Scottish Court of Session Decisions

On 6th December 1906 the Lord Advocate, as representing the Commissioners of Inland Revenue, raised an action against the Caledonian Railway Company, in which he craved—(1) declarator that “under and in respect of section 12 of the Finance Act 1895 ( v. sup. in rubric) … the defenders, when authorised by virtue of any Act to purchase property, are bound to produce to the Commissioners of Inland Revenue, within three months after completion of the purchase, an instrument of conveyance

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of the property, duly stamped with the ad valorem duty payable upon a conveyance on sale of the property;” and (2) decree ordaining the defenders to produce to the Commissioners of Inland Revenue the instrument of conveyance or disposition disponing to the company St Columba's Gaelic Church in Glasgow, duly stamped with the ad valorem duty payable thereon, or, in the event of their failure to do so, decree for £223, 10s. (or such other sum as might be found to be the amount of the duty), with interest thereon at five per cent. from 3rd June 1901 till payment.

Under their Special Act, the Caledonian Railway (General Powers) Act 1899 (62 and 63 Vict. cap. ccxv), the defenders were authorised to take for the purposes of their undertaking certain lands in the City of Glasgow adjoining the west side of their Central Station there, including the subjects held in trust for St Columba's Gaelic Church, Glasgow. These subjects were acquired compulsorily, the price being fixed by arbitration. Following on the award, the trustees executed and delivered to the defenders a conveyance dated 24th, 25th, 27th, and 29th May, and 3rd June 1901. On 7th June 1901 the conveyance (the deed, production of which was called for in the summons) was taken by the defenders to the office of the Inland Revenue Commissioners in Glasgow to be marked provisionally with the amount of stamp duty payable, and was then impressed with a stamp duty of £223, 10s., the duty payable.

The pursuer, inter alia, averred—“(Cond. 2)…. It is explained and averred that the stamps which the deed in question bears were impressed in Glasgow on 7th June 1901, when it was presented at the Collector's office there to be stamped, but the deed was not then nor afterwards produced duly stamped to the Commissioners of Inland Revenue in compliance with the provisions after mentioned of section 12 of the Act 58 Vict. c. 16 ( v. sup. in rubric). Had the deed been presented in order that it might be produced as a duly stamped instrument to the Commissioners in terms of that section, the Collector in Glasgow would have forwarded the deed to the Comptroller at Edinburgh, or have instructed the agent to do so himself. … (Cond. 4) Information has been asked from the defenders as to the deeds of conveyance relating to the property purchased by them in recent years under powers conferred by statute, and they have been repeatedly reminded of the obligation imposed on them by the Finance Act of 1895 to produce to the Commissioners of Inland Revenue stamped instruments of conveyance on acquiring property by purchase under statutory powers. The defenders, however, have declined to furnish any information as to the conveyances in their favour of property so acquired, and they refuse to make production of any instrument of conveyance or disposition of such property, denying that they are under any obligation to do so.…”

In answer the defenders stated—“(Ans. 2) The conveyance … was on 7th June 1901 produced by the defenders at the office of the Commissioners of Inland Revenue at Glasgow, and was then duly impressed with a stamp duty of £223, 10s., being the amount of the ad valorem duty payable upon a conveyance on sale of the foresaid land or property … The defenders, by said production, satisfied the whole requirements of the after mentioned section 12 of the Finance Act 1895.” … (Ans. 4) Admitted that the Commissioners of Inland Revenue demand the defenders to produce to the Commissioners conveyances of all property purchased by the defenders for the purposes of the defenders' Special Acts within three months after the purchase of such property, and that the defenders deny that they are bound, under the Finance Act 1895, to produce to the Commissioners conveyances of such property within three months after the purchase thereof. Explained that in many cases where property is purchased by the defenders for the purposes of their Special Acts no conveyance has been granted to the defenders within three months after the purchase or until long after the purchase thereof, and that the said Finance Act does not apply to property scheduled to the defenders' Special Acts for the purpose of conferring on the defenders power to take such property compulsorily, subject to the provisions of the Lands Clauses Consolidation (Scotland) Act 1845.…”

The defenders, inter alia, pleaded—“(2) The defenders are entitled to absolvitor, in respect that, upon a sound construction of the Finance Act 1895, the pursuer is not entitled to decree in terms of the declaratory conclusions of the summons. … (5) Separatim—The defenders having made production of the said conveyance in terms of section 12 of the Finance Act 1895, and having made payment of the sum of £223, 10s., being the amount of the ad valorem duty payable on the conveyance in question, should be assoilzied.”

On 10th July 1907 the Lord Ordinary ( Johnston) pronounced this interlocutor:—“Finds that the instrument of conveyance or disposition referred to in the summons has already been produced to the Commissioners of Inland Revenue in the sense of the Finance Act 1895 (section 12), and therefore assoilzies the defenders from the conclusions of the summons, and decerns.”

Opinion.—“This case is brought to test the duty of railway and other public companies and bodies under the 12th section of the Finance Act 1895 (58 Vict. cap. 16), or, perhaps more properly stated, to determine what the Inland Revenue may insist on as the due compliance by such companies, &c., with that enactment.

“To lead up to a consideration of the Act of 1895, it is desirable to examine the state of matters which preceded it. The object of the 12th section of that Act being ostensibly to secure the revenue in the duties, expressing it generally, upon the transfer of property authorised to be purchased by railway companies, &c., by way

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of a general enactment of universal application, it is understood that the same object had previously been in use to be attained by special clauses, inserted at the instance of some public department, probably the Board of Trade, in all private Acts, where the necessity for such arose.

At my request the defenders, who are the Caledonian Railway Company, have lodged in process specimens of such clauses.

Their Act of 1889, while it gives them compulsory power (sec. 4) to acquire lands in usual terms, expressly sanctions (sec. 33) four agreements for the acquisition of lands, ‘provided always that within three months from the date of completion of each of the purchases contemplated by the agreements comprised in schedules (C, E, and F) to this Act, the companies shall produce to the Commissioners of Inland Revenue a duly stamped deed of conveyance in respect of such purchase; and if the company shall not produce such deed as aforesaid, the ad valorem stamp duty, with interest thereon at the rate of five pounds per centum per annum from the date of such completion to the date of payment, shall be recoverable from the company, with full costs of suit, and all costs and charges attending the same.’

Their Act of 1891 (sec. 4) gives them compulsory power to acquire lands in usual terms. But (sec. 39) also empowers the company, in conjunction with the Glasgow and South-Western Railway Company, to purchase by agreement a certain private railway, and to maintain, improve, and work the same, ‘provided any such purchase shall be evidenced by a duly stamped conveyance, which shall within three months from the date of vesting’ of the said private railway in these companies be produced to the Commissioners of Inland Revenue, mutatis mutandis, as in the before recited Act.

Then their Act of 1894 (secs. 40 and 41) authorises them to acquire the undertaking of the Forfar and Brechin Railway Company on terms fixed by the Act, and (sec. 42) on payment, transfers to and vests that undertaking in the Caledonian Company as from the date of the passing of the Act, ‘provided that within three months after payment of the consideration of the transfer the company shall produce to the Commissioners of Inland Revenue’ a Queen's printers' copy of the Act, duly stamped as if it were a deed of conveyance, all as provided, mutatis mutandis, in the first recited Act.

Now, it is here to be noted in passing that though two of these Acts at least provide for the compulsory acquisition of lands in general terms, their enactments regarding the production of a duly stamped conveyance or copy of the Act apply only to the cases of statutory vesting, or statutory confirmation and sanction of provisional agreements for purchase. And it is patent that some such provision was necessary for the protection of the Revenue, because otherwise in the case of a statutory vesting no conveyance or transfer was necessary, and therefore nothing came into existence naturally requiring to be stamped; and in the case of lands acquired by provisional agreement scheduled to an Act, and expressly confirmed and sanctioned by it, there was always the risk that the company would, at anyrate for a period of years, if not altogether, rest content with possession on such an agreement with statutory confirmation and sanction, and take no feudal conveyance requiring to be stamped. It does not therefore appear to have been considered necessary, prior to 1895, to require production, under the same condition or penalty, of conveyances of lands taken in the ordinary way by compulsory purchase, where a feudal title by conveyance would follow, as in similar voluntary transactions.

Subsequent to the passing of the Finance Act 1895 these particular clauses in protection of the Revenue were dropped out of the defenders' private Acts, and I presume out of all other similar Acts, as, for instance, in the defenders' Act of 1902, where (sec. 16) compulsory powers in ordinary form are given; (sec. 17) certain prior agreements for the purchase of lands are confirmed and sanctioned; and (sec. 34) certain subordinate independent undertakings are statutorily vested in the company, and no provision in protection of the Revenue follows. Examples might be multiplied, but this example is a complete and comprehensive one.

Now the section of the General Finance Act 1895, which I have to interpret and apply (sec. 12), is as follows:—

Where, after the passing of this Act, in virtue of any Act, whether passed before or after this Act, either

( a) any property is vested by way of sale in any person; or

( b) any person is authorised to purchase property, such person shall within three months

( a) after the passing of this Act or the date of vesting, whichever is later, or

( b) after the completion of the purchase,

as the case may be, produce to the Commissioners of Inland Revenue

( a) a copy of the Act printed by the Queen's printer of Acts of Parliament, or some instrument relating to the vesting in the first case, and

( b) an instrument of conveyance of the property in the other case, duly stamped, with the ad valorem duty upon a conveyance on sale of the property; and in default of such production, the duty, with interest thereon at the rate of five per centum per annum,

( a) from the passing of the Act, date of vesting, or

( b) completion of the purchase, as the case may be, shall be a debt to Her Majesty from such person.'

I have quoted the ipsissima verba of the Act, though the spacing and lettering is mine, to assist in its consideration.

What is meant by ( a) a statutory vesting by way of sale, and how the want of a formal conveyance on sale in such a case

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is to be supplied, is quite clear and needs no comment.

But a question of some difficulty is raised on the interpretation of the alternative expression ( b) ‘authorised to purchase property.’ The Department maintains that it covers every case of purchase by a railway or other company, &c., by virtue of statutory powers, whether by agreement receiving statutory confirmation and sanction, or by exercise of compulsory powers statutorily conferred. The defenders, on the other hand, maintain that it applies only to the case of statutory confirmation and sanction of an agreement to purchase.

The defenders maintained with great force that the general provision was only the crystallising of the particular clauses in use to be inserted in private Acts; that the necessity was the same, and is the measure of the general, as it had been of the particular, provisions. I did not receive any explanation from the Department of a more extended necessity or purpose, leading to a more extended interpretation. The terms of this part of the provision are no more happily chosen than are those of another part to be immediately noticed, and I feel the full force of Mr Clyde's argument. If I found it necessary for the disposal of the case to determine this question, I should feel much hesitation, notwithstanding that the general expressions ‘authorised to purchase,’ ‘in virtue of any Act,’ are capable of covering more than merely confirmations and sanctions of provisional agreements, and might perfectly well cover acquisition by the exercise of statutory compulsory powers. My hesitation is not diminished by the impression that the extended construction is not necessary for the protection of the Revenue. There was a time in which instances occurred, and I remember of more than one in my own particular practice, where the railway companies in Scotland were in the earlier days of railway enterprise dilatory in taking, or the landowners in granting, conveyances of land compulsorily acquired, and both rested on possession following on the exercise of compulsory powers and a settlement of the price. But I think that these days are past, and that railway companies and proprietors now treat compulsory purchases just like ordinary transactions, and that conveyances are taken and recorded in ordinary course.

Nor is my hesitation diminished by the difficulty of interpreting the expression ‘completion of purchase.’ This expression is vague, and the Crown have not assisted to elucidate it. They have evidently felt the difficulty, for they have not attempted distinctly to interpret it, but have in their summons somewhat vaguely assumed that at latest it must be the date of execution of a disposition of the lands acquired. Now according to the generally accepted doctrine, the Act which confers compulsory powers is the equivalent of an offer of the property, and the company's notice to treat is the acceptance, and on offer and acceptance, even when the offer has to be fixed by arbitration, a purchase is completed past resiling on either side. But as arbitration, failing agreement to fix the consideration, must follow in compulsory purchase, and often takes months, even years, to carry to an award, before which an execution of a conveyance on sale is not possible, it is evident that the statute cannot mean to fix the date of the notice to treat as the date within three months of which an instrument of conveyance of the property duly stamped must be produced to the Commissioners of Inland Revenue. It is not, however, easy to say what other date is intended. It must either be the arbiter's award, as I think the Crown are inclined to argue, or the execution of the conveyance. Now, once the notice to treat is given, either party can, under the Lands Clauses Act, compel arbitration proceedings resulting in the fixing of a price. And the landowner, after the award, may compel the company to take a title—see in re Carey Elwes' Contract, [1906], 2 Ch. 143. But the Inland Revenue cannot interfere to hasten the parties. It is difficult therefore to see, if this is the meaning and intention of the phrase, how in such cases the assumed object of the statute is attained, if that object is the mere speedy collection of the revenue.

But assume the extended interpretation contended for by the Department, and that the completion of the purchase is, in the sense of the statute, the execution, and I think it must be added the delivery, of the conveyance, it falls now to be considered what it is that the Department demand. It is this, that conveyances on compulsory sale shall, in the matter of stamping, go through forms and ceremonies not required in the case of any other conveyances on sale.

To test the question, the Department have fixed on a certain conveyance to the Caledonian Railway Company, by the Trustees of the Church of Scotland, of St Columba's Gaelic Church, Glasgow, which followed on a compulsory taking and arbitration proceedings. The duty has been paid, and the document has been stamped in ordinary course. But the Department says to the defenders, you must produce the conveyance again in order that it may be examined, and entered on a register we have instituted, and be marked with a certificate we have adopted accordingly; and as a compulsitor on the company to bring the document back to the Department, they sue for the duty already paid, with 5 per cent. interest, from the date three months after its execution, which took place six years ago.

I thought the demand unreasonable on my own knowledge of the practice of the Department. But as I could not trust to that, I thought it proper to remit to the Depute-Keeper of the Signet to report. His report has confirmed me in thinking that, whatever view may be taken of the matters I have already referred to, the Department are not justified in their demand.

If all conveyances were in use to be

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written on paper already stamped, then, on their interpretation of the statute, the Department would be entitled and bound to demand production of such documents, and I do not think that the defenders would oppose the demand. But the practice is otherwise. For manifest good reasons, the practice has long prevailed, for which the internal arrangements of the Department provide, of writing conveyances and all more important documents on plain paper, and then handing them in to be stamped with the proper stamp, and so giving opportunity to the party sending the document to be stamped, and the Department, to come to a prima facie agreement as to the stamp to be impressed. I refer to Mr Paul's report, the details of which I need not repeat. For my purpose the gist of it is this—A deed which it is desired to have stamped is handed to the ‘deeds marker.’ The ingiver pencils on the left-hand top corner the amount of duty which he proposes to pay. The deeds marker examines the deed sufficiently to satisfy himself whether he can pass it for the amount so proposed. If he can do so, he initials it and passes it on to be stamped. If he cannot, and cannot agree with the ingiver on an altered duty, he passes the deed on to the Solicitor's office for consideration—not for formal adjudication, unless that is desired and an extra fee paid—but that the superior officer of the Department may consider the matter of the stamp. Whether the deed goes direct to the ‘stamper’ or through the ‘check clerk’ is immaterial for the present purpose. What is material is this—In Scotland the Controller of Stamps and Taxes represents the Commissioners of Inland Revenue, the ‘deeds marker’ is an official in the Controller's Department. The Commissioners cannot act personally in the matter, nor can the Controller. If the conveyance is produced to the ‘deeds marker,’ or (if he is not satisfied and submits the deed to the Solicitor for his opinion) to the Solicitor, and if the deed remains in the hands of the Inland Revenue Authorities until it is stamped prima facie to their satisfaction, it appears to me that the obligation to produce it duly stamped to the Inland Revenue is reasonably complied with, for the emphasis is not on the word ‘duly,’ but on the word ‘produce.’

Where one finds an enactment with a practical object drawn with some indefiniteness, and not altogether contemplating the customary practice, alongside of which it has to be applied, I think that a reasonable application consistent with the object should be sought.

Now, there is nothing in the matter of duty to differentiate conveyances to railway companies from any other conveyances. And the object of the enactment is not, I am persuaded, to enforce a compulsory adjudication of the stamp duty, as if the essence of the enactment was contained in the word ‘duly.’ For one reason, that however often the document is produced to the Commissioners, unless the stamp is formally ‘adjudicated’ and the adjudication fee paid, the mouth of the Inland Revenue is not closed. But nevertheless the document has been as ‘duly stamped’ as any other document which has passed through the mill of the Stamp Office, and the ingiver has done his duty on that behalf. The object of the enactment is to secure that the revenue from stamps is promptly collected; and if they choose, the Inland Revenue officials can secure all that, in my opinion, the Act intends, when the document is in their hands for stamping; and before it is given out again duly stamped if it has not been timeously stamped they can exact interest on the duty. If they cannot trust to their ‘deeds marker’ to see to this, they have only to instruct him to pass on all such documents per aversionem to the solicitor, or to some special official, as I presume they would be passed on if the Department were warranted in insisting on the system they seek to initiate.

I have all sympathy for a public Department which is in any way thwarted by members of the public in the execution of a statutory duty. But I cannot myself see, and though I have asked for it I have not received from the Department, any satisfactory reason for their insistence in the present demand. It appears to me that in the present case, by bringing, according to practice, their conveyances to the Department for stamping, and, as I humbly think, for ‘due stamping’ in the sense of the statute, the defenders are putting the Department in a position to perform all their functions under the statute in a reasonable way, and that the Department is not justified in saying to them, ‘You must take your deeds away out of this door, and you must bring them back again by that door, in order that we may keep certain registers and write certain certificates which have no statutory warrant, and, so far as I can see, no statutory or other effect.’

I am confirmed in this view when I consider the particular circumstances of the case and the conclusions of the summons.

Notice to treat was served on 25th November 1899. The owners intimated their claim on 8th December 1899. The oversman pronounced his award on 22nd March 1901. A conveyance was executed by the owners on 3rd June 1901. The conveyance was handed in, the duty paid, and the stamp impressed in ordinary course on 7th June 1901. The conveyance was recorded on 8th June 1901, while the action was not raised till 6th December 1906. The duty was thus paid four days after the execution of the deed, and the action not raised till four and a-half years after the duty was paid.

Now, the logic of their position obliged the Department to say there has been default, the duty and interest is due in consequence, and for that we sue. But they cannot face up to this, for they know that the duty has been paid and accepted nearly six years ago, and that they cannot recover it twice over, and have no statutory warrant for suing for interest, owing to delay in producing only. So they frame

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a conclusion, which, however reasonable from their point of view, is not in accordance with the situation which the enactment contemplated.

I think I must therefore find that the instrument of conveyance or disposition referred to in the summons has already been produced to the Commissioners of Inland Revenue in the sense of the Finance Act 1895, section 12, and therefore assoilzie the defenders from the conclusions of the summons, with expenses.”

The Lord Advocate reclaimed, and argued—(1) The words of the section clearly covered the present case. That was the Lord Ordinary's view, though he did not find it necessary to decide the point. The Railway Company were persons “authorised to purchase property.” The pursuer was therefore entitled to declarator in terms of the first conclusion of the summons. (2) The Lord Ordinary was in error in thinking that the section had been complied with. The object of the section was to prevent companies relying on their statutory transfers of property without obtaining a duly stamped conveyance, and so defeating the legitimate claims of the Revenue. It was not enough to lodge a conveyance for stamping, even though the stamp duty were then paid; it must be produced duly stamped to the Commissioners— Eastbourne Corporation v. Attorney— General, [1904] AC 155, per Lord Lindley, 157; Attorney-General v. Felixstowe Gas Light Company (1907), 97 L.T. 340; Inland Revenue v. Irvine and District Water Board, December 5, 1905, 43 S.L.R. 649. The date when it was so produced was important, for otherwise the amount of any penalty that might be due could not be ascertained. (3) “Completion of the purchase” meant the final act done by the purchaser, i.e., the payment of the last instalment of the price— Lewis v. The South Wales Railway Company, 1852, 22 L.J. Ch. 209. It could not mean after the “completion of the deed,” for that would be futile; nor could it mean after the “date of the contract,” for that was the notice to treat. The terminus a quo therefore was the final payment of the price.

Argued for respondent—(1) The section did not apply to cases of compulsory purchase. It only applied to cases where statutory authority had been interponed to private arrangements, viz., “agreements” to purchase. Prior to the Finance Act 1895 similar provisions were in use to be inserted in private Acts, and the object of section 12 was to embody such provisions in one general statute. A purchaser was not bound to execute and record a conveyance. He might, if he liked, be content with an unfeudalised conveyance or a personal right. He was not bound to execute and record a conveyance merely to benefit the Revenue. (2) Èsto, however, that the company were bound to produce a duly stamped conveyance, that had been done, and therefore section 12 had been complied with. The section did not contemplate double presentment, otherwise the enactment would have been absurd. There was no penalty for failure to produce a second time. No penalty was due in any event, for the section declared that the duty, if unpaid, was to be a “debt” to the Crown, and “debt” could not be read as “penalty.” (3) The Lord Ordinary was right in holding that the date of the completion of the purchase was the date of the delivery of the conveyance.

At advising—