18T DIV. Summers v. Upper District Committee virtue of the powers conferred by section situated at points near the respective outfalls, in which the sewage is subjected to bacterial treatment and so purified before being passed on to the outfalls. The question is, whether the exemption of sewers covers the purification sewer The Finance Act, 1921 (11 & 12 Geo. V. cap. works-whether, in short, the word Council 32), section 34, enacts : is broad enough to cover purification works of the kind indicated, established on the line of the of the County of the County of November 25, 1924. (1) Income tax shall not be charged in respect of a sewer vested in a local authority in the United Kingdom: Provided that the foregoing exemption shall not extend to any rent payable or other annual payment to be made by the local authority in respect of the sewer. (2) In this section The expression sewer means a sewer The expression "local authority means a public body having power under any enactment relating to the public health to construct and maintain sewers. The Public Health (Scotland) Act, 1897 Section 103. The local authority shall have power pur The case was heard before the First Division on 25th November 1924, when the following authorities were cited: Brown v. Magistrates of Kirkcudbright, 1905, 8 F. 77; Assessor for Aberdeen v. Magistrates of Aberdeen, 1913 S.C. 712; Guthrie, Craig, Peter & Co. v. Magistrates of Brechin, 1888, 15 R. 385; Brook v. Meltham Urban Council, [1909] A.C. 438. On 25th November 1924 the Court sustained the appeal. The Lord President (Clyde).—This appeal relates to assessments under Schedule A of the Income Tax Acts upon certain Local Authorities, and arises upon the terms of subsection 1 of section 34 of the Finance Act, 1921. By that enactment a sewer vested in a Local Authority in the United Kingdom" is exempted from income tax, subject to certain conditions which do not arise for consideration here. The Local Authorities in the present case are owners (in the first place) of certain sewers carrying sewage away from their districts in which the sewage is produced to the respective district outfalls; and (in the second place) of certain works consisting of tanks, channels, filters, and the like, sewer. 66 66 In the section, the word sewer is defined to mean a sewer maintained by a Local Authority in pursuance of their statutory duties in relation to the public health.” It becomes, therefore, legitimate to look at the statutes which regulate that duty, in order to see what light they throw upon the meaning of the word sewer. It is right, however, to say, in the first instance, that if I regarded the word sewer" just as a word in ordinary use in the English language, I should understand it to mean a pipe or channel for the conveyance of sewage away from the place where it is produced to some place where it can be got rid of ; and-so treating and using it—it would not occur to me to apply it to works constructed for purifying the sewage. Such works might take the form of a sewage farm. When I turn to the Public Health (Scotland) Act, 1897, I find that under section 103 of that Act a power is given to the Local Authority to construct within their district, and also (when necessary for the proper disposal or treatment of the sewage) outside their district, such sewers as are required to keep the district cleansed and drained. It was suggested in the argument that some confusion had arisen in the decision of the case by the Commissioners from the reference in section 103 to the disposal or treatment of the sewage. Whether that is so or not, it is really quite plain, so far as section 103 goes, that it deals from beginning to end with the making of sewers in the ordinary meaning of the term-that is to say, pipes or channels forming the means of conveying sewage from the district where it is produced to some point of outfall-and with nothing else. It may be a question whether, if it is necessary to instal a pumping-engine somewhere on the line of the sewer in order to enable the sewage to be carried by the sewer under pressure to its ultimate destination, that is part of the sewer or not. But that has nothing to do with the question that arises in this case. Now, when I turn to section 108, I find that a further power, separate and distinct from the power to make sewers conferred by section 103, is given to the local authority whereby it is enabled to acquire, or contract for, or purchase, both land and apparatus for the purpose of disposing of, or treating, or utilising sewage. So far, therefore, as the Public Health (Scotland) Act of 1897 avails to throw light on the subject, a sewer is County 1924. to the particular nature of the works which the 1st DIV. Lord Sands.-I think it is possible that purification may take place in a pipe or chamber which may reasonably be described as part of a sewer. But that is not the nature of the question which we have before us. The Commissioners appear to have determined generally that works for the treatment of sewage are part of a sewer within the meaning of the Act of 1921. I do not think that this determination can be sustained. Counsel for Appellant, The Lord Advocate Lord Skerrington.-While the case contains a general description of the works which are entered in the Valuation Roll as sewers or as "sewage works" respectively, it does not, as I interpret it, raise any question as to whether some particular work or works described in the Valuation Roll as sewage works" ought for the purposes of the Income Tax Acts to be regarded as forming an integral part or parts of a sewer, and therefore as exempted from income tax by section 34 of the Finance Act, 1921. The question we have to decide is a more general and important one, namely, whether works which, according to the ordinary use of language, would not be described as sewers or as parts of sewers," but as I works for the disposal or treatment of sewage," are entitled to the exemption merely because they are vested in a Local Authority and were constructed by that Authority by virtue of the powers conferred by section 103 of the Public Health (Scotland) Act, 1897, on Local Authorities to construct sewers for the purpose of the disposal or treatment of sewage. I do not read the section in question as using the word sewer in any but its ordinary meaning; but even if it did use the word as including works for the disposal or treatment of sewage, I do not think that this circumstance would affect the interpretation of the word as used in section 34 of the Finance 2. Act, 1921. The definition of sewer tained in section 34 (2) of that Act restricts the exemption to a certain class of sewers, but does not extend it to works which are not sewers. In my judgment the appeal should be allowed. sewer con Lord Cullen.-The Commissioners have decided this question, not with any special reference FIRST DIVISION. (The Lord President, Lords Skerrington, 26th November 1924. Scottish Oils Limited v. Commis- Revenue Corporation Profits Tax-Finance Act, 1920 Scottish Oils Ltd., of Bothwell Street, Glasgow, appealed to the Commissioners for the Special Purposes of the Income Tax Acts against an assessment to Corporation Profits Tax made upon it by the Commissioners of Inland Revenue for the accounting period of one year ended 31st March 1921, under the provisions of the statutes relating to that duty. The Special Commissioners dismissed the appeal, and at the request of the company stated a case for the opinion of the Court of Session. The case set forth, inter alia: I. The following facts were admitted or proved: 1. The company carries on the business of dealers in, and producers, importers, exporters, distillers, and distributors of, petroleum and other mineral oils, etc., and also holds nearly all the ordinary shares of the following subsidiary companies, viz. the Broxburn Oil Co. Ltd., the Pumpherston Oil Co. Ltd., the Oakbank Oil Co. Ltd., Young's Paraffin Light and Mineral Oil Co. Ltd., James Ross & Co., Philpstoun Oil Works Ltd., and the company has also acquired and holds other interests. The proportion of the ordinary capital of the subsidiary companies not held by the company is insignificant in amount. 2. The trading profits of the company as estimated for the purpose of Corporation Profits Tax for the accounting period in question were £32,486 (hereinafter called the estimated profits). 3. The company also received in the same 4. Out of the total sum of the estimated profits "the amount of tax payable in respect of those profits any interest or dividends actually paid out of those profits at a fixed rate on any debentures, debenture stock, preference shares (so far as the dividend paid thereon is at a fixed rate), or permanent loan issued before the commencement of this Act, or on any debentures, debenture stock, or permanent loan issued after that date for the purpose of replacing an equal amount of any debentures, debenture stock, or permanent loan issued before that date." Section 53 (2) (a) of the Finance Act, 1920, provides as follows: 66 profits shall include all profits and gains arising from any lands, tenements, or hereditaments forming part of the assets of a company, and all interest, dividends, and other income arising from investments or any other source and received in the accounting period, not being interest, dividends, or income received directly or indirectly from a company liable to be assessed to Corporation Profits Tax in respect thereof, and no deduction shall be allowed on account of the annual value of any premises used for the purposes of the company. II. The company contended that it was entitled, under the above provisions, to treat the preference dividend as payable, in the first place, out of the esti mated profits, and that, as the preference dividend was larger than the estimated profits, no Corporation Profits Tax was payable. III. On behalf of the Commissioners of Inland Revenue it was contended that the preference dividend must be treated as payable out of the estimated profits under the paragraphs referred to in the proportion which the estimated profits bore to the total profits, and that the duty payable was 10 per cent. on £32,486, less £30,814 (being 32486 × 194524). 205079 Tax. The company's profits struck under observance of that qualification were £32,000. 3. SECOND DIVISION. (The Lord Justice-Clerk, Lords Ormidale, 24th October 1924. Stewart v. Astor & Faith. The next thing, under subhead (b) of subsection (1) of section 52, is to see that from this £32,000 there is deducted any interest or fixed dividends on the company's preference or debenture stock which have been (in the words of the statute) "actually paid out of those profits." The fixed dividends on the company's preference shares amounted to £194,000; and, Reparation-Negligence-Liability-Relevancy-Proof as paragraph 4 of the case informs us, this sum was, as a matter of fact, paid out of a total sum of profits made up of (a) the £32,000, and (b) a sum of £172,000, representing dividends received from subsidiary companies. The question, therefore, is how much, if any, of the £194,000 was in these circumstances actually paid out of " the £32,000 within the meaning of the Act? The answer obviously is that it was actually so paid out of the £32,000 pro rata only. Accordingly, the question put to us must be answered in the negative. Lord Skerrington.-I think that the Commissioners were right in holding that the facts admitted or proved did not support the contention that the appellants were entitled to treat the preference dividend as having been actually paid," in the first place, out of the estimated profits. I express no opinion as to whether the Commissioners were bound to hold that any part of the preference dividend must be treated as having been so paid. or jury trial-Pursuer's son meeting his death as (Reported ante, 1924 S.L.T. p. 573.) Reclaiming Note against an Interlocutor of Robert Stewart, miner, Glasgow, brought an The averments of the pursuer, the material plea in law, and issue proposed will be found in 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. opinion of the Lord Ordinary will be found in the previous report. Lord Sands.-I also agree. When I read Article 4 it seemed to me conclusive of the case. Counsel for the Appellants, Robertson, K.C., M. J. King; Agents, A. & W. M. Urquhart, S.S.C., for Boyds, Miller & Thompson, Solicitors, Glasgow.-Counsel for Respondents, The Lord Advocate (Watson, K.C.), Skelton; Agent, Stair A. Gillon, Solicitor of Inland Revenue. C. de B. M., for W. G. S. The The defenders reclaimed, and maintained that the pursuers averments were irrelevant. On 24th October the Court recalled the interlocutor reclaimed against, and allowed a proof before answer. The Lord Justice-Clerk (Alness).-The pursuer is the father of a lad who died as the result of 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 reclaiming note has been taken against his judgment by 2ND DIV. Stewart v. Astor & Faith. October 24, 1924. 2ND DIV. the defenders, who maintain that the pursuer's Stewart v. averments are irrelevant. October 24, 1924. Astor & The case for the pursuer is not very satisFaith. factorily stated. It is quite true, no doubt, that the pursuer in a case of this type cannot profess precise knowledge of the cause of the fire, and, accordingly, his case is stated, as I understand it, or is intended to be stated, alternatively. If these alternatives were of the ordinary type, there is, no doubt, authority for the proposition that his case might well be tried by the ordinary tribunal of a jury, and that it would be relevant. The pursuer attempts to set out, as I understand it, four alternative grounds upon which, or upon any of which, the defenders may be in fault. In the first place, he avers that they were in fault in permitting smoking upon the premises; in the second place, he says that, if they permitted smoking upon the premises, it was their duty to segregate the combustible goods in which they dealt from the smokers; in the third place, he alleges that a gas-stove had been lit upon the premises, near the combustible materials, and that it may have kindled the conflagration; and, in the last place, he says the defenders were in fault because they had no fire extinguishers upon the premises. Any of these averments, if proved, the pursuer maintains would include the theory of accident, and would establish the liability of the defenders. The defenders say, in reply, that the pursuer's pleadings are notable because of certain omissions. He does not say that the state of matters of which he complains was ever brought to the notice of the defenders, and he does not say that the arrangements which he desiderates are universally adopted in similar circumstances. Indeed, it is consistent with the pursuer's averments that in premises of this kind, which are by no means unusual in our great cities, the arrangements under similar circumstances may not be the same, and may not have been the same over a long period, as those which obtained in the defenders' auction room. In short, there is no averment that the precautions which the pursuer desiderates are usual precautions adopted by careful persons under similar circumstances. If the pursuer's case be that he is concerned with a general type of warehouse, of which there are many instances, then I think that these omissions from the point of view of relevancy are serious. On the other hand, the pursuer, I think, does represent that the case is unique, and in the unique circumstances of this case he suggests that a prudent man would have taken the precautions which he desiderates. I think I have said enough to indicate that the case with which we are dealing is of an unusual character, and also that it is not un important from the point of view of the large number of persons who, I apprehend, carry on a business of the type which the defenders carried on. If the case is sent to a jury, the general issue and the general verdict which would be submitted and returned respectively would not, by any means, make it clear upon which of these four grounds, assuming that they are relevantly stated, the jury had proceeded; and there is also this consideration, that, in the expiscation of the circumstances of this case, there are questions of law which are at least as important as the questions of fact involved. Treating the case, therefore, as one entirely exceptional in its character, of a novel character, and of an important character, and having regard to the, to my mind, somewhat unsatisfactory character of the averments of the pursuer, both from the point of view of what he has said and from the point of view of what he has not said, I venture to suggest to your Lordships that the proper course to take is to allow a proof before answer. I move your Lordships accordingly. Lord Ormidale.-I concur. Lord Hunter.-I also agree. In the course of the argument in this case I entertained grave doubts as to whether the pursuer had stated on record a relevant case. At the same time I am not prepared to differ from your Lordship's view that it is probably more satisfactory that we should make a final determination of the legal liability against the defenders when we are in possession of the facts relative to this case. As your Lordship has said, and as has been admitted by the parties, the case is practically unique. There seems to be no precedent for a similar action of damages having been brought in at all similar circumstances. I quite agree with the view that, in an ordinary case where a claim of damages is made against someone on the ground of negligence, that is no reason whatever for withdrawing the case from trial by jury. It is the right of a pursuer to have his case so determined. On the other hand, the statutes have recognised that there may be exceptional circumstances, where the Court may consider it more appropriate that the trial should proceed by way of proof before a member of the Court rather than by way of jury trial; and I agree with your Lordship that a special case has been made out here. I should not have considered any case for special treatment had been established if there had been a clear averment made by the pursuer as to how the accident occurred; but I do not find that here. There are alternative theories : |