United Kingdom House of Lords Decisions

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Cite as: [1907] UKHL 968, 45 ScotLR 968

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SCOTTISH_SLR_House_of_Lords

Page: 968↓

House of Lords.

(On Appeal from the Court of Appeal in England.)

Wednesday, November 27, 1907.

(Before the Lord Chancellor (Loreburn), The Earl of Halsbury, Lords Ashbourne, Macnaghten, James of Hereford, and Atkinson.)

45 SLR 968

Inland Revenue

v.

Maple & Company (Paris), Limited.

Subject_Revenue — Stamp Duty — “Conveyance on Sale” — French Property — French Deed — Consideration Payable in England — Stamp Act 1891 (54 and 55 Vict. cap. 39), sec. 54.
Facts:

One English company transferred to another English company certain property in France by a deed of “apport” executed in France according to the formalities of French law, the price of the property being payable in shares of the purchasing company.

Held that the deed was a “conveyance on sale” within the meaning of section 54 of the Stamp Act 1891, and as such chargeable with stamp duty.

Headnote:

Appeal from a judgment of the Court of Appeal (Moulton and Farwell, L.JJ., Collins, M.R., dissenting), reported (1906) 2 KB 834, affirming a judgment of Walton, J., upon a case stated by the Commissioners of Inland Revenue.

The question was whether a certain instrument was chargeable with stamp duty as a conveyance on sale under the provisions of the Stamp Act 1891 (54 and 55 Vict. cap. 39).

Section 54 of that Act is—“For the purposes of this Act the expression ‘conveyance on sale’ includes every instrument and every decree or order of any court or of any commissioners whereby any property or any estate or interest in any property upon the sale thereof is transferred
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to or vested in a purchaser or any other person on his behalf or by his direction.”

The facts sufficiently appear from the judgment of Lord Macnaghten ( infra).

The instrument in question was called a deed of. “apport.” It was executed in France between the English company Maple & Company, Limited, and the English company Maple & Company (Paris), Limited. The following are the material portions of the deed—“Deed of ‘Apport.’—Between the English company Maple & Company, Limited, hereinafter called the ‘old company,’ registered on the 8th April 1881, whose registered address is in London, with a branch in Paris, of the one part, and the English company Maple & Company (Paris) Limited, hereinafter called the ‘new company,’ registered on the 10th May 1905, whose registered address is in London, of the other part. It has been agreed upon as follows—‘Apport.’—The old company by these presents brings into the new company under all guarantees in fact and in law the property of which the description follows and which the latter accepts.… ( here followed a description of the property, being the branch business of the old company carried on at 5 Rue Boudreau, Paris, with premises). … In consideration of the ‘apport’ granted by these presents the new company allots to the old company 72,000 shares in its share capital of a nominal value of £1 each. Out of these 72,000 shares, 40,446 are allotted in consideration of the ‘apport’ of the moveable property and 31,554 in consideration of the ‘apport’ of the immoveable property above mentioned.”

Judgment:

Lord Macnaghten—This case seems to me to be very plain and very simple. But I must express my opinion with diffidence, because I find that the view which I venture to think so plain and so simple has been described by one of the learned Lords Justices in a most elaborate judgment as based on premises which are absurd and ridiculous. There are no facts in dispute. A trading company, limited by shares and registered in England, had a branch in Paris, with property there both moveable and immoveable. For some reason or other it was thought good to separate the French business from the English. So on the 10th May 1905 a company, limited by shares, was registered in England with the object of purchasing the French business. On the 5th June following an instrument in the French language was executed in Paris, both by the old company and the new, whereby the old company transferred to the new company, as from a past day, the French business with all the property attached to it, and the new company purported to allot to the old company a specified number of shares out of its share capital. In connection with the actual allotment of the shares which were the consideration of the purchase, it was, of course, necessary to register the instrument of the 5th June duly stamped. Under the Companies Act of 1900 default is visited with so heavy a penalty as to make it practically impossible to get shares allotted for a consideration other than cash without complying with the requirements of section 7. The Commissioners of Inland Revenue were asked to determine whether the instrument in question was or was not subject to duty and to fix the duty, if any. Their opinion was that it was a “conveyance on sale” within the meaning of the Stamp Act 1891, and that an ad valorem stamp was necessary. There is no question now raised as to the amount of duty, if duty is payable. But both Walton, J., and the Court of Appeal, Collins, M.R., dissenting, decided that the instrument was not a conveyance chargeable under the Act of 1891. From that decision the present appeal has been brought. I think that there can be no doubt that the deed of the 5th June 1905 is a “conveyance on sale” within the meaning of the Act of 1891, having regard to the definition contained in section 54. It is an “instrument whereby … property … upon the sale thereof is transferred to … a purchaser.” According to French law, too—if that is material—it is a conveyance on sale, although it appears that in the absence of registration a purchaser without notice might obtain a perferential title. Then comes the question—How is the expression “conveyance on sale” to be understood? What limitations are to be placed upon it? Is it to be limited to conveyances executed in the United Kingdom? Such a limitation would be unreasonable when the instrument operates on property situate in the United Kingdom. A trip across the channel would afford ready means of evading duty. Now section 14, sub-section 4, of the Stamp Act 1891, shows that it was not intended so to limit the expression. Why may not that sub-section be referred to for the purpose of showing that conveyances on sale executed abroad are chargeable with duty when they relate “to any matter or thing done or to be done in any part of the United Kingdom,” as well as when they relate to any property situate in the United Kingdom? Speaking for myself, I have some difficulty in seeing why it should be assumed that this instrument does not relate to property situate in the United Kingdom. The Act speaks of the “instrument.” The provision is not confined to the operative part of the instrument. It speaks of the instrument as “relating to” certain subjects. There is no expression more general or far-reaching than that. This instrument relates to the capital of the new company, out of which it was agreed that a specified number of shares should be appropriated and allotted to the old company. The share capital of the new company, if it was situated anywhere, was situated in England. In my opinion, therefore, this instrument does relate to property situated in England. It certainly relates to something to be done in England. It relates to the registration in the name of the old company of the shares which were to be allotted in an English company as the

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consideration for the purchase of the French property. It seems to me, though I still speak with great diffidence, that the learned Lord Justice who gave the leading judgment in favour of the respondents has not paid sufficient attention to two points which appear to me to be clear enough. In the first place, it must always be borne in mind that as regards conveyances on sale the charge is on instruments, not on persons. In the next place, I think it clear that there is nothing criminal in a purchaser omitting to stamp his conveyance. By such an omission he commits no breach of duty. He does nothing wrong. The instrument, if not duly stamped, cannot be put in evidence or made available for any purpose. That is all. … I agree with the judgment of Collins, M.R. I think that judgment should be entered in favour of the Commissioners, with costs here and below.

The Lord Chancellor (Loreburn) and Lords Ashbourne, James of Hereford, and Atkinson concurred.

Appeal sustained.

Counsel:

Counsel for the Appellants— Sir R. Finlay, K.C.— W. Finlay—(the Attorney-General Sir J. Lawson Walton, K.C., with them). Agents— Rawle, Johnstone, & Company, Solicitors.

Counsel for the Respondents— Danck-werts, K.C.— Beddall. Agents— Parker, Garrett, Holman, & Howden, Solicitors.
1907