Seymour v Reed
[1927] A.C. 554(Judgment by: Viscount Cave LC (including background))
Between: Seymour - Appellant
And: Reed - Respondnent
Judges:
Viscount Cave LCViscount Dunedin
Lord Atkinson
Lord Phillimore
Lord Carson
Subject References:
REVENUE
INCOME TAX
Profit from Employment
Proceeds of professional Cricketer's Benefit Match
Legislative References:
Income Tax Act, 1918 (8 & 9 Geo. 5, c. 40) - Sch. E, r. 1
Case References:
Herbert v. McQuade distinguished - [1902] 2 K. B. 631
Blakiston v. Cooper distinguished - [1909] A.C. 104
Judgment date: 24 May 1927
Judgment by:
Viscount Cave LC (including background)
A professional cricketer in the service of the Kent County Cricket Club might, by the rules of the club, be grunted a benefit, but this was on the express understanding that he allowed the proceeds to be invested in the name of trustees of the club during the pleasure of the committee. The invested sum was always, however, eventually handed over to him when his career as a cricketer was over, or when he found an investment of which the trustees approved.
The appellant, a professional cricketer in the employment of the club, was granted a benefit, the proceeds from which, together with subscriptions, after being held by the trustees on certain securities, were eventually handed to the appellant and applied by him in the purchase of a farm. The appellant having been assessed under Sch. E, r. 1, of the Income Tax Act, 1918, on so much of the fund as represented the gate money at the match:-
Held (by Viscount Cave L.C., Viscount Dunedin, Lord Phillimore, and Lord Carson; Lord Atkinson dissenting), that the appellant was not assessable in respect of this sum, inasmuch as it was a personal gift, and not a profit or perquisite arising from his employment within Sch. E, r. 1.
Herbert v. McQuade [1902] 2 K. B. 631 and Blakiston v. Cooper [1909] A.C. 104 distinguished.
Decision of the Court of Appeal [1927] 1 K. B. 90 reversed and decision of Rowlatt J. [1926] 1 K. B. 588 restored.
Appeal from an order of the Court of Appeal reversing an order of Rowlatt J. upon a case stated by the General Commissioners of the Income Tax Acts for the division of Lower South Aylesford, Kent. The sole question for determination was whether the appellant was assessable under Sch. E, r. 1, of the Income Tax Act, 1918, in respect of a sum of 939l. 16s., being the net proceeds derived from a benefit match played at Canterbury in the year 1920 under the direction of the Kent County Cricket Club for the benefit of the appellant.
The Commissioners were of opinion that this sum was a donation or gift and was not an emolument or profit arising from the appellant's employment, and was consequently not assessable to income tax.
Rowlatt J. affirmed the determination of the Commissioners, but his decision was reversed by the Court of Appeal by a majority (Lord Hanworth M.R. and Warrington L.J.; Sargant L.J. dissenting).
The facts are fully stated in the report of the case before the Court of Appeal.
1927. May 3, 5. Sir John Simon K.C. (with him W. T. Monckton) for the appellant. This sum was received by the appellant as a token of appreciation of his exceptional personal merit and qualifications as a cricketer and did not accrue to him by virtue of his employment by the Kent County Cricket Club. It was not a perquisite or profit within the meaning of Sch. E, r. 1, but was a personal gift given on a single occasion on account of his special qualities as a cricketer. No valid distinction can be drawn between this gate money and the subscriptions, which the Crown does not seek to assess. Both are in substance personal gifts to the appellant from the public.
This was a question of fact for the Commissioners and there was evidence to support their conclusion. Herbert v. McQuade [F1] is distinguishable. In that case the respondent, a beneficed clergyman, received for many years a grant from a fund having for its object the augmentation of benefices below a certain value, and it was held on the facts that the grant was not a gift personal to himself, but accrued to him by virtue of his office of incumbent - that it was a gift to the benefice and not to the person - and that consequently it was a perquisite or profit accruing by reason of his office.
The true test is, as Collins M.R. stated in that case, whether the gift is a personal gift for exceptional merit or is a gift to the office rather than to the holder. In the latter case it is conceded that the fact that the payment is voluntary does not affect the matter. In Blakiston v. Cooper [F2] (the Easter offering case) the appellant was made liable to income tax because the money was an annual gift to the incumbent in respect of his services as incumbent. But Lord Loreburn there said:
"Had it been a gift of an exceptional kind, such as a testimonial, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present."
In Turner v. Cuxon [F3] a grant made from the Curates' Augmentation Fund to a curate "in recognition of faithful service for more than fifteen years," was held by Lord Coleridge to be given to him, not as being curate of the parish, but as a donation honoris causa and consequently not to be assessable to income tax. That case was recognized as an authority by Collins M.R. in Herbert v. McQuade. [F4] Poynting v. Faulkner [F5] was a mere case of an augmentation of stipend and not a personal gift. But in Turton v. Cooper [F6] (an Easter offering case) it was decided on the facts that the offerings were not given as an additional remuneration, but on account of personal poverty and were therefore not assessable. Cowan v. Seymour [F7] also supports the appellant's case.
Sir Thomas Inskip S.-G. and Reginald Hills (Sir Douglas Hogg A.-G. with them) for the respondent. This sum was part of the profits or emoluments accruing to the appellant from his office or employment as a professional cricketer in the employment of the Kent County Cricket Club and comes within the words of r. 1 of Sch. E, "all salaries, fees, wages, perquisities or profits therefrom," i.e., from the employment. It was paid to the appellant while in the employment of the club by his employers in pursuance of their regulations for the staff and of their practice of arranging benefit cricket matches for the members of the staff.
A professional cricketer, on entering the employment of the club, knows that he has an opportunity of adding to his ordinary emoluments in the shape of the proceeds of a benefit match. This money really came to the appellant from his employers and is distinguishable on this ground from the subscriptions which came from the outside public. The suggestion that unless the payment can be attributed wholly to the office - if in a greater or less degree, personal considerations enter into the matter - it is not a sum received by virtue of the office is met by Blakiston v. Cooper, [F8] where personal considerations materially affected the amount of the gift. There may be a casual payment or an annually recurring payment and the payment may be by the employer or by outside persons.
In the case of an annually recurring payment it is unnecessary to consider whether it was provided by the employer or not, but in the case of a unique payment the fact that it was provided by the employer is an important element in considering whether it is liable to income tax. In Cowan v. Seymour, [F9] which was a case of a single payment, Lord Sterndale M.R., in arriving at the conclusion that the payment was a personal gift, laid great stress on the fact that the money did not come from the employer. The fact that this sum has been invested does not affect its liability to tax. This payment was given to the appellant as a member of the staff as a reward for his services; the capacity in which he received the money was that of a servant of the club.
[They also referred to Mudd v. Collins; [F10] M'Donald v. Shand; [F11] and Martin v. Lowry. [F12] ]
Sir John Simon K.C. replied.
The House took time for consideration.
1927. May 24. Viscount Cave L.C. -
My Lords, in this case James Seymour, a professional cricketer, appeals against a judgment of the Court of Appeal in England by which, differing from the Commissioners for the General Purposes of Income Tax and from Rowlatt J., they held the appellant liable for income tax in respect of the net proceeds of a benefit cricket match.
In the year 1920 the appellant, who had been for many years in the employment of the Kent County Cricket Club at a salary and had played fine cricket, was allowed by the club to have a benefit match, the match selected being the Kent v. Hampshire match played in the Canterbury week. The club's regulations for the staff contained the following provision:
"Benefits and Tours.
"The committee reserve to themselves an absolute and unfettered discretion as regards benefit matches, the collection of subscriptions in connection with such matches, and dealing with the net proceeds of such matches in any way they may think desirable in the interest of the beneficiaire [sic]. The committee also reserve the like discretion in regard to granting permission to any player to go on winter tour and in regard to dealing with remuneration receivable by him on account of such tour."
The gate money received at the match in question, less some expenses, amounted to 939l. 16s. 11d., and this sum, together with other sums obtained by public subscription, was invested by the direction of the committee in certain securities, of which the income (less tax) for the years 1921, 1922 and 1923, was paid to the appellant. In the year 1923 the securities were realized and the proceeds, amounting (with the addition of certain other moneys) to 1914l. 14s. 5d., were paid to the appellant with a view to their being applied, with the approval of the committee, to the purchase of a farm. Thereupon the respondent, the inspector of taxes, made an assessment upon the appellant under Sch. E of the Income Tax Act, 1918, in the sum of 939l. 16s., being the net gate money received from the benefit match, for the tax year 1920-21, and the question for your Lordships to determine is whether this assessment was valid.
In considering this question, I will assume that the appellant was assessable (if at all) under Sch. E of the Act. It would appear that in the year 1920-21 any assessment upon him must have been made, not under Sch. E, but under Sch. D (see Great Western Ry. Co. v. Bater [F13] ); but the law was altered by the Finance Act, 1922, and it has not been disputed that the assessment in the year 1923, if allowable at all, was properly made under Sch. E.
The question, therefore, is whether the sum of 939l. 16s. fell within the description, contained in r. 1 of Sch. E, of "salaries, fees, wages, perquisites or profits whatsoever therefrom" (i.e., from an office or employment of profit) "for the year of assessment," so as to be liable to income tax under that Schedule. These words and the corresponding expressions contained in the earlier statutes (which were not materially different) have been the subject of judicial interpretation in cases which have been cited to your Lordships; and it must now (I think) be taken as settled that they include all payments made to the holder of an office or employment as such, that is to say, by way of remuneration for his services, even though such payments may be voluntary, but that they do not include a mere gift or present (such as a testimonial) which is made to him on personal grounds and not by way of payment for his services. The question to be answered is, as Rowlatt J. put it: "Is it in the end a personal gift or is it remuneration?" If the latter, it is subject to the tax; if the former, it is not.
Applying this test, I do not doubt that in the present case the net proceeds of the benefit match should be regarded as a personal gift and not as income from the appellant's employment. The terms of his employment did not entitle him to a benefit, though they provided that if a benefit were granted the committee of the club should have a voice in the application of the proceeds. A benefit is not usually given early in a cricketer's career, but rather towards its close, and in order to provide an endowment for him on retirement; and, except in a very special case, it is not granted more than once. Its purpose is not to encourage the cricketer to further exertions, but to express the gratitude of his employers and of the cricket-loving public for what he has already done and their appreciation of his personal qualities. It is usually associated, as in this case, with a public subscription; and, just as those subscriptions, which are the spontaneous gift of members of the public, are plainly not income or taxable as such, so the gate moneys taken at the benefit match, which may be regarded as the contribution of the club to the subscription list, are (I think) in the same category.
If the benefit had taken place after Seymour's retirement, no one would have sought to tax the proceeds as income; and the circumstance that it was given before but in contemplation of retirement does not alter its quality. The whole sum - gate money and subscriptions alike - is a testimonial and not a perquisite. In the end - that is to say, when all the facts have been considered - it is not remuneration for services, but a personal gift.
I am of opinion that this appeal should succeed, and that the order of Rowlatt J. should be restored with costs here and below, and I move your Lordships accordingly.