Alas, Proctor and Gamble has lost its fight before Britain's highest court. The product may be fun, and the chips may look exactly alike (well, as alike as technology and manufacture can make them look) but the justices have ruled. Pringles are potato chips (Notice, no "e" at the end, Dan Quayle). Even P&G's own website agrees that the major ingredient in Pringles is "dried potatoes."
P&G wanted its "savory snack" to qualify as something other than a potato chip, so that it would be exempt from the VAT (value added tax), and thus sell for less than comparable products, "crisps," in British parlance. But the Supreme Court of Judicature ruled that legal sleight of hand was not necessary to spell out how Pringles might be different from "crisps." Just because Pringles weren't completely potato didn't mean they weren't any potato at all. Indeed, they're 42 percent potato. That was enough spudosity for the Court. One could discern "potato-ness" in a Pringles with that much potato hanging on. Other P&G arguments didn't hold water either (possibly inflating potato volume). Because Pringles were made of a mix of potato and grains didn't mean they weren't potato. The Court noted that if that were true, then "a marmalade made using both oranges and grapefruit would be made of neither — a nonsense conclusion.” Two thoughts come to mind here. 1) These are the folks who spawned Edward Lear and Lewis Carroll. 2) The Brits do like their marmalades.
To be fair, this case is really about deference to the agency. "Although Mr Christopher Vajda QC for HMRC opened the appeal by attacking the judgment of Warren J rather than concentrating upon the decision of the Tribunal (which of course he contended was correct) in the end counsel were agreed that what really mattered was whether the decision of the Tribunal was wrong in law. For it is the Tribunal which is the primary fact finder. It is also the primary maker of a value judgment based on those primary facts. Unless it has made a legal error in that in so doing (e.g. reached a perverse finding or failed to make a relevant finding) or has misconstrued the statutory test it is not for an appeal court to interfere. This has been said in other contexts e.g Osmani v Camden LBC [2007] EWCA Civ 1281 at [34] ("the main focus of attention on a second appeal such as this should be on the decision of the Council rather than that of the County Court Judge on appeal" per Auld LJ and Waltham Forest LBC v Maloba [2007] EWCA Civ 1281 at [19] per Toulson LJ). The same applies for the same reasons to appeals from this Tribunal."
What P&G had to show was that the agency had so erred and how, persuading the appellate court to reverse the finding. What was at stake was about one hundred million pounds in tax receipts, a not inconsiderable stack of chips. The Court's discussion of the nature of a Pringles is to show why the Tribunal's is not error (not a perverse finding, making an irrelevant finding, not miscontruing the statutory test).
The Court notes that the case here is "not one calling for or justifying over-elaborate, almost mind-numbing legal analysis. It is a short practical question calling for a short practical answer. The Tribunal did just that." It goes on to say, "no doubt because of the submissions which were made to it by the parties, the treatment of the issue which was before it, was far more elaborate than was necessary. I do urge Tribunals, when considering issues of this sort, not to be misled by authorities which are no more than authorities of fact into elevating issues of fact into questions of principle when it is not appropriate to do so on an inquiry such as this. The Tribunal had to answer one question and one question only: was each of these products properly described as biscuits or not? If it had confined itself to that issue which is, and has to be, one of fact and degree, then the problems which subsequently arose would have been avoided."
The Court even discusses where to draw the rule with regard to the "42 percent" problem, quoting the U.S. Justice Oliver Wendell Holmes, Jr. "'When he has discovered that a difference is difference of degree, that distinguished extremes have between them a penumbra in which one gradually shades into the other, a tyro thinks to puzzle you by asking you where you are going to draw the line and an advocate of more experience will show the arbitrariness of the line proposed by putting cases very near it on one side or the other, Law and Science in Law Collected Legal Papers 1921, pp.232-233,'Putting the point another way: you do not have to know where the precise line is to decide whether something is one side or the other....Here the potato flour content is over 40 per cent; it is the largest single ingredient by about 9 percentage points; and it is nearly three times larger than the other flours in the ingredients taken together. We have to give a yes or no answer to the question 'are Regular Pringles [partly] made from the potato, from potato flour or from potato starch' and we are bound to say yes. There are other ingredients but it is made from potato flour in the sense that one cannot say that it is not made from potato flour, and the proportion of potato flour is significant being over 40 per cent. The fact that it is also made from other things does not affect this. I cannot begin to see anything wrong with that, still less that that was not a conclusion which any reasonable Tribunal could reach. There is more than enough potato content for it to be a reasonable view that it is made from the potato."
An interesting case from a legal snack food point of view, but not, I think, wholly unexpected. And thus does the chip crumble. Snap!
Read more here in an op-ed from Adam Cohen and here from Improbable Research. The case is Procter & Gamble UK v Revenue and Customs Commissioners, Court of Appeal, Civil Division, [2009] All ER (D) 177 (May); [2009] EWCA Civ 407, decided 20 May 2009.
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