Lands Valuation Appeal Appeal By Stated Case The City Assessor For Glasgow City Council V. Monti Marino (glasgow) Limited
| Jurisdiction | Scotland |
| Judge | Lord Justice Clerk,Lord Hardie,Lord Hodge |
| Judgment Date | 26 June 2012 |
| Neutral Citation | [2012] CSIH 55 |
| Court | Court of Session |
| Published date | 26 June 2012 |
| Docket Number | XA62/12 |
| Date | 26 June 2012 |
| LANDS VALUATION APPEAL COURT, COURT OF SESSION | |
| Lord Justice Clerk Lord Hardie Lord Hodge | [2012] CSIH 55 XA62/12 OPINION OF THE LORD JUSTICE CLERK in the Appeal by Stated Case by GLASGOW CITY ASSESSOR Appellant; against MONTI MARINO (GLASGOW) LIMITED Respondent: ______ |
For the appellant: Cleland; Simpson and Marwick
For the respondent: MacIver; Brodies
26 June 2012
Introduction
[1] This is an appeal by the assessor against the decision of the Glasgow Valuation Appeal Committee (the Committee) dated 28 June 2011 on an appeal by the respondent relating to the entry in the Roll at the 2010 Revaluation for Unit 51 at the Silverburn Shopping Centre, Glasgow (Silverburn). The assessor entered the subjects as a shop at a net annual value/rateable value of £159,000. The respondent contended that the subjects should be entered as a café or restaurant at a value of £87,000. The Committee allowed the appeal and applied the respondent's valuation.
[2] The subjects are a unit in a mall at Silverburn in which the respondent runs a franchise of Coffee Republic. The respondent contends that the subjects should be valued in their actual state and according to their actual use (Ass for Stirlingshire v Myles and Binnie, 1962 SC 530; Ass for Moray and Nairn v Elgin High Church 1962 SC 524); that food outlets ought not to be equated with shops (Spudulike Group Ltd v Ass for Tayside VJB, [2002] RA 91); and that restaurants at Silverburn have been valued at a lower rate than shops (Texstyle World v Ass for Strathclyde 1995 SC 588). The respondent contends that a comparison of the subjects with other cafés or restaurants indicates that the subjects should be valued at £500 psm.
[3] The assessor considers that the appeal subjects should be valued as a shop (Wood v Aberdeenshire Ass [1963] RA 101). They can easily be altered from restaurant use to shop use. They are not licensed. They are immediately adjacent to shops. They are to be distinguished from the licensed restaurants at Silverburn, which are valued by a specific valuation scheme. The assessor contends that the decision of the Lands Tribunal in Spudulike Group Ltd v Ass for Tayside VJB (supra), on which the respondent relies, is unsound. The assessor values the subjects on a zoning basis at a Zone A rate of £1250 psm. This is the rate that he has applied to all standard-size shops in the main mall.
The decision appealed against
The Committee's findings in fact
[4] The Committee found that Silverburn has a wide range of cafés, restaurants and coffee shops.
[5] The subjects have a seating and table area, drink and food preparation and sales areas and a food storage area. There are customer toilets and a staff room. There is also seating outside.
[6] The lease provides that the only permitted use is use as a coffee shop, which includes the sale of hot and cold drinks, food products and merchandise, or such other uses as are within Class 3 of the Schedule to the Town and Country Planning (Use Classes) (Scotland) Order 1997, that is to say use for the sale of food and drink on the premises.
[7] The respondent provides delicatessen food and coffee. More than 50% of the turnover comes from the sale of food. In other high street coffee outlets food sales account for less than 20%. By contrast with many other coffee shops, food is made to order and there is a table service. Although some takeaway food is provided, most customers eat in the premises.
[8] The subjects are similar in character to other food units at Silverburn such as Frankie and Benny's, La Tasca and Prezzo, which are fitted out as restaurants or cafes and not as shops. All three are valued on the basis of the assessor's scheme for licensed premises. Nandos, Pizza Hut, Wagamamas and Home Made Burger Company are also valued as licensed restaurants. Costa Coffee and O'Brien's are valued as mall kiosks. The evidence was that their valuations are based on rent. The zoning method used in the valuation of shops was not used for any of these food units.
[9] The appeal subjects were leased by the previous tenant at an annual rental of £120,000 pa with effect from 16 June 2008. There was a six months rent-free period. The tenant's business did not prosper. It was taken over by the respondent. The respondent pays a rent of £90,000 pa subject to a top-up when turnover exceeds £692,000. The turnover at the date of the hearing was £480,000.
[10] The only other food and drink outlet at Silverburn that has been valued as a shop is Starbucks. It is situated in the centre of the mall. It trades on two floors. It has a considerable balcony area. It is about twice the size of the appeal subjects and is in a more attractive position. Starbucks has been assessed at a net annual value of £117,000. The rent passing is £110,000.
[11] The Committee found that restaurant use was not a sub-division of shop use. It constituted a separate general category for valuation purposes. From evidence from other restaurants and cafes at Silverburn, the Committee thought it fair and reasonable to apply to the appeal subjects an overall rate of around £500 psm. This gave a net annual value/rateable value of £87,000.
The Committee's reasons
[12] The Committee considered that the subjects were more properly described as a restaurant. They were used predominantly by sit-in customers. They should be valued by comparison with other food and drink outlets at Silverburn rather than by comparison with shops. The Committee recognised that the premises were not licensed, but it considered that that did not affect their categorisation.
[13] The principal considerations that weighed with the Committee were that (a) the property should be valued in its actual state; (b) the issue in dispute had been resolved in Spudulike Group Ltd v Ass for Tayside VJB (supra); (c) food sales constituted 50% of the turnover of the subjects; (d) the unit was restricted to Class 3 planning purposes, and (e) the Marks and Spencer's kiosk and certain other comparable subjects had not been entered in the Roll as shops.
Spudulike Group Ltd v Ass for Tayside VJB (supra)
[14] The subjects in that case were a fast food restaurant operating in a shop unit in a shopping centre. The unit was permanently open to the mall in order to create an atmosphere of an open café or food court. To return the premises to use as a shop would cost around £10,000, although work of a similar cost would often be done by a new occupier. The Tribunal held that the subjects were not appropriately categorised as a shop, even if they might sometimes have the same value as shops or be physically proximate to them. Cafes and restaurants were in a different category. The premises were a restaurant rather than a café because there was substantial preparation and cooking of food on the premises, although with fast food. The dividing line was a fine one. Because there was some similarity with restaurants, a certain regard should be had to rental evidence relating to cafés.
[15] Since the premises could be adapted to shop use with only minor adjustments, they could be compared with shops unless it was shown that restaurants commanded a different order of rent. They attracted a substantially lower rental compared with five other proximate units of similar size, using the zoning method of...
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