Westminster Bank Executor and Trustee Company (Channel Islands) Ltd v National Bank of Greece S.A.
| Jurisdiction | England & Wales |
| Judge | Lord Chancellor,Viscount Dilhorne,Lord Upjohn,Lord Donovan,Lord Pearson |
| Judgment Date | 11 November 1970 |
| Judgment citation (vLex) | [1970] UKHL J1111-1 |
| Date | 11 November 1970 |
| Court | House of Lords |
[1970] UKHL J1111-1
Lord Chancellor
Viscount Dilhorne
Lord Upjohn
Lord Donovan
Lord Pearson
House of Lords
After hearing Counsel, as well on Monday the 5th, as on Tuesday the 6th and Wednesday the 7th, days of October last, upon the Petition and Appeal of National Bank of Greece S.A., a foreign Corporation incorporated according to the laws of the Kingdom of Greece, whose principal place of business is at 86 Eolou Street, Cotzia Square, Athens, Greece, and who also carry on business at 48/50 St. Mary Axe in the City of London, praying, That the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 25th of June 1969, might be reviewed before Her Majesty the Queen, in Her 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 Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Westminster Bank Executor and Trustee Company (Channel Islands) Limited, 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 Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 25th day of June 1969, 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 Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
In this case the sum remaining in dispute between the parties is £39 0s. 5d. But we were assured that this was a test case and that the destiny of further and larger sums of the order of £50,000 was likely to follow the event of this Appeal.
The parties to the dispute are both corporations incorporated under laws other than those of the United Kingdom. The plaintiffs (Respondents to this Appeal) are a trust corporation incorporated according to the laws of Jersey. The defendants (Appellants) are a Greek company and were sued as being the guarantors of the principal and interest due under bonds issued in 1927 and 1930 respectively by another Greek company the National Mortgage Bank of Greece ("The Mortgage Bank").
Under the terms of these bonds it was provided on their face that:—
"The National Bank of Greece" (a second Greek Company but a different entity from the present Appellants) "hereby unconditionally guarantees the due payment of the principal monies and interest and the due performance of all the conditions of this bond". At no time did the principal debtors or the original guarantors have any place of business in the United Kingdom.
The present Appellants are sued as the universal successors under Greek legislation to the rights and obligations of the original guarantors. On the occassion of their becoming universal successors to the original guarantors, the Appellants acquired, and still possess, a branch in the United Kingdom at which they carry on business.
The present proceedings began by Writ dated the 11th July, 1963. In the event, the Appellants admitted liability and have satisfied the amounts due under the guarantee by way of principal and interest except for the above sum of £39 0s. 5d. This sum they claim to be entitled, and indeed bound, to deduct from the payment due by them as guarantors (in default of payment by the principal debtors) of the interest due under the bonds. It is agreed that this sum is correctly calculated as the amount of income tax at the appropriate standard rates applicable at the time.
Originally the Appellants based their claim to deduct income tax on sections 169 and 170 of the Income Tax Act 1952, the relevant statute in force. In the event they abandoned as untenable any reliance on section 169 and before this House based their argument solely on the provisions of section 170.
So far as relevant the provisions of section 170 are as follows:—
"(i) Where—( a) any interest of money, annuity of other annual payment charged with tax under Schedule D … is not payable or not wholly payable out of profits or gains brought into charge, the person by or through whom any payment thereof is made shall, on making the payment, deduct out of it a sum representing the amount of the tax thereon at the standard rate in force at the time of the payment".
It will be seen from the above quotation that in order to sustain their claim to deduct tax under section 170 the Appellants in the present case are obliged to show that the payment out of which the deduction is made is a payment "charged with tax under Schedule D". The charging section under Schedule D was, of course, section 122 of the Income Tax Act 1952. It was conceded that no charge to tax relevant to these proceedings could have been made under the terms of subsection (1) ( a) (i)-(iii) of the charging section. Counsel for the Appellants, however, rested his argument upon the words of section 122 (1) ( b) which is as follows:—
"(1) Tax under this Schedule shall be charged in respect of …( b) all interest of money, annuities and other annual profits or gains not charged under Schedule A, Schedule B, Schedule C or Schedule E, and not specially exempted from tax".
Read out of context these words would appear to be wide enough to charge income even of residents outside the United Kingdom even from property outside the United Kingdom. But it is clear that they cannot be so read, since such charge would be wholly outside the scope of the Income Tax Acts altogether including the scope of Schedule D.
This appears from the well known statement of Lord Herschell in the leading case of Colquhoun v. Brooks 14 A.C. 493 at page 504. Lord Herschell said:
"The Income Tax Acts themselves impose a territorial limit; either that from which the taxable income is derived must be situate in the United Kingdom, or the person whose income is to be taxed must be resident there".
The whole passage of which this brief extract is only a part was cited as definitive in Brook v. Inland Revenue Commissioners [1918] 1 K.B. 257 at 266 and 269 (Swinfen Eady and Scrutton L.JJ.) and in Whitney v. Inland Revenue Commissioners [1926] A.C. 37 at 41 (Sir D. Hogg K.C. arguendo) and page 54 and 55 per Lord Wrenbury. See also per Lord Phillimore at page 61.
Before this House the Appellants claimed to make their deduction on the ground that tax was to be charged under Schedule D Case III (see Income Tax Act 1952 section 123) and conceded that if the income arose under Case IV ("income arising from securities out of the United Kingdom") no deduction...
To continue reading
Request your trial
-
Murtagh (Inspector of Taxes) v Rusk
...1967 SCHED 6 ART 1 INCOME TAX ACT 1967 S76(2) WESTMINSTER BANK EXECUTOR & TRUSTEE COMPANY (CHANNEL ISLANDS) LTD v NATIONAL BANK OF GREECE 1971 AC 945 COLQUHOUN v BROOKS 21 QDB 52 1889 14 APP CAS 493 REX v WILLIAMS 1942 AC 541 FINANCE ACT 1894, IN RE & DEANE 1936 IR 556 CMRS OF STAMPS v HOP......
-
Murphy v Ingram (HM Inspector of Taxes)
...Hailsham of St. Marylebone L.C. inNational Bank of Greece S.A. v. Westminster Bank Executor and Trustee Co. (Channel Islands) Ltd. [1970] 1 W.L.R. 1400. Now in Leitch v. Emmott the provision in question was in a proviso to rule 16 of the General Rules applicable to all Schedules of the Inco......
- Socony Mobil Oil Company Inc. v West of England Ship Owners Mutual Insurance Association (London) Ltd (No 2) (Padre Island)
-
Dawson v Commissioners of Inland Revenue
...approved by Lord Hailsham (with whose speech all the other members of the House agreed) in. Westminster Bank v. National Bank of Greece, (1971) AC 945. The reason why tax legislation is in general territorially limited can be attributed, as it was by Lord Esher M.R. in Colquhoun v. Brooks, ......
-
Weekly Tax Update - 30 November 2015
...having regard to the 'Greek Bank case' (Westminster Bank Executor and Trustee Co (Channel Islands) Ltd v National Bank of Greece SA [1971] AC 945; (1970) 46 TC 472), the single previous binding case on this; the absence of security is a neutral factor - the fact that the agreements specifie......
-
Action
...in Nigeria, but in Switzerland. See National Bank of Greece S.A. v. Westminister Bank Executor & Trustee Co. (Channel Islands) Ltd. (1971) A.C. 945; (1971) 1 All E.R. 233) in the Times Law Report, House of Lords of 11th November, 1970. That being so, on that ground we must decide that the c......
-
Preliminary sections
...National Bank of Greece S.A. v. Westminister Bank Executor & Trustee Co. (Channel Islands) Ltd. (1971) A.C. 945; (1971) 1 All E.R. 233……….................................................…………..246 National Bank of Nig Ltd v. Bello (1969) N.C.L.R 210………………..................................745......
-
Table of Cases
...National Bank of Greece S.A. v. Westminister Bank Executor & Trustee Co. (Channel Islands) Ltd. (1971) A.C. 945; (1971) 1 All E.R. 233……….................................................…………..246 National Bank of Nig Ltd v. Bello (1969) N.C.L.R 210………………..................................745......
-
Table of Cases
...National Bank of Greece S.A. v. Westminster Bank Executor & Trustee Co. (Channel Islands) Ltd. (1971) A.C. 945; (1971) 1 All E.R. 23……...............................................................………885 National Electric Power Authority v. Ango (2001) 15 N.W.L.R. (Pt. 737) 627……….....….39,......