Copol Clothing Ltd v Hindmarch
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE FOX,LORD JUSTICE OLIVER,LORD JUSTICE DUNN |
| Judgment Date | 23 November 1983 |
| Judgment citation (vLex) | [1983] EWCA Civ J1123-1 |
| Docket Number | 83/0458 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 November 1983 |
[1983] EWCA Civ J1123-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(On Appeal from the Chancery Division—Mr Justice Nourse)
Royal Courts of Justice
Lord Justice Dunn
Lord Justice Oliver
and
Lord Justice Fox
83/0458
1981 C. No. 84
MISS FIONA STOCKTON (instructed by Messrs Gaunt Brook & Co., Manchester) appeared for the Appellant.
MR ROBERT CARNWATH (instructed by the Solicitor of Inland Revenue) appeared for the Respondent.
This is an appeal by the taxpayer ("the Company") from a judgment of Nourse J. upholding a decision of the General Commissioners which disallowed the claim of the Company to industrial buildings allowance for the year ending 31st December 1978 under the Capital Allowances Act 1968.
The material facts are as follows.
The Company had for some years carried on business as clothing wholesalers and distributors.
In February 1978 the Company formed a wholly owned subsidiary company called Copol Wharehouses Ltd (which I will call "Wharehouses") the principal activity of which was the warehousing and storage of goods.
A building at Sagar Street in Manchester was purchased by the Company. The ground floor was used for the Company's trade. The first floor was a warehouse and was leased to Wharehouses on a 21 year lease. Wharehouses used the warehouse for the purposes of its warehousing and storage business.
About 90% of the Company's purchases were imported. Most of these came by sea and the greater part were landed at Southampton—but some were landed at Tilbury, Felixstowe and London. On a few occasions goods were landed at Manchester Airport.
The goods which came in by air were in cartons. Those which came by sea were packed in cartons and transported in large containers.
Goods arriving by air were collected from Manchester Airport by agents of the Company or of Wharehouses for storage of the goods at the warehouse in Sagar Street.
The containerised goods reached the warehouse in sealed containers—each container containing goods of the value of £14,000 to £20,000.
The containers which were landed at Southampton travelled by rail to a container base at Urmston near Manchester and from there by road to the warehouse. The containers landed at other places were sent to the warehouse by road. In the event it is agreed that the deliveries by air were so limited as to be of no consequence. Save as I have stated there is no evidence of any user of the warehouse.
The matter turns upon the provisions of section 7 of the Capital Allowances Act 1968. The allowance will be available if the warehouse is an "industrial building or structure" within section 7 (1) of the Act.
Section 7 (1) (f) is in the following terms:
"(1) Subject to the provisions of this section, in this Chapter 'industrial building or structure' means a building or structure in use—
(f) for the purposes of a trade which consists in the storage—
(i) of goods or materials which are to be used in the manufacture of other goods or materials, or
(ii) of goods or materials which are to be subjected, in the course of a trade, to any process, or
(iii) of goods or materials which, having been manufactured or produced or subjected, in the course of a trade, to any process, have not yet been delivered to any purchaser, or
(iv) of goods or materials on their arrival by sea or air into any part of the United Kingdom."
The Company claimed that this case falls within section 7 (1) (f) (iv). The General Commissioners, without giving reasons, decided that the warehouse was not in use for the purposes of a trade which consists in the storage of goods or materials on their arrival by sea or air into any part of the United Kingdom and was not therefore an industrial building or structure within the Section.
Nourse J. upheld the decision of the Commissioners and the Company now appeals. Nourse J., while accepting that the word "into" was more appropriate to arrival at a seaport or airport than an inland location not being an airport and while accepting also that the word "on" did not usually cover an event long after the event in question, was principally influenced by the consideration that under paragraph (f) (iii) the allowance is not available in the case of a building used for the storage of goods and materials which have been sold by a United Kingdom manufacturer to a United Kingdom purchaser; and that accordingly it seemed unlikely that the allowance should apply to a wide class of inland freight depots which are used for storing goods manufactured abroad.
On this appeal Miss Stockton, for the Company, says that the word "on" is elastic. It can mean "after". In the present case it cannot mean immediately upon arrival inside the United Kingdom and ought to be construed in the broad sense of "on the occasion of".
Miss Stockton also draws attention to the words "arrival" and "into any part of the United Kingdom" which she says taken together are wide enough to cover delivery to Manchester which was the place to which the goods were consigned in the United Kingdom and which was their true place of arrival. Storage on arrival in any part of the United Kingdom, she says, must at any rate cover the first place of storage in the United Kingdom.
Mr Carnwath, for the Revenue, says that if the goods are brought from abroad by sea to, say, Southampton, storage of those goods at Manchester cannot possibly, according to the ordinary use of English, be described as storage of those goods "on their arrival by sea or air into any part of the United Kingdom". And he says that normally paragraph (f) (iv) would in relation to a port extend only to premises within the recognised dock area of the port.
The latter proposition is, in my view, altogether too narrow. I agree with Miss Stockton that the word "on" is not to be...
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