TSE HONG HUNG AND ANOTHER v. THE COMMISSIONER OF ESTATE DUTY

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JUDGMENT

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Sir Derek Cons V.P. delivered the judgment of the Court:

1. On the 26th August 1988 the late Mr. Tse Yok Kwan went into China on business. On the same day, before he left, he took out a Travel Insurance Policy with the Commercial Union Assurance Co., plc through its agent in Hong Kong, Gilman Insurance. The premium was in fact paid subsequent to his death by his sister, but Mr. Litton, who now appears for the Respondents, accepts that the payment was in pursuance off contractual obligation undertaken by Mr. Tse nimself. The "Period" of the policy was from that day until the 4th September. It, provided, inter alia:

"         In consideration of the Premium and subject to the terms exceptions and conditions herein or endorsed nereon the Company agrees that in the event of the contingencies described hereafter happening during the Period anywhere in the world the Company will   .....
	(c)	pay to the Insured or his legal personal representatives the percentage set out in Section III of the Sum Insured stated in the Schedule for the Person-Insured"

2. In the circumstances the relevant contingency was set out in the policy under the heading "SECTION  III - PERSONAL ACCIDENT":

"The contingency of bodily injury to the Person-Insured occurring after the inception of the Policy caused solely by violent accidental external and visible means which shall. independently of any other cause be the sole cause of:           (a)         death ..."

3. Mr. Tse unfortunately did meet with such a fate, on the 2nd September, his death ensuing three days later. The amount that became then payable under the policy was HK$3 million, which was in effect paid by the company to Mr. Tse's sister on the 22nd September 1989. Mr. Tse's sister had been named by him as his "Beneficiary" in the proposal form, and her name had been duly carried forward into the policy, to which had been added an endorsement in the terms:

                "COMPENSATION PAYABLE TO NAMED BENEFICIARY

In the event of the death of the Person-Insured in circumstances giving rise to a valid claim under this Policy Compensation may be payable to the person named in the Schedule or any list which forms part of the Policy as the Beneficiary whose discharge to the Company in respect of any such payment shall be a full and binding discharge to the Company."

4. Mr. Tse died intestate, survived by his father and mother, a brother and two sisters, one being the sister to whom we have already referred. The father is in the process of obtaining letters of administration to his son's estate, in the course of which the Commissioner of Estate Duty has suggested that the HK$3 million are liable to duty under the provisions of the Estate Duty Ordinance, Cap. 111. As a result the father and sister jointly issued an originating summons by which, while accepting, without prejudice to further judicial consideration, that the monies in question were situate in Hong gong, they sought a declaration that such monies were not exigible to duty. Liu J. found in their favour on the 23rd May last year. The Commissioner appeals.

5. His claim below was founded on Sections 5 and 6(1)(a) of the Ordinance. In this Court he adds Section 6(1) (f). We set out the relevant parts of those provisions:

"     5.    In the case of every deceased person there shall, save as hereinafter expressly provided, be levied and paid upon the principal value, ascertained as hereinafter provided, of all property passing on the death of such person, a duty called estate duty at the graduated rates mentioned in the applicable Schedule:   .....         6.     (1)    Property passing on the death of the deceased shall be deemed to include the property following -
	(a)	property of which the deceased was at the time of his death competent to dispose;"
	......
	(f)	any annuity or other interest purchased or provided by the deceased either by himself alone or in concert or by arrangement with any other person, to the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased,"

6. There was at one time considerable discussion in England as to the relationship between Sections l and 2(1) of the Finance Act 1894, from which our Sections 5 and 6(1) are to a large extent taken. There it has been resolved by statute. However, in view of the decision to which we have come in the present instance, and which we should say turns upon principles which were not raised below, it is not necessary for us to enter into that discussion; but we would respectfully observe in passing that the relationship does appear to be well explained at p. 164 et seq. of the judgment of the English Court of Appeal in In re Weir's Settlement Trusts [1971] 1 Chancery 145.

7. It is well established that "when real, or personal property is purchased in the name of a stranger, a resulting trust will be presumed in favour of the person who is proved to have paid the purchase money in the character of a purchaser": Lewin on Trusts, 16th Edition, p. 129; and see Snell's Principles of Equity, 28th Edition, p. 179.

8. This presumption was applied in In re A Policy No. 6402 of the Scottish Equitable Life Assurance Society [1902] 1 Chancery 282. There a Mr. Sanderson insured his own life in favour of his wife's sister, whom he subsequently married on the death of his wife. It was specifically provided that she "and her executors, administrators, and assigns, should be entitled to receive at the end of six months after the decease of the said William Sanderson" such sums as should then be due. In the event the lady pre-deceased Mr. Sanderson, but subsequent to his death disputes arose as to the ownership of the monies. On a summons taken out by his executors, Joyce J. had no hesitation in finding that

" ... although the legal personal representative of the lady in this case would be the person entitled to receive the money at law and to give a receipt for it, in equity the money belongs to the legal personal representatives of Mr. Sanderson, who took out the policy."

9. Mr. Litton, after referring us to various dicta in Pettitt v. Pettitt [1970] AC 777 emphasizing the importance of considering all the relevant evidence, has argued that there is in the present instance sufficient evidence, albeit meagre, to indicate a definite intention to pass the proceeds of the policy, should they arise, to Mr. Tse's sister beneficially. With respect we find none. Like Joyce J., in the case to which we have just referred, we find that this too

"really, is a case of a man taking the policy out in the name of another, that other person ... not standing in any relation to him 'that would meet the presumption,' as Lord Eldon expressed it. It comes really to this: a purchase by one in the name of another with no other circumstances at all proved."

10. Once it is accepted that Mr. Tse retained throughout a beneficial interest in the proceeds. of the policy it is clear that they fall within Section 5 of the Ordinance as property passing on his death. We do not accept the suggestion that there is a distinction in the right enjoyed by him during his life and that which is enjoyed subsequently by his estate by reason that he himself could never nave taken the direct benefit of the proceeds arising on his death. In our view only one right is granted by the policy. That the fruits of the right may be different in different circumstances is a factor of no materiality.

11. By the same token the HK$3 million is equally dutiable under Section 6(1)(a). Mr. Tse having the sole beneficial interest in the policy was competent to dispose of it as and when he wished. It matters not that in the event he may have had little opportunity of doing so.

12. It follows from these conclusions that the Respondents were not entitled to the declaration granted to them below. It is then not necessary to consider the first proposition of Mr. Dicks, who now appears for the Commissioner, which, as we understand it, suggests that on the authority of In re Stapleton-Bretherton [1941] 1 Chancery 482 and the observations of Uthwatt J. at first instance in In re Schebsman [1943] 1 Chancery 366, Mr. Tse had a legal right during his life to dispose of the fruits of the policy; or to consider whether the construction of the English equivalent of Section 6(1) (f) adopted by Mynn-Parry J. in In re Miller's Agreement [1947] 1 Chancery 615, and apparently approved by two of their lordships in Beswick v. Beswick [1968] AC 58, is to be preferred to that of the majority of the court in Cathels v. The Commissioner of Stamp Duties [1962] 62 ST.R. (NSW) 455.

13. For these reasons the appeal is allowed and the declaration granted below set aside; we make an order nisi that the Appellant is to have his costs here and below.