The Commissioner of Estate Duty v. Shanti Ramesh Ramchandani
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CACV000011/1981 Estate Duty - proceeds of life insurance policy - insurance company based in Canada but having branch office in Hong Kong - amount "payable by bankers' demand draft on Toronto, Canada for Canadian Dollars" - Deceased died in Hong Kong - beneficiary in Singapore - proceeds were "property situate outside the Colony", and excluded from liability. Contract - policy of life insurance - situs of debt - currency indorsement implied that debt would be paid in Toronto - in any event no evidence that debt would he paid in Hong Kong in the ordinary course of business.
BETWEEN
___________ Coram: Sir Alan Huggins, V.-P., Yang & Barker, JJ.A. Dates of hearing: 8, 9 and 25 February 1982 ___________ JUDGMENT ___________ Sir Alan Huggins, V.-P. : 1. The Plaintiff sought a declaration in the following terms:
2. The Company had its head office in Toronto and a branch in Hong Kong which was granted only limited authority. The Deceased was born in Hong Kong, lived here all his life and died here at the age of 20 years. It was a whole life policy. His administratrix lives in Hong Long and took out Letters of Administration here. The policy bore the following endorsement:
Pursuant to that endorsement application was made to the Hong Kong branch by the administratrix's solicitor for payment of the moneys due under the policy, although we are told that they asked for payment direct to the beneficiary, who is in Singapore. Part payment has been made accordingly. 3. A demand for payment of estate duty was made by the Defendant on the basis of s.6(1)(f) of the Estate Duty Ordinance, which is in these terms:
The Plaintiff contends that the property, although within that provision, is excluded from liability to estate duty under s.10(1)(b) as "property situate outside the Colony". 4. The beneficiary not being a party to the contract his right is a chose in action. It is a right to payment of the sums specified in the policy, but there is a further indorsement which provides: CURRENCY
On this the question arises whether the debt constitutes property situate outside the colony. The judge decided that it did and the Commissioner appeals. 5. The judge found that the policy was not a specialty and this finding has been accepted by both sides. It is then agreed that the situs of a simple contract debt is the residence of the debtor:
There was some argument before us based upon the distinction between a contractual right and a chose in action. However, the chose in action in the present case arises from a simple contract and the only possible materiality of the distinction is that, whilst a debtor whose claim lies in contract must seek out and pay his creditor, it may be that in a case here the debt is based upon a chose in action it is for the creditor to seek out the debtor. On the view I take this difference is not material here. 6. A difficulty may arise where a person has a residence in more than one place, but it is common ground that a contract can localise a debt by making provision for the place of payment and that here one must first inquire whether the policy has done so. Again it is common ground that there is no express provision. However, the parties are not agreed whether there is an implied provision. Indeed, as I understood it, the Commissioner at first submitted that there could be no implied provision as to the place of payment and that a passage in F. & K. Jabbour v. Custodian of Israeli Absentee Property [1954] 1 W.L.R. 139 at page 146 was inconsistent with the decision of the Privy Council in The King v. Lovitt, supra. In the former case Mr. Justice Pearson said:
I am satisfied that this passage is correct and that it is not inconsistent with The King v. Lovitt. In any event the Commissioner's argument in its final form was that, if there was an implied provision, it was for payment in Hong Kong, but that, on the facts, there was no implied provision and that the place of payment was, therefore, to be in accordance with the ordinary course, of business between the parties. 7. The judge in the court below came to the conclusion that there was an implied term for payment in Toronto. In deciding whether a term as to the place of payment is to he implied one may have to ask whether, having regard to the necessary course of business between the parties (The King v. Lovitt at page 219, but the emphasis is mine), one must conclude that the parties must at the time of making the contract have intended to localise the debt. That is a different thing from asking where the debt would be paid according to the ordinary course of business. However, the judge based his implication of a term as to the place of payment entirely upon the currency endorsement on the policy, which I here already cited. He, expressly indicated that there was no necessity to resort to a consideration of the course of business between the parties. He was obviously impressed by the fact that in two cases in England, Pick v. Manufacturers Life Insurance Company [1958] 2 Lloyd's Rep. 93 and Rossano v. Manufacturers' Life Insurance Company [1963] 2 Q.B. 352, different judges had had no difficulty in implying terms where almost identical clauses had been included in life insurance policies. It is suggested that in both those cases the view expressed on this matter was obiter. That of Mr. Justice McNair in the latter case was obiter, although it is not so clear that that of Mr. Justice Diplock was. He said at p.99 :
These opinions were certainly not unconsidered and the judge was entitled to adopt them. Furthermore, it matters not in this connection that the debts in both the English cases were contractual, the policies being endowment policies which had matured. I see no reason to come to a conclusion different from that reached by the judge. 8. What I have already said will have indicated the sense of the term which was to be implied. Mr. Barlow submitted that it vas necessary to consider the course of business between the parties to the policy in deciding what term should be implied and he emphasized the following factors: (1) that the insurance was negotiated in Hong Kong, (2) that the policy was delivered to the Assured in Hong Kong, (3) that the Assured was born and. lived in Hong Kong, and (4) that the draft was to be delivered in Hong Kong and would constitute conditional payment, which would become a final payment by relation back when the draft was honoured, notwithstanding that collection was to take place in Toronto (A suggestion that the handing over of the draft would constitute accord and satisfaction was abandoned). In my view only the fourth of these factors could possibly have any significance in relation to this issue and I see no justification for saying that the draft was to be handed over in Hong Kong. I have cited the indorsement which told the beneficiary where to apply for payment. "The address above" there mentioned was an address in Toronto. The primary beneficiary was not even resident in Hong Gong at the time of the contract (or thereafter) and there was no reason to anticipate that application for payment would be made to the Company's Hong Kong office. In fact, when application was made to the Hong Kong office, a draft by way of payment on account was sent direct from the Company's head office in Toronto to the beneficiary's guardian in Singapore. Even if the draft were in truth required to be delivered in Hon Kong, the fact that it had to be drawn "on Toronto" would have meant that there was no property situated in Hong Kong which could have beer, liable to estate duty: any funds to meet the draft were necessarily in Canada and might never be remitted to Hong Kong. 9. If I be wrong as to an implied term, the question arises where the debt would be paid according to the ordinary course of business. In addition to the factors already listed in relation to the implied term one would have to consider matters arising after the conclusion of the contract. These are said to include: (a) that the Assured died in Hong Kong, (b) that the application for payment was made to the Hong Kong office, (c) that the draft for the first and only premium was handed over in Hong Kong, (d) that an interim receipt was given in Hong Kong, (e) that the policy was delivered to the Assured in Hong Kong, (f) that the policy remained in Hong Kong up to the time of the Assured's death, (g) that Letters of Administration of the Assured were taken out in Hong Kong, (h) that the Company still had an office in Hong Kong at the date of the Assured's death, (i) that the policy was on the register of the Company at its Hong Kong office, and (j) that in a letter dated 18th August 1977 and written to the Office Manager of the Company's head office it was said that settlement should be made in Hong Kong. I do not think that the opinion of someone in the Company's Hong Kong office is a relevant matter, nor can it be relevant that the policy was on the register of that office. The Letters of Administration are not relevant, because the moneys payable do not form part of the estate of the deceased Assured and are payable to the beneficiary upon proof of death. The remaining matters are not sufficient to show either that the draft would probably be tendered in Hong Kong or that the moneys would probably be paid in Hong Kong in the ordinary course of business. It was not extraordinary that the draft should be sent direct to Singapore from the place where the funds were held: it could as easily be sent to Singapore as to Hong Kong. This was not a case where payment would be effected by the Hong Kong office and, indeed, the General Hanager of the Hong Kong office did not, under the Power of Attorney produced in evidence, have authority to pay the moneys due. The relevant matters in this case were almost identical to those in Rossano v. Manufacturers' Life Insurance Company and it is significant that Mr. Justice McMair had no difficulty in deciding that the Assured, if all had gone well, would have collected his money by presenting his banker's draft at the place whereon it was drawn. It seems to me that the beneficiary here would have been likely to do the same, although he might, of course, have discounted it in Singapore. It makes no difference that in Rossano's Case there was no interim receipt but, instead, an interim policy for one of the insurances. There has been considerable discussion of the sentence at p.379 of Mr. Justice McNair's judgment, where he said:
It was urged upon us that the judge was there rejecting the view of Mr. Justice Diplock in Pick's Case that the place designated as the place for collection of the draft was the sites of the debt. I do not so read the judgment. I think the judge was probably indicating the unlikelihood that the money would be paid in Egypt even if there were no implied term and if it were, therefore, necessary to ascertain the place of payment in accordance with the ordinary course of business. 10. I think Mr. Justice Rhind came to the right conclusion and would dismiss this appeal. Yang, J.A.: 11. I have had the advantage of reading the judgment of the Vice-President in draft and I also would dismiss the appeal for the reasons he has given. Barker, J.A.: 12. 1 agree and there is nothing I can usefully add. 25th February 1982. Representation: B. Harlow (Legal Department) for Appellant. G. Horton (Hastings & Co.) for Respondent. |