Scottish Court of Session Decisions

Certain chemical works at Mid-Calder, of which the Pumpherston Oil Company, Limited, were owners and occupiers, were entered in the valuation roll for the county of Midlothian as of the annual value of £5400. The Parish Council of the parish of Mid-Calder assessed the Pumpherston Oil Company for poor-rates in respect of these chemical works on the said annual value of £5400 under deduction of 20 per cent. The company having refused payment, R. Straton Wilson, the collector of rates for the parish of Mid-Calder, upon a certificate obtained by him under section 97 of the Taxes Management Act 1880, obtained a warrant for collecting the said assessment by poinding and sale. Against this poinding the Pumpherston Oil Company brought a note of suspension and interdict. The amount of the rate in question was consigned in bank to await the orders of Court.

The complainers averred that they had called on the Parish Council to ascertain by a mutual remit to a man of skill the amount of the deductions falling to be made under section 37 of the Poor Law Amendment (Scotland) Act 1845 (quoted infra), in respect of the expenses necessary to maintain the subjects in their actual state, and that the Parish Council had refused this demand.

The complainers pleaded, inter alia—“(2) In estimating the annual value of lands and heritages for assessment the Parish Council are bound to take into consideration the actual and average cost of maintaining the lands, and the actual and average amount of the other deductions to be made from the annual value as fixed by the valuation roll, and are not entitled without investigation to make an arbitrary deduction which has no reference to the circumstances of the lands in question. (3) The deduction made from the said annual value being greatly less than the actual average amount of said repairs and others, the amount of said assessment is oppressive and unjust.”

The Collector of Rates lodged defences, in which he pleaded—“(1) The action is irrelevant. (2) The assessment in question being legal, the note should be refused with expenses. (3) The Parish Council having after due consideration allowed an adequate deduction in terms of the statute, the assessment should be upheld and the note dismissed. (4) In ascertaining the annual value of lands and heritages for assessment the Parish Council are bound only to allow deduction for such repairs, taxes, and insurance as landlords expend in maintaining and insuring said lands and heritages, including all capital charges for the permanent repair or renewal thereof, together with landlords' taxes and insurance, and the complainers are not entitled to require the Parish Council to give deduction for the cost of such works or temporary repairs as they in their character of tenant of the said lands and heritages have executed in the conduct of their business for the acquisition of tenants' profits, or for tenants' taxes or insurance.”

The Poor Law Amendment (Scotland) Act 1845 enacts—section 37—“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

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actual state, and all rates, taxes, and public charges payable in respect of the same.”

The Valuation of Lands (Scotland) Act 1854 enacts—section 6—“In estimating the yearly value of lands and heritages under this Act 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,”… Section 41—“Nothing contained in this Act shall alter or affect any classification or power of classification, or any deductions or allowances, or power of making deductions or allowances from gross rental made or imposed by any body, persons, or person entitled to impose or levy assessments, but the same shall not affect the value to be inserted in the valuation roll in terms of this Act.”

On 9th December 1899 the Lord Ordinary ( Kyllachy) pronounced the following interlocutor:—“Before answer remits to Mr W. J. Armstrong, estate agent, 57 Manor Place, Edinburgh, to consider and report to the Lord Ordinary, with special reference to the statements and pleas of parties as to the probable annual average cost of the repairs, insurance, and other expenses, if any, necessary to maintain the complainers' subjects assessed in their actual state, and the rates, taxes, and public charges payable in respect of the same, it being the object of this remit to ascertain the deductions to be made in terms of the 37th section of the Poor Law (Scotland) Act 1845, and to report upon any other matter which either party may consider material to the question at issue.”

In obedience to this interlocutor Mr Armstrong lodged a report, from which the following excerpt is taken—“Having made a careful examination of the books of the Pumpherston Oil Company, and the relative vouchers with regard to outlays for repairs, insurance, rates, taxes, and public charges, during the last five years from 1894 to 1899 inclusive, finds that the average annual outlay has been as follows, viz.—(1) Repairs—The whole of the repairs of every kind (which are exceptionally heavy, particularly in the chemical works) are executed by and at the expense of the Pumpherston Oil Company, and the average outlay has been as follows, viz.—‘ On Works—After deducting the sales of scrap iron, old lead and brass, the average annual outlay on repairs has been no less than £4336, 11s., or 80 per cent on the annual value per valuation roll; that is exclusive of the cost of new retorts and other new works, which are not included in this report. Amongst the heaviest items for repairs are iron stills, which last from one to two years only, and lead-lined tanks or receptacles in the sulphate of ammonia works. On the 27th of January 1900, the reporter received a letter from Mr J. Thom, agent for the defenders, requesting him to differentiate between such expenditure as would have been made by the Pumpherston Oil Company if they had been proprietors only (of the chemical works), and such expenditure as would have been made by them if they had been tenants only. The reporter is not able to comply with this request, and he cannot for a moment suppose that any sane proprietor ‘only’ would undertake or become responsible for the repairs and upkeep of chemical works of the nature referred to. No part of the expenditure reported upon forms part of the capital charges for the renewal of works that a landlord would be legally bound to defray, or for renewal of the company's new system of retorts; new works of this description are charged to capital account, not to repairs. The reporter has rejected all subjects about which he had any doubt as to whether they came under the head of ‘repairs,’ and he has, as before stated, excluded all underground pumps and machinery, and also the cost of upkeep of shafts and roadways into and in mines. The expenditure on these underground works amounts to upwards of £2000 per annum on average.”

The reporter then proceeded to deal with the expense of insurance and taxes, and submitted the following schedule of deductions—

“ Works—
Repairs,	£4336	11	0	or 80 per cent. on
Insurance,	247	16	10	or 4 1 2 do.	£5400	0	0
Rates and taxes	535	8	1	or 10 do.
	£5119	15	11	or 94 1 2 do.”

Parties having been heard on objections to the report, the Lord Ordinary on 21st February 1901 pronounced an interlocutor by which, after findings in respect of certain other questions on which parties had come to an agreement, he made the following findings—“(3) that with regard to the chemical works it is admitted by the complainers that only the landlord's and not the occupier's taxes fall to be deducted from the valuation, and to that effect the respondent's objections to the report by Mr Armstrong fall to be sustained. Quoad ultra repels the said objections and approves of said report: Finds in terms of said report that a sum amounting to 90 per cent. on the valuation of the said chemical works represents the legal and proper deduction to be made from said valuation in terms of section 37 of the Poor Law (Scotland) Act 1845, 8 and 9 Vict. cap. 83, and that the amount of the assessment in respect thereof is £36, 11s. 3d.: Finds the respondent entitled to payment out of the sum consigned in Court of the said sum of £36, 11s. 3d., with bank deposit interest on said sum till payment … from the 7th day of June 1899, and also of the further sum of £22, 18s. 7d., being one-half of the expenses of the diligence brought under suspension, and authorises the respondent to uplift said sum and interest from the consigned sum contained in deposit-receipt, No. 6 of process: Finds the suspenders entitled to the balance of the said consigned fund and accrued interest, and authorises them to uplift same, and in order thereto grants warrant to the Accountant of Court to exhibit and deliver the deposit-receipt, and to the Clydesdale Bank, Limited, Edinburgh, to make such payments, and that both on production of a certified copy

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hereof: Further, in respect of the foregoing findings, sustains the reasons of suspension, suspends the said certificate, warrant, poinding, and notice of sale, and whole grounds and warrants thereof, and interdicts, prohibits, and discharges the respondent from proceeding to have the said articles valued and sold, and decerns: Finds the complainers entitled to expenses modified at one-half of the taxed amount thereof.”

Opinion.—“In this case the complainers have now accepted the respondent's offer to make a deduction of 15 per cent. in respect of repairs, insurance, and taxes on the mines and minerals of which the complainers are the tenants and occupiers. The parties are further agreed that with respect to the chemical works only landlord's taxes should be deducted. They are also, it appears, agreed as to the amount to be deducted in respect of insurance. This being so, the only question for decision is as to the deduction to be allowed for repairs on the chemical works—that is to say, the repairs on the heritable subjects, consisting of buildings, fixed plant and machinery which form these works, and of which the complainers are both owners and occupiers.

The reporter has fixed this deduction at the sum of £4366, 11s. He finds that the sum in question represents the average sum expended during the five years from 1894 to 1899, and he explains that this average is exclusive of the cost of new retorts and other new works which are not included in his report. He also explains that the heaviest repairs are those on the iron stills, which last from one to two years only, and lead lined tanks or receptacles in the sulphate of ammonia works, of all which it would appear that the cost of upkeep is very heavy.

The respondent does not dispute the accuracy of the reporter's figures—that is to say, he does not dispute that for the upkeep of the heritable subjects which are entered in the valuation roll the complainers have expended on repairs, apart from renewals, the average sum which the reporter states. Neither does he dispute that the repairs were proper and necessary. But he suggests that the complainers being both owners and occupiers the expenditure must, at least to a large extent, be held to have been made by them in the latter character, and to be really part of what he calls their working expenses.

I am unable to find in the Poor Law Statute any ground for the distinction suggested. If repairs are made on heritable subjects which are necessary for their upkeep, it does not appear to be of importance whether they are executed by the landlord or by the tenant, or whether they are executed by the landlord qua owner or the landlord qua occupier. That circumstance may be material in the Valuation Court in fixing the valuation, but it cannot, in my opinion, affect the deduction claimable under the Poor Law Act. The deduction falls to be made from the annual value appearing on the valuation roll, which value it must be assumed has been properly ascertained. A good deal was said in the course of the argument as to the necessity of assuming a hypothetical tenancy; but that is a topic which I need hardly say is only relevant in the Valuation Court. I see, however, no reason to doubt that in the present case the valuation was properly made. I quite agree with the reporter's observation that no tenant would be at all likely to pay a rent of anything like £5400 for the heritable part of these chemical works except upon the footing that the landlord undertook the cost of upkeep. But however that may be, it is, in my opinion, enough that the repairs in question have been in fact made, and that no doubt is suggested as to their being proper and necessary to maintain the heritages in their actualstate.”

The respondent reclaimed, and argued—(1) The Parish Council had no power to make any deduction at all, but were bound to assess on the sum appearing in the valuation roll, Section 37 of the Poor Law Act of 1845 (quoted supra) though not repealed was rendered inoperative by the provisions of the Valuation Act of 1854. Under that Act the duty of estimating the value of lands, which was formerly laid upon the Parochial Board, was entrusted to the county assessor. It was his duty in making his assessment under section 6 of the Valuation Act (quoted supra) to take into consideration the repairs, &c., necessary to maintain the subjects in their actual state, and to deduct the average annual expense of such repairs from his valuation. The Parochial Board were only entitled to make deductions in “estimating the annual value of lands.” As it was no longer their duty to estimate annual value, the power to make deductions was necessarily abolished. Section 41 of the Valuation Act (quoted supra) only reserved the power to make general deductions in respect of particular classes of property, and not the power to make deductions in any particular case. There was no decision to the contrary in Magistrates of Glasgow v. Hall, January 14, 1887, 14 R. 319, and any opinions to that effect were obiter. (2) Assuming the Parish Council had the power to make deductions, that power only referred to deductions for repairs which would fall upon the landlord, and a new remit should be made to the reporter to distinguish between landlord's and tenant's repairs. The principle was that the assessment should be laid on the annual value of the subjects to the landlord, i.e., the net amount he received after deducting what he required to spend. This rule was assumed in the cases on the subject— Edinburgh and Glasgow Railway Company v. Adamson, June 28, 1855, 17 D. 1007; Glasgow Gas-Light Company v. Adamson, March 23, 1863, 1 Macph. 727; Edinburgh and Glasgow Railway Company v. Hall, June 29, 1866, 4 Macph. 1006.

Argued for the respondents—(1) The Parish Council, as coming in the place of the Parochial Board, had power to make deductions under section 37 of the Poor Law Act 1845, and were therefore bound to

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make them. The Valuation Act 1854 said nothing about repairs, but directed the assessor to take the rent of the subjects without any deduction at all. The power of the parochial board, and of the parish council in its place, to make deductions was preserved by section 41 of the Valuation Act, quoted supra. This was the constant and invariable practice, and was sanctioned in the cases of Edinburgh and Glasgow Railway Company v. Meek, December 10, 1864, 3 Macph. 229, and Magistrates of Glasgow v. Hall, January 14, 1887, 14 R. 319. (2) The whole average annual expense of maintaining the subjects should bededucted, whether as a matter of private contract it was borne by landlord or tenant. In either case it was really a deduction from the rent received. There was no sanction in section 37 of the Poor Law Act for any distinction between landlord's and tenant's repairs.

At advising—