Law Report: Case summaries

THE following notes of judgments were prepared by the reporters of the All England Law Reports.

Admiralty

The Lu Shan; QBD (Adm Ct) (Clarke J); 11 June 1993.

Where a compromise had been reached in an Admiralty action for damages relating to a collision between two vessels, it was unrealistic to strike a balance at the date of collision. Interest should be added to each claim before the balance was struck. The assessment at the date the balance was struck should be taken for the purpose of converting the smaller claim into the currency of the larger. Interest should be calculated on both claims up to that date and a balance struck between the claims inclusive of interest; thus reflecting both capital loss caused by the collision and the time which had passed between collision and assessment.

Charles Macdonald QC (Sinclair Roche & Temperley) for the plaintiffs, owners of the Botany Triad; Nigel Teare QC (Clyde & Co) for the defendants, owners of the Lu Shan.

Revenue

Fitzwilliam and ors v Inland Revenue Commissioners; HL (Lord Keith of Kinkel, Lord Templeman, Lord Ackner, Lord Browne-Wilkinson and Lord Mustill); 1 July 1993.

An elaborate tax avoidance scheme implemented in 1980 to avoid capital transfer tax on the estate of the late Earl Fitzwilliam did not constitute a pre-ordained single composite transaction as formulated in W T Ramsay Ltd v Inland Revenue Commissioners (1982) AC 300. The scheme involved the appointment of interests for a short period to Lady Fitzwilliam and her daughter, resulting in pounds 3.8m being transferred to the daughter. with the benefit exemptions from tax. Each step taken pursuant to the scheme had its own fiscal effect, imposing a charge to income tax on the relevant beneficiary for a limited period of time, and there was a potential charge to capital transfer tax on the estate of Lady Fitzwilliam in the event of her death while in possession of an interest appointed to her under the scheme. It was therefore not possible to treat the scheme as one composite whole.

Christopher McCall QC and Launcelot Henderson (Inland Revenue Solicitor) for the Crown; Edward Nugee QC and Mark Herbert (Currey & Co) for the trustees.

Company

Nisbet v Shepherd; CA (Balcombe, Leggatt, Hoffmann LJJ); 28 June 1993.

The omission, in a stock transfer form, to state the consideration for the transfer of legal title to shares in the company, was an irregularity which did not render the transfer a nullity, since the instrument was nevertheless appropriate and suitable for the purposes of s 75 of the Companies Act 1948, now s 183 of the 1985 Act. The registration of the transfer by the company was therefore lawful and, by virtue of s 24 of the 1985 Act, the defendant, as the sole shareholder, was personally liable jointly and severally with the company for payment of its debts.

Aubrey Craig (G F Lodder & Sons, Stratford-upon-Avon) for the appellant; James H Allen (R C Moorhouse & Co, Leeds) for the respondent.

Insolvency

Re a debtor No 90 of 1992; ChD (Knox J); 25 June 1993.

A statutory demand should, under the Insolvency Act 1986 and Insolvency Rules 1986 (SI 1925), either be set aside or not. The statutory demand procedure was not a process of securing judgment, but one of establishing whether a debtor should be treated as unable to pay a debt immediately payable, and there was no scope under the insolvency legislation for a 'conditional' order, such as might be appropriate in proceedings under RSC Ord 14, in relation to the grey areas inhabited by shadowy defences.

Alexander Dawson (Kenneth Garbett, Canterbury) for the debtor; Jonathan Russen (Denison Till, York) for the bank.