P. S. WIJEWARDENE, Appellant, and G. B. S. GOMES and others, Respondents

027-NLR-NLR-V-70-P.-S.-WIJEWARDENE-Appellant-and-G.-B.-S.-GOMES-and-others-Respondents.pdf


Wijewardene v. Gomes
97
[Privy Council]
1967 Present : L3rd Morris of Borth-y-Gest, Lord Wilberforce,Lord Pearson, Sir Jocelyn Simon, and Sir Alfred NorthP.S. WIJEWARDENE, Appellant, and G. B. S. GOMES andothers, RespondentsPrivy Council Appeal No. 14 of 1966S. C. 460 of 1960—D. O. Colombo, 14315jT
Administration of estates—Judicial settlement of accounts—Application under CivilProcedure Code, s. 729—A legatee's objections to the accounts—Right ofappeal to the Privy Council—Scope—Voluntary Settlement of future sharesin a company—Death of Settlor before allotment of the shares—Rights, if any,of the Trustees of the Settlement to the ownership of the shares when they cometo be allotted—Trusts Ordinance {Cap. 87), s. 6—Identity of propertydesignated in a last will—Quantum of evidence—Article due to a legatee—Refusal by the executors to deliver it—Personal liability of the executors—Gifts under a will—Direction that they should take effect on the “ date ofdistribution ”—Meaning of expression “ date of distribution ”—Relevancy ofdate of final assessment of estate duty—Estate Duty Ordinance (Cap. 241).
Appeals concerned with the taking of an account, as in a judicial settlement ofaccounts under section 729 of the Civil Procedure Code, will not be entertainedby the Judicial Committee of the Privy Council if questions of fact rather thanprinciples of law are involved.
On 28th February 1950 the principal shareholder of a company (AssociatedNewspapers of Ceylon Ltd.) oxecutod, for the benefit mainly of his youngestson, a Voluntary Settlement, which included 6,000 ordinary shares in thecompany of which he was the registered owner and 1,000 further ordinaryshares “which haul been issued but not yet allotted and which the Settlor isabout to be caused to be allotted into the names of the Trustees ”. On thesame day he executed in favour of tho Trustees of the Settlement a transferof the 6,000 shares of which he was the registered owner, but died on 13th Juno1950, before any allotment of tho 1,000 shares of the new issue had been made.In duo course the 1,000 shares were allotted to the executors of the deceasedshareholder’s estate on payment by them of a balance sum of money due inrespect of those shares.
The question arose whether tho Settlement Trustees were entitled to call uponthe executors to transfer to them the 1,000 newly allotted shares. In view ofdoubts as to whether a valid trust had been constituted in respect of thoseshares, the main contention on behalf of the respondent executors was thatthe deceased shareholder should be regarded as having formally agreed withtho Trustees to cause to be allotted, or to transfer, to them the 1,000 nowshares. Consequently, it was argued, so soon as the new shares came to boallotted, the Trustees of the Voluntary Settlement were in a position to enforcethe promise made by the deceased.
Held, that, assuming that if the necessary basis of fact were shown to exist aneffective trust could bo constituted under the law of Ceylon, there was no
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LORD WLLBERFORCE—Wijcwardene v. Gomes
evidence, either extrinsic or intrinsic, to establish that the alleged promise wasmade by the deceased. More than a mere manifestation of intention is requiredin order to constitute a promise enforceable in law. Accordingly, the 1,000 shareswhich were the subject of the new issue did not pass to the Trustees of theVoluntary Settlement but dovolved under the last will of the deceased.
Where the identity of a piece of land designated by a Testator falls to bodetermined upon consideration of not only a particular plan mentioned in thewill but also upon other pieces of extrinsic evidence, the Privy Council will notinterfere with the concurrent findings of the trial Court and the Supreme Courtunless some substantial misdirection or error in law has occurred.
The respondent executors rejected the claim of the appellant to apainting to which the latter was entitled as legatee under the will and wronglygave it to a third person.
Held, that, if the executors could not deliver the painting to the appellant,they should pay him the value of the picture, the amount of such valueto be paid by the executors personally and not out of the estate of the Testator.
The last will directed that the gifts contained therein should take effecton the “ date for distribution ” and after tho value of the relevant properties hasbeen “ finally assessed for estate duty purposes ”.
Held, that the date for distribution related to the making of the final, a nd nota provisional, assessment for purposes of estate duty. As the final a=*essmentfigures were in fact communicated to the executors in August 1957, tbo Jute onwhich distribution could have been made could properly be taken to bo 31stDecember, 1957.
.ApPEAL from a judgment of the Supreme Court.
F. N. Gratiaen, Q.C., with M. P. Solomon, L. Kadirgamar andMark Fernando, for the appellant (a legatee).
S. Nadesan, Q.C., with R. K. Uandoo and N. Ghinivamgam, for therespondents (executors and the other legatees).
Cur. adv. vidt.
July 5, 1967. [Delivered by Lord Wilberporce]—
This is an appeal from the judgment and decree of the Supreme Courtof Ceylon dated 24th May 1963 dismissing an appeal from the judgmentof the District Court of Colombo dated 30th May 1960. The proceedingsrelate to the estate of Tudugallege Don Richard Wijewardene who diedon 13th June 1950 and whose will, dated 26th May 1950, was proved on21st March 1951. The proving Executors made an application undersection 729 of the Civil Procedure Code for the judicial settlement ofthe accounts of their administration up to 31st December 1957. Thepresent appellant, who is the eldest son of the Testator and a legateeunder his will, raised certain objections to these accounts. He succeededwith regard to one only in the District Court and appealed unsuccessfullyto the Supreme Court of Ceylon as regards the remaining objections.As regards that objection on which he tiad succeeded, the executorslodged a cross-appeal and succeeded in the Supreme Court in reducing
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the amount awarded to the appellant. The appellant now appeals totheir Lordships against the rejection of his objections and against thereduction in the amount awarded to him in respect of the matter onwhich he was successful.
The appeal, as presented to their Lordships, related to six matters;but as regards two of these, namely [a) certain fees payable to the firm ofProctors acting for the executors and (L) the cost of a passage fromCanberra for a person named in the will as executor, Counsel for theappellant properly and inevitably conceded that these were not matterswhich could be raised on an appeal to this Board. According to theirLordships’ practice, recently restated in Vander Poortenv. Vander Poorten1,appeals concerned with the taking of an account will not be entertainedwhere questions of fact rather than principles of law are involved.
There remain four other questions relating to individual andunconnected matters and their Lordships will deal separately with them.
1. The appellant claims to be entitled to a quarter share of a holdingof 1,000 ordinary shares in the Associated Newspapers of Ceylon Ltd.The validity of this claim depends in the first instance upon whether the
shares in question devolved under the will of the Testator or formedpart of the Trust Fund under a Voluntary Settlement made by theTestator on 28th February 1950. The Testator, who was the principalshareholder and managing director of the company, was the registeredowner in 1950 of 8,020 shares of Rs. 100 each out of a total ordinaryshare capital of 11,500 shares. A meeting of the directors was held on9th February 1950 at which it was resolved to issue 2,000 ordinary sharesat par, such shares to be offered to members in proportion to their existingholdings. On 16th February 1950 a circular letter was sent out to themembers, including the Testator, containing an offer from the companyto each member in accordance with the resolution. The number of sharesof the new issue to which the Testator was entitled under this offer was1,396. There was attached to the circular letter a form of request forallotment to be completed and returned to the company together with apayment of Rs. 50 a share before 15th March 1950. The remainingRs. 50 were to be paid on allotment on or before 15th September 1950.On 28tli February 1950, that is to say after receipt of the offer but beforehe had taken any action upon it, the Testator executed a VoluntarySettlement for the benefit, in the main, of his youngest son. The Settle-ment was, according to a schedule, to include 6,000 ordinary shares in thecompany of which the Testator was the registered owner and 1,000 furtherordinary shares which had been issued but not yet allotted and whichthe Settlor is about to cause to be allotted into the names of the Trustees ”.On the same day the Testator executed a transfer to the Trustees of theSettlement of 6,000 shares of which he was the registered owner. On orabout 7th March 1950 the Testator applied to the company for anallotment of 1,396 new ordinary shares and sent to the company a chequefor Rs. 69,800 being the amount payable on application. The company,
1 [196-3] 1 W. L. R. 945, 65 N. L. R. 385.
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on 7th March 1950, acknowledged me receipt of this application. Ameeting of the directors of the company was held on 6th April 1950 atwhich the applications for allotment of the new shares were recorded andagreed to. On 26th May 1950 the Testator executed his last will in whichhe made certain dispositions of shares in the company but he expresslyexcluded from those dispositions any shares which had formed the subjectof the Voluntary Settlement. He died on 13th June 1950 before anyallotment of the shares of the new issue had been made. In due coursethe 1,396 shares to which the Testator was entitled were allotted to theexecutors on payment by them of the final amount due.
In these circumstances the question arose whether the SettlementTrustees were entitled to call upon the executors to transfer to them
of the allotted shares. In fact the executors transferred to theTrustees, by agreement with three of the Testator’s children, or at leastwithout objection by them, 750 of these shares ; but, on objection beingmade by the appellant, they retained 250. The appellant contends thatthe 1,000 shares in question do not belong to the Settlement Trusteesbut ought to devolve under the will.
Under the Trusts Ordinance of Ceylon (Cap. 87) Section 6, for aneffective trust to be created there must (unless the Settlor is himself tobe the Trustee) be either a testamentary disposition or a transfer of thetrust property to the Trustee.
The learned District Judge held that a valid trust had been constitutedbecause the Voluntary Settlement of 28th February 1950 was effective asa transfer to the Trustees of the rights of the Settlor in the
shares and constituted a valid declaration of trust in respect of thoseshares. The contention that the Settlement amounted itself to a transferappears to their Lordships to involve considerable difficulties both on theform of the Settlement andhaving regard to the facts relatingto the shares.Moreover, such a contention was expressly disclaimed in argument beforethe District Court ; nor does it appear to have been contended before theSupreme Court. Furthermore, if and so far as it is suggested that theSettlor had declared himself a Trustee of the shares, or of the rights inthem, this was inconsistent with the form of the Settlement, and with thewell-known principle that where a trust is intended to be effected by meansof a transfer of property to trustees, and no such transfer takes place,effect cannot be given to the trust as a declaration by the Settlor that hehimself holds the property as Trustee (see Milroy v. Lord1). Theseparticular contentions were in fact not supported in argument bylearned Counsel appearing for the surviving Settlement Trustee. Nordid Counsel endeavour to justify an alternative line of argumentrelied on by the learned District Judge which was to the effect thatthe (admittedly effective) gift of the 6,000 shares in the companycarried with it, as the fruit of that holding, the rights to the newshares issued in 1950. On this point too the facts were against himsince the Testator himself had separated the rights from the mainholding, transferring the one but not the other.
1 (1862) 4 De O. F. cfc J. 264, per Turner L. J. at p. 271.
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In place of these arguments, on which the judgment of the DistrictCourt was based, the respondents contended that the Testator should beregarded as having formally agreed with the Trustees to have allotted, orto transfer, to them the 1,000 new shares. Such an agreement, under thelaw applicable in Ceylon, would, it was argued, be legally enforceable,without the necessity of consideration such as English law would require.Consequently, so soon as the new shares came to be allotted, the Trusteesof the Voluntary Settlement were in a position to enforce the promisemade by the Testator.
Their Lordships express no opinion whether, if the necessary basis offact were shown to exist, an effective trust could be constituted in thismanner under the law of Ceylon, for they are satisfied that the respondentshave faded to show that any such promise was made. That, at the timeof making the Settlement, it was the policy and intention of the Settlor tovest in the Trustees both 6,000 of the existing shares and 1,000 of thenew shares to be allotted, there can be no doubt, but more than a meremanifestation of intention is required in order to constitute a promiseenforceable in law. No evidence was given that any such promise wasmade to, or relied on by, the Trustees, and the respondents were,consequently, driven to rely upon the terms of the Settlement itself. Butthese, though again they are evidence of the Settlor’s intentions, and alsoindicate upon what trusts the shares are to be held once vested in theTrustees, cannot be construed as amounting either expressly or byimplication to a promise. The words most relied on, which appear bothin recital (c) and in the Schedule paragraph (2) are that the Settlor “ isabout to cause to be allotted into the names of the Trustees ”, but theseare words which declare an intent and fall far short of amounting to apromise. In the absence therefore of the requisite factual substratumtheir Lordships must hold that this argument fails. It follows that theappellant succeeds, on this objection, in showing that the 1,000 sharesthe subject of the new issue in 1950, do not pass to the Trustees of theVoluntary Settlement.
There remain certain points of detail. First it appears that since thedeath of the Testator there has been a bonus issue, on a one-for-onebasis, of fully paid shares in the company, so that the 1,000 shares thesubject of this issue are now represented by 2,000 shares. It was notdisputed that the whole of this aggregate holding devolves together.Secondly their Lordships were informed that, of the 750 shares transferredto the Settlement Trustees, a number said to represent one-eighth parthad been transferred to the appellant. The appellant must of coursebring any of these shares into account in any distribution of the
(2,000) shares under the will. Thirdly, although it is now clearthat the 1,000 (2,000) shares should pass under the will, it was contendedby the respondents that the question remains whether they devolveunder clause 15 (1) or under clause 15 (7). Under the former clause theappellant would be entitled to one-quarter (250/500) : under the latterto one-fifth (200/400). In view of the fact that the Testator’s youngest
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son, who would be interested to argue for the second alternative, wasnot represented on the appeal, in order to avoid further litigation, Counselfor the appellant was instructed to agree to limit his claim to 200/400out of the 1,000/2000 shares in the company.
The appeal therefore succeeds on this issue and the accounts must beadjusted to give effect to the points above stated.
The appellant claims that a piece of land known as Field No. 1 ofthe Galpokuna Estate devolves to him under the terms of the will. Underclause 15 (1), a half share “ of the Galpokuna Divison of my GalpokunaGroup ” was devised to the appellant ; the other half share of this divisionwas devised under clause 15 (3) to the Testator’s daughter Ranee, thefifth respondent. By clause 15 (2) of the will the Testator devised “ allthat divided portion known as the Udabaddawa Division of the groupaforesaid ” to his daughter Nalini, the fourth respondent. The issue isunder which of these devises Field No. 1 passes. The question is oneof identification upon which extrinsic evidence is admissible and in facta considerable volume of evidence was led before the learned DistrictJudge and considered by him. This evidence consisted in the main ofthe following matters : (a) The Testator acquired at separate dates twoestates adjoining each other, the Galpokuna estate and the Udabaddawaestate. He combined these two into a single group called Galpokunagroup. Field No. 1 originally formed part of Galpokuna estate. (6) On5th October 1936 two maps were prepared by the same surveyor,Mr. Pieris, who gave evidence at the trial. One of these maps(Exhibit P. 21) showed the Galpokuna group as a whole and was entitled“ Plan of Galpokuna group including Udabaddawa Division ”. The fieldin question was depicted on this plan in a manner which appears toseparate it from the Udabaddawa Division, and a tabular statementgrouped it together with other Galpokuna fields and separately from thethree Udabaddawa fields. However, the plan did not in terms make anyreference to a Galpokuna Division. The other plan (Exhibit P. 23D)purported to show Udabaddawa Division Galpokuna group : the areadepicted included Field No. 1. Moreover, on the plan, under the words“ Udabaddawa Division ” there appear in smaller characters the words“ including Field No. 1 of Galpokuna ”. This plan therefore, on the faceof it, appears to show the field in question as included in the UdabaddawaDivision, (c) There was the evidence of a Proctor, Mr. Abeywardene,relating to the preparation of the plan Exhibit P. 23D. He said thathe had been instructed in 1936 by the Testator to prepare a statementrelating to the title to the block of land included in Exhibit P. 23D.Accordingly he obtained the relevant documents and bound all the titledeeds relating to this block into one volume. On the cover page of thatvolume, in what was proved to be the handwriting of Mr. Abeywardene’sclerk, appear the words “ Title deeds of Udabaddawa Division Galpokunagroup in extent A. 183—R. 2—P. 1 ”. The extent of this acreage was suchas to include Field No. 1. Mr. Abeywardene was not able to say preciselyfor what purpose this volume was assembled though he did say that it
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was not in connection with any proposed will. The plan (Exhibit P. 23D)was amended on 6th November 1941 by a surveyor so as to includecertain new acquisitions, (d) Certain evidence was produced as to themanagement of the Galpokuna group by a firm of estate agents of whichthe Testator was himself a director. A crop disposals book (Exliibit
35) showed that separate crop figures were maintained in relation toeach field in the group as a whole and Field No. 1 was there recordedtogether with 10 other fields of Galpokuna as distinct from the threefields of Udabaddawa. But in the statements sent to the Testator duringhis lifetime no separate crop figures of Galpokuna Division and Udabad-dawa Division were given and the Testator never asked for separatereturns in respect of the two divisions.
In addition to these matters of extrinsic evidence, there was a clause inthe will itself from which it was sought by either side to draw support.This was clause 21 which declared that in each appropriation to theTestator’s children of estates, plantations and premises or divisions orportions thereof, there should be included “ not only all land depictedin the most recent plan of the property appropriated as may be inexistence at the date of my death, but also ” all further or additionalland purchased prior to the Testator’s death.
These matters, which their Lordships have only summarised as theyare very fully set out in the judgment of the District Court, were carefullyconsidered and weighed by the learned District Judge, who came to theconclusion upon the evidence as a whole that the intention of the Testatorin clause 15 of his will was to include Field No. 1 in the UdabaddawaDivision. In doing so he also took into account the fact that, if this wereso, the four elder children of the Testator (the appellant and his threesisters) would receive approximately equal values of land, whereas if theappellant’s contention was correct there would be a considerable inequalityas between the appellant and two of the daughters on the one hand andthe third daughter (Nalini) on the other. The learned judge deduced fromthe terms of clause 15, subclauses 1-4, of the will an intention both inrelation to the number of shares in the Associated Newspapers ofCeylon Ltd., and in relation to immovable property that the childrenshould be treated alike. Their Lordships are in agreement with thelearned judge in attaching some significance to this consideration.
The matter cannot be resolved solely as one of construction of theprovisions in the will, or merely by a decision as to what constitutes themost recent plan referred to in clause 21. In the first place that clausewas designed not so much to lay down what was to be conclusive ordecisive evidence as to the extent of land previously devised, as to makeit plain that subsequent additions were to be included. Any plan shownto be the “ most recent ” would be an element to be taken intoconsideration, but in conjunction with other material evidence as to theTestator’s intention. But, secondly, it appears to their Lordshipsimpossible to say with any certainty that the most recent plan therereferred to was Exhibit P. 21 on the one hand or P. 23D on the other.
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They were contemporaneous, and if P. 21 may be said to designate theestate as a whole, or possibly, the two separate divisions the plan whichdesignated Udabaddawa Division was P. 23D.
The identity of the property designated by the Testator therefore fellto be determined upon consideration of the other pieces of extrinsicevidence to which reference has been made. It was on a balance of thesethat the learned District Judge reached his conclusion that the fielddevolves as part of the Udabaddawa Division.
In such a matter their Lordships would be reluctant to interfere withthe findings of the trial judge, more particularly when these were, as inthe present case, concurred in by the Supreme Court. To justify suchinterference it would be necessary to show that some substantialmisdirection or error in law had occurred. After a careful considerationof the judgment of the learned District Judge their Lordships are fullysatisfied that no such error or misdirection can be shown and indeedtheir Lordships find themselves in substantial agreement with his findings.They therefore find that the appellant does not succeed with thisobjection.
This objection relates to a painting to which the appellant claims tobe entitled under the will but which has not been made over to him bythe executors. The painting was one which was commissioned by theTestator during his lifetime from a Mr. Floyd, who, it appears, wasinvited by the Testator from England in order to execute a number ofpaintings for him. Mr. Floyd in fact did paint a number of picturesduring his stay in Ceylon. The disputed picture was one depicting thescene at the Assembly Hall on Independence Day, 4th February 1948,and showed His Royal Highness the Duke of Gloucester handing overthe grant of independence to the Prime Minister of Ceylon. Under thewill, in consequence of a nomination made by the Testator’s widow, theappellant became entitled to the Testator’s pictures and paintings. Thecase made by the executors at the trial was that the painting did not belongto the deceased and therefore did not pass under his will. They calledcertain evidence to substantiate this which was rejected by the learnedDistrict Judge and it is not now disputed that the painting should havepassed to the appellant and that he was entitled to have it made over tohim. It is further not now in dispute that the executors wrongly handedit over to a third person. The only question now in issue relates to thevalue for which the executors are accountable to the appellant in theevent of the painting itself not being forthcoming. In his originalobjections to the executors’ accounts the appellant placed an arbitraryvalue upon the painting of Rs. 12,500. At the trial, through his counsel, heindicated his willingness to accept Rs. 10,000 and this was the figureawarded by the learned Judge. On appeal this amount was reduced toRs. 1,340. The appellant now'submits that the Supreme Court was notjustified in making this reduction and seeks to have the original awardrestored.
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It is unfortunate that the evidence as to the value of this picture is, onany view, exiguous. This is no doubt because it formed a small item inrelation to the estate as a whole and because the main dispute at the trialwas whether it formed part of the estate or not. Indeed even so late asthe time when the executors lodged their objections against the decisionof the District Court no clear issue had been stated as regards the picture’svalue. In these circumstances their Lordships are reluctant to reach theconclusion that the finding of the District Court should be disturbed.Nevertheless they find it impossible to escape from the conclusion thatthe evidence before it was insufficient to justify the valuation of Rs.10,000.The figure was based upon the evidence of one Atukorale (a witnessfound to be unreliable) that he had been asked by Mr. Floyd to sell itfor Rs.10,000, an insufficient basis for finding as the judge did find thatthis was its true value. Their Lordships therefore consider that theSupreme Court was justified in holding that this finding of the DistrictJudge could not be maintained. The substituted figure of Rs.1,340which was accepted by the Supreme Court was arrived at on the basisof an insurance policy taken out in 1948 by the Testator in which the“ Assembly Hall ” was included and against which the figure of £100was inserted. It appears that this figure was stated by the Testatorhimself in a signed list which he sent to the insurance company. Noevidence was called to show that any valuation at this figure was madeor as to the basis on which insurance cover was requested or given sothat the figure appearing in the policy can hardly be accepted assatisfactory evidence of value. In the same policy a number of otherpaintings by the same artist were indifferently valued at £50.
The appellant sought to justify the higher valuation upon the well-known principle that where a wrong-doer has deprived a claimant of theopportunity of having an item of property appraised, he must submitto having it valued as an object of the highest quality of its kind.Admitting the general validity of the rule, it cannot help the appellanthere, first because it was not satisfactorily shown that the painting couldnot have been valued—since its situation at about the time of the trialseems to have been known—and secondly because the appellant wasunable to provide the court with a valuation on the highest quality basis.In view of the protracted litigation which has taken place, and the notvery considerable sum of money involved, their Lordships are reluctantto remit this issue for a fresh valuation to be obtained but in the circum-stances they consider that this is the only possible course to take, andthat the decision of the Supreme Court must be varied accordingly.They express the hope that agreement may be possible between theparties interested which will make further proceedings unnecessary.
This claim relates to the date for distribution of the Testator’sestate. The question arises under clause 15 of the will in which it wasdirected that the gifts therein contained, which included gifts to theappellant, should take effect on the “ date for distribution Theexecutors claim and their accounts have been submitted on the basis
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that the date for distribution was 31st December 1957. The appellant’sclaim (as amended) is that the correct date should be 31st March 1954.These differing dates are in each case related to the making of an assess-ment for purposes of estate duty. The earlier date contended for by theappellant is related to the fact that an assessment for estate duty wasmade on 3rd March 1951 and he contends that in accordance with estateduty legislation this assessment became final after three years, on 3rdMarch 1954, in the absence of fraud or evasion. Consequently it is said theexecutors could have distributed the estate on 31st March 1954 providedthat they had sufficient money in hand. The appellant undertook toshow from the accounts that in fact sufficient money was in the handsof the executors. The executors on the other hand contend that theassessment of 3rd March 1951 was a provisional assessment only (it is infact so described) and the date contended for by them is related to afinal assessment for estate duty purposes which was made on 4th June1958. The effect of this assessment was communicated to the executors inAugust 1957 and it is consequently contended that distribution couldnot have been made before 31st December 1957.
Before considering the relevant clause in the will it is necessary toexamine the machinery adopted in Ceylon as regards assessment ofestate duty. The present Estate Duty Ordinance (Cap. 241, which datesfrom 1938) does not make any provision for a provisional assessment.It requires that a return should be made by the executors, that estate dutyshould be assessed by the Commissioner of Estate Duty and that probateshall not issue until his assessment has been made and a certificate giventhat the appropriate estate duty has been paid. An additional assessmentmay bo made at any time within three years after the original assessment,but not after this period unless there has been fraud or ivilful evasion.This procedure evidently involves practical difficulties in relation toestates of any size or complexity and it was found by the District Courtthat a practice has been established whereby a provisional assessment ismade by the Commissioner based on information supplied by theexecutors and whereby Letters of Administration or of Probate are issuedupon the strength of a provisional certificate showing that duty inaccordance with the provisional assessment has been paid. Later a finalassessment is made on the basis of figures officially accepted. Thisprocedure seems to have originated under the earlier Estate DutyOrdinance (No. 8) of 1919 as is confirmed by the case of Saibo v.Commissioner of Stamps x. The learned judge took the view that thesame practice of making a provisional assessment was followed under thepresent Ordinance, that no final assessment takes place at this stage andthat notwithstanding the provisional assessment it is open to the Commis-sioner to make a final assessment beyond a period of three years of thedate of the provisional assessment. 1
1 (1038) 40 N. L. R. 374.
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Whether such a procedure, convenient though no doubt it is, is strictlyconsistent with the terms of the present Ordinance, is not a matter onwhich their Lordships need express any opinion. For the question fordetermination is not whether the right procedure has been followed, butwhat the Testator meant in his will. For this purpose, their Lordshipsagree with the learned District Judge that the existence de facto of theprocedure of provisional assessment, followed by final assessment, isrelevant, and that it is this which has to be related to the relevanttestamentary clauses. Their Lordships will deal with these briefly sincethe applicable dispositions are fully considered in the judgment of thelearned District Judge, with which their Lordships are here in fullagreement.
The relevant clauses in the will are clauses 14,15 and 16. The schemeof these clauses is that the distribution which is directed to be madeunder clause 15 cannot be carried out until the executors have consideredwhether some adjustment or charge of the assets to be distributed toindividual children requires to be made under clause 16 in view of stepstaken by the executors to provide for estate duties. These adjustmentsor charges, however, cannot themselves be decided upon until the valueof the relevant properties has been “finally assessed for estate dutypurposes ”. These latter words are those contained in clause 16 and it mustbe clear in the context of the practice referred to that they contempateda final assessment made by the authorites rather than any provisionalassessment which may have been made on figures supplied by theexecutors. It follows that the necessity or otherwise for adjustments orcharges cannot be decided upon until the final assessment has been madeand therefore that the date for distribution must wait upon that finalassessment. From what has been said as regards the assessment proce-dure the conclusion appears inescapable that the date for distributioncannot be prior to, but on the contrary must be deferred until after, thefinal assessment, which in this case was not made until June 1958. TheirLordships are content to accept that, as the assessment figures were infact communicated to the executors in August 1957, the date on whichdistribution could have been made can properly be taken to be31st December 1957.
Their Lordships do not think it necessary to expand upon this particularobjection for the reasons that they are fully satisfied with the carefulanalysis of the will and of the estate duty legislation made by the learnedDistrict Judge and with his conclusion. This objection therefore alsofails.
To summarise :
1. The appellant was entitled to an appropriate share of the1,000 Ordinary Shares in Associated Newspapers of Ceylon Ltd.referred to in the Note to Schedule I of the voluntary final accountdated 16th July 1958 ; as well as of any bonus shares issued in respectof the said 1,000 shares since the death of the deceased. Such
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The Shell Company of Ceylon Ltd. v. H. D. Perera
appropriate share shall be taken to be one-fifth less any part of thesaid 1,000 shares (and bonus shares) which the appellant may havealready received. The accounts are to be adjusted accordingly.
The Order of the Supreme Court is to be varied by directingthat if the executors cannot deliver the painting of the Assembly Hallto the appellant, the executors shall pay him the value of the pictureto be assessed by the District Court, the amount of such value to bepaid by the executors personally and not out of the estate of theTestator. The proceedings will be remitted to the District Court foxthe purposes of such assessment.
As regards the other objections to the said voluntary account,the appeal is dismissed and the Order of the District Court affirmed.
Their Lordships will humbly advise Her Majesty accordingly.
The respondent executors are to pay to the appellant out of the estateof the deceased one-half of his costs of this appeal. The costs of therespondents are to be paid out of the estate of the deceased.
Appeal partly allowed.