The Swedish Central Railway Company, Ltd v Thompson (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judge | Lord Buckmaster,Lord Atkinson,Lord Sumner,Lord Dunedin,The Lord Chancellor |
| Judgment Date | 13 March 1925 |
| Judgment citation (vLex) | [1925] UKHL J0313-2 |
| Date | 13 March 1925 |
| Court | House of Lords |
[1925] UKHL J0313-2
Lord Chancellor.
Lord Dunedin.
Lord Atkinson.
Lord Sumner.
Lord Buckmaster.
House of Lords
After hearing Counsel, as well on Monday the 26th, as Tuesday the 27th, and Thursday the 29th, days of January last, upon the Petition and Appeal of the Swedish Central Railway Company, Limited, whose Registered Office is situate at II, Ironmonger Lane, in the City of London, 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 3d of April 1924, 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 Petitioners 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 William Paxton Thompson (His Majesty's Inspector of Taxes), 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 His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 3d day of April 1924, 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 Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
Tested by the principles enunciated in De Beers v. Howe in 1906, A.C. 455, and New Zealand Shipping Company v. Thew in 8 Tax Cases, p. 228, the appellants contend that they would be held to reside in Sweden and therefore cannot be resident here. That argument, in my opinion, is open to serious criticism.
The levying of taxation is essentially a matter of domestic jurisdiction. A company may do such acts within the jurisdiction of this country as causes it to be liable here as resident to income tax without excluding the possibility that it may also be held to be resident in another jurisdiction for the same or another purpose.
In principle both the cases quoted show only liability in the circumstances to taxation here, and the statement in New Zealand Shipping Company v. Thew, that for purposes of determining residence "the registered office is only an incident in the evidence," would have left the Courts in New Zealand full discretion, if they thought fit, to declare that in their jurisdiction the place of incorporation of a company or its registered office was the sole test.
The statements in that case must be related to its facts. The phrase "real residence," to which Warrington, L.J. and Atkin, L.J. call attention, means no more than this: that the actual residence was here as determined by the principles enunciated. For purposes of our income tax the real and not a merely nominal residence was here, and if there were also residence elsewhere that did not displace it. The reference to the registered office is important; it is, to my mind, one of the critical facts in determination of residence in this country, but not necessarily the sole and exclusive fact. It varies in consequence in every instance. Nor, even if it were the sole fact would it follow that a company incorporated and with a registered office elsewhere could not also be resident here for purposes of income tax.
My Lords,
I have read and anxiously considered the judgments which have just been delivered by my two noble friends who have preceded me, I regret extremely that I am unable to concur with them. I take the view of the authorities expressed at length in the able judgment delivered in the Court of Appeal by Lord Justice Atkin, and, like him, am convinced that these judgments cannot be reconciled with the cases which have been decided in this country during the last half century. On the question of the mode of acquisition by an incorporated company of a residence here, within the meaning of the Income Tax Acts, L.J. Atkin has clearly and ably analysed most, if not all, of the authorities dealing with it. I need not attempt to perform again the task he has so well performed, and as the facts have been already fully stated. I need only restate them as far as it may be necessary to make this my judgment intelligible. I express no opinion as to whether it would be wise or unwise, just or unjust, manageable or embarrassing to confer upon incorporated companies the privilege of acquiring legally, for the purpose of the Income Tax Acts, two or more residences: but I have the strongest opinion that such an acquisition, would conflict with the principles embodied in the authorities I have mentioned. It is, I think, not only not authorised by them; but is, on the contrary, in effect, forbidden by them. The word "person" is, no doubt, frequently used in Schedule D of the Income Tax Acts, and, of course, I am aware that an incorporated company is, according to our law, a "person," and that, therefore, companies which, like the Appellant Company in this case, manage great commercial or manufacturing enterprises in different parts of the world must answer to the description of persons to come within the reach of the Income Tax Acts. I have seen that it has been frequently said in argument in some of the authorities to which we have referred, if not in this ease, "that if an individual, a real person, can acquire as many residences as he pleases, why should not this fictitious person, a company, be permitted by the law to do the same," A false analogy is the most misleading of all things. And I think if one considers, even for a moment, the means and methods by which a real person can acquire a residence, or several residences, it will be obvious that there is no real analogy between the two processes, and that the inference suggested by this question cannot reasonably be drawn. A real person can acquire a residence in a house by eating and sleeping in it, though he should be a hopeless paralytic, or an imbecile or a lunatic, or whether he is capable of transacting business, or has any business to transact, or whether he moves from house to house to improve his health, or promote his pleasure, or gratify his whims, whereas these incorporated companies have, as a rule, great enterprises to promote, conduct, govern and control. It was because of this, I think, that Lord Loreburn, in giving judgment in this House, in the De Beers case, 1906, A.C. 455, said first:
"A Company cannot eat or sleep, but it can keep house and do business."
We ought, therefore, to see where it really "keeps house and does business." Further on he states what he means by the words doing business." He said "the decision of Kelly, C.B. and Huddleston, B. in Calcutta Jute Mills, 1 Ex. D. 428, now thirty years ago, involved the principle that a company resides for the purposes of income tax where its real business is carried on. Those decisions have been acted on ever since. I regard that as the true rule, and the real business is carried on where the central management and control actually abides." That judgment was concurred in by the four other members of the House who heard the case. But if the true rule be, as Lord Loreburn said, that the residence is where "the central management and control abides," then, unless a thing can have two or three different and separate centres, it would appear to me to be quite impossible, according to the ordinary use of language, that "the central control and management of a company" can at the same time abide in two or more different and separated places. I think this House is now bound by the decision on the De Beers case. If it be desirable to alter the law as there laid down, it should, I think, be done by the Legislature not by this House, and I, therefore, concur with Lord Justice Atkin. This is, I think, the first case in which it has been attempted to alter it. This was not, however, the only point that was decided in the De Beers case. The House, following the decisions of Kelly, C.B. and Huddleston, B., in the Calcutta Juie case and Cesena case, decided, in effect, that neither in the case of English companies nor in that of foreign companies does the place of registration under the Companies Act of 1862 or 1867, or in the case of the latter companies under any similar legislation, suffice per se to fix, according to English law, the residence of a company.
In the case of the Calcutta Jute Mills v. Nicholson, 1 Ex. D. 428, the company was incorporated under these same statutes of 1862 and 1867. It was not registered or incorporated elsewhere. In the case of the Cesena Sulphur Company v. Nicholson, which was heard and decided immediately after and reported with the other, the company was incorporated under the same Acts, but was afterwards registered for all purposes in Italy. The then Attorney-General, Sir John Holker, apparently contended on behalf of the Crown that the registration of a company furnished conclusive evidence of its residence, and that if a company was registered in England it must be held to reside in England. Huddleston, B., in dealing with this contention at p. 453 of the Report, said "he could not assent to that proposition, and thought that the answer given to it in argument was a good one. It was this. Registration, like the birth of an individual, is a fact which must be taken into consideration in determining the question of residence. It may be a strong circumstance, but it is only a circumstance. It would be idle to say in the case of an individual that the birth was conclusive of the residence, so, drawing an...
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