The Corporation of Foreign Bondholders v Inland Revenue Commissioners
[1944] 1 All ER 420(Decision by: Lord Greene Mr)
Between: The Corporation of Foreign Bondholders
And: Inland Revenue Commissioners
Judges:
Lord Greene MrMacKinnon LJ
Luxmoore LJ
Subject References:
Income Tax
Exemption
Charity
Protection of interests of holders in the United Kingdom of foreign bonds
Whether established for "charitable purposes"
Legislative References:
Income Tax Act 1918 (c 40) - s 37(1)(b); Sched D
Judgment date: 9 March 1944
Decision by:
Lord Greene Mr
The appellants are a corporation founded under an Act of Parliament intituled the Corporation of Foreign Bondholders Act 1898. By virtue of that Act they succeeded to an earlier body which had been incorporated as a company limited by guarantee under Companies Acts, and had accumulated a fund amounting to £100,000. Parliament thought it right that the affairs and activities of that earlier corporation should be set upon a more satisfactory basis and, accordingly, the present appellants were incorporated.
It has long been the practice of investors in this country who are so minded to invest money in the bonds of foreign states and foreign corporations. Their experiences in doing so have often and notoriously been unfortunate, and the original corporation was formed and its subscriptions obtained for the purpose of protecting the interests of investors of that class. The present corporation has objects of a similar nature. In addition to protecting, watching over and generally doing its best to further the interests of such bondholders (a comprehensive phrase which I use for brevity), it places its information and its statistics, and all the other matter it has collected, at the service of any member of the public who is interested in such matters. The object of the corporation may, I think, summarily be stated in this way. It exists to enable a certain limited class of investor to protect, so far as possible, his investment, and to get his money back, or as much of it as can be extracted from a reluctant foreign government. That is the object of the corporation. Nobody can suggest that the investors themselves are to be regarded in any sense as doing anything more than looking after their private interests. Yet it is said that this corporation, whose object is to assist them in so doing, is established for charitable purposes.
Counsel for the appellants, in an engaging argument adorned with excursions into elementary economics, has endeavoured to put this body before us as one which exists for the public purpose of protecting the foreign investments of this country, and thereby doing a public good. It cannot, I think, be disputed that, in the matter of helping the investor in foreign bonds and applying whatever persuasion can be brought to bear upon defaulting foreign governments, the country is benefited by the operations conducted by this corporation; but it is quite untrue to say that a body which is established for the purpose of protecting private investors becomes a charity, because one of the results of its operations is to do something which is beneficial to the state.
In my opinion, the facts have only to be understood for the question raised by this appeal to be answered, and it must be dismissed with costs.