[HOUSE OF LORDS]

AND

Revenue - Tax advantage - Practice - Tribunal appointed under Finance Act, 1960, s. 28 - Consideration of commissioners' certificate and taxpayer's statutory declaration - Determination whether prima facie case - Whether principles of natural justice applicable - Whether taxpayer entitled to be heard or to correct counter-statement - Finance Act, 1960 (8 & 9 Eliz. 2, c. 44), s. 28 (5).

Natural Justice - opportunity to meet charge - Revenue - Tribunal appointed under Finance Act, 1960, s. 28 - Consideration whether prima facie case of tax advantage - Whether taxpayer entitled to be heard or to correct counter-statement - Whether principles of natural justice applicable - Finance Act, 1960, s. 28 (5).

The Inland Revenue Commissioners, having considered statutory declarations made by the appellants under section 28 (4) of the Finance Act, 1960,¹ in relation to certain transactions concerning shares in a company, decided to submit the

1 Finance Act, 1960, s. 28: "(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 ... (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 30 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

matter under subsection (5) to the tribunal constituted for the purposes of that section to determine whether there was a prima facie case for proceeding in the matter.

The registrar of the tribunal refused the appellants' request to be represented by counsel at that determination and to be given copies of the commissioner's certificate and counter-statement and the appellants issued an originating summons asking for declarations whether the tribunal was bound to accede to their request and whether the procedure which the tribunal intended to adopt was in accordance with the principles of natural justice.

On a motion by the respondents, the members of the tribunal and the Inland Revenue Commissioners, to strike out the summons, Pennycuick J. held that the summons disclosed no reasonable cause of action and should be struck out. The Court of Appeal affirmed that decision. On appeal:-

Held, dismissing the appeal, that section 28 of the Finance Act, 1960, gave the taxpayer a sufficient opportunity of stating his contentions to the tribunal and that the tribunal was entitled to make its determination on the documents specified for there was nothing so unfair about the procedure specified in the section as to entitle the court to say that the principles of natural justice were not followed.

Cozens v. North Devon Hospital Management Committee [1966] 2 Q.B. 330; [1966] 3 W.L.R. 279; [1966] 2 All E.R. 799, C.A. considered.

Per Lord Reid. Natural justice requires that the procedure before any tribunal which is acting judicially shall be fair in all the circumstances, and I would be sorry to see this fundamental general principle degenerate into a series of hard and fast rules (post, p. 308B-C).

Per Lord Reid, Lord Morris of Borth-y-Gest and Lord Wilberforce. Observations on the circumstances in which it would be proper for the tribunal to depart from the strict terms of section 28 (post, pp. 308G, 309G - 310B, 320F - 321A).

Decision of the Court of Appeal [1968] Ch. 429; [1968] 2 W.L.R. 320; [1967] 3 All E.R. 1045, C.A. affirmed.

The following cases are referred to in their Lordships' opinions:

Alliance des Professeurs Catholiques de Montreal v. Labour Relations Board [1953] 2 S.C.R. 140 (Canada).

Commissioner of Police v. Tanos (1958) 98 C.L.R. 383 (Australia).

Cooper v. Wandsworth Board of Works (1863) 14 C.B.N.S. 180.

Cozens v. North Devon Hospital Management Committee [1966] 2 Q.B. 330; [1966] 3 W.L.R. 279; [1966] 2 All E.R. 799, C.A.

Hammersmith Rent-charge, In re (1849) 4 Ex. 87.

Inland Revenue Commissioners v. Sneath [1932] 2 K.B. 362, C.A.

K. (Infants), In re [1965] A.C. 201; [1963] 3 W.L.R. 408; [1963] 3 All E.R. 191, H.L.(E.).

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: ... (6) Any person to whom notice has been given under subsection (3) of this section may within 30 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."

Parry-Jones v. Law Society [1969] 1 Ch. 1; [1968] 2 W.L.R. 397; [1968] 1 All E.R. 177, C.A.

Reg. v. Ngwevela, 1954 (1) S.A. 123 (A.D.) (South Africa).

Rex v. Housing Appeal Tribunal [1920] 3 K.B. 334.

Rex v. Income Tax Special Commissioners, Ex parte Elmhirst [1936] 1 K.B. 487, C.A.

Russell v. Duke of Norfolk [1949] 1 All E.R. 109, C.A.

The following additional cases were cited in argument:

Board of Education v. Rice [1911] A.C. 179, H.L.(E.).

B.P. Australia Ltd. v. Council of the City of the Gold Coast [1967] Qd.R. 307 (Australia).

Davies v. Davies Jenkins & Co. Ltd. [1968] A.C. 1097; [1967] 2 W.L.R. 1139; [1967] 1 All E.R. 913, H.L.(E.).

Dean v. Wiesengrund [1955] 2 Q.B. 120; [1955] 2 W.L.R. 1171; [1955] 2 All E.R. 432, C.A.

Delta Properties Pty. Ltd. v. Brisbane City Council (1955) 95 C.L.R. 11 (Australia).

Fair Prices Act, 1924-35, in the Matter of an Application under [1961] S.A.S.R. 33 (Australia).

Goldsmiths' Company v. Wyatt [1907] 1 K.B. 95, C.A.

Lapointe v. L'Association de Bienfaisance et de Retraite de la Police de MontrŽal [1906] A.C. 535, P.C.

Literature Board of Review v. H. M. H. Publishing Company Inc. [1964] Q.D.R. 261 (Australia).

Lowe v. Dorling & Son [1906] 2 K.B. 772, C.A.

Reg. v. Ashford Kent, Justices, Ex parte Richley [1955] 1 W.L.R. 562; [1955] 2 All E.R. 327n. D.C.

Reg. v. Coppel, Ex parte Viney Industries Pty. Ltd. (1962) V.R. 630 (Australia).

Reg. v. Dick [1969] 1 Can.Cr.Cas. 147 (Canada).

Reg. v. Morley (1966) 11 R.R.C. 390, C.A.

Reg. v. Randolph [1966] S.C.R. 260 (Canada).

Reg. v. Transport Regulation Board, Ex parte Banks [1968] V.R. 95 (Australia).

Reynolds v. Attorney-General (1909) 29 N.Z.L.R. 24 (New Zealand).

Ridge v. Baldwin [1964] A.C. 40; [1963] 2 W.L.R. 935; [1963] 2 All E.R. 66, H.L.(E.).

Stafford v. Minister of Health [1946] K.B. 621.

Testro Bros. Pty. Ltd. v. Tait (1963) 109 C.L.R. 353 (Australia).

Vitkovice Horni a Hutni Tezirstvo v. Korner [1951] A.C. 869, H.L.(E.).

APPEAL from the Court of Appeal.

This was an appeal by leave of the House of Lords by the appellants, Cyril Robert Wiseman and Millicent Edith Wiseman (his wife) from an order of the Court of Appeal (Lord Denning M.R., Diplock and Edmund Davies L.JJ.) dated November 1, 1967, dismissing an appeal by the appellants from an order of the Chancery Division (Pennycuick J.) dated July 18, 1967, whereby it was ordered on motion that an originating summons dated June 27, 1967, and subsequently amended, wherein the appellants were plaintiffs and the first five respondents, Roy Ernest Borneman, Sir William Carrington, Sir Richard Yeabsley, Andrew Hunter Carnwath, David Linton Pollock, the members of the tribunal established

for the purposes of section 28 of the Finance Act, 1960, and the sixth respondent, the Commissioners of Inland Revenue, were defendants, be struck out on the grounds that it disclosed no reasonable cause of action.

The issue which arose on this appeal was whether the tribunal in determining a question between the taxpayer and the Commissioners of Inland Revenue referred to it under section 28 (5) of the Finance Act, 1960, was bound to observe the rules of natural justice, and to give the taxpayer the right to see and comment upon material adverse to the taxpayer placed before the tribunal by the Commissioners of Inland Revenue.

The facts were as follows: On February 23, 1967, the Commissioners of Inland Revenue issued notifications to each of the appellants pursuant to section 28 (4) of the Finance Act, 1960, in respect of transactions in shares of Meyers Brooks & Co. Ltd., which transactions were completed in May 1957.

On March 22, 1967, the appellants being of opinion that section 28 did not apply to them in respect of the transactions (because of the proviso to subsection (1) of the section, and the date of completion of the transactions) made statutory declarations to that effect and stated therein facts and circumstances upon which their opinions were based. The statutory declarations were delivered to the Commissioners of Inland Revenue on March 23, 1967.

By letter dated April 7, 1967, the Commissioners of Inland Revenue, having assessed the female appellant to surtax in the sum of £29,342 5s. in respect of the transactions, informed the appellants' solicitors that they saw reason to take further action in the matter and would therefore submit the case to the tribunal in accordance with section 28 (5).

By letters dated April 25 and May 5, 1967, to the secretary (taxes) of the Commissioners of Inland Revenue and May 12, 1967, to the registrar of the tribunal the appellants' solicitors requested copies of any certificate and counter-statement of the Commissioners of Inland Revenue made pursuant to section 28.

On a date between May 12 and 22, 1967, the registrar by telephone informed the appellants' solicitors, and on May 23, 1967, by letter to them confirmed, that the tribunal intended to determine whether there was or was not a prima facie case for proceeding in the matter in the absence of the appellants, who would not be allowed to be represented and would not be supplied with copies of any certificate or counter-statement before the tribunal's decision.

On June 27, 1967, the appellants took out an originating summons in the Chancery Division of the High Court of Justice, joining as defendants the respondents, by which (as subsequently amended) they asked for determination of the following questions, namely:- (1) Whether the tribunal referred to in section 28 of the Finance Act, 1960, in determining the questions referred to in paragraph (b) of subsection (5) of that section was bound to give the plaintiffs an opportunity of dealing with the certificate and any counter-statement of the Commissioners of Inland Revenue of the kind mentioned in the said paragraph. (2) Whether the tribunal in determining the questions aforesaid was bound to give the plaintiffs an opportunity of addressing argument to the tribunal and of adducing evidence bearing on the said questions. (3) Whether the procedure which

the tribunal intended to adopt in relation to the plaintiffs' case was in accordance with the principles of natural justice.

By notices of motion dated July 13, 1967, the first five respondents and the sixth respondent respectively moved that the originating summons be struck out under R.S.C., Ord. 18, r. 19, alternatively under the inherent jurisdiction of the court on the alleged grounds that it disclosed no reasonable cause of action, it was frivolous and/or vexatious and was an abuse of the process of the court.

On July 18, 1967, Pennycuick J. ([1968] Ch. 334) held that the summons did not raise any question which was open to serious argument and ordered that it be struck out.

The appellants appealed on the grounds, inter alia, that the judge misdirected himself in holding that the originating summons did not raise any question open to serious argument in the High Court and that he ought to have held that the summons raised such a question and to have dismissed the motions. On November 1, 1967, the Court of Appeal dismissed the appeal.

Michael Miller, Michael Mark and A. E. W. Park for the appellant.

The principle applicable here is that very clear words are required to take away fundamental rights which are ordinarily accorded by the law and, indeed, by natural justice: see per Salmon L.J. in Cozens v. North Devon Hospital Management Committee [1966] 2 Q.B. 330, 349, and perByles J. in Cooper v. Wandsworth Board of Works (1863) 14 C.B.N.S. 180, 194.

Section 28 (1) of the Finance Act, 1960, does not apply unless one or more of the circumstances referred to in subsection (2) are applicable, and it does not apply to transactions carried out before April 5, 1960. The transactions in question were carried out in 1957 and none of the circumstances mentioned in section 28 (2) are applicable.

It is to be remembered that the Revenue might put in facts in the counter-statement which are unknown to the taxpayer and indeed which are erroneous. This shows that it is not enough that the taxpayer is entitled to put his own case before the tribunal, but that he must have the case against him produced so that he may comment upon it. Thus the Revenue might produce a document which contained a typing error relating to the date of the transaction in question. If this were to happen, the tribunal might find that there was a prima facie case to answer whereas if the taxpayer had been able to point out the error, he would have been able to stop the proceedings in limine. A judicial tribunal must act judicially and must allow the party to the disputes before it that amount of fair play which enables it to perform its functions judicially: see Tucker L.J. in Russell v. Duke of Norfolk [1949] 1 All E.R. 109, 118.

This is a statutory tribunal and is amenable to the supervisory jurisdiction of the court. The tribunal has no administrative functions to perform at all. It has only two functions: 1. To determine under section 28 (5) (b) whether there is a prima facie case for proceeding in the matter; 2. To hear under section 28 (6) appeals from the special commissioners.

Reliance is placed on the observations of Lord Loreburn in Board of Education v. Rice [1911] A.C. 179, 182, on the general question of natural

justice. Those observations apply a fortiori to a body that has judicial functions. It is a common law right that a party should have those opportunities to which Lord Loreburn refers. There is no reported decision which states that the rule is not applicable to a situation analogous to that here.

There is a wide range of decisions that establish that the principle applies to preliminary determinations on whether a prima facie case has been made out. The general principle applies equally to preliminary and final determinations. The observations of Byles J., in Cooper's case, 14 C.B.N.S. 180 apply albeit the statute is silent on the matter.

It is said that the doctrine expressio unius est exclusio alterius applies because the statute in defining the functions of the tribunal in its appellate role, has laid down in detail the procedure to be followed in this connection and therefore Parliament could not have intended to apply this procedure to matters which come under section 28 (5) (b). But this doctrine is not to be applied where it leads to injustice: see Dean v. Wiesengrund [1955] 2 Q.B. 120, 130, 137 and 138. Reliance is also placed on the observations of Farwell L.J. in Lowe v. Dorling & Son [1906] 2 K.B. 772, 784, 785. Thus for the respondents to succeed it must be plain from the language of the statute that the right of he subject to a hearing under section 28 (5) (b) is excluded because such a right cannot reasonably have been intended to co-exist with the procedure for appeals under section 28 (6).

As to the practice of the Board of Referees: 1. There was no practice of refusing applicants to the board of the opportunity of addressing argument to the board on preliminary determinations. 2. The Board of Referees as doing no injustice in withholding from the subject the case of the Crown if the subject had not asked for the opportunity: see Reg. v. Deputy Industrial Injuries Commissioner, Ex parte Moore [1965] 1 Q.B. 456, 490E. 3. The Act of 1960 should be construed according to its own terms and not with reference to the provisions of the Finance Act 1927: Clyde Navigation Trustees v. Laird (1883) 8 App.Cas 658, 673, per Lord Watson, which was referred to in Goldsmiths' Company v. Wyatt [1907] 1 K.B. 95, 107. 4. It must nat be presumed in construing a statute that the legislature knows of the particular practice in question: see Davies v. Davies Jenkins & Co. Ltd. [1968] A.C. 1097, 1120G-1121A, per Lord Morris of Borth-y-Gest.

If the Crown's argument be correct then the following two cases would have been decided differently: Rex v. Housing Appeal Tribunal [1920] 3 K.B. 334, and Stafford v. Minister of Health [1946] K.B. 621. Moreover, if the Crown be correct, the appellants are deprived of a very valuable right, namely the determination whether a prima facie case is made out against them, for in the event of the tribunal holding that there is not, then the statute does not apply. If, however, the case goes to appeal to the special commissioners, the taxpayers have to prepare a case, of which the Crown's case they are unaware, and in the event of success they have no means of recovering costs from the Crown.

In Re Hammersmith Rent-charge (1849) 4 Ex. 87 and Reg. v. Morley (1966) 11 R.R.C. 390, support the proposition that the principles of natural justice apply to a preliminary determination. It is conformable with the principles of natural justice that the respondent to any application should

have the opportunity of addressing the tribunal on the case of his opponent with a view that the order asked for should not be made. The language of R.S.C., Ord. 53, r. 1, could not be more apt for providing that an application is to be made ex parte. In view of that language, it would still be open to the Divisional Court and the Count of Appeal to hold that an order should not be made. But of the rules of natural justice did not apply, there would be no such right if an order were made to apply for the order to be discharged because there is no express rule to that effect.

Reg. v. Guerin (1888) 16 Cox C.C. 596 shows that the preliminary character of proceedings before justices does not prevent them being any the less judicial proceedings.

The following Commonwealth and South African cases are relevant on the question of natural justice: Delta Properties Pty. Ltd. v. Brisbane City Council (1955) 95 C.L.R. 11; Commissioner of Police v. Tanos (1958) 98 C.L.R. 383; In the Matter of an Application under the Fair Prices Act, 1924-35 [1961] S.A.S.R. 33; Reg. v. Coppel, Ex parte Viney Industries Pty. Ltd. [1962] V.R. 630; Testro Bros. Pty. Ltd. v. Tait (1963) 109 C.L.R. 353; B.P. Australia Ltd. v. Council of the City of the Gold Coast [1967] Qd.R. 307; Reg. v. Transport Regulation Board, Ex parte Banks [1968] V.R. 95; Reynolds v. Attorney-General (1909) 29 N.Z.L.R. 24; Reg. v. Dick [1969] 1 Can.Cr.Cas. 147; Alliance des Professeurs Catholiques de Montreal v. Labour Relations Board [1953] 2 S.C.R. 140; Reg. v. Ngwevela, 1954 (1) S.A. 123 (A.D.).

Strong reliance is placed on the observations of Lord Greene M.R. in Johnson & Co. v. Minister of Health [1947] 2 All E.R. 395, 401 D-E for the proposition that the putting in of the counter-statement by the Revenue made it incumbent upon the tribunal to have the comments of the appellant taxpayer upon it.

In summary, the general principle of natural justice is that a party to a dispute is to be given an opportunity of commenting upon and contraverting his opponent's case and this is applicable to preliminary determinations of a judicial character even though the matter at that stage is merely to determine whether a prima facie case is made out; In re Hammersmith Rent-charge, 4 Ex. 87.

Even when a tribunal is empowered specifically to determine a matter ex parte, for example, the Divisional Court or the vacation judge hearing an application for a prerogative order, natural justice is the principle which entitles the party affected by the grant of leave to apply bo the judge to have the order set aside on the grounds that he has not been heard on the preliminary matter. Strong reliance is placed on the observations of Salmon L.J. in Cozens v. North Devon Hospital Management Committee [1966] 2 Q.B. 330. Reliance is placed also on the observations of Lord Hodson in In re K. (Infants) [1965] A.C. 201, 234 B-C.

The Act of 1960 by necessary implication confers on the taxpayer the right to see the counter-statement put in by the Revenue by virtue of the fact that the tribunal is compelled to consider such counter-statement, for on the principle propounded by Lord Greene in Johnson's case [1947] 2 All E.R. 395 information of that kind should be disclosed to the other party to give that other party an opportunity of controverting it, or making comments upon it.

[Reference was also made to Stephens History of the Criminal Law, pp. 250-254; Vitkovice Horni a Hutni Tezirstvo v. Korner [1951] A.C. 869.]

W. A. Bagnall Q.C. and J. P. Warner for the first five respondents.

Section 28 of the Finance Act 1960 introduces a very special power to deal with cases where a taxpayer has found a way of obtaining a tax advantage for enabling the Crown to sweep it all away. In the nature of the case all the relevant facts will be available to the taxpayer and it will only be in the rarest of cases where the taxpayer is unaware of all the relevant facts.

The first safeguard given to the taxpayer is provided by section 28 (10), which enables a taxpayer to approach the commissioners and state what he proposes to do or what he has in fact done. This enables the taxpayer to furnish all the facts and request a clearance. If the taxpayer does not take advantage of subsection (10) or has not obtained a clearance, then in the plain words of subsection (3) the Revenue may serve a notice to counteract the tax advantage. There then occurs the second safeguard. Each party is given an opportunity to prevent the matter going further; there is nothing ex parte bout it. The taxpayer makes a statutory declaration setting out all the facts and this is sent to the commissioners. If the commissioners are satisfied that the section does not apply, that is an end of the matter. If the commissioners wish to continue they put in a certificate and that is the first the tribunal hear of the case. A determination that there is no prima facie case is a final conclusion against the Revenue. A determination that there is a prima facie case gives the taxpayer all the appeal procedure of the Revenue legislation, namely, two appeals on the facts and on the law and three further appeals on the law, the third, with leave, to this House.

Even if there were no difference in the approach of the courts in applying the rules of natural justice depending upon whether the statute in question provided for the making of a final order or not, it is a matter of necessary implication here that any further hearing, that is, representation, is ruled out by the terms of the section for it provides that three documents only should be submitted to the tribunal. The section provides a short summary procedure for disposing of the matter. It is to be remembered that a determination against the Revenue is final and conclusive but this is not so if it is found that there is a prima facie case against the taxpayer.

Section 28 clearly excludes the rules of natural justice since it provides its own complete code of procedure for determining the matters that me within its ambit.

The appellants wish (1) to add further facts; (2) to correct any errors of facts that there may be in the counter-statement; and (3) to submit written argument to controvert the counter-statement.

Section 28 contemplates that the facts put before the tribunal should be on oath for there is a statutory declaration. There is no warrant for the making of a further statutory declaration or that evidence can be given in any other way. The appellants' argument entails rewriting the section. It involves one further document being put before the tribunal, namely, the taxpayer's comments on the Revenue's counter-statement. It would be inherent in the argument if this comment would be allowed that the Revenue should be allowed to comment upon the comment. Thus two

further documents would have to be put in before the tribunal. But this argument leads logically to the admission of two further documents and so on ad infinitum. The tribunal is not to be embroiled in questions of law on written argument at the preliminary stage when plainly in such circumstances the case must go forward and the tribunal will have to determine it in its appellate character at a later stage.

The question of law is that there is a dichotomy between that which is a final determination of what are substantive rights and a preliminary determination leading to something else. The respondents accept that if the tribunal is concerned with a final determination, then there is a presumption that this rule of natural justice is imported unless the statute excludes it expressly or by implication. If the decision is not a final decision, then there is no presumption either way. The statute is approached with an open mind and the ordinary rules of construction are applied in determining the question.

There can be no doubt that this decision quoad the taxpayer is not a final determination, but a preliminary determination. It is the appellants' submission that this decision deprives the appellants of the right of having the case against them stopped in limine and therefore that it is final. But this begs the question.

Once then it has been decided that the decision has not an element of finality, the question is, what is the procedure which the Act prescribes? In re Hammersmith Rent-charge, 4 Ex. 87 is the foundation of the law in relation to non-final determinations. Lapointe v. L'Association de Bienfaisance et de Retraite de a Police de Montreal [1906] A.C. 535 recognises the difference in approach on this question between final and non-final decisions.

As to the argument based on the making of ex parte orders, common law litigation was inter partes and no court would have made a final order ex parte. There are three types of ex parte orders: 1. Interlocutory orders, for example, an interim injunction granted ex parte, the term of the grant being that the plaintiff gives an undertaking to accept short notice of motion to set aside the relief granted. 2. This is statutory: a preliminary procedure directed to be taken ex parte, the statute making express provision that the ex parte order may be set aside on motion, for example, the procedure for serving a writ out of the jurisdiction: see R.S.C., Ords. 11 and 12. 3. This is also statutory: a direction that relief shall be given ex parte without there being an express provision for setting it aside on motion. In that case, the statutory provisions must be followed. That is the ratio decidendi of the majority decision in Cozens' case [1966] 2 Q.B. 330.

There is no example of a statutory power to make an order ex parte which is final.

The question here is: does the general principle apply if the order which is made is only an interim order?

It is established that where a statutory tribunal is charged with making a decision determining rights, one approaches the construction of the Act in question with the presumption that it does not take away the right of a party to be heard. The question here is: when the tribunal is empowered to make an interim order, is the Act approached with the same presumption? There are two answers: 1. One does not approach it with

any presumption. 2. The presumption exists that the rules of natural justice apply whether it be a final or interim order and it is left for the court to determine whether the rules apply in any particular case. There is no authority which decides in la case where a statute prescribes an interim order that the court has an inherent jurisdiction to set it aside. Reliance is placed on the history of applying for a prerogative writ. There is no inherent jurisdiction to set aside the writ or order giving leave. [Reference was made to R.S.C., Ord. 53, r. 1.]

There is no case which suggests that there is an inherent right in the Divisional Court to set aside is own order giving leave. Thus it is not so suggested in Reg. v. Ashford, Kent, JJ., Ex parte Richley [1955] 1 W.L.R. 562 or in Reg. v. Morley (1966) 11 R.R.C. 390.

The majority decision of the Court of Appeal in Cozens' case [1966] 2 Q.B. 330 is consonant with the respondents' argument. The approach of Lord Denning M.R. and Danckwerts L.J. is right and that of Salmon L.J. was wrong.

As to the Commonwealth cases, both the Delta Properties case, 95 C.L.R. 11 and Commissioner of Police v. Tanos, 98 C.L.R. 383 are distinguishable, for they were cases of final orders. The Fair Prices Act case (1961) S.A.S.R. 33 was plainly a case where the Act in question contemplated that both sides to the dispute should be heard.

As to Reg. v. Coppel [1962] V.R. 630 and Testro Bros. Pty. Ltd. v. Tait, 109 C.L.R. 353, these were both decisions that the tribunal in question was not a judicial body at all and therefore any animadversions on the principles of natural justice were obiter dicta. Further, the B.P. Australia case [1967] Qd.R. 307, Reg. v. Transport Regulations Board [1968] V.R. 95, Reynolds v. Attorney-General, 29 N.Z.L.R. 24 and Reg. v. Ngwevela 1954 (1) S.A. 123 are all distinguishable in that they all concern final decisions.

As to Reg. v. Dick [1969] 1 Can.Cr.Cas. 147, if there is provision made for a trial, it is plain that the trial must be properly conducted.

The first respondents rely on two cases, which, if they be rightly decided, are conclusive on the difference between final and preliminary orders: Reg. v. Randolph [1966] S.C.R. 260 and Literature Board of Review v. H.M.H. Publishing Co. Inc. [1964] Qd.R. 261. The latter case is precisely the present case, albeit the body in question there was probably an administrative tribunal and not a judicial tribunal.

There is nothing in In re Hammersmith Rent-charge, 4 Ex. 87 which contravenes the respondents' submissions.

As to Rex v. Housing Appeal Tribunal [1920] 3 K.B. 334, in that case there was express provision made for putting forward further documents.Power to dispense with a hearing in those circumstances meant power to dispense with an oral hearing, but since the relevant statutory provisions referred to further documents, it did not mean on its true construction that the Act dispensed with a "paper hearing."

The respondents submit that section 28 plainly prescribes a fair and adequate procedure protecting the rights of the taxpayer. To accept the argument for the appellants would entail inserting, in effect, another subsection into section 28.

[Reference was also made to Broom's Legal Maxims (1939), 10th ed., p. 68.]

J. Raymond Phillips Q.C. and Henry Brooke for the sixth respondent. Mr. Bagnall Q.C.'s argument is adopted.

On the assumption that the proper approach to the construction of section 28 is to ask what is fair and reasonable, the argument is confined to the construction of subsections (3) and (4) thereof.

What is the end purpose of these subsections? If the subsections had not been enacted, the position would have been that if in a particular instance it appeared to the Revenue that section 28 applied, it would then be the duty of the Revenue to serve a counter-notice under subsection (3). Thereupon under subsection (6) the taxpayer would be entitled to appeal to the special commissioners and, if not satisfied with that appeal, to the tribunal, and if still not satisfied, he could appeal by way of case stated to the High Court. In those circumstances, it would have been plain that the requirements of natural justice had been complied with. Subsections (4) and (5) afford an additional protection to the taxpayer and give nothing to the Revenue. In these circumstances, the court will be slow to add further protection by means of invoking the doctrine of natural justice.

What is the purpose of subsection (4)? In particular, it does not operate to empower or enable the Revenue to obtain leave to appeal. The object of subsections (4) and (5) is to prevent proceedings continuing where the taxpayer has, or thinks he has, a short, crucial and devastating point. Unless the taxpayer does something about the position, the matter will proceed in the normal way. The document which initiates the procedure is the statutory declaration. The Act postulates a case where the taxpayer is so appraised of the situation that he can stultify the proceedings ab initio. In those circumstances, if this was the situation that Parliament was envisaging, there seems no particular reason, after the taxpayer has put in his statutory declaration and the Revenue its counter-statement, why the taxpayer should be entitled to see the counter-statement. If that be the object, then he either persuades the tribunal or he does not. There seems therefore nothing unfair in not allowing the taxpayer to see the counter-statement.

If, in fact, the taxpayer were enabled to see the counter-statement and comment upon it, or adduce further facts, then inevitably the Revenue must be entitled to see those arguments or further facts because proceedings at this stage can be conclusive against the Revenue, but not against the taxpayer. Here one is dealing with a very special type of procedure for a very special purpose. If other documents were let in, then this would be substantially different from the short procedure envisaged by Parliament. That the whole procedure is very special is shown by the fact that the tribunal need not give any reasons for its decisions.

The taxpayer's statutory declaration is made at a very early stage and within 30 days of receiving the Revenue's notice. It must follow that what is envisaged by these provisions is a short, crucial devastating point and that is their object. It must follow that if subsections (4) and (5) did not appear in section 28, no court would invent them as being inherently required in the circumstances for the purposes of natural justice.

[Reference was also made to Parry-Jones v. Law Society [1969] 1 Ch. 1.]

Miller replied.

Their Lordships took time for consideration.

July 29, 1969. LORD REID. My Lords, I agree with your Lordships that this appeal should be dismissed and I shall only add a few observations. Natural justice requires that the procedure before any tribunal which is acting judicially shall be fair in all the circumstances, and I would be sorry to see this fundamental general principle degenerate into a series of hard-and-fast rules. For a long time the courts have, without objection from Parliament, supplemented procedure laid down in legislation where they have found that to be necessary for this purpose. But before this unusual kind of power is exercised it must be clear that the statutory procedure is insufficient to achieve justice and that to require additional steps would not frustrate the apparent purpose of the legislation.

In the great majority of cases which come before this tribunal all the relevant facts are known to the taxpayer and he has a full opportunity to set out in his statutory declaration all the facts which he thinks are relevant and also all arguments on which he relies. The only advantage to him of having a right to see and reply to the counter-statement of the commissioners would then be that he could reply to their arguments. If the tribunal were entitled to pronounce a final judgment against the taxpayer, justice would certainly require that he should have a right to see and reply to this statement, but all the tribunal can do is to find that there is a prima facie case against him.

It is, I think, not entirely irrelevant to have in mind that it is very unusual for there to be a judicial determination of the question whether there is a prima facie case. Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case, but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So there is nothing inherently unjust in reaching such a decision in the absence of the other party.

Even where the decision is to be reached by a body acting judicially there must be a balance between the need for expedition and the need to give full opportunity to the defendant to see the material against him. I do not think that a case has been made out that it is unfair to proceed as the statute directs. But I do not read the statute as preventing the tribunal from seeking farther comment from the taxpayer if in any unusual case they think that they could carry out their task more effectively in that way. If they do that, then they must allow the commissioners to reply if so advised, because any decision against the commissioners is a final decision.

LORD MORRIS OF BORTH-Y-GEST. My Lords, that the conception of natural justice should at all stages guide those who discharge judicial functions is not merely an acceptable but is an essential part of the philosophy of the law. We often speak of the rules of natural justice.

But there is nothing rigid or mechanical about them. What they comprehend has been analysed and described in many authorities. But any analysis must bring into relief rather their spirit and their inspiration than any precision of definition or precision as to application. We do not search for prescriptions which will lay down exactly what must, in various divergent situations, be done. The principles and procedures are to be applied which, in any particular situation or set of circumstances, are right and just and fair. Natural justice, it has been said, is only "fair play in action." Nor do we wait for directions from Parliament. The common law has abundant riches: there may we find what Byles J. called "the justice of the common law" (Cooper v. Wandsworth Board of Works (1863) 14 C.B.N.S. 180, 194).

I approach the present case by considering whether in all the circumstances the tribunal acted unfairly. It is not now suggested on behalf of the appellants that they had a right to insist upon being heard orally before the tribunal. But the tribunal declined to furnish the appellants with a copy of the counter-statement of the commissioners and declined to allow the appellants to submit written comments or arguments in regard to such counter-statement before proceeding to a determination. Was that in all the circumstances unfair?

In the careful address of counsel for the appellants we were referred to many decisions. I think that it was helpful that we should have been. But ultimately I consider that the decision depends upon whether in the particular circumstances of this case the tribunal acted unfairly so that it could be said that their procedure did not match with what justice demanded.

It is important to have in mind exactly what the tribunal had to do. There was no question of their being required to come to a determination as to whether section 28 applied to the appellants in respect of the transactions in question. There was to be no decision comparable to that in Rex v. Housing Appeal Tribunal [1920] 3 K.B. 334. The decision or determination that the tribunal had to make was whether there was or was not a prima facie case "for proceeding in the matter." That was a most limited decision. A decision that there was such a case would mean that it could not be said that the commissioners must definitely not give a notice under subsection (3) because they would certainly be wrong if they gave one.

It may well be unlikely, if a taxpayer could not in his statutory declaration point to the elimination of even "a prima facie case for proceeding in the matter," that he would be able to do so in some rebuttal of anything contained in the commissioners' counter-statement. But having said this I feel bound to express my prima facie dislike of a situation in which the tribunal has before it a document (which might contain both facts and arguments) which is calculated to influence the tribunal but which has not been seen by a party who will be affected by the tribunal's determination. If there is a determination that there is no "prima facie case for proceeding in the matter" the taxpayer will be free of any risk that a notice under subsection (3) will be served upon him. The taxpayer might want to make use of resources which he will be retaining to meet any possible liability resulting from a notice. It is conceivable that some fact might be mistakenly set out in a counter-statement

which unless corrected could result in a determination one way rather than another. These considerations lead me to the view that if the tribunal decided in any particular case that it would be fair to allow the taxpayer to see a counter-statement and to comment on it, even though this would involve giving further opportunity to the commissioners of counter-inspection and counter-comment (and of similar processes to such extent as any tribunal could reasonably control), they would not be acting beyond their powers. This, however, still leaves the question whether in this case it should be held that the tribunal acted unfairly. Here it becomes necessary to consider the statutory provisions. The tribunal is a statutory body. There are statutory directions to it. While I have expressed the view that the statutory provisions must not be read as in any way absolving the tribunal from doing at all times what in all the circumstances is fair, even at a stage when no decision finally adverse to the taxpayer is being made, it is, I think, a positive consideration that Parliament has indicated what it is that the tribunal must do and has set out that the tribunal must take into consideration three documents (a) the declaration (b) the certificate and (c) the counter-statement, if there is one. In his statutory declaration the taxpayer, who ought to know all about his affairs, will have been able to set out fully why he considers that section 28 does not apply. If the tribunal follows the course that Parliament has defined and decides not to extend that course I do not think that by reason of that circumstance alone it should be held that they have acted unfairly.

I would dismiss the appeal.

LORD GUEST. My Lords, I have had the advantage of reading the speech of my noble and learned friend Lord Donovan, with which I agree. I have only a few observations of my own to make.

Where a question arises as to whether the principles of natural justice should be followed in any particular case it is important, in my view, that the principles upon which this question is to be decided should be reasonably clear and definite. Inferior tribunals should be in a position to know whether, in any particular case, they were called on to apply the principles of natural justice and to what extent those principles should be followed. It would be unsatisfactory if cases where statutory tribunals had been set up were to be decided ex post facto upon some uncertain basis.

It is reasonably clear on the authorities that where a statutory tribunal has been set up to decide final questions affecting parties' rights and duties, if the statute is silent upon the question, the courts will imply into the statutory provision a rule that the principles of natural justice should be applied. This implication will be made upon the basis that Parliament is not to be presumed to take away parties' rights without giving them an opportunity of being heard in their interest. In other words, Parliament is not to be presumed to act unfairly. The dictum of Byles J. in Cooper v. Wandsworth Board of Works, 14 C.B.N.S. 180, 194 is clear ko this effect and has been followed in many subsequent cases.

Where, however, the matter which the tribunal has to decide is a preliminary point which does not finally decide the rights of parties, then the question arises whether, and, if so, to what extent, the principles of natural

justice should be followed by the tribunal. In the present case it is common ground that the tribunal set up under section 28 of the Finance Act, 1960, is a judicial tribunal. I am not, however, prepared to accede to the extreme arguments advanced on either side of the Bar. For the Revenue it was contended, first, that the terms of section 28 (5) of the Finance Act, 1960, excluded the principles of natural justice and that there was no room for their implication into the subsection; alternatively it was contended that, as a general rule, where a preliminary point was to be decided the court would not imply a term that the rules of natural justice should be applied. In my view, the answer to the first argument is that, to some extent at any rate, this is a judicial tribunal which has to apply the principles of natural justice in that the taxpayers are given an opportunity of stating their case. Upon the second point I can see no reason why, if the principles of natural justice have to be applied to a tribunal entrusted with a final decision, the same should not be true of a tribunal which has to decide a preliminary point which may affect parties' rights. There is, moreover, in my view, no authority for this latter proposition of the Revenue. The case of Cozens v. North Devon Hospital Management Committee [1966] 2 Q.B. 330 which was cited in support of this contention is not a satisfactory decision. The circumstances were special, and it should not, in my view, be followed as a matter of principle.

For the appellant it was contended that in the case where the tribunal was entrusted with the decision of a preliminary point which affected parties' rights the principles of natural justice in their full vigour must be employed. Your Lordships were urged to adopt the dissenting judgment of Salmon L.J. in Cozens.

The true view, in my opinion, is that expressed by Tucker L.J. in Russell v. Duke of Norfolk [1949] 1 All E.R. 109, 118:

"There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case."

In the present case I can see nothing manifestly unfair about the procedure which the statute enjoins to be followed by the tribunal set up under section 28 of the Finance Act, 1960. The provisions in subsection (5) of section 28 contain a safeguard or concession to the taxpayer which entitles him by taking certain preliminary procedure to have the case under section 28 dismissed against him without further ado if the tribunal so determine. If the commissioners serve on the taxpayer a notice that they have reason to believe that section 28 applies to him in respect of transactions specified in the notice, the taxpayer may, if he is of opinion that the section does not apply to him, make a statutory declaration stating the facts and circumstances upon which his opinion is based. This would entitle him to state all the facts within his knowledge and the arguments

for his view that the section did not apply. The commissioners are then given an opportunity, if they so desire, of submitting a counter-statement in which, presumably, they would be able to state any additional facts within their knowledge and their contention as to the reason for the application of the section. The statutory declaration and counter-statement, if any, are then submitted to the tribunal who are to determine whether there is or is not a prima facie case for proceeding further. The complaint of the appellant is that the taxpayer is not given an opportunity either of seeing the counter-statement or of answering it. It is possible, I suppose, that the counter-statement might contain additional facts. It is unlikely that these will not be within the knowledge of the taxpayer. If the appellant was given an opportunity of answering the counter-statement the commissioners would then certainly require an opportunity to reply. There might be a demand for a duply. This would entail further delay in a procedure which was essentially designed to be fairly summary. It is clearly necessary that the Revenue should be given an opportunity of submitting a counter-statement, as if the tribunal decided against them that is the end of the case and they can take the matter no further, whereas, on the other hand, if the tribunal decide that there is a prima facie case under subsection 5 (d) the taxpayer may go to the special commissioners and thereafter if dissatisfied with their decision appeal to be reheard by the tribunal. Having regard to all these factors the section does, in my opinion, give the taxpayer a sufficient opportunity of stating his contentions to the tribunal and there is nothing so unfair about the procedure as to entitle the court to say that the principles of natural justice were not followed.

For these reasons I would dismiss the appeal.

LORD DONOVAN. My Lords, this appeal arises out of the provisions of section 28 of the Finance Act, 1960, which is intended to cancel tax advantages from certain transactions in securities. Where the circumstances defined in the section exist, and a person obtains a tax advantage in consequence of a transaction in securities, or is in a position to do so, then the Commissioners of Inland Revenue may cancel it by an assessment to tax, or by nullifying a right to repayment of tax, or the requiring of the return of a repayment already made, and so on. These consequences are not to follow, however, if the taxpayer shows that the transaction was carried out for bona fide commercial reasons, or in the ordinary course of making or managing investments, and that the obtaining of a tax advantage was not a main object, or one of the main objects, of the transaction. Section 29 of the same Act gives the Commissioners of Inland Revenue power to call for the information they require before setting section 28 in motion.

That is done by a notice served on the taxpayer by those commissioners stating that they have reason to believe that section 28 may apply to him in respect of a transaction or transactions specified in the notice. Such a notice was served on each of the two appellants on February 23, 1967.

This gave each of them the right under section 28 (4) to make a statutory declaration, within thirty days of the issue of the notice, stating the facts and circumstances which, in the opinion of the taxpayer, made

section 28 inapplicable in his or her case, and to send it to the said commissioners. No doubt in most cases the taxpayer will seek to invoke one or other of the exemptions conferred by the section, and will set out in his declaration facts supporting such a claim. Each of the appellants sent such a declaration to the Commissioners of Inland Revenue on March 23, 1967. If the commissioners are satisfied by such a statutory declaration, section 28 ceases to operate in relation to the transaction or transactions in question. But if they are not, and see reason to take further action in the matter, section 28 (5) directs them to send to a tribunal composed of the persons described in subsection (7) a certificate to the effect that they see reason to take further action, the statutory declaration of the taxpayer, and, if the commissioners wish, a counter-statement. This counter-statement is described in subsection 5 (a) as "a counter-statement with reference to the matter." No doubt it will set out facts and arguments supporting the revenue's case. Such a counter-statement was prepared in the present case but because of the proceedings referred to below has not yet been submitted to the tribunal. The first five respondents to this appeal constitute the tribunal.

When the tribunal receives the aforesaid three documents its duty under section 28 (5) (b) is to take them into consideration and determine whether there is or is not a prima facie case for proceeding in the matter. If they determine that there is not, the section ceases to apply to the taxpayer in respect of the specified transaction or transactions. Otherwise the section remains applicable and the commissioners may proceed with their authorised "adjustments" so as to cancel the tax advantage. (See section 28 (3).) Against these there is a right of appeal to the special commissioners, a further right of appeal by way of rehearing by the aforesaid tribunal, and a right of appeal to the High Court by way ot case stated on a point of law (s. 28 (6), (7) and (8)). Where the tribunal finds, on consideration of the three documents mentioned above, that there is a prima facie case for proceeding, they are not obliged under any express provision of the section so to notify either the commissioners or the taxpayer. But they must obviously do so, and this matter is covered by their own rules. Likewise the commissioners are under no express statutory obligation to tell the taxpayer that they intend to submit a counter-statement to the tribunal, but their usual practice is to inform him when this has been done.

In the present case the taxpayers' solicitors were informed of the commissioners' intention to seek a finding from the tribunal as to the existence of a prima facie case for proceeding; and they asked for a copy of any counter-statement which the commissioners intended to send to the tribunal. The commissioners replied that they would send a copy if the tribunal found that there was a prima facie case for proceeding.

The same solicitors then asked the tribunal for a copy of any such counter-statement but this was likewise refused. At this stage the taxpayers' solicitors were also asking for an oral hearing of the issue as to whether there was a prima facie case for proceeding and indicated that their clients would wish to be represented by counsel. They were told by the tribunal that there would be no such hearing.

In these circumstances an originating summons was taken out in the

Chancery Division by the two appellants in June, 1967. The questions it posed were (to summarise the matter) whether in determining questions under section 28 (5) of the Finance Act, 1960, the tribunal was bound to observe the principles of natural justice; whether the taxpayer was entitled to have an opportunity to deal with any counter-statement by the commissioners, and of addressing arguments to the tribunal and adducing evidence. Both the tribunal and the Commissioners of Inland Revenue countered this move by motions to strike out the originating summons on a number of grounds, the chief of which was that it disclosed no reasonable cause of action: and the proceedings were heard by Pennycuick J. in July, 1967. After allowing the originating summons to be amended so as to refer specifically to the two appellants, he decided, as a matter of construction of section 28, first, that they had no right to an oral hearing by the tribunal at this stage and, secondly, no right to a copy of any counter-statement of the commissioners and an opportunity of replying to it. He therefore struck out the originating summons on the ground that it raised no question open to serious argument.

Upon appeal by the two appellants to the Court of Appeal this decision was upheld without counsel for the respondents being called upon. Lord Denning M.R., Diplock and Edmund Davies L.JJ. decided, as I read their judgments:

(1) that where a tribunal is simply called upon to decide whether a prima facie case exists, there is no initial presumption that the rules of natural justice must apply;

(2) that in the present case the language of section 28 in any event precluded any such presumption.

The court therefore upheld the decision of Pennycuick J. that the originating summons disclosed no cause of action and should be struck out. In the Court of Appeal the appellants abandoned their claim to an oral hearing by the tribunal.

Before your Lordships it was agreed that the question to be decided should not be whether the originating summons should have been struck out, but that the substantive issue should be decided, namely, whether the rules of natural justice required that the appellants should see any counter-statement of the Commissioners of Inland Revenue, and be entitled to reply to it, and have their reply taken into consideration by the tribunal. This issue must be decided by considering section 28 and its purpose as a whole.

I start by adopting the words of Lord Tucker in Russell v. Duke of Norfolk [1949] 1 All E.R. 109, which I think are in point. He said, at p. 118:

"There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter which is being dealt with and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used but, whatever standard is adopted, one essential is that the person

concerned should have a reasonable opportunity of presenting his case."

If the Commissioners of Inland Revenue decide to nullify an alleged tax advantage by adjustments made pursuant to section 28 (3) the taxpayer is given ample rights of challenge by the section. He may appeal first to the special commissioners. If dissatisfied by their determination he may require a rehearing before the tribunal. Thence he may go to the High Court by way of case stated on a point of law. These rights fully satisfy the requirements of natural justice once the Commissioners of Inland Revenue have decided to proceed.

The taxpayer is, however, given an additional right, namely, to stop the whole proceedings at the outset if he can satisfy the Board of Referees that there is no prima facie case for proceeding. In the statutory declaration which he is authorised to make for this purpose he would (or should) set out all the facts and circumstances supporting his opinion and there is nothing to prevent him from adding argument as well. The Commissioners of Inland Revenue see this statutory declaration for it has to be sent to them; and only if they still see reason to proceed do they send it to the tribunal together with their certificate to that effect, plus any counter-statement that they desire to make. This the taxpayer does not see before the tribunal makes up its mind whether there is a prima facie case or not.

This certainly looks, at first sight, unfair. But to give the taxpayer the right to see the counter-statement would be useless unless he were also allowed to comment upon it and have his comments taken into consideration by the tribunal together with the other documents already specified by the section. And if this were allowed, then inevitably the Commissioners of Inland Revenue would have to be given an opportunity of considering the taxpayer's comments, and of submitting a further counter-statement to the tribunal. For the decision of the tribunal is conclusive if it is adverse to the commissioners though not so to the taxpayer. The exchanges might not stop even there.

I do not believe that Parliament intended that the additional safeguard given to the taxpayer by this preliminary procedure should develop into something like a round-by-round contest conducted on paper. I think that, by specifying three documents only, it was intended that these three documents only were the ones to be considered by the tribunal at this stage. All the issues would be open, and each side's documents submitted to the tribunal would be available at the subsequent appeal hearings if any took place.

Moreover, any unfairness to the taxpayer in his not seeing the counter-statement before it is considered by the tribunal is, in my view, more apparent than real. In view of the complexity of fiscal legislation, transactions which have a tax advantage in view, whether as a main object or not, have to be planned with considerable care and usually with professional assistance. It is well known to the taxpayer or his advisers what has to be done and when; and if other persons are to play a part, just what they have to do and when; and what tax advantage is expected to accrue, and when. The taxpayer or his adviser will also have a fairly shrewd idea where any weaknesses of the scheme lie in relation to section 28, and, therefore, to what

points any eventual counter-statement of the commissioners is likely to be directed. Accordingly, while it is possible that that counter-statement may introduce new facts outside the taxpayer's knowledge, the cases where this would happen are likely to be much more the exception than the rule.

Moreover, if your Lordships were to hold that natural justice nevertheless required that he should see the commissioners' counter-statement, be allowed to reply to it, and have that reply taken into consideration by the Board of Referees, the decision could not stop there. It would have to deal with such questions as whether any such reply should also be by way of statutory declaration, and within what time limit it had to be lodged. I think the commissioners' right to put in a further counter-statement would also inevitably have to be conceded; and we should have to consider whether the closure was to be applied at that stage or not. All this would go beyond merely inserting into section 28 provisions which Parliament would be presumed to have intended in order to conform to rules of natural justice. It would be equivalent to new legislation and nonetheless so if, as the appellant suggested, these matters could be provided for by the rules of the tribunal itself.

In support of his case, ably presented by the appellants' counsel, he more than once stressed that unless the taxpayer saw the counter-statement and was allowed to reply to it before the tribunal decided whether there was a prima facie case for proceeding, then the taxpayer and his property were being put to a new hazard without his being allowed to reply to the commissioners' case. I doubt if this is the right way to regard the matter. I think the better view is that the taxpayer, having set out, in his statutory declaration, all the facts and grounds upon which he bases his opinion that section 28 does not apply to him, has, if the tribunal nevertheless finds that a prima facie case exists, simply failed to qualify for the special advantage which he sought.

I agree that one cannot dismiss the present appeal simply by saying that proceedings before the tribunal at this stage are merely for the purpose of deciding whether there is a prima facie case and that accordingly the rules of natural justice do not apply. Otherwise it would be permissible for a member of the tribunal to sit even though he had advised the taxpayer in the particular transaction under scrutiny. Nor, on a careful reading of the judgments in the Court of Appeal, do I think that they take any such short cut to a decision. For myself I agree with their conclusion that reading the section as a whole it is clear that Parliament intended the three specified documents to be considered by the tribunal at this preliminary stage, and those three documents alone; and I reach this conclusion bearing in mind the full rights of appeal against subsequent proceedings which the section confers; and also the further considerations which I have mentioned above.

I do not myself think that the previous practice with regard to the somewhat similar procedure regarding surtax introduced in relation to the Board of Referees in the Finance Act, 1927, is of any assistance here. In the Finance Act, 1928, a different procedure was introduced involving the Special Commissioners of Income Tax instead: and, for reasons which are here immaterial, became much more popular with surtax payers. My

recollection is that thereafter the right to go to the Board of Referees under the Act of 1927 was rarely exercised.

Both sides apparently agreed that the proceedings before the tribunal would be judicial. It would make no difference to my view whether they, were or were not. But since this question could easily arise in some other context and require specific decision, I reserve my opinion upon it: and I do so having in mind what was said in the Court of Appeal on a cognate point in Inland Revenue Commissioners v. Sneath [1932] 2 K.B. 362 and Rex v. Income Tax Special Commissioners, Ex parte Elmhirst [1936] 1 K.B. 487.

I would dismiss the appeal with costs.

LORD WILBERFORCE. My Lords, I agree that this appeal should be dismissed, but I would base the decision on rather broader grounds than those stated in the courts below, for I cannot accept that there is a difference in principle, as to the observance of the requirements of natural justice, between final decisions, and those which are not final, for example, decisions that as to some matter there is a prima facie case for taking action. The suggestion that there is some such difference which was sought to be extracted from the decision of the Court of Appeal and from the later case of Parry-Jones v. Law Society [1969] 1 Ch. 1 is one that I cannot accept. Even if there were anything to be said in favour of treating one class of decision in a different manner from the other, this would be of little value, so great is the range of difference between prima facie decisions themselves. At one end, the decision may be merely that of an administrative authority that a prima facie case exists for taking some action or proceedings as to which the person concerned is to be able in due course to state his case; at the other end, a decision that a prima facie case has been made out may have substantive and serious effects as regards the person affected, as by removing from him an otherwise good defence (Cozens v. North Devon Hospital Management Committee [1966] 2 Q.B. 330) or by exposing him to a new hazard, or as when he is prevented, however temporarily, from taking action which he wishes to take. In the present case, the decision of the tribunal may have the effect of denying the taxpayer the opportunity of eliminating, in limine, a claim which may otherwise have to be fought expensively through a chain of courts.

I am not, therefore, satisfied with an approach which merely takes the relevant statutory provision (Finance Act, 1960, section 28 (4)), subjects it to a literal analysis and cuts straight through to the conclusion that Parliament has laid down a fixed procedure which only has to be literally followed to be immune from attack. It is necessary to look at the procedure in its setting and ask the question whether it operates unfairly to the taxpayer to a point where the courts must supply the legislative omission. I echo the well-known language of Byles J. in Copper v. Wandsworth Board of Works, 14 C.B.N.S. 180, 194. I need not restate the numerous authorities in which the general principle has been affirmed. The strength and pervasiveness of them has been asserted and reasserted by decisions, English, Australian, Canadian and South African, which were cited at the bar. I confine myself to three points particularly emphasised in the present case.

First. it is clear that the question, how far the general principle is to be

carried is a relative one. A striking example of this is In re K. (Infants) [1965] A.C. 201, where this House had to decide whether, in infancy proceedings, confidential reports obtained by the guardian ad litem ought to be disclosed to the parties. Lord Hodson pointed out, in language very apposite here, at p. 234, the force of the argument that it is contrary to natural justice that the contentions of a party in a judicial proceeding may be overruled by considerations in the judicial mind which the party has no opportunity of criticising or controverting and that the undisclosed evidence may, if subjected to criticism, prove to be misconceived or based on false premises. But as Lord Evershed said, at p. 217, it was not enough to say that the proceeding was a judicial proceeding. It was necessary to define or to have in mind what was the true character of the judicial proceeding and what was its end or purpose. Each of these considerations is relevant in this appeal.

Secondly, the legislature may certainly exclude or limit the application of the general rules. But it has always been insisted that this must be done, clearly and expressly:

"Such an intention is not to be assumed nor is it to be spelled out from indirect references, uncertain inferences or equivocal considerations. The intention must satisfactorily appear from express words of plain intendment"

(Commissioner of Police v. Tanos (1958) 98 C.L.R. 383, 396, per Dixon C.J. and Webb J.)

"Il ne faudrait rien moins qu'une dŽclaration expresse du lŽgislateur pour mettre de c™tŽ cette exigence qui s'applique ˆ tous les tribunaux et ˆ tous les corps appelŽs ˆ rendre une dŽcision qui aurait pour effet d'annuler un droit possŽdŽ par un individu"

(Alliance des Professeurs Catholiques de Montreal v. Labour Relations Board [1953] 2 S.C.R. 140, 154, per Rinfret C.J.); and see Reg. v. Ngwevela, 1954 (1) S.A. 123, 131 (A.D.), per Centlivres C.J. and Rex v. Tribunal of Appeal under the Housing Act, 1919, cited below. I do not find anything in the context of section 28 of the Finance Act, 1965, which by implication or contrast limits or excludes the general rule.

Thirdly, it is true, as the judgments in the Court of Appeal point out, that ex parte applications are frequently made to the courts and granted without hearing the party affected: but merely to say this overlooks that procedure invariably exists, and is where necessary invoked, for enabling the party affected rapidly to seek annulment or amendment of the order made against him. The decision on which the respondents mainly relied, In re Hammersmith Rent-Charge (1849) 4 Ex. 87, so far from supporting an argument that orders, of an interim kind, may normally be made ex parte, shows to me the contrary, since all the learned judges, though differing in their ultimate conclusions, proceeded on the basis that ex parte procedure was only tolerable if, in one way or the other, the party affected had a way open to him to have any order set aside. On this point there are two other decisions of relevance. On the side of the respondents, Cozen's case [1966] 2 Q.B. 330 was invoked to show that an order, vitally affecting a party's interest, may be made ex parte if the relevant Act of

Parliament so requires. I must say that I find great force in the dissenting judgment of Salmon L.J. but whether that judgment is to be preferred or not as to cases arising under the Limitation Act, 1963 - a matter which must be left open - I cannot find in the majority decision on that unsatisfactory statute a principle to be extended to such a case as the present.

The appellants' strongest case was Rex v. Housing Appeal Tribunal [1920] 3 K.B. 334 under the Housing (Additional Powers) Act, 1919. There, in the face of a rule which explicitly entitled the tribunal to dispense with a hearing, it was held by the King's Bench Divisional Court that this only entitled them to dispense with an oral hearing and that they must give the appellants an opportunity of making out their case. This certainly illustrates the strength of the underlying principles of natural justice but the particular requirement which the court held to follow from them must be related to the fact that the tribunal was a tribunal of appeal whose decisions finally affected substantive rights. In neither respect is it strictly comparable to the present case.

It is against this background that the Finance Act, 1960, s. 28, must be considered.

As appears from its face, and also from such cases under it as have reached the courts, it is a section of considerable severity. It places in the hands of the Commissioners of Inland Revenue a means, which they arc under a duty to use, to take action against any taxpayer who is in a position to obtain or has obtained a tax advantage. So pervasive is the present tax system that, in the world of commerce or investment, only the na•ve or the incompetent would make decisions without regard to tax considerations, yet, on the face of the section, every such decision is exposed to attack, or at least may require justification.

No doubt because of this it was thought fit to interpose between the taxpayer and the commissioners a specialised body - the tribunal - composed of a learned chairman and laymen of a wide range of experience, with power to determine, conclusively as against the revenue, whether a prima facie case for proceeding exists. I think their proceedings (under sub. (5)), which involve considerable responsibility, are judicial in character. Moreover, I do not accept the argument of the revenue that as this procedure represents an "uncovenanted benefit" or a kind of bonus to the taxpayer, he must gratefully take it as he finds it in all its nudity from the section. Whether the benefit represents generosity or bare justice, he is entitled, if offered a proceeding of a judicial character, to insist that its judicial character should be a reality, that the procedure should be fair.

The procedure laid down is as follows: first, the commissioners must notify the taxpayer that they have reason to believe that the section may apply to him in respect of a transaction or transactions. These must be specified in the notification, but no doubt this may be done in very general terms - in the present case we find a reference to "all other transactions of whatever description relating thereto." Then the taxpayer may make a statutory declaration stating the facts and circumstances on which he bases his opinion that the section does not apply and sends this to the commissioners. It is then for the commissioners to decide whether they wish to proceed, and if so they send to the tribunal a certificate to that effect

with the statutory declaration and, if they wish, a counter-statement. This may contain fresh facts, or arguments of law, or both.

The question to be answered, in my opinion, is this: is it fair that the tribunal should decide on this material: or, in the interests of natural justice, or fairness, ought there to be read in a requirement either to allow the taxpayer an opportunity to see and answer the counter-statement, or, perhaps to allow him some kind of hearing? Thus, this is not a case where the court has to supply the requirement audi alteram partem. The requirement is, up to a point, already and expressly there. The question is, whether it is so imperfectly or inadequately imposed that the court should extend it. I do not find this easy to decide.

On the taxpayer's side, there is the natural aversion against allowing a decision to be made on the basis of material he has not seen: and he can meet the objection that to allow him to see the counter-statement and comment on it invites an infinite process of contestation with the argument that in practice this will not result, since it will be exceptional that, after a counter-statement has gone in, the taxpayer can show there is no prima facie case. On the side of the commissioners it can be said that the taxpayer already has the essentials of justice in his right to put in a statutory declaration. In the normal case in which the section is likely to be invoked, the taxpayer will know quite well what are the relevant circumstances, will be aware of the case against him, and will know as much as, probably more than, the commissioners themselves. A case where he is unable to convince the tribunal that there is no prima facie case for proceeding on the strength of his statutory declaration is in the nature of things one which will have to be decided.

My Lords, not without some hesitation, and although cases can be imagined in which the taxpayer may be at some disadvantage, still upon a broad view of the matter, and taking the normal case, I have come to the conclusion that the revenue's contention ought to be accepted. The system, intended to be fair, might be or might be made to appear fairer still, but the roughness in justice does not, in my view, reach the point where the courts ought to intervene. I consider, therefore, that the tribunal is entitled to make its determination on the documents specified. But I would add two qualifications. The first is, that if the matter proceeds, the taxpayer should be entitled to see the counter-statement: certainly he should if an appeal goes to the tribunal under subsection (6), since it would be wrong that as an appeal body they should be in possession of a document which one side has not seen and I think the same should be done if the case goes to the special commissioners.

Secondly, in my opinion, a residual duty of fairness rests with the tribunal. I would, therefore, think them empowered, if in any case where they are exercising their function under subsection (5) they consider exceptionally that material has been introduced of such a character that to decide upon it ex parte would be unfair, to take appropriate steps to eliminate that unfairness.

I do not think that rules need be formulated or procedures laid down. The tribunal can deal with these exceptional cases as they think best and I have no doubt that they will have in mind that justice to the revenue

requires that, since a decision one way is conclusive, the Revenue ought to have the last word.

In reaching the above conclusion I have not been influenced by the procedure said to have been followed over many years by the Board of Referees established with a similar jurisdiction under similar statutory language. There may have been good reasons why taxpayers never insisted on a right to a hearing before this board, or to see the revenue's statement, in connection with the surtax assessments to which the board's jurisdiction related - in fact, for reasons into which I need not enter, the whole procedure of recourse to the board was little used. I cannot find in the fact that Parliament has taken over for use in quite a different context the procedure and language used in setting up the board any warrant for supposing that Parliament has given its endorsement or approval to any pre-existing practice. The manner in which, in a contested matter, the section is to be applied is entirely open in the courts. I should add that the particular procedure by which this case reached the High Court and ultimately this House has not been the subject of argument, both sides having been content that the substantive question, as to the scope of section 28, should be decided.

I would dismiss the appeal.

Solicitors: Beer & Co.; Treasury Solicitor; Solicitor of Inland Revenue.

J. A. G.