Ryanair Ltd v HM Revenue and Customs [2014] EWCA Civ 410

Case No A3/2013/1517[2014] EWCA Civ 410
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HM COURTS AND TRIBUNALS SERVICE
UPPER TRIBUNAL (TAX & CHANCERY CHAMBER)
MR JUSTICE WARREN, CHAMBER PRESIDENT AND JUDGE COLIN BISHOPP
FTC/20/2012 and TCC-JR/05/2012
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 4 April 2014
Before
THE MASTER OF THE ROLLSLORD JUSTICE PATTENLORD JUSTICE PITCHFORD
Between
RYANAIR LIMITEDAppellantTHE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMSRespondent
Lord Pannick QC and Ms Eleanor Campbell (instructed by Enyo Law LLP) for AppellantMr James Eadie QC and Mr Simon Pritchard (instructed by HM Revenue and Customs) for RespondentHearing Hearing date : 10 March 2014
JudgmentLord Justice Patten :
[1]Air passenger duty (“APD”) is a familiar component of the cost of flying. It was introduced in the United Kingdom by the Finance Act 1994 (“FA 1994”) and is payable by the airline as a charge on the carriage of each passenger on a flight originating in the United Kingdom. Section 28 provides:
“(1) A duty to be known as air passenger duty shall be charged in accordance with this Chapter on the carriage on a chargeable aircraft of any chargeable passenger. (2) Subject to the provisions of this Chapter about accounting and payment, the duty in respect of any carriage on an aircraft of a chargeable passenger— (a) becomes due when the aircraft first takes off on the passenger’s flight, and (b) shall be paid by the operator of the aircraft. (3) Subject to section 29 below, every aircraft designed or adapted to carry persons in addition to the flight crew is a chargeable aircraft for the purposes of this Chapter. (4) Subject to sections 31 and 32 below, every passenger on an aircraft is a chargeable passenger for the purposes of this Chapter if his flight begins at an airport in the United Kingdom. (5) In this Chapter, ‘flight’, in relation to any person, means his carriage on an aircraft; and for the purposes of this Chapter, a person’s flight is to be treated as beginning when he first boards the aircraft and ending when he finally disembarks from the aircraft.”
[2]Ryanair has made a claim to recover APD totalling £10,230,613 which it says was overpaid between 16 September 2007 and 31 March 2011. The claim was rejected by HMRC and Ryanair appealed against the refusal under s.16 FA 1994. At a subsequent hearing before the First-tier Tribunal, the FTT transferred to the Upper Tribunal (Tax and Chancery Chamber) the issues of the proper construction of the relevant provisions of FA 1994 and the orders made under it and whether, on the proper construction of those provisions, Ryanair was entitled to the benefit of an exemption for connected flights which I will describe in more detail later in this judgment. Ryanair also issued proceedings in the Administrative Court for judicial review of HMRC’s treatment of it in respect of the connected flights exemption which it says was substantially unfair and inconsistent in the way that it has allowed some other airlines to enjoy the benefit of the exemption even though they do not issue conjunction tickets as defined but has refused to extend the concession to Ryanair. Again, I shall deal with the detail of this argument a little later.[3]The application for judicial review was transferred from the Administrative Court to the Upper Tribunal and heard together with the two issues in the s.16 appeal. The Upper Tribunal (Warren J and Judge Colin Bishopp) (Appeal No. FTC/20/2012) ruled that Ryanair was not entitled to the benefit of the connected flights exemption and dismissed the claim for judicial review. Ryanair now appeal against the decision in the s.16 appeal but not against the decision to dismiss the claim for judicial review.[4]No issue arises in this case about whether the aircraft operated by Ryanair were chargeable under s.29 FA 1994. APD was therefore payable on the carriage of each chargeable passenger: that is each passenger whose flight began at an airport in the United Kingdom: see s.28(4). The rate of duty is prescribed by s.30 by reference to the place where “the passenger’s journey ends”: see s.30(2). The rate differs according to which Part of Schedule 5A the passenger’s final place of destination is specified in and what class of ticket the passenger buys. The longer the journey, the higher is the charge.[5]In the case of passengers taking single flights to a particular destination, the duty is readily calculable. But special provisions have been made to deal with passengers who take connected flights. This will include passengers who take a domestic flight from one UK airport to another where they change on to a flight to a foreign destination; or to passengers whose journey originates abroad but who then use a UK airport to continue their journey by an internal domestic flight to another UK airport or who transit in the UK to another international flight. In each case there will be at least one flight which begins in the UK so as to attract duty under s.28(4). But s.30(5)-(8) provides: “(5) Subject to subsection (6) below, the journey of a passenger whose agreement for carriage is evidenced by a ticket ends for the purposes of this section at his final place of destination. (6) Where in the case of such a passenger—(a) his journey includes two or more flights, and(b) any of those flights is not followed by a connected flight, his journey ends for those purposes where the first flight not followed by a connected flight ends. (7) The journey of any passenger whose agreement for carriage is not evidenced by a ticket ends for those purposes where his flight ends.

(b) any of those flights is not followed by a connected flight,

[6]For the purpose of calculating the applicable rate of duty, s.30 therefore treats the passenger who is ticketed to travel from, say, Edinburgh to Rome via London on what are two connected flights as making a single journey which ends in Rome rather than two chargeable journeys from Edinburgh to London and then from London to Rome.[7]In the case of a passenger who begins his journey abroad but uses a UK airport to transit on to either a domestic or another international flight, the effect of the two flights being connected is to exempt the whole journey from APD by treating the two flights as one journey not originating from a UK airport. The second flight is therefore exempted from the charge to APD even though it begins at a UK airport. This is made clear by s.31(3) which provides: “A passenger whose agreement for carriage is evidenced by a ticket is not a chargeable passenger in relation to a flight which is the second or a subsequent flighton his journey if—(a) the prescribed particulars of the flight are shown on the ticket, and(b) that flight and the previous flight are connected.”

and

[8]“Ticket” is defined by s.43(1) as meaning “a document or documents evidencing an agreement (wherever made) for the carriage of any person”.[9]The prescribed particulars of the flight which must be shown on the ticket for the purposes of s.31(3)(a) are set out in regulation 11 of the Air Passenger Duty Regulations 1994 (S.I. 1994/1738) (“the 1994 Regulations”) as follows:
“(1) For the purposes of section 31(3) of the Act the following particulars of a second or subsequent flight are prescribed— (a) the airport from which the passenger intends to depart; (b) the date and time of his intended departure; and (c) the airport at which he intends to arrive.” (a) the airport from which the passenger intends to depart; (b) the date and time of his intended departure; and (c) the airport at which he intends to arrive.”
[10]The provisions of s.30(8) make it clear that for successive flights to be connected for the purposes of the charge to APD they must be treated as such under an order. The relevant order for these purposes is the Air Passenger Duty (Connected Flights) Order 1994 (S.I. 1994/1821) (“the CFO”).[11]Paragraphs 2 and 3 of the CFO are in these terms:
“Interpretation 2. The provisions of the Schedule to this Order, including the Notes next mentioned, shall be interpreted and applied in accordance with the notes contained therein. Rules for determining whether successive flights are connected 3. The provisions of the Schedule to this Order shall be used, in respect of the transfer of a passenger as described therein, for determining whether successive flights are treated as connected for the purpose of section 30(6), or section 31(3), of the Finance Act 1994.”

Rules for determining whether successive flights are connected

[12]The Schedule (headed “Rules for determining whether successive flights in question are connected flights for the purposes of Air Passenger Duty”) contains two rules. The first (the “Case A Rule”)applies to passengers who transfer to a domestic flight. The second rule (the “Case B Rule”) applies to passengers transferring to an international flight.[13]The Case A Rule states:
“The passenger’s previous flight (“Flight A”), and the next flight after it on his journey (“Flight B”) on which he is carried domestically, are connected if the booked time of departure of Flight B is by or at the time or within the period in column 3 of the following Table specified opposite to the period of time (specified in column 2 of that Table) into which the scheduled time of arrival of Flight A falls on the scheduled day of arrival.”
[14]There is then a table setting out the relevant arrival and departure times. This is followed by some “Notes of interpretation for the Case A Rule and for these Notes” which state: “(1) “Booked”, in relation to a time or an airport, means the time or the airport that is specified expressly and correctly on the passenger’s ticket at the time it is issued or last amended, by reference to the journey to be undertaken by the passenger constituted wholly or partly by Flight A and Flight B. (2) If the ticket does not specify correctly and expressly the time or the airport in question, having regard to the journey undertaken by the passenger which is constituted wholly or partly by Flight A and Flight B (so that the flights in question are not connected), then those flights shall nevertheless be connected where the aircraft operator who would be liable, but for this Note, for the air passenger duty in question satisfies the Commissioners that, had the ticket in question been correctly and expressly specified with the time or the airport in question, the two Flights A and B in question would have been connected by virtue of this Rule. (3) A passenger is carried domestically where the booked airport for the beginning and ending of his flight is in the United Kingdom. (4) “Scheduled” means:—(a) in relation to a time, the time indicated in the operator’s timetable for the flight in question at the time the passenger’s ticket is issued or last amended; and(b) in relation to “the day of arrival”, the day of arrival indicated in the operator’s timetable for the flight in question at the time the passenger’s ticket is issued or last amended. (5) Notwithstanding the effect of this Rule that, but for this Note, would result, Flight A and Flight B are not connected:— (a) where the booked airport of departure of Flight A is the same airport as the booked airport of arrival of Flight B; or (b) where the ticket for Flight A and the ticket for Flight B are not conjunction tickets. (6) For the purposes of paragraph (b) of Note (5) the two tickets in question are only conjunction tickets at the time of issue or when last amended:— (a) if those tickets are contained in one booklet of tickets; or (b) in the case of each of those tickets being contained in a separate booklet of tickets, if:— (i) each of those booklets is referable to the other by virtue of a statement on each to the effect that each is to be read in conjunction with the other; or (ii) each booklet or each ticket in question has as a part of it a summary of the flights of the passenger constituting his journey, which includes the flights in question. (7) “Ticket”, for the purposes of this Rule, means the ticket in the form of a coupon, or the coupon (as it is sometimes called in the airline industry), issued for the passenger in relation to his intended flight specifying the time of and the airport of departure for that flight.” (a) in relation to a time, the time indicated in the operator’s timetable for the flight in question at the time the passenger’s ticket is issued or last amended; and (b) in relation to “the day of arrival”, the day of arrival indicated in the operator’s timetable for the flight in question at the time the passenger’s ticket is issued or last amended. (a) where the booked airport of departure of Flight A is the same airport as the booked airport of arrival of Flight B; or (b) where the ticket for Flight A and the ticket for Flight B are not conjunction tickets. (a) if those tickets are contained in one booklet of tickets; or (b) in the case of each of those tickets being contained in a separate booklet of tickets, if:— (i) each of those booklets is referable to the other by virtue of a statement on each to the effect that each is to be read in conjunction with the other; or (ii) each booklet or each ticket in question has as a part of it a summary of the flights of the passenger constituting his journey, which includes the flights in question.[15]The Case B Rule is as follows:
“Case B Rule, governing a transfer to an international flight 2. The following rule (the “Case B Rule”) applies in the case of a passenger who transfers to an aircraft on which he is carried internationally. CASE B RULE “The passenger’s previous flight (“Flight A”), and the next flight after it on his journey (“Flight B”) on which he is carried internationally, are connected if the booked time of departure of Flight B falls within the period of 24 hours starting at the scheduled time of arrival of Flight A. Notes of interpretation for the Case B Rule and these Notes (1) The Notes of Interpretation for the Case A Rule and its Notes (set out above) numbered (1), (2), (4) limited to its sub-paragraph (a), (5) limited to its sub-paragraph (b), (6) and (7) shall be used for the interpretation and application of this Rule and its Notes. (2) A passenger is carried internationally where his flight begins at an airport in one country and ends at an airport in another country; and for the purposes of this Note the United Kingdom, subject to the provisions of Note (4), is a country. (3) Notwithstanding the effect of this Rule that, but for this Note, would result, Flight A and Flight B are not connected where the airport at which the passenger first boards the aircraft for Flight A is in the same country as that at which the passenger finally disembarks from the aircraft for Flight B.”
CASE B RULE

Notes of interpretation for the Case B Rule and these Notes

[16]APD is recovered through a process of self-assessment and Ryanair accounted for the duty in respect of every passenger departing on one of its flights from a UK airport. It did so, it says, in the mistaken belief that, because its ticketing procedures did not satisfy the conditions set out in Notes (5) and (6) to the Case A Rule, it could not qualify for the connected flights exemption under the Case A and Case B Rules. This was because Ryanair, in common with all other airlines, no longer issues paper tickets as such (whether in the form of one or more booklets of tickets) but operates a paperless electronic system under which passengers book online and receive an e-mail containing a reference code known as a Passenger Name Reference (“PNR”) unique to the booking together with details of the destination, flight number and date and time of the flight or flights if there is a return flight. During the period in question, if the passenger wished to book consecutive connecting flights to an ultimate destination rather than outward and return flights to and from a single destination, the second flight had to be made through a separate booking with its own PNR and e-mail flight details which made no reference either on screen or in the e-mail or any print-out of the booking to there being a connected flight. It did not therefore satisfy the ticketing conditions set out in Notes (5)-(7) which require the details of all flights in the journey to be summarised on one ticket or a combination of tickets which state that they are to be read together.[17]Other airlines such as British Airways and easyJet operate computerised booking systems which enable a passenger to purchase a sequence of flights as part of a single booking with one PNR. The entry by the passenger of the relevant PNR on to the airline booking system therefore produces and allows the passenger to print out his entire itinerary. Although Notes (5)-(7) of the CFO are expressed in terms of the now long abandoned paper-based ticketing system, HMRC have taken the view that these provisions should be interpreted in accordance with the‘always speaking’ principle of statutory construction so as to apply to computerised online booking systems which produce a single record of the whole journey evidencing that the flights involved satisfy the temporal requirements contained in the Case A and Case B rules. Since 1 June 2011 the Ryanair booking system has been modified to introduce these features. But, in the period we are concerned with, it is common ground that even on this ‘always speaking’ construction of the CFO, the ticketing conditions in Notes (5)-(7) were not complied with.[18]Ryanair’s claim for repayment is made under s.137A of the Customs and Excise Management Act 1979. To succeed it must be shown that the APD in question was not due to HMRC: see s.137A(1). The airline accepts that the claim depends on it having satisfied the relevant conditions for the connected flights exemption set out in the CFO. Factual issues such as the number of qualifying flights involved and the quantum of any overpayments will be matters for the FTT.[19]The first and principal issue raised in the Upper Tribunal was whether the ticketing conditions contained in Notes (5)-(7) of the CFO constitute substantive requirements in the Order which have to be complied with in addition to the temporal conditions contained in the Case A and Case B rules in order to obtain the benefit of the connected flights exemption. Lord Pannick QC for Ryanair submitted that the Upper Tribunal was wrong to construe the CFO as containing two sets of conditions (temporal and ticketing) which had to be complied with in every case. The ticketing requirements contained in Notes (5)-(7) are, as the heading in the CFO makes clear, notes of interpretation for the Case A Rule. The structure of the CFO is that there is one obviously substantive provision in paragraph 3 which identifies “the provisions of the Schedule” as determining whether successive flights are to be treated as connected for the purpose of s.30(6) FA 1994. The notes which follow the statement of the Case A Rule and its accompanying table are described as “Notes of interpretation for the Case A Rule and for these Notes” and should therefore be read as aids to the construction of the Case A (or Case B) Rule rather than as additional substantive requirements. Note (5)(a) is said to be an obvious example of this because it makes clear that the Case A (and B) rule has no application to return flights. But Note (5)(b) does not deal with any ambiguities as such. What it does is to stipulate a means of recording whether the temporal conditions have been complied with.[20]It is common ground that the purpose of the CFO was to draw a distinction (for APD purposes) between transfers through a UK airport which qualify for exemption and stopovers which do not. To achieve and enforce this distinction, the temporal conditions in the Case A and Case B rules were introduced. Lord Pannick submits that the ticketing conditions, even if literally complied with, can do no more than to indicate that the two flights were part of one journey and what was the booked transfer time between them. They therefore provide an evidential tool to determine whether the temporal conditions are satisfied. The absence of conjunction tickets therefore removes from the airline the prescribed method of proving whether the flights are connected, but should not be treated as disqualifying the airline from the benefit of the exemption.[21]In support of this construction of the CFO, we were referred to some parliamentary materials consisting of the Tenth Report of the House of Commons Select Committee on Statutory Instruments (18 October 1994) which considered and made various criticisms of the drafting of the CFO. The Committee had received (and appended to their report) a memorandum from the Treasury which states in [4]-[7] in relation to conjunction tickets:
“4.7 Conjunction tickets The tickets for Flight A and Flight B must be conjunction tickets (for which see Notes 5(b) and (6) to the Case A rule: these apply to the Case B rule by virtue of its Note (1)). Conjunction tickets are a present practice of the airline industry. The reason for this requirement of the relief is to enable the airline industry operator, and in particular his ticket issuing agent whenissuing the ticket, to determine his liability for APD and any associated relief arising by virtue of this order, in respect of the passenger in question, from not only the top copy of the tickets when issued, but also the counterfoils of the tickets which he retains for the purpose of making a return after the passenger has flown.”
[22]In paragraph 4 of the report itself the Committee noted:
“The Rules are framed in terms of the length of time between the scheduled time of arrival of the first flight and the booked time of departure of the second flight. Each of these rules is to be interpreted in accordance with a number of notes relating to it, also contained in the Schedule. The Treasury explain in their second memorandum on the Order, printed in Appendix III, that “In the course of settling the contents of the schedule it became apparent that some notes needed to be qualified, and it was believed that this would be achieved best in some cases by adding a note that made that qualification. An example is Note (2) and Note (4) of the Case B Rule set out in paragraph 2 of the schedule”
. The Treasury confirm that the distinction between “Notes” and “note” in article 2 is intended to convey a distinction between a note qualifying a rule, on the one hand, and a note qualifying another note, on the other. The Treasury also explain that the phrase “next mentioned” in Article 2 is intended to refer to “the notes contained herein” at the end of the Article. The Committee reports article 2 on the ground of defective drafting giving rise to a need for the elucidation provided by the memorandum, a need which is exacerbated by the use of a capital letter for “Notes” in one place but not in the other in article 2 and in all places in the Schedule. The Committee notes the intention to clarify the article by re-drafting it following the review of the working of the order by the Commissioners of Customs and Excise after October 1995. The second and third cases considered by the Committee to be defectively drafted are similar to each other. Notes (2) and (5) to the Case A Rule in the Schedule, far from providing interpretation of the Case A Rule or qualification of other Notes to the Case A Rule, make substantive provision and, accordingly, their content should have been incorporated in the Case A Rule itself rather than constituting Notes thereto. There are in fact several Case A Rules, although some are disguised as mere Notes; the drafting should have reflected the reality. The Committee therefore reports Notes (2) and (5) of paragraph 1 of the Schedule on the ground of defective drafting. Similarly, Note (1) to the Case B Rule, insofar as it applies Notes (2) and (5) to the Case A Rule, and Note (3) to the Case B Rule make substantive provision and do not provide interpretation of the Case B Rule or qualification of the other Notes thereto. Accordingly, the Committee also reports Note 1 to the Case B Rule, insofar as it applies Notes (2) and (5) to the Case A Rule, and Note 3 to the Case B Rule on the ground of defective drafting.”[23]In McMonagle v Westminster City Council [1990] 2 AC 716 the House of Lords accepted that words which were on any view surplusage and the product of poor drafting could be ignored when to give them effect according to their literal meaning could undermine the obvious purpose of the legislation. Lord Bridge (at p. 726) said:
“The presumption that every word in a statute must be given some effective meaning is a strong one, but the courts have on occasion been driven to disregard particular words or phrases when, by giving effect to them, the operation of the statute would be rendered insensible, absurd or ineffective to achieve its evident purpose. The principle is shortly stated by Brett J. in Stone v. Yeovil Corporation (1876) 1 C.P.D. 691, 701 where he said: “It is a canon of construction that, if it be possible, effect must be given to every word of an Act of Parliament or other document; but that, if there be a word or a phrase therein to which no sensible meaning can be given, it must be eliminated.” “It is a canon of construction that, if it be possible, effect must be given to every word of an Act of Parliament or other document; but that, if there be a word or a phrase therein to which no sensible meaning can be given, it must be eliminated.”
[24]On the basis of this principle, Note 5(b) should, Ryanair contends, be ignored for the purpose of determining what conditions have to be satisfied in order to qualify for the connected flights exemption.[25]The second limb of Lord Pannick’s argument is that this construction of the CFO is supported by a consideration of the primary legislation. Section 31(3) FA 1994 exempts a passenger from APD in respect of a second or subsequent flight if:
“(a) the prescribed particulars of the flight are shown on the ticket, and (b) that flight and the previous flight are connected.”
[26]The substantive ticketing condition is set out in s.31(3)(a) which, as explained earlier, is a reference to regulation 11 of the 1994 Regulations. The prescribed particulars comprise the details of the airport of departure; the date and time of the passenger’s intended departure; and the airport at which he intends to arrive. Lord Pannick submits that s.31(3)(b) should by contrast be treated as addressed to matters other than the form and contents of the ticket and its evidential rôle. The combination of regulation 11 of the 1994 Regulations and paragraph 3 of the CFO is sufficient to enable the Case A and Case B Rules to be applied to second or successive flights in order to decide whether they are connected for the purpose of s.31(3). As a matter of construction, it would therefore be outside the scope of s.31(3)(b) to treat the test of what constitutes a connected flight under the CFO as including a further ticketing condition. This is confirmed by the definition of a “ticket” in s.43 FA 1994 which applies, of course, to s.31(3) and is different from the definition of “ticket” in paragraph 1(7) of the Schedule to the CFO. It indicates that the FA 1994 had dealt with the ticketing requirements of a connected flight in s.31(3)(a) and that this was not intended to be a matter for the CFO.[27]Lord Pannick referred us to the decision of the Supreme Court in Reilly & Anor, R (on the application of) v Secretary of State for Work and Pensions [2013] UKSC 68 where Lord Neuberger of Abbotsbury PSC at [48] approved what Sir Stanley Burnton had said about the role of delegated legislation: “More specifically, in relation to the point at issue, we cannot improve on the reasoning of Sir Stanley Burnton in the Court of Appeal, where he said this: “75. Where Parliament in a statute has required that something be prescribed in delegated legislation, it envisages, and I think requires, that the delegated legislation adds something to what is contained in the primary legislation. There is otherwise no point in the requirement that the matter in question be prescribed in delegated legislation. However, the description of the Employment, Skills and Enterprise Scheme in the 2011 Regulations adds nothing to the description of such schemes in the Act. ... In effect, the Secretary of State contends that any scheme he creates is a scheme within the meaning of section 17A notwithstanding that it is not described in any regulations made under the Act. Furthermore, it is not possible to identify any provision of the Regulations that can be said to satisfy the requirement that the description be 'determined in accordance with' the Regulations. … 76. Description of a scheme in regulations is important from the point of view of Parliamentary oversight of the work of the administration. It is also important in enabling those who are required to participate in a scheme, or at least those advising them, to ascertain whether the requirement has been made in accordance with Parliamentary authority. …” “75. Where Parliament in a statute has required that something be prescribed in delegated legislation, it envisages, and I think requires, that the delegated legislation adds something to what is contained in the primary legislation. There is otherwise no point in the requirement that the matter in question be prescribed in delegated legislation. However, the description of the Employment, Skills and Enterprise Scheme in the 2011 Regulations adds nothing to the description of such schemes in the Act. ... In effect, the Secretary of State contends that any scheme he creates is a scheme within the meaning of section 17A notwithstanding that it is not described in any regulations made under the Act. Furthermore, it is not possible to identify any provision of the Regulations that can be said to satisfy the requirement that the description be 'determined in accordance with' the Regulations. …[28]Consistently with this, s.31(3)(b) should be read as a legislative statement of intent to introduce through the CFO conditions which deal with matters other than ticketing which was the subject-matter of s.31(3)(a).[29]Lord Pannick also takes issue with what he says is the inconsistent approach by HMRC to the construction of the CFO. They rely, he says, on the wording of Notes (5)(b) and (6) as creating a distinct and substantive ticketing requirement whilst accepting that the Notes must now be interpreted so as to accommodate the changes in technology which have led to a paperless booking system. This involves an acknowledgement that Notes (5)(b) and (6) cannot be given their literal meaning if they are to remain capable of being complied with. No airline issues paper tickets; still less booklets of tickets; and if the rules about conjunction tickets are to be strictly applied no airline would be eligible for the connected flights exemption.[30]Lord Pannick queried whether the always speaking principle has any application to the Notes about conjunction tickets. The provisions of Notes (5)(b) and (6) do not contain a general concept but rather a specific set of physical requirements which no longer exist. The fact Notes (5)(a) and (6) are no longer capable of being complied with and have not been amended to keep pace with changes in the methods of ticketing strongly suggest, he submits, that they were never regarded as more than an evidential tool whose redundancy is not fatal to the application of the connected flights exemption.[31]There are, of course, dangers in this line of argument for Ryanair. If Lord Pannick is right and the rules about what constitutes a conjunction ticket are no longer capable of being complied with, but the Upper Tribunal is also right that they must be complied with as part of the CFO, then the exemption was unavailable to Ryanair for the period in question as well as to all other airlines. Ryanair does not therefore press this argument except as an adjunct to their first and primary submission that Notes (5)(b) and (6) are, on the true construction of the CFO, evidential rather than substantive.[32]In my view, the Upper Tribunal was right to dismiss Ryanair’s claim. Attractive as Lord Pannick’s argument is as an attempted rationalisation of the relevant statutory provisions, his analysis is not capable in my judgment of overcoming the clear words of both FA 1994 and the CFO. The starting point in relation to what is a question of statutory construction must be to assume that the words used were intended to give effect to the purpose of the legislation. The creation of a generally expressed charge to tax subject to a number of exceptions and reservations is a method of drafting common to most tax statutes. Section 28 FA 1994 therefore imposes the charge to APD on the operator of an aircraft in respect of the carriage on any chargeable aircraft of any chargeable passenger. Since chargeable passenger includes every passenger on a flight beginning at a UK airport (s.28(4)), the duty is payable on each single flight of that description unless the provisions of s.30(6)-(8) apply.[33]I agree with the submission of Mr Eadie QC for HMRC that the construction of these and the other provisions relating to connected flights ought to be considered in the first place free from the complications created by the changes in technology which have led to the abandonment of paper tickets. If Ryanair’s construction is correct, it must have been correct from the inception of the legislation. Lord Pannick has placed emphasis on what he contends is a division of subject matter between s.31(3)(a) and (b). The substantive ticketing provisions are, he argues, to be found in s.31(3)(a) to the exclusion of (b) and the CFO should be interpreted consistently with this. But the provisions which introduce the connected flights exemption begin at s.30(6) which qualifies what would otherwise constitute a passenger’s final place of destination under s.30(5) in cases where the passenger’s journey involves taking more than one flight. The default position, as s.30(6) makes clear, is that the place of destination in respect of each flight is to be treated as final and the s.43 definition of “ticket” accommodates this: see s.30(5) and (7). The difference in treatment arises only when the second or subsequent flight is a connected flight: see s.30(6)(b).[34]There is no definition as such of a “connected flight”. Instead, s.30(8) provides that successive flights are connected “if and only if they are treated under an order as connected”. Accepting as I do that the purpose of delegated legislation is or ought to be to add to the content of the primary legislation, it seems clear to me from these words that the definition of what constitutes a connected flight is to be provided by the terms of the relevant[35]Section 30(8) makes no distinction between particular parts of the order it refers to or as between the potential subject matter of such an order. More particularly, there is nothing in s.30(6) which qualifies what is meant by a “chargeable passenger” under s.28(4) so as to indicate what the substance of the criteria or conditions for the exemption should be. That was to be left to the delegated legislation. I do not therefore read s.31(3) as introducing any such limitation. In my view, s.31(3)(b) simply replicates the clearly general provisions of s.30(6)-(8) even though s.31(3)(a) contains what may be described as a ticketing condition in respect of the second or successive flight.[36]That brings one to the construction of the CFO. Paragraph 3 states that the question whether successive flights are to be treated as connected for the purposes of s.30(6) and s.31(3) is to be determined by the “provisions of the Schedule”. One possible argument might be to say that the Notes which follow the table to paragraph 1 of the Schedule are not “provisions of the Schedule” within the meaning of paragraph 3 of the CFO. But that argument, as Lord Pannick recognised, faces formidable difficulties as a matter of construction. It is inconsistent with paragraph 2 of the CFO which treats the Notes as part of the “provisions of this Schedule” and perhaps, more importantly, it fails to accommodate the fact that Note (5)(a) has, by common consent, to be treated as part of the substantive conditions of the exemption.[37]As the Select Committee on Statutory Instruments pointed out in their report, the inclusion of such provisions in what are described as “Notes of interpretation” is somewhat confusing and not good drafting practice. But it was clear to them that the conditions which Note (5) imposes are substantive. I can see no basis on which, as a matter of construction, one can read Note (5)(a) as imposing a limitation on what constitutes a connected flight under Rule A but not give the same effect to Note (5)(b). The use of the conjunction “or” indicates as a matter of ordinary language that they are of equal application. It is perhaps worth noting that in a second Treasury memorandum in response to questions from the Select Committee it was said:
“As regards Note (5): this is intended to tell the reader that even though the flights in question appear to come within the Case A Rule (ie the flights in question appear to be connected) the flights are not to be treated as connected where the circumstances described in paragraph (a) or (b) apply. As indicated in paragraph 2 above, it was intended that the meaning and ambit of both of the Rules should be gathered from a self contained code. Notes (2) and (5) could have been the subject of a paragraph of the schedule (in the same way that all of the provisions of the schedule could have been the subject of paragraphs instead of rules and notes). However, because the rules are to be read in conjunction with the notes, it was felt that a qualification of a rule or of a note should be set out in a note.”
[38]All of this is, I think, evident from the language of the Notes. One can see from Note (6), for example, that there are specific requirements to be satisfied for the tickets to be conjunction tickets. To some extent, these difficulties are recognised by Lord Pannick in his submissions because, on his construction of the CFO, Notes (5)(b), (6) and (7) fall to be deleted. As I explained earlier by reference to the decision in McMonagle, this can in extreme cases be a legitimate approach to the construction of a statute. But the conditions for its exercise are that to give the relevant words their natural (or any possible) meaning would fatally undermine the obvious purpose of the legislation. We are, I think, far from that situation here. Taking the provisions of the CFO at the time when they came into effect, the ticketing conditions contained in Notes (5)(b) and (6) were capable of being satisfied. It is therefore difficult to see any obvious reason why they should not be given effect according to their terms rather than simply deleted as part of the test of what constitutes a connected flight. The general rule is that the court will seek to ascertain the intention of the legislature from the totality of the words used. Surplusage is not to be lightly assumed. In Quintavalle, R (on the application of) v Secretary of State for Health [2003] UKHL 13; [2003] 2 AC 687 Lord Bingham of Cornhill said:
“8. The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said in the enactment to be construed. But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty. Such an approach not only encourages immense prolixity in drafting, since the draftsman will feel obliged to provide expressly for every contingency which may possibly arise. It may also (under the banner of loyalty to the will of Parliament) lead to the frustration of that will, because undue concentration on the minutiae of the enactment may lead the court to neglect the purpose which Parliament intended to achieve when it enacted the statute. Every statute other than a pure consolidating statute is, after all, enacted to make some change, or address some problem, or remove some blemish, or effect some improvement in the national life. The court's task, within the permissible bounds of interpretation, is to give effect to Parliament's purpose. So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment. 9. There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not properly be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but are so regarded now. The meaning of "cruel and unusual punishments" has not changed over the years since 1689, but many punishments which were not then thought to fall within that category would now be held to do so. The courts have frequently had to grapple with the question whether a modern invention or activity falls within old statutory language: see Bennion, Statutory Interpretation, 4th ed (2002) Part XVIII, Section 288. A revealing example is found in Grant v Southwestern and County Properties Ltd [1975] Ch 185, where Walton J had to decide whether a tape recording fell within the expression "document" in the Rules of the Supreme Court. Pointing out (page 190) that the furnishing of information had been treated as one of the main functions of a document, the judge concluded that the tape recording was a document.”
[39]I take the view that one can apply the “always speaking” approach to statutory construction to the provisions of the Schedule to the CFO, although we are not called upon on this appeal to express any view as to whether, so interpreted, they were satisfied by airlines other than Ryanair in the period under review. But I am also satisfied that, whether or not they can be so interpreted, the correct approach to construction is not to delete Notes (5)(b) and (6) from the Schedule. Lord Pannick’s point that some support for Ryanair’s construction can be derived from the present impossibility of literal compliance with the conjunction tickets provisions is, I think, misplaced. The CFO cannot be construed by reference to subsequent events which were not necessarily foreseeable in 1994 and, when looked at in the context of the ticketing practices at that time, its provisions were entirely workable.[40]So far as Ryanair’s arguments embody an attack on the vires conferred by s.30 and s.31 FA 1994, they fail in my view for essentially the same reasons. The provisions of s.30 are unlimited and s.31(3)(a) and (b) are not to be construed in the exclusive and self-contained way contended for.

Conclusions

[41]I would therefore dismiss the appeal.

Lord Justice Pitchford :

[42]I agree.

The Master of the Rolls :

[43]I also agree.

order

in this case the CFO. And it is not surprisingly common ground that Ryanair can only succeed in its claim if it can bring the flights in dispute within those provisions.