*46 In Re Quirk.
Public Trustee v Quirk.
[1941] 1 Ch. 46
[1940. Q. 1566.]
Chancery Division
Ch D
Morton J.
1940 July 26.
Will--Construction--Testator a British subject ordinarily resident in
Turkey--Bequest of freehold land in France "free of all death duties"--
Whether French duty included.
A British subject ordinarily resident in Turkey by his will devised
"free of all death duties" certain freehold land in France. On his
death there was payable in respect thereof a French duty on transfer
by death. No other duty in England or elsewhere was payable in respect
of it, either at the date of his death or at the date of the will:-
Held, that this duty was payable out of the estate and not by the
devisee.
In re Norbury. Norbury v. Fahland [1939] Ch. 528 distinguished.
ADJOURNED SUMMONS.
The testator, John Quirk, died on October 22, 1939, at a sanatorium in
Switzerland, leaving his wife Inna Markovna Quirk and his stepdaughter
Princess Nicolas Troubetzkoy surviving him.
By his will, dated July 1, 1938, he described himself as "a British
subject domiciled in England but ordinarily resident at Number 4,
Berna Apartment, Silahane Djadessi Nichantash, Istanbul, in the
Republic of Turkey." By clause 4 he bequeathed to his wife "free of
all death duties my freehold land and messuage known as Clos Sainte
Anne in the Department of Var Alpes Maritimes in the Republic of
France for her own absolute use and benefit." By clause 5 he
bequeathed to her "free of all death duties payable at my decease" the
use and enjoyment during her life of all his furniture and other
articles of household use or ornament not otherwise specifically
disposed of. By clause 7 he directed his trustees to pay the pecuniary
legacies bequeathed by his will "including the duty on all legacies
and annuities bequeathed free of duty." By clause 10 he directed that
during the joint lives of his wife and stepdaughter his trustees *47
should pay half the income of a trust fund to each of them, provided
"that if at the end of any year .... my wife's moiety for that year
shall be less than 1200l. net after deduction of any United Kingdom
income tax payable, then the income of my said wife for that year
shall be made up to such net sum of 1200l. out of my step-daughter's
moiety ...."
On the testator's death there was payable in respect of the house in
France a French duty on transfer by death known as the "droits de
mutation par deces." No other duty in England or elsewhere was payable
in respect of it, either at the date of the testator's death or at the
date of his will.
On June 17, 1940, the trustees of the will took out a summons to
determine (inter alia) whether this duty was payable out of the estate
of the testator or should be borne by his wife. It was agreed by all
parties that the matter should be decided on the footing that the
nature of the duty was still as set out in the evidence given in the
case of In re Scott. Scott v. Scott. [FN1]
FN1 [1915] 1 Ch. 592.
F. McMullan for the trustees.
C. D. Myles (Henry E. Salt with him) for the wife. The gift "free of
all death duties" covers this French duty: In re Scott. [FN2] This
testator was ordinarily resident abroad and was dealing with immovable
property in a foreign country. In re Norbury. Norbury v. Fahland [FN3]
is distinguishable on that ground.
FN2 Ibid. 609.
FN3 [1939] Ch. 528.
L. M. May for persons interested in residue. In re Norbury [FN4] is
similar to the present case. The only duties payable out of the estate
are such as may be imposed by English law, this being an English will
by an English testator. The French duty is not so payable.
FN4 [1939] Ch. 528.
T. K. Wigan for another person interested in residue. This case is
covered by the authority of In re Norbury. [FN5]
FN5 [1939] Ch. 528.
MORTON J.
[having stated the facts:] So far as the evidence *48 before me goes,
I have to deal with the will of a British subject domiciled in
England, who described himself as ordinarily resident in Turkey and
who, at the date of his will and at the date of his death, owned a
freehold house in France.
It is agreed by all the counsel concerned that, as this house is
immovable property situate in a foreign country, no duty is payable in
respect of it in the United Kingdom on the testator's death, and the
only duty payable in respect of it, either at the date of the will or
at the date of the death, is this French "mutation" duty. In these
cir***stances, I should have been disposed, apart from authority, to
hold that the very general words "free of all death duties" would cast
the burden of discharging the "mutation" duty upon the estate in
exoneration of the devisee.
I have been referred to two authorities which may bear upon the
matter. The first is the case of In re Scott. [FN6]I do not find that
this case is of any real assistance so far as the decision goes,
because there the Court of Appeal had to construe the phrase "free of
legacy duty" and to determine whether the words "legacy duty" could
extend to the French "mutation" duty. It is plain, I think, that that
was a very different case from the one which I am considering. But Mr.
Myles, for the widow, rightly relied upon a passage in the judgment of
Phillimore L.J., who said this [FN7]: "The testator has used words of
art, and though it may be that from other parts of the will you may
deduce the view that he has used words of art inartificially, unless
you can make this deduction you must treat those words of art as
meaning what they technically do mean. 'Legacy duty,' to my mind, is a
word of art, and means duty payable under English or British law. If
there was no legacy duty payable, if there was nothing in the way of
any duty on the succession but the mutation duty, one might then be
driven to suppose that the testator had used a word of art in an
artificial sense, but, inasmuch as there is ample to satisfy the words
'free of legacy duty,' there is no reason for our supposing that they
mean more than they say." I find that observation *49 of some
assistance, because it shows that if there had been no duty to which
the words could apply other than the "mutation" duty Phillimore L.J.
might have been driven to treat even the term of art "legacy duty" as
extending to "mutation" duty. That passage fortifies me in the view
which I have formed, apart from authority, that the words "free of all
death duties" extend to and cover the "mutation" duty payable in
France.
FN6 [1915] 1 Ch. 592.
FN7 Ibid. 609.
The other authority to which I was referred was the recent case of In
re Norbury [FN8], a decision of Bennett J. The headnote is as follows:
"Where an English testator by an English will gives a pecuniary legacy
'free of duty' the only duties payable out of his estate in respect of
the legacy are those imposed by English law, in the absence of any
contrary intention expressed in the will." In that case the testator,
according to the statement of facts, "bequeathed free of duty the sum
of 15,000l. to his trustees with powers of appropriation of securities
and investment upon trust to pay the income thereof to Frau Mita
Armska Esterhazy Fahland (whose address was given as in Berlin) during
her life without power of anticipation during any coverture and on her
death the said trust legacy was to fall into and form part of the
testator's residuary estate. The testator devised and bequeathed all
his residuary estate to his trustees upon trust for conversion and to
pay and provide for his funeral and testamentary expenses and the
legacies bequeathed by his will or by any codicil thereto and the
duties on all legacies and annuities bequeathed free of duty." Subject
thereto he made certain dispositions of his residue. The statement of
facts continues: "Frau Fahland was a German national residing in
Berlin, and at the date of the will had been resident there for many
years. Under German law a tax known as the inheritance tax was payable
by her in respect of the settled legacy of 15,000l. She claimed that
the expression 'free of duty' in the gift of the legacy to her
included freedom from such inheritance tax. The plaintiffs took out
this summons for the determination of *50 the question whether they as
executors ought to pay the German inheritance tax on the legacy out of
the testator's estate, or recoup to Frau Fahland the amount of any
duty paid by her on the legacy, or whether the freedom from duty in
the clause referred to did not extend to the German inheritance tax.
There was evidence by Dr. E. J. Cohn, a German lawyer, that
inheritance tax was payable by any one living in Germany in respect of
all property acquired by such person under a will or an intestacy or a
donatio inter vivos or a donatio mortis causa. It was payable at the
rate of 20 per cent. on the value of Frau Fahland's life interest in
the legacy. The beneficiary was the only person liable to pay the tax,
which was payable notwithstanding that the property acquired came from
a person living outside Germany and the assets out of which the
interest came were situate in a country other than Germany. The tax
was levied from time to time on the income as received." Bennett J.,
after saying that the point which he had to decide was not covered by
the Court of Appeal's decision in the case of In re Scott [FN9],
proceeded as follows [FN10]: "An English testator must be presumed to
know something about the duties the English law imposes both upon his
estate and upon beneficiaries under his will when he dies; but not
many of them, I suppose, know much if anything about death duties
imposed by the laws of foreign countries. Nor, I suppose, would many
of them contemplate some additional burden being imposed upon their
estates by a change of residence on the part of a person to whom a
legacy had been given. In the absence of authority, I hold that, where
an English testator by an English will gives a pecuniary legacy 'free
of duty,' the only duties payable out of his estate in respect of the
legacy are duties imposed by English law, unless there are words in
the will which make it clear that duties imposed by the law of a
foreign country are to be paid thereout."
FN8 [1939] Ch. 528.
FN9 [1915] 1 Ch. 592.
FN10 [1939] Ch. 528, 530.
If I had been dealing with a case of a pecuniary legacy given by an
English testator in an English will I should have *51 applied the rule
there laid down by Bennett J., with which I respectfully agree, but I
am dealing with the case of a devise of immovable property in a
foreign country. I think the case before me is to be distinguished on
several grounds from In re Norbury. [FN11] In the first place there is
the fact that at the date of the will and at the date of the
testator's death there was no duty payable in respect of this land
other than the "mutation" duty. In the second place the observation of
Bennett J. that not many English testators would "contemplate some
additional burden being imposed on their estates by a change of
residence on the part of the person to whom a legacy had been given"
has no application to a case such as the present, where the gift is
one of an immovable property. Even if there had been no other grounds
for distingui****ng this case from In re Norbury [FN12]I should have
considered these two grounds sufficient. In the third place, this
testator was a man who, as appears from his will, was ordinarily
resident in Turkey and owned real property in France. I think that he
was more likely to have in mind duties payable in a foreign country
than a testator who was resident in England and owned no property
abroad. That is, perhaps, a somewhat small indication of intention,
but I think it is worth mentioning. In the fourth place, the fact that
in clause 10 the testator used the phrase "United Kingdom income tax"
instead of simply "income tax" shows that when he intended to refer
only to something payable under the law of the United Kingdom, he
expressed that intention in clear words.
FN11 [1939] Ch. 528.
FN12 [1939] Ch. 528.
For these reasons I think that upon the true construction of the will
the French "mutation" duty ought to be paid by the plaintiffs out of
the testator's estate.
Representation
Solicitors: Pyke, Franklin & Gould; Guscotte, Wadham, Thurland &
Howard.
(F. C.)
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