Attorney-General v. Till [1909] UKHL 601
(Before the Lord Chancellor (Loreburn) , Lords Atkinson , Gorell , and Shaw .)
47 SLR 601Attorney-General v. Till.Subject_ Revenue — Income Tax — True and Correct Statement of Profits — Negligent Delivering of False Statement — Penalty — Income Tax Act 1842 (5 and 6 Vict. cap. 35), secs. 52, 55. Facts:Delivery of an incorrect statement of profits and gains under the Income Tax Act 1842, sec. 52, although without fraud, renders the deliverer liable to the penalty for non-deliverance of a true and correct statement under sec. 55, if he has made the statement negligently and not to the best of his knowledge and belief.The respondent had delivered an incorrect statement of profits under the Income Tax Act 1842. Under the circumstances stated in the opinion of Lord Gorell, he was found liable by Lord Alverstone , C.J., and a jury for the penalty imposed by section 55 for non-delivery of a correct statement. This judgment was reversed by the Court of Appeal ( Cozens-Hardy , M.R., Moulton and Buckley , L.JJ.).Their Lordships gave considered judgment as follows:—
Lord Chancellor (Loreburn) —I hold that this appeal should be allowed, and in view of the exhaustive criticisms to which your Lordships have subjected these somewhat obscure sections I will only say a few words. I attach great importance to the rule that unless penalties are imposed in clear terms they are not enforceable. Also, where various interpretations of a section are admissible, it is a strong reason against adopting a particular interpretation if it shall appear that the result would be unreasonable or oppressive. After listening attentively to the argument and considering the 55th section both by itself and in connection with other parts of this and other Acts to which we were referred, I have come to the conclusion that neither canon is violated by the contention of the Crown. When the 55th section enacts “that if any person who ought by this Act to deliver any list, declaration, or statement as aforesaid, shall refuse or neglect so to do within the time limited in such notice,” he shall be liable to a penalty, surely it means that he must either be liable to the penalty or must do what by the Act he ought to do as to the delivery of the list, declaration, or statement. What he ought to do is described in the preceding sections, and among them is section 52, which requires him to deliver “a true and correct statement in writing.” If he does not deliver a true and correct statement, or if he does not deliver any statement at all, he in either case equally fails to do what he ought to do under the Act. I confess that the distinction sought to be drawn between the use of the words “any statement” and the possible but not adopted use of the words “such statement” seems to me to take more account of grammar than of substance. If the latter words had been used the meaning of the section would, it is true, have been incontestable. As it is I think that it does not offend against grammar and is sufficiently clear and would have been so regarded but for the fact that with a severe precision in the use of language the thought underlying the words might have been still more plainly expressed. Lord Gorell has adduced additional reasons from the other contents of this, and from the contents of other sections, fortifying this conclusion, and I will not dwell upon them. They seem to me very cogent. Mr Till, however, argued that upon this view a very hard penalty may fall upon a person who without any fault on his own part makes a statement incorrect even in a small particular; and he urges that it is no answer to say that the Crown would never use such a power. I entirely agree with him that such an answer could not prevail. But I do not think that it is true that an innocent mistake exposes a man toPage: 602 ↓
Lord Atkinson —I have had the advantage of reading the judgment which Lord Gorell is about to deliver, and I concur in the conclusion at which he has arrived, and in the reasoning by which he has arrived at it. Like him I think that the appeal should be allowed, but I do not think that the contention of the Crown, as I understood it, is well founded, namely, that any taxpayer who sends in a statement of the gains and profits earned by him in his trade or business, as required by section 52 of the Income Tax Act 1842, which statement is erroneous in fact, necessarily becomes liable to the penalties imposed by section 55 of that statute. With all due respect to the Court of Appeal, it would appear to me that, finding themselves confronted with this contention, they allowed themselves to be too much influenced by the quite natural repugnance which one must necessarily feel against adopting a construction of these enactments which would render the subject liable to those very heavy penalties if, while honestly endeavouring to furnish a correct statement according to his lights, he made some mistake, or was guilty of some error in estimating what his gains and profits amounted to. I do not think that the provisions of the statute are as unjust and oppressive as that. It is only necessary to read the last six lines of the first part or paragraph of section 52 to see that the amount of the gains and profits to be stated is an estimated amount, and the estimate is to be made for the period and according to the rules contained in the respective schedules to the Act. Many persons might find a difficulty in applying those rules, and it is scarcely conceivable that the Legislature should have intended that a person who estimated the amount of his gains and profits to the best of his judgment and belief, according to those rules, should be liable to the penalties imposed by section 55 if he should not apply them with perfect accuracy and his estimate should consequently be incorrect. That this is so is shown by reading section 190. That section provides that “The schedule marked G, with the rules and directions therein contained, shall, in making the returns of the amount of annual value or profits upon which duty is chargeable under the Act so far as the same are applicable to each person,” be observed by the persons making them. One of the rules applicable to the declaration of a person returning a statement of profits under Schedule D is rule 15. It provides that the person shall declare the truth of the statement, and that the profits are fully stated upon every description of property appertaining to the declarant “estimated to the best of his judgment and belief according to the directions and rules of the Act.” If in making this estimate he applies those rules and directions according to the best of his judgment or belief he is not liable to these penalties though he may perchance have fallen into error. I do not think that there is anything in section 129 inconsistent with this construction of section 190. If a person discovers that the statement which he has lodged, though framed according to the best of his judgment and belief at the time when he made it, is wrong in fact, he might be guilty of a fraud upon the Revenue if he allowed himself to be assessed on an estimate which he subsequently discovered to be erroneous. Accordingly section 129 provides that when he discovers any defect or wrong statement in the statement which he has delivered he may correct it. No doubt the words “and such person shall not afterwards be subject to any proceedings by reason of such omission or wrong statement” would seem to suggest that he would be liable if he had made a statement not true in fact, though true and accurate according to his belief; but I do not think that this is enough to override the express words of section 190 and the rules. In this case the question left to the jury was not framed precisely as it should have been.Page: 603 ↓
Lord Gorell —The appeal in this case is from a judgment of the Court of Appeal, dated the 17th February 1909, allowing an appeal by the respondent from a judgment of Lord Alverstone, C.J., dated the 10th July 1908, and ordering judgment to be entered for the respondent, with costs of the appeal to the Court of Appeal and of the trial in the King's Bench Division. The judgment of the Lord Chief-Justice was for the present appellant for £50 and costs upon an information filed against the respondent under the Income Tax Act 1842. The case raises a point of law upon the construction of section 55 of the Act, and it is unnecessary for its determination to set out the facts except so far as to state that in April 1907 proceedings were instituted by the Attorney-General against the respondent for not sending in a correct return of his profits and gains as a solicitor for assessment of income tax, under Schedule D of the Act of 1842, which is kept in force for the year of assessment in the case by the Finance Act 1895. Section 6, sub-section 2, of the latter Act puts in force all such enactments relating to income tax as were in force on the 5th April 1895, including the Act of 1842. The return in question was made by the respondent on the 20th May 1905, and was less by a sum of £200 than it should have been, under circumstances which have been detailed in the evidence. It was admitted at the trial that the return was incorrect. There was no suggestion that it was fraudulently made, but the jury found that there was neglect on the part of the respondent. The Lord Chief-Justice followed the decision of the Scottish Court in the case of Lord Advocate v. Sawers ( 35 S.L.R., 190; 3 Tax. Cas., 617), but the Court of Appeal differed from the conclusion arrived at in that case. The question turns mainly on sections 52 and 55 of the Act of 1842, but as leading up to those sections it will be convenient to refer to a few of the earlier sections, Under section 47 the assessors are to fix general notices on church doors, &c., requiring all persons who are by the Act required to make out and deliver any list, declaration, or statement, to make out and deliver the same as directed within a limited time. Under section 48 the assessors have to deliver to or at the houses of persons chargeable with duties notices requiring them to prepare and deliver as directed all such lists, declarations, or statements as they are respectively required to deliver by the Act within a limited time, and in case of refusal or neglect to comply with the requirement “then the Commissioners shall forthwith issue a summons under their hands to such person making default as aforesaid in order that the penalty for such refusal or neglect may be duly levied; and the said Commissioners shall, moreover, proceed to assess or cause to be assessed every person making such default in manner herein directed.” Section 49 merely prescribes the place of delivery. Section 50 requires every person when required as prescribed to prepare and deliver a list in writing containing “to the best of his information and belief” the names of lodgers, inmates, and others, &c., provided that no person shall be liable to the penalties thereinafter mentioned for any omission of the name or residence of any person in his service or employ and not resident in his dwelling-house, if it shall appear to the Commissioners that such person is entitled to be exempted from duty. Section 51 requires every person acting for another to prepare and deliver a list in writing in such form as the Act requires, signed by him, containing “a true and correct statement” of the particulars mentioned in the section, in order that the duty may be duly charged. Section 52 provides that every person chargeable under the Act shall when required so to do, whether by any general or particular notice given in pursuance of the Act (that is, under sections 47 or 48), within the period to be mentioned in such notice as aforesaid, “prepare and deliver to the person appointed to receive the same, and to whom the same ought to be delivered, a true and correct statement in writing in such form as the Act requires, and signed by the person delivering the same, containing … the amount of the profits or gains arising to such person from all and every the sources chargeable under the Act according to the respective schedules thereof, which amount shall be estimated for the period and according to the respective rules contained in the respective schedules of the Act, and to the statement is to be added a declaration that the same is estimated on all the sources contained in the said several schedules describing the same after setting against or deducting from such profits and gains such sums, and no other, as are allowed by the Act, and every such statement is to be made exclusive of the profits and gains accrued or accruing from interest of money or other annual payment arising out of property of any other person for which such other person ought to be charged by virtue of this Act.” It may here be noticed that by section 190, Schedule G and the rules therein are to be observed in executing the Act, and that rule 15 requires a general declaration by each person returning a statement of profits under, inter alia ,Page: 604 ↓
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Lord Shaw —The question in issue in this appeal is whether a person who negligently delivers an incorrect return of his profits and gains to the Inland Revenue authorities renders himself liable to the penalty of £50 imposed by section 55 of the Income Tax Act 1842. That Act has been re-enacted by Finance Acts of succeeding years. The actual statute under which the particular instance of its application is in question now was the Finance Act 1905, applying, of course, as it did to the statement by the respondent of his income for assessment for the year 1905–6 and returned to the Inland Revenue by him on the 20th May 1905. By the information filed by the Attorney-General the penalty before mentioned was claimed. After certain proceedings, which need not be referred to, in the course of which a special jury found that the return had been made negligently, Lord Alverstone, C.J., directed judgment to be entered for the Crown. In the Scotch case of Lord Advocate v. Sawers , 35 S.L.R. 190, 3 Tax Cas. 617, the same point was also settled favourably to the Crown by a decision of the First Division of the Court of Session. The Lords Justices reversed the judgment of the Lord Chief-Justice, differed from the decision of the Court of Session, and entered judgment for the defendant. This difference of judicial opinion in the two kingdoms on the construction of an imperial statute adds importance to the question. The difference was fully before the minds of the Lords Justices, and I have thought it due and respectful to them to consider with much care the reasons upon which they proceeded. These are compendiously and conveniently formulated in a serious of propositions, six in number, by Cozens-Hardy, M.R., to which I shall afterwards refer seriatim . The case has been argued before your Lordships upon the footing that while neglect has thus been affirmed the respondent was not guilty of any fraudulent conduct. I think that the admission to that effect by the Crown was entirely proper. If the penalty is due it is agreed that it is exigible under section 55 alone. That section is in the following terms:—[ His Lordship read the section ut supra ] — It is agreed, of course, that the respondent falls within the category of “any person who ought by this Act to deliver any list, declaration, or statement, as aforesaid;” (2) that he is not in a position as trustee, agent, or receiver, to escape liability for the penalty, or obtain further time to cure “an imperfect list, declaration, or statement,” or to deliver a list, &c., “as perfect as the nature of the case will enable him to prepare and deliver;” (3) that he has not been assessed in treble the duty; and (4) that the forfeiture of £50 would accordingly apply if the list, declaration, or statement required by statute was not timeously returned. The respondent maintained, however, that “any list, declaration, or statement as aforesaid” means a list, declaration, or statement of any kind, true or untrue, correct or incorrect. The Crown maintained that the words “list, declaration, or statement as aforesaid” refer to section 52, and provide for a true and correct statement in writing. That is the whole point of the case, apparently very simple. Other sections of the Act were relied on in the Court below and in the arguments before this House. The chief of these are three in number. By sec. 48 it is provided that assessors shall deliver at the residences of persons chargeablePage: 607 ↓
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Judgment appealed from reversed.Counsel for Appellant—Solicitor-General for England ( Sir S. Evans, K.C.)— W. Finlay. Agent—Solicitor of Inland Revenue.Counsel for Respondent— Party. Agents — Lovell, Son, & Pitfield, Solicitors.