§ (1) For the purposes of the enactments referred to in subsection (2) of this section neither a trading stamp nor a stamp book to which this Act applies shall be regarded as a bill of exchange, promissory note, debenture or security by reason only that it contains or evidences, either expressly or impliedly, an obligation on the part of the promoter to pay money.
§ (2) The following are the enactments referred to in the preceding subsection:—
- Bills of Exchange Act 1882;
- Stamp Act 1891;
- Borrowing (Control and Guarantees) Act 1946;
- Exchange Control Act 1947;
- Companies Act 1948;
- Prevention of Fraud (Investments) Act 1958.—(Sir H. Legge-Bourke.]
§ Brought up, and read the First time.
§ 3.0 p.m.
§ Sir H. Legge-Bourke
I beg to move, That the Clause be read a Second time.
Since Second Reading considerable thought has been given to the matter contained in the Clause. It seeks to ensure that everybody understands what is the status of a single trading stamp 1772 and what is the status of a filled book of trading stamps. My hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing), who is sorry that he cannot be here this afternoon, is deeply grateful, as I am, for two letters written by the Parliamentary Secretary on 25th March and 21st April. These have greatly clarified the situation, but it is only right, in order to get it on the record, to ask for confirmation of these statements.
I understand that a single trading stamp does not fall into the definition of a bill of exchange by Section 3(1) of the Bills of Exchange Act, 1882, particularly because it is not an unconditional order to pay, nor is it addressed by one person to another named, nor is it indicated with any reasonable certainty. Moreover, trading stamps, in addition to giving entitlement to the payment of money in certain circumstances, also give an option to receive goods. That rules out a single trading stamp from being regarded in any way as capable of definition as a bill of exchange.
I understand that a trading stamp would not fall within the definition of a promissory note under Section 83(1) of the Bills of Exchange Act, 1882, and under Section 33 of the Stamp Act, 1891. This is because it is not an unconditional promise to pay a certain sum of money. Moreover, in relation to the Stamp Act the courts have held that a promissory note does not include an instrument containing the promise to pay forming one of a number of stipulations. This, therefore, rules out the single stamp from being treated as a promissory note. I shall have a word later to say about the book of stamps.
Finally, there is the question of debentures. I understand that in order to fall within the very wide definition once given in a well-known case, Levy v. Abercorris Slate and Slab Co., 1887, trading stamps must create or acknowledge a debt, and that it is most improbable that they could be held to do any such thing. These are the points which I wish to have publicly confirmed in respect of a single stamp.
I come to the empty stamp book. I understand that this would not be caught by any of these Statutes referred to in the new Clause. There is no sum of money expressed in respect of which a duty can be charged.
1773 I turn to a filled stamp book as distinct from an empty book. It might possibly be regarded as a debenture or a security, but I gather that the advice given both to the Government and to the stamp companies is that a filled stamp book would not be regarded as a debenture or a security if only because it does not create or acknowledge a debt, which could not arise until at the earliest the holder has opted to receive cash. Moreover, in considering whether a filled stamp book could be regarded as a promissory note, I understand that the question which arises is not whether the document is materially altered—that is, the empty book—when the trading stamps are stuck in, but whether the book and the stamps together operate as a promissory note. In order to establish that they should be so regarded we should have to show that there was a promise to pay. Under Clause 3 of the Bill the obligation to pay is statutory without the need for there being any promise by the promoter. We congratulate the promoters of the Bill on having drafted Clause 3 in that way.
There is also the question of duality of purpose. I understand that cases have been decided that a document which is substantially anything more than a promise to pay is not a promissory note. A stamp is more than a promise to pay. There are alternative ways of payment by which the stamp can be honoured.
I hope that we shall perhaps be given public confirmation that what I have said is correct, and perhaps the Minister of State will give a little further indication that even though, as I understand it, the legal advisers of the stamp companies and of the Government are agreed on these points, the matter will be watched. I hope that the Government will give an indication that if it is proved by a test case, or in some other way to be taken later, that this agreement was not as strongly founded as we hoped, then consideration will be given to tidying the position up. It is in order to establish those points that I put the Clause on the Order Paper.
§ Mr. du Cann
I need not detain the House on the new Clause. As my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) indicated in what he was good enough to say, particularly with reference to my hon. Friend the 1774 Parliamentary Secretary—and I will convey his thanks to the Parliamentary Secretary, which will be greatly apprecited—we have very carefully considered the whole of this matter. We have consulted not only our own legal advisers but those of the Inland Revenue and, in addition, we have taken the opinion of Parliamentary counsel. I am happy to be able to tell the House that they are all unanimous in their view that any amendment to the Bill on the lines proposed in the new Clause is totally unnecessary.
I followed with the greatest care the catalogue which my hon. Friend was good enough to recite to the House, and I can assure him that his description of the legal position is entirely accurate in every single case. I need not, then, rehearse in full the answers to the questions which he asked me. I can tell him that his description of the position is exactly correct.
My hon. Friend asked a final question: what would occur if ever any problem arose? We do not think that it is likely that any problem will arise. Nevertheless. I must answer the question, and I am happy to attempt to do so. If any problem ever arose in practice it is one which Governments would consider in relation to the Finance Bill, which is the appropriate context. It need not be considered in the context of this Bill. Having said that, I hope that my hon. Friend will regard it as possible to withdraw the new Clause.
§ Mr. Buck
On behalf of the promoters of the Bill I thank my hon. Friends the Minister of State and the Member for the Isle of Ely (Sir H. Legge-Bourke) for the very close attention they have both given to this difficult point. The promoters have always been anxious that there should be no danger of trading stamps attracting stamp duty, which is the nub of the problem. It is very much to the advantage of the Whole House that this matter should have been gone into so thoroughly and that in the end there should have been such unanimity of opinion. We are most grateful to all concerned who have given such detailed attention to this difficult matter.
§ Sir H. Legge-Bourke
I am grateful to my hon. Friends the Minister of State and the Member for Colchester 1775 (Mr. Buck) for what they have said. I hope that this matter is now clear beyond dubiety to all concerned.
I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.