Taxes - Other - 1900- 1929

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This page lists 6 cases, and was prepared on 28 October 2012.

Grey (Earl) -v- Attorney General [1900] AC 124
1900 HL Earl of Halsbury L.C	Taxes - Other	Casemap 1 Cites 1 Citers
	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"

In re Cochrane [1905] 2 IR 626
1905 Palles C.B	Northern Ireland, Taxes - Other	Casemap 1 Citers
	(Ireland) "as in these questions of revenue, matters of mere conveyancing form are immaterial; as we are to view the substance only of the transaction, and as 'gift' in the context means 'beneficial gift,' so, too, in the actual case before us, should it be held that the reservation of the ultimate trust to Sir Henry Cochrane cannot, per se . . . render the entire capital subject to duty."

Re Cochrane [1905] 2 IR 626
1905 Palles CB	Taxes - Other, Northern Ireland	Casemap 1 Cites 1 Citers
	(High Court of Ireland) The court considered the effectivenmess of a gift with a reservation to the donor, distinguishing Eal Grey: "The limitation of this annuity, although prior to the gift, was, as well as being charged on the land, secured by the personal covenant of the grantee, and this covenant, according to The Attorney-General v Worrall [1895] 1 QB 99, made its subject-matter a reservation of the gift within the meaning of [the statute]; and therefore, even if Lord Halsbury's words, "The settlement itself has reserved £4,000 a year" mean, as they probably do, "reserved out of the gift" they are in no sense contrary to our present decision. The law made it a reservation out of the gift by reason of the personal covenant." Without a covenant to pay it the reservation of a rentcharge is not in itself a benefit reserved out of the property given but is merely property not given. The trust of surplus income and the ultimate contingent trust of corpus were expressly retained by the donor for himself on the face of the instrument, and never in any shape or form included in what he gave.

Re Cochrane [1906] 2 IR 200
1906 CA Fitzgibbon LJ	Taxes - Other, Northern Ireland	Casemap 1 Cites 1 Citers
	(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 the various benefits which the donor had retained in that case, including the son’s covenant to pay the rentcharge, but did not mention the reservation of the rentcharge itself.

Attorney-General -v- Boden [1912] 1 KB 539
1912	Company, Taxes - Other	Casemap
	There was a partnership between a father and his two sons. The sons were obliged to devote their whole time to the practice, the father only so much time as he wished. On his death the sons were to pay out to his estate the value of the capital but not including any charge for goodwill. The revenue sought to bring in the father's share of the goodwill. Held: Allowing for the different obligations, the sons acquired their father's share in the goodwill as bona fide purchasers for value. Where it can be shown that the partnership agreement represented a true bargain, it was arguable that the only asset that passed for estate duty purposes was the right of the estate to receive the payment provided for in the agreement.

Lang -v- Webb (1912) 13 CLR 503
1912 Griffith CJ, Barton and Isaacs JJ	Taxes - Other, Commonwealth	Casemap 1 Citers
	(High Court of Australia) In 1908 the deceased had transferred and conveyed a piece of land to each of her three sons; on the same date as, but subsequently to, the execution of the transfers and conveyances there had been executed by the deceased and each of her sons a lease back for a term of five years of the land which had been transferred and conveyed to him; and the transfers and conveyances and leases had been executed after discussion and arrangement between the deceased and her three sons and after she had explained to them that she desired to make fixed and permanent provision for them and at the same time to take from them leases at whatever might be a reasonable rental for grazing purposes having regard to the conditions of the leases, those conditions and the amounts of the rents having been discussed and agreed before the execution of any of the documents. The rents reserved were in each case fair and reasonable and after the execution of the documents the whole of the land continued to be occupied by the deceased and was used by her for grazing purposes. On the deceased's death in 1910, before the expiration of the leases, a claim for death duties was made in respect of the freehold. Held: The claim was upheld. Section 102 requires people to define what they give away what they retain. If an interest is given away, they may not receive back any benefits from that interest. The policy was to avoid the "delay, expense and uncertainty" of requiring the revenue to investigate whether a gift was genuine or pretended. If the donor continued to derive any benefit from the property in which an interest had been given, it would be treated as a pretended gift unless the benefit could be shown to be referable to a specific proprietary interest which he had retained. This is probably the most plausible explanation. Isaacs J: "But there must be no misunderstanding as to what is meant by the transaction ... in the relevant sense it means that you regard the substantial effect of the 'conveyance, assignment, gift, delivery or transfer', by which the gift was made. If by an instrument, as in this case, you look at the instrument by which the property passes from the donor to the donee, and, disregarding mere form, ascertain its real effect. What does it give, not how does it give it? In this case the gift is made by the indenture executed by Henrietta Lang, and by that the whole of her estate in the lands was given without any exception or reservation whatever. That was the transaction of gift - complete in itself and unqualified. No other construction is possible. It had to be complete before the donee could execute to her the lease of the property. A lease is a conveyance; and it is more than form, it is substance, when the donor's interest has to be vested in the donee before the donee can convey a smaller interest. That smaller interest was comprised in the gift itself, it was part of it, and is quite different from the case of Re Cochrane , where the trust of surplus income and the ultimate contingent trust of corpus were expressly retained by the donor for himself on the face of the instrument, and never in any shape or form included in what he gave."
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