English, Scottish and Australian Bank Ltd v Commissioners of Inland Revenue

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Buckmaster,Lord Warrington of Clyffe,Lord Tomlin,Lord Macmillan
Judgment Date15 Dec 1931
Judgment citation (vLex)[1931] UKHL J1215-2

[1931] UKHL J1215-2

House of Lords

Lord Buckmaster.

Lord Warrington of Clyffe.

Lord Atkin.

Lord Tomlin.

Lord Macmillan.

English Scottish and Australian Bank, Ltd.
and
Commissioners of Inland Revenue.

After hearing Counsel, as well on Thursday the 12th, as on Friday the 13th, days of November last, upon the Petition and Appeal of The English, Scottish and Australian Bank, Limited, whose registered office is situate at No. 5 Gracechurch Street, in the City of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 15th of October 1930, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of the Commissioners of Inland Revenue, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal, in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 15th day of October 1930, complained of in the said Appeal, be, and the same is hereby, Reversed; And it is hereby Declared that the agreement in question is not liable to ad valorem duty as assessed by the Commissioners upon the sums of £13,482 7s. 7d. (thirteen thousand, four hundred and eighty-two pounds, seven shillings and seven pence) and £3,262,347 18s. 7d. (three million, two hundred and sixty-two thousand, three hundred and forty-seven pounds, eighteen shillings and seven pence); And it is further Ordered, That the Respondents do repay, or cause to be repaid, to the said Appellants, the excess of duty amounting to £32,758 (thirty-two thousand, seven hundred and fifty-eight pounds), paid by the Appellants to the Respondents in conformity with such erroneous assessment; And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants, the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Lord Buckmaster .

My Lords,

1

The question on this Appeal is whether an agreement made in this country for the purchase of debts owed by debtors who reside out of the United Kingdom is liable to an ad valorem Stamp Duty based on such debts.

2

The history of the matter is quite simple. The Appellants are a Company incorporated in this country under the Companies Acts and on 1st April 1927 they entered into an agreement with the Royal Bank of Australia Ltd., a Company incorporated in Victoria, Australia for the purchase from the Australian Bank of all the assets of that Bank with certain inconsiderable exceptions.

3

Part of such assets consisted of simple contract debts owing by customers of the Royal Bank resident outside the United Kingdom on overdrafts a small portion of which had been granted by an office in London but practically the whole had been granted in Australia. None of these debts were specialty debts or secured by bills of exchange, or other negotiable instruments.

4

The Commissioners of Inland Revenue included in their assessment for stamp duty all the debts to which I have referred, and the question on this Appeal is whether such assessment was correct.

5

Mr. Justice Rowlatt and the Court of Appeal have upheld the assessment, regarding themselves, rightly as I think, bound by the decision in the Court of Appeal in Velasquez Ltd. v. Inland Revenue Commissioners 1914, 3 K.B., 458, and the real point for consideration of this House is whether such decision should be overruled.

6

The section of the Stamp Act 1891 section 59 (1) that is applicable is, omitting matters not relevant, in the following terms:—

"59.—(1) Any contract or agreement made in England or Ireland under seal, … for the sale of any estate or interest in any property except lands, tenements, hereditaments, or heritages, or property locally situate out of the United Kingdom, … shall be charged with the same ad valorem duty, to be paid by the purchaser, as if it were an actual conveyance on sale of the estate, interest, or property contracted or agreed to be sold."

7

The question that arises upon this is whether debts are capable of a local situation, and if they are, whether that situation should be assumed to be out of the United Kingdom so that the property is within the exception mentioned in the section. That for purposes of probate and estate duty a simple contract debt is assumed to be situated where the debtor resides is established by a long series of authorities that stretch far back into the mists of antiquity. Instead of discussing the earlier cases, I think it better to take the latest of these authorities, the case of the Royal Trust Co. v. Attorney General for Alberta, 1930 Appeal Case, page 144.

8

In that case Lord Merrivale delivering the opinion of the Board used these words:

"The local situation proper to be attributed to the various assets of a deceased person has long been governed by rules no doubt somewhat artificial in character which were evolved when the lawful jurisdiction to divert administration of such assets depended upon the locality in which the assets were found. Many of the Courts concerned had authority within small provincial areas only. A simple contract debt due from a debtor outside the jurisdiction within which the testator resided was not assets within that jurisdiction,"

9

and he might have added but within the jurisdiction where the debtor resided.

10

I have examined but I do not think it necessary to discuss the earlier authorities for the statement I have already referred to is in my judgment an accurate statement of law.

11

The cases where a similar question has arisen in consideration of wills are conveniently summarized in Guthrie v. Walrond, 22 Chancery Div. page 573, and in these cases gifts of property situate in a particular place have been held to include simple contract debts from debtors there resident.

12

Cases of wills, however, are always open to the criticism that their construction depends upon ascertaining what the Testator meant, and this is affected by many considerations not present in the consideration of an Act of Parliament.

13

These authorities therefore may be passed by with the comment that they did at least recognize that a debt may be localized somewhere and that is one of the first matters for consideration in this case.

14

Did the matter rest there, I should have thought that when the local situation of a debt had been recognized for two such important purposes as Probate and Gift by Will, the local situation so attributed would be that referred to in the section of the Statute. But authority has intervened, and has prevented this conclusion being reached until after a careful examination of the meaning and validity of such decisions.

15

In the Smelting Co. of Australia v. Comms. of In. Rev. 1891, 1 K.B., page 175, it was decided by the Court of Appeal that a license to work a patent in Australia, and a share in a patent in New South Wales, were not locally situated outside the United Kingdom within the meaning of the statute. Lord Esher and Lopes L.J. thought that the words "or property situate outside the United Kingdom" ought to be regarded as ejusdem generis, with the property described in the preceding sentence, but this interpretation was disapproved in this House, in Muller's Margarine Co. Ltd., v. Comm. of In. Rev., 1901, A.C. 227, and it needs no further comment beyond saying that it appears to be based on the view that the word "or" in the section is equivalent to "and," a view with which I cannot agree.

16

Lord Esher also thought that such rights as were there in question could have no locality. They were incorporeal, incapable of being handled or seen, and therefore in his view, could not be situate anywhere. Ld.J. Rigby based his decision on the ground that the property could be bought and sold here, a feature certainly not distinctive of the particular property there in dispute.

17

In Muller's Marg. Coy. Ltd., the question arose as to whether the good will of a German business was locally situate outside the United Kingdom, and this House thought that it was, though Lord Halsbury held that it was not. In that case Macnaghten L. said (p. 223):

"It is not easy to form a conception of property having no local situation" and Lord Davey added "I express no opinion on the abstract question ( i.e., as to all property having a local situation) but I am not impressed with the difficulty of hold-the decisions in the probate cases,"

18

while Lord Lindley said that he saw no difficulty in assuming that such property was capable of local situation, and that indeed for legal purposes such a local situation must be assumed. The actual question therefore was not decided but valuable help had been afforded to those on whom the ultimate duty of decision should be cast.

19

The exact question then arose in the case of Velasquez Ltd. v. Comms. of Inland Revenue in 1914, 3 K.B., p. 408. This was first heard before Mr. J. Scrutton, and his Judgment is reported in 1914, 2 K.B., p. 404. He regarded the decision in the Smelting Co. of Australia as binding upon him, and not in terms overruled by Muller's case, which in his view was decided upon the ground that the good will was in some way attached to real estate. This opinion he...

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