Pepper (Inspector of Taxes) v Hart

 
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[1992] UKHL J1126-2

House of Lords

Lord Chancellor

Lord Keith of Kinkel

Lord Bridge of Harwich

Lord Griffiths

Lord Ackner

Lord Oliver of Aylmerton

Lord Browne-Wilkinson

Pepper (Her Majesty's Inspector of Taxes)
(Respondent)
and
Hart
(Appellant) and Nine Other Appeals
(Consolidated Appeals)
Lord Mackay of Clashfern L.C.

My Lords,

1

I have had the advantage of reading in draft the speech of my noble and learned friend Lord Browne-Wilkinson. I respectfully adopt his narrative of the proceedings in this appeal and his account of the statutory provisions by reference to which it falls to be decided.

2

A fact which I regard as crucial to the decision of these appeals is stated by the Special Commissioner [1990] S.T.C. 6, at p. 11f-g as follows "on the facts, the taxpayers' sons occupied only surplus places at the college and their right to do so was entirely discretionary". I regard it as important in considering the benefit which is to be subject to taxation that the benefit should be identified. The benefit which the taxpayers in this case received was the placing of their children in surplus places at the college, if as a matter of discretion the college agreed to do so. As I read the stated case there was no question of the taxpayers being entitled to have their children educated at the school. They were in a similar position to the person coming along on a standby basis for an airline seat as against the passenger paying a full fare, and without the full rights of a standby passenger, in the sense that the decision whether or not to accommodate them in the college was entirely discretionary. If one regards the benefit in this light I cannot see that the cost incurred in, or in connection with, the provision of the benefit, can properly be held to include the cost incurred, in any event, in providing education to fee paying pupils at the school who were there as a right in return for the fees paid in respect of them. The expenses incurred by the college were all incurred necessarily in order properly to provide for these pupils. No further expense over and above that was incurred in, or in connection with, the provision of surplus places to the taxpayers' children. Although the later words of section 63(2) provide that the expense incurred in, or in connection with, the provision of a benefit includes a proper proportion of any expense relating partly to the benefit and partly to other matters, I consider that the expenses incurred in provision of places for fee paying pupils were wholly incurred in order to provide those places. The benefit conferred upon the taxpayers was one which logically followed only when it was determined that there were surplus places and the authorities of the college in their discretion agreed to admit the taxpayers' children to these places. This decision was the decision to provide the benefit to the taxpayers' children and this decision involved no further expense on the college. I conclude that looking at the matter from the point of view of expense incurred and not from the point of view of loss to the employer no expense could be regarded as having been incurred as a result of the decision of the authorities of the college to provide this particular benefit to the taxpayer.

3

Notwithstanding the views that have found favour with others I consider this to be a reasonable construction of the statutory provisions and I am comforted in the fact that, apart from an attempt to tax airline employees, which was taken to the special commissioners who decided in favour of the taxpayer, this has been the practice of the Inland Revenue in applying the relevant words where they have occurred in the Income Tax Acts for so long as they have been in force, until they initiated the present cases.

4

At the very least it appears to me that the manner in which I have construed the relevant provisions in their application to the facts in this appeal is a possible construction and that any ambiguity there should be resolved in favour of the taxpayer.

5

For these reasons I would allow these appeals. I should perhaps add that I was not a member of the committee who heard these appeals in the first hearing since I became involved only when your Lordships who sat in the first hearing suggested a second hearing under my chairmanship and accordingly I have not been asked to consider this matter apart from the discussion of the extracts from Hansard which have been put before us in this appeal. However, this is the conclusion that I would have reached apart altogether from considering Hansard.

6

But much wider issues than the construction of the Finance Act 1976 had been raised in these appeals and for the first time this House has been asked to consider a detailed argument upon the extent to which reference can properly be made before a court of law in the United Kingdom to proceedings in Parliament recorded in Hansard.

7

For the appellant Mr Lester submits that it should now be appropriate for the courts to look at Hansard in order to ascertain the intention of the legislators as expressed in the proceedings on the Bill which has then been enacted in the statutory words requiring to be construed. This submission appears to me to suggest a way of making more effective proceedings in Parliament by allowing the court to consider what has been said in Parliament as an aid to resolving an ambiguity which may well have become apparent only as a result of the attempt to apply the enacted words to a particular case. It does not seem to me that this can involve any impeachment, or questioning of the freedom of speech and debates or proceedings in Parliament, accordingly I do not see how such a use of Hansard can possibly be thought to infringe article 9 of the Bill of Rights and I agree with my noble and learned friend's more detailed consideration of that matter.

8

The principal difficulty I have on this aspect of the case is that in Mr Lester's submission reference to Parliamentary material as an aid to interpretation of a statutory provision should be allowed only with leave of the court and where the court is satisfied that such a reference is justifiable:

  • a. to confirm the meaning of a provision as conveyed by the text, its object and purpose;

  • b. to determine a meaning where the provision is ambiguous or obscure; or

  • c. to determine the meaning where the ordinary meaning is manifestly absurd or unreasonable.

9

I believe that practically every question of statutory construction that comes before the courts will involve an argument that the case falls under one or more of these three heads. It follows that the parties' legal advisors will require to study Hansard in practically every such case to see whether or not there is any help to be gained from it. I believe this is an objection of real substance. It is a practical objection not one of principle, and I believe that it was the fundamental reason that Lord Reid, for example, considered the general rule to be a good one as he said in the passage my noble and learned friend has cited from Beswick v. Beswick [1968] A.C. 58, 74A. Lord Reid's statement is, I think, worthy of particular weight since he was a parliamentarian of great experience as well as a very distinguished judicial member of your Lordships' House. It is significant that in the following year, in his dissenting speech in Warner v. Metropolitan Police Commissioner [1969] 2 A.C. 256, 279 he, while agreeing with the general rule was prepared to consider an exception from it although not that the time was right to do so. But the exception he contemplated was in respect of a particular type of statute, namely, a statute creating criminal liability in which the question was whether or not a guilty intention was required to create liability. Now that type of exception would mean that the practical difficulties to which he referred would not arise except in the comparatively few cases that arise of the particular type. The submission which Mr Lester makes on the other hand is not restricted by reference to the type of statute and indeed the only way in which it could be discovered whether help was to be given is by considering Hansard itself. Such an approach appears to me to involve the possibility at least of an immense increase in the cost of litigation in which statutory construction is involved. It is of course easy to overestimate such cost but it is I fear equally easy to underestimate it. Your Lordships have no machinery from which any estimate of such cost could be derived. Two enquiries with such machinery available to them, namely, that of the Law Commission and the Scottish Law Commission, in their Joint Report on the Interpretation of Statutes (1969) No. 21 and the Renton Committee Report on the preparation of Legislation ((1975) Cmnd 6053), advised against a relaxation on the practical grounds to which I have referred. I consider that nothing has been laid before your Lordships to justify the view that their advice based on this objection was incorrect.

10

In his very helpful and full submissions Mr Lester has pointed out that there is no evidence of practical difficulties in the jurisdictions where relaxations of this kind have already been allowed, but I do not consider that, full as these researches have been, they justify the view that no substantial increase resulted in the cost of litigation as a result of these relaxations, and, in any event, the Parliamentary processes in these jurisdictions are different in quite material respects from those in the United Kingdom.

11

Your Lordships are well aware that the costs of litigation are a subject of general public concern and I personally would not wish to be a party to changing a well established rule which could have a substantial effect in increasing these costs against the advice of the Law Commissions and the Renton Committee unless and until a new enquiry demonstrated that that...

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