SCOTS LAW MADE IN ENGLAND.

Some interesting considerations are presented by the case of Young v. Campbell, reported 1924, S.L.T. 73. This was a case where the pursuer met with a serious accident through a fall consequent on her having caught her foot in a saucer-shaped depression in the pavement of a court common to and situated at the back of two tenements belonging to the defenders. The pursuer's husband was tenant of a house in one of the tenements. The Sheriff-Substitute allowed a proof, and the pursuer required the cause to be remitted to the Court of Session for jury trial. The First Division recalled the interlocutor of the Sheriff-Substitute and dismissed the action, chiefly on the brocard volenti non fit injuria. The pursuer's own averments shewed that she had accepted the risk and put her out of court. So far there is nothing out of the way in the case. What is noteworthy is the part played in the case by the decision in Fairman v. Perpetual Investment Building Society ([1923] A.C. 74). Lord Skerrington and Lord Sands reserved their opinions on this case and its possible effect on Scots law. Lord Cullen, however, observed that "there is, I think, no doubt that an application of that decision in Scotland involves the upsetting of a considerable train of Scottish authorities whereby the law on the subject was here regarded as settled. While that is so, I am unable to perceive that the decision went on any principles of the law of liability for negligence which are not common to both countries. Moreover, as the report shews, the House had under its consideration certain representative Scottish cases on the subject. I am of opinion that we must follow the case of Fairman.

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The plaintiff in Fairman lodged with her sister in a flat on the fourth floor of a block of flats owned by the defendants. The stairs were made of cement reinforced with bars of iron, of which there were two or three on each step. Owing to the wearing away of the cement, in some cases a bar became exposed and an irregular depression was scooped out behind it by the breaking away of little bits of cement. The plaintiff caught her heel in a depression so formed, and fell downstairs. The subsequent action went to the House of Lords, which found for the defendants. Though differing on the facts, the noble and learned Lords were at one on the principles to be applied. They held that the only duty owed by the defendants to the plaintiff was not to expose her to a concealed danger or trap. In so holding, they overruled the well-known case of Miller v. Hancock ([1893], 2 Q.B. 177). As Scots authorities were quoted, the personnel of the House is worth recording-Lords Buck

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master, Atkinson, Sumner, Wrenbury, and Carson. The only direct reference to the Scots cases is made by Lord Buckmaster : Two cases in the Scottish Courts appear....to hold that in circumstances where the landlord retains control and possession of a common staircase his duty to the public is to keep it reasonably safe. Whether such a duty is one that it might be reasonable to impose on landlords is not a matter which this House has to consider. The question is-Does such a duty exist?" The answer in England is now "No." Miller v. Hancock said "Yes"; and this was, and, it is submitted, still is, the law of Scotland.

In Miller v. Hancock the defendant was owner of a building in the city of London, different floors of which were let as separate tenements for offices. The plaintiff was a collector in the employment of the Midland Railway, and had to call on tenants on the second floor. He met with an accident on the stairs owing to their defective condition, and broke his leg. (Lord Sumner, who in Fairman goes fully into the different reports of Miller, points out the curious circumstance that they are not unanimous even on the question whether the plaintiff was going up or coming down.) The jury awarded £200 damages, and this was upheld by a strong Court of Appeal holding that, inasmuch as the defendant must have known and contemplated that the staircase would be used by persons having business with his tenants, there was a duty on his part towards such persons to keep it in a reasonably safe condition. Lord Esher M.R. said: "I think that there is a relation between the landlord and those who resort to the premises for business purposes, from which a duty arises on the part of the landlord to keep the staircase, which is the means of access to the premises, in reasonably safe repair." Bowen L.J., afterwards Lord Bowen, said: landlord must know when he lets a flat that tradesmen and other persons having business with the tenant must have access to it. It seems to me that it would render the whole transaction inefficacious and absurd if an implicit undertaking were not assumed on the part of the landlord to maintain the staircase so far as might be necessary for the reasonable enjoyment of the demised premises."

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The Scots cases to which Lord Buckmaster referred are Kennedy v. Shotts Iron Co. (1913 S.C. 1143) and Grant v. Fleming (1914 S.C. 228). In these cases our Court enunciated the principle that there is a duty on the landlord in circumstances like those disclosed in this type of action to see that the staircase must be kept safe, not only in a question with his tenant but in a question with those lawfully resorting h

GENERAL DEVISES AND POWERS
OF APPOINTMENT.

"It is quite settled in our law and practice that, where a testator leaves his whole means and estate to a person or persons named in his will, that may be a sufficient exercise of a power to dispose of funds not the property of the testator, but which the testator has been empowered by somebody else to dispose of." That statement of the law of Scotland was made by Lord Deas in the case of Mackenzie v. Gillanders (1 R. 1050), and it is quoted by Lord Adam in the case of Dalgleish's Trs. v. Young (20 R. 904). In the latter case Lord Adam also referred to the case of Hyslop v. Maxwell's Trs. (12 S. 413) as follows: "In that case Mr Maxwell left to his niece, Miss Hyslop, an annuity of £100 stg. with power to her 'by will or other deed under her hand' to dispose of as she might think proper, after her decease, of the capital sum of £2000, which was to be set apart by his trustees for ensuring the annuity, and which they were directed to pay in the way she might order and appoint. Miss Hyslop, before Mr Maxwell's death, had executed a settlement of her whole estate, heritable and moveable, in favour of her three sisters. After her death her sisters claimed this sum of £2000. Mr Maxwell's trustees objected to the claim on the ground that the testatrix had no property in the sum, but a mere power or faculty to dispose of it, and that her settlement was not an effectual exercise of the power, so that the sum of £2000 fell to the residuary legatee of Mr Maxwell. The Lord Ordinary, Lord Corehouse, than whom I need hardly say there can be no higher authority, preferred the Misses Hyslop's claim. 'The only question, therefore,' he said, 'is, whether the general conveyance in favour of her sisters is an execution of the power, and comprehends that sum. According to a very strict and rigorous construction of the instrument, it ma perhaps be admitted that the words used do not comprehend it, for neither was the fee vested in her person, nor could the trustees have been called to denude of it during her life. But testamentary deeds are not SO construed; on the contrary, it is an invariable rule that they shall receive the most liberal interpretation, and that which carries the presumed intention of the testator into effect. The sum in dispute, though not technically Miss Hyslop's property, was virtually so. She had the interest of it during her life, and the unlimited power of disposal at her death. So much was it considered her property that at one time she submitted to a reduction of her annuity when the rate of interest fell. Indirectly, she might have disposed of it even in

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her lifetime, for onerous causes, by a deed to take effect at her death. When she made a settlement, therefore, leaving everything she had, or might afterwards have, to her sisters, no reasonable doubt can be entertained that she meant to include a sum which in effect was as much hers as any part of her property.' The Lord Ordinary goes on to point out that the law of Scotland has never recognised the English rule that a general devise, however unlimited in terms, will not comprehend the subject of the power unless it refers to the subject or the power itself."

Attention is directed to the final sentence in the paragraph above quoted as probably conveying an erroneous impression as to the law of England on the point of a general devise in relation to the subject of a power and the exercise of that power, and the following explanations are made.

Lord Corehouse was speaking in the year 1834, and the exact words used by him were these: "The defenders, relying on those English cases and dicta, have pleaded that a general devise, however unlimited in terms, will not comprehend the subject of the power unless it refer to the subject, or to the power itself, or unless some part of the will would otherwise be inoperative. If that be a rule of the law of England it is enough to say that no trace of such a rule ever existed in the law of Scotland."

It appears from "Jarman on Wills" after referred to, that such a rule did exist in England prior to the year 1837, but it was rescinded in that year by the statute to be afterwards adverted to.

Lord Adam, however, was speaking in the year 1893, and one gathers from the sentence referred to that the English rule was even then in operation, for no reference is made by his Lordship to the statute of 1837 abrogating the former law. Indeed, in "Wood's Lectures on Conveyancing," at p. 715, on the subject of Wills, the sentence mentioned is given as authority to the effect that the law of England differs from the law of Scotland on the subject under discussion.

Apparently, therefore, the sentence in question has already had, and may continue to have a misleading effect. The purpose of the present article is to correct any misleading tendency, and to point out to those members of the profession who may not hitherto have had occasion to consider the subject, that the law of both countries has been brought into line since the passing of 1 Vict. cap. 26, which applies to England only. It is entitled, "An Act for the Amendment of the Laws with respect to Wills," and is referred to shortly as the Statute of Wills. It is enacted by section 27 of the statute (the

INCOME TAX ON TRADE INTEREST IN A YEAR OF LOSS.

If one may judge from the correspondence columns of the accounting press, it appears that quite a large amount of attention is being given to the income tax relations which arise, in a year of loss, on a trader's account which contains a debit of interest paid to a creditor under deduction of income tax. It is said that the Department's practice is (1) to require the trader to pay over to the Department the tax which he has thus deducted from the creditor, although the trader may otherwise be liable for no tax at all in that year; and (2) that nevertheless, for the purposes of future averages, the interest in question is added back so as to reduce that year's loss to be brought into account in future years, or even it may be to turn that year's loss into a profit. It is pointed out that this creates a hardship and amounts to double taxation, and it is added that there is an unjustifiable differentiation against the trader in respect of interest paid by him under deduction of tax as compared with interest paid by him gross. This is not an accountants' journal, and no attempt will here be made to go into a tabulation of figures, or to dispute "c "computations " with official and accounting experts. But on the legal aspects of the matter it may be useful to state certain considerations which do not appear to have been mentioned in the extensive correspondence to which reference has been made.

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It has been alleged that section 17 of the Income Tax Act, 1918, does not apply, because it is a section dealing with exemption, abatement, or relief," and the suggestion apparently is that these words have specific and limited meanings, which do not cover the question at issue. It is thought that that view is unsound. Section 17 deals with any “claimant," which is in contradistinction to the term " individual" in section 9. It is also to be observed that the rights of exemption, abatement, and relief introduced by section 9 are all to be found "in the six sections next following," being sections 10 to 15 both inclusive. It is true that section 16 refers back and is limited to those immediately preceding sections, but section 17 starts afresh on a wider basis. It therefore appears that the reference in section 17 to the taxpayer's right to deduct and "retain" is relevant and important.

There appears to be a good deal of confusion as to the true meaning of paragraph (b) of subsection (1) of section 209 of the 1918 Act. That paragraph provides that "no deduction shall be made on account of any annual interest to be paid out of such profits or gains in regard that a proportionate part of

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the tax is allowed to be deducted on making any such payment." But loan interest of the nature now referred to is not a payment "out of" profits. A payment “out of profits is an item in the apportionment of profits after the profits have been ascertained, as for instance payment to a retired partner, or to the widow of a deceased partner, under partnership arrangements giving those parties respectively continuing interests in the profits. That has nothing whatever to do with the case of payment of interest on borrowed capital. Interest of that kind is an outgoing before profits are ascertained. Therefore that enactment seems to have no bearing whatever on the question now under consideration. Further, in the correspondence referred to it has, we are bound to admit in our opinion very naturally, been suggested, or otherwise assumed as obvious, that the clause introduced by "in regard that" is the reason assigned by the statute for the disallowance of the deduction in question. The correspondent who puts that forward is evidently not familiar with the remarks of Lord Justice Bowen in the case of Alexandria Water Co. (11 Q.B.D. 177), where the correspondent's view or assumption is absolutely negatived. The Lord Justice said that that clause is "not an expression of the reason of the legislature, but is to render impossible an erroneous view which might otherwise be entertained by the person computing (the taxpayer) as to his being entitled to make the deduction." That dictum from the English Appeal Bench has been supported very recently by Lord Ormidale in the Second Division in the case of Lord Inverclyde's Trs. (1923, S.L.T. 711). For the benefit of any readers of this article who may not, as yet as any rate, have had access to the report of the latter case, it may be explained that the decision of the Court there was that the trustees must pay in full on an assessment under Schedule D on War Loan interest, received without deduction of tax at the source, and that they were not entitled as against that to set-off the very large amount of interest which in the same year they had paid on death duties without deduction of tax, the non-deduction of tax on the death duties being in terms of section 18 of the Finance Act, 1896.

Paragraph (1) of Rule 3, Schedule D, Cases I. and II., is not helpful or applicable at all, for it also is limited to annual payments "out of" profits.

It seems to us that the question really turns upon the title and power of the Department to compel the trader to pay over the tax which he has deducted from the creditor in a year of loss. That payment may in many cases as matter of