v. Edinr 2 LORD SALVESEN-The sole question in this case is whether the yearly rent of the public-house at 227 and 229 Gorgie Road, belonging to the appellants, falls to be entered at £350, the assessed present value, or at £180, which is said to be the actual rent at which the subjects are let. It appears that in 1903 a lease was granted by Peter Fisher, the then proprietor of the same premises, to James Watson, at an annual rent of £130. Subsequent to the date of the lease the appellants purchased the property, and by assignation, dated 13th and 20th April 1904, James Watson, with consent of the appellants, assigned the lease to Walter S. Stratford, who was entered in the valuation roll thereafter as tenant. In 1907 the appellants made certain alterations on the premises, in respect of which the tenant agreed to pay an additional rent of £50. The subjects have stood in the valuation roll at the figure of £180 ever since. It now appears that Stratford obtained the assignation of the lease in question under an arrangement with the appellants, which provides, inter alia, that the appellants are to be entitled to two-thirds of the profits of the business after deducting interest on the sum which they advanced, and in addition that the appellants supply the business with all the beer and spirits which it could turn over. It is also plain that they exercise a control over the business, for the drawings must not be banked in the tenant's name. What other provisions there may be in the agreement between the appellant and Stratford we do not know, because the appellants have refused to produce the agreement, or to give any information with regard to the business. In these circumstances the Assessor has disregarded the lease on the footing that the premises are not bona fide let for a yearly rent as the "fair annual value thereof without grassum or consideration other than the rent." The appellants' contention was to the effect that the assignation of the lease, and the financial arrangement in respect of which they have an interest in the profits, and in fact supply the exciseable liquors required for the business, are to be treated separately, and that any consideration which they receive under the financial arrangement cannot enter into the question whether there is a bona fide lease of the premises to him at the rent stipulated in the original lease. I do not think that that is the fair import of the evidence. In my opinion the assignation of the lease was part of the same transaction under which the appellants advanced the bulk of the money required to purchase the goodwill belonging to the former tenant; and I take it that Stratford was really their nominee, in whose name the purchase was carried through but mainly for behoof of the appellants themselves. It is true, as was decided in M'Lachlan, 24 R. 734, that the mere fact that the owner of a hotel was one of the partners of the firm which was the tenant of the hotel under a lease does not displace the rule that the rent stated in the lease is the measure of value. It is to be noted, however, that in M'Lachlan's case the assumption on which the argument proceeded was that the lease was bona fide, while that is the de quo queritur in the present case. Lord Kyllachy in that case said "I quite concede that where a lease is impeached as not being a bona fide lease, it may be, so on various grounds. It may be inferred, for instance, from the whole facts, from the amount of the rent stipulated as compared with the previous rent, from the relationship of the parties, from the interest of the landlord in the tenancy, &c., &c., that the lease was not a real and bona fide lease. We have had examples of that in this Court, in cases where it appeared that the landlord and tenant were in substance the same person." Now I think in this case we are entitled to infer from the whole evidence that the landlord and tenant are in substance the same person, and that the tenant just got such interest in the business as would induce him to take out a licence in his own name, but really for behoof mainly of his landlords. As I read the evidence he was in a position substantially of the appellants' servant, putting into the business a certain amount of capital for their security, and being remunerated partly by a share of the profits. I am therefore of opinion that the decision of the Valuation Committee is right, no question having been raised as to the amount of the yearly value of the premises, on the footing that the lease falls to be disregarded. LORD CULLEN I concur with Lord Salvesen. The Court was of opinion that the determination of the Valuation Committee was right. Counsel for the Appellants-MacmillanMarquisten. Agents-Menzies, Bruce Low, & Thomson, W.S. Counsel for the Assesor-Clyde, K.C.Cooper, K.C. Spens. Agent - Andrew M'Dougall, Solicitor. and Steel by the Licensing Court. The Valuation Committee disregarded the lease, and fixed the valuation at £34. Held that, in the circumstances of the case, the determination of the Committee was right, but that the voluntary execution by the tenant of alterations and repairs was not per se a consideration other than rent. At a meeting of the Lands Valuation Committee for the Lower Ward of the County of Lanark, held at Glasgow upon the 16th day of September 1910, William Higgins, farmer, Main Street, Clackmannan, as owner, and David Steel, spirit dealer, Mollinsburn, as tenant, appealed against the following entry of the Assessor in the valuation roll for the County of Lanark for the year 1910-11, viz. : Description and Situation of House and Proprietor. Tenant. Occupier. William David Tenant Licensed Shop, Higgins, Steel, Inhabient Yearly Robert Johnstone, £10 The appellants craved that the valuation of the subject should be restricted to £16, which was the rent at which it was let to a tenant. The Committee found (first) that the Assessor was entitled to disregard the let founded on by the appellants, and (second) that the value of the subjects in terms of the Valuation of Lands (Scotland) Acts was £34. The appellants took a case for appeal. The Case stated "The following facts were submitted to the Committee and admitted by the parties, viz.-The property is jointly owned by the appellants and Mrs Rennie, the wife of David Rennie, the former tenant. There is no formal lease of the subjects and no form of written agreement has been entered into. The rent paid is £16. David Steel, the tenant and occupier, is also joint owner to the extent of nine thirty-second parts acquired as after mentioned. He became tenant of the premises in February 1901, when he paid £360 to the then tenant David Rennie, and at the term of Whitsunday 1901 he acquired from David Rennie's brothers their share of nine thirty-second parts of the property at the price of £75. During David Rennie's tenancy the property was owned jointly by William Higgins, David Rennie, and his wife, sister, and mother. In the returns made since 1901 to the Assessor, William Higgins has always been returned as owner, and David Steel as occupier and tenant. The joint ownership was not disclosed in the returns. The present owners are William Higgins, who holds fourteen thirty-second parts share of the property, David Steel, who holds nine thirty-second parts, and Mrs Rennie, who holds nine thirty-second parts. Repairs and alterations ordered by the Licensing Courts have been carried out by the tenant at his 4, 1911 own expense. The expenditure on repairs was stated by the appellants to be trivial. No information was given as to the cost of the alterations ordered by the Licensing Courts. The rent is paid and an accounting is made annually, and a proportion (nine thirty-second parts) of the net balance is returned to David Steel, the remainder being divided between William Higgins and Mrs Rennie in proportion to their shares. The feu-duty is paid sometimes by David Steel and sometimes by William Higgins, and credit therefor is given when the net income is divided. No written statement or account has ever been made out. There is no family relationship between Higgins and Steel. Higgins never knew about the payment of £360 by Steel to Rennie, and received no part of it. No evidence was led for the Assessor." The appellant's contention was stated thus-"That the lease of the premises, though verbal, was binding and conclusive, and that there being no relationship the Assessor and Committee were not entitled to set aside or disregard the lease. The repairs were too trivial to be regarded as consideration other than the rent. The payment of £360 was made by David Steel qua incoming tenant to David Rennie qua outgoing tenant. No benefit from it accrued to the proprietors. It was made for goodwill of the tenant and does not affect the value to be entered in the valuation roll." 66 The Assessor's reply was thus stated— "That the rent of £16 was not the fair annual value of the subjects, and that the let was not conclusive. The obligation to make any necessary alterations and repairs was a consideration other than rent, and in the circumstances of the case might be a substantial consideration. The subjects were not bona fide let for a yearly rent conditioned as the annual value thereof. The annual value of the house, exclusive of the licensed premises, is not less than £8, and deducting this there remains only £8 as the annual value of the licensed premises, and prima facie, and on a comparison with the values placed on other premises in the district, the sum of £40 was a fair value for the whole subjects. The alleged let was not conclusive in view of the relationship of the parties, for on the decisions relationship was not restricted as suggested by the appellants to blood relationship." The Committee were of opinion that the obligation undertaken by the appellant David Steel to carry out alterations and repairs was a consideration other than rent, and that the rent of £16 was materially less than the rent at which one year with another the subjects in their actual state might be reasonably expected to let from year to year, and were thereupon advised that the let of the subjects not being a bona fide lease within the meaning of the statutes, was not conclusive, and might be disregarded quoad the annual value for valuation purposes. Argued for the appellants-There was no obligation on the tenant to make repairs and alterations. Therefore any such made by him were purely voluntary, and could not be regarded as a consideration other than rent. The relationship of the parties as co-proprietors was not a good objection to the fairness of the rent, in the absence of evidence to the effect that the rent was inadequate-Alexander v. The Assessor for Kirkcudbright, February 19, 1890, 17 R. 835, 27 S. L.R. 630. Argued for the Assessor-The fact that the tenant was also one of the co-owners of the property was inconsistent with the view that the rent under the lease was the fair value of the subject. It was a fair inference from the facts that the tenant was really under obligation to do the repairs and alterations. The Assessor was therefore entitled to disregard the lease. At advising LORD SALVESEN-The appellants in this case complain that the yearly value of a house and licensed shop has been raised from £16, at which figure it has stood, at all events since 1901, in the valuation roll, to £34. It appears that the appellant Higgins is the owner of fourteen thirtysecond parts and the appellant Steel of nine thirty-second parts of the heritable subjects, and Mr Steel is also tenant both of the house and of the licensed shop. The former tenant, from whom Steel acquired the goodwill of the business, was a Mr David Rennie, and he and his near relatives owned eighteen thirty-second parts of the property. It was during Mr Rennie's tenancy apparently that the rent of £16 was fixed as the rateable value of the whole premises; and immediately after acquiring the goodwill of the licence Mr Steel also acquired nine thirty-second parts of the property. Up till the present year Mr Higgins has been regularly returned as the proprietor of the whole subjects, and it was not known until this year by the Assessor that other persons were jointowners with him. There is no formal lease of the subjects, and no form of written agreement has been entered into, but the rent actually paid has been £16. Repairs and alterations which have been ordered by the Licensing Courts have been in fact carried out by the tenant at his own expense. In these circumstances, no evidence having been led on either side, the Valuation Committee came to be of opinion that the verbal lease of the subjects ought to be disregarded in fixing the annual value for valuation purposes. They also found that the fair annual rent of the subjects was £34 instead of £16. I am unable to concur with the Committee in the first reason which they give for disregarding the lease, namely, that the obligation undertaken by the appellant David Steel to carry out alterations and repairs was a consideration other than rent; because I find no evidence that any such obligation was in fact undertaken; and it cannot be inferred from the mere fact that the tenant did bear the expense of the alterations. He may have done so in order to protect his interest as the licence-holder, which would obviously have been imperilled if he had refused to conform to the orders of the Licensing Court. There is nothing to suggest that he was under any obligation, as in a question with the owners of the property, to bear this expense. There is another reason, however, which I think is sufficient to support the finding of the Committee. At the time when Rennie's rent was fixed at £16 he controlled more than one-half of the pro indiviso shares of the property, and the circumstance that Mr Steel has also throughout been a joint-owner is, I think, of great materiality in considering the question whether the subjects are bona fide let for a yearly rent of £16 "conditioned as the fair annual value thereof." They accordingly state as one of the grounds of their appeal that "the subjects being owned jointly by a number of proprietors, and accordingly the joint-proprietors, other than the appellant David Steel, being not entitled in law to increase or decrease the agreed rent of £16 without the consent of the said David Steel, the yearly rent or value of the subjects is to be estimated in terms of section 6 of the Lands Valuation Act 1854 at the let rent of £16." This plea-whether good or bad in law it is unnecessary to consider-goes far to explain why the yearly rent of the subjects remained at £16, while according to the decision of the Valuation Committee the fair rent is £34. There is no doubt that the position of Steel as a pro indiviso proprietor, and as tenant, must have given him an undue influence in fixing the rent which he was to pay for the premises; and I am of opinion accordingly that the subjects cannot be held to be bona fide let for the yearly rent of £16 conditioned as the fair annual value thereof. It is not to be left out of view that the incomplete return under the heading "proprietors" (whoever was responsible for it) may be assumed to have been made for the purpose of concealing from the Assessor the fact that both the former and the present tenant were part proprietors; and the admission that the tenant has borne all the expenditure on repairs and alterations tends to show that the rent he pays is not a full rent for the premises, quite apart from the consideration that the Valuation Committee have fixed the fair annual value in the open market at more than twice the figure which he pays under his verbal lease. All these circumstances taken together, I think, fully justified the Committee in reaching the conclusion that they were entitled to disregard the lease and to enter the subjects in the valuation roll at their actual value. I am accordingly for affirming the finding appealed against. LORD CULLEN-I concur. LORD JOHNSTON-I concur in the judgment proposed. On the first point I have nothing to add. On the second point, on the statement of the Magistrates I had much difficulty in entertaining the question at all. It is not properly raised. But I v. Edinr. Assessor cannot read the second ground of appeal without seeing that in this case the true dominus litis is David Steel, and that there is not a true and proper let to him at a fair value. That Steel could be ejected by his co-proprietors I have no doubt. Qua tenaut he could not avail himself of his right as co-proprietor pro indiviso to resist removal at the instance of his co-proprietors. Those co-proprietors own only twenty-three thirty-second parts pro indiviso of the subjects, while David Steel himself owns the other nine thirty-second parts. But that fact does not enable him to maintain himself in possession qua tenant till he is removed with his own consent. But it does place him in a position in which he could make it impossible to let the property to another tenant, and therefore to give much trouble to his co-proprietors. He has probably availed himself of his position, for I must accept the Commissioners' opinion that the rent is far from being a fair rent, and justice will therefore, I think, be done by supporting the judgment of the Valuation Committee. The Court sustained the determination of the Valuation Committee. (Before Lord Johnston, Lord Salvesen, DEARDS v. EDINBURGH ASSESSOR. In a question as to the annual value of a public-house, the licence - holder claimed a reduction from the figure at which the subjects stood in the valuation roll for the previous year, on account of the increase of licence duty imposed by the Finance (1909-10) Act 1910 (10 Edw. VII, cap. 8), sec. 43. Held that the statutory increase in the duty established a prima facie case for reduction in the valuation, that the onus was on the assessor to prove that the value of the premises had been maintained in spite of the additional duty, and that as he had failed to discharge that onus, the valuation of the subject fell to be reduced by a sum equal to half the increase in licence duty. Deards' Case. - At a Court of the Burgh 4, 1911 against the following entry in the valua- Description and Situation of Subjects. Description. Situation. Yearly Proprietor. Public- 30 Wright's Walter Deards. The Committee sustained the Assessor's In the Case the Committee stated the following facts as admitted, proved, or being within their knowledge-"(1) The premises in question are occupied as a public-house, and are situated at No. 30 Wright's Houses, facing Bruntsfield Links. (2) The appellant purchased the premises and business in 1909, and entered into occupation in or about May of that year. In making up the valuation roll for the year to Whitsunday 1910 the Assessor entered the value of the premises at £160. Against this valuation the appellant appealed to the Burgh Valuation Appeal Court, held in September 1909, and craved that the value should be entered at £90. The Court fixed the value at £120, and the appellant proceeded no further with his appeal. The Assessor proposed to continue the same valuation for the year to Whitsunday 1911. (3) The licence duty paid by the appellant in respect of the premises for the year to 28th May 1910 was £25, 14s. 3d. The licence duty paid for the year to 28th May 1911 was, in virtue of the provisions of the Finance (1909-10) Act 1910, £51, 8s. 6d., being an increase of £25, 14s. 3d. In addition a surcharge of £10, 8s. 7d. was paid on 29th May 1910. (4) The appellant declined, although called upon by the Assessor to do so, to give any information in regard to the drawings or turnover in his shop, either to the Assessor privately or to the Committee. (5) There has been no change of circumstances in connection with the premises since last year, other than the increase of licence duty payable by the appellant. (6) There are 715 licence-holders (including licensed grocers) within the city. Of these 175 appealed to the Committee's Court held in September 1910 against the valuation at which the Assessor had entered their respective premises in the valuation roll for the year ending Whitsunday 1911. In the course of the hearing of these appeals only a few cases came before the Committee where transactions had been entered into during the year 1910, but in the cases where such transactions had occurred, the sum paid for property and goodwill and the rents agreed to be paid were not less than the amounts paid and rents fixed for similar premises in recent years. On the other hand, three cases came before the Court in which it was proved that landlords of licensed premises had agreed to give a reduction of the rents payable to them. These reductions were as follows: -(1) £20 from an annual value of £80; (2) £15 from an annual value of £75; and (3) v. Edinr. Assessor 4, 1911 £5 from an annual value of £200. In each of these cases the reductions were less than the additional licence duty imposed by the Finance (1909-10) Act 1910, and (except in the third case) other considerations than the licence duty were present as influencing the reduction. "The appellant maintained that, as the business carried on in the premises was now subject to additional taxation to the extent of £25, 14s. 3d. per annum, the onus was on the Assessor to show that the annual value of the premises had not been reduced by that amount, and that the Assessor had failed to discharge this onus. The Assessor contended that the onus was on the appellant to show that his premises had been reduced in value, and that he had failed to discharge the onus upon him." The Committee were of opinion-(1) That the onus was on the appellant to show that the annual value of his premises had been reduced by the increase of the licence duty. (2) That there was no evidence before thein to show that the value was so reduced. They accordingly sustained the Assessor's valuation and dismissed the appeal. Argued for the appellant - A licenced business was peculiar in respect that the licence and goodwill effeired to the particular premises, and therefore any additional burden which cut down profits automatically reduced the value of the premises. The finding of the Magistrates that no other change had occurred in connection with the business, along with the fact that the duty had been doubled, raised a presumption that the value of the premises had been diminished, and put the onus of proving the contrary on the Assessor-Rex v. Shoreditch Assessment Committee, [1910] 2 K.B. 859; Wrigglesworth v. The King, December 16, 1910, 27 T.L.R. 154; Camberwell Assessment Committee v. Ellis, [1900] A.C. 510. There was no obligation on the appellant to produce evidence of the weekly drawings which could not affect the question of valuation here-Dodds v. The Assessment Committee of South Shields, [1895] 2 Q. B. 133; Cart right v. Sculcoates Union, [1900] A.C. 150. The appellant was entitled to a deduction of the valuation equal to the whole increase of licence duty, or at all events to a reduction equal to 75 per cent. of that increase. If any Argued for the Assessor-It was too soon to ascertain what the effect, if any, of the increased duty would be on the value of such premises. It might come to be borne by the customer, or wholesale trader, or by the licence-holder personally. decrease in the lettable value of the premises had resulted from it, the onus of proving that rested on the appellant, and he had failed to discharge that onusLivingstone v. Assessor for Paisley, February 19, 1909, 46 S. L.R. 433. There was no absolute presumption that increased duty lowered the value of the premises. It was quite probable that it would have the contrary effect by diminishing competition. All that could be said was that a new element had been introduced into the calculation necessary to determine the value. In order to justify a tenant in demanding a reduction of rent from his landlord he would require to show not merely increase of duty, but also actual decrease in the value of the premises from a business point of view, of which there was no evidence here. Any suggestion that the appellant was not entitled to a reduction equal to the whole amount of the increase of duty, but only to a part, was fatal to the claim unsupported by evidence. Rex v. Shoreditch Assessment Committee (cit. sup.) really supported the Assessor's view, because the decision there was merely that if the appellant could point to a new element calling for consideration he was entitled to inquiry. Clark's Case.-In this case the appellant, Charles Clark, wine and spirit merchant, 1 Roseburn Terrace, Edinburgh, craved that the valuation of his premises, as entered in the roll at £165, should be reduced to £120. The facts of the case as stated by the Valuation Committee were substantially the same as in Deards' case, except that the appellant led evidence to show that the receipts and turnover of the business during the previous year had substantially decreased. Both cases were advised together. At advising LORD JOHNSTON-This case raises the very general question of what is the effect in the valuing of public-house property for the purposes of taxation in Scotland of the great increase of the licence duty effected by the Finance Act 1910, sec. 43. Though this is, as I have said, a very general question, we have to dispose of it with reference to the valuation of premises in a particular year 1910-11, and our judg. ment must have regard to the circumstances of that year, which are these-the Act passed on 29th April 1910, and the duty was to be charged on all licences granted after 1st July 1909, with a certain drawback affecting the first years 1909-10, and a provision for surcharging those who had, prior to the Act passing, taken out licences for 1909-10 under the law then in force. As in Scotland licences run from their date to 28th May in each year (see the Licensing Act 1903, sec. 51), it follows that practically, all licencees in Scotland, including the appellant, had to be so surcharged. But the valuation roll for 1909-10 had, of course, been made up long prior to the passing of the Finance Act 1910, and therefore in regard to that valuation roll no question arose as to the effect on values of an increase of duty, which had not only not come into play, but which had not been imposed. Moreover, the incidence of the increased duty could have no appreciable or ascertainable effect upon transactions in relation to licensed premises during the year 1909-10 in Scotland, for it only came into force a short month before the close of the year. We are now engaged in adjusting the valuation roll for 1910-11, that is, from 28th |