N.Z. INCOME TAX COMMR. v. EASTERN EXTENSION &c. TELEGRAPH Co.

is the Land and Income Assessment Act No. 49 of 1900, the material sections of which, for the present purpose, are the following: Section 51: Where the taxpayer is a Company, its income derived from business shall . . . be deemed to include all profits derived from or received in New Zealand from such business in each year ending at the close of the thirty-first day of March, including therein all profits falling within the definitions of income derived from business' and income derived from employment or emolument,' in Sections fifty-nine and sixty hereof, . . . and Income Tax shall be assessed and levied on all such incomes accordingly." Section 59: "Income derived from business' includes, but without limiting the meaning of the words, the profits derived from or received in New Zealand by any taxpayer, in or out of New Zealand, in each year ending the thirty-first day of March from the following sources": (inter alia) "(1) From any business." Section 65: "For the purposes of this Act a taxpayer (whether a company or not) shall be deemed to have derived income although the same has not been actually paid to or received by him, but has been credited in account, or reinvested, or accumulated, or capitalised, or carried to any reserve, sinking, or insurance fund, however designated, or otherwise dealt with in his name or interest or on his behalf."

The telegraph lines in New Zealand belong to the Government, and no person other than the Government is allowed to receive a message for transmission to any place in or out of the colony. The Government telegraphic station at Wakapuaka and the respondent company's station at that place are under one roof, and are connected by a wicket or internal window. The present claim relates to the period of eleven months ending March 31, 1901. During that period the ordinary course of business in transmission of telegrams from New Zealand to places beyond Australia was as follows: The Government received the message from the sender together with the entire charge (being at the rate of 58. 2d. a word) and transmitted it over their own line to Wakapuaka, the charge for which

was 1d. a word. It was there handed to the respondent company and transmitted by it to La Perouse (the charge for which was 3d. a word) and handed to the Government of New South Wales. The Government of New Zealand deducted ld. and (by arrangement with the respondent company) 3d. and credited the New South Wales Government with the balance of 4s. 10d. New South Wales in its turn transmitted the message to Adelaide, the charge for which was 1d., and credited the South Australian Government with the balance of 4s. 9d. The South Australian Government transmitted the message to Port Darwin (say), the charge for which was 7d., and credited the respondent company with the balance of 4s. 2d. The company sent the message over their cable to Madras, where the Indian Government took charge of it, receiving the balance of the charge. It is unnecessary to pursue the message further.

This course of business was in accordance with the rules contained in the St. Petersburg International Telegraph. Convention of 1875 and the regulations made by the contracting parties for carrying the Convention into effect. By rules 2 and 3 of the Convention the parties to it undertake to adopt all necessary measures to insure the secrecy and prompt despatch of the correspondence, but declare that they accept no responsibility on account of the service of international telegraphy. In the "Conditions " under which telegrams are transmitted to places beyond the colony, made and published by the New Zealand Government it is declared that that "No responsibility is accepted for any delay or errors in the transmission of telegrams nor for the non-transmission or non-delivery of telegrams from whatever cause arising."

The appellant seeks to charge the respondent company with income tax on the profits derived by it from transmitting messages from Port Darwin to Madras. No part of these profits was ever received by the respondent company in New Zealand. The only question, therefore, is whether they are profits derived from New Zealand within the meaning of section 59 of the Act of 1900. The appellant

N.Z. INCOME TAX COMMR. v. EASTERN EXTENSION &c. TELEGRAPH Co. maintains the affirmative on three alternative grounds-first, that the respondent company contracted in New Zealand with the New Zealand Government to carry the message to its ultimate destination; secondly, that the Government contracted with the sender to transmit the telegram to its destination as agent for and on behalf of the respondent company; and thirdly, that the message was carried at any rate from Port Darwin or Roebuck Bay in performance of an obligation undertaken by the respondent company in New Zealand. There is no evidence to support the first suggestion. The Government did not even treat the respondent company as a "limitrophic State" within the meaning of the Convention, and no part of the total charge was paid or credited to the respondent company by the New Zealand Government beyond the 3d. per word for transmission to La Perouse. The second suggestion is equally lacking in foundation. Indeed, their Lordships, looking to the terms of the Convention and regulations and the published conditions of the business, have great doubt whether the Government itself entered into any obligation to do more than start the telegram on its journey and hand it over to the owners of the next stage. This observation applies equally to the appellant's third mode of putting his case, but independently of any considerations of that kind their Lordships cannot find any evidence from which to infer or imply any such contract as suggested. In the result they think that the profits of transmitting the telegram from Port Darwin or Roebuck Bay were derived from South Australia or Western Australia, as the case might be, and not from New Zealand, or business done there.

learned Chief Justice in his judgment in the present case quotes copious extracts from the judgments of the Master of the Rolls and the Lords Justices in Erichsen v. Last,1 and he sums up his remarks in the following passage, with which their Lordships agree: "It will be observed that in all these judgments the ratio decidendi is that the Company has made contracts in the United Kingdom for the transmission of telegrams to their destination. If the Company had received the full amount of the telegraph charge, less the cost of transmission from the office where it was received to Wakapuaka, and had undertaken with the New Zealand Government to transmit the message to its destination, then I should have been of opinion that the case of Erichsen v. Last was directly in point, and that the tax was properly levied. But this is not what is done. The New Zealand Government only pay for the transmission to La Perouse, and they leave to the States of New South Wales and South Australia, or one of them, the making of the new arrangement between the Eastern Extension Company and the State for the transmission beyond Port Darwin, and the Company is paid by the South Australian Government for what it does. This seems to me to distinguish this case from that of Erichsen v. Last, and, reading the words literally, as an Act making a charge or a tax upon an individual should be read, I cannot see how it can be said that the profits were derived from the business carried on in New Zealand."

The learned counsel for the appellant relied on the case of Erichsen v. Last [1881]. The English Income Tax Act differs in its language from the New Zealand Act, which their Lordships have to construe, but it may be assumed that the principle on which that case was decided in the Court of Appeal is equally applicable to the New Zealand Act. The

(1) 50 L. J. Q.B. 570; 51 L. J. Q.B. 86; 7 Q.B. D. 12; 8 Q.B. D. 414.

Two agreements dated December 13, 1892, between the New Zealand Government, the Governments of certain Australian colonies, and the respondent company were referred to by the learned Judges in the Court of Appeal. These agreements had been determined, and were not in force during the period in question, but they were referred to as illustrating the course of business in international telegraphy. The appellant, however, referred to them at their Lordships' Bar in support of his argument that there was a contractual relation between the respondent company and the New Zealand Government as to the transmission of messages over the respondent company's

N.Z. INCOME TAX COMMR. v. EASTERN EXTENSION &c. TELEGRAPH Co.

cables beyond Australia. If and so far
as these agreements can be said to have
added to or varied the proper inferences
to be drawn as to the relations of the
parties from the actual course of business
and other circumstances, their Lordships
think that, having been determined by
the parties, they could not properly be
used for such purpose.
But their Lord-

ships do not understand any of the agree-
ments to have had that effect. The first
agreement is between the New Zealand
Government and the respondent company
alone. It relates exclusively to messages
transmitted over the company's cables
connecting New Zealand and Australia,
and has nothing to do with this case.

By the second agreement, which was made between the Australian Governments of the first part, the New Zealand Government of the second part, and the respondent company of the third part, the provisions of a previous agreement of March 31, 1891, made between the Australian Governments and the respondent company were adopted, with some variations as to rates, and the New Zealand Government became bound by, and had the benefit of, those provisions as varied, and became a party to a guarantee thereby given by the Australian Governments to the respondent company. These agreements appear to their Lordships to relate only to the rates to be charged by the parties to them for their services in the transmission of through messages to places beyond Australia, and do not appear to have varied the mode in which that business was conducted on the basis

of the Convention. Both agreements were made in London, and the amount of the guarantee under the second agreement was payable in London.

Their Lordships will humbly advise his Majesty that the appeal be dismissed, and the appellant will pay the costs of it.

Solicitors-Mackrell, Maton, Godlee & Quincey,
for appellant; Bischoff, Dodgson, Coxe,
Bompas & Bischoff, for respondents.

[Reported by J. Eyre Thompson, Esq.,
Barrister-at-Law.

1906. WILFLEY ORE CONCENTRATOR June 27. SYNDICATE v. GUTHRIDGE.* High Court of Australia-Special Leave to Appeal-Question of Private Right.

Special leave to appeal from a decision of the High Court of Australia will not be granted where a matter of private right only and not of public importance is involved.

Petition for special leave to appeal from a decision of the High Court of Australia. The question, which was alleged to be of great importance to the parties, was whether the specification of a patent was or was not valid.

T. Terrell, K.C., and A. J. Walter, for the petitioners.

G. R. Northcote, for the respondent, was not heard.

LORD DAVEY delivered the judgment of their Lordships:

Their Lordships have very carefully considered this petition and have had an opportunity of considering the arguments by counsel for the petitioners in support of it. They have also looked through the judgment of the learned Chief Justice in the High Court, and they see no fault to find with the law as there laid down.

Whether it was rightly applied to the particular case is, of course, another question, but the law as laid down seems to their Lordships to be in entire accordance with the judgment of the House of Lords in the case of Anglo-American Brush Electric Light Corporation v. King, Brown & Co. [1892]. Both the judgments of Lord Halsbury (then Lord Chancellor) and of Lord Watson expressly lay down that the specification is not required to contain "explanations or directions which would enable a workman of ordinary skill to construct" the patented invention. All that is required is that the specification of the patentee should "convey to men of science and employers of labour information which will enable them, without any exercise of inventive ingenuity *Coram, Lord Davey, Sir Arthur Wilson, and Sir Alfred Wills.

(1) [1892] A.C. 367.

WILFLEY ORE CONCENTRATOR SYNDICATE v. GUTHRIDGE.' to understand his invention and to give a workman the specific directions which he failed to communicate." Therefore the construction of the document was, as the Chief Justice says, a matter for the Court, and the Court put its construction upon it, and held that it did disclose the invention in a sufficient way to enable a mining mechanician, or a mining engineer, to give the necessary directions to the skilled workmen who were to make the machine in accordance with it. It appears, therefore, to their Lordships that there is no question of law upon which the judgment of the learned Chief Justice can be objected to. It is a question of great importance, no doubt, but a mere question concerning the value of the patent to the parties themselves, or, in other words, it is a matter of private right, and not one involving any question of public importance.

Counsel for the petitioners said quite truly that this Board had laid down that, in considering the question of whether leave to appeal should be given from the High Court of Australia, it would act upon the same principles on which it has been in the habit of acting in similar applications for leave to appeal from the Supreme Court of Canada, and he referred to the case of Prince v. Gagnon [1882],2 in which Lord Fitzgerald specified certain circumstances under which the Board would be disposed to advise an exercise of the prerogative; but the case of Prince v. Gagnon 2 was commented upon by Lord Watson in the well-known case of La Cité de Montréal v. Les Ecclésiastiques du Séminaire de St. Sulpice de Montréal [1889],3 in the following words: "It is the duty of their Lordships to advise Her Majesty in the exercise of her prerogative, and in the discharge of that duty they are bound to apply their judicial discretion to the particular facts and circumstances of each case as presented to them. In forming an opinion as to the propriety of allowing an appeal, they must necessarily rely to a very great extent upon the statements contained in the petition with regard to the import and effect of the Judgment complained of, (2) 8 App. Cas. 103.

(3) 59 L. J. P.C. 20; 14 App. Cas. 660.

and the reasons therein alleged for treating it as an exceptional one, and permitting it to be brought under review. Experience has shewn that great caution is required in accepting these reasons when they are not fully substantiated, or do not appear to be prima facie established by reference to the petitioner's statement of the main facts of the case, and the questions of law to which these give rise. Cases vary so widely in their circumstances that the principles upon which an appeal ought to be allowed do not admit of anything approaching to exhaustive definition. No rule can be laid down which would not necessarily be subject to future qualification, and an attempt to formulate any such rule might therefore prove misleading. some cases, as in Prince v. Gagnon,' their Lordships have had occasion to indicate certain particulars, the absence of which will have a strong influence in inducing them to advise that leave should not be given, but it by no means follows that leave will be recommended in all cases in which these features occur. A case may be of a substantial character, may involve matter of great public interest, and may raise an important question of law, and yet the judgment from which leave to appeal is sought may appear to be plainly right, or at least to be unattended with sufficient doubt to justify their Lordships in advising Her Majesty to grant leave to appeal."

In

The present case is said, no doubt, to be of a very substantial character; but in the opinion of their Lordships that is not a sufficient ground to induce them to recommend his Majesty to give leave to appeal from the decision of the High Court of Australia.

They will therefore humbly advise his Majesty that the petition ought to be dismissed. The petitioners must pay the costs of the petition.

Solicitors - Greenip, Snell & Co., for petitioners; Murray, Hutchins, Stirling & Murray, for respondent.

[Reported by J. Eyre Thompson, Esq., Barrister-at-Law.