Jackson (Inspector of Taxes) v British Mexican Petroleum Company, Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Thankerton,Lord Macmillan,. |
| Judgment Date | 19 April 1932 |
| Judgment citation (vLex) | [1932] UKHL J0419-1 |
| Date | 19 April 1932 |
| Court | House of Lords |
[1932] UKHL J0419-1
House of Lords
Viscount Dunedin.
Lord Warrington of Clyffe.
Lord Atkin.
Lord Thankerton.
Lord Macmillan.
After hearing Counsel for the Appellant, on Friday, the 4th day of March last, upon the Petition and Appeal of William Stanley Jackson, late of 80 Pall Mall, London, S.W.1, now of Lillie House, London Road, Leicester, one of His Majesty's Inspectors of Taxes, 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 8th of May 1931, 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 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 The British Mexican Petroleum Company, Limited, lodged in answer to the said Appeal; and Counsel appearing for the Respondents, but not being called upon; and due consideration being had this day of what was offered for the said Appellant:
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 8th day of May, 1931, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal, be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellant do pay or cause to be paid to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
The Respondents were incorporated in 1919 for the purpose of entering into an agreement with the Huasteca Petroleum Company, an American Company in possession of large sources of oil in Mexico, and for the purpose of buying, selling, refining and dealing in oil, and carrying on the business of shippers of oil. The whole voting power of the Respondents was in the hands of Messrs. Andrew Weir & Company and the Huasteca Company, who each held one-half of the "B" shares in the Respondents Company.
Shortly thereafter the agreement with the Huasteca Company was concluded, and its provisions, so far as material, are set out in the stated case. It provided for purchase by the Respondents from the Huasteca Company of certain quantities of fuel petroleum at certain prices and subject to certain conditions over a period of twenty years, and for the provision of tonnage for transport by the Huasteca Company for the deliveries of the first contract year. By subsequent agreements Andrew Weir & Co. became interested in the provision of tonnage.
The Respondents' business was prosperous at first, but about June, 1921, it became seriously affected by the great slump in the petroleum business. Their profits for the eleven months ending 30th June, 1920, being £99,021 and for the year ending 30th June, 1921, being £141,425.
At 30th June, 1921, the amount owing by the Respondents to sundry creditors was £1,443,638 of which £1,073,281 was due to the Huasteca Company for oil supplied, freights etc. By 30th September, 1921, the amount owing by the Respondents to the Huasteca Company had increased to £1,270,232, and, further, they had entered into a contract with Harland & Wolff Ltd. for the construction of ten tank steamers, and there was a large sum owing to that company under this contract.
It is found by the Special Commissioners that these sums of £1,073,281 and £1,270,232 due to the Huasteca Company at 30th June, 1921, and 30th September, 1921, respectively were the agreed and admitted liability of the Respondents to the Huasteca Company and that the amount of that liability was never disputed by the Respondents.
It being realised by all the parties concerned that steps would have to be taken to assist the Respondents in their difficulties, an agreement dated 25th November, 1921, was entered into between the Respondents, Harland & Wolff Ltd., Andrew Weir & Co. and the Huasteca Company, which is fully set out in the stated case. Under this agreement it was provided that the number of tankers to be constructed by Harland & Wolff was to be reduced to ten; the existing contractual arrangements between the Respondents and Andrew Weir &Co. and as between the Respondents and the Huasteca Company were modified as from 1st October, 1921, mainly as regarded freights and prices, and provision was made for the release of the Respondents from some of their indebtedness to these parties as it stood at 1st October, 1921.
The effect of this agreement was that the Respondents were released from the debt owing for charter hire to Andrew Weir & Co. to the amount of £466,153, and were released from the debt owing to the Huasteca Company to the extent of £945,232, on payment to that company of the sum of £325,000—which was duly paid.
The debt of £466,153 released by Andrew Weir & Co. was brought into account in the profit and loss account of the Respondents as follows:—
| £ | |
| Year ended 30th June, 1921 … … | 249,705 |
| 18 months ended 31st December, 1922 … | 216,448 |
| £466,153 |
The debt of £945,232 released by the Huasteca Company was...
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