537 / 736
TAX LAW
Building Contract Unconditional Subject to No
Tax
Mr. Justice Goff said that the taxpayers argued
that a contract could not be conditional in itself
and that the contract in question was absolute,
subject to no condition preventing it from arising
or placing it in abeyance. Alternatively, they said
that one must distinguish a contingent condition
operating outside the contract and not under the
control of the parties from a promissory note and
that as the condition was promissory it could not
on any showing make the contract conditional.
In His Lordship's judgment, a contract could
not properly be regarded as conditional where
there was no condition which was a prerequisite
to the formation of any binding agreement as in
"subject to contract cases or those kept in abey
ance" ;
per Lord
Justice
Jenkins
in
Parway
Estates Ltd. v I.R.C.
(37 A.T.C. 166).
If he was wrong the further question arose
whether, the term or condition being promissory,
the contract was in any event not conditional. It
was impossible to hold that a contract to acquire
an asset subject to no term or condition save the
due performance of one's own obligations could
properly be described as a conditional contract to
acquire it. The appeal would be dismissed with
costs.
[Eastham (Inspector of Taxes) v Leigh, Lon
don, and Provincial Properties Ltd. (in voluntary
liquidation), before Mr. Justice Goff; Chancery
Division; 28 July 1970.]
TAX LAW
Papers win Tax Relief on Hospitality Expenses
Money spent by newspaper publishers in giving
meals and drinks to contributors, informants and
other contacts who provided news and features
was part of the cost of providing the newspapers.
Mr. Justice Megarry ruled in the High Court
yesterday.
In 1965 Associated Newspapers, who publish the
Daily Mail, Daily Sketch
and
Evening News,
spent
£67,143 in entertainment expenses, and claimed
tax relief on that sum in computing their taxable
profits. They won an appeal to the Special Com
missioners of Income Tax, who determined their
net loss at £701.418 for that year. If tax relief
had been allowed the loss would have been only
£634,275.
The Commissioners had decided that the expen
ses were deductible because they were incurred in
the provision by any person of anything which it
is his trade to provide and which is provided by
him in the ordinary course of that trade for pay
ment.
"Anything"
in
that context
they held
included newspapers.
The Crown appealed against that decision,
arguing that "Anything" was confined to the enter
tainment actually provided by that expenditure.
The judge rejected that contention. "Experience
has shown," he said, in a reserved judgment, "that
the provision of hospitality, in the form of meals
or drinks or both, assists in obtaining information
and encourages existing or potential contributors
to provide, or continue to provide, material."
Such a decision was not "driving a coach and
four" through the Act, the judge said. If Parlia
ment had meant to confine the saving clause in
the way suggested by the Crown, more specific
language would have been used.
[Regina v Associated Newspapers; Megarry J.;
29 July 1970.]
SET-OFF
When Banks can Set-off in Liquidation
Where there is an existing agreement between
banker and customer to keep separate banking
accounts and the customer becomes bankrupt or
goes into liquidation during the currency of the
agreement, the banker has no "lien" or right to
combine the accounts and set off debit and credit
unless he can show that the agreement had that
degree of mutality as to bring it within the set-off
provisions of Section 31 of the Bankruptcy Act,
1914.
The Court, Lord Justice Buckley dissenting, on
the applicability of Section 31, so held in allowing
an appeal by the liquidator of Halesowen Press-
work & Assemblies Ltd. from Mr. Justice Roskill,
who had held in favour of Westminster Bank that
the bank was entitled to set-off a credit balance
of £8,600 in the company's No. 2 account at the
bank against a debit balance of £11,338 in its
No. 1 account, (see Section 25 of the Bankruptcy
(Ireland) Act, 1857.)
The question was whether, if a customer had
one account in credit and another account in
debit, the banker had a right to combine the two
accounts, set off the debit against the credit, and
81