John Hudson & Company, Ltd v Kirkness (HM Inspector of Taxes)
| Jurisdiction | UK Non-devolved |
| Judge | Viscount Simonds,Lord Morton of Henryton,Lord Reid,Lord Tucker |
| Judgment Date | 05 May 1955 |
| Judgment citation (vLex) | [1955] UKHL J0505-1 |
| Court | House of Lords |
[1955] UKHL J0505-1
Viscount Simonds
Lord Morton of Henryton
Lord Reid
Lord Tucker
Lord Somervell of Harrow
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Kirkness (Inspector of Taxes) against John Hudson & Co. Ltd., that the Committee had heard Counsel, as well on Monday the 28th, as on Tuesday the 29th, Wednesday the 30th and Thursday the 31st, days of March last, upon the Petition and Appeal of Eric Arthur Kirkness, of City 6th District. Ibex House, Minories, London, E.C.3, one of Her Majesty's Inspectors of Taxes, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 2d of December 1953, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament might seem meet; as also upon the printed Case of John Hudson & Co. Ltd. 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 Her Majesty the Queen assembled. That the said Order of Her Majesty's Court of Appeal, of the 2d day of December 1953, in part 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,
This appeal raises questions of some difficulty in regard to the meaning and effect of section 17 of the Income Tax Act, 1945. The material parts of that section are as follows:
"17. (1) Subject to the provisions of this section, where, on or after the appointed day, any of the following events occurs in the case of any machinery or plant in respect of which an initial allowance or a deduction under Rule 6 of the Rules applicable to Cases I and II of Schedule D has been made or allowed for any year of assessment to a person carrying on a trade, that is to say, either—
( a) the machinery or plant is sold, whether while still in use or not; or
( b) the machinery or plant, whether still in use or not, ceases to belong to the person carrying on the trade by reason of the coming to an end of a foreign concession; or
( c) the machinery or plant is destroyed; or
( d) the machinery or plant is put out of use as being worn out or obsolete or otherwise useless or no longer required,
and the event in question occurs before the trade is permanently discontinued, an allowance or charge (in this Part of this Act referred to as 'a balancing allowance' or 'a balancing charge') shall, in the circumstances mentioned in this section, be made to, or, as the case may be, on, that person for the year of assessment in his basis period for which that event occurs …
(2) Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the plant or machinery still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount thereof shall be the amount of the expenditure still unallowed as aforesaid, or, as the case may be, of the excess thereof over the said moneys.
(3) If the sale, insurance, salvage or compensation moneys exceed the amount, if any, of the said expenditure still unallowed as at the time of the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to the excess or, where the said amount still unallowed is nil, to the said moneys …"
It will be observed that in subsection (1) ( a) occur the words "is sold", and it is around these two plain English words that a controversy arose between the Crown and the Respondents which occupied your Lordships for several days.
The relevant facts are simple and few. At all material times the business of the Respondents was that of coal merchants and they owned a large number of wagons which they used for the transport of coal. These wagons were on the 1st January, 1948, under requisition by the Minister of Transport under the powers contained in Regulation 53 of the Defence (General) Regulations, 1939.
On the 1st January, 1948, the property in these wagons was vested in the British Transport Commission by virtue of section 29 of the Transport Act, 1947, which is in the following terms:
"29.—Where, immediately before the date of transfer, any privately owned railway wagon is under requisition by virtue of an exercise of the powers in that behalf conferred by Regulation 53 of the Defence (General) Regulations, 1939—
( a) the property in that wagon shall vest in the Commission on the date of transfer, free from any mortgage or other like incumbrance, and the requisition shall then cease; …"
Compensation to the owner of wagons who has been thus deprived of them is provided by section 30, which enacts by subsection (1) that subject to the provisions of the three next succeeding subsections the Commission shall pay to him as compensation in respect thereof an amount determined by reference to the type of wagon and the year in which it was first built in accordance with the Table set out in the VIth Schedule to the Act. The three succeeding subsections provide for certain variants of the amount of compensation, but, broadly speaking, it is a sum determined by age and type without reference to the condition of repair. The amount so determined, if it exceeded the sum of £2,000. was not to be paid in currency but was to be satisfied by the issue of British Transport Stock.
It is perhaps worth noting that the expression "the date of transfer" refers back to section 12 of the Act which provides for the vesting in the Commission of the undertakings specified in the Third Schedule on the 1st January, 1948, and refers to that date as the date of transfer. "Transfer" is apparently adopted as a convenient word for describing a statutory operation by which the property of "A" is vested in "B".
Pursuant to section 29 of the Act the Respondent Company's wagons were duly vested in the Commission, and in due course the Company received an amount of compensation determined in accordance with the provisions of section 30 and the VIth Schedule which was satisfied by the issue of an equivalent amount of British Transport Stock. This amount was substantially higher than the written down value of the wagons for the purposes of the income tax allowances in respect of wear and tear as appearing in the Company's books. On these facts a balancing charge of £29,021 was made on the Company in pursuance of section 17 of the Income Tax Act, 1945, which I have already set out, by an assessment for the year 1948/49 made under Case I of Schedule D of the Income Tax Act, 1918. This amount (except for a part about which no dispute arises) represents the excess of the original cost over the written down value.
The Respondent Company appealed against the balancing charge to the Commissioners for the Special Purposes of the Income Tax Acts who determined the question in favour of the Crown and at the request of the Company stated a case for the opinion of the High Court. The case was duly heard by Mr. Justice Upjohn who reversed the determination of the Commissioners, holding that no balancing charge was payable, and his decision was upheld by the unanimous opinion of the Court of Appeal. Your Lordships are now invited to reverse their judgment.
My Lords, I must at a later stage call your Lordships' attention to an argument which is founded on the provisions of certain later Acts, but our primary task is to consider whether the statutory transaction which I have described was an event to which section 17 (1) ( a) of the Income Tax Act, 1945, applied, or in other words whether the Respondent Company's wagons were "sold" within the meaning of that section. Let me say at once that there is nothing in the Act itself to give any special meaning or colour to that word: it may be that the policy of the Act might equally well be applied to other transactions which are in some respects analogous to sales, but that is guess work and we are here concerned with sales not with analogous transactions.
My Lords, in my opinion the Company's wagons were not sold, and it would be a grave misuse of language to say that they were sold. To say of a man who has had his property taken from him against his will and been awarded compensation in the settlement of which he has had no voice, to say of such a man that he has sold his property appears to me to be as far from the truth as to say of a man who has been deprived of his property without compensation that he has given it away. Alike in the ordinary use of language and in its legal concept a sale connotes the mutual assent of two parties. So far as the ordinary use of language is concerned it is difficult to avoid being dogmatic but for my part I can only echo what Lord Justice Singleton said in his admirably clear judgment:
"What would anyone accustomed to the use of the words 'sale' or 'sold' answer? It seems to me that everyone must say 'Hudsons did not sell'".
I am content to march in step with everyone and say "Hudsons did not sell". Nor is a different result reached by an attempt to analyse the legal concept. When Benjamin said in the passage quoted by Lord Justice Singleton and Lord Justice...
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