Re Cuff Knox, Deceased

• Jurisdiction: Ireland
• Judgment Date: 21 December 1963
• Date: 21 December 1963
• Court: Supreme Court

Supreme Court.

In re Cuff Knox, Deceased

In the Matter of the Finance Act, 1894, And in the Matter of the Estate Duty on the Property Passing on the Death of HENRY HOWE CUFF KNOX

Barclay's Bank Executor & Trustee Company (Channel Islands) Ltd., Petitioners and Respondents

and

The Revenue Commissioners, Respondents and Appellants

(1959. No. 11 Revenue)

Revenue - Estate duty - Testator, domiciled in Jersey, entitled to trust fund - Life annuity charged on fund - Fund comprising mainly investments outside Eire - Settlement of fund an Irish settlement - Whether testator entitled to investments in specie - Whether testator's right a mere chose in action - Whether testator entitled only to right of action against the trustees.

Petition.

The petitioners, Barclay's Bank Executor and Trustee Company (Channel Islands) Ltd., had been appointed the sole executors of the will of Henry Howe Cuff Knox, dated the 13th August, 1947. He died on the 16th February, 1954, and at the date of his death he was domiciled in Jersey. By means of various instruments and arrangements he was at the date of his death entitled to the beneficial interest in a trust fund, subject to an existing life annuity which was charged on the fund. The property subject to the present trusts consisted of investments, but it had formerly been land and was originally settled by the will of one, Charles Howe Cuff Knox, dated the 28th October, 1920. The settlement was an Irish settlement and one of the trustees thereof was resident in Ireland and one was resident in England. At the date of the death of Henry Howe Cuff Knox the fund consisted of the following securities:—£20,622 3s. 10d. Government of Australia 3¹/₂% Stock 1961/66, value £19,539 10s. 6d.; £47,199 8s. 10d. 3¹/₂% War Loan, Bank of England, value £40,355 10s. 5d.; £3,700 3% Savings Bonds 1955/65, value £3,570; 440 4¹/₂%Land Bonds value £444 8s. 0d.; £264 4% Land Bonds, valued £236 5s. 7d.; £500 3% Defence Bonds (Redeemed June, 1954), value £500; £3,440 11s. 4d. 3% Savings Bonds, 1955/65, value £3,320 2s. 11d.; cash capital in trustees' bank account, £344 8s. 5d.; cash capital owed by the deceased to the trustees, £478 0s. 6d.: the total fund thus amounted to £68,788 6s. 4d. All the investments except the land bonds were at the date of the death of the testator situate outside Éire éire.

The petitioners claimed that as the testator was domiciled abroad they were not liable for estate duty in Ireland on any of the assets of the fund which were situate outside Éire éire, and they based their claim on the grounds (a) that the testator died domiciled in the States of Jersey, Channel Islands, and (b) that the personal properties situate outside Éire éire were not liable or chargeable with duty in Éire éire on the testator's death as the testator was entitled thereto absolutelyin specie.

The Revenue Commissioners maintained their claim on the ground that the testator, at the date of his death, had no proprietary interest in the items of property making up the trust fund but had only a personal right against the trustees to demand that they execute the trusts declared by the instruments under which the trust fund was held and the right, if necessary, to enforce that demand by legal action. The right of the testator, the Revenue claimed, was only a chose in action and as such was governed by the proper law of the instruments creating such a chose in action and governing the trust fund. It was not contested that the proper law of the said instruments was Irish. The Revenue Commissioners therefore claimed that the entire proceeds of the trust fund were liable to Irish estate duty.

The petitioners accordingly brought a petition in the High Court to determine the liability to estate duty. In their petition the petitioners sought declarations 1, that the interest of the above-named deceased, Henry Howe Cuff Knox, in the personal property representing the proceeds of the sale of the lands formerly comprised in the first settlement and the second settlement was at the date of his death an interest therein in specie.

2, That the Revenue Commissioners were in error in claiming that the interest of the above-named deceased in the said funds and personal property was at his death an Irish asset or a chose in action or that the right of succession in the said funds at the date of the death of the said deceased arose under an Irish settlement and/or the said will.

3, That no estate duty was chargeable in respect of so much of the said funds as was at the date of the deceased's death situate outside the Republic of Ireland.

4, That the value of the said funds so situate was not aggregable with the amount or value of the real and personal estate of the said deceased which was at the said date situate within the Republic of Ireland.

5, That the Revenue Commissioners were in error in their claim that estate duty was payable at the rate of 30 per cent upon the net value of the real and personal estate of the deceased.

6, That the estate duty on the said property to which the deceased was entitled at the date of his death and which was situate within the Republic of Ireland ought to be assessed without regard to, and not as aggregable with, the said personal property situate outside the Republic of Ireland.

The petitioners sought the following orders:—

1, That no estate duty was payable in respect of so much of the personal property included in the relevant Inland Revenue affidavit as is situate outside the Republic of Ireland.

2, That the estate duty on the net value of the personal estate passing on the death of the said deceased might be re-assessed in accordance with the declarations sought.

3, That all necessary accounts might be taken and directions given.

4, That the Revenue Commissioners should pay the petitioners' costs of and incidental to the petition.

From the above judgment the Revenue Commissioners appealed to the Supreme Court (1). In their notice of appeal, dated the 11th August, 1960, the appellants sought an order refusing the petition of the petitioners and declaring as follows:—

1, That the interest of the deceased, Henry Howe Cuff Knox, in the personal property representing the proceeds of the sale of the lands formerly comprised in (a) the indenture of settlement, dated the 29th September, 1869, referred to in the first paragraph of the petition herein and therein called"the first settlement" and in (b) the indenture of settlement, dated the 16th October, 1905, referred to in the fourth para. of the said petition and therein called "the second settlement," was not at the date of the death of the deceased an interest in specie, but was a chose in action situate in the Republic of Ireland.

2, That estate duty was chargeable on all the funds set out at para. 13 of the said petition and upon all the income accrued upon the said funds to which the deceased was entitled at the date of his death.

3, That the appellants were entitled to retain the sum of £1,390, lodged with them by way of security for estate duty pursuant to order, dated the 13th day of January, 1959, and interest accrued thereon, and to have the sum of £27,000 3¹/₂% War Loan, transferred into the name of the Accountant of the High Court of Justice pursuant to the said order, transferred to the Revenue Commissioners.

4, That the appellants were entitled to their costs of the appeal and of the proceedings in the High Court.

The appeal was brought on the ground that the trial Judge was wrong in law 1, in holding that the interest of the said deceased in the personal property representing the proceeds of sale of the lands comprised in the said first and second settlements was at the date of his death an interest in specie;

2, In holding that no estate duty was chargeable on the funds set out in the petition and the income accrued thereon at the date of the death of the deceased (except the 4¹/₂%

Land Bonds and income accrued thereon at the said date);

3, In holding that the following facts were not material to the issues in the case:—(a) That at the date of the death of the deceased all the funds set out in the petition were vested in trustees, one of whom was then domiciled and resident in the Republic of Ireland;

(b) That, the deceased became entitled to the said funds (subject to the jointure annuity of £1,312 10s. 0d. in favour of Violet Ileene Cassandra Knox created by the second settlement and charged on the said funds) under the will and codicil of his father, Charles Howe Cuff Knox, who died domiciled in Ireland;

(c) Whether the form in which the said Violet Ileene Cassandra Knox could enforce payment of her said jointure (or annuity) or in which the deceased could have enforced his rights to have the trusts of the second settlement and of the will and codicil of Charles Howe Cuff Knox administered was the Republic of Ireland or elsewhere;

4, In holding that the said funds were not aggregable with other property situate within the Republic of Ireland to which the deceased was entitled at the time of his death;

5, In ordering repayment and re-transfer.

B. was the executor of K., a testator who died domiciled in Jersey. At the date of his death K. was entitled to the beneficial interest in a trust fund but subject to an existing life annuity charged on that fund. The fund consisted mainly of investments situate outside Eire. The settlement under which K.became entitled to the fund was Irish and of the two trustees one was resident in Éire éire and one was resident in England The Revenue Commissioners claimed that K. had only a personal right of action to call upon the trustees to execute the trusts declared by the instruments under which the trust fund was held, and the right, if necessary, to enforce such request by legal action. The locality of such a right, it was contended, was that of the proper law of the instruments creating the trust and would in the circumstances be Irish and therefore...