89 / 328
Per Hanna, J.:—It is absolutely clear law that on
the receipt of the assessor's request for particulars
of income, every taxpayer is bound by Statute to
make a clear and correct return. It should be known
to everyone that, under the Statute, the taxpayer
who neglects or refuses to make such a return is
subject to a heavy penalty.
The defendant appealed to the Supreme Court on
the ground that the penalty was not applicable until
the appeals which had been lodged had been heard
and determined by the Revenue Commissioners.
In March, 1931, the Supreme Court (Kennedy, C.J.,
Fitzgibbon and Murnaghan, J.J.) allowed the appeal,
on the ground that Hanna, J. had fixed the penalty
based upon the guess-work of the assessing authority
without any material supplied by the defaulting
tax-payer, and that it was inequitable for the plaintiffs
to have brought an action for penalties before the
assessment had been finally determined by
the
Commissioners.
(Attorney-General
v.
X, 38 Tax Cases
(1961),
666.)
Aiding champerty—Solicitor only entitled to out-of-pocket
expenses.
Mr. Justice Pennycuick gave a reserved judgment
for the applicant, Radomir Pachtich, son of a former
Prime Minister of Yugoslavia, Nicola Pachtich, in
this interlocutory application for review of taxation
of the costs of a solicitor, and held that if a solicitor
was aware of the existence and the terms of a
champertous agreement in connection with litigation
his contract of retainer in respect of that litigation
was unenforceable.
His Lordship said that on February 26th, 1959,
the applicant sought to prove for a sum of £2,616,486
in the winding up of Trepca Mines Ltd. This claim
having been rejected by the liquidator, an application
was brought to the Court to have the liquidator's
order reversed. That application was dismissed on
July 12th, 1959. The applicant then persuaded a
M. Tayssou to interest himself in a possible appeal
from this order, and they entered into an agreement
in October I4th, 1959.
It was in French and
purported to have been entered into in Paris, but
it was in fact signed in London. Under this agree
ment M. Tayssou was to pay the solicitor named in
the agfeement (the respondent) for the Conduct of
the appeal. This contract was plainly objectionable
on the grounds of champerty and was accepted by
counsel for the solicitor to be so.
It was admitted
by the solicitor that he was at all material times
aware of the terms of the agreement of October I4th,
1959.
After some correspondence and discussion a deed
was executed in English on April 9th, 1960, between
M. Tayssou, as the guarantor of the expenses of the
proceedings, and the applicant. M. Tayssou agreed
not to withdraw the guarantee, and in consideration
of this the applicant undertook to hold 2 5 per cent,
of sums recovered up to £300,000 and 50 per cent,
of sums recovered in excess of £300,000 on trust
for Tayssou, and not to enter into any negotiations
with the liquidator of the company without the
consent of Tayssou.
By July 13th, 1960, the Court of Appeal discharged
the order and remitted
the application to
the
Companies Court for further adjudication of the
applicants' claim. Later the applicant changed his
solicitors and without M. Tayssou's consent came to
a compromise with the liquidator. The solicitor,
who estimated that the costs of the appeal would
exceed £4,000, obtained a charging order of £6,000
on the £70,000 compromise sum for his costs,
charges and expenses.
It was plain that the agreement of October I4th,
195 9, and the deed of April 9th, 1960, were objection
able on the ground of champerty. Champerty was
the maintenance of an action under an agreement
whereby the maintainor was to have a share in the
subject-matter and was illegal on the ground of
public policy ;
it was an indictable offence. Where
a party retained a solicitor to conduct litigation who
was ignorant of the champertous agreement, the
contract of retainer was unobjectionable.
If the
solicitor was aware of the terms of such an agreement
the contract of retainer, being an agreement to abet
the doing of a series of illegal acts, must be void and
unenforceable.
In the present case the solicitor was aware of the
terms of the agreement and the deed, and the terms
had been such as to involve him as an active
participant in carrying them out.
His Lordship
thought that unless he was constrained to decide
otherwise by authority he would come, without
hesitation, to the conclusion that the solicitor had
been retained for abetting a, series of acts which were
illegal by reason of champerty and that the contract of
retainer was on that ground void and unenforceable.
His Lordship, having examined authorities, held
that the solicitor was entitled only to his out-of-
pocket expenses.
The solicitor was granted leave to appeal.
(In re. Trepca Mines Ltd.
—
The Times,
loth February,
1962.)
Local Government—institution of proceedings by solicitors
—ratification by subsequent resolution
In January, 1961, a local authority served notice
on the defendant to abate a statutory nuisance on