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ΠΑΓΚΥΠΡΙΟΣ ΔΙΚΗΓΟΡΙΚΟΣ ΣΥΛΛΟΓΟΣ
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(1983) 3 CLR 369
1983 March 24
[A. LOIZOU J.]
INTHEMATTEROFARTICLE146OFTHECONSTITUTION
PHANOSIONIDESANDMARIAROSSIDOU,
ASADMINISTRATORSOFTHEESTATEOFTHE
DECEASEDLOIZOSROSSIDES,LATEOFSTROVOLOS,
Applicants.
v.
THEREPUBLlCOFCYPRUS,THROUGH
THECOMMISSIONEROFESTATEDUTY,
Respondent.
(CaseNo.110/79).
Estateduty—Employee—LifeAssuranceScheme—ContributionstotheSchemebyemployerandemployee—WhichwerepaidtoTrustees—Lattertakingassurancepoliciesandpayingfromthecontributionsthepremiumsonthepoliciesissuedonthelifeoftheemployees—Amountpayableundertheschemetotheemployee'slegalrepresentativestaxableundersection7(h)oftheEstateDutyLaw,1962(Law67/62).
ThedeceasedLoizosRossideswastheChiefAccountantofDianellosandVergopoulosLtd.,formerlytheArdathTobaccoCo.(Cyprus)Ltd.WhilstservingwiththeaforesaidCompany,hejoinedtheCompany'sPensionandLifeAssuranceSchemewhichwasanarrangementforthebenefitofitsqualifiedemployeesinCyprusandassuredbytheGreshamLifeAssuranceSocietyLtd.ThisschemewasintroducedbyaTrustDeeddated15thMarch,1953,andunderitboththedeceasedandtheCompanyweremakingcontributionstoaProvidentFundforthepurposeofsecuringthebenefitsprovidedforbytheschemefortheemployees.ThesecontributionswerepaidtotheTrusteesoftheFundwhotookoutwiththeGreshamAssuranceCo.Ltd.assurancepoliciesandpaidtherefromthepremiumsonthepoliciesofassuranceissuedonthelifeoftheemployees.WhenthesaidAssuranceCompanytransferreditsportofoliototheUniversalLifeInsuranceCo.Ltd.,thelattertookoverthepoliciesissuedforthemembersoftheschemebyGresham.
Thedeceasedbecameamemberoftheschemeonthe1stJanuary,1962,anduntilthe31stDecember,1974,thedayprecedinghisdeath,thecontributionswereasfollows:
|
Bythedeceased |
C£1,697.180mils |
|
BytheCompany |
C£4,711.160mils |
UponthedeathofthedeceasedasumofC£14,598.-becamepayabletohislegalrepresentativesaccordingtotheamendedschemewhichcameintoforceonthesameday.
TherespondentCommissionerdecidedthattheaforesaidsumattractedliabilitytoestatedutyandhencethisrecourse:
Held,thatthepolicyinquestionwasneither"effected"nor"keptup"bythedeceasedforthebenefitofadoneeandthereforesection7(g)oftheEstateDutyLaw,1962(Law67of1962)isnotapplicable;thatsincethedeceasedcontributedtowardthecostofthebenefit,thebeneficiaryhadanenforceablerighttoitandthebeneficialinterestaroseinfavourofthebeneficiaryontheemployee'sdeath;thatsincethiswasaPolicyprovidedbythedeceasedinconcertorarrangementwithanother;andthatsinceinanyeventwhatcametothebeneficiarywaspropertythatthedeceasedwasatthetimeofhisdeathcompetenttodisposetheamountinissueistaxableundersection7(h)ofLaw67/62.
Applicationdismissed.
Observationswithregardtotheneedofamendmentoftherelevantlegislation.
Casesreferredto:
BarclaysBankLtd.v.TheAttorney-General[1944]2AllE.R.208;
ReJ.Bibby&SonsLtd.,PensionsTrustDeed.Daviesv.InlandRevenueCommissioners[1952]2AllE.R.483;
ReMiller'sAgreement[1947]2AllE.R.78;
Attorney-Generalv.Quixley[1929]AllE.R.(Rep.)969;
ReKilpatrick'sPoliciesTrusts[1966]Ch.730atpp.766-767.
Recourse.
RecourseagainstthedecisionoftherespondenttoassesstheestateofthedeceasedLoizosRossidesatC£16,182.-forestatedutypurposes.
L.Papaphilippou,fortheapplicants.
A.Evangelou,SeniorCounseloftheRepublic,fortherespondent.
Cur.adv.vult.
A.LOIZOUJ.readthefollowingjudgment.BythepresentrecoursetheapplicantsasadministratorsoftheestateofthedeceasedLoizosRossides,lateofStrovolos,seekfromtheCourtthefollowingremedies:
"(A)AdeclarationoftheCourtthattheactordecisionoftherespondentdatedthe15thJanuary,1979,toassesstheestateofthedeceasedLoizosRossidesatC£16,182.-forestatedutypurposes,isnullandvoidandofnolegaleffectwhatsoever.
(B)AdeclarationthattheomissionorrefusaloftherespondenttoreducetheamountoftheproceedsfromaninsurancepolicytakenoutonthelifeofthedeceasedLoizosRossidesbytheTrusteesofthePensionandLifeAssuranceSchemeofhisemployerfromC£14,598.-toC£3,866.-oughtnottohavebeenmadeandthatwhateverhasbeenomittedshouldhavebeenperformed.
(C)AdeclarationthattheomissionorrefusaloftherespondenttoallowasaproperdeductionfromthevalueoftheestatethesumofC£6,000.-whichistheestimatedamountofrentscollectedbythedeceasedLoizosRossidesovertheyears1966-1974fromtherentingofanupstairsflatofhiswife,oughtnottohavebeenmadeandthatwhateverhasbeenomittedshouldhavebeenperformed".
Therelevantfactswhicharesimpleandnotindisputearethese:ThedeceasedwastheChiefAccountantofDianellosandVergopoulosLtd.,formerlytheArdathTobaccoCo.(Cyprus)Ltd.WhilstservingtheaforesaidCompany,hejoinedtheCompany'sPensionandLifeAssuranceSchemewhichwasanarrangementforthebenefitofitsqualifiedemployeesinCyprusandassuredbytheGreshamLifeAssuranceSocietyLtd.Therulesofthispensionschemehavebeenattachedtotheapplicationandareexhibits1and2beforeme.Theoriginalrulesofthescheme,werethoseinexhibit1 whichwerelateramendedandreplacedasfromthe1stJanuary,1975,byexhibit2whichhappenstobealsothedateofthedeceased'sdeathwhichcameaboutbyaheartattack.ThisschemewasintroducedbyaTrustDeeddated15thMarch,1953,andunderitboththedeceasedandtheCompanyweremakingcontributionstoaProvidentFundforthepurposeofsecuringthebenefitsprovidedforbytheschemefortheemployees.ThesecontributionswerepaidtotheTrusteesoftheFundwhotookoutwiththeGreshamAssuranceCo.Ltd.assurancepoliciesandpaidtherefromthepremiumsonthepoliciesofassuranceissuedonthelifeoftheemployees.WhenthesaidAssuranceCompanytransferreditsportofoliototheUniversalLifeInsuranceCo.Ltd.,thelattertookoverthepoliciesissuedforthemembersoftheschemebyGresham.
Thedeceasedbecameamemberoftheschemeonthe1stJanuary,1962,anduntilthe31stDecember,1974,thedayprecedinghisdeath,thecontributionswereasfollows:
|
Bythedeceased |
C£1,697.180mils |
|
BytheCompany |
C£4,711.160mils. |
UponthedeathofthedeceasedasumofC£14,598 becamepayabletohislegalrepresentativesaccordingtotheamendedschemewhichcameintoforceonthesameday.Theissuewhicharisesfordeterminationnowinthiscaseiswhethertheaforesaidsumsopaidtotheestateofthedeceasedattractsliabilitytoestateduty.Thesecondquestionthatwasinissueinthisrecourseunderrelief(C)hasbeendisposedofattherequestofbothsidesintherecoursebeforereservingjudgmentuponstatementsmadebybothsidesinrelationthereto.
CounselfortherespondentconcededthatinrespectoftheclaimbythewidowofthedeceasedforC£6,000.-whichistheestimatedamountofrentscollectedbythedeceasedtherehadnotbeenaproperinquiryintothesubjectandthatnoreasoneddecisionhadbeengiven.Uponthatstatementbeingmade,lwasinvitedbycounselfortheapplicanttoexercisemypowersunderArticle146oftheConstitutionandannulthatpartofthesubjectdecisionoftherespondentwhichrelatedtothefactssoconceded.InannullingthatpartofthedecisionIhadthistosay:"AsIhavenoreasontodisagreewiththestatementmadebycounselforbothsidesregardingthelackofdueinquiryandtheabsenceofproperreasoningregardingthewidow'sclaimforC£6,000.-representinganallegeddebtowedtoherandasthisstandisbornoutbythedocumentalreadyadducedinevidence,thatpartofthesubjudicedecisionshouldbetreatedforallintentsandpurposesasnullandvoidandthemattershouldbere-examinedbytherespondentCommissionerofEstateDuty.IhavefollowedthiscoursesothattherewillbenofurtherdelayintheexaminationofthematterbutIshallhavetorefertoitinmyjudgmentwhichwillbedeliveredinduecourse".
Thegroundsoflawreliedupononbehalfoftheapplicantinrespectofthesoleissueleftnowfordeterminationareassetoutintheapplication(Schedule'B')thefollowing:-
"1.The Respondent's act to include in the value of the estate liable to estate duty the whole amount paid on an insurance policy on the life of the deceased, the premiums on which were met partly out of the contributions of the deceased to the Pension and Life Assurance Scheme of his employer, and partly out of the contributions to the Scheme by the Employer, is ultra vires and contrary to the provisions of para. (g) of section 7 of the Estate Duty Laws, 1962-1976 and/or the Respondent acted under misconception of facts and/or of Law.
2.The inclusion in the assessable estate should have been limited to the proportion of the proceeds of the life policy which corresponds to the contributions of the deceased in the premiums paid.
3..................................
4.The Respondent acted under misconception of facts in that he did not take into consideration and/ or disregarded and/or did not weigh properly the rules and regulations of the Pension Life Assurance Scheme as particularly stated in the facts here of".
ThestatutoryprovisionsinvokedbythetwosidesinsupportoftheirrespectivecasesareparagraphsF,G,andHofsection7oftheEstateDutyLaw1962(LawNo.67of1962)whichLawhasbeenamendedbyLaw3of1976butwithwhichamendmentswearenotconcernedinthiscase.Theseprovisionsreadasfollows:
"(στ) περιουσιακά στοιχεία περιερχόμενα εις άλλους δυνάμει συνεστηκότος η μέλλοντος να συσταθή καταπιστεύματος γενομένου υπό του αποθανόντος δι' εγγράφου μη έχοντος ισχύν διαθήκης, δια του οποίου επιφυλάττεται τω συστήσαντι το καταπίστευμα (settlor), ρητώς ή σιωπηρώς, συμφέρον τι, ισοβίως η δι' ετέραν τινά χρονικήν περίόδον καθοριστέαν δι' αναφοράς προς τον θάνατον, επί τών τοιούτων στοιχείων ή επί των εκ της πωλήσεως τούτων προκυπτόντων χρημάτων, η διά του οποίου ο συστήσας το καταπίστευμα επεφύλαξεν έαυτω το δικαίωμα όπως, διά της ασκήσεως οιασδήποτε εξουσίας, ανακτήση η αξιώση απόλυτον συμφέρον επί της τοιαύτης περιουσίας ή τών έκ της πωλήσεως ταύτης προκυπτόντων χρημάτων:
Νοείται ότι διά του; σκοπούς της παρούσης παραγράφου, ο όρος 'καταπίστευμα' θα περιλαμβάνη τράστς (trusts) πάσης φύσεως, γενόμενα εγγράφως η μη συσταθέντα προς όφελος οίουδήποτε προσώπου, και εάν ταύτα εμπεριέχωνται εν τω ιδρυτικώ τούτου καταπιστεύματος εγγράφω ανεξαρτήτως του ότι το έγγραφον εγένετο επί αντιπαροχή είτε άνευ αντιπαροχής μεταξύ του συστήσαντος το καταπίστευμα (settlor) και οιουδήποτε ετέρου προσώπου·
(ζ) χρήματα εισπραττόμενα δυνάμει ασφαλιστηρίου εγγράφου γενομένου υπό του αποθανόντος επί της ζωής του όταν τα ασφάλιστρα καταβάλλωνται καθ' ολοκληρίαν υπό του αποθανόντος προς όφελος δωρεοδόχου τινός (αρχικού ή εκδοχέως), ή μέρος των τοιούτων χρημάτων ανάλογον προς τα υπό του άποθανόντος καταβληθέντα ασφάλιστρα εις περιπτώσεις καθ' ας τα ασφάλιστρα καταβάλλονται μερικώς υπό του αποθανόντος διά το τοιούτον όφελος·
(η) ετησία παροχή ή ετερόν τι συμφέρον αγορασθέν ή συσταθέν υπό του αποθανόντος, είτε μόνου είτε τη συμπράξει μεθ' έτερου προσώπου, κατά την έκτασιν της αξίας του προκύπτοντος λόγω επιβιώσεως ή άλλως οφέλους επί τω θανάτω του αποθανόντος".
And in English reads:
"(f)propertypassingunderanypastorfuturesettlementsmadebythedeceasedbyanyinstrumentnottakingeffectasawillwherebyaninterestinsuchpropertyortheproceedsofsalethereofforlifeoranyotherperioddeterminablebyreferencetodeathisreserved,eitherexpresslyorbyimplication,tothesettlor,orwherebythesettlormayhavereservedtohimselftheright,bytheexerciseofanypower,torestoretohimselfortoreclaimtheabsoluteinterestinsuchpropertyortheproceedsofsalethereof:
Providedthatinthisparagraphtheexpression'settlement'shallincludeanytrust,whetherexpressedinwritingornot,infavourofanyperson,andifcontainedinaninstrumenteffectingthesettlement,whethertheinstrumentwasmadeforvaluableconsiderationornotasbetweenthesettlorandanyotherperson:
(g)moneyreceivedunderapolicyofinsuranceeffectedbythedeceasedonhislifewherethepolicyiswhollykeptupbyhimforthebenefitofadonee,whethernomineeorassignee,orapartofsuchmoneyinproportiontothepremiumpaidbyhim,wherethepolicyispartiallykeptupbythedeceasedforsuchbenefit;
(h)anyannuityorotherinterestpurchasedorprovidedbythedeceased,eitherbyhimselfaloneorinconcertorbyarrangementwithanyotherperson,totheextentofthebeneficialinterestaccruingorarisingbysurvivor-shiporotherwiseonthedeathofthedeceased".
Para.(g)oftheaforesaidsection7correspondstosection2(1)(c)oftheEnglishFinanceAct1894incorporatingthelastparagraphofsection11(1)oftheCustoms&InlandRevenueAct,1889.
Theprerequisitesofthissectionarethat:
(a)thepolicyofinsurancemustbe"effected"by the deceased,thatis,theinsurancecontractmusthavebeenmadebyhimanditisimmaterialwhopaidthefirstpremium(seeHanson'sDeathDuties,10thEd.,p.261,para.618).And,
(b)thepolicyhastobe"keptup"byhim,whichexpressionimpliesacontinuousprocess.
InBarclaysBankLtd.v.TheAttorney-General[1944]2AllE.R.208,thedeceasedsettledtwopoliciesonhislifetogetherwithtwotrustfunds,upontrust,interalia,topaythepremiumsonthepoliciesoutoftheincomeofthetrustfunds.Itwasheldthatthetrusteeswerenotagentsforthedeceasedbutkeptupthepoliciesasprincipals.Moreover,since"keepingup"policiesinvolvespayingpremiumsastheyfalldue,thedeceasedcouldnotbesaidtohavekeptupthepoliciesmerelybecausehehadprovidedinadvancethemeanstodoso.
AscommentedinHanson's,para.617(supra):"Liabilityunderthissubsectionbyitselfattaches,therefore,onlyifthedeceasedpaidthepremiumshimself,oremployedanagenttopaythembymeansofsumsprovidedortobeprovidedbyhim,e.g.,amandatetoabankertopayoutofcurrentbalances".
Theeffect,however,ofthisdecisionwasnullifiedbysection76oftheFinanceAct,1948,whichimposeddutyonthemoniespayableunderapolicyonthedeceased'slifekeptup,underthetermsofasettlementoragreementoutoffundsorincomeprovidedbyhimeitherdirectlyorindirectlyoroutoffundsprovidedbyanotherunderanyreciprocalagreementbyhim(seeHanson's(supra),para.1421,p.963).
Thisamendment,however,introducedbysection76oftheActof1948doesnotappearinourlawandthereforethepositionshouldbeexaminedasitexistedinEnglandbeforeitsintroduction.
Thenature,therefore,oftheschemeunderexhibit1hastobeexamined.Inthefirstplacethiswascontributoryschemeandthelegibilityformembershipissetoutinrule2wherebyallemployeeswhoatthedateofcommencementoftheschemewerewithincertaincategoriesandwhoproducedevidenceoftheirdateofbirthtothesatisfactionoftheAssuranceSocietywereeligibleformembershipoftheScheme.
ItappearsthatthedeceasedwaseligibleformembershipandsojoinedtheScheme.ForemployeeswhojoinedtheserviceoftheCompanyafterthecommencementoftheSchemeitwasaconditionfortheiremploymentthattheyshouldbecomemembersoftheScheme.Rule3thereofisentitled"ContributionsandPoliciestobeEffected"andeachmemberisobligedtocontributetowardsthecostoftheSchemebydeductionfromsalaryorotherwiseinaccordancewiththescalessetouttherein.TheCompanyhavingtocontribute:
"...inrespectofeachMember,suchfurtheramountsasmaybenecessarytosecurethebenefitsprovidedbytheSchemeforsuchMember.
ThecontributionsfrombothMembersandtheCompanyshallbepaidtotheTrusteeswhowillutilisethemaspremiumsonthePolicyofAssuranceeffectedwiththeAssuranceSocietyonthelifeoftheMemberinquestion.SuchPolicyofassuranceshallbeofatypeknownasaDoubleEndowmentAssurance(withouttherighttoparticipateintheprofitsoftheAssuranceSociety)andwillbeforsuchamountasshallbesufficienttoprovidethebenefitsoftheSchemeinrespectoftheMember.
WheneveraMemberreceivesanincrementinSalarythenasfromthenextorcoincidentEntryDatethecontributionspayableshallbeincreasedandthebenefitssecuredbytheassuranceonhislifeshallbeincreasedaccordinglybyendorsementontheassurancepolicy.
EachMemberwillbegivenaCertificateshowingtheamountofthebenefitssecuredbytheassurancepolicyeffectedonhislife.Theactualpolicywill,however,beheldbytheTrustees".
Rule4providesfortheBenefits.
"The following benefits will be provided for Members:
(a)Pension
Upon retirement at Normal Pension Date a Member shall be entitled to an annual pension of:
(i)In the case of Male Members, one-eightieth of Pensionable Salary for each complete year of Pensionable Service.
or
(ii)ln the case of Female Members, one-seventieth of Pensionable Salary for each complete year of Pensionable Service.
Provided that if the annual amount of such pension would be less than £25, then a cash sum will be paid in lieu thereof.
The pension would be payable throughout the lifetime of the Member by monthly instalments in advance the first instalment falling due at Normal Pension Date. Should the Member die before sixty monthly instalments of the pension have been paid then the pension shall continue for the benefit of the estate of the Member, until the completion of such sixty instalments.
(b)Life Assurance Benefit
If a Member dies prior to Normal Pension Date, whilst still in the active service of the Company then the amount payable under the assurance policy on that Member's life in such circumstances shall be granted to the Member's legal personal representatives. The Trustees shall be entitled to require such evidence of title from the claimant as they, in their absolute discretion, may consider necessary".
FromthevarioustermsoftheSchemeinquestionandtakingintoconsiderationwhatwasstatedinBarclaysBankcase(supra)lhavecometotheconclusionthatthePolicyinquestionwasneither"effected"nor"keptup"bythedeceasedforthebenefitofadoneeandthereforesection7(g)isnotapplicable.Inotherwords,thecontributionsoftheemployersandtheemployeesweregiventothetrusteesforthepurposeofsecuringpensionsandotherbenefitsandthetrusteesutilizedthismoneywhichwerethemoneyoftheemployeesandnotoftheemployerstopaythepremiums.Thisisclearfromthefactthatifanemployeedidnotdiepriortonormalpensiondatethemoneypaidbothbyemployerandemployeewouldcometotheemployeeasbeingentitledtothemaspartofhissalaryandthetotalityofhisemolumentsreceivedbyhiminreturnoftheservicesrendered.
Havingfoundthatpara.(g)ofsection7 oftheLawdoesnotapply,thefurtherquestionariseswhetherthisattractsanestatedutyunderthelaw.
Ithasbeenarguedonbehalfoftherespondentsthattheamountoftheinsuranceistaxableundersections7(h)andpossibly7(f)oftheLaw.Section7(h)correspondstosection21(d)oftheEnglishfinanceActof1894whichhasbeensetoutearlierinthisjudgment.InthecaseofReJ.Bibby&SonsLtd.,PensionsTrustDeed.Daviesv.InlandRevenueCommissioners[1952]2AllE.R.,p.483,theCompanyadoptedapensionschemewhichwascreatedbyanindenturemadebetweenthecompanyandsomeofitsdirectorswhoweredesignatedtrustees.Theschemewasnon-contributory,andthepensionsfundwastoconsistof£60,000providedbythecompanyandsuchfurthersumsasthecompanyshouldthereafterprovide.Thefundwasvestedinthetrustees,andwasstatedtobe"primarilyestablishedforthebenefitofretiredemployeesofthecompanyanditspredecessorsinbusinesswhosecharacterandlengthofservicemayinthejudgmentofthetrusteesentitlethemtoclaimsuponit".Thetrusteesweretohaveanabsoluteanduncontrolleddiscretionintheexerciseofthepowersconferredonthem.TheCrownclaimedestatedutyundertheFinanceAct,1894,s.2(1)(d).ltwasheld:onthetrueconstructionofthedeedof1924(asamended),thebenefitswereentirelyinthediscretionofthetrustees,and,therefore,thepensionwasnot"property"withins.2oftheActof1894;thewidowhadno"beneficialinterest"withins.2(1)(d)sinceshehadnoenforceablerighttothepension,norwasanyinterest"purchasedorprovided"byA.,thepensionbeingagratuitousprovisionbythecompanywithoutanybargainoragreementbetweenthecompanyandA.;and,therefore,noestatedutywasexigible.(ReMiller'sAgreement[1947]2AllE.R.78),applied.
ItisusefultoquoteherefromthejudgmentofHarman,J.atp.486:
"TheCrownarguesthatthepensiontowhichthiswidowisentitledsubjecttothediscretionofthetrusteestowithdrawitincertaincontingenciesas,forinstance,formisconduct,isanitemofpropertywhichaccruedonthedeathofthedeceasedandshehasabeneficialinterestinit.Moreover,itissaid,theannuitywasprovidedbythedeceasedinthesensethat,butforthefactthathewastheworkmanofthecompanyoverhisyearsofservice,therewouldhavebeennopensionforhiswidow.Thetaxpayer'sanswertothatis,firstofall,thatthisisnotpropertyatallbutmerespesorhopeofgettingsomethingandsecondly,evenifitisaspeciesofproperty,itisnotprovidedbythedeceased.Thetaxpayersaysthatthewholeoftheannuityisprovidedbytheprovidersofthefund,andthedeceaseddidnotpayapenny.Hisworkmayhavebeenthecausasinequanonofthegrantingofthepension,butnotthecausacausans.Theessentialproviderishewhoprovidesthemoney.Thedeadmanprovidednothing,nordidhebargainthatanythingshouldbeprovidedbecausehehadalreadyfulfilledthenecessarytenyearsbeforethereeverwasapensionschemeandthereisnoevidencethatheorthecompanyeverchangedeitheroftheirpositionsonthestrengthofthisvoluntaryofferwhichthecompanymade.Thirdly,saysthetaxpayer,thatwhichaccruedonthedeathofthedeceasedtohiswidowwasnotabeneficialinterestinpropertybecauseitwasnothingwhichthecourtwouldprotectassuch.
When Ireadthedeed,withouttravellingoutsideitandlookingatthefact,forinstance,thateverybodyknowsthatagoodemployerwillnotseethewidowofhisfaithfulemployeeleftinthestreetwithnothing,lcanonlycometotheconclusionthatthisisapurelydiscretionarytrustdeed.Itistrueitisatrust,butitisatrustunderwhich,sofarasanyemployeeisconcerned,itseemstomethetrusteeshaveanabsolutediscretioneithertogiveortowithholdapensionaccordingtotheirviewsofthedesirabilityofpayingit.Theyarenotbound,Ithink,togiveanyreason,norboundtodoanythingbuthonestlyconsiderthemeritsoftheplaintiff'scase.Itistruethattheplaintiff's,perhapsbyherselforitmaybe,inarepresentationaction,mightcometothecourtforthismuchassistance,thatshecouldpreventthetrusteesfromembezzlingthefundorpayingitbacktothecompanyandtherebydefeatingwhatiscalledthemainobjectcreatedbycl.7ofthedeed.Thewholematteristhere.Itisnot'Whohaveclaimsuponit?'but'Whointhejudgmentofthetrusteeshaveclaimsuponit?',andtheaddedwordsaboutwidowsandchildrenseemtomeexactlyinparimateriaforthispurpose.Everypersonwantingashareinthisfundmustsubmithimselforherselftothejudgmentofthetrustees,and,iftherewasathreateneddiversionofthemoneyssothatthetrusteescouldnotperformtheirpartofthatfunctionIconceivetheCourtofChancerymightprotectthefund,ormightevenadministeritbywayofscheme,butitwouldstillremainvis-a-visanyonewidoworanyoneex-employeeorchildofanex-employeecompletelydiscretionaryinthetrusteeseithertowithholdortogiveanymoneysatall".
Ifanything,theSchemeinourcaseisacontributoryoneandinnowaydiscretionaryinthetrusteeseithertowithholdortogiveanymoneyatall.Theyareboundinourcasetopayoverthepensionortheinsurancemoneyifthateventualityarisesandtheemployeeandhisbeneficiarieshaveaclaiminlawandequityandtheyareentitledtothemashavingalegalright.
InGreen'sDeathDuties,7thEd.,p.255,thepositionissummedupasfollows:
"Amongthecasesfallingunders.2(1)(d)areanannuityorlumpsumpayableunderapartnershipagreementtothewidowordependantofadeceasedpartner-providedthatthebenefitcanbesaidtoariseonthedeceasedpartner'sdeathandthatitisenforceablebythebeneficiary;
abenefitpayableundersuperannuationarrangementstothewidow,dependant,ornomineeofadeceasedemployeebutonlyif-
(a)thedeceasedcontributedtowardsthecostofthebenefit;and
(b)thebeneficiaryhadanenforceablerighttoit;and
(c)abeneficialinterestarisesinfavourofthebeneficiaryontheemployee'sdeath,aconditionwhichissatisfiedonlyiftheidentityofthebeneficiaryisnotfinallydetermineduntilthedeath".
AspointedoutinHalsbury'sStatutesofEngland,2ndEd.,Vol.9,p.352:"Thegeneralpurposeofthisprovisionistopreventamanescapingestatedutybysubtractingfromhismeans,duringlife,moneyormoney'sworth,which,whenhedies,aretore-appearintheformofabeneficialinterestaccruingorarisingonhisdeath"(perLordLoreburn,L.C.inLethbridgev.A-G.,[1907]A.C.19,atp.23).
Evenif,however,myapproachwasfoundtobewrongasregardsthetaxabilityoftheamountinissueundersection7(h),yetontheauthorityoftheAttorney-Generalv.Quixley[1929]AllE.R.(Rep.),p.696,Iwouldholdthatanestatedutyisattractedundersection7(a)ofthelawwhichprovidesthatpropertydeemedtopassonthedeathofthedeceasedshallbedeemedtoincludethepropertyfollowing,thatistosay,apropertynotbelongingtothedeceasedofwhichthedeceasedwasatthetimeofhisdeathcompetenttodispose.
InQuixley'scaseaschool-teacherdiedandherlegalpersonalrepresentativebecameentitledtoreceivea"deathgratuity"undertheSchoolTeachers(Superannuation)Act,1925,s.5(1).Thegratuitywaspaidandanestatedutywasclaimedinrespectofit.ItwasheldbytheCourtofAppealthatthegratuitywaspropertyofwhichtheteacherwas"competenttodispose"withinthemeaningoftheFinanceAct1894,s.22(2)(a)andtherefore,estatedutywasexigibleinrespectofitbyvirtueofs.2(1)(a)ofthatAct.Rowlatt,J.,whosejudgmentwasaffirmedonappeal,hadthistosayatp.698:
".......Underthosecircumstancesisthispropertywhichpassesonherdeath?ReferencehasbeenmadetotheFinanceAct,1894,s.2(1)(a)and(d).Section2(1)(d),whichcomprisesthecommoncaseofprovisionsbeingmadebyinsurance,doesnotveryreadilyfitthiscase,becauseasannuityorotherinterestpurchasedorprovidedbythedeceaseddoesmeansomethingwhichshehasvoluntarilypurchasedorprovided,andifitisimposedonher,Ifeelverygreatdifficultyinsayingthatshehasprovideditbyherself.lfshehadbeenlefttoherself,itisthelastthingintheworldthatshewouldhavedone.Icannotsaythatshehasdoneanythingbyconcertorarrangementwithanyotherpersonwhenshehasnothadachanceofrefusingorconcerting,orarranginganything.ButIdonotthinkthedifficultyarises,becauseIaminfavouroftheCrownons.2(1)(a),byvirtueofthedefinitionofcompetencytodispose.Readingsub-s.(1)(a)alone:
'propertypassingonthedeathofthedeceasedshallbedeemedtoincludepropertyofwhichthedeceasedwasatthetimeofhisdeathcompetenttodispose',
Ishouldnotbepreparedtoholdthatincludedpropertyintheformofposthumousrighttohavemoneypaidtoherexecutorsofwhichshecould,ofcourse,bywilldisposeprospectivelyafterherdeath.Ithinkthatsofarthemerewordsinpara.(a)pointtoadispositionwhichamancanmakeatthetimeofhisdeathinthesenseofeffectivelywhileheisstillaliveandtillthemomentofdeathwhenthebreathleaveshisbody-inotherwords,athisdispositionintervivos".
Sankey,L.J.,summedupthepositionasfollowsatp.702:
"Thequestiontobeansweredhereis:hadthedeceasedatthetimeofherdeathsuchaninterestinpropertyasenabledhertodisposeofthepropertybywill?lnmyviewtheanswermustbethat,indeed,Igatherwasadmittedbythedefendant-intheaffirmative.Shehadsuchaninterest,andshehadpowertodisposeofitbywill,butcounselforthedefendanttookapointinliminewhichsavoursrathermoreofmetaphysicsthanoflaw;hecontendedthat,attheteacher'sdeath,nopropertyinfactexisted,butonlyaconditionalrightorinterestwhichhadnotbeenascertainedorquantified.Ithinkthisisafallacy".
Itisclearfromthefactsandcircumstancesofthiscasethatthedeceasedcontributedtowardsthecostofthebenefit,thebeneficiaryhadanenforceablerighttoitandthe beneficialinterestaroseinfavourofthebeneficiaryontheemployee'sdeathandthatthiswasaPolicyprovidedbythedeceasedinconcertorarrangementwithanother,andthatinanyeventwhatcametothebeneficiarywaspropertythatthedeceasedwasatthetimeofhisdeathcompetenttodispose.HavingreachedthisconclusionIneednotdealwiththeapplicabilityofsection7(f)oftheLaw.
Beforeconcluding,however,Imustsaythatthiscasehasnotbeendevoidofdifficulty,particularlysoinviewoftheconstantchangesofthelaweffectedinEnglandonwhichwehavemodelledourlaw,andwhichchangestakenoteofthejudicialinterpretationsofthevarioussections.Ifind,however,comfortinthewordsofDiplockL.J.,whoinReKiIpatrick'sPoliciesTrusts[1966]Ch.730,hadthistosayatpp. 766-767:
"Asinnearlyallappealsaboutestateduty,lreachmydecisionwithoutconfidence.WereIabettingmanlshouldlaytheoddsonitsbeingrightat6to4(i.e.,3to2)on—oragainst.Ifeverabranchoflawcalledforreformin1966,itisthelawrelatingtoestateduty.Ioughttobecertain:itoughttobesensible—itisneither.OnecannotreadeventhescoreofcaseswhichhavebeencitedinthepresentcasewithoutrealisingthatithasgotintoamessfromwhichIseenohopeofthecourt'srescuingitwithoutdrasticlegislativeassistance".
lhopethattheappropriateAuthoritieswillconsiderareviewofthislegislationwhichnodoubthastobecertainandsensible.
Foralltheabovereasonsthisrecourseisdismissedbutinthecircumstanceslmakenoorderastocosts.
Recoursedismissedwithnoorderastocosts.