Scottish Court of Session Decisions

This was an appeal on a case stated by the Commissioners of Inland Revenue under the Stamp Act 1891 (54 and 55 Vict. cap. 39) at the request of Mr David Tod, Eastwood Park, Renfrewshire, with respect to the stamp-duty chargeable on an instrument consisting of an extract decree of the Sheriff, pronounced in terms of section 8 of the Heritable Securities Act 1894 (57 and 58 Vict. cap. 44), and following on an unsuccessful exposure of a property made in virtue of the power to sell contained in a bond and disposition in security.

By the first Schedule of the Stamp Act 1891 there are charged the following stamp duties, viz.—“( a) Conveyance or transfer on sale of any property (except such stock as aforesaid):

Where the amount or value of the consideration for the sale does not exceed £5 £0 0 6 and so on.

And see sections 54, 55, 56, 57, 58, 59, 60, and 61.

( b) Conveyance or transfer of any kind not hereinbefore described £0 10 0 and see section 62.”

Section 54 of the Act is as follows:—“For the purposes of this Act the expression ‘conveyance on sale’ includes every instrument and every decree or order of any Court or any Commissioners whereby any property, or any estate or interest in any property, upon the sale thereof is transferred to or vested in a purchaser, or any other person on his behalf, or by his direction.”

Section 57—“Where any property is conveyed to any person in consideration, wholly or in part, of any debt due to him,

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or subject either certainly or contingently to the payment or transfer of any money or stock, whether being or constituting a charge or incumbrance upon the property or not, the debt, money, or stock is to be deemed the whole or part, as the case may be, of the consideration in respect whereof the conveyance is chargeable with ad valorem duty.”

Section 62—“Every instrument, and every decree or order of any court or of any commissioners, whereby any property on any occasion except a sale or mortgage, is transferred to or vested in any person, is to be charged with duty as a conveyance or transfer of property; provided that a conveyance or transfer made for effectuating the appointment of a new trustee is not to be charged with any higher duty than ten shillings.”

The Heritable Securities (Scotland) Act 1894 provides:—Section 8—“Any creditor who has exposed for sale under his security the lands held in security, at a price not exceeding the amount due under the said security, and under any prior security, and any security or securities ranking pari passu with the exposer's security (exclusive of the expenses attending the exposure or prior exposures), or at any lower price, and has failed to find a purchaser, may apply to the Sheriff for decree in the terms of Schedule D hereto annexed, and the Sheriff may, after service on the proprietor and on the other creditors, if any, and after such intimation and inquiry as he may think fit, grant such application and issue decree in the said terms. On such decree being pronounced, and an extract thereof in which said lands shall be described at length, or by reference recorded in the appropriate Register of Sasines, the right of redemption reserved to the debtor shall be extinguished, and the creditor shall have right to the lands disponed in security in the same manner and to the same effect as if the disposition in security had been an irredeemable disposition as from the date of such decree, and upon registration of an extract of such decree in the appropriate register, the lands shall be disencumbered of all securities and diligences posterior to the security of the said creditor; or instead of granting such decree the Sheriff may, upon any such application being made to him as aforesaid, appoint the lands held subject to the security to be re-exposed for sale at a price to be fixed by him, and in that event the said creditor shall have right to bid for and purchase the said lands at such sale, and, in the event of the creditor purchasing, the Sheriff may issue decree in the form and to the effect aforesaid, or the creditor may grant a disposition of the lands to himself in the same manner as if he had been a stranger.” Schedule D provides—“The Sheriff having resumed consideration of the said petition, finds and declares that X Y [the debtor in the bond] has forfeited the right of redemption reserved to him in the said bond and disposition in security, and that the said right is extinguished as from and after this date, and that A B [design him], the petitioner, has right to and is vested in the lands described in the said bond and disposition in security, dated and recorded as aforesaid, as absolute proprietor thereof, but subject always to the burdens and conditions contained or referred to in the said bond and disposition in security at the price of £ [here mention the price at which the lands were last exposed, or the price at which the lands have been bought in, as the case may be], and decerns; and grants warrant to record the decree to be extracted hereon in the Register of Sasines.”

The following instrument was presented to the Commissioners of Inland Revenue on behalf of Mr Tod, that they might express their opinion as to the stamp duty with which it was chargeable:—“At Glasgow, the 26th day of January 1897, in an action in the Sheriff Court of the county of Lanark at Glasgow, at the instance of David Tod, Esq., of Eastwood Park, Renfrewshire, Pursuer; against David Lamont Rodger, residing at 11 Rylett Crescent, Shepherd's Bush, London, heir-at-law of the deceased David Rodger, writer in Glasgow, and as such heir of provision in trust for the firm of Murdoch & Rodger, writers in Glasgow, and Ebenezer Erskine Scott, chartered accountant, Edinburgh, as trustee for the creditors of the said Murdoch & Rodger and of James Murdoch, writer, Glasgow, and the said David Rodger, Defenders; the Sheriff in absence found and declared that the defenders had forfeited the right of redemption reserved to the granters in a bond and disposition in security for the sum of Twenty-two thousand pounds sterling, dated the tenth, and recorded in the Division of the General Register of Sasines applicable to the county of the barony and regality of Glasgow the eleventh, both days of September eighteen hundred and seventy-three, granted quoad the personal obligation by the said Murdoch & Rodger and James Murdoch and David Rodger, the individual partners of the said company or firm of Murdoch & Rodger, and quoad the disposition in security by the said James Murdoch and David Rodger, the only partners of the said firm of Murdoch & Rodger and trustees for said company or firm and partners thereof in favour of the pursuer (therein designed as of Iron-bank, Partick), and that the said right was extinguished as from and after the said date hereof, and that the pursuer had right to and was vested in—In the first place, All and Whole …; in the second place ( primo), All and Whole … and ( secundo) one-half pro indiviso of All and Whole …; in the third place, All and Whole …; and in the fourth place, All and Whole” … [the subjects are certain heritable subjects in Glasgow, particularly described in the said bond and disposition insecurity] “as absolute proprietor thereof, but subject always to the burdens and conditions contained or referred to in the said bond and disposition in security (that is to say) … the whole conditions, provisions, restrictions, declarations, prohibitions, servitudes, clauses irritant, resolutive,

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and others specified in” [certain instruments of sasine, a deed of allocation, and a feu-contract, particularly referred to], “at the price of Twenty-seven thousand pounds (the sums due under the said bond and disposition in security at the term of Whitsunday Eighteen hundred and ninety-six, being Twenty-eight thousand four hundred and eighty-three pounds two shillings and twopence), and decerned; and granted warrant to record this extract-decree in the Register of Sasines.—Extracted at Glasgow, this ninth day of February 1897, by me, Sheriff-Clerk-Depute of Lanarkshire.— Alex. Pearson, Sheriff-Clerk-Depute.”

The Commissioners were of opinion that the decree was chargeable in terms of section 54 of the Stamp Act 1891 with ad valorem duty as a conveyance-on-sale, and that under section 57 the sum upon which the duty was payable was £27,000, being the sum set out in the instrument as the “price of the subjects.” They accordingly assessed the ad valorem conveyance-on-sale duty as £135.

Mr Tod expressed himself dissatisfied with the determination of the Commissioners on the ground that the instrument was not a conveyance-on-sale within the meaning of section 54 of the Act, in respect that the property in question was not “upon the sale thereof” vested in him by the instrument, but that on the contrary it had vested in him on the recording of the bond and disposition in security, and all that the decree did was to take away the debtor's right of redemption with the consequence that his right became absolute. He contended that the extract decree if subject to any duty was subject only to the deed-duty of 10s., and accordingly called on the Commissioners to state a case.

The question for the opinion of the Court was—“Whether the said instrument, in the circumstances above set forth, is liable to be assessed and charged with the said ad valorem conveyance-on-sale stamp-duty; or if not, with what other duty, if any, it is liable to be assessed and charged?”

Argued for appellant—This document did not fall under either section 54 or 57 of the Stamp Act. (1) All that the declarator of the Sheriff did was to make the appellant's right indefeasible and irredeemable. It could not be said—as the Crown contended—to convert the bond and disposition in security into a “conveyance on sale”— Anderson v. Commissioners of Inland Revenue, October 19, 1878, 6 R. 56; Belch v. Commissioners of Inland Revenue, February 24, 1877, 4 R. 592. On the contrary, the order was only made after the failure to sell. (2) The 57th section did not apply because there was here no conveyance, no transfer of a right of property— Scottish Equitable Life Assurance Society v. Commissioners of Inland Revenue, November 23, 1894, 22 R. 85. Moreover, this section did not impose the duty, but merely decided how the consideration was to be ascertained. The case really fell within section 62, which applied exactly to it.

Argued for respondents—The two sections, 54 and 57, taken together, covered this case. There was a consensual contract entered into when the bond was granted, to the effect that the bondholder was entitled to use the remedies given him by law. He acquired the property, and for a price, the decree having the effect of a disposition at that date. If this were not a sale, what could it be termed— Foster v. Commissioners of Inland Revenue, L.R. [1894], 1 Q.B. 516; Huntington v. Commissioners of Inland Revenue, L.R. [1896], 1 Q.B. 422.

At advising—