Trustees of The Londonderry Presbyterian Church House v Commissioners of Inland Revenue
| Jurisdiction | Northern Ireland |
| Judgment Date | 07 June 1946 |
| Date | 07 June 1946 |
| Court | King's Bench Division (Northern Ireland) |
No. 1359-HIGH COURT OF JUSTICE, NORTHERN IRELAND (KING'S BENCH DIVISION)-
COURT OF APPEAL, NORTHERN IRELAND-
Income Tax - Exemption - Charitable purposes - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Section 37(1)(a); Finance Act, 1921 (11 & 12 Geo. V, c. 32), Section 30(1)(a).
The Appellant Trustees held certain properties "upon trust to permit the "same or any part thereof to be used as a Hall for meetings or for Social or "Recreation purposes in connection with the various Presbyterian Churches "in the City of Londonderry and the surrounding district or as a Hostel or "Boarding House or as a Library or for such other…purposes as the "Board of Governors…shall…think fit, it being the true intention and "meaning of these presents that said premises shall be used for the purposes "of assisting and helping in the religious moral social and recreative life of "those connected with the Presbyterian Church in the City of Londonderry "and surrounding district in such manner as the said Board of Governors "…shall…think right."
The Trustees claimed exemption from Income Tax, Schedule A, for the years 1934-35 to 1943-44, under Section 37(1)(a) of the Income Tax Act, 1918, in respect of the let properties (the rents of which had been accumulated and were held for the purposes of the trusts), and under Section 30(1)(a) of the Finance Act, 1921, in respect of the properties occupied for the purposes of the trusts. The claim was refused by the Commissioners of Inland Revenue and, on appeal, by the Special Commissioners, on the ground that the trusts were not charitable trusts.
Held, that the Special Commissioners' decision was correct.
Stated under the Finance Act, 1925, Section 19(3), and Income Tax Act, 1918, Section 149, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the King's Bench Division of the High Court of Justice in Northern Ireland.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 22nd March, 1945, the said Commissioners, pursuant to Section 19(2) of the Finance Act, 1925, heard claims by the Trustees of the Londonderry Presbyterian House (hereinafter called "the Appellants"):-
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(a) for exemption under Section 37(1)(a) of the Income Tax Act, 1918, from Income Tax under Schedule A in respect of the rents and profits of certain properties belonging to the Appellants, and
(b) for exemption under Section 30(1)(a) of the Finance Act, 1921, from Income Tax under Schedule A in respect of certain properties owned and occupied by the Appellants.
The claims were for the ten years 1934-35 to 1943-44 as hereinafter more particularly mentioned. They had previously been made to the Commissioners of Inland Revenue (hereinafter called "the Respondents") who had dismissed the same.
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(a) The various properties which were the subject of the said claims were:-
(2) A building known as "The Church House" situate in Great James' Street, Londonderry.
(3) A caretaker's house adjoining the Church House.
(4) A dwelling-house known as "The Manse" situate in Queen Street, Londonderry.
(5) Another dwelling-house known as No. 16 Patrick Street, Londonderry.
(b) During all the said ten years all the said four properties were owned by the Appellants.
(c) Up to 1st April, 1943, the Church House and the caretaker's house were occupied by the Appellants, and for the years 1934-35 to 1942-43 the claims in respect of these two houses were for exemption under Section 30(1)(a) of the Finance Act, 1921, from tax under Schedule A upon the ground that the Appellants were a body of persons or trust established for charitable purposes only.
(d) On 1st April, 1943, the Church House was requisitioned by the Admiralty, who paid the Appellants compensation rent for the same, and for the year 1943-44 the claim (as regards the Church House) was for exemption under Section 37 of the Income Tax Act, 1918, from tax under Schedule A upon the grounds that the Appellants were trustees for charitable purposes and that the said rent was applied to charitable purposes only. The caretaker's house was not requisitioned, and the claim in respect thereof for 1943-44 was under Section 30(1)(a)of the Finance Act, 1921, as before.
(e) The two dwelling-houses, namely, "The Manse" in Queen Street and the other dwelling-house No. 16 Patrick Street, were let by the Appellants to tenants who occupied them as private residences throughout the whole of the said ten years 1934-35 to 1943-44, and the claims in respect of these two houses for all the said ten years were for exemption under Section 37 of the Income Tax Act, 1918, from tax under Schedule A in respect of the rents received from the respective tenants, on the ground aforesaid.
3. All four properties were, on 21st November, 1922, conveyed to fourteen persons, who, by a deed of the same date, declared the trusts upon which they were to hold the same. The Appellants are the present trustees and hold all four properties upon the trusts declared in that deed.
The said trusts are as under:-
Upon trust to permit the same or any part thereof to be used as a Hall "for meetings or for Social or Recreation purposes in connection with the "various Presbyterian Churches in the City of Londonderry and the surrounding "district or as a Hostel or Boarding House or as a Library or for such "other purpose or purposes as the Board of Governors hereinafter defined or "any Board of Governors or Committee to be substituted therefor in manner "hereinafter appearing shall from time to time think fit it being the true "intention and meaning of these presents that said premises shall be used for "the purposes of assisting and helping in the religious moral social and "recreative life of those connected with the Presbyterian Church in the City "of Londonderry and surrounding district in such manner as the said Board "of Governors or substituted Board of Governors or Committee shall from "time to time think right.
A copy of the said deed of trust is hereto annexed, marked "A", and forms part of this Case(1).
4. So long as the Church House was in the occupation of the Appellants it was used by them for the following purposes, viz.,
(a) for meetings of the Presbytery of Derry, the Synod of Derry and Omagh, the Londonderry Presbyterian City Mission, and sub-committees of churches in the district;
(b) for teas, plays and concerts connected with church organisations, and for the playing of table tennis;
(c) for the playing of badminton by clubs connected with the Presbyterian churches in Londonderry;
(d) for the use of outside clubs.
Payments were made by the badminton and outside clubs to cover the cost of heating and lighting, but no profit was made from lettings.
5. During the whole of the said period of ten years the caretaker's house was used solely as the residence of the caretaker of the Church House, for the purpose of the performance of his duties as such (these duties continuing notwithstanding that the Church House was requisitioned as aforesaid). His remuneration was £20 per annum, together with the free use of the house and free coal and light. He was also in receipt of an old age pension.
6. The rents received from the tenants of the said two houses which were let, and the compensation rent received in respect of the requisitioning of the Church House, had not yet been expended by the Appellants but had been accumulated by them, and were held by them upon the said trusts declared by the said deed of trust.
7. It was contended on behalf of the Appellants that:-
(a) the trusts declared by the said deed of trust were charitable trusts, being partly for the advancement of religion and partly for other purposes beneficial to the community;
(b) the Appellants were charitable trustees, and a body of persons or trust established for charitable purposes only;
(c) the Appellants were therefore entitled to the exemption from Income Tax which was claimed, and their claims should be allowed.
The following cases were referred to:-
Special Commissioners of Income Tax v. Pemsel, 3 T.C. 53.
O'Neill v. Commissioner of Valuation, [1914] 2 I.R. 447.
Commissioner of Valuation v. Trustee of Fisherwick Presbyterian Church, [1927] N.I. 76.
Shillington v. Portadown Urban District Council,[1911] 1 I.R. 247.
Commissioners of Inland Revenue v. Tayport Town Council, 20 T.C. 191.
In re Foveaux, [1895] 2 Ch. 501.
8. It was contended on behalf of the Respondents that:-
(a) the trusts declared by the said deed of trust were not charitable trusts for the advancement of religion;
(b) the said trusts were too vague and indefinite to constitute charitable trusts for the benefit of the community, or a particular class thereof;
(c) the Appellants were not trustees for charitable purposes, or a body of persons or trust established for charitable purposes only, and the rents and profits of their properties were not applicable or applied to charitable purposes only;
(d) The Appellants were not entitled to the exemptions from Income Tax claimed, and their claims should be dismissed.
Reference was made to the following cases, viz.,
Farley v. Westminster Bank, [1939] A.C. 430.
In re Thackrah, [1939] 2 All E.R. 4
Keren Kayemeth Le Jisroel, Ltd. v. Commissioners of Inland Revenue, 17 T.C. 27.
In re Christchurch Inclosure Act (1888), 38 Ch.D. 520.
In re Topham, [1938] 1 All E.R. 181.
9. We, the Commissioners who heard the claims, held that the trusts declared by the said deed were not charitable trusts, and that the Appellants were not, therefore, charitable trustees, or a body of persons or trust established for charitable purposes only.
We therefore dismissed the claims.
10. The Appellants immediately after the determination of the claims declared to us their dissatisfaction therewith as being erroneous in point of law and in due course required us to state a Case for the opinion...
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