STAMP DUTY CASE

Evening Post, Volume C, Issue 22, 26 July 1920, Page 7

STAMP DUTY CASE

VALUE OF OIL SHARES

IMPORTANT PRINCIPLE INVOLVED,

. An appeal by. the British Petroleum Development Company, Ltd., was heard before the Full Court at the Supreme; Court this morning: The Court comprised the Chief Justice (Sir Robert Stout), and their Honours Mr. Justice Chapman, Mr. Justice Sim, and Mr. Justice Herdman. Mr. A. Hanna,\of Auckland, appeared for the appellant company, and Mr. C. Skerrett, X.C, and with him Mr. Macassey, of the Crown. Law Office, for the Minister of Stamp Duties. '. '■- • '

the case as stated by the Minister of Stamp Duties showed that on 23rd January, 1919, the British Petroleum Development Company secured a lease for 999 yearn of freehold laud belonging to'the. Associated Oil Corporation, the'consideral tion by way of premium for the grant of siich lease to the' appellant Company being (a) £800Q cash,, (b)-debentures to be issued by the appellant' company" for" £22,000 having a currency of,, three years and bearing interest at the rate of 7 per cent, per annum, and charged upon all the property and uncalled capi: tal_of that company; and (c) 120,000 fully paid up £1 shares of the appellant company to be allotted to the shareholders of the Associated Oil Corporation. The agreement was subject to ad valorem stamp duty at the rate of three shillings for every £50 of the amount, of the consideration.. This ad valorem stamp duty on the agreement had been assessed at £450 computed on . a consideration of £150,000 made up as follows : —(a) £8000 in cash ; (b) £22,000 in debentures ; (c) £120,000 in fully paid up shares. The duty so assessed had been paid by the appellant company, but the company objected to the assessment «o far as it related to the debentures and shares.

With respect to the debentures it was contended by the appellant companysl that ad valorem stamp duty should be assessed not on the .'nominal.'amount'of the debentures but on the actual saleable value of them in the market at the date of their issue, the actual saleable value of each. £250 debenture on that date being £62 10s. The - Minister of Stamp Duties, on the other hand, maintained that the consideration on which the ad valorem duty was to be computed was the nominal amount of such debentures as constituting, a. debt payable by the appellant company -to the Associated Oil Corporation on the issue of ths debentures. Regarding the paidup shares, the appellant company contended that the ad valorem stamp duty should be a-ss^sed not.on the nominal but on the saleable value of the shares, which was then 2s- 6d per share. The Minister contended (1) that evidence was not admissible to reduce the amount of ad valorem duty which was payable in accordance with'the, terms of . an instrument, and that, having 'regard to the law prohibiting companies from issuing shares at a discount, the.-agree-ment must be taken to be a statement that the property acquired by the appullant company was equal in value to the cash, debentures and paid-iip shares paid or issued; (2) that in the alternative the appellant company was estopped from alleging that it knowingly and wilfully issued-paid-up shares for a consideration less than the nominal amount of those shares. The' liiurt was asked to determine,whether the assessment of stamp- duty as stated was correct, and, if not, what' was the pToper assessment. Mr. Hanna explained that as the questions at issue were most important it had been decided to place tEem before the Full Court for determination. '

During argument Mr. Skerrett stated that the land in question comprised 21 acres situated at Ifew Plymonth, ."the home of oil failures in New Zealand 1.! 1 Their Honours reserved decision. QUESTION OF A LICENSE/ The Full Court also-heard an appeal by the Thames Valley Co-operative Dairying Company against ths decision of the Deputy-Commissioner o£ Stamps, charging the company with, an annual license fee. Mr. Hanna appeared for ths appellant company, and Mr. Macassey for .the Deputy-Commissioner of Stamps. Mr. Hanna said the appeal was made under the 7th schedule of the Finance Act, 1915. The company claimed to be a butter and cheese manufacturing company, and he submitted was therefore exempt. Mr. Macassey said the point was whether the company was " formed exclusively" for the manufacture of butter and cheese. The Chief Justice pointed put that the' articles of association showed that the company was also carrying on business as '' brokers, commission. agents,: carriers, storekeepers," etc. Mr.,Hanna replied' that these were only incidental to the carrying on of the main business of the company, which was that of butter_and cheese manufacture. He said he had been asked to bring the matter forward in order to get a ruling. Most of the New Zealand judgments were against him, and if it were given so in the present case, steps would be taken to secure amending legislation. The Chief Justice held that the appellant company was not entitled to exemption as it was carrying on businesses, other than that of a dairying company". Mr. Justice Chapman, Mr. Justice Sim, and Mr, Justice Herdman concurred.