Scottish Court of Session Decisions

At a meeting of the Income Tax Commissioners held at Edinburgh on 5th May 1896 the Trustees of the Free Church of Scotland appealed against an assessment for inhabited-house-duty on £1105, duty £41, 8s. 9d., made on them for the year ended 24th May 1896, as occupiers of the Free Church Assembly Hall and of the Free Church College Buildings, Edinburgh, and claimed exemption on the ground that the premises “are exempt from the inhabited house duties in respect that they are not inhabited houses, and are not within the provisions of the Acts, or if they are that they are within the exemptions expressed in the Acts.”

The Commissioners refused the appeal and the appellants obtained a case.

The case contained the following statements:—“(2) The buildings in question enclose three sides of a quadrangle or Mound Place, Edinburgh. On the north and west sides of the quadrangle stands what is known as the Free Church College a building of four storeys, containing or the sunk floor cellarage and accommodation for the heating apparatus; on the ground floor, a janitor's dwelling-house two class-rooms or halls, with professor's retiring-rooms attached, and a hall in which the Senatus and the College Committee of the General Assembly meet; or the first floor, four class-rooms and four retiring-rooms, a common hall for the use of students, where newspapers, books, &c are placed, and where, since the institution of dinners for the students some years ago the dinners are served, a large library hall and other library accommodation; and, or the second floor, other two class-rooms with two retiring-rooms, a gymnasium and a museum. (3) The buildings known as the Assembly Hall, which stand on the south side of the enclosed quadrangle, contain a large hall, a smaller hall, which during the meetings of a General Assembly is used as a refreshment-room, and several retiring-rooms and lavatories. (4) A gate way from Mound Place leads through the northern side of the College buildings to the quadrangle, whence access is had by separate doors to the Assembly Hall and the College buildings. The janitor's dwelling house on the ground floor, which is entered by a door within the gateway, and forms an integral part of the main building, now communicates internally with the sunk floor, which contains the furnaces, heating apparatus, and cellarage, and thence with the whole premises assessed. As the buildings were originally erected, there was no internal communication between the janitor's house and the remainder of the buildings charged. Some time ago, however prior to 1895, an opening was made through part of the back wall of a press in the inmost room of the janitor's house, which opens on to a, wooden gangway with steps

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leading to the cellar in which the furnaces for the heating apparatus are. The remainder of the press is still used as such, and is boarded off from the opening. The communication was opened for the convenience of the janitor in attending to the furnaces, and to prevent the necessity of his going from the house through the quadrangle and then into the cellar. The heating apparatus is for the College only. The gateway leading to the janitor's dwelling-house and to the quadrangle is furnished with an iron gate which is locked at night, and thus shuts in the whole buildings, and establishes internal communication throughout the whole premises charged to duty. (5) The Assembly Hall was built expressly as a place of meeting for the General Assembly of the Free Church of Scotland, which meets annually in the month of May, and sits about ten days, and for the meetings of the Commission of the General Assembly, which are held about three times a year. The hall is occasionally let for meetings of a religious, semi-religious, or charitable character, or for temperance meetings, when a charge of from £2, 2s. to £3, 3s. a-day is made for its use, but the fees charged for admission to the meetings of the Assembly and the charges for the occasional use of the hall do not more than cover expenses. (6) The Free Church College is what is known in Scotland as a divinity hall, and it is in this sense that the word “college” is used in this case, and is intended primarily for the training of candidates for the ministry of the Free Church of Scotland when they have completed their undergraduate course at one or other of the national universities. (10) The janitor takes charge of letters addressed to professors and students at the College; attends to the gate and to the heating and ventilation, and superintends the cleaning of the whole premises. He also buys the food and superintends the serving of the students' dinners during the session. (12) The College and Assembly Hall are both charged to poor and school rates for the year to which the assessment to inhabited-house-duty applies. These rates were paid under protest.”

The Surveyor of Taxes contended that the College and Assembly Hall were assessable as an “inhabited dwelling-house” in virtue of the schedule annexed to the House Tax Act 1851 (14 and 15 Vict. cap. 36), or alternatively as a “hall or office” under Rule V. of Schedule B, 48 Geo. III. cap. 55. That rule provides—“Every hall or office whatever belonging to any person or persons, or to any body or bodies politic or corporate, or to any company, that are or may be lawfully charged with the payment of any other taxes or parish rates, shall be subject to the duties hereby made payable as inhabited houses; and the person or persons, bodies politic or corporate, or company to whom the same shall belong, shall be charged as the occupier or occupiers thereof.”

The appellants contended—“(1) That even on the assumption that the whole block of buildings, including the Assembly Hall, New College, and janitor's house formed only one building, that then and in that event the case fell under sub-sec. 2 of sec. 13 of the Customs and Inland Revenue Act of 1878 (41 Vict. cap. 15), and that as the janitor resided within the said building solely for its protection, the duty was not exigible; and (2) but the Assembly Hall, New College, and janitor's house did not truly form one building, that as originally built the janitor's house was an entirely separate building. That although there has always been internal communication between the College buildings and the Assembly Hall, the heating apparatus is for the College only, and does not affect in any way the Assembly Hall and the rooms connected therewith. That the hole which had been knocked through in the wall of the press solely to enable the janitor during the night to visit the heating apparatus without going out into the quadrangle, did not transform the Assembly Hall and College into parts of the house in which he lived and so liable to inhabited-house-duty.”

Sub-sec. 2 of sec. 13 of the Customs and Inland Revenue Act 1878, provides—“Every house or tenement which is occupied solely for the purpose of any trade or business, or of any profession or calling by which the occupier seeks a livelihood or profit, shall be exempted from the duties by the said Commissioners upon proof of the facts to their satisfaction, and this exemption shall take effect although a servant or other person may dwell in such house or tenement for the protection thereof.”

Argued for appellants—(1) The buildings did not form an inhabited dwelling-house, for it was necessary for premises to be slept in to constitute a dwelling-house— Reilly v. Read, March 5, 1879, L.R., 4 Exch. Div. 100. This point had not been raised for discussion in Scotland. It was true there were dicta to the contrary, but they were unnecessary for the decision of the cases where they occurred— Glasgow Coal Exchange Co. v. Solicitor of Inland Revenue, March 18, 1879, 6 R. 850; Corporation of Glasgow v. Solicitor of Inland Revenue, Oct. 19, 1880, 8 R. 17; Muat v. Shaw Stewart, Jan. 27, 1890, 17 R. 371. (2) Nor were these buildings a “hall or office” in the sense of the statute. The section applied only to such halls as those belonging to London Trading Companies, where business really was carried on, not to colleges, where lectures were given. But even if the Assembly Hall was covered by the section, it did not apply to the class rooms forming the main part of the New College. (3) Assuming that the section applied, they came under the exemption attaching to premises used for business purposes. It was true that the buildings were not primarily used for these purposes, but they were used indirectly to make a profit, i.e., by charging fees they endeavoured to avoid loss in carrying on the institution. Moreover, the professors who lectured there made their livelihood thereby.

Argued for respondents—(1) Both the

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Act and a number of decisions showed that the term “dwelling-house” was not confined to premises which were slept in— London Library v. Carter, May 24, 1890, 2 Tax Cases, 594, Law Times, vol. 62, p. 466. The dicta of Baron Kelly were not approved in subsequent cases, and the point was specially raised in the case of the Glasgow Coal Exchange Company. (2) Alternatively, the building clearly was a “hall or office,” and has been rated as such. The exemption could not be said to apply, for the appellants did not occupy the buildings for livelihood or to gain a profit.

At advising—