Commissioners for Special Purposes of Income Tax v Pemsel
[1891] A.C. 531(Decision by: Lord MacNaughten)
Between:Commissioners for Special Purposes of Income Tax - Appellants
And: John Frederick Pemsel - Respondent
Judges:
Lord Halsbury LC
Lord Watson
Lord Bramwell
Lord Herschell
Lord MacNaughtenLord Morris
Subject References:
REVENUE
INCOME TAX
Allowances
'Charitable Purposes'
Certificate
Procedure
Mandamus to Commissioners
5 & 6 Vict. c. 35, Sched. A, s. 61, No. VI., s. 62
Judgment date: 20 July 1891
Decision by:
Lord MacNaughten
My Lords, the circumstances which have given rise to the present question are peculiar. The question itself is important, but it does not, I think, involve serious difficulty.
Income Tax Acts have been in force in this country without any intermission since 1842, and, with one long interval, ever since the close of the last century. Every Act has contained an exemption in favour of property dedicated to charitable purposes. What are charitable purposes within the meaning of these Acts the legislature has nowhere defined; but from the very first it was assumed, as a matter not open to controversy, that the exemption applied to all trusts known to the law of England as charitable uses or trusts for charitable purposes. On that principle, without inequality and apparently without difficulty, the law was administered in England and Scotland, and afterwards, when the tax extended to Ireland, throughout the whole of the United Kingdom. At length, about three or four years ago, the Board of Inland Revenue discovered that the meaning of the legislature was not to be ascertained from the legal definition of the expressions actually found in the statute, but to be gathered from the popular use of the word "charity." Proceeding on this view they refused remissions in cases in which the remission had been claimed and allowed as a matter of right for more than forty years continuously.
The action of the Board was confirmed in Scotland by the Court of Session, in the case of Baird's Trustees v. Lord Advocate. There it was held that, "in ordinary familiar and popular use," charity had only one sense, the relief of poverty, and that the exemption related to funds given as alms, or as a provision for the relief of persons from physical privations or sufferings arising from poverty, and that it went no further. The opinion of the Court was based on a proposition which I will state in the words of the Lord President. "It appears to me," his Lordship observed,
"that in the construction of taxing Acts the Court must always take it for granted, where these Acts apply to the whole United Kingdom, that the words used by the legislature are used in their popular and ordinary signification, and are not technical legal terms belonging to one system of jurisprudence, which may exist in one part of the United Kingdom and not in another. The occurrence of such technical terms as these in a taxing Act would have the most disturbing and confusing effect, and it would be very difficult indeed to administer such a statute as applicable to the whole United Kingdom. And, accordingly, we always find in these taxing Acts that the words used are words of ordinary meaning, which are understood by everybody, whether in England, Scotland, or Ireland, in the same sense."
In deciding the present case the Divisional Court (Lord Coleridge C.J., Grantham J. dissenting) followed and approved the reasoning of the Court of Session. The decision was reversed on appeal, but the majority of the Court of Appeal agreed with the Lord Chief Justice so far as to hold that the legal meaning of the words in question must be rejected in favour of their popular signification. They thought, however, that the Lord Chief Justice had taken too narrow a view. Lord Esher M.R., with whom Lopes L.J. concurred, by way of giving an explanation of practical use, paraphrased the enactment as follows:
"Allowances are to be made in respect of the duties on the rents and profits of lands, tenements, hereditaments, or heritages vested in trustees when the rents and profits are given in trust to be expended in assisting people to something considered by the donor to be for their benefit, and which assistance the donor intends shall be given to people who, in his opinion, cannot without such assistance, by reason of poverty, obtain that benefit, and where the intention of the donor is to assist such poverty as the substantial cause of his gift."
Fry L.J. differing from the Court of Session, considered that the expression "charitable purposes" had acquired a technical meaning in Scotland as it undoubtedly had in England and Ireland, and that consequently he was bound to adopt that meaning.
In the course of the argument at your Lordships' Bar the learned counsel for the Crown admitted that the construction adopted by the Court of Session and the Lord Chief Justice was too narrow, but they insisted that the words must be construed in some popular sense, and without attempting any definition they contended that the expression "charitable purposes," in its ordinary acceptation among persons of education, would not include the purpose of converting the heathen.
In this state of perplexity the question remains for your Lordships to decide.
It will be convenient, I think, in the first place to deal with the more important considerations which seem to have weighed with the Courts in approaching the subject. Foremost of all is the very broad proposition on which the decision of the Court of Session rests, and which has been adopted rather hastily, I think, by the Lord Chief Justice and the majority of the Court of Appeal. Is it true, as a matter of fact, that we always find in these taxing Acts that the words used are words of ordinary meaning, understood by everybody in the three kingdoms in the same sense, and not technical legal terms in use in one part of the United Kingdom? I could wish it were so. But we are not living in Utopia, where a perfect or ideal lawgiver may be had very readily. The Income Tax Acts themselves form an instructive commentary on the proposition of the Lord President. In the earliest Income Tax Act, the Act of 1799, except when it deals with commissioners for districts in Scotland, the language is the language of an English lawyer. So little attention was paid to the legal phraseology of Scotland, that the word "heritages" does not, I think, occur in the Act. The term used to denote real property is the expression "lands, tenements, and hereditaments." In the Acts of 1803 and 1806 the word "heritages" is introduced, but it will not be found inserted in all places where it seems to be required. Even in the Act of 1806 you will find the words "hereditaments" and "messuages" - words I should suppose not of ordinary meaning in Scotland, nor familiar in their English sense to Scotch lawyers - used as applicable to all parts of Great Britain. Another example not without some bearing on the present question is presented by the Succession Duty Act 1853. That is a taxing Act. It extends to the three kingdoms. No statute was ever drawn with more care. Studiously and with great skill it avoids technical expressions wherever they would be likely to create confusion. Yet there we find the very word "charity," which has given rise to all this argument, used in its technical sense according to English law, and applied to property belonging to public trusts in Scotland as well as to property dedicated to charitable purposes in England. In sect. 16 the Act provides for the case of "a succession to property subject to a trust for any charitable or public purposes," and it goes on to give the trustee of any such property, who is made responsible for the duty and a debtor to the Crown in the event of non-payment, power to raise the duty. How is it to be raised? All the Act says is,
"Upon the security of the charity property."
Again, I ask, is the Lord President correct in saying that in construing a taxing Act extending to the whole of the United Kingdom, the Court must always take it for granted "that the words used by the legislature are used in their popular signification"? I can find no authority for such a proposition. There is, indeed, a passage in the judgment of Lord Campbell in Lord Saltoun v. Lord Advocate which at first sight looks like an authority, and is so treated in the rubric. In reality it has no bearing upon the point. The case was this: Lord Saltoun, under an entail created by his grandmother, succeeded to a settled property on the death of his uncle without heirs male of his body. What was the rate of duty? Was it 3 per cent., as on a succession from an uncle, or 1 per cent., as on a succession from a lineal ancestor? This House, differing from the Court of Session, took the latter view, and Lord Campbell began his judgment with these observations: "In construing the statute on which the case depends we must bear in mind that it applies to the whole of the United Kingdom, and that the intention of the legislature must be understood to be that the like interests in property taken by succession should be subjected to the like duties, wheresoever the property may be situated. The technicalities of the laws of England and of Scotland, where they differ, must be disregarded, and the language of the legislature must be taken in its popular sense." The technicalities to be disregarded were not technical expressions in the Act, but, as Lord Wensleydale I think very clearly points out, the technicalities of the law of real property outside the Act altogether. In the Act itself, so far as it came under consideration in that case, there were no technical expressions belonging to the law of either country. But outside the Act there was the technical rule of Scotch law, by which each succeeding substitute takes the whole fee, and must be served heir to the preceding owner.
Since these remarks have been in print, I have had the advantage of reading the adverse criticism passed upon them by my noble and learned friend on the woolsack. My noble friend observes that in Lord Saltoun's Case "the word which was in debate was 'predecessor'"; that "the turning point of the case" was the question, "whether that word was to receive its meaning according to technical application in Scotch law, or its more popular meaning"; and, moreover, that "it was with reference to that word 'predecessor' that Lord Campbell's observations were made." My noble friend's opinion, if I am not mistaken, is based on these premises. Are they quite sound? Lord Campbell possibly may have supposed that the term "predecessor" was a technical expression with Scotch lawyers. But, even so, it must not, I think, be assumed that he thought its meaning open to debate in Lord Saltoun's Case. The very Act before him defined the term "predecessor." The definition seems somewhat remote from the popular meaning of the word, and not less remote from any technical application of it that can be imagined. When you find a special meaning assigned to a particular word in an Act of Parliament you must abide by that meaning in construing the Act - you cannot add to it or take away from it - nor can you substitute anything else for it. And, therefore, with the utmost respect, I venture to doubt whether it would have been permissible in Lord Saltoun's Case to discuss the comparative merits of other meanings which the Act had not adopted. And certainly I have some difficulty in understanding how such a discussion, if permitted, could have presented or involved the turning point of the case. In point of fact the question in Lord Saltoun's Case was not, Which of two meanings of a certain word was to be preferred, but Which of two persons was to be taken as fulfilling the conditions of the statutory definition of that word.
It seems to me that statutes which apply to Scotland as well as to England, and which touch upon matters commonly dealt with in legal language may be divided into three classes. Sometimes, but very rarely, legal terms are carefully avoided, as in the Succession Duty Act. Sometimes in very recent statutes, as in the Bills of Exchange Act and the Partnership Act, every legal term according to English law is immediately followed by its equivalent in Scotch legal phraseology; and where no exact equivalent is to be found, a neutral and non-legal expression is adopted. But in some cases certainly, and especially in the legislation of former days, the statute proclaims its origin, and speaks the language of an English lawyer, with some Scotch legal phrases thrown in rather casually. The Income Tax Acts, I think, fall within this class, though, no doubt, the Act of 1842 is less conspicuously English than its predecessors. How are you to approach the construction of such statutes? We are not, I think, quite without a guide. It seems to me that there is much good sense in what Lord Hardwicke says in his well-known letter to an eminent Scotch judge. Incidentally he happens to deal with the very point. He observes that where there are two countries with different systems of jurisprudence under one legislature, the expressions in statutes applying to both are almost always taken from the language or style of one, and do not harmonize equally with the genius or terms of both systems of law. That was, perhaps, rather a delicate way of stating the case, but one must remember to whom Lord Hardwicke was writing, and his meaning is perfectly clear. Then he explains how these statutes ought to be expounded. You must, he says, as in other sciences, reason by analogy - that is, as I understand it, you must take the meaning of legal expressions from the law of the country to which they properly belong, and in any case arising in the sister country you must apply the statute in an analogous or corresponding sense, so as to make the operation and effect of the statute the same in both countries. Thus you get what Lord Hardwicke calls "a consistent, sensible construction." A simpler plan is now recommended. Though the words have a definite legal meaning in England, you must not, it is now said, look at that meaning unless it be in vogue north of the Tweed. You must put out the light you have, unless it penetrates directly to the furthest part of the room. That was not Lord Hardwicke's view. He seems to have thought reflected light better than none.
In construing Acts of Parliament, it is a general rule, not without authority in this House (Stephenson v. Higginson that words must be taken in their legal sense unless a contrary intention appears. Is a contrary intention shewn merely by the circumstance that the legal meaning of the words used belongs more properly, or even exclusively, to the jurisprudence of one part of Great Britain? Agreeing with Lord Hardwicke rather than with the Court of Session, I am disposed to answer that question in the negative.
That according to the law of England a technical meaning is attached to the word "charity," and to the word "charitable" in such expressions as "charitable uses," "charitable trusts," or "charitable purposes," cannot, I think, be denied. The Court of Chancery has always regarded with peculiar favour those trusts of a public nature which, according to the doctrine of the Court derived from the piety of early times, are considered to be charitable. Charitable uses or trusts form a distinct head of equity. Their distinctive position is made the more conspicuous by the circumstance that owing to their nature they are not obnoxious to the rule against perpetuities, while a gift in perpetuity not being a charity is void. Whatever may have been the foundation of the jurisdiction of the Court over this class of trusts, and whatever may have been the origin of the title by which these trusts are still known, no one I think who takes the trouble to investigate the question can doubt that the title was recognised and the jurisdiction established before the Act of 43 Eliz. and quite independently of that Act. The object of that statute was merely to provide new machinery for the reformation of abuses in regard to charities. But by a singular construction it was held to authorize certain gifts to charity which otherwise would have been void. And it contained in the preamble a list of charities so varied and comprehensive that it became the practice of the Court to refer to it as a sort of index or chart. At the same time it has never been forgotten that the "objects there enumerated," as Lord Chancellor Cranworth observes,
"are not to be taken as the only objects of charity but are given as instances."
Courts of Law, of course, had nothing to do with the administration of trusts. Originally, therefore, they were not concerned with charities at all. But after the passing of the Act 9 Geo. 2, commonly known as the Statute of Mortmain, which avoided in certain oases gifts to "uses called charitable uses," alienations and dispositions to charitable uses sometimes came under the cognizance of Courts of Law, and those Courts, as they were bound to do, construed the words "charitable uses" in the sense recognised in the Court of Chancery, and in the Statute of Elizabeth, as their proper meaning. I have dwelt for a moment on this point, because it seems to me that there is a disposition to treat the technical meaning of the term "charity" rather as the idiom of a particular Court than as the language of the law of England. And yet of all words in the English language bearing a popular as well as a legal signification I am not sure that there is one which more unmistakeably has a technical meaning in the strictest sense of the term, that is a meaning clear and distinct, peculiar to the law as understood and administered in this country, and not depending upon or coterminous with the popular or vulgar use of the word.
In Ireland, though neither the Statute of Elizabeth nor the so-called Statute of Mortmain extended to that country, the legal and technical meaning of the term "charity" is precisely the same as it is in England.
As regards the law of Scotland, the case is somewhat different. I think that Fry L.J., with whose very able judgment in other respects I concur, has gone rather too far in saying that the word "charity" has the same technical meaning in Scotland which it has in England. On the other hand, it seems to me that, in the case of Baird's Trustees, the Court of Session has erred more seriously in the opposite direction.
To borrow the words of Lord Chelmsford (Magistrates of Dundee v. Morris) "I cannot discover that there is any great dissimilarity between the law of Scotland and the law of England with respect to charities."
And the result of such researches as I have been able to make is, that in the Scotch Act to which Mr. Crackenthorpe referred, the Act of 1633 - in some statutes extending to Scotland, as in 2 & 3 Will. 4, c. 115, a Roman Catholic Relief Act, and the Succession Duty Act, 1853, to which I have already referred - in some opinions, delivered by Scotch judges in Scotland, as in the case of Ferguson v. Marjoribanks, and not unfrequently in this House, sitting as a Court of Scotch Appeal, as in the University of Aberdeen v. Irvine; and Andrews v. McGuffog, the words "charity" and "charitable" are used sometimes in the sense which they bear in English law, sometimes in a sense hardly distinguishable from it. If this conclusion is right, although the expression "charitable purposes" may not have acquired a technical meaning, properly so called, in the law of Scotland, I cannot see that the use of the expression in a general Act as a legal term without the addition of its equivalent according to Scotch law (if any such equivalent could be found) would of itself, and apart from other circumstances, either create surprise or lead to any practical difficulty.
No doubt the popular meaning of the words "charity" and "charitable" does not coincide with their legal meaning; and no doubt it is easy enough to collect from the books a few decisions which seem to push the doctrine of the Court to the extreme, and to present a contrast between the two meanings in an aspect almost ludicrous. But still it is difficult to fix the point of divergence, and no one as yet has succeeded in defining the popular meaning of the word "charity." The learned counsel for the Crown did not attempt the task. Even the paraphrase of the Master of the Rolls is not quite satisfactory. It would extend to every gift which the donor, with or without reason, might happen to think beneficial for the recipient; and to which he might be moved by the consideration that it was beyond the means of the object of his bounty to procure it for himself. That seems to me much too wide. If I may say so without offence, under conceivable circumstances, it might cover a trip to the Continent, or a box at the Opera. But how does it save Moravian missions? The Moravians are peculiarly zealous in missionary work. It is one of their distinguishing tenets. I think they would be surprised to learn that the substantial cause of their missionary zeal was an intention to assist the poverty of heathen tribes. How far then, it may be asked, does the popular meaning of the word "charity" correspond with its legal meaning? "Charity" in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads. The trusts last referred to are not the less charitable in the eye of the law, because incidentally they benefit the rich as well as the poor, as indeed, every charity that deserves the name must do either directly or indirectly. It seems to me that a person of education, at any rate, if he were speaking as the Act is speaking with reference to endowed charities, would include in the category educational and religious charities, as well as charities for the relief of the poor. Roughly speaking, I think he would exclude the fourth division. Even there it is difficult to draw the line. A layman would probably be amused if he were told that a gift to the Chancellor of the Exchequer for the benefit of the nation was a charity. Many people, I think, would consider a gift for the support of a lifeboat a charitable gift, though its object is not the advancement of religion, or the advancement of education, or the relief of the poor. And even a layman might take the same favourable view of a gratuitous supply of pure water for the benefit of a crowded neighbourhood. But after all, this is rather an academical discussion. If a gentleman of education, without legal training, were asked what is the meaning of
"a trust for charitable purposes,"
I think he would most probably reply,
"That sounds like a legal phrase. You had better ask a lawyer."
Having attempted to clear the ground so far, I come to the words of the enactment on which the question before the House depends. They are to be found in the Income Tax Act of 1842. By sect. 61 of that Act it is provided that, under Sched. A, certain allowances are to be made for the duties charged on colleges or halls in the universities, and on any hospital, public school, or alms-house in respect of their public buildings, offices, and premises. The allowances are to be granted by the Commissioners for General Purposes in their respective districts.
Then allowances are to be made "on the rents and profits of lauds, tenements, hereditaments, or heritages belonging to any hospital, public school, or alms-house, or vested in trustees for charitable purposes, so far as the same are applied to charitable purposes." These allowances are in the hands of quite a different body. They are to be granted "on proof before the Commissioners for Special Purposes of the due application of the said rents and profits to charitable purposes only, and in so far as the same shall be applied to charitable purposes only." They are "to be claimed and proved by any steward, agent, or factor acting for such school, hospital, or alms-house, or other trust for charitable purposes, or by any trustee of the same by affidavit... stating the amount of the duties chargeable, and the application thereof," and are to be carried into effect by the Special Commissioners without altering the assessments which are to be levied notwithstanding such allowances.
By the 88th section it is provided, with respect to Sched. C., that exemption shall be given to "the stock or dividends of any corporation, fraternity, or society of persons, or of any trust established for charitable purposes only; or which according to the rules or regulations established by Act of Parliament, charter, decree, deed of trust, or will, shall be applicable by the said corporation, fraternity, or society, or by any trustee to charitable purposes only, and in so far as the same shall be applied to charitable purposes only; or the stock or dividends in the names of any trustees applicable solely to the repairs of any cathedral, college, church, or chapel, or any building used solely for the purpose of divine worship, and in so far as the same shall be applied to such purposes, provided the application thereof to such purposes shall be duly proved before the said Commissioners for Special Purposes by any agent or factor on the behalf of any such corporation, fraternity, or society, or by any of the members or trustees."
Section 98 contains directions as to the manner in which these claims of exemption are to be made and carried into effect.
Section 105 provides by reference to the provisions of Sched. C, for similar exemptions under Sched. D, in the case of "any corporation, fraternity, or society of persons and any trustee for charitable purposes only."
In the case of the British Museum, sect. 149 provides for the like allowances under Sched. A, "as are granted to colleges and other properties mentioned in No. 6 of that Schedule," and the like exemptions in respect of any dividends of stock," as are granted to charitable institutions" in the Act.
Section 188 enacts that every provision applied to the duties in any particular schedule, which is also applicable to the duties in any other schedule, and not repugnant to its provisions shall be applied as fully and effectually as if the application thereof had been expressly directed.
I do not think it necessary to refer to any other provisions in the statute.
What is the meaning of the expression "charitable purposes," as used in the Act of 1842? In order to determine that question, it is necessary, I think, to consider what the Act is speaking about, and whom it is speaking to. It does not help one much to take the word "charity" nakedly, and in the abstract, and then to turn to dictionaries for its meaning. It is said that the most common signification of "charity" is conveyed by the word "alms." So it is when that meaning fits the context, or the occasion. Perhaps, by way of illustrating my meaning, I may be permitted to refer to a passage in the writings of one of the most popular authors of the last century, where a striking contrast is drawn between charity, in its vulgar sense, and a gift, for purposes which the law of England, rightly or wrongly - wrongly, as some think - considers charitable. In one of his essays, Goldsmith tells the story of a French priest at Rheims, so miserly in his habits that he went by the name of "The Griper." Working incessantly in his vineyard, steadily refusing to relieve distress, he managed to save a large sum of money. Then the writer adds: "This good man had long perceived the wants of the poor in the city, particularly in having no water but what they were obliged to buy at an advanced price; wherefore, that whole fortune which he had been amassing, he laid out in an aqueduct, by which he did the poor more useful and lasting service than if he had distributed his whole income in charity every day at his door." No one can misunderstand the meaning of the word there. But the Act of 1842 has nothing to do with casual almsgiving or charity of that sort. Nor indeed has it anything to do with charity which is not protected by a trust of a permanent character. The provisions of the Act which your Lordships have to consider are concerned with the revenues of established institutions - the income of charitable endowments. Such endowments, as I have already pointed out, form, according to English law, a distinct class of trusts, standing by themselves, and owe their validity in each case, if the trust is a perpetuity, to the fact that the purposes are charitable in the eye of the law.
Then, I ask, to whom is the Act speaking? In one sense, no doubt, it is speaking to all concerned. But it is addressed, I think, specially to that body under whose "cognizance and jurisdiction," to use the words of the Act, these particular allowances and exemptions are placed. All applications for these allowances and exemptions are to be made not to the General Commissioners in their respective districts but to the Special Commissioners, and "at the head office for stamps and taxes in England." This is an express direction with reference to exemptions under Sched. C, and having regard to sect. 188 the same rule must hold good in all cases. So that in no case can the question come before any board or any commissioners in Scotland. Practically the Special Commissioners are identical with the Board of Inland Revenue, who now represent the Commissioners of Stamps and Taxes named in the Act of 1842. How are the authorities at Somerset House to determine what constitutes a trust for charitable purposes? The majority of the Court of Appeal tell them they must be guided by the popular meaning of "charity," and that "each individual case must be decided on its own facts." There is certainly no indication in the Act that such a hopeless task as that was laid on the Special Commissioners. They have to satisfy themselves that the income in respect of which exemption is claimed is applied solely to charitable purposes, and they are told how that is to be proved. But the question, charity or no charity, if you accept the contention of the respondent, is determined for them by the law of the country in which they sit to exercise their jurisdiction. In the case of Baird's Trustees, the Lord President observed that such a construction "would have a most disturbing and confusing effect." With the utmost deference, it seems to me the only way to ensure uniformity in the administration of the Act.
On these grounds I have come to the conclusion that the expression "trust for charitable purposes" in the Act of 1842, and the other expressions in the Act in which the word "charitable" occurs, must be construed in their technical meaning according to English law.
Although I rest my opinion on these broad grounds, it is, I think, satisfactory to find that every consideration to which the case has given rise, if examined closely, confirms this view, and that there is no indication in the Act pointing in the opposite direction.
In the first place it is plain on the very words of Sched. A, that the Legislature considered the purposes of a public school to be charitable, and a public school to be a trust for charitable purposes, just as much as an almshouse or a hospital. This seems to me to be enough to displace the narrow view of the Court of Session.
Then, as Fry L.J. points out, every expression in the first provision which I have read from Sched. A is a legal expression. But the argument may be carried further. Turn to the parallel passage in the Act of 1806 from which the Act of 1842 is copied. There the words are "on the rents and profits of messuages, lands, tenements, or hereditaments, belonging to any hospital, public school, or almshouse, or vested in trustees for charitable purposes, so far as the same are applied to charitable purposes." In that passage every expression is a legal expression, and what is more to the purpose, a legal expression according to English law. There is no trace of Scotch legal phraseology there. I am not sure that the omission of the word "messuages" and the introduction of the word "heritages" may not have had something to do with creating the difficulty which your Lordships have now to solve. It seems to me too that the expressions in Sched. C "decree, deed of trust, or will" more properly belong to English legal phraseology than to Scotch. "Deed of trust" indeed is common to the legal language of both countries. But the word "decree" I think points primarily to the decrees of the Court of Chancery, by which no small proportion of the charities in this kingdom have been established, and I rather doubt whether the word "will" would have been used there as it is, if due attention had been paid to the language of Scotch lawyers.
There was an argument which appears to have had great weight with one of the learned judges in the Court of Session, to which I cannot attach much importance. That learned judge points out that in Sched. C there is a special exemption in favour of funds dedicated to the repair of cathedrals, colleges, churches, and places of worship. From that he infers that such purposes are not charitable within the meaning of the Act, and so, "without going outside of Sched. C," he finds a construction conclusive, as he thinks, in favour of the claim of the Crown. But, my Lords, in construing any document, it is not well to confine your attention to an isolated passage. It seems to me to be necessary to go outside of Sched. C in order to understand the Act. If you turn to Sched. A, and to Sched. D, you will observe that these special exemptions are not to be found in either. So that if that learned judge is right we have this singular result:- If property devoted to these special purposes is in land, income-tax attaches. If the land is taken by a railway company and there is an interim investment in consols, or if the property is in any Government funds, home, foreign, or colonial, it is exempt; in any other form of investment it is subject to income-tax. Why should a premium be offered for the investment of money intended for church repairs in the funds of foreign or colonial governments? A construction which leads to a result so whimsical ought not, I think, to be adopted without good reason. It is not so very uncommon in an Act of Parliament to find special exemptions which are already covered by a general exemption. Nor is surplusage or even tautology wholly unknown in the language of the Legislature. On the other hand, if the legal meaning of the expression "charitable purposes" be adopted, there may be a superfluous expression here or there, but the Act will be consistent throughout.
No argument can, I think, be founded on the special exemption of the British Museum. The clause relating to the Museum, which is also to be found in the Act of 1806, is obviously out of its place, and was probably introduced at the instance of the trustees of the Museum. It was necessary as regards the buildings and premises in the actual occupation of the Museum chargeable under Sched. A, and that being so, it was natural, and not, I think, improper, that the exemptions to which the Museum would be entitled, as a charitable institution, under Sched. C, should be also specially mentioned.
A strong confirmation of the view which I am presenting to your Lordships is, I think, furnished by the income tax section of the Charitable Trusts Amendment Act 1855. The Charitable Trusts Act 1853, which established the Charity Commission, provided for the transfer of charitable funds to official trustees, of whom the secretary to the Commission was one. It appears from a Parliamentary Paper ("Charities," 1865), which contains a correspondence between the Board of Inland Revenue as Special Commissioners of Income Tax, and the Treasury, on the subject of income tax on charities, that it was the practice of the Board to give exemption to all stock standing in the names of the official trustees of charitable funds without further inquiry. This practice was confirmed, and the principle was carried still further by the Charitable Trusts Amendment Act, 1855, which enacts (sect. 28) that "all dividends arising from any stock in the public funds standing in the names of the official trustees of charitable funds, and which shall be certified by the Board" (that is the Charity Commissioners) "to the Governor and Company of the Bank of England to be exempt from the property or income-tax, shall be paid or carried to the banking account of the official trustees, without any deduction of such tax, and all dividends arising from any stock in the public funds standing in any other names or name, and which the Board shall certify to the Governor and Company of the Bank of England to be subject only to charitable trusts, and to be exempt from such tax, shall be paid without any deduction thereof." By virtue of this enactment, the income of a large proportion of the funds devoted to charity in this country, exceeding in amount for the year 1865 one million-and-a-half, and now probably much larger, was entirely withdrawn from the cognizance and jurisdiction of the Board of Inland Revenue. Thenceforth, for the purposes of the Income Tax Acts, as well as for the purposes of administration, that income has been under the jurisdiction of a body bound by law to construe the expression "charitable trusts" according to its legal meaning, and to give certificates of exemption in accordance with that construction. The obligation is clear. The Charitable Trusts Amendment Act 1855 is to be construed as one Act with the Charitable Trusts Act 1853, and the Act of 1853 contains a definition of "charity" by reference to the Act of Elizabeth, and the practice of the Court of Chancery. I may add that sect. 28 of the Act of 1855 has always formed part of the Income Tax Code whenever the tax has been reimposed, carrying with it into the code, to a certain extent at least, the legal definition of "charity."
I cannot help reminding your Lordships, in conclusion, that the Income Tax Act is not a statute which was passed once for all. It has expired, and been revived, and re-enacted over and over again; every revival and re-enactment is a new Act. It is impossible to suppose that on every occasion the Legislature can have been ignorant of the manner in which the tax was being administered by a department of the State under the guidance of their legal advisers, especially when the practice was fully laid before Parliament in the correspondence to which I have referred ("Charities," 1865).
It seems to me that an argument in favour of the respondent might have been founded on this view of the case. The point of course is not that a continuous practice following legislation interprets the mind of the Legislature, but that when you find legislation following a continuous practice and repeating the very words on which that practice was founded, it may perhaps fairly be inferred that the Legislature in re-enacting the statute intended those words to be understood in their received meaning. And perhaps it might be argued that the inference grows stronger with each successive re-enactment. However, as the point was not dealt with at the Bar, I forbear to express any opinion upon it.
With the policy of taxing charities I have nothing to do. It may be right, or it may be wrong; but speaking for myself, I am not sorry to be compelled to give my voice for the respondent. To my mind it is rather startling to find the established practice of so many years suddenly set aside by an administrative department of their own motion, and after something like an assurance given to Parliament that no change would be made without the interposition of the Legislature. In 1865 the Treasury communicated to Parliament the fact that they had come to the conclusion that the subject was "one which should be reserved to be dealt with by the Legislature, and that in the meantime the practice which has hitherto prevailed should be followed." For such a conclusion, even if the claim of the Crown had been originally well-founded, there would be much to be said. The Legislature declaring the law can at the same time grant immunity for the past; but a change of practice, established by judicial decision only, would leave the bulk of the charitable foundations in this country exposed to liabilities appalling in amount.
I am, therefore, glad to find that the claim of the (Crown is based on what seems to me to be a very superficial view of the meaning of the Legislature, and my opinion is that the appeal should be dismissed with costs.