Highland Tea Company, Limited v. Commissioner of Stamps.
1940Present : Soertsz and Keuneman JJ.
HIGHLAND TEA COMPANY, LIMITED v. COMMISSIONER
C. (Inty.), 19.
Stamps—Joint stock company in liquidation—Liquidator authorised, afterpayment of debts, to distribute assets to contributories—Conveyance byliquidator—Stamp duty—Stamp Ordinance, Schedule A, Part I., items23 (1) (b), 23 (4) and (8) (Cap. 189).
At an extraordinary general meeting of the Portmore Tea Companyof Ceylon it was resolved that the said Company be wound up voluntarilyand for that purpose a liquidator was appointed. The liquidator wasauthorized to pay the debts and liabilities of the Company and then todistribute in specie or kind amongst the contributories of the Company,in accordance with their respective rights and interests, the whole of theassets of the Company. The liquidator paid and satisfied all the debtsand liabilities of the Company, and by deed No. 1379 dated November29, 1939, the Company and the liquidator conveyed to the HighlandsTea Company certain lands and estates for the reason that the transfereewas the registered owner of or otherwise beneficially entitled to all theissued shares in the Portmore Company.
Held, that the instrument of transfer did not fall for stamp dutyunder item 23 (1) (b) of Schedule A, Part I. of the Stamp Ordinance. Itfalls under either item 23 (4) or item 23 (8).
PPEAL from an order of the Commissioner of Stamps. The factsare stated in the headnote.
H. V. Perera, K.C. (with him E. F. N. Gratiaen), for appellant.—Thedeed is a deed of transfer by a liquidator to the contributors and wouldattract duty under item 23 (4) of Part I. of Schedule A to the StampOrdinance. A liquidator is in the position of a trustee. (Cites In reLeir & Company, Ltd. Knowles v. ScottIn re Windsor Steam Coal Co. )There is no consideration for this transfer. If the deed does not comeunder item 23 (4) it will fall under item 23 (8), but not under item 23 (1)(b) because there is no-consideration for the transfer. (Cites WaharakaInvestment Company v. Commissioner of Stamps *.)
H. H. Basnayake, C.C., for respondent.-—This deed should be stampedunder item 23 (1)(b). There is consideration fon the transfer. The
contributor’s right to receive the capital value of the shares is extinguishedby the transfer. (Cites In re Mahawila Rubber & Tea Co., Ltd.s;Huntinqton v. Commissioner of Inland Revenue*. The deed cannot fallfor duty under item 23 (4) as a liquidator is not a trustee in the sensein which that expression is used in that item. The word trustee theremeans a real trustee (1 Times of Ceylon Law Reports, p. 250). A liqui-dator is only in the position of a trustee in certain circumstance^- (PahawCompany Precedents, 15th ed., Vol. II., pp. 253 and 254, 818 and 819).
cur. adv. vult.
1 (1919) 1 Ch. p. 416-4 34 X. L. R. 266.
– (1891) 1 Ch. 717.‘ 3 Law. flee. 152.
3 (1901) 98 L. J. (Chancery)147 al 153.* (1896) 1 Q. B. D. p.422.
15J. X. B 17627 (5/52)
38/5 SOERTSZ J.—Highland Tea Company. Limited v. Commissioner of Stamps.June 26, 1940. Soertsz J.—
The facts from which this appeal arises may be stated briefly asfollows:—At an extraordinary general meeting of the Portmore TeaCompany of Ceylon, Limited, it was duly resolved that the said Companybe wound up voluntarily, and for that purpose, a liquidator wasappointed. The liquidator was authorised to pay the debts and liabilitiesof the Company and then “ to distribute in specie or kind amongst thecontributories of the Portmore Company in accordance with theirrespective rights and interests therein the whole of the assets of thePortmore Company Accordingly, the liquidator paid and satisfiedall the debts and liabilities of the Company and by deed No. 1379 datedNovember 29, 1939, the Company and the liquidator conveyed, assigned,transferred, set over, and assured unto the Highland Tea Company thelands and estates described in the schedule to the deed, for the reasonthat the transferee, that is to say, the Highland Tea Company was “ theregistered owner of or otherwise beneficially entitled to all the issuedshares in the Portmore Company (See the first recital in the deed.)This deed was stamped with a ten-rupee stamp, and the Highland TeaCompany thought fit to apply to the Commissioner of Stamps in terms ofsection 29 of the Ordinance, to have his opinion as to the duty withwhich the instrument is chargeable, and- through their lawyers submittedit to him for that purpose.
The Commissioner by his letter of March 5/6, 1940, gave his opinion“ that the instrument is a transfer of immovable property for considera-tion and is liable to a duty of Rs. 9,592 under item 23 (1) (b) of Schedule A,Part I. of the Stamp Ordinance ”.
The Highland Tea Company is dissatisfied with this determination ofthe Commissioner of Stamps, and prefers the present appeal against it.The Commissioner has given no reasons for his opinion. It is suggestedby Counsel that the opinion given has the quality of wishful thinking,and he submits that upon the correct view of the matter, this instrumentfalls under item 23 (4) or alternatively, under item 23 (8) of Schedule A,Part I. of the Stamp Ordinance and that it was rightly stampedwith a ten-rupee stamp. It was not at all clear to me how Crown Counselsought to make out that there was consideration. He seemed to contendthat because this was not a deed of gift, there was some sort of considera-tion. That, however, is to overlook conveyances such as are contemplatedby items 23 (4) and 23 (8).
The item under which the Commissioner of Stamps places thisinstrument is in these terms : “ Conveyance or transfer of any immovableproperty /or any consideration, where the purchase or considerationmoney therein or thereupon expressed, or if the consideration be otherthan a pecuniary one, or partly pecuniary and partly other thanpecuniary, the value of the property shall be over Rs. 0 and not over
Rs. 50 … . one rupee, &c”. The crucial words are “ for
any consideration ” and “ therein or thereupon expressed ” and in thecontext, this word “ consideration ” bears the meaning “ money ” or“ partly ” money and “ partly ” other than money consideration. Now
SOERTSZ J.—Highland Tea Company, Limited v. Commissioner of Stamps. 387
in this instance there is no “ purchase or consideration money ” expressedin or upon the instrument, nor is any consideration “ other than apecuniary one, or partly pecuniary, and partly other than pecuniary ”,expressed in or upon the instrument, and, in my opinion, in this case,that fact alone takes the instrument out of class 23 (1) (b). But evenif it is relevant to consider the question whether although no kind ofconsideration is expressed in or upon the deed, yet, in reality there wasconsideration, I reach the conclusion that the deed falls outside the classreferred to on the ground that there was, in reality, no considerationfor this deed.
It is clear that the word consideration as used in the Stamp Ordinancebears the meaning it has in English law. If authority is required for thatproposition there is the case of Waharaka Investment Co. v. Commissionerof Stamps In that case Macdonell C.J. dealing with item 22 (b) ofPart I. of Schedule B of the then Stamp Ordinance which is identicalwith the present item 23 (2), Schedule A, Part I, observed as follows :
“ I would say that wherever in one of our Statutes the term ‘ considera-tion ’ occurs, there is a strong presumption that it must be given themeaning it has in English law, and indeed what other meaning can yougive it, if it is a term peculiar to English law ”, and he went on to pointout that the meaning generally given to that term in English law wasstated in the case of Currie v. Misa1 to be “ some right, interest, profit orbenefit accruing to one party or some forbearance, detriment, loss orresponsibility given, suffered or undertaken by the other Examinedby that test, there was no “ consideration ” for the instrument beforeus. So far as the transferors are concerned, there is no right, interest,profit or benefit accruing to them, and in regard to the transferees thereis not apparent or conceivable any forbearance given or shown, or anydetriment or loss suffered, or any responsibility undertaken by them.Once the directors of the Portmore Tea Company resolved that theCompany be wound up voluntarily, and appointed a liquidator for thepurpose, the resulting position was that this Company held its. assetsin order that the debts and liabilities of the Company might be paid andthereafter distribution made of what remained in specie or in kind amongthe contributories of the Company. In other words, it might justifiablybe said that the Portmore Tea Company held its remaining assets in trustfor those beneficially entitled to them. It is not disputed that theHighland Tea Company of Ceylon were so entitled either as registeredholders, or otherwise, to all the issued shares of the Portmore Company.The conveyance did no more than give unto the Highland Tea Companythe things that were theirs.
In my view, this conveyance falls within item 23 (4). It is a convey-ance of immovable property by a trustee to the person beneficiallyentitled to it. But, Counsel for the respondent contended that trusteein that context meant a trustee as understood in the Trusts Ordinance.Assuming that to be so, it seems to me that by virtue of section 96 of ourTrusts Ordinance the Portmore Company stood in that capacity. But
> 34 N. L. R. 266.
* L. R. 10 Ex. 162.
3o3SOERTSZ J.—Highland Tea Company, Limited v. Commissioner of Stamps.
quite apart from that view of the matter there are English cases in whichthe relationship between a company in course of liquidation and theshareholders has-been placed on that footing, for instance in Knowles v.ScottRomer J., while refusing to saddle a liquidator with the responsi-bility of a “ trustee in the strict sense ”, went on to observe as follows:
“ in support of the plaintiffs’ contention, reference has been made todicta by distinguished Judges in various cases, which describe liquidatorsas trustees, or as holding assets of companies in trust. No doubt in a certainsense, and for certain purposes, a liquidator may fairly enough be describedas a trustee …. A director is not a trustee for the shareholders of thecompany, though he is often referred to in various cases as a trustee, and nodoubt, rightly enough for certain purposes ”. In the case before us, thetransferors are the liquidators and the Portmore Tea Company, and in viewof this participation of the Company as a transferor, I would refer to thecase of In re The Oriental Inland Steam Company, Ltd. ~ in which MellishL.J. said “ under a winding up order, the legal estate in the property of theCompany ordered to be liquidated was not taken from the Company, but thebeneficial interest in the property was and …. a trust attached forthe benefit of all creditors ”. That was a case concerning creditors.
It is not necessary, however, to pursue this matter any further for onceit is held that this, conveyance does not fall within 23 (1) (b), the questionwhether it falls within 23 (4>- is academic. Crown Counsel concedes thatif this conveyance is not in the class assigned to it by the Commissionerof Stamps, it must fall under 23 (4) or 23 (8) and, in either event, the dutychargeable is ten rupees.
In conclusion, I should wish to make it quite clear that my considerationof the question before us is based on the fact that all the averments andrecitals in the deed in. question are admitted by the Commissioner of Stamps.I understood Crown Counsel to say that. At any rate he did not dispute orquestion them. -It is not, therefore, necessary to decide in this case what theposition would have been in a case in which the Commissioner contendedthat although no consideration was expressed in or upon the instrument,that that was pure contrivance, and that there was, in reality, considerationas understood in English law.
In my opinion, this appeal is entitled to succeed and I hold that the dutypayable on the deed is the duty that was paid on it. The appellantis entitled to the costs of the appeal.
Keuneman J.—I agree.
(1891) 60 L. J. 284.
– (1874) 4-5 L. J. Ch. 699.
HIGHLAND TEA COMPANY,LIMITED v. COMMISSIONER OF STAMPS