The donor conveyed land to his son by way of gift but reserved an annual rentcharge during his life which was charged on the land conveyed and which his son covenanted to pay (together with the other liabilities of the donor), and retained the right to occupy the mansion house which stood on the land conveyed together with other benefits. He also reserved a power of revocation.
Held: The gift was ineffective to save estate duty. The gift was revocable; the donor had reserved an interest for life; he had retained the right to occupy part of the land which formed the subject-matter of the gift; and he had clearly reserved a benefit by contract or otherwise in the shape of the son’s covenant to pay the rentcharge. This was a benefit which the donor did not possess before the gift. It was a security for the rentcharge which guaranteed payment even if the land produced insufficient income to support it. Earl of Halsbury LC: ‘My Lords, there are some cases so extremely plain that it is difficult to give a better exposition of the question than that which the statute itself provides’
References: [1900] AC 124
Judges: Earl of Halsbury LC
Jurisdiction: England and Wales
This case cites:
- Appeal from – Attorney General v Earl Grey CA 2-Jan-1898 ([1898] 2 QB 534)
The court considered the effectiveness of a gift from father to son for estate duty purposes, where the revenue said that the father had reseved an interest in the land to himself. The conveyance to the defendant donee contained the following . .
This case is cited by:
- Mentioned – Ingram and Palmer-Tomkinson (Executors of the Estate of Lady Jane Lindsay Morgan Ingram Deceased) v Commissioners of Inland Revenue CA 28-Jul-1997 (Times 11-Sep-97, Gazette 10-Sep-97, , [1997] EWCA Civ 2212, [1997] 4 All ER 395, [1997] STC 1234)
The deceased had first conveyed property to her solicitor. Leases back were then created in her favour, and then the freeholds were conveyed at her direction to her children and grandchildren. They were potentially exempt transfers.
Held: . . - Cited – In re Nichols, deceased CA 2-Jan-1975 ([1975] 1 WLR 534)
The father, Lord Nichols, gave property to his sons who then leased it back to him. On the father’s death the revenue claimed duty.
Held: Goff LJ: ‘Having thus reviewed the authorities, we return to the question what was given, and we think . . - Cited – St Aubyn v Attorney General HL 12-Jul-1951 ([1952] AC 15, , [1951] UKHL 3, [1951] 2 All ER 473)
The donor exercised powers of appointment ‘to make some part of the settled property his own’, and it was ‘wholly irrelevant that by a contemporaneous or later transaction he surrenders his life interest in other parts of it’. The different parts of . . - Cited – Commissioner of Stamp Duties of New South Wales v Perpetual Trustee Co Ltd PC 1943 ([1943] AC 425)
The Board consideerd the application of the retention of benefit rules. Lord Russell of Killowen said: ‘the entire exclusion of the donor from . . enjoyment which is contemplated . . is entire exclusion from . . enjoyment of the beneficial interest . . - Distinguished – Re Cochrane 1905 ([1905] 2 IR 626)
(High Court of Ireland) The court considered the effectivenmess of a gift with a reservation to the donor, distinguishing Earl Grey: ‘The limitation of this annuity, although prior to the gift, was, as well as being charged on the land, secured by . . - Cited – Re Cochrane CA 1906 ([1906] 2 IR 200)
(Court of Appeal of Ireland) The court considered the effectivenmess of a gift with a reservation to the donor. As to the Earl Grey case, if ever there was a case to which the statute applied it was The Attorney-General v Grey. The court referred to . .
These lists may be incomplete.
Last Update: 22 September 2020; Ref: scu.223759
