HC Deb 25 February 1870 vol 199 cc832-44

said, he rose to call the attention of the House to an alteration that has been made in the administration of the Law in respect of Stamps upon Leases, and to ask Mr. Chancellor of the Exchequer, Whether Her Majesty's Government intend to propose any remedy for the hardships and anomalies of the existing Law? He had received communications from Manchester, Birmingham, Liverpool, and other large towns relative to the present condition of the Stamp Laws, and he did not think the Government, if they intended to introduce a Bill on the subject, could object to his bringing forward a matter which really showed the strong necessity for amendment and consolidation. About fifteen years ago, in the year 1854, an Act was passed imposing a stamp upon leases. The practice under that Act, taken in connection with other Acts, was this—An ad valorem stamp calculated on the rent was imposed on every document called a building lease. The practice was perfectly well known and uniform, and it was sanctioned over and over again by the authorities of Somerset House in the most formal manner. To use the expression of the Chancellor of the Exchequer, the customary interpretation applied to these documents was that ad valorem stamps, and ad valorem stamps alone, were imposed. The authorities at Somerset House not only applied this customary interpretation to those documents, but they formally adjudicated on the subject. In 1850 an Act was passed which enabled anyone who had a doubt as to the stamp to be placed on any document to take that document to Somerset House and obtain the opinion of the law officers of the Commissioners of Inland Revenue as to what additional stamp was necessary. This was called the adjudication stamp. Last December however, a new light seemed to have broken upon the authorities of Somerset House, and they gave notice that they would require, for the future, any document of the character he had described to bear an additional stamp of 35s., besides the ad valorem stamp. A gentleman who had occasion to get a lease stamped demurred to this new practice, and appealed against it to the Court of Exchequer, which Court, however decided that the customary interpretation of the Act had been an erroneous one, and that the new interpretetion of the Board of Inland Revenue was correct. What was the result? Briefly stated, it was this—that from data on which he could rely it appeared that not less than 1,000,000 documents in the United Kingdom were at that moment erroneously stamped, and were consequently useless as legal instruments in a court of law, and invalid for giving a good title to land. He need not enlarge upon the dismay that this decision had occasioned over all the country, or upon the trouble and expense that must be incurred if a remedy were not applied. A hundred instances might be furnished, but he would content himself with one, as an illustration of the effect of the decision. A gentleman of his acquaintance wished to assign fifty-eight leases, and he discovered that under the new interpretation of the law fifty-four were improperly stamped. The intending purchaser declared that he could not accept them, because they were invalid documents, and the result was that the gentleman would have to go to an outlay of at least £100 in order to give a good title. Now, he might be told that it was the duty of every subject to be acquainted with the law, however hard or harsh it might be; that ignorantia juris not excusat. But, in this case, the ignorance was on the part, not of the public who suffer, but of the Department who counsel the suffering: and it would therefore be extremely unfair if the public were to be mulcted for laches that were not their own. He therefore hoped that the Government would invoke the power of Parliament to prevent a retrospective effect being given to the decision he had referred to, and that they would introduce a Bill declaring that all documents that were now stamped with proper ad valorem stamps should be considered valid, although they did not bear the 35s. stamp. As to the future, he thought that this now stamp—for it really was a now one—would fall with peculiar hardship upon leases of small properties and upon the whole of the building trade, which was already in a state of great depression. If, therefore, the Government thought that leases of this description ought to bear a stamp at all, he hoped they would not propose a uniform one of 35s., because it was obviously unjust that a man should be called upon to pay a £1 15s. stamp whose ground-rent was perhaps £5 a year, when the person who had a house in Belgrave Square, with a ground-rent of£300 or £400 a year paid no more. He must also express his belief that there were many leases, not building leases, but which contained covenants to repair; and rebuild, which would come under the new rate if the decision of the Court of Exchequer was to be carried out; and in fairness to the general public he thought that the Government ought to bring in a measure dealing retrospectively with leases, and also dealing with building leases for the future, and with other leases which contained covenants constituting a "valuable consideration." He appealed with confidence to the justice of the Government in this matter, and had therefore abstained from putting any Motion on the Paper; and he hoped that the reply of the right hon. Gentleman would relieve him from the necessity of introducing a Bill himself on the subject, because he was convinced that a question involving such large items of taxation could be much more effectively handled by the Government.


said, he thought the hon. Member was entitled to the thanks of the House for introducing this subject. He entirely concurred in all that the hon. Gentleman had said as to the injustice and harshness of the recent decision of the Commissioners of Inland Revenue. He held in his hand a paper that had been drawn up by a number of gentlemen in Cork, who, in 1860, acquired some land in the neighbourhood of that city, and lot it out in building plots on leases for 400 years. Fifty leases were granted, and fifty small houses were built, at an average cost of 11s. for the legal documents. But if the recent decision were to be acted upon, each of the tenants would have to pay 35s., and was also liable for a penalty of £10. He could not believe that the Government intended to sanction such injustice, and its decision was awaited with the greatest interest. He knew a gentleman in Ireland who had been concerned in 200 leases since the Act, all of which had been registered, and it would be a thing totally without precedent if, after registration, their validity were to be called in question upon a point connected with the stamps.


said, that as he understood the case, it was simply this. In 1854 an Act was passed which certainly, read by the light of unassisted reason, imposed an ad valorem duty, and that only, on all leases, that duty being six times the amount of the one which previously existed. For fifteen years that construction of the Act was not only adopted by the public and the legal profession, but acquiesced in by the authorities of Somerset House. Building leases were all stamped with the ad valorem duty, under the positive authority of the Commissioners of Inland Revenue. Things wont on in that way until one day last November some gentlemen at Somerset House, endowed with a peculiar scent for that kind of game, ferreted out the 15th section of the Act, which seemed to provide that any instrument charged with an ad valorem duty should, if it contained any further valuable consideration, be chargeable on that account with an additional stamp. The matter was brought before the Court of Exchequer, which decided that the case in question came within the letter of the Act. Let the House consider the consequences of this. Of the 1,000,000 building leases insufficiently stamped a large proportion had been handed about the country, had got into the hands of all sorts of owners, had been mortgaged, had been assigned, and in every case purchasers and mortgagees had got a bad title and security. But the mischief did not stop there, for if they looked carefully to the language of the Act, the same reasoning which applied to building leases applied also to mining and to agricultural leases; because all such leases contained covenants to build, or paint, or do something of that kind. He believed that if this decision of the Court of Exchequer were pushed to an extreme it would invalidate every lease in the country. Who was to bear the expense of setting that right? It was very hard upon a man who bought leases fifteen years ago to find that he could not make them available unless he paid 35s. on each. There were those to whom that sum was a serious consideration, and when you came to multiply it by fifty or sixty, you made it a serious matter for another class, while a million times 35s. was a very large sum indeed. He was aware that this was a two-edged argument, and that the grand total would be valuable to the Chancellor of the Exchequer, and would, perhaps, enable him to take 1d. off the income tax. If that could be done by fair means he should not object; but he maintained that this was a case in which the Government and the Legislature were bound to take retrospective action, upon the simple ground that it was the duty of the Legislature to make these fiscal enactments reasonably plain, and not leave them to be pitfalls for the unwary. It was not right to allow an error committed per incuriam in an Act of Parliament to be made use of by the Executive, as it might be in a country attorney's office.


said, that he had that day received a letter from the agent of an estate, of which he was one of the trustees, telling him that the effect of the recent decision would be to stop any further building upon it, and the effect would be generally to discourage artizans from buying their own houses—an object which the House had done all in its power to promote. If the Government did not respond to the appeal now made to them he hoped that his hon. Friend (Mr. Bourke) would himself bring in a Bill on the subject.


said, that in common with other Gentlemen he had received many communications from the country on the subject, and he was himself practically aware of the injurious results that must necessarily follow if the Government did not listen to the appeals that were now made to them. He believed he was warranted in saying that the judgment of the Court of Exchequer was not acquiesced in by the lawyers of the country generally, and there was a strong impression that, if the matter were carried to another court, a different decision would be arrived at. In 1845 a decision was given in "Nicholls v. Cross," which was similar to the Bolton case. A lease had been granted of a piece of land at a yearly rent of £8; there was a covenant to build a dwelling-house of the value of £150; the lease was stamped with the lease stamp; and the question arose whether, in consideration of the covenant, the lease was not liable to additional duty. The Court of Exchequer held that the lease was sufficiently and properly stamped, and did not require an additional stamp. This remained the law down to the passing of the Act of 1854. It would be contended, of course, that the new Act was framed in terms different from those of the old one; but if it had been intended to make such a change as this the officials at Somerset House would have taken care that every lease which came before them was impressed with the additional stamp as well as the ad valorem lease stamp. This Act was somewhat of a penal character, and it ought to be construed strictly in favour of the subject. He hoped that the Government would remedy the evils that had been so clearly pointed out by the other hon. Gentlemen who had spoken.


said, the hon. Gentleman who brought that question before the House (Mr. Bourke) had stated it so clearly and so fully that it was unnecessary for him to recapitulate the circumstances. He was quite content to take them on his statement with one single correction, and that was, that about four years ago, as he has informed, the Board of Inland Revenue discovered the mistake which they had made, and from that time they uniformly enforced the additional stamp of 35s. ["No, no!"] The hon. Gentleman was perhaps better acquainted with the practice of the Board of Inland Revenue than he was; but he could only say that he made that statement on the authority of the officials of the Board. Now, the point to which every speech that had just been made was addressed was this—Hon. Gentlemen said, and said with considerable justice and force, that where a body which was appointed to collect, taxes was allowed in the first instance to adjudicate upon them, and had decided that only a certain stamp was required, and in that way misled the public, it would be hard and unfair to go back from such a decision as that and demand the affixing of an additional stamp. He did not see anything to quarrel with in that argument. People were, of course, all bound to obey the law; but it seemed to him that if those who were entrusted with the administration of the law misconstrued it, and so misled the subject, the public might reasonably be called upon to bear the injury inflicted upon them by the mistake of their officers. Therefore, so far as regarded what had been done during the time that the Board of Inland Revenue misunderstood the law and acted upon an erroneous interpretation of it, he thought he might fairly say that the Government would not be disposed to enforce either the tax or the penalty. But a very different set of considerations came into force the moment the Board of Inland Revenue found out their error and enforced the law. ["Oh, oh!"] Hon. Gentlemen who interrupted him must allow him to say that, while they represented a small class, he spoke on behalf of the whole community of this country. The Inland Revenue Board found out their error and enforced the law; and as regarded the period which had elapsed since, he confessed it seemed to him extremely difficult to pass a retrospective Bill for the remission of the additional duty. He could not imagine with what justice they could be at Somerset House enforcing this law, obliging persons to pay the duty, and deciding, as he was told had been repeatedly done for four years, that this 35s. stamp must be affixed, and then in deference to the feelings of hon. Members, remitting to other persons that very tax they had been during that time enforcing. It would be an injustice and an unfair ness. What they ought to do was, he thought, very clear. The hon. Gentleman who spoke last had questioned the decision of the learned Barons of the Exchequer. He (the Chancellor of the Exchequer) was not a Court of Appeal to sit in judgment upon them he took their decision as he found it. The learned Chief Baron laid it down that the point was entirely free from doubt, and Mr. Baron Martin, a Judge of great weight, experience, and learning, used these remarkable words— I think this case falls directly within the words of the Act of Parliament, and I should not be at all surprised if the Act were intended to aim at this very case. That was the decision of the Judges in that case, and he could not himself see that there was any good reason why, from the time when the Government collected the tax on the principle laid down by the Court of Exchequer, they should bring in a measure to remit these taxes. Of course, as far as penalties went, the matter being an honest mistake, it would be quite wrong to enforce them; but it seemed to him that it was their simple duty—his at least, and that of the Revenue Department, in the absence of any directions to the contrary, to obey the law when clearly declared, and to collect the tax, from the period when it had been collected on this principle by the Board of Inland Revenue. For the future, he thought, the subject was one well worthy of consideration. It would be his duty to call the attention of the House in the course of the Session to the whole subject of the Stamp Laws, and then the question of this duty of 35s. and its application would definitely and legitimately come before the House, and possibly they might be of opinion that it was altogether of a larger amount than ought to be levied. He hoped the House would consider this statement satisfactory. Meanwhile, having for several years collected the tax on the principle now adopted the Government could not in fairness introduce a Bill to relieve persons from the payment of it without refunding the tax to those from whom it had been taken; though as persons had been misled into believing that they had not to pay it, they had a fair claim to indemnity from penalties, and the Government would be prepared to treat them on that footing.


said, he was glad to hear the announcement of the right hon. Gentleman the Chancellor of the Exchequer, as the subject was of extreme interest to his constituents. In Liverpool, under the corporation, hundreds of leases were held which would be liable to this additional duty, though very few required an ad valorem duty beyond £1. There were many kinds of leases on a small scale in large towns upon which the tax would press very heavily; and it was an anomaly that, while Parliament was pressing forward town improvements and better dwellings for the sake of the poorer population, the Government should enforce a very doubtful piece of law and more than double the costs of these transactions., He rejoiced to hear that the Chancellor of the Exchequer intended to propose the consolidation of the Stamp Acts, and he hoped this increase of the burdens upon building leases would be taken into consideration, and that the right hon. Gentleman would be inclined to relent as to the four years, for the decision of the Commissioners was not publicly announced, and thousands of persons entered into these engagements without the least idea of the burdens they were incurring.


said, he also hailed with pleasure the announcement of the Chancellor of the Exchequer. The right hon. Gentleman had alluded to what he appeared to think was an error of the Inland Revenue. It seemed to him (Mr. Dillwyn) rather that the Inland Revenue Department had discovered an error which had crept into an Act of Parliament, and intended to take advantage of it, for the benefit of the public revenue. Looking at the debates which took place on the introduction of the Stamp Act of 1854, and the words which then fell from the Chancellor of the Exchequer—now the Prime Minister—that it was not intended to interfere with the laudable desire of working men to possess small plots of land for building purposes—it was clearly the intention of Parliament that the stamp duty should be imposed, not upon building leases, but upon conveyances of real property. He hoped the Government would rectify this error in the Act.


said, he could corroborate the statement of the hon. Gentleman who had just sat down, with respect to the obvious intention of the House when the Act was passed. With the greatest respect for the learned Barons of the Exchequer, he must say that their decision was not generally acquiesced in by that branch of the legal profession to which he belonged. That was not a direct, but an inferential tax, and nothing could be more unsatisfactory than the mode in which it was carried out. He did hope that the Chancellor of the Exchequer would fulfil, before long, the pledge of legislation upon that subject, which the House had been so much gratified to hear.


said, he did not rise to discuss the decision of the Court of Exchequer. All that he would say was that it had taken the whole country and the legal profession by surprise, and solicitors in particular were completely paralyzed by it. Though the answer of the Chancellor of the Exchequer was satisfactory as regarded the future, and a certain period in the past, ending about four years ago, it was most un- satisfactory as to the intermediate period, and would leave the practice very vague and uncertain. A lease could not be given in evidence, unless the Legislature made it admissible. Was a Judge to accept or reject a document which, according to this decision, bore an insufficient stamp? According to existing law he must reject it. The right hon. Gentleman said he would apply the test of whether people had notice that the law was to be enforced; but how could any Judge decide that a particular deed was stamped with or without notice? It would be impossible for him to enter into such an inquiry; but, on the other hand, it would be most unfair to make any man suffer unless you could bring home to him a knowledge of the decision of the Commissioners four years ago. They had not received any promise from the Chancellor of the Exchequer that he would deal with the period down to the four years. [The CHANCELLOR of the EXCHEQUER: YES; I promised to do so.] He had not heard it. However, that was satisfactory so far; but he did not think the right hon. Gentleman could in fairness draw a distinction between the cases of leases before the four years and those stamped with the ad valorem stamp after that period.


said, he wanted to know whether those who had taken out leases before the four years were to be let off altogether with their 10s., and those who had taken out leases during the four years were to pay the 35s., but without any penalty? The Chancellor of the Exchequer was only making a virtue of necessity in remitting the penalty, because it would be impossible to get it from nine-tenths of the people concerned.


said, the declaration of the Chancellor of the Exchequer would be received with satisfaction as far as it went. But the subject must not be considered as a question of stamp duty merely—of the actual amount of money to be paid—but as a question whether it was right that faith in the securities of the country should be shaken. Until the matter was settled, dealings in those deeds would be brought to a perfect standstill. At present, as the deeds represented property, they were dealt in every day, and money was lent on them. The Chancellor of the Exchequer had not stated with sufficient clearness that the promised Bill should be brought in immediately, in order that the cloud which was hanging over property should be cleared away at once. As things stood at present, insurance offices that had leases brought before them, in order to have money advanced on their security, would feel a difficulty in dealing with them. If the right hon. Gentleman reviewed the whole question he would see that it was of the utmost consequence to thousands of persons that he should not insist on treating leases taken out within the four years in an exceptional manner. He hoped, the right hon. Gentleman would feel that this question should not be left over until the general measure was to be brought in.


Sir, I have no right to speak again; but, as it would not be desirable that there should be any doubt on the subject, perhaps the House will permit me to say a few words. In reply to the question of the hon. Baronet the Member for North Durham (Sir Hedworth Williamson), our intention is this—For the period during which we think that the law and the practice of the Revenue Department have been in unison we propose to collect the revenue just as if there had been no question at all about it—that is to say, the ad valorem duty and the 35s. stamp, [Murmurs.] Hon. Gentlemen will please to remember this, that we have been collecting it during the four years, and if we make a law to exempt persons who have not paid we must refund the money to those who have paid. I beg to assure the hon. Member for the City of London (Mr. Alderman W. Lawrence) that we will bring in a Bill of Indemnity without unnecessary delay.


said, he wished to know whether, after the strong expression of feeling from both sides of the House, it would not be well that leases up to the time when the decision in the Court of Exchequer was given should be relieved from the 35s. stamp. That, in his opinion, would meet the views of hon. Gentlemen, and do away with the feeling of harsh treatment which prevailed in various parts of the country in connection with this question. People who had executed leases within the four years would not feel the justice of the distinction which the right hon. Gentle- man had laid down. If the Chancellor of the Exchequer did what he (Mr. Hibbert) suggested, it would hardly be necessary to refund the 35s. stamp duty to those who had their leases properly stamped, because he believed such cases to be few in number.


said, he could not refrain from expressing the hope that the Chancellor of the Exchequer would listen to the advice given to him from both sides of the House, and would extend the remedy up to the time at which the decision was given in the Court of Exchequer. The right hon. Gentleman said that if he did he should have to refund a certain amount. He should very much like to know what the amount would be. He did not think the right hon. Gentleman need be frightened at the idea of having to refund a very large sum, for he (Mr. Russell Gurney) had not been able to hear of a single person who had paid the duty of 35s. It might be true that in some particular cases the Inland Revenue Department had insisted upon that payment; but it did not appear that they had ever made their determination public in any way. He happened to know that so late as 1865 there was a lease at that time brought to the Inland Revenue Commissioners, and they said nothing about that duty being required.


said, he hoped that however disagreeable the dose offered might be, the Chancellor of the Exchequer would make one gulp of it and swallow it down. He was quite sure the distinction which the right hon. Gentleman endeavoured to draw was so nice that it would not be generally appreciated; and that it would be viewed as an ungracious act on the part of the Government if they attempted to impose this 35s. duty, which he thought was a most excessive duty on small leases. There were in his immediate neighbourhood thousands and tens of thousands of leases the ground-rent of which did not exceed 25s. a year, and to do what the Chancellor of the Exchequer contemplated would be to impose a tax on the best system of savings banks that had ever been invented in this country. To say to those unfortunate people who happened to have built within the last four years that a sudden light had broken on the Commissioners of Inland Revenue, and that they were to pay 35s. extra, would be a most ungracious proceeding. In reality, the Act of Parliament was probably in itself an error.


Sir, I would suggest to the House that it would be an advantage if they would kindly postpone the further prosecution of this discussion until my right hon. Friend brings in his Bill. He has promised to make a proposal, and to make it at the earliest possible day. It will be observed that there are several important matters of fact upon which we are not yet quite clear. Some hon. Gentlemen are under the impression that very few persons have paid the duty in question during the interval since the change of new on the part of the Board of Inland Revenue, while others are under a different impression. Now, we shall have an opportunity of ascertaining how that is, and also what means the public and the profession have had of knowing the change of view. We shall, therefore, be able to approach the discussion hereafter with much greater advantage. I would, therefore, respectfully suggest that it would be for the convenience of the House not to proceed with this discussion at present.


said, he thought the I Chancellor of the Exchequer was under a misapprehension when he stated that the duty had been demanded during the last four years. He (Mr. Lopes) had that evening presented a petition from 110 solicitors of the city of Bristol stating that up to the time of the case of Bolton, about which the decision had been given in the Exchequer Court, this 35s. had in no instance been demanded in Bristol.