1960 PLP 585 (PTD)

Income‑tax‑ Capital or income receipt‑Reminiscences of jockey sold to newspaper‑Jockey agreeing to supply photographs and press cuttings‑Articles written by journalist‑Whether sale of property or provision of services‑Liability to tax‑Case VI of Schedule D‑Income‑tax Act, 1952 (15 & 16 Geo. 6 & 1 Eliz. 2, C. 10), S. 123‑Income‑tax Act (XI of 1922), Ss. 3, 4 (3) (vii). A jockey agreed to sell his reminiscences to K. Newspapers Ltd. for publication in four articles under his name. By the agreement lie agreed to make available to a nominee of the com pany reminiscences of his life and experiences on the Turf, and to provide photographs and press cuttings. He also granted the company the first British serial rights in those reminiscences. In facts the articles were written by a professional journalist under his name and he merely "vetted" the information which the journalist had found by his own research. Owing to a strike one article only was published and the jockey was paid 750 for it. The Crown claimed that that sum was taxable under Case VI of Schedule D of the Income‑tax Act, 1952: Held, that no sale of any property took place under the agreement ; the reminiscences comprised nothing in the nature of copyright, and the right to use the jockey's name was subsidiary to the main purpose of the agreement, which was the provision of services, and the fact that they were of a trivial nature was immaterial. The Crown's claim that they were taxable, accord ingly, succeeded. Bradbury v. Arnold (1957) 37 Tax Cas. 665 applied.

1. At a meeting of the Commissioners held on November 11, 1957, the taxpayer, Bryan Marshall, appealed against an assess ment to income‑tax made upon him under Case VI of Schedule D of the Income‑tax Act, 1952, (Income‑tax Act, 1952, S. 123 : .... Case‑VI tax in re any annual profits or gains not falling under any of the foregoing Cases and not charged by virtue" of Schedules A, B, C & E.) for the year 1954‑1955 in the sum of 750.

2. That sum was paid to the taxpayer by Kemsley News papers Ltd., under an agreement made on March 4, 1955.

3. Evidence was given by the taxpayer and there was put in evidence a copy of the said agreement. The following facts were found by the Commissioners.

4. The taxpayer was a jockey of some renown having, among other successes, twice ridden the winner of the Grand National. From 1929 until 1954 he was a jockey both in flat races and under National Hunt rules. In 1954 he obtained a licence to train racehorses, whereupon he commenced to train at Berkeley House, Lambourne, Berkshire, at the same time ceasing to ride in flat races but continuing at all relevant times to ride under National Hunt rules. As a result of his successes as a jockey he was well known in racing circles and among those of the general public who were interested in racing.

5. Early in 1955 the taxpayer was approached by a person known to him as a frequenter of racecourses who inquired whether he (the taxpayer) had ever thought of writing the story of his life. He replied that he would probably do so when he gave up any connexion with horse‑racing. His acquaintance then asked him if he would be interested in receiving cash for the story of his life, which a "ghost" writer would prepare. The taxpayer said that he might be interested. About a week later, on March 3, 1955, this acquaintance telephoned the taxpayer in the evening and asked if he and the London editor of the Sunday Chronicle newspaper could come straight down to the taxpayer's house to discuss with him the publication of the story of his life. The taxpayer agreed to this suggestion with some reluctance ; and late that same night the acquaintance and the editor arrived at his home. They stayed until the early hours of the next morning and the agreement of March 4, 1955, was signed.

6. The agreement provided that the taxpayer would on or before March 11, 1955, make available to a writer appointed by Kemsley Newspapers Ltd. reminiscences of his life and experiences on the Turf for the purposes of writing a series of four articles of not less than 2,000 words each. The taxpayer undertook to place at ‑the disposal of Kemsley Newspapers Ltd. all documents, photographs, newspaper cuttings or other matter in his custody or control relating to his reminiscences of people and events referred to therein and to facilitate their publication. The taxpayer for the consideration mentioned in the agreement as beneficial owner granted to Kemsley Newspapers Ltd. the first British serial rights in his reminiscences and authorized the publication of the articles under his name with the right to use a facsimile of his signature. Kemsley Newspapers Ltd. agreed to pay the taxpayer 1,500, as to 750 within seven days of the publication of the first article and the balance of 750 within seven days of the publication of the fourth article.

7. Somewhere about March 11, 1955, one Pollock, who was a writer employed by Kemsley Newspapers Ltd., installed himself in a public‑house convenient to the taxpayer's home. He visited the taxpayer usually twice a day for a week. Before coming to see the taxpayer Pollock had done considerable research into the events of his life and his racing career. He discussed the informa tion he had so obtained from other sources with the taxpayer; whose contribution to the discussion was confined to confirming most of the information supplied by Pollock with the correction of some minor errors of fact. The taxpayer did not put pen to paper, nor did he produce any documents, photographs, news paper cuttings or other publishable material. During the course of this single week of intermittent discus sions Pollock drafted four articles for issue in the Sunday Chronicle. Each of these articles was read over by Pollock to the taxpayer, who suggested certain trifling amendments. The first of the four articles was published in the Sunday Chronicle on March 20, 1955. Shortly thereafter the taxpayer received from Kemsley Newspapers Ltd. a cheque for 750 and it was this payment which was in dispute in this case. Following the publication of the first article on March 20, the taxpayer was interviewed by the stewards of the National Hunt Committee at Aintree. He was not reprimanded by the stewards but they made it clear to him that they were not in favour of publication of newspaper articles by trainers or jockeys. The taxpayer was left with the impression that the stewards would see no objection to the publication of the articles prepared by Pollock if they appeared under his name and not under the `tax payer's name. Accordingly the taxpayer approached a representa tive of Kemsley Newspapers Ltd. who was also present at Aintree racecourse, and asked him to have the titles of the remaining three articles altered to show that the articles were written by Pollock. No further action was taken by the taxpayer because shortly after the above‑related events the Sunday Chronicle, in common with other newspapers, ceased publication for a while because of a strike of employees engaged in the newspaper industry. So far as the taxpayer knew, the second article written by Pollock was never published in the Sunday Chronicle newspaper. Certainly the third and fourth articles were not so published. The taxpayer did nothing about the second instalment of 750 mentioned in the agreement of March 4, 1955, and this sum was never paid to him.

9. It was contended on behalf of the taxpayer that the agreement of March 4, 1955, provided for the sale of the right to publish the taxpayer's reminiscences and that the sum 750 paid to him thereunder was not assessable upon him under Case VI of Schedule D.

10. It was contended on behalf of the Crown : ((1942) 1 K B 491 496) that the agreement of March 4, 1955, did not provide for the sale of any property by the taxpayer ; (2) that it provided for the performance of services by the taxpayer ; and (3) that the sum of 750 was properly assessed upon him under Case VI of Schedule D.

11. The Commissioners decided to allow the appeal. They stated that it was common ground that the test which they ought to apply in this case was that approved by Lawrence J. in Hobbs v. Hussey (Inspector of Taxes), (1) viz. "the true question in such cases is whether the transaction in question is really sale of property or the performance of services . . ." In applying that test to the construction of the agreement of March 4, 1955, they bore in mind that the taxpayer was well known to people interested in horse‑racing ; that the details of his life and achievements, though no doubt of great interest to such people, would have only an ephemeral appeal ; and that their publication in a series of newspaper articles would exhaust their value as a subject of publication. The agreement of March 4, 1955, provided for the taxpayer to make available to Kemsley Newspapers Ltd. his reminiscences and any documents, etc., relating thereto and granted to that company the right to publish before any other British newspaper a series of articles containing his reminiscences. The taxpayer could have made his reminiscences available by word of mouth or in some recorded form. Bearing in mind those considerations, they thought that on a proper construction of the said agreement it provided predo minantly for the sale of the major part, if not the whole, of the publication rights in his reminiscences. Any services to be rendered were, in their view, subsidiary and incidental to the sale of the taxpayer's property in these reminiscences. They accordingly discharged the assessment appealed against. The agreement so far as material provided: "(1) The grantor (the taxpayer) shall on or before March 11, 1955, make available to a writer or writers to be appointed by the company (Kemsley Newspapers Ltd.) reminiscences of his life and experiences on the Turf for the purpose of writing a series of four articles of not less than two thousand words each. (2) The grantor warrants and represents that the said reminis cences will not infringe the copyright belonging to any party and that they will contain nothing slanderous. (3) The grantor undertakes to place at the disposal of the company all documents, photographs newspaper cuttings or other matter‑in his custody or control relating to his said reminis cences or to the persons and events referred to therein and gives permission so far as he is able for the publication of the same' and to obtain where necessary and where possible the permission of any other person or persons to such publication. (4) The grantor for the consideration hereinafter mentioned as beneficial owner hereby grants to the company the first British serial rights in the said reminiscences and authorizes the company to publish the articles under his name and the right to use a facsimile of his signature whether at the foot or elsewhere in the said articles or in any advertisement issued by the company in connexion therewith. (5) The grantor hereby undertakes that during the period from the date hereof until the fourth of the said articles shall have been published under the terms of this agreement he will not allow himself to be interviewed (other than by officers or employees of the company) on the subject of his said reminis cences nor will he write, permit to be written or provide material for any person, company or firm (other than the company) to write his said reminiscences. (6) For the consideration herein mentioned the company agrees to pay to the grantor the sum of 1,500, as to 750, within seven days of the publication of the first article and the balance of 750 within seven days of the publication of the fourth article. (7) The grantor undertakes to execute any further documents or perform any further act or thing which shall more effectually vest in the company the rights hereinbefore granted." Donoghue v. Allied Newspapers Ltd. (1938) Ch. 106 ; Ryall v. Hoare (1923) 2 K B 447 ; Sherwin v. Barnes (1931) 16 T C 278 ; Mitchell v. Rosay (1954) 35 T C 496 ; Moriarty v. Evans Medical Supplies Ltd. (1958) 1 W L R 66 and Martin v. Lowry (1927) A C 312 ref. Alan Orr for the Crown. G. B. Graham for the Taxpayer. Solicitors : Solicitor, Inland Revenue : Delme, Radclife Brunskill, Devizes.