The Gazette 1976

GAZETTE

NE/J

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

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

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".