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Moorhouse (inspector of Taxes) Vs. Dooland. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Reported in[1955]28ITR86(Cal)
AppellantMoorhouse (inspector of Taxes)
RespondentDooland.
Cases ReferredSeymour v. Reed
Excerpt:
- evershed m. r. in this appeal the question is whether the crown are entitled to recover income-tax in respect of a sum (not finally ascertained, but treated for the purposes of the proceedings as amounting to pounds 48 or thereabouts) which represents the proceeds of collections made at cricket matches during the cricket season of 1951 for his own benefit by or on behalf of mr. bruce dooland, a professional cricket employed as such at the relevant dates by the east lancashire cricket club, one of the clubs commonly known as 'the lancashire league.'mr. dooland was at the relevant dates assessed for tax and, as is agreed, rightly assessed - under schedule e of the income tax act 1918, his service as cricket professional being an 'employment' which, as the result of section 18 of the finance.....
Judgment:
EVERSHED M. R. In this appeal the question is whether the Crown are entitled to recover income-tax in respect of a sum (not finally ascertained, but treated for the purposes of the proceedings as amounting to pounds 48 or thereabouts) which represents the proceeds of collections made at cricket matches during the cricket season of 1951 for his own benefit by or on behalf of Mr. Bruce Dooland, a professional cricket employed as such at the relevant dates by the East Lancashire Cricket Club, one of the clubs commonly known as 'the Lancashire League.'

Mr. Dooland was at the relevant dates assessed for tax and, as is agreed, rightly assessed - under Schedule E of the Income Tax Act 1918, his service as cricket professional being an 'employment' which, as the result of section 18 of the Finance Act, 1922, was translated from the scope of Schedule D to the of Schedule E. It follows that Mr. Doolands liability has to be tested having regard to the well-known language of rule 1 of Schedule E '... all... fees, wages, perquisites or profits arising therefrom,' that is, from the employment concerned. The Crown have not relied upon any of the special words, for example, particularly 'perquisites' in this rule. This, in the event, is not therefore a case related to any of the peculiar differences between the terms of Schedule D and Schedule E or their respective rules. The question is whether, upon the whole facts of the case as proved and found, these collections were in truth and in substance part of Mr. Doolands earnings as a professional cricketer and taxable as such : whether they fall fairly within the words which are found in the rule applicable to case II of Schedule D, 'all profits and earnings of whatever value arising from' the employment, a formula which for present purposes may be taken as synonymous with that quoted from the rule applicable to Schedule E.

Since all cases of comparable character must, in my judgement, turn upon their exact facts, I find it desirable to quote at some length from the case stated and the documents annexed thereto.

Mr. Doolands engagement was governed by a contract in writing dated August 27, 1949, and made between Mr. Eli Higham, on behalf of the Ease Lancashire Club, of the one part and Mr. Dooland of the other part. By that contract Mr. Dooland agreed to serve cricket professional to the club for the two seasons of 1950 and 1951. Clauses 2 and 3 were in the following terms : 2. The salary payable by the club to the professional shall be the sum of pounds 800 for each of the said two seasons to be paid by equal weekly payments throughout the said seasons or in such other manner or at such other times as may be mutually agreed upon and the club shall also pay in each of the said seasons the sum of pounds 150 for or towards the cost of one passage for the professional between Australia and England. 3. Talent money shall be paid to the professional by the club at the rate of one guinea for each and every score of fifty runs made by the professional guinea for each and every score of fifty runs made by the professional in any Lancashire League or Worsely Cup match in which the club takes part during the term of his engagement and also a like sum on every occasion on which he obtains six wickets or performs the hat trick in any such match. Collections shall be made for any meritorious performance by the professional with bat or ball in any Lancashire League or Worsley cup match in accordance with the rules for the time being of the Lancashire Cricket League' As will later appear, the last sentence of clause 3 is, in my view, of particular importance.

There followed a number of clauses strictly regulating Mr. Doolands obligations as to playing in club matches, acting as coach and the like; including provisions, in the event of Mr. Doolands incapacity, enabling the club to engage a substitute at a remuneration to be paid, up to a stated limit, by Mr. Dooland, and also in certain circumstances to determine the agreement. The final clause, 13, was as follows : 'Provided always and it is hereby declared that this agreement is made subject to the rules for the time being in force of the Lancashire Cricket League a copy of which has been produced to the professional and such rules so far as they relate to the professionals engaged by any Lancashire League Club and so far as they are not hereby varied or inconsistent herewith shall be read with this agreement and deemed to be incorporated herein.'

There was in fact, no express obligation on Mr. Doolands part to play in the matches to the best of his ability; but it may no doubt be assumed from the nature of the engagement and of the game of cricket that he would do so, and that he would be encouraged to such efforts by the provisions for talent money and collections in clause 3.

The relevant rules of the league are also set out in the case. At the date of the contract, 1949, rule 33 was, as set out in paragraph 3(2) (b) of the case : 'Each club must play one professional, but not more than one, in league matches; the whole of a professionals remuneration must be in the form of a weekly wage plus usual talent money and collections, and all other forms of payment such as benefit matches, commission on gate money, agreement signing fee, etc., are strictly forbidden. All professional agreements must be deposited with the league secretary within 14 days of completion thereof, and shall then be examined by him to see that they conform to the league rules. The knowledge of any part of the agreement shall be confined to the President and Honorary Secretary, unless they decide that the interests of the League require that any portion of the agreement should be laid before the league committee. All agreements must contain the following clause : The said............ shall not at any time during the continuance of this agreement play in any cricket match other than the matches arranged by the............ cricket club without first obtaining the consent of the committee of the said club in writing under the hand of the chairman or secretary of such committee.'

This rule was altered before the opening of the 1950 cricket season by the omission from the opening paragraph of the words 'and collections.' It follows, therefore, that during the relevant seasons, 'collections,' according to the league rules and therefore to Mr. Doolands contract, were not and could not be part of the professionals 'remuneration' (as defined by rule 33); but they were still clearly permissible, and in fact made, in Mr. Doolands case. Mr. Doolands contract gave him the right to the benefit of such collections in the circumstances stated in the rules. In fact, during the seasons 1950 and 1951, collections were made by or for Mr. Dooland as a result of performances on his part which qualified him therefor on five and eleven occassions respectively. The claim in the present case (as I have already stated) arises from the latter. To judge from the list of fixtures in the rules annexed to the case, the East Lancashire Club played about 25 matches in the season. It appears from the case that the collections (which were made on the ground and might be made on the occasion of home or away matches) were handed, after counting, immediately to the player concerned, the club neither contributing to nor handling the money. It was stated in evidence by the treasurer of the East Lancashire Club that the financial standing of a club might influence a professional in deciding which club to join (a fact which appears to me obvious) and that in fact the East Lancashire Club was 'the wealthiest and best supported' in the League.

On these facts Mr. Bucher, for Mr. Dooland, contended that since the performances which qualified a player for the taking of a collection were performances of exceptional personal prowess which, in Mr. Doolands case, it was not his contractual duty to achieve, they were therefore distinct from and outside the scope of his employment and the sums collected represented (unlike talent money) not earnings, but the spontaneous expression by way of gift on the part of members of the public of their grateful pleasure in witnessing Mr. Doolands skill. This argument was (according to Mr. Bucher) strongly reinforced by the facts : (i) that amateurs could qualify like professionals (albeit by reference to a somewhat less exacting standard) for the making and taking of collections, the true character of which could not differ from those taken for professionals but which, in the case of an amateur, could not constitute professional earnings; (ii) that the sums collected were small in comparison with the regular salary; and (iii) that there was no finding and no evidence that the possibility or expectation of collections has played any part in influencing Mr. Dooland to make the contract which he did. On these grounds, therefore, Mr. Bucher contended, applying the principle which has found similar judicial expression, including the language of that very experienced judge, Rowlatt J., in the cases to which I shall later refer, that these collections were 'mere personal gifts' and not 'by way of payment for his 'services.' Mr. Bucher further submitted that, in any case, the conclusion of the majority of the General Commissioners was one of fact and, there being no error of law shown, was conclusive.

But there emerge from the facts of the present case three circumstances of the most significant relevance : First, though it is true that Mr. Dooland qualified for the collections by excellent performances of his professional duti as cricketer, and they arose in the ordinary course of his services which playing as the cricket professional of the East Lancashire Club. Second, though the performances were exceptional, in the sense of being outstanding, they were not exceptional in the sense of being very rare and unlikely to be, save very occasionally at most, repeated. Third, and not the least, it was a term of Mr. Doolands contract of service that on each occasion on which he performed his service with the requisite degree of skill, he should be entitled to invite subscriptions for himself from bystanders. It was a right capable of enforcement at law, if Mr. Doolands employers infringed it by refusing to permit the taking of a collection when, according to the league rule incorporated in his contract, his performance had reached the qualifying standard. The right, in other words, was part of the consideration for his services flowing from his employers. And if the question were asked 'What is the right worth ?' the corresponding question would be naturally provoked 'How much in fact was collected ?'

In Light of these circumstances, my own conclusion on the facts is - unless I am precluded by a contrary finding of the commissioners - that the collections received by Mr. Dooland during the 1951 season constituted, in truth and substance, part of the earnings of his profession and cannot fairly be called 'mere personal presents' distinct from his earnings. To put my conclusion in the form posed by Jenkins L. J. during the argument, if the question had been asked of Mr. Dooland at the end of the 1951 cricket season, What were his earnings as the East Lancashire Cricket Club professional an answer which ignored altogether the proceeds of the collections would, by ordinary standards of common sense and accuracy, have fallen short of the truth.

I have said 'unless I am precluded by a contrary finding of the Commissioners,' and it will be convenient for me to dispose at once of this point made by Mr. Bucher. I cannot myself assent to the view advanced by Sir Reginald Hills that it is 'dangerous' to leave matters of this kind - the discrimination between earnings arising from an employment on the one hand and mere personal presents on the other -to the commissioners as questions of fact. No doubt problems of this character commonly involve mixed questions of fact and law. But as Viscount Cave L. C. observed in Seymour v. Reed, the Kent Country cricketer : 'The question to be answered is, as Rowlatt J. put it, Is it in the end as personal gift or is it 'remuneration ' And in many cases, at least - and more particularly perhaps where the sum involved is small - provided that the Commissioners have been properly instructed upon the principles to be applied, the question will, as Rowlatt J. said, 'in the end' be one to be answered, in my judgement, as a matter of substance, of common sense and therefore of fact. But, in the present case, the commissioners did not, as I understand them, purport so to answer the question. Paragraphs 8 and 10 of the case stated were thus expressed : '8. After due consideration of the facts and the arguments submitted to them the commissioners, by a majority, were of the opinion that the collection in question were not a profit arising from the respondents employment within the meaning of the statutes but were given as testimonials to his abilities.' '10. The question in law for the opinion of the High Court is whether on the evidence before them the commissioners were entitled to hold that the collections in question were not a profit arising from the respondents employment within the meaning of the 'statutes.' In my judgement, therefore, the question in the present case has not been determined as a matter of fact conclusive in the courts. In Seymours case, above, the commissioners, after setting forth the rival contentions of the Crown and the subject - and after, indeed, a somewhat jejune statement of facts, on any view - stated their conclusion thus : 'We, the commissioners, ... after due consideration of the facts and arguments submitted to us, were of the opinion that the contentions of the respondent were correct.' Lord Carson, in the House of Lords, was able to treat this statement as a conclusive statement of fact; but I cannot find that any other of the noble lords or of the judges who heard the case was conscious of any embarrassment on this ground. In this respect, the present case is, in my judgement, of the same character as Seymours case.

We were referred to a number of well-known cases in which analogous questions had come before the courts - cases relating, for example, to Easter offerings, to the 'benefits' enjoyed by a professional footballer or a professional county cricketer, to the 'tips' given to a taxicab driver in augmentation of his fares. In these cases the relevant contrast, as I have already stated, was expressed as being between that which was in substance remuneration or earnings arising from the profession or employment as such, being taxable (on the one hand), and that which was (on the other hand) a mere personal gift and was not taxable. I have already referred to the language of Rowlatt J. approved and adopted by Lord Cave in Seymours case. I quote by way of further example language used by Lord Collins M. R. in Herbert v. McQuade, which related to the so-called Clergy Sustentation Fund for augmentation of the stipends of the clergy : 'If, as was contended by the incumbent, it was in fact a gift personal to himself, I do not think it would fall within the provisions of Schedule E; if, on the other hand, it accrued to him by virtue of his office as incumbent, the respondent himself could hardly dispute his liability.'

In the context of the facts of those cases the contrast thus simply expressed was sufficient. I observe only that the alternatives were intended to be mutually exclusive -if the sum in question was a mere personal gift, then, ex necessitate rei, it was not received by way of earnings of the office or employment; and vice versa. But the attempt to apply the antinomy to the facts of the present case seems to me to have produced the result of an over-simplification or over-statement on each side of their respective cases. Mr. Bucher did not, of course, seek to contest the proposition that a sum received might be taxable earnings though it was given voluntarily; but it was his contention that since the contributions of the spectators were on their part entirely 'spontaneous' donations, having no relation to any contract of employment between Mr. Dooland and his club, they could not, therefore, be earnings arising from that contract. Mr. Bucher relied also upon a passage the judgment of Stirling L. J. in the same case of Herbert v. McQuade : 'A profit accrues by reason of an office when it comes to the holder of an office as such - in that capacity - and without the fulfilment of any further or other condition on his part.' And Mr. Bucher emphasized the point that the collections here in question were not made to Mr. Dooland because he was the professional member of the East Lancashire Club XI but because he had individually performed an outstanding cricketing feat. But, in my judgment, this argument disregards, inter alia, the special term of Mr. Doolands bargain conferring upon him the right, in the appropriate circumstances, to solicit the collections. And it fails also, in my judgment, to pay due regard to another highly significant matter, namely, that the character of the sums received is to be ascertained and judged in relation rather to their recipient than to their giver. For that proposition I make a third citation from Herbert v. McQuade where the Master of the Rolls referred to the 'principle of law that a payment may be liable to income-tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office : if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it.' It follows, in my judgment, that a sum received may be earnings arising from the recipients employment although it was a mere gift on the part of him who paid; and that it is not sufficient in this case merely to say that the collections were spontaneously given by members of the public in token of their admiration for a special feat of bowling or batting.

It was said on behalf of the Crown that though a sum paid by an employer might be voluntary, in the sense that it was a 'mere present' on his part, nevertheless if the fact of the payment was essentially attributable to the circumstance that the payee was his employee, it followed that the sum so paid was part of the employees earning and taxable as such. On this view Christmas boxes paid by an employer to an employee would or might be taxable. It is not necessary for me in the present case to decide whether such Christmas boxes are or are not taxable. But I am unable to assent to the wide proposition that if it be shown of a voluntary payment to an employee - whether a Christmas box, a wedding present or any other kind of gift - made by the employer or by a third party, that it was would not otherwise have been made, therefore the sum is taxable; and accordingly that the collections in this case are taxable, because they owe the fact of their having come into existence to Mr. Doolands contract with the East Lancashire Club. In mu judgment, such a proposition is inconsistent with decision in Seymours case; for it is clear that the renowned Kent professional indubitably owed his benefit, in one sense at least, to the fact that the had played cricket for many years as a professional for the Kent Country Cricket Club and to the fact that the benefit was entirely contributed about one half of the total sum provided. The proposition, to my mind, confuses an incidental, albeit essential circumstance of the collection of the sum received, with its substantial character in the hands of the recipient. Thus in Seymours case, in the Court of Appeal, Sargant L. J. (in the course of his judgment disenting from the view of the majority of the court which was rejected in the House of Lords) thus expressed himself : '..... the substantial reason why these moneys were to be paid to Seymour was, not because he had been a mere member of the Eleven and as part of an addition to what was given to him by virtue of his office, but as a personal present by way of recognition of the pleasure that had been afforded to the patrons of the club and the general public who had flocked to see the play, by the brilliance of the particular individual cricketers play.' And Lord Cave L. C., in the same case, immediately before his reference to Rowlatt J. already quoted, had said that taxable payments under Schedule E 'include all payments made to the holder of an office or employment as such - that is to say, by way of remuneration for his services, even though such payments may be voluntary - but that they do not include a mere gift or present (such as a testimonial) which is made to him on personal grounds and not by way of payment for his services.'

It follows, in mu view, that a gift or present made either upon some special occasion as a wedding, a century at cricket, a birthday or at a season of the year when it is customary to make presents, does not necessarily cease to be non-taxable merely because the ties that link the recipient and the giver are or are substantially those of service and are not or not exclusively those of blood or friendship; and this may still be so, although the present is (for example, whenever another century is made or according to custom at Christmas) repeated.

Seymour v. Reed from which I have already made citations, was naturally much referred to, being clearly upon its facts most akin of the decided cases to the present. In that case, the claim of the Crown to tax the benefit subscribed for Seymour was confined to that part of the total (in sum about half) which had in effect been contributed by the Kent Country Club as representing the gate money paid at the benefit match which in the ordinary course belonged to the Club. The Crown made no claim to in the words of Rowlatt J. they 'shield at - that part of the fund which had been subscribed independently by members of the public. It was a point much stressed, and naturally, by Mr. Bucher, who referred to the Lord Chancellors language ...... those subscriptions, which are the spontaneous gift of members of the public, are plainly not income or taxable as such.' In truth, as was observed passim in the judgments and speeches in Seymours case there was no valid distinction in principle between the two kinds of contribution for the purpose of taxability; and the Crown, who have displayed no similar 'shyness' in the present case, were disposed, as I understood Mr. Borneman, to admit that their concession in Seymours case was unnecessary and logically unsound. But, in mu judgment, the facts, on which Seymours case was determined, are different in vital respects from those in the present case. The terms of Seymours contract nowhere appear, but quite plainly they did not include any right in any circumstances to a 'benefit'. At most, as Sargant L. J. observed, it was said to be a settled practice of the Kent Club to arrange a 'benefit' for a professional, who had rendered long and distinguished service to the club, so that there might be some claim on the part of a cricketer after such service to expect a donation of that kind. But the grant or arrangement of a benefit was a matter entirely in the discretion of the club - as was also the method of disposition of the sum subscribed, which, according to the evidence, was not handed over to the professional but invested on his behalf as a means for providing for him after his retirement from the name. These circumstances, plus the facts that (according to the evidence), except in the rarest instances, a player had only one benefit and that one towards the end of his career as a professional and that the sum subscribed was very large by comparision with the professionals regular salary (the converse of the present case) were the basis of the decision and have no correspondence with the facts of the present case.

In my judgment, therefore, Seymours case cannot be treated as an authority which ought to govern our decision in this case. On the facts of the later, and particularly having regard to the three essential characteristics to which I drew attention earlier in this judgment, I conclude that the proceeds of the collections made in the year 1951 were, from the stand point of Mr. Dooland, substantially earnings arising from his employment as cricket professional and taxable as such. Whether the result would be the same if any one or more of those characteristics were absent, it is quite unnecessary for me to say. For example, if there was no right for Mr. Dooland by contract to have these collections - so that his position in that respect would be analogous to that of an amateur player in the League - and if the qualifying exploits were of such a kind, as for example, the making of 50 runs and taking all 10 wickets in an innings in the same match, so that their achievement or repeated achievement could be regarded as altogether exceptional, the result might be different. I base my decision on, and limit it to, the particular facts proved and found in the case before us.

In the Easter offerings case - Blakiston v. Cooper, Lord Loreburn L. C. said : 'In my opinion, where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office. Here the sum of money was given in respect of those services. Had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose, as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present.'

I observe that Lord Loreburn L. C. said 'might not.' Applying that language to the present case, although no doubt the collections were 'testimonials' 'peculiarly due to the great qualities' of Mr. Dooland as a cricketer, in my judgment, for the reasons I have given, they were not mere presents so as not to be taxable but were, in Mr. Doolands hands 'substantially in respect of his services' as the clubs professional.

Mr. Borneman contended that the facts of the case were so plain that res ipsa loquitur in the Crowns favour. I cannot agree. Although I think the Crown entitled to succeed, I have for my part found the case far from easy and have felt much sympathy with the view taken by the majority of the commissioners and by Harman J. Mr. Borneman, as I understood him, also suggested in opening that the decision of Harman J. involved an anomaly, unjust to parsons, as regards Easter offerings, and to professional footballers as regards their benefits. I cannot by any means assent to that suggestion. The case of the professional footballer is plainly quite different since, in his case, benefits appear to be payable at stated times by this employer as a term of his contract (see is no doubt that to the extent that the facts relating to them correspond with the facts in Blakiston v. Cooper they are taxable. The House of Lords so decided in that case in the year 1908 and Parliament has not since altered the law. With the income-tax at its present rate, it might perhaps appear startling that those who on a particular Sunday - and that one of the most significant in the Christian Year - contribute to the collection in their church, should be rendering unto Caesar nearly half their contributions. But so undoubtedly it is. I observe, however, that the decision in Cooper v. Blakiston turned largely upon the circumstance that the offerings there in suit had been prompted by a letter from the Bishop alluding to 'the laudable practice of making freewill offerings at Easter to the parish clergy who are seldom sufficiently endowed,' and Lord Phillimore in Seymours case referred to the historical connexion between Easter offerings and the common law Easter dues. Offerings made, therefore, in circumstances similar to those in Blakiston v. Cooper must be regarded as systematic and recurrent augmentations of the stipends of the clergy. On the other hand, offerings made to a particular clergyman out of regard for and in relief of his particular circumstances may well still not be taxable (see Turton v. Cooper).

In any case, the clergyman, unlike the professional cricketer, is the holder of an office. In the case of the clergy the office (that is, that of the incumbent of a particular living) and its holder for the time being are clearly distinguishable. Easter offerings (as ordinarily understood are contributions made to the holder of the office as such, so that (as has been observed) if a particular incumbent should die before the time arrived for payment of the offerings, they would go to his successor. Such considerations have no place in connexion with an employment such as that of a professional cricketer. In my judgment, the authority of Blakiston v. Cooper is necessarily limited by its own particular facts.

The court, however, is not concerned with anomalies - save at least in those cases (of which the present is not one) in which it will tend to favour an interpretation of a doubtful matter of law or an obscure passage in an Act of Parliament or other instrument which will avoid anomalies. Here the courts duty is to relate particular facts to established principles. Since, however, the matter of anomalies was raised, I must observe that our decision in favour of the Crown may well be said to create an anomalous distinction between the large benefits received by professional country cricketers which are not taxable and the relatively small collections received by Lancashire League cricketers which are. An anomaly which may be thought more startling still arises within the Lancashire League itself, between the collections of the professional cricketer, which are taxable, and the collections of the amateur in corresponding circumstances, which (seemingly) are not; a point which strongly appealed to Harman J. and led him to the view that the contractual element in Mr. Doolands collections was incidental only and should not be regarded as significant. In light of these considerations. I confess that I have reached my conclusion with little satisfaction or enthusiasm. But I think that the appeal must be allowed.

JENKINS L. J. If this had been the first case of its kind, there might have been something to be said for the view that the proceeds of the collections were not in their nature taxable at all, for the simple reason that these were not sums paid or provided by or at the expense of Mr. Doolands employers, but were contributed voluntarily by spectators under no obligation to make any such payment, and were, accordingly, in the nature of casual profits as distinct from income derived from a regular source.

But it has long been settled that payments voluntarily made by third parties to the holder of an office or employment may, in some circumstances, be taxable as profits arising to such holder therefrom, although the immediate source from which they proceed consists in the generosity of persons on whom he has no legal claim.

The present case cannot therefore be dismissed on the short ground above suggested, and it becomes necessary to consider whether, on the authorities, the circumstances in which Mr. Dooland received the proceeds of these collections, albeit contributed voluntarily and by strangers to his contract of employment, were such as to make those proceeds when considered in relation to the nature and terms of his employment, 'perquisites or profits... therefrom' within the meaning of rule 1 of the rules applicable to Schedule 'E' as applied to his case by section 18 of the Finance Act, 1922.

The circumstances in which voluntary payments may be made to the holder of offices or employments are obviously capable of wide variation from case to case, and each must be judged by reference to its own facts; but the authorities indicate certain general principles to which regard should be had in determining whether the circumstances of a particular case are or are not such as to bring it within the line of tax liability.

In Herbert v. McQuade, which concerned the liability of the vicar of a certain parish to tax on sums granted to him by the Queen Victoria Clergy Sustentation Fund, Collins M. R. said : 'Now that.... is certainly an affirmation of a principle of law, that a payment may be liable to income-tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office; if it does, it does not matter whether it was voluntary or whether it was compulsory on the part of the persons who paid it. That seems to me to be the test; and if we once get to this -that the money has come to, or accrued to, a person by virtue of his office - it seems to me that the liability to income tax is not negatived merely by reason of the fact that there was no legal obligation on the part of the persons who contributed the money to pay it.'

In the same case Stirling L. J. said : 'I think that a profit accrues by reason of an office when it comes to the holder of an office as such - in that capacity - and without the fulfilment of any further or other condition on his part; and what we have to determine is whether the sum in question does so come to the holder of this office.'

In Cooper v. Blakiston, Lord Loreburn L. C. said : 'In my opinion, where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office. Here the sum of money was given in respect of those services. Had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose, as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present.'

In Seymour v. Reed, where tax was unsuccessfully claimed on the proceeds of a professional cricketers benefit, Lord Cave L. C., after referring to the terms of rule 1 of Schedule 'E', said : 'These words and the corresponding expression contained in the earlier statutes (which were not materially different) have been the subject of judicial interpretation in cases which have been cited to your Lordships; and it must now (I think) be taken as settled that they include all payments made to the holder of an office or employment as such - that is to say, by way of remuneration of this services, even though such payments may be voluntary - but that they do not include a mere gift or present (such as a testimonial) which is made to him on personal grounds and not by way of payment for his services. The question to be answered is, as Rowlatt J. put it, Is it in the end a personal gift or is it remuneration If the latter, it is subject to the tax; if the former, it is not. Applying this test, I do not doubt that in the present case the net proceeds of the benefit match should be regarded as a personal gift and not as income from the appellants employment. The terms of his employment did not entitle him to a benefit, though they provided that if a benefit were granted the committee of the club should have a voice in the application of the proceeds. A benefit is not usually given early in a cricketers career, but rather towards its close, and in order to provide an endowment for him on retirement; and, except in a very special case, it is not granted more than once. Its purpose is not to encourage the cricketer to further exertions, but to express the gratitude of his employers and of the cricket - loving public for what he has already done and their appreciation of his personal qualities. It is usually associated, as in this case, with a public subscription; and, just as those subscriptions, which are the spontaneous gift of members of the public, are plainly not income or taxable as such, so the gate moneys taken at the benefit match, which may be regarded as the contribution of the club to the subscription list, are (I think) in the same category. If the benefit had taken place after Seymours retirement, no one would have sought to tax the proceeds as income; and the circumstance that it was given before, but in contemplation of, retirement does not after its quality.'

In the same case Lord Phillimore (after referring to Blakiston v. Cooper and Herbert v. McQuade) said : 'In fact in these cases of ministers of religion there is always, I think, some element of periodicity or recurrence which makes another distinction between them and the cases of a single gift by an employer or employers.'

From these citations I deduce the following principles :-

(i) The test of liability to tax on a voluntary payment made to the holder of an office or employment is whether, from the standpoint of the person who receives it, it accrues to him by virtue of his office or employment, or in other words, by way of remuneration for his services.

(ii) If the recipients contract of employment entitles him to receive the voluntary payment, whatever it may amount to, that is a ground, and I should say a strong ground, for holding that, from the standpoint of the recipient, it does accrue to him by virtue of his employment, or in other words, by way of remuneration for his services.

(iii) The fact that the voluntary payment is of a periodic or recurrent character affords a further, but I should say a less cogent, ground for the same conclusion.

(iv) On the other hand, a voluntary payment may be made in circumstances which show that it is given by way of present or testimonial on grounds personal to the recipient, as for example, a collection made for the particular individual who is at the time vicar of a given parish because he is in straitened circumstances, or a benefit held for a professional cricketer in recognition of his long and successful career in first-class cricket. In such cases the proper conclusion is likely to be that the voluntary payment is not a profit accruing to the recipient by virtue of his office or employment but a gift to him as an individual, paid by reason of his personal qualities or attainments in the latter example.

Applying these principles to the facts of the present case, I find :- (i) that under his contract of service with the East Lancashire Cricket Club Mr. Dooland was entitled to make, or have made on his behalf, collections from spectators on the ground, whenever he achieved one of the performances in batting or bowling which carried the right to a collection according to the rules of the Lancashire Cricket League; and (ii) that occasions on which he attained one or other of the stipulated performances, and enjoyed a collection accordingly, recurred with considerable frequency, there having been no less than eleven such occasions during the 1951 season. According to the principles above stated, these facts afford cogent grounds for holding that the present case falls within the line of tax liability.

On the other hand it is to be observed :- (i) that in order to earn the right to a collection Mr. Dooland had not only to play in a given match, but also to achieve in the course of play one or other of the stipulated performances, and (ii) that according to the rules of the Lancashire Cricket League amateurs were entitled to make, or have made on their behalf, similar collections whenever they achieved like performances in batting or performances in bowing of a slightly less exacting standard.

Mr. Bucher, for Mr. Dooland, contends that these features of the present case show that spectators contributing to his collections were not contributing, albeit voluntarily, to the remuneration of Mr. Dooland as professional to the East Lancashire Club but where merely expressing, in terms of cash, their spontaneous appreciation of a display of skill given by one of the players, who happened to be Mr. Dooland, the clubs professional, but might equally well have been any other player in the match, professional or amateur, who achieved a comparable performance. Mr. Bucher submits that the necessity of achieving one or other of the stipulated performances, in order to earn the right to a collection, amounts to a condition which suffices to take the proceeds of it out of the category of profits arising by virtue of the employment, and, in support of this submission, he refers to the observation of Stirling L. J. in Herbert v. McQuade to which I have already referred. Mr. Bucher further contends that while sums voluntarily contributed may be profits of an office or employment, there must, to bring them within the line of tax liability, be some nexus between recipient and contributor in the shape of services rendered by the former for the benefit of the letter. He says that while such a nexus may be said to exist between a taxi driver or waiter and a passenger or customer who gives him a tip, or between the vicar of a parish and a member of his flock who contributes to his Easter offering, there was no similar bond between Mr. Dooland and spectators he helped to entertain.

I hope I will not be thought to undervalue these arguments, if I says that I regard them as disposed of by the application of the principle that the question whether a given receipt is a profit of an employment must be decided from the standpoint of the recipient. From the standpoint of Mr. Dooland, the proceeds of the collections were by the very terms of his contract of employment part of what he was to get under the contract by way of remuneration or reward for what he was to do under the contract. True it is that the amount of any collection would depend on the number and goodwill of the spectators present; but the terms of this employment entitled him, as of right, to collect what he could. True it is, also, that his right to collect depended on his achieving one or other of the stipulated performances; but that condition was itself a term of the contract. His right to talent money likewise depended by the terms of his contract on his attainment of specified feats in bating or bowling; but it could hardly be maintained that whatever talent money he might earn would not be profits of his employment. The term of his contract, giving him the right to collect, cannot be regarded as nugatory. It gave him a contractual right to do something which he could hardly have done without the permission of the club - that is to say, to solicit contributions from spectators on the ground. If the club had prevented him firm collecting on attaining one or other of the stipulated performance, he could, I take it, have sued them in damages. Even in the case of an 'away' match, where it was necessary for the club on whose ground the match was played to permit the making of a collection, Mr. Doolands own club were, I take it, under a contractual obligation for, such permission. I do not think that the rights given by the league rules to amateurs in the matter of collections really assist Mr. Doolands case. If the proceeds of collections made by or for amateurs are not taxable, that is merely because they are amateurs playing cricket for their own amusement and not as a source of income. I do not think that Mr. Buchers submission to the effect that sums paid voluntarily by third parties to the holder of an office or employment are not taxable if there is some nexus between the payer and the recipient in the shape of services rendered by the latter for the benefit of the former can be accepted. The presence of some nexus may no doubt support the conclusion that the payment in question is a profit of the office or employment, but it does not follow that the absence of any such nexus will necessarily conclude the matter the other way. Here the link between Mr. Doolands employment and the proceeds of the collections is supplied by an express term in the contract of employment. Moreover, I am by no means satisfied that there is any such distinction, as Mr. Bucher seeks to draw for the purposes of the submission, between tips voluntarily given to a taxi-driver or waiter who has rendered services to the payer in the shape of transportation or attendance and the contributions made by spectators to a collection for Mr. Dooland who by his skilful play had helped to entertain them.

Mr. Bucher also submitted that this case resolved itself into a question of fact, which was concluded by the commissioners decision. But in my view the question involved is essentially a mixed question of fact and law which was open to Harman J. and is open to this court, and which was correctly stated by the commissioners in paragraph 10 of the case as being 'whether on the evidence before them the commissioner were entitled to hold that the collections in question were not a profit arising from the respondents employment within the meaning of the statues.'

For the reason which I have endeavoured to state, I am of opinion that this question should be answered in the negative and would accordingly allow the appeal.

BIRKETT L. J. It is with some regret that I have come to the clear conclusion that this appeal should be allowed. At the end of his judgment Harman J. made it quite plain why he decided the case in Mr. Doolands favour. Speaking of the collections which the Crown sought to tax he said : 'In what capacity does (the money) come to this recipient Does it come to him because he is the professional employed by the East Lancashire Club, or does it come to him because he strikes the person who pays it as being a very brilliant cricketer on that particular Saturday afternoon Those are the questions the commissioners had before them.... The commissioners came to the view that these were personal testimonials to the skill of the respondent as a cricketer, and were not paid to him because he was the professional employed by the East Lancashire Club. They did not, in other words, arise out of his office or employment but were personal tributes to him.'

The judge then went on to treat the findings of the commissioners as findings of fact which they were entitled to make, and with which he would not interfere. But as I read paragraphs 8 and 10 of the case stated, the commissioners did not purport to make the findings of fact, but expressed an opinion, and stated the question of law for this court 'whether they were entitled to hold that opinion on the evidence before them.'

In my judgment the opinion expressed by a majority of the commissioners and supported by Harman J. 'that the collections in question were not a profit arising from the respondents employment within the meaning of the statutes but were given as testimonials to his abilities' was clearly wrong. Mr. Dooland is a very distinguished cricketer and on August 27, 1949, he entered into the contract with the East Lancashire Cricket Club the terms of which have been read by Evershed M. R. The East Lancashire Cricket Club belonged to the Lancashire Cricket League and Mr. Dooland served the club as professional in the years 1950 and 1951.

It is the terms of this contract which make it impossible, in my view, to support the judgment of Harman J. It was not challenged that Mr. Doolands service with the club was an 'employment' under Schedule 'E' of the Income Tax Act, 1918, or that this liability was to be governed by the words of rule 1 of that Schedule, the material words being 'profits arising therefrom.'

Mr. Dooland was contractually entitled to the benefit of the collections taken up on the cricket grounds where he played, if he fulfilled the conditions laid down in the contract (which incorporated the rules of the Lancashire League); and, if necessity arose, he could enforce his contractual rights against the club at law. The assessment in the present appeal is upon the amount of money received by Mr. Dooland from the collections made in the cricket season of 1951, and those collections were made because of the provisions in the contract of August 27, 1949. That seems to me to be decisive. There was an employment and there were profits arising therefrom, and inexorably Schedule E and the rules come into operation.

The arguments for Mr. Dooland have been so fully considered in the two judgments that have been delivered that I will only add a very few words. I quite appreciate that the warm-hearted and generous Lancashire public were contributing their sixpence and shillings as a token of the pleasure that Mr. Dooland had given them when performing one of the feats laid down in the contract. They knew nothing of the contract, and would no doubt be much surprised to hear that Mr. Dooland was not going to get the whole of their gift. But Mr. Dooland knew what the terms of the contract were, and knew that the collections would be part of his profit when fulfilling his employment as the professional to the club, and whether he knew the money would be liable to tax is immaterial. The money given to these collections by the cricketing public from whatever motive, and however they are described, whether as gifts, testimonials, tributes or what not, seem to me to be governed for tax purposes by the provisions of the contract, and it is the recipient and not the giver who is the concern of the tax collector.

Seymour v. Reed was naturally much relied on by counsel for the respondent, and the Master of the Rolls has dealt fully with the decision in that case so far as it relates to the present appeal.

It does appear to be a great anomaly that a famous cricketer may receive a benefit running into many thousands of pounds tax free, whilst a professional cricketer in Lancashire playing for a few brief seasons, and receiving small sums by way of collections, should be liable to tax. But the facts in Seymours case were quite different from the facts in the present case and it is quite clear that the present appeal cannot be determined by applying the decision in Seymours case to it.

I should have been glad to find, if I could, that the collections made to Mr. Dooland were essentially of the same character as the benefit given to Mr. Seymour, and to say that the collections were voluntary payments made by the cricketing public on grounds which were purely personal to Mr. Dooland because he was well liked and because of his cricketing skill, and were not a profit accruing to him by virtue of his employment. In my opinion, however, this case is concluded by the special facts, the chief and decisive fact being the contract of employment which had provided for these very collections to be made to him in the circumstances which arose in this case.

I am in full agreement with the judgments of the Master of the Rolls and of Jenkins L. J., and in my opinion this appeal should be allowed.

Appeal allowed.

Solicitors : Solicitors of Inland Revenue; Gibson & Weldon.


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