Parker v Lord Advocate
| Jurisdiction | England & Wales |
| Judge | Viscount Simonds,Lord Radcliffe,Lord Cohen,Lord Keith of Avonholm,Lord Jenkins |
| Judgment Date | 15 December 1959 |
| Judgment citation (vLex) | [1959] UKHL J1215-2 |
| Date | 15 December 1959 |
| Court | House of Lords |
| Docket Number | No. 3 |
[1959] UKHL J1215-2
House of Lords
Viscount Simonds
Lord Radcliffe
Lord Cohen
Lord Keith of Avonholm
Lord Jenkins
Upon Report from the Appellate Committee, to whom was referred the Cause Parker and others against Lord Advocate (on behalf of the Commissioners of Inland Revenue), that the Committee had heard Counsel, as well on Monday the 23d, as on Tuesday the 24th, days of November last, upon the Petition and Appeal of George Coats Parker, Shillowhead, Killearn, Stirlingshire, and Marie Symington Parker and Elsa Balfour Parker, both residing at Hardington, Milngavie. Dunbartonshire, the Trustees presently acting under a Deed of Declaration of Trust by them and others dated 21st, 22nd and 29th April and registered in the Books of Council and Session on 9th August, all in the year 1938, praying. That the matter of the Interlocutor set forth in the Schedule thereto, namely, an Interlocutor of the Lords of Session in Scotland, of the Second Division of the 9th of July 1958, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Interlocutor might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of the Lord Advocate (for and on behalf 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 Interlocutor of the 9th day of July 1958, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the party entitled to the same within one calendar month from the date of the certificate thereof, the Cause shall be, and the same is hereby, remitted back to the Court of Session in Scotland, or to the Judge acting as Vacation Judge, to issue such Summary Process or Diligence for the recovery of such Costs as shall be lawful and necessary.
My Lords,
I am so fully in agreement with the Opinion given by their Lordships of the Second Division of the Court of Session that I can be very brief. In the month of April, 1938, the late Mrs. Parker, whom I will call "the truster", transferred certain investments to trustees for behoof of her three children. The trust deed (which is sufficiently and accurately described by the learned Lord Justice Clerk in these terms) provided that during the truster's lifetime the three children were to be paid the whole income of the trust fund equally among them with provision for the event of any of the children dying leaving issue or not leaving issue: on the death of the truster the trust fund was to be divided into three parts and one part paid over to each child as his or her absolute property. There was a destination over in favour of issue of predeceasers and a survivorship clause. Vesting in the fee was clearly postponed to the date of the truster's death.
The truster died on the 16th February, 1956, survived by her three children. All of them had then attained their majority. On the death of the truster the Respondent claimed that estate duty was payable upon the whole of the trust fund under section 2 (1) ( d) of the Finance Act, 1894, upon the footing that the trust fund was an interest provided by the truster and that a beneficial interest accrued to the three children on her death and that the extent of that beneficial interest was the whole corpus of the fund. This claim, which was resisted by the Appellants, was held to be well founded by the Court of Session. Hence their appeal to this House, and, in spite of the strenuous and ingenious arguments of Mr. Pennycuick on their behalf, I have no doubt that the decision was right.
It must be asked what were the rights of the beneficiaries before and after the death of the truster? Before the death it was the usufruct of a fund in the hands of trustees during the joint lives of the beneficiary and the truster: the beneficiary had no right in the corpus of the fund: vesting was expressly postponed until the truster's death. After the death the child, if surviving the truster, became entitled to one-third of the fund absolutely. The beneficial interest that then arose or accrued to each child was an absolute interest in one-third of the corpus subject to the expenses of administration and distribution and duties, if any. This, then, and nothing more nor less was the extent to which the interest provided by the truster must be deemed to be included in the property passing on her death.
The answer to this claim as I understand it is that in order to ascertain what beneficial interest so accrues under a disposition it must first be asked what rights of enjoyment in possession the beneficiary had immediately before the death upon which the property passed. Then, the argument proceeds, the value of the rights enjoyed before the death is to be deducted from the value of the rights enjoyed after the death and duty is payable only on the excess of the one over the other. In other words, it was argued that duty is exigible only in respect of any enlargement of interest arising on the death. But this is a contention for which I can find no justification except perhaps within very narrow limits. I would reserve the question whether in In re Parkes' Settlement Midland Bank Executor and Trustee Co., Ltd. and another v. Inland Revenue Commissioners and others (1956) W.L.R. 397 it was correctly decided that duty was not payable in respect of the annuities to which the daughters were entitled on the death of the settlor. In that same case the difference is emphasised between the case in which the rights of the beneficiary merely become more valuable and that in which such rights are materially changed upon the death. In regard to the latter my noble and learned friend, Lord Jenkins, said in respect of the interest accruing to the children upon the death of the settlor:
"I find it impossible consistently with the ratio decidendi in Adamson's case as explained by Lord Porter in D'Avigdor-Goldsmid v. Inland Revenue Commissionersto hold that such vested interest in capital was not a beneficial interest accruing or arising on the death of the deceased within the meaning of section 2 (1) ( d)."
So here the rights that accrued or arose upon the death of the truster were substantially different in kind from any rights previously enjoyed by the children and no deduction can be made for any rights previously enjoyed.
I would dismiss the appeal with costs.
My Lords,
I agree that the appeal should be dismissed.
The only question that we have to consider is how to apply the provisions of section 2 (1) ( d) of the Finance Act, 1894, to the interests accruing or arising under this particular Declaration of Trust dated the 21st April, 1938. I do not pretend that I understand or can reconcile all that has been laid down judicially about the meaning or effect of this subsection, the purport of which seems to become only the more elusive with each authoritative explanation of what it is: but, even so, if one is to determine what were the beneficial interests which accrued or arose on the death of the settlor, Mrs. Parker, I do not see how one is to avoid going to the Settlement itself and ascertaining what was the exact nature of the interests which were created by its particular terms.
I am afraid that I cannot get out of this Settlement anything that will aid the argument of the Appellants. During the lifetime of Mrs. Parker each child was entitled to receive the income of a share of the Trust Fund during his life. He was also entitled ( a) to certain contingent interests in expectancy by way of accruer of the other children's shares of income during Mrs. Parker's life, and ( b) to an interest in expectancy contingent on his surviving Mrs. Parker in his share of capital and, subject to contingencies, in the other shares as well. On Mrs. Parker's death each child who survived her found that his right to receive the income of a share of the Trust Fund came to an end and that what the Settlement provided for him was a right to have made over to him a corresponding share of the capital of the fund as his own absolute property.
In my opinion, the beneficial interest that thus accrued or arose to him was that right to capital, with all its incidental rights and advantages. I cannot see that the value of that right (which under section 28 of the Finance Act, 1934, has to be ascertained without regard to the pre-existing interest in expectancy) can be reduced by the circumstance that under the Settlement it had been preceded by an interest for the same child's life which was limited to cease on the death of Mrs. Parker. It may be correct to speak of that interest as being enlarged by the death: but it seems to me that what is important for the purpose of section 2 (1) ( d) is that it was the death that was the occasion of the contingent right to capital becoming absolute and displacing the previous limited right which had come to an end.
My Lords,
The question for your Lordships' decision is as follows:
Whether on the true construction of a Deed of Declaration of Trust registered on the 9th August,...
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