Scottish Court of Session Decisions

In the amended valuation roll made up for the year ending Whitsunday 1885 the yearly rent or value of the lands and heritages belonging to the Glasgow Corporation Waterworks was fixed by the Assessor of Railways, Canals, &c., at £116,126.

In February 1885 intimation was made to the Corporation, as Waterworks Commissioners, by the Collector of Poor and School Rates for the City Parish that they were assessed for the year ending 14th May 1885, under the Poor Law Amendment Act 1845 (8 and 9 Vict. cap. 83), for the relief of the poor of that parish, and also under 35 and 36 Vict. cap. 62, for the Glasgow school rate, as owners and occupiers of lands and heritages within the parish of the annual value of £11,696, the poor and school rate upon which amounted to £807, 2s. 11d., being £563, 9s. 7d. of poor rate, and £243, 13s. 4d. of school rate.

Upon the receipt of this notice the Corporation objected, and represented to the collector that he had failed to make the deduction allowed by section 37 of the Poor Law Amendment Act of 1845, which provides—“That in estimating the annual value of lands and heritages the same shall be taken to be the rent at which, one year with another, such lands and heritages might in their actual state be reasonably expected to let from year to year under deduction of the probable annual average cost of the repairs, insurance, and other expenses, if any, necessary to maintain such lands and heritages in their actual state, and all rates, taxes, and public charges payable in respect of the same, provided always that no mine or quarry shall be assessed unless it has been worked during some part of the year preceding the day on which the assessment may be ordered to be levied.”

The collector, on the grounds stated below, refused to make the deductions demanded, maintaining that every proper deduction had already been made.

The Corporation offered the collector the amount of the assessment less 20 per cent., a deduction which had been allowed in previous years as hereafter explained, which offer he refused.

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He thereafter obtained a warrant from the Sheriff against the Corporation for recovery of £887, 17s. 2d., being the assessment, with the addition of £80, 14s. 3d. added for costs. This warrant was followed on 24th June 1885 by a poinding of certain property belonging to the Corporation as Commissioners.

On 20th October a note of suspension was presented by the Corporation, praying the Court to interdict the collector from enforcing the disputed assessment and the warrant to poind and the execution of poinding.

It appeared from the admissions of the parties that in prior years the practice had been, in working out the provisions of the section, to allow the complainers a deduction of 20 per cent. on the value.

The respondent (the collector) explained that in the year now in dispute he was carrying into effect the principle of valuation fixed by the Lord Ordinary on the Bills in an appeal decided by him on 30th September 1884; that the yearly value as originally fixed by the Assessor of Railways and Canals was £131,404, against which the Corporation had appealed, and this interlocutor had been pronounced by the Lord Ordinary on appeal—“Finds that in fixing the annual rent or value of the lands and heritages belonging to the appellants a deduction should be allowed from the gross revenue of all necessary outlays for management, maintenance, and repairs which are properly chargeable against revenue, and not merely a proportion of these charges; quoad ultra dismisses the same, and remits to the assessor to amend the valuation in accordance with this interlocutor” [see ante, vol. xxii. p. 10]; that the Assessor had proceeded to reduce his valuation in terms of the judgment of the Lord Ordinary by “allowing a deduction from the gross revenue of all necessary outlays for management, maintenance, and repairs which were properly chargeable against revenue;” that in doing so he allowed the items then claimed as deductions from the valuation roll by the complainers themselves, which items were the cost of repairs on the works and bridges, half wages of inspectors, clerks, artisans, half rates and taxes, half auditor's and assessor's fees, the law and parliamentary expenses, the cost of materials, horse's food, workmen's houses, and insurance. The result was that the amended valuation roll fixed the value at £116,126, as above stated.

The complainers replied that the deductions referred to by the respondent were made for the purpose of ascertaining the sum to be entered in the valuation roll as the value of their property, and were quite separate and distinct from those which they were entitled to under section 37 of the Poor Law Act, viz., “probable annual average cost of repairs, insurance, and other expenses, if any, necessary to maintain such lands and heritages in their actual state, and all rates, taxes, and public charges payable in respect of the same.” They maintained that the provisions of the Valuation of Lands Act, and particularly of section 30 thereof, were conclusive on the question of value, and that the respondent was therefore not entitled to inquire how the roll was made up and the value therein entered arrived at, or the purposes for which any deductions claimed under it had been allowed.

The Lord Ordinary appointed the complainers to lodge in process a note of the several heads under which they claimed deductions and the amount they claimed.

They lodged a minute claiming under (1) the head of repairs, the cost of repairing works and bridges, and also one-half the wages of workmen engaged thereat, and one-half the expense of the materials, in all £8299, 3s. 3d.; (2) under the head of insurance, a sum of £27, 1s. 9d. as insurance on buildings; (3) under the head of other expenses not included in these items, a sum of £572 for one-half horses' keep, one-half rent of workmen's houses, also the charges for law business, and Parliamentary charges, and a sum of compensation to certain owners of fishings; (4) one-half of rates and taxes, one-half of fee to public assessor for valuation roll, and stamps for mortgages, £5054, 15s. 11d.—or in all under the four heads, £13, 953, 17s. 9d.; and further, they craved to be allowed certain sums for depreciation and deterioration of the subjects belonging to them. These items, therefore, as appeared from the minute, were, except the claim for depreciation, the items which had been, as the collector stated, allowed by the assessor in arriving at the valuation which he had entered on the roll.

On 20th May 1886 the Lord Ordinary ( Lord M'Laren) pronounced this interlocutor—“Finds that the complainers are entitled to deduction of the estimated or probable annual average cost of the repairs, insurance, and other expenses which are necessary to maintain the water-works and others constituting their undertaking in their existing state, and all rates, taxes, and public charges payable in respect of the same: Finds that the complainers are liable to be assessed for the relief of the poor on the annual value of their undertakings as appearing on the valuation roll, videlicet, on the sum of £114,670” [ i.e., the £116,126 above stated, after taking off £1456 applicable to certain works known as the River Supply Works, about which there had been no appeal to the Lord Ordinary on the Bills] “under deduction as aforesaid: Finds the circumstances stated showing that the various elements of deduction here specified were to certain effects taken into account by the Court in fixing the annual value of the said undertaking do not constitute a relevant answer to this complaint, and appoints the case to be further heard on the question of the amount of the deduction being made in terms of the preceding findings, and of the Poor Law Amendment (Scotland) Act 1845.

“ Opinion.—The complainers, the Magistrates of Glasgow, are proprietors of a public undertaking, being the Glasgow Water-Works, the annual value whereof, as stated in the valuation roll for the current year, is £114,670.

“They have been assessed for the relief of the poor in the City Parish of Glasgow, and for school rate, on the full annual value of their undertaking, and they have presented this note of suspension for the purpose of establishing their claim to the deductions specified in the 37th section of the Poor Law Amendment (Scotland) Act for repairs, public burdens, and others.

“The defence, shortly stated, is, that under an appeal to the Lord Ordinary on the Bills against the assessor's valuation, Lord Kinnear, the Lord Ordinary officiating in the Bill Chamber, after

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hearing counsel, reduced the assessable value by taking off a sum which his Lordship held to be the equivalent of the cost of maintenance, repairs, public burdens, and other outgoings. Thus, it is said for the defender, the complainers have already received the benefit intended by the statute in another form, and are not entitled to a second deduction in respect of the same outgoings.

“The apparent reasonableness of this contention appeared to me to recommend it to favourable consideration, but while willing if possible to give effect to it, I have not been able to remove the impression I originally formed of its essential unsoundness.

“I cannot adopt the suggestion that the Lord Ordinary on the Bills, in reducing the assessor's valuation to a lesser figure, was making the deduction contemplated by the Poor Law Amendment Act.

“It is settled by decisions of this Court, and is matter of, familiar and unvarying practice, that the deductions authorised by the Poor Law Act of 1845 are deductions to be made in diminution of the sum in the valuation roll. This was of course known to the counsel who argued the case, and to the Lord Ordinary, and in the report of the case which has been furnished to me there is nothing which suggests in the faintest degree that the Lord Ordinary was asked to anticipate, or meant to anticipate, the Poor Law deductions from rental.

“The fixing of the annual value is very much a discretionary proceeding. The Judge is not bound by any fixed rules, and his decisions have not been considered always to have the same finality as regards future valuations which we are accustomed to attribute to the decisions of a Judge on strictly legal questions. It is therefore for consideration whether in this question I ought to look to the grounds of the Lord Ordinary's decision at all, or to look at anything except the sum in the valuation roll, taking that sum at a gross valuation from which certain statutory deductions are to be made.

“I may say, however, that I have carefully considered the note of Lord Kinnear's opinion, and that in my apprehension it does not support the respondent's contention.

“I understand that his Lordship expressed the difficulty which has been felt in similar cases of realising the case of a hypothetical tenant who would take over such an undertaking as the Glasgow Water-Works at a yearly rent, especially in view of the statutory provision to the effect that the proprietors of the undertaking are not to make a profit by the sale of the water beyond the surplus which they are authorised to set aside as a sinking fund.

“It is plain enough, and it is known to the profession, that the application of the Valuation Act to public undertakings is difficult, and that the value of such concerns is arrived at by a highly artificial system of rules, which, as I have said, are not strictly obligatory, but are used as guides to the ascertainment of a reasonable value. In ascertaining the rent to be given by the hypothetical tenant every element is taken into account which a tenant would consider preparatory to making his offer. Amongst these, repairs, insurance, maintenance, rates, and taxes are of course considered, because no tenant in considering what rent he could afford to give would omit to take account of such outgoings. The larger the outgoings the less rent would the tenant be able to give, other circumstances being supposed equal, and therefore outgoings are rightly and necessarily allowed for in making the valuation as deductions from the gross income of the hypothetical tenant. But a deduction from gross income and a deduction from assessable value are very different things, and the Lord Ordinary in making the first of these deductions left the second entirely unaffected.

“The same distinction might indeed be taken respecting private property. I can imagine a tenant anxious to remain in his house, warehouse, or farm, making a calculation to find what was the highest rent he could afford to offer on the footing that he was to undertake repairs, taxes, insurance, and charges. He would certainly consider such repairs, taxes, &c., as elements of deduction from gross profits before he could arrive at the sum available for rent. But none the less would he be entitled when he came to settle with the inspector of poor to claim that these very elements should be deducted from the actual rent stated in the valuation roll, and to pay poor-rate only on the difference.

“It appears to me, indeed, that there is no real inconsistency between the judgment I propose and that which was given in the valuation roll appeal case, nor is there in reality a case of double deduction. The same elements undoubtedly enter into the two computations, but they enter these in different ways and for different purposes. Nothing is more common in the more complicated arithmetical operations than that the same factor should appear more than once in different stages of the computation without any doubt being thereby suggested as to the validity of the formulae or the correctness of the arithmetical processes by which the desired result is attained.”

Thereafter his Lordship pronounced this further interlocutor—“Finds that the complainers are entitled to deduction of the whole of the sums claimed in their minute under the head of repairs, insurance, rates, taxes, and public charges: Finds that they are not entitled to deduction of the third, fourth, and fifth items of miscellaneous expenses, being compensation to owners of fishings and charges for law and Parliamentary expenses: Finds that the deductions herein allowed amount to £13,648, 15s. 11d.: Finds that the complainers are not entitled to the additional deductions claimed in respect of depreciation or deterioration of the subjects belonging to them, and lastly, that the value on which the complainers ought to be assessed is £102,478, being the value stated in the valuation roll, £116,126 under deduction of the foresaid sum of £13,648: Therefore suspends the notice of assessment, warrant, and execution of poinding in so far as the same are in excess of assessment applicable to the said sum of £102,478: Quoad ultra dismisses the note of suspension, and decerns: Finds the complainers entitled to expenses,” Ac.

The collector reclaimed, and argued—The result of the Lord Ordinary's judgment was to give a deduction again which the assessor had already made in making up the roll. The Court, though not itself a Valuation Court, could inquire into the manner in which the roll had been made, and, so doing, could give effect to the circumstance

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that a double deduction was the true nature of the claim made by the complainers. There were no tenant's profits in the present case, as the subject did not admit of them; instead thereof the Lord Ordinary proposed to allow as deductions landlord's taxes because of the peculiarity of the subject. What was let in the present case was the rates and the right to collect them, and the assessable amount should be the annual returns less working expenses

Authorities— North British Railway Company v. Assessor for Leith, February 9, 1854, 11 R. 558; Caledonian Canal Commissioners v. Assessor of Railways and Canals, September 29, 1886, 24 S.L.R. p. 80; Mersey Dock Commissioners, L.R., 9 Q.B. 92; Edinburgh and Glasgow Railway Company v. Adamson, June 28, 1855, 17 D. 1007; Dundee Gas Commissioners, January 12, 1881, 9 R. 1240; Sharp v. Latheron Parochial Board, July 12, 1883, 10 R. 1163.

Replied for complainers—The amount stated in the valuation roll, which was the basis for assessment, was gross rental. It was impossible to get behind the valuation roll, and from the sum there set down the respondents were entitled to certain deductions under sec. 37. This was not a case of double deduction at all, as all that the assessor had to do was to find gross rental, and, having it, to allow certain deductions therefrom. What the valuation roll showed was gross rental, as clearly appeared from the terms of section 6.

Authorities— Edinburgh and Glasgow Railway Company v. Meek, December 10, 1864, 3 Macph. 229; City of Worcester Droitwich Assessor, L.R., 2 Ex. Div. 49; Mersey Docks v. Liverpool, L.R., 9 Q.B. 92; Poor Law Act (England), 6 and 7 Will. IV. c. 96, sec. 1; Valuation of Lands (Scotland) Act 1854 (17 and 18 Vict. c 91), secs. 6, 30, 35.

At advising—