Exported Live Stock (Insurance) Board v Carroll

• Jurisdiction: Ireland
• Judgment Date: 01 January 1953
• Date: 01 January 1953
• Docket Number: [1951. 6]
• Court: Supreme Court

Supreme Court.

[1951. No. 6]

Exported Live Stock (Insurance) Board v. Carroll.

THE EXPORTED LIVE STOCK (INSURANCE) BOARD

Appellants

and

T. J. CARROLL, Inspector of Taxes

Respondent.

Revenue - Income tax - Statutory corporation - Insurance board - Statutory body performing statutory functions - Excess of receipts over expenditure - Whether taxable profit or gain - Income Tax Act, 1918 (8 & 9 Geo. 5, c. 40),Sch. D., Case I - Exported Live Stock (Insurance) Act, 1940 (No. 25 of1940), ss. 3, 4, 5, 6, 7, 8, 9, 13, 19 - Exported Live Stock (Insurance) Act,1943 (No. 2 of 1943), s. 6 - Exported Live Stock (Insurance) Act, 1950 (No. 10 of 1950), ss. 5, 7.

Case Stated under the Income Tax Act, 1918, s. 149, by the Commissioner for the Special Purposes of the Income Tax Acts for the opinion of the High Court of Justice.

The Case Stated, as amended by Maguire J., was as follows:—

"1. At a sitting by me, a Commissioner for the Special Purposes of the Income Tax Acts, held at Dublin Castle on the 1st day of April, 1949, for the purpose of hearing appeals, the Exported Live Stock (Insurance) Board (herein-after referred to as "the Board") appealed against estimated assessments under Schedule D of the Income Tax Act, 1918 (as amended and extended) in respect of profits from insurance business for the following years and in respect of the following sums:—

1940/41	£63,000
1941/42	90,000
1942/43	95,000
1943/44	21,000
1944/45	1,000
1945/46	1,000
1946/47	1,000
1947/48	1,000
1948/49	1,000

2. At the hearing of the said appeal the following facts were either admitted or proved:—

(a) The Board was established by the Exported Live Stock (Insurance) Act, 1940, and its functions and activities are governed by that Act, as amended and extended by the Exported Live Stock (Insurance) Act, 1943.

(b) As appears from the preamble to the Principal Act, its purpose was to make provision for insuring exporters of live stock from the State to Great Britain against loss or damage to such stock in course of transit and against general average contributions under the Marine Insurance Act, 1906.

(c) Sect. 3 of the Act of 1940 provided that the Board should be a body corporate with perpetual succession, established to fulfil the functions assigned to it by the Act.

(d) The membership of the Board is regulated by the provisions of ss. 4 and 5 of the said Act, as amended by s. 6 of the Act of 1943, and consists of nine persons resident in the State and engaged in the live stock trade, such members being appointed by the National Executive of the Irish Live Stock Trade—a registered friendly society.

(e) The duration of office of members of the Board, and the holding of meetings, election of a chairman, and procedure at meetings of the Board, etc., are regulated by ss. 4 to 9 of the Act of 1940, as amended by s. 6 of the Act of 1943.

(f) By s. 13 of the Act of 1940 it was provided that the Board should establish, maintain, and manage in accordance with the Act, a fund, to be known as the Exported Live Stock (Insurance) Fund (hereinafter called 'the Fund'). All moneys received by the Board which are required by the Act to be paid into it are paid into the Fund and moneys required by the Act to be paid out of it are paid out of the Fund. The Board is empowered to invest any moneys which are not immediately required for the purposes of the Act and the moneys received from dividends or interest from such investments are paid into the Fund.

(g) The Fund was duly established and is (apart from the dividends or interest mentioned in sub-paragraph (f) of this paragraph) maintained by means of the sale by the Board of levy stamps, which the owner of each animal which is delivered to a shipowner for shipment to a British landing place, or to a carrier when the export is via Northern Ireland, is required by the said Acts to purchase. The value of the levy stamp which the owner of an animal about to be exported is required to purchase from the Board is an amount equal to the 'appointed percentage' at the time of delivery of the declared value or the appointed minimum value of such animal, whichever is the greater. The 'appointed percentage' is fixed from time to time by the Minister of Agriculture after consultation with the National Executive of the Irish Live Stock Trade.

(h) The owner of an animal who has purchased levy stamps and has otherwise complied with the said Acts is entitled to be compensated out of the Fund in respect of loss or damage to such animal in transit in an amount not exceeding the declared value or appointed minimum value of such animal, whichever is the greater.

(i) The amount of the 'appointed percentage' was calculated with a view to providing and maintaining a fund which together with the annual income would be sufficient to meet all prospective claims, and between the 2nd September, 1940, and the 1st November, 1942, the 'appointed percentage' was reduced on five occasions and by five stages from 40s. per £100 to 10s. per £100. The policy of the Board has been, subject to the maintenance of a prudent reserve in the Fund, to keep the 'appointed percentage' as low as possible." [Tables showing (a) comparative figures of receipts and disbursements from the inception of the Board to the 31st March, 1948, and (b) the reductions in the "appointed percentage" between the inception of the Board and the 31st March, 1948, were annexed to, and formed part of, the Case Stated].

"3. On behalf of the Board it was contended:—

(a) That the Board was not trading, in any sense of the word, but was merely fulfilling the functions assigned to it by the Acts in obedience to s. 3 of the Act of 1940.

(b) That in insuring live stock through the medium of the Board and in accordance with the provisions of the Acts, the exporters of live stock were legally in precisely the same position as a body of persons who had voluntarily subscribed to a common fund for their mutual insurance against loss or damage in transit and that the present appeal was governed by the decision of the House of Lords in New York Life Insurance Co. v. Styles(1), which was reaffirmed by the House of Lords in Jones v. South-West Lancashire Coal Owners' Association(2).

(c) That the Board was not carrying on a trade and that it did not make a profit liable to income tax in any of the years of assessment under appeal.

4. On behalf of the Inspector of Taxes it was contended:—

(a) That the Board is a body corporate in charge of the Fund and that it carries out and fulfils the functions previously performed by ordinary commercial insurance companies and that it carries on the trade of insurance.

(b) The moneys in the Fund belong to the Board and no person has any title thereto except by way of a claim for compensation under the Act of 1940.

(c) The fact that no profits are distributed does not affect the liability to tax once the profits are earned.

(d) The Board is not a trustee for any person and there is no provision for divesting the Board of the Fund, save in payment of compensation.

5. I, the Commissioner who heard the appeal, adjourned the case for consideration. Having considered the Acts under which the Board is constituted and the authorities opened before me, I was of opinion that the Board is carrying on the business of insurance. It receives premiums through the sale of levy stamps and, in return, insures exporters of live stock against loss of, or damage to, animals in course of transit to British landing places and I was of opinion that the nature of its activities are indistinguishable from those of an ordinary commercial insurance company. The fact that the Board was set up by statute and that all its receipts must be paid into the Fund and applied only to the purposes authorised by the Act did not, in my opinion, prevent any surplus of income over expenditure from being

liable to income tax under the provisions of the Income Tax Acts. In my opinion, the contention that the business carried on between the Board and exporters of live stock constituted mutual insurance by exporters of live stock to Britain, within the principle laid down in New York Life Insurance Co. v. Styles(1) was not well founded. The Board is a body corporate and a distinct legal entity and, in my opinion, has no relationship with any individual exporter of live stock beyond the liability to pay

...