“ It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words … This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation. ” 34. The court in Pollen Estate also referred to the words of Lord Reid in Luke v IRC[1963] AC 557 at 577: “ To apply the words literally is to defeat the obvious intention of the legislation and to produce a wholly unreasonable result. To achieve the obvious intention and produce a reasonable result we must do some violence to the words. This is not a new problem, though our standard of drafting is such that it rarely emerges. The general principle is well settled. It is only where the words are absolutely incapable of a construction which will accord with the apparent intention of the provision and will avoid a wholly unreasonable result, that the words of the enactment must prevail. ” 35. The court then went on to construe paragraph 1(1) adding the highlighted words as follows: “A land transaction is exempt from the charge to the extent that the purchaser is a charity and the following conditions are met …”
“ 288(1) An interest does not cease to be the relevant interest merely because of the creation of a lease or other interest to which that interest is subject. (2) This is subject to any election under section 290. ” 41. Mr Mullan emphasised use of the word “merely” in that sub-section. Section 288(1) refers to the position where a lease or other subordinate interest is created, to which the relevant interest is subject. He submitted that the effect of section 288(1) was that the grant of a subordinate interest will not “ on its own ” cause an interest to cease to be a relevant interest. The implication was that depending on the circumstances the grant of a subordinate interest could cause an interest to cease to be a relevant interest. 42. Mr Mullan submitted that the question whether the grant of a sub-lease causes a lease to cease to be a relevant interest would involve consideration of the terms of the sub-lease. In particular the grant of a sub-lease where the lessor did not retain any valuable interest in a building might cause a lease to cease to be a relevant interest. It was implicit in Mr Mullan’s submissions that if in those circumstances the lease ceased to be a relevant interest, the purposive construction of section 286 meant that the granting of a sub-lease would be treated as the sale of a relevant interest. If the grant of a sub-lease could never amount to the sale of a relevant interest then section 288(1) would be unnecessary. On that basis Mr Mullan submitted that it was not necessary to omit, add or substitute any words in the legislation to arrive at a result consistent with the policy intention of Parliament. Nor was it necessary to do violence to the words of the statute. 43. We were also referred to the decision of Megarry J in Sargaison v Roberts[1969] 1 WLR 951 as support for the proposition that niceties of English land law should not affect the availability of capital allowances. In that case the taxpayer was a farmer who acquired freehold property in 1957 and incurred considerable capital expenditure that qualified for allowances. In 1964 he settled the freehold on trust for the benefit of his family, and the trustees immediately granted a 40 year lease to the taxpayer so that he could continue farming. The Inland Revenue refused a capital allowances claim in 1965-66 on the basis that the taxpayer had transferred the whole of his interest in the land to some other person, namely the trustees withinsection 314(4) Income Tax Act 1952 . 44. The general commissioners allowed the taxpayer’s appeal and Megarry J dismissed an appeal by the inspector of taxes. He held that whilst there was a notional instant during which the taxpayer had no interest in the land, the reality was that his interest had been reduced from freehold ownership to a long lease and he had not transferred the whole of his interest in the land. He was supported in that conclusion by his view that the Act was not drafted in terms of English property law but in broader and less technical language. He concluded that the statutory provision was intended to operate broadly, without fine technical distinctions. 45. We do not consider that Sargaison v Roberts provides much if any real support for Mr Mullan’s arguments in the context of the provisions we are asked to construe. More important are the words used by Parliament in the statute, together with the broad context and policy which underpin IBAs. 46. Mr Bracegirdle submitted that the legislation made specific provision for circumstances where there was more than one interest in a building. On the facts of the present case there were three interests in Unit 2 – the freehold, the Lease and the Underlease. The possibility of more than one interest in a building made it important to define precisely the interest which was relevant for IBA purposes. He relied on the express wording of section 286(3) which makes provision for more than one interest in a building. Where one of the interests is reversionary on the other it is the reversionary interest which is the relevant interest. 47. Mr Bracegirdle also relied on section 359(5). Section 286(1) which sets out the general rule as to what is the relevant interest, is expressly subject to section 359. Section 359 makes provision for new leases arising on the termination of a lease to be treated as a continuation of the original lease. Section 359(5) provides as follows: “ 359(5) If on the termination [of a lease] – (a) another lease is granted to a different lessee, and (b) in connection with the transaction that lessee pays a sum to the person who was the lessee under the first lease, the two leases are to be treated as if they were the same lease which had been assigned by the lessee under the first lease to the lessee under the second lease in consideration of the payment. ” 48. Section 359(5) could apply in the circumstances of the present appeal if there had been a surrender of the Lease together with a re-grant of a lease by the freeholder to Mr Wellstead. Obviously that would require a willingness on the part of the freeholder to grant a new lease directly to Mr Wellstead, which it may or may not have been willing to do. It might also apply to some form of partition of the Lease. 49. Mr Mullan accepted that in theory it might have been possible for there to have been some form of partition of the lease and an assignment of that part relating to Unit 2. We do not know whether HMRC would have maintained an argument that a partitioned lease of Unit 2 would not be the same interest as the relevant interest which was a lease of both units. 50. Mr Bracegirdle submitted that if Parliament had intended to treat the grant of a long lease as a sale of the relevant interest then it could easily have done so. However it restricted relief in such circumstances to sub-leases exceeding 50 years between non-connected persons and where an election was made. It did not intend IBAs to be available generally in the case of sub-leases outside sections 290 and 291. He submitted that was the only qualification to the general rule in section 288(1) that an interest does not cease to be a relevant interest because of the creation of a subordinate interest. 51. The difficulty with Mr Bracegirdle’s construction of section 288 is that the word “merely” in section 288(1) is rendered unnecessary. It is not necessary to include that word simply, as Mr Bracegirdle suggested, to lead the reader to sub-section (2). Sub-section (2) naturally follows from and qualifies sub-section (1) without any need for the word “merely”