*528 In Re Norbury (Deceased).
Norbury v. Fahland.
[1939] Ch. 528
[1938. N. 1682.]
Chancery Division
Ch D
Bennett J.
1939 March 10.
Will--Construction--Legacy given free of duty--Legatee domiciled
abroad-- Incidence of foreign duty--Direction referable to English
duty only.
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.
SUMMONS.
By his will dated June 13, 1935, the testator, John Norbury, appointed
the plaintiffs the executors and trustees thereof, and after
bequeathing a legacy to his wife and a settled legacy to his daughter
and her issue, 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, and subject thereto to
divide the residue equally between his three nieces and his nephew
therein named.
The testator made two codicils to his will, respectively dated August
20, 1936, and March 15, 1937, neither of which affected the legacy
given to Frau Fahland. By the second codicil the testator revoked the
residuary gift contained in the will, and gave the residue upon trust
for his wife for her life and after her death for his daughter and her
issue.
The testator died on May 5, 1937, and his will and codicils were
proved on July 16, 1937, by the executors.
*529 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 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.
Wilfrid Hunt for the plaintiffs.
L. W. Byrne for the defendant Frau Fahland. The expression "free of
duty " has no general meaning as applied to all wills but is a
comprehensive term and, it is submitted, includes the German
inheritance duty in the present case. The testator knew the legatee
was a German living in Germany, and he intended her to receive the
clear income of the capital sum free of any kind of death duty. There
is no authority exactly in point, but In re Scott [FN1] was the case
of a legacy in an English will given free of legacy duty which
disposed of valuable chattels in France on which the legatee had to
pay *530 the French "mutation" duty, a similar duty to this
inheritance duty. This decision turns on the use of the expression
"legacy duty," but the case was argued upon the footing that it was a
matter of construction whether the words used could include foreign
duties.
FN1 [1915] 1 Ch. 592.
N. D. Ouvry for the residuary legatees was not called upon.
BENNETT J.
I am told that there is no direct authority upon the question raised
for decision by the summons now before me. The point is not covered by
the decision of the Court of Appeal in In re Scott. [FN2] 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.
FN2 [1915] 1 Ch. 592.
Representation
Solicitors: Ouvry & Co.
(H. L. L.)
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