 1968,—
LORD PRESIDENT (Clyde).—The question in the present case arises in regard to the interpretation of certain words in the fourth purpose of the trust disposition and settlement of the late Mrs Maclean. The words which...
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