Munby v Furlong
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,SIR JOHN PENNYCUICK,LORD JUSTICE BROWNE |
| Judgment Date | 25 January 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J0125-3 |
| Date | 25 January 1977 |
| Court | Court of Appeal (Civil Division) |
[1977] EWCA Civ J0125-3
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Chancery Division
(Revenue Paper)
(Mr. Justice Fox)
The Master Of The Rolls
(Lord Denning)
Lord Justice Browne and
Sir John Pennycuick
MR. HEYWORTH TALBOT, Q.C. and MR. HOLROYD PEARCE (instructed by Messrs. Slaughter & May, Solicitors; London) appeared on behalf of the Appellant.
MR.P.MEDD, Q.C. and MR.B. DAVENPORT (instructed by the Solicitor of Inland Revenue) appeared on behalf of the Respondent.
This case concerns a lawyer's library. It can be divided into three parts. First, when a young man starts at the Bar, he may, if he has enough money, buy a set of law reports. That is capital expenditure. Second, he may buy textbooks. They have a life of four to nine years. That too is capital expenditure. Third, he may take in the periodicals, such as Weekly Law Reports and the All England Law Reports. They come out every week or month. He pays for them an annual subscription. That is not capital expenditure. It is revenue expenditure. He can deduct the whole of these annual subscriptions from his income for tax purposes. He can also deduct the cost of binding these weeklies at the end of each year, and also the cost of repairing his sets of law reports. That third part is all revenue expenditure. We are not concerned with it today.
We are only concerned with the first two parts which I have described as capital expenditure - the money which he spends in buying law reports to start his library or the money which he spends on his textbooks which are going to last him for some years. As the law has been applied for the last 50 years, he has not been able to deduct anything oh that account because it is not his 'plant'.
The relevant statutory provision is Section 41(1) of the Finance Act 1971. It says: "…where a person carrying on a trade incurs, capital expenditure on the provision of machinery or plant for the purposes of the trade… there shall be made to him for that period an allowance…". The allowance is nowadays 100%: so that he can deduct all of it against his tax. The word "trade" extends to professions. Section 7 says that the provision shall apply in relation to professions, employments, vocations and offices as they apply in relation to trade.
The question in this case is whether the first two parts of a lawyer's library, which are certainly capital expenditure, are also 'plant'. If they are 'plant', he can get a capital allowance in respect of the amount which he can deduct from his tax. If they are not 'plant', he cannot.
For 50 years the law has been against him. It is because of a decision by that excellent judge Mr Justice Rowlatt in Daphne v. Shaw (1926-27) Reports of Tax Cases,' Volume 11, page 256. It was shortly after the provision about 'plant' had been extended to the professions. Mr. Daphne, a solicitor in London who was carrying on business in Charterhouse Square, spent £ 8 on his law library. In that year he asked for an allowance on account of wear and tear and so forth. It depended on whether or not it was 'plant'. He appeared in person. The Solicitor General appeared: against him. Mr. Daphne argued: "These books are my plant, my tools of trade". He was no doubt interested in old law, and he quoted Coke upon Littleton to Mr Justice Rowlatt. Coke's notes say: "… no man shall be distreined by the utensils or instruments of his trade or profession, as the axe of the carpenter, or the bookes of a scholler…". This was repeated in Gilbert on Distress, another old book. On those old authorities Mr. Daphne asked Mr. Justice Rowlatt to say his books were 'plant'.
But Mr. Justice Rowlatt would have none of it. He said: "… I cannot bring myself to say that the books of a lawyer, whether a barrister or a solicitor or, I am sorry to say, a Judge… I cannot bring myself to say that such books as those people use to consult are 'plant'… I am sure (that) ninety-nine people" out of a hundred would agree (that) the books which a man consults for the purposes of information (are not his plant)". He said: "It is hard, but I have to deal with the words of the Act ofParliament, and unless I can say books are 'plant' I cannot do anything for Mr. Daphne". Mr. Daphne did not appeal, and there it was.
It has stood, as I have said, for all these years. Nearly all the cases which were cited to us - I will not go through them all this afternoon: we have been through them all in the course of the day - are dealing with physical things used physically. One case concerns partitions, another dry docks, another cutting knives, shoemakers' tools and the like. Those cases were all concerned with physical items used physically. The one case which deals with items used intellectually is McVeigh (H.M. Inspector of Taxes) v. Arthur Sanderson & Sons Ltd (1966-69) Reports of Tax Cases, Volume 4-5, at page 273. The question was about certain designs which were used for making wallpaper. Some of these designs were used physically on the rollers, and qualified as a revenue expenditure: but not those which were not used on the rollers but only kept for reference - as an intellectual exercise. Lord Cross (then Mr. Justice Cross) at page 285 expressed a good deal of doubt about Mr. Justice Rowlatt's decision with regard to the law library. He said: "If I thought that I was free to do so, I am not sure that I would accept the limitation which the Crown's argument imposes on the meaning of 'plant'. If a barrister has to buy a new edition of a textbook in order to help him to write his opinions, I cannot see as a matter of principle why the book should not be regarded as a tool of his trade just as much as the typewriter on which his opinions are typed". That was his view. It seems good sense to me. Mr. Justice Cross thought he could not apply it in the case before him concerning the designs. The designs used intellectually did not qualify as 'plant'. Sitting alone at first instance, he could not go back on the case decided by Mr. Justice Rowlatt which had stood for so many years. Mr. Justice Fox has in this very casefelt the same. He said: "The position therefore is this, that
Daphne v. Shaw has now stood for nearly fifty years, and as recently as 1968 Mr. Justice Cross came to the conclusion that he could not depart from it. In the circumstances, I think I must follow Daphne v. Shaw and hold that the hooks are not plant. So there it is. Those two judges did not like Daphne v. Shaw at all. Nor did the Commissioners of Income Tax, but they felt they had to apply it.
The case now comes up for the first time for consideration in the Court of, Appeal. I would agree with what Lord Donovan once said. He said, "If you ask me for the ordinary meaning of the word 'plant', I would not say that a horse and cart were plant, I would not call the partitions in a.building separating a room 'plant', but still the cases show that they are plant for tax purposes". So his statement there and, I may add, the statements by the majority of the House of Lords in the dry dock case of Commissioners of Inland Revenue v. Barclay, Curie & Co. Ltd (1966-69) Reports of Tax Cases, Volume 4-5, page 221, show quite conclusively that in this taxing statute the courts do not apply the meaning to the word 'plant' as the ordinary Englishman understands it. It has acquired by the course of decisions a special meaning in tax cases. It has acquired a special meaning, it seems to me, in the interests of fairness, that 'plant' extends virtually to a man's tools of trade - that is the phrase which Mr. Justice Cross used. It extends to the things which he uses day by day in the exercise of his profession.
Mr. Medd, in "his excellent argument before us, would confine a professional man's 'plant' to things used physically like a dentist's chair or an architect's table, or, I suppose, the typewriter in a barrister's chambers: but, for myself, I do not think 'plant' should be confined to things which are used physically. It seems to me that on principle it extends tothe intellectual storehouse which a barrister or a solicitor or any other professional man has in the course of carrying on his profession. The difficulty has arisen because the legislature, when it extended this provision to professions, did not make clear the scope of the word 'plant' in that context. It seems to me, in the context of a profession, the provision of 'plant' should be so interpreted that a lawyer's books - his set of law reports and his textbooks - are 'plant'. Although I know many years have passed since the decision in Daphne, the time has now come when this court should say that it would not be decided in the same way today. It may have been all very well in Mr. Justice Rowlatt's day, but the course of decisions since has shown that that decision should no longer he relied upon. I would therefore allow this appeal and hold the library to be plant.
I will ask Sir John Pennycuick to deliver the next judgment.
I have reached the same conclusion. The sole issue upon this appeal is whether certain textbooks purchased by Mr. Munby in the first year of his practice represent plant for the purposes of his profession as a barrister. It seems to me that that issue is virtually determined in this court by the decision of three members of the Court of Appeal sitting as a Divisional Court in the case of Yarmouth v. France (1887) 19' Queen's Bench Division 647. That was case under the Employers' liability Act 1980, and the court held that a horse was plant for the purpose of that Act. In the course of his judgment Lord Esher at page 651 said: "Then comes the question which is somewhat more difficult,- can a horse be...
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