Edwards (Inspector of Taxes) v Bairstow [1956] AC 14

Court: House of Lords

Facts: B purchased a spinning plant for £12,000 and sold it in various lots for £18,000. The tax inspector contended that this transaction constituted an "adventure or concern in the nature of trade," rendering B liable for tax. However, the tax commissioners determined that the deal did not qualify as trade, ruling in favor of B. This decision was upheld by the High Court and Court of Appeal.

Issue: Was there a material error of fact in the commissioners' decision that justified judicial review?

Held: Appeal allowed; the decision of the tax commissioners was set aside as it could not be justified by the primary facts.

Key Judicial Statements: Viscount Simonds stated, "The determination of the commissioners was a ‘pure finding of fact,’ that may be set aside ‘if it appears that the commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained.’" He noted that the "primary facts do not justify the inference or conclusion of the commissioners." He elaborated on the distinction between law and fact, indicating that whether a transaction qualifies as an "adventure or concern in the nature of trade" is "no more than an inference from the facts previously found," provided the tribunal is correctly directed in law regarding the characteristics of such a trade. Lord Radcliffe added that while "inferences drawn from other facts are not incapable of being themselves findings of fact," there is significant value in distinguishing between primary facts and inferences drawn from them. He explained that if the case contains any "ex facie" evidence of bad law affecting the determination, it is erroneous in law. Conversely, in the absence of such misconceptions, if the found facts are such that "no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal," then the court must intervene, indicating an error of law.

💡Leveluplaw: underscores the principle that a decision can be subject to judicial review for material error of fact if it is based on unreasonable inferences drawn from primary facts. It highlights the interplay between fact and law, illustrating that the courts have the authority to correct decisions that lack reasonable evidentiary support. The distinction made by Viscount Simonds and Lord Radcliffe reflects the nuanced understanding of how errors of fact can sometimes transcend into errors of law, reinforcing the judiciary's role in ensuring decisions are grounded in rational and lawful bases.