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United Kingdom House of Lords Decisions |
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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Inland Revenue v. Hamilton [1919] UKHL 524 (21 July 1919) URL: http://www.bailii.org/uk/cases/UKHL/1919/56SLR0524.html Cite as: 56 ScotLR 524, [1919] UKHL 524 |
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Page: 524↓
(Before
(In the Court of Session, December 12, 1917, 55 S.L.R. 163, and 1918 S.C. 135.)
Subject_Revenue — Succession Duty — Entail — Predecessor — Disposition — Devolution by Law — Succession Duty Act 1853 (16 and 17 Vict. cap. 51), secs. 2 and 10.
Revenue — Succession Duty — Finance (1909–10) Act 1910 (10 Edw. VII, cap. 5), sec. 58 — First Succession under the Disposition.
The Succession Duty Act 1853, section 2, enacts—“Every past or future disposition of property by reason whereof any person has or shall become beneficially entitled to any property or the income thereof upon the death of any person dying after the time appointed for the commencement of this Act, either immediately or after an interval, either certainly or contingently, and either originally or by way of substitutive
Page: 525↓
limitation, and every devolution by law of any beneficial interest in property or the income thereof, upon the death of any person dying after the time appointed for the commencement of this Act, to any other person in possession or expectancy, shall be deemed to have conferred or to confer on the person entitled by reason of any such disposition or devolution a succession; and the term ‘successor’ shall denote the person so entitled; and the term ‘predecessor’ shall denote the settlor, dis—poner, testator, obligor, ancestor, or other person from whom the interest of the successor is or shall be derived.” A proprietor by entail settled his estate upon himself and the heirs of his body, whom failing upon his brother and the heirs-male of his body, “whom failing the heirs-female of the body of the said” brother.
The succession having opened to an heir-female of the body of the brother after he and his heirs-male had successively held the estate, held that the heir-female took, for the purposes of the Succession Duty Act 1853, by disposition not by devolution by law, and that her predecessor was the settlor and not her father, the last heir-fmale of the brother.
Lord Advocate v. M'Culloch, 1895, 22 R. 356, 32 S.L.R. 266, approved.
The Finance (1909–10) Act 1910, section 58, increases succession duty in certain cases, “in the case of a succession arising under a disposition only if the first succession under the disposition arises on or after” 30th April 1909. Held that “the first succession” meant the first taking which involved liability for payment of duty under the Succession Duty Act.
This case is reported ante ut supra.
At delivering judgment—
The deed of 11th October 1823 was made by Hugh Hamilton ( primus), who died in 1829. By it certain lands were disponed to the settlor and the heirs of his body, whom failing to Alexander West Hamilton “and the heirs-male of his body, whom failing to the heirs-female of the body of the said Alexander West Hamilton and the heirs whatsoever of their bodies” with further limitations. Provision was further made by the deed in the following terms—“the eldest heir-female and the descendants of her body, always excluding heirs-portioners, and succeeding without division throughout the whole course of the female successton, and the daughter of the heir who was last in possession succeeding always in preference to the daughter of any former heir or other heir-female so often as the succession shall devolve upon daughters or heirs-female through the whole course thereof, which I hereby declare to be my true meaning and intention notwithstanding the aforesaid general destination to heirs whatsoever.”
On the death of the settlor, Alexander West Hamilton succeeded to the lands, and on his death in 1838 he was succeeded by his son Hugh Hamilton ( secundus), who died in 1910 without heirs-male of his body, but leaving two daughters, of whom the appellant is the elder. The Crown claims duty on the footing that her predecessor for the purposes of succession duty was the settlor, and that she took by his disposition. The appellant claims that while Alexander West Hamilton, her paternal grandfather, took by disposition under the settlement, she took by devolution of law.
From the authorities referred to in argument I desire to cite only one passage which occurs in the judgment of Lord Selborne in The Earl of Zetland v. Lord Advocate ( 1878, L.R., 3 A.C. 505, at pp. 519–520, 5 R. (H.L.) 51, 15 S.L.R. 373)—“The second section of the Act distinguishes between two classes of titles, viz., those in which the interest of the successor comes to him by ‘disposition’ (or, in the terms of English law, by purchase), and those in which it comes to him by ‘devolution by law’ (or, in English technical phrase as to the real property, by descent). The predecessor in cases of ‘disposition’ (or purchase) is the settlor, disponer, testator, or obligor, ‘from whom the interest of the successor is derived.’ In cases of ‘devolution by law’ (or descent) he is the ‘ancestor from whom the interest of the successor is derived.’ I omit the words ‘or other person,’ which seem to have been put into the Act only ex abundanti cautela. Devolution by law takes place whenever the title is such that an heir takes under it by descent from an ‘ancestor,’ according to the rules of law applicable to the descent of heritable estates; and in all cases of descent the estate of the successor is immediately ‘derived’ from the ‘ancestor’ from whom the estate descends. The word ‘ancestor’ does not mean, either etymologically or technically, a lineal ancestor only—in illustration of which proposition I may refer to a passage in Comyn's Digest as to the English writ of ‘Mort d'Ancestor,’ which (it is said) ‘does not lie upon the death of any ancestor except a father, mother, brother, sister, uncle, aunt, nephew, or niece; for upon the death of another ancestor, an aiel, besaiel, or cosinage lies.’”
Under the deed of tailzie, on the failure of heirs-male of the body of Alexander West Hamilton the property passed to the heirs—female of his body, and the heirs of their bodies, subject to the provisions in favour
Page: 526↓
It remains to consider whether that duty is raised to 10 per cent by virtue of section 58 of the Finance Act 1910. That section provides (sub-section 1) that any succession duty which under the Succession Duty Act 1853 is payable at the rate of 5 per cent. shall he payable at the rate of 10 per cent. on the value of the succession, and further (sub-sec. 4) that the section shall take effect in the case of succession arising under a disposition only if the first succession under the disposition arises on or after the 30th of April 1909.
The appellant contends that the first succession under the disposition occurred on the death of Alexander West Hamilton in 1838, and that the succession duty as now claimed is therefore dutiable only at 5 per cent. It was contended on the other hand for the Crown that the first succession referred to in sub-section 4 of section 58 of the Act of 1910 must be a succession dutiable under the Act of 1853.
My first impression was in favour of the contention of the appellant upon this point, but that impression has been modified by further consideration, and I am of opinion that the contention on the part of the Crown is right. The Act of 1910 increased to 10 per cent. the duty payable at 5 per cent. under the Succession Duty Act 1853, and the term “succession” is defined in the Act of 1853 as denoting any property chargeable with duty under the Act. I think that the term “succession” under sub-section 4 of section 58 of the Act of 1910 must be read in the same sense as referring to a succession dutiable under the Act of 1853. As the death of Alexander West Hamilton took place in 1838 before the Act of 1853 became operative it was not the first succession within the meaning of sub-section 4.
Upon the whole I think that the appeal must be dismissed on both points with costs.
By a disposition and deed of tailzie dated llth October 1823, Hugh Hamilton disponed, inter alia, the estate of Pinmore in strict entail to himself and the heirs whatsoever of his body, whom failing to Alexander West Hamilton (his cousin) and the heirs-fmale of his body, whom failing to the heirs-female of the body of the said Alexander West Hamilton and the heirs whatsoever of their bodies, with other destinations-over on failure, the eldest heir-emale and the descendants of her body, always excluding heirs—portioners, to succeed without division throughout the whole course of the female succession, and the daughter of the heir who was last in possession succeeding always in preference to the daughter of any former heir or other heir-female, so often as the succession should devolveon daughters or heirs-female throughout the whole course thereof, which he declared to be his true meaning and intention notwithstanding the foresaid general destination to heirs whatsoever.
The entailer Hugh Hamilton died in 1829 leaving no heirs of his body, and thereupon Alexander West Hamilton succeeded and died in 1838. His eldest son Hugh Hamilton ( secundus) succeeded him as heir-male of his body, and Hugh Hamilton ( secundus) died in August 1910 leaving no heir-male of his body. He was succeeded in the entailed lands by his eldest daughter, who is the present appellant.
The first question in this case relates to the rate of succession duty payable by the appellant under the Succession Duty Act of 1853. She maintains that she took the succession through devolution by law from her father or grandfather, and that she was therefore by reason of the provisions of section 10 of the Act liable to succession duty to the rate of only 1 per cent. The Crown, an the other hand, claims that she succeeded by virtue of the terms of the disposition by the original entailer to whom she was related as a collateral, and was therefore liable at the rate of 5 per cent. under that section, or possibly, in view of the change made by a later Act to be afterwards referred to, at the rate of 10 per cent.
Section 2 of the Act of 1853 provides, so far as is material, that “every past or future disposition of property … and every devolution by law of any beneficial interest in property … shall be deemed to … confer on that person entitled by reason of such disposition or devolution a succession … and the term'predecessor'shall denote the settlor, testator, obligor, ancestor, or other person from whom the interest of the successor is derived.”
Now it is well settled that when the disposition has vested an estate in a person taking under it, and the succession of the next taker arises by the operation of a principle of law which alone ascertains the character in which he takes, his succession is deemed to be by way of devolution from the taker to whom he succeeds, and that taker is the predecessor within the meaning of section 2. What the determining principle of law is, and what is the construction of the disposition, are matters belonging to the law applicable, which may be that of Scotland or England or of some other country. All that the Courts have laid down about a common rule of interpretation is really confined to the construction of the statute itself, on which they have intimated that a construction ought to be placed which will enable it to apply to an estate arising under whatever general system of law is being considered.
In Scotland the law relating to estates in land is radically different from that of England. Here the fee-simple can be split up into a series of minor estates in possession or remainder. If, for example, land is given
Page: 527↓
I think that the result is that it is now established that when a person takes under a Scottish entail as the head of a new class of heirs, he takes, within the meaning of the Succession Duty Act of 1853, by disposition and not by devolution, while if he takes as an heir to be ascertained by law within a class which has been called or constituted by the act of the entailer he takes by devolution, and it makes no difference in the latter instance that he may have to serve himself as heir in order to establish his title.
Now, if this be so, how does the question stand on the destination before us? On the failure of the heirs-male of the body of Alexander West Hamilton, which took place in the person of Hugh Hamilton ( secundus), there is a destination to the heirs-female of Alexander's body under which the appellant has come in. I think that section 2, on the construction to which I have referred as now settled, compels us to say that this destination to heirs-female of Alexander's body is one to a new class which is to be ascertained by reference to the disposition as the agency which created it. No doubt when the class is ascertained the law does the rest by recognising a devolution. But the ascertainment of the class is due to the disposition and to that alone. I therefore find myself in agreement on this question with the learned Judges who decided this case in the Court of Session, and also with those who decided Lord Advocate v. M'Cul—loch, 1895, 22 R. 356, 32 S.L.R. 266.
This, however, is not the only question which your Lordships have to dispose of. Section 58 of the Finance Act 1910 provides that “any legacy or succession duty which under the Stamp Act 1815, or the Succession Duty Act 1853, or any other Act, is payable at the rate of three per cent., shall be payable at the rate of five per cent., and any legacy or succession duty which under the said Acts is payable at the rate of five per cent. or six per cent. shall be payable at the rate of ten per cent. on the amount or value of the legacy or succession.” Sub-section 4 of the same section provides that the “section shall take effect in the case of legacy duty only where the testator by whose will the legacy is given or the intestate on whose death the legacy duty is payable dies on or after the thirtieth day of April 1909, and in the case of a succession arising through devolution by law, only where the succession arises on or after that date, and in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date.”
For the appellant it is contended that the succession of the appellant was not the first succession specified in accordance with the words as they stand of the taxing statute, inasmuch as Alexander West Hamilton was the first to succeed to the entailer. But “succession” is defined by section 1 of the Act of 1853 to denote any property chargeable with duty under that Act, and I think that the true inference from the language of subsection 4 of section 58 is that the legislation refers to the same kind of succession as is referred to in the Act of 1853, that is, to such a taking under a disposition as makes the property subject to duty. I agree with the reasons given by Lord Cullen for adopting this interpretation.
I am of opinion that the appeal fails and ought to be dismissed with costs.
On the first point I am clearly of opinion that the appellant took by virtue of a disposition and not by devolution of law. The death of Hugh Hamilton ( secundus) broke the chain of succession among the heirs—male of the body of Alexander West Hamilton, and opened the succession to a new class designated by the entailer, namely, the heirs-female of the body of Alexander West Hamilton, taking in the order specially indicated in the disposition and deed of tailzie of the 11th October 1823. The appellant is the first member of this new class and takes by the disposition of the entailer.
On the second point I agree with the interpretation put by the Lord Ordinary upon section 58 (4) of the Finance (1909–10) Act 1910, and with the reasoning upon which his conclusion is founded.
I think that the appeal should fail.
Page: 528↓
The metaphysical conception of the estate taken by successive holders is radically different in English and Scottish law, and the words of the statute cannot be directly applied in both countries to the same effect.
Rejecting the view of the Court of Session it was necessary to find some other rule. That rule was formulated as follows:—As long as the succession opened to one class of heirs called in a destination, succession was by devolution of law; as soon as that class was exhausted and the original entail or settlement had to be involved to designate what was the next class called, the succession was by disposition. In the first case the predecessor was the immediate preceding holder; in the other it was the entailer or settlor. Applying that rule, the heirs—male of the body of Alexander West Hamilton being exhausted, it was necessary to go to the entail to find who were next called, to wit, the heirs-female of his body, and in virtue of her belonging to the class the appellant succeeded. Accordingly the entailer was her predecessor.
As to the question of the rate of duty exigible, that is a question of pure chance, In the present case the appellant has to pay at the higher rate. In M'Culloch's case the successor had to pay at the lower. The appellant's counsel in this case seemed to think that there was an argument in the statement that if his client had been a male the duty would have been at the lower rate. The answer is a simple one, that in that case his client would have been in the first class called. But it is equally true that if Mrs Jamieson M'Culloch had been a male the duty would have been at the higher rate instead of the lower. In the same way it is useless to say that if the destination had been simply to the heirs of the body of Alexander West Hamilton instead of to the heirs-male of the body, whom failing to the heirs-female of the body, then the appellant would have succeeded by devolution of law. The answer is that in that case the destination would have been a different one, and in certain eventualities would have called different persons from the destination as it stands, for under the first supposed destination a female might have succeeded before a male. I am bound to say that although I have dealt with this question in my own words I do not think I am adding anything to what was said by Lord President Robertson, afterwards Lord Robertson, in M'Culloch's case.
As regards the second point I agree with the learned Judges of the First Division. The statute begins by altering the 5 per cent. to one of 10 per cent. Then comes the proviso, which says that the section shall take effect in the case of a succession arising under a disposition (which, the first point being decided as above, is the present case) only if the first succession under the disposition arises on or after the date of 30th April 1909.
Now it is evident that the duty of 10 percent. cannot be exigible except from successions on which 5 per cent. was due—that is to say, from successions accruing after the date of the Succession Act 1853. It seems to follow, unless the Act is to be made nonsensical, that when the proviso speaks of the first succession it is a succession of the same class, i.e., a succession arising after the Act of 1853. If that is so, the present succession is the first succession arising since the Act of 1853, and was after the date of 1909.
Agreeing as I do with the First Division on both points, I am of opinion that the appeal should be dismissed.
It is not necessary to re-state the facts, which are well known, governing the decision; and I do not think that there is any doubt as to the law of this case. In the Pinmore entail the entailer was succeeded by his cousin Alexander West Hamilton, to whom in 1838 his son Hugh Hamilton ( secundus) succeeded as heir of entail. All that is relevant in the deed of entail are these words—“Whom failing to Alexander West Hamilton … and the heirs-male of his body, whom failing the heirs-female of the body of the said Alexander West Hamilton.”
When Hugh Hamilton diedin 1910 it turned out that he was the last of the heirs-male of the body of Alexander West Hamilton, and accordingly that that line, prescribed by the entail, had come to an end. A further line had to be sought for, and it could only be sought for by referring to the deed of entail itself, and it was found in the words “whom failing to the heirs-female of” Alexander West Hamilton. This is the connection between the last taker, who was the last of the old line of heirs-male, and the new and present taker, viz., the first taker of the new line of heirs-female. I entertain no doubt that in the construction of the Succession Act of 1853 and the Taxation Statutes which follow the relation between these two persons was not a relation of devolution by law, but that the appellant takes under what is known under the statute as disposition.
The appellant, however, maintains, for some reason which I have not been able to fathom, that no respect be paid to the well—known decisions affecting this branch of the law, and that the relation was that the succession is open to the present proprietor by devolution by law. Devolution by law does not mean devolution necessarily according
Page: 529↓
But it equally follows that while devolution by law takes place within the class selected under the entail, it does not take place between one class and another class. This appears to me to be in entire accord with Lord Hatherley's language in the Zetland case, where he interpreted the leading decision of Lord Saltoun.
It is here that I beg to express my distinct view that the judgment of the Court of Session in the case of the Lord Advocate v. M'Culloch was a correct decision. That, too, was a case of the exhaustion of the heirs-male of the body and the taking of one of another class, i.e., from the line of heirs—female. Lord President Robertson's words are very clear, and in my humble judgment very sound. “Mrs M'Culloch,” said he, “takes, not because she is heir-male, but, on the contrary, because there are no more heirs-male; neither does she claim because it is a legal consequence of the destination to heirs-male that she should now take. On the contrary, she points to the deed of Edward the entailer, which, now that the law has executed his commission to devolve the estate down the line of heirs-male, steps in and startsa fresh line of succession. To my thinking the case is just the same as if the heirs-female now called had been the heirs—female of some stranger, who and whose heirs-male had never yet taken at all.”
If that case be sound the answer to the main question presented by the appellant admits of no doubt. I do not think that for taxing purposes the relation between successor and predecessor—that is to say, between the respondent as the first taker of the class of heirs-female with the last of the line of heirs-male—arose by devolution of law. It arose by disposition.
On the rate of duty I have nothing to add to what your Lordships have already declared.
Their Lordships affirmed the interlocutor appealed from and dismissed the appeal with expenses.
Counsel for the Appellant— Macmillan, K.C.— Pitman. Agents— Shaw & Young, Ayr— J. & F. Anderson, W.S., Edinburgh— John Kennedy, W.S., Westminster.
Counsel for the Respondent—Lord Advocate and Dean of Faculty (Clyde, K.C.)— R. C. Henderson. Agents— Sir Philip J. Hamilton Grierson, Edinburgh— H. Bertram Cox, C.B., London.
