ESSO PETROLEUM LIMITED (RESPONDENTS)
v.
COMMISSIONERS OF CUSTOMS AND EXCISE
(APPELLANTS)
Lord Wilberforce
Viscount Dilhorne
Lord Simon of Glaisdale
Lord Fraser of Tulleybelton
Lord Russell of Killowen
Lord Wilberforce
My Lords,
I have had the benefit of reading in advance the opinion prepared by
my noble and learned friend Lord Simon of Glaisdale. I agree with
his analysis of the transaction. The case being one of impression, as
to an essentially simple situation, I do not consider it useful to add any
fresh arguments of my own.
I would dismiss the appeal.
Viscount Dilhorne
My Lords,
The only question for decision in this appeal is whether the coins distri-
buted by the respondents to garage proprietors, for them to give to customers
who bought four gallons or more of petrol, were coins ” produced in
” quantity for general sale “. If they were, then they came within Group 25
in Schedule 1 of the Purchase Tax Act 1963, and the respondents are liable
to pay purchase tax on them to the amount of some £200,000.
That the coins were produced in quantity and for general distribution is
clear and not disputed. Were they produced for sale? They were sold
by the respondents to some 4,900 retailers of petrol for £3 per thousand,
but that does not determine the tax liability. The question to be decided
is, were they sold or intended to be sold by the garage proprietors to
purchasers of petrol?
Each coin bore the head of one of the 30 members of the English squad
for the World Cup and was wrapped in an opaque covering. The respondents’
intention was to promote the sale of their petrol by tempting persons to buy
petrol from their dealers in the hope of securing a complete set of coins, and
they advertised their ” World Cup Coin Collection ” extensively in the press
and on television.
They distributed to garages posters for exhibition on the forecourts. One
series of posters had on it ” Collect the complete set. One coin given with
” every four gallons of petrol “. Another series had the words ” Collect the
” full set of thirty coins. One coin given when you buy four gallons of
” petrol “. They sent each of their dealers who participated in the campaign
a pamphlet telling him to give one coin to each customer buying four gallons ;
two coins if eight gallons were bought and so on, and that if he did so and
gave a free collection card in which the coins could be placed he would
” then ensure the success of this promotion by increasing gallonage sales on
” your station “. The dealers were also supplied with ” luxury collector ”
cards which they were told to sell for 2s. 6d. each.
If the coins were a free gift to every customer who purchased four gallons
of petrol or multiples of that quantity, then the appeal must be dismissed.
If, on the other hand, a legal contract was entered into between the customer
and the dealer which, in addition to the supply of petrol, involved the dealer
2
in a legally binding obligation to transfer a coin or coins to the customer,
and if that legal contract amounted to a sale, then the appeal must be allowed.
Was there any intention on the part of the garage proprietor and also on
the part of the customer who bought four gallons, or multiples of that
quantity, of petrol to enter into a legally binding contract in relation to a
coin or coins? In Rose & Frank Co. v. J. R. Crompton & Bros. Ltd. [1923]
2 K.B. 261, Scrutton L.J. said at page 288:
” Now it is quite possible for parties to come to an agreement by
” accepting a proposal with the result that the agreement concluded does
” not give rise to legal relations. The reason of this is that the parties
” do not intend that their agreement shall give rise to legal relations.
” This intention may be implied from the subject matter of the agree-
” ment, but it may also be expressed by the parties. In social and family
” relations such an intention is readily implied, while in business matters
” the opposite result would ordinarily follow.”
And Atkin L.J. said at page 293:
” To create a contract there must be a common intention of the parties
” to enter into legal obligations, mutually communicated expressly or
” impliedly.”
The facts of that case were very different from those of this. In that case
there was an agreement dealing with business matters. In this case the
question has to be considered whether there was any agreement as to a coin
or coins between the garage proprietor and the customers and also, if there
was, was it intended on both sides to be one having legal relations? If a
coin was just to be given to the motorist, it would not be necessary for there
to have been any agreement between him and the garage proprietor with
regard to it.
In Edwards v. Skyways Ltd. [1964] 1 W.L.R. 349. where the facts were
also very different from those in this case and where the plaintiff was
seeking to recover the amount of an ex gratia payment, Megaw L.J. at page
355 referred to these passages in Rose & Frank v. J. R. Crompton & Bros.
Ltd. and said:
” In the present case, the subject-matter of the agreement is business
” relations, not social or domestic matters. There was a meeting of
” minds—an intention to agree. There was, admittedly, consideration
” for the company’s promise. I accept the propositions of counsel for
” the plaintiff that in a case of this nature the onus is on the party
” who asserts that no legal effect was intended, and the onus is a heavy
” one.”
I do not wish in any way to criticise or qualify these statements, but I do
not feel that they provide a sound foundation for the decision of this appeal.
True it is that the respondents are engaged in business. True it is that
they hope to promote the sale of their petrol, but it does not seem to me
necessarily to follow or to be inferred that there was any intention on
their part that their dealers should enter into legally binding contracts with
regard to the coins ; or any intention on the part of the dealers to enter into
any such contract or any intention on the part of the purchaser of four
gallons of petrol to do so.
If in this case on the facts of this case the conclusion is reached that there
was any such intention on the part of the customer, of the dealer and of the
respondents, it would seem to exclude the possibility of any dealer ever
making a free gift to any of his customers however negligible its value to
promote his sales.
If what was described as being a gift which would be given if something
was purchased was something of value to the purchaser, then it could readily
be inferred that there was a common intention to enter into legal relations.
But here, whatever the cost of production, it is clear that the coins were of
little intrinsic value.
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I do not consider that the offer of a gift of a free coin is properly to be
regarded as a business matter in the sense in which that word was used by
Scrutton L.J. in the passage cited above. Nor do I think that such an offer
can be comprehended within the ” business relations ” which were in the
Skyways case, as Megaw L.J. said ” the subject-matter of the agreement.”
I see no reason to imply any intention to enter into contractual relations
from the statements on the posters that a coin would be given if four gallons
of petrol were bought.
Nor do I see any reason impute to every motorist who went to a garage
where the posters were displayed to buy four gallons of petrol any intention
to enter into a legally binding contract for the supply to him of a coin.
On the acceptance of his offer to purchase four gallons there was no doubt a
legally binding contract for the supply to him of that quantity of petrol, but
I see again no reason to conclude that because such an offer was made by
him, it must be held that, as the posters were displayed, his offer included
an offer to take a coin. The gift of a coin might lead to a motorist returning
to the garage to obtain another one, but I think the facts in this case
negative any contractual intention on his part and on the part of the dealer
as to the coin and suffice to rebut any presumption there may be to the
contrary.
If. however, there was any contract relating to the coin or coins, the
consideration for the entry into that contract was not the payment of any
money but the entry into a contract to purchase four gallons or multiplies of
that quantity of petrol, in which case the contract relating to the coin or
coins cannot be regarded as a contract of sate.
I therefore, while of opinion that there was no legalling binding contract
as to the coins and so that it has not been established that they were produced
for sale, am also of opinion that if there was any such contract it was not one
for sale.
In my opinion this appeal should be dismissed.
Lord Simon of Glaisdale:
My Lords,
I have had the advantage of reading in draft the speech prepared by my
noble and learned friend. Lord Russell of Killowen. I beg to take advantage
of his explanation of the facts that have led to the appeal and the statutory
provisions by which they are to be judged.
I am, however, my Lords, not prepared to accept that the promotion
material put out by Esso was not envisaged by them as creating legal relations
between the garage proprietors who adopted it and the motorists who yielded
to its blandishments. In the first place, Esso and the garage proprietors put
the material out for their commercial advantage, and designed it to attract the
custom of motorists. The whole transaction took place in a setting of
business relations. In the second place, it seems to me in general undesirable
to allow a commercial promoter to claim that what he has done is a mere
puff, not intended to create legal relations (c.f. Carlill v. Carbolic Smoke Ball
Co. [1893] 1 QB 256). The coins may have been themselves of little intrinsic
value ; but all the evidence suggests that Esso contemplated that they would
be attractive to motorists and that there would be a large commercial advan-
tage to themselves from the scheme, an advantage in which the garage
proprietors also would share. Thirdly, I think that authority supports the
view that legal relations were envisaged. In Rose and Frank Co. v. J. R.
Crompton and Bros. Ltd. [1923] 2 K.B. 261, Scrutton L.J. said at p. 288:
” Now it is quite possible for parties to come to an agreement by
” accepting a proposal with the result that the agreement concluded
” does not give rise to legal relations. The reason of this is that the
” parties do not intend that their agreement shall give rise to legal
4
” relations. This intention may be implied from the subject matter of
” the agreement, but it may also be expressed by the parties. In social
” and family relations such an intention is readily implied, while in
” business matters the opposite result would ordinarily follow.”
In the same case Atkin L.J. said at p. 293:
” To create a contract there must be a common intention of the
” parties to enter into legal obligations, mutually communicated expressly
” or impliedly. Such an intention ordinarily will be inferred when parties
” enter into an agreement which in other respects conforms to the rules
” of law as to the formation of contracts. It may be negatived impliedly
” by the nature of the agreed promise or promises, as in the case of
” offer and acceptance of hospitality, or of some agreements made in the
” course of family life between members of a family as in Balfour v.
“ Balfour [1919] 2 K.B. 571.”
In Edwards v. Skyways Ltd. [1964] 1 W.L.R. 349 Megaw J. quoted these
passages at p. 355, and added:
” In the present case, the subject-matter of the agreement is business
” relations, not social or domestic matters. … I accept the proposition
“… that in a case of this nature the onus is on the party who asserts
” that no legal effect was intended, and the onus is a heavy one.”
I respectfully agree. And I would venture to add that it begs the question
to assert that no motorist who bought petrol in consequence of seeing the
promotion material prominently displayed in the garage forecourt would
be likely to bring an action in the county court if he were refused a coin.
He might be a suburb Hampden who was not prepared to forego what he
conceived to be his rights or to allow a tradesman to go back on his word.
Believing as I do that Esso envisaged a bargain of some sort between
the garage proporietor and the motorist, I must try to analyse the transaction.
The analysis that most appeals to me is one of the ways in which Lord
Denning M.R. considered the case ([1975] 1 W.L.R. 406 at p. 409 B-D).
namely a collateral contract of the sort described by Lord Moulton in
Heilbut, Symons & Co. v. Bucckleton [1913] AC 30. 47:
“… there may be a contract the consideration for which is the making
” of some other contract. ‘ If you will make such and such a contract
” ‘ I will give you one hundred pounds ‘, is in every sense of the word
” a complete legal contract. It is collateral to the main contract. . . .”
So here. The law happily matches the reality. The garage proprietor is
saying, ” If you will buy four gallons of my petrol, I will give you one of
” these coins “. None of the reasons which have caused the law to consider
advertising or display material as an invitation to treat rather than an
offer applies here. What the garage proprietor says by his placards is in
fact and in law an offer of consideration to the motorist to enter into a
contract of sale of petrol. Of course, not every motorist will notice the
placard, but nor will every potential offeree of many offers be necessarily
conscious that they have been made. However, the motorist who does notice
the placard, and in reliance thereon drives in and orders the petrol, is in
law doing two things at the same time. First, he is accepting the offer of
a coin if he buys four gallons of petrol. Secondly, he is himself offering
to buy four gallons of petrol: this offer is accepted by the rilling of his tank.
Has there then been a sale of the coins, so that they can be said to have
been ” produced in quantity for general sale ” within Group 25 of Schedule 1
of the Purchase Tax Act 1963? I think that the main emphasis here is
on ” quantity ” and ” general “. But it would be contrary to all principles
of sound statutory construction not to give each word its full significance.
I agree with my noble and learned friend, Lord Russell of Killowen, for
the reasons which he gives, that the definition of ” purchase ” in section 40(1)
throws no light on the meaning of ” sale ” in the Schedule. ” Sale ” must
therefore be interpreted in the primary sense demanded by the context of a
taxing statute (unless some secondary meaning must be preferred in order
5
to avoid injustice, absurdity, anomaly or stultification of the statutory objec-
tive). The primary sense of ” sale ” in this context is its primary meaning in
ordinary legal usage. This is expressed in section 1 of the Sale of Goods
Act 1893 (which codified the common law), namely ” a contract whereby
” the seller transfers or agrees to transfer the property in goods to the buyer
” for a money consideration, called the price “. Here the coins were not
transferred for a money consideration. They were transferred in considera-
tion of the motorist entering into a contract for the sale of petrol. The
coins were therefore not produced for sale, and do not fall within the Schedule.
They are exempt from purchase tax.
I would therefore dismiss the appeal.
Lord Fraser of Tullybelton
My Lords,
The facts in this case have been fully set out in the speech which is about
to be delivered by my noble and learned friend Lord Russell of Killowen
and which I have had the advantage of reading in print. I need not there-
fore rehearse them. The only question for decision is whether these coins
were ” produced … for … sale “. In my opinion they were, and I
would therefore hold that they fell within the Group 25 of Schedule I to
the Purchase Tax Act 1963.
The matter that is in my view of decisive importance is the wording on
the posters which were displayed in the forecourts of Esso petrol retailers
during the promotion scheme. The originals of these posters were large,
60″x40″, and each poster was headed in large letters ” Free World Cup
” Coins “. Below that was a picture either of one of the coins or of a group
of the coins and below the picture on one poster were the words ” Collect
” the complete set. One coin given with every four gallons of petrol ” and
on the other poster ” Collect the full set of thirty coins. One coin given
” when you buy four gallons of petrol “. The feature of that wording, which
is of special significance, is the correlation of one coin to every four gallons;
a definite scale of issue, or ration, was thus promised, and the plain inference
is that any motorist who bought four gallons of petrol would have a right
also to receive a coin. It is as if a baker had a poster in his shop window
promising that any person who bought a dozen buns would be given one
extra bun free of charge to make up a ” bakers’ dozen “. Standing that
promise by the retailer, it is in my opinion impossible to avoid the inference
that when a motorist ordered some petrol he was offering to enter into a
contract on the terms advertised by the retailer, and therefor that when his
offer was accepted he had a contractual right to one coin with every four
gallons of petrol. The analysis by the Vice-Chancellor in [1973] 1 W.L.R.
1240 (at p. 1245) of what would happen when a motorist ordered petrol is
in my opinion the correct one.
Various reasons have been suggested for taking the contrary view, and
the one that appears to me to be the strongest is also the simplest, namely,
that the poster and advertisements repeatedly use the words ” gift ” ” given ”
and ” free “. It is said that the use of these words, together with the small
value of the coins and the fact that the price of petrol was not increased
during the promotion period shows that the coins were truly given away.
But the purpose of the promotion scheme was to attract motorists, and
perhaps their children, and to persuade them to buy Esso rather than some
other brand of petrol, and it cannot be right that a motorist who had been
persuaded to buy four gallons of Esso should be liable to be met at the
end of the transaction with a refusal to give him a coin. No doubt it was
unlikely that any Esso retailer who was taking part in the promotion would
fail to deliver a coin with four gallons of petrol, because he would lose
goodwill if he did. But the same is true in greater or less degree of every
retailer who may be tempted to give short weight or inferior quality in
breach of his contract, and the unlikeliness of such an event cannot in my
opinion affect the legal quality of the transaction. It was even more unlikely
6
that any motorist would sue to enforce his right to the coin or to recover
damages for failure to deliver one. But the same is true of many small
retail transactions which are undoubtedly contracts capable of being enforced
by legal proceedings, but not worth enforcing. Accordingly I regard that
also as irrelevant. The fact that the inclusive price could not be apportioned
so as to attribute any particular part of it to the coin is also irrelevant, and
does not by itself indicate that the coin was not bought along with the
petrol for one inclusive price—see Taylor v. Smetten (1883) 11 Q.B.D. 207,
Scott & Co. Ltd. v. Solomon [1905] 1 K.B. 577, 69 J.P. 137. It was argued
that these cases, where coupons carrying valuable rights were included in
packets of tea, were distinguishable because the coupons were either physic-
ally inside the packet or were part of the wrapper, so that it was impossible
to buy the tea without the coupons. But I cannot see that that makes any
difference, because here the delivery of the coin would be, for all practical
purposes, contemperaneous with delivery of the petrol, so that both would
form part of the one transaction just as the tea and the coupon did.
I recognise that the reason why an advertisement or display of goods for
sale at a stated price is only an invitation to treat and not an offer for sale
(as explained by my noble and learned friend Lord Russell of Killowen
in his speech) has no application to the advertisement of the coins, because
the petrol retailer could always remove the advertisement if the supply of
coins threatened to run out. But while that is so, I do not regard it as a
sufficient reason for declining to recognise what seems to me a simple
operation of acquiring four gallons of petrol and a coin as a sale of both
articles in one transaction, nor as a ———————– reason for breaking
it up into two separate operations, a sale of the petrol and a collateral contract
for acquiring the coin.
For these reasons I would allow the appeal.
Lord Russell of Killowen
My Lords,
The question in this appeal is whether certain goods were chargeable for
the purposes of the now defunct purchase tax: and that depends upon
whether, being goods of a type within the description contained in Group 25 of
Schedule 1 to the Purchase Tax Act 1963, they were ” produced in quantity
” for general sale “. As will be seen the goods were undoubtedly produced
in quantity, and, if produced for sale, it is not disputed that the sale envisaged
in the production was ” general ” sale. Thus the argument has centred on
the question whether the goods were ” produced … for sale “. Vice-
Chancellor Sir John Pennycuick concluded that they were: the Court of
Appeal (Lord Denning M.R. and Stephenson and Lane L.JJ.) concluded that
they were not. The amount of purchase tax involved is the substantial sum
of some £200,000.
The goods in question were medals bearing the likenesses of the 30
members of the England soccer squad which went to Mexico in 1970 for
the World Cup, together with reproductions of their signatures and their
names, one player to each medal, the other side bearing the word Esso and
the words ” England World Cup Squad. Mexico 1970 “.
The respondents (” Esso “) conceived in 1970 a petrol sales promotion
scheme. Esso had some 6,000 petrol outlets in this country, some owned
by Esso subsidiaries but most by other proprietors. The scheme involved
the production of millions of these medals, the intention being that these
medals should be distributed, to use a neutral phrase, by petrol pump
proprietors to motorists buying Esso petrol on the basis of one medal to each
motorist buying four gallons of petrol, two if eight, and so on. The medals
were to be in opaque wrappers, and it was hoped that a motorist would
persist in buying Esso petrol in the hope of collecting the full set of 30. It
was to be, according to Esso, the biggest promotion scheme ever promoted
by Esso.
7
The promotion scheme was extensively advertised by Esso in the press
and on television, the public being urged to start collecting the set of 30
medals. Typical extracts from such advertisements were the phrases ” Free
” from Esso “: ” Going free, at your Esso Action Station now “: ” We are
” giving you a coin with every four gallons of Esso petrol you buy “: ” We
” are also giving you a free collector card to mount them in. (For only
” 2/6, you can buy the handsome permanent mounting board . . .) “: ” One
” free coin with every 4 gallons “.
Esso circularised the 6,000 outlets, of which some 4,900 adopted the
scheme. The medals were made available to outlet proprietors at 30/- for
500—slightly under 3 farthings each, the temporary collector cards without
charge, permanent mounting cards at 2/- each. A folder circulated by Esso
to the outlets to encourage their promotion scheme contained these phrases:
” One coin should be given to every motorist who buys four gallons of
” petrol—two coins for eight gallons and so on ” : ” Free collector cards
” should be offered to all motorists at the start of the promotion “. Large
posters (60 by 40 inches) were supplied by Esso to the forecourts of proprietors
joining the scheme. The most prominent lettering in the posters is ” Free
” World Cup coins ” ; one also says ” One coin given with every four gallons
” of petrol “: the other example says ‘ One coin given when you buy four
” gallons of petrol “. A further pamphlet of instructions to outlets said ” Give
” one coin to each customer buying four gallons of petrol. . . .”: ” Give free
” collector cards to every customer you serve “: ” Try to sell luxury collector
” card at 2/6 each “: ” You will then ensure the success of this promotion
” by increasing gallonage sales on your station “. The last document to
which reference should be made is the free collector’s card, which includes
the phrase ” You will be given a coin each time you buy four gallons of
” petrol from an Esso station. . . . This temporary collector card is
” free
My Lords, it is not in dispute that unless the medals were produced at the
instance of Esso for the purpose of, i.e. with a view to, their being sold by
garage proprietors to motorists there cannot be the suggested charge of
purchase tax. The first question accordingly is whether, notwithstanding
the liberal references in the documents attending the promotion scheme to
” giving “, ” gifts “, and ” free “, that which would and did take place gave
rise to a contract, enforceable by a motorist who bought four gallons from
a participating proprietor, that he should receive one of these medals. It is
to be borne in mind in this connection that the mere fact that Esso and
the garage proprietors undoubtedly had a commercial aim in promoting
the scheme does not deprive the delivery of a medal of the quality of a gift
as distinct from a sale: for benevolence is not a necessary feature of a gift,
which may well be motivated by self interest. On the other hand it is trite
law that if on analysis a transaction has in law one character, the fact that
the parties either accidentally or deliberately frame the transaction in language
appropriate to a transaction of a different character will not deny to it its
true character.
We have here, my Lords, a promotion scheme initiated by Esso, who
procured the production of the medals. Each medal was of negligible intrinsic
value, though the incentive to soccer enthusiasts to collect all 30 may have
been strong. Plainly it was never in Esso’s mind that this negligible intrinsic
value should be reflected in an increase in the pump price of petrol, and
it never was: indeed the price of a gallon could not be increased by 3/16 of
a penny. In my opinion it would have been thought by Esso, and rightly,
that there could have been no occasion, in order to ensure success of the
scheme, for an outlet proprietor to subject himself to a contractual liability
to deliver a coin to a motorist who had bought four gallons. The subject
matter was trivial: the proprietor was directly interested in the success of
the scheme and would be in the highest degree unlikely to renege on the
free gift offer, and indeed there is no suggestion that a motorist who qualified
and wanted a medal ever failed to get one: from the motorist’s viewpoint,
if this had ever happened, I cannot think that he would have considered
that he had a legal grievance, though he might have said that he would not
8
patronize that outlet again: similarly in my opinion if a garage advertised
” Free Air ” and after buying petrol or oil the motorist was told that the
machine was out of order that day. In my opinion, the incentive for the
garage proprietor to carry out the scheme was such as to make it quite
unnecessary to invest, or for Esso to intend to invest, the transaction with
the additional compulsion of a contractual obligation, and in all the circum-
stances of the case I am unable to regard that which under the scheme
was intended by Esso to take place in relation to the medals, and did take
place, as something which would be intended to or regarded as creating a
legal contractual relationship. In forming that opinion I regard the minimal
intrinsic value of a medal as important. I would not wish it to be thought
that my opinion, if correct, would, in other cases in which a sales promotion
scheme involves substantial benefits, give carte blanche to participants to
renege on ” free ” offers. I am simply of opinion, in agreement with the
Court of Appeal, though not I fear with the majority of your Lordships, that
in the instant case, because of the absence of any contractual element, it
should not be said that any medal was produced for general sale.
Suppose however that there was a contractual obligation on the proprietor
to deliver a medal to the motorist who had bought four gallons of petrol, the
further question arises whether there was a contract for sale of the medal
for a price in money, which (subject to a point taken by the respondents
under section 40 of the Purchase Tax Act 1963) is involved in the reference
in Group 25 to ” sale “. The learned Vice-Chancellor analysed the transaction
as being, by a combination of the medal posters and the price marked on the
petrol pump, one invitation to treat by the proprietor: the motorist by
ordering four gallons made an offer to pay the pump price on the terms of
that invitation to treat: the proprietor accented that offer by supplying the
petrol: consequently an unascertained part of the price paid was for the
right to receive the medal: therefore it was a sale of the medal for a price
in money. (My Lords, when I embark upon a consideration of these niceties,
I confess to being fortified in some measure in my view on the first point.)
Now it is of course clear that a mere statement of the price of petrol on
the pumps is not itself an offer to sell petrol at that price: this follows the
ordinary situation that the display of goods in a window, or advertisement
of goods for sale, even al a stated price is not to be treated as itself an
offer capable of acceptance, bat is only an invitation to treat. The reason
for this is the eminently sound one that the vendor might otherwise find
himself bound to a series of contracts that he would be quite unable to fulfil:
since it is a mere invitation to treat he reserves to himself the ability to refuse
an offer from a would-be purchaser. But, my Lords, those considerations
have no relevance to the matter of these medals. The question of liability
to hand over medals remains at all times under the control of the proprietor:
knowing his gallonage of saleable petrol he knows at all times whether
he has his maximum liability of one-quarter in number of medals: further
if he has no medals available he retains the ability, before accepting a
motorist’s order for four galons, to cancel or withdraw the offer of a medal.
There are no reasons why the posters, assuming them to be capable of being
the foundation of a contract, should not be regarded as in themselves an
offer to the motorist that if he buys four gallons of petrol the proprietor
will hand him one medal. This, if the matter lies in contract, appears to me
to be the simple and straightforward approach. That is what, ignoring
words such as ” gift ” and ” free ” the posters say: ” If you buy four gallons
” of petrol I will hand you one medal “. The motorist entitles himself (if he
wishes one) to receive a medal by carrying out a contract for the purchase
of petrol. This is not, my Lords, sale of the medal at a price in money.
An alternative argument was advanced on behalf of the respondents,
supposing that there was not a sale at a price in money. Section 40(1) of
the Purchase Tax Act 1963 defines ” purchase ” in the following terms: —
” ‘ purchase ‘ ” means any contract which is a contract of sale within
” the meaning of the Sale of Goods Act 1893 and also a contract similar
” to such a contract in other respects but made for a consideration wholly
” or partly in … money, and includes any transaction, in whatsoever
” form expressed, in so far as its effect is in substance the same as the
9
” effect of such a contract as aforesaid ; and references to goods being
” bought include, in relation to a purchase made for a consideration
” not, or not only, in money, and in relation to any such transaction as
” aforesaid, references to goods being acquired in any manner ; “.
In the instant case, on the above analysis, it is said that the contract
for the delivery of the medal was ” a contract similar to such a contract
” in other respects but made for a consideration wholly or partly in money’s
” worth and not, or not only in money “. If, it was argued, that is what
” purchase ” means, ” sale ” in Group 25 must have the complementary
meaning. I leave aside, my Lords, the question whether the carrying out
of a contract to purchase four gallons is properly to be described as money’s
worth. I do not derive any guidance from this definition on the meaning
of ” sale ” in Group 25. It would indeed be odd if the prima facie meaning
in Group 25 was designed to be extended merely by a definition of purchase
and not by a definition of sale. But the truth of the matter is that ” purchase ”
is so defined for the purpose of recognising the circumstances which constitute
a tax point, when tax is charged in respect of a purchase by a retailer from
a wholesaler: see section 9. It is true that section 9(4) refers to a ” seller ”
and in that instance he is a seller notwithstanding that the goods in question
may not have been disposed of solely for a price in money: but that is
because he is ” the seller under the purchase ” which necessarily imports
into the transaction the definition of ” purchase “. I find no justification
for importing from the definition of ” purchase “, inserted for quite other
and particular reasons, a construction of ” sale ” in Group 25 other than
its prima facie meaning.
I refer, my Lords, to certain authorities to which your Lordships’ attention
was called.
Bulpitt & Sons Ltd. v. S. Bellman & Sons Ltd. [1962] L.R. R.P. 62
(Ungoed-Thomas J.) was a case in which a trader sought to avoid an
injunction against selling below the minimum fixed retail selling price by
the device of ” giving “, with goods sold, coupons worth a considerable
amount in terms of entitlement to other goods. He rightly failed. But this
does not assist in the present appeal ; it was a mere and barefaced device
to avoid an obligation: moreover if what had been done had been a
distribution of medals of minimal intrinsic value the decision might well
have been otherwise. In Taylor v. Smetten (1883) 11 Q.B. 207 (D.C.) a man
sold pound packets of tea for 2s. 6d. each, each purchaser acquiring at the
same time a right to a ” prize “, the prizes being of varying nature and value,
and the purchaser of the tea not knowing what his prize was to be until
he had bought the tea and found the prize described on a coupon within
the packet. The man was convicted of running a lottery. The pound of
tea was worth the money paid, but as was said in the judgment of the court
it was ” impossible to suppose that the aggregate prices charged and obtained
” for the packages did not include the aggregate prices of the tea and the
” prizes “. It appears from the report that this was the man’s constant
method of trading. The purchaser was held to be buying the tea and a
chance. I do not doubt the correctness of the decision, but I do not find
it persuasive on either of the main points in the present appeal.
In Scott & Co. Ltd. v. W. Solomon (1905) 69 J.P. 137 (D.C.) the appellants
were convicted of dealing in plate without a licence. They sold tea and
with each packet were coupons which in sufficient numbers would entitle
the presenter of the coupons to claim from the tea vendor valuable articles
of various sorts, depending upon the number of the coupons, some of which
were articles of plate such as watches. The argument for conviction was
that there was a binding contract with the tea purchasers as soon as sufficient
coupons were presented, to transfer the ownership of the watch, the con-
sideration being the payment of money for tea and coupons. There was
no evidence of any increase in the price of the tea upon the introduction
of the coupons. Lord Alverstone said this
” [This evidence] seems to me to point to one view of the facts,
” namely, that it was all one transaction. In respect of the payment
10
” for the tea, the various purchasers each of them got what has been
” called this ‘ coupon ‘. Mr. Danckwerts does not dispute, and I do not
” think he could dispute, that that was a sale of coupons. The sugges-
” tion that there is full value given for the tea, meaning that there is
” nothing charged for these coupons, is simply absurd. This very large
” business, to the extent of thousands of pounds, of Scott and Company,
” the appellants, could not possibly be carried on if there were no
” charge for the coupons. The coupons having been delivered out with
” the tea, the persons who received them either having purchased them
” themselves, or having obtained them from other purchasers, on present-
” ing them become entitled to receive certain articles, and, amongst
” others, became entitled in certain events, according to the number of
” coupons they presented, to receive a very considerable number of
” articles of plate, watches, and other things of the kind. It seems to
” me that, looked at in its real essence, this transaction is a trading in
” watches by means of receiving payment for them by instalments when
” the money is paid for the tea. and by afterwards recognising the value
” of those various instalments as evidence by the coupons by giving
” back various articles—in this particular case, watches “.
Again, I do not doubt the correctness of that decision, but I do not find it
persuasive on either of the two points in the present appeal.
Finally the decision in this House in Chappell & Co. Ltd. v. Nestle Co.
Ltd. (1960) AC 87 affords in my opinion no assistance: it merely decided
that there was no ” ordinary retail selling price ” of the records in question,
having regard to the fact that Nestle would not have sold them at the price
of 1/6 had the purchaser not produced evidence of the consumption of a
required amount of Nestle’s chocolate.
For the reasons that I have stated, I am of opinion that the decision of
the Court of Appeal was correct and that this appeal should be dismissed.
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