ROMER L - (1.) . The question which now call for determination concern the incidence of the estate duty which became leviable upon the passing of the first moiety of the trust estate on the death of Alexander and of both moieties on the death of Eila. It has been contended on behalf of the residuary legatees and was conceded before Upjohn J. that unless they were exempted by the direction 'free of duty' which we have quoted, the legatees would be bound to pay, or suffer by ways of deduction, a part of both sums of estate duty calculated in accordance with the proportion which the legacies bore and bear to the moieties of the trust estate. The extent to which this contention, according to the general law, is well founded is dealt with later in this judgment. We deal first with the effect of the formula 'free of duty' and with the contention of Mr. Cozens -Hardy Horne on behalf of the first defendant, Anna Elizabeth MacPherson (who had been appointed by the order of the judge to represent all the pecuniary legatees), that such formula upon the true construction of this will operates to discharge the legatees from all liability to contribute in any way in those sums of estate duty. It will be appreciated that by virtue of the Finance Act, 1949, section 27, legacy duty had ceased to be chargeable in respect of the legacies with which we are concerned before the date when they became payable, namely, on the death of Eila. At that date the only death duty exigible in respect of any part of the testators estate was the estate duty already mentioned; and the same was true also at that date of the death of Alexander, since the legacies were not then payable. It was the aim premise of Mr. Hornes argument that the formula 'free of duty,' in the absence of some special or limiting context, means 'without any deduction (therefrom) by reason or in respect of death duty'; that is to say, it imports freedom from all kinds of death duties which might otherwise have the effect of diminishing the gift. This proposition was founded on such cases as In re Turnbull, before Farewell, J., and In re Snape, before Eve J.
(2.) IN the former case the question particularly arose in regard to settlement estate duty which was chargeable in respect of certain legacies in addition to legacy duty. Farewell J. said : 'I do not see how I can spell out of that anything other than what it says, namely, that the legacy is to be paid free from duty. The settlement estate duty is charged upon the legacy, no doubt, in a sense, but the executors have to pay it before they pay over the legacy, and they do so as a matter of practice. Not only are they required to retain, but for their own protection they do retain, the duty before they pay over the legacy. I cannot myself see any reason for saying that free from duty means free from one kind of duty payable by the executors more than from another kind of duty so payable.' The exact scope of formulae of this kind has been considered in relation to particular wills in many cases which have come before the courts, but it appears that the present is the first occasion on which it has been necessary to consider the effect of such exemptions (and also, indeed, strictly, the effect of the general law) in the case of deferred pecuniary legacies. To the general principle which Mr. Horne invokes from the case of in re Turnbull, and In re Snape, two collaries may here be mentioned. In the first place, it has been decided (see In re Wedgwood) that in the case of a legacy given to trustees in trust for persons in succession the exemption conferred by the formula 'free of duty' will prima facie be satisfied (and its effect exhausted) by freeing the gift from diminution for death duties when it is first severed from the estate and handed over to the trustees. No question of this kind, however, arises in the present appeal - though the testator did in fact give a settled pecuniary legacy by clause 9 of his will. The second corollary is to the effect that since the will speaks prima facie from the death the exemption will ordinarily cover new death duties which may be imposed between the dates of the will and of the death; but may, on the other hand, not cover new death duties imposed after the date of the death : see In re DOyly. This principle, again, is not directly relevant in the present case. On the other hand, as already observed, legacy duty which was operative in respect of the legacies given by the testator and payable on his death had ceased to be operative at the time when Eila died. It seems to us, as a matter of principle, plain enough that if upon the true construction of this will the exempting formula 'free of duty' was apt and intended only to relieve the legatees from liability in respect of legacy duty (which was an existing tax at the date of the testators will and death) then it would be wrong, simply because legacy duty had been abolished, to give to the formula an extended meaning in order that it might have some practical effect in favour of Mr. Hornes clients when their legacies became payable on Eilas death. We are prepare to accept, at least for the purposes of this judgment, the correctness of Mr. Hornes general proposition founded on the cases of In re Turnbull and In re Snape. But it is trite law that in any given instrument the meaning of any form of words used therein must depend upon the context of that instrument an the guidance to interpretation which the instrument itself provides. It becomes necessary, therefore, to look somewhat closely at the testators will as a whole. It will be observed at once from its form an language that the will was the product of a skilled professional draftsman. We think, therefore, that the interpretation of the phrase 'free of duty' where used in the will must be judged against that background : and against the background of knowledge, which we think must be attributed to the draftsman, that at its date legacy duty and succession duty were operative as well as estate duty, is payable as regards personality by the executors as part of their administration expenses. By the first clause of the will the testator appointed the Royal Bank of Scotland his general executor and trustee and declared that the bank should be entitled to remuneration 'free of duties' (plural) out of his estate in accordance with its relevant scale. Clause 2 contained an appointment of executors for the testators East Indian property with a bequest to them of the proceeds of sale of that property 'free of all duties (including estate duty) leviable in England by reason of my death,' which duties he directed to be paid as testamentary expenses. By clause 3 the testator devised his Norfolk freehold property, with an exception in favour of his gamekeeper, to his brother in fee simple, and the directed the bank to pay as testamentary expenses 'all the duties (including estate duty)' leviable at his death in regard to his Norfolk property and in exoneration thereof. The clause also contained a devise to the gamekeeper of the excepted cottage, expressed to be 'free of all duties (including estate duty),' which were to be paid as part of his testamentary expenses. There followed in clauses 4, 5 and 6 a bequest of leasehold property to his sister and specific legacies to his sister and brother, all expressed to be 'free of duty.' Clause 7 contained a forgiveness of all debts due to the testator with a direction to the bank to pay as part of his testamentary expenses 'all duties (including estate duty)' leviable at his death in respect of any such indebtedness. Clause 8 to 12 inclusive comprised pecuniary legacies, charitable and otherwise, one settled pecuniary legacy, and certain annuities. In each case the bequest was expressed simply to be 'free of duty.' Clause 13 contained a declaration to the effect that if he had made any gift during his life in respect of which estate duty should be payable at his death, such duty was to be paid out of his personal estate as a testamentary expense. There followed then the residuary gift of clause 14 which we have already sufficiently cited.
(3.) THE direction in clause 1 that the banks remuneration should be 'free of duties' may not perhaps for present purposes be of significance one way or the other - it may haves been taken from some form provided by the bank. We are not presently concerned with the scope of the exemption intended, but observe none the less that the plural 'duties' is used. Of much greater significance, in our judgment, is the language of clauses 2 and 3. Not only is the plural used in both cases - free of all 'duties' -but express reference is made tote inclusion of estate duty. The same observation is applicable in regard to clause 7, even though, as pointed out in argument, the precise effect intended may be more doubtful. It will be noted also that by clause 13 express reference is made to estate duty in circumstances in which provision for such duty was plain and desirable. Finally, in the first paragraph of clause 14 there is again found the use of the plural 'all death duties' in a context containing express reference to estate duty. In contrast to these provisions, the simple formula and the use of the singular 'free of duties' in a context containing express reference to estate duty. In contrast to these provisions, the simple formula and the use of the singular 'free of duty' is used in every case in regard to bequests (clauses 4, 5, 6, 8, 9, 10, 11, 12 and the sub -clauses of clause 14). Where in a will of this elaborate character, to be judged against the background already mentioned, two distinct formulae are found, it seems to us that prima facie distinct meanings should be attributed to each : and where one formula, namely, the singular 'free of duty,' is on the fact of it less comprehensive than the other, it would seem to follow that by the formula a more limited exemption was intended. It is true that in the first paragraph of clause 14 the reference to all death duties (in the plural) is followed by the language : 'and other moneys which under... any direction or devise or bequest free of duty contained in this my will... are payable out of my general personal estate.' But we are not satisfied that the use of the phrase 'free of duty' in that passage can have the effect of equating in significance the two formulae. The words 'free of duty' in the passage just cited are part of a reference to a direction, to be found in several places in the will, for payment of the duty out of the general personal estate - a direction not, however, in fact found in any of the cases in which bequests are given free of duty.;