Jones, NO and Others v Borland SSC and Others

• Jurisdiction: South Africa
• Judge: Trollip J
• Judgment Date: 31 October 1968
• Citation: 1969 (4) SA 29 (W)
• Hearing Date: 08 October 1968
• Court: Witwatersrand Local Division

Trollip, J.:

The testatrix died on 11th December, 1963, in Scotland, where she was domiciled, leaving two wills that she had executed in Scotland on 20th October, 1961. The one dealt with all her assets in the Republic, which were appreciable - about R105,000 in value, and the B other with her assets in the United Kingdom. At the time the wills were executed estate duty was not payable in the United Kingdom on any immovable property which was owned by a deceased domiciled in the United Kingdom but which was situated abroad. Thereafter, in 1962, such a d duty was introduced in that country for the first time by the Finance Act of that year (11 and 11 Eliz. 2 C. 44). In consequence, the net assets of C the overseas estate have proved insufficient to pay all the estate duty levied in the United Kingdom; a balance of about £8,300 is still due and payable there. On the other hand, the final liquidation and distribution account of the South African estate shows that there is a net amount of R86,895 available for distribution. The question raised in D the application by the applicants, who are the testamentary executors of the South African estate, is whether any part of the surplus must now be transferred to the domiciliary executors in Scotland for payment of the remaining estate duty, or whether they, are the ancillary executors here, should ignore the claim for foreign estate duty and distribute the surplus direct to the testamentary beneficiaries.

E The difficulty that has arisen stems from the fact that the claim by the revenue authorities in Scotland for the estate duty is not enforceable in any of the Courts of the Republic, for they have no jurisdiction to entertain legal proceedings for the enforcement of the revenue laws of another State. See Commissioner of Taxes, Federation of Rhodesia v McFarland, 1965 (1) SA 470 (W). There VIEYRA, J., F collected and reviewed all the authorities, from which it appears that the same principle is also well established in the United Kingdom. Consequently, if the appropriate part of the surplus in the South African estate were to be transferred to the domiciliary executors in Scotland, where the claim for estate duty is enforceable, it would be used to pay a debt which was unenforceable here. Should the local G executors do that, or be allowed to do that?

Mr. Philips, for the applicants, contended that this Court is endowed by common law with a discretionary power to permit or disallow it, and he relied on Re Lorillard, (1922) 2 Ch. 638 (C.A.). There the testator, H domiciled in New York, died leaving assets and creditors both in England and America. The English estate had a surplus after paying all its creditors, whereas the American estate was exhausted leaving unpaid certain creditors whose claims, however, were prescribed by English but not American law. The English executor applied to Court for directions as to how he should deal with the surplus. At the same time the American executor applied for the surplus to be transferred to him for payment of those creditors and distribution of the balance to the beneficiaries. In the Court of first instance EVE, J., made an order

Trollip J

giving the American creditors two months within which to prove their claims against the English estate and, failing that, directing the English executor to distribute the surplus among the beneficiaries. No such claims were proved, presumably because, being prescribed, they were A not provable. On appeal the order of EVE, J., was upheld. The Court of Appeal held that the Court had a discretion to order either transference or distribution of the surplus, and it refused to interfere with the exercise of that discretion by EVE, J. The decision is directly in point, for here the claim for the estate duty, like the prescribed debts in that case, is unenforceable in the Courts of the ancillary executors. B Hence, if I were satisfied that our law too conferred such a discretion on the Court, I would follow Lorillard's case and direct the applicants not to...