Edwards (Inspector of Taxes) v Bairstow: HL 25 Jul 1955

The House was asked whether a particular transaction was ‘an adventure in the nature of trade’.
Held: Although the House accepted that this was ‘an inference of fact’, on the primary facts as found by the Commissioners ‘the true and only reasonable conclusion’ contradicted that decision.
The House set out principles for establishing that decisions of a commissioner were ones of law, and were reviewable by an appellate court. Whether facts as found or admitted fall on one side or the other of some conceptual line drawn by the law is a question of fact.
Lord Radcliffe said that ‘Perversity’ in a decision means that ‘the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination.’
Viscount Simonds said: ‘For it is universally conceded that, although it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarized by saying that the court should take that course if it appears that the commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained.’
Lord Radcliffe criticised the tendency of courts to treat questions as ‘pure questions of fact’, so as to exclude review: ‘As I see it, the reason why the courts do not interfere with the Commissioners’ findings or determinations when they really do involve nothing but questions of fact is not any supposed advantage in the Commissioners of greater experience in the matters of business or any other matters. The reason is simply that by the system that has been set up the Commissioners are the first tribunal to try an appeal, and in the interest of the efficient administration of justice their decisions can only be upset on appeal if they have been positively wrong in law. The Court is not a second opinion where there is a reasonable ground for the first. But there is no reason to make a mystery about the subjects that Commissioners deal with or to invite the courts to impose any exceptional restraint on themselves because they are dealing with cases that arise out of facts found by the Commissioners. Their duty is no more than to examine those facts with a decent respect for the tribunal appealed from and if they think that the only reasonable conclusion on the facts found is inconsistent with the determination come to, to say so without more ado.’ and ‘I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent with and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test. For my part, I prefer the last of the three …’ As to the commissioners findings of fact: ‘Their duty is no more than to examine those facts with a decent respect for the tribunal appealed from and if they think that the only reasonable conclusion on the facts found is inconsistent with the determination come to, to say so without more ado.’
HL Income Tax, Schedule D-Purchase and sale of cotton spinning plant – Isolated transaction – Whether adventure in nature of trade.

Lord Radcliffe, Viscount Simonds
[1956] AC 14, [1955] 3 All ER 48, [1955] 36 Tax Cas 207, [1955] UKHL 3, [1955] UKHL TC – 36 – 207, 36 TC 207
Bailii, Bailii
England and Wales
Cited by:
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Taxes Management, Judicial Review, Litigation Practice, Income Tax

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Updated: 31 October 2021; Ref: scu.181055