1. Save as mentioned in paragraph 7(e) hereof, the Commissioners of Inland Revenue (hereinafter called "the Respondents") admit the accuracy of the facts set out in the Statement of the Chancellor Masters and Scholars of the University of Cambridge (hereinafter called "the Applicants") dated the 30th day of October 1941, subject to the additional facts set out in paragraphs 2, 3, 4, 5 and 6 hereof.
2. The land which is the subject of the present application and is referred to in the said statement as the University Press consists of certain land situated in Trumpington Street, Cambridge, together with the buildings thereon, such buildings consisting of printing works, offices and premises whereon the Applicants carry on the trade or business of printers and publishers, as more particularly mentioned in paragraph 5 and 6 hereof. The said land and buildings and the plant thereon, and the said trade or business, are the property of the Applicants.
3. The powers of the Applicants to carry on the said trade or business are conferred upon them by the following Statutes and other provisions:-
(a) On the 20th day of July 1534 his Majesty King Henry VIII granted to the predecessors of the Applicants Letters Patent empowering them to appoint three Stationers and Printers or sellers of books, who should be entitled lawfully both to print books of every kind which had been approved by, or submitted for approval to, the Chancellor, or his vice-gerent and three doctors, and to offer for sale both those books and other books wheresoever printed which had been approved or submitted for approval as aforesaid.A translation of the said Letters Patent (the original being in Latin) is hereto annexed marked "A".
(b) The Statute 13 Elizabeth Cap 29, passed in the year 1570, (referred to in the said Statement), besides incorporating the Applicants, ratified and confirmed (inter alia) all liberties and privileges and other matters granted to the Applicants or their predecessors by any Letters Patent granted by Her Majesty the Queen or any of her Progenitors or Predecessors.
An extract of the relevant provisions of this Statute it is hereto annexed, marked "B".
(c) By an Order of Council of the 10th December 1623 the Applicants were given leave to print certain almanacs.
It appears that this is the ancient privilege of almanac printing in commutation of which the Applicants receive the Treasury annuity of £500 per annum mentioned in the said Statement.
(d) By an order of Council the 16th April 1629 the applicants were given leave to print Bibles and Prayer Books. As a result of this Order the Applicants enjoy (in common with certain other bodies granted a similar privilege) certain exclusive and profitable rights as to the printing and publication of Bibles and Prayer Books.
A copy of the said Orders of the 10th December 1623 and 16th April 1629 is hereto annexed marked "C".
(e) The present power to make Statutes and regulations for the University is vested in the University of Cambridge Commissioners by section 6 of the Universities of Oxford and Cambridge Act 1923 (13 & 14 Geo. 5 Ch. 33) and is exercisable in accordance with the provisions of that Act and the provisions of the Universities of Oxford and Cambridge Act 1877 (40 and 41 Vict. Ch. 48) set out in the Schedule to the first named Act.
In pursuance of the provisions of those Acts Statutes were made by the said Commissioners and approved by his Majesty in Council in the year 1926.
The Statutes, and Ordinances made thereunder, provide that the University Press shall be managed by a Press Syndicate consisting of the Vice-Chancellor, the Treasurer and fourteen members of the Senate.
An extract of the relevant Statutes and Ordinances is hereto annexed marked "D".
There are no Statutes, Ordinances or other provisions defining or limiting the activities of the Press Syndicate, or the nature or class of books or other matter which may be printed or published by the University Press.
4. The Respondents would refer to the short history of the Cambridge University Press set out under the head "Cambridge Printing" on the first page of the Catalogue of that Press which accompanied the said Statement, from which it appears that the Applicants began the systematic publication of educational books in 1875, when the "Pitt Press" series was inaugurated, since which year the activities of the Applicant as printers and publishers have greatly developed.
5. The land and buildings referred to in paragraph 2 hereof are used exclusively (a) for the purpose of the printing works and offices of the Applicants said trade of printers and publishers and (b) for housing the editorial staff of the publishing department of that trade. Save as aforesaid, the publication (as distinct from the printing) department of the said trade is carried on elsewhere, namely in London.
6. (a) For the purpose of illustrating the general character of the said trade, the Respondents would refer to the said Catalogue of the University Press for the year 1938, which shows the large variety of works published, and the prices charged for the same, which appear to be ordinary commercial prices.
(b) The Applicants have the special privileges as regards the printing and publication of Bibles and Prayer Books hereinbefore mentioned, and the sales thereof are substantial and profitable. As regards modern works which are the subject of copyright, the Applicants obtain from authors either assignments of their copyright or licences to publish their works in return for royalties or other consideration, as is customary in the publishing trade.
(c) Save that the Syndics of the Press, who perform the functions of the directors of a printing and publishing company, perform those functions as a service to the University, and receive no remuneration therefor, and save that the trade has no share capital and the profits are not distributable by way of dividend to individuals beneficially, the said trade is carried on in all respects as a purely commercial undertaking, and makes profits.
(d) The Applicants pay, and are liable to pay, Income Tax and National Defence Contribution in respect of the profits of the trade (the Special Commissioners having decided on appeal that such profits are not within the exemption of the Income Tax Acts applicable to charities, and no appeal to the High Court having been taken against that decision).
7. The Respondents submit that it is for the Applicants to establish by evidence that the conditions specified in paragraph (a) and (b) of subsection (1) of section 39 of the War Damage Act 1941 are satisfied as respects the said land in respect of which they claim relief from contribution, and that the Applicants have not established a title to such relief, for the following reasons:-
(a) Notwithstanding that (as contended by the Applicants) it may be within their power at any time to use the said land for any University purpose other than the purpose of the University Press, the purpose for which the proprietary interest in the said land was held at the relevant date (namely the 1st day January 1941), and continues to be held, is that specified in the said Letters Patent to of his Majesty King Henry VIII mentioned in paragraph 3(a) hereof, namely that of printing and selling books of every kind which have been approved by the Chancellor.(b) That purpose is wide enough to include the use of the said land further carrying on, on purely commercial lines, of the trade of printing and publishing books and other literature of every kind which may be approved by the Chancellor.
(c) Nothing in the said Letters Patent or in any Statute or Ordinance of the University requires the Chancellor or the Press Syndicate to limit such approval to the printing or publishing of such books or other literature as may be for the advancement of education, learning, science or research, or requires any profits made therefrom to be applied solely to the advancement of education, learning, science or research. As stated by the Applicants, any such profits are solely their property. Any such profits are available for any purpose the Applicants may think fit, including (if they so decide) the extension or improvement of the University Press itself as a purely trading concern. Although the Applicants may not in fact do so, there appears to be nothing to prevent them from printing and publishing fiction or other non-educational literature of any kind. In short, by Letters Patent, confirmed by Act of Parliament, the Applicants are being granted a special privilege of trading in literature of whatsoever kind, the possession and exercise of which privilege is additional to their functions and powers as a University, and is in no way restricted by the fact that the Applicants are a University. The purpose for which the proprietary interest in the said land is held is the possession and exercise of this privilege, and in the submission of the Respondents that purpose is not a charitable purpose for the advancement of education, learning, science or research, within the meaning of Section 39 of the War Damage Act 1941.
(d) The said land is in fact used exclusively for the carrying on, on purely commercial lines, of the trade or business of printing and publishing books and other literature, in competition with other printing and publishing concerns, with the added advantage that as regards one class of books, namely Bibles and Prayer Books, the Applicants possess the special privileges hereinbefore mentioned.
It is admitted by the Applicants in their statement that the Press has no endowments (charitable or otherwise) except the Treasury annuity of £500 per annum before mentioned. And, in the submission of the Respondents, this annuity is not in the nature of an endowment at all, but is simply a commuted trade profit, representing profits from the printing and sale almanacks "in a new form" (Commissioners of Inland Revenue v. Northfleet Coal and Ballast Co, Ltd. XII Tax Cases 1103).
The trading operations of the Applicants, therefore, are conducted on a wholly business and commercial basis and in competition with ordinary commercial publishing companies and firms.
(e) The position in the foregoing respects is in no way affected (in the submission of the Respondents) by the contention of the Applicants that they recognise that it is one of their primary functions to disseminate the results of learning and research by the publication of books which, under heads (b) and (c) of Category 1 set out on page two of the said statement, and that their ability to finance the publication on un-remunerative works of learning depends upon the successful publication of text books which come under head (a), and in reply to this contention the Respondents would submit:-
(i) That if the contention is that the trade as a whole is carried on solely or mainly as a means of financing the publication of non-remunerative works of learning or research, there is at present no evidence to support that contention.(ii) That precisely the same considerations are applicable to any high-class publishing concern whose business it is to publish educational, medical, scientific or other technical works.
(iii) That, according to the said Catalogue the prices charged for all works, whether works of "learning or research" or otherwise, would appear to be the ordinary commercial prices, and the fact that a loss may be sustained on certain of the more expensive publications is no more than an incident which may be expected to be common to all high-class publishing concerns which undertake the publication of technical or other specialised classes of literature.
(iv) That the works published by the Applicants are supplied only to purchasers who are prepared to pay the ordinary commercial prices for the same and, in the submission of the Respondents, it is no more true to say of the Applicants that it is one of their primary functions to disseminate the results of learning or research in the charitable sense, then it would be true to say (for example) of an ordinary commercial firm of Medical or Law publishers that it was their primary function to disseminate the results of medical or legal learning or research, in the charitable sense.
(f) Even if the profits arising from the said trade of the Applicants were applicable and applied solely to one or more of the charitable purposes mentioned in section 39 of the War Damage Act 1941, (which is not admitted), the mere fact that they were so applicable and applied would not satisfy the condition of paragraph (b) of subsection (1) of that section. The language of that paragraph, as read with paragraph (a), shows that in order to satisfy the condition mentioned in paragraph (b) the actual use of the land, as distinct from the application of any profits made by that use, must be exclusively for or in connection with the actual carrying out of one or more of the said charitable purposes, as, for example, the use of premises as an almshouse for the relief of poverty, or as a hospital for the making of provision for the cure or mitigation of disease, infirmity or disability affecting human beings, or as a place of worship for the advancement of religion, or as a school or other educational establishment for the advancement of education.
In the submission of the Respondents, even if the works printed and published by the Applicants were exclusively works which might be said to be for the advancement of education, learning science or research (which is not admitted), the use of premises for the purpose of mere trading in a commodity, whether books or otherwise, which is or may be of use for the advancement of education, learning, science or research is not a use of those premises for or in connection with the carrying out of the charitable purpose of the advancement of education, learning, science or research within the meaning of section 39 of the War Damage Act 1941, any more than (for example) the use of premises for the manufacture and sale of medicines or surgical instruments by a trader in those commodities would be a use of those premises for or in connection with the charitable purpose of the making provision for the cure or mitigation of disease infirmity or disability affecting human beings, within the meaning of the said section.
(g) In the submission of the Respondents there is nothing in the War Damage Act 1941 to warrant the view that the body of persons (whether a University or charitable body, or otherwise) carrying on an ordinary commercial trading concern, in competition with other traders in the like commodity, are to be entitled to relief from contribution in respect of their trade premises, merely because the commodities (or some of them) produced and sold in the course of trade are, or may be, of benefit for the advancement of education learning science or research.
8. Accordingly, the Respondents submit that the Applicants have not established:-
(a) that the proprietary interest in the said land is held for charitable purposes to which section 39 of the War Damage Act 1941 applies, or for ecclesiastical purposes, and for such purposes only; and(b) that the said land, as distinct from profits thereof, is used in any manner for or in connection with the carrying out of charitable purposes to which section 39 of the War Damage Act applies, or for ecclesiastical purposes, and not otherwise.
Dated this 26th day of November 1941.
W. B. Blatch
Solicitor of Inland Revenue for and on behalf of the Commissioners of Inland Revenue.