Scottish Court of Session Decisions

The Inland Revenue Act 1880 (43 and 44 Vict. c. 20), section 43, enacts—-“(I) On and after the first day of July 1880, in lieu of the duties of excise now payable on licences

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to be taken out by retailers of spirits in the United Kingdom, there shall be charged and paid the duties following (that is to say)—If the annual value of the dwelling-house in which the retailer shall reside or retail spirits, together with the offices, courts, yards, and gardens therewith occupied, is under £10 … [ Here follows a sliding scale of the duty payable.]

On 28th October 1905 William Cleghorn Paterson, wine and spirit merchant, Harbour Bar, Girvan, brought an action against the Lord Advocate as representing the Commissioners of Inland Revenue, in which he sought declarator that he was not bound to pay excise licence duty in respect of a billiard saloon occupied by him as tenant, and situated in the flat immediately above his licensed premises. He also sought repayment of excess licence duty which he had paid under protest in respect of the said saloon.

The premises for which the pursuer held a public-house certificate consisted of a single room (the bar) with a dwelling-house of one room and kitchen attached, and were occupied by him under a lease, dated 17th November 1902, at an annual rent of £14. Under this lease he also occupied the stable, cellars, and outhouses behind the “Harbour Bar,” at an annual rent of £11. Under another lease dated 25th May and 6th June 1905 he occupied as a billiard saloon at a rent of £20 the flat above the bar, room and kitchen. It belonged to the same proprietrix but had no internal communication with the lower flat, access to the saloon being obtained from the street through a pend leading to the yard behind and by an outside stone staircase going up from the yard to the flat above. There was also a private exit behind the bar into the entrance lobby of the dwelling-house, and thence through a back door into the court behind, from which the saloon might be reached by ascending the outside stone staircase above described, thus avoiding the necessity of going out into the public street.

The pursuer pleaded—“(1) The pursuer is entitled to decree of declarator as concluded for in respect that ( a) the said flat occupied by him as a billiard saloon is not certificated by the licensing authority for the sale therein by retail of exciseable liquors; ( b) the said flat is a separate tenement from the certificated premises; and ( c) the said flat is not occupied by the pursuer along with certificated premises as offices, courts, yards, or gardens.”

The defenders pleaded—“( a) In the circumstances and on a sound construction of the statutory provisions relating to licence duty, the rent of the billiard room is rightly included in the annual value according to which the duty has been charged.”

The facts connected with the case are given in the opinions of the Lord Ordinary and the Lord President.

On 7th March 1906 the Lord Ordinary in Exchequer Causes ( Johnston) assoilzied the defender from the conclusions of the summons.

Opinion—“The pursuer is tenant under a lease, No. 6 of process, of a public-house for six and one-half years, commencing at Martinmas 1902. The premises when they were first let to him consisted of the bar in Knockushion Street known as the Harbour Bar, with the stable, cellars, and outhouses behind the same, all as presently occupied by Hugh Kirkwood, publican there, under exception (from and after the term of Whitsunday 1904) of the flat above the said public-house, which flat was to be taken over by the landlady at Whitsunday 1904. Accordingly, the upper flat was in the hands of Mr Kirkwood, the publican who preceded Mr Paterson. It is not indicated whether it was used by him as a billiard saloon or not, and for the purposes of the case I shall assume that it was not. The landlady did take the upper floor back into her own hands after a short period, but by the lease No. 7 of process she re-let it to Mr Paterson at Whitsunday 1905 for a period of seven years, and the terms of this lease, I think, require to be noted. The subject is described as that flat above the said Harbour Bar, situated at the corner of Henrietta Street and Knockushion Street, Girvan, to be used by him as a billiard saloon, and that for a period of seven years from and after the term of Whitsunday 1905. Now, Mr Young is quite right in drawing attention to this, that not only is the use of the upper flat defined, but that there is a break in favour of the landlady just at the term at which the lease of the public-house runs out, showing, therefore, that in her mind the billiard saloon was a valuable adjunct—I use that word in preference to offices — a valuable adjunct of the public-house business. I think that the same thing is shown by the previous passage, which declares that in the event of Paterson, the publican, selling the business, the landlady shall be bound to accept the purchaser as tenant of the billiard saloon after let. Now, I cannot read that otherwise than as indicating that in the first place the landlady thought the billiard saloon an important adjunct of her public-house premises, and, in the second place, that Mr Paterson thought that it would be of no use to him if he had not got the public-house, and that at the same time its possession would enhance the value of the public-house as a marketable subject. Now, these considerations do not necessarily lead to the decision of the case, but they are, I think, pertinent to the question which I have got to consider, and that is whether the terms of this statute, badly worded as they are, support the demand of the Grown. What I have got to interpret are the words, ‘ if the annual value of the dwelling-house in which the retailer shall reside or retail spirits, together with the offices, courts, yards, and gardens therewith occupied,’ is as defined, the duty should be as specified. Now, there is no question that the first case which was referred to, the case of Lawrence and its sequels, the cases of Kirk v. The Lord Advocate, and Paterson v. The Lord Advocate, are all cases dealing

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with the question of ‘the dwelling-house.’ They are all cases in which a dwelling-house, practically separate, was sought to be brought under the definition of ‘ the dwelling-house in which the retailer shall reside or retail spirits,’ and I do not think they really throw any light upon the question which we have here. At the same time, I agree with Lord Stormonth Darling when, in a subsequent case bearing more nearly upon the question, he says that his statement in the case of Kirk to the effect that ‘the test of liability is the annual value of the certificated premises and no other,’ was not an accurate statement if it be taken as a general statement, but that he intended it only with reference to the particular circumstances with which he was dealing.

“The question which I have to determine is rather upon the latter half of the clause quoted above, than the former, viz., whether this billiard saloon can be brought within the term ‘offices, courts, yards, and gardens therewith occupied.’ I think that the case of Phillips v. The Lord Advocate, 1 Fr. 828, is much nearer an authority than these above referred to, and supports me in the conclusion at which I have arrived, that such premises as this billiard saloon must be held to be covered by the terms of the statute. I set aside ‘courts, yards, and gardens ’ and look at the word ‘ offices ’ only, but I must take the word ‘ offices ’ in conjunction with the words ‘ therewith occupied.’ Now, the word ‘offices’ is a word of very wide meaning. I think you may search the dictionary through and you will hardly get a word to which such various grades of meaning have been gradually attached. Even when used in the plural, and taken in the special significance in which presumably it is used here, it is an extremely general word. I don’t think I can do better than refer to two quotations in Murray's Dictionary. The Times of 1798 has this passage, ‘To be sold, a freehold house with numerous attached and detached offices of every description.’ Now, it seems to me that that indicates that one hundred years ago at any rate the word ‘offices’ carried an extremely wide meaning. Again, he gives this passage from an author Russell writing in 1881—‘ The usual outbuildings and offices which such fortified places contained.’ It seems to me that these indicate a wide range of meaning, and of meaning fluctuating with the principal subject. The term ‘offices’ describes something which is pertinent, but it describes something which corresponds as a pertinent with the principal subject. That is appropriate as a pertinent to one thing which is not necessarily appropriate to another. For instance, to go back to Murray, a pantry, scullery, laundry, etc., are not appropriate offices of a farm, neither are byres and dairies appropriate offices of a dwelling-house, but they are each respectively offices of this particular principal subject. Now, if one considers what the principal subject is here, viz., a public-house, that may fairly come under the term offices in connection with a public-house, which would not necessarily come under the same term with reference to another building. Therefore, as I said at the beginning, one must regard not merely the word ‘offices,’ but the words ‘ occupied therewith,’ as marking the relation between the ‘offices’ and their principal subject. Now, I cannot dispossess my mind of the consideration that a billiard saloon is an adjunct of a public-house which every publican would be delighted to have. There can be no question that—to refer to the case of Phillips ( supra cit.)—the stable is not necessary to the public-house, but it is a very convenient adjunct of the public-house. It gives the customers of the public-house an opportunity of stabling. They get no drink in the stables, but in consequence of the use of the stable they are attracted to the public-house. I think that the billiard saloon is in very much the same position. A man who goes to the billiard saloon gets no drink there, because I cannot accept the suggestion of Mr Young that the licensed premises cover the billiard saloon. He can et no drink there, but the attraction of the billiard saloon is also an attraction to the public-house; and, apart from the terms of the lease, I cannot hold that the billiard saloon is not really ‘therewith occupied.’ The billiard saloon is truly an adjunct of the public-house in the sense of the statute and therefore an office in the sense of the statute. I say ‘apart from the lease,’ because if I go to the lease I find that conclusion confirmed by the terms of the lease to which I have already referred. Accordingly I am prepared to hold that this billiard saloon must be included in the annual value of the licensed premises just as much as the stable, courts, washing-house, and whatever else there may be in the back yard, and I therefore assoilzie the Crown from the conclusions of the summons with expenses….

“I think I should add that the situation of the premises weighs with me also. I cannot say that these have that separateness which the pursuer contends for. The court is not in any way a public court. One other set of premises has a right-of-way through it; otherwise it is truly a private court belonging to the public-house, and the passage to the billiard saloon is part of it.”

The pursuer reclaimed, and argued—The question turned on sub-sec. 1 of sec. 43 of the Inland Revenue Act 1880 (43 and 44 Vict. c. 20). The licence was for the “Harbour Bar,” together with “the offices, courts, yards, and gardens therewith occupied.” The saloon clearly did not fall under any of the last three. A billiard saloon was not one of the “offices” of a public-house in the sense of the Act— Lawrence v. The Lord Advocate, January 24, 1889, 53 Justice of the Peace Reports, 167; Kirk v. Lord Advocate, October 22, 1897, 5 S.L.T. 143; Phillips v. Lord Advocate, December 28, 1898, 1 F 828, 36 S.L.R. 636; Grant v. Langston, May 28 1900, 2 F. (H.L.) 49, 37 S.L.R. 691; Webster's Dictionary, voce “offices.” The saloon could not be called a pertinent, for it was held on a separate lease. The subjects were separate and the rents were separate. One of the leases too excluded assignees

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and the other did not. The rent of the saloon, £20, was more than the rent of the licensed premises. The Lord Ordinary was wrong in thinking that the saloon fell within the word “offices.” The word “offices” must be construed with relation to the principal subject, e.g., “offices” of a farm-house. The saloon was not necessary for the purposes of the other, and the “offices” of a house meant such buildings as were necessary for the purposes of the house.

Argued for respondent — In Grant v. Langston (ut supra) the subject in question was really a shop, not a dwelling-house. The case of Phillips v. Lord Advocate (ut supra) was in the respondent's favour. The billiard saloon was occupied as an appanage of the public-house. The upper flat was referred to in the lease of 17th November 1902 as within the “offices,” e.g., “the said public-house and offices, including the flat above the same.” The lease of 1905 provided that the billiard saloon was to be so conducted as not to endanger the licence of the public-house. That showed the subjects were meant to go together. Moreover, the lease provided that if the public-house were sold the proprietrix should be bound to accept the purchaser as tenant of the saloon. “Offices” need not be such buildings as were “necessary” for the use of the principal subject—it was enough if they were used for and as part of the subject. A “store” and a “billiard saloon” were both offices of a public-house if they were used as part of the premises.