Shell-Mex and B P Ltd Ltd v Clayton (Valuation Officer) and Anor
[1956] 3 All ER 185(Judgment by: Lord Morton of Henryton)
Between: Shell-Mex and B P Ltd Ltd
And: Clayton (Valuation Officer) and Anor
Judges:
Viscount Simonds
Lord Oaksey
Lord Morton of HenrytonLord Tucker
Lord Keith of Avonholm
Subject References:
LOCAL GOVERNMENT
RATES
De-rating
Freight-transport hereditament
Installations for unshipping and storing oil
Ratepayer selling agent for oil companies
Use of hereditament for dock purposes
Occupation and use of hereditament as part of a dock undertaking
Oil 'intended for the use of' the ratepayer
Legislative References:
Rating and Valuation (Apportionment) Act 1928 - (18 & 19 Geo 5 c 44), s 5(1) (c), (3), s 6(3)(b)
Case References:
Clyde Navigation Trustees v Inland Revenue, Inland Revenue v Kirkwall Assessor - [1930] SC 454; Digest Supp
Clyde Navigation Trustees v Glasgow Assessor - [1931] SC 400; Digest Supp
Judgment date: 25 July 1956
Judgment by:
Lord Morton of Henryton
My Lords, the appellants claim that certain land, fully described in the Case Stated by the Lands Tribunal, is a "freight-transport hereditament" within the meaning of the Rating and Valuation (Apportionment) Act 1928. To succeed in this claim the appellants must satisfy your Lordships that this land is (to quote s 5(1)(c) of the Act):
"A hereditament occupied and used wholly or partly for dock purposes as part of a dock undertaking being an undertaking whereof a substantial proportion of the volume of business is concerned with the shipping and unshipping of merchandise not belonging to or intended for the use of the undertakers."
It will be seen that the burden lies on the appellants to show that the land satisfies three conditions, namely: (i) that it is occupied and used wholly or partly for dock purposes; (ii) that it is so occupied and used as part of a dock undertaking; and (iii) that such dock undertaking is one whereof a substantial proportion of the volume of business is concerned with the shipping and unshipping of merchandise not belonging to or intended for the use of the undertakers.
In the Court of Appeal, counsel for the respondents contended that no one of these three conditions was satisfied, but in this House they conceded, for the purposes of the present appeal, that the first condition was satisfied, since the land was occupied and used "partly for dock purposes". I turn, therefore, to the question whether it is so used "as part of a dock undertaking". Counsel for the appellants put their argument under this head in two alternative ways. First they submit that the land is occupied and used as part of the "dock undertaking" of the Port of Hull, carried on by the British Transport Commission. Alternatively, they submit that the appellants' own undertaking is a "dock undertaking" and the land is occupied and used as part of it.
My Lords, I cannot accept the first of these submissions. There can be no doubt that the undertaking carried on by the British Transport Commission at Hull is a "dock undertaking", as defined by s 5(3) of the Act of 1928. Nor can it be doubted that that undertaking satisfies condition (iii) already stated. But a statement of these facts supplies no answer to the relevant question: Is the land in question occupied and used as part of the undertaking of the British Transport Commission? To my mind it is not so used or occupied. It is used and occupied as part of the wholly separate undertaking of the appellants. As the Court of Appeal put it ([1955] 3 All ER at p 114), the land is
"... in lease to and exclusively occupied by the ratepayer for the purposes of its own business of importing and distributing oil and thus excluded and segregated from the British Transport Commission's dock undertaking."
That court later observed, in regard to an argument by leading counsel for the appellants (ibid, at p 115):
"Counsel for the ratepayer relies strongly on the terms of the leases under which the various parts of the hereditaments are held by the ratepayer. He says these leases show that the ground was let with a view to the erection and operation thereon of a terminal oil depot for the unshipping, storage and distribution of oil, in connection with which the lessee were to have unshipping facilities in the shape of the pipes running out along the jetties. There was thus, he argues, something in the nature of an arrangement between the dock undertakers and the lessees under which the lessees were to extend the activities of the dock undertaking to the importation of oil. Therefore, says counsel ... the installation should be regarded as constructed and operated as part of the dock undertaking. We cannot accept this argument. We would be disposed to agree with counsel if what the ratepayer did was to provide unshipping and storage facilities for anyone having occasion to import oil; but the ratepayer does nothing of the sort. It uses the hereditament and the pipe lines on the jetties simply and solely for the purposes of its own individual business, and not by way of performing the functions properly within the province of the dock undertakers as such ... we find it impossible to hold that, in occupying and using the hereditament for its own private purposes, the ratepayer is occupying and using the hereditament as part of the dock undertaking carried on by the British Transport Commission. To hold the contrary would involve the conclusion that the tenants of every industrial site let by the commission in the vicinity of the Port of Hull would be occupying and using their respective sites as part of the commisson's dock undertaking if their leases or tenancy agreements allowed them the use for their own private purposes of the dock facilities provided by the commission."
My Lords, I agree entirely with this reasoning and I also agree with the reasoning which led the Court of Appeal to reject the appellants' alternative submission under this head, which I have already stated.
The result is, in my view, that the appellants have failed to satisfy the second condition laid down in s 5(1)(c) of the Act of 1928. If I am right so far, the appellants' claim fails, and the question whether the third condition is satisfied does not arise, but I shall express my views on this question, as the Court of Appeal answered it "no", and I do not agree with that answer.
In my view, almost all the oil which is unshipped by the appellants and distributed by them is "merchandise not belonging to or intended for the use of" the appellants, within the meaning of s 5(1)(c). The only exception is the oil which the appellants retain for their own use, and this is a trifling part of the whole. I think that the sub-section is directed to the case of merchandise in the hands of agents for sale, such as the appellants, or forwarding agents, as contrasted with merchandise which has reached the end of its journey when it is unshipped, either by reaching the hands of an absolute owner, or by delivery to a person who intends to put it to the use for which it was manufactured. As appears from the Case Stated, the whole, or substantially the whole, of the oil unshipped at the jetties is oil consigned by three companies to the appellants as their sole agent for the sale and distribution of oil for consumption in the United Kingdom, under an agreement made between these three consigning companies of the one part and the appellants of the other part, and dated 31 December 1931. Substantially the whole of the appellants' business consists of the sale and distribution of this oil, and they are remunerated for their services by the three consigning companies on a commission basis. The appellants are given wide powers under the agreement in regard to prices, terms and conditions of sale and so forth.
These being the facts, does the oil which the appellants unship and pass on to purchasers "belong to" the appellants, within the meaning of s 5(1)(c), while it is in the appellants' possession? My Lords, I think not. It is true that the appellants have some of the rights of an owner while the oil is in their possession, but in other material respects their position differs from that of owner. For instance (a) the appellants are under a duty to the consigning companies to endeavour to sell the oil; (b) the appellants are not bound to pay for oil which they unship but fail to sell; (c) the agreement with the consigning companies is terminable on notice, and any oil which is in the tanks when the agreement is terminated belongs to the consigning companies-see cl 19 of the agreement of 31 December 1931 set out in the Case Stated; (d) if the oil in tanks had been requisitioned when war broke out, the compensation money would have been payable to the consigning companies and not to the appellants. Having regard to these facts, and to the general intention of s 5 of the Act of 1928, read as a whole, I am of opinion that, of all the oil unshipped by the appellants, only the small quantity which the appellants keep and consume "belongs to" them, within the meaning of s 5(1)(c). The rest of the oil "belongs to" the consigning companies.
Is the oil "intended for the use of" the appellants, within the meaning of s 5(1)(c)? Again, my Lords, I would answer "No". Here again I rely on the general intention of s 5, as I read it, and also on the ordinary meaning of the word "use", in the case of merchandise, such as oil, which is consumed by being used; that is, to put it to the use for which it was manufactured or otherwise brought into being. If a visitor to the storage tanks on the land in question were to ask one of the appellants' officials: "Is this oil intended for the use of the company?", I feel confident that the answer would be: "Oh no, we can only use a very small part of it. All the rest is intended for sale by the company." And, in my opinion, that would be a natural and correct use of words by the official.
The result is that, in my opinion, the land in question satisfies the third of the three conditions laid down by s 5(1)(c) of the Act of 1928; but I would dismiss the appeal because, and only because, the appellants have not shown that the land in question satisfies the second of these three conditions.