Green and Co (Cork) Ltd v The Revenue Commissioners
| Judge | Sullivan P. |
| Judgment Date | 19 May 1926 |
| Court | High Court |
The revenue commissioners having excluded such cargoes from the company’s claim, an appeal was taken to the special commissioners who were of opinion that “trading stock in hand” in Pt II rule 1 meant trading stock in possession of the claimant, and that none of the goods in such cargoes had come into the possession of the company on 31 August 1921, or alternatively they were of opinion that the property in the goods had not been passed unconditionally to the company before that date.
Held, on appeal, the Supreme Court confirming the decision of the High Court, delivered judgment in favour of the Revenue.
FA 1921, Sch 2 Pt II, rule 1, ITA 1967 s 57, FA 1975 s 31.
Elliott v Elliott 9 M & W 23.
Re Richardson 50 LJ Ch 488.
Biddell Brothers v Clemens Horst Company [1911] 1 KB 934.
The Parchim [1918] AC 157.
Shepherd v Harrison LR 5 HL 116.
Nevile Reid & Company v Commissioners of Inland Revenue 12 TC 545.
Case stated under FA 1915 (No 2) s 45(5), FA 1921 Sch 2 Pt IV rule 9, and the Taxes Management Act 1880 s 59, by the Commissioners for the special purposes of the Income Tax Acts for the opinion of the High Court of Justice
1. At meetings of the Commissioners for the special purposes of the Income Tax Acts held on 22 February 1924, at Cork and on 12 June 1924, at Dublin for the purpose of hearing appeals, Messrs J W Green & Company (Cork) Limited (hereinafter referred to as “the appellants”) appealed against the determination of the revenue commissioners that the goods comprised in certain contracts were not trading stock in hand on 31 August 1921, within the meaning of FA 1921 Sch 2 Pt II rule 1, and must therefore be excluded from the appellants’ claim for allowance under that part of the second Schedule to the Act.
2. The grounds of the appeal were:
that the goods comprised in the said contracts had in pursuance of the said contracts legally become the property of the appellants prior to 31 August 1921,
that the said goods had in accordance with the usages and customs of the corn trade become the property of the appellants prior to 31 August 1921 and that such portions of the said goods as had not been disposed of until after 31 August 1921, were trading stock in hand on 31 August 1921, within the meaning of FA 1921 Sch 2 Pt II rule 1.
3. At the hearing of the appeal, counsel on behalf of the appellants intimated that it was not proposed to pursue the appeal in so far as certain of the contracts were concerned.
4. The remaining contracts specified hereunder accordingly formed the subject matter of the appeal:
Goods on board of |
Contract entered into by or on behalf of |
Date of contract or contracts |
Date of bill or bills of lading |
|---|---|---|---|
SS Baltimore Maru |
Messrs R & H |
27 June 1921 |
30 July 1921 |
Hall Ltd |
29 June 1921 |
||
SS Australpeak |
Do |
28 July 1921 |
18 Aug 1921 |
SS Dunaff Head |
Do |
16 June 1921 |
31 Aug 1921 |
SS Do |
Appellants |
29 July 1921 |
29 Aug 1921 |
SS Erlesburgh |
Messrs R & H |
12 Aug 1921 |
19-26 July 1921 |
Hall Ltd |
|||
SS Lowlands |
Do |
5 August 1921 |
10 Aug 1921 |
15 Aug 1921 |
|||
SS Southgate |
Appellants |
9 Aug 1921 |
19 Aug 1921 |
5. The appellants carry on in Cork the business of grain merchants and importers. They buy grain to meet the requirements of millers in Cork and district. Maize is bought in whole cargoes and wheat in whole cargoes and occasionally in half cargoes.
6. The grain usually passes from the growers into the hands of large operators who hold stocks abroad. The grain is bought from these operators through London and Liverpool agents at a price inclusive of cost, insurance and freight to Cork, by the appellants or by Messrs R & H Hall Ltd, between whom and the appellants a standing arrangement exists for sharing the goods comprised in all grain contracts entered into by either of them.
7. During the period of food control up to 31 March 1921, cargoes of grain were distributed by the Wheat Commission between the appellants and two other grain merchants in Cork in the following proportions:
Appellants |
47 per cent |
Messrs R & H Ltd |
47 per cent |
Messrs E McDonnell & Co |
6 per cent |
8. By mutual agreement between these three grain merchants this method of distribution of cargoes and part cargoes of grain has been continued since the removal of control up to the present time.
9. Appellants and Messrs R & H Hall Ltd enter, in rotation, into contracts for cargoes or part cargoes of grain and each of them in turn, immediately following the making of the contract, sells 47 per cent thereof to the other, no charge being made for expenses, and sells 6 per cent. thereof to Messrs E McDonnell & Co who are charged one half of one per cent on the amount of their purchase for expenses.
10. In the case of each contract a sold note in the form ordinarily used is issued by either the appellants or by Messrs R & H Hall Ltd, indicating that 47 per cent of the quantity contracted for has been sold to the other. A copy of each of these sold notes is attached hereto, and forms part of this case [Not included in present print].
11. Immediately upon receipt of a notice of appropriation from their sellers by either the appellants or by Messrs R & H Hall Ltd, a copy of such notice is transmitted to the other.
12. No grain contract is entered into, either by the appellants or by Messrs R & H Hall Ltd, without the knowledge and agreement of the other as regards price and quantity.
13. In the usual course of business the appellants or Messrs R & H Hall Ltd, having completed a contract to purchase a cargo or half of a cargo of grain, inform their customers (the millers in Cork and district) and sell forward before the arrival of the grain, as much of it as possible, usually about three-fourths or three-fifths. Some of the balance may be sold while the ship is at sea, some on its arrival in Cork and some after it has been stored in Cork. For example, in the case of the cargo of the SS “Southgate”, the contract in respect of which was made by the appellants on 9 August 1921, (see para 4) the quantity of maize invoiced was about 5,450 tons, of which about 4,691 tons was on or before 31 August 1921, already contracted to be sold by them, an additional 524 tons was sold in September 1921, before the arrival of the ship in Cork, and the remainder about 235 tons were sold from the stores in Cork. A statement showing the manner in which this cargo was disposed of is annexed hereto and forms part of this case [Not included in present print].
14. The goods forming the subject matter of this appeal were not in the actual possession of the appellants or of Messrs R & H Hall Ltd, on 31 August 1921, being abroad or at sea on that date, and no bills of lading, invoices or insurance policies or certificates in relation to such goods had been tendered or delivered to the appellants or to Messrs R & H Hall Ltd, on or before that date.
15. In ascertaining their stock-in-hand on 31 August 1921, the appellants included stock which they did not normally include when preparing their balance sheets. Their usual practice was to include only stock which had actually been paid for, but for the purpose of their claim under FA 1921 Sch 2 Pt II, appellants also included the portions unsold on 31 August 1921, of all stock for which contracts had been signed on or before that date.
16. At the appeal meeting, as stated in para 3 the appellants abandoned their claim in relation to certain of the contracts, the bills of lading in respect of which were not dated until after 31 August 1921.
17. The facts and circumstances regarding the several contracts specified in para 4 as forming the subject matter of the appeal are as detailed in the following parts, numbered 1 to VII of this case.
Part I - SS “Baltimore Maru”.
18. On 27 June 1921, in London, Messrs Harris Brothers & Co, Brokers, London, signed a contract with Messrs Strauss & Co Ltd, London, (hereinafter in this part of the case referred to as “the sellers”) on account of Messrs R & H Hall Ltd, Dublin, Cork, Belfast and Waterford, (hereinafter in this part of the case referred to as “the buyers”) in the following terms:
Bought off (the sellers) for (the buyers) on the printed conditions and rules endorsed on this contract.
A cargo (or parcel) at seller’s option of .... wheat .... shipment in good condition per SS Baltimore Maru or substitute .... from Oregon and/or Washington as per bill or bills of lading to be dated July 1921, about 7,000 tons .... at the price of 70/- per 480 lbs gross, including freight and insurance to any two safe ports in .... Great Britain .... and Ireland .... as per charter party .... order for both port of discharge to be given on signing bills of lading.
Payment by cash in London, in exchange for shipping documents on or before the arrival of the vessel ....
Seller to give all policies and/or certificates of insurance .... on the cargo or parcel, all duly stamped, and for not less than 2 per cent over the invoice amount, any amount over the 2 per cent to be for seller’s account, in case of total loss only ....
19. On 29 June 1921, Messrs Harris Brothers & Co Brokers, London, signed a further contract as follows:
Sold for (the sellers) to (the buyers) .... a quantity of .... wheat ....
Shipment in good condition per SS Baltimore Maru or substitute .... from Oregon and/or Washington as per bill or bills of lading to be dated July 1921, not exceeding 900 tons .... at the price of 68/- per 480 lbs gross, including freight and insurance to any two safe ports in .... Great Britain .... and Ireland .... as per charter party .... orders for both ports of discharge to be given on signing bills of lading.
Payment by cash in London, in exchange for shipping documents on or before the arrival of the vessel ....
Seller to give all policies and/or certificates of insurance .... on the cargo or parcel, all duly stamped, and for not less than 2 per cent to be for seller’s account in case of total loss only, ....
The second contract contains the...
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