SUBJECTS OF CASES. Accident Agreement-Compensation paid for Accident--Application to review weekly payments Accident Compensation paid for period-Agree. 1906 70 495 442 406 Accident-Declaration of liability filed-Workman Accident Full compensation paid for more than a ..... Ct. of Accident-Incapacity, duration of-Notice by to s. 14. neces- Accident-Liability for total incapacity admitted-- pro. Accident-Prohibited act-Outside sphere of em. PAGE 409 609 662 221 415 75 592 656 xxxii-Index.] SUBJECTS OF CASES. Accident-Sudden emergency-Fellow workmanRescue in mine other than employer's-DeathFor the purposes of and in connection with the employer's trade or business-Altogether outside sphere of employment-Coal Mines Act 1911 (1 & 2 Geo. 5, c. 50), s. 110, sub-s. 2-Workmen's Compensation Act 1906 (6 Edw. 7, c. 58), s. 1, sub-s. 1-Workmen's Compensation Act 1923 (13 & 14 Geo. 5, c. 42), s. 7. (Jones v. Tarr. Ct. of App.) Accident-Shipwreck-Disease caused by exposure PAGE 783 664 Notice, delay in giving-Connection between accident and disease obscure-Notice given when connection realised-Workmen's Compensation Act 1906 (6 Edw. 7, c. 58), s. 2 (1) (a). (Fenton v. Owners of Ship Kelvin. Ct. of App.).. Accident to collier returning from work on special workman's train-Liability admitted-Full compensation paid-No recorded agreement-Subsequent decision changing law and negativing liability Closing of colliery and discharge of workman-Arbitration-Question settled by agreement-Workmen's Compensation Act 1906 (6 Edw. 7, c. 58), s. 1, sub-s. (3). (Williams v. Guest, Keen, and Nettlefolds Limited. Ct. of App.).... 111 Claims against company-Weekly payments of compensation for injury-Receiver appointed in debenture-holder's action-Priority over other creditors Extent of preference Abolition of limitation of 1001.-Abolition not retrospectiveApplication only to accidents occurring after 1906 (6 1923--Workmen's Compensation Act Edw. 7, c. 58), s. 5, sub-s. 3-Workmen's Compensation Act 1923 (13 & 14 Geo. 5, c. 42), s. 19, sub-ss. 2, 3, Sched. I. (Re Snowdown Colliery Company Limited; South-Eastern Coalfield Extension Company Limited v. Snowdown Colliery Ct. of App.). . . . Company Limited. Claim not within six months of accident-Ignorance of requirements of Act-Fit to transact businessfor delay in claimOther reasonable cause Workmen's Compensation Act 1906 (6 Edw. 7, c. 58), s. 2, sub-s. 1 (b). (Aldridge v. Warwickshire Coal Company Limited. Ct. of App.).... Costs-Accident-Claim on basis of total incapacity --Liability denied-Payment into court-Average earnings overstated-Award of continuing weekly payment-Basis of partial incapacity-Uncertainty of sufficiency of sum paid in to cover award -Costs given to applicant except of issue of amount after date of payment into court-Discretion as to costs-Workmen's Compensation Rules 1913-1924, r. 19 (8)-Workmen's Compensation Act 1906 (6 Edw. 7, c. 58), Sched. II. (7). (Turner v. Lee. Ct. of App.).... Death by accident-Dependants-Illegitimate grandchild-Increase of benefit for workman's children under Act of 1923-Illegitimate grandchild included-Workmen's Compensation Act 1906 (6 Edw. 7, c. 58), s. 13-Workmen's Compensation Act 1923 (13 & 14 Geo. 5, c. 42), s. 2. Bettisfield Colliery Company (Pritchard Limited.) Ct. of App.). V. mother Death by accident-Dependency of 454 439 67 448 whe Industrial disease-Accident results-When disablement comm suffering from miner's nystagmu and 1923-Intermediate periods men's Compensation Act 1906 (6 s. 8 (1) (a) Workmen's Compen (13 & 14 Geo. 5, c. 42), ss. 1, 4. (M Vale Steel, Iron, and Coal Con Ct. of App.). W t Industrial disease-Dermatitis-Disease leaving proneness Suffering from disease includes su effects of the disease-Danger employed in same employment-S No. 287, par. 2-S. R. and O. Workmen's Compensation Act 19 58), s. 8 (1) (i.) and (6). (Starkey Sons. Ct. of App.).. Injury by accident-Total incapac partial incapacity-Subsequent re Wa incapacity Compensation Workmen's Compensation (War 1917 and 1919 (7 & 8 Geo. 5, c. Geo. 5, c. 83)-Workmen's Con 1923 (13 & 14 Geo. 5, c. 42), s. 1. and Steel Company Limited v. Dic Iron Company Limited v. Dalgleis Jurisdiction- Contract of employm Kingdom-Employers resident Service of copy of application registered post-County Courtin different districts "-Liability Sufficiency of service-Workmen's Rules 1913-1924, Rules 15, 16 (3) (a) Workmen's Compensation Ac 7, c. 58) ss. 1, 11, Sched. II., par. Hochseefischerei Stadtische Gesellschaft M.b.H. (in liquidation) Liability for accident admitted-Co weekly payments-Paid for eight y nity company-Liquidation of demnity company cease paymentof employers' protection-Liability of association of indemnity comp under Workmen's Compensation c. 58), s. 5, sub-s. 1-Workmen's Act 1923 (13 & 14 Geo. 5, c. 52), s Northern Employers' Mutual In pany Limited. Ct. of App.)...... Workman injured crossing line to tra ment-Four miles from his home---Fog hanging over mountaincolliery 7 a.m.-Train provided Question whether train proved nece convenience-Workmen's Compens (6 Edw. 7, c. 58), s. 1(1). (Newton and Nettlefolds Limited. Ct. of A , 1926. [Registered at G.P.O. Postage within the United Kingdom, One Penny; and to Canada at Canadian Magazine Rate.] lement ertified , 1921, -Workc. 58), t 1923 .Ebbw 630 IN THE HOUSE OF LORDS, THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL, FROM JULY TO DECEMBER 1925. H.L.] GLOUCEster Railway Carriage & Wagon Co. v. Inland RevENUE COMMRS. House of Lords. Jan. 29, 30, and Feb. 19. (Before Lords CAVE, L.C., DUNEDIN, ATKINSON, SUMNER, and BUCKMASTER.) GLOUCESTER RAILWAY CARRIAGE AND WAGON COMPANY LIMITED v. INLAND REVENUE COMMISSIONERS. (a) ON APPEAL FROM THE COURT OF APPEAL IN ENGLAND. Revenue-Corporation profits tax-Manufacture of wagons for sale and hiring out-Sale outright of wagons for hiring out-Profit largely in excess of book value-Assessed to corporation profits tax-Accretion to capital or annual profits-Claim of winding-up of separate business. The company carried on the business of constructing wagons and selling them outright, or upon a deferred purchase or hire-purchase system. They also, as part of their business, let out wagons to tenants on simple hire. In 1909 the wagons owned by the company were re-valued and a sum written off in respect of which no claim for relief from income tax was made, the amount being regarded by the company as a loss of capital. The company always kept separate accounts in its books in respect of the letting-out of wagons on simple hire. In 1919, having decided it would be to the advantage of the company to shut down the hiring-out part of their business, the directors sold the wagons so used, and for the accounting period from the 1st Jan. to the 31st May 1920 received for such wagons so [H.L. value of the wagons sold. That surplus was credited to revenue account, but 100,000l., part of it, was placed to reserve account by the directors, who considered the amount belonged more properly to capital account. The Crown claimed that the sum of 148,651l. 10s. 9d. was a part of the annual profits or gains accruing to the company in the accounting period, as it made no difference that one way of making a profit out of the wagons was given up, for the very giving-up itself involved the making of the profit in another way out of the same wagons, and the purpose of the company's trade was to make a profit out of wagons. The company appealed on the ground that they carried on two separate businesses, one concerned with the manufacture and sale of wagons, the other with the manufacture of wagons for the sole purpose of letting them on hire, and that the wagons sold were sold not in the course of such business but for the purpose of winding it up, and therefore the profit made ought to be treated as an accretion to capital. Held, that the appellants were only carrying on one business, which was that of dealing in wagons. This was a question of fact and had A wagon so been found by the commissioners. was none the less sold as an incident of the business of buying and selling because in the meantime before sold it had been utilised by being hired out. Decision of the Court of Appeal (131 L. T. Rep. 595) affirmed. APPEAL from the decision of the Court of Appeal (Warrington, L.J. and Eve, J.; Pollock, M.R. dissenting) reported 131 L. T. Rep. 595, upon a case stated by the Commissioners for the H.L.] GLOUCESTER RAILWAY CARRIAGE & WAGON Co. v. INLAND REVENUE The case stated as follows: At a meeting of the commissioners, held at Gloucester on the 11th.March 1921, the Gloucester Railway Carriage and Wagon Company Limited, whose registered office is situate at Bristol-road, Gloucester (hereinafter referred to as the company), appealed against an assessment to.corporation profits tax made upon them in the sum of 43211. 15s. for the accounting period from the 1st Jan. 1920 to the 31st May 1920 by the Commissioners of Inland Revenue under the Finance Act 1920, Part V., in respect of the profits of its business. The sole question at issue was whether a sum of 148,6517. 10s. 9d. should be included as a trade receipt of the company for purposes of computing its liability to corporation profits tax for the accounting period in question. 66 A company (hereinafter referred to as the old company) was incorporated on the 4th Feb. 1860 under the name of the Gloucester Wagon Company Limited. The third paragraph of the memorandum of association of the old company provided that the objects for which the company was established were the construction, repair, maintenance, sale, purchase, hiring, and letting of railway wagons and carriages and other rolling stock, and the doing all such other things as are incidental or conducive to the attainment of the above objects." This business had since then been carried on upon a large scale at Gloucester. The original prospectus of the old company stated : "The increasing traffic in English railways and the extension of railway enterprise at home and abroad have entirely gone beyond the supply of railway trucks and rolling stock, notwithstanding the formation of several wagon companies. The railway companies very often cannot and for some descriptions of merchandise will not supply trucks. It is therefore found that the most advantageous course open to the freighter is to hire trucks under a contract for keeping them in repair. It is therefore proposed to form such a company under the provisions of the Joint Stock Companies Act for the construction, export, maintenance, and hiring-out of railway trucks." The first report of the directors for the year to the 31st Dec. 1860 showed that 217 wagons, of which 119 already had been constructed, had been let on simple hire, and it was stated therein that the company's wagons had been constructed with the greatest care and attention, no necessary expense being spared to secure the best materials and workmanship, on the ground that the more substantially the wagons were built the less would be the cost of maintenance. The second report referred to the "large sum which has already been invested in wagons let on hire." Reports of the directors from time to time showed the numbers of wagons let on hire (which in 1866 had risen to 1659.) Besides constructing wagons to be let on hire, the old company also constructed wagons and rolling stock for sale on the deferred purchase 66 the business of this compan entirely confined to building and carriages on deferred the period covered by the from 1862 to 1866, inclusiv wagons shown on the compa on deferred payment were : 3287; 1864, 3596; 1865, 5 In the year ended the 30t number of wagons let on hire number of wagons sold on was 3232. For this year the that the wagons let on hire old company's books at 21 according to a valuation directions worth only 95,369 necessary to effect a redu company's share capital. 66 It was accordingly decided old company, and this was ef tary liquidation of the old incorporation, on the 14th appellant company, under but with a diminished sh objects of the company were as to manufacture, constr tain, buy, sell, hire, and let wagons, vehicles, engines, stock." The diminution of was carried out by reducing shares of 101. each to shares paid, and 16,250 shares of 10 51. had been paid, to shares unpaid liability of 31. 10s. value of the wagons was due decrease in the market value a impossibility of maintaining ing rentals. The above-m 217,1891. 3s. representing th let on hire at the 30th June in the capital assets of the o balance-sheet for the year end 1888, and had been built up a built to be let on hire had b a rough and ready manner would include a profit on and the capital value so ar included both in the yearly st company's assets and as an facturing account of the ol which the profit shown in th of the old company was arri which it had paid income tax Owing to the lapse of time a of book-keeping adopted the so included cannot now be the other hand the old comp by year from the total sur representing the value of w various amounts for dep amounts also were passed th revenue accounts of the old became a deduction in arriv of the year. The same system of b continued after 1888 by the was not till the year 1899 th -onstruct the ent of the old -keeping was and it H.L.] GLOUCESTER RAILWAY CARRIAGE & WAGON Co. v. INLAND REVENUE COMMRS. [H.L possible to ascertain exactly the cost of manu- included in the income tax assessments up the company. The company always ke separate accounts in its books in respect of t letting out of wagons on simple hire, t profits from which were shown separately. Wagon building was prohibited by t Government in the later years of the War, a the result of the War was to increase both t demand for wagons and the cost of man facturing them. In the course of the ye 1918 it therefore became possible for t company to sell the wagons which it had let hire at a price which became very profital to itself, and thus to secure an immedia advantage which it would not have be possible to secure by waiting for opportunit for increasing the rents. Moreover, most of t wagons were let out under agreements various terms of ten years and under down yearly agreements which were customar continued from year to year. The positi thus created had already been a cause of t sale of 461 wagons which took place in t spring of 1918. That sale was a sale to t tenants of the wagons before it had been fina decided to close down the business of letti wagons on hire. The profit upon it was includ in the ordinary profit of the company a dealt with in the usual way, and the compa did not claim to be exempt from income t in respect of it. The company, however, c tended before the commissioners that it w not liable to pay such tax and it did not adı that the surplus on such sale was prope chargeable with income tax. In the cumstances above set out the manag director of the company, early in 1918 beg to form the opinion that it was desirable the company which had then parted with wagon-repairing business, to dispose of wagons let on hire and the benefit of any tena agreements connected therewith. The f steps directly toward this end were taken w early in the year 1919 letters were sent to tenants of the company's wagons offering th the right to purchase the wagons. result of these letters negotiations arose w the tenants, and the company, where it was able to sell, attempted without great succes secure renewals of the tenancy agreements enhanced rents. No definite decision to the wagons as a whole had yet been tal nor had the question been discussed by board of directors, nor was it referred to at annual general meeting of the company 1 to consider the accounts of the company for year ended the 31st May 1919. The num of wagons used by the company for letting hire sold in the year ended the 31st May was fifty-five, at a profit of 9391. 7s. 3d., the number of such wagons still on hand at date was 5085. For the year ended the 5th April 1911, the question of the rate of depreciation to be allowed to the company on wagons was fixed by the commissioners at 5 per cent. on the written down value. Depreciation had since then been allowed to the company at that rate for income tax purposes. No claim was made at any time for relief from income tax for the amounts written off the value of the wagons in 1888 or 1909, these amounts being regarded by the company as losses of capital. During the ten years immediately preceding the appeal the company ceased almost entirely to manufacture wagons to be let out on simple hire. Large numbers of wagons were, however, constructed to be let out on hire purchase agreements, by which agreements, the so-called purchaser became entitled to purchase the wagons for a nominal sum on payment of a certain number of instalments which were called hire. Wagons so constructed were constructed under contracts made with the intending purchasers to their specifications. In some cases the tenants of wagons under hire purchase agreements were unable to fulfil their contracts, and in such cases where it was not possible to renew the contract in another form the wagons came back into the possession of the company and were added to the wagons used by the company for letting on hire. Some 437 wagons so came to be added to the wagons in the seven years ended the 31st May 1918. In the seven years ended the 31st May 1918, 1076 wagons were purchased by the company, and of these 546 were sold and 530 let in those years. These purchases were necessary to replace wagons which had been let to tenants and which needed repair, and by reason of some of the wagons purchased being or becoming surplus wagons they were sold. The As In the year 1919 circumstances arose confirm the managing director's opinion a the advisability of selling the wagons let simple hire and their tenancy agreements, the final decision was taken to sell the w |