Unigate Foods Ltd v The Scottish Milk Marketing Board
| Jurisdiction | England & Wales |
| Judge | Lord Wilberforce,Viscount Dilhorne,Lord Diplock,Lord Salmon,Lord Fraser of Tullybelton |
| Judgment Date | 29 July 1975 |
| Judgment citation (vLex) | [1975] UKHL J0729-3 |
| Docket Number | No. 4. |
| Court | House of Lords |
| Date | 29 July 1975 |
[1975] UKHL J0729-3
House of Lords
Lord Wilberforce
Viscount Dilhorne
Lord Diplock
Lord Salmon
Lord Fraser of Tullybelton
My Lords,
I have had the advantage of reading in advance the speeches to be delivered by my noble and learned friends, Viscount Dilhorne and Lord Fraser of Tullybelton.
I agree with them and would dismiss the appeal.
My Lords,
In this appeal from the decision of the First Division of the Court of Session the main question for determination is the construction to be placed on part of a memorandum published by the first appellants (hereinafter referred to as "the Board") for determining the price to be paid to the Board for milk sold by them for manufacture into butter. The Board are a statutory body and enjoy a monopoly of the right to market milk within their territorial area. The second appellants are and were at all material times the Board's auditors.
The respondents have since the 1st April 1965 carried on business as manufacturers of inter alia butter, and for that purpose they have held a licence from the Board as manufacturers entitled to obtain from them milk for making into butter. Under the Scottish Milk Marketing Scheme (Approval) Order, 1933, the Board are given power to determine the price to be paid to them for such milk and in the exercise of that power in 1965, 1966, 1967 and 1968 published memoranda providing that the price of milk used for the manufacture of butter in each year should be certified by the second appellants and reached by applying a formula. By that formula it was stated that the price of butter in each calendar month of the year should be ascertained by taking the lower of two alternatives, only one of which is material to this case. That alternative is stated to be
"the average gross realised price per cwt of the Board's bulk salted butter sold in that month (sales not at arm's length being excluded) as certified by the Board's auditors.
Provided that where in any month the butter sold as aforesaid is less than 50 per cent. of the quantity of the bulk salted butter manufactured by the Board in that month, the quantity sold shall be notionally increased to the said 50 per cent. and for the purpose of the computation of the gross realised price per cwt in respect of the quantity represented by the notional increase shall be deemed to be the same as the simple average of the weekly prices per cwt of Finest New Zealand bulk salted butter for that month as quoted in the Official Market Report of the London Provision Exchange".
To the price of salted butter ascertained in accordance with this formula, the memorandum prescribed that certain adjustments were to be made to arrive at the price for milk used for making butter to be charged each month by the Board.
The respondents allege that since April 1965 they have carried on the manufacture of butter from milk supplied by the first appellants at a loss. The Board say they were able to do so at a profit.
On the 8th August, 1969, the respondents instituted these proceedings in which they contend that the formula has been wrongly interpreted and applied, and that a great deal of the Board's bulk salted butter had been excluded wrongly from the computation of the price of the Board's salted butter certified by the second appellants. They sought a declarator to this effect: "production and reduction of all pretended certificates issued by" the second appellants "purporting to certify the price of milk used for the manufacture of butter for the months comprised in the period from 1st April 1965 to 30th September 1968"; a decree for the issue of new certificates certifying the price of such milk; and finally for a count and reckoning and payment to the respondents of the sums overpaid by them.
The appellants pleaded that the action was incompetent and irrelevant and on the 14th December, 1971, Lord Stott held that the conclusion for accounting was incompetent, a decision with which the First Division of the Court of Session agreed and which was not challenged in this House. He also held that the respondents' averments were irrelevant. The First Division by a majority reversed his decision as to irrelevancy.
This appeal has consequently to be determined on the pleadings and the parties' pleas-in-law and as the memorandum containing the formula for arriving at the price of salted butter is not set out in or exhibited to the pleadings, their Lordships are unable to consider that part of it set out above in its context. In Attorney-General v. Prince Ernest Augustus of Hanover [1957] A.C. 436, Viscount Simonds said at page 461:
"words, and particularly general words, cannot be read in isolation: their colour and content are derived from their context. So it is that I conceive it to be my right and duty to examine every word of a statute in its context …"
"I must admit to a consciousness of inadequacy if I am invited to interpret any part of any statute without a knowledge of its context in the fullest sense of that word".
These observations made in relation to the construction of statutes are applicable also to the construction of a document such as that under consideration in this case and I must admit to a feeling of inadequacy in consequence of being unable to consider the whole of the document containing the formulae referred to, and unable to see that formula in its context: a feeling which is not alleviated by the assertion of the appellants and the respondents that the formula is the only relevant part of the memorandum.
The Board sold salted butter in bulk. That butter had a standard quantity of salt and moisture. There was no difficulty in certifying the average gross price per cwt. of that butter sold in a month. The Board however contended that the words "the bulk salted butter manufactured by the Board in that month" meant butter of the same degree of salinity and moisture as that of the salted butter sold in bulk by them, and in their answer to Condescendence 4 asserted that the bulk salted butter sold by them had always, between April 1965 and September 1968, been more than 50 per cent of the butter of that degree of salinity and moisture manufactured by them and consequently, they said, the proviso to the formula never came into operation.
I cannot accept the contention that the words "salted butter" in the formula meant and only meant butter with the degree of salinity and moisture selected by the Board for sale in bulk. True it is that that was the only butter sold by them in bulk but it does not follow that only butter containing that amount of salt and moisture is to be regarded as "salted butter manufactured by the Board". If it had been the intention to restrict the application of the formula only to such salted butter, then that could have been and should have been clearly stated. It was not, and I am not prepared to agree that such a restricted meaning should be given to the words "salted butter". So far as I can see from the materials put before us, it was open to the Board to sell salted butter containing different quantities of salt, and so long as the butter was salted, no matter to what degree, the average price of that butter sold in bulk in a month required to be certified by the second appellants.
In their answer to Condescendence 4 the Board say that some butter (referred to as category 2) partially salted was put into deep freeze from which it was later taken, "mixed and blended to give it the standard content … of salt and moisture" and that on the mixing, blending and colouring being completed "this butter was made into packetted salted butter at which stage only was the manufacturing process completed".
"Partially salted" I take to mean salted to a lesser degree than the salted butter sold by the Board in bulk, but I can see no ground for concluding that partially salted butter is not to be regarded as salted butter. Mr. Murray in opening this case for the Board conceded that all the Board's salted butter is manufactured in bulk. The process of making milk into butter was completed when the butter was put into deep freeze. It was then salted and the process of converting it into butter of the same salinity and moisture as that sold by the Board in bulk was completed before the butter was packetted. While it would be correct to say that the process of manufacturing packetted salted butter was only completed when the butter was packetted, it clearly is not true to say that the manufacure of the salted butter was only completed when it was packetted and I cannot believe that the Board's answer was intended to be so interpreted.
I cannot see any reason for excluding this category of butter from the computation of the quantity of the bulk salted butter manufactured by the Board in a month.
Butter salted to the same extent as the salted butter sold in bulk by the Board was put into chill for a period then taken out, transferred to Mauchline "and made into packetted salted butter, at which stage only was the manufacturing process complete". This butter has been referred to as category 3. I need not repeat what I have said about the completing of the manufacturing process, for what I have said with regard to category 2 in that connection applies equally to category 3. I can see no possible justification for excluding this category of butter salted to the same extent as that sold by the Board in bulk and made in bulk before packetting from the computation of the bulk salted butter manufactured by the Board in a month.
The Board also manufactured salted butter containing the same quantity of salt as that sold by them in bulk. That butter was put on trolleys which were wheeled to the packetting machine "and made into packetted salted...
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