Turner's Trustees v Turner
| Jurisdiction | Scotland |
| Judgment Date | 24 March 1943 |
| Date | 24 March 1943 |
| Docket Number | No. 35. |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
ProcessSpecial caseCompetencyEffect of agreement between partiesQuestion in case amount payable to widow in respect of annuity under husband's willWidow a party to caseAgreement that widow not thereby barred from electing legal rightsLegal rights of spousesElection.
A special case was presented by a testator's trustees, his widow, his residuary legatees, and his heirs ab intestato, for the purpose of determining the construction of the testator's holograph will, and in particular the amount payable to the widow in respect of an annuity. The case stated that parties were agreed that the widow by entering into the case was not to be deemed to have made her election between her testamentary provisions and her legal rights.
Held, after consultation with the judges of the Second Division, that this agreement did not make the special case incompetent, the question at issue being neither academic nor premature but one in which both the trustees and the widow had an immediate interest, and with regard to which either might competently have brought an action of declarator.
SuccessionAnnuitiesIncome taxBequest to widow of annuity and half her tax thereonTestament dated prior to 3rd September 1939Whether bequest subject to statutory provisions giving relief from standard rate of taxLiability of widow to account for proportion of her tax reliefsFinance Act, 1941 (4 and 5 Geo. VI, cap. 30), secs. 25 and 27.
Secs. 25 and 27 of the Finance Act, 1941, contain provisions whereby, in the case of a will made before 3rd September 1939 and not varied on or after that date, "any provision, however worded, for the payment of a stated amount free of income tax" is subjected to modification.
A testator died in 1940, leaving a holograph will dated 15th July 1936, whereby he directed his trustees to pay to his widow "seven hundred pounds yearly and half of income tax she is charged on the sum of seven hundred yearly."
Held (1) that secs. 25 and 27 of the Finance Act, 1941, were inapplicable to the widow's provision, in respect that there was here no bequest of a "stated amount free of income tax," but on the contrary two bequests which were, accordingly, both subject to deduction of tax at the current rate, these being (first) the annuity and (second) one half of the tax chargeable against the widow in respect of the annuity; and (2) that the trustees must pay to the widow annually the sum of 700 and half of the standard rate of income tax thereon, both payments under deduction of income tax at the standard rate, the widow, however, paying to the trustees one half of such reliefs as she might receive so far as effeiring to the 700.
ProcessSpecial caseCourt's refusal to answer question not argued.
A testator by his holograph will provided alternatively for the case where his estate exceeded 20,000 and the case where it amounted to less than that sum. He concluded by expressing his desire that his holdings of shares in certain companies should be disposed of only at a time convenient to the directors. The questions in a special case included a question as to whether the concluding provision applied in both alternatives, and the parties concurred in asking that this question should be answered of consent in the affirmative.
Held that, as no argument had been submitted, and as there appeared to be no proper contradictor, the question could not be answered.
Mackinnon's Trustees v. MacNeillUNK, (1897) 24 R. 981,followed.
William Turner, brewer, Ayr, died on 26th March 1940, leaving a holograph will dated 15th July 1936, whereby, after appointing trustees, he provided, first, for the event of his estate exceeding 20,000 after payment of all his expenses, debts, death duties and funeral expenses. In that event (which happened) he provided,inter alia: "To my wife Maggie Lees, house and contents motor car my private papers in my safe at 29 South Harbour Street. Seven hundred pounds yearly and my trustees to pay also to my wife half of income tax she is charged on the sum of Seven hundred yearly. The capital to be used if the income of my estate is not sufficient per year to pay Seven hundred." He then made an alternative set of provisions applicable in the event of his estate amounting to less than 20,000, and he concluded these provisions (and the will) by providing as follows: "It is my desire that the shares in Turners Ayr Limited held in trust or my own and also the shares in Westcon Limited held jointly or my own be disposed of only at a time convenient to the directors of said companies "
Questions having arisen as to the construction and effect of the holograph will, and in particular as to the meaning and effect of the provision in favour of the widow, a special case was presented for the opinion and judgment of the Court. The first parties were the testator's trustees; the second party was his widow; thethird parties were the persons prospectively entitled to the residue on the death of the widow; and the fourth parties were the testator's heirs ab intestato.
The special case set forth that "the parties are agreed that, by entering into this case, the testator's widow is not to be deemed to have made her election between her testamentary provisions and her legal rights."
The contentions of the parties in regard to the questions here reported were stated as follows:"The first parties contend that on a proper construction of the said provisions:(1) The first parties are bound to set aside each year such a sum as will, after deduction of income tax at one half of the standard rate, produce 700, and pay this sum over to the second party under deduction of income tax at the standard rate. For example, when the standard rate of income tax is 10s. in the , the first parties pay over to the second party 933, 6s. 8d. under deduction of tax, viz., a net sum of 466, 13s. 4d. (2) The first parties are entitled to receive from the second party a portion of the total reliefs from income tax allowed to her proportionate to the ratio which said gross yearly payment bears to her total income, or in any event to one-half of said sum. (3) The first parties are entitled to the relief, or in any event to one-half thereof, given by sections 25 and 27 of the Finance Act, 1941.1
(6) The provisions regarding the testator's said shares apply in the present circumstances.""The second party maintains:(1) That the first parties are bound to set aside each year such a sum as will, after deduction of income tax at the standard rate, produce 700...
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