Morgan v Tate & Lyle Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SINGLETON,LORD JUSTICE JENKINS |
| Judgment Date | 06 May 1953 |
| Judgment citation (vLex) | [1953] EWCA Civ J0506-3 |
| Date | 06 May 1953 |
| Court | Court of Appeal |
[1953] EWCA Civ J0506-3
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Singleton
Lord Justice Jenkins
and
Lord Justice Hodson
THE SOLICITOR-GENERAL (Sir Reginald Mannigham-Buller, Q.C., M.P.) and Sir REGINALD HILLS (instructed by the Solicitor of Inland Revenue) appeared on behalf of the Appellant.
MR J. MILLARD TUCKER, Q.C., Mr. ROY BORNEMAN, Q.C., and Mr. DHSMOND C. MILLER (instructed by Messrs. Pennefather & Co.) appeared on behalf of the Respondents.
During the year 1949 there were proposals for the extension of nationalisation to certain industries of which sugar refining was one. The position is shown in many documents exhibited to the Case, one of which was published in April, 1949, on the authority of the National Executive Committee of the Labour Party which at that time provided the Government of the country It is a book of some thirty pages entitled "Labour Believes in Britain", and it was for consideration at the Annual Conference of the Labour Party at Whitsuntide 1949. It contained this passage: "The Sugar "Monopoly. The privately owned British Sugar Corporation, Ltd., "with a monopoly in sugar beet manufaetare, was set up by a "Conservative Government. The legislation creating the monopoly "will expire early in the next Parliament. Labour will not leave "this monopoly in private ownership. Sugar refining is also "controlled by a State-protected private monopoly which has enabled "large profits to be made for private shareholders. One concern "dominates the British sugar industry; it also has large "interests in some of the colonial territories which the Labour "Government is pledged to develop. The sugar industry is vital "both in war and peace. Labour intends to transfer to public "ownership all the sugar manufacturing and refining concerns."
Tate & Lyle, Ltd. (the Company) refines roughly 53 per cent of all the sugar refined in this country It has an issued capital of over £8,000,000.
The directors of the Company became convinced that the nationalisation of the sugar refining industry would become part of the Labour Party's official programme, and they were satisfied that the Company was the "one concern" referred to in the extract set out above. They decided to take every legitimate step to oppose this. The president of the Company is Lord Lyle of Westbourne. One of the documents attached to the Case, entitled "No appeasement", reproduces two of his speeches along with this note; "in" the fight against nationalisation of sugar refining, Lord Lyle, President of Tate & Lyle, Ltd., has made it clear that he and his board will oppose this stop with every weapon at their command. The two recent speeches made by Lord Lyle to his shareholders caused world-wide interest. They are therefore reproduced here in full."
These speeches are strong indiotments of nationalisation in general and bring forward substantial reasons against the proposal for nationalisation of the sugar refining industry in particular.
As, according to the Case, they were used in the propaganda campaign which followed I think it right to set out passages from each.
From the first; "The consumer under free enterprise is "protected against unjustified price increases by the guarantees "that refiners have given to Chancellors of the Exchequer, by "potential competition with foreign white sugar and by the course "open to manufacturers to conduct their own refining operations. "Where would those safeguards be under a State Monopoly? I do not "hesitate to forecast that they would all go by the board "Competition would no longer keep a check on prices rising "costs would be followed by a cut in quality, a restriction of "choice and a curtailment of services to the consumer.
"The workers of your company enjoy the highest wages and best working conditions in the Industry They have a pride in "the company which they serve and we who are on the Board are proud to serve with them. can you imagine that the same spiritwould exist under the remote control of bureaucracy? I "believe that with the standardisation that goes hand in hand "with bureaucracy the best they can hope for is a standstill "in wages and working conditions while other sections of the "industry catch up."
"What is so disturbing, if I may be Allowed for a moment to take a wider view, is the effect that the "nationalisation of sugar refining will have on other efficient "industries. The undisclosed motives for nationalising sugar "refining can apply equally to" any industry which is efficiently "run and is making profits. The managements of such companies "will be subjected to a war of nerves, and will be continually "looking over their shouldered. When will the naticnalisers be "wanting them" When will the boys be looking for new jobs? "When will their profits be wanted to offset the growing losses "of the industries nationalised "the year before? Some "industries, to quote the planners, have sinned by making "'a high profit'. When they begin to lose millions a year of "the taxpayers money, doubtless the planners will be satisfied "and will then look about then for new victims.
"I have spoken at some length to ensure that you realise "what we are up against you will appreciate from the way I "have spoken how important I consider it that the public should "be kept informed of the plans of the nationalises. You will "have noticed that since they were given the all clear at "Blackpoll, they have made no further mention of their plans. "The last thing that they want is for the public to know the "facts. It is plainly our duty to supply them.
One or other of these speeches was made at an extraordinary meeting of stockholders of the Company held on 15th September, 1949, at which the following resolution was passed: "Believing" as we do that nothing but harm to workers, consumers and stockholders alike can spring from the nationalisation of the sugar "refining industry, the members of this Company hereby empower "the board of Directors to do everything in-their power to meet "the threats of the nationalisers who, learning nothing from the "chaos, losses and labour unrest that they have created in other "industries, now wish to seize the assets of this Company.…"
Before this time — indeed before the Labour party Conference of 1949 — the Company had on the 31st March. 1949, entered into an agreement with a Company known as Aims of Industry, Ltd., By this agreement, after reciting that the Company was desirous of fostering and promoting the interests of the industry of sugar refining with the ultimate view of the preservation and extension of the goodwill of the Company's business, Aims of Industry, Ltd., was appointed the Company's Public Relations Officer and Advertising Agent for a period of five years at a fee of £5,000 per annum. Under Clause 2 of the said agreement, Aims of Industry, Ltd., undertook to use its best endeavours to foster and promote the interests of the said industry generally and to that end to seek to extend and develop the knowledge and information of the public generally in relation to the said industry, its processes, difficulties and achievements and its relation to the national economy, and it was provided further that nothing in the agreement contained should be deemed to impose upon Aims of Industry, Ltd., any obligation to advertise the business of the Company other than as a member of the said industry. It was also agreed that the Company should place to the credit of a joint account (to be opened with Lloyd's Bank, Ltd.,) a sum of £75,000 for the purpose of meeting all expenditure recommended byAims of Industry, Ltd., and approved by the Company for furthering the aims and objects of the agreement.
In fulfilment of the obligation imposed upon them by the resolution referred to in an earlier paragraph, the Directors decided to intensify their anti-nationalisation propaganda campaign, which was of national dimensions and which was in the hands of Aims of Industry, Ltd., in order to try to preserve the business and assets of the Company intact.
During the Company's accounting year up to 1st October, 1949, Aims of Industry, Ltd., expended £29,98,5,Od, out of the £75,000 deposited with them. This sum of £29,396.5.0d. was entered in the Company's Profit and Loss Account for the 52 weeks ended 1st October, 1949, being included in an item of £42.183 for "advertising (including anti-nationalisation campaign)". In the accounts attached to this Case the item of £29,398,5.0d. is shown under central administration expenses., (There is another item for advertising,£12,785.l. 2d, shown under selling expenses)"
The activities of Aims of Industry, Ltd., included advertising, film making, film showing, the issue of pamphlets and ration book holders (suitably inscribed) photography, recording, etc.
There has been made a suggested allocation to show how the £29,398.5.0d, was spent. This is not a final division, but it provides a convenient way of looking at this case. It is:-
| (1) | General advertising | £11,508.4, 10 |
| (2) | Anti-nationalisation | |
| (specific) | 15,339. 15. 2 | |
| (3) | General | 2,558. 5, 0 |
| £29,398. 5. 0 |
The Company claim to deduct the whole of this sum, namely, £29,398, 5.0d, in arriving at the balance of profits for the accounting period. The Inspector of Taxes contended, and still contends, that part of that sum, namely, £15,339. 15. 2d. is not a proper deduction. That is the dispute between the parties to this appeal. The General Commissioners for the City of London set out the facts in the Case and state their conclusion in this way: "The Commissioners found that the sum in question was money wholly and exclusively laid out for the purposes of the Company's trade and was an admissible deduction from its...
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