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November 25,


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lør Div.

virtue of the powers conferred by section situated at points near the respective outfalls,

103 of the Public Health (Scotland) Act, in which the sewage is subjected to bacterial Summers

1897, on Local Authorities to construct treatment and so purified before being passed v. Upper District

sewers for the purpose of the disposal or Committee treatment of sewage.

on to the outfalls. The question is, whether

the exemption of sewers covers the purification of the County

The Finance Act, 1921 (11 & 12 Geo. V. cap. works—whether, in short, the word sewer Council 32), section 34, enacts :

is broad enough to cover purification works of of the

the kind indicated, established on the line of the County of

(1) Income tax shall not be charged Renfrew. in respect of a sewer vested in a local

In the section, the word " sewer" is defined

authority in the United Kingdom:
Provided that the foregoing ex

to mean

à sewer maintained by a Local shall not extend to any rent payable or Authority in pursuance of their statutory other annual payment to be made by duties in relation to the public health.” It the local authority in respect of the sewer. becomes, therefore, legitimate to look at the (2) In this section

statutes which regulate that duty, in order to The expression means a sewer see what light they throw upon the meaning of maintained by a local authority in pursu- the word “ sewer. It is right, however, to say, ance of their statutory duties in relation in the first instance, that if I regarded the word to the public health. The expression "local authority”

just as a word in ordinary use in the means a public body having power under English language, I should understand it to any enactment relating to the public mean a pipe or channel for the conveyance of

health to construct and maintain sewers. sewage away from the place where it is proThe Public Health (Scotland) Act, 1897 and-80 treating and using it—it would not

duced to some place where it can be got rid of; (60 & 61 Vict. cap. 38), enacts :

occur to me to apply it to works constructed Section 103. The local authority shall have power for purifying the sewage. Such works might to construct within their district and also, when take the form of a sewage farm. When I necessary for the purpose of outfall or distribution turn to the Public Health (Scotland) Act, 1897, or disposal or treatment of sewage, without their I find that under section 103 of that Act a district, such sewers as they may think necessary for power is given to the Local Authority to conkeeping their district properly cleansed and drained. struct within their district, and also (when

Section 108. The local authority may chase, or take on lease any lands, for the purpose of necessary for the proper disposal or treatment receiving, storing, disinfecting, distributing, or dis- of the sewage) outside their district, such posing of or treating sewage.

are required to keep the district

cleansed and drained. It was suggested in the The case was heard before the First Division argument that some confusion had arisen in on 25th November 1924, when the following the decision of the case by the Commissioners authorities were cited : Brown v. Magistrates from the reference in section 103 to the disof Kirkcudbright, 1905, 8 F. 77; Assessor for posal or treatment” of the sewage.

of the sewage. Whether Aberdeen v. Magistrates of Aberdeen, 1913 S.C. that is so or not, it is really quite plain, so far 712 ; Guthrie, Craig, Peter & Co. v. Magistrates as section 103 goes, that it deals from beginning of Brechin, 1888, 15 R. 385 ; Brook v. Meltham to end with the making of sewers in the ordinary Urban Council, [1909] A.C. 438.

meaning of the term that is to say, pipes or On 25th November 1924 the Court sustained channels forming the means of conveying the appeal.

sewage from the district where it is produced to

some point of outfall—and with nothing else. The Lord President (Clyde).-This appeal It may be a question whether, if it is necessary relates to assessments under Schedule A of the to instal a pumping-engine somewhere on the Income Tax Acts upon certain Local Authorities, line of the sewer in order to enable the sewage and arises upon the terms of subsection 1 of to be carried by the sewer under pressure to its section 34 of the Finance Act, 1921. By that ultimate destination, that is part of the sewer enactment“ a sewer vested in a Local Authority or not. But that has nothing to do with the in the United Kingdom” is exempted from question that arises in this case. Now, when I income tax, subject to certain conditions which turn to section 108, I find that a further power, do not arise for consideration here. The Local eparate and distinct from the power to make Authorities in the present case are owners (in sewers conferred by section 103, is given to the the first place) of certain sewers carrying sewage local authority whereby it is enabled to acquire, away from their districts in which the sewage or contract for, or purchase, both land and is produced to the respective district outfalls; apparatus for the purpose of disposing of, or and (in the second place) of certain works con- treating, or utilising sewage. So far, therefore, sisting of tanks, channels, filters, and the like, as the Public Health (Scotland) Act of 1897

sewers as

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avails to throw light on the subject, a sewer is to the particular nature of the works which the 1st Div. one thing, and works for the purification or respondents carry on, but on the general ground

Summers treatment of sewage are another : and accord that the word sewer, as used in the Act of

v. Upper ingly, “a sewer maintained by a Local Authority 1921, includes works for the disposal or treat- District in pursuance of the

statutory duties in ment of sewage. I am unable, like your Committee relation to the public health” does not cover Lordships, to affirm that general proposition. of the

County purification works established under a statutory According to the natural or ordinary use of

Council power distinct from that of making the sewer, the word, the word "

» does not, in my of the and separately conferred. In any view, the opinion, include all works for the disposal or County of provisions of the Public Health Act afford no treatment of sewage ; and I do not think that Renfrew. justification for confounding together" sewers" there is anything in the context of the Act of November 25, and “sewage purification or treatment works,” 1921 itself or in the Public Health (Scotland)

| or for giving to the word "sewer”, a con- Act of 1897, so far as it may be legitimately struction wider than that which it bears in referred to, which enables one to give such a ordinary use. That being so, I do not think secondary meaning to the word as would that the Commissioners' determination can include all works of that nature. An argument stand. The appeal to us ought, therefore, to be was founded upon the Rivers Pollution Presustained, and the case remitted back in order vention Act of 1876, and the case of Brook v. that the Commissioners may sustain the assess-Meltham Urban Council ([1909] A.C. 438) decided ments on the sewage works.

under it; but it appears to me that a decision

under so totally different an Act does not Lord Skerrington.—While the case contains a afford a guide to the construction of the word general description of the works which are

as it occurs in the Act of 1921. entered in the Valuation Roll as as "sewage works” respectively, it does not, Lord Sands. I think it is possible that as I interpret it, raise any question as to purification may take place in a pipe or whether some particular work or works de- chamber which may reasonably be described scribed in the Valuation Roll as sewage as part of a sewer. But that is not the nature works" ought for the purposes of the Income of the question which we have before us. The Tax Acts to be regarded as forming an integral Commissioners appear to have determined part or parts of a sewer, and therefore as ex- generally that works for the treatment of sewage empted from income tax by section 34 of the are part of a sewer within the meaning of the Finance Act, 1921. The question we have to Act of 1921. I do not think that this deterdecide is a more general and important one, mination can be sustained. namely, whether works which, according to the ordinary use of language, would not be described Counsel for Appellant, The Lord Advocate

parts of sewers," but as (Watson, K.C.), Skelton; Agent, Stair A. “ works for the disposal or treatment of Gillon, Solicitor of Inland Revenue.Counsel for sewage,” are entitled to the exemption merely Respondents, Robertson, K.C., L. H. Watson ; because they are vested in a Local Authority Agents, Martin, Milligan & Macdonald, W.S. and were constructed by that Authority by

C. de B. M., virtue of the powers conferred by section 103

for W. G. S. of the Public Health (Scotland) Act, 1897, on Local Authorities to construct sewers for the purpose of the disposal or treatment of sewage.

FIRST DIVISION. I do not read the section in question as using the word sewer in any but its ordinary (The Lord President, Lords Skerrington, meaning; but even if it did use the word as

Cullen, and Sands.) including works for the disposal or treatment of sewage, I do not think that this circumstance

26th November 1924. would affect the interpretation of the word

as used in section 34 of the Finance 2. Scottish Oils Limited v. CommisAct, 1921. The definition of

sioners of Inland Revenue. tained in section 34 (2) of that Act restricts the exemption to a certain class of sewers, but Revenue-- Corporation Profits Tax-Finance Act, 1920 does not extend it to works which are not

(10 & 11 Geo. V. cap. 18), section 55 (1) (b) and

(2) (a) — Company's trading profits for purposes of In my judgment the appeal should Corporation Profits Tax amounting to £32,486— be allowed.

Company receiving dividends amounting to $172,598

from subsidiary companies assessable to Corporation Lord Cullen.-The Commissioners have de

Profits Tax in respect thereof-Preference dividend,

absorbing £194,524, paid out of total of these profits cided this question, not with any special reference and dividends-Held that the preference dividend

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18T Div. was actually paid out of " the £32,486 of the trading

of those profits any interest or diviprofits and the $172,593 derived from subsidiary

dends actually paid out of those profits Scottish

companies in proportion to those amounts, and that Oils Ltd.

at a fixed rate on any debentures, Corporation Profits Tax was accordingly payable out v. Inland

debenture stock, preference shares (so of the balance of the £82,486 not appropriated on Revenue. that basis to payment of preference dividend.

far as the dividend paid thereon is at

a fixed rate), or permanent loan issued November 26, 1924.

before the commencement of this Act, Exchequer Cause.

or on any debentures, debenture stock, Scottish Oils Ltd., of Bothwell Street,

or permanent loan issued after that

date for the purpose of replacing an Glasgow, appealed to the Commissioners for the

equal amount of any debentures, deSpecial Purposes of the Income Tax Acts

benture stock, or permanent loan against an assessment to Corporation Profits

issued before that date." Tax made upon it by the Commissioners of

Section 53 (2) (a) of the Finance Act, 1920, Inland Revenue for the accounting period of

provides as follows: one year ended 31st March 1921, under the pro

profits shall include all profits and visions of the statutes relating to that duty.

gains arising from any lands, tenements,

or hereditaments forming part of the The Special Commissioners dismissed the

assets of a company, and all interest, appeal, and at the request of the company

dividends, and other income arising stated a case for the opinion of the Court of

from investments or any other source Session.

and received in the accounting period, The case set forth, inter alia :

not being interest, dividends, or

income received directly or indirectly I. The following facts were admitted or proved :

from a company liable to be assessed 1. The company carries on the business of

to Corporation Profits Tax in respect dealers in, and producers, importers,

thereof, and no deduction shall be exporters, distillers, and distributors of,

allowed on account of the annual value petroleum and other mineral oils, etc.,

of any premises used for the purposes and also holds nearly all the ordinary

of the company." shares of the following subsidiary com- II. The company contended that it was entitled, panies, viz. the Broxburn Oil Co. Ltd., under the above provisions, to treat the preference the Pumpherston Oil Co. Ltd., the Oak. dividend as payable, in the first place, out of the estibank Oil Co. Ltd., Young's Paraffin Light mated profits, and that, as the preference dividend and Mineral Oil Co. Ltd., James Ross & was larger than the estimated profits, no Corporation Co., Philpstoun Oil Works Ltd., and the Profits Tax was payable. company has also acquired and holds III. On behalf of the Commissioners of Inland other interests. The proportion of the Revenue it was contended that the preference divi. ordinary capital of the subsidiary com- dend must be treated payable out of the estimated panies not held by the company is in- profits under the paragraphs referred to in the prosignificant in amount.

portion which the estimated profits bore to the total 2. The trading profits of the company as esti- profits, and that the duty payable was 10 per cent.

mated for the purpose of Corporation on £32,486, less £30,814 (being x 194524).
Profits Tax for the accounting period in
question were £32,486 (hereinafter called
the estimated profits).

The Question of Law for the opinion of the 3. The company also received in the same Court was :

period from the above-named companies, “ Whether the company was entitled to treat which were already charged with Cor- the preference dividend as actually paid, poration Profits Tax, dividends total

in the first place, out of the estimated ling £172,593 (hereinafter called the

4. Out of the total sum of the estimated profits

The case was heard before the First Division
and the dividends amounting to £205,079
(hereinafter called the total profits) the on 26th November 1924, on which date the
company paid a dividend on its preference Court answered the question of law in the
shares amounting to £194,524 (herein- negative.

after called the preference dividend). 5. Section 52 (1) (b) of the Finance Act, 1920, The Lord President (Clyde).—The assessment provides as follows:

to Corporation Profits Tax is arrived at with “ the amount of tax payable in respect regard to the sum represented by 10 per cent. of of the profits of a British company for the company's profit. Under subhead (a) of subany accounting period shall in no case section (2) of section 53 of the Finance Act, 1920, exceed the amount represented by 10 per cent. of the balance of the profits profits, for this purpose, are exclusive of any of that period estimated in accordance dividends received by the company from it's with the provisions of this part of this subsidiary companies which have already been Act, after deducting from the amount liable to be assessed to Corporation Profits

32486 205079



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Tax. The company's profits struck under

2ND Div.

SECOND DIVISION. observance of that qualification were £32,000.

Stewart v. The next thing, under subhead (6) of sub

(The Lord Justice-Clerk, Lords Ormidale,

Astor & section (1) of section 52, is to see that from this


Hunter, and Anderson.) £32,000 there is deducted any interest or fixed

October 24, dividends on the company's preference or

24th October 1924. debenture stock which have been (in the words of the statute) “ actually paid out of those


Stewart v. Astor & Faith. profits." The fixed dividends on the company's preference shares amounted to £194,000; and, Reparation-Negligence -Liability—Relevancy --Proof or as paragraph 4 of the case informs us, this sum jury trial-Pursuer's son meeting his death as was, as a matter of fact, paid out of a total the result of a fire originating in the defenders'

Auction rooms and spreading to the adjoining premises sum of profits made up of (a) the £32,000, and

where he was employed-Pursuer averring (a) that (6) a sum of £172,000, representing dividends

there was a large quantity of inflammable material received from subsidiary companies.

in the auction room where a sale was in progress ; The question, therefore, is how much, if any,

(b) that persons attending the sale were smoking

without objection from the defenders; (c) that the of the £194,000 was in these circumstances

Are was caused by a cigar or cigarette end dropped actually paid out of " the £32,000 within the

by a smoker, or by a gas-stove situated in immediate meaning of the Act? The answer obviously is proximity to and in contact with the combustible that it was actually so paid out of the £32,000

material-Interlocutor of Lord Ordinary approving

an issue recalled, and proof before answer allowed. pro rata only. Accordingly, the question put to us must be

(Reported ante, 1924 S.L.T. p. 573.) answered in the negative.

Reclaiming Note against an Interlocutor of Lord Skerrington.-I think that the Com

Lord Ashmore. missioners were right in holding that the facts admitted or proved did not support the con- Robert Stewart, miner, Glasgow, brought an tention that the appellants were entitled to action against Astor & Faith, auctioneers there, treat the preference dividend as having been in which he concluded for payment of £500 as 'actually paid,” in the first place, out of the damages for the death of his son as the result of estimated profits. I express no opinion as to a fire originating in the defenders' premises. whether the Commissioners were bound to hold The averments of the pursuer, the material that any part of the preference dividend must plea in law, and issue proposed will be found in be treated as having been so paid.

the previous report.

On 25th June 1924 the Lord Ordinary Lord Cullen.-I agree in the opinion expressed (Ashmore) repelled, inter alia, the first plea in by your Lordship in the chair.

law for the defenders on relevancy, and approved

of the issue proposed by the pursuer. The Lord Sands. I also agree. When I read opinion of the Lord Ordinary will be found in Article 4 it seemed to me conclusive of the case. the previous report.

The defenders reclaimed, and maintained that
Counsel for the Appellants, Robertson, K.C., the pursuers averments were irrelevant.
M. J. King ; Agents, A. & W. M. Urquhart, On 24th October the Court recalled the inter-
S.S.C., for Boyds, Miller & Thompson, Solicitors, locutor reclaimed against, and allowed a proof
Glasgow.-Counsel for Respondents, The Lord before answer.
Advocate (Watson, K.C.), Skelton ; Agent, Stair
A. Gillon, Solicitor of Inland Revenue.

The Lord Justice-Clerk (Alness).-The pursuer
C. de B. M., is the father of a lad who died as the result of
for W. G. S.

certain burning injuries which he sustained.
The action is directed against a firm of

auctioneers in Glasgow, in whose premises
the fire originated. It spread to the adjoining
premises where the pursuer's son was employed,
and in consequence, at any rate in part, of the
burning injuries which he then sustained he
died. An action of damages was thereupon
brought by the lad's father against the
auctioneers, an action which is based upon
negligence. The Lord Ordinary has approved
of an issue for the trial of the case, and a reclaim-
ing note has been taken against his judgment by


Astor &

October 24,


2nd Div. the defenders, who maintain that the pursuer's unusual character, and also that it is not un Stewart v. averments are irrelevant.

important from the point of view of the large The case for the pursuer is not very satis- number of persons who, I apprehend, carry on Faith. factorily stated. It is quite true, no doubt, a business of the type which the defenders

that the pursuer in a case of this type cannot carried on. If the case is sent to a jury, the profess precise knowledge of the cause of the general issue and the general verdict which fire, and, accordingly, his case is stated, as I would be submitted and returned respectively understand it, or is intended to be stated, would not, by any means, make it clear upon alternatively. If these alternatives were of which of these four grounds, assuming that the ordinary type, there is, no doubt, authority they are relevantly stated, the jury had profor the proposition that his case might well be ceeded; and there is also this consideration, tried by the ordinary tribunal of a jury, and that that, in the expiscation of the circumstances it would be relevant.

of this case, there are questions of law which The pursuer attempts to set out, as I are at least as important as the questions of understand it, four alternative grounds upon fact involved. which, or upon any of which, the defenders Treating the case, therefore, as one entirely may be in fault. In the first place, he avers exceptional in its character, of a novel character, that they were in fault in permitting smoking and of an important character, and having upon the premises ; in the second place, he regard to the, to my mind, somewhat unsatissays that, if they permitted smoking upon the factory character of the averments of the premises, it was their duty to segregate the pursuer, both from the point of view of what he combustible goods in which they dealt from has said and from the point of view of what the smokers ; in the third place, he alleges he has not said, I venture to suggest to your that a gas-stove had been lit upon the premises, Lordships that the proper course to take is to near the combustible materials, and that it may allow a proof before answer.

I move your have kindled the conflagration; and, in the Lordships accordingly. last place, he says the defenders were in fault because they had no fire extinguishers upon the Lord Ormidale.-I concur. premises. Any of these averments, if proved, the pursuer maintains would include the Lord Hunter. I also agree. In the course of theory of accident, and would establish the the argument in this case I entertained grave liability of the defenders.

doubts as to whether the pursuer had stated on The defenders say, in reply, that the pur- record a relevant case. At the same time I am suer's pleadings are notable because of certain not prepared to differ from your Lordship's view omissions. He does not say that the state of that it is probably more satisfactory that we matters of which he complains was ever brought should make a final determination of the legal to the notice of the defenders, and he does not say liability against the defenders when we are in that the arrangements which he desiderates are possession of the facts relative to this case. universally adopted in similar circumstances. As your Lordship has said, and as has been Indeed, it is consistent with the pursuer's aver- admitted by the parties, the case is practically ments that in premises of this kind, which are unique. There seems to be no precedent for by no means unusual in our great cities, the a similar action of damages having been brought arrangements under similar circumstances may in at all similar circumstances. I quite agree not be the same, and may not have been the with the view that, in an ordinary case where

a long period, as those which claim of damages is made against someone obtained in the defenders' auction room. In on the ground of negligence, that is no reason short, there is no averment that the precautions whatever for withdrawing the case from trial which the pursuer desiderates are usual precau- by jury. It is the right of a pursuer to have his tions adopted by careful persons under similar case so determined. On the other hand, the circumstances.

statutes have recognised that there may be If the pursuer's case be that he is concerned exceptional circumstances, where the Court may with a general type of warehouse, of which there consider it more appropriate that the trial are many instances, then I think that these should proceed by way of proof before a member omissions from the point of view of relevancy of the Court rather than by way of jury trial; are serious. On the other hand, the pursuer, and I agree with your Lordship that a special I think, does represent that the case is unique, case has been made out here. I should not and in the unique circumstances of this case he have considered any case for special treatment suggests that a prudent man would have taken had been established if there had been a the precautions which he desiderates.

clear averment made by the pursuer as to I think I have said enough to indicate that how the accident occurred; but I do not find the case with which we are dealing is of an that here. There alternative theories




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