Dunn's Trustees v. Dunn [1924] ScotLR 411 (20 March 1924)

Dunn's Trustees v. Dunn [1924] ScotLR 411 (20 March 1924)

The testator's direction that legacies be 'given free of legacy or other duty' is comprehensive and unambiguous, requiring that both the liferenter and the fiars receive the legacy undiminished by any duty, including estate duty payable on the death of the liferenter. The estate duty must therefore be paid out of the residue of the trust estate, not from the corpus of the legacy.

Citation
[1924] ScotLR 411
Parties
First Parties (applicants): Patrick Smith Dunn and others (Trustees of Robert Hunter Dunn); Second Parties (respondents): Patrick Smith Dunn and his four children (James Valentine Dunn, William Alexander Dunn, Miss Margaret Jean Fairlie Dunn, Mrs Sarah Constance Dunn or Kelso)
Jurisdiction
Scotland
Judgment Date
20 March 1924
Procedural Posture
Special Case (construction of Testamentary Trust) / Inner House, Second Division, Court of Session (final Judgment)
Outcome
First question answered in the affirmative; second question answered in the negative.
Legal Topics
Construction of Wills, Testamentary Trusts, Estate Duty Liability, Interpretation of 'free of Duty' Clauses
Succession Law Trusts and Estates Construction of Wills Testamentary Trusts Estate Duty Liability Interpretation of 'free of Duty' Clauses

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Parties

Patrick Smith Dunn and others (Trustees of Robert Hunter Dunn)

First Parties (applicants)

Patrick Smith Dunn and his four children (James Valentine Dunn, William Alexander Dunn, Miss Margaret Jean Fairlie Dunn, Mrs Sarah Constance Dunn or Kelso)

Second Parties (respondents)

Procedural Posture

Special Case (construction of Testamentary Trust) / Inner House, Second Division, Court of Session (final Judgment)

Legal Issues

  1. 1 Whether estate duty payable under section 14 of the Finance Act 1914 on a settled legacy upon the death of the liferenter is to be paid out of the residue of the trust estate or out of the corpus of the legacy.

Ratio Decidendi

The testator's direction that legacies be 'given free of legacy or other duty' is comprehensive and unambiguous, requiring that both the liferenter and the fiars receive the legacy undiminished by any duty, including estate duty payable on the death of the liferenter. The estate duty must therefore be paid out of the residue of the trust estate, not from the corpus of the legacy.

Court Disposition

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

Orders

  • Estate duty payable under section 14 of the Finance Act 1914 on the settled legacy of £12,000 is to be paid out of the residue of the trust estate, not from the corpus of the legacy.