Archer-Shee v Garland
| Jurisdiction | England & Wales |
| Judge | Lord Buckmaster,Viscount Dunedin,Lord Tomlin,Lord Thankerton |
| Judgment Date | 15 December 1930 |
| Judgment citation (vLex) | [1930] UKHL J1215-1 |
| Date | 15 December 1930 |
| Court | House of Lords |
[1930] UKHL J1215-1
House of Lords
Lord Buckmaster.
Viscount Dunedin.
Lord Warrington of Clyffe.
Lord Tomlin.
Lord Thankerton.
After hearing Counsel, as well on Tuesday the 18th as on Thursday the 20th, days of November last, upon the Petition and Appeal of Sir Martin Archer-Shee of 100 Abbey House, Victoria Street, in the County of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal of the 10th of March 1930, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioner might have the relief prayed for in the Appeal or such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed case of C. E. Garland (one of His Majesty's Inspectors of Taxes), lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 10th day of March 1930, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Rowlatt, of the 29th day of November 1929, thereby Reversed, be, and the same is hereby, Restored: And it is further Ordered, That the Respondent do pay, or cause to be paid, to the said Appellant the Costs incurred by him in the Court of Appeal, and also the Costs incurred by him in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
The Appellant is, by General Rule 16 of the Income Tax Acts, assessable to income tax in respect of the profits of his wife. Her father was a citizen of the United States of America, and under his will, made in New York, she is entitled to receive during her life the income of his residuary estate which is held at present by the Trust Company of New York as Executor and Trustee of the will. Part of such monies are remitted to this country by the Trustee and about these no question is raised, but part remain in New York and the liability of the Appellant to have these retained monies assessed for income tax is the sole question on this appeal.
The early history of the case and all material facts are to be found in 1927 A.C., p. 844, which contains the report of the decision when the same dispute as the present was considered by this House under different circumstances. The explanation of why, notwithstanding that decision, this case is again presented to your Lordships lies in the fact that the will of the Appellant's father-in-law under which the property passed was then construed according to English law, and, so regarded, it was held that the interest of the Appellant's wife was derived from stocks, shares or funds outside the United Kingdom and therefore by Rule 1 of Case 5 was assessable to Income Tax whether received here or not. The question as to what might happen if the American law differed from the English was left open. Such decision covered the claims up to April 1925, but since then three assessments have been made in accordance with the law then laid down, and these are the assessments now in dispute. It is obvious, therefore, for the Appellant to succeed he must shew that the American law differs in a crucial respect from the law of England, and that the former judgment has accordingly lost its force, and this he now claims to have done.
His contention was accepted by the Commissioners and Rowlatt J., but not by the Court of Appeal who, with the dissent of Greer L. J., once more found against the Appellant.
To make the point now in issue quite plain it is necessary again to refer to the Statute and the Rules.
Under Schedule D. 1, a tax is charged in respect of—
(a) "The annual profits or gains arising or accruing
(i) to any person residing in the United Kingdom from any kind of property whatever whether situate in the United Kingdom or elsewhere."
This general provision is then separated into six different cases under which the tax is to be charged, the fourth and fifth of which are the ones relevant to this appeal. They are as follows:—
"Case IV. Tax in respect of income arising from securities out of the United Kingdom except such income as is charged under Schedule C.
Case V. Tax in respect of income arising from possessions out of the United Kingdom."
Except that these two cases appear to overlap, the matter seems so far clear, but the mists begin to fall when the rules are examined, "subject to and in accordance with which" the tax is to be charged, for it is then found that two distinct methods of computation and two distinct liabilities apply to different classes of property under these two rules.
It will be noticed that Case IV applies only to what are called "securities", and Rule 1 under it provides that the tax is in that case to be "computed on the full amount thereof arising in the year of assessment whether the income has been or will be received in the United Kingdom or not", and this differs from the rules under Case V, which create the present difficulties. The rules in question are 1 and 2, and their material portions are as follows:—
"1.—The tax in respect of income arising from stocks, shares or rents in any place out of the United Kingdom shall be computed on the full amount thereof on an average of the three preceding years, as directed in Case I, whether the income has been or will be received in the United Kingdom or not….
2.—The tax in respect of income arising from possessions out of the United Kingdom, other than stocks, shares or rents, shall be computed on the full amount of the actual sums annually received in the United Kingdom from remittances payable in the United Kingdom … on an average of the three preceding years as directed in Case I, without any deduction or abatement other than is therein allowed."
If, therefore, the income in this case is income "arising from stocks, shares or rents", it must be computed on a three years' average, and is liable to be taxed whether received in the United Kingdom or no, but if it is not it is still computed on a three years' average but only "on the full amount of the actual sums annually received in the United Kingdom."
It is not for us to enquire into the reason for this change; we assume a reason to exist, and that it is wise and just. We are concerned only with whether Rule 1 or Rule 2 applies. That when this matter was formerly raised Rule 1 applied was determined by this House by Wrenbury, Carson and Atkinson LL., Sumner and Blanesburgh LL. dissenting. Lord Wrenbury's judgment was expressly concurred in by Lord Atkinson, who added no further reasons of his own.
It is, therefore, extremely important to see why...
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