De Vigier v Inland Revenue Commissioners

[1964] 2 All ER 907

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(Judgment by: Lord Evershed)

De Vigier
vInland Revenue Commissioners

Court:

Judges: Lord Reid
Lord Evershed
Lord Guest
Lord Pearce
Lord Upjohn

Subject References:

Hearing date: 2, 3, 8 June 1964
Judgment date: 6 July 1964

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Judgment by:
Lord Evershed

My Lords, I must confess at once that I share the regret expressed by Russell LJ and Donovan LJ at the end of their judgments in the Court of Appeal; for, as I feel compelled to conclude, the claim of the respondent Commissioners of Inland Revenue is well founded. As Russell LJ observed, the financial assistance provided by Mrs de Vigier cannot be held to involve anything in the nature of "a device for the avoidance of tax". The assistance was given for the benefit of Mrs de Vigier's children under the trust established by her husband, and I agree with the learned lord justice in his view that in the circumstances of the present case the pit dug by the legislature in enacting s 408 of the Income Tax Act, 1952, has been wide enough to catch the unwary innocent. It is also to my mind clear that, if Mrs de Vigier had had in mind to avoid the pit, her beneficence could have taken a form which would have been successful in so doing. Thus, as regards her own one thousand shares she could have transferred them from her own name to those of her co-trustee and herself on terms that she would receive the purchase price out of trust income, when there was sufficient of such income to provide the purchase price; and, as regards the purchase of rights arising from the Acrow company's shares and the purchase of further shares in the same company on the Stock Exchange, by means analogous to the course adopted in Re Pumfrey, Worcester City and County Banking Co Ltd v Blick . But the course in fact taken and innocently taken was otherwise. As was pointed out in the Court of Appeal, the case of Mathew v Blackmore (and there were other cases to the like effect to which your lordships attention was drawn) makes it clear that there may, according to the ordinary and proper sense of the word, be a "loan" though the person providing the money advanced could not in law sue for its recovery as money lent. Counsel for the appellant, at the conclusion of his argument, felt compelled, as I think rightly, to abandon the point that the "arrangement"--and I use deliberately the neutral term--between Mrs de Vigier and her co-trustee was ultra vires; that is, was an arrangement which was beyond their powers as trustees to make. When this concession is made, and when regard is had to the effect of Mathew v Blackmore and the other cases to which I have referred, I think it impossible on the facts of this case to avoid the conclusion that the sums provided by Mrs de Vigier in 1957 were in truth "loans" and that the payments made to her in the following year were other than sums "paid by way of repayment of a loan" within the ordinary sense and meaning of s 408(7)(i) of the Act of 1952. The point is in the end of all a short one and, if I do not labour it, I intend no disrespect to the careful arguments addressed to the House by counsel for the appellant and counsel for the Crown. I have had the advantage of reading the opinion written by my noble and learned friend Lord Upjohn, and express my entire concurrence with it. As I have said the result appears to me, as it did to Russell LJ "regrettable", but I see no ground which would justify a conclusion that the Court of Appeal and Wilberforce J were wrong in their decisions.

I agree therefore that the appeal must be dismissed.