WISEBURGH Vs. DOMVILLE

JUDGEMENT

(1.) The subject-matter involved is the sum of Pound 4,000 which was paid out to the taxpayer by way of settlement of an action which he had brought against a company, Gordon Mills Ltd., the action being based on as alleged breach by Gordon Mills Ltd. by way of repudiation of a contract of agency which the taxpayer had with them at the time. The question, when properly formulated, is whether, within the language of the applicable Income-tax Act, 1918, Schedule D, paragraph I (a) (ii), this is properly chargeable as being in respect of "the annual profits or gains arising or accruing" to the taxpayer from a trade. His trade, in respect of which he admittedly is or was taxable, is that of a sales agent for articles of womens clothing manufactured by various manufacturing companies.

(2.) The facts are fully set out in the case stated and it unnecessary, for the purposes of my judgment, that I should restate them fully. I can sufficiently state the essentials of the matter by reference first to Appendix D to the case which shows that during a number of years beginning in 1939 and ending in 1951 the taxpayer had agencies of this character for a number of manufacturers totalling in all twenty. It is, however, necessary to observe at once that at no one time did the taxpayer hold agencies for twenty such firms or anything like that number, Indeed, at the relevant date, namely, July 1, 1948, when Gordon Mills Ltd. terminated the taxpayers agency with them, he had two such agencies, one with a company called Green, Hearn & Co., and the other with this company, Gordon Mills Ltd. However, the importance of this schedule lies in the circumstance that during the business life of thirteen year which it covers, the taxpayers agencies varied in their nature and number from time to time. Some were held for a very short time : some, by the figures, may have represented little more than isolated transactions conducted on commission basis : others lasted longer. In the case of Green, Hearn & Co. the agency had continued by 1951 for no less than twelve years, and, similarly, the Gordon Mill agency at the relevant date had lasted for seven years or more; but it was in the nature of an agency business of this kind that there might be from time to time changes in the actual agencies held, by the substitution of one for another. I need say no more about this particular agency than that its terms were comprehended in a written agreement, one clause of which provided that it was terminable on either side by twelve months notice ending on October 20 in any year. It is therefore an incident of importance, in this case, that, if it is to be regarded in any sense as an asset, its quality must be judged by its legal character, and it was an asset liable to determination on relatively short notice. On the other hand, it is fair to say, as Mr. Graham emphasized in his short but forceful speech, that it was obviously in the ordinary expectation of the parties (and the case so finds) that, if all went well, the contract in fact as a business matter would be likely to have gone on, one might say, indefinitely. Unfortunately for him or perhaps being deliver or him, because I know not the ultimate financial gain or made by taxpayer engaged himself in 1948, the year with which we are concerned, as manger for business, of which his wife was substantially the proprietor, called K. Wiseburgh, Ltd., a business of manufacturing and merchanting garments of the same character, to some extent at least, Those made by Gordon Mills. It was because of that enterprise that Gordon Mills said that he was neglecting his proper obligation to them and had accordingly treated the contract as at an end.

(3.) Thereupon the taxpayer issued his writ and by his statement of claim he asked for damages for breach of contract and also for an account of the commission which he alleged was at that date due and unpaid in respect of his past work. It is right to observe that, as pleaded, the damage for breach of contract which the tax payer alleged was "damage in that he had lost commission which he would otherwise have earned." He says that the real damage lay not so much in the loss of the commission which would otherwise have been earned but in the loss the particular contract; but to may mind there is no valid distinction for the present purpose between these two.