Edwards v Clinch
| Jurisdiction | England & Wales |
| Judge | Lord Wilberforce,Lord Salmon,Lord Edmund-Davies,Lord Lowry,Lord Bridge of Harwich |
| Judgment Date | 22 October 1981 |
| Judgment citation (vLex) | [1981] UKHL J1022-2 |
| Date | 22 October 1981 |
| Court | House of Lords |
[1981] UKHL J1022-2
House of Lords
Lord Wilberforce
Lord Salmon
Lord Edmund-Davies
Lord Lowry
Lord Bridge of Harwich
My Lords,
This appeal is concerned with the taxation of fees received by the respondent, a civil engineer by profession, in respect of public inquiries which he was asked to carry out by the Secretary of State for the Environment. Should they be taxed under Schedule E or under Schedule D? The Revenue seeks to tax him under Schedule E as the holder of an office. The existence of two separate Schedules under which the citizen may be assessed, with different results, for income tax has over the 140 years in which it has survived, with minor changes, created perplexity. This is nonetheless so because apparently minor changes are made in the Schedules from time to time as to which it is not disclosed whether any change in principle or substance has been intended.
The word "office" has been in the income tax legislation all along: the Act of 1842 referred to "Every public office". Since 1922 the qualification "public" has disappeared so all offices are now taxed under Schedule E. At no time has any definition of "office" been provided, so the judges have been left to work out what the word included.
In performing this task, they naturally looked for a context. They found one in rule 1 of Schedule E in the Act of 1842 (quoted by my noble and learned friend Lord Bridge of Harwich) which contemplated that the tax would be levied on the office as such over a whole year.
This it was, I think, which led to the well known Rowlatt definition of office, or, as it has later been called, a generally sufficient statement of the meaning of the word as used in the 1842 Act. An office was something "which was a subsisting, permanent, substantive position, which had an existence independent of the person who filled it and which went on and was filled in succession by successive holders" ( G.W.R. v. Bater [1920] 3 K.B. 266 [1920] 3 K.B. 266, 274)—a definition or statement, which was, I dare to say, bred into the bones of every practitioner in income tax matters, and more importantly, was known to the legislature, and its drafting agents, on the many occasions when revisions of the Schedules were made or considered.
Because this was the origin of the income tax meaning of "office", I have doubts as to the value, or indeed legitimacy, of now resorting to a dictionary for a definition. Of course it would be desirable in an ideal world for expressions in tax legislation to bear ordinary meanings, such as the citizen could find out by consulting the Oxford English Dictionary. But it is a fact that many words of ordinary meaning acquire a signification coloured over the years by legal construction in a technical context such that return to the pure source of common parlance is no longer possible. I think that "office" is such a word.
My noble and learned friend, Lord Bridge of Harwich, has rendered us a service by designating as the critical question whether the Rowlatt definition should be considered as still retaining all its ingredients through successive legislative changes which have ( inter alia) led to the disappearance of rule 1. I do not, for myself, regard the disappearance of rule 1, and its successor paragraph 2 of Schedule 9 of the Act of 1952—rules concerned with the machinery of assessment—as indicating any legislative intention to change the meaning of the word "office". For the same reason I would reject the respondent's counterpart argument based on the (assessment) provision now contained in section 204 of the 1970 Act. But I would agree that in the natural course of development, it is open to the courts, and right, to consider whether the ingredients of the Rowlatt definition are still appropriate, at least in their full force. It would seem to me that the legislature, by continuing to use the word in the taxing words of Schedule E without any corrective definition, showed a general intention to adopt the judicial interpretation of it which, though uncritically, has been consistent and continuous. For myself I would accept that a rigid requirement of permanence is no longer appropriate, nor is vouched by any decided case and continuity need not be regarded as an absolute qualification. But still, if any meaning is to be given to "office" in this legislation, as distinguished from "employment" or "profession" or "trade" or "vocation" (these are the various words used in order to tax people on their earnings), the word must involve a degree of continuance (not necessarily continuity) and of independent existence: it must connote a post to which a person can be appointed, which he can vacate and to which a successor can be appointed. This is the concept which was accepted by all three of the members of the Court of Appeal, who all desired, in my opinion rightly, to combine some degree of consistency with what had become accepted notions in the law of income tax, with practical common sense requirements, and without "treating as authoritative decisions which were reached for reasons which may no longer be appropriate", per Buckley L.J. [1981] Ch. 1, 5. Thus the Lord Justice accepted that to constitute an office a post need not be capable of permanent or prolonged or indefinite existence—a development of the law with which I agree.
Acceptance of the admittedly somewhat indefinite guidelines suggested above does not, of course, solve the instant, or any similar, problem. It is necessary to appraise the characteristics of the appellant's "appointment". There is in this task an element of common sense evaluation of fact: a task which is committed in the first place to the general commissioners. Their finding was for the respondent, and though this is far from sacrosanct, indeed I think that they applied the Rowlatt definition too literally, nevertheless it is not in my opinion, wholly to be disregarded. They described it as "merely a transient, indeterminate, once-only execution of a task for which [the respondent was peculiarly qualified"—adding an analogy which I do not find appropriate.
The Revenue does not contend that the respondent, who was a member of a panel, and was called on to conduct a number of inquiries, held one office. Their contention, which would seem an odd one to an ordinary man, is that he held a series of offices—so did, I suppose, each of the other 60 members of the panel who were called on to act. So each "appointment" has to be judged separately.
The relevant facts concerning a typical appointment are detailed in other opinions. I am happy to take those presented by Lord Bridge. But with very great hesitation, I have formed the opposite view, on this matter of impression, to his. I agree, on the other hand, with the conclusions of the members of the Court of Appeal:
"… each appointment was personal to the taxpayer; it lacked the characteristic of independent existence and continuance which, in my judgment, is one of the essential characteristics of an 'office'", per Buckley L.J. l.c. p. 12.
It was a temporary, ad hoc, appointment confined to the taxpayer. He was not appointed to a position which had an existence of its own. It had no quality of permanency about it.", per Ackner L.J. 1.e. p. 17.
There is no office of inquirer or inspector created by the Act, but merely a provision authorising the Minister to 'cause to be held' the appropriate inquiries.", per Oliver L.J. 1.c. p.19 [surely an effective point].
and again:
"This [the concept of continuance apart from the individual holder] … is something entirely lacking in the instant case. The duty of making the inquiry is one which is offered to and accepted by the individual ad hoc. If he is unable to complete it and to make his report for any reason, there is no question of appointing a successor to the office of conducting that inquiry. There has to be a new inquiry by another individual equally appointed ad hoc, and on terms which fall to be separately negotiated with him", per Oliver L.J. 1.e. p.23.
There is no doubt that the factual ingredients detected by their Lordships are correctly stated: I agree with their estimation of their weight.
Each of the Lords Justices moreover carefully examined and, in my opinion effectively, answered the four points on which Walton J. relied in order to decide for the Revenue, and disposed of the argument that the public nature of the respondent's duties and their statutory background were significant elements. I would add that I do not find that any decisive argument can be based on analogy with such other cases as recorders or deputy judges or on the relative convenience of taxing the respondent under one or other of Schedule D or Schedule E. The latter provides for bringing temporary employment within the P.A.Y.E. system, and though perhaps some element of estimation would have to be used, the respondent's fees could be dealt with in a similar way. Assessment under Schedule D, on the other hand, assuming that this is the right method (we are not called on so to decide), would present no difficulty at all.
I would dismiss the appeal.
My Lords,
From time to time prior to 1973 and during the fiscal years 1973– 4 and 1974–5, the Secretary of State for the Department of the Environment invited Mr. F. H. Clinch, B.Sc., A.C.G.I., C.Eng., F.I.Mun.E., F.I.C.E., M.R.T.P.I., to hold a public local inquiry for the purpose of hearing objections and representations in respect of compulsory purchase orders and other like matters for which the Secretary of State was responsible. Neither the Secretary of State nor any subordinate or representative of his could hold such an inquiry.
Mr. Clinch was a most experienced and distinguished civil engineer, and no doubt it was for this reason...
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...markedly different and the distinction is of the greatest importance. Indeed atax case is mentioned in the report - Edwards v. Clinch [1982] A.C. 845. It is a distinctionwhich is under a great deal of pressure, much of it unprincipled, from thetax authorities. Forthat reason, although this ......