Wimpey (George) & Company Ltd v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE STAMP,SIR JOHN PENNYCUICK |
| Judgment Date | 05 February 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0205-1 |
| Date | 05 February 1975 |
| Court | Court of Appeal (Civil Division) |
[1975] EWCA Civ J0205-1
In The Supreme Court of Judicature
Court of Appeal
Civil Divison
(Revenue Paper)
Lord Justice Russell,
Lord Justice Stamp and
Sir John Pennycuick
Mr PETER REES, Q.C. and Mr A.L. POTEZ (instructed by Mr P.J. Ward) appeared on behalf or the Appellant.
Mr CHRISTOPHER SIABE, 2.0. and Mr PETER GIBSON (instructed by Solicitor of Inland Revenue) appeared on behalf of the Respondents
This is an appeal from a decision of Mr. Justice Brightman which is reported at 1974 1 Weekly Law Reports, page 975. The question raised is whether the stamp duty exigible on an instrument dated the 12th June, 1972, ad valorem as a conveyance on sale of property was correctly so levied. The learned Judge held that the instrument was such a conveyance by force of Section 54 of the Stamp Act, 1891.
The instrument in question was the grant of an option by a Mr. Morgan to George Wimpey & Co. Ltd. It recited first that Mr. Morgan was the beneficial owner of the property there in described, some 30 acres, in Wales. It then recited: "The intending vendor" - that is Mr. Morgan - "has agreed to grant to the intending purchaser" - that is Wimpeys - "an option to purchase the property on the terms hereinafter appearing". By Clause I it was agreed: "In consideration of the sum of £15,000 paid by the intending purchaser to the intending vendor… the intending purchaser shall have the option of purchasing the property for an estate in fee simple in possession on the terms and conditions set forth in the Second Schedule". Then there are various provisions for application for residential development planning permission. Clause 3 provided: "The said option shall be for a period of five years from the date here of and shall be exercisable by notice in writing". Clause 4 provided: "If the said option shall be exorcised as hereinbefore mentioned then the purchase price shall be calculated at the undermentioned rate per acre or proportionally for part of an acre" and provided that it should be £10,000 per acre if the option should be exercised in the first three years of the period of five years and £12,000 an acre if it was exorcised during the last two years.
Then our attention was drawn again to Clause 8(d), in connection with the determination of the option, which used the phrase "to determine this agreement and the option granted herein". So the instrument in question was undoubtedly an instrument which granted an option to purchase some 30 acres of land in Wales, the consideration for the grant being £15,000.
Section 54 of the Stamp Act, 1891 , so far as relevant, is in these terms: "For the purposes of this Act the expression 'conveyance on sale' includes every instrument … whereby any property, or any estate or interest in any property, upon the sale thereof is transferred to or vested in a purchaser…".
The Judge, quite rightly on authority, held that Section 54 is applicable in an appropriate case though the instrument creates for the first time the property or the estate or interest in property; and, as a general proposition, that is not challenged.
In my judgment, the answer to this case is a short one. The instrument in question granted the option to purchase the land pursuant to the recited agreement so to do. The option to purchase is, in my view, within the scope of the word "property", which has more than once in the context of the Stamp Act been described as a word of wide import. The option was granted for a consideration paid of £15,000. In my view, it is correct to say that the option was sold for that sum by Morgan and bought for that sum by Wimpey. Accordingly, the instrument was one by which property upon the sale thereof was vested in the purchaser of that property, and it was consequently within the expression "conveyance on sale"by force of Section 54 and fell to be stamped accordingly.
In argument it was proposed that it was impossible to describe this as a sale, and reference was made to language of Lord Greene, Master of the Rolls, in V.G.M. Holdings Limited, which is reported in 1942 1 Chancery. That case raised the question whether it was contrary to the then relevant section of the Companies Act for a company to afford financial assistance to somebody to enable that somebody to subscribe for shares allotted by the company, and it was held that in such a case it could not be said, that this was a purchase of shares. That is obviously correct, because it is not in the nature of the concept of a company limited by shares that it can sell shares in itself. But, in the course of his judgment, the Master of the Rolls said this: "A share is a chose in action. A chose in action implies the existence of some person entitled to the rights which are rights in action as distinct from rights in possession, and, until the share is issued, no such person exists. Putting it in a nutshell, the difference between the issue of a share to a subscriber and the purchase of a share from an existing shareholder is the difference between the creation and the transfer of a chose in action. The two legal transactions of the creation of a chose in action and the purchase of a chose in action are quite different in conception and in result".
I have no complaint about the generality of those words in the context of the subject-matter then under discussion. But it seems to me that, granted that an option to purchase is "property" within the Stamp Act, and granted that a property can be the subject-matter for the purposes of the Stamp Act of a sale at its first creation, it is correctlysaid to be a sale and purchase of the option.
The case of Angus was much relied upon by the Appellant; but it does not, in my view, assist. It was a case of a purely executory contract for the sale of property, a contract which would be specifically enforceable. But it was not a transaction of sale complete in itself, as in the present case in relation to the subject-matter in the present case, namely the option. To argue, as was argued, that Angus should be followed in this case afortiori is, in my view, to confuse the subject-matter in the two cases. In Angus there was a transaction which was only an executory contract to sell thereafter the subject-matter. In the present case we have an executed transaction in which the subject-matter was the granted option.
The other case that was referred to, Muller (as explained by Lord Justice Collins in the Danubian Sugar case), gives, in my view, no indication at all to the contrary of the views I have so far expressed.
In the case of Cory, certain phrases were relied upon as indicating that it could not be said that in the present case there was a sale of anything; in particular, a phrase of Lord Reid in which he described the document which created an option to purchase as not being an agreement for the sale of anything at all. In that case, I might say incidentally, the stamp duty of a minimal amount had in fact been paid as if it were a conveyance on sale, and that fact had boon observed by Lord Reid in the course of his Opinion. Naturally, I do not rely on that fact as indicating that the case of Cory supports the view that I have formed; but the phrase that was used by Lord Reid - namely, that the instrument was not an...
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