Kenneth William Hall Benson (HM Inspector of Taxes) (Appellant) (Respondent) The Yard Arm Club Ltd (Respondent) (Appellant)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUCKLEY,LORD JUSTICE SHAW,LORD JUSTICE TEMPLEMAN |
| Judgment Date | 15 January 1979 |
| Judgment citation (vLex) | [1979] EWCA Civ J0115-4 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 January 1979 |
[1979] EWCA Civ J0115-4
In The Supreme Court of Judicature
Court of Appeal (Civil Division)
On Appeal from The High Court of Justice
Chancery Division
Revenue Paper
(Mr. Justice Goulding)
Lord Justice Buckley
Lord Justice Shaw and
Lord Justice Templeman
MR. HEYWORTH TALBOT Q.C. and MR. F.J. BRENNAN (instructed by Messrs. Peake & Co., Solicitors, London WC1 R4DQ) appeared on behalf of the Respondent (Appellant).
MR. BRIAN DAVENPORT (instructed by The Solicitor of Inland Revenue, London WC2) appeared on behalf of the Appellant (Respondent).
This is an appeal from a judgment of Mr. Justice Goulding of 16th February 1978, when he allowed an appeal from the Income Tax General Commissioners for the Spelthorne Division of Middlesex, who had allowed an appeal by the taxpayer company against certain income tax assessments under Schedule D, Case I in respect of the profits of the company's trade as a restaurateur for the three fiscal years 1963/64 to 1965/66, and against certain assessments of corporation tax in respect of such profits during the period commencing on 1st October 1966 and ending on 31st December 1973.
The question involved in the appeal is whether the company was entitled to capital allowances in respect of certain capital expenditure incurred in acquiring a vessel formerly called The Hotspur but later known as The Hispaniola, and the cost of its conversion into a floating restaurant, together with a barge which provided services to it.
The vessel was acquired by the company in 1962 at a cost of £2,449. Its engine and boiler were removed, as well as the steering tackle, so that the vessel became, as Mr. Heyworth Talbot described it, a hulk. It was then towed to a permanent site adjoining the wall of the Victoria Embankment, near Hungerford Bridge, The barge referred to was a dumb barge; it was fixed to mooring posts at the site where the vessel was to be moored; the barge was able to slide up and down those posts as required by tidal movement, and the vessel was moored to the barge by ropes and chains and consequently was also subject to vertical movement with the tide, and also to a small horizontal movement up and down river to the extent of some 5 ft, caused by the ebb and flow of the tide. The vessel was initially used by the company for thepurposes of a club, but from 13th. August 1963 onwards it was used as a public restaurant and was thereafter so used throughout the relevant period.
The vessel comprised three decks, a hold where the washing up and so on was done, which was served by a lift from the other decks, a main deck containing bars, toilets and restaurant facilities, and an upper deck comprising table facilities and the kitchen. The barge was necessary for the purpose of providing a seating for the gangway from the ship, which could slide on the deck of the barge; the barge also contained sewerage disposal equipment, waiters' changing rooms and other facilities. In 1972 a new kitchen was built in the barge.
The barge was moored permanently at the site, save that it was moved under tow to dry dock for repainting and maintenance every few years, but except on such occasions the vessel was, as the Commissioners found, intended to be kept in a permanently fixed position, although it could be moved if required; it was never intended to carry passengers or cargo on voyages.
The company expended a total sum of £75, 862 in the provision of the vessel and the barge and on furnishing it in various ways. Of that sum £41, 254 was the amount of the cost of the vessel and of the alterations to the hull. That figure may also have included the cost of the barge, but I am not quite sure about that. The total figure also included £8,517, representing the cost of lifts, machinery and furniture, and £26, 091 the cost of additional fixtures. Capital allowances were granted in respect of the cost of the lifts, machinery and furniture and fixtures.
The item in dispute is the £41,254. The General Commissioners took the view that that sum was expended on the provision of plantwithin the meaning of the relevant statutory provisions, holding the vessel, and by implication the "barge, to be plant within the meaning of those provisions. The learned judge, however, took a contrary view.
The statutory provisions which were consecutively in operation during the relevant period were: the Income Tax Act, 1952, Sections 279 and 280; the Capital Allowances Act, 1968, Sections 18 and 19 and the Finance Act, 1971, Sections 41 and 44. Those statutory provisions all employ the same verbal formula authorising capital allowances in respect of capital expenditure incurred by a person carrying on a trade "on the provision of machinery or plant for the purposes of the trade". We are not in this case concerned with machinery, so the question is whether the £41,254 was spent on providing plant for the purposes of the company's business as restaurateurs. The statutes have not at any time contained a definition of the meaning of "plant". Consequently the question is: what does that word mean and how does it apply to the particular circumstances of this case? That is a question of law, being one of interpretation, but nevertheless it is a jury question in the sense that the word "plant" is not a word of art; it must be interpreted according to its ordinary meaning as a word in the English language in the context in which it has to be construed; that is to say, the court of construction must interpret it as a man who speaks English and understands English accurately but not pedantically would interpret it in that context, applying it to the particular subject matter in question in the circumstances of the particular case.
In Yarmouth v. France, reported in 19 Queen's Bench Divisionat page 647, Lord Justice Lindley at page 658 formulated an interpretation of the word which has been constantly cited since andtreated as authoritative. He said: "There is no definition of plant in the Act: hut in its ordinary sense, it includes whatever apparatus is used by a business man for carrying on his 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".
In J. Lyons & Co. Ltd. v. Attorney-General, (1944) 1 Chancery, 251, Mr. Justice Uthwatt had to consider whether electric light fittings were plant; he held that they were not, since they were not part of the apparatus used for carrying on the taxpayer's business. In the course of his judgment he cited Lord Justice Lindley's interpretation or explanation of the meaning of the word "plant" and said, I think by way of obiter dictum, that plant does not include the place in which the business is carried on.
In Hinton v. Maden & Ireland Ltd., 38 Tax Cases, 391, Lord Reid, at page 417, after remarking that "plant" is an ordinary English word and that it is not altogether easy to construe and that it may have a more or less extensive meaning according to its context, cited Lord Justice Lindiey's formulation and also Mr. Justice Uthwatt's observations, with approval.
In Jarrold v. John Good & Sons Ltd., 40 Tax Cases, page 681, moveable partitions used for dividing up the space in an office building so that the plan of the office accommodation within the building could be varied from time to time as circumstances required, were held to be plant. Mr. Justice Pennycuick, who heard the case in the Chancery Division, indicated at page 688 that it seemed to him that the setting in which a business is carried on and the apparatus used for carrying on a business are not always necessarily mutually exclusive, but in the case beforehim it seemed to him to be impossible to deny that fixtures possessing the character of the moveable partitions merited the title of apparatus used by the company for carrying on its business, and accordingly he held such partitions to be "plant" within the meaning of the Act. His decision was upheld in this court. Lord Justice Ormrod, who thought the case was one which was very near to the dividing line, cited Yarmouth v. France, and J. Lyons & Co. v. Attorney-General, and said that in his judgment, in the circumstances of that case the partitions should be regarded as something more than a mere setting for the carrying out of the trade, in other words as coming within the definition of "plant". Lord Justice Donovan, at page 694, said that he agreed with Mr. Justice Pennycuick that "setting" and "plant" were not mutually exclusive conceptions; but at. page 695 lie said that the definition given to plant by Lord Justice Lindley in Yarmouth v. France clearly embraced the partitions there under consideration. He said: "I would agree, however, that there may be cases, like J. Lyons & Co. Ltd. v. Attorney-General, where an asset or some article can be excluded from the definition because it is more a part of the setting than part of the apparatus for carrying on the trade. In the present case, however, the contrary is found. These partitions are required by the nature of the Respondent's trade, as the lamps in the case of J. Lyons & Co. Ltd. v. Attorney-General were not". Lord Justice Pearson, at the foot of page 695, said that plant was something to be distinguished from the premises in which the business is carried on. At page 696 he said: "There can be no doubt, therefore, as to the main principles to be applied, and the short question in this case is whether the partitioning is part of the premises in which the business is carried on, or partof the plant with which the business is carried on". He also agreed with the view taken by Mr. Justice Pennycuick.
In Commissioners of Inland...
To continue reading
Request your trial