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Legal Notes about Haldane v. Eckford
This document is taken from here.
Estate Duty - Property 'passing' on death - Direction by testator to accumulate income and make periodical investments of land in Scotland to be entailed - Scots law - Heir of entail in possession entitled to payment of accumulations in cash - No beneficial interest or title passes on his death - No right to enjoy current income - Right to compel trustees to accumulate - Right already enjoyed by successor - Contingent right to accumulations
COURT OF APPEAL LORD GREENE M.R. AND EVERSHED L.J. 1948. July 30. [1948] All 2 E.R. 622.
A testator by certain codicils to his will directed his trustees to accumulate the income of certain parts of his estate until the value of the accumulations amounted to £8000 or upwards and then to invest the accumulations in the purchase of land in Scotland to be settled under the fetters of a strict entail. Further accumulations were to be made until a figure of £8000 was again reached when a similar investment in and settlement of land in Scotland was to be made and the process was to be repeated until 31 December 1956 when the fund itself was to be invested in land in Scotland and settled under the fetters of a strict entail.
In the course of an administration action it was held that the testator died domiciled in Jersey and that the trusts of the will were valid according to the law of Jersey. The relevant provisions of the law of Scotland were proved by an affidavit made by a member of the Scottish bar.
By the Entail (Scotland) Act, 1848, where any money or other property has been invested in trust for the purpose of purchasing land to be entailed, but the direction has not been carried into effect, it is competent to the person who if the land had been entailed in terms of the trust would be the heir of entail in possession, provided he is capax and of full age, to make a summary application to the Court of Session for warrant and authority for payment to him of such money, and the Court will grant such warrant and authority without the consent of any person if the direction to entail was contained in the will of a testator who died subsequent to 1 August 1848 and the applicant was born after the death of the testator.
Until there was an heir of entail in possession competent to make the necessary application to the Court of Session, the accumulations of the income of the trust fund were carried to the credit of an account in the administration action entitled 'income and accumulations of income' and whenever that account exceeded £8000 that amount was carried to an account entitled 'moneys subject to be invested in land' and the income of the last-mentioned account was paid to the heir of entail in possession for the time being. The first heir of entail in possession born after the death of the testator was Douglas Eckford and he on attaining the age of 21 years applied to the Court of Session and by order of that Court the money standing to the credit of the 'moneys subject to be invested in land' account was paid out to him. Two further accumulated sums of £8000 were subsequently paid to Douglas Eckford on similar applications. On his death in 1912 his daughter Helen Eckford who was born in 1905 became heir of entail in possession and during her minority two further accumulated sums of £8000 were carried to the 'moneys subject to be invested in land' account and pursuant to an order of the Court of Session were paid out to her when she attained the age of 21 years. Subsequently during her lifetime, three further sums of £8000 were paid out to her as the accumulations of income reached that sum and the appropriate application was made by her to the Court of Session.
Helen Eckford died unmarried in 1935 and John Eckford Hacket became heir of entail in possession. Since Helen Eckford's death the accumulations of income again reached £8000 and pursuant to an Order of the Court of Session the accumulated fund was paid out to John Eckford Hacket. The Crown claimed estate duty under the Finance Act, 1894, s. 1, on the corpus of the trust estate the income of which was directed to be accumulated and applied as aforesaid, on the ground that it was property which had passed on the death of Helen Eckford.
The question for the Court was whether on the facts of the case some actual change as regards the beneficial interest in the corpus of the property as a whole had taken place on the death of Helen Eckford. Romer J. held that there was no such change and that the Crown's claim for estate duty was not well founded. He said that the only right which Helen had in relation to the trust property was to compel the performance by the trustees of their duty to accumulate the income and that right did not pass on her death for the reason that her successor as a contingent beneficiary of the trust already had that right. Helen had no right to any current income but only the expectation, if she lived for some uncertain period of time, of receiving one or more sums of £8000 Her successor had during her lifetime a similar expectation and all that happened on Helen's death was that her expectancy ceased and one contingency was eliminated from the expectancy of her successor.
The Court of Appeal formed a different opinion and held that on the death of Helen there was a de facto change in the beneficial interest and that accordingly the corpus of the estate did pass within the meaning of s. 1 of the Finance Act, 1894, as interpreted by the relevant authorities. Lord Greene MR. in delivering the judgment of the Court said:
It seems to us that the effect of the death of Helen was to bring about an actual change in the title to the corpus as a whole. Before that death it was producing income to which, by the combined operation of the codicils and of Scottish law, Helen became entitled at recurrent stages and subject to the contingency of her being alive and capax at the end of a stage. On her death this interest of hers came to an end and an exactly similar interest arose in her successor.... It is clear that Helen's right in respect of the income of the corpus determined on her death. It is also clear that subject to the requirements of Scottish law her successor stepped into her shoes and succeeded to precisely similar rights in respect of that income. It is true that if he had died before the accumulations current at Helen's death had amounted to £8000 he never would have enjoyed any income and in that case the Finance Act, 1894, s. 5 (3), would, we think, have operated to prevent duty becoming payable on his death, but this did not happen and he succeeded de facto and de jure to the right to obtain the whole income produced by the corpus during his lifetime whenever that income plus accumulated accretions should amount to £8000. The fact that he could not obtain any income for himself until, during his lifetime, the necessary period subsequent to the death of Helen had elapsed for the accumulations to reach the figure of £8000 does not, in our opinion, prevent a passing on the death of Helen: see Finance Act, 1894, s. 22.
This is from Edinburgh Gazette; April 27, 1926:
From discovery.nationalarchives.gov.uk/details/record?catid=-2970582&catln=7
Cause number: 1865 H174. Short title: Haldane v Eckford. Documents: Bill, two depositions. Plaintiffs: Alexander Haldane (since deceased). Defendants: William James Eckford (abroad, since deceased) and Clement de Quetteville Armstrong (abroad, since deceased). Amendments:
© Jo Edkins 2022 - Return to Eckford index
Order to carry on proceedings 1865. Edward Simpson made defendant (since deceased).
Order to carry on proceedings 1879. Douglas Eckford added.
Order to carry on proceedings 1885. Plaintiff: Robert Eckford. Defendant: Ellen Theophila Simpson widow as executrix of Edward James Simpson, deceased.
Order to carry on 1887. Plaintiff: Douglas Eckford. Defendant: Ellen Theophila Simpson widow.
Order to carry on 1898. Plaintiff: Douglas Eckford. Edward James Douglas Simpson, Beatrice Jessie Thornhill Simpson and Maude Penny Sofle Simpson, legal personal representatives of Ellen Theophila Simpson.
Order to carry on 1908. Plaintiff: Douglas Eckford. Defendants: surviving defendants and Helen Lois Vivienne Eckford added as defendant as sued by Arthur Robert Melville Eckford her guardian.
Order to carry on 1913. Plaintiff: Helen Lois Vivienne Eckford by John Waller Hills her next friend.
Order to carry on 1936. Plaintiff: John Eckford Hacket. Defendants: Norman Douglas Simpson and James Victor Druitt (personal representatives of Edward James Douglas Simpson).
Order to carry on proceedings 1947. Plaintiff: John Eckford Hacket. Defendants: Sir Walter Johnston Halsey bart and Geoffrey Barham Sankey.
Order to carry on proceedings 1951. Alexander John Patrick Sellar added as defendant..