036-NLR-NLR-V-46-WILLE-Appellant-and-COMMISSIONER-OF-STAMPS-Respondent.pdf
WiUe and Commissioner of Stamps.
113
19MPresent: Keunem&n and Cannon JJ.WILLE, Appellant, and COMMISSIONER OF STAMPS,Respondent.
No. 57—Case stated by the Commissioner of Stamps.
Stamps—Purchase of property by fifteen persons in the name of one of them—Subsequent formation of limited liability company wherein they wereto be shareholders—Transfer of the property by the nominee to theCompany—Ad valorem duty—Stamp Ordinance(Cap. 189), items
23 (1) (6), 23 (4) and 23 (8).
By deed No. 143 dated July 23, 1941, two estates “ Kelaneiya " and" Braemar ” situated at Maskeliya were purchased in the name of oneV. P. It would appear that fifteen persons paid the purchase moneyin equal shares and purchased the property in question in the name ofone of them, namely, V. P., who thuB held the property in trust forhimself and the others. They worked the estates in partnership for twoyears and then in 1943, for the first time, it occurred to them to form andbecome shareholders in a Limited Company. In pursuance of thisintention deed No. 4504 of May 15, 1943, was executed wherein it wasagreed that V. P. should convey the property to the Company, whenformed, without claiming any consideration for such conveyance. Afurther step in this direction was taken by the execution on June 25, -1943, of deed No. 212 wherein it was agreed that the fifteen persons werethe beneficial owners of the two estates and that there should be allottedto them, in the said Company, shares in proportion to their respectivecontributions to the purchase price.
In August, 1943, the proposed " Kelaneiya and Braemar EstatesLimited Company " was formed and incorporated under the CompaniesOrdinance for the purpose of acquiring the estates “ Kelaneiya " and“Braemar”. By deed No. 219 of September 9, 1943, V. P., afterreciting, and in accordance with, the terms of the aforementioned deeds,conveyed and assigned to the Company the two estates.
Held, that the deed No. 219 was a conveyance chargeable with anad valorem duty under item 23 (8) of Part I. of Schedule A of the StampOrdinance.
A
PPEAL on a case stated by the Commissioner of Stamps undersection 31 of the Stamp Ordinance. The facts appear from the
head-note.
illKEUNEMAN J.—Wills and Commissioner of Stamps.
H. V. Perera, K.C. (with him N. M. de Silva), for the appellant.—The value of property conveyed in deed No. 219 is Rs. 330,00. Ifthe deed is to be stamped on an ad valorem basis it would be liable to aduty, of Rs. 5,280, whereas if it is a conveyance by a trustee to thebeneficiary the duty would be Rs. 10.
It cannot be said that the conveyance was made for consideration.Consideration implies a prior agreement between the parties. A companycannot contract before it comes into existence. The allotment of sharestook place in the present case in pursuance of an agreement to which the-company was not a party. The contract between the promoters andV. P. was not a contract binding upon the company, for the companyhad then no existence, nor could it become binding on the company byratification. The position is made clear in Palmer’s Company Precedents-(15th ed.), Part I., pp. 293-294. The case of John Foster and Sons, Ltd. v.Commissioners of Inland Revnue—on which the Commissioner of Stampshas relied cannot be applied to the facts of the present case. Deeds4504 and 212 and the definition of “trust” in section 3 of the TrustsOrdinance (Cap. 72) establish beyond any doubt that the transfer to thecompany was only a conveyance by a trustee to the beneficiary.
H. H. Basnayake, C.C., for the Commissioner of Stamps, was notcalled upon.
Cur. adv. vult.
November 6, 1944. Keuneman J.—
This is an appeal on a case stated by the Commissioner of Stamps,who has decided that the deed in question falls under item 23 (1) (6) ofthe Schedule to the Stamp Ordinance or in the alternative under item23 (8). Speaking for myself, I am not sure that item 23 (1) (6) applies,namely that this deed is a conveyance on transfer, of any immovableproperty for any consideration. I think there is great force in theargument of Mr. H. V. Perera that in this case there is no considerationmoving from the company, who is the grantee, to the seller. However,I do not think it necessary to decide the point and I have not called uponCrown Counsel to support it.
As regards the contention of the appellant that the deed comes underitem 23(4), namely a conveyance or transfer of property without
consideration to the person beneficially entitled to such property by thetrustee, I think, on the documents and affidavits it is not possible to holdthat the grantor was in fact a trustee. The Commissioner has lookedat the facts fully and I agree with him on the point, that no trust infavour of the company has been established. The only other itemwhich can apply is item 23 (8) which is of a general character. TheCommissioner has rightly held that item 23 (8) is applicable in whichcase ad valorem duty must be paid.
In all the circumstances I think the order of fhe Commissioner must beupheld and the appeal dismssed with costs.
Cannon J.—I agree.
Appeal dismissed.
1 L. R. 11894) 1 Q. B. 816.