Pepper v Hart

Facts

The taxpayers were teachers at a fee-paying school who were allowed to have their children educated there at one fifth of the normal fees. The Revenue treated the concession as a taxable benefit in kind under section 63 of the Finance Act 1976 and sought to tax them on the cost of providing the benefit. The teachers said that the cost should be the additional or marginal cost to the school of providing the places, which was small, and relied on statements by a minister in Parliament on the passing of the Act.

Issue

Whether the courts may refer to statements made in Parliament, as recorded in Hansard, as an aid to the construction of legislation, and if so in what circumstances; and on the meaning of the cost of the benefit in section 63 of the Finance Act 1976.

Held

The House decided in favour of the teachers. Reference to Hansard was allowed in limited circumstances, and on that material the cost of the benefit was the additional cost to the school of providing the places, which was small.

Ratio

• The exclusionary rule against reference to Parliamentary material in construing legislation should be relaxed so as to permit reference to such material where the legislation is ambiguous or obscure, or leads to an absurdity.
• Even then the material relied on must consist of statements by a minister or other promoter of the Bill, together with such other Parliamentary material as is necessary to understand those statements and their effect, and the statements relied on must be clear.

The judgments

Key reasoning

• The rule against reference to Parliamentary material had been justified by the need to avoid cost and to respect Parliamentary privilege, but the court should not be denied access to clear statements which show what Parliament was told the provision meant.
• Reliance on the statements of a minister is a means of discovering the intention of Parliament and of avoiding results that the legislation was never intended to produce, so long as the statement is clear and the words are ambiguous.
• The speech of the Financial Secretary to the Treasury showed that the intention was to tax the benefit by reference to the additional cost to the employer, so that the teachers were taxable on that figure only.

Where it fits in the module

In the Constitution course the case is used to examine the relationship between Parliament and the courts in statutory interpretation, parliamentary privilege and the question of whose intention governs. It supports the argument that the courts seek Parliamentary intention, and it is contrasted with the view that the law is what the words of the statute mean.

Criticisms

• Relying on the statements of a minister gives executive statements an influence on the meaning of statutes, which is hard to square with the idea that Parliament as a whole enacts the law.
• The three conditions are difficult to apply and raise the cost and length of litigation because parties must search Hansard, which was the reason for the earlier rule.
• The approach is in tension with the principle that citizens should be able to know the law from the text of the statute, since they cannot be expected to consult ministerial speeches.