Philipson-Stow v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | Viscount Simonds,Lord Reid,Lord Radcliffe,Lord Tucker,Lord Denning |
| Judgment Date | 30 November 1960 |
| Judgment citation (vLex) | [1960] UKHL J1130-1 |
| Date | 30 November 1960 |
| Court | House of Lords |
[1960] UKHL J1130-1
Viscount Simonds
Lord Reid
Lord Radcliffe
Lord Tucker
Lord Denning
House of Lords
After hearing Counsel, as well on Tuesday the 11th, as on Wednesday the 12th and Thursday the 13th, days of October last, upon the Petition and Appeal of Guyon Philipson Philipson-Stow, of Priors Court, Long Green, Gloucester, in the County of Gloucester, Sir Walter Charles Norton. M.B.E., M.C., of 116 Old Broad Street, E.C.2, in the City of London, and Dame Audrey Frances Philipson Worsley-Taylor, of Town Head, Clitheroe, in the County of Lancaster, Widow, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 20th of November 1959, might be reviewed before Her Majesty the Queen, in Her 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 Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the 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 Her Majesty's Court of Appeal, of the 20th day of November 1959, complained of in the said Appeal, be. and the same is hereby, Reversed: And it is hereby Declared, That the seven eighth undivided shares in the property known as "Steenbokspan" situate in the Orange River Colony in the Union of South Africa forming part of the residuary estate of Sir Frederic Samuel Philipson Philipson-Stow deceased, ought to be treated for the purposes of estate duty as excluded by virtue of section 28 (2) of the Finance Act, 1949, from the property passing on the death of Sir Elliot Philipson Philipson-Stow deceased: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants one half of the Costs incurred by them in the Chancery Division, the whole of the Costs incurred by them in the Court of Appeal, and also the whole of 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,
The question in this appeal is whether certain immovable property consisting of seven one-eighth undivided shares in a farm called Steenbokspan situate in South Africa became liable to estate duty on the death in 1954 of the late Sir Elliot Philipson Philipson-Stow, whom I will call "the deceased" At the date of his death these shares were vested in the trustees of the will of Sir Frederic Samuel Philipson Philipson-Stow (the testator), who died in 1908, upon trust for sale and upon certain other trusts declared by or by reference to the testator's will.
By his will of the 14th March, 1898, the testator made the following relevant provisions. By clause 2 he declared that he had an English domicile and that it was his wish and intention that his will and any codicil thereto should be construed and operate as far as the case should admit according to the law of England. By clause 3 he appointed executors and trustees. By clause 4 he devised certain property in Sussex to his trustees to the use of his wife for life with remainder to his trustees for a term of 100 years upon trusts which have been satisfied with remainder to the use of the deceased for life with remainder to the use of the first and every other son of the deceased one after the other according to their respective seniorities in tail male with remainders over. By clause 5 he cut down the estate in tail male of any person born in his life-time to a life interest. By clause 25 he devised and bequeathed all his real and personal estate whether situate in the United Kingdom or in South Africa or elsewhere except as therein mentioned to his trustees upon trust for sale and conversion with the fullest power of postponement and directed them to hold the proceeds of such sale and conversion upon trust to make such payments thereout as were therein mentioned and to retain or invest the residue thereof in manner therein authorised. By clause 37 he directed his trustees to hold the ultimate residue of the investments representing his residuary estate after setting aside such sums and making such payments as were therein mentioned upon trust to pay the annual income to his wife during her life and after her death to hold such ultimate residue as if the moneys or investments representing them were capital moneys arising under the Settled Land Acts, 1882 to 1890, from his settled estates. By clause 39 he gave his trustees a very wide power of investment, by clause 40 he provided that in a certain event the equitable doctrine of election should apply to the dispositions made by his will and by clause 44 gave to his trustees power to delegate to trustees resident in Cape Colony or elsewhere abroad the execution of the trusts or powers in Cape Colony or elsewhere abroad.
The testator died on the 17th May, 1908, without having altered his will except by a codicil which is not material. He was at his death absolutely entitled to five equal undivided one-tenth shares of the farm known as Steenbokspan. Two further shares were acquired and vested in the trustees of the testator's will and one share was acquired by the deceased personally. There was then a partition whereby certain plots were allotted to the holders of the two remaining shares and the remainder of the farm to the trustees and the deceased in the proportion of seven-eighths and one-eighth. The widow died on the 22nd December, 1930, and, as has already been stated, the deceased died in 1954. His eldest son, having been born in the life-time of the testator, succeeded to a life estate only in the settled estates. The undivided shares in the South African property to which the testator was entitled at his death were duly registered in the Register of Deeds in Bloemfontein an the names of the trustees, as at a later date were the seven-eighth shares to which they were ultimately entitled. The formal deed of partition was also duly registered. It will be plain from what I have said that the trustees have not exercised the trust for sale. It follows and is conceded by the Respondents that the only property, if any, which for estate duty purposes can be deemed to pass on the death of the deceased is the seven-eighth shares of the farm. I will call it "the South African property".
The question whether this property is to be deemed to pass on the death of the deceased so as to make estate duty exigible on that event depends on the meaing and effect of a few words in section 28 (2) of the Finance Act, 1949.
That sub-section is as follows:—
"(2) As respects property passing on the death of a person dying after the commencement of this Part of this Act, subsection (2) of section two of the Finance Act, 1894 (which exempts from estate duty property situate abroad and not chargeable with legacy duty or succession duty), and section twenty-four of the Finance Act, 1936 (which restricts the exemption conferred by the said subsection (2)), shall not have effect; but that property shall be deemed for the purposes of estate duty not to include any property passing on the death which is situate out of Great Britain if it is shown that the proper law regulating the devolution of the property so situate, or the disposition under or by reason of which it passes, is the law neither of England nor of Scotland and that one at least of the following conditions is satisfied, namely,—
"( a) that the deceased did not die domiciled in any part of Great Britain;
( b) that the property so situate passes under or by reason of a disposition—
(i) made by a person who, at the date at which the disposition took effect, was domiciled elsewhere than in some part of Great Britain; and
(ii) not made, directly or indirectly, on behalf of, or at the expense of, or out of funds provided by, a person who at that date was domiciled in some part of Great Britain;
( c) that the property so situate is, by the law of the country in which it is situate, immovable property;
or if the property so situate passes only by virtue of paragraph ( c) of subsection (1) of section two of the Finance Act, 1894, as having been the subject of a gift inter vivos and it is shown that one at least of the said conditions is satisfied."
It would not be proper to come to a final conclusion upon the meaning of what I think are the vital words of this section—"proper law regulating the devolution of the property so situate or the disposition under or by virtue of which it passes"—without some reference to the earlier law. But it is legitimate first to see whether the positive enactment in the section has by itself a sufficiently clear meaning. In my opinion it has.
To obtain exemption property situate abroad must by the law of the country in which it is situate be immovable property. That condition is satisfied in the present case.
But it must further be established that the "proper law" regulating its devolution or the disposition under which it passes is not the law of England or of Scotland. It is urged, as I understand the argument, that, if in every case it is a corollary of the property being immovable by the law of the country in which it is situate that the proper law regulating its devolution, etc., should be the law of that country, the section is tautologous. I do...
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