The Executors and Trustees of A C Ferguson (deceased) v Donovan (Inspector of Taxes)
| Judge | Sullivan P and Hanna J. |
| Judgment Date | 17 December 1926 |
| Court | High Court |
The matter was argued before the High Court on a case stated, when the appeal was allowed, with costs.
Held, on appeal to the Supreme Court, judgment was delivered confirming the decision in the court below, with costs.
ITA 1967 s 200.
Mitchell v Egyptian Hotels Ltd [1915] AC 1022; 6 TC 542.
Colquhoun v Brooks 14 AC 493, 2 TC 490.
San Paulo (Brazilian) Railway Co v Carter 73 LT 538, 3 TC 407.
Donovan v Crafts 1 ITC 126.
Sully v Attorney-General 5 H & N 711, 2 TC 149.
Ogilvie v Kitton [1908] Sess Cas 1003, 5 TC 338.
Case stated under ITA 1918 s 149, by the Commissioners for the special purposes of the Income Tax Acts for the opinion of the High Court of Justice
1. At a meeting of the Commissioners for the special purposes of the Income Tax Acts held on 3 December 1924, at Dublin, for the purpose of hearing appeals, the executors and trustees of Alan Campbell Ferguson, deceased, (hereinafter called “the trustees”) appealed against assessments to income tax made upon them for the years of assessment 1920-21, 1921-22, 1922-23, 1923-24 and 1924-25 under ITA 1918 Sch D Case 1 in respect of the profits of a sheep station situate in or about Albermarle in the colony of New South Wales in the Commonwealth of Australia (hereinafter referred to as “the Albermarle Station”).
2. The appeal was made on the ground that the trustees were not liable to income tax for the years in question in respect of the said profits.
3. The following facts were admitted or proved:
The late Alan Campbell Ferguson had been and was at the date of his death on 21 September 1920, a resident in County Cork. He had been assessed in that county to income tax for some years previously under ITA 1918 Sch D Case 1, and the corresponding provisions of the earlier Acts, in respect of the profits of the Albermarle Station which had been owned, controlled and managed by him with the assistance of Messrs Dalgety and Co Ltd, of Sydney, New South Wales.
4. The Albermarle Station is situated about 510 miles from the town of Sydney in a direct line, but the distance by road and rail is about 700 miles. Its area is 725,8271/2 statute acres. The stock in hands at 30 September 1922, consisted of 44,941 sheep, 344 cattle and 142 horses.
5. The Albermarle Station is not used for the purpose of fattening sheep or for ordinary farming purposes but for the production of wool. Sheep are only sold when a drought is anticipated, or when they become old and valueless for wool production. The number of live-stock bought and sold each year bears a very small proportion to the total number of live-stock on hands during the year. The only stock purchased are about 100 rams annually which are required for breeding purposes. Surplus stock is disposed of at the town of Broken Hill some 90 miles from the Albermarle Station where it is sold to the local butchers for the meat supply of the town.
6. The late Alan Campbell Ferguson (hereinafter referred to as “the testator”) duly made and executed a will on 7 February 1911, to which on six subsequent dates he added Codicils. This will and the Codicils added thereto are hereinafter referred to as “the will”. A copy of the will is annexed hereto and forms part of this case [Not included in present print].
7. The will was on 25 November 1920, duly proved in the Principal Probate Registry of the High Court of Justice, England, and subsequently resealed in the Principal Probate Registry of the High Court of Justice, Ireland.
8. Letters of administration to the estate of the testator with the will annexed were granted by the Supreme Court of New South Wales in its Probate Jurisdiction on 23 June 1921.
9. Under the will, after giving certain legacies and making certain specific bequests the testator gave, devised and bequeathed all his real and personal estate in the UK, and the Colonies of Victoria and New South Wales, Australia or elsewhere, including the Albermarle Station unto five persons named therein, called the trustees, “upon trust that my trustees shall sell call in and convert into money the same”, and appointed the said five trustees to be the executors of the will.
10. Of the five surviving trustees appointed under the will, three ordinarily reside in Saorstat Eireann and formerly resided in that part of the UK which is now Saorstat Eireann and two ordinarily reside and have resided in England. One of the latter is Mr A H Tickell, Solicitor, of the firm of Messrs Guscotte, Wadham, Tickell and Thurland, Solicitors, of 19 Essex Street, Strand, London, WC2, who is also legal adviser to the trust.
11. The will provided for the payment by the trustees of an annuity of £100 to the testator’s mother and an annuity of £1,000 to the testator’s widow, and for the division of the surplus of the residuary trust fund, after the payment of three annuities of £50 each, equally between the testator’s widow and his two sisters. The testator’s widow and one of his sisters ordinarily reside in Saorstat Eireann and formerly resided in that part of the UK which is now Saorstat Eireann and the testator’s mother and the remaining sister reside and have resided in England.
12. Under the will the trustees were empowered to postpone the sale and conversion of the real and personal property belonging to the testator and to continue investments for so long as they should think fit without being answerable for any loss arising thereby, and the rents, profits and income accruing from property remaining unsold and unconverted was, after payment of such expenses and outgoings as in the opinion of the trustees ought to be paid out of income, to be paid and applied as directed in the will.
13. By the will the trustees were given the following powers in addition to all powers conferred on them by law:
- (1) to let or demise any real or leasehold property for the time being remaining unsold, to accept surrender of leases and tenancies, to expend money in repairs, improvements or alterations, to purchase any cattle, sheep, horses, stores, tools, etc required in connection with the management of the property, to fell timber and other trees, generally to manage the property in such manner as they shall think fit: to borrow money on mortgage of the property for the purpose of paying for any improvements or other expenses which in the opinion of the trustees ought to be paid out of capital and not out of income,
- (2) and as regards any property out of Great Britain to appoint attorneys, agents and managers with such remuneration as they shall think proper, and to delegate to any such persons all or any of the powers vested in them, and to advance to them any moneys out of the estate for any purpose connected with the management of the property without being answerable for any loss arising thereby,
- (3) to settle and determine all questions which may arise in relation to the trust property, and to determine whether any money shall, for the purposes for the will, be considered as income or capital and what expenses ought to be paid out of income and capital respectively,
- (4) to make arrangements among themselves for the division between them of the business of the trust and in particular to leave the management of property out of Great Britain to any one or more of their number who may be resident there and the management of property in Great Britain to any one or more of their number who may be resident there,
- (5) each of the trustees might at any time with the consent of his co-trustee or co-trustees resign the trusteeship of the will.
14. No evidence...
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