1904 FANSHAWE, In re. LE MARCHANT, Ex parte. Co. (1) Here, the rights of all parties were fixed in 1895 by the applicants proving as unsecured creditors for 26047. It was their refusal to withdraw their proof that caused the scheme of arrangement to fail, and they thus deprived the general body of the unsecured creditors of the 10s. in the pound that they would have received under the scheme. It would not now be fair or just to allow the applicants to take away from the unsecured creditors the value of the equity of redemption under the mortgage, which is the only remaining asset in the bankruptcy. Muir Mackenzie, in reply. BIGHAM J. In this case the applicants, who are secured creditors, in 1895 assessed the value of their security at onehalf of the amount of their debt and proved as unsecured creditors for the remaining half of it. It is not suggested, and I have no reason to suppose, that they did not then act honestly and value their security to the best of their judgment, and it may very well be that their valuation at that time was correct. What was their right at that time? Rule 13 of Sched. II. to the Act provides that where a creditor has valued his security in accordance with the previous rules he may at any time amend the valuation and proof on shewing to the satisfaction of the trustee or the Court that the valuation and proof were made bonâ fide on a mistaken estimate, or that the security has diminished or increased in value since its previous valuation. That was the right they then had, and that is the right they are now seeking to assert, and they have satisfied me that their security has greatly increased in value by reason of the jointure ceasing in 1903 to be operative. But it is said that they ought not now to be allowed to amend their valuation because the debtor arranged in 1895 to pay his unsecured creditors 10s. in the pound, and that scheme failed solely because the applicants insisted on their proof for 26047. This circumstance is set up as a reason why the applicants should not now be entitled to the benefit of the rule, and reliance is placed on an obiter remark made by (1) [1904] 1 Ch. 226. I In re. LE MAR- Ex parte. Bigham J. Vaughan Williams J. in the case of In re Newton (1), where 1904 he says that the rule ought to be construed so as to give the FANSHAWE, creditor the right to amend "unless by something which has happened the position of the trustee and the creditor has become so altered that the rights of the parties concerned may be considered to be fixed on the basis of the alteration." take it that the "trustee" there represents the unsecured creditors, and the word "creditor" means the secured creditor. But I do not think that that obiter dictum applies to the present case, because it seems to me that nothing these secured creditors did in 1895 has taken away from them the right they now insist upon. I am at a loss to understand why the fact that the debtor failed to carry his scheme should deprive the applicants, who acted in good faith, of the right they now have of revaluing their security. The application will be granted, but the applicants must repay the dividend they received with interest at 4 per cent., and also pay the costs of the application. Solicitors: Farrer & Co.; Munns & Longden.. (1) [1896] 2 Q. B. 403. H. L. F. 2 VOL. I. 1905. C. A. 1904 [IN THE COURT OF APPEAL.] Dec. 9. THE UNDERGROUND ELECTRIC RAILWAYS COMPANY OF LONDON, LIMITED, APPELLANTS; THE COMMISSIONERS OF INLAND REVENUE, RESPONDENTS. Revenue-Stamp- Conveyance-Ad Valorem Duty Consideration — Consideration payable on Contingency-Stamp Act, 1891 (54 & 55 Vict. c. 39), s. 56, sub-s. 2; s. 57. 66 A company agreed to sell its undertaking to a new company in consideration of certain money and shares, and it was agreed that the profits of the new company in respect of each year should be applied, first, in the payment of a cumulative dividend of 5 per cent. per annum on the amount for the time being paid up on any shares for the time being issued by the new company; and, secondly, in paying to the original company, as a further part of the consideration for the said sale, such a sum as shall be equal to a dividend of 3 per cent. for such year on the amount for the time being paid up on such of the original ordinary share capital . . . . in the new company as shall for the time being have been issued by the new company 66 Held, that the further consideration, though payable contingently, was 'money payable periodically in perpetuity or for an indefinite period not terminable with life" within the meaning of s. 56, sub-s. 2, of the Stamp Act, 1891, and was chargeable with ad valorem duty. Judgment of Channell J., [1904] 2 K. B. 198, reversed. APPEAL from a judgment of Channell J. upon a case stated by Commissioners of Inland Revenue, reported [1904] 2 K. B. 198. The question as to the amount of stamp duty payable by the appellants arose under an agreement between the Metropolitan District Electric Traction Company, Limited, therein called the traction company, and the appellants, therein called the new company. By the first clause the traction company were to sell and the new company to purchase the entire undertaking of the traction company. Clause 2 stated that part of the consideration for the sale should be two several sums payable in cash and in shares Upon respectively, subject to certain specified deductions. Clause 3 provided: "The profits of the new company available for dividend in respect of each year shall be applied in the following order and manner-that is to say:- "First. In payment of a cumulative dividend at the rate of 5 per cent. per annum up to the end of such year. on the amount for the time being paid up on any shares for the time being issued by the new company; and Secondly. In paying to the traction company or its assigns as a further part of the consideration for the said sale such a sum as shall be equal to a dividend of 3 per cent. for such year on the amount for the time being paid up on such of the original ordinary share capital of 5,000,000l. in the new company as shall for the time being have been issued by the new company." The Commissioners found that at the date of the agreement the whole of the ordinary share capital of the new company to the amount of 5,000,000l. had been issued, and that the amount paid up was 1,300,000l., upon which sum a dividend of 31. per cent. for a year would amount to 39,000l. The Commissioners were of opinion that the sum contingently payable out of profits in each year under clause 3, sub-clause 2, was part of the consideration for the sale, and that, so far as such sum was capable of ascertainment at the date of the agreement, it was liable to ad valorem conveyance duty at the rate of 10s. per cent. They were of opinion that the sum of 39,000l. arrived at as above mentioned was, under the terms of the agreement, "money payable periodically . . . either in perpetuity or for an indefinite period not terminable with life" within the meaning of s. 56, sub-s. 2, of the Stamp Act, 1891, and consequently came within the provision of that sub-section that "the conveyance is to be charged in respect of that consideration with ad valorem duty on the total amount which will or may, according to the terms of sale, be payable C. A. 1904 UNDERGROUND ELECTRIC RAILWAYS COMPANY OF LONDON V. INLAND REVENUE COMMIS SIONERS. C. A. 1904 UNDERGROUND ELECTRIC RAILWAYS COMPANY OF LONDON V. INLAND REVENUE SIONERS. during the period of twenty years next after the day of the date of the instrument." They therefore applied the provisions of that sub-section, and multiplied the sum of 39,000l. by 20, making a sum of 780,000l., the duty on which, at 10s. per cent., amounted to 39007.; and that sum they assessed as the duty payable in respect of the further consideration mentioned in clause 3, sub-clause 2, of the agreement. At the request of the railway company, a case was stated upon which the company appealed. On argument before Channell J. judgment was given for the appellants. The Commissioners appealed. Sir R. B. Finlay, A.-G., and S. A. T. Rowlatt, for the Commissioners. The fact that the payment of this part of the consideration for the sale to the new company depends on a contingency does not prevent the duty from attaching. No doubt there is the contingency that before the traction company can be paid in any year any portion of this part of the consideration, the new company must have earned enough to pay the 5 per cent. mentioned in the first sub-clause; but there is no ambiguity with regard to the amount payable annually. That sum has been correctly estimated at 3 per cent. on the amount of paid-up capital at the date of the agreement, and on that footing the consideration payable under clause 3, sub-clause 2, of the agreement has been ascertained by multiplying by 20; and on that amount the duty is payable. A similar point arose in the case of a mortgage in Mortimore v. Commissioners of Inland Revenue (1), where the debt arising on the mortgage was contingent, and the decision was that the words "mortgage, debt, or sum of money " included contingent as well as absolute debts. In Canning (Lord) v. Raper (2) there was an assignment of chattels to secure to the assignee an indemnity against a payment the necessity for which might not arise, and the deed was held to be subject to a stamp duty as a "security for the repayment of money, to (1) (1864) 2 H. & C. 838. (2) (1852) 1 E. & B. 164. |