TMI Blog1992 (11) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation of benefits for the purpose of income tax under Schedule E, in particular, the interpretation and application to the facts found of section 63(1) and (2) of the Finance Act 1976. After the hearing but before judgment it was decided that there should be a further hearing before an Appellate Committee of seven Lords to determine the issue whether, and in what circumstances, Parliamentary debates on a Bill might be used as an aid to construction of the ensuing Act, in particular, the relevance of certain extracts from Hansard to the construction of the provisions of the Finance Acts at issue in the consolidated appeals. The facts are stated in the opinion of Lord Browne-Wilkinson. Stephen Oliver Q. C. and Jeremy Woolf, for the taxpayers at the first hearing. Alan Moses Q. C. and Timothy Brennan, for the Crown at the first hearing. Anthony Lester Q. C., Jeremy Woolf and Clive Sheldon, for the taxpayers at the second hearing. Sir Nicholas Lyell Q. C., A. C, Alan Moses Q. C., Timothy Brennan and Rabinder Singh, for the Crown at the second hearing. JUDGMENT Their Lordships took time for consideration. 26 November. Lord Mackay of Clashfern L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 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. At the very least it appears to me that the manner in which I have construed the relevant provisions in their applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning where the provision is ambiguous or obscure ; or (c) to determine the meaning where the ordinary meaning is manifestly absurd or unreasonable. 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 Reg. v. Warner [1969] 2 A.C. 256, 279, he, while agreeing with the general rule, was prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions and the Renton Committee unless and until a new inquiry demonstrated that that advice was no longer valid. I do not for my part find the objections in principle to be strong and I would certainly be prepared to agree the rule should no longer be adhered to were it not for the practical consideration to which I have referred and which my noble and learned friend agrees to be of real substance. Reference to proceedings in Parliament has already been allowed in Pickstone v. Freemans Plc. [1989] A.C. 66 without, I think, any argument upon whether or not it was permissible for ascertaining the purpose of subordinate legislation and also in other cases for ascertaining the purpose for which a power to make subordinate legislation was used. I believe that such statements are likely to be readily identified in Parliamentary proceedings and the cases in which they are relevant will be determined by the nature of the subject matter. Allowing reference to Hansard in such cases does not have the large practical consequences to which I have referred. If reference to Parliamentary material is permitted as an aid to the construction of legislation which is ambiguous, or obscure or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of the Bill containing the relevant provision, had, in effect, assured the House of Commons it was not intended to impose. It was this which led to the appeal being re-argued before the Appellate Committee of seven which now reports to the House. Following the further arguments of which we have had the benefit, I should find it very difficult, in conscience, to reach a conclusion adverse to the appellants on the basis of a technical rule of construction requiring me to ignore the very material which in this case indicates unequivocally which of the two possible interpretations of section 63(2) of the Act of 1976 was intended by Parliament. But, for all the reasons given by my noble and learned friend, Lord Browne-Wilkinson, with whose speech I entirely agree, I am not placed in that invidious situation. It should, in my opinion, only be in the rare cases where the very issue of interpretation which the courts are called on to resolve has been addressed in Parliamentary debate and where the promoter of the legislation has made a clear statement directed to that very issue, that reference to Hansard should be permitted. Indeed, it is only in such cases that reference to Hans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Bill of Rights. I agree that the House is not inhibited by any Parliamentary privilege in deciding this appeal. I cannot agree with the view that consulting Hansard will add so greatly to the cost of litigation, that on this ground alone we should refuse to do so. Modern technology greatly facilitates the recall and display of material held centrally. I have to confess that on many occasions I have had recourse to Hansard, of course only to check if my interpretation had conflicted with an express Parliamentary intention, but I can say that it does not take long to recall and assemble the relevant passages in which the particular section was dealt with in Parliament, nor does it take long to see if anything relevant was said. Furthermore if the search resolves the ambiguity it will in future save all the expense that would otherwise be incurred in fighting the rival interpretations through the courts. We have heard no suggestion that recourse to Parliamentary history has significantly increased the cost of litigation in Australia or New Zealand and I do not believe that it will do so in this country. As to the question of statutory construction I should myself have cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reach of many airline and rail employees. Probably the most universally provided perk is the company car. Parliament has introduced taxation of this perk but upon a gradually increasing scale still short of the true value of the use of the car _ no doubt because to have introduced it at its full value would have been seen as an unfair and unacceptable increase in the burden of taxation in one year on those who enjoyed the perk and of course the future of the British motor industry would be taken into account. It is against this background that I approached the construction and which led me to prefer the interpretation which bases the assessment to tax upon the actual cost to the employer rather than the hypothetical cost arrived at by dividing the number of pupils into the total cost of providing full facilities. I should make it clear that my construction did not depend upon the children of the staff taking up surplus places in the sense that if there were sufficient fee paying pupils, the staff's children would not be given a place. The crucial question, as I see it, is whether accepting the staff children involved the school in extra expenditure. Absorbing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to regulate his conduct. We must, therefore, I believe, be very cautious in opening the door to the reception of material not readily or ordinarily accessible to the citizen whose rights and duties are to be affected by the words in which the legislature has elected to express its will. But experience shows that language _ and, particularly, language adopted or concurred in under the pressure of a tight Parliamentary timetable _ is not always a reliable vehicle for the complete or accurate translation of legislative intention ; and I have been persuaded, for the reasons so cogently deployed in the speech of my noble and learned friend, that the circumstances of this case demonstrate that there is both the room and the necessity for a limited relaxation of the previously well-settled rule which excludes reference to Parliamentary history as an aid to statutory construction. It is, however, important to stress the limits within which such a relaxation is permissible and which are set out in the speech of my noble and learned friend. It can apply only where the expression of the legislative intention is genuinely ambiguous or obscure or where a literal or prima facie co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly endowed institution, where the employee's benefit would have to be valued at a figure in excess indeed, it may be many times in excess-of the market price of the service provided. The references to Hansard which are set out in the speech of my noble and learned friend, Lord Browne-Wilkinson, put it beyond doubt that that could not have been the intention of Parliament in enacting the section. Accordingly, I, too, would allow the appeal. I would add only that I find myself quite unable to see how referring to the reports of Parliamentary debates in order to determine the meaning of the words which Parliament has employed could possibly be construed as questioning or impeaching the freedom of speech or debate or proceedings in Parliament or as otherwise infringing the provisions of article 9 of the Bill of Rights. Lord Browne-Wilkinson. My Lords, the underlying subject matter of these tax appeals is the correct basis for valuing benefits in kind received by the taxpayers who are schoolmasters. However in the circumstances which I will relate, the appeals have also raised two questions of much wider importance. The first is whether in construing ambiguous or obscure s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These words are defined by section 63(1) and (2) as follows : (1) The cash equivalent of any benefit chargeable to tax under section 61 above is an amount equal to the cost of the benefit, less so much (if any) of it as is made good by the employee to those providing the benefit. (2) Subject to the following subsections, the cost of a benefit is the amount of any expense incurred in or in connection with its provision, and (here and in those subsections) includes a proper proportion of any expense relating partly to the benefit and partly to other matters. The taxpayers contend that the only expense incurred by the school in or in connection with the education of their children is the additional, or marginal, cost to the school. The school was, in any event, up and running so as to provide its educational facilities for 625 boys. All the costs of running the school (staff salaries, provision of buildings and grounds, etc.) would have had to be incurred in any event : the admission of the taxpayers' children did not increase these basic expenses in any way. The only expense attributable to the education of the taxpayers' children (additional food, laundry, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first hearing, it came to your Lordships' attention that an examination of the proceedings in Parliament in 1976 which lead to the enactment of sections 61 and 63 might give a clear indication which of the two rival contentions represented the intention of Parliament in using the statutory words. Your Lordships then invited the parties to consider whether they wished to present further argument on the question whether it was appropriate for the House (under Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 1234) to depart from previous authority of this House which forbids reference to such material in construing statutory provisions and, if so, what guidance such material provided in deciding the present appeal. The taxpayers indicated that they wished to present further argument on these points. The case was listed for rehearing before a committee of seven members not all of whom sat on the original committee. At the start of the further hearing, the Attorney-General, who appeared for the Crown, drew our attention to a letter addressed to him by the Clerk of the House of Commons suggesting that any reference to Hansard for the purpose of construing the Act might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 9. However, the Attorney-General warned your Lordships that, even if reference in this case to Parliamentary materials did not infringe article 9, the House of Commons might take the view that the House enjoyed some wider privilege which we would be infringing and might well regret that its views on the point had not been sought before a decision was reached by your Lordships. Whilst strictly maintaining the privileges of the House of Commons, the Attorney-General used the Parliamentary materials in this case as an illustration of the dangers of so doing. Moreover, in order to assist us, whilst still maintaining the privileges of the House of Commons, he made submissions as to the effect of such material on the construction of section 63 if, contrary to his contentions and advice, we decided this appeal with the assistance of such material. In the result, the following issues arise. 1. Should the existing rule prohibiting any reference to Hansard in construing legislation be relaxed and, if so, to what extent ? 2. If so, does this case fall within the category of cases where reference to Parliamentary proceedings should be permitted ? 3. If reference to Parliamentary proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits. In 1975 the Government proposed a new tax on vouchers provided by an employer to his employees which could be exchanged for goods or services. Clause 33(1) of the Finance (No. 2) Bill 1975 provided that the employee was to be treated, on receipt of a voucher, as having received an emolument from his employment of an amount equal to the expense incurred by the person providing the voucher in or in connection with the provision of the voucher and the money, goods or services for which it is capable of being exchanged. The statutory wording of the Bill was therefore similar to that in the Act of 1948 and in section 63(2) of the Finance Act 1976. On 1 July 1975 in the Standing Committee on the Bill (Standing Committee H), the Financial Secretary was asked about the impact of the clause on railwaymen. He gave the following answer (Hansard, column 666) : Similarly, the railwayman travelling on his normal voucher will not be taxable either. The clause deals with the situation where a number of firms produce incentives of various kinds. In one or two instances, there is likely to be some liability concerning rail vouchers of a special kind, but in general, the position is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y employees. At the start of the meeting of Standing Committee E on 17 June 1976 (before clause 54 was being discussed) the Financial Secretary to the Treasury, Mr. Robert Sheldon, made an announcement (Hansard, columns 893-895) in the following terms : The next point I wish to make concerns services and deals with the position of employees of organisations, bodies, or firms which provide services, where the employee is in receipt of those services free or at a reduced rate. Under clause 54(4) the taxable benefit is to be based on the arm's length price of the benefit received. At present the benefit is valued on the cost to the employer. Representations have been made concerning airline travel and railway employees. . . . It was never intended that the benefit received by the airline employee would be the fare paid by the ordinary passenger. The benefit to him would never be as high as that, because of certain disadvantages that the employee has. Similar considerations, although of a different kind, apply to railway employees. I have had many interviews, discussions and meetings on this matter and I have decided to withdraw clause 54(4). I thought I wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of services to an employee earning less than 5,000 and an employee earning more than 5,000, or one who is a director. The position is quite clear. What we are withdrawing is the arm's-length valuation of benefit under clause 54(4) where an employer is providing services to the employee at a cost which may be very little. The employee earning more than 5,000 or the director will be assessed on the benefit received by him on the basis of the cost to the employer rather than the price that would generally be charged to the public. That is the position that we have now brought in, as opposed to the original one in the Bill where it would be assessed on the cost to a member of the public. That position now is the same as it stands before this legislation is passed. After being further pressed, the Financial Secretary said, at column 931 : The position is as I have enunciated it. If a company provides a service to the kind of employee which we have been talking about, and the company subsidises that service, the benefit assessable on the employee is the cost to the employer of providing that service. This was to have been changed by clause 54(4) under wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdrawal of clause 54(4), applies to other employees in service industries ; the benefit is the cost to the employer. It is a good illustration of one of the reasons why I withdrew this subsection, in that the cost to the employer in this instance could be much less than the arm's length cost to the outside person taking advantage of such a service. (column 1024) The question of the taxation of merchant seamen in respect of travel concessions to their families on their employers' ships was raised by another speaker and an amendment (No. 299) was tabled to meet their position. The Financial Secretary said, at column 1100 : Perhaps I may discuss a closely allied problem under Amendment No. 299, to which a number of Hon Gentlemen spoke. This proposal concerns the employee of a company and his wife, or the spouse, and the concession of a free passage or voyage in a company ship 'once in each calendar year' according to the amendment. I think that I can satisfy the Hon. Gentlemen that these voyages will not now be subject to tax as a result of the withdrawal of subsection (4), apart from the nominal charge for food which is normally made and which wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us law. He explained that in each case (including that of teachers) the charge would be on the cost to the employer of providing the services and that in each case that cost would either be nil or very small. After these statements were made by the Financial Secretary the Bill passed into law without further discussion on this aspect of the matter. Against that background I turn to consider the various issues which I have identified. 1. Should the rule prohibiting references to Parliamentary material be relaxed ? Under present law, there is a general rule that references to Parliamentary material as an aid to statutory construction is not permissible ( the exclusionary rule ) : Davis v. Johnson [1979] A.C. 264 and Hadmor Productions Ltd v. Hamilton [1983] 1 A.C. 191. This rule did not always apply but was judge made. Thus, in Ash v. Abdy [1678] 3 Swans. 664 Lord Nottingham took judicial notice of his own experience when introducing the Bill in the House of Lords. The exclusionary rule was probably first stated by Willes J. in Millar v. Taylor [1769] 4 Burr. 2303, 2332. However, the case of In re Mew and Thorne [1862] 31 L.J. Bank. 87 shows that even in the middle of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support for a conclusion he had reached on other grounds. My noble and learned friends, Lord Brandon of Oakbrook and Lord Jauncey of Tullichettle, agreed with both those speeches. This case therefore represents a major inroad on the exclusionary rule : see also Owens Bank Ltd. v. Bracco [1992] 2 A.C. 443. Mr. Lester, for the taxpayers, did not urge us to abandon the exclusionary rule completely. His submission was that where the words of a statute were ambiguous or obscure or were capable of giving rise to an absurd conclusion it should be legitimate to look at the Parliamentary history, including the debates in Parliament, for the purpose of identifying the intention of Parliament in using the words it did use. He accepted that the function of the court was to construe the actual words enacted by Parliament so that in no circumstances could the court attach to words a meaning that they were incapable of bearing. He further accepted that the court should only attach importance to clear statements showing the intention of the promoter of the Bill, whether a minister or private member : there could be no dredging through conflicting statements of intention with a view to discover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be a degradation of that process if the courts were to be merely a reflecting mirror of what some other interpretation agency might say. In Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251, 279, Lord Diplock said : The constitutional function performed by courts of justice as interpreters of the written law laid down in Acts of Parliament is often described as ascertaining 'the intention of Parliament ;' but what this metaphor, though convenient, omits to take into account is that the court, when acting in its interpretative role, as well as when it is engaged in reviewing the legality of administrative action, is doing so as mediator between the state in the exercise of its legislative power and the private citizen for whom the law made by Parliament constitutes a rule binding upon him and enforceable by the executive power of the state. Elementary justice or . . . the need for legal certainty demands that the rules by which the citizen is to be bound should be ascertainable by him (or, more realistically, by a competent lawyer advising him) by reference to identifiable sources that are publicly accessible. In Davis v. Johnson [1979] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mischief which the Bill seeks to remedy as do the white papers, reports of official committees and Law Commission reports to which the courts already have regard for that purpose. If a minister clearly states the effect of a provision and there is no subsequent relevant amendment to the Bill or withdrawal of the statement it is reasonable to assume that Parliament passed the Bill on the basis that the provision would have the effect stated. There is no logical distinction between the use of ministerial statements introducing subordinate legislation (to which recourse was had in the Pickstone case [1989] A.C. 66) and such statements made in relation to other statutory provisions which are not in fact subsequently amended. Other common law jurisdictions have abandoned the rule without adverse consequences. Although the practical reasons for the rule (difficulty in getting access to Parliamentary materials and the cost and delay in researching it) are not without substance, they can be greatly exaggerated : experience in Commonwealth countries which have abandoned the rule does not suggest that the drawbacks are substantial, provided that the court keeps a tight control on the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt advised I cannot foresee that any statement other than the statement of the minister or other promoter of the Bill is likely to meet these criteria. I accept Mr. Lester's submissions, but my main reason for reaching this conclusion is based on principle. Statute law consists of the words that Parliament has enacted. It is for the courts to construe those words and it is the court's duty in so doing to give effect to the intention of Parliament in using those words. It is an inescapable fact that, despite all the care taken in passing legislation, some statutory provisions when applied to the circumstances under consideration in any specific case are found to be ambiguous. One of the reasons for such ambiguity is that the members of the Legislature in enacting the statutory provision may have been told what result those words are intended to achieve. Faced with a given set of words which are capable of conveying that meaning it is not surprising if the words are accepted as having that meaning. Parliament never intends to enact an ambiguity. Contrast with that the position of the courts. The courts are faced simply with a set of words which are in fact capable of beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of legislation as white papers and Parliamentary reports. The decision in Pickstone v. Freemans Plc. [1989] A.C. 66 which authorises the court to look at ministerial statements made in introducing regulations which could not be amended by Parliament is logically indistinguishable from such statements made in introducing a statutory provision which, though capable of amendment, was not in fact amended. The judicial antipathy to relaxing the rule has been far from uniform. Lord Reid, who in the passage I have quoted from the Black-Clawson case [1975] A.C. 591, 613-615, supported the maintenance of the rule, in his dissenting speech in Reg. v. Warner [1969] 2 A.C. 256, 279 said : the layman may well wonder why we do not consult the Parliamentary Debates, for we are much more likely to find the intention of Parliament there than anywhere else. The rule is firmly established that we may not look at Hansard and in general I agree with it, for reasons which I gave last year in Beswick v. Beswick. This is not a suitable case in which to reopen the matter but I am bound to say that this case seems to show that there is room for an exception where examining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent alone to discover his position. It is undoubtedly true that Hansard and particularly records of Committee debates are not widely held by libraries outside London and that the lack of satisfactory indexing of Committee stages makes it difficult to trace the passage of a clause after it is redrafted or renumbered. But such practical difficulties can easily be overstated. It is possible to obtain Parliamentary materials and it is possible to trace the history. The problem is one of expense and effort in doing so, not the availability of the material. In considering the right of the individual to know the law by simply looking at legislation, it is a fallacy to start from the position that all legislation is available in a readily understandable form in any event : the very large number of statutory instruments made every year are not available in an indexed form for well over a year after they have been passed. Yet, the practitioner manages to deal with the problem albeit at considerable expense. Moreover, experience in New Zealand and Australia (where the strict rule has been relaxed for some years) has not shown that the nonavailability of materials has raised these practical pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion may feel that they have to research the materials to see whether they yield the crock of gold, i.e., a clear indication of Parliament's intentions. In very many cases the crock of gold will not be discovered and the expenditure on the research wasted. This is a real objection to changing the rule. However again it is easy to overestimate the cost of such research : if a reading of Hansard shows that there is nothing of significance said by the minister in relation to the clause in question, further research will become pointless. In sum, I do not think that the practical difficulties arising from a limited relaxation of the rule are sufficient to outweigh the basic need for the courts to give effect to the words enacted by Parliament in the sense that they were intended by Parliament to bear. Courts are frequently criticised for their failure to do that. This failure is due not to cussedness but to ignorance of what Parliament intended by the obscure words of the legislation. The courts should not deny themselves the light which Parliamentary materials may shed on the meaning of the words Parliament has used and thereby risk subjecting the individual to a law which Parl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to ensure that Members of Parliament were not subjected to any penalty, civil or criminal for what they said and were able, contrary to the previous assertions of the Stuart monarchy, to discuss what they, as opposed to the monarch, chose to have discussed. Relaxation of the rule will not involve the courts in criticising what is said in Parliament. The purpose of looking at Hansard will not be to construe the words used by the minister but to give effect to the words used so long as they are clear. Far from questioning the independence of Parliament and its debates, the courts would be giving effect to what is said and done there. Moreover, the Attorney-General's contentions are inconsistent with the practice which has now continued over a number of years in cases of judicial review. In such cases, Hansard has frequently been referred to with a view to ascertaining whether a statutory power has been improperly exercised for an alien purpose or in a wholly unreasonable manner. In Reg. v. Secretary of State for the Home Department, Ex parte Brind [1991] 1 A.C. 696 it was the Crown, at p. 741f, which invited the court to look at Hansard to show that the Minister in that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents or his reasoning. The Attorney-General raised a further constitutional point, namely, that for the court to use Parliamentary material in construing legislation would be to confuse the respective roles of Parliament as the maker of law and the courts as the interpreter. I am not impressed by this argument. The law, as I have said, is to be found in the words in which Parliament has enacted. It is for the courts to interpret those words so as to give effect to that purpose. The question is whether, in addition to other aids to the construction of statutory words, the courts should have regard to a further source. Recourse is already had to white papers and official reports not because they determine the meaning of the statutory words but because they assist the court to make its own determination. I can see no constitutional impropriety in this. Finally on this aspect of the case, the Attorney-General relied on considerations of comity : the relaxation of the rule would have a direct effect on the rights and privileges of Parliament. To the extent that such rights and privileges are to be found in the Bill of Rights, in my judgment they will not be infringed for the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortfall being made good by the endowment. On the average cost basis, the taxpayer would be treated as receiving a benefit greater than the amount charged to the public. On the other side, the revenue contend that once one has identified the benefit under section 61, section 63 contains a code for establishing its cash equivalent. Section 63(1) defines the cash equivalent as the cost of the benefit and section 63(2) defines the cost of a benefit as being the expense incurred in or in connection with its provision. The benefit in this case consists of the enjoyment of the facilities of the school. What is the cost of providing those facilities? It must be the total cost of providing the school. However the total cost of providing the school is incurred not only in connection with the provision of the benefit to the employee but also in providing the school with fee paying boys. This provision is expressly covered by the final words of section 63(2) and includes . . . a proper proportion of any expense relating partly to the benefit and partly to other matters. Therefore, says the revenue, the cost of the benefit is a proportion of the total cost of providing the services. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Corporation Taxes Act 1970) shows that he was saying that the position was unchanged : nothing the Minister said could affect the proper construction of legislation already on the statute book. To this contention there are, in my judgment two answers. First the old Acts were repealed by the Act of 1976 : the provisions were re-enacted in different language, albeit that the phrase incurred in or in connection with the provision of the benefit appeared in both statutes. In this case the court is concerned to construe the Act of 1976 : what is relevant is the ministerial statement as to the effect of that Act. Second, the existing practice of the revenue under the pre-1976 law was not to tax benefits in kind on the average cost basis and those who were asking questions on behalf of their constituents would have been well aware of this fact. For example in the case of airline employees the revenue had sought to tax concessionary travel on the average cost basis but their claim had failed before the commissioners and they had not persisted in that claim. The minister's answer in Parliament that the cost to the airlines of providing concessionary travel for airline employees wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing surplus capacity. Yet in both cases in Parliament the section was put forward as providing that only the marginal cost would be treated as taxable. I can therefore find no ground for drawing the narrow distinction and would hold that in the case of all in-house benefits the same test applies, viz. the cost of the benefit to the employer is the additional or marginal cost only. Therefore if reference to Hansard is permissible, I would allow the appeal. 4. If reference to Hansard is not permissible, what is the true construction ? Having once looked at what was said in Parliament, it is difficult to put it out of mind. I have the advantage that, after the first hearing and before seeing the Parliamentary materials, I had reached the conclusion, in agreement with Vinelott J. and the Court of Appeal, that the revenue's submissions were correct. If it is not permissible to take into account what was said by the Financial Secretary, I remain of the same view. My reasons are the same as those given by the Court of Appeal. I accept Mr. Lester's submission that there must be a causal link between the benefit provided for the taxpayers and the cost of the benefit ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fee was payable. Without deciding the point, it seems to me arguable that, on the taxpayer's argument, such loss or part of it would be an expense incurred by the school in providing the concessionary places. If so, the amount on which the taxpayer would be assessed to tax would vary from year to year depending upon the success of the school in attracting applicants. To my mind such a variation on a year by year basis by reference to an extraneous factor would be a most anomalous result, and would involve great difficulties in quantifying the cost to the employer in each case. In the circumstances, if I could detect from the statute any statutory purpose or intention pointing to one construction rather than the other, I would certainly adopt it. But the statute yields no hint. The basic problem is this. What is taxable is the benefit to the employee and one would have expected the quantum of that benefit to be assessed by reference to the value of the benefit to the employee. But the statutory formula does not seek to value the benefit to the employee as such, but requires the quantum of the benefit to be fixed by reference to the cost to the employer in providing it. Given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse might breach Parliamentary privilege until the Attorney- General raised the point at the start of the rehearing. Even then, the Attorney-General did not ask for an adjournment to enable the House of Commons to consider the matter. Your Lordships therefore heard the case through to the end of the argument. Although in the past the courts and the House of Commons both claimed the exclusive right to determine whether or not a privilege existed, it is now apparently accepted that it is for the courts to decide whether a privilege exists and for the House to decide whether such privilege has been infringed : see Erskine May on Parliamentary Practice, 21st ed. (1989), pp. 147-160. Thus, Erskine May says, at p. 150 : In the 19th century, a series of cases forced upon the Commons and courts a comprehensive review of the issues which divided them, from which it became clear that some of the earlier claims to jurisdiction made in the name of privilege by the House of Commons were untenable in a court of law : that the law of Parliament was part of the general law, that its principles were not beyond the judicial knowledge of the judges, and that it was the duty of the common la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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