PEACE L.J. - (1.) LORD EVERSHED M. R. The plaintiffs in this action are the personal representatives of one, Tom Shipside, who died on December 15, 1955. The assets of the deceaseds estate included 1,100 fully paid shares of pound 1 each in the capital of a company, T. Shipside Ltd., formed in the year 1917 to acquire the motor business formerly carried on by the deceased. The share capital of the company was and is pounds 10,000, divided into 10,000 shares of pound 1 each, carrying the right, upon a poll, of one vote per share at general meetings of the company. The issued share capital was at all material times, and is, pounds 8,350. The companys regulations include clause 61 of Table 'A' in the companies (Consolidation) Act, 1908, whereby, in the case of joint holders of shares 'the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for his purpose seniority shall be determined by the order in which the names stand in the register of members'. The deceased was a director of this company from the date of its incorporation until the date of his death.
(2.) IN addition to the 1,100 shares registered in his sole name, of which he was, admittedly, the beneficial owner, his name also appeared first on the register as joint holder with (since 1948) the names of three other persons of a further 3,650 of the companys shares. These 3,650 shares are the subject of a settlement made by the deceased on December 1, 1936, in favour of his wife and three children (to the exclusion of any beneficial interest in himself). By the settlement he had the power during his life of appointing new trustees - a power which he exercised in 1948. It will be noted that the 3,650 shares, plus the deceaseds own 1,100, together amount to a majority of the issued shares of the company; so that if he exercised his voting rights, under the companys regulations, as 'senior' registered holder of the 3,650 shares and as sole proprietor of his own 1,100 shares, he would command a majority of all the votes at general meetings of the company. In these circumstances, the question has arisen whether it should now be held that at and time during the last five years of the deceaseds life he was 'in control' of the company within the meaning of section 55 of the Finance Act, 1940 : for, if so, it must follow that his own 1,100 shares in the company must be valued for estate duty purpose, not according to their value in the market pursuant to section 7 of the Finance Act, 1894, but according to the value of the companys assets as provided by the Act of 1940. It is this question of the proper basis of valuation which is posed for the court by the originating summons, and which Danckwerts J. answered in a sense favourable to the plaintiff executors. It is to be noted, as Mr. Bathurst for the plaintiffs observed, that an answer favourable to the Crown may have the added effect of so increasing the value of the estate as to raise also the general rate of estate duty payable in respect of it.
(3.) THE problem turns entirely upon the true interpretation of the relevant provisions of the Finance Act, 1940. [His Lordship read section 55(1), (3) and (5) and section 58(4) and (5) and continued :] It is easy, and perhaps not profitable, to criticise the draftsmanship of an Act of Parliament; but the intelegance and obscurity of some, at any rate, of the relevant provisions of the Act of 1941 is certainly remarkable and in this respect section 58(4) undoubtedly takes pride of place. Nevertheless, it is a mistake to suppose that, to the draftsman of this Act, the; phrases 'control of the company' or 'controlling interest in the company' had acquired the precise significance which later judicial pronouncements in Inland Revenue Commissioners v. J. Bibby and Sons Ltd., and other cases have given them. In 1940. Only Rowlatt J., in B.W. Noble Ltd. v. Inland revenue Commissioners, had anticipated the law, as later laid down, when he said that the phrase 'controlling interest' in regard to a company was a reference to the situation of one 'whose shareholding in the company is such that he is the shareholder who is more powerful than all the other shareholders put together in general meeting'; for on this point I do not think the decision of this court in Himley Estates Ltd. and Humble Investments Ltd. v. Inland Revenue Commissioners is relevant. In that case the question for the determination of the court was whether the company then under consideration was to be treated as being under the control of not more than five persons within the meaning of subsection 6(d) of section 21 of the Finance Act, 1922. The voting scars were held by 14 persons, all of whom were admittedly beneficial owners of their shares. But it was said on behalf of the crown that they were nonetheless friends (though not relatives or nominees) and supports of the tenant for life, Lord Ednam, and that the case fell, therefore, somehow within the language (the 'ridiculous' language, according to one member of this court) of the definition at the end of the subsection, 'a company shall be deemed to be under the control of any persons where the majority of the voting power or shares is in the hands of those persons or relatives or nominees of those persons, or where the control is by any other means whatever in the hands of those persons.' The debate before Rowlatt J. and this court was substantially directed to the interpretation of that special formula, quite different from anything found in the Act of 1940. ;