Imperial Tobacco Ltd v Attorney General
| Jurisdiction | UK Non-devolved |
| Judge | Viscount Dilhorne,Lord Edmund-Davies,Lord Fraser of Tullybelton,Lord Scarman,Lord Lane |
| Judgment Date | 06 March 1980 |
| Judgment citation (vLex) | [1980] UKHL J0306-3 |
| Date | 06 March 1980 |
| Court | House of Lords |
[1980] UKHL J0306-3
Viscount Dilhorne
Lord Edmund-Davies
Lord Fraser of Tullybelton
Lord Scarman
Lord Lane
House of Lords
My Lords,
The start of this litigation was the taking out by the respondents on the 13th December 1978 of an originating summons in the Commercial Court to secure a declaration that schemes they had operated on and after the 9th October 1978 were lawful and did not contravene the Lotteries and Amusements Act 1976, in other words, a declaration that they were not guilty of criminal offences. Those schemes were called "Spot Cash, Trade Spot Cash, Special Trade Spot Cash and Wholesalers Spot Cash".
For the year 1978/79 the respondents had allocated £19,800,000 for advertising and promoting the sale of Players cigarettes. For their Spot Cash promotion 262,250,000 cards were printed, 260 million of those cards were to be inserted in packets of Players King Size cigarettes. The packets which contained a card had on their outsides a strip bearing the words "Spot Cash closes 31.3.79" and so could be distinguished from the packets of King Size cigarettes which did not contain a card. The purchaser of a packet so marked, would, if the card contained had the same amount of money, it might be £5,000, £1,000, £100 or £10 or £1 or the words "Free Packet" printed on it three times, win a prize of the amount so printed or a free packet of King Size cigarettes as the case might be.
The purchaser of such a packet paid no more for it than he would have had to pay for a packet which did not contain a card. The Spot Cash Scheme was widely advertised as free and as a game not involving any skill.
The remaining 2,250,000 cards were distributed without anything having to be purchased to obtain a card. Members of the public could obtain them from retailers or on application to the respondents. Cards were also allocated to wholesalers and sales representatives to encourage the promotion of the Spot Cash scheme.
It proved very successful. In the short time it was operated, from the 9th October to the 27th November 1978 sales of King Size cigarettes increased by 39.9%.
Mr. Douglas, a director of the Imperial Group Ltd. and a solicitor, in an affidavit sworn in these proceedings, said that the value of sales effected by the success of the Spot Cash promotion ran into "tens of millions of pounds". In a statement prepared by the respondents it was said
"The idea of 'spot Cash' as (for want of any better expression) a 'free lottery' evolved during the summer months of 1978."
That the 2,250,000 cards were cards giving chances in a 'free lottery' is not disputed. The respondents in the light of the legal advice they had received, believed that the 260 million cards in the packets of cigarettes were also free and that consequently they were not conducting an unlawful lottery. Although their receipts from the sale of their King Size cigarettes increased so substantially, they did not charge for any card. It was essential in their view that a money payment should be made for the chance if the distribution of prizes by lot or chance was to constitute an unlawful lottery.
The British American Tobacco Company, one of the respondents' principal competitors, were advised that the Spot Cash scheme was an unlawful lottery. They did not, as they might have done, launch a private prosecution to test the matter. They applied to the Attorney General for his consent to the institution of a relator action by them against the respondents. The Attorney General did not consent and after his refusal, a prosecution was started on the instructions of the Director of Public Prosecutions by the laying of informations in Nottingham magistrates court. Lord Denning in the course of his judgment in this case, wondered why consent to the institution of such an action had been refused. The fact that it was refused does not surprise me. If I had been Attorney General at the time, I would have refused my consent without any hesitation. If the Spot Cash scheme was an unlawful lottery, criminal offences had already been committed when the application was made and the proper place for the determination of the respondents' guilt or innocence was a criminal and not a civil court.
Summonses in the Nottingham magistrates court were taken out not only against Imperial Tobacco Ltd. but also against three directors and a senior manager. I do not know why these four individuals were selected from the Board of Directors and managers. I would have thought that it would have sufficed to prosecute the company.
On the 24th November 1978 a letter was sent by a Principal Assistant Director in the office of the Director of Public Prosecutions to the respondents. That letter stated that counsel had advised the Director that three of the schemes were unlawful lotteries and four of them unlawful competitions. It said:�
"The Director would like to receive your assurance that you will discontinue these promotions immediately, pending the outcome of the trial. � It is the Director's intention to proceed on indictment.� In the event of your giving the assurance which is now sought, it will become unnecessary for the Director to consider what further steps can be taken to prevent further breaches of the law."
Mr. Douglas replied to this on the 30th November. Among other things, he said that it was believed that the scheme was lawful but that all advertising of it had been terminated, that the manufacture of packets of cigarettes containing the cards had been stopped and that the promotion would be run down as soon as possible. He asked that the summonses against the individual defendants who were honourable men and who had done no more than carry out their proper functions, should be withdrawn.
On the 7th December 1978 the same Principal Assistant Director replied. In his letter he appears to have expressed his personal views. It was not expressed to be written on behalf of the Director. He was not satisfied about what had been done to stop the promotion and in the course of his letter he said:�
" I" (my emphasis) "do not regard the proceedings which I have instituted as being in any way a 'test case' but rather as a prosecution for contravention of the statute, and I take the view that any continuation of the promotion constitutes further illegality. In these circumstances, I am quite unable to give any assurance as to the courses I might take, and in particular as to the presentation of the prosecution's case at the Crown Court.
You also ask me to withdraw the proceedings instituted against the individual defendants. I am not willing to do so."
It appears from this letter that it was this gentleman's view, despite having been informed that legal advice had been obtained that the scheme was lawful, that there was no defence to the prosecution. All prosecutions for criminal offences created by statute are, of course, prosecutions for contravention of a statute.
This letter appeared to the respondents to contain a threat to prosecute wholesalers and retailers as well and led to Mr. Douglas writing, saying that the company had been content to let the issue be determined in the magistrates' court or the Crown Court but that as it appeared from the letter of the 7th December that there was appreciable risk of further criminal proceedings against the company and others in the trade they had decided to try to get the legality of the scheme determined at the earliest possible date and for that purpose had taken out the originating summons.
I do not propose to make any further observations on the letters which emanated from the Director's office. I have not heard what explanation there may be for correspondence which at first sight appears difficult, if not impossible, to justify.
I have set these matters out at this length as they explain why the unusual course of seeking a ruling as to innocence of criminal offences from the Commercial Court was followed.
The case was heard by Donaldson J. He had to decide whether the Spot Cash scheme was (1) an unlawful lottery, (2) an unlawful competition and (3) whether, if he came to the conclusion that it was neither, it was a proper exercise of his discretion to grant a declaration to that effect. He held that it was an unlawful lottery and an unlawful competition but that if he had come to the other conclusion, it would have been a proper exercise of his discretion to have granted the declaration sought.
The Court of Appeal (Lord Denning M.R., Ormrod and Browne L.JJ) held that the scheme was lawful and granted the declaration.
In both courts it had been argued for the Attorney General that the issue of the originating summons was an abuse of process and that the issue should be decided in a criminal and not a civil court. That argument was not pursued in this House but as the question is of great and far-reaching importance and as it would not be right for their Lordships to uphold the decision of the Court of Appeal unless they were satisfied that the granting of the declaration after a criminal prosecution had been started, could be regarded as a proper exercise of judicial discretion, their Lordships heard argument on this question.
So the same three issues as were decided below have to be considered by this House and the first of them is
Was the Spot Cash scheme an unlawful lottery?
In this connection one can ignore the cards which were or were to be distributed but were not to be inserted in the packets of cigarettes. They formed a very small proportion of the total. We are concerned only with the distribution of the 260 million cards in the packets of Players King Size cigarettes.
Section 1 of the Lotteries and Amusements Act 1976...
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