[1956] EACA 39

## **APPELLATE CIVIL**

## Before CONNELL, J.

## WALLACE BROTHERS & COMPANY (HOLDINGS) LTD., Appellant $\nu$ .

## THE COMMISSIONERS FOR STAMP DUTIES, Respondents

Miscellaneous Civil Suit (Case Stated) No. 85 of 1955

- Stamp Ordinance (Cap. 259)—Transfer of shares between two companies not incorporated in Kenya-Shares in company incorporated in Kenya-Whether transfer liable to stamp duty under section 4—Or exempted by section 30B. The facts appear fully in the judgment. - Held (22-2-56).—(1) The transfer being between two companies, neither of which was incorporated in Kenya, was amenable to stamp duty by section 4 of the Stamp Ordinance, Cap. 259, and by item 62 (ii) of the First Schedule thereto.

(2) The words "company with a limited liability" contained in section 30_B of the (2) The words company with a finited happing command in section 308 of the<br>Stamp Ordinance, Cap. 259, are to be constructed in a restricted sense to mean a company<br>with a limited liability incorporated within the law of Ke

(3) Express and unambiguous language is indispensable in an Ordinance enacted to<br>impose a stamp duty or to exempt from a duty imposed. As the exemption from the imposed duty did not appear expressly and unambiguously in section 30B the transfer could not be held exempted.

Cases cited: In re Tennant. Stanley v. Stanley, (1906) 1 Ch. 131; Nestlé Co. Ltd. v. Inland Revenue Commissioners, (1952) 1 All. E. R. 1388; Nestlé Co. Ltd. v. Inland Revenue Commissioners, (1953) 1 Ch. 355 C. A.

Authority cited: Craies Statute Law, 5th edn., 106.

McCallum for the appellant.

Reid, Crown Counsel, for the respondents.

Appeal upheld.

JUDGMENT.—This appeal comes to me by way of a Case Stated by the Commissioners for Stamp Duties (respondents), represented by Mr. Reid, at the request of the appellants, Wallace Brothers and Company (Holdings Ltd.), represented by Mr. McCallum under section 60 of the Stamp Ordinance (Cap. 259 of the Laws of Kenya, 1948, vol. III).

The facts are clearly set out in the Case Stated and, in short, are these:—

On 4th January, 1955, Wallace Brothers and Company Ltd. incorporated in United Kingdom transferred to the appellant, Wallace Brothers (Holdings) Ltd., also incorporated in United Kingdom, 6,800 ordinary shares of Sh. 20 each of and in the undertaking called "Wallace and Adam Ltd.", the last-named being, as I understand, a company incorporated in Kenya.

The transfer was presented to the Senior Collector of Stamp Duties on 22nd January, 1955; the respondents Commissioners were satisfied that the effect of the transfer was to transfer a beneficial interest in property, namely the shares in Wallace and Adam Ltd., from the transferor to the appellant and that the appellant is the beneficial owner of not less than 90 per cent of the issued share capital of the transferor. The respondents Commissioners were also of opinion that the exemption provisions of section 30_B of the Stamp Ordinance were not applicable except where the transferor and transferee companies were incorporated in the Colony and Protectorate of Kenya and that accordingly the said transfer was liable to stamp duty at the rate Sh. 10 per centum by virtue of section 4 of the Ordinance and item 62 (b) (ii) of the First Schedule thereto.

The main basis of the appeal obviously turns on the construction of section 30 (b) (2) (a), and (b) and I hereto set out the section up to and including (b) (i) but omitting the proviso to section $30B(1)$ :

" $30B$ (1) Stamp duties under the headings "Conveyance" and "transfer" in the Schedule to this Ordinance shall not be chargeable on an instrument to which this section applies.

(2) This section applies to any instrument as respects which it is shown to the satisfaction of the Commissioners—

- $(a)$ that the effect thereof is to convey or transfer a beneficial interest in property from one company with limited liability (hereinafter called the 'transferor') to another such company (hereinafter called the 'transferee') and - (b) that either (i) one of such companies is beneficial owner of not less than 90 per cent of the issued share capital of the other company."

Mr. McCallum for the appellant argues that as there is no definition of the word "company" in the Stamp Ordinance and none in the Interpretation and General Clauses Ordinance he can turn by way of analogy to the definition of a company in the Companies Ordinance, Cap. 288, vol. IV, Laws of Kenya, and in the East African Income Tax (Management) Act of 1952. The definition in the former Act is not of much assistance to the appellant, for "company" therein means a company formed and registered under this Ordinance or an existing company. "Existing company" means a company formed and registered under the Indian Companies Act, 1882, as applied to the Colony, or under the repealed Companies Ordinance; I have been unable to trace a definition of "company" under the Indian Act, but, so far as my perusal goes, all the indicia seems to point to a company being one which is registered under the Act or is formed in pursuance of an Act of Parliament or some other Act of the Governor-General in Council or, by the Royal Charter of Letters Patent.

Now the present "case stated" has reference only to section 30_B of the Stamp Ordinance and in fact in paragraph 7 of the "case stated" the question for the opinion of the Court is: $-$

"Whether the said transfer is liable to stamp duty as aforesaid or is exempt from stamp duty by virtue of the provisions of section 30_B of the said Ordinance."

The question might indeed be posed in yet another form and that is whether the words in section $30B$ (2) (a) "company with limited liability" should be construed as "company with limited liability incorporated in Kenya" or in the wider sense as "any company with limited liability" or at least "company with limited liability incorporated in Great Britain".

The other definition of "company", referred to by Mr. McCallum, was that in the East African Income Tax (Management) Act where "company" means any company incorporated or registered under any law in force in any of the Territories or elsewhere". Mr. McCallum urges that the definition in the Income Tax (Management) Act, being a taxing statute, should have high priority when one comes to consider in a Revenue Statute what is the meaning of the words "company with limited liability" in section $30B(2)$ (a) of the Stamp Ordinance. He has quoted a case In re Tennant. Stanley v. Stanley, (1906) 1 Ch. 131 where. as stated in the headnote, a testator empowered the trustees of his will to invest moneys in "the stocks, funds and securities of any corporation or company, municipal, commercial or otherwise". Buckley, J., in his judgment at page 134. stated "I think I ought to give their full meaning to the words 'any corporation. or company, etc.'; and I hold therefore that the trustees are at liberty to invest: in the stocks, funds and securities of any corporation or company, notwithstanding the fact that it is not formed or registered in the United Kingdom".

Buckley, J., therefore, gave the wider meaning to the word "company" and not the restricted sense as meaning any corporation, company, etc., formed in England.

The present case stated, however, does not concern the interpretation of a will but it involves a perhaps more difficult question of how to construe words in a Revenue Statute. All sorts of canons of construction have been laid down by the Courts at various times as to how words in Statutes should be construed; the statement of objects and reasons may be perused; other sections may be perused in ascertaining the meaning or intention of the legislature, analogous statutes in England may be considered and, finally, perhaps, the most important limb in the argument of Mr. Reid for the Crown, decisions of British Courts on similar sections in similar British Acts may be utilized by Colonial Courts in coming to a decision in Colonial Courts as to what is the meaning or underlying intention of a Colonial Ordinance.

In the latter connexion, Mr. Reid has drawn my attention to section 55 of the Finance Act, 1927, in dealing with certain exemptions which can be obtained on "reconstruction" and "amalgamation" of companies; this section is practically the same as section 30_A of the Kenya Stamp Ordinance except that the latter in section 30 $\lambda$ (1) (a) contains the addition of the words "or an Ordinance of the Colony"; while section 42 of the Finance Act, 1930, is almost identical in terms with section 30_B (1) and (2) (a) (b) of the Stamp Ordinance.

Now in the case of Nestlé Co. Ltd. v. Inland Revenue Commissioners, (1952) 1 All. E. R. 388 and (1953), 1 Ch. 395. Section 55 of the Finance Act came up for consideration by both Courts of first instance and of appeal on the construction to be given to the words "any particular existing company" and "existing company" (the same phrases occur in various subsections of section 30A (1) of the Kenya Stamp Ordinance); in those decisions it was held (see the headnote in the appeal judgment) that "the word 'company' in section 55 of the Finance Act, 1927, must be given a restricted and technical meaning and meant a body corporate of the kind indicated in section 112 and 113 of the Stamp Act, 1891 that was to say, a body corporate, incorporated under Letters Patent of Her Majesty or according to the laws general or special of England, Wales and Scotland; and that "any particular existing company" in section 55 did not include a company incorporated in Northern Ireland, where, following the Government of Ireland Act, 1920, the power to legislate as regards both stamp duty and joint stock companies for Northern Ireland was transferred to the Northern Ireland Parliament; and that accordingly the Commissioners were right", i.e. right in rejecting the claim for exemption.

In other words, both Courts interpreted the words "any particular existing company" in a restrictive sense.

I have read both these judgments carefully; it is true that they are concerned with the interpretations of words which occur in section 30A and not section 30B of the Kenya Stamp Act; I think, however, that they are a strong indication that in the view of both Courts they would put a similarly restrictive construction on the words "company with limited liability" occurring in section 42 (2) (a) of the Finance Act, 1930 (corresponding with section 30 (2) (a) of the Kenya Stamp Ordinance).

At page 407 of the appeal judgments, Jenkins, L. J., says, "one must rightly. I think, ... approach section 55 with a strong bias towards the view that the companies referred to, whether they be transferee companies or particular existing companies, are companies within the meaning of the law of *this country*. and as such are companies which, save in so far as they may have been exempted from it by the date of their incorporation, or relieved from it by some previous application of the provisions of section 55, are amenable to the provisions of sections 112 and 113 of the Stamp Act, 1891, as regards stamp duty on their capital".

Now the provisions of sections 112 and 113 in an abridged form are contained in item 54 of the Schedule to the Kenya Stamp Ordinance.

Again at page 407, Jenkins, L. J., in discussing section 55 (a) (1) of the Finance Act (see section $30A$ (1) (a) of the Kenya Ordinance) states: "It should be **remembered that under paragraph** $(a)$ of section 55 (1) The nominal share capital of the transferee company, or the amount by which the capital of the transferee company has been increased, as the case may be, shall, for the purpose of computing the stamp duty chargeable in respect of that capital, be treated as being reduced by either (i) an amount equal to the amount of the share capital of the existing company'. Pausing there," says Jenkins, L. J., "it is plain that if the benefits of the section were thrown open to particular existing companies incorporated in foreign parts, the calculation postulated by paragraph (a) might well be impossible of performance."

It is hardly necessary to make other quotations, but I will quote, finally, Evershed, M. R., at page 401: "I think that when the general purpose of this section is borne in mind you are inevitably carried back to sections 112 and 113 of the Stamp Act, 1891, to see what sort of creature it is that Parliament is referring to in section 55 of the Finance Act, 1927, as a 'company'. You must, in other words, give a restricted and technical meaning to this word 'company'; and in order that I may state at once what my conclusion is, I think that the inevitable meaning of this context of the word 'company' is a body corporate of the kind indicated in sections 112 and 113 of the Stamp Act, 1891, that is to say a body corporate incorporated under Letters Patent of Her Majesty or according to the laws general or special of Great Britain—and I mean by Great Britain England, Wales and Scotland."

Mr. MacCallum has answered the English case by submitting (1) that under the parallel section 30 $\lambda$ of the Kenya Ordinance, section 30 $\lambda$ (1) (a) the words occur "that a company with a limited liability is to be registered, or that since the date of the commencement of the Stamp (Amendment) Ordinance, 1951, a company has been incorporated by Letters Patent, Act of Parliament, or an Ordinance of the Colony. ... ".

I should have thought it stretching the argument too far to say that any commercial company formed in Great Britain, under the Companies Act, was incorporated by Act of Parliament; in any event there is no recital in the case stated that the transferor or transferee company were incorporated by Act of Parliament since the 1951 Amendment. If I were asked to decide what is meant by Act of Parliament I should have thought it bore the meaning in section 34 of the Interpretation and General Clauses Ordinance "Where by any order of the King in Council or Ordinance any Act of the Imperial Parliament... is extended or applied to the Colony". Secondly, Mr. MacCallum has submitted that in any event the scope of section 30B is different from that of section 30A. In this respect it is, however, to be noted that in both sections there are envisaged two companies an "existing company and transferee company" (section 30A) and "a transferor and transferce company" (section 30B).

In conclusion I would cite a · passage, quoted· by Mr. Reid, at page 108, *Craies on Statute* Law, 5th Ed., "Express and unambiguous language appears to be absolutely indispensable in statutes passed for the following purposes: Imposing a tax or charge"; the headnote (p) adds the ,words "Also exempting from a tax or rate".

In my view the words "company with limited liability" in. section 30B (2) (a) must be construed in the restrictive sense contended for by Mr. Reid and mean a company with limited liability incorporated in Kenya.

I therefore answer the question posed in paragraph 7 of the case stated, by stating that, in my judgment, the "said transfer" is liable to stamp duty under the provisions of section 4 of the Stamp Ordinance and the item 62 (ii) of the first schedule thereto. .