Scottish Court of Session Decisions

These were appeals by the Inspector of Poor of the City Parish of Glasgow against valuations made by the Assessor of Railways, &c., of the Corporation Gasworks and the Corporation Waterworks.

The assessor had fixed the valuation of the latter at £113,188, 12s. 5d. The appellant objected, inter alia, that there had been erroneously allowed deduction of the whole rates and taxes instead of one-half, beinga deduction of £9225, 2s. 8d. instead of one-half thereof, £4612 11s. 4d.

In the case of the gasworks it was in like manner objected that the assessor had allowed deduction of the whole expenditure for taxes, amounting to £19,162, 7s. 6d. instead of £9581, 3s. 9d., being half thereof, the remaining half being properly applicable, as he contended, to the Gas Commissioners as owners of the works. Objection was also taken to a deduction of £449, 13s. 2d. for law and parliamentary charges.

Argued for appellant—The deduction here claimed was novel. The gross rent, deducting tenant's profits, ought to be taken.

Argued for respondent—The difficulty arose from having to apply an assumed tenancy to a case in which the assumed tenant had to undertake much of the landlord's duties and to make no profit. The deductions allowed were fair and reasonable.

Authorities.— Droitwich Case, L.R., 2 Ex. Div. 49; Dundee Gas Commission, 9 R. 1240; Kirkwell, 1881, 9 R. 1243; Edinburgh and Glasgow Railway Co., 8 Macph. 229; Dalbeattie Case, 10 R. 23.

The Lord Ordinary on the Bills, after hearing counsel, pronounced these interlocutors:—

Waterworks.

“Finds that in fixing the annual rent or value of the lands and heritages in question, deduction should only be allowed of a proportion of the rates and taxes paid in respect of such heritages, being the proportion payable by a tenant: Finds that the amount to be now deducted in respect of such proportion of rates and taxes is the sum of Four thousand six hundred and twelve pounds eleven shillings and four pence sterling, being one-half of the whole amount of the rates and taxes paid or payable in respect of said heritages: To this extent and effect sustains the appeal: Quoad ultra dismisses the appeal and remits to the assessor to amend the valuation in accordance with this interlocutor.

Note.—It was argued for the appellant that the assessor had erroneously allowed deduction of the whole expenses of management and maintenance on the ground (1) that a proportion at least of these would necessarily fall upon the landlord, and (2) that in valuing heritages the gross rental received by the landlord should enter the valuation-roll without any deduction on account of the expense he had been put to on account of management and maintenance. I should not hesitate to give effect to this argument in the ordinary case of landlord and tenant. But this is not the ordinary case; it is the case of landlord and tenant in one person prohibited from making any profit by his enterprise or business. In these circumstances there is considerable difficulty in reaching the standard of valuation given by the

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Valuation Act viz., ‘the rent at which, one year with another, such land and heritages might in their actual state be reasonably expected to let from year to year,’ It is not impossible however, to apply that standard to the present case. A tenant would scarcely be found to enter upon the works in question at a loss to himself, but a tenant might be found to carry them on without gain. The corporation is in fact its own tenant on these terms. What the tenant in such case could reasonably be expected to give as rent is just what he received less the rent of management and maintenance, and what the tenant paid and the landlord received under such an agreement would be the gross rent. I agree in the opinion of Lord Fraser and Lord Kinnear [ante, vol. xxii.p. 10, and p. 114] that the yearly rent or value of the works in question is the income derived from the rates after all necessary outlays have been met. Rates and taxes, however, stand in a different position. These are imposed on landlord and tenant in a certain proportion. That which is imposed on, and may be directly recovered from, the landlord as such, cannot be said in any view to be tenants' expenditure, and cannot, in my opinion, be allowed as a deduction from gross rent. I have allowed therefore a deduction—one-half of the amount paid or payable as rates or taxes in respect of the heritages in question, the assessor informing me that that is the amount fairly chargeable against the tenant.”

Gasworks.

“Finds (first) that in fixing the annual rent or value of the lands and heritages in question deduction should only be allowed of a proportion of the rates and taxes paid in respect of such heritages, being the proportion payable by a tenant: Finds (second) that the amount to be deducted in respect of such proportion of rates and taxes is the sum of £14,371, 15s. 7d. sterling, being three-fourths of the whole amount of the rates and taxes paid or payable in respect of said heritages: Finds (third) that the deduction of £449, 13s. 2d. on account of law and parliamentary charges should not be made; to this extent and effect sustains the appeal; quoad ultra dismisses the same, and remits to the assessor to amend the valuation in accordance with the interlocutor.

Note.—No explanation was offered as to the circumstances under which, or the purpose for which, the charge for law and parliamentary expenses was incurred; prima facie these are landlord's, not tenant's, charges, and I disallow them as deductions in ascertaining the yearly rent or value of the subjects in question. As regards the other deductions which form the subject of appeal, I refer to the note appended to my interlocutor on the appeal relative to Glasgow Waterworks [ supra], adding only that in fixing the amount to be allowed as deduction in respect of taxes I have proceeded on the information of the assessor, who had satisfied himself that about one-fourth of the taxes was all that could be regarded as the landlord's proportion.”