British Oxygen Co Ltd v Board of Trade (British Oxygen Co Ltd v Minister of Technology)

A public authority entrusted with statutory discretion may adopt a policy, even one precise enough to be called a rule, to guide many similar applications. It must remain willing to consider a substantial argument for an exception or change and must not refuse to listen. Where the statute supplies no policy or guidance beyond eligibility, an eligible applicant has no right to a grant. Exercise of the discretion may still be impugned for bad faith or such unreasonableness that no real discretion was exercised.

Under legislation excluding vehicles, equipment forming a practical single transport unit is part of the vehicle. Reusable cylinders may nevertheless qualify as plant while used to receive or store manufactured gases. Storage ends when delivery begins. Dual-purpose use does not necessarily disqualify expenditure and may justify proportionate approval.

British Oxygen Co Ltd v Board of Trade (British Oxygen Co Ltd v Minister of Technology) concerned applications for investment grants under the Industrial Development Act 1966. The company claimed grants for road tankers, hydrogen-cylinder trailers and large numbers of reusable gas cylinders. The Minister treated the tankers and trailers as excluded vehicles and operated a policy against grants for individual items costing less than £25.

The company began proceedings by originating summons and sought declarations about the equipment's eligibility, the legality of the £25 policy and whether approval imposed a duty to pay. It appealed from the Court of Appeal's order, reported at [1969] 2 WLR 892.

The central questions were whether the equipment was eligible plant, whether the reusable cylinders were used in an industrial process through receipt or storage of manufactured gas, and whether a statutory discretion could lawfully be administered through a general policy.

1. Disposition. The House dismissed the appeal unanimously. Lord Reid proposed a slight variation of the Court of Appeal's order and awarded the respondent three-quarters of his costs in the House. Lord Morris of Borth-y-Gest, Lord Wilberforce and Lord Diplock expressly agreed with Lord Reid's speech; Viscount Dilhorne separately reached the same overall disposition.
2. The statutory discretion. Per Lord Reid, the word “may” in section 1(1) of the Industrial Development Act 1966 conferred a discretion. The Act prescribed eligibility but supplied no policy or guidance governing which eligible applicants should receive grants. It therefore gave an eligible person no right to payment and imposed no duty to make a grant. If an enactment disclosed a policy or guidance, the discretion would have to be exercised consistently with it, applying Padfield v Minister of Agriculture [1968] AC 997.
3. Limits and policies. An unqualified discretion remained reviewable for bad faith or for such unreasonableness that there had been no real or genuine exercise of discretion. Subject to those controls, the Minister could adopt a legitimate limiting policy. Explaining R v Port of London Authority [1919] 1 KB 176, Lord Reid held that the distinction between a policy and a rule was not decisive. A large authority dealing with many similar applications could adopt a policy precise enough to be called a rule, provided it remained willing to listen to a substantial argument or something new. An oral hearing was unnecessary. The Minister's officers had considered the company's representations. Viscount Dilhorne considered it unnecessary to decide the hypothetical position had they refused to do so and doubted whether the earlier formulation applied literally to this administrative scheme.
4. Tankers and hydrogen trailers. Per Lord Reid, each tanker formed a single vehicle designed and used for transporting liquefied gases. Its tank could not be notionally severed from the chassis. The hydrogen cylinders, although detachable, were never detached during use and were likewise parts of the trailer rather than its load. Both types were therefore excluded vehicles under section 13. Viscount Dilhorne agreed and additionally considered that filling the tankers and trailers for distribution was not a process incidental to making the gases.
5. Reusable cylinders. Per Lord Reid, the individual cylinders were plant and were capable of qualifying when used to receive newly made gases or to store them. Storage under section 1(3) meant keeping goods in store and ended when delivery to customers began. Use for both storage and delivery did not automatically disqualify the cylinders. The Minister could approve the proportion of capital expenditure appropriate to an eligible use. The available facts did not permit a more definite declaration, but this conclusion accounted for the company's limited success and the slight variation of the order.

1. House of Lords: The appeal was dismissed unanimously in British Oxygen Co Ltd v Board of Trade (British Oxygen Co Ltd v Minister of Technology) [1971] AC 610. The Court of Appeal's order was slightly varied, and the respondent received three-quarters of his costs in the House.
2. Court of Appeal: The order under appeal was reported at [1969] 2 WLR 892. Its precise terms are not reproduced, although the House substantially left it undisturbed.
3. Proceedings below: The company issued an originating summons on 7 July 1967 and later amended it to seek declarations concerning eligibility, the £25 policy and the alleged duty to make grants. The judgment does not state the earlier court's citation or precise disposition.