RENNELL Vs. INLAND REVENUE COMMISSIONERS
LAWS(CAL)-1961-10-6
HIGH COURT OF CALCUTTA
Decided on October 30,1961

Rennell Appellant
VERSUS
INLAND REVENUE COMMISSIONERS Respondents

JUDGEMENT

- (1.) WE have had an opportunity of considering this case since the conclusion of the arguments and having reached a clear conclusion upon it, we have thought that there would be no point in reserving our judgment.
(2.) THE question raised by the summons is whether certain property, which, according to the evidence at the material date amounted in value to some pounds 450,000, is liable to estate duty as deemed to pass on the death of the settlor, the late Augustine Courtauld, that death having occurred on March 3, 1959. The property in question is subject to a settlement dated nearly three years before namely, March 20, 1956, made by the settlor on the occasion (and I now deliberately use a neutral word) of the marriage of his daughter Perina to Christopher Fordham, the parties to the instrument being first, the settlor, second, the daughter Perina Courtauld, third, Christopher Fordham, the intending bridegroom, and fourth, the trustees who are the plaintiffs in the present proceedings. The short effect of the settlement was that the beneficial interests thereby created were to take effect only on the happening of the marriage between Christopher Fordham and Perina Courtauld and then there was, for a specified period beginning with the marriage a trust as to both capital subject to certain limitations, and as to income at the entire discretion of the trustees in favour of a large class namely, the wife, her issue and all other the issue of the settlor Christopher Fordham and the husband or wife of any of the settlors issue. At the end of the specified period the remaining corpus was then divisible among the living issue per stripes of the settlor and there was a final limitation in favour of Perina Courtauld and her personal representatives. Mr. Stamp, in arguing for the Crown suggested that discretionary trusts of this character were a very unusual subject -matter of a marriage settlement in the year 1910, and that the legislators of that year, in passing the Finance (1909 -10) Act, 1910, could not have contemplated marriage settlements in which the beneficial interests were of this discretionary character. Whether that view is right or not, it no doubt is unusual, as a form of settlement on the marriage of one child only, to find dispositions of this kind, whether discretionary or otherwise in favour not only of that child and the issue of that childs intending marriage but of the issue of all the children of the settlor, of which in this case there were in truth, six. If, therefore, the judge was right, as I think that he was, there is no doubt something starting in the conclusion that this property should be free of duty as having been made in consideration of the marriage of Perina within the terms of section 59 of the Act of 1910. I agree also with Mr. Goff that it would be quite impossible to evaluate, in any sensible way whatever, the interest which Perina Courtauld, her intending husband and the issue of her marriage were entitled to enjoy under the settlement. The argument put forward by Sir Lynn Ungoed -Thomas on behalf of the trustees following such decisions as that of Newstead v. Searles and Mackie v. Herbertson was to this effect : that where the interests of the parties to the marriage in question and the issue of that marriage that is those strictly within the marriage consideration were so mixed up with the interests of other persons, either in being or to come into being, but quoad that marriage, volunteers, as to be incapable of severance, it was legitimate to treat all the beneficial interests as being within the marriage consideration; or, to put it the other way round, if it were necessary to show, in order to get the benefit of section 59 of the Act of 1910, that the gift had to be in favour of persons within the consideration of the marriage which was the occasion of the gift, it was sufficient that some, at any rate, of such persons were within that consideration and that they were so inextricably mixed with the other beneficiaries. Per contra, Mr. Goff contended that the cases referred to did not establish any such broad proposition, being rather directed to a more limited and different question, for example whether, in certain circumstances, gifts to volunteers properly so called were liable to be overridden by a subsequent transfer of the property concerned to a purchaser for value. In that connection Mr. Goff strongly relied upon the language of Lindley L. J. in Attorney -General v. Jacobs Smith, a case on which he indeed much founded himself. Lindley L. J. said : 'I do not think you can read Newstead v. Searles or any other case as going the whole length of saying that those persons to whom I have alluded are not volunteers. They are volunteers but not liable to be defeated under the Statute of 27 Eliz. c. 4. The Revenue Act with which we are now dealing' - and that was the Customs and Inland Revenue Act, 1881 - 'has nothing to do with that question.' Having regard to the conclusion I have reached upon the whole matter, I find it unnecessary to express any view upon this matter debated between Sir Lynn and Mr. Goff.
(3.) HAVING referred, however, to Attorney -General v. Jacobs Smith it would be convenient if I further stated that case arose under the Customs and Inland Revenue Acts of 1881 and 1889, and the relevant date was prior to the passing of the Act of 1894. It was concerned with a settlement made on the second marriage of a widow whereunder certain property became payable to children of the widows former marriage, and the question was whether that settlement was or was not within the ambit of the Customs and Inland Revenue Acts. In the course of their judgments Lindley, Lopes and Kay L. JJ. made very clear the point that the marriage consideration covers only the husband and wife and the issue of the particular marriage in respect to which the consideration passes and does not cover anyone else. It was held quite clearly that the children of the former marriage of the widow were for the purposes of taxation, volunteers.;


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