Jarrold v John Good & Sons Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORMEROD,LORD JUSTICE DONOVAN,LORD JUSTICE PEARSON |
| Judgment Date | 07 December 1962 |
| Judgment citation (vLex) | [1962] EWCA Civ J1207-3 |
| Date | 07 December 1962 |
| Court | Court of Appeal |
[1962] EWCA Civ J1207-3
Lord Justice Ormerod,
Lord Justice Donovan and
Lord Justice Pearson.
In The Supreme Court of Judicature
Court of Appeal
MR C. N. BEATTIE, Q. C. and MR ALAN S. ORR (instructed by the Solicitor of inland Revehue) appeared as Counsel on behalf of the Appellant (Appellant).
SIR JOHN SENTER, Q. C, MR PETER ROWLAND and MR STEWART BATES(instructecTby Messrs Beardall, Feriton & Co., agents for Mr E. B. Burstall, Hull) appeared as Counsel on behalf of the Respondents (Respondents).
This appeal is by the Inspector of Taxes from a Judgment of Mr Justice Pennycuick given on the 25th Hay of this year. The Commissioners allowed an appeal by the Respondents against an assessment to income tax under Case 1 of Schedule for the year 1960/61. The Inspector of Taxes appealed against that decision to Mr Justice Pennycuick, who dismissed the appeal. The Inspector has now appealed to this Court.
The question for consideration lies in a small compass, but is none the less difficult. It is whether certain partitions installed by the Respondents in their office should be regarded as plant for the purposes of sections 279and 280 of the Income Tax Act, 1952. If so, then they qualify for two forms of relief, (1) the "initial" allowance provided by section 279, and (2) the "annual" allowance provided by section 280.
The relevant sections of the Income Tax Acts are set out in the Judgment of Mr Justice Pennycuick, and it may be convenient if I read the paragraph of his Judgment referring to them: "Sections 279 and 280 are contained in Part of the Income Tax Act, 1952, which is headed 'Reliefs for Certain Capital Expenditure'. Chapter I is headed 'Industrial Landings and Structures, etc.' Industrial buildings and structures do not include any building or structure in use as an office, see section 271. Chapter II is headed 'Machinery and Hunt'. Section 279 (1) is, so far as is relevant, in these terns: 'Subject to the provisions of this Act and, in particular, subject to the proisions of subsection (5) of this section, where a person carrying on a trade incurs capital expenditureon the provision of machinery or plant for the purposes of thetrade there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, anallowance (in this Chapter referred to as "an initial allowance"'…" Then he goes on: "Section-260; 'Subject to the provisions of this Act, where the person carrying en a trade in any year of assessment has incurred capital expenditure on the provision of machinery or plant for the purposes of the trade, an allowance (in this Chapter referred to as "an annual allowance") shall be made to him for that year of assessment on account of the wear and tear of any of the machinery or plant which belongs to him and is in use for the purposes of the trade at the end of the basis period for that year of assessment'".
The facts shortly are that when the building was about to be constructed -it was in fact first occupied in the early part of 1959 - the architect was told to provide for the maximum floor spece in the building into which movable partitions could be inserted. That in fact was done, and partitions were provided which could be fixed to the floor and ceiling and not at all laterally so that they could be easily moved with the labour which the Respondents had on the premises. I think I should say at this stage that a model of the partitions in question was before Hr Justice Fennycuick, and, I believe, was before the Commissioners, and we have had the opportunity of inspecting it. The inspection of the model revealed that it was possible to insert these partitions, and, as it were, fix them in position, without the use of nails or screws at all, as there was a device which enables the partitions to be held firmly to the ceiling and the floor of the room in whatever part it was required.
The findings of the Commissioners, as stated in the Case, are set out in the learned Judge's Judgment, and I think that part of his Judgment should be read. The learned Judge says: "The Case stated by the General Commissioners, after setting out the particulars of the assessment and the hearing, proceeds as follows: '3. It was proved or admitted that: (1)'….". That I think I need not read because it relates to the carrying on by the Respondents of the business of shipping agents and warehousemen. (2) I think is important. "(2) The work of each Department fluctuates from time to time over the years and throughout any particular year necessitating increases in or a diminution of the staff of such Department with theconsequent need for more or less office accommodation to accommodate that Department's staff. Moreover the gain or loss of an agency involves the setting up of a new department or the closure of an existing department. (3) It is, therefore, a commercial necessity for the office accommodation of the Respondents as a whole to be highly flexible so that the section thereof devoted to any particular Department may be increased or diminished as occasion requires. (4) In or about the year 1958 the Respondents constructed a steel framed structure in-concrete on a site belonging to them in High Street, Kingston-upon-Hull, for use as a warehouse and office, the warehouse portion being situate at the end of the site having a frontage to the River Hull and the offices at the High Street end thereof and being numbered 71 High Street, Kingston-upon-Hull. (5) In connection with the planning thereof special instructions were given to the architects that the portion of the building to be devoted to offices was to be cayable of the greatest degree of elasticity as regards its sub-division as was possible. (6) Pursuant to these instructions the architect planned a large open floor space in which the j; irtitioning hereinafter mentioned could be erected so as to sub-divide such floor space to any degree desired and so that there was no limit to the variations which could be made in the size of the rooms into which it was divisible. (7) The partitioning referred to consists of metal ribs into which insets of either hard-board sheeting, doors or windows are inserted and this partitioning is then screwed to the floor and ceiling to form a room of any desired size, but it is not fixed laterally to the structure in any way. (8) If the offices were moved the partitioning could be moved and used in the new premises provided they were of similar modern construction. The expenditure on the partitioning was charged by the Respondents to their Office Fixturc-s and Fittings Account and not to the cost of the building. (9) If it is desired to extend or diminish the sizi: of any particular room the partitioning is detached from the floor and ceiling and coved to and refixed to the floor and ceiling at the place required to effect the desired adjustment to the size of the room. This adjustment could be carried out by the Respondents' normal maintenance staff or by an average handyman and oven a major alteration including any necessary redecoration could be carried out in not nore than two days. (10) The offices were occupied in May, 1959, and up to the 12th January, 1961, there had been only two alterations to the partitioning. The telephone cubicle was enlarged and a lobby to a department was formed, these alterations being carried out by the fitters who originally installed the partitioning". (11) merely sets out that a model was available to be demonstrated, as in fact it was demonstrated to us.
The word "plant", the word which is to be construed, is not, so far as I know, defined anywhere in the Income Tax Acts. But there have been decisions relating to it from time to time, arising not only on the Income Tax Acts, but on other Statutes. There is, first of all, Yarmouth v. France, 19 Queen's Bench Division, page 647. The facts of that case are not material. They concerned the question whether a horse could be regarded as "plant", and the issue in the case was whether the word "plant" must be confined to inanimate objects or whether it could also include animate objects. It is with "that in mind that we must consider the language used by Lord Justice Lindley. It was a decision of the Divisional Court, but all the members of the Court were Lords Justice. Lord Justice Lindley, at page 658, said: "There is no definition of plant in the Act: but, in its ordinary sense, it includes whatever apparatus in used by a business man for carrying onhis business, - not his stock-in-trade which he "buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business". That, I think, is the definition of "plant" which is best known and has been most generally invoked.
There is a decision upon which MR Beattie relied substantially, and that is the case of J. Lyons & Company Limited v. The Attorney-General, 1944 Chancery, 261. The case was heard by Mr Justice uthwatt (an he then was) and the question under consideration was whether certain electric lamps or fittings were properly described as "plant" within the meaning of the War Damage Act 1943. MrJustice Uthwatt helu that they were not "plant"? they were not part of the plant and machinery ased in carrying out the operations of the trade of a catering business but were the setting upon which or in which the tradewas being carried on. Mr Justice Uthwatt adopted substantially Lord Justice Linuley's definition but extended it to exclude netonly the building in which the operation was being carried on, but the fixed assets or fixed plant which was part of the building. He says: "Confining my attention to trade plant, am content to accept the: jeneral description in Yarmouth v. France that 'plant' includes whatever apparatus or instruments are used by a business man in...
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