Life Interests
Cases
In the Matter of the Estate of Francis J. D. Reid
Land Commission.
6 June 1905
[1905] 39 I.L.T.R 236
Meredith J.
The question which I have to consider is not whether I have power to appoint trustees of the compound settlement but whether the trustees of the will can give a receipt for the purchase-money. I am clear from the decisions in the cases that have been referred to that the trustees of the will can give a valid discharge for the purchase-money in this case. I accordingly make the order applied for.
Re Lord Annaly’s Settled Estates
High Court of Justice.
Chancery Division.
10 February 1896
[1896] 30 I.L.T.R 45
Porter, M.R.
[I think I ought to make you bring the money into Court. What is proposed to be done with it?]
The money would be paid to the trustees to be applied in part satisfaction of the charge, which carries four and a-half per cent. interest. It would *45 be for the benefit of the estate that the charge should be reduced.
Porter, M.R.—I will make the order.
In the Matter of the Estate of Henry Bruen (junior)
6 December 1910
[1911] 45 I.L.T.R 38
Wylie J.
Wylie, J.
A rather curious question has been raised in this case affecting the right of the vendor to receive the bonus. The facts upon which the question arises, so far as they have been laid before me, are these:—By a settlement of Nov. 15, 1886, the lands sold in this matter were limited to the Rt. Hon. Henry Bruen, father of the vendor, for life, with remainder to the vendor for life, with remainder to the first and other sons of vendor in tail male, with remainders over. By a voluntary conveyance of the 30th November, 1897, the Rt. Hon. Henry Bruen conveyed his life estate to the vendor. On Nov. 23, 1907, the vendor, having entered into agreements with the tenants for the sale of the settled lands under the Land Purchase Acts, lodged an originating application with the Land Commission to carry out said sale, and on Aug. 4, 1910, the “estate” was declared by the Estates Commissioners, and the purchase-money lodged in bank. The Rt. Hon. Henry Bruen is still living, and counsel on his behalf contend that the power to sell the settled lands remained vested in him notwithstanding the conveyance of Nov. 30, 1897, and that the vendor had no power to sell during his father’s lifetime. This contention was based entirely on the provisions of s. 50 of the Settled Land Act, 1882. That section provides that the powers under this Act of a tenant-for-life are not capable of assignment or release, and do not pass to a person as being, by operation of law or otherwise, an assignee of a tenant-for-life, and remain exercisible by a tenant-for-life after and notwithstanding any assignment, by operation of law or *39 otherwise, of his estate or interest under the settlement, and that any contract by him not to exercise his powers is void. Now, the meaning of that section, I think, is very clear so far as it goes, and the many decisions upon it leave no doubt as to its meaning up to a certain point. And I think the effect of the section and of the decisions is this, that once a person is a tenant-for-life of settled land within the meaning of s. 2 (5) of the Settled Land Act, 1882, and having, as such, the powers conferred upon a tenant-for-life by said Act, he cannot, so long as he is such tenant-for-life, deprive himself of any of these powers by any assignment or release or contract not to exercise them, and, subject in certain cases to the consent of the assignee, they remain exercisible by him, notwithstanding any assignment by operation of law or otherwise of his estate, and do not pass to any person as his assignee. It is plain, therefore, that the power of sale which was vested in the Rt. Hon. Henry Bruen on the date of the conveyance of Nov. 30, 1897, did not pass to the vendor as his assignee. This, I think, disposes of one ground on which Mr. FitzGibbon relied in support of his contention that the vendor had a power of sale—viz., the provisions of s. 58 (1) (v.), which gives the powers of a tenant-for-life to a tenant in possession for the life of another, because, if the vendor in this case was in possession of the lands as tenant for the life of his father, it must have been as assignee of his father’s life estate. But then Mr. FitzGibbon’s other ground of contention is, that vendor, at the time of sale, was in possession, not as assignee of his father’s life estate, but by virtue of his own estate as next tenant-for-life, either under the Settlement of 1886, or under a compound settlement consisting of that settlement and the conveyance of 1897. His contention is that the conveyance of 1897, having vested in the vendor the life estate of his father, and the vendor being next tenant-for-life in remainder after the father’s life estate, and there being, as was admitted, no intermediate estate to prevent merger, the effect of the conveyance in conjunction with the settlement was to merge the father’s life estate in the life estate of the vendor, with the result of extinguishing the life estate of the father and accelerating the life estate of the vendor. This contention, it seems to me, is clearly right in point of law, and, therefore, when the vendor, after the conveyance of 1897, entered into and continued in possession and receipt of the rents and profits of the settled lands, it must have been as tenant for his own life of those lands, either under the settlement of 1886 or the compound settlement consisting of that settlement and the conveyance of 1897. This being so, had the veudor as such tenant-for-life a power of sale under the Settled Land Acts? Mr. Wilson, on behalf both of the Rt. Hon. Henry Bruen and the trustees of the settlement of 1886, says “No;” and contends that the power to sell the settled lands conferred by the Settled Land Acts cannot be vested in two different persons at the same time; that once a person has become tenant-for-life of the settled lands within the meaning of s. 2 (5) of the Settled Land Act, 1882, the Act confers upon him a power of sale, which nothing that may happen can deprive him of, and which must remain in and be exercisible by him during his life, and, this being so, that a power of sale cannot during his life be vested in any other person. Now, the provisions of the Settled Land Act, 1882, bearing upon this question are ss. 2 (5), 3, 50, and 51. Section 2 (5) defines the person in whom as tenant-for-life the powers conferred by the Act are vested. Section 3 confers on the tenant-for-life the power of sale. Section 51 makes void any provision in any instrument tending or intended to prevent the tenant-for-life from exercising or to induce him not to exercise his powers under the Act. Then s. 50, as we have seen, in effect prevents a tenant-for-life— i.e., as defined—from depriving himself of these powers or passing them to any one else. Now, in order to see the meaning and effect of s. 50, it is necessary to bear in mind the definition of “tenant-for-life.” I could understand the argument of Mr. Wilson as to the effect of this section, if the Act had conferred the powers given to a tenant-for-life upon the person who was the first tenant-for-life under a settlement. But, referring to the definition in s. 2 (5), the powers are conferred on the person who is for the time being, under a settlement, beneficially entitled to possession of settled land for his life. That is the person to whom s. 50 applies, whether he happens to be the first, second, or third tenant-for-life. Now, in the events that have happened, who was the person, at the date of the sale in this case, for the time being, under the settlement, beneficially entitled to the possession of the settled lands for his life? Was it the vendor or his father? It seems to me clear, for the reasons already given, that, upon the execution of the conveyance of 1897 the vendor, either under the settlement of 1886 alone or under the compound settlement, constituted by it and the said conveyance, under which the settled land then stood limited, became beneficially entitled to the possession of the settled land, and, accordingly, the tenant-for-life in whom the powers under the Act became vested, and thenceforth the provisions of s. 50 applied to the vendor and not to the father. This, I think, will be seen to be in accordance with the other provisions of the Act, and with *40 decided cases. By s. 58 (1) (vi) the powers of a tenant-for-life under the Act were conferred upon “a tenant for his own life whose estate is liable to cease in any event during his life, whether by expiration of the estate or by conditional limitation or otherwise.” Now, until the event happens which determines his estate, such a tenant-for-life has a power of sale under the Act, and s. 50 applies to him. But if the event happens before the power of sale is exercised, and some one else, therefore, under the settlement becomes entitled beneficially to the possession of the settled land, could it be successfully contended that the tenant-for-life whose estate had determined could still exercise a power of sale by reason of the provisions of s. 50? I think not; and it seems to me I am supported in this by In re Levy’s Trusts, 30 Ch. D. 119; In re Haynes, 37 Ch. D. 306; and In re Trenchard, [1902] 1 Ch. 378. Now, if this be so, does the fact that the father’s estate was in this case determined by merger through an act of his own make any difference? In giving judgment in In re Mundy & Roper’s Contract, [1899] 1 Ch., at p. 296, Chitty, L.J., after referring to this power of sale and the effect of s. 50, says—“It may be that if the settlement consists merely of a life estate in A., with remainder to B. in fee, and A. surrenders his estate to B., the power is gone under the doctrine of merger; and that such a case is not within the section, because, where the settlement is thus brought to an end and exhausted, there is no reason why such a power should continue after the absolute fee-simple is vested in possession. I say ‘may be,’ because it is not necessary to consider such a case, which does not arise upon the facts before us.” And Swinfen-Eady, J., in In re Barlow’s Contract, [1903] 1 Ch., at p. 384, referring to the above observations of Lord Justice Chitty, says—“But those observations which are prefaced by the words, ‘it may be,’ are directed to a case where an entire life estate has merged, so that the fee-simple is vested in possession, and are based on the assumption that in such a case there is no reason why the powers should continue. In the present case, where at most only a portion of the life estate is gone, and the life tenant is still beneficially entitled to the remaining portion, and where it may be to the interest of all parties that she should be able to exercise her powers, I am of opinion that her powers still continue as to the entirety.” Now, I cannot, of course, treat those cases as decisions on the point, but it seems to me that, having regard to the object and purpose of the Settled Land Acts, this is a stronger case than the one referred to in those judgments, because by the merger here of the first life estate the second life estate is accelerated and brought into possession, and thereupon the person entitled thereto becomes the tenant-for-life under the settlement of the settled lands with all the powers conferred by the Acts upon a tenant-for-life, and, therefore, there is not only no reason why the powers of the first tenant-for-life should continue, but there is every reason why they should not, because the person who is for the time being entitled to the possession of the settled land is the person who was intended to have, and should have, the power of sale. On the whole case, therefore, I am of opinion that the vendor had power to sell, and having sold, is entitled to the bonus. It is not necessary for me to decide whether the power of sale formerly vested in the vendor’s father continued exercisible by him, as he has not sold under it.
In the Matter of the Donoughmore Settlement
in the Matter of the Settled Land Acts, 1882 to 1890
High Court of Justice.
Chancery Division.
14 May 1912
[1913] 47 I.L.T.R 268
Ross J.
Ross, J.
There are a few small things that are doubtful, but one must look at these things in a large way and not be meticulous. In the whole expenditure I can find nothing that I can lay my hand on as purely ornamental. I approve of the whole scheme. It comes within the extending clause.
The curial part of the order was as follows:—“That the several works already executed upon the premises known respectively as Knocklofty Mansion and Kilmanahan Castle (being part of the lands and premises subject to the trusts of the above-mentioned settlement) and mentioned in the two schemes already approved by the applicants as trustees of said settlement, and described more particularly in said summons and schedules thereto, exclusive of said electric lighting system in said schedules mentioned, are improvements within the meaning of the Settled Land Acts, 1882 to 1890, as extended by the provisions of the above-mentioned settlement, that the said sums of £10,668 14s. already paid in carrying out the said works at Knocklofty Mansion and the sum of £1,436 16s. 2d. already paid in carrying out the said works at Kilmanahan Castle were properly payable out of capital moneys, subject to the trusts of said settlement, and arising under the provisions of said Acts, and that the applicants, as trustees of the said settlement, were justified and authorised by the provisions of the said Acts and settlement in applying the sum of £10,866 0s. 7d. out of capital moneys in their hands, so arising as aforesaid in payment to that extent on foot of the said sums of £10,668 14s. and £1,436 16s. 2d., notwithstanding that a scheme or schemes for the aforesaid works was not submitted for the approval and sanction of the Court before the execution of said works; that the applicants, as such trustees aforesaid, were at liberty to apply out of capital moneys arising under the said Acts in their hands, or to come to their hands and subject to the trusts of the said settlement the sum of £1,239 9s. 7d. in repaying to the said Michael Paul Grace, one of the applicants, the sum of £1,239 9s. 7d., lent by him to the applicants for the purpose of completing said works, and applied by them for said purpose, and that the costs of all parties appearing be taxed as between solicitor and client, and that same when so taxed be paid by the applicants out of the property subject to the trusts of the said settlement.”
In the Matter of the Estate of Hugh Locke, a Minor
in the Matter of the Conveyancing and Law of Property Act, 1881
in the Matter of the Settled Land Acts
High Court of Justice.
Chancery Division.
3 May 1913
[1913] 47 I.L.T.R 147
[What powers do the trustees wish to exercise?]
Accepting surrenders, making lettings, giving receipts, and generally to deal with the property in the ordinary and proper course of management as a land agent; the last phrase, s. 42 (2), “and generally to deal with the land in a proper and due course of management,” is wide enough to cover all these matters.
[The Master of the Rolls.—It would not include a power of letting.]
I then ask to amend the title of the summons by adding “and in the matter of the Settled Land Acts,” and attaching the jurisdiction under s. 60 of the Settled Land Act, 1882, giving powers of leasing under s. 31 (iii): In re Cowley, [1901] 1 Ch. 38.
The Master of the Rolls.—I will grant liberty to amend the title accordingly, and appoint the proposed trustees to exercise the powers of an infant tenant-for-life, in respect of letting only, in addition to the powers of management under s. 42 of the Conveyancing and Law of Property Act, 1881, and order the costs to be paid out of the accruing rents of the property.
In re Estate of Keating
Land Commission.
23 July 1888
[1888] 22 I.L.T.R 67
Mr Commissioner Lynch
Mr. Commissioner Lynch
Our jurisdiction as to the appointment of trustees for the purpose of the Settled Land Act, arises under section 13 of the Land Puchase Act of 1885, as extended by the 23rd section of the Land Law (Ireland) Act, 1887.
In this case Nicholas Keating devised all his property, real and personal, to four trustees (of whom Ellen Keating was one) upon trust after payment of dividends, debts, and legacies, to apply the rents and interest, of the real and personal property for the maintenance of his wife, and the maintenance and education of his three children until they should become entitled to their shares under the provisions of the will; and as to the lands of Turkyle, the subject matter of the present application, he directed the trustees to hold the same in trust for his son, Nicholas Andrew, if he should live to attain age, and in the event (which happened) of his death under age, in trust for testator’s second son, James John, if he should attain age, and in the event of his death in trust for his daughter, Mary, on attaining age or marrying with an executory devise over in favour of testator’s wife, Ellen Keating, the present applicant.
Nicholas having died, James John, who is a minor, will, if he attains age, be entitled to the lands in fee-simple. It appears from Mrs. Keating’s affidavit that she is now in receipt of the rents of these lands, and that she applies the same to the maintenance of herself and her children. In January last she, describing herself as owner of the lands, entered into agreements for sale with the tenants under the Purchase of Land Act, and now applies to have trustees appointed to carry out such sales. Having considered this case I am of opinion that Ellen Keating is not “a person beneficially entitled to the possession of the lands for her life,” within the definition of the 2nd section of the Settled Land Act, neither is James John Keating, under the terms of the will, a tenant for life in possession, nor can I regard Ellen Keating, James John, and Ellen Mary Keating, as together constituting the tenant for life for the purposes of the Act (section 2, sub-s. (6). The decision In re Atkinson ; Atkinson v. Bruce, 30 Ch. Div. 605 (affirmed in the Court of Appeal) appears to bear directly on this point. I have also considered the case, having regard to the decision of North, J., In re Morgan, 24 Ch. Div. 114. In that case certain estates were devised to trustees on trust to pay the income to the testator’s wife for the maintenance of the testator’s son till he should attain 21 and then in trust for him absolutely, but if he should die under 21 on trust to pay the testator’s wife the income for her life and after her death in further trusts as therein. It was held that the infant son had the powers of a tenant for life, being tenant in fee-simple in receipt of the income with an executory limitation over. In the present case, however, the will provides that until John James and Ellen Mary become entitled to their shares of the testator’s estate (of which Turkyle only forms a part), that the rents, dividends, and interest of all the real and personal estate are to be applied for the maintenance of the wife and the maintenance and education of the children.
Mr. Swifte, while admitting that this case cannot, like Morgan’s case, be brought under sub-section 2 of section 58, contends that it comes within sub-section (6) of that section, and that James John Keating, Ellen Mary Keating, and Mrs. Keating are “tenants for years determinable on life,” whose estate is liable to cease in any event during that life. I cannot yield to this contention—a tenancy for years determinable on life means a tenancy, say for sixty years, provided A. B. so long lives; *67 and whatever present rights these persons have to the income of this estate, they are determined not upon a life, but upon James John Keating attaining age, or if he die under age on Ellen Mary Keating attaining age—the term here is not a term of years determinable on a life—and we have no persons here who can claim the exclusive possession or receipt of the rents of these lands for their lives and I must therefore adhere to my first opinion.
Our desire here is to facilitate sales to tenants as far as we can, and in the cases of limited owners to throw no technical obstacles in the way of such sales. The points in support of this motion were most ingeniously made, and I am sorry that my decision will prevent the sale of this estate, but I cannot put a construction on the Act which the facts laid before me do not warrant.
O’Farrell v Stapleton
[1959] I.R.387
In the Matter of the Settlement created by the Will dated the 1st day of September 1943 and two codicils thereto dated respectively the 15th day of December 1945 and the 31st day of May 1946 of CHARLES O’FARRELL Deceased and In the Matter of the Settled Land Acts 1882 to 1890
DESMOND RICHARD O’FARRELL Plaintiff v. CECIL GEORGE STAPLETON, GEORGE CRAMER STAPLETON and RICHARD CHARLES PASCAL O’FARRELL Defendants.
Dixon J. 389
I think I should not allow the proposed expenditure under s. 25 of the Settled Land Act, 1882, as only a very small part of it, if indeed any of it, would appear to be an improvement under that section. The expenditure on the garage was sought to be included under clause (xi) of that section which refers to “Farmhouses, offices, and outbuildings, and other buildings for farm purposes”; but a garage in a suburban domestic residence is clearly not a building for farm purposes.
The second item of proposed expenditurethat on the plumbing and central heatingis sought to be included under clause (xiii) of the section, which deals with “works and machinery for supply and distribution of water for agricultural, manufacturing, or other purposes, for domestic or other consumption.” The extension in the latter part of that clause might be thought sufficiently wide to include the items here proposed. In de Vere v. Perceval and Cole (1)Mr. Justice Gavan Duffy permitted expenditure on central heating, but in that case the expenditure was contemplated in order to enable the house to be let, and the authority to spend the money was sought, and granted, under s. 13 (ii) of the Settled Land Act, 1890, which applies to improvements or alterations made to enable the premises to be let. Consequently, I think that case cannot be applied in the present circumstances, where the expenditure is intended to enable the tenant for life and his family to occupy the premises. In the result, therefore, if this application rested solely on the specific provisions for improvements under s. 25 of the Act of 1882, only the expenditure proposed on the plumbing could be permitted.
But permission for the proposed expenditure is also sought by virtue of s. 21 (vii) of the Act of 1882, which permits the investment of capital moneys in freeholds, or leaseholds held for sixty or more unexpired years. That section has been applied in In re Blake’s Settled Estates (2) by Romer J. as including cases in which alterations, improvements or renovations have been necessary or desirable in the purchased house or premises where the trustees would have had to pay a higher purchase price for the premises had the vendor carried out those works before the sale. I think the same principle applies here. The premises were bought for £3,000 and works are proposed to be carried out to bring them up to modern standards. They are all necessary to bring the premises into modern condition. They all have the result of adding to the value of the premises. The result, therefore, is, that instead of the tenant for life buying a property for a certain price with a condition that the vendor should spend a sum on improvements, he bought it in an unimproved condition at a lower price. If he had bought the premises in the condition into which he proposes to put them, he would have had to pay £5,000. The only item which causes me doubt is the amount of £420 for the built-in wardrobes. Mr. de Courcy, the valuer, was doubtful if they would add the full amount of their cost to the value of the house. He is perhaps right in that, but at the same time he regarded them as an improvement which would add to the saleability of the premises. He could not put a figure on it, but he thought it would be something. But taking into account his clear opinion of the increased saleability, and adding the other proposed items, they might all together add more to the value of the house than the cost of the individual items. To disallow the item would be mere speculation.
Accordingly, the whole of the proposed expenditure may be authorised by the trustees to be expended as part of the purchase money, but not to exceed £2,000, and subject to safeguards for the annuity of £200 per annum to Henry O’Farrell. The moneys representing the sale of Dalystown will be insufficient to meet the annuity in full, but Mr. Matheson’s proposal that the deficiency be charged on the residuary estate which is settled on trusts as would most nearly correspond with those of the mansion house and demesne, is satisfying. The tenant for life must take out a policy to cover the contingency of his dying before the annuitant. Subject to those conditions I authorise the proposed expenditure.
Gormanston v. Gormanston and Others
[1923] IR 138
By the will of the late Viscount Gormanston, dated 14th February, 1907, he appointed his wife Georgina Viscountess Gormanston and Major Gerald Dease his trustees, and he bequeathed to them, inter alia, all his family jewels upon trust to permit the said Georgina Viscountess Gormanston to have the possession and use thereof during her life, and subject thereto to permit the same to devolve and be enjoyed as heirlooms with his real estate, but so that the same should not vest in any person becoming tenant in tail male or in tail unless he should attain the age of twenty-one years, but on his death under that age should devolve as if they had formed part of the said estate; and the testator by his said will made the present Viscount Gormanston his residuary devisee and legatee.
The late Viscount Gormanston, the testator, died on the 29th October, 1907, and probate of his will was granted on the 27th November, 1907, to the said Georgina Viscountess Gormanston and Gerald Dease.
The present Viscount Gormanston is married and has four children, viz., the Hon. Jenico William Richard Preston, the Hon. Robert Francis Hubert Preston, the Hon. Stephen Edward Thomas Preston, and the Hon. Eileen Antoinette Mary Preston, who are infants. Georgina Viscountess Gormanston has relinquished her life estate in the jewels.
Oliver Murphy , for the plaintiff:
The bequest in the will deals only with personalty, and must be construed as so applying, and the possible limitations of the property to persons possibly taking by descent must be extended; and as limitation of personalty can only be by purchase, and not by descent, the restricting clause must be confined to those who take by purchase. Therefore the restriction does not violate the rule against perpetuities, as the persons who take by purchase must come into being in the lifetime of the present Lord Gormanston: Martella v. Holloway (1); Christie v. Gosling (2).
Phelps , for the defendants.
His Honor the Master of the Rolls, having stated the facts hereinbefore set out, proceeded:
It is now desirable for family reasons to sell the jewels, and the present Viscount Gormanston claims to be the absolute owner thereof as the testator’s residuary legatee, his contention being that the bequest of the jewels as heirlooms, to be enjoyed with the settled lands in the manner prescribed by the will, is invalid, and that the bequest thereof failed and the jewels passed to him as residuary legatee.
Lord Gormanston is plaintiff in the summons; Georgina Viscountess Gormanston and Gerald Dease, as executors of the will, are defendants. The Hon. Jenico William Richard Preston, as the eldest son of Lord Gormanston and first tenant in tail of the lands under the settlement, is also a defendant; and I have named him to represent the class of tenants in tail. The brothers of the present Lord Gormanston, viz., Richard and Hubert, are also defendants, together with Gerald Dease and Wm. O’Reilly, the trustees of the settlement, so that all parties interested are thus represented.
I may say in the first place, before approaching the question at issue, that although the testator spoke of the real estates as his real estate, they were not, strictly speaking, his own, as all the lands were in settlement, and he was only tenant for life thereof. But it is certain that when he referred to his real estates he meant the lands subject to the settlement I have mentioned.
Now, the point which Lord Gormanston makes is this: He says that the bequest of the jewels to devolve and be enjoyed as heirlooms with his real estates, but so that the same shall not vest in any person becoming tenant in tail male or in tail unless he shall attain the age of twenty-one years, but on his death under that age shall devolve as if they had formed part of the said estates, is invalid, because it offends against the rule against perpetuities, and has therefore failed. This depends on the meaning to be put on “tenant in tail male or in tail.” If it means tenant in tail by purchase, the bequest would be valid; but if tenant in tail male or in tail includes all tenants in tail, whether by purchase or by descent, the bequest is invalid, because that would or might have the effect of tying up the property for a longer time than is allowed by the rule against perpetuities. For instance, any one of Lord Gormanston’s sons might die under the age of twenty-one years leaving male issue, in which case the jewels would not vest absolutely until some one of such unborn male issue attained twenty-one years of age.
If the trust declared by the will had stopped at the words to “devolve and to be enjoyed as heirlooms with my real estates,”possibly no objection could be taken, because the first person becoming tenant in tailnecessarily a tenant in tail by purchase would become absolute owner of the jewels; but by the superadded words, “but so that the same shall not vest in any person becoming tenant in tail unless he shall attain the age of twenty-one years, but on his death under that age shall devolve as if they had formed part of the said estates,” all tenants in tail, whether by purchase or descent, are shown to have been meant by the testator. “Tenant in tail by purchase” is not meant. “Any person becoming tenant in tail” includes all tenants in tail, so that the testator intended to postpone the vesting of the jewels until some tenant in tail, no matter how remote, attained the age of twenty-one years. Such is Lord Gormanston’s contention.
I confess that, altogether apart from authority, I see no answer to this. Let me now see how the authorities stand. In Christie v. Gosling (1) lands were settled by will on the testator’s nephew for life, with remainder to his first and other sons in tail, and he bequeathed his personal property on the same trusts as were directed concerning his real estate, or as near thereto as the rules of law and equity would permit, with a proviso that the personal estate should not vest absolutely in any tenant in tail unless such person should attain twenty-one. It is to be observed that this settlement of the personal estate is not in the same terms as those in the case before me. In Christie v. Gosling (1)there was no gift over in the event of the tenant in tail dying under twenty-one years, while in the present case there is. This, I think, is a material difference. The question in Christie v.Gosling (1) was whether tenant in tail should be construed as tenant in tail by purchase only. It was held by Lord Chelmsford and Lord Cranworth (Lord St. Leonards dissenting) that it was to be so construed. The reasoning was this: that the limitation of the personal estate to the nephew for life, with remainder to his first son in tail, gave the son, who was a tenant in tail by purchase, the whole estate in the personal property, subject to the proviso that he should attain twenty-one, and that the proviso should be read as a mere qualification of the preceding gift, and not as a description of the person who should take the personalty. If the proviso were to be read as a description, that would let in a class embracing any tenant in tail who would attain twenty-one, and so make the limitation void, as contrary to the rule against perpetuities.
I have pointed out that there is no gift over in Christie v.Gosling (1), while there is a gift over in the present case. On the death of any tenant in tail the jewels are to devolve as if they had formed part of the real estatethat is, they are to pass to the next tenant in tail who would take the real estate, and who might be a tenant in tail by descent and not by purchase. For instance, the eldest son of Lord Gormanston is the first tenant in tail, and he is tenant in tail by purchase. But he may marry, have issue male, and die in his father’s lifetime before he attains twenty-one years; and in like manner such issue male may marry, have issue male, and die before he attains twenty-one years. Each of these tenants in tail on attaining twenty-one years would take under the terms of the gift over if it were possible in law. This gift over shows that the tenant in tail to whom the jewels were absolutely given by the will was not necessarily a tenant in tail by purchase. I cannot read the proviso that the jewels are not to vest unless the tenant in tail attains twenty-one, coupled with the limitation over to tenants in tail in succession, as a mere qualification of the gift to the first tenant in tail, as was done in Christie v. Gosling (1). I am forced to read it as description of the tenant in tail who was intended to take the jewels absolutely, and the description includes the whole class of tenants in tail on whom the lands were settled. This involves a settlement of the jewels in such a way as makes it void under the rule against perpetuities.
I wish further to point to a distinction between Christie v.Gosling (1) and the present case. In the former the real estate was settled by the same instrument as that which disposed of the personal estate, and I think that that circumstance aided the construction by which “tenant in tail” was given the meaning of tenant in tail by purchase. But here we have a settlement by will of heirlooms on the same persons as those on whom lands were settled by a previous settlement, under which tenants in tail both by purchase and descent were entitled to take. That distinction was pointed out by Lord Hatherley in Harrington v.Harrington (2). At p. 98 he calls attention to the circumstance that in Christie v. Gosling (1) the lands were settled by the will which disposed of the chattels, and then he goes on to say: “But this willin Harrington v. Harrington (2)which refers, not to anything contained in the will itself, but to an old settlement of a long anterior date (more than twenty years before the will itself), and to the limitations which might be created by that settlement, and which speaks of giving chattels, not to those persons who took simply as tenants in tail by purchase, but to persons who for the time being should be persons taking by descent through the operations of the estates tail given to persons under the settlement, is a will of a very different character from the will in Christie v. Gosling (1), and therefore that case has no application to the present case.”
I think that these observations strongly support the view I have taken, that Christie v. Gosling (1) does not govern the case with which I am now dealing.
In my opinion the specific bequest of the jewels failed, and they passed to Lord Gormanston as residuary legatee under the will. I shall so declare.
Annesley v Annesley
12 March 1918
[1918] 52 I.L.T.R 189
Wylie J.
The plaintiff in this action is in possession of the Annesley estates as tenant-for-life without impeachment of waste under a settlement of April 3, 1906, and claims a declaration that as such tenant she is entitled to fell and dispose of all timber and other trees on said estates other than such timber and other trees as were at the date of the settlement left standing for the purpose of ornament or shelter to the mansion house and the pleasure grounds attached thereto, or of ornament to any of the views or prospects thereof, and in particular the timber and other trees in certain woods mentioned in the claim. She also claims a declaration of right as regards ornamental timber, but this part of the claim has for the present been abandoned. The defendants in the action are the infant son of the plaintiff, who is tenant in tail in remainder, and Lady Clare Annesley and Lady Constance Malleson, who may become entitled to the estates with remainders over. The infant defendant by his defence simply submits his rights to the Court. Lady Clare Annesley has put in no defence. Lady Constance Malleson, by her defence, admits all the material facts stated in the statement of claim, and further admits that the plaintiff is entitled to sell and dispose of the timber and trees ripe for cutting upon the said estates other than such timber and other trees as were planted or left standing for the purpose of ornament or shelter, and submits that an inquiry should be directed to ascertain what woods, timber and trees were planted or left standing for the purpose of ornament or shelter. The same submission was made by counsel on behalf of Lady Constance Malleson at the close of plaintiff’s case, and an inquiry was strongly pressed for. After full consideration it seems to me, having regard to the nature of this question and to the fact that plaintiff has confined the action to the particular words mentioned in the first paragraph of the claim, that the defendants would be unable to add to or improve their case by further inquiry. The delay caused by such an inquiry would undoubtedly involve the plaintiff in great loss, and all the parties would incur much useless expense. I have, therefore, come to the conclusion that I ought not to direct an inquiry, but decide the question myself at once. Now, the question is in reality a question of fact. I do not think in the view I take, any question of law is involved in it. Stated generally the question is—whether the timber and other trees in the woods near Newcastle and in the woods near Castlewellan, or any of them, were planted or left standing for the purpose of ornament or shelter? Now, I have said this is a peculiar question. It is also very difficult, and the peculiarity and difficulty a rise from the fact that it is not a question of whether these woods are at present ornamental, either according to the view of the Court or the parties or their witnesses. They might be very unsightly,and yet in the view of the law be held to have been planted or left standing for the purpose of ornament by some eccentric owner, it there was sufficient evidence of the fact. The question is—were they planted or left standing for the purpose of ornament? Whose purpose? Why, the purpose of the man who planted them or left them standing, having power to cut them down. Therefore the answer to the question involves the ascertainment of the purpose or intention of a dead man in planting or leaving standing certain plantations when he has left behind him no direct evidence whatsoever of his purpose or intention. Some were planted for ornament or shelter only, others for profit only, and some for both purposes; but almost all woods, for whatever purpose planted, are ornamental. How then are we to decide, in the absence of all evidence, of the purpose or intention of the planter, what his purpose or intention was in respect of any particular wood? I think we can only infer it from the character and position of the wood and the general conduct and acts of the planter in relation to the woods on his estate. If a man plants a wood which is in fact ornamental, and when the trees are ripe and fit for cutting, has them all felled and sold for timber, you would hardly infer that he planted it for ornament. If he died when they were only half cut down, you would also hardly infer that he left the other half standing for ornament. If a man has many woods on his estate, planted and reaching maturity at different times, and from time to time as they severally come to maturity he has the best and ripest of the trees in some of them cut and sold, I think you should infer that those woods in which the trees were cut were not planted for ornament. But how are we to arrive at his purpose in planting as regards those woods in which little or no cutting took place before he died and left them standing? I think we can only arrive at it by comparing these woods with the other woods, in regard to which his acts have shown his purpose, and by looking at the situation and extent of these woods themselves, the class of trees planted, and the acts of the owner generally in relation to timber on the estate. My observations so far have been general, but they have been suggested by the facts proved and evidence given in the case. In dealing with the case specially, there is one fact proved that it is important to bear in *190 mind, that there is and always has been a nursery on the estate at Castlewellan in which there has always been a large stock of young trees for use in replanting, there being at present, I think one of the witnesses said, about 250,000. This fact coupled with the evidence of cutting and replanting by former owners of the estate throws, I think, considerable light upon the purpose or intention of such owners in planting the several woods. As regards the woods mentioned in the claim which are near Castlewellan and outside the demesne, I am fully satisfied upon the evidence given as to these woods, that the only inference I can draw from it is that these woods were not planted or left standing for the purpose of ornament or shelter within the meaning of the rule of law which prevents a tenant-for-life without impeachment of waste from cutting them down. As regards the two woods at Newcastle, the question is more difficult, because little evidence has been given of any timber or trees having been felled or disposed of in either of these woods up to the present time. These two woods are contiguous, forming one continuous plantation along the base of Slieve Donard Mountain, above and behind the town of Newcastle and Donard Lodge, both of which form part of the Annesley estate. The woods are about five miles from the mansion house and demesne at Castlewellan and cover over 300 acres. They are just visible from the mansion house and demesne on a clear day. Now, Mr. FitzGibbon, on behalf of the plaintiff, contended that these two facts—the distance from the mansion house and the extent of the woods—were sufficient in law to exclude these woods from the old rule of equity as to ornamental timber, and referred to one or two authorities. From the view I take I have not thought it necessary to consider and decide the question as one of law, but I may say, as at present advised, that if it were clearly proved by direct evidence, such, for example, as a recital in the settlement, that these woods had been planted or left standing for ornament and shelter to that part of the estate in and about Newcastle and Donard Lodge, I would feel great difficulty in deciding that either the distance from the mansion house or the size of the woods was sufficient to exclude them from the rule as to ornamental timber. But in the absence of direct evidence, these two facts are material to consider when you are endeavouring to ascertain whether these woods were planted or left standing for the purpose of ornament or shelter by a former owner who had power to dispose of them. Now, what is the evidence as to these two woods? As first stated, they cover over 300 acres and are five miles from the mansion house and only visible on a clear day. Most of the trees are Scotch or larch fir—the class of trees usually planted for commercial profit. They have all now reached maturity, and are ripe for cutting, some of them over-ripe. They will deteriorate every year they are left standing, and will be blown down by wind storms. According to the best course of forestry they should all be cut down and the ground replanted. There exists in the estate nursery about 250,000 young trees intended for use in replanting. The plaintiff intends to replant as the old ones are cut. As she put it herself, the replanting following the axe, and in the course of 10 or 12 years, probably well within her own lifetime, the young plantation will be more ornamental than the old. The trees are of great value if sold now, there being a contract for sale for £16,000, most of which may be lost if the plaintiff is not entitled to cut. She has excluded from the contract 30 or 40 acres surrounding Donard Lodge, which form the ornamental grounds of the lodge. It appears to me, therefore, that the plaintiff in taking the course proposed could hardly be said to be making an unconscientious use of her powers. The circumstances I have referred to, however, would not justify the plaintiff in cutting as proposed, if, as a fact, the trees were planted or left standing for the purpose of ornament, but I think they are proper to be considered in conjunction with the other evidence in the case. As regards the woods generally, when endeavouring to decide whether, as a fact, the trees in the Newcastle woods were so planted or left standing, if the settlor intended that these immense woods, covering three or four hundred acres of this estate at the date of the settlement, should be preserved as ornamental timber, he might have easily so provided by the settlement, but instead of that every tenant-for-life under the settlement is unimpeachable for waste. This is a circumstance which should not be overlooked. Counsel for the defendant based his case entirely on the fact that these woods are an ornament to Newcastle, Donard Lodge and the surrounding district. There can be no doubt that they are ornamental in the sense that all well planted woods are ornamental, but that is not the question I have to decide, and, having given the most careful consideration I can to the entire case, I am unable to arrive at the conclusion as against the tenant-for-life, who is unimpeachable for waste, that these woods at Newcastle were planted or left standing for the purpose of ornament or shelter within the meaning of the rule of law which prevents such a tenant from cutting the timber. The burden of proof in such a case is on the *191 defendants, and, I think, they have wholly failed to discharge it. I declare the plaintiff entitled to fell and dispose of the timber and other trees in the woods mentioned, and to retain the proceeds for her own use. There will be liberty to apply to the Court in reference to possible disputes as to the cutting of particular trees. As my judgment is in relief of the plaintiff, she must pay the costs of the parties.
In Re William Lenox Naper
Naper v Kirkpatrick
High Court.
27 February 1952
[1952] 86 I.L.T.R 106
Dixon J.
This application is on a matter of judicial discretion. In exercising my discretion in this case, I must note that the tenant for life has to all intents and purposes been in possession of Loughcrew since the date when the provisions of the will of William Lenox Naper came into effect. She has not been in possession of the actual rents derived from the property in Oldcastle, which consists of a large amount of small town property.
The general principles to be followed by a Court in the exercise of its discretion in cases like this is laid down by Chitty, J., in In re Bagot’s Settlement, Bagot v. Kittoe [1894] 1 Ch. 177 at page 182: “Now, the application is addressed to the judicial discretion of the Court, and this discretion is to be exercised on reasonable grounds, the Court looking to the convenience of the parties; to the question of expense, which falls, of course, on the tenant for life; and to other circumstances of a like kind. It is clear that Mrs. Bagot has no right to claim to be let into possession; and she can only claim to be let into possession through the exercise of the judicial discretion.” I think that applies largely in the present case, if it were not for the trusts for sale contained in the codicil. The plaintiff is in the position of a tenant for life, and is entitled to manage the property for her own benefit so far as the income therefrom is concerned, subject always to some supervision and checking in the interest of the persons entitled in remainder.
Loughcrew is not costing the plaintiff anything by way of agent’s commission, in respect of its management. There would, however, be room and opportunity for her to make a better income from Loughcrew and to effect economies in its management if she were not merely actually, but legally, in possession. If there were nothing more, it would be reasonable that the plaintiff should be let into possession of Loughcrew.
I have also no doubt concerning the property in the town of Oldcastle; it consists of a large amount of comparatively small urban properties, cottages and small dwellings. The question of the collection of rents arises here, together with the liability to repair these dwellinghouses, which may, in the majority of cases, rest on the landlord, together with the responsibility for the general upkeep and maintenance of the properties. These liabiliities do not, to my mind, furnish a sound reason for depriving the tenant for life of the right to be in possession of the rents and profits from these properties, and to collect them, as she wishes, through some agent of her own appointment, while accepting the corresponding liabilities for repair and maintenance. There is force in Mr. Matheson’s observations as to the desirability of taking the long view with regard to the properties in Oldcastle; an immediate increase of the rents of these properties to the maximum sanctioned by the Rent Acts is not necessarily the best policy from the long-term point of view for the benefit of the estate and of the persons entitled in remainder. There is a limit, however, to the application of this principle. The life tenant, while she remains entitled to the income, is entitled to have the property made as beneficial to her *107 as is possible consistently with not damaging the interest of the persons entitled in remainder. Consequently, I think that so far as the property in Oldcastle is concerned it would be consistent with convenience and fairness to put the tenant for life into possession.
The difficulty arises with regard to the replanting of trees at Loughcrew; evidently the trustee has an interest in that as representing the estate generally and the persons entitled in remainder, even though the tenant for life is the licensee and is the person actually liable under the Forestry Acts. It is very much the concern of the trustee that the replanting should be done, and done properly, and in making my order in this case I must reserve to the trustee a reasonable right to enter on the lands and inspect the replanting, and if necessary reserve facilities for the carrying out of the replanting to the trustee himself.
If I do not make any order concerning the funds invested, I will still leave some small amount of funds in the trustee’s hands, bearing some small income. This might not be enough, if the trustee had to recoup the estate the cost of replanting for which the tenant for life is responsible. I think that there should be some undertaking concerning the recoupment of the estate on the lines suggested by Mr. Matheson, to be settled between themselves by Counsel for both parties to this suit. These matters can be satisfactorily dealt with between the parties, and if they are not, the suit already in Court concerning the replanting of the land can be reentered and the appropriate order made concerning the carrying out of the replanting and stating how the cost of replanting is to be borne and whence the actual funds for the replanting are to be provided.
Beyond this it is not necessary to go now. But in respect of the property of which I am letting the tenant for life into possession, undertakings should be given along the lines required in In re Wythes [1893] 2 Ch. 369, particularly with regard to the property in Oldcastle where there may be subsisting outstanding liabilities on the part of the trustee as landlord.
The remaining part of the order sought by the plaintiff is that she should be given the powers conferred on a tenant for life under the Settled Land Acts, over and above what has already been given by the order of the late President of the High Court, namely the power of leasing and surrender. I think that she should be given these powers, but in a modified degree. It is proper to give her these powers, but where the testator has directed that the trustees shall have the power of sale, the qualification should be that the plaintiff be given all the powers of the tenant for life under the Settled Land Acts, save that the power of sale and exchange may be exercised by her only with the consent of the trustees.
The plaintiff should pay the trustee’s costs.
Revenue Commissioners v Royal Trust Company (Ireland)
[1971] 11 JIC 0801
Judge: KENNY J.
A number of questions relating to the meaning of the settlement were debated. The Revenue contended that each of the three children took immediate vested interests in their shares of the trust fund and that these were liable to be divested in the event of death under 30 or 40. In so far as real estate is concerned the issue whether a devise or settlement of it has created a vested or a contingent interest is always difficult to decide because of the rule of construction said to have been established in Phipps v. Ackers ( 9 Cl. and Fin. 583) but the property settled in this case consisted of shares and debentures and so the meaning of the settlement is to be determined by the words used in the context and not by artificial rules derived from medieval social conditions (see Murphy v. Murphy ( 1951) T.R. 308). Clause 3 (c) (ii) which I have already set out provides that the trust fund is to be held upon trust as to one-half of it “for such of the settlor’s said three children as attain the age of thirty years ……… and as to the remainder of the trust fund for such of the settlor’s said three children as attain the age of forty years”. These show that until each child attained the ages mentioned he had no vested interest in the share appropriated to that interest in the trust fund. Attainment of the age of thirty was a condition precedent to getting any interest. It follows that Tara had, at the date of his death, a contingent interest only in the two shares of the trust fund which had been appropriated by the trustees.
The Revenue contended that clause 3 (b) gave the trustees the power to apply the income of the two appropriated shares during the life of Tara for his benefit or for that of his children. The argument was that if his share was contingent, all those who could in an event become entitled to it were included in the class referred to in clause 3 (b). This was the foundation of the argument that duty was payable under s.21 (2) of the Finance Act 1965. I think that the words “during the suspense of absolute vesting in any person or persons contingently entitled to a share in capital or any part thereof under the provisions of this settlement at their discretion to pay and apply the income thereof for or towards the maintenance education or benefit of any such person or persons” meant that the trustees had power to make payments only to the persons immediately contingently entitled. Until Tara attained 30 the suspense of absolute vesting referred to must have related to him only and could not refer to the position of his children. They had a contingent interest only if he died before he attained the age of 40. The settlement contemplated an absolute vesting in him of part of the trust fund when he reached 30 and of another part when he reached 40 and these were the interests which were suspended until he had reached these ages. I do not agree with the argument that during the lifetime of Tara the trustees could under clause 3 (b) apply any part of the income of the two shares to which he was entitled to the maintenance of his children or indeed of anyone except him.
Counsel for the trustees has contended that the whole contingent interest of Tara under the settlement escapes liability for duty because of s.5 sub-s.(3) of the Finance Act 1894. It reads: “(3) In the case of settled property, where the interest of any person under the settlement fails or determines by reason of his death before it becomes an interest in possession, and subsequent limitations under the settlement continue to subsist, the property shall not be deemed to pass on his death.” This sub-section was amended by s.28 of the Finance Act 1938but it was agreed that this change was not relevant to any of the issues in this case. This exemption, it was said, extended to the contingent interest despite the power of the trustees to apply the income of it for maintenance. The Revenue argued that the property was not settled and that if it were, the power to apply income for maintenance made the contingent interest one in possession. S.22 (1) of the Finance Act 1894 is the definition section for the purposes of that Act. Sub-paragraph (h) provides that the expression “settled property” means property comprised in a settlement and sub-paragraph (i) reads: “The expression lsquo;settlement” means any instrument, whether relating to real property or personal property, which is a settlement within the meaning of section 2 of the Settled Land Act, 1882, or if it related to real property would be a settlement with the meaning of that section… S.2 (1) of the Settled Land Act 1882 reads: “(1) Any deed, will, agreement for a settlement …………under or by virtue of which instrument or instruments any land, or any estate or interest in land, stands for the time being limited to or in trust for any persons by way of succession, creates or is for the purposes of this Act a settlement… The Revenue submission was that the funds settled by the settlement were not limited to or in trust for any persons by way of succession but that the interests created were substitutional. If any of the settlor’s children died under 30 or 40 without issue, the others received his share, it was said, not by succession, but by substitution and if any of them died leaving issue, the issue received the parent’s share in his place. The answer made to this was that the Attorney General v. Power (1906) 2I.R. 272 had decided that a document similar to the one in this case created a settlement. In that case, however, it was conceded that there was a settlement and the decision is, therefore, not an authority on this point. The phrase “by way of succession” in the Settled Land Act is one to which a narrow or technical meaning is not to be given and is to be regarded as equivalent to “successively upon death” (see the judgment of Mr. Justice Kennedy in A.G. v. Owen [1899] 2 Q.B. 253 and also the decision in Mundy and Ropers Contract (1899) 1 Ch. 275.) The Attorney General v. Clarkson [1900] 1 Q.B. 156 seems to me to be an authority for the view that when a document creates a contingent interest, it is a settlement until the contingent happens. In that case there was a contingent gift to the testator’s sons if they attained 25 or married: if they died under 25 leaving issue, the legacy of the son so dying was left to his children who reached 21. Two of the sons attained 25 in the lifetime of the testator but another died under that age and Settlement Estate duty was claimed on the legacy on his death. The Court held that the property was settled, that it was settled on persons by way of succession and that the duty was payable. Similarly, in this case the gift of one-half of the trust fund for such of the settlor’s said three children who attained the age of 30 and of the remainder of the trust fund for such of the said three children who reached 40 created a settlement.
But if this view is wrong, 1t seems to me that the trust declared in respect of the settled property in the event of all three children dying under 30 created interests by way of succession. If that happened the trustees were to hold the trust property for such person or persons absolutely who would be entitled thereto under the provisions of the Statutes for the distribution of the personal estates of intestates if the settlor had died a widow without issue and any person who became entitled to any benefit under this clause would do so by way of succession and not by substitution. I reject the contention that the document of 1954 was not a settlement.
As the trustees contended that the Attorney General v. Power (1906) 2 I.R. 272 was an authority for the view that the interest of Tara was not one in possession and that the exemption given by s.5 (3) of the Finance Act 1894 extended to the two shares despite the power to pay maintenance it is necessary to examine that case in some detail. Under two settlements made in 1873 property was limited to trustees from the death of the survivor of the father and mother (which occurred in 1892) “to the use of the children of the intended marriage and their respective heirs and assigns forever as tenants in common” with a limitation over that if and so often as any of the said children should die under the age of twenty-one years without leaving issue surviving him or her, then as well as to his or her original share, as also to the share or shares which should have accrued to him under the limitations in the settlement “to the use of the other of the said children and their respective heirs and assigns forever in equal shares as tenants in common”. The settlements also contained this clauses “If anyone who, but for this proviso, for the time being entitled to the possession or receipt of the rents of the premises or of any undivided share of them, shall, being a male, be under the age of twenty-one years…….the trustees shall enter into the possession or receipt of the rents, and shall, during the minority of such person, continue in such possession and receipt and manage the same and shall apply an annual sum or sums which they shall think proper, according to the age of such minor, in or towards his or her maintenance, education, advancement or benefit and shall invest the residue and accumulate the annual income thereof and be possessed of the rents and accumulations and the income thereof, if the person during whose minority the rents shall have been accumulated shall attain the age of twenty-one upon trust for such person, but if such person being a male shall die under twenty-one, then upon trust for the persons or person who shall ultimately become indefeasibly entitled to the premises or the undivided share”. Hubert Power, one of the children of the marriage, died in August 1898 under 21 without leaving issue and at that date another child was over 21 while a third was under that age. The Revenue claimed that estate duty was payable on the death of Hubert. It is to be noted that his interest was vested but liable to be divested on his death under 21 and so that case is not similar to this. Palles C.B. rejected the claim for duty because Hubert had not an interest in possession and so S.5 (3) of the 1894 Act applied. The decisive feature was that the trustees had a discretion until Hubert attained 21 as to whether they would pay him; any part of the income and if they did not pay the whole of it to him, they had to accumulate it. His judgment contains this passage: “Now the cardinal fact here and that on which I base my judgment is that Hubert was not entitled to be paid the whole income of the third. The residue after payment of such sums as should be applied for his maintenance and prior charges was to be accumulated and to be held on trust under which, not Hubert, but the present defendants became entitled. Was Hubert’s interest an interest in possession which I agree with the Attorney General means possession properly so-called as distinct from remainder or reversion………Had Hubert here been entitled to the entire surplus of the rents and profits of his share, I should have held his estate was one in possession; but being, as I hold him; to be, entitled to part only of that surplus, and that fluctuating, uncertain and incapable of being defined or ascertained irrespective of its application, I must hold that his estate is not in possession and that such sums as he might receive for maintenance were payable to him, not by reason of his vested estate which must be taken to be subject to the estate or interests of the trustees, but as maintenance eo nomine, out of the express trust for its payment to him out of the interim income of an estate, the present income of which was not his, but the trustees.” Power’s Case (1906) 2 I.R. 272 has been accepted as correct since it was decided and was expressly approved by Lord Wilberforce in Gartside v. The Inland Revenue Commissioners (1968) 1 All E.R.121. Moreover the last mentioned case establishes that the object in whose favour a discretionary trust may be exercised has not got for the purpose of the estate duty code “an interest” in the funds out of which the income payable under a discretionary trust is derived.
In my view the contingent interest of Tara in the funds settled by the settlement was not “an interest in possession” at the date of his death and his right to have the trustees exercise their discretion as to whether they would pay maintenance to him was not “an interest” in the sense in which that ambiguous word is used in the Finance Act 1894 or in any of the Acts which have greatly widened its incidence. After Tara died, subsequent limitations under the settlement of 1954 continued to subsist and the contingent interest which he had did not therefore, pass on his death.
The next Revenue argument was that there was a passing of the two shares to which Tara was contingently entitled at his death because there was a discretionary trust in his favour during his lifetime to apply all or any of the income of his shares for his benefit and, on his death, this power could be exercised in favour of his two children. The case, it was said, fell within the principles laid down in Scott v. The Commissioners of Inland Revenue 1937 A.C. 176 The startling result of this Argument is that estate duty might become payable on the two shares to which Tara was contingently entitled on three occasions before the date when he would have attained 30 if he had lived. The argument was that duty was payable on his death because the group entitled to maintenance changed and as the power of applying the income of the contingent share could be exercised in favour of each of his children if he died under 30, it would follow that duty would be payable on the death of each of them if they died under 21. Thus, if both died when they were under 21, estate duty would be leviable on each occasion.
In order to state what was decided in Scott’s Case and Burrell’s Case it is necessary to set out the relevant provisions of s.1 and s.2 (1)(b) of the Finance Act 1894 which are so painfully familiar. S.1, so far as relevant, reads; “1. In the case of every person dying after the commencement of this Part of this Act, there shall, save as, hereinafter expressly provided, be levied and paid, upon the principal value ascertained as hereinafter provided of all property, real or personal, settled or not settled, which passes on the death of such person a duty, called Estate Duty; at the graduated rates hereinafter mentioned, ……..” while s.2 (1) (b) provides: “Property passing on the death of the deceased shall be deemed to include the property following, that is to say. (b) Property in which the deceased or any other person had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest.” In Scott ???query?????? Inland Revenue Commissioners (1937) A.C. 174 the fifth Earl of Cadogan and his eldest son settled estates to the use of the eldest son as tenant for life with remainder to the use of his sons successively in tail male and in default of issue to the use of the second son of the fifth Earl for life with other remainders. The fifth Earl subsequently bought the life interest of his second son and conveyed this to two trustees to hold it during the life of his second son upon discretionary trusts in favour of his second son, his wife and his children and, subject to this upon trust to accumulate the surplus of the rents and profits. In 1908 the eldest son of the fifth Earl died and in 1910 his only son died. In 1915 the fifth Earl died and was succeeded by his second son as sixth Earl and the life estate became an estate in possession and was therefore held upon the discretionary trusts which had been declared in respect of it. In 1933 the sixth Earl died and was succeeded by his son who became the seventh Earl. The Revenue claimed estate duty on the death of the sixth Earl. In the course of his speech Lord Russell of Killowen said: “It will be seen that the result of this Disposition by the Fifth Earl of the life estate of the Sixth Earl was that immediately before the death of the Sixth Earl the income of the property had to be applied in payment to or for the benefit of all or any of the objects of the discretionary trust, or (in so far as not so applied) in accumulation and the payment off of incumbrances. The persons beneficially interested in the income of the property at that moment were therefore the various persons who were objects of the discretionary trust and the persons who might ultimately benefit by the accumulations and discharge of incumbrances. Immediately after the death of the Sixth Earl the only person interested in the income was the Seventh Earl as tenant in tail male in possession. Did the property pass to him, within the meaning of the Finance Act, 1894 on the death of the Sixth Earl?….. On the death of the Sixth Earl, the Seventh Earl’s estate in tail male became, instead of an estate in remainder, an estate in tail male in possession. He became entitled to receive the whole income of the estate, which immediately before the death of the Sixth Earl was primarily applicable for the benefit of the objects of the discretionary trust. That in my opinion was a change of hands in the beneficial title or possession of the property as a whole occurring on the death of the Sixth Earl, which constituted a passing of the property on that death within the meaning of s.1 of the Finance Act of 1894”.
That case and Burrell’s Case (1937) A.C. 286 (if correctly decided) establish that if a discretionary trust is created and if the death of a person has the result that the group of persons to whom the income may be applied changes as a result of it and not because of the death of one of the objects, (for until 1965 when the Oireachtas intervened, it was settled law that no estate duty was payable on the death of one of the objects of a discretionary trust when two or more survived) then duty may be payable on the entire fund on the ground that the group entitled to the income has changed as a result of the death and so the property out of which the income issues passes. The Revenue seek to apply the reasoning of these cases to this by contending that prior to Tara’s death, the income or part of it had to be applied for his maintenance while, after his death it could be applied for his children for the same purpose and then say that his death had the result that a new group, his children, became entitled to be considered for payment as objects of the discretionary trust. To this ingenious argument there are a number of good answers The relationship between ss. 1 and 2 of the Finance Act 1894 was discussed in the Public Trustee .v. The I.R. Commissioners (1960) 1 All E.R. 1 in which the traditional view, based upon some incautious generalisations by Lord MacNaghten, that they were mutually exclusive, was decisively rejected. On the death of Tara no interest in the income passed for he had no right to be paid anything by the trustees. The Revenue must therefore rely upon s.2 (1) (b) and establish that he had an interest ceasing on his death in the income which might be applied for his maintenance. But Gartside v. The Inland Revenue Commissioners (1968) 1 All E.R. 121 decides that the object of a discretionary trust has no interest for estate duty purposes in the capital which is settled or in the income itself. Therefore Tara had not an interest ceasing on his death in the income which might be applied for his maintenance and so nothing passed on his death. The next answer is that the matter has been in my opinion, correctly decided in Lord Advocate v. Muir (1942) 21 A.T.C. 204. In that case a fund was left to the testator’s son when he attained 25 The trustees had power which was not exercised, to vest the property in him at an earlier date and a power, which they exercised to apply the income of it at their discretion for his maintenance. Unapplied income was to be accumulated. The son died under 25 without issue and his sister became entitled to the fund. There was, therefore, a power to apply the income of a fund to a person contingently entitled. Lord Keith accepted the view that s.5 (3) of the Act of 1894 had no application where there was a passing under s.1 or under s.2 (1) (b) but was of opinion that s.5 (3) conferred exemption from duty because there was no passing under s.1 or under s.2 (1) (b). At the son’s death there was no real beneficial right in anyone but merely a prospective right to have income applied for maintenance. This is a happier expression of what the Chief Baron meant, I think, when he referred in Power’s Case (1906) 2 I.R. 272 to “maintenance eo nomine out of the express trust for its payment to him out of the interim income of an estate, the present income of which was not his but the trustees”. The power to apply income for the maintenance of Tara was not in any sense a trust and it is confusing to compare or equate it with the position of the objects of a discretionary trust. I agree with the statement in the tenth edition of Haneon’s Death Duties in paragraph 537 a: “No true group life tenant appears to be created by a more power for the maintenance of an individual.” Lastly, the words of Mr. Justice Ungoed Thomas in the High Court in Gartside v. The Inland Revenue Commissioners (1966) 3 All E.R. 89 at p.104 have particular force in this case: “The Crown’s submissions would mean, as pointed out by Palles, C.B., in the passage which I have quoted, that the trustees’ statutory power of maintenance would give a minor beneficiary with a contingent interest an interest in possession and cause a passing on his death under twenty-one, a conclusion disavowed by the Attorney General before Palles, C.B., and a far reaching claim which I understand has never been made by the Crown. These considerations to my mind reinforce the conclusion unfavourable to the Crown to which I have come on the first question.” I agree with this and I am not aware of any case up to now in Ireland in which it has been contended that when there is a contingent interest with a power to apply income in the period before the contingency happens for the maintenance of the person who may become entitled, duty is payable on his death before the contingency happens because of the power of maintenance.
The next contention by the Revenue was that some duty was payable under s. 21 (2) of the Finance Act 1965. This section was intended to make estate duty payable in certain circumstances on the death of an object of a discretionary trust. Sub-s(2) reads: “Where property is vested in a trustee upon trusts under which the income or capital of the property may be paid to one or more of a number or of a class of persons as the trustee or any other person may, at his discretion, select and one or more of those persons dies or die during the continuance of the discretionary trust and after the passing of this Act, any person so dying shall, for all purposes of estate duty, be deemed to have had an interest limited to cease on his death In the property”. Sub-s. (3) then provides a method of valuing the interests. I have already decided that during Tara’s lifetime he was the only person to whom the trustees could pay any of the income of the securities appropriated in respect of his two contingent shares. Sub-s. (2) deals only with the case where income or capital may be paid to one or more of a number or of a class of, persons. It does not include the case in which income may be paid to one person only for he is not one or more of a number or of a class of persons. The Revenue seek to construe the section as if it read: “Where property is vested in a trustee upon trust under which the income or capital of the property may be paid to a person or to one or more of a number or of a class of persons”. I do not think it has this meaning and I am certainly not prepared to give it a construction which would have the result that duty was payable…
In my view none of the grounds upon which the Revenue claim that duty was payable on the death of Tara Browne are correct. This summons which seeks an order that the trustees are to deliver to the plaintiffs an account of the property which passed under s.1 or was deemed to pass under s.2 (1)(b) on his death must accordingly be dismissed.
UK Cases
Doherty v Allman
(1877) 3 App Cas 709 House of Lords (Lord O’Hagan)
.
Lord O’Hagan:
‘ waste with which a Court of Equity ought to interfere should be not ameliorating waste, nor trivial
waste. It must be waste of an injurious character- it must be waste of not only an injurious character, but of a substantially injurious character and if either the waste be really ameliorating waste – that is a proceeding which results in benefit and not in injury – the Court … ought not to interfere to prevent it …
Waste, to be of any sort of effect with a view to an injunction, must be a waste resulting in substantial damage.’
Honywoodv Honywood
(1874) LR 18 Eq 306 Chancery (Jessel MR)
Jessel MR:
‘The question of what timber is depends first on general law, that is the law of England; and secondly, on the special custom of a locality. By the general rule of England, oak, ash and elm are timber, provided they are of the age of 20 years and upwards, provided also they are not so old as not to have a reasonable quantity of usable wood in them, sufficient to make a good post. Timber, that is the kind of tree which may be called timber, may be varied by local customs. There is … the custom of the country and it varies
in two ways. First of all, you may have trees called timber by the custom of the county – beech in some counties, hornbeam in others and even whitethom and blackthorn and many other trees are considered timber in peculiar localities – in addition to the ordinary timber trees. Then again, in certain localities, arising probably from the nature of the soil, the trees of even 20 years old are not necessarily timber, but may go to 24 years, or even to a later period, I suppose, if necessary: and in other places, the test of when a tree becomes timber is not its age, but its girth.’
Mancetter Developments Ltd v Garmanson Ltd
[1986] 2 WLR 871 Court of Appeal (Dillon and Kerr LJJ , Walker LJ dissenting)
Dillon LJ
‘”Waste” is defined in Woodfall, Law of Landlord and Tenant, as being “a spoil or destruction to houses, gardens, trees or other corporeal hereditaments, to the injury of the reversion … “It is divided into two main categories, voluntary waste and permissive waste. Permissive waste, which is not in question here, is a matter of suffering buildings to fall into disrepair by neglect. Voluntary waste, which is in question, is said in Woodfall to be actual or comrnissive, as by pulling down houses or altering their structure. Waste is a somewhat archaic subject, now seldom mentioned; actions in respect of disrepair are now usually brought on the covenant.
… The law of fixtures is of very ancient origin. Originally the routine was simply that anything affixed to the land became part of the land and passed with the land, quicquid plantatur solo, solo cedit. The development of a tenant’s right to remove tenant’s or trade fixtures was a mitigation of that rule; it came about not by any change in the concept of what is a fixture, but by a qualification of the tenant’s obligation not to remove fixtures once they had been affixed to the land.’
“it appears to have been generally understood in practice that, as well where trading as where ornamental fixtures are taken down, the tenant is liable to repair the injury the premises may sustain by the act of removal ”
he extent of the liability is expressed in Foley v Addenbrooke (1844) 13 M & W 174 … as being that the tenant must leave the premises in such a state as would be most useful and beneficial to the lessors or those who might next take the premises and must not leave the premises in such a state as not to be conveniently applicable to the same purpose. I would interpret this as a requirement of the law that if a tenant’s fixtures are removed, the premises must be made good to the extent of being left in a reasonable condition.
The right of a tenant to remove tenant’s or trade fixtures arose by the common law independently of contract, though the right might be confirmed or excluded by contract. So equally … the obligation on the tenant to make good the damage, if tenant’s fixtures were removed, arose at common law irrespective of contract, although there might also in a particular case be a relevant contract.
The liability to make good the damage, or to repair the injury the premises may sustain by the act of removal of tenant’s fixtures, must, insofar as it is a liability at common law and not under a contract, be the liability of the person who removes the fixtures, and not of the person, if different, who originally installed the fixtures and left them there. The analysis of the liability at common law is … that the liability to make good the damage is a condition of the tenant’s right to remove tenant’s fixtures: therefore removal of the fixtures without making good the damage, being in excess of the tenant’s right ofremoval, is waste, actionable in tort, just as much as removal by the tenant of a landlord’s fixture which the tenant has no right to remove is waste. The act of the tenant, or in the present case Garmanson, in removing the tenant’s fixtures without making good was commissive rather that permissive …
… It seems to me, however, contrary to common sense and contrary to my understanding of the concept of voluntary waste, as something that applies even in the absence of any contract, or repairing covenant, that a tenant who for his own convenience installs tenant’s fixtures, and who has, in order to so, to make holes in the walls of his landlord’s building which are filled by those fixtures while they remain installed, should be allowed to remove the fixtures without filling the holes. So long as the fixtures remain installed, the building is wind and weather proof and there is no damage to the reversion. One affixed, the fixtures become part of the freehold. If they are removed, albeit legitimately, and the holes are not filled, the reversion then suffers damage. To make good the damage by filling in the holes (which involves, in part, replacing sheets of cladding and lining with holes in them) is part of the condition attached by law to Garmanson’s right to remove the fixture.’
KerrLJ:
‘ … in the present case there was a voluntary act, the removal of the machinery and the extractor fans. Admittedly there was a right to remove them, although they had been affixed to the realty, but if their removal caused the fabric of the premises to cease to be wind and water tight due to the exposure of the holes, as was the case, then the act of removal also had the effect of causing the building to become damaged when it could not be considered to have been relevantly damaged before. I therefore see no escape from the conclusion that a direction to carry out the removal without reinstating the holes was an act for which a claim in the tort of waste must lie. Accordingly I would dismiss the appeal.’
Turner v Wright
(1860) 2 De GF & J 234 Chancery (Campbell LC)
Definitions – equitable waste, voluntary waste
Campbell LC:
‘Equitable waste is that which a prudent man would not do in the management of his own property. This court may interfere where a man unconscientiously exercises a legal right to the prejudice of another – and an act may in some sense be regarded as unconscientious if it be contrary to the dictates of prudence and reason, although the actor, from his peculiar frame of mind, does the act without any malicious motive. The prevention of acts amounting to equitable waste may well be considered as in furtherance of the intention of the testator, who, no doubt, wished that the property should come to the devisee over in the condition in which he, the testator, left it at his death; the first taker having had the reasonable enjoyment of it, and having managed it as a man of ordinary prudence would manage such property were it absolutely his own.’