Scottish Water v. Clydecare [2003] ScotCS 73 (21 January 2003)
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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
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Lord Osborne
Lord Macfadyen
Lord Sutherland
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XA69/02
OPINION OF THE COURT
delivered by LORD OSBORNE
in
APPEAL
From the Sheriffdom of Glasgow and Strathkelvin at Glasgow
in the cause
SCOTTISH WATER
Pursuers and Respondents;
against
CLYDECARE LIMITED
Defenders and Appellants:
_______
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Act: Martin, Q.C., Davies; Harper MacLeod, Glasgow (for Pursuers and Respondents)
Alt: Tyre, Q.C., Sutherland; Balfour & Manson (for Defenders and Appellants)
21 January 2003
- The pursuers in this action are a body corporate, incorporated under section 20 of the Water Industry (Scotland) Act 2002, and are statutory successors to the former water and sewerage authorities in Scotland, including the West of Scotland Water Authority, who, prior to amendment, were previously the pursuers in this action. In terms of the 2002 Act and certain other statutory provisions, the functions, property and liabilities of the West of Scotland Water Authority were transferred to the pursuers with effect from 1 April 2002.
- The defenders, a company, are and have been proprietors and occupiers of premises at 751 Broomfield Road, Glasgow, since 13 August 1997. Since that date the pursuers and their predecessors have supplied those premises with water and since then those premises have been connected to the public sewer system. The premises at that address have, throughout the period of the defenders' ownership and occupation of them, been operated as a registered nursing home. Throughout that period, the water supply provided to the premises has been unmeasured.
- By virtue of section 62 of the Local Government etc (Scotland) Act 1994, the West of Scotland Water Authority were established as the water and sewerage authority for the area in which the premises are situated. Under section 74 of the 1994 Act, the West of Scotland Water Authority, as a "new water and sewerage authority," had the power
"(a) to fix charges for any services provided in the course of carrying out
their functions; and
(b) to demand and recover charges fixed under this section from any
person to whom they provide services."
Those powers were exercisable either by or in accordance with a charges scheme under section 76 of the 1994 Act, or by or in accordance with an agreement with the person to be charged. In terms of section 76 of the 1994 Act, the West of Scotland Water Authority made a series of charges schemes, which were duly approved and which constituted the basis upon which charges for the services rendered by them were levied. The schemes of charges relevant to the circumstances of the present action are set forth in the appendix to the appeal. Subject to the detailed provisions of section 78 of the 1994 Act it is provided that occupiers of premises are treated as recipients of supplies of water and beneficiaries of the provision of sewerage services.
- Section 79 of the 1994 Act provides, inter alia, as follows:
"79(1) The Secretary of State may by order determine -
(a) that as respects services provided, within a financial year specified in
the order, by a new water and sewerage authority (in this section referred to as the 'providing authority') to dwellings within the area of a local authority (in this section and in Schedule 10 to this Act referred to as the 'collecting authority'), or within such part of that area as may be so specified, the collecting authority and not the providing authority shall demand and recover charges (other than charges in respect of a supply of water taken by meter) payable for those services under a charges scheme; and
(b) that the collecting authority shall, at such intervals as may be so
specified, make such payments to the providing authority (to whom no other amount shall be payable under the charges scheme for the services provided) as may be so specified or as may be determined in accordance with the provisions of the order.
...
(5) In subsection (1)(a) above, 'dwelling' has the same meaning as in Part II of the Local Government Finance Act 1992."
- Two orders relevant to the circumstances of this case were made in terms of section 79(1) of the 1994 Act. These were first the Water Services Charges (Billing and Collection) (Scotland) Order 1997 (S.I. No. 362 (S. 27)) and second the Water Services Charges (Billing and Collection) (Scotland) Order 1998 (S.I. No. 634 (S. 25)). Article 2 in each of these orders was in the following terms:
"Every local authority shall, as respects services provided in the relevant year by a water authority to dwellings within the area of the local authority, demand and recover the charges (other than charges in respect of a supply of water taken by meter) payable for those services under a charges scheme."
In each of these orders, the term "dwelling" is defined as having the same meaning as in Part II of the 1992 Act.
- In the present action, originally the West of Scotland Water Authority sought and now the pursuers seek payment from the defenders of £25,389.60, being water and sewerage charges, in respect of the said premises, for the years 1997/98 to 2000/2001, in accordance with the detailed claim set out in condescendence 3, which they claim they are empowered to levy against the defenders. Although the calculation of the claim is not the subject of active controversy between the parties, no admission is made in regard to its accuracy. However, the defenders defend the action upon the basis that the pursuers themselves are not entitled in law to levy such a demand for payment, because the property to which the demand relates is a "dwelling" for the purposes of issuing a demand for charges and recovering such charges under the 1994 Act.
- In view of the nature of the legal dispute which has arisen, it is necessary now to notice the statutory provisions in which the expression "dwelling" is defined. The concept of a "dwelling" is, of course, of importance in the context of the imposition of the council tax, which, in terms of section 70(1)(b) of the 1992 Act, is payable in respect of "dwellings". Section 72 of the 1992 Act, which is contained within Part II of the Act, provides, inter alia, as follows:
"72(1) Council tax shall be payable in respect of any dwelling which is not an exempt dwelling.
(2) In this Part, 'dwelling -
(a) means any lands and heritages -
(i) which consist of one or more dwelling houses with any garden,
yard, garage, outhouse or pertinent belonging to and occupied with such dwelling house or dwelling houses; and
(ii) which would, but for the provisions of section 73(1) below, be
entered separately in the valuation roll;
(b) includes -
(i) the residential part of part residential subjects; and
(ii) that part of any premises which has, in terms of section 45 of
the 1980 Act, been apportioned, as at 1 April 1989 as a dwelling house;
...
(4) The Secretary of State may vary the definition of dwelling in subsection (2) above by including or excluding such lands and heritages or parts thereof or such class or classes of lands and heritages or parts thereof as may be prescribed.
...
(6) In this Part - 'chargeable dwelling' means any dwelling in respect of which council tax is payable; 'exempt dwelling' means any dwelling of a class prescribed by an order made by the Secretary of State. .... "
- In the context of this case, it is also necessary to notice certain of the terms of section 99 of the 1992 Act, which provides for the interpretation of Part II of that Act. Section 99(1) provides, inter alia, as follows:
"'Part residential subjects' means lands and heritages which are used partly as the sole or main residence of any person, other than -
(a) dwellings (except the residential part of part residential subjects);
(b) such other class or classes of lands and heritages as may be prescribed;
...
'Resident', in relation to any dwelling, means an individual who has attained the age of 18 years and has his sole or main residence in the dwelling; and cognate expressions shall be construed accordingly; ... "
- It should also be noticed that, in terms of section 73(1) of the 1992 Act, it is provided:
"Subject to subsection (7) below, dwellings shall not be entered in the valuation roll in respect of the financial year 1993-1994 or any subsequent financial year."
That provision was, of course, a concomitant of the creation of the council tax by the 1992 Act. It is also necessary to note that section 75 of the 1992 Act defines the persons who are liable to pay council tax. It is unnecessary to examine the details of that provision, except to observe that the liability is imposed upon a series of classes of persons, who are resident in the dwelling or part of it, together with other classes of persons there specified.
- In the context of the present case, it is necessary to notice certain of the provisions of section 76 of the 1992 Act, which are concerned with the liability to pay council tax in certain prescribed cases. This section provides, inter alia, as follows:
"76(1) Subsections (3) and (4) below shall have effect in substitution for section 75 above in relation to any chargeable dwelling of a class prescribed for the purposes of this subsection.
...
(3) Where on any day this subsection has effect in relation to a dwelling, the owner of the dwelling shall be liable to pay the council tax in respect of the dwelling and that day. ..."
- It is to be observed that the power created by section 76(1) of the 1992 Act was exercised in the Council Tax (Liability of Owners) (Scotland) Regulations 1992 (S.I. No. 1331 (S. 128)). Regulation 2 of these regulations provides: "The classes of dwellings specified in the schedule to these Regulations are prescribed for the purposes of section 76(1) of the Act." Paragraph 1 of the schedule mentioned is in the following terms:
"1. A dwelling which constitutes all or part of a residential care home, nursing home, private hospital or hostel (within the meanings given by paragraph 8 of Schedule 1 to the Act)."
- Since they figured in the argument before us, it is appropriate to notice the provisions of the 1992 Act relating to discounts of council tax. These are as follows:
"79(1) The amount of council tax payable in respect of a chargeable dwelling and any day shall be subject to a discount equal to the appropriate percentage of that amount if on that day -
(a) there is only one resident of the dwelling and he does not fall to be
disregarded for the purposes of discount; or
(b) there are two or more residents of the dwelling and each of them
except one falls to be disregarded for those purposes.
(2) The amount of council tax payable in respect of a chargeable dwelling and any day shall be subject to a discount equal to twice the appropriate percentage of that amount if on that day -
(a) there is no resident of the dwelling; or
(b) there are one or more residents of the dwelling and each of them falls
to be disregarded for the purposes of discount.
(3) In this section 'the appropriate percentage' means 25% or, if the Secretary of State by order so provides in respect of the financial year in which the day falls, such other percentage as is specified in the order.
...
(5) Schedule 1 to this Act shall have effect for determining who shall be disregarded for the purposes of discount."
- Finally, in this review of the relevant statutory provisions, it is necessary to consider the terms of the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992 (S.I. 1992 No. 2955 (S. 242)), which were made by the Secretary of State in exercise of the powers conferred on him by, inter alia, section 72(4) of the 1992 Act, already quoted, altering the definition of "dwelling" contained in that section. Regulation 2 of these regulations contains a number of definitions. It provides, inter alia, as follows:
"2. In these regulations, unless the context otherwise requires - 'the Act' means the Local Government Finance Act 1992; 'hostel' has the same meaning as in sub-paragraph (2) of paragraph 8 of Schedule 1 to the Act; 'nursing home' has the same meaning as in that sub-paragraph; 'private hospital' has the same meaning as in that sub-paragraph; ... 'residential care home' has the same meaning as in sub-paragraph (2) of paragraph 8 of Schedule 1 to the Act; ...".
Regulations 3, 4 and 5 of these regulations, headed "Variation of Definition of Dwelling" are in the following terms:
"3. The definition of dwelling in Section 72(2) of the Act is hereby further varied in accordance with regulations 4 and 5 below.
4. There shall be included as a dwelling any lands and heritages or parts thereof -
(a) which fall within in the classes specified in Schedule 1 to these
regulations; and
(b) which would, but for the provisions of Section 73(1) of the Act -
(i) be entered separately in the valuation role; or
(ii) in the case of parts of lands and heritages, form part of a
separate entry in the valuation role.
5. There shall be excluded from the definition of dwelling any lands and heritages or parts thereof which fall within in the classes specified in Schedule 2 to these regulations.
Regulation 6 of these Regulations, headed "Definition of Part Residential Subjects - Exceptions" is in the following terms:
"6. The classes of lands and heritages which are prescribed for the purposes of paragraph (b) of the definition of part residential subjects in Section 99(1) of the Act (lands and heritages excluded from that definition) are -
(a) any lands and heritages or parts thereof excluded from the definition of
dwelling under paragraph 3 of Schedule 2 to these regulations; and
(b) any part of -
(i) a hostel;
(ii) a nursing home;
(iii) a private hospital; or
(iv) a residential care home;
which is not used wholly or mainly as the sole or main residence of a person employed there. ... ".
- Schedule 1 to these Regulations contains 5 paragraphs. Paragraph 1 deals with bed and breakfast accommodation, paragraph 2 with student halls, paragraph 3 with barracks, paragraph 4 with communal residential establishments, and paragraph 5 with school boarding accommodation. For the present purposes it is sufficient to notice the details of paragraph 4 thereof. It is in the following terms:
"4. Any lands and heritages which are used (or, if not in use, were last used) wholly as the sole or main residence of persons who reside there and in which there are facilities available for sharing by some or all of those persons, other than any part of -
(a) a hostel;
(b) a nursing home;
(c) a private hospital; or
(d) a residential care home,
which is not used wholly or mainly as the sole or main residence of a person employed there."
- Against the foregoing background of statutory provisions, the sheriff, by interlocutor of 11 March 2002, after a debate, excluded the averments of the defenders specified in the interlocutor from probation and allowed a proof restricted to the question of quantum. When this appeal came before us, senior counsel for the defenders moved us to allow the appeal, recall the interlocutor of 11 March 2002, sustain the defenders' plea-in-law 1, which was a general relevancy plea, which the sheriff had repelled, and dismiss the action. He explained that what the sheriff had done was to hold as irrelevant the substantive defence tabled on behalf of the defenders, to the effect that the pursuers were not entitled to levy the demand which they had made, because the property to which the demand related was a "dwelling" for the purposes of the relevant legislation.
- Senior counsel for the defenders submitted that the sheriff had misinterpreted the relevant statutory provisions in coming to the conclusion which she had. Having reviewed those provisions, he proceeded to make a series of points in support of his main submission. First, he drew attention to the provisions of the Schedule to the Council Tax (Liability of Owners)(Scotland) Regulations 1992, which we have quoted, contending that the language used in paragraph 1 of the schedule showed that it was contemplated that all of a nursing home was capable of being a "dwelling". That supported the defenders' own approach. Reference was also made to the Explanatory Note attached to those regulations, which states, inter alia,
"The schedule to these regulations prescribes classes of dwelling in respect of which special provision as to liability for the tax is made. The owner of the dwelling will be liable for the tax in respect of the following classes - nursing homes and other similar homes, houses occupied by religious communities, houses in multiple occupation and houses occupied by certain domestic staff. ... ".
Secondly, it was submitted that support for the defenders' position could be derived from the provisions relating to discounts for council tax purposes found in section 79 of the 1992 Act, in association with schedule 1 thereto, paragraph 8. This latter enactment states that:
"8(1) A person shall be disregarded for the purposes of discount on a particular day if, on the day -
(a) he has as his sole or main residence a residential care home, nursing
home, private hospital or hostel in Scotland; and
(b) he is receiving care or treatment (or both) in the home, hospital or
hostel."
Thus, it was argued that discount was related to residence in a nursing home. These provisions assumed that a nursing home was a chargeable dwelling for council tax purposes. If it were not, there would be no liability for such tax and therefore no need for a discount. Thirdly, further support for the defenders' position could be derived from the provisions of Schedule 5 to the 1992 Act which dealt with issues of apportionment in connection with "part residential subjects". In this connection the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992 were of importance. Regulation 6 of these Regulations amounted to an exclusion of the four specified kinds of subjects, with the exception of what might be described as "an employee's flat", which would be "part residential subjects" and therefore not a "dwelling". Looking at the Explanatory Note relating to these regulations it appears that it was intended that there should be included as "dwellings" a communal residential establishment. It was of significance that Regulation 6 of these Regulations contained the same double negative as appeared in paragraph 4 of Schedule 1.
- Senior counsel for the defenders then submitted that there was plainly a drafting error in paragraph 4 of Schedule 1 to these Regulations. The effect of a literal reading of those provisions would be that only an employee's flat would be included. Paragraph 4 of Schedule 1 was in the nature of an inclusion, but the power of prescribing contained in section 99(1) of the Act of 1992 was exclusive only.
- There were several conclusive indications of the drafting error contended for, which consisted in the appearance of the word "not" in the last line of paragraph 4 of Schedule 1 to the Regulations. First, the three lines at the commencement of that paragraph would have no content, if the intention of Parliament had been only to include an employee's flat in a residential care home or nursing home. Secondly, the interaction of the statutory provisions relating to liability for council tax and discount were of importance; if only an employee's flat was a dwelling, there was no need for those provisions. Thirdly, the Explanatory Note referred to showed that a drafting error had occurred. Finally, in 2002, it was apparently still the understanding of the Scottish Parliament that nursing homes were included in, not excluded from the definition of "dwellings". In this connection reference was made to the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Amendment Regulations 2002 (S.S.I. 2002 No. 102). The Explanatory Note to those regulations indicated that the Regulation of Care (Scotland) Act 2001 had replaced hostels, nursing homes and residential care homes with care home services. These Regulations were designed to ensure that exemptions in relation to council tax applied to accommodation in relation to care home services, as they formerly did to hostels, nursing homes and residential care homes. In summary therefore the court was faced with an evident drafting mistake.
- The question which then arose was what could be done about that state of affairs. In this connection, senior counsel for the defenders drew our attention to a number of authorities on statutory interpretation. The first of these was Bennion, Statutory Interpretation, 3rd edition, section 287. It was there indicated that:
"It is presumed that the legislator intends the court to apply a construction which rectifies any error in the drafting of the enactment, where it is required in order to give effect to the legislator's intention. This may be referred to as a rectifying construction."
What was involved here was an instance of the fifth of the five categories where a rectifying construction might be required, that is to say where there was a textual conflict. Reliance was placed on the passage at page 685. Secondly reference was made to Regina v. Moore [1995] Q.B. 353. Emphasis was placed on the observations of Sedley, J. at pages 361 to 362. Finally, reliance was placed on Inco Europe Limited v. First Choice Distribution [2000] 1 WLR 586, at page 592.
- Reverting to the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992, senior counsel for the defenders once again drew attention to the terms of Regulation 6 and paragraph 4 of Schedule 1. Looked at literally, these provisions would make an employee's flat both a dwelling and not a dwelling, which was absurd. It was submitted that the terms of Regulation 6 were correct. The consequences of that were that a nursing home would be a "dwelling" for council tax and water charge purposes. On that view the present action was misconceived. The main issue in the case was whether there had been a drafting error in Schedule 1 of the Regulations referred to. The sheriff had failed to interpret the statutory provisions correctly, but, on the contrary, had engaged in speculation concerning their purpose. Furthermore, she had not been referred to authorities on the statutory interpretation. Upon the assumption that the foregoing submissions were wrong, it was a matter of agreement that there should be a proof on quantum.
- Senior counsel for the pursuers moved us to refuse the appeal. He indicated that his submissions would fall into three parts. First he would deal with the authorities relating to statutory interpretation. Secondly, he would examine the purpose of the legislation. Thirdly, he would address the interpretation of the legislation and deal with the problems which were alleged to exist in it.
- On behalf of the pursuers, it was emphasised that any apparent inconsistencies in legislation ought, so far as possible, to be reconciled. Only in exceptional circumstances would the court be justified in "rectifying" legislation by reading out words which were present in it. In this connection emphasis was placed upon the observations of Lord Nicholls of Birkenhead in Inco Europe Limited v. First Choice Distribution at page 592. Before such an approach could be followed, the court would require to be abundantly sure that, by inadvertence, the draftsman and Parliament had failed to give effect to the intended legislative purpose. That was a high standard, which the defenders could not meet in the circumstances of this case. Even if that test were met, before there could be rectification, the court would require to be abundantly sure concerning the substance of the provision that would have been made by Parliament, but for the inadvertence of the draftsman. It might be very difficult for that test to be met in the circumstances of this case.
- The need for this rigorous test to be satisfied before the court could proceed to "rectify" an alleged drafting error was evident from Mayor, etc. of the Borough of New Plymouth v. Taranaki Electric-Power Board [1933] AC 680, at page 682 per Lord Macmillan. Senior counsel for the pursuers then advanced the proposition that there had to be a complete absence of any possible rational explanation for the words which Parliament had used before the court was entitled to depart from the meaning of those words.
- Senior counsel for the pursuers next turned to deal with the purpose of the legislation under consideration. He observed that, historically, all heritable property was subject to rating and appeared on the valuation roll. In the 1980s, a legal distinction had been created between dwellinghouses and other heritable property, in connection with the introduction of the community charge. In the 1992 Act Parliament had abolished the community charge system by section 100 and replaced it, in Part II of the Act, with the council tax system. In this connection reference was made to sections 70 and 72 of the 1992 Act. Associated with the council tax system was the deletion of dwellings from the valuation roll, effected by section 73 of that Act. However, it was to be noted that "part residential subjects" could still be entered in the valuation roll by virtue of section 73(7).
- Senior counsel for the pursuers then made certain observations of a general nature concerning the legislation in question. It should be recognised that a nursing home could well be a commercial organisation. In principle, therefore, there was no reason why it should not appear in the valuation roll. If the submissions for the defenders were correct, the consequences would be very significant. The same statutory provisions and definitions were applicable to the rating and council tax systems. It was a fact that nursing homes had continued to be entered in the valuation roll, following the introduction of the council tax. No one had challenged that. If the defenders were to be consistent, they should have objected to their nursing home being entered in the valuation roll. Furthermore, to be consistent, they should have argued that it should have been entered in the council tax register of dwellings. In short, the implications of the defenders' argument were extensive, affecting those who paid and levied rates, who, of course, were not represented in this case. It was the case however that the occupiers of nursing homes did not actually pay rates, since there was a 100% rebate. In this connection, reference was made to the Rating (Disabled Persons) Act 1978, sections 5(1) and (2), which, by virtue of paragraph (a) covered nursing homes. Those provisions had been amended by the Rating and Valuation (Amendment)(Scotland) Act 1984, section 5(1). The upshot of these provisions was that the defenders had no pecuniary interest to challenge the appearance of their nursing home in the valuation roll.
- Turning next to the interpretation of the legislation in controversy, senior counsel for the pursuers submitted that there were no such problems as alleged on behalf of the defenders. The critical issue was, of course, the meaning of "dwellings" in section 79(1)(a) of the 1994 Act, which expression was defined in section 79(5) by reference to Part II of the 1992 Act. Turning to that Act, section 72(2) contained a definition of a "dwelling", which could be varied by the Secretary of State. That had been done in the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992. Regulation 4, under reference to Schedule 1, made an addition to the definition of "dwelling". Turning to Schedule 1 to these Regulations there was nothing to suggest that a drafting error of the kind contended for had been made. The form of paragraph 4 of Schedule 1 was that there was an inclusion of what were described as communal residential establishments, which were to be within the definition of "dwelling". In paragraphs 1, 2, 3 and 5, other kinds of establishment were also to be included. However, in the latter part of paragraph 4, there was excluded from the definition there to be found of communal residential establishments of "any part of" the particular establishments listed in subparagraphs (a) to (d), which "is not used wholly or mainly as the sole or main residence of a persons employed there." There was nothing in the legislative scheme to show that what was in fact done in that paragraph was in conflict with some legislative policy or purpose. Indeed, it was possible to perceive a rationale for what was done there. The words "which is not used wholly or mainly as the sole or main residence of a person employed there" had been used to make clear that employees' apartments were to be regarded as within the definition of "dwelling". There was no error of draftsmanship or legislative infelicity. Looking at Regulation 6 of the same Regulations of 1992, once again its terms were quite comprehensible upon the view that a nursing home was not a dwelling but that a part of it used wholly or mainly as the sole or main residence of a person employed there was. Thus there was no inconsistency between Regulation 6 and paragraph 4 of Schedule 1.
- It was recognised that the Council Tax (Liability of Owners)(Scotland) Regulations 1992, up to a point, constituted a difficulty for the pursuers. The words of paragraph 1 of the Schedule to those regulations and in particular the word "all" might be thought to suggest that a nursing home might be a dwelling. However, what could be said of these Regulations was that they were not made under section 72(4) or section 99(1) of the 1992 Act, but rather under sections 76 and 116 of that Act for a completely different purpose. To the extent that there was a conflict between these Regulations and the Council Tax (Dwellings and Part Residential Subjects)(Scotland) Regulations 1992, the latter ought to prevail.
- Further alleged problems had been said to arise from the system of discounts for council tax purposes created by section 79 of the 1992 Act. These provisions did not in fact create any difficulties at all. The provisions of Schedule 5, paragraph 8 to the 1992 Act were simply concerned with the circumstances in which a discount would be available to a resident of an undoubted dwelling. The purpose of the provisions was to cover the situation where a person normally resident at such an address was living away from it because they were receiving care. Those provisions had nothing whatsoever to do with the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992.
- Before indicating the conclusions which we have reached on the foregoing material and arguments, we think it right to explain the approach which we consider ought to be followed in the face of contentions of the kind made on behalf of the defenders here, in which it is said that the court ought to "rectify" what is alleged to be a manifest error of drafting. While
we accept that rectification may be essential in the kind of situation figured in Bennion, Statutory Interpretation, 3rd edition, at page 685, we consider that the circumstances in which that will be appropriate are likely to be very rare. In this connection we respectfully agree with the dictum of Lord Nicholls in Inco Europe v. First Choice Distribution at pages 592 to 593 where he said:
"It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross's admirable opuscule, Statutory Interpretation, 3rd edition (1995), pages 93 to 105. He comments at page 103: 'In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role'. This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way, the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation: see per Lord Diplock in Jones v. Wrotham Park Settled Estates [1980] A.C. 74, 105-106. In the present case these three conditions are fulfilled.
Sometimes, even when these conditions are met, the court may find itself inhibited from interpreting the statutory provision in accordance with what it is satisfied was the underlying intention of Parliament. The alteration in language may be too far-reaching. In Western Bank Limited v. Schindler [1977] Ch 1, 18, Scarman L.J. observed that the insertion must not be too big or too much at variance with the language used by the legislature. Or the subject matter may call for a strict interpretation of the statutory language, as in penal legislation."
- In our view, the foregoing dictum is very much in accord with what was said much earlier by Lord Macmillan in the Mayor etc. of the Borough of New Plymouth v. Taranaki-Electric Power Board. At page 682 his Lordship said:
"But, as Lord Hewart C.J. said in a recent case, where the question was as to the meaning of the word 'contiguous': 'it ought to be the rule, and we are glad to think that it is the rule, that words are used in an Act of Parliament correctly and exactly, and not loosely and inexactly. Upon those who assert that that rule has been broken the burden of establishing their proposition lies heavily. And they can discharge it only by pointing to something in the context which goes to show that the loose and inexact meaning must be preferred': Spillers Limited v. Cardiff (Borough) Assessment Committee [1931] 2 K.B. 21 at page 43."
Accordingly, in assessing the submissions on behalf of the defenders in this case, we consider that it is necessary to expect from them highly persuasive reasons why it is to be supposed that a fundamental error of draftsmanship has occurred in the legislation under consideration. We choose to describe that alleged error as fundamental, because the defenders' submissions invite us to read out of the words of paragraph 4 of Schedule 1 to the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992 the word "not"; it would be difficult to envisage a more starkly radical piece of rectificatory interpretation than that.
- We turn now to examine the relevant parts of the legislation in question. In the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992, the Secretary of State exercised the powers conferred on him by inter alia sections 72(4) and 99(1) of the 1992 Act. The former power was, of course, one to vary the definition of "dwelling" in section 72(2) by inclusion or exclusion. The latter power appears in the definition of "part residential subjects" contained in section 99(1) of the same Act. Having regard to the structure of that definition, any class or classes of lands and heritages prescribed are excluded from the definition there given. Reverting to the terms of the Regulations themselves, Regulation 4 provides for the inclusion of certain lands and heritages or parts thereof within the definition of "dwelling". These are specified in Schedule 1 to the regulations. Turning to Schedule 1 itself, one finds specification of five categories of lands and heritages which are to be included within the definition. These are: (1) bed and breakfast accommodation, (2) student halls, (3) barracks, (4) communal residential establishments and (5) school boarding accommodation. Looking at the terms of paragraph 4, dealing with communal residential establishments, which was the focus of argument before us, the essential definition of communal residential establishments, for this purpose, is given as:
"Any lands and heritages which are used (or if not in use, were last used) wholly as the sole or main residence of persons who reside there and in which there are facilities available for sharing by some or all of those persons, ... ".
However, the definition is then made subject to an exception in these terms:
" ... other than any part of -
(a) a hostel;
(b) a nursing home;
(c) a private hospital; or
(d) a residential care home,
which is not used wholly or mainly as the sole or main residence of any person employed there."
Looking at these exclusions from the definition of communal residential establishments, it appears to us that there is nothing irrational or odd about this provision. It is to be supposed that it reflects the policy underlying these Regulations. While, during the course of the debate before us, that policy was not considered in any depth, we do not think that there is anything odd or extraordinary about this part of Schedule 1. It is of course the final words in paragraph 4 which are the subject of controversy here; it is said that the word "not" should not appear in the phrase concerned, which is: " ... which is not used wholly or mainly as the sole or main residence of any person employed there." Looking at this part of paragraph 4 of Schedule 1, we are not persuaded that there is any error of draftsmanship involved here. It appears to us that what is being done in paragraph 4 is the inclusion of communal residential establishments within the definition of "dwelling", under exception of the four types of establishment listed in paragraphs (a) to (d), with the recognition, however, that those establishments may contain the "residential part of part residential subjects", within the meaning of section 72(2)(b) of the 1992 Act, which would be "dwellings". Thus the words which we have mentioned at the end of paragraph 4 appear to us to be comprehensibly used to make clear that what is being done in the main part of paragraph 4 is not to affect the position of employees' accommodation. Indeed, as was submitted by senior counsel for the pursuers, it would be logical to exclude from the list of things which are not "dwellings" something which is a dwelling.
- Turning now to Regulation 6 of the Regulations under consideration, we do not consider that there exists any conflict between its provisions and the provisions of Schedule 1, paragraph 4, with which we have just dealt. Regulation 6, we consider, is an exercise of the power to prescribe an exception to the definition of "part residential subjects", contained in section 99(1) of the 1992 Act. Logically, the draftsman, in Regulation 6(b) has listed the same kind of establishments as were listed in paragraph 4 of Schedule 1, since these establishments are not ultimately to be included in the definition of "dwelling" contained in section 72(2)(b) of the 1992 Act. However, the draftsman, recognising that employees' accommodation is in a different category. has, in the latter words of Regulation 6,
" ... which is not used wholly or mainly as the sole or main residence of a person employed there.", excluded such accommodation from the prior exclusion, to enable such accommodation to be recognised as "the residential part of part residential subjects". Thus it appears to us that there is nothing irrational or illogical in the draftsmanship of Regulation 6, which we consider to be entirely consistent with the draftsmanship of paragraph 4 of Schedule 1.
- During the course of the argument before us, reliance was placed by senior counsel for the defenders on the terms of the Council Tax (Liability of Owners) (Scotland) Regulations 1992. Those regulations, of course, prescribe, for the purposes of section 76(1) of the 1992 Act, the classes of dwellings in respect of which special provision as to liability for council tax is made. The owner of the dwelling is to be liable for the tax in respect of the prescribed classes. It appears to us that the words "all or" in paragraph 1 of the Schedule to these regulations do indicate an apparent inconsistency between these Regulations and the Regulations which we have just considered. Had paragraph 1 of the Schedule confined itself to "part of a residential care home, nursing home, private hospital or hostel", there would have been no problem, since that expression could have been seen as referring to "the residential part of part residential subjects" in such establishments, being employees' accommodation. However the draftsman has gone further and by the use of the words mentioned appears to have contemplated the possibility that the whole of any one of the establishments mentioned could be a "dwelling" within the meaning of section 72(2) of the 1992 Act. We are driven to conclude that there is most probably an error of draftsmanship in paragraph 1 of the Schedule to these Regulations, having regard to the material which we have earlier considered. However, the existence of that error, if error it be, appears to us to have no bearing on the issue in this appeal, which does not concern the issue of the liability of any person to pay council tax. Furthermore, the Regulations in question were, of course, made under a different power from the Regulations which are directly involved in this appeal.
- In the debate before us, senior counsel for the defenders relied upon the various statutory provisions dealing with discounts in respect of council tax authorised by section 79 of the 1992 Act, in association with Schedule 1, paragraph 8 to that Act. It appears to us that the submission made in this connection on behalf of the defenders is based upon a misapprehension concerning the effect of these provisions. We consider that they are concerned with the definition of the circumstances in which a person who is resident in an undoubted "dwelling" may receive a discount in respect of council tax payable as regards that "dwelling". Paragraph 8 of the Schedule provides for the disregarding for the purposes of discount on a particular day a person actually residing in a "residential care home, nursing home, private hospital or hostel in Scotland". It appears to us that these provisions have no bearing whatsoever upon and give rise to no inference as to the status of such establishments as those listed in regard to the statutory definitions of "dwelling".
- Again, reliance was placed by senior counsel for the defenders on the Explanatory Note attached to the Council Tax (Dwellings and Part Residential Subjects)(Scotland) Regulations 1992. We should make clear at the outset that we have considerable reservations about having regard to such a Note in relation to the interpretation of statutory provisions, since it is specifically stated in the Note itself that it is not part of the Regulations. However, if regard is had to that Note, we do not consider that it assists the position of the defenders. It states that:
"These regulations vary the definition by including as dwellings certain bed and breakfast accommodation, student halls, barracks, communal residential establishments and school boarding accommodation ... ".
As we understood it, it was argued that if the view which we have taken of paragraph 4 of Schedule 1 to these regulations was taken, there would be no content in the reference in that paragraph and, indeed, in the Explanatory Note, to "communal residential establishments". We cannot agree with that suggestion. It appears to us that it is not difficult to figure establishment which could properly be described as "communal residential establishments" which would not fall within any of the establishments listed. Thus, we consider that paragraph 4 of Schedule 1 and the Explanatory Note do possess content, upon the view of these regulations which we have formed.
- Senior counsel for the defenders latterly relied upon the provisions of the Council Tax (Exempt Dwellings) (Scotland) Order 1997, which by Article 3 and Schedule 1 exempts certain dwellings for the purposes of section 72(6) of the 1992 Act from the scope of liability to pay council tax. Paragraph 5 of Schedule 1 to this order provides that the scope of "exempt dwellings" is to include:
"5. an unoccupied dwelling which in the last occupation was the sole or main residence of a person who -
(a) is, and has throughout the period since that day been, a relevant person;
and
(b) is a qualifying person."
The expression "qualifying person" is defined by Article 2 of the Order as
"a person who would be liable (either solely or jointly and severally with another person or persons) for council tax in respect of the dwelling concerned, but for the provisions of this order."
The expression "relevant person" is also defined there. It is unnecessary for us to note the extensive terms of that definition; suffice it to say that it relates to a person who is to be disregarded for the purposes of discount; has his sole or main residence in a place other than a dwelling for the purposes of receiving personal care; or has his sole or main residence in a place other than the dwelling concerned, for the purpose of providing personal care for certain persons. It appears to us that these provisions have a purpose which is remote from the matter under consideration in this appeal and give rise to no inference concerning the meaning of the provisions which are under such consideration. Accordingly, we do not consider that they assist the defenders in any way.
- Reliance was also placed by senior counsel for the defenders on the terms of the Explanatory Note attached to the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Amendment Regulations 2002. Once again we have reservations about having regard to such material. However, if that is done, we do not consider that the language used assists the defenders.
- For all of the foregoing reasons, we consider that this appeal is ill-founded and must be refused. Accordingly we shall adhere to the interlocutor of the sheriff, dated 11 March 2002. The result will be that, unless agreement can be reached on the amount of the pursuers' claim, the proof restricted to the question of quantum allowed by the sheriff will now require to be held.
