Barry v Hughes (Inspector of Taxes)

[1973] 1 All ER 537

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(Judgment by: Pennycuick V-C)

Between: Barry
And: Hughes (Inspector of Taxes)

Court:

Judge:
Pennycuick V-C

Subject References:
Income tax
Relief
Children
Child over the age of 16 receiving full-time instruction
Instruction at any university, college, school or other educational establishement
Other educational establishment
Meaning of education
Training of mind in contradistinction to training in manual skills
Taxpayer's son attending a training unit for the mentally subnormal
Training predominantly in factory work
Academic training every day or every alternate day
Whether unit educational establishment

Legislative References:
Income and Corporation Taxes Act 1970 - s 10(2)

Case References:
Heaslip v Hasemer - (1927) 13 Tax Cas 212; 138 LT 207; 28(1) Digest (Reissue) 448, 1602

Judgment date: 1 December 1972

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Judgment by:
Pennycuick V-C

I have before me an appeal by Mr Leonard Thomas Barry ('the taxpayer') against a decision of the General Commissioners of Income Tax for the Division of West Brixton. The appeal relates to a claim for child relief made by the taxpayer in respect of his son Michael for the year ended 5 April 1970. Very summarily, Michael was rather educationally backward, and after attaining the age of 15 he spent two years as a day boy at the Sherwood Intensive Training Unit, which is a training unit run by the Manor Hospital Management Committee. The question before me today is whether that unit represents a 'school or other educational establishment' for the purpose of s 10 of the Income and Corporation Taxes Act 1970. Before proceeding further, I will read the relevant provisions of that section:

'(1)

If the claimant proves-

(a)

that there is living at any time within the year of assessment a child of his with respect to whom one of the conditions in subsection (2) below is fulfilled ... he shall, subject to the provisions of this section and section II below, be entitled in respect of each such child to a deduction from the amount of income tax with which he is chargeable equal to income tax at the standard rate on the appropriate amount for the child ...

'(2)

The conditions referred to in subsection (1) above are ...

(b)

that the child is over the age of sixteen years at the commencement of that year of assessment, but is receiving full-time instruction at any university, college, school or other educational establishment.'

Subsection (3) sets out the appropriate amount.

'(4)

The reference in subsection (2)(b) above to a child receiving full-time instruction at an educational establishment shall include a reference to a child undergoing training by any person (hereinafter referred to as "the employer") for any trade, profession or vocation in such circumstances that the child is required to devote the whole of his time to the training for a period of not less than two years ...

'(6)

If any question arises as to whether any person is entitled to relief under this section in respect of a child who is over the age of sixteen years, as being a child who is receiving full-time instruction at an educational establishment, the Board may consult the Secretary of State for Education and Science ....'

The case has had rather a lengthy course. The taxpayer's appeal first came before the General Commissioners in December 1970, and they stated a case. Then, the taxpayer's appeal on that case stated came before Megarry J on 2 December 1971, and Megarry J, for reasons which will become apparent, remitted the case to the General Commissioners. The same General Commissioners then reheard the appeal, and they stated a supplemental case as a result of that rehearing. The taxpayer's appeal is now once again before the court on that supplemental case stated.

I shall first read the original case stated. Paragraph 1 states the hearing of the appeal. Paragraphs 2-7:

'2.

The question for our decision was whether the child [that is Michael] was receiving full time instruction at any University, College, School or other educational establishment within Section 10(2)(b) Income and Corporation Taxes Act 1970.

'3.

Oral evidence was given before us by the [taxpayer] and by the Respondent Inspector of Taxes. Also a letter from Mr. A. R. Worters M.B., D.P.M., Physician Superintendent of The Manor Hospital, Epsom, Surrey, dated 8 September 1970 with an accompanying timetable as from 5th February 1970 was produced. [I shall refer to that in a moment.] ...

'4.

The following facts were admitted or proved before us:-

(a)

The [taxpayer] received Dependent Relative Relief of £75 in respect of the Child in the year of Assessment 1969/1970.

(b)

Following Medical examination it had been determined that the Child was educationally sub-normal.

(c)

The Child attended Sherwood Intensive Training Unit (hereinafter called "Sherwood") a training unit run by The Manor Hospital Management Committee as a day patient.

(d)

"Sherwood" functioned as a mixed residential intensive training unit for adolescent, and young adult, relatively high grade sub-normal patients.

(e)

Although it was situated apart from the main hospital, it constituted part of The Manor Hospital Group and was, therefore, a National Health Service Establishment.

(f)

"Sherwood" was not recognised as an educational establishment.

(g)

"Sherwood" held no examinations and there was no academic training. [I interpose that that last finding requires qualification, in that it is now accepted that there was academic training in history, geography and arithmetic for one hour every day or every other day.]

(h)

At Sherwood the emphasis was on factory work at which the child earned about £1 per week.

(i)

The Child was born on the 28th January 1952, and was therefore over 16 years of age at the commencement of the year assessment.

'5.

The [taxpayer] contended:-

(a)

The instruction given was full time education at Sherwood Intensive Training Unit at the Manor Hospital, Epsom, Surrey.

(b)

"The Child" attended as a daytime pupil as he had failed his 11 plus.

(c)

"The Child" was not resident at "Sherwood".

(d)

"The Child" earned £1 weekly pocket money from the special centre.

(e)

That he was entitled to the Child Allowance for his Son under Section 10(2) [of the 1970 Act.]

'6.

The Respondent Inspector of Taxes contended:-

(a)

That the Child was not receiving full time education at a University, College, School or other educational establishment.

(b)

"Sherwood" School at the Manor Hospital was not a recognised educational establishment.

(c)

"Sherwood" was a part of a therapeutic centre for the treatment of mentally handicapped or sub-normal young people and was not ejusdem generis with a University, college, school or other educational establishment.

(d)

"Sherwood" was a vocational centre. The object of the training was to try to remedy the mental deficiencies of the person concerned.

(e)

Such "education" as there was, was remedial and in no sense full time.

(f)

Under the terms of Section 10(2) [of the 1970 Act] "the Child" failed to qualify for Child Relief.

'7.

We, the Commissioners who heard the Claim having considered all the arguments, gave the following decision:-

Under Section 10 [of the 1970 Act] The Claim for Child Allowance fails because

(a)

The education was not full time.

(b)

Sherwood is not a recognised educational establishment, College, University or School.'

And there was a formal declaration of dissatisfaction.

I should refer next to the letter from Mr Worters, which is referred to in that case. It is dated 8 September 1970 and runs as follows:

'Thank you for your enquiry of the 27th August. "Sherwood" functions as a mixed, residential, intensive Training Unit for adolescent/young adult, relatively high-grade subnormal and, in the minority of instances, psychopathic patients. Although it is situated apart from our main hospital, it does constitute part of The Manor Hospital group; therefore it is a National Health Service Establishment. So far as training is concerned, the emphasis during the working week is on factory work-being machine production of chain-link fencing and brushes, printing, and the assembly of electronic components on a sub-contract basis, the patients' ages ranging between 15 and 30. We attempt to develop all aspects of our patients' personalities, concentrating on facets which are known to be relevant in a particular patient's social incompetence. Thus, in addition to the factory training already mentioned, those patients in need receive daily remedial tuition on a one-teacher-to-one-patient basis-say, for 30-40 minute sessions and, as you will see from the provisional time-table enclosed, all patients also receive tuition in basic cookery and pottery. There is no fixed criteria so far as the maximum age to which patients may continue to receive remedial tuition and the additional subjects shown. It is widely known that the subnormal can continue to make excellent progress educationally well after the age when most children have left school. We therefore tend to ignore a patient's age, and plan his or her training programme almost entirely on his existing level, and inherent ability to profit from further tuition. It may well be observed that the "education" we give is in no sense full-time. However, our patients are often so disturbed during the early part of their stay with us that they are only able to benefit from tuition given on the basis described. In fact, many of the patients concerned have previously attended a Special School for the educationally subnormal, and have made relatively little academic progress when taught within a full-time class setting.'

Then, the time-table shows the daily routine at Sherwood. It starts with the hour at which patients living at Sherwood are called, and so forth. Michael's routine begins with 'Clock on-8.30'. I will not go through the time-table in detail, but basically the items in it are 'Factory Training Unit' repeatedly; 'P.E.', which I take it means physical exercises, on every day; 'Cookery' on certain days; and on every day but one a period of 'Remedial Tuition,'

When the case came before Megarry J he very properly took the point that the two grounds for the decision given by the commissioners contained two plain errors; first, the question posed by the statute is not one of 'full-time education' but one of 'full-time instruction'; and, secondly, the statute refers to 'any university, college, school or other educational establishment', and the word 'recognised', which appears in the commissioners' decision, is no part of the statutory language. He accordingly remitted the case to the commissioners for further hearing.

Before the further hearing, the commissioners, as they were entitled to do under s 10(6) of the 1970 Act, consulted the Permanent Secretary of the Department of Education and Science. I shall not read the letter written on behalf of the commissioners, but perhaps I should point out that it omits to mention the one hour's teaching, daily or on alternate days, of history, geography and arithmetic. The answer, which is dated 23 February 1972, is as follows:

'In reply to Mr Robertson's letter of February 10, I am directed by the Secretary of State to say that she has given careful consideration to all the information about the Sherwood Intensive Training Unit contained in the letter and in the provisional timetable for the Unit which was enclosed. She does not regard the training provided in this institution as constituting education in the sense with which she is concerned in the exercise of her functions as the Minister responsible for the promotion of education in England and Wales. The provisions of the Education (Handicapped Children) Act 1970 for the transfer of staff and property were ancillary to provisions relating to the education and training of children of compulsory school age. The Order made under the Act (The Education of Handicapped Children (Transfer of Staff and Property) Order 1971) ^[F2] applied only in relation to institutions for training children classified under section 57 of the Education Act 1944 as unsuitable for education at school, that is to say, children not over the upper limit of compulsory school age. Neither the Act nor the Order had any application to this institution and it has not been recognised by the Secretary of State as a special school within the meaning of section 9(5) of the Education Act 1944. It is understood that the Unit is provided by the South West Metropolitan Regional Hospital Board.'

I must pay due attention to that letter as representing a statement by the Minister of the place of Sherwood in the educational scene of things, but, it is not in dispute that the conclusion whether the condition referred to in s 10(2)(b) is or is not fulfilled rests with the court.

After their second hearing, the General Commissioners stated a supplemental case as follows.

'2.

The [taxpayer] gave evidence which we accepted that:-

(a)

Up to the age of 11 years, his Son Michael (hereinafter called "the Child") the subject of the Claim for child allowance, had attended an ordinary primary school but was found to be unsuitable to take the "11-plus" examination.

(b)

The Child was subsequently sent to the lowest stream in a secondary modern school where he became bewildered, confused and reluctant to attend.

(c)

As a result, the [taxpayer] succeeded in getting the Child to a remedial school, Chartfield. It was not so rough there but the Child still did not learn much and there was pressure from that School to get the Child to leave when he reached the age of 16 years.

(d)

The [taxpayer] came to the conclusion that the Child was not then capable of earning his own living and with the assistance of a doctor and a psychiatrist he succeeded in getting the Child into "Sherwood" which the Child attended daily from April 1969 to April 1971.

(e)

"Sherwood" was a new venture set up originally to provide some occupation for children roaming the wards at the Manor Hospital proper, but "Sherwood" did accept a few others who attended daily among whom were the Child.

(f)

"Sherwood" stood on its own a short way from the main hospital but probably in the hospital grounds. The "Sherwood" residents lived above the main workshop and diningroom and together with those who attended daily never came into contact with the hospital patients. There were about 30-40 patients in the workshop.

(g)

The Child left home at 7.30. a.m. and returned home at 5.30. p.m. on a five day week throughout his 2 year stay at Sherwood. The [taxpayer] could have taken the Child away at any time but it was arranged that he would stay at "Sherwood" until he was fit to work. It was originally thought that this would take longer than two years.

(h)

There was at "Sherwood" one qualified teacher paid on the Burnham scale. The Child was taught history, geography and arithmetic for an hour a day, or an hour every other day. The rest of the time was spent on "factory" work. The Child was engaged successively on the printing machine, for which he made up print; on the chain link fence machine; in operating the fly press producing chassis for electronic components and soldering fitting and wiring up electronic components to specification. The Child was, to-day engaged in similar work that is the assembly of electronic components. Instruction in the "factory work" was carried out by two full-time male instructors in the workshop.

(i)

The Child was paid "pocket money" of £1. per week, as were the Sherwood residents but only so as to make no distinction between the Child and residents. The hospital received payment for the items produced in the workshop.

(j)

The Child never received any medical treatment at "Sherwood".

'3.

Mr. M. A. Walker, Assistant Secretary of the Department of Education and Science gave evidence, which we accepted pursuant to Section 10(6) [of the 1970 Act.] Mr. Walker produced a copy of a letter dated 10th February 1972 ... and his reply [I have already referred to those.] Mr. Walker then expanded the opinion contained in his letter as follows:-Education was not defined by the statutes but was considered to be wider than purely academic subjects. He said that a helpful definition of training (as contrasted with education) produced in the Department was "the systematic development of the attitude/knowledge/skill pattern required by an individual in order to perform adequately a given task or job". Further education was a mixture of education and training and in order to decide whether a particular course was "education" or "training", the particular course had to be analysed. He illustrated this by reference to a secretarial course which in addition to instruction in typing, gave lessons in spelling and use of English-this would be regarded as educational, whereas courses consisting of typing practice alone would be regarded as training. In the Department's "Special schools", education was very broad-such as would help develop powers and capabilities beyond intellectual ability to enable the subject to take a place in society. Often this might mean no more than nursery education.

However this did not include training in a repetitive process. The factory training at "Sherwood" would not be included in the Department's "Special schools". He thought there was not a lot of tuition at "Sherwood". The emphasis was on training rather than education. He did not consider that "Sherwood" was an educational establishment although some people got more tuition than others. There was some training at technical colleges but it was the overall character of the college syllabus which decided whether it was an educational establishment or not. In a technical college education would predominate although some individual students might only be engaged in training. He did not consider that the instruction in electronics which took place at Sherwood was educational. So far as he was concerned some of it could be regarded as training within Section 10(4) [of the 1970 Act].

'4.

The [taxpayer] contended that there was full-time instruction. While he agreed that "Sherwood" was not a university or college he contended that it was a school or of the same nature as a school; that it came within the term "other educational establishment". He maintained that there could be no denying that "Sherwood" was an "Establishment" and one had to look at the purpose of that Establishment and the sole purpose of the establishment at "Sherwood" was to educate. The [taxpayer] maintained that Michael had learned more in 2 years at "Sherwood" than he did in the previous schools. Education meant developing and drawing out such mental capabilities and skills as the student might have. He, Michael, had been educated to a point where he could now work for his living. He had been educated and trained at "Sherwood" for 2 years-on a full time basis.

'5.

For the Respondent, H.M. Inspector of Taxes it was contended that:

(i)

there were three questions involved in the construction of Section 10(2)(b) [of the 1970 Act], namely:-

(a)

Was there instruction?

(b)

Was the instruction full time?

(c)

Was the instruction received at a University, College, School or other educational establishment?

(ii)

for the purpose of the present case it was not proposed to make any distinction between "instruction" in respect of the "remedial tuition" and any "instruction" in the "factory work".

(iii)

As a result of the [taxpayer's] evidence, it was accepted that there was "instruction" and that this instruction was "full time".

(iv)

On the third point as to whether "Sherwood" was within the term "university college school or other educational establishment"

(a)

Sherwood was not a "university college or school".

(b)

The words "other educational establishment" had to be construed ejusdem generis with "university college or school" and "Sherwood" was not an "other educational establishment" on this basis.

(c)

A "university college school or other educational establishment" meant an establishment set up to provide education in the sense that the Department of Education and Science understood it.

'6.

The Case of Heaslip v Hasemer was cited to us.

'7.

We the Commissioners who heard the Claim originally as well as the supplementary evidence and having considered all the arguments, gave the following decision. On remission we find that, notwithstanding that Michael was receiving full time instruction, the claim under Section 10(2)(b) [of the 1970 Act] the Child allowance must fail as "Sherwood" was not a University, College, School or other educational establishment within that Section.'

It will be observed that before the commissioners the Crown abandoned the claim based on 'instruction' or 'full-time instruction' and confined its case to the contention that Sherwood was not within the term 'university, college, school or other educational establishment,'

On the present appeal the taxpayer again appeared in person and, if I may say so, conducted his appeal admirably. The Crown was represented by Mr Medd. I will get one or two points out of the way before reaching what I think is the decisive point. In the first place, I think it is clear that the facts as put in evidence show that it was not a school in any ordinary use of that term. The question is: was Sherwood an 'other educational establishment'? I do not think that the argument based on ejusdem generis takes one very far. That would be an extremely important argument if the expression were 'university, college, school or other establishment'. With the word 'educational' in, all one has to do, so far as I can see, is to determine whether or not Sherwood is some kind of educational establishment other than a university, college or school. I should also mention at this stage, as I think is common ground, that the only case ^[F3] cited does not advance the present question. What had to be considered by the commissioners and what I now have to consider bearing in mind their decision is whether Sherwood is properly to be described as an educational establishment. I do not think there was any argument on whether it is an establishment or not-I have no doubt it can properly be so described-but is it an educational establishment?

Looking at the matter apart from any finding on the facts of this particular case, an educational establishment must, I think, be an establishment whose primary function is that of education. In this context, and especially against the background of the legislation which has now culminated in s 10 of the 1970 Act, I think it is clear that 'education' denotes training of the mind, in contradistinction to training in manual skills. In the present case, by far the greater part of the activities carried on at Sherwood was addressed to manual skills, and a very small proportion of the time was addressed to training of the mind in a direct sense; that is to say, the hour every day or every other day during which history, geography and arithmetic were taught. On those facts, which are not in dispute, prima facie it seems to me that Sherwood could not properly be described as an educational establishment. The only escape from this conclusion, and perhaps a possible one, would be to say that the training in manual skills at Sherwood represented a therapeutic training of the mind; that is, that the mind was being trained therapeutically through exercises in manual skills. I say that is a possible conclusion on the facts, but I do not think I would put it any higher.

The commissioners, after hearing the Assistant Secretary of the Department of Education and Science and after taking into account the full particulars of what was done at Sherwood, came to the conclusion that Sherwood was not an educational establishment. It seems to me, to put it at its very lowest, that that was a conclusion to which reasonable commissioners, acting judicially and properly instructed, might have come, and I do not think it is a conclusion which I am entitled to disturb, even if I would myself have come to a different conclusion. I am very far from saying that I would have come to a different conclusion. To avoid misunderstanding I stress that, while the commissioners were entitled to have regard to what was said by Mr Walker, I am certainly not saying, as was apparently argued on behalf of the Crown, that the expression 'university, college, school or other educational establishment' means an establishment set up to provide education in the sense that the Department of Education and Science understands it. I think it means an establishment set up to provide education in the sense in which a judicial tribunal, first the commissioners and then the court, understands it after receiving such guidance as the Department of Education and Science has been able to afford it. I must accordingly dismiss this appeal.

Appeal dismissed.