- (1.) I need not repeat the complicated facts of this case. They are set out in the case stated itself and summarised in the judgment of Plowman J. The crucial question is whether, on the assumption that the appellant company is a company within the scope of section 245 of the Act of 1952, could more than half the income of the period April 1, 1956, to January 31, 1957, be apportioned to the appellants Mr. Garside and Mr. Spence ? If so, this will in the first place justify the direction, for the company will then not be a "subsidiary company." This question of apportionment depends chiefly on the effect of the decision of the House of Lords in Fendoch Investment Trust Co. Ltd. v. Commissioners of Inland Revenue.
(2.) It is conceded for the appellants, and I think necessarily so, that the individual shareholders, Mr. Garside and Mr. Spencer must, by virtue of the decision in the Fendoch case, be regarded as members of the company for present purposes, notwithstanding that a few days before the end of the trading period with which the case deals, namely, the period ending on January 31, 1957, they sold all their shares in the company. But it is argued that nevertheless, when the Special Commissioners come to make the apportionment of the income among the members "in accordance with their respective interests," to quote the language of section 248, they (that is the Special Commissioners) must apportion to the shareholders no more than a sum equivalent to the dividend on their preference shares - a mere Pounds 1,000, which is only a small fraction of the whole income of the period.
(3.) I think that the ratio of the decision in the Fendoch case compels us to negative this contention and to say that the Special Commissioners were within their statutory rights in making the much larger apportionment to these two individual shareholders which they did.;