(1989) 3A CLR 984

1989 August 14

 

[BOYADJIS. J]

IN THE MATTER OF ARTICLE 146 OF THE CONSTITUTION

THE CYPRUS TELECOMMUNICATION AUTHORITY,

Applicant,

v.

THE REPUBLIC OF CYPRUS, THROUGH THE MINISTER OF

FINANCE AND/OR ANOTHER,

Respondents.

(Case No. 43/81)

Public corporations - The Cyprus Telecommunication Authority- Whether or not it is to be treated for (he purposes of tax and other privileges of the State as bodies exercising functions on behalf of the State - Question determined in the negative - Whether it may be considered in consimili casu with servants of the Slate earning out governmental duties and discharging state responsibility or not - Who may be considered as persons in consimili casu with the State - The functions-powers and responsibilities of the Authority in question under the law establishing it are of a governmental nature and, therefore. though the Authority is not a servant of the Republic. it is in consimili cacti to servants of the Republic exercising junctions required and created by the Government - It follows that the Authority is entitled to immunity from payment of Income Tax.

In this case the applicants raised, inter alia, the issue whether they are liable to pay Income Tax. The applicants argued that they are in consimili casu to servants of the State and therefore they enjoy the same immunity from Income Tax.

In the course of its judgment the Court referred extensively to authorities relating to the concept of persons "in consimili casu" with servants of the State. Having defined this concept. The Court proceeded and examined in detail the functions and responsibilities of the applicant Authority In the light of such functions and responsibilities, as described in the course of the judgment, the Court reached the conclusion that such functions and responsibilities are of governmental nature.

In the of such conclusion the Court accepted the argument that the Authority is in consimili casu with servants of the State and that therefore, it was not bound to pay Income Tax.

As a result the sub judice decision, whereby the respondent Commissioner assessed the Authority with the payment of Income Tax for the year 1978, was annulled.

Sub judice decision annulled. No order

as to costs.

Cases referred to:

The king Cook 3 T. R. 519,

Coomber (Surveyor of Taxes) v. Justice of Country of Berks, 2 Tax Cases I,

Mersey Docks & Harbour Board v. Cameron-Jones v. Mersey Docks [1864-65] II H.L.C. 1405,

Tamlin v. Hannaford [1949] 2 ALL E. 327,

British Broadcasting Corporation v. Johns (Inspector of Texes) [1964] I ALL E. R. 923.

Republic v. The Cyprus Ports Authority (1984) 3 C.L.R. 117,

Bank Voor Handel En Scheepraart. N. Y. v. Administrator of Hungarian property [1954] 1 ALL E.R. 969,

Ports Authority of Cyprus v. Petrolina Company Ltd. (1971) 1 C.L. R. 19,

Harrison Ltd. v. Griffiths, 40 T.C. 281.

Glasgow Corporation Water Works v. Miller, 1 T.C. 28,

Mersey Docks Harbour Board v. Lucas 2 T.C. 25.

Recourse.

Recourse against the income tax assessments raised on applicant.

C. Hadjioannou, for the Applicant.

A. Evangelou, Senior Counsel of the Republic, for the Respondents.

BOYADJIS, J. read the following judgment. This case raises the interesting question of immunity from income tax to which the Cyprus Telecommunications Authority is allegedly entitled. The question has arisen in the following circumstances:

The respondent Commissioner of Income Tax raised for the first time an income tax assessment on the Applicant Authority in respect of the year 1962, i.e. eight years after the latter came into existence. Similar assessments were raised on the Applicant for each ensuing year until 1978. The applicant hereinafter referred to as "the Authority", objected to each yearly assessment but the respondents omitted to determine these objections and preferred to leave the matter in abeyance.

On 10th January, 1981, however, the respondent Commissioner, communicated to the Authority his decision to dismiss the latter's objection to the assessment raised for the year 1978 whereby the chargeable income of the Authority was fixed at £50,000.- and the income tax payable thereon was assessed at £21,250.- By means of the present recourse the Authority is now challenging the aforesaid decision of the Commissioner dated 10th January. 1981, on several grounds of law which may conveniently be summarized as follows:

(1) The Authority never made a taxable profit within the meaning of the Income Tax Laws and the sub judice assessment is arbitrary and/or in abuse of power and/or excessive.

(2) The Authority is a public corporation exercising a function of government and is, therefore, a servant or agent of the Republic or in consimili casu, entitled as such to immunity from income tax.

(3) The Authority is not a "person" within the meaning of sections 2 and 5(1) of the Income Tax Laws 1961 to 1979.

(4) The Authority does not carry on a "trade" within the meaning of section 5(1) of the Income Tax Laws, especially in view of the fact that section 19 of Cap. 302 casts on it the obligation to reduce its rates in the following year if during the preceding year it realised a surplus, and also precludes it from making any profit within the meaning of section 5(1) of the Income Tax Laws.

During the hearing of the case learned counsel for the Authority has expressly abandoned the first aforementioned ground of law which included the allegations that the sub judice assessments was factually wrong and arbitrary. Following this development I shall proceed to examine the other aforementioned three grounds of law raised against the sub judice assessment, not in abstractum but on the basis that, examined from the factual aspect, the said assessment was reasonably opened to the Commissioner of Income Tax to make.

Ground No.2. Can the Authority rely on the Republic's privilege and plead the Government's immunity as an answer to the assessment made on it? Before answering this question it is useful to examine the nature and origin of the privilege or exception relied upon by the Authority.

In England, consistent with the royal prerogative, a general principle as to the construction of statutes imposing charges has developed according to which the Crown is not bound by such statute unless there can be gathered from it an intention that the Crown should be bound: See The king Cook, 3 T. R. 519; Coomber (Surveyor of Taxes) v. Justice of County of Berks, 2 tax Cases I; Mersey Docks & Harbour Board v. Cameron-Jones v. Mersey Docks [1864-65] II H.L.C. 1405; And Tamlin v. Hannaford [1949] 2 ALL E. R. 327 referring to this settled rule of construction in British Broadcasting Corporation v. Johns (Inspector of Taxes) [1964] I All E. R. 923, Diplock, L.J. said the following at p. 941:

"Since laws are made by rulers for subjects, a general expression in a law such as 'any person' descriptive of those on whom the law imposes obligations or restraints is not to be read as including the ruler himself. Under our more sophisticated constitution the concept of sovereignty has in the course of history come to be treated as comprising three distinct functions of a ruler: executive, legislative and judicial, though the distinction between these functions in the case, for instance, of prerogative powers and administrative tribunals is sometimes blurred. The modem rule of construction of statutes is that the Crown, which today personifies the executive government of the country and is also a party to all the legislation, is not bound by a statute which imposes obligations or restraints on persons or in respect of property, unless the statute says so expressly or by necessary implication".

It is suggested that the above principle received statutory recognition in Cyprus through the enactment of section 44 of the Interpretation Law, Cap. 1, which, under the marginal note "Rights of the Crown", reads as follows:

"No Law or public instrument shall in any manner whatsoever affect the rights of the Crown unless it is therein expressly provided or unless it appears by necessary implication that the Crown is bound thereby".

Under Article 188.1 of the Constitution, the above statutory provision continues to be in force after the date of the coming into operation of the Constitution and under Article 188.3(a) reference therein to the Crown is to be construed as reference to the Republic.

The republic is not being named in the Income Tax Laws under which the Commissioner of Income tax has raised the impugned assessment on the Authority and it has not been suggested that they contain words which can be construed as taking away the exemption from taxation enjoyed by the Republic, which was judicially recognized for the first time in the judgment of the Full Bench in The Republic of Cyprus, through The Commissioner of Income Tax v. The Cyprus Port Authority (1984) 3 C.L.R. 117.

The immunity from taxation enjoyed by the Crown and in our case by the State, may be relied upon by the servants or agents of the State and also by those who, though not strictly servants of the State, might be considered in consimili casu. See Bank Voor Handel En Scheepraart, N.Y. v. Administrator of Hungarian Property [1954] 1 ALL E.R. 969; and Republic v. Cyprus Ports Authority (supra). Difficulty, however, in the application of the principle of the State's immunity from taxation in the case of a subordinate body often arises in view of the fact that, though the State is entitled to operate through servants or agents who are incorporated, in many cases there is no provision in the enactments establishing them (there is none in Cap. 302 establishing the Cyprus Telecommunications Authority) whether or not they are to be treated for the purposes of tax and other privileges of the State as bodies exercising functions on behalf of the State.

The applicant Authority in the present case cannot be considered as servant of the State and the question which I have to determine is whether it may be considered in consimili casu with servants of the State carrying out governmental duties and discharging State responsibility or not.

The answer to the above question will depend on the consideration of the status, duties and functions of the Authority set out in the statute establishing it, namely, the Telecommunications Service Law, Cap.302, as subsequently amended, and of the historical background regarding the legislation affecting the functions now performed by the Authority. Before, however, I embark on a consideration of the last aforementioned enactments, I propose to examine the case law delineating the boundaries of the class of persons who are "in consimili casu with servants of the State" to which class the Authority in the present case is alleged to belong.

The phrase "in consimili casu" was first coined by Mr. Justice Blackburn in the House of Lords cases of Mersey Docks and Harbour Board v. Cameron-Jones v. Mersey Docks (supra), which has been described by Lord Reid in Bank Voor Handel case (supra) as the starting point of these questions. Mr. Justice Blackburn stated the following at p. 1413 of the report:

"So far the ground of exemption is perfectly intelligible, but it has been carried a good deal farther, and applied to many cases in which it can scarcely be said that the Sovereign or the servants of the Sovereign are in occupation. Long series of cases have established that where property is occupied for the purposes of the government of the country, including under that head the police, and the administration of justice, no one is rateable in respect of such occupation. And this applies not only to property occupied for such purposes by the servants of the great departments of State, such as the Post Office, Smith v. Birmingham (7 El. and BI. 483), the Horse Guards, Lord Amherst v. Lord Somers (2 T.R. 372), or the Admiralty, The Queen v. Stewart (8 El. and BI. 360), in all which cases the occupiers might strictly be called the servants of the Crown; but also to property occupied by local police. Justices of Lancashire v. Shelford (El. BI. and ElI. 225); to county buildings occupied for the assizes, and for the judges lodgings. Hodgsen v. Local Board of Carlisle (8 El. and BI. 116); or occupied as a county court, The Queen v. Manchester (3 El. and Bl. 336); or for a jail, The Queen v. Shepherd (1 Q.B. 170).

In these latter cases it is difficult to maintain that the occupants are, strictly speaking, servants of the Sovereign, so as to make the occupation that of Her Majesty; but the purposes are all public purposes, of that kind which, by the constitution of this country, fall within the province of Government, and are committed to the Sovereign, so that the occupiers, though not perhaps strictly servants of the Sovereign, might be considered in consimili casu. And the decisions are uniform, and were not disputed at the Bar, that the exemption applies so far; but there is a conflict between the decisions as to whether the exemption goes farther".

Reading his opinion in the above case the Lord Chancellor (Lord Westbury) emphasized that the exemption is not given to charity or to public purpose beyond that which is strictly involved in the position that the Crown is not bound by the Act and added the following at pp. 1428 and 1429 of the report:

"At last in the, case of the Tyne Improvement Commissioners v Chirton (1 ElI. and Ell. 516), the Court of Queen's Bench recurred to that, which is in my opinion the true principle, namely, that the only ground of exemption from the statute of Elizabeth is that which is furnished by the rule that the Sovereign is not bound by that statute, and, that consequently when valuable property (that is, property capable of yielding a net rent above, what is required for its, maintenance), is sought to be exempted on the ground that it is occupied by bare trustees for public purposes, the public purposes must be such as are required and created by the government of the country, and are therefore to be deemed part of the use and service of the Crown".

In Coomber (Surveyor of Taxes) v. Justice of County of Berks (supra), Lord Watson referred to the last quoted extract from the opinion of Lord Westbury, and added the following at p. 19:

"The precise language of that definition satisfies me that the noble and learned Lord meant to affirm, and did affirm, that the exemption extended not only to the immediate and actual servants of the Crown, but to all other persons, not being servants of the Crown, whose occupation was ascribable to a bare trust for purposes required and created by the Government of the country. And seeing that, in my opinion the administration of justice, the maintenance of order, and the repression of crime are among the primary and inalienable functions of a constitutional Government, I have no hesitation in holding that assize courts and police stations have been erected for proper Government purposes and uses, although the duty of providing and maintaining them has been cast upon county or other local authorities".

In Bank Voor Handel v. Hungarian Administrator (supra), reading his opinion, Lord Reid drew a distinction between servants of the Crown and those in consimili casu with servants of the Crown and stated the following at p. 981 of the report:

"Those in consimili casu are typically bodies like the justices, independent of the Crown, asserting Crown privilege, not for the benefit of the revenues of the Crown. but for the benefit of their own revenues, in order that the functions which they are carrying out shall not be prejudiced, and it is easy to see why such independent bodies can only be permitted to claim Crown privilege in respect of a very limited class of functions, and only if the property or money in respect of which immunity is claimed is wholly devoted to those functions. But the case of a subordinate servant of the Crown is very different. If a Minister receives income to be used in the service of the Crown it does not matter whether the purposes for which it is to be used are, or are not, purposes which, if carried out by independent bodies, would put them in consimili casu with servants of the Crown: in all cases he can claim Crown immunity".

Lord Reid added the following at p. 983:

"While it may be that a Crown servant could not claim Crown immunity in respect of his performance of statutory duties which served no Crown purpose at all, I can find nothing to justify the argument that Crown immunity can only be claimed by the Crown (or its servants on its behalf) if it is required to protect some direct or financial interest of the Crown; and still less can I find any support for the argument that immunity cannot be claimed by the Crown unless the Crown alone is interested in the benefit which it will bring. I have already said that there is in my view, an essential difference between the immunity of the Crown itself and immunity which may be claimed by independent bodies on the ground that they are performing functions of a governmental character. There is every reason for strictly limiting the right of such bodies to claim immunity, but I can see no ground for applying those limits to the Crown itself. If an Act of Parliament does not bind the Crown, then the Crown can claim immunity from its provisions whether its interest to obtain immunity in a particular case is large or small or direct or indirect".

Reading his opinion in the same case, Lord Asquith of Bishopstone stated the following at pp. 990 and 991 of the report:

"Persons may enjoy immunity who are not servants of the Crown, but occupy premises, such as assize courts, judges' lodgings, policemen's lodgings, and the like, and do so exclusively for the performance of the functions of the executive government. These persons are in some of the cases described as "in consimili casu" with servants of the Crown. Persons will tend to be placed in this category if the public functions which they discharge are closely connected with the exercise of the Royal prerogative; e.g., inter alia, the administration of justice, the preservation of public order, the making of war, and the conclusion of peace. And the courts appear, on some of the authorities, to have taken these last factors into account as relevant in deciding who is a "servant of the Crown" within the second class.

These principles seem to most clearly stated in the opinion of Lord Cranworth in Mersey Docks v. Cameron (38 Digest 466, 286) though they emerge also in Greig v. Edinburgh University (38 Digest 472, 327), Coomber v. Berks JJ. (38 Digest 465, 281), and Metropolitan Meat Industry Board v. Sheedy [1927] A.C. 899.

For completeness, perhaps, a fourth principle or rule may be added. The courts will lean against including in any of the exempted categories an aggregation of commercial undertakings brought under some degree of public statutory control: and they will (if the other requirements are satisfied) lean in favour of exemption for persons or bodies who are mere Ministerial instruments, of the Crown's will, lacking in themselves any discretion or initiative".

Reference should finally be made to the decision in British Broadcasting Corporation v. Johns [1964] 1 All E. R. 923, C. A. where Diplock, L.J. stated the following at p. 943: [*994

"..I. will content myself by saying (i) that "Crown immunity" is restricted to persons who are servants or agents of the executive government and is enjoyed only in relation to acts. which they do or property which they own or occupy exclusively in that capacity; (ii) that reference in the cases to persons in consimili casu to servants of the Crown - Blackburn, J. incidentally, did not speak of persons in consimili casu to agents - its today best translated as agents of the executive, government;"

Dealing with the question whether the B.B.C. carries on all or any of its activities as agent for the executive government, he suggested the following test at p.941:

"Are they carried out in the performance of a duty or the exercise of a power which is imposed on or vested in the executive government of the. United Kingdom by statute or by the prerogative?"

I conclude the examination of this aspect of the case by stating that the burden is on the person asserting the State's immunity to show that he is entitled to it. See Bank voor Handel case (supra).

I now turn to examine the status, functions and duties of the Authority as they emerge from the several provisions of the Telecommunications Service Law, (Law No. 67 of 1954) now Cap. 302, as subsequently amended. The Law was first enacted on 30th December, 1954, and was cited as the Inland Telecommunications Service Law and the Authority established thereby was named the Cyprus Inland Telecommunications Authority. The word "Inland" was deleted from the title of the Law and the name of the Authority as a result of the amending Law No. 34 of 1962. Regarding the establishment and constitution of the Authority, Section 3 provides that it shall be a body corporate with perpetual succession and a common seal and shall have power to acquire, hold and dispose of property, to enter into contracts, to sue and be used in its name and to do all things necessary for the purposes of this Law. Section 5, as amended by Law 20 of 1960, provides that the Authority shall consist of not more than seven members appointed by the Council of Ministers, one of whom shall be designated as Chairman and another as ViceChairman. They hold office for a period of not more than five years subject to such conditions as the Council of Ministers may determine. They are subject to removal at any time by the Council of Ministers without even assigning any reason therefor. Under section 9A, added by Law No. 25 of 1963, the Minister of Communications and Works may issue directions of a general nature concerning the performance of the duties by the Authority which are necessary for the public benefit and which the Authority is bound to follow. On demand the Authority is under a duty to provide the said Minister with reports, accounts and other information relating to the property and the operations of the Authority and to render any assistance to him in checking such information in the manner that he might think fit. Under section 11 of the Law, all members, officers and servants of the Authority shall be deemed to be employed in the public service within the meaning of the Criminal Code.

General provisions regarding the functions of the Authority are set out in Part III of the Law. Section 12(1) casts upon the Authority the duty, inter alia, to operate a good and sufficient telecommunications service in Cyprus for the Government, public bodies and the public generally; to operate all installations and plant which is, or which may be, acquired by the Authority under the provisions of this Law, for the purposes set out in this section; and to promote the development of the telecommunications service in accordance, as far as practicable, with recognised international standard practice and public demand. In order to enable the Authority to carry out its duties under section 12(1), section 12(2) empowers it subject to the provisions of this Law to, inter alia, purchase, construct, reconstruct, instal, maintain and operate installations and plant, sell, hire or otherwise supply installation and plant and carry on all such other works with a view of providing an efficient telecommunications service.

Under section2 "telecommunication" means any transmission, emission or reception of signs, signals, writing images and sounds or intelligence of any nature by wire, radio, visual or other electromagnetic systems. The words "telegram", "telegraph" and telegraph line" have the same meaning as in section 2 of the Telegraph Law, Cap. 305.

The installations and plant which is or which may be acquired by the Authority under the provisions of this Law is the inland telegraph and telephone undertaking of Cable and Wireless Limited with whom the Authority is empowered under section 24 of the Law to enter into the agreement set out in the First Schedule with a view of acquiring it. The company's inland telegraph undertaking is described in the said agreement as being the telegraph lines and the installations and plant and the undertaking in connection therewith. It is also stated that "telegram", "telegraph" or "telegraphic" or any cognate expressions includes "telephone".

Special financial provisions are to be found in sections 14 to 22 inclusive. Section 14 provides that for the purpose of enabling the Authority to carry out its functions under this Law, it may, with the consent of the Council of Ministers, borrow money subject to such conditions as the Council of Minister may deem fit to impose. Under section 15 the Authority may, for the purpose of raising money, issue securities which shall be issued, transferred, dealt with and redeemed according to Regulations made by the Council of Ministers. Section 17 requires the Authority to pay into a fund all sums received by it and pay out of it the remuneration of its members, the salaries of its officers and servants and all expenses incurred by it, including repayment to the Government of the principal and interest on any advances made by the Government to the Authority. Section 18 empowers the Authority to invest all moneys not immediately required to be expended in such securities as may be approved by the Council of Ministers. Section 19 requires the Authority to fix its charges in respect of its services at such rates and scales that the revenue derived thereby by it, taking one year with another, will be sufficient and only sufficient as nearly as might be to pay for its running expenses, debts, redemption of securities and a reserve fund. Section 20 requires the Authority to keep proper accounts in respect of its operations which should be audited by an auditor appointed annually with the approval of the Minister of Communications who shall receive copy of the auditor's report. Under section 21, the Authority is exempted from - (a) payment of customs duties on machinery, apparatus vehicles etc. imported for use by the Authority and not intended for sale to the general public; (b) payment of stamp duty; and (c) payment of government tax, or any rate of any local authority, in respect of any telegraph line.

Reference should lastly be made to section 43 which empowers the Authority to make Regulations, not inconsistent with the provisions of the Law and always with the approval on the Council of Ministers, for the better carrying out of the Law into effect and in respect of matters which include the fixing of the rate of charges in respect of communications arid other services properly rendered by the Authority to its subscribers.

Having set out the functions, powers and responsibilities of the Authority under the Law establishing it, it is of great importance, in the light of the aforementioned authorities, to consider whether they are of governmental nature or not. If the submission of learned counsel for the Authority that the Telegraphs Law, now Cap. 305, created a government monopoly of the use of telegraphy and telephony, the answer to the question should be in the affirmative.

If, on the other hand, the submission of learned counsel for the respondents that the aforesaid Law simply empowered the government to control the new activity by a system of licences, the answer to the question should be in the negative and the Authority's claim to the government immunity should fail.

The Telegraphs Law was not the first enactment that dealt with telegraphy. Provision for the regulation of the installation and working in Cyprus of telegraphic apparatus and for the exercise of control in certain events by the High Commissioner over the transmission of messages in Cyprus by telegraphic apparatus was first made in Cyprus by the Cyprus Telegraphic Order, 1904, issued on 24th October, 1904, under the Foreign Jurisdiction Act, 1890. It is not necessary to recite the contents of this order. It suffices to say, that telegraphic apparatus was defined to include any apparatus intended for the transmission or receipt of messages with or without the employment of wires or cables and that it was made unlawful for any person to instal or maintain in Cyprus any telegraphic apparatus without a licence to be granted in that behalf by the High Commissioner. There was also provision therein that in case of emergency the government would take possession of such telegraphic apparatus.

The provisions of the Cyprus Telegraphs Order, 1904, in so far as they related to Wireless Telegraphy were revoked on 14th October, 1913, by the Cyprus Telegraphy Amendment Order, 1913, which defined Wireless Telegraphy as any system of transmitting messages without the aid of any wire.

The aforesaid two Orders in Council remained in force until they were repealed by the Telegraphs Law enacted on 15th August, 1933. Considering its contents, the Order of 1904 cannot be said that it created any Government privilege or monopoly in telegraphy. It simply created a system of government control by means of licences.

On 10th June, 1930, the Telephone (Agreement) Law, now Cap. 306, was enacted entitling the Governor to enter into an agreement with the "company" which was defined as the Imperial and International Communications Limited, its successors and assigns, whereby the company would take over the Government telephones and establish and maintain the telephone service in the then colony of Cyprus under terms which, inter alia, were exempting the company from payment of special and exclusive taxation in respect of its property and revenues in Cyprus and from import duties. In 1934 Cable and Wireless Ltd. succeeded Imperial and International Communications Ltd. Until the establishment of the Authority, Cable and Wireless Ltd. were providing telecommunications in Cyprus on an exclusive basis pursuant to an agreement with the Government entered into under the Telephone (Agreement) Law, now Cap. 306.

The allegation of the Authority that its functions are of a government nature is based on section (1) of the Telegraphs Law, now Cap. 305, which reads as follows:

"3(1) The Governor (now the Council of Ministers) shall have the exclusive privilege of establishing, constructing, maintaining and working telegraphs and telegraph lines within the Colony (now the Republic)".

Sub-section (1) of section 3 is followed by four other subsections which read as follows:-

"3(2) The Governor may grant a licence, on such terms and conditions and in consideration of such payments as he thinks fit, to any person or telegraph company to establish, construct, maintain or work a telegraph or telegraph line within any part of the Colony and to place, lay, carry and maintain any poles or wire for the purpose of such telegraph or telegraph line in, along, through, across or under any street or immovable property.

(3) The Governor may, at any time, revoke any licence granted under this section on the breach of any of the terms or conditions therein contained or in default of payment of any consideration payable thereunder.

4) Every licence to establish, construct, maintain or work a telegraph granted under the provisions of any of the enactments hereby repealed and subsisting at the time of the coming into operation of this Law, shall he deemed to have been granted under this Law, and every telegraph line or pole placed under, in, upon, over, along or across any street or immovable property for the purposes of such telegraph shall be deemed to have been placed in exercise of the powers conferred by, and after the due observance of all the requirements of, this Law.

(5) If any person or telegraph company to whom a licence has been granted under this section breaks any term or condition contained in such licence, such person or telegraph company shall be guilty of an offence and shall be liable on conviction to a fine not exceeding one hundred pounds and to a further fine not exceeding fifty pounds for every week during which the breach of the term or condition continues".

Section 2 of the Law provides that:

(i) "telegram" or "message" means any communication transmitted or intended to be transmitted by telegraph or to be delivered or intended to be delivered as a communication transmitted either wholly or partly by telegraph.

(ii) "telegraph" includes "telephone" and means an electric or magnetic telegraph, and includes appliances and apparatus for making, transmitting or receiving telegraphic, telephonic or other communications by means of electricity or magnetism, or by any agency of a like nature, with the aid of wires".

I should add at this juncture that according to the uncontradicted affidavit evidence by Philippos Vatyliotis, the Chief Engineer of the Authority, the telex service provided by the Authority comprises the transmission of messages through telephone lines and is identical to the telegraph service, the only difference being that the messages are transmitted automatically on a subscriber to subscriber basis instead of from telegraph office to telegraph office. I should also add that under section 6 of the Law, Cap. 305, on any public emergency or in the public interest the Council of Ministers may, inter alia, take temporary possession of any telegraph or telegraph line established, maintained or worked by a person or telegraph company licensed under this Law, and also that the Authority does not operate pursuant to any licence granted under this or any other law.

In England telegraphy was treated in a similar manner. Section 4 of the telegraph Act, 1869, read as follows:

"4. The Postmaster General to have exclusive privilege of sending messages with certain exceptions.- The Postmaster General, by himself or by his deputies, and his and their respective servants and agents, shall have the exclusive privilege of transmitting telegrams within the United Kingdom of Great Britain and Ireland, except as hereinafter provided; and shall also within that Kingdom have the exclusive privilege of performing all the incidental services of receiving, collecting, or delivering telegrams, except as hereinafter provided".

The above English corresponding provision which is closely similar to our provision section 3(1) of the Telegraphs Law, Cap. 305, was considered and compared with the Wireless Telegraphy Acts of 1904 and 1949, by the Court of Appeal in England in the case of B.B.C. v. Johns 9supra). It was described as a statutory method of creating a monopoly in the executive government. I have found extremely helpful the following passage from the judgment of Diplock, L.J., at p.942 of the report:

"In the case of telegraphy, which was invented in 1837, Parliament, by the Telegraph Act, 1869, s.4, did confer on the Postmaster-General the exclusive privilege, with certain exceptions, of transmitting inland telegrams, a privilege which was held to extend to telephonic communications when telephony was invented (see A.-G. v. Edision Telephone Co. of London [1880] 6, Q.B.D. 244); but this statutory method of dealing with a new activity by creating a monopoly in the executive government with exceptions which included, inter alia, other persons license by the Postmaster-General, is in marked contrast to the way in which Parliament dealt with the new activity of wireless telecommunication in the Wireless Telegraphy Act, 1904. By that Act, which in the income tax year with which this appeal is concerned had been replaced by the Wireless Telegraphy Act, 1949, Parliament contended itself with empowering the executive government, acting through the agency of the Postmaster-General, to control wireless transmission and reception by a system of licensing. It was under s.1 of the Act of 1949 that a licence was granted by the Postmaster-General to the B.B.C. to use wireless telegraph stations for broadcasting. If the B.B.C. had been entitled to Crown immunity, it would have required no licence, any more than the Admiralty, the War Office or the Royal Air Force".

The B.B.C. was held not entitled to the Crown immunity from taxation on the ground that broadcasting was never made a function of government and the Wireless Telegraphy Acts 1904 and 1949, upon which the B.B.C. relied in support of their argument that they had created a Crown monopoly in wireless telegraphy, all that they purported to do was to provide for the regulation of wireless telegraphy by a system of licences. There was no provision in the Wireless Telegraphy Acts similar to section 4 of the Telegraph Act, 1869, or to section 3(1) of our Telegraphs Law, Cap. 305 (supra). That this is the ratio decidenti in the B.B.C. case (supra) becomes evident from the following statement of Lord Diplock at p.942:

"The charter thus empowers the B.B.C. to provide broadcasting services either under contract with the Postmaster-General and pursuant to a licence granted under s.1 of the Wireless Telegraphy Act, 1949, or, without licence, as agent for the executive government. The services with which this appeal is concerned are provided by the B.B.C. in the exercise of the former power, pursuant to the licence and agreement of June 12, 1952".

Very relevant is also the following passage from the judgment of Wilmer, L.J. at p. 930:

"It was, however, contended by counsel for the B.B.C., and the contention appears to have been accepted by Wilberforce, J., that from the early days of wireless telegraphy the Crown asserted a monopoly in respect thereof. I do not think that this is so What happened was that Parliament passed the Wireless Telegraphy Act, 1904, since replaced by the Wireless Telegraphy Act, 1949, which in no sense created a Crown monopoly in respect of wireless telegraphy. All that the Act purported to do was to provide for the regulation of wireless telegraphy by a system of licences. In other words, wireless the telegraphy was treated in much the same way in which road traffic was treated on the invention on the internal combustion engine, and in which more recently aviation has been treated. It may be that at some date in the future it will similarly be necessary to legislate for the regulation of space travel. It seems to me that, when broadcasting became a practical possibility, it was for Parliament to decide how it should be dealt with. It might have been left to be developed entirely by private enterprise, as I understand is the position in the United States of America. It might, on the other hand, have been specifically made a function of government, as was no doubt the case in Nazi Germany; for instance, by imposing a statutory duty on the Postmaster-General, or some other Minister, to organise a government broadcasting service. This was what was done in relation to certain aspects of the National Health Service, as was held by this court in Pfizer Corpn. v. Ministry of Health [1963] 3 ALL E.R. 779. Had Parliament seen fit to deal with broadcasting in the same sort of way, it would no doubt have been correct to say that broadcasting had been made a function of government".

Guided by the caselaw referred to hereinabove, taking into consideration the totality of the circumstances and in particular the status, functions and duties of the Authority, the degree of governmental control exercised over it, the fact that its functions and powers fall within the province of government, and recalling that, unlike the B.B.C., it does not operate under a licence from the executive government nor is the Government entitled in case of emergency to take over its operations under section 6 of the Telegraphs Law, Cap. 305, a power which is limited only to licencees, I have come to the conclusion that, though the Authority is not a servant of the Republic, it is in consimili casu to servants of the Republic exercising functions required and created by the Government and is entitled to the latter's immunity from payment of income tax. This case is indistinguishable from the case of The Republic v. The Ports Authority of Cyprus (supra).

Having sustained ground 2 above and having found that the Authority is entitled to the Republic's immunity from taxation, it becomes unnecessary to examine the remaining two grounds of law put forward by the Authority against the validity of the sub judice assessment. These same grounds were put forward by the Cyprus Ports Authority in The Ports Authority of Cyprus v. The Republic, through the Commissioner of Income Tax (1983) 3 C.L.R. 385, where, though Pikis, J. thought it unnecessary to pronounce upon their validity, he expressed the view that success in that area was hard to visualize.

I would like to add to the remarks of Pikis, J., that, at least as regards the question whether the Authority is "trading" or not, success is not only hard but almost impossible to visualize in view of the decisions in Electricity Authority of Cyprus v. Petrolina Company Ltd. (1971) 1 C.L.R. 19, Harrison Ltd. v. Griffiths 40 T.C. 281, Glasgow Corporation Water Works v. Miller 1 T.C. 28 and Mersey Docks Harbour Board v. Lucas 2 T.C. 25.

In the result, the recourse succeeds. The sub judice assessment to taxation is annulled. There shall be no order as to costs.

Sub judice decision annulled. No

order as to costs.

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