THE SCOTS LAW TIMES REPORTS 1924 EDINBURGH PUBLISHED BY W. GREEN & SON, LIMITED, AT THE OFFICE 2 AND 4 ST GILES STREET REPORTS 1924, SCOTS LAW TIMES REPORTED BY W. R. GARSON, Esq.; MARCUS DODS, Esq., B.Α.; MAURICE J. KING, Esq., M.A., LL.B.; J. A. LILLIE, Esq., M.A., LL.B.; WILLIAM GARRETT, Esq., B.A., LL.B.; M. G. FISHER, Esq., M.A., LL.B.; J. MACGREGOR, Esq., M.A., LL.B.; And T. GRAINGER STEWART, Esq., ADVOCATES. NOTE.-Cases in this volume may be cited 1924, S.L.T. Thus: Inland Revenue v. Fothringham, 1924, S.L.T. 2. REPORTS granted leave to reclaim. His Lordship's opinion is printed in the previous report. The Lord Advocate reclaimed, and the case was heard before the First Division on 23rd and 24th October 1923. Argued for the Pursuer: The modus calculandi of the statute was to ascertain the number of years' purchase at which the property was valued and use that number as the multiplier of the amount of the annuity. The question had never been raised whether, in ascertaining the number of years' purchase of the property, it was legitimate to deduct a sum in name of Revenue-Estate duty-Property passing on death extended "-Cesser of an "Aberdeen Act" annuity of years' purchase of the whole property by which gross rental in ascertainment of number of years' was increased, and in the result the capital value of the annuity was also increased.) The deduction was a proper one, because what had ultimately to be valued was the capital of a charge-free annuity. The rental of the property used in the calculation must, therefore, also be a charge-free rental. An annuitant had an interest in the repairs of the estate on which the annuity was secured, since if the estate were not properly kept up the annuity might possibly have to be curtailed. It was, therefore, necessary to figure a hypothetical addition to the property which yielded after deduction for repairs a free annuity of £4000. Thus it Reclaiming Note against an Interlocutor of Lord was fair and right to deduct repairs from the Blackburn. purposes of estate duty. (Reported ante, sub. nom. Lord Advocate v. The Lord Advocate, on behalf of the Commissioners of Inland Revenue, brought an action of accounting and payment, inter alia, of estate duty against Walter Thomas James ScrymsoureSteuart Fothringham of Pourie and Grandtully. The conclusions of the action, the pleadings of the parties, and the relevant sections of the Finance Act, 1894, are all sufficiently set forth in the previous report. On 8th June 1923 the Lord Ordinary (Blackburn) sustained the second and third pleas in law for the defender, continued the cause, and gross rental of the actual property before calculating the number of years' purchase at which it was valued. Counsel referred to the following authorities: Attorney-General v. Coole, [1921] 3 K.B. 607, per Sankey J. at p. 618; Edinburgh and Glasgow Railway Co. v. Hall, 1866, 4 M. 1006, per Lord Justice-Clerk Inglis at p. 1008; Attorney-General v. Power, [1906] 2 I.R. 272, per Palles C.B. at p. 277 ; In re Elwes, 1858, 3 H. & N. 719, per curiam (Watson B.) at p. 716; Lord Advocate v. Henderson's Trs., 1905, 7 F. 963; Lord Advocate v. Maclachlan, 1899, 1 F. 917, per Lord President Robertson at p. 922, Lord Adam at p. 923, REPORTS-1924, SCOTS LAW TIMES. 3 and Lord M'Laren at p. 924; In re Earl upon the principal value of all property which IST DIV. Cowley's Estate, [1898] 1 Q.B. 355, per A. L. Argued for the Defender: This was a taxing statute and in dubio must be construed in favour of the subject. There was no authority beyond the ipse dixit of the Commissioners that the word "income" in section 7 (7) of the Finance Act of 1894 meant income passes on the death of such person; and, by Inland after deduction for repairs. It was equally Accordingly, the Murthly property must be open to the defender to assert that the word meant gross income, and perhaps he had conceded too much in not stating his objection to the deduction even of public burdens. If the contention of the Crown was right, why did the Commissioners stop at repairs? They might with equal logic have deducted the cost of insurance and management. But the defender had conceded the deduction of public burdens because they constituted a charge upon income prior to the annuity. The cost of repairs was not prior to the annuity. The interest of the deceased here was £4000 per annum, nothing more and nothing less. She had no concern with the repairs to the whole property. The benefit accruing to the defender was also £4000 per annum, neither more nor less, and the number of years' purchase at which that benefit should be valued must be ascertained by a consideration of the true annual a deemed to have passed on the death of Lady value of the whole property to him. That depends-according to their terms-on the annual value was the gross rental less public burdens. It was out of that annual value that he had to keep his property in repair. Besides, the cost of repairs had been already allowed for in fixing the number of years' purchase at which the whole property was valued. That calculation always included as a factor in it the state of the property. Counsel referred to the following authorities, in addition to those cited for the pursuers: Earl of Galloway v. Dowager Countess of Galloway, 1903, 6 F. (H.L.) 1; In re Parker-Jervis, [1898] 2 Ch. 643. [Lord Skerrington referred to AustenCartmell on the Finance Acts, p. 80.] Avizandum, 24th October 1923. On 17th November 1923 the Court recalled the interlocutor of the Lord Ordinary, sustained the fifth plea in law for the pursuer, and remitted to the Lord Ordinary to proceed. The Lord President (Clyde). The late Lady Douglas Stewart was entitled to an annuity secured over the property of Murthly. The interest which, as annuitant, she had in the property ceased on her death on 6th October 1916. By section 1 of the Finance Act, 1894, estate duty is payable in the case of every person dying after the commencement of the Act result of a comparison between the extent of The whole dispute between the parties is as 1923. |