The Gazette 1964/67

69 / 364

attempt an answer. Minutes of meetings and agenda
and other documents prepared for trustees' meetings
were not, in the absence of an action impugning the
trustees' good faith, documents which a beneficiary
could claim the right to inspect, for if she did she
would at once know their motives and reasons which
they were not bound to disclose ; further, communi
cations between individual trustees and appointors,
or letters to or from a beneficiary, ought not to be
open to inspection by another beneficiary, though
general letters of the trust solicitors, as, for instance,
an aide-memoire by solicitors summarising the state of
appointment would seem to be trust documents in
which the beneficiary had a proprietary right and
therefore a right to inspect. But the judge's order in
this case went too far and the appeal should be
allowed. A form of declaration which did not cut
down the beneficiaries' rights too much should be
minuted and considered by the court at a later date.
(Solicitors' Journal, Friday, November i3th, 1964
(Vol. 108, p. 896).
"Short interest" taxed
The House of Lords allowed this appeal by the
Inland Revenue Commissioners from a decision of the
Court of Appeal in which the Court of Appeal held
in favour of a taxpayer, Mr. Philip Frere, solicitor,
that interest on short-term loans for less than a year
was deductible under the provisions of the Income
Tax Acts in computing the taxpayer's total income
for surtax purposes.
Viscount Radcliffe said that the taxpayer on two
occasions borrowed large sums of money for short
periods. On the first occasion he borrowed £50,000
which he repaid some eight months later with
£2,210 193. zd. interest. On the second occasion he
borrowed £40,000 for one month, the interest for
which was £186 25. 9d. Those loans were made to
the taxpayer by an unlimited company which did not
satisfy the description "banker". The taxpayer's
claim was that in computing his total income for
assessment to surtax the amount of interest he paid on
those loans ought to be deducted from the assessable
figure. In principle, income assessed to tax was gross
income reduced for the purposes of assessment by
such deductions only as were actually specified in the
tax code or were granted by way of reliefs. It followed
that in principle it was irrelevant that some part of a
person's taxable income had been expended on what
would normally be regarded as his own income
account, in paying rent, wages, mortgage interest,
rates, insurance, or that the payments he made for
such purposes would themselves constitute assessable
income in the recipient's hands. The payment of
interest whether long or short, would be no more
than an "application" of his income.
The taxpayer's argument was that all payments
were deductible in arriving at the payer's total
income which represented "pure income" in the
hands of the payee. Apart from the argument founded
on the wording of Schedule G to the Act of 1842, his
Lordship could find no trace of an intention to treat
part of a person's income as not being taxable
merely because he used it to make payments to
another person which were themselves taxable
directly as part of the income of the recipient. Lord
Morris of Borth-y-Test, Lord Guest, Lord Pearce
and Lord Upjohn agreed.
(Inland Revenue Commissioners v. Frere, The
Times, Friday, November 2oth, 1964.)
Solicitors—negligence
The plaintiffs instructed the defendants, a firm of
solicitors, to act for them in purchasing a freehold
dwelling-house and an adjoining vacant plot. Before
exchange of contracts the plaintiffs instructed the
defendants to exchange contracts only if satisfied that
there was no building restriction on the vacant plot.
There was, in fact, a restriction against building on
the plot, but, owing to a mistake arising from
different colours on different plans, the defendants
exchanged contracts on the erroneous view that the
restrictions did not affect the vacant plot. In the
circumstances the defendants were liable for negli
gence, but the market value oftheproperty purchased,
that is, subject to the restriction, was equal to the
price paid by the plaintiffs. HELD, that the measure of
damages was the difference between the cost of
purchase and the market value at the time of the sale
of the property as it was, that is with the vacant
plot subject to the restriction. Accordingly, since the
price paid by the plaintiffs was equivalent to the
market value of the property as it was at the time of
the purchase, the defendants' liability was nil for the
plaintiffs had suffered no loss.
(Ford v. White & Co. 1964. 235 L.T. 345,
Pennycuick J. 6 C.L., p. 431.)
Privilege
The Cour ppeal—Denning M.R., Salmon
and Harman dealt with the question of Crown
privilege and in so doing have narrowed its scope.
The Departmental decision that the production of a
certain class of documents would be injurious to the
public interest was supported by an affidavit of a
Minister of State claiming privilege. The affidavit
was considered defective and the sufficiency of a
subsequent affidavit was questioned. The question
was also raised as to whether a claim to Crown
privilege is a matter of substantive law in view of the
Rule of the Supreme Court relating to production of
documents when the statement was made that