United Kingdom House of Lords Decisions

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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