Les Croupiers Casino Club v Pattinson
| Jurisdiction | England & Wales |
| Judgment Date | 22 July 1987 |
| Date | 22 July 1987 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal.
Mr. Robin Mathew (instructed by Messrs. Gouldens, agents for Messrs, Grossman, Hermer & Seligman) for the taxpayers.
Mr. Alan Moses (instructed by the Solicitor of Inland Revenue) for the Crown.
Before: Fox and Nourse L.JJ. and Sir Denys Buckley.
The following cases were referred to in the judgment of NourseL.J.:
Furniss (H.M.I.T.) v. Dawson [1984] A.C. 474; TAX[1984] BTC 71
R. v. Hampshire County Council, ex parte Ellerton WLR[1985] 1 W.L.R. 749
R. v. Secretary of State for the Home Department, ex parte KhawajaELR[1984] A.C. 74
This was an appeal by the taxpayers from a decision of Scott J. ([1985] BTC 353) that, on primary facts found by the Special Commissioners, it could be inferred that club receipts had been concealed.
The taxpayers, who were partners in a gambling club, each opened small current accounts under assumed names at a bank not used by the partnership. That entitled each of them to keep a deed box in the bank strong room. Two years later, in October 1977, the taxpayers visited the bank and, having examined their deed boxes, demanded to see the manager. The manager was subsequently convicted of theft in respect of the manipulation of other accounts at the bank. The bank's investigator discovered that in October 1977 the manager had cashed two cheques for £5,000 each drawn on the taxpayers' accounts. When clearing out the manager's desk he found three note bands provided by the bank used by the club for wrapping £500 in £5 notes which bore the club's stamp.
Following a police inquiry, the tax inspector dealing with the club's accounts was informed that the deed boxes had contained cash belonging to the club. The inspector was unable to obtain any satisfactory explanation from the taxpayers and so raised assessments under Sch. D, Case I on them on the ground that the "stolen" cash represented undeclared partnership receipts.
The taxpayers appealed against the assessments. The Special Commissioners found that the deed boxes contained money and inferred that the taxpayers had each deposited £5,000 at the bank which represented gross takings of the club. They found that the money had been fraudulently extracted from the club's takings so that the profits were understated.
The taxpayers appealed to the High Court contending that the primary facts found by the Commissioners did not justify a finding that the boxes contained club money. The appeal was dismissed and the taxpayers appealed to the Court of Appeal.
Held, dismissing the appeal:
The standard of proof in civil proceedings, while it was always proof on the balance of probabilities, was flexible, being higher or lower according to the nature and gravity of that which had to be proved. Before an inference which involved fraud or other criminal conduct could be justified, the primary facts must have a probative value which weighed up to the gravity of the offence. Here, the primary facts taken together had a sufficient probative value to justify the inference of fraudulent extraction of club takings by the taxpayers. The taxpayers had acted in concert in opening the two accounts in circumstances which justified the inference of an improper motive common to both individuals. There was ample material from which the Commissioners could infer that the cash in the deed boxes represented the fruits of a joint venture which the taxpayers wished to conceal. No other venture having been suggested, the Commissioners were entitled to infer that it could only have been the club.
The taxpayers appealed against the judgement of Scott J. delivered on 24 April 1985 on the following grounds:
The judge misdirected himself in finding that the Special Commissioners were entitled to infer a finding of fraud against the two partners in the club on the primary facts found by the Special Commissioners. There were no primary facts found capable of sustaining (whether directly or indirectly or whether singly or in combination) their determination.
Fox L.J.: I will ask Nourse L.J. to give the first judgment.
Nourse L.J.: The appellants in this case are the partners in a firm operating a gaming club in Cardiff called Les Croupiers Casino Club. The Special Commissioners found that two of the partners had fraudulently, and with intent to evade tax, extracted cash from the club's takings and concealed it in deed boxes held in false names at a bank, thereby procuring that false returns of income were made by the appellants to the Inland Revenue in the years of assessment 1976-77 and 1977-78. An appeal to the High Court by way of case stated was in large part dismissed by Scott J. and a further appeal is...
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