Goodwill rights under partnership deed do not pass on death where the deceased's interest ends, defeating estate duty charge.

A partnership deed that extinguishes a partner's claim to goodwill on death prevents any property in that goodwill from passing to the deceased partner's estate. Where clauses 14 and 15 provided that the partner's interest in the firm ended on death and no claim to goodwill survived, the deceased had no subsisting or transferable interest at the moment of death. On that basis, section 5 of the Estate Duty Act, 1953 was not attracted because no property passed on death, and section 6 was inapplicable. The alleged share of goodwill could not therefore be brought into the estate for duty purposes.

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Issues: Whether, in view of clauses 14 and 15 of the partnership deed, any property in the deceased partner's share of the firm's goodwill passed on his death so as to attract estate duty under section 5 of the Estate Duty Act, 1953.

Analysis: The partnership deed expressly provided that on death or retirement the partner would have no claim to goodwill, and that the deceased partner's interest in the firm would come to an end on death. On that footing, the deceased had no subsisting or transferable interest in the goodwill at the moment of death. The Court accepted the view that section 5 is attracted only when property passes on death, but held that where the partner's right in the goodwill is extinguished by the partnership terms, there is no continuity of interest and no passing of property. Section 6 was found inapplicable.

Conclusion: No property in the goodwill passed on the death of the deceased partner, and the addition of the alleged share of goodwill to the estate was unjustified.

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