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48 The Judges'Role from the commissioners to whom the responsibility of adjudication was assigned. In 1874 the introduction of a specific period of time within which a case could be demanded turned the expression of dissatisfaction into a separate, distinct procedural, and quite unnecessary, step. The 1955 Royal Commission commented: "The law requires that the intending appellant should declare his dissatisfaction with the decision immediately after it has been given; he must then follow up this declaration within 21 days with a notice in writing. It was suggested to us (and a similar suggestion found favour with our predecessors in 1920)11 that the condition requiring the immediate expression of dissatisfaction should be abolished as unnecessary. Indeed the case against it is not merely that it is unnecessary: it is also that it is capable of providing a trap for the unwary and of depriving a taxpayer of the right of appeal for no sufficient reason." Reasons for retaining the requirement were then discussed and the conclusion reached: "... giving all due weight to these reflections the fact remains that this condition is an unusual one which is capable of bearing hardly upon the taxpayer, particularly the appellant in person. On balance we think that it would be fairer to remove it and we recommend accordingly."

Of course, in practice, the appellant in person tends to be protected by the commissioners who hear his appeal. If they have found against him and there is the slightest possibility that a point of law might be argued in his favour, they will explain the position and invite the unsuccessful appellant to express his dissatisfaction.

Indeed, on one heart-warming occasion it is understood that a Yorkshire appellant, asked whether he was dissatisfied, gave the rousing reply: "Dissatisfied? I'm downright disgusted."

The Royal Commission suggests that the condition is unusual. A glance at the earlier patterns suggests to me that it was accidental. It came in merely because the words used quite naturally in earlier statutes were rearranged and in due course the altered form was interpreted as meaning that there must be a separate step, a formal declaration of dissatisfaction, at the conclusion of the hearing. The procedure for framing fiscal statutes makes no provision to cover that sort of point. There is no one, seemingly, whose task is to look at the draft, as a lawyer with experience of the procedure might look at it, and raise the question how it will work in practice. The point is trivial—and boring. Why should time be wasted on it? As trivial and boring, perhaps, as the transfer of all employments to Cmd. 615, para. 590.

The Judges' Role 49 Schedule E with the consequences which that had on deductions for expenses and the taxing of benefits in kind. On the requirement of a formal expression of dissatisfaction the 1920 Royal Commission, however, recommended a change. The 1955 Royal Commission repeated the suggestion. Those familiar with the law will know, and others will not be surprised to hear, that there has been no change.

Nor has the fee required if a case is to be stated, changed: jfl in 1874, it remained at £l in 1974. Would that the rate of tax had stayed as steady.

How then did the judges fare when they entered the ring after 1874? As was said of the lion in the case of "Albert and the Lion" you could see that the judge did not like it. Here was a topic of which few, if any, judges had professional experience, though all no doubt had disagreeable personal experience. The topic was entirely statutory, scattered in addition over a multitude of statutes, and apparently lacking in any discernible principles. What could a judge do but fall back on the words of so much of the statutory code as was brought to his attention? What was the plain meaning of the words used? If Government was to interfere with property, pry into a man's affairs and take his money, one thing was certain—there must be clear statutory authority. Parliament was the starting pointso be it. There could be no taxation without representation: that was not just an entertaining historical anecdote, it was the stuff of society, the faith of our fathers. And if Parliament intended to tax, it must have said so clearly.

The books tend to cite Lord Cairns in Partington v. Attorney General12 as delivering the first authoritative guidance on how to construe a taxing statute. The case was heard in 1869 and therefore preceded by several years the arrival of cases stated by General and Special commissioners before the courts. The claim was for probate duty. Two ladies had died intestate, the second to die being the next-of-kin of the first. The children of the second sought to recover the assets of the first and the Revenue sought probate duty, twice over. The claim sounded harsh, though reasonable enough by reference to the scheme of the tax. "As I understand the principle of all fiscal legislation, it is this:"—said Lord Cairns upholding the claim for tax—"If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the (1869) L.R. 4 E. & I. App. H.L. 100.

50 The Judges'Role law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute."

Adherence to the statutory words has been the judicial motto, at least in relation to the second of the two situations considered by Lord Cairns, when tax is claimed but liability is not clearly imposed.

Moreover it is adherence to the words rather than to the sense, to what the statute says rather than to what the statute means. I cannot help but wonder from what source Lord Cairns learnt the principle of fiscal legislation. He had been Solicitor General and Attorney General, and as member of Parliament for Belfast had been present, for example, when the bill which became the Income Tax Act 1853 was debated in the House. He cannot have been unaware of the problems of communicating Parliament's will to the judges in the form of Acts.

It is stranger to find Lord Cairns commending adherence to the letter and neglect of the intendment of a fiscal act when in the same volume of the law reports he is to be found taking note of the intention of legislation. In Hammersmith and City Railway Company v. Brand13 their Lordships held that the Land Clauses Consolidation Act and the Railways Clauses Consolidation Act do not contain any provisions under which a person, whose land has not been taken for the purposes of a railway, can recover statutory compensation from the railway company in respect of damage or annoyance arising from vibration occasioned (without negligence) by the passing of trains, after the railway is brought into use, even though the value of his property has been actually depreciated thereby. Lord Cairns disagreed. He rejected the narrower construction adopted by the majority, that compensation was only due for damage sustained when the authorised works were carried out being damage directly occasioned by the carrying out of the works. He reviewed the Acts as a whole and concluded that the landowner had no direct claim against the Railway Company in respect of works which were positively authorised by Parliament. He continued14: ''That fact alone would certainly predispose the mind to find, in the enactments upon the subject, compensation given, in some form or other, for the loss which beyond all doubt, the landowner in such a case L.R. 4 E. & 1 App. H.L. 171.

14 At p. 01c A* „ 215 The Judges'Role 51 sustains. I do not mean to say that it would be safe to strain the words of an Act of Parliament on account of considerations of that kind, but if there be any doubt or ambiguity in the words, the consideration ought not to be overlooked that, beyond all doubt, the intention of legislation of this kind is that, in some shape or other, compensation should be made to those who sustain loss or harm by the operation of the parliamentary powers." A little further on in his speech Lord Cairns put the example of an Act authorising

the taking of land to make a gas works or copper smelting plant:

"Supposing Parliament authorised the gas works or the copper smelting works to be constructed, by words of enactment which would make it impossible for the owner of the adjacent land to

maintain an action for the injury sustained, and then Parliament said:

'If by the execution of these works the neighbouring owners sustain any damage you shall pay for such damage,' I should understand by an enactment of that kind, not that the neighbouring owner is supposed to be likely to sustain damage by the construction of the building... but to sustain damage by those works as active going works, which are there for the purpose of manufacturing gas or

smelting copper, as the case may be; and that when Parliament said:

'If by the execution of these works' it meant if by the works, qua gas works or qua copper smelting works, continuing to exist and actively proceeding, any damage is done, that damage shall be paid for."

Why was Lord Cairns prepared to take a wider view where compensation was the issue and a narrower view if tax was in point?

Was it just loyalty to the tradition, doubtless inherited through Blackstone, that subjects should be relieved of burdens more readily than burdens should be imposed upon them, particularly if the burden is a tax burden? A Parliament which derived its authority to levy tax from the Glorious Revolution could not be supposed to have exercised that power save by words clearly imposing the burden of tax upon the individual. Lord Cairns himself suggested an

explanation in Pryce v. Monmouthshire Canal and Railway Co.1**:

"The cases which have decided that taxing Acts are to be construed with strictness and that no payment is to be extracted from the subject which is not clearly and unequivocally required by Act of Parliament to be made, probably meant little more than this, that, inasmuch as there was not any a priori liability in a subject to pay any particular tax, nor any antecedent relationship between the taxpayer and the taxing authority, no reasoning founded upon any a(1879)4A.C. 197H.L.

52 The Judges' Role supposed relationship of the taxpayer and the taxing authority could be brought to bear on the construction of the Act, and therefore the taxpayer had a right to stand upon a literal construction of the words used, whatever might be the consequence."

Notwithstanding the tradition that Parliament could only be supposed to have taxed a man if it said so in clear and unambiguous terms, it seems at least possible that the rule of construction was not always quite as rigid as it became after the time of Lord Cairns.

For example there is a significant footnote in some editions of Blackstone's Commentaries in Chapter 8, which under the heading "of Persons" deals with tax. The editions were edited by Edward Christian, Downing Professor of Law at Cambridge. The footnote reads: "It is considered a rule of construction of revenue acts, in ambiguous cases, to lean in favour of the revenue. This rule is agreeable to good policy and the public interest; but, beyond that, which may be regarded as established law, no one can ever be said to have an undue advantage in our courts." The reconciling factor may be "ambiguity": after all, one man's ambiguity is another man's clarity.

As late as 1899 Mr. Justice Wills questioned whether there was any distinction to be made between construing taxing Acts and other Acts. In Styles v. Treasurer of Middle Temple1 he said "I quite agree that every tax, if it is to be supported at all, must be found within the clear language of an Act of Parliament, but I am myself rather disposed to repudiate the notion of there being any artificial distinction between the rules to be applied to a taxing Act and the rules to be applied to any other Act. I do not think such artificial distinctions ever can help anybody in arriving at the true meaning of words."

The question do you look at the scheme of the Act or must you take the scheme as you find it in the particular words which you have to construe is a question which arises repeatedly in applying taxing acts. Two recent Court of Appeal decisions may serve as examples. In the Garvin and Rose cases shares in a company carrying a controlling interest were sold. Subsequently the purchaser procured the payment by the company of an abnormal amount by way of dividend. The one word which had to be construed was "whereby." In the Hammersmith Railway case it was "by." Was the purchase of a controlling interest in shares of a company pregnant with dividend a transaction "whereby" the dividend was subseb (1899) 68 L.J. Q.B. 1046; 4 Tax Cas. 123.

!5 I.R.C. v. Garvin and related appeal [1980] S.T.C. 295.

The Judges'Role 53 quently delivered and received? If it was, liability for tax was established. If not, not. Whether the purchaser would procure the payment of this dividend was expressly found to be "an open question" when the shares changed hands.

The conclusion reached by Lord Justice Buckley was that the purchase was not a transaction "whereby" the dividend was subsequently received: "I do not feel able to accept the view that the fact that the purchaser of shares acquires the whole of the share capital of, or a controlling interest in, a company which has large undistributed profits can by itself afford a sufficient ground for holding that such acquisition was the cause of a subsequent distribution of those profits by way of dividend." To the same effect Lord Justice Donaldson: "... the only connection between the receipt of the consideration [for the sale of the shares] and the transaction whereby the dividends were paid... was that [the purchaser] would not have received the dividends if it had not previously bought the shares from the taxpayers and retained them until the time when the dividends were paid. The purchase of the shares and the associated consideration were conditions precedent to the receipt of the dividend, but there was no other connection.

The distinction is between a sequential connection and a consequential connection. And [the relevant section] requires a consequential connection which is wholly absent in this case."

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