The Gazette 1964/67

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 Court of Appeal—Denning M.R., Salmon and Harman L.JJ. 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