Commissioner Of Stamps V. Logan Et Al.,

1933 Present: Dalton A.C.J. and Poyser J.

COMMISSIONER OF STAMPS v. LOGAN et al.

108-D. C. (Inty.) Colombo, 1,939.

Estate duty-Partnership deed-Good-will of business-Bona fide purchase for money or money's worth-Consideration-Ordinance No. 8 of 1919, s. 9 (1).

A deed of partnership entered into between three persons contained the following clause :-"In the event of the death of the said Henderson during the subsistence of the partnership hereby created the good-will of the business including the right to use the firm name of Henderson & Company shall belong to the said Hanscomb and the said Hanscomb shall be entitled to purchase the share of the said Henderson in the partnership business .... it being hereby declared for the purposes of this clause that no value shall be placed upon the good-will as a partnership asset and the representatives of the said Henderson shall not be entitled to be paid anything in respect of good-will."

A memorandum of agreement signed the same day recited that Hender , son was the owner of the good-will of the firm and provided as follows : " Whereas in consideration of the fact that the said Hanscomb has for many years past devoted himself to the business of the said firm and has advanced its interests and helped to develop its business, the said Henderson by the said deed of partnership agreed that in the events fully set out the said Hanscomb should be entitled to the good-will of the firm without any payment therefor."

Held, that there was no purchase by Hanscomb of the good-will from Henderson for consideration so as to bring it within the exception provided by section 9 (1) of the Estate Duty Ordinance.

Held, further, that the good-will passed by way of gift to Hanscomb, only on Henderson's death to be held by him under the conditions set out in the agreement.

THIS was an appeal from an order of the District Judge of Colombo allowing an appeal from a decision of the Commissioner of Stamps on a question of estate duty. The first and second respondents are the executors of the last will of James Alexander Henderson. Henderson died on April 18, 1928, and at the date of his death was a partner in the firm of Henderson & Company. The third respondent Hanscomb was a partner with the deceased and with the first respondent in the firm of Henderson & Company. The Commissioner of Stamps assessed the value of the good-will of the business of Henderson & Company for the purpose of estate duty to be paid by the estate of the late James Alexander Henderson. The District Judge held, reversing the Commissioner's decision, that the good-will had passed to Hanscomb for consideration and that estate duty was not payable.

L. M. D. de Silva, K.C., S.-G. (with him Pulle, C.C.), for appellant.- " Full consideration" is to be understood as consideration within the meaning of the English law. Wherever the word " consideration" occurs in a local Ordinance, it bears the meaning which it has in English

law. See Salman v. Obias[2I N. L. R 410. ] and Waharaka Investment Co. v. Commissioner of Stamps 2[34 N. L. R. 266, at 272]. That being so, it is insufficient to show that the consideration which has passed is past consideration, because past consideration is no consideration at all. See Anson on Contracts (16th ed.) ,p.119.

Section 9 (1) of the Estate Duties Ordinance is the same as section 3 (1) of the Finance Act of 1894. That is an added reason why the word " consideration" has to be given a meaning which it enjoys under English law.

The stipulations contained in the deed and memorandum are inconsistent with the idea of a purchase for money or money's worth. The only basis upon which the idea of purchase can be put is the services rendered to the partnership during Henderson's life-time. It is entirely inconsistent with that idea that, if Hanscomb died during the continuance of the partnership, the representatives

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