MACDONELL C.J.—Somasunderam v. Attorney.General.
1936Present: Macdonell C.J. and Poyser J.
In re Appeal under Section 32 of Ordinance No. 22 of 1909
SOMASUNDERAM v. ATTORNEY-GENERALS. C. 63— (Inty.)Stamp Ordinance—Agreement for sale of tea coupons—Sale of future goods—Not liable as conveyance—Ordinance No. 22 of 1909, Schedule B,item 4 (a).
An agreement for the sale of tea coupons is liable to stamp duty as anagreement or contract under item 4 (a) of Schedule B of the StampOrdinance and not as a conveyance under item 22 (b).
^^PPEAL from an order of the Commissioner of Stamps.
P. Tiyagaraja, for appellant.
H. H. Basnayake C.C., for Commissioner of Stamps, respondent.
Cur. adv. vult.
March 30, 1936. Macdonell C.J.—
This was an appeal as to the stamp necessary for a document ” 'rdedas follows : —
“ This indenture made and entered into between Daniel Dias Gunasekeraof Diyatalawa (of the. first part) and Valiappa Chettiar Somasunderam ofBadulla (of the other part).
“ 1. The party of the first part for and in consideration of the paymentto him of the sum of Rupees Five hundred (Rs. 500), lawful money ofCeylon, and the due performance of the convenants and conditions herein-after mentioned by the party of the second part solemnly agrees to trans-fer, sell, and assign the entire quantity of the tea coupons issued to him(the party of the first part) by the Tea Export Controller in respect of thetea property called Galenpaninawatta and Dambagasulpota bearingRegistered No. T. W. 223.
: “ 2. The coupons shall be assigned from date hereof for the full periodduring which tea restriction shall be in force in this Island and the partyof the first part undertakes to nominate and appoint the party of the
•MACDONELL C.J.—Somasunderam v. Attorney-General.
second patt- his nominee with absolute and irrevocable powers for thepurpose of receiving the tea coupons directly from the Tea ExportController.
‘•3. The party of the second part shall convert the tea couponsinto cash and after deducting therefrom three cents on each pound oftea coupons shall be entitled to appropriate the balance amount inliquidation of the Rupees Five hundred (Rs. 500) paid in advance at theexecution of these presents and of the interest and principal due to himfrom the party of the first part upon mortgage bond intended to beexecuted to-day provided however (a) that the coupons shall not be soldby the party of the second part for a price lower than that prevailing inthe coupon market on the day on which the coupons came into his handsand (b) provided this agreement for the assignment of the coupons shallcontinue to be in force for the full period aforesaid whether the amountdue to the party of the second part from the party of the first part shallhave been liquidated or not.
“ 4. It is further agreed by and between the parties that this agreementshall bind themselves and their respective heirs, executors, and adminis-trators and that the party in default in the performance of any one ormore of the above covenants shall be bound to pay to the party of theother part the sum of Rupees Five hundred (Rs. 500) as liquidateddamages.
“ In witness whereof the parties of the first and second parts abovenamed have hereunto and to two others of the same tenor and date asthese Presents set their hands at Badulla on this Twenty-fourth day ofJuly, One thousand Nine hundred and Thirty-four.
“ Schedule of property affected by this agreement.
“ Tea coupons in respect of tea holding bearing RegisteredNo. T. W. 223.”
The maker of this document claimed through his Proctor to stamp itunder item 4 (a) of Schedule B of the Stamp Ordinance, No. 22 of 1909, asbeing an “ Agreement or contract, or any minute or memorandum of anyagreement in this Island (and not otherwise charged nor expresslyexempted from all stamp duty) whether the same shall be only evidenceof a contract, or obligatory upon the parties, from its being a writteninstrument.” The Commissioner, on application being made to him, ruledthat it should be stamped under item 22 (b) of the same Schedule as a“ Conveyance or transfer of any movable property for any consideration,”and it is from this ruling that the present appeal is brought. The wordsagreement and contract are not defined in Ordinance No. 22 of 1909,but in section 3 (9) “ Conveyance” is defined as follows : —
“ ‘ Conveyance ’ includes a conveyance on sale and every instrumentby which property, whether movable or immovable, or anyinterest or estate in any property, is transferred inter vivos, andwhich is not otherwise specifically provided for under thisOrdinance.”
MACDONELL. C.J.—Somasunderam v. Attorney-General.
The document in question is clearly intended to secure to the secondparty payment of Rs. 500 which he advanced to the first party subject tocertain restrictions safeguarding the first party from the tea couponsbeing sold too cheap> but subject to this also, that the second party shallhave transferred to him all the tea coupons issued in respect of theproperty mentioned in the deed as long as the restrictions imposed byOrdinance No. 11 of 1933 are in force, even though the debt of Rs. 500has been paid off sooner.
What is a tea coupon ? It is the creation of Ordinance No. 11 of 1933,section 26 of which says that the registered proprietor of an estate orsmall holding shall be entitled to receive from the Controller in respect ofany period of assessment, that is a period of twelve months, the first ofwhich periods commenced on an appointed day in the year 1933, TeaCoupons representing the amount determined to be the exportablemaximum of that estate or small holding for that period, and the samesection legalizes a transfer or sale of tea coupons by one person to another.Section 27 says in effect that a person possessed of tea coupons shall beentitled to obtain from the Controller in exchange for them an exportlicence authorizing the export from the Island of an amount of made teaequal to the amount represented by such coupons, and the same sectionmakes it legal for one person to transfer or sell export licences to anyother person.
It follows then that these tea coupons are not in themselves licences toexport tea but are in the nature, of permits in exchange for which thepossessor can obtain a licence to export tea. Without such licence aperson cannot export and without a tea coupon he cannot obtain alicence to export. Presumably they will come within the definition ofmovable property.
It will be noticed that this movable property, tea coupons, which thefirst party “ agrees to transfer, sell, and assign ” to the second party seemto be future coupons, not those already in existence, and the second partyis constituted irrevocable agent of the first party to receive them fromtime to time from the Controller. If they are future goods or movablesnot yet in existence, then we find that there is nothing in the sameOrdinance No. 22 of 1909, providing for the stamping of future goods, andthe learned Crown Counsel arguing this appeal admitted that he had notbeen able to find any authority saying how future goods should be dealtwith in matter of stamping. Rather he laid stress on the definition of“ Conveyance ” in section 3 (9) and claimed that this was an instrumentby which movable property was transferred inter vivos. There seems apractical difficulty about conveying or transferring something not yet inexistence ; you may agree to transfer the next litter of a lady dog butuntil that litter arrives there seems a physical difficulty about making aconveyance or transfer of it, which words mean a handing over. Thedocument itself says “ agree to transfer ”, and the phrase “ agreement totransfer” applies more aptly than the term conveyance to a.making overof future property not yet in existence. Some guidance in this difficultyis perhaps given by section 60 of the English Stamp Act of 1891, which isas follows : “ Where upon the sale of any annuity or other right not beforein existence such annuity or other right is not created by actual grant or
MACDONELL C.J.—Somasunderam v. Attorney-General.
conveyance, but is only secured by bond, warrant of attorney, covenant,contract, or otherwise, the bond or other instrument, or some one of suchinstruments, if there be more than one, is to be charged with the same dutyas an actual grant or conveyance, and is for the purpose of this Act to bedeemed an instrument of conveyance on sale”.
Wow the reason for the insertion of the above section 60 seems clear.The legislator was anxious to obtain the ad valorem, and therefore higher,stamp duty on agreements to transfer rights not yet in existence, whichhigher duty he could charge if those agreements really were conveyances,but he was doubtful whether an agreement to transfer rights not yet inexistence could be described as a conveyance, and he therefore insertedthis section 60 so that there might be no doubt that these agreementswould have to be stamped as conveyances even though, strictly speaking,they might not themselves be conveyances. Presumably the legislatorfelt that without this section it would be difficult to hold that an agreementto transfer something not yet in existence, could be described as a con-veyance. There is no similar section that I can discover in our ownStamp Ordinance and, reasoning from section 60 of the English Act setout above, I conclude that such an agreement as the present remains anagreement merely and cannot be described as a conveyance since thelegislature has not seen fit to insert the appropriate section declaring thatit is to be considered a conveyance even though it purports only to transferfuture goods.
If this be the correct inference from the fact that there is no suchsection in our own Ordinance, then the law to be applied is clear. PerParke B. in In re Micklethwait1—“ It is a well established rulethat the subject is not to be taxed without clear words for that purpose ;and also that every Act of Parliament must be read according to thenatural construction of its ‘ words ’ ” ; and per Lord Cairns in Partingtonv. Attorney-General1—“As I understand the principle of all fiscallegislation, it is this: if the person sought to be taxed comes withinthe letter of the law he must be taxed, however great the hardship mayappear to the judicial mind to be. On the other hand, if the Crown,seeking to recover the tax, cannot bring the subject within the letter ofthe law, the subject is free, however, apparently within the spirit of thelaw the case might otherwise appear to be Per Collins M.R. inAttorney-General v. Selbome ’—“ The Crown fails if the case is notbrought within the words of the statute • interpreted according to theirnatural meaning, they must fail ; and if there is a case which is notcovered by the statute so interpreted, that can only be cured by legislation,and not by an attempt to construe it benevolently in favour of theCrown ”.
The present case seems to fall within the principle enunciated in theabove quotations. On the natural meaning of the word there cannot bea conveyance, that is a handing over, of something not yet in existence.The English Act of 1891 saw this difficulty and provided for it by thesection 60 quoted above. Our law has not seen fit to include a similarsection. Therefore we must take the words according to their naturalmeaning, and so tested, an agreement to transfer something not yet in
1 11 Ex. 456.* L. R. 4 H. L. 100.* (1902) 1 K. B. 388.
AKBAR J.—Ranasinghe v. Ranasinghe.
existence cannot be a conveyance. This deed must therefore be stampedunder .item 4 (a) of Schedule B as being an agreement or contract, but doesnot require to be stamped under item 22 (b) as being a conveyance.
When this matter was argued to us, a preliminary objection was takenby the Crown that the appellant, namely, the second party to the deed,had no right to appeal since it was the Notary who had written to theStamp Commissioner and the Notary who had received the ruling fromthe Commissioner, and stress was laid on the words in section 30 (1) ofOrdinance No. 22 of 1909, allowing the person bringing the instrumentto obtain the opinion of the Commissioner as to how it should be stamped.He, it was argued, was the only person entitled to appeal, and in this caseit would be the Proctor. There did not seem to be anything in thisobjection and it was over-ruled. Perfectly true, all the necessary actionin this matter was taken by the Proctor, but in what capacity did he takeit ? Clearly as law agent of the second party to the deed, the realappellant. This preliminary objection was therefore over-ruled.
For the foregoing reasons I am of opinion that this appeal must beallowed with costs, which, at the argument before us, were agreed atRs. 52.50.
Poyser J.—I agree.
SOMASUNDERAM v. ATTORNEY – GENERAL