Grey v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ORMEROD,The Master Of The Rolls |
| Judgment Date | 15 May 1958 |
| Judgment citation (vLex) | [1958] EWCA Civ J0515-4 |
| Court | Court of Appeal |
| Date | 15 May 1958 |
[1958] EWCA Civ J0515-4
In The Supreme Court of Judicature
Court of Appeal
The Master of the Rolls
Lord Justice Morris
Lord Justice Ormerod
(The Appeal of the Respondents, The Commissioners of Inland Revenue)
MR J. H. RENNTCUICK, Q.C. and Mr W. T. ELVERSTON (instructed by Messrs. Soames, Edwards and Jones, 6 Norfolk Street, Strand, W.C.2) appeared as Counsel on behalf of the Appellants.
MR R. O. WILBERFORCE, Q.C. and Mr. E. B. STAMP (instructed by the Solicitor, Board of Inland Revenue, Somerset House, Strand, W.C.2) appeared as Counsel on behalf of the Respondents.
: The question presented for the determination of the Court by the Commissioners of Inland Revenue in their Case Stated under Section 13 of the Stamp Act 1891 is whether instruments, self - described as "Declarations of Trust", are liable to be charged with Stamp Duty, ad valorem, calculated by reference to the parcels of shares to which they respectively relate. The question so posed requires an answer to the enquiry: Are these several instruments chargeable as "conveyances or transfers operating as voluntary dispositions inter vivos" within the scope and language of Section 74 of the Finance (1909-10) Act 1910, the relevant portion of which Act must, by the terms of its 96th section, be read and construed as one with the Stamp Act 1891?
But, as Mr Wilberforce pointed out at the beginning of his opening of the appeal on behalf of the Crown, the form of the question presented by the Case Stated disguises, as not uncommonly is so in stamp duty cases, the true nature of the problem raised. Though we were referred to sections of the Stamp Act containing definitions (e.g. Sections 54 and 62), nothing in truth turns upon the language or effect of Section 74 of the Finance (1909-10) Act. If the instruments in question alone constitute or alone effectively declare the trusts upon which the several shares are now held (as it is of the essence of the Crown's argument that they do), then it is not in doubt that they fall within the ambit of Section 74. Mr Pennycuick for the named trustees in the Instruments (Respondents in this Court), so concedes; and it is in the obvious interest of the trustees and their bene-ficiaries that he should do so. We were concerned during the argument to be satisfied that the Court could safely and properly accept the result of the concession; for it seemed that, on one view of the case (if the trustees' argument were not acceptable) then the final effect of the transaction before us (including the Instruments in question) might be merely negative so that no effective trusts had been constituted at all. For reasons which it will be more convenient to state after the facts have been set forth, we were so satisfied. If the trustees' argument, which Mr Justice Upjohn accepted, is not well founded, then the Instruments are taxable under Section 74. But, as I have said, the conclusion does not at all depend upon the solution of any question presented by the legislation relating to stamp duty. It depends rather upon a much more difficult problem under the general law; in the end of all, upon the question whether certain directions orally given to the trustees by a person, competent by virtue of his interest to give them, which the Instruments recited and were according to their language intended to confirm, effective in law to establish the trusts thereby specified; or whether they constituted "a disposition "of an equitable interest or trust subsisting at the time of the disposition" within the terms of Section 53 (1) (c) of the Law of Property Act 1925, and so failed of effect through want of writing.
The relevant facts, which are fully set out in the Case Stated, and are also related by Mr Justice Upjohn, may be recapitulated as follows: Under six Deeds made in the years 1949 and 1950, one Edward William Hunter made voluntary settlements in favour of grandchildren. The original trustees of all the Settlements have remained such trustees ever since. On the 1st February, 1955? Mr Hunter transferred to the trustees 18,000 Ordinary Shares of £1 each in Sun Engraving Co. Limited. As the trustees took no beneficial interest in the shares, they held them for Mr Hunter absolutely. On the 18th February, 1955 – seventeen days after the transfer last mentioned – a meeting took place at the offices of Sun Engraving Co. Limited. at which were present Mr Hunter, the Trustees, and the senior partner in a firm of solicitors. At the meeting Mr Hunter (to use the language of the findings of the Commissioners in paragraph 5 of their Case Stated) "orally and irrevocably directed" the Trustees to divide the 18,000 shares into six equal parcels and to hold one of such parcels upon the trusts and subject to the provisions contained in each of the six Settlements above mentioned of 1949 and 1950, "to the intent" (to resume my quotation from the Case Stated) "that "such directions should result in the entire exclusion of Mr Hunter "from till future right title mid benefit to or in the said shares…. "and the income thereof". The question in the Appeal is, what was the effect, if any, of Mr. Hunter's directions at the meeting on the 18th February, 1955?
Finally, on the 25th March, 1955 were executed six Declarations of Trust, one such Declaration being related to each of the six above mentioned Settlements. The declarants were in each case the trustees. The Instruments recited the events of the meeting of the 10th February in terms corresponding to the findings of the Commissioners above referred to. They further recited that the trustees thereupon assented to, and accepted, the trusts reposed in them by Mr. Hunter's directions; and that the giving of such directions and the nature thereof were testified by Mr. Hunter's executing (as he did) the Instruments. It was then witnessed by the operative part of the Instruments and the trustees thereby acknowledged and declared, that "they had been since" the 18th February, 1955 "and are now" holding the shares upon the trusts and subject to the powers and provisions of the respective Instruments of 1949 and 1950.
Having stated the terms of the Instruments, the "Declarations of "Trust", it will be convenient to dispose of the doubt, earlier mentioned, whether the Court ought to act upon Mr. Pennycuick's concession if it rejected his main argument. The operative part of each of the Declarations of Trust witnessed that the Trustees acknowledged and declared that they had been since the preceding 18th February "and are "now" holding the shares upon the specified trusts. The directions given on the 18th February, 1955 and their intention had been recited; and Mr. Hunter "testified" to the giving of the direction and his intention by executing the Instruments: in the circumstances I am satisfied that if the directions were, for want of writing, ineffective on the 18th Februaiy, Mr. Hunter could not after the 25th March recall or purport to revoke the beneficial interests arising under the trusts upon which, on that later date, the trustees declared, in his presence, that they held the shares. Whatever might be or have been the effect (if any) of the trustees' acknowledgment or declaration that they had so held the shares since the preceding 18th February, it clearly follows in my judgment that (on the hypothesis that the oral directions on the 18th February had no legal effect) the instruments of the 25th March, 1955 must have effectively established or constituted the relevant trusts and therefore must, as Mr. Pennycuick conceded, be conveyances or transfers operating as voluntary dispositions inter vivos within the terms of Section 74 of the Finance (1909-10) Act, aided by the definition provisions of Section) 54 and 62 (and particularly the latter) of the Stamp Act, 1891.
I return to the main question. It is, to my mind, though difficult, a short one. We were very properly referred to a number of cases, both ancient and modem. But, in the end, the problem will be resolved as the few short questions put to us at the end of their arguments by Mr. Pennycuick and Mr. Wilberforce are answered. It is not in doubt that on the 18th February, 1955 and immediately before the meeting on that day described in the Case Stated and recited in the Instruments of March 25th, 1955, the shares were vested in the trustees as registered proprietors; but the trustees held the shares upon trust wholly for Mr. Hunter, who was entitled, absolutely, to all the benefits belonging to them. The subject matter being shares in a company, the right to transfer them depended upon the company's regulations; but, subject to those regulations, the trustees would be bound to deal with the shares and all the benefits attached to them as Mr. Hunter required. Those rights, which Mr. Hunter had in personam against the trustees, would be enforced, if necessary, by the Courts. But, as Lord Parker pointed out in his speech in Sinclair v. Brougham, 1914 Appeal Cases, at page 441, equitable rights, though in origin they may have been rights in personam only, have come to acquire the characteristics of proprietary rights. In that sense, therefore, Mr. Hunter no doubt had an equitable interest in the shares, proprietary in character, of which, as such, he was capable of "disposing". He was undoubtedly capable, in the eye of the law, or rather (perhaps) of equity, of assigning such "rights", such "interest" to another or others, wholly or in part; and if he desired or purported so to do, it is no less undoubted that, by the terms of Section 53 (1)(c) of the Law of Property Act, 1925, writing would be required to give effect to his desire.
Is that what Mr. Hunter purported to do on February 18th, 1955? Mr....
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