Monday, June 9, 2014


Reports of Hearings and Judgment 193
Mr. Macnagbten: Any day will be convenient. I think that would be as convenient as any.
Mr. Justice Swinfen Eady: Then let it be restored this day week. It will give the parties time to consider.

Chancery Division.
Tuesday, 20th February, 1012.
Before Mr. Justice Swixkkn Eady.
In re Consuelo, Dowager Duchess of Manchester, deceased.
Duncannon v. Manchester.
(Transcript of the Shorthand Notes of W. li. Ourney & Sons, 26 Abingdon Street, Westminster, S. W.J
Mr. Justice Swinfen Eady: A further question is now raised upon this Summons, and it is whether the settlement estate duty that is payable in respect of the American assets ought to be paid, and whether the English executors are liable to pay that settlement estate duty or whether they are not. The contention is that having regard to the true construction of Section 19 ofthe amending Act, the Finance Act of 1890, the settlement estate duty is payable only out of the settled property, that is the American property, and is not payable out of the English assets; therefore that the Eng
195 190 Reports of Jlearinyti and Judgment

lish executors have no liability to pay that duty and they are not liable to pay it.
Now the question which has been raised reallly turns solely upon the true construction of Section 19 of the amending Act. It is not disputed that but for that amending Act, if the matter had remained upon the Act of 1894, the duty would have been so payable by the English executors, but the two acts must be construed together, and in
order to see what the true construction of Section 19 of the Act of 1896 is one must have regard to the provisions of the earlier statute.
Now the earlier statute imposed estate duty that is to be levied and paid upon all property, real or personal, settled or non-settled, passing on the death. Then the additional duty, called the settlement estate duty is imposed by Section 5: "Where property in respect of which estate duty is leviable"—that is this case, because it has been decided that estate duty is leviable in respect of the American assets, being property of which the deceased was competent to dispose and passing on lita the death—"is settled by the Will of the deceased, or having been settled by some other disposition passes under that disposition on the death of the deceased to some person not competent to dispose uf the property"—that again is this case—"a further estate duty (called settlement estate duty)" shall be leviable. So that the settlement estate duty is estate duty.
Then by Section 6 (2) of the Statute "the executor of the deceased shall pay the estate duty." That includes the settled estate duty "in respect of property wheresoever situate"—that would include personal property in America—"ofwhich the deceased was competent to dispose at his death." This was property which the testator was absoReports of 11 car hi ys and Judgment 199

lutely entitled aiid was competent to dispose of. Therefore down to that point the executor shall pay the estate duty.
Then under Section 8 (3) "The executor of the deceased shall, to the best of his knowledge and belief, specify in appropriate accounts annexed to the Inland Revenue Affidavit all the property in respect of which estate duty is payable upon the death of the deceased, and shall be accountable for the estate duty in respect of all personal property wheresoever situate, of which the deceased 200 was competent to dispose at his death." So that again the executor is accountable in respect of this settlement estate duty.
Then by Section 9 (4) it is provided that if the rateable part of the estate duty in respect of any property is paid by the executor it shall, where the occasion requires, be repaid to him by the trustees or owners of the property. Then there is a provision with regard to where the duty is payable in respect of real property, so that if the executor being liable to pay the estate duty has paid the estate duty, a rateable part where occasion requires shall be repaid to the executor either by 201 the trustees or by the owners of the property. Down to that point I think it would be clear that the executor would be liable to pay the settlement estate duty on the American assets, and would be entitled under Section 9 (4) to recover the rateable part of the duty so paid, as regards the settlement estate duty in respect of the persons taking the property by which the duty ought really to be borne.
True it is that in re Webber, Mr. Justice North had decided that the settlement estate duty should come out of the general estate, but in the case of Haryon-Wilson it was pointed out that was a mis203

20« Reports of Hcnr'uiyx and Judgment
take, and that the Act of 1896 had corrected that mistake.
Now Section 19 of the Act of 1896 provides in the 1st Sub-section that "the settlement estate duty leviable in respect of a legacy or other personal property settled by the Will of the deceased shall (unless the Will contains an express provisions to the contrary) be payable out of the settled legacy or property in exoneration of the rest of the deceased's estate." Now that section has reference to all settled property wheresoever situate; it is not limited to property abroad, it is not confined to property situate abroad, but it would equally extend to property situate in England. Hut again it says: "Unless the Will contains an express provision to the contrary." It is open to the testator by the Will to say that what would be the Settlement Estate Duty should not be borne by that property but should come out of the general estate. It is open to him so to provide: ("unless the Will contains an express provision to the contrary) be payable out of the settled legacy or prop201 erty in exoneration ofthe rest of the deceased's estate."
Now in my judgment the whole of that Section points to the ultimate liability to the duty, and the way in which the duty is to be borne as between the beneficiaries. It enables the Will to determine how it is to be borne. One would naturally find that if it were a question as between the beneficiaries, but not ofcourse if it were to affect the liability to the Crown. Then again, it is to be payable out of the settled legacy or property in exoneration of the rest of the deceased's estate. Again, that is to say, the settled property is not alone charged with the duty, but it is payable by one part 206

of the testator's estate in exoneration of the rest of the estate in due course ofadministration.
In my opinion this Section 19 merely corrects the mistake that had been made in the interpretatation of the earlier Act. That was the way it was put by Lord Justice Lindley in the Maryon-Wilson case. He said: "Mr. Justice Kekewich treats this enactment"—that is Section 19—"as a recognition by the Legislature of the soundness of the reasoning which led to the decision." That is the decision in Webber. "I cannot so regard the enactment. It corrected a mistake and so saved further litigation."
Then it was urged that at all events Sub-section (2) of Section 19 made the matter clear because it provided that "the Settlement Estate Duty leviable in respect of the legacy or property is to be collected upon an account setting forth the particulars of the legacy or property, and delivered to the Commissioners by the executor within six months after the death, or within such further time as the Commissioners may allow."
Now it may well be that the sub-section supplied 207 a defect in the earlier Act. There would be a difficulty in ascertaining the true amount, or there might be a difficulty in ascertaining the true amount of the Settlement Estate Duty at the period when it would have to be ascertained if it was to be in the account annexed to the Inland Revenue affidavit. One difficulty was pointed out by Mr. Austen-Cartmell, that there might be voluntary debts. They would not be deducted for the purpose of arriving at the amount of the general estate duty, but, of course, of ascertaining the value of the share of residue or the share that was settled by the Will, the voluntary debts as well as the debts for value would have to be taken into account. That