Report No. 67
Section 4-English Law as to two Instruments Used to Effectuate one Transaction
The general rule in England is that ad valorem duty is not paid more than once, and that fixed duty is paid more than once only where each instrument taken by itself attracts a stamp, e.g., because it is a deed. This, in a case of a contract comprising an offer and acceptance under hand one 6 d. stamp is sufficient, which logically should be affixed to the acceptance. As regards conveyance, it is expressly provided by statute, that where there are several instruments of conveyance, the principle instrument only is to be liable to ad valorem duty, and the others to such duty as they may be liable, not exceeding the ad valorem duty.1
Section 58(3), Stamp Act, 1891, is as follows:-
"58(3). Where there are several instruments of conveyance for completing the purchaser's title to property sold the principal instrument of conveyance only is to be charged with ad valorem duty, and the other instruments are to be respectively charged with such other duty as they may be liable to, but such last mentioned duty shall not exceed the ad valorem cliity payable in respect of the principal instrument."
Section 61 is as follows:-
"61(1). In the cases hereinafter specified the principal instrument is to be ascertained in the following manner:
(a) (b) [Repealed by Finance Act, 1949, section 52 and Schedule XI].
(c) Where in Scotland there is a disposition or assignation executed by the seller, and any other instrument is executed for completing the title, the disposition or assignation is to be deemed the principal instrument.
(2) In any other case the parties may determine for themselves which of several instruments is to be deemed the principal instrument, and may pay the ad valorem duty thereon accordingly.
The position for other instruments is the same,2 though there are no statutory provisions. As the Revenue have in England never irisisted on double ad valorem duty in cases where two instruments are used to effect one transaction, there is very little authority on the point, as no one cares to contest the matter?
There appears to be an exception to this general rule where two securities are given for the same debt. Thus, if a person gives a bill of sale and a promissory note, to secure a debt, a separate ad valorem duty is payable on each.3-4
This exception has received statutory recognition, inasmuch as, under the heads of charge "Bond, Convenant,5 etc.", a separate and lower rate of ad valorem duty is provided for collateral securities. The ad valorem duty on the collateral securities is, in some cases by statute6 and in others by extra-statutory concession-limited to 10s. But there are, still, cases where two ad valorem duties are payable.
1. Sections 58(3) and 61(2), Stamp Act, 1891.
2. Monroe Stamp Duties, (1964), p. 31.
3. Monetary Advance Co. v. Cater, (1888) 20 QBD 785 (788).
4. Promissory notes are no longer liable to ad valorem duty in England.
5. Stamp Act, 1891, Schedule I.
6. Revenue Act, 1903, section 7, limiting the duty on collateral securities to 10s.