Scottish Court of Session Decisions

The parish of Urray, which lies partly in Inverness-shire and partly in Ross-shire, is a very large parish, having a length of nearly forty miles. In 1884 the local authority, the parochial board of the parish, formed the village of Tarradale or Ord and some adjacent lands into a special water supply district under the Public Health (Scotland) Act 1867, and afterwards formed the same area into a special drainage district under the same Act. In order to execute the works necessary for carrying out this purpose they had to borrow money to the extent of about £1400 on the security of their statutory powers of assessment. When the districts were formed the local authority, in order to pay the interest on the borrowed money, imposed an assessment of 2s. 6d. per £ upon the special district, viz., 2s. 3d. upon the special water district, and 3d. upon the special drainage district. This was the maximum amount of assessment they could levy from the district under section 1 of the Public Health (Scotland) Amendment Act 1871 (34 and 35 Vict. c. 38). The sum realised, however, in this way was insufficient to meet the charges, and accordingly, by a minute of 22nd April 1889 the local authority resolved to assess and did assess the lands and heritages within the parish (excluding the special water and drainage district) at the rate of 4d. per £ on the assessable rental of the parish, one-half to be paid by the proprietors, and the other half by tenants and occupiers.

John Tolmie, farmer, Gilchrist, in the said parish, but not a ratepayer within the said special district, besides a number of others, refused to pay the assessment imposed. He brought an action against the parochial board of the parish, as the local authority thereof, to have it declared that the resolution of 22nd April 1888 was illegal and ultra vires of the local authority, and that they were not entitled to levy the said assessment. He averred that the estimated expense of the works executed in the district, which had been largely exceeded, was disproportionate to the small number who could possibly be benefitted by the scheme. He further averred that the assessment of 4d. per £ on the assessable rental of the parish was unauthorised by the 93rd, 94th, and 95th sections of the Public Health Act, and that they were ultra vires of the defenders and utterly illegal.

The defenders explained that the operations complained of had been forced upon them by the action of the Board of Supervision, and the expense was increased by opposition and a necessary application to Parliament for a provisional order.

The defenders pleaded—“(2) The assessment complained of having been legally and properly laid on by the defenders, they should be assoilzied with expenses.”

The Public Health (Scotland) Act 1867, sec. 89, sub-sec. 6, provides—“It shall be lawful for the local authority to borrow for the purpose of constructing … such works as are herein authorised for providing a supply of water … and on the security of the after-mentioned special water assessments, where such exist, and of general assessments, or either of them, such sums of money … as the local authority shall deem necessary for that purpose, and to assign the said special water assessments, and general assessments, or either of them, in security of the money to be so borrowed.” Sec. 93 provides—“Where any special drainage district has been formed as hereinbefore provided, the expense of the sewerage and drainage incurred by the local authority within the same, or for the purposes thereof, and the sums necessary for payment as before mentioned of any money borrowed for sewerage purposes as hereinbefore provided, shall be paid out of a special assessment, which the local authority shall raise and levy on and within such special district in the same manner and with the same remedies and modes of recovery as are herein provided for the district of the local authority.” Sec. 94, subsec. 1, provides—“Where any special water supply district has been formed, as hereinbefore provided, the expense incurred for the water supply within the same or for the purposes thereof, and the sums necessary for payment as before mentioned of any money borrowed for water supply purposes as hereinbefore provided, shall be paid out of a special assessment which the local authority shall raise and levy on or within such special district in the same manner and with the same remedies and modes of recovery as are herein provided for the district of the local authority.” Sub-sec. 2 of this section provides—“All charges and expenses incurred by the local authority in executing this Act, or any of the Acts hereby repealed, and not recovered as hereinbefore or after provided, may be defrayed out of an assessment to be levied by the local authority along with, but as a separate assessment from, any one of the assessments hereinafter mentioned in this section.”

Upon 11th March 1890 the Lord Ordinary ( Kyltachy) assoilzied the defenders from the conclusions of the summons, and found them entitled to expenses.

“ Opinion.—The pursuer here is a ratepayer in the parish of Urray in Ross-shire, and he seeks to have it declared that the local authority of the parish are not entitled to impose an assessment over the whole parish to meet their obligations for money borrowed in connection with the introduction of a water supply into a certain special water supply district within their bounds. It is not disputed that the maximum assessment within the special water supply district is insufficient for the purpose, nor is it disputed that the money in question has been spent, or that it has been borrowed on the security of the whole assessments which the local authority can impose. But the pursuer's contention is that on a just construction of the Public Health Act it is in no circumstances competent to assess the parish generally for any part of the expenses of drainage works or water works executed for the benefit of a special drainage or special water supply district.

The facts of the case are shortly these.

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The parish of Urray, which is a large parish, having a valuation of about 13,500, includes within it the village of Tarradale, which in 1884 appears to have been in a highly insanitary condition, so much so that the Board of Supervision appear to have put pressure upon the local authority to compel, inter alia, the introduction of a proper water supply. With this view the village and a small surrounding district, having a valuation in all of about £450 per annum, was formed under the provisions of the Public Health Act into a special water supply district, and estimates having been taken, and the usual procedure followed, the local authority entered into contracts for the execution of water works. Owing, however, to opposition on the part of landowners, and the necessity for obtaining a provisional order so as to exercise compulsory powers, the cost of the works, including the legal expenses, seems greatly to have exceeded the original estimate. The exact figures do not appear, but the total outlay is said to have been about £1400, being, as the respondents state, about three times the amount estimated, and this sum of £1400 having been borrowed by the respondents they have now to provide for the payment of the interest, and I presume also some instalment of the principal. For this purpose they lately imposed upon the special district the maximum assessment which the Act authorises, and that assessment being admittedly insufficient, they further, and at the same time in order to make up the deficiency, assessed the whole other lands and heritages within the parish at the rate of 4d. in the £, this assessment being imposed in virtue of the second subsection of section 94 of the Act, which subsection provides that ‘all charges and expenses incurred by the local authority in executing this Act, or any of the Acts hereby repealed, and not recovered as here in before or after provided, may be defrayed out of an assessment to be levied by the local authority along with but as a separate assessment from any one of the assessments hereinafter mentioned in this section.’

In short, the local authority having incurred, as they say in good faith and in execution of the Act, expenditure which they have no other means of meeting, propose to treat that expenditure as falling under the head of general expenses incurred in executing the Act.

The pursuer does not allege that the local authority when they incurred the expenditure in question were in the knowledge that it would exceed the resources of the special water supply district, or that they omitted to take previous estimates for the work as prescribed by section 80 of the statute, or that the expenditure was in any other way unlawfully incurred, But he founds upon the first sub-section of section 94 of the statute, which provides as follows—“Where any special water supply district has been formed, as hereinbefore provided, the expense incurred for the water supply within the same or for the purposes thereof, and the sums necessary for payment as before mentioned of any money borrowed for water supply purposes as hereinbefore provided, shall be paid out of a special assessment which the local authority shall raise and levy on or within such special district in the same manner and with the same remedies and modes of recovery as are herein provided for the district of the local authority.

The question is, whether the above provision overrides the provision before quoted of section 94, sub-section 2, with respect to expenses not otherwise recoverable. The pursuer maintains that it does, and that it does so to the effect (1) of preventing the local authority from pledging their general assessments in security for money borrowed for the benefit of a special district, and (2), and in any view, from throwing the ultimate liability for any part of such borrowed money upon any part of the parish outside the special district.

The question as to the defenders' power of borrowing for a water supply depends upon the construction of the 89th section of the statute, sub-section 6. That sub-section is expressed in similar terms to the 86th section, which deals with the power of borrowing for sewers. The power is thus expressed:—‘It shall be lawful for the local authority to borrow for the purpose of constructing … such works as are herein authorised for providing a supply of water … and on the security of the after—mentioned special water assessments where such exist, and of general assessments, or either of them, such sums of money … as the local authority shall deem necessary for that purpose, and to assign the said special water assessments, and general assessments, or either of them, in security of the money to be so borrowed.’ The defenders say that whatever may be the ultimate incidence of the burden as between the parish generally and the special district, the above enactment is conclusive as to the power of a local authority to give a creditor from whom they borrow the security of their whole assessments, general and special.

On this matter I am of opinion that the defenders are right. I do not see that the language of the statute admits of any other construction. The pursuer was unable to suggest any case to which the power of pledging both assessments was applicable, if not to the present. And I can moreover quite understand why the Legislature, while contemplating that each special district should ultimately bear its own burdens, should at the same time arm the local authority with the power of pledging its whole assessments for money borrowed, so as to give the creditor the largest possible security, and thus enable the local authority to obtain the money on the best possible terms. It follows therefore, in my opinion, that the creditors from whom the respondents have borrowed the £1400 in question, have a good claim against the defenders' general assessments, and that in order to meet their claims the defenders are bound if necessary to lay on such assessment as that which is here complained of. And if this be so, it rather

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seems to me to be conclusive of the matter as regards this action. The creditors who have lent the money are entitled to be paid, and it is not suggested that there is any other source from which they can be paid except by laying on the assessment complained of. In a question with the creditors, therefore, the defenders are bound to lay on that assessment, and the question of relief as between the two parts of the parish, or as between the parish and the members of the local authority, is an after question which may be raised in another form, and which cannot, in my opinion, affect the legality of the present assessment.

I may say, however, that I do not at present see how if the maximum assessment has already been laid on in the special district, any further redress can be had by the outside parishioners. I incline to think that the present is just one of these cases which the provisions of section 44, sub-section 2, were intended to cover. It is of course the duty of the local authority in constructing works for the benefit of a special district, to take due precautions against the cost of the works exceeding the resources of that special district, but if through unforeseen circumstances their estimates are as here largely exceeded, I do not see how the excess can be regarded otherwise than as part of the general expenses in executing the Act.

It may be, that if the members of the local authority wilfully and knowingly incur expenditure in excess of what the maximum assessment provided by the Act for that expenditure is sufficient to meet, they may incur to the ratepayers personal liability, but no such question is raised here, and on the whole matter I have come to the conclusion that the defenders are entitled to absolvitor, with expenses.”

The pursuer reclaimed, and argued—The local authority having formed this special water district could only assess for the works performed on the district within its limits. The ratepayers outside the limits got no benefit from the works, and ought not to pay for it— Edmonstone v. Kilsyth Police Commissioners, June 9, 1882, 9 R. 917. Section 94, sub-section 1, of the Public Health (Scotland) Act contained the ruling provision as to assessments for special water supply districts, and by that section the special assessment could only be levied upon the property within the district. The 89th section related solely to the local authority's power to borrow, and could not be held to increase the defenders' power to levy an assessment upon property outside the special district, when it was specially provided that only that district should be liable.

The respondents argued—There was a very strong case here for creating the special water district, as the Board of Supervision had ordered it; and the local authority had to borrow the money in order to carry out the order. They therefore borrowed the money under sec. 89 of the Act, and they had to repay to the lenders what they had got in a legal manner. The only way to do this was to levy an assessment. They had assessed the special district to the full extent they were permitted, and the only other resource open to them was the general property in the parish. There was no real repugnancy between the first and second sub-sections of the 94th section of the Act.

At advising—