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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Case for the Edinburgh Life Assurance Co. v. Solicitor of Inland Revenue, and the Scottish Widows Fund and Life Assurance Co [1875] ScotLR 12_283 (2 February 1875) URL: http://www.bailii.org/scot/cases/ScotCS/1875/12SLR0283.html Cite as: [1875] SLR 12_283, [1875] ScotLR 12_283 |
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Page: 283↓
[Court of Exchequer.
(Under the Customs and Inland Revenue Act, 1874 37 Vict. c. 16.)
Held that Insurance Companies, whether proprietory or mutual, are not entitled to have their premises exempted from Inhabited House Duties, in terms of section 11 of the Act 32 and 33 Vict. c. 14—not being companies engaged in trade within the meaning of the statute.
The Edinburgh Life Assurance Company, 22 George Street, Edinburgh, appealed to the Commissioners for executing the Acts relating to the Inhabited House Duties for the County of Edinburgh against the charge of £13, 2s. 6d. made upon them for Inhabited House Duty, at the rate of 9d per pound on £350, the annual value of the premises occupied by them at the above-mentioned address. The Company (which was a proprietory Company), occupied the premises in question for the purpose of carrying on their business of life insurance. The area flat, consisting of four apartments, having internal communication with the offices above, was occupied as a dwelling-house by a servant of the Company, who went messages, superintended the cleaning of the premises, and acted as a clerk to the Company to the extent of addressing and booking letters, and with whom resided his wife and a female servant, whose wages were paid by the Company. The appellants claimed relief from the assessment under the Act 14 and 15 Victoria, cap. 36, and under the 11th section of 32 and 33 Victoria, cap. 14, on the ground that they were a proprietory company engaged in trade; that the business carried on for the benefit of, and at the risk of the shareholders, of insuring lives, buying and selling annuities, reversions, &c., was essentially a trading business that the part of the tenement occupied by them in 22 George Street was used “for the purpose of trade only;” and that the person dwelling in the area flat, lived there “for the protection thereof,” and to take care of the premises.
The Commissioners were of opinion that the business carried on was not of the nature of trade, and that therefore the premises did not come within the exemption granted by the statute, and they accordingly refused the appeal and confirmed the assessment.
The appellants craved a case for the opinion of the Court of Session, which was accordingly stated by the Commissioners.
The appellants argued—The business of insurance was a trade within the meaning of the Act. An insurance company dealt with risks, undertaking to pay so much in case of death for the price of an annual premium. The Company also dealt to a large extent in money-lending. In regard to the duties performed by their servant or
Page: 284↓
messenger, they never could be held to be of such a nature as to entitle him to have the designation of a clerk, but were merely of a purely mechanical or subordinate description, such as were invariably performed by any bank or insurance messenger, and that it was frivolous to attempt to magnify the importance of such services by designating the person who discharged them as a clerk. The respondent argued—The premises did not fall within the exemption quoted,—(1) Because the business carried on by the appellants was not of the nature of trade in the meaning of the Act, and that the premises were not therefore used “for the purposes of trade only.” The Act made a clear distinction between trades and professions. And under it the offices of writers, accountants, &c., were charged, although a considerable part of their business was akin to that of banking (which had been held to be a trade), inasmuch as they lent money, purchased shares, &c.; but it was maintained that their offices were not solely used for the purposes of trade, and they were therefore taxed. Life insurance was not a trade: there was neither a buyer nor a seller, but for an annual payment the company guaranteed a sum at death. And (2), Because, even if the business carried on was of the nature of trade, the premises did not come under the exemption claimed, inasmuch as the person residing in them did not dwell there solely for the protection thereof, but was otherwise occupied, sometimes in discharging the duties of a messenger, and at other times the more important duties appertaining to the position of a clerk.
There was also a case for the Scottish Widows Fund and Life Assurance Company, which was in a similar position to the Edinburgh Life Assurance Company, except that the latter was a mutual and not a proprietary company. Both cases were heard together.
At advising—
Now, in order to determine whether the business carried on by this Company is of the nature of a trade, it is necessary of course to ascertain what is the meaning of the term trade as used in this statute. But for that purpose, again, it seems to me to be necessary to attend to the legislative history of this inhabited house-duty,—what it is in itself, and how the exemptions have arisen and been introduced into the statute. The duty itself was imposed originally in the year 1808 by 48 Geo. III. along with a great many other taxes, and there cannot be much doubt, I think, reading that Act, that it was intended to assess all houses or tenements which were occupied not merely by persons residing in them, but also by persons occupying them during the day for business purposes. In short, although it was called an inhabited house-duty, it really was something more expansive than that, because an inhabited house in the popular sense of the term is a house in which persons dwell, reside, and spend the night as well as the day. But the tax in its original conception under the 48th Geo. III. was of a more comprehensive description than that. But after it had been in operation for some time, there was first one exemption introduced by the Act of 57th Geo. III. c. 25, and afterward another by the 5th Geo. IV. c. 44. The first of these, the 57th Geo. III. c. 25, introduced this exemption—“Any person or any number of persons in partnership together occupying a tenement or building as a house for the purposes of trade only, or as a warehouse for the sole purpose of lodging goods, wares or merchandise therein, or as a shop or counting house, no person inhabiting, abiding, or dwelling therein, except during the day time only, for the purpose of such trade, such person or each of such persons in partnership respectively residing in a separate and distinct dwelling house, or part of a dwelling house, charged to the duties under the said Act, it shall be lawful for the said Commissioners, according to the provisions of this Act, to discharge the assessment made for that year in respect of such tenement or building which shall be so used for purposes of trade, or so employed as a warehouse for the sole purpose of lodging goods, wares and merchandise therein, or as a shop or counting house.” Now, this is an exemption applied to trade premises solely, and confined entirely to that, and the words used in this statute are extremely important. It must be a house used for the purposes of trade only, or a warehouse for the sole purpose of lodging goods, wares, and merchandise, or a shop or counting-house, and it must be occupied only during the day for the purposes of such trade, and not occupied during the night as a dwelling-house. Now, prima facie, certainly under that statute the word trade is used as meaning the trade of a merchant or shopkeeper,—that is to say, of one who buys and sells as a merchant does on a large scale, or of one who deals in retail like a shopkeeper; and, reading that statute alone, one would be very much disposed to come to the conclusion that the exemption was not intended to extend beyond either a merchant in the proper sense of the term, or a shopkeeper. But then we have the next statute, 5th Geo. IV. cap. 44, which, by sect. 4, extends the exemption to another class, and it is not immaterial to observe that that section has a special preamble referring back to the 57th of Geo. III. in these terms:—“The provisions in the said Act contained for granting exemptions from the said duties to persons in trade in respect of houses, tenements, buildings in the said Act described.” Now, here is the interpretation of the previous statute in this preamble. The exemption extends to persons in trade in respect of houses used solely for the purposes of trade. That is the meaning of the clause in the 57th Geo. III., as construed by the Parliament which passed the Act of 5th Geo. IV., and it extends that provision, and enacts that the exemptions “shall and may be extended and applied by the respective commissioners and officers acting in the execution of the said Act and this Act, on due proof, to all and every person, or any number of persons in partnership together, for or in respect of any house, tenement, or building, or part of a tenement or building, in the said Act described, which shall be used by such person or persons as offices or counting houses, for the purposes of exercising or carrying on any profession, vocation, business, or
Page: 285↓
Now, it seems to me that the question we have to solve in the present case is, whether the Edinburgh Life Assurance Company is within the first statute or the second, whether it is a trader within the meaning of the 57th Geo. III., or is a company carrying on a business or calling within the meaning of the 5th Geo. IV. In these two statutes the two classes of persons are placed exactly in the same position. They are equally exempt, but the necessity of distinguishing between the two in this case arises from the provisions of the 11th section of the recent statute 32d and 33d Vict., which provides:—“From and after the fifth day of April one thousand eight hundred and sixty-nine, any tenement or part of a tenement occupied as a house for the purposes of trade only, or as a warehouse for the sole purpose of lodging goods, wares, or merchandise therein, or as a shop or counting house, or being used as a shop or counting house, shall be exempt from inhabited house duties, although a servant or other person may dwell in such tenement or part of a tenement for the protection thereof.” The persons who are exempted under the 57th Geo. III. have this additional privilege under the statute of the 32d and 33d Vict., that they may enjoy their exemption although they have a servant dwelling in the house for the purpose of protection; and this is not extended to those who enjoy their exemption under the 5th Geo. IV.—and thence arises the necessity of determining to which class of exempted persons this Insurance Company belongs. Now, I am of opinion that the term trade is used in the first of these statutes in its strict meaning, and that there are a great many businesses which may be regarded as falling within the description of trading that are not trading within the meaning of that statute. I am satisfied, taking these two statutes conferring the exemptions together, that the distinction intended to be made between the two is, that the one exemption is confined to traders in the proper and legitimate sense of the term—merchants and shopkeepers, and that the exemption is extended to all other persons who are carrying on any other kind of business for profit, not being traders in that proper sense; and as the 11th section of 32d and 33d Vict, repeats the very words of the 57th Geo. III. in giving the additional privilege, that additional privilege must be confined to the persons within the meaning of the 57th Geo. III.; and I am therefore of opinion with the Commissioners that this Insurance Company is not a trader. That renders it quite unnecessary to enter upon the question whether the servant whom they had in charge of their premises is within the meaning of the 11th section of the recent statute, for the purposes of protection, and for no other purpose. That might raise some little difficulty, but it is not a question of the same importance as the other. It is sufficient for our judgment, I think, to adopt the same ground that has been adopted by the Commissioners, and in which I think they are quite right. With regard to the case of the Scottish Widows Fund, it is not necessary to say much, because, if a proprietary company like the Edinburgh Life Assurance Company are not traders, still less are the mutual society called the Scottish Widows Fund. I think, if we had held that a proprietary office was a trader in the meaning of the statute, a very serious question would have arisen, whether the same construction of the statute would have applied to the case of a mutual office; but it is not necessary to enter on that question.
I think we can fairly dispose of both cases upon the ground which has been taken by the Commissioners.
Page: 286↓
The Court affirmed the judgment of the Commissioners.
Counsel for the Appellants— Dean of Faculty (Clark) and Balfour. Agent— James Mylne, W.S,
Counsel for the Crown—Solicitor-General ( Watson) and Rutherfurd. Agent— Angus Fletcher, Solicitor of Inland Revenue.
