Scottish Court of Session Decisions

At a meeting of the Commissioners for executing the Acts relating to the inhabited-house duties for the County of Bute, Mr Nicol Campbell, advocate, appealed against an assessment at the rate of 9d. per £ on £440, the annual value of the premises situated in Argyle Street, West Bay, Rothesay, belonging to him.

The following statement of facts admitted or proved was made in a case stated by the Income-Tax Commissioners—“1. For the year 1879–80 the building was assessed to inhabited-house duty at the rate of 6d. per pound, under 14 & 15 Vict. cap. 36, and according to Rule VI. of 48 George III. cap. 55, Sch. B, which enacts that ‘where any house shall be let in different stories, tenements, lodgings, or landings, and shall be inhabited by two or more persons or families, the same shall, nevertheless, be subject to, and shall in like manner be charged to, the said duties as if such house or tenement was inhabited by one person or family only, and the landlord or owner shall be deemed the occupier of such dwelling-house, and shall be charged to the said duties: Provided that when the landlord shall not reside within the limits of the collector … the duties so charged may be levied on the occupier or occupiers respectively, and such payments shall be deducted and allowed out of the next payment on account of rent.’ Mr Campbell appealed against this assessment; and on a case stated at his request, the Court of Exchequer pronounced judgment confirming the assessment— Campbell v. Inland Revenue, February 21, 1880, 7 R. 579. In that case the rate of duty was not before the Court.

2. It was admitted that the following is an accurate description of the premises. The appellant being proprietor of the Queen's Hotel, Rothesay, erected an addition, to be occupied partly by the Royal Northern Yacht Club and partly as an extension of the hotel. On the street floor, in the new addition, the club occupy a reading-room, a committee-room, steward's

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service and store-rooms, and lavatory. From the entrance-hall leading to these rooms a stair leads to a billiard-room, also occupied by the club, in a wing behind the new addition (the wing being part of the new addition). From this stair, by a landing and by an ordinary two-leaved door with the usual lock and fastenings, entrance to the dining-room, called in the agreement of lease after referred to the dining-hall on the first floor, is obtained. This is the dining-room of the hotel, which the members of the club are entitled to use—an entrance to it from the hotel is had by an ordinary door opening from the lobby of the hotel. This room is entirely in the new addition, and occupies nearly the whole space of the first floor of such addition. There are bedrooms connected with the hotel in the floor immediately above the dining-hall. The club-house is open during the whole year for the use of the members. No person sleeps in the club premises. The business of the club is transacted at the secretary's office in Glasgow. The hotel consists of the whole of the old building, the first floor of the new building, containing dining-room, etc., and the second floor of the new building, containing bedrooms, and the Yacht Club part consists of the ground floor in the new building occupied as before mentioned, and billiard-room in wing. The door by which there is internal communication between the portion of the building let to the club and the hotel has bolts, and is not opened at all when members are absent. Both of the subjects let have separate and distinct entrances from the street. The hotel-keeper has nothing to do with the taking care of and cleaning the club premises. That duty is attended to throughout the whole year by servants in the employment of the club.

3. The Queen's Hotel is let to Miss Sarah Thompson, under a lease for five years from the term of Whitsunday 1897, at the rent of £290 per annum; and the club-house is let to the Royal Northern Yacht Club at the rent of £150 per annum. Miss Thompson is duly licensed for the sale by retail of beer, ale, wine, and other liquors to be consumed on the premises leased to her. No licence for the sale of intoxicating liquors is held in respect of the premises occupied by the club, but members in the club-house may be supplied with liquors from the hotel.

4. Prior to 1877 the appellant entered into an agreement of lease, by which he let to the Yacht Club for fifteen years from 1st April of that year the rooms of the club, together with the use of the said dining-room and some adjacent ground, at an annual rent of £140 for the first seven years, and of £150 for the remaining eight years. The agreement provided that the club was to have a private access to the dining-room, and that neither the tenant of the hotel nor his servants, nor anyone living in the hotel, unless he were a member of the club, should have right to the use of any of the rooms set apart for the club. By supplementary agreement between the appellant and the club, dated 7th and 9th November 1883, it was agreed that from and after 1st April 1884 the club's let should only be from year to year, and that it should not be competent to either party to put an end to any yearly occupancy unless upon twelve months' written notice; and the parties ratify the original agreement except in so far as altered by the supplementary agreement, and agree that the two agreements shall form the conditions of let between them. Since the date of the supplementary agreement, the club has remained tenant from year to year of the same subjects, at the rent of £150 per annum. The lease of the Queen's Hotel, and the agreement and supplementary agreement between the appellant and the Royal Northern Yacht Club are docqueted by the Commissioners in reference hereto, and made part of this case.

5. The appellant has been assessed and has paid inhabited-house duty at the rate of 6d. per £1 on the cumulo rent for each of the years from 1879–1880 to 1897–1898 inclusive.

6. The appellant was assessed for the year 1898–1899 at the rate of 9d. per £1 on the total rental of £440, upon which the duty amounts to £16, 10s.”

By the schedule attached to the Inhabited-House Duty Act 1851 the lower rate (6d. per £) is chargeable “where any such dwelling-house shall be occupied by any person who shall be duly licensed by the laws in force to sell therein by retail beer, ale, wine, or other liquors, although the room or rooms thereof in which any such liquors shall be exposed to sale, sold, drunk, or consumed shall not be such shop or warehouse as aforesaid.”

By section 31 of the Customs and Inland Revenue Act 1871 the lower rate is chargeable on “every inhabited dwelling-house … which shall be occupied by any person who shall carry on in the said dwelling-house the business of an hotelkeeper or an innkeeper or coffeehouse-keeper, although not licensed to sell therein by retail, beer, ale, wine, or other liquors.”

The Commissioners sustained the appeal and fixed the assessment at 6d. per £.

The Surveyor obtained the present stated case.

Argued for the Surveyor—By the previous case— Campbell v. Inland Revenue, Feb. 21, 1880, 7 R. 579—it was settled that for the purposes of duty Mr Campbell was the occupier of this house. The lower rate of duty was only chargeable if, under the Inhabited-House Duty Act 1851, schedule (quoted supra), the house was occupied by a person who had a licence, or under sec. 31 of the Customs and Inland Revenue Act 1871 (quoted supra) by a person who kept an inn or coffee-house without a licence. The words “occupied by” must mean occupied by the occupier as defined by Rule VI. of 48 Geo. III. c. 55 (quoted supra), i.e., by Mr Campbell. Mr Campbell was not licensed, and did not keep an inn or coffee-house, and the decision of the Commissioners was therefore wrong.

Argued for Mr Campbell—Even if Mr Campbell was under Rule VI. the occupier,

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he was constructively carrying on the business of a hotel through his tenant, as in the cases where a hydropathic company or a railway company had been held to be carrying on similar occupations through their managers— Strathearn Hydropathic Co. v. Inland Revenue, June 14, 1881, 8 R. 798: Glasgow and South-Western Railway Co. v. Banks, July 16, 1880, 7 R. 1161; Inland Revenue v. Grant, June 24, 1898, 25 R. 1040. It was not necessary, under the Customs and Inland Revenue Act 1871 (quoted supra) that the occupier should hold a licence. But it was not necessary to hold that the words “occupied by” in the Acts of 1851 and 1871 meant occupied by the landlord under Rule VI. The natural meaning was the de facto occupier. Even in Rule VI. itself the word “occupier” was used in both senses—in the first clause as the landlord or owner, in the last as the de facto occupier. If on either of these arguments it were held that the rooms used as an hotel were subject to the lower rate, the same rule must be applied to the rooms used as a club, on the principle recognised in the cases already cited, that if every part of a house was inhabited the whole was subject to duty. The house must be taken to be a unum quid—if any part was subject to the lower duty, the whole was.