The Gazette 1976

J U NE/J U LY

GAZETTE

1976

The chapter on valuation contains a fine study of this important area with particular reference to the valuation of private trading company shares, where the author makes full use of the excellent Irish case law available on this subject. A s regards the absence of "Anti-Lynall" legislation in the Act, it is pointed out that "the per- suasive use"—as the author says—of this factor might in any particular case be to the advantage or disadvantage of the taxpayer. It is true that the facts of the Lynall case were such that the decision to limit the information available in the hypothetical open market did mean in fact a lower value for Estate Duty. However, it is equally possible that such limitation could also cause the exclusion of information, which, if admissible, would have a detrimental effect on the market value of shares with a consequent "over-valuation" under the open market rule as laid down in Section 8. One of the most controversial areas of the Act is Section 6, which deals with the private non-trading company. This entity is of course the third assessable person and is, like the discretionary trust, burdened by the absence of a threshold. Mr. Johnston here again produces a contribution which is difficult to fault His exposition of the control factor is well executed, and his reliance on the Interpretation Act 1937 is a reminder to both tax adviser and student of tax law of the importance of this legislation in interpreting statute law. Section 11 of the 1937 Act states, inter alia, that "every word importing the singular shall, unless the contrary intention appears, be construed as if it also imported the plural . . ." and vice versa. It is interesting to see how the use of this provision works in Section 6(1) (b)(iii) to the disadvantage of the taxpayer and in Section 6(5) to his advantage. On. the question of the future of the private non-trading company as an element in tax planning, the example in Appendix B is interesting and shows that it still has a valuable func- tion. lake many other questions the answer is not always clear-cut. There are so many other areas which could be com- mented on that it is difficult to choose. A very practical contribution by the author which will benefit all parties dealing with the tax, is the treatise in Chapter 9 on the appropriate forms of return and how they should be completed. To sum up, this is a very readable book, which is a rare quality in any textbook on tax law. It ought to find a place in the law library of every practitioner and it is a text-book equally suited to the needs of the student of taxation. There should be a market for it in the U.K. also where a wealth tax is still in futuro. For this reason, among others, it is regretted that a reprint of the Act was not appended. I have no doubt that speedy publication plus keeping costs down are the reasons for omitting the Act. It should also be noted that the author incorporates in his text many quotations from the Act. Still, in my opinion, the work would have been much more complete with a reprint of the Act included. Finally, Mr. Johnston has earned well our thanks for his initiative, his industry and not least his expertise in producing such an excellent book. To the Incorporated Law Society also, full marks for the valuable part it played in the publication of this very welcome work. Let us hope that this book will be the forerunner of other text-books on Irish tax law, an area where we have been far too long dependent on outside texts. J . F. QUINLAN Current Legal Problems 1975. Edited by Lord Lloyd of

Hampstead and Roger W. Rideout. vii, 252p. 23cms. (Current Legal Problems, 28). London : Stevens, 1975. £8.75.^ This is Volume 28 of the series "Current Legal Prob- lems" which has been successfully edited by Lord Lloyd of Hampstead, Mr. Roger Rideout and Mr. Robert Venablts on behalf of the Faculty of Laws of University College, London. The contents of this volume are as comprehensive as its predecessors and lawyers will gain a wealth of knowledge from experts. Lord Edmund Davies, a Law Lord, discusses the doctrine of Judicial Activism which save for Lord Denning, is not favoured in England. As Lord Morris declared in Pickin v. British Railways Board (1974) A.C. : "When an enact- ment is passed, there is finality unless and until it is amended by Parliament". We are fortanate in being able to rely on a written Constitution as our Funda- mental Law. It is also fortunate that the Law Reports contain many instances of judicial independence. Pro- fessor Joliet of Liege deals in detail with a decision of the European Court, relating to patents, known as the Sterling case, but whose official title is Centrafarm v. Winthrop B.V. —Case 16/74 (1974) 2 C M.L.R. 480. It will be recalled that the product Negram is sold in England for half the price it is sold in the Netherlands Centrafarm bought medications patented in England and imported them into the Netherlands without the agree- ment of the parent company. With regard to free move- ment of goods the Court held that under Article 30 quantative restrictions on imports are prohibited. Dero- gations can be made under Article 36 in order to protect industrial or commercial property, but such deroga- tion is not justified, where the patent has been put on to the market in a legal manner by the patentee him- self or with his consent. One cannot justify the pro- hibition of parallel imports, because of the patentee's desire to control the marketing in order to protect against the defective pharmaceutical products. Mr. Stephens, Lecturer in Law in London, considers the thorny matter of the "Agent's Duty to Account". Lord Denning had endeavoured to introduce the Scottish doctrine of Restitution in the case of Reading v. Attorney General, but, on appeal to the House of Lords—(1951) AC . 513—Lord Porter, though concurr- ing with Lord Denning's judgment, stated that the law of unjust enrichment forms no part of the law of England. The old Equity case of HalletVs Estate (1879) 13 Ch.D. suggests that it is necessary to establish a fiduciary relationship before it is possible to trace in Equity. Re Diplock (1948) Ch.D. established that once property is regarded as a subject to a trust, then the property, or its proceeds in a mixed fund, can be traced into anyone's hand, unless the recipient is a bona fide purchaser or the fund has no assets. In Phipps v. Board- man (1967) 2 A.C. the trustees decided to use some of the trust funds to acquire additional shares in a private company so that control could be obtained with a view to asset stripping. The defendant, having in- formed the trustees, acquired some of the shares. Subse- quently he made some capital payments to members from which the defendant benefited. The plaintiff claimed that the defendant solicitor held these on trust for him as a beneficiary, and the House of Lords unani- mously held that the defendant was liable to account. Mr. Oakley, Fellow of Trinity College, Cambridge, considers learnedly in even more detail the "Prere- quisites of an Equitable Tracing Claim". Mr. Prentice, Fellow of Pembroke College, Oxford, makes some pro- posals for reform relating to the complicated theory of "Insider Trading". 87