Mosley v George Wimpey & Company Ltd
| Jurisdiction | England & Wales |
| Date | 1943 |
| Year | 1943 |
| Court | Court of Appeal |
No. 1349-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION)-
COURT OF APPEAL-
Income Tax; Schedule D - "Rent payable…in respect of any "easement" - Licence to extract gravel on payment of tonnage rents - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Schedule A, No. III, Rules 1, 2 and 3; Rule 19 of the Rules applicable to Schedules A, B, C, D and E: Finance Act, 1934 (24 & 25 Geo. V, c. 32), Section 21.
The Plaintiff granted the Defendants a licence to extract gravel, on payment of tonnage rents, from land of which she was tenant for life, the Defendants agreeing to replace the overburden as the gravel was extracted. The Defendants, who carried on business as civil engineers and contractors, used the gravel for making concrete runways on an aerodrome which they were constructing. On making payment of the sums due to the Plaintiff the Defendants deducted Income Tax, contending that they were bound to do so under Section 21 (1) (a) of the Finance Act, 1934, or, alternatively, that the sums were annual payments from which they were entitled to deduct Income Tax under General Rule 19. The Plaintiff brought this action to recover from the Defendants the amount they had deducted in respect of Income Tax.
Held, that the payment made by the Defendants to the Plaintiff was a "rent" within the meaning of Section 21 (4) (c) of the Finance Act, 1934; that the rights granted to the Defendants were an "easement" within the meaning of Section 21 (4) (b); that the extraction of the gravel for commercial purposes was a "concern" within No. III of Schedule A of the Income Tax Act, 1918, and accordingly that, the rent being payable in respect of an easement enjoyed in connection with the concern, Income Tax was properly deducted therefrom under Section 21 (1) (a) of the Finance Act, 1934.
The case came before Macnaghten, J., in the King's Bench Division on 19th April, 1944, when judgment was reserved. On 26th April, 1944, judgment was given in favour of Mrs. Mosley, with costs.
Macnaghten, J.-The Defendants in this case, George Wimpey & Co., Ltd., who carry on business as civil engineers and contractors, were engaged in 1941 in constructing an aerodrome in the County of Leicester and for the purposes of that work they required some 50,000 cubic yards of gravel. The
Plaintiff is the tenant for life of land in the Parish of Hemington in that County which contains gravel, and she granted to the Defendants a licence to take gravel from her land on the terms set out in a letter dated 1st July, 1941. By those terms the Defendants agreed to pay 1s. 6d. or 1s. per cubic yard according to the quality of the gravel taken by them.In order to get the gravel the Defendants had to remove the "overburden" or surface which covered the gravel to a depth of about 3 feet, and when they had done that they were able to take the underlying gravel by what one of the witnesses described as "grabbing", that is by means of a mechanical grab.
This action is brought by the Plaintiff to recover £1,115, the balance of a sum of £2,230 due to her from the Defendants for gravel taken by them from her land under that licence. There is no dispute between the parties as to the amount due to the Plaintiff, but the Defendants contend that they are compelled by the provisions of the Finance Act, 1934, Section 21, to deduct from the amount due to the Plaintiff Income Tax at the standard rate, namely, 10s. in the £, or alternatively that they are entitled to make such deduction by Rule 19 of the All Schedules Rules of the Income Tax Act, 1918. The question and the only question at issue in this case is whether the Plaintiff must submit to that deduction. She claims that she is entitled to the payment of the full amount of £2,230.
The Finance Act, 1934, Section 21, provides that where "rent" is payable in respect of any "easement" and the easement is "used, occupied "or enjoyed" in connection with any of the concerns specified in Rules 1, 2 and 3 of No. III of Schedule A, the rent shall be charged with tax under Schedule D and shall be treated for the purposes of such of the provisions of the Income Tax Acts as refer to royalties paid in respect of the user of a patent as if it were such a royalty.
Sub-section (4) of Section 21 defines the words "rent" and "easement" for the purposes of the Section, and Mr. Scrimgeour, on behalf of the Plaintiff, admitted that having regard to the decisions of the Court inStratford v. Mole & Lea, 24 T.C. 20, and Earl Fitzwilliam's Collieries Co. v. Phillips, [1943] A.C. 570; 25 T.C. 430, the licence to take gravel granted by the Plaintiff to the Defendants was an "easement" and the sum payable by the Defendants for the gravel was a "rent" within the meaning of those words as used in that Section. So the question at issue is reduced to this: Was the so-called "easement" used, occupied or enjoyed in connection with any of the concerns specified in Rules 1, 2 and 3 of No. III of Schedule A? If the easement was so used, occupied or enjoyed, then it follows that the so-called "rent" must be treated as a royalty payable for the user of a patent, and in that case the Defendants would be bound by the Finance Act, 1934, Section 21, to deduct Income Tax from the rent, and the claim of the Plaintiff in this action would necessarily fail.
The concerns specified in Rule 1 of No. III of Schedule A are quarries of stone, slate, limestone or chalk. Mr. Talbot submitted that the gravel which the Defendants grabbed from the Plaintiff's land was a quarry of stone-it is true that the stones were not large, they were little stones, but still they were stones and therefore the concern was a concern specified in Rule 1 of No. III of Schedule A.
I do not think that contention is well founded. The Income Tax Act of 1918 is a taxing Act. There was some suggestion during the argument that it ought to be construed generously. I was in some doubt, when the argument was used, as to whom the generosity was to be extended, whether generous to the Crown or generous to the subject. But I do not think that any taxing Act should be construed "generously"; it should be construed strictly. From the very foundation of the Courts of Common Law at Westminster it has always been the duty of His Majesty's Judges to protect the subject from exactions by the Crown. It is true that at the present time a Judge when he is appointed takes an oath to serve the King, but the older form of oath, going back almost beyond the time of legal memory, was that the Judge took an oath, it is true, to serve the King, but not only that, he took an oath to serve the King and his people. It was certainly the duty of the Judges-a duty which, except perhaps for the unhappy times of the 17th century, was always performed with courage by the Judges-to protect the subject from the exactions of the prerogative, and unless the taxing Act plainly requires the subject to contribute to the demands of the Crown, it is the duty of the Judges to protect the subject from the exactions.
In those circumstances I think the words "quarries of stone" should be read in their ordinary and natural meaning, and there is no doubt, as one of the witnesses who was called before me said, that a quarry of stone is where stone is cut out from a mass and excavated either by pick or by blasting. It certainly does not in ordinary language include gravel which can be grabbed, although a case was cited to me under which apparently a gravel pit came within the meaning of the word "quarry" under an Act of Parliament which was designed for the protection of persons working in quarries.
Moreover, there is no less authority for that proposition than that of Lord Bramwell when he was a Judge of the Court of Appeal. I think it will be found that in the case of Jones v. Cwmmorthin Slate Co., 1 T.C. 267, at pages 269/70, Lord Bramwell expressed a view about the meaning of the word "quarry" no doubt similar to that which the eminent gentlemen who gave evidence before me expressed in the witness-box. So I do not think that this "easement" is a "concern" which comes within Rule 1.
The "concerns" in Rule 2 are "mines of coal, tin, lead, copper, "mundic, iron, and other mines". Mr. Talbot did not suggest that this gravel pit was any of the designated mines, but he said it was one of the "other mines". There again, coming to the word "mines" in its ordinary meaning, I am of opinion that the word "mines" in ordinary diction refers to underground excavation, although cases may arise where the word "mines" in the document which has to be construed includes what would be open workings of a mineral. For the former proposition I refer to Glasgow Corporation v. Farie (1888), 13 App. Cas. 657, and for the latter to the Midland Railway Co. v. Robinson (1889), 15 App. Cas. 19.
This, of course, is a litigation between two subjects, and the Crown is not a party to the suit, but it seems to me that I ought to construe the word "mine" for the purpose of the present action as referring to what is commonly understood to be a mine, namely, some underground excavation. and not to include an open gravel pit. Therefore I do not think it comes within Rule 2-that is to say, that "easement" is not a "concern" within Rule 2.
I now come to Rule 3, and that is indeed a perplexing one because it contains a list of concerns so varied that it is difficult to understand how they come to be all put together. The concerns in Rule 3 are "ironworks, "gasworks, salt springs or works, alum mines or works, waterworks, streams "of water, canals, inland navigations, docks, drains or levels, fishings, rights "of markets and fairs, tolls, railways and other ways, bridges, ferries, and "other concerns of the like nature having profits from or arising out of any "lands, tenements, hereditaments or heritages". Those are the multifarious concerns mentioned in Rule 3.
Mr. Talbot has not suggested, of course, that this easement is any one of...
To continue reading
Request your trial
-
Russell v Scott
...that the sandpit was a concern carried on by the Appellant. Further, following the decision in the Court of Appeal in Mosley v. George Wimpey & Co. Ltd. (1945) (1 All E.R. 674) we hold that it was a concern of a like nature with those enumerated in Rule 3 of No. III of Schedule A. We accor......
- Rogers v Longsdon
-
Scott v Russell (HM Inspector of Taxes)
...was not a "concern of the like nature" with those enumerated in Rule 3 of No. III of Schedule A. Mosley v. George Wimpey & Co., Ltd., 27 T.C. 315,overruled. CASE Stated under Section 149 of the Income Tax Act, 1918, by the Commissioners for the Special Purposes of the Income Tax Acts for th......
-
Scott v Russell (HM Inspector of Taxes)
...was not a "concern of the like nature" with those enumerated in Rule 3 of No. III of Schedule A. Mosley v. George Wimpey & Co., Ltd., 27 T.C. 315,overruled. CASE Stated under Section 149 of the Income Tax Act, 1918, by the Commissioners for the Special Purposes of the Income Tax Acts for th......