Scottish Court of Session Decisions

The Inhabited-House-Duty Act (48 Geo. III, cap. 55), Schedule B, Rule 1, for charging the duties, enacts—“The … duties to be charged annually on the occupier or occupiers for the time being of every such dwelling-house … and to be levied on him, her, or them.” Rule 6—“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.” Rule 14—“Where any dwelling-house shall be divided into different tenements being distinct properties, every such tenement shall be subject to the same duties as if the same was an entire house, which duty shall be paid by the occupiers thereof respectively.”

The Customs and Inland Revenue Act 1878 (41 Vict. cap. 15), section 13, enacts—“(1) Where any house being one property shall be divided into and let in different tenements, and any of such tenements are occupied solely for the purposes of any trade by which the occupier seeks a livelihood or profit,” the Commissioners shall, on proof of the facts, grant relief. (2) Every house or business, or of any profession or calling or tenement which is occupied solely for the purposes 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.”

This was an appeal by Alexander Murdoch, librarian, Glasgow, and George Bain Murdoch, M.D., Glasgow, under the Taxes Management Act 1880 (43 and 44 Vict. cap. 19) against an assessment for inhabited-house-duty on the annual value of Nos. 25 and 27 Bank Street, Hillhead, Glasgow, which the Income-Tax Commissioners for the Lower Ward of the county of Lanark had made on them jointly and in one sum, and had fixed at £92.

In the case for the opinion of the Court of Exchequer the Commissioners stated:—

“The following facts were admitted or proved—1. ( a) No. 25 Bank Street belongs to the appellant Alexander Murdoch and his wife; No. 27 Bank Street belongs to George Bain. In 1900 George Bain and the appellant George Bain Murdoch verbally agreed, the first named to let and the second named to take No. 27 Bank Street for five and a-half years from Martinmas 1900 at the yearly rent of £40. The tenancy of the appellant George Bain Murdoch subsisted during the year of assessment. The appellant George Bain Murdoch is a nephew of George Bain and a son of the appellant Alexander Murdoch. ( b) Nos. 25 and 27 Bank Street are dwelling-houses of three storeys each, basement, ground floor, and first floor. When originally built they were two distinct and independent though adjoining dwelling-houses. There is now, and has been for the last three years, internal communication between them by means of a doorway made in the separating wall of the houses. The doorway, which is without a door, is on the ground floor, is six feet six inches in height and three feet in width, and gives access from the lobby of No. 25 to a pantry in No. 27, which is entered by a door from the lobby of No. 27. The houses were separately assessed to inhabited-house-duty for the years prior to the year 1902–1903, the assessor being unaware of the houses having been internally connected by means of the doorway, ( c) The appellant Alexander Murdoch and the members of his family, other than the appellant George Bain Murdoch and a daughter, sleep in No. 25 Bank Street. The appellant George Bain Murdoch and the daughter referred to sleep in No. 27 Bank Street. The public rooms of No. 27 Bank Street are used by the appellant George Bain Murdoch for the purposes of his practice as a doctor. The appellant Alexander Murdoch and all the members of his family, including the appellant George Bain Murdoch and the daughter referred to, take their meals in No. 25 Bank Street. ( d) Only one servant is kept for both houses. Her wages are paid by the appellant Alexander Murdoch. The meals of all the inmates of Nos. 25 and 27 Bank Street are cooked in the kitchen of No. 25 Bank Street. The kitchen of No. 27 is not used as a kitchen.

“2. The appellants maintained—(1) That No. 25 Bank Street and No. 27 Bank Street are distinct properties in separate ownerships, separately occupied, and should be separately assessed; (2) that No. 25 Bank Street is occupied by the appellant Alexander Murdoch, who should be assessed on £47, being the amount of the assessment made on the appellant Alexander Murdoch for Income-Tax (Schedule A) in respect of No. 25 Bank Street; (3) that No. 27 Bank Street is occupied by the appellant George Bain Murdoch, who should be assessed on £40, being the sum at which No. 27 Bank Street is let to him; and (4) that the opening of a door of communication did not constitute the appellant Alexander Murdoch occupier of No. 27 Bank Street, nor the appellant George Bain Murdoch occupier of No. 25 Bank Street. The appellants referred to 48 George III, c. 55, Schedule B, Rule 14, and to the Attorney-General v. Mutual Tontine Westminster Chambers Association, Limited, 1876, 1 Ex. D. 469; the opinion of Lord President Inglis in Campbell v. Inland Revenue, February 21, 1880, 7 R. 579, 27 S.L.R. 407; and the Glasgow and South-Western Railway Company v. Banks, July 16, 1880, 7 R. 1161, 27 S.L.R. 768.

“3. Mr David Callum Letham, surveyor of taxes, maintained—(1) That Nos. 25 and 27 Bank Street constituted, for the purposes of inhabited-house-duty, one inhabited dwelling-house which is not divided into

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different tenements within the meaning of Rule 14 of Schedule B of 48 George III, chapter 55, and is occupied by the appellants in common, living in family together, and should be assessed as a dwelling-house in the joint occupation of the appellants Alexander Murdoch and George Bain Murdoch; and (2) that the assessment should be made on one sum of £97, being the amount in cumulo of the assessments for Income-Tax (Schedule A) made in respect of Nos. 25 and 27 Bank Street. The surveyor referred to Swain v. Fleming, 1899, 81 L.T.R. 202, 4 Tax Cases 107, in support of his contention that properties owned by different persons may be conjoined in one assessment to inhabited-house-duty, and as to the effect of putting a door in the separating-wall of adjoining houses he quoted the observation made by Lord Chancellor Halsbury in the course of the argument in London and Westminster Bank v. Smith, 1902, 4 Tax Cases, p. 517, viz.—‘If you were to put a door m the separating-wall of a semi-deaached villa it would then constitute one thouse within these Acts.’

“4. The Commissioners found, on the evidence submitted to them, that Nos. 25 and 27 Bank Street formed in their present state one dwelling-house, which is in the joint occupation of the appellants Alexander Murdoch and George Bain Murdoch, and were accordingly of opinion that the assessment for inhabited-house-duty in respect of Nos. 25 and 27 Bank Street should be made on the appellants Alexander Murdoch and George Bain Murdoch jointly and in one sum. The Commissioners fixed the assessment at £92, being the cumulo amount of ( a) the amount (£47) of the assessment for income-Tax made in respect of No. 25 Bank Street, and ( b) the amount (£45) to which the assessment for Income—Tax made in respect of No. 27 Bank Street was reduced on appeal.”

The case was appointed to be heard before the First Division.

Argued for the appellants—There were here two separate houses; or otherwise there was one house divided into two tenements separately owned and occupied, which would bring the case under rule 14 of Schedule B of 48 Geo. III, cap. 15—( Campbell v. Inland Revenue, February 21, 1880, 7 R. 579, 17 S.L.R. 407). The tenements here were separate and distinct; they were separately owned, and they were separately let. The making of the doorway did not make them one—L. J. Vaughan Williams in Browne v. Furtado [1903], 1 K.B. 723. A separate tenement was a separate holding, i.e., let separately, and if separately owned it fell to be separately assessed however it might be used. The assessor's cases were not in point.

Argued for the respondents—The tax was by rule 1 of 48 Geo. III, cap. 15, Schedule B, put upon the occupier, and the question in this case was what was occupied. The question of ownership or leases did not come in. The internal communication pointed to the houses being occupied together and forming one unit for the assessment— Glasgow and South Western Railway Company v. Banks, July 16, 1880, 7 R. 1161, 17 S.L.R. 768; Russell v. Coutts, December 14, 1881, 9 R. 261, 19 S.L.R. 197; Yorkshire Fire and Life Insurance Company v. Clayton, 1881, L.R., 8 Q.B.D. 421. Though some of the cases had been decided upon section 13 of the 1878 Act they were applicable. Rule 14 of 48 Geo. III, cap. 55, could not govern this case, as it applied to a unit being divided up into separate tenements, and here it was separate units which had been united and there were no separate tenements. The whole facts pointed to a joint occupation and one establishment— Grant v. Langston [1900], A.C. 383; Union Bank v. Foster, March 20, 1901, 3 F. 771, 38 S.L.R. 464, 4 T.C. 385, were also referred to.

At advising—