HIGH COURT OF AUSTRALIA

                                                        Moffatt

                                                           Vs.

                                         Webb (Commissioner of Taxes)

                              (Griffith C.J., Barton, Isaacs and Gavan Duffy JJ.)

                                                      13.03.1913

                                                    JUDGMENT

GRIFFITH C.J.

This is an appeal from a decision of the Supreme Court of Victoria upon a special case stated under
the Income Tax Act, the question raised being whether the appellant is entitled in the assessment of
the income of his business of a grazier to deduct the Commonwealth land tax paid by him in respect
of the land on which he carries on that business. As I understand the case, it is found as a fact that
the appellant used the land--which is large, but not very large for Australia, comprising about
18,000 acres--solely for the purpose of grazing. The question is whether he is entitled to deduct that
land tax from his income.

Sec. 9 of the Income Tax Act 1895 provides that "(1) All losses and outgoings actually incurred in
Victoria by any taxpayer in production of income ... shall be deducted from the gross amount of
such taxpayer's income." The second paragraph of that section provides that "In estimating the
balance of the income liable to tax no sum shall be deducted therefrom for" several matters
enumerated, nine altogether, two of which only it is necessary to mention, namely:--"(g) Any
disbursements or expenses whatever not being money wholly and exclusively laid out or expended
for the purposes of such trade;" and "(h) The rent or annual value of any dwelling-house or domestic
offices or any part of such dwelling-house or domestic offices except such part thereof as may be
used for the purposes of such trade not exceeding such proportion of the said rent or annual value as
may be allowed by the Commissioner."

The first point taken for the appellant is that land tax is an outgoing incurred in production of
income under the circumstances I have stated. Nothing turns upon the succeeding words of the
section, "all taxes payable by him under any Act of the Parliament of Victoria except this Act,"
because that deduction is not limited to taxes in respect of the land used, but includes any taxes
imposed upon the taxpayer under any law of Victoria in respect of any matter whatever.

In considering whether the land tax is an outgoing I am greatly assisted by the decision of the House
of Lords in the case of Russell v. Town and County Bank[1]. In that case the deduction claimed was
in respect of the annual value of premises occupied by the respondents, and claimed to be occupied
solely for the purposes of their business of bankers. The question there arose under 5 & 6 Vict. c.
35, sec. 100 and Schedule D. Lord Herschell in his speech said[2]:--

The case is a case under Schedule D, and to be dealt with according to the rules provided in relation
to that schedule. It is asserted on behalf of the appellant that the rules prohibit all deductions except
those which are expressly authorized by the Act, and that this deduction not being a deduction
allowed, the respondents are not entitled to insist upon it.

The duty is to be charged upon "a sum not less than the full amount of the balance of the profits or
gains of the trade manufacture, adventure, or concern;" and it appears to me that that language
implies that for the purpose of arriving at the balance of profits all that expenditure which is
necessary for the purpose of earning the receipts must be deducted, otherwise you do not arrive at
the balance of profits, indeed, you do not ascertain, and cannot ascertain, whether there is such a
thing as profit or not. The profit of a trade or business is the surplus by which the receipts from the
trade or business exceed the expenditure necessary for the purpose of earning those receipts. That
seems to me to be the meaning of the word "profits" in relation to any trade or business. Unless and
until you have ascertained that there is such a balance, nothing exists to which the name "profits"
can properly be applied.

It appears to me that the words of sec. 9 (1) which I have read, simply embody that principle in
express language. The tax in England is upon the profits or gains. To ascertain the profits you must
deduct all expenditure necessary for the purpose of earning the receipts. This is substantially the
same thing as deducting the "outgoings incurred in production of income."

In the same case to which I have already referred, Lord Herschell went on to say[3]:--

My Lords, it is quite true that the section provides that "the duty shall be assessed, charged and paid
without other deduction than is hereinafter allowed;" and I will assume, for the purposes of this
case, that that does prohibit (although the words certainly appear to be applicable to the duty) the
making of any deductions from the balance except those allowed by the subsequent provisions of
the Act. It is to be observed that, properly speaking, there is nothing to which those words are
applicable. The provisions of the Act do not expressly allow any deductions. What they do is to
prohibit certain deductions with certain exceptions, and therefore it may perhaps, in a sense, be said
that having prohibited certain deductions with certain exceptions, the excepted things are allowed.

Now it is not disputed that the annual value of premises exclusively used for business purposes is
properly to be deducted in arriving at the balance of profits and gains. I am, of course, speaking, for
the moment, of premises which are not used in any way as a place of dwelling, but are exclusively
business premises. But there may be a question where the right to make that deduction is to be
found. I am myself disposed to think that it is allowed because it is an essential element to be taken
into account in ascertaining the amount of the balance of profits. If not it can only be included by a
very broad extension of the terms actually used, as being a disbursement or expense which is money
wholly and exclusively laid out or expended for the purposes of the trade. It is quite true that,
strictly speaking, the annual value where the premises are owned and not rented, is not money laid
out or expended for the purposes of the trade, but it is admitted, and must, I think, have been
admitted, that in either the one way or the other that deduction is to be made, because inasmuch as it
is clear that even in the case of a dwelling-house a part of which is used for purposes wholly
unconnected with the trade, the annual value of the portion which is used for the purposes of the
trade is to be deducted, it is evident that it can never be contended that in the case of premises used,
not for the purpose of a dwelling at all, but exclusively for trade purposes, the annual value is not to
be deducted. The annual value is, therefore, to be deducted somehow. It is to be deducted either by
taking it as an element before arriving at the balance of profits and gains, or as included in a very
broad construction of the provision relating to disbursements and expenses.
No question arises in this case as to deduction for annual value, but I am strongly disposed to think
a compulsory payment such as land tax would fall within the words "annual value," if it were not
otherwise deductible as an outgoing. No one would dispute that rent would be a deductible
outgoing. The deduction of annual value is apparently intended to put the freeholder on the same
footing as a lessee.

The argument may be summed up thus: The possession of land is necessarily incident to carrying on
the business of a grazier; the payment of land tax is a necessary consequence of the possession of
land of taxable value, whether the land is freehold or leasehold; the payment of land tax is therefore
a necessary incident of carrying on the business of grazing. The case therefore seems to me to come
within the exact words of the first paragraph of sec. 9.

It is contended by the respondent that, even if that is so, the payment of land tax is not a payment
made wholly and exclusively for the purpose of the trade. It is said: "True, the grazier could not
carry on his trade without paying it, but he would have to pay it whether he carried on his trade or
not, and therefore it is not an expenditure for the purpose of his trade."

A good deal of light is thrown upon that contention by the case of Smith v. Lion Brewery Co.
Ltd.[4]. In that case the respondents, who were brewers, had acquired certain licensed houses,
commonly called "tied houses," by means of which they earned profits which they could not have
earned without them, but which did not form part of the trade premises in which the business of
brewing was carried on. Certain payments having become due in respect of the ownership of those
houses, the question was whether the respondents were entitled to deduct those payments as being
wholly and exclusively laid out or expended for the purposes of their trade of brewers. The Court of
Appeal, by a majority, had decided that they were so entitled[5]. On appeal to the House of Lords,
the House was equally divided in opinion. Under those circumstances the opinion of the Law Lords
who agreed with the decision of the Court of Appeal is to be taken to be the law. But, on reading the
speeches of the learned Lords who were of a different opinion, it seems to me that all the House was
of one mind as to the principle which governed the case, and which, I think, governs this case also. I
will refer to two or three passages from the speeches.

Lord Halsbury quoted the language of the special case which had been stated by the Commissioners
of Income Tax as follows[6]:--"The Lion Brewery Company are as part of their business and as a
necessary incident of the profitable exploitation of such business the owners of these premises
which have been acquired by them in the course of and solely for the purposes of their said
business." He thought that that was sufficient to dispose of the matter. After referring to a
suggestion which had been made that the deduction claimed was in the nature of a premium of
insurance, he said[7]:--

He must if he carries on that business or that trade pay this tax; it is the act of the legislature which
makes him pay it, and it is not a thing that is open to his own will or option.

Under these circumstances it appears to me that it would land us in a very serious difficulty if in any
question like this we were called upon ourselves to do that which is the action of a business man, to
find out what exactly he may or may not treat as part of the adventure, part of that which is
necessary to be carried on.

Lord Atkinson, who agreed with Lord Halsbury, remarked[8]:--"Now what is the nature of the levy
for compensation" (that is, the deduction which was sought to be made) "under the Licensing Act
1904? First it is a compulsory levy. Though paid in the first instance in full by the publican in
possession, it is, in the ultimate result, paid in part by him, and in part by every person having an
interest in the premises. No doubt it is paid by those persons interested simply because they have the
particular interest, irrespective of who or what they are, or what their position or avocation in life
may be; but a portion of the contribution levy is by the legislature imposed and charged upon every
interest in the premises, which portion the owner of that interest must pay. And it certainly would
appear to me that where a trader deliberately acquires any particular interest in the licensed premises
wholly and exclusively for the purpose of using that interest to secure a market for the commodities
he manufactures, the money he must expend to satisfy the charge thus imposed is necessarily
disbursed wholly and exclusively for the purposes of this his trade."

It was suggested faintly in this case that there may be a difference between a case where land is
acquired for the purpose of carrying on the business of grazing, and where land already in
possession is applied to that purpose. I mention the point, but I think it is impossible to make any
distinction of that sort. Otherwise the principle applicable to the liability to income tax would
depend upon the motive which was present in the mind of the taxpayer some years before the tax
was assessable. As Lord Shaw said in the Lion Brewery Case[9]:--"In my opinion, the words
purposes of such trade do not mean the motives animating the minds of the traders, but do mean the
purposes to and for which the money is applied and expended." The dissenting Lords in that case
did not think that there was so close a connection between the business of brewing and the
ownership of the houses in respect of which the compensation levy was made, that it could be said
that the expenditure was wholly for the purpose of the brewing business. Here no question of nexus
arises. The land taxed is the very land on which the business is carried on; and, as I have already
pointed out, it is impossible to carry on the business of grazing on that land without paying the tax.
It seems to me, therefore, that the tax falls within the words "a payment made wholly and
exclusively for the purpose of the trade," as construed in that case.

A third point made for the Commissioner was that land tax is capital expenditure. I confess that I am
unable properly to appreciate that argument. The cases relied on in support of it were cases in which
money or money's-worth was paid or given as the price of something to be used in order to earn
income. It is impossible to say that land tax is paid for the purpose of acquiring anything. It may
secure the taxpayer against being disturbed in his possession, but it certainly adds nothing to his
capital--some people might think it diminishes it.

For these reasons I come to the conclusion that the deduction ought to be allowed. āBeckett J.
inclined to that view, although he did not formally dissent from the judgment of the Court. On
reading the judgments of the other learned Judges, it seems to me that the matter was not presented
to them in the way which leads me to the conclusion I have formed.

I think that the appeal should be allowed.

BARTON J

. read the following judgment:--

The question is whether the taxpayer, an owner in fee of lands on which he carries on the business
of a grazier, is entitled to deduct from his gross income for 1911 from personal exertion, in order to
arrive at his income taxable under the Victorian Income Tax Acts, a sum of Ģ387 paid to the
Commonwealth under the Federal Acts of 1910 as land tax in respect of the lands upon which he
carries on his grazing business. The Supreme Court of this State has held, āBeckett J. dubitante, that
the taxpayer is not entitled to the deduction, and he appeals to this Court.

The Principal Act, No. 1374, passed in 1895, six years before the establishment of the federal
legislature, provides in sec. 9 that "(1) All losses and outgoings actually incurred in Victoria by any
taxpayer in production of income and all taxes payable by him under any Act of the Parliament of
Victoria except this Act shall be deducted from the gross amount of such taxpayer's income." Sub-
sec. (2) of the same section forbids (inter alia) the deduction, in estimating the income liable to tax,
of (b) any sum "used or intended to be used as capital" in the taxpayer's "trade," or of (g) any
disbursements or expenses whatever, "not being money wholly and exclusively laid out or expended
for the purposes of such trade."

The Act No. 1467 amends sec. 9 of the Act No. 1374, but not so as to affect the present question.

As Hodges J. said in his judgment, the amounts fixed by the Federal Land Tax Acts are to be paid
by the owner, whether he earns income from the land or not.

The appellant's contention is put in three ways.

First, he says that there is nothing in the Victorian Income Tax Acts to prevent the application of the
case of Lawless v. Sullivan[10]. There it was held by the Judicial Committee that the word "income"
in a provincial rating Act, which did not define it, must, when applied to the taxable income of a
trade or business, be understood in its natural and ordinary sense, as the balance of gain over loss in
any year. The appellant contends that if the word income is so understood in this case, there being
no definition of it nor any context to alter its meaning, one of the allowances to be made in his
favour in arriving at the balance of his gain over his loss is this sum which he has paid as federal
land tax proper to the year.

Secondly, he says that the sum in question is an "outgoing," within the meaning of sec. 9 (1),
"actually incurred in Victoria ... in production of income," and is therefore to be deducted from the
gross amount of his income.

Thirdly, he contends that as sec. 9 (2) (g) allows by clear inference the deduction of "any
disbursements or expenses ... being money wholly and exclusively laid out or expended for the
purposes of" his "trade," this is such a disbursement or expense, and he is entitled to deduct it.

The Commissioner contests all these propositions of the appellant, and further contends that the
payment is within sec. 9 (2) (b) as a sum "used or intended to be used as capital in such trade," and
that its deduction is therefore expressly prohibited.

I am of opinion that the answer to the question before us depends entirely on the construction of sec.
9 of the Act of 1895, so that while the case of Lawless v. Sullivan[11] is useful as a guide to the
meaning of the term "income," as used in sec. 9, it does not give ground for any construction of it
which is independent of that section. I have some doubt whether the sum sought to be deducted can
fairly be called an "outgoing actually incurred in production of income," within the meaning of the
first sub-section, although there is much to be said in favour of that view, as āBeckett J. evidently
thought, and I do not dissent from it. But the strength of the appellant's case seems to me to rest on
paragraph (g) of the second sub-section. As I understand the Case Stated, the sole use to which the
appellant puts the land is for the purposes of his business as a grazier. He needs a large area of land
for that purpose, and this area of about 18,000 acres is applied to his business needs. It seems too
much altogether to say that he would have to pay the federal tax on this land if he did not carry on
the grazing business. Somebody would be taxed, no doubt, but would it be the appellant? It cannot
be predicated that he would own the land at all if he carried on any other business. It is scarcely an
inference from the case to say that he holds the land simply as an instrument essential to the proper
conduct of his business: I think it is the fair meaning of the first paragraph, at which we can arrive
without inserting anything not imported by the words. If I am right there, then is the land tax
payment a disbursement or expense wholly and exclusively laid out or expended for the purposes of
the business? It may not be so if the criterion is whether the business could be carried on without
payment of the tax. But I do not think that is the criterion. Is the payment wholly and exclusively
incidental to the carrying on of the business? Well, it is only by reason of the necessity of land for
his business that he holds this land, and it is only because of his holding it for his business that he
necessarily pays the tax, for without the business it cannot be said that he would hold the land at all.
In view, then, of the particular facts, I think the payment is incidental to the conduct of his business,
and that it is money wholly and exclusively expended for the purposes of his trade.

The reasoning of Lord Halsbury and Lord Atkinson in the case of Smith v. Lion Brewery Co.
Ltd.[12], and of the majority in the Court of Appeal[13], seems to me to help the appellant's
contention. Strong & Co. Ltd. v. Woodifield[14] was an entirely different case, and affords no basis
of comparison with the present one. But the remarks of Lord Herschell in Russell v. Town and
County Bank[15] are, I think, a strong support to the appellant's argument.

On the other hand, the cases cited for the Commissioner to show that the land tax payment is
"money used or intended to be used as capital" do not apply to the present question. The payment is
an annual one, which, as I believe, is truly incidental to the conduct of his business. It is incurred by
reason of the ownership of the land to enable that business to be carried on. It is a payment which
must be taken into account each year before the taxpayer can ascertain what is the balance of profit
in his favour.

In my opinion the appeal should be allowed, and the question answered in the affirmative.

Isaacs J

. read the following judgment:--

I agree that the appeal should be allowed. Apart from special provisions as to companies the Act
taxes "income" as defined. The word "chosen by the legislature for describing ... the taxable
subjects" (see per Lord Davey in London County Council v. Attorney-General[16]) is in Victoria
"income" not "profits." It is true that, in the end, profits only bear the burden, but it is the profits as
arrived at artificially, and in the mode prescribed by the Statute, and not simply profits as they
would appear in a commercial balance sheet. Gross income is primarily liable (sec. 8), and then by
sec. 9 liability is reduced to the net income only, but the net income as it appears after the statutory
deductions. Sub-sec. (1) of sec. 9 allows as the first deduction from "the gross amount of" the
"taxpayer's income," what it describes as "all losses and outgoings actually incurred in Victoria by
any taxpayer in production of income." So that no outgoing can be allowed as a deduction unless it
is incurred in production of the income, from the gross amount of which it is sought to be deducted.
And further, even if it is so incurred, it must not fall within any of the prohibitions of sub-sec. (2).
The only material portion of that sub-section is paragraph (g), namely, "disbursements or expenses
... not being money wholly and exclusively laid out or expended for the purposes of such trade."
The Crown claims, and the Supreme Court has decided, that the federal land tax could not be
considered as incurred in the production of income, because the taxpayer was bound to pay the tax
as owner, and therefore no matter what he did with the land.

Smith v. Lion Brewery Co. Ltd.[17] is an important case upon the question. The learned Lords were
equally divided, and the opinions of Lord Loreburn L.C. and Lord Shaw, when closely read, appear
to me to support the view put forward by the Crown; the former saying[18], "it is only in the
character of owners of a house that the Lion Brewery Company can be called upon to pay this levy
at all"; and the latter observing[19], "it is not qua trader, but simply qua owner, apart from being a
trader at all, that the owner makes the payment." On the other hand, Lord Halsbury and Lord
Atkinson are distinct in the other direction; and so, the House being equally divided, the decision
appealed from becomes, under the special rule laid down for itself by the House of Lords, the law of
England, until altered by Parliament. But, apart from that, by which we are not technically bound, I
am, with the most unfeigned respect to the opinions of the other learned Lords in this great divided
controversy, more strongly persuaded by the views expressed by Lord Halsbury and Lord Atkinson.

I want to guard against one possible misconception. There the special case stated expressly that the
property in respect of which the tax was paid was acquired and held solely for the purposes of the
business, and not as an investment. Here, as was there also recognized--see per Lord Shaw[20]--
the decision must proceed upon the facts as set forth in the stated case. We have no power, as the
Supreme Court had no power, to find further facts, directly or by way of inference--unless, of
course, the law itself postulates one inference only--which is not the case here.

There is no statement in the matter before us, corresponding with that to which I have just referred,
and so far as any observations of the learned Lords rest upon the facts mentioned, the judgments are
irrelevant.

But, after all, it seems to me those facts only raise an ā fortiori case. Lord Halsbury[21] points out
the purpose for which the tax was enacted is utterly immaterial. He adds that the taxpayer "must if
he carries on that business or that trade pay this tax; it is the act of the legislature which makes him
pay it, and it is not a thing that is open to his own will or option."

And Lord Atkinson[22] reasons out the position, and shows convincingly, to my mind that, though a
tax may in one sense be paid as owner or lessee, in another it is paid as trader. The instances he puts
as to licences are undeniable, and I cannot distinguish them from this case.

To carry the matter further: Suppose the Federal Parliament were to lay a tax on the owners of
motor cars, and carts, and guns, and dogs and sheep, so that the tax was payable whether these
things were employed in trade or not; could it be doubted that the tax would be a real outgoing
necessary for the production of the income of a business in which they were all used? The land is as
necessary to the business as the personal property. The grass, water, and shelter of that particular
land were indispensable to the production of the particular income for the year; with other land the
amount would probably be different; and as the actual gross return could not be received without the
use of that land, and the use of the land means the use of an instrument to which is attached by law a
compulsive payment, it seems to me to follow naturally that the payment made under compulsion of
law in respect of that necessary element of the business income is an outgoing made in the
production of the income, and in the circumstances here it was made wholly and exclusively for the
taxpayer's business.
And the fallacy of the contrary doctrine consists in this: it confuses, not so much the meaning, as the
application of the word "purpose." The land tax is enacted by the legislature for its own purpose,
that is, to tax the owner; and when he pays it to the Crown, he pays it as the owner, it is true, but so
far, not for any purpose of his. He simply pays it because he is obliged to by law. But when he uses
the property to produce an income, that is, for his business purposes, he pays the tax inseparably
connected with the land also for his business purposes, namely, as an outlay necessary in the
existing state of the law to obtain that income by means of that land.

In Ashton Gas Co. v. Attorney-General[23] Lord Halsbury L.C. says of the English Act, "the profit
upon which the income tax is charged is what is left after you have paid all the necessary expenses
to earn that profit." If a tax paid by the owner of a motor car and paid by him as owner, which
would be the Commonwealth purpose, is incurred for his business purposes, then, unless the
legislature prohibits it or excepts it, he may deduct it--because it is a necessary expense to earn his
profit; and land can stand in no different position. Take the case of rent--which would be a
conceded deduction, both on general principles, and by reason of statutory recognition. If the
premises were held on a long lease entered into by the trader, years before he commenced his
business, and therefore without thought of it, and, perhaps, originally for residential purposes only,
it would be quite true to say of him that he paid the rent as lessee, without reference to whether he
used it for business purposes or not. Nevertheless no one, I imagine, would deny its deductibility
even under sub-sec. 1 as an outgoing in the production of the income. Again, suppose the premises
purchased years before the establishment of the business, or derived by descent or will, the annual
value is an equally obvious deduction. Yet it is, as Lord Herschell says in Russell's Case[24], not
even strictly an outgoing, but is to be treated as such, by deduction somehow, and, if so treated, is in
one sense most certainly in the character of owner. No other capacity is possible. But in the material
and important sense, it is in the character of trader, because the owner has, for the time being,
enlisted that property with all its legal attributes in his trading service, and the Crown in taxing the
income produced by it in combination with it, treats it as such.

Indeed, the trader here is owner of everything: he devotes the land to business purposes in the
character of owner; he uses it as owner; he is entitled to the income of the business as owner; he is
entitled to deduct the annual value of his own land as owner of the land in precisely the same sense
as he pays the federal land tax in respect of the same land as owner.

We must remember that so long as he devotes his land to business purposes--his business
purposes--he applies the annual value, that is, the appurtenant benefits of the land, and subject to all
appurtenant liabilities of the same land, to the business; and if it is borne in mind, as I have said,
that the Act in speaking of the purposes of outgoings means the taxpayer's purposes, and not the
purposes of the legislature, the difficulty, as it seems to me, disappears.

For these reasons the question should, in my opinion, be answered in favour of the taxpayer.

I desire to add my appreciation of the clear and able argument on both sides.

Gavan Duffy J.

I agree that the appeal should be allowed. It is admitted that the land in question is used by the
taxpayer wholly and exclusively for the purposes of his trade as a grazier. In these circumstances the
Commonwealth land tax paid in respect of that land on which he carries on that trade is, in my
opinion, an outgoing actually incurred in Victoria in the production of income. I think, therefore,
that the taxpayer is entitled to deduct the sum paid for Commonwealth land tax from the gross
amount of his income under the provision of sec. 9 (1) of the Income Tax Act 1895; and I also think
that there is nothing in the other provisions of that section which precludes him from making that
deduction.
Appeal allowed. Order appealed from discharged. Question answered that the whole sum mentioned
should be deducted from the taxpayer's gross income for the year 1911. Case remitted to County
Court. Respondent to pay the costs of and occasioned by the special case and of this appeal.
Solicitors, for the appellant, Whiting & Aitken.
Solicitor, for the respondent, Guinness, Crown Solicitor for Victoria.
[1] 13 App. Cas., 418.
[2] 13 App. Cas., 418, at p. 424.
[3] 13 App. Cas., 418, at p. 424.
[4] (1911) A.C., 150.
[5] (1909) 2 K.B., 912.
[6] (1911) A.C., 150, at p. 156.
[7] (1911) A.C., 150, at p. 157.
[8] (1911) A.C., 150, at p. 159.
[9] (1911) A.C., 150, at p. 168.
[10] 6 App. Cas., 373.
[11] 6 App. Cas., 373.
[12] (1911) A.C., 150.
[13] (1909) 2 K. B., 912.
[14] (1906) A.C., 448.
[15] 13 App. Cas., 418, at p. 425.
[16] (1901) A.C., 26, at p. 45.
[17] (1911) A.C., 150.
[18] (1911) A.C., 150, at p. 155.
[19] (1911) A.C., 150, at p. 170.
[20] (1911) A.C., 150, at p. 164.
[21] (1911) A.C., 150, at p. 157.
[22] (1911) A.C., 150, at pp. 160, 161.
[23] (1906) A.C., 10, at p. 12.
[24] 13 App. Cas., 418, at p. 425.