British Broadcasting Corporation v Johns
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DIPLOCK,LORD JUSTICE WILLMER,LORD JUSTICE DANCKWERTS |
| Judgment Date | 05 March 1964 |
| Judgment citation (vLex) | [1964] EWCA Civ J0305-2 |
| Date | 05 March 1964 |
| Court | Court of Appeal |
[1964] EWCA Civ J0305-2
Lord Justice Willmer
Lord Justice Danckwerts
Lord Justice Diplock
In The Supreme Court of Judicature
Court of Appeal
MR. F. N. BUCHER, Q. C. and MR. J. E. HOLROYD PEARCE (instructed by Messrs, Richards, Butler & Co., Stone House, 128-140, Bishopsgate, London, E. C.2.) appeared as Counsel on behalf of the Appellant.
MR. JOHN FOSTER, Q. C. and MR. J. RAYMOND PHILLIPS(instructed by the Solicitor of Inland Revenue, Somerset House, Strand, W. C.2) appeared as Counsel on behalf of the Respondent.
LORD JUSTICE WILLLMER: This case arises out of an appeal to the Speeial Commissioners for Income Tax brought by the British Broadcasting Corporation (hereinafter referred to as the B. B. C.) against an assessment to Income Tax for the year 1958-59 under Case 1 or Case 6 of Schedule D. Three points have been put' forward on behalf of the B. B. C. as follows:
(a) It is contended that the B. B. C. is entitled to Crown immunity from taxation because it is a body constituted by the Crown for the purpose of executing functions required and created for the purposes of Government. It is suggested that the B. B. C. should properly be regarded as an "emanation" of the Crown.
(b)Assuming, contrary to the first submission, that the B. B. C. does not enjoy Crown immunity from taxation, it is nevertheless ocutended that its liability to income tax is restricted to its investment income and to suoh profits as are derived from its trading activities in relation to its publications, and does not extend to the surplus funds remaining in its hands at the end of the year arising out of the annual grant from Parliament.
(c) Assuming, contrary to the second submission, that the surplus remaining in its hands represents a taxable profit, it is contended that the B. B. C. is entitled in computing the amount of such profit to deduct sums expended annually and representing an additional subscription pay ble to a company formed by it in conjunction with other organisations for the purpose of obtaining supplies of news film.
The Special Commissioners decided all three of these points adversely to the B. B. C. On appeal Mr. Justice 'Jilberforce agreed with the Commissioners with regard to points (a) and (b), but he decided that the additional subscription payable in respect of the supply of news film was an expense wholly and exclusively laid out or expended for the purposes of the B. B. C's trade and was therefore properly deductible in computing the profits of such trade. The B. B. C now appeals to this Court against the decision of the liearned Judge with regard to points (f.) and (b), and there is a cross appeal by the Crown in relation to point (c).
The facts giving lise to the appeals are fully set out in the Case Stated, to which are annexed the current charter and licence of the B. B. C. as well as a number of other documents. In these circumstances I do not think it is necessary tc set out again the facts in detail; but it will be desirable to state in outline the effect of the charter and of the licence granted by the Postmaster General under which the B. B. C. operates. The B. B. C. was first established with effect from the 1st January, 1927, by Royal Charter of the 20th December, 1926, and at the same time it received a licence from the Postmaster General laying down the conditions under which it was permitted and required to operate. Subsequent charters and licences have replaced the original ones, those current at the material time being the charter of the 1st July, 1952, and the licence and agreement between the Postmaster General and the B. B. C. of the 12th June, 1952.
The charter, after referring in the recitals to the great value of broadcasting services as a means of disseminating information, education and entertainment, provided that the B. B. C. should be a body corporate with perpetual succession, which might sue and be sued in all Courts and do all matters and things incidental or pertaining to a body corporate, but so that the Corporation should apply the whole of its income solely in promoting its objects. Among the objects prescribed by the charter was that of providing, as public services, broadcasting services both by sound and television for reception in the United Kingdom (called the "Home Services"), and also for reception overseas (called the "External Services"). The Home Services include the three regular sound broadcasting programmes (the Home Service, the Light programme and the Third programme) and alsothe television service. Power was conferred on the B. B. C. inter alia to publish such periodicals as mqr be conducive to the objects of the Corporation, to organise and provide concerts and entertainments, to oolleot news and information, to aoquire copyrights in literary, musical and artistio irorks, to acquire films and gramophone records, to acquire patent rights in relation to any device oaloulated to serve any useful purpose in connection with any of the objects of the Corporation, and to invest money not immediately required. The B. B. C. was further authorised, empowered and required to provide such broadcasting services as should be required by or under any licence granted by the Postmaster General to the Corporation or any agreement made by the Postmaster General with the Corporation. It was also authorised, empowered and required to receive all funds paid to it by the Postmaster General, out of aids and supplies appropriated by Parliament therefor, in furtherance of the purposes of the charter and to apply such funds in accordance with terms and conditions attached to the grant thereof. The B. B. C. was also authorised, empowered and required to apply all other monies derived from any other source exclusively in furtherance of the purposes of the charter, with power to treat the funds in its hands either as capital on income, but so that no funds derived from any souroe ehcttld in any event be divided by way of profit or otherwise amongst the Governors of the Corporation. The B. B. C. was further required to prepare accounts annually to be audited by an auditor approved by the Postmaster General. Lastly, it was provided that upon the voluntary or compulsory dissolution of the Corporation its property and assets after the discharge of its debts and liabilities should be disposed of in accordance with the directions of the Postmaster General.
By the licence and agreement between the Postmaster General and the B. B. C. a licence was granted by the Postmaster General to the B. B. C. to broadcast from existing stations and from additional stations to be established. The B. B. C. was specifically prohibited from receiving money or any valuable consideration from any person in respect of its broadcasting services. Clause 15 of the licence conferred upon the Postmaster General power to exercise a certain measure of control over the broadcasting services of the B. B. C, and in particular required the B. B. C. to broadcast daily from such stations and during such hours as the Postmaster General might direct. Such broadcasts were to include an impartial account day by day of the proceedings in both Houses of Parliament, and also any special announcement required by any Government department. with regard to the external services, the B. B. C. was specifically required to send programmes to such countries, in such languages and at such times as might be prescribed by Government departments specified by the Postmaster General. For the purposes of financing the Home services the Postmaster General was required to pay to the B. B. C, out of aids and supplies appropriated by Parliament, a sum representing a leroentage of the revenue received by him from the issue of wireless and television licences, the percentage being subject to review by the Treasury after the expiration of three years. For the purpose of financing the external services the Postmaster General was required to pay to the B. B. C. each year such a sum as the Treasury might authorise out of such aids or supplies as might be appropriated by Parliament. Power was reserved to the Postmaster General, in the event of any emergency, to direct that any of the B. B. C's broadcasting stations might be taken possession of in the name and on behalf of Her Majesty, and to prevent the B. B. C. from using them. In the event of failure on the part of the B. B. C. to broadcast efficiently, or of breach on its part of any provision contained in the charter or in the licence and agreement, the Postmaster General reserved power to revoke and determine the licence. It was further provided that the B. B. C should at all times indemnify the Crown against all actions, claims and demands which might be brought against the Crown or any Crown servant arising from any act of the B. B. C. or its servants licensed or permitted by the agreement.
It is against this background that the first two submissions put forward on behalf of the B. B. C. have to be considered. It remains to say, however, that in practice, as found in the Case Stated, oomplete editorial control is left to the B. B. C. in relation to its broadcasts both in the Home and External services.
I turn now to consider the first submission put forward on behalf of the B. B. C. As the argument was originally presented, it was said that the B. B. C. is an "emanation" of the Crown. This expression has more than once been criticised in the decided cases — see for instance, Tamlin v. Hannaford, (1950) I K. B. 18, per Lord Justice Denning at page 22. I confess that for my part I have had some difficulty in entertaining the concept of a body set up as an independent legal, persona (as the B. B. C. was), in contractual relations with the Crown through the Postmaster General, yet at the same time being an...
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