St. Aubyn and Others v Attorney-General (on Behalf of HM), et e contra
| Jurisdiction | UK Non-devolved |
| Judge | Lord Simonds,Lord Normand,Lord Radcliffe,Lord Tucker |
| Judgment Date | 12 July 1951 |
| Judgment citation (vLex) | [1951] UKHL J0712-1 |
| Court | House of Lords |
| Docket Number | Parliamentary Archives, HL/PO/JU/4/3/1010 |
| Date | 12 July 1951 |
[1951] UKHL J0712-1
Lord Simonds
Lord Normand
Lord Oaksey
Lord Radcliffe
Lord Tucker
Parliamentary Archives, HL/PO/JU/4/3/1010
HOUSE OF LORDS
MY LORDS,
This appeal and cross appeal are brought from an order of the Court of Appeal, by which that Court as to the subject matter of the appeal reversed an order of Croom-Johnson, J., and as to the subject matter of the cross-appeal thought fit to make no order.
The facts of the case are somewhat involved but present no real difficulty. It is in the application to them of the relevant sections of the Finance Act, 1940, that I have found it impossible to reach any conclusion that is wholly satisfactory.
I will give a broad outline of the relevant facts supplementing it as occasion demands.
Immediately before the execution by the late Lord St. Levan, who died on the 10th November, 1940, and to whom I will refer as Lord St. Levan, of the instruments dated in March, 1927, which are next mentioned, he was, under a Resettlement dated the 26th April, 1879, tenant for life in possession of certain settled property consisting of (a) freehold lands in the counties of Devon and Cornwall (b) investments representing capital moneys arising under the Resettlement and (c) equitable interests which by virtue of the Law of Property Act, 1925, represented certain undivided shares in land which at the date when that Act came into operation were subject to the Resettlement. The whole of the settled property was under the Resettlement and a Deed Poll dated the 9th January, 1905, subject to an overriding general power of appointment exercisable by Lord St. Levan and Sydney Alexander Ponsonby (hereinafter called "Mr. Ponsonby") who was one of the trustees of the Resettlement but had no beneficial interest thereunder. The subsequent limitations of the Resettlement, as varied by the said Deed Poll and other instruments, were such as to cause the settled property to devolve together with the Barony of St. Levan, which on the death of Lord St. Levan without having had a son devolved on and is now held by his nephew Francis Cecil St. Aubyn.
On the 21st March, 1927, St. Aubyn Estates Ltd. (hereinafter called "the Company") was incorporated under the Companies Acts, 1908 to 1917 (by the name of St. Aubyn Settled Properties Ltd. which was afterwards changed) with a nominal capital of £200,000 divided into 200,000 shares of £1 each with power to issue any part of its capital with such preferential rights as might be thought expedient. The Company's Memorandum of Association was subscribed by seven persons, including Lord St. Levan and Mr. Ponsonby, each of whom agreed to take one share. These seven shares were held by the subscribers as nominees of the Trustees of the Resettlement. By the Company's Articles of Association it was provided that Lord St. Levan should be the Governing Director of the Company.
By a Deed Poll dated the 23rd March, 1927, Lord St. Levan and Mr. Ponsonby exercised their overriding power of appointment in such manner as to authorise the transactions next mentioned.
By an Agreement dated the 24th March, 1927, to which Lord St. Levan, Mr. Ponsonby and the Company were parties it was agreed that the whole of the settled property should be sold to the Company for £1,700,000 of which £950.000 was to be paid to the Trustees of the Resettlement (hereinafter called "the Trustees") in cash on completion of the sale (which was to take place on the 26th March, 1927) and the balance of £750,000 was to be paid to the Trustees in cash by 40 half yearly instalments of £18,750 each (the first payment to be made on 24th June, 1927) without interest except that any instalment not paid within 21 days of becoming due was to carry interest at 5 per cent, per annum from the date on which it ought to be paid until actual payment thereof.
On the same date (the 24th March, 1927) the Company allotted 100,000 7 per cent. Cumulative Non-participating Preference shares of £1 each to Lord St. Levan at par and 49,993 Ordinary shares to the Trustees at a premium of £16 a share.
By a Deed dated the 25th March, 1927, Lord St. Levan as tenant for life directed, and he and Mr. Ponsonby in exercise of their overriding power of appointment ratified such direction, that the Trustees should invest the capital money subject to the Resettlement in Ordinary shares of the Company at the premium required by the Company.
On the 26th March, 1927, the sale to the Company of the freehold lands and equitable interests which I have already mentioned was completed by two conveyances of that date. The sales to the Company of the investments already mentioned were completed on or about the same date by appropriate separate instruments. The consideration payable immediately in cash (£950,000) was so paid but as to £850,000 immediately repaid by the Trustees to the Company in consideration of the issue to them or their nominees of 50,000 Ordinary Shares of the Company (including the shares for which the Memorandum had been subscribed) at the price of £17 a share. The balance of £100,000 was dealt with as hereafter stated.
The net result of the transactions so far described was that the property formerly subject to the Resettlement had been converted into (a) 50,000 fully paid Ordinary Shares of the Company (b) the right to receive from the Company a capital sum of £750,000 by the instalments already mentioned and (c) the above mentioned sum of £100,000 paid by the Company to the Trustees.
By a Deed Poll dated the 28th March, 1927, Lord St. Levan and Mr. Ponsonby in exercise of their overriding power appointed that the said sum of £100,000 and the said sum of £750,000 payable by instalments and any interest which might become payable in respect of any instalment should be held upon trust for Lord St. Levan and that he should be entitled thereto for his own sole use and benefit instead of for his life only.
The Trustees thereupon paid over the said sum of £100,000 to Lord St. Levan and he immediately paid the like amount to the Company in consideration of the issue to him of 100,000 Preference Shares fully paid.
By a further, and final, Deed Poll dated the 29th March, 1927, Lord St. Levan and Mr. Ponsonby in exercise of their overriding power appointed new trusts of (in effect) the whole of the property then remaining subject to the Resettlement i.e., the 50,000 issued Ordinary Shares of the Company. The terms of the new trusts so declared were somewhat complicated but they admittedly had the effect of extinguishing the life interest of Lord-St. Levan in the 50,000 Ordinary Shares and of excluding him from all benefit so far as those shares and the income thereof were concerned.
The following further facts are not now in dispute:—
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1. That the Trustees are to be regarded for the purposes of section 43 (2) (a) of the Finance Act, 1940, as having assumed bona fide possession and enjoyment of the 50,000 Ordinary Shares immediately after the determination by the Deed Poll of the 29th March, 1927, of the late Lord St. Levan's life interest therein.
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2. That the Company is a Company to which section 56 of the Finance Act, 1940, applies and was concerned in associated operations (as defined by section 59 of that Act) of which the determination of Lord St. Levan's life interest was one.
Lord St. Levan having, as I have said, died on the 10th November, 1940, claims for estate duty were made against his executors in respect of the outstanding instalments of the purchase money and the 100,000 Preference shares which he still retained and these claims were admitted and paid. But other claims also were made which are the subject of the present appeal and cross-appeal. They were (a) a claim under section 43 of the Finance Act, 1940, against the Appellants, the present Trustees of the Resettlement, for estate duty on the 50,000 Ordinary shares of the Company, and, alternatively, (b) a claim under section 46 of that Act against the Company for estate duty on a proportion of the Company's assets corresponding to the benefits accruing to Lord St. Levan from the Company. These claims were not admitted and proceedings were accordingly begun by English Information for their enforcement. On the 20th May, 1949, Mr. Justice Croom-Johnson dismissed the information in regard to both claims. His Majesty's Attorney-General appealed to the Court of Appeal, which allowed the appeal under claim (a) but made no order upon claim (b). From that order the Appellant Trustees have appealed to this House in respect of claim (a), and in respect of claim (b) the Attorney-General has similarly appealed. To his appeal the Trustees and the Company are respondents. The two claims are for the purpose of the present proceedings admitted to be strictly alternative and it was for that reason that the Court of Appeal, having decided in favour of claim (a), refused to make any order upon claim (b). In the result your Lordships are deprived of the assistance which you would otherwise have had from the consideration by the learned Judges of the Court of Appeal of the very difficult problems that arise under the latter claim.
The two claims, my Lords, are not only alternative but wholly independent of each other, and I find it convenient to deal with them separately.
I have said that the first claim arises under section 43 of the Finance Act, but this claim must be considered under two aspects. For the Crown, while contending that the claim would be valid, even if section 43 stood alone, invoke also the provisions of section 56 if their primary claim fails. I propose therefore first to consider the question whether there is a valid claim under section 43 and for the time being to disregard section 56.
Section 43, so far as relevant and in force at the death...
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