Eames v Stepnell Propertied Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN |
| Judgment Date | 07 December 1966 |
| Judgment citation (vLex) | [1966] EWCA Civ J1207-2 |
| Court | Court of Appeal |
| Date | 07 December 1966 |
[1966] EWCA Civ J1207-2
In The Supreme Court of Judicature
Court of Appeal
Civil Division
Appeal from Order of Buckley J. dated 22nd March, 1966.
Lord Justice Willmer
Lord Justice Harman and
Lord Justice Diplock
(H.M, Inspector of Taxes)
Mr ROY BORNEMAN, Q.C., and Mr PETER REES (instructed by Messrs Joynson-Hicks & Co., Agents for Messrs Phipps & Troup, Northampton) appeared on behalf of the Appellant (Respondent).
Mr p. HEYWORTH TALBOT, Q.C., and Mr J. RAYMOND PHILLIPS (instructed by The Solicitor of Inland Revenue) appeared on behalf of the Respondent (Appellant)
Judgment of Willmer L.J.
Page 1 Three lines above E: 'against' should read 'upon'
- do - Second paragraph, line 2: 'Special' should read 'Stated'
Page 2 Fifth line: 'I think' should be omitted
- do - Three lines below A: 'Boarman' should read 'Boardman'.
Page 3 Three lines above D: "2nd July" should read '22nd July'
- do - One line above E: 'of should be omitted'
Page 5 At C: for '209' read '207'
- do - One line below C: after 'said' insert 'at page 229'
Page 6 Two lines below C: after 'alternative:' insert 'if'
Page 7 Three lines above B: for 'certainty' read 'certainly'
- do - Five lines below D: for 'circumstances' read 'circumstance'
- do - One line below E: after 'true and only' insert 'reasonable'
Judgment of HARMAN L.J.
Page 8 8th line: for 'summer' read 'sum'
- do - Three lines below A: after 'company, and' delete 'they were'
- do - Five lines below B; for 'is' read 'are'
- do - One line below E: for 'negotiate a sale' read 'sell'
- do - At F: for '£2,100' read £5,400
- do - Penultimate Line: For 'The builders' read 'B. & W.' and delete 'B. & W.' where it now appears
Page 9 Second line: delete 'as an investment'
- do - Second paragraph, third line: delete '8th or'
Judgment of HARMAN L.J.
Page 9 Two lines below for 'would' read 'should'
- do - At E: after 'acquire this land' insert 'on 16th July 1959'
- do- Delete last three lines and insert 'The designation of those two portions of the land with which we are concerned had important consequences under the Town and Country Planning Act 1959 which came into force on 16th August, 1959, and applied to "every"
Page 10 Third line: for 'that it was an' read 'the'
- do - Fourth line: for 'whenever' read 'even if' and after 'took place' insert 'before the Act came into force'
- do - Fifth line below B: for 'was' read 'is'
- do - Two lines below E: after 'agricultural use' insert 'or as a school playing field'
- do - Two lines above F: for 'Section 4' read 'Section 3'
- do - One line above F: after 'permission would be granted' insert 'for use as a school playing field'
Page 11 Three lines above A: for 'merely on the articles of the company, but' read 'but merely a request for the company's'
(Transcript of the Shorthand Notes of THE ASSOCIATION OF OFFICIAL SHORTHANDWRITERS, LIMITED, Room 392, Royal Courts of Justice, and No. 2, New Square, Lincoln's Inn, London, W.C.2.)
Mr ROY BORNEMAN, Q.C., and Mr PETER REES (instructed by Messrs Joynson-Hicks & Co., Agents for Messrs Phipps & Troup, Northampton) appeared on behalf of the Appellant (Respondent).
Mr p. HEYWORTH TALBOT, Q.C., and Mr J. RAYMOND PHILLIPS (instructed by The Solicitor of Inland Revenue) appeared on behalf of the Respondent (Appellant)
LORD JUSTICE WILLMER This is an appeal from a judgment of Mr Justice Buckley, given on the 22nd March 1966; on a Case Stated by the Special Commissioners with regard to an. assessment to income tax against the appellant company. The question in issue is whether the appellant company, which is described as a property investment company, Is liable for income tax, under Case I of Schedule D., on a profit of £47,900 resulting from the purchase and sale of a piece of land on the basis that that transaction was an adventure in the nature of trade.
The facts of the case have been very fully stated in the Special Case, and many of them have been repeated in the judgment of the learned judge. In these circumstances I do not think It is necessary to set out again all the detailed facts, but I will refer only to those which seem to me to be the salient facts of the case.
In 1955 a company of building contractors called Bosworth & Wakeford (which has been referred to throughout the case as B. & W.) purchased some fifty-three acres of land on the outskirts of Rugby. The larger part of the land which they purchased was land which had been zoned for residential development. The smaller part, which included that with which we are immediately concerned in this case,had been zoned for a school and playing fields. In 1957 B. & W. obtained planning permission in respect of that part of the land which had been zoned for residential development.
In or about 1958 Mr Boardman, who was the solicitor to B. & W., and I think also acted as solicitor for the Wakeford family, had occasion to give advice with regard to making provision for estate duty in relation to the Wakeford family. In the course of dealing with that problem he advised, amongst other things, the formation of two new companies, one of which should be a development company formed for the purpose of taking over and developing the land which was zoned for residential development; the other was to be a property investment company, which would take over the remainder, including the part of the land with which we are concerned, and which has been loosely, if somewhat inaccurately, described during the case as the "school site". As Mr Boarman's advice has been relied on, it is right that I should read a few lines from the Case Stated, where the effect of it is set out. It was to this effect; "That that part of the Rokeby land which could be developed should be transferred to the new development company, and the remainder of the Rokeby land, that is, the school site together with any part of the Rokeby land zoned as agricultural land, should, when its extent was finally ascertained, be transferred to the new investment company and form the nucleus of its property Investment", That advice was accepted and acted upon, and it is the case for the appellant company that it was never departed from. The development company, which was called Stepnell Developments Limited, was in fact formed in April 1959, and shortly afterwards acquired from B. & W. the land which had been zoned for residential development; and, as I understand it, the company set about developing that land, but we are not concerned with that.
By that time, however, certain other things had happened. From January 1959 onwards, correspondence was taking place between the solicitor to B. & W. and the Warwickshire County Council as to the possible acquisition of the school site by the County Council. On the 21st January the County Architect wrote to the solicitors, and in the course of his letter he said "I am writing to inquire whether your clients would be prepared to tell the freehold of fields No. 269 and No. 268 shown edged red on the attached plan, and having a total area of 8.31 acres. This land would be used for playing field purposes. The remaining field, No. 286, would then be reserved on the town planning map as being required in the future for the erection of the new Rokeby secondary school". As I understand It, the whole of field No. 286, and at least the major part of fields No. 268 and No. 269, were included in what I have described as the school site.
The next letter referred to in the Case is a letter from B. & W. themselves, dated the 3rd April, and written to the County Architect, in which they said. "We confirm that we are prepared to negotiate on behalf of our associated company for the sale of fields L No. 268 and No. 269. There is, however, the question of field No. 286, which we understand from the County Planning Department you may also require for educational purposes. In view of the fact that development has already started on this estate, we shall be glad if you will confirm that you require this field, and that you are prepared to complete the purchase".
If I may pause to comment on this letter, it is, of course, the fact that at that time the appellant company had not been, brought into existence, and the "associated company" referred to in the letter can only have been intended by the writer of the letter to refer to the company which it was proposed to incorporate. It has been suggested during the course of the argument that this letter shows that Messrs B. & W. were pressing the County Council to purchase, and reveals them as being persons who are anxious to sell. For myself I do not so read that letter. To me it is more in the nature of an inquiry, directed by a party threatened with thepossibility of compulsory purchase, in order to find out what it is that the County Council really does want. In fact the County Council seem to have had a great deal of difficulty in making up their minds. One difficulty which appears to have presented itself to them was that an adjacent field, No. 287, which formed a vitally important part of the site for the proposed new school, was land which belonged to Rugby School, and it was expected that there might be some difficulty in the acquisition of that land.
The correspondence continued, and on the 25th May we find the County Architect writing to B. & W. and saying this: "I am approaching the County Education Officer to see whether he has any objections to me proceeding through the District Valuer with the purchase of the land which you own comprising fields Nos.268, 269 and 286 on the plan which I previously sent to you" That, so far as the Stated Case goes, was the last that anyone heard before the date of...
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