Prestcold (Central) Ltd v Minister of Labour
| Jurisdiction | England & Wales |
| Judge | LORD DIPLOCK,THE MASTER OF THE ROLLS |
| Judgment Date | 24 October 1968 |
| Neutral Citation | [1968] EWCA Civ J1024-3 |
| Judgment citation (vLex) | [1968] EWCA Civ J1024-1 |
| Date | 24 October 1968 |
| Court | Court of Appeal (Civil Division) |
[1968] EWCA Civ J1024-1
In The Supreme Court of Judicature
Court of Appeal
Appeal of Prestcold (Central) Ltd. from Judgment of Queen's Bench Divisional Court given on the 21st February, 1968 dismissing Appellants' appeal from decision of the Industrial Tribunal.
The Master of the Rolls (Lord Denning)
Lord Diplock and
Lord Justice Winn
The Hon. S.C. SILKIN, Q.C., and Mr. R. TUCKER (instructed by Messrs. Herbert & Glowers & Co., Oxford) appeared on behalf of the Appellants, Prestcold (Central) Ltd.
Mr. PETER WEBSTER, Q.C and Mr. GORDON SLYNN (instructed by the Solicitor's Department) appeared on behalf of the Department of Employment and Productivity)
THE LASTER OF THE ROLLS: Prestcold (Central) Ltd. have an establishment at Birmingham known as Amara works. There are some 102 persons employed there. 53 of them, that is, more than half, are engaged in work in connection with refrigerating machinery; They fall into two categories- (a) Some of these 53 work inside the Amara works. They make low-temperature units for special purposes, such as for keeping blood in store in hospitals, or for simulating high altitude conditions in aircraft establishments. These low temperature units are really big refrigerators. Very few of the components are made at the Amara works; most of the parts are brought to the works from other establishments. They are only assembled at the Amara works. When the units are completed they are taken by lorries to the places where they are to be used. (b) The rest of the 53 workmen work at sites which clay be some distance from the Amara works. They work at slaughterhouses, butchersshops, supermarkets, banana stores, and the like. They fit up rooms at those places — cooling rooms — with refrigerating machinery, so that they can be used for freezing carcases of meat and all kinds of food. The reason why the men go out to those places is that the required refrigerating plant is so large that it would outstrip any cabinets. No lorry could take it. So the men go to the site and do the work. The components are taken from the Amara works and assembled on the site. The work done on these sites Is very similar to the work done to the Amara works, but, owing to the size of the units, they have to be specially installed in rooms on the site.
It is quite plain that the employment of these 53 len is employment in or carried out from the establishment at the Amara works, and, therefore, satisfies the first words of section 1(2) of the Selective Employment Payments Act, 1966. But the question which arises is whether the establishment at the Amara works is engaged by way of business "wholly or partly in activities" which entitle the establishment to a refund of the tax and payment of a- premium. But broadly, without going intodetails at the moment, the question is whether the establishment is engaged in manufacturing work or in construction work. If it is engaged in manufacturing work, Prestcold are entitled to refund of the Selective Employment tax and also to payment of a premium. If it is engaged in construction work, Prestcold get nothing. That is the broad issue, but we have to get dawn to details. We have to see whether the establishment is engaged solely or partly in activities falling under the minimum list heading shown in Orders III to XVI of the Standard Industrial Classification or not and so we get back to the Classification, as we have had several times to do in this Court.
Looking at this Standard Industrial Classification, there are two competing headings under one or other of which this establishment must be put. If it is apt for both, so that it can equally well be put under each of them, then you must decide willy-nilly to make a decision between them. It cannot be put under both. It must be under one only. You must choose between them.
The two competing headings are heading 339(3) and 500. Prestcold say the establishment comes under the heading 339, sub-paragraph 3. "Refrigerating Machinery. Manufacturing all types of refrigerators (including domestic) and refrigerating machinery". If Prestcold are right, they get the tax back and the premium.
The Minister says that the establishment comes under heading 50O: "Construction". "Erecting and repairing buildings of all types …… Establishments specialising in demolition work or in sections of construction work, such as asphalting, electrical wiring, flooring, glazing, installing heating and ventilating apparatus, painting, plastering, plumbing, roofing." If the Minister is right, Prestcold are not entitled to any refund.
So there is the conflict; under which of those two headings is this establishment to be put?
The Tribunal held that the assembling of components is not "manufacturing" and for that reason the establishment was not inheading 339(3). In coming to that conclusion, they relied on a rating case in the House of Lords - Sedgwick v. Watney, Combe, geld & Co. (1931 A.C 446); but I am afraid that in relying on that case they were in error. It has sot nothing to do with this case. It seems to me that when a person makes a machine, by getting component parts from elsewhere and assembling them together himself, he can properly be said to be "manufacturing" that machine. Take some of the large works where motorcars and aircraft are assembled. Those establishments are engaged In "manufacturing" the machines even though all the components come from other places.
The Divisional Court upheld the Tribunal, but on a different ground. They drew a distinction between the work done at the Amara works Itself and the work done, at sites outside. They held that the work done inside the Amara works was "manufacturing refrigerators" under heading 339(3), but the work done on the sites outside was "construction, under heading 500. They looked at the photographs and held that, when the men worked on the sites outside, they were Installing machinery and not manufacturing it. They were making a cooling room, and that was "construction". If those men engaged on outside work were excluded, It meant that less than half of the total in the establishment were engaged in "manufacturing refrigerators". So Prestcold were not entitled to a refund.
We have had an advantage which the Divisional Court did not have. We have been referred to a very recent decision of an industrial Tribunal presided over by Sir John Clayden. It is R. Gordon (Kingston) Ltd, v. Minister of Labour decided on the 13th September, 1967, and reported in 1967 Industrial Tribunal Reports at page 644. In that case a company did work which was so similar to Prestcold's work as to be indistinguing able from It. It put refrigerating machinery into rooms on sites far away from the home establishment. The Tribunal had before then the decision of the; Tribunal in this present case (the Prestcold case) and disagreed with it because they thought that assembling components into one machine is "manufacturing". Sir JohnCjayden and his colleagues were quite right in that respect. They next went on to consider work of the men who wont to sites away from the establishment. They held that it should be placed under heading 339(3). They took the view that the installing of refrigerating machinery should be regarded as "manufacturing" that machinery.
The Tribunal in the Gordon case drew attention to heading 4 of 339, which refers tot "Space-heating, ventilating and air-conditioning equipment"; and goes on to give these particulars:-"flanufacturing, other than at foundries, equipment for space-heating, ventilating and air-conditioning systems and dust extraction systems, including heater batteries, unit heaters, ventilators, hoods, cowls, ducting, etc. Self-contained air-conditioning machines are included but thermostats and similar neasuring and controlling apparatus are excluded and classified in Heading 351. Establishments specialising in the installation of equipment are also excluded and classified in Heading 500" Turning now to heading 500, it refers only to "installing heating and ventilating apparatus". It does not refer to installing refrigerating machinery. Looking at that provision, Sir John Clayden and his colleagues said that they would have expected, if the Legislature had intended installation of refrigerating machinery to fall under construction industry, as it did intend that the installing of ventilating and air-conditioning should fall, it would have said so, and it does not. The Tribunal in the Gordon case thought that this omission was some indication that the installing of refrigerating machinery does not fall under heading 500. I think that the Tribunal in the Gordon case were right to regard that omission as an indication, but no more. It was in no way decisive, because after all, this Classification is not a lawyer's document and is not to be construed by the rules which lawyers use.
Apart from that indication, the Tribunal in the Gordon cage went on to more general lines. They held that the installation of refrigerating machinery, in rooms which were far away from theoriginal works, was still "manufacturing refrigerating machinery". I think that conclusion was justifiable in law. It Is very difficult to draw any logical distinction between the work done by men inside the establishment and the work done by their colleagues on the sites outside. In each case both sets of men are engaged in the manufacturing of refrigerating machinery. There is an Interesting analogy in heading 3 where "manufacturing safes and strong rooms" is put as one head of "manufacturing". The work on strong rooms Is obviously done on sites away from the establishment. So also the work on...
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