MORGAN Vs. INLAND REVENUE COMMISSIONERS

JUDGEMENT

(1.) THIS is an appeal from Cross J. given on April 18 of this year when the held that no claim to duty arose under section 2 (1) (d) of the Finance Act, 1894, upon the death of the settlor, Henry Frederick Stanley Morgan, who died on June 15, 1959. On February 6, 1952, the settlor made a settlement of shares in Morgan Motor Co. Ltd. upon each of his five children. The trusts declared by the settlement in favour of his respective children and their testamentary beneficiaries were in identical form and so throughout, for the purposes of argument, only the trusts declared in favour of his son Peter have been considered.

(2.) THE trust were very simple in form. The shares in the company were settled upon trust for Peter for the point lives of the settlor and Peter, and upon the death of the settlor during the lifetime of Peter in trust for Peter absolutely but if Peter predeceased the settlor, then in trust for a class of persons described thus : 'For the person of persons who would be entitled to the residuary personal estate of Peter if the settlor and his wife were then dead in the same share and subject to the same trusts as should be applicable to such estate.' The settlement contained a clause of revocation but this was later released. Later on it was apprehended, rightly that the settlement in this form was well devised to attract the maximum amount of duty upon the death of the first to die (see now Parker v. Lord Advocate), and so on May 1, 1957, Peter made a revocable assignment whereby he assigned to the trustees all the interest to which he was entitled in the investments settled under the settlement of 1952 during the joint lives of his father and himself and also all that interest to which he was entitled contingently upon surviving his father to the intent that the investments should be held upon the trusts thereinafter declared and contained concerning the same. Peter then declared that he might by deed executed by him at any time with consent in writing of the trustees revoke the provisions of the deed and thereupon the interest created by clause 1 should belong to Peter as if the deed had never been executed. Subject to that, the trustees were to hold the investments upon trust to pay the income to Peter during his life and upon his death upon trust for the persons who would then be entitled to the residuary personal estate of Peter if the settlor and any wife of his were then deed and in the same shares and subject to the same trusts as were applicable to such estate, being the like trusts as were declared by the settlement of 1952, in the event of Peter predeceasing his father but -and now follow some important words which I quote -'excluding any person whose interest shall not vest (either in possession or in reversion) before the expiry of 21 years from the death of the last survivor of the descendants of [the settlor] living at the date of this deed.' I shall call this the settlement of 1957. The whole question is whether on the death in Peters lifetime of his father, the settlor, duty is exigible under section 2 (1) (d).

(3.) FOR the section to apply three matters have to be established (see Lord Morton in DAvigdor -Goldsmid v. Inland Revenue Commissioner) (i) there must be an annuity or other interest : (ii) purchased or provided by the deceased. So far there is no difficulty; the deceased father has provided the shares (iii) A beneficial interest therein must accrue or arise by survivorship or otherwise on the death of the deceased. That is the problem.