Murdoch's Trustees v. Murdoch and Others [1918] ScotLR 664 (20 June 1918)

Murdoch's Trustees v. Murdoch and Others [1918] ScotLR 664 (20 June 1918)

The codicil's restriction to £2000 per annum did not alter the original direction that the widow was to receive the 'free revenue' of the estate, meaning the sum after income tax had been paid by the trustees. Therefore, the widow is entitled to £2000 per annum without deduction of income tax if the income permits, and is entitled to recover past deductions with interest, less tax on the interest.

Citation
[1918] ScotLR 664
Parties
First Parties: Murdoch's Trustees; Second Party: Mrs Catherine Hutchison or Murdoch; Third Parties: Alexander Norman Murdoch and others (the testator's children)
Jurisdiction
Scotland
Judgment Date
20 June 1918
Procedural Posture
Special Case (court of Session, Inner House, First Division) / Judgment on Questions of Law Regarding Trust and Income Tax
Outcome
Judgment for the second party (widow).
Legal Topics
Construction of Testamentary Provisions, Incidence of Income Tax on Trust Income, Rights of Annuitant Under Trust, Interpretation of 'free Revenue'
Succession Trusts Construction of Testamentary Provisions Incidence of Income Tax on Trust Income Rights of Annuitant Under Trust Interpretation of 'free Revenue'

Case Brief

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Parties

Murdoch's Trustees

First Parties

Mrs Catherine Hutchison or Murdoch

Second Party

Alexander Norman Murdoch and others (the testator's children)

Third Parties

Procedural Posture

Special Case (court of Session, Inner House, First Division) / Judgment on Questions of Law Regarding Trust and Income Tax

Legal Issues

  1. 1 Whether the widow is entitled to £2000 per annum from the trust without deduction of income tax if the income permits
  2. 2 Whether trustees were entitled to deduct income tax from the annuity
  3. 3 Whether the widow can recover past deductions of income tax with interest

Ratio Decidendi

The codicil's restriction to £2000 per annum did not alter the original direction that the widow was to receive the 'free revenue' of the estate, meaning the sum after income tax had been paid by the trustees. Therefore, the widow is entitled to £2000 per annum without deduction of income tax if the income permits, and is entitled to recover past deductions with interest, less tax on the interest.

Court Disposition

Judgment for the second party (widow).

Orders

  • Widow entitled to £2000 per annum without deduction of income tax if the income permits.
  • Trustees to pay to the widow the sum of £2634 9s. 2d. (past deductions), with interest at 5% from 11 July 1917, less income tax on such interest.