Wiseman and Another v Borneman and Others
| Jurisdiction | England & Wales |
| Judgment Date | 29 July 1969 |
| Date | 29 July 1969 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
COURT OF APPEAL-
HOUSE OF LORDS-
Surtax - Procedure - Tax advantage - Counteraction - Reference to Tribunal on whether prima facie case for proceeding - Taxpayer not entitled to be heard by Tribunal or to see certificate and counter-statement of Commissioners of Inland Revenue before decision reached - Finance Act 1960 (8 & 9 Eliz. 2 c. 44), s. 28(4) and (5).
Having been notified that the Commissioners of Inland Revenue had reason to believe that s. 28, Finance Act 1960, might apply to them in respect of certain transactions, so as to require counteraction of the resulting tax advantages, the Plaintiffs, a husband and wife, delivered statutory declarations under s. 28(4) claiming that s. 28 did not apply. The Commissioners of Inland Revenue informed the Plaintiffs that they intended (pursuant to s. 28(5)) to submit the declarations, together with a counter-statement, to the Tribunal constituted under s. 28, and, in reply to an enquiry, that the Plaintiffs would be given a copy of the counter-statement if the Tribunal found that there was a prima facie case for proceeding. The Registrar of the Tribunal informed the Plaintiffs that it was not the practice of the Tribunal, when considering whether or not there was a prima facie case for proceeding, to hear the parties orally or to furnish the taxpayers with copies of the certificate or of any counter-statement submitted by the Commissioners of Inland Revenue. The Plaintiffs thereupon issued an originating summons against the members of the Tribunal individually and the Commissioners of Inland Revenue claiming declarations that the Tribunal were bound to give the Plaintiffs an opportunity (a) of dealing with the Commissioners' certificate and counter-statement and (b) of addressing argument to the Tribunal and adducing evidence.
The members of the Tribunal and the Commissioners of Inland Revenue applied to the Chancery Division for an Order striking out the originating summons as disclosing no reasonable cause of action. It was contended for the Plaintiffs that the procedure adopted by the Tribunal was not in accordance with the principles of natural justice. For the members of the Tribunal and the Commissioners of Inland Revenue it was contended that the procedure under s. 28(4) and (5) was not in the nature of a hearing or appeal, and that the Tribunal was required to decide whether or not there was a prima facie case on the basis only of the documents specified in s. 28(5). Before the House of Lords the question was, not whether the originating summons should have
been struck out, but whether the rules of natural justice required that the Plaintiffs should see any counter-statement and be entitled to reply and have their reply considered by the Tribunal.Held, in the Chancery Division, that the procedure under s. 28(5) did not include a hearing by the Tribunal.
Held, in the House of Lords, (1) that the Plaintiffs were not entitled to see the counter-statement before the Tribunal decided whether or not there was a prima facie case; (2) that the Tribunal had power to seek further comment from the taxpayer if in any unusual case they thought proper, but they must allow the Commissioners of Inland Revenue to reply to any such comment.
The Plaintiffs issued an originating summons, to which the individual members of the Tribunal constituted under s. 28, Finance Act 1960, and the Commissioners of Inland Revenue were Defendants, asking for a declaration (1) whether, in determining under s. 28(5) whether there was a prima facie case for proceeding against them under s. 28 in respect of certain transactions, the Tribunal were bound to give the Plaintiffs an opportunity to deal with the certificate and counter-statement of the Commissioners of Inland Revenue, and (2) whether the procedure under the practice of the Tribunal was in accordance with natural justice. The Defendants applied for an Order striking out the summons on the ground that it disclosed no reasonable cause of action.
The case came before Pennycuick J. in the Chancery Division on 18th July 1967, when judgment was given in favour of the Defendants, with costs, ordering the summons to be struck out.
Pennycuick J.-In this originating summons the Plaintiffs are Mr. Cyril Robert Wiseman and his wife, Mrs. Millicent Edith Wiseman. There are six Defendants, the first five of whom are Tribunal constituted by s. 28 of the Finance Act 1960. The sixth Defendant are the Commissioners of Inland Revenue. By the originating summons the Plaintiffs seek certain declarations as to the manner in which the Tribunal ought to carry out their duties at a certain stage in the procedure under s. 28. I have before me today two motions, one on behalf of the members of the Tribunal, the first five Defendants, and the other on behalf of the Commissioners of Inland Revenue, the sixth Defendant, whereby they seek an order striking out the originating summons on the ground that it discloses no reasonable cause of action, and there are alternative grounds.
The facts of the case are quite simple. In order that they may be intelligible I will first read the statutory provisions under which the issue arises.
Section 28 provides as follows:
"(1) Where-(a) in any such circumstances as are mentioned in the next following subsection, and (b) in consequence of a transaction in securities or of the combined effect of two or more such transactions, a person is in a position to obtain, or has obtained, a tax advantage, then unless he shows that the transaction or transactions were carried out either for bona fide commercial reasons or in the ordinary course of making or managing investments, and that none of them had as their main object, or one of their main objects, to enable tax advantages to be obtained, this section shall apply to him in respect of that transaction or those transactions". There is a proviso which I need not read. Then subs. (2) sets out at length the circumstances mentioned in subs. (1). I need not read them. The procedural provisions are contained in the following subsections. "(3) Where this section applies to a person in respect of any transaction or transactions, the tax advantage obtained or obtainable by him in consequence thereof shall be counteracted by such of the following adjustments, that is to say an assessment or additional assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made (the amount to be returned being chargeable under Case VI of Schedule D and recoverable accordingly), or the computation or recomputation of profits or gains, or liability to tax, on such basis as the Commissioners of Inland Revenue may specify by notice in writing served on him as being requisite for counteracting the tax advantage so obtained or obtainable. (4) The Commissioners of Inland Revenue shall not give a notice under the foregoing subsection until they have notified the person in question that they have reason to believe that this section may apply to him in respect of a transaction or transactions specified in the notification; and if within thirty days of the issue of the notification the said person, being of opinion that this section does not apply to him as aforesaid, makes a statutory declaration to that effect stating the facts and circumstances upon which his opinion is based, and sends it to the Commissioners, then subject to the next following subsection this section shall not apply to him in respect of the transaction or transactions. (5) If, when a statutory declaration has been sent to the Commissioners under the foregoing subsection, they see reason to take further action in the matter- (a) the Commissioners shall send to the tribunal a certificate to that effect, together with the statutory declaration, and may also send therewith a counter-statement with reference to the matter; (b) the tribunal shall take into consideration the declaration and the certificate, and the counter-statement, if any, and shall determine whether there is or is not a prima facie case for proceeding in the matter, and if they determine that there is no such case this section shall not apply to the person in question in respect of the transaction or transactions". There is a proviso I need not read. "(6) Any person to whom notice has been given under subsection (3) of this section may within thirty days by notice to the clerk to the Special Commissioners appeal to the Special Commissioners on the grounds that this section does not apply to him in respect of the transaction or transactions in question, or that the adjustments directed to be made are inappropriate; and if he or the Commissioners of Inland Revenue are dissatisfied with the determination of the Special Commissioners they may require the appeal to be re-heard by the tribunal. (7) For the purposes of this section the tribunal shall consist of-(a) a chairman, being either the chairman of the Board of Referees or a person appointed by the Lord Chancellor, for a specified period or in relation to a specified case, to act as chairman of the tribunal in the absence of the chairman of the Board of Referees on account of illness or for any other reason, and (b)two or more persons appointed by the Lord Chancellor as having special knowledge of and experience in financial or commercial matters. (8) The provisions of section two hundred and forty-seven of the Act of 1952 (appeals against directions as to undistributed income) as to the giving of notices, the application of provisions of that Act relating to appeals, and the powers and duties of the Special Commissioners, shall with the necessary modifications apply in relation to appeals under this section; and subsections (3) and (4) of the said section two hundred and forty-seven (rehearings, statement of case on a point of law, etc.) shall apply in relation to...
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...Board [1975] 1 WLR 1686; [1976] 1 All ER 12. Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69. Wiseman v Borneman [1967] 3 WLR 1372; [1967] 3 All ER 1045. Wiseman v Borneman [1971] AC 297. Judicial Review This was an application for judicial review to quash a decision made by......