Neutral Citation no.[2001] NIQB 28
Ref:  
KERC3476

 
Judgment: approved by the Court for handing down
Delivered:
03.07.2001
(subject to editorial corrections)

 
 
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
 
   QUEEN’S BENCH DIVISION (CROWN SIDE)
 
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IN THE MATTER OF AN APPLICATION BY HSS HIRE SERVICE GROUP PLC FOR JUDICIAL REVIEW
 
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KERR J
Introduction
HSS Hire Service Group plc (HSS) operates in Northern Ireland through nine HSS Hire Shops and one other outlet.  By this application it seeks judicial review of three decisions of the Construction Industry Training Board (Northern Ireland) (CITB).  The first decision under challenge is the inclusion of the applicant in the levy scheme under the Industrial Training (Northern Ireland) Order 1984 and the Industrial Training Levy (Construction Industry) Order (Northern Ireland) 1999.  The second decision attacked by the applicant is the fixing of the levy payable by the applicant on the basis of an estimate.  The third decision relates to the issue by CITB of a composite assessment of the applicant’s liability in respect of all of its outlets rather than assessing each separately.
            The applicant argues that it is a condition precedent to the exercise by CITB of its powers under the Orders of 1984 and 1999 that it be established that the company levied is in fact engaged in activities that bring it within the scope of the legislation.  The applicant claims that CITB has failed to do this.  It is also claimed that HSS cannot benefit from the levy since none of the training services that CITB provides is of any benefit to it.  It was submitted that the imposition of the levy on HSS was therefore Wednesbury unreasonable and a breach of article 14 of the European Convention on Human Rights.  HSS further claims that CITB has no power to raise an assessment of the levy due by means of an estimate.  Finally, HSS claims that the assessment made by CITB was in respect of all HSS’s establishments in Northern Ireland and that such a composite assessment is not permitted unless the company to be levied has consented.  It is claimed that HSS has not so consented.
The statutory framework
            By section 1 (1) of the Industrial Training Act (Northern Ireland) 1964, the Ministry of Labour and National Insurance was empowered to make an order establishing an industrial training board.  The Industrial Training (Construction Board) Order (Northern Ireland) 1964 duly established CITB.  Paragraph 1 of Schedule 1 to the 1964 Order set out the activities that were to be regarded as the activities of the construction industry as they are carried out in Northern Ireland.  Sub-paragraph (f) specified “the hiring out of contractors plant and scaffolding” as one of the included activities.  Sub-paragraph (h) specified “any other activity of industry or commerce carried out at or from an establishment engaged mainly in one or more of the [listed] activities”. 
            Article 23 (1) of the Industrial Training (Northern Ireland) Order 1984 provides: -
“An industrial training board may submit to the Department for the Department’s approval proposals … for the raising and collection of a levy to be imposed for the purpose of raising money towards meeting the board’s expenses.”
 
Article 23 (2) empowers the Department to “make an order imposing a levy … giving effect to levy proposals approved … and providing for the levy to be imposed on employers in the industry.  The industry is defined in Article 2 as “the activities in relation to which [CITB] exercises its functions”.
            Article 24 (4) of the Order provides that a person assessed to levy may appeal to an industrial tribunal.  Article 24 (5) allows the industrial tribunal to rescind the assessment if satisfied that the appellant ought not to have been assessed to levy, or if persuaded that the amount assessed was excessive, to reduce it.
            Article 28 (2) provides: -
“An industrial training board may require employers in the industry to furnish such returns and other information of a kind approved by the Department”
 
Article 28 (3) deals with enforcement of employers’ obligations to furnish information required under Article 28 (2).  If a company covered by the scheme fails to supply the information sought, it will be liable to prosecution.
            Pursuant to Article 23 (1) of the 1984 Order, the Industrial Training Levy (Construction Industry) Order (Northern Ireland) 1999 came into force on 31 August 1999.  Article 2 of this Order provides: -
“(1) The levy to be imposed on employers shall be assessed in accordance with the provisions of this Article
 
(2) The levy shall be assessed by the Board separately in respect of each construction establishment of an employer, but in agreement with the employer one assessment may be made in respect of any number of such establishments in which case those establishments shall be deemed to constitute one establishment
 
 (3) Subject to the provisions of this Article, the amount of the levy imposed on an employer in respect of a construction establishment shall be equal to 0.7 per cent of the relevant emoluments paid and payable to or in respect of all persons employed by the employer at or from that establishment …
 
and no remission of the levy shall be given to any employer.”
 
Article 3 deals with assessment notices and makes provision for the service of the notices on employers.  Article 4 provides for the payment of the amount assessed in two instalments and Article 5 deals with the withdrawal of assessments.
            Article 1(2) of the 1999 Order defines a construction establishment as meaning: -
“an establishment in Northern Ireland engaged wholly or mainly in the construction industry for a total of twenty-seven weeks in the thirty-fifth base period, [the year commenced 6 April 1998], or being an establishment that commenced to carry on business in the thirty-fifth base period, for a total number of weeks exceeding half of the number of weeks in the part of the said period commencing with the number of weeks in the part of the said period commencing with the day on which business was commenced and ending on the last day thereof …”
 
A construction establishment is therefore one where one or more of the specified activities are carried on for most of the time.  The definition of construction industry activities contained in the 1964 Order is preserved in the 1999 Order which defines “construction industry” as meaning: -
“any one or more of the activities which, subject to the provisions of paragraph 2 of Schedule 1 to the [1964] Order as the activities of the construction industry.”
   
Factual Background
            In 1998 CITB sent an Annual Return direct to HSS’s Group Office in England 1998.  After that return had been received there was an exchange of correspondence between HSS and CITB in which HSS claimed not to be within the scope of CITB.  Ultimately, it did not complete the 1998 Annual Return.  On 23 June 1999 Messrs Carson & McDowell, solicitors for HSS, received a 1999 Annual Return for completion by HSS.  The solicitors did not receive instructions from HSS to complete the return and on 17 November 1999 Sean McCarthy, then Levy Manager at CITB, sent to HSS a letter informing them that an assessment of the levy payable had been made and the first instalment was overdue.  
            HSS sought leave to judicially review CITB’s decision to estimate the extent of levy due by HSS.  Leave to apply for judicial review was granted on 21 February 2000 but in the meantime CITB’s solicitors wrote to Carson & McDowell on 18 February 2000 informing them that the assessment of 18 November 1999 had been withdrawn pursuant to article 5(1) of the Industrial Training Levy (Construction Industry) Order (NI) 1999.  No further action was taken in the judicial review proceedings.  
            In mid-March 2000 the applicant’s solicitors became aware that CITB proposed to send out another annual return and that it would again estimate the assessment to levy if HSS refused to complete the return.  Following that change in position HSS sought leave to proceed with the original judicial review proceedings, but ultimately, it decided to await the further assessment and the judicial review proceedings were dismissed by consent.
            By letter dated 22 March 2000 CITB’s solicitors requested HSS to complete a fresh annual Return for 1999.  Carson & McDowell replied on 28 March 2000 stating that HSS would not complete the return on the basis that it was not ‘within scope’ of the legislation and that CITB was not entitled to proceed on the basis of an estimate.  
The judicial review application
            On behalf of the applicant it was submitted that the purpose of the levy was to ‘encourage the adequate training of persons employed or intending to be employed in the construction industry’.  The category of the construction industry into which HSS was deemed by CITB to fall was ‘plant hire (non-operated)’.  The applicant claimed that HSS was engaged in the hire of equipment, none of which was to the grade that could be classified as ‘contractor’s plant or scaffolding’.  It was not “within scope” of the legislation, therefore.
            According to Peter Jones, group company secretaryof HSS, the company receives its information on the equipment it hires out from specifications and other literature provided by the manufacturers and also from manufacturer’s demonstrations and HSS own expert technical staff.  He claimed that CITB does not offer any courses that are relevant to HSS’s field of business, in terms of the purpose of the legislation.
            Peter Davison, a solicitor in Carson & McDowell, sought the views of plant and equipment hirers who are currently paying the levy on the relevance to them of the training offered by CITB.  He was informed that they had been instructed that it was compulsory to pay the levy.  Either they had not been offered or they were unaware of any CITB courses that are specifically geared towards hirers of equipment. 
            Mr Davison also referred to the ‘Employers’ Guide to CITB Services’ and ‘Direct Training & Assessment Programme’ (documents produced by CITB) and suggested that it was clear from these that the vast proportion of the courses offered by CITB are for those engaged directly in construction activities such as electrical, welding, scaffolding, confined spaces working and for managers of such workers.  In particular the training offered in respect of ‘plant’ related to the teaching of health and safety awareness to ‘operators’ who are to use plant equipment and the training of ‘operatives’ in the safe use of a range of plant equipment including cranes, excavators, trucks, elevating work platforms and welding and metal burning equipment. 
            Furthermore, Mr Davison suggested, the courses on ‘Scaffolding NVQ Training and Assessment’ were directed at ‘operatives’ who have to erect, alter or dismantle scaffolding with the objective of improving safety standards by ensuring that the operatives are sufficiently well trained and experienced to carry out such work safely.  There were no courses listed by CITB for hirers of such plant equipment to operatives. 
            It was accepted by the respondent that the role of CITB was to encourage the adequate training of those employed in the construction industry.  This was achieved by identifying training needs, providing information about the availability of training and either offering grants for training courses or providing this directly.  Employers who pay the levy are entitled to these facilities free of charge.  It was claimed that the levy system ensured that the cost and benefits of training were spread evenly throughout the industry.
            Allan McMullen, chief executive of CITB, explained that only 70% of employers actually made returns on which their liability to levy could be calculated.  It was necessary, therefore, to make estimates in respect of the remaining 30% - some 787 approximately.  He pointed out that an assessed amount could be appealed to an Industrial Tribunal.  The appeal lay either against inclusion in the levy (scope) or against the amount estimated.
            CITB became aware of HSS’s presence in Northern Ireland in December 1998 and they were duly registered in March 1999.  It was considered that HSS was within scope because it hired out contractors’ plant.  The plant advertised and offered for hire by HSS was, in the estimation of Mr McMullen and his colleagues, such as would be used by contractors for the construction, demolition, alteration and repair of buildings.  CITB therefore sent out a return form for completion by HSS.  When HSS claimed that it was not within scope, CITB estimated its liability.  The amount claimed was not paid by HSS since it claimed that it was not within scope and that, in any event, CITB was not entitled to make an estimate of its liability.  According to Mr McMullen, CITB withdrew the first assessment because it wanted to give HSS the opportunity to make returns on which an accurate assessment could be made and because CITB wished to “reflect with [its] lawyers”.  A second estimate was issued in due course on 8 May 2000.  The applicant has appealed against this assessment.
            In deciding that HSS was within scope of the legislation, Mr McMullen had regard to the contents of an advertising catalogue produced by HSS.  He claimed that most of the equipment displayed in the catalogue was more suitable to the commercial contractor than the DIY enthusiast.  
            On the question of the availability of training Mr McMullen stated that if HSS had made a genuine enquiry about training, a training adviser would have developed a training needs analysis and a tailored training plan.  This plan would have been specifically tailored to suit the needs of the Group’s operations in Northern Ireland.  
            James Downey is a levy assessor with CITB.  In early March 2000 he visited nine of HSS’s Northern Ireland outlets.  He was informed at all the branches that he visited that the majority of customers who hired plant and equipment were “professional”, “trade” or “building contractors”. 
The case for the applicant
            On behalf of the applicant C M Lavery QC argued it was a question of “fact and degree” whether HSS was a construction establishment.  It was impossible to establish this without a detailed analysis of the business of HSS and CITB had failed to undertake such an analysis.  Unlike other tax statutes, the legislators in this instance had not placed an onus on the potential taxpayers to establish that they did not come within the scope of the legislation.  In the absence of such a provision, it was for CITB to show that HSS was within scope.
            Even if HSS was within scope, Mr Lavery argued that it did not follow that they had to be made subject to the levy.  Unlike other forms of taxation, this was designed to create funds which would be used for the benefit of those who were levied.  In the case of HSS there were no training programmes that could be provided by CITB that would be of any benefit.  To impose the levy in those circumstances was to discriminate against HSS.  This was in violation of Article 14 of the Convention and was disproportionate.  It was also Wednesbury unreasonable.
            In the alternative, argued Mr Lavery, CITB had no power to estimate the amount of the levy due.  It was submitted that once the stage was reached that the employer was within scope, in the absence of a completed return, the only means that CITB had of assessing the levy was by resort to its powers under Article 28 of the 1984 Order.
            Finally, it was submitted for the applicant that the composite assessment issued by CITB could only be valid if the applicant had given consent under Article 2 (2) of the 1999 Order.  HSS had not consented to receive a composite assessment.  It could not be required to pay on this assessment, therefore.
The case for the respondent
            For the respondent Mr Morgan QC submitted that CITB had no role to play in relation to the imposition of the levy.  The liability to the levy was the consequence of the legislation and the amount to be levied was established by the 1999 Order.  CITB’s role was confined to the collection of the levy.  The assessment function was not concerned with the imposition of the levy but rather with its collection.  Mr Morgan accepted, however, that, in conducting the assessment, CITB is required to exercise judgment as to whether the construction establishment concerned is within scope.  But CITB had no discretion as to whether the levy should be collected, once it was clear that it was within scope.
            In any event, there were courses available that would benefit the applicant if it chose to avail of them.  Mr Mc Mullen’s evidence on this point had not been countered.  Indeed, no-one connected with the running of HSS had sworn an affidavit in the proceedings.  No case of discrimination or lack of proportionality had been made out.
            In relation to the applicant’s argument that CITB was obliged to resort to the enforcement procedure under Article 28 rather than estimate the applicant’s liability, Mr Morgan argued that the purpose of this provision was to allow CITB to secure a criminal conviction.  It was not part of the criminal process and was quite divorced from the collection of the levy provisions. 
            On the applicant’s claim that it had not consented to a global assessment, Mr Morgan pointed out that the initial request for a return had included the statement that CITB preferred to have a global return and the applicant was invited to let CITB know if it disagreed.  A return form requiring details of all HSS’s outlets was issued in November 1999.  No challenge to the propriety of this was ever voiced by HSS nor was it suggested in protracted correspondence between the parties and their respective legal advisers that the estimated assessment was invalid because it related to all the outlets of HSS in Northern Ireland.
Is HSS within scope?
            This issue can be dealt with briefly.  All the available evidence points strongly – indeed, irresistibly – to the conclusion that HSS is principally involved in the hire of plant and equipment to the construction industry.  The HSS Guide 2000 (which was produced during the hearing and which is similar in content to that which was considered by Mr McMullen and his colleagues) is replete with material and equipment offered for hire that would be suitable only for the construction industry.  Scaffolding, lift shaft towers, lifting gear, materials for building and site works, surveying and measuring equipment are typical of the contents.  
            Mr Downey’s investigations reinforced the conclusion that the hire of materials and equipment to the construction industry was the principal type of business carried on by the applicant.  The applicant adduced no contrary evidence to that provided by Mr Downey’s affidavit.  The claim that HSS was engaged in the hire of equipment, none of which was to the grade that could be classified as ‘contractor’s plant or scaffolding’ was completely unsupported by evidence.  
            I am satisfied that CITB was fully justified in its conclusion that HSS was within scope.  No other conclusion was possible.
Must the levy be imposed?
            Again, this topic does not warrant elaborate discussion.  As Mr Morgan has said, CITB does not enjoy discretion whether to require the levy to be paid.  It is fixed with a statutory obligation to collect the levy from those who are liable to pay it.  Article 23 (1) of the 1984 Order empowers CITB to submit to the Department for its approval proposals for the raising and collection of the levy but it is the Department that makes the levy order under Article 23(2). 
By virtue of Article 2 (1) of the 1999 Order the assessment of the levy by CITB is to be in accordance with the provisions of the Article.  The import of the Article is clear.  CITB is to assess and collect the levy according to the provisions of the Article and no remission of the levy is to be given to any employer.
            Even if I had concluded that a measure of discretion was available to CITB as to whether to require the levy to be paid, I would not have acceded to the application for judicial review of the respondent’s decision on the basis that it had wrongly exercised that discretion.  As Mr McMullen made clear in his second affidavit, if HSS had expressed an interest in training, a training adviser would have been appointed by CITB to analyse the training needs of HSS and to develop a tailored training plan which would have been specifically tailored to suit its needs.  In this context it is to be noted that HSS’s Hire Guide 2000 offers a range of services, including safety training for its customers’ employees.  It includes the following statement: -
“You will be pleased to know that the safety training we give our staff is now available to you.  IPAF-approved and CITB-approved Safety at Work training helps equipment operators to reduce safety risks they may face.”
 
The Guide even claims that HSS is CITB approved!  It is difficult to understand, in light of this claim, how it could ever have been argued on behalf of HSS that it could not benefit from any of the services that CITB had to offer or how such a claim featured in Mr Davison’s affidavit.  
            So far from there being any discrimination of HSS by requiring it to participate in the levy scheme, its claim that it was CITB approved alone made it an inevitable candidate for the levy.  One must deprecate the failure of the applicant to reveal the claim that I have set out above.  The fact that the applicant allowed a case to be made on its behalf which is plainly inconsistent with that claim is even more deserving of censure.  Not only are the applicant’s claims that the decision of CITB was unreasonable and a violation of Article 14 devoid of any merit, they ought never to have been made. 
May CITB estimate the levy?
            Mr Lavery’s argument that where an employer fails to make a return CITB must have resort to Article 28 of the Order rather than make an estimate of the amount of the levy must be considered in light of the structure of the legislation.
            Article 23 of the 1984 Order is the principal provision dealing with levies.  This provides for CITB to have power to submit to the Department its proposals for the raising of the levy for a particular year and for the Department’s power to approve the proposals.  It also provides for certain matters that either must or may be contained in the levy order.  The levy order itself is contained in the yearly Order that is produced by the process described in Article 23; it is not part of the 1984 Order.  In the present case the 1999 Order is the instrument that provides for the actual assessment of and the collection of the levy payable.
In my opinion, the enforcement provisions of Article 28 are unrelated to the collection duties of CITB; the latter are provided for in Article 2 of the 1999 Order.  If it had been intended that Article 28 should act as a supplement to the actual assessment and collection powers contained in the 1999 Order, some express provision to that effect would be required.  Article 28 appears in a section in the 1984 Order with the cross-heading “Miscellaneous and Supplementary”.  I consider that this indicates that the provisions in this section (in so far as they may be said to be supplementary) are supplementary to the earlier provisions of the 1984 Order rather than any later enactment.
The 1999 Order contains no express provision that CITB may make an estimate of the amount of the levy in the absence of a return.  The question therefore arises whether the power to estimate the amount of the levy may be said to be incidental to the collection duties imposed by Article 2 of the 1999 Order.  Carswell LCJ dealt with the powers that may be regarded as incidental to those conferred on a statutory body in the following passage of his judgment in Re Human Rights Commission’s application (2001) unreported: -
“As a statutory body it has only the powers conferred by statute upon it, which will include such powers as may fairly regarded as incidental to or consequential upon those things which the legislature has authorised: cf Attorney-General v Great Eastern Railway Co (1880) 5 App Cas 473 at 478, per Lord Selborne LC.; Wade & Forsyth, Administrative Law, 7th ed, p 219.  In order fairly to be regarded as incidental, those powers, if not expressly conferred, must be derived by reasonable implication from the provisions of the legislation: Baroness Wenlock v River Dee Co (1885) 10 App Cas 354 at 362-3, per Lord Watson; and cf Lord Macnaghten’s remarks in Amalgamated Society of Railway Servants v Osborne [1910] AC 87 at 97. “   
 
In my view, the power to estimate the amount of the levy must be regarded as incidental to the express powers conferred in the 1999 Orders.  It cannot be the case that the collection of the levy could be frustrated by the refusal of employers to complete return forms.  The present position as described by Mr McMullen illustrates the absurdity of confining the power of CITB to collect the levy to those cases where a return had been made.  Currently, 30% of those liable to the levy do not make a return.  If it were the case that liability could be avoided simply by refusing to complete a return that number would undoubtedly increase substantially.
Composite assessments
            Article 2 (2) of the 1999 Order contemplates the issue of one assessment for a number of establishments with the agreement of the employer.  Absent such agreement, CITB is required to make separate assessments in respect of each establishment.  The applicant’s express agreement to the issue of a composite assessment was not obtained but it was well aware of the desire of CITB that it should make a global return for all its premises and that two composite assessments had been made.  No objection to this form of assessment was made until this application for judicial review proceeded.  In the circumstances, I consider that HSS must be taken to have consented to the issue of a composite assessment.
            If I am wrong in that conclusion, I should make it clear that I would have exercised my discretion to refuse judicial review to the applicant on this account because of its failure to raise this issue before applying for judicial review.

 
Conclusions
            I am satisfied that none of the grounds on which the applicant has sought judicial review has been made out and the application must be dismissed.

IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
 
   QUEEN’S BENCH DIVISION (CROWN SIDE)
 
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IN THE MATTER OF AN APPLICATION BY HSS HIRE SERVICE GROUP PLC FOR JUDICIAL REVIEW
 
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JUDGMENT
 
OF
 
KERR J
 
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