Alloway v Phillips
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE WALLER,LORD JUSTICE DUNN |
| Judgment Date | 17 March 1980 |
| Judgment citation (vLex) | [1980] EWCA Civ J0317-2 |
| Docket Number | 1978 No. 64 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 March 1980 |
[1980] EWCA Civ J0317-2
In The Supreme Court of Judicature
Court of Appeal
On Appeal From the High Court of Justice Chancery Division
(Mr. Justice Brightman)
The Master of the Rolls
(Lord Denning)
Lord Justice Waller and
Lord Justice Dunn
MR. D. MARCUS JONES (instructed by Messrs. David Lewis & Co.) appeared on behalf of the Appellant.
MR. B. DAVENPORT (instructed by R. S. Boyd, Esq., Solicitor of Inland Revenue) appeared on behalf of the Respondent).
On the 8th August, 1963 there was the great train robbery. Over two and a half million pounds were stolen. The robbers were caught. They were tried in 1964 at the Aylesbury Assizes. One of the gang was Charles Frank Wilson. He was convicted and sentenced to 30 years' imprisonment. But he escaped from prison and went to Canada. His wife joined him there. They hid there living under the names of Mr. and Mrs. Alloway. In January 1968 the police discovered them. Charles Wilson was arrested, brought back to England) and put back in prison again. (We are told that he has since been released on parole).
Now his wife remained for a few months in Canada. She was very nervous and taking sleeping pills. But in February 1968, soon after her husband had been taken back to England, someone telephoned her from England – and told her that a reporter from the News of the World was coming to see her – that she should speak to him – and that she would be paid for doing so. A little later the reporter arrived. He brought a typewriter with him. He stayed in Mrs. Alloway's house for about a week. He talked with her and her friends. He saw the papers and photographs that she had with her. He wrote up a story in journalese about Charles Wilson's part in the robbery, of his life "on the run", and so forth. The first instalment appeared in the News of the World on Sunday, 25th February, 1968, and the remaining instalments on the five following Sundays finishing on Sunday, 31st March, 1963.
The newspaper paid well for her help. They paid solicitors named Sampson & Co. in the City of London two cheques. One for £19,000 and the other for £20,000. The solicitors cashed the cheques and put them, I expect, into their client's account. Charles Wilson made a claim to the money but they did not pay.it to him. His wife came back to England some time in 1968 after the 5th April – when the tax year ended. She tried to get the money, but found it very difficult. She asked a friend of her husband to deal with it. Eventually after four or five years in 1973 she was paid a lump sum of £28,000 and, in addition, a house at East Horsley in Surrey was purchased in her name.
Now the News of the World had, I expect, in their tax returns included the payment of £39,000 as part of their expenditure for the year 1967/68. I also expect that the revenue authorities discovered in 1973 that the wife had received payment of that sum or its equivalent. At any rate, in 1974 the revenue authorities assessed her for income tax on £39,000: just within the six years after it had been paid by the News of the World to her solicitors.
Then there came to light a written agreement. it was dated the 10th February, 1968 and purported to be made between the News of the World and Charles Wilson and his wife. Her address was given as Rigaud, Quebec, Canada. His was given as "care of 11 St. Bride Street" in the City of London. That was the address of Sampson & Co. the solicitors. They were presumably, at that time, his solicitors as well as hers. But they were not described as agents. A man called Emanuel Fryde, a South African attorney, was described as the agent of the husband and wife.
Under this agreement the wife agreed to co-operate in the writing of articles for the newspaper: and the newspaper agreed to pay her £19,000 on delivery of the typescript with her approval endorsed thereon: and on publication of the first instalment another £20,000. It also provided that the agreement was to be construed in accordance with English law, and the High Court of Justice in England should be the court having jurisdiction over the matter.
The first question is whether that agreement was binding ornot. The Commissioners of the Inland Revenue found that the wife did not expressly authorise it: but they found that she ratified it – by all that she did in implementing it – namely by receiving the telephone call from London; and acting on it by receiving the newspaper reporter into her home; and seeking payment of the sums provided for in the contract. I wondered at first whether she had sufficient knowledge of the contents of the document to warrant a finding of ratification: but I think the circumstances were such as to warrant the clear inference that she was adopting the supposed agent's acts, whatever they were, see Marsh v. Joseph (1897) 1 Chancery at. page 247 by Lord Russell of Killowen, C.J. And on ratification the agreement became just as binding on the parties as if she had previously authorised it.
Next arises the question: Was she liable to pay tax on it for the year 1967/68 when it was paid over to Sampsons? Or for the year 1973/74 when they paid it over to her? The answer is, I think, that, if she is liable at all, it is for the year 1967/68. It is a general principle that receipts are to be taken as accruing in the period in which the money is earned, even though it is not paid or received till a later period. These sums were certainly earned in the year 1967/68.
Now here is the point in the case: At that time, in February or March 1968, the wife was not resident in the United Kingdom. She was resident in Canada. In order that she should be made liable for tax on the £39,000, it must be brought within the Income Tax Act 1970, section 108, Schedule D.1(iii) as being the annual profits or gains arising or accruing … to any person, whether a British subject or not, although not resident in the United Kingdom, from any property whatever in the United Kingdom"
and under Case VI as being "tax in respect of any annual profitsor gains not falling under any Case or Schedule D".
The crucial question is whether this £39,000 was an annual profit or gain accruing to her on any property whatever in the United Kingdom.
Mr. Marcus Jones submitted two interesting propositions to us. First, he submitted that the wife here had no property in the United Kingdom. She derived her profits from the services that she had rendered in Canada, Second, he submitted that her rights under the contract were not property in the United Kingdom. The contract was only machinery for collecting the reward for her services. It had no independent vitality.
For his first proposition Mr. Marcus Jones referred us to the case of Housden v. Marshall (1959) 1 Weekly Law Reports 1. That was a case where a jockey sold his reminiscences to a reporter of the Sunday Chronicle and was paid £750 for an article. Mr. Justice Harman held that he had to pay tax on it as an "annual profit or gain". I will read – because it is interesting and typical of Mr. Justice Harman – what he had to say about services of this kind. He said (at page 5):
"This kind of case arises either as a result of something emanating from the famous, as, for instance, Lord Haig, the soldier, and Steve Donoghue, the jockey; or from the infamous, William Cooper Hobbs (blackmail, forgery and arson). Either category can produce money, particularly, I think, from the Sunday newspapers, because the public likes to read at its ease before the fireside sensational reminiscences of either of these two categories of persons. They are not usually, in fact, strictly speaking, reminiscences of these persons at all; they are written by what are called 'ghost' writers. The celebrated or notorious character communicates this or that to the 'ghost' and may, as here, allow his signature to be used to give an air of realityto an otherwise bald and unconvincing narrative.
"The question here is agreed to be capable of a simple statement: was the transaction on the one side the sale by the taxpayer of some property of his, or was he really agreeing to perform services for the newspaper for a reward?"
As a result, Mr. Justice Harman said, he was paid a sum of money for services rendered: that is a taxable subject matter: and the jockey was held liable to pay tax on the sum. That was the case which Mr. Marcus Jones submitted for his first proposition that the wife had derived her profits from the services that she had rendered.
For his second proposition Mr. Marcus Jones submitted that rights under the contract were not property. The contract did not matter because it was mere machinery: it had no independent vitality. For that proposition he referred us to a case corcerning Mr. Leslie Howard, the actor, see Stainer's Executors v. Purchase (1952) Appeal Cases 280. Mr. Leslie Howard was a film actor, acting for money. He was paid lump sums, and a share of the profits, under a contract. Lord Asquith of Bishopstone said (at page 291):
"The contracts in the present case enjoy, in my view, no such independent vitality. The consideration for what Mr. Howard was to do-- to act or manage – was not the grant of a contract or contracts but the payment of money under the terms of those contracts. Mr. Howard acted for money; he did not act for contracts. The contracts were mere incidental machinery regulating the measure of the services to be rendered by him on the one hand and, on the other, that of the payments to be made by his employers; they were not the source, but the instrument of payment".
Those two propositions seem to carry Mr. Marcus Jones quite a long way. He cited other cases on his second proposition, see- Carson v. Cheyney's Executor (1959) Appeal Cases 412 at page 424;and...
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