NOTES OF CASES
| DOI | http://doi.org/10.1111/j.1468-2230.1954.tb00276.x |
| Published date | 01 November 1954 |
| Date | 01 November 1954 |
NOTES
OF
CASES
THE
CROWN
AND
THE
TAXPAYER-A DUTCH TREAT
IN
Bank
zloor
Handel en Scheepvart
N.
V.
v.
Administrator
of
Hungarian Property
119521
1
All E.R. 314
l;
119531
1
Q.B.
248,
279;
119541
2
W.L.R.
867,
the facts were involved but not parti-
cularly important to the decisions in the Court of Appeal and the
House of Lords. Gold to the value of d52m. came into the hands
of the Custodian of Enemy Property who sold
it
and purchased
Treasury bills at a discount, paying income tax on the profits made.
Subsequently the owner of the gold-a Dutch banking company-
obtained judgment for the amount of the proceeds of the sale and
claimed that the income tax paid (more than
.€76,000)
should not
be deducted arguing that the custodian, being a Crown servant,
was not liable for and ought not to have paid the tax. Devlin
J.
accepted the company’s contention
;
the three members of the Court
of
Appeal unanimously reversed his decision, and the House of
Lords by three votes to two restored the first judgment. When
four of Her Majesty’s judges are of one opinion and five of another
opinion and the minority, being more strategically deployed, win
the day, the case deserves consideration.
The custodian, not being a corpora-
tion sole, must be thought of simply as the person who for the
time being holds the office. The beneficial ownership of property
vested in him is suspended and he has such powers
of
dealing with
the property as the statute gave him. He is a trustee with no
beneficiary. Examining the position of the custodian, the learned
judge found nothing conclusive in the fact that he was appointed
by the Board of Trade, paid out of the Consolidated Fund and
subject to a large measure of control by the Board. Indeed, he
found that the fact that the Board’s powers to give directions
to the custodian were limited to the scope and purpose of the
statute tended to negative the inference that the custodian was a
Crown servant since
“
the power to direct a servant how to perform
his duties
is
normally at large.” Devlin
J.
found that the custodian
had Crown status because his statutory duties brought him within
the sphere of “two of the most ancient and peculiar prerogatives
of the Crown-the power to make war, including the power to take
for itself the property
of
an enemy found within the realm, and
the power to make peace.)’
In
the Court of Appeal, Sir
R.
Evershed
M.R.
argued that the
office
of
custodian was not
of
itseIf sufficient to confer on its holder
Devlin
J.
proceeded thus.
1
For an
earlier
note, see
15
M.L.R.
355.
564
Nov.
1964
NOTES
OF
CASES
565
the immunity belonging to the Crown (the office not being one
derived directly and historically from the King in person). More-
over, since the interests of the company continued
to
exist-though
suspended-it could not be said that the sums were held by the
custodian exclusively
for
public purposes. Nor would his lordship
accept that the duties of the custodian were “manifestations
of
the Sovereign’s war-making prerogative.” His lordship concluded
by arguing that since the company was entitled to the
“
fruits
”
which the principal sum had earned,
it
should, in common sense,
also be liable to tax thereon. Denning
L.J.
said
:
“
The reason
why public revenue is exempt from tax
is
because there is no point
in the Crown taking money from one pocket and putting
it
in
another
. .
.
A study of the Trading with the Enemy Acts shows
that his [the custodian’s] income does not go in aid
of
the public
revenue
at
all.
It
is held in suspense pending later arrangements.
As
such
it
is not exempt from tax.” The activity in question
must be a Crown activity as well as being performed by a person
having Crown status before the question of immunity can arise;
moreover “the activity must be such that the Crown purposes
would be prejudiced unless immunity were afforded to
it.”
‘‘
Crown
status
”
attaches to Ministers, to Government Departments of which
they are the heads and to servants of those Departments; also
to
those who act exclusively for
“
Crown purposes
”
though the extent
of that phrase
is
uncertain. Although the Custodian of Enemy
Property probably has Crown status, his activities are not Crown
activities but his own. He does not hold money on behalf of the
Crown. “He is a public officer carrying out public purposes; but
they are not Crown purposes.”
Romer L.J., on the other hand, regarded
“
the purposes of the
Crown
”
as synonymous with
“
public purposes
’)
but held that as
the property might be restored to the owner
it
was impossible
to say that it could only be properly applied to such purposes.
The appeal was therefore allowed.
So,
on to the House of Lords.
Lord Reid, Lord Tucker and Lord Asquith made up the majority
group which allowed the appeal. Lord Reid held that the custodian
was a servant of the Crown because
of
the considerable powers
exercised over him by the Board of Trade and because he had no
“
substantial independent discretion
”
under the statute.
‘‘
The
question
is
not how much independence the custodian in fact enjoys
but how much he can assert and insist on by reason
of
the terms
of his appointment
or
the nature of his office.” The statutory
power of the Board of Trade to appoint custodians was bestowed,
in the words of the Act,
“
with a view to preventing the payment
of money to enemies and of preserving enemy property in contem-
plation of arrangements to be made at the conclusion of peace.”
These arrangements, said Lord Reid, were not limited
to
returning
all property to its former owner; there was, therefore,
“
a Crown
VOI..
17
36
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