Smith's Trustees v. Gaydon and Others [1918] ScotLR 92 (23 November 1918)

Smith's Trustees v. Gaydon and Others [1918] ScotLR 92 (23 November 1918)

The bequest of £750 yearly to the niece is to be paid without deduction of income tax, as 'net annual proceeds' refers to income after tax has been deducted. The trust deed, read as a whole, indicates the testator's intention that the sum be paid in full, and this is reinforced by the parallel provisions for the nephew and by authority of Murdoch's Trustees v. Murdoch.

Citation
[1918] ScotLR 92
Parties
First Parties: David Stewart and others, testamentary trustees of John Smith; Second Party: Mrs Leonora Hean Smith or Gaydon; Third Party: Harold Wallace Gaydon, as tutor and administrator-in-law of her pupil children; Fourth Parties: Corporation of the Dundee Royal Infirmary and others
Jurisdiction
Scotland
Judgment Date
23 November 1918
Procedural Posture
Special Case / Court of Session Inner House First Division, Final Judgment
Outcome
First question answered in the affirmative; second in the negative.
Legal Topics
Construction of Testamentary Provisions, Incidence of Income Tax on Trust Income, Interpretation of 'net Annual Proceeds'
Succession Trusts Construction of Testamentary Provisions Incidence of Income Tax on Trust Income Interpretation of 'net Annual Proceeds'

Case Brief

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Parties

David Stewart and others, testamentary trustees of John Smith

First Parties

Mrs Leonora Hean Smith or Gaydon

Second Party

Harold Wallace Gaydon, as tutor and administrator-in-law of her pupil children

Third Party

Corporation of the Dundee Royal Infirmary and others

Fourth Parties

Procedural Posture

Special Case / Court of Session Inner House First Division, Final Judgment

Legal Issues

  1. 1 Whether the bequest of £750 yearly to the niece is payable without deduction of income tax
  2. 2 Interpretation of 'net annual proceeds' in the context of the trust deed

Ratio Decidendi

The bequest of £750 yearly to the niece is to be paid without deduction of income tax, as 'net annual proceeds' refers to income after tax has been deducted. The trust deed, read as a whole, indicates the testator's intention that the sum be paid in full, and this is reinforced by the parallel provisions for the nephew and by authority of Murdoch's Trustees v. Murdoch.

Court Disposition

First question answered in the affirmative; second in the negative.

Orders

  • The niece is entitled to payment of £750 yearly without deduction for income tax.
  • Past payments of income tax are to be repaid as agreed by the parties.