The Gazette 1961 - 64

defendant was well aware at the time in his capacity as solicitor to the company that parcel H and parcel B were both incumbered with mortgages already and that there were judgments against the company. He did not take any steps to ensure that the plaintiff's mortgage would have priority over the existing mortgages. In his defence it was urged that this could be done. It was found by the court that on receipt of the mortgage loan of money the defendant and his client Mr. Kerwin proceeded within three days to disperse all but $1,000 of this fund to various creditors of the company. It was held that the plaintiff's claim did not rest solely on the breach of the solicitor's duty in registering and perfecting his client's security but that the relation ship created between them was one from which flowed duties more important and more extensive. The court was satisfied that the defendant was aware that the plaintiff was relying upon his knowledge and experience to guide her in investing in a foreign country under a legal system with which she was unfamiliar. He was possessed of certain information which he knew could be vital to her decision to carry on or stop the transaction. Whereas there is no objection to the common employment of one solicitor by both mortgagor and mortgagee a conflict may arise when the solicitor is in receipt of confidential information as against the mortgagor which he knows or should know will affect the decision of the mortgagee. In such circumstances he cannot act fairly in a fiduciary relationship for either and if he continues to do so he may be liable for the consequences that ensue. The court gave judgment for the plaintiff and directed an assignment of the plaintiff's interest in the mortgage to the defendant upon his satisfying the decree for damages and costs. (Western Weekly ~L Reports (British Columbia)* Vol. 40, 1962, page 129.) Defence costs paid by company—whether taxable emolument The High Court allowed an appeal by a company director against the decision of Special Com missioners who had held that the amount of £641 spent by the company for his defence at his trial for causing the death of a pedestrian by reckless or dangerous driving (of which he was acquitted) was spent for his benefit and was chargeable to income tax under Schedule E as part of his emoluments for the year 1958-59. Buckley J. giving judgment said that Mr. Rendell was a full-time director of the company and, on July 23'rd, 1958, while returning to the head office of the company after making a call on its business, the car belonging to the company and driven by the

taxpayer left the road and killed a pedestrian. Mr. Rendell instructed his secretary to get in touch wtih the Automobile Association to arrange for a solicitor to give him legal advice. The managing director of the company, however, contacted the company's solicitors, by whom he was advised that if the taxpayer was convicted, he would be imprisoned and his conviction might involve the company in liability. If the taxpayer went to prison the company might have lost business and the managing director instructed the company's solicitors to spare no reasonable expense to obtain the taxpayer's acquittal. The taxpayer was subsequently charged with causing the death of another person by reckless or dangerous driving and was acquitted. His defence was undertaken by the company's solicitors without consulting the taxpayer. The company paid the bill of costs of his defence, which amounted to £641. Counsel for the taxpayer contended that the sum was expended by the company for its own business purposes and it was not an expense incurred in providing a benefit for the taxpayer. Counsel for the Crown contended that the whole of the sum of £641 was an expense incurred by the company in or in connection with the provision for the taxpayer of a benefit or facility, and it was to be treated as his emoluments assessable to income tax. The crucial point in this case was whether what was provided to the taxpayer by the company was of benefit to him. Obviously what was provided for him was of benefit to him, but if the company chose to be extravagant it would be hard that the taxpayer should be charged for that. What ought to be considered was the sum the company must have reasonably spent for the defence and only that sum could be regarded as spent beneficially for the taxpayer ; so far as the company chose to spend more than required, it must be assumed that it was for the company's own benefit and not for the benefit of the taxpayer. The case should be referred back to Special Commissioners to find as a matter of fact what sum was reasonable for the defence of the taxpayer and he would be chargeable for that sum only. (Rendell v. Went (Inspector of Taxes), The Times, March i9th, 1963. Solicitors Journal, March 29th, to the court for settlement of a mental patient's property—basisfor taxation of costs of applicant and other interested parties An application was made to the Court of Protec tion in England for a settlement of a patient's property under sections 102 and 103 of the Mental Health Act, 1959. Certain relatives applied for the 94 page 253.) Application