Scottish Court of Session Decisions

The Income-Tax Act 1853 (16 and 17 Vict. c. 34), sec. 2, enacts that income-tax is to be “payable yearly for and in respect of the several properties, profits, and gains respectively described, or comprised in” … inter alia, Sched. D of the Act. Sched. D—“For and in respect of the annual profits or gains arising or accruing to any person residing in the United Kingdom for any kind of property whatever, whether situate in the United Kingdom or elsewhere.” …

The Income-Tax Act 1842 (5 and 6 Vict. c. 35), sec. 39, enacts—“No person who shall on or after the passing of this Act actually be in Great Britain for some temporary purpose only, and not with any view or intent of establishing his residence therein, and who shall not actually have resided in Great Britain at one time or several times for a period equal in the whole to six months in any one year shall be charged with the said duties mentioned in Schedule D as a person residing in Great Britain in respect of the profits or gains received from or out of … any foreign possession … or foreign securities.” … Sched. D, Fourth Case, dealing with the computation of duty to be charged in respect of interest from securities in foreign countries, enacts—“The duty to be charged in respect thereof shall be computed on a sum not less than the full amount of the sums (so far as the same can be computed) which have been or will be received in Great Britain in the current year without any deduction or abatement.”

Schedule D, Fifth Case, of the said Act, dealing with the computation of duty to be charged in respect of possessions in foreign countries, enacts—“The duty to be charged in respect thereof shall be computed on a sum not less than the full amount of the actual sums annually received in Great Britain.” …

This was an appeal under section 59 of the Taxes Management Act 1880 (43 and 44 Vict. c. 19) by Thomas William Cooper, Surveyor of Taxes, Dundee, from a determination of the General Commissioners of Income-Tax for the District of Brechin, in the county of Forfar, at a meeting held at Brechin on 15th December 1903. At this meeting John Lambert Cadwalader had appealed against an assessment of £3000 made upon him under Schedule D of the Income-Tax Acts for the year ending 5th April 1904.

The assessment was made under authority of the Finance Act 1903 (3 Edw. VII, c. 8), sec. 5, and the Income-Tax Acts of 1853 (16 and 17 Vict. c. 34), sec. 2 (quoted supra), and of 1842 (5 and 6 Vict. c. 35), sec. 100, Cases Fourth and Fifth (quoted supra).

The facts stated in the case for the opinion of the Court of Exchequer as found or admitted before the Commissioners were set forth in the opinion of the Lord President as follows:—“The appellant (Mr Cadwalader) is an American citizen, having his ordinary residence in New York, where he practises as a barrister.

“By a minute of lease entered into between the commissioners of the Earl of Dalhousie of the first part, and the appellant of the second part, dated 16th March and 2nd and 3rd April 1900, there was let to the appellant for the period of three years from 1st February 1900, at the yearly rent of £1500, payable in advance on 1st February yearly, the sole and exclusive right of shooting and sporting over the grouse shootings of Millden, together with Millden Lodge and the furniture therein, and also with a right of fishing in the rivers and streams within the territory let. It was stipulated in the lease that the furniture and other effects in the lodge and outbuildings should be delivered over, per inventory, to the appellant,

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who bound himself to keep and maintain them in good order during the currency of the lease, and on the expiry thereof to deliver them back to the lessors, in an equally good state, ordinary tear and wear excepted. The lessors undertook to maintain the whole buildings wind and water tight, and to bear the expense of keeping in order the grounds attached to the lodge, to pay all rates and taxes imposed in respect of the appellant's tenancy, and also to pay the expenses of a housekeeper and housemaid, as well as of one gamekeeper and a watcher, all of whose services should be at the disposal of the appellant. It was farther stipulated that the shootings should be under the entire management of the keeper appointed by the lessors, but that the appellant should have the services of the keeper and underkeeper, who were to be under his control during the shooting season. It was also stipulated by the lease that the appellant might, upon grounds reasonable and satisfactory to the lessors, require the removal of any of the servants mentioned, and the substitution of others. By subsequent agreements the lease was renewed until the expiry of two years from 1st February 1904.

“The appellant is a bachelor, and he resides, with his valet, whom he brings with him from America, at Millden continuously for a period of two months in each year during the grouse shooting season. A caterer from London supplies him with food and servants. His guests at Millden are chiefly Americans. When he takes possession of Millden the housekeeper and housemaid remove from the lodge and do not return until he leaves. They receive board wages from the lessors.

“The appellant is entered in the valuation roll of the county of Forfar as tenant of the Millden shooting lodge and shootings, and he is charged with all local and imperial rates and taxes applicable to his occupancy, although the lessors relieve him of these rates and taxes under the stipulations of the lease.

“When the appellant or his friends are not living at Millden the lodge is under the care of the female servants above mentioned, and is available for the appellant's return at any time.

“The appellant has no place of business in the United Kingdom, and during his stay there he maintains and keeps open his residence in New York, so that he could return to it at any time. He also pays all rates and taxes due by him in New York in respect of his house and his profession.”

On these facts the Commissioners being of opinion that the appellant was not liable sustained the appeal and discharged the assessment.

The Surveyor of Taxes being of opinion that the determination of the Commissioners was erroneous in point of law, appealed to the Court of Exchequer. The case was appointed to be heard before the First Division.

Argued for the appellant—The respondent was a “person residing in the United Kingdom” in the sense of the Income Tax Act 1853, sec. 2, Schedule D. The fact of domicile had nothing to do with the question of residence— Lloyd v. Solicitor of Inland Revenue, March 12, 1884, 11 R. 687, 21 S.L.R. 482. The fact that this case had been overruled on another point by the decision in Colquhoun v. Brooks 1889, 14 App. Cas. 493, did not affect its authority on this point. A man could have only one domicile at one time, but he might have many residences. The respondent, too, was not within the exception provided in section 39 of the Income Tax Act 1842. This was settled by Attorney-General v. Coote 1817, 4 Price 183, a decision on section 51 of 46 Geo. III. c. 65, which was in the same terms as section 39 of the Act of 1842. Absence from the country during the fiscal year or the greater part of it did not prevent respondent having a residence— Rogers v. Inland Revenue, June 28, 1879, 6 R. 1109, 16 S.L.R. 682.

Argued for the respondent—The word “residing” in section 2, Schedule D, of the Income Tax Act 1853, was to be construed in the light of the provisions in section 39 of the Act of 1842. In the latter section “residing” meant “ordinarily residing”— Lloyd v. Solicitor of Inland Revenue, supra, per Lord Shand at 11 R. 692. The respondent came to this country for a temporary purpose and not with a view to establish a residence. Residence did not mean a mere right to reside but actual residence. Colquhoun v. Brooks ( cit. supra) overruled the decision in Lloyd v. Solicitor of Inland Revenue ( supra) relied on by the appellant. The real question was one of intention, and that had been regarded as the determining element in Attorney-General v. Coote ( cit. supra). The same principle had been taken as the test in the recent case, Turnbull v. Solicitor of Inland Revenue, October 25, 1904, 42 S.L.R. 15.

At advising—