ASSESSOR for GRAMPIAN REGION v UNION GRAIN STORAGE (ABERDEEN) Ltd
| Jurisdiction | Scotland |
| Judgment Date | 22 January 1988 |
| Date | 22 January 1988 |
| Docket Number | No. 18. |
| Court | Lands Valuation Appeal Court (Scotland) |
L.V.A.C.
Lords Jauncey, Clyde and Coulsfield.
ValuationAgricultural lands and heritagesGrain store complex owned by farmers' co-operative for storage of grain to be marketed by another co-operative of which the farmers were also membersWhether grain store fell to be treated as agricultural lands and heritagesRating Act 1971 (cap. 39), sec. 7 (a).1
The respondents were a non-profit making organisation whose objects were to carry on, for the benefit and as agent for its members, the business of a co-operative association of agricultural producers providing facilities for the dressing, drying and storage of grain grown by members on land occupied by them. Their purposes did not include marketing and selling of the grain, but each member entered into a contract for the supply of a certain quantity, and a marketing agreement with another co-operative whose members included non-members of the storage co-operative.
The respondents appealed against the entry of the storage complex subjects on the valuation roll, arguing (1) that they were used solely in connection with agricultural operations in terms of sec. 7 (a) of the 1971 Act; (2) that in any event the subjects qualified for industrial de-rating. The assessor argued that the respondents' use of the complex was in large part commercial; that premises used for storage could be outwith the exemption for agricultural operations and, further, that the use was as a merchant of produce rather than
"solely" agricultural, and so was ineligible for de-ratingThe valuation appeal committee found that the subjects came within the exemption provided for by sec. 7 (a) of the 1971 Act and did not proceed to consider the second argument. The assessor appealed to the Lands Valuation Appeal Court against the committee's findings.
Held that the relationship with the marketing co-operative was not such as to prevent the subjects from qualifying as being used solely in connection with the agricultural operations of members of the grain store co-operative and that the valuation appeal committee had been right to conclude that they fell to be treated as agricultural lands and heritages; and appeal refused.
Assessor for Roxburgh v. West Cumberland Farmers Trading Society Ltd.SC1974 S.C. 74 and Lowland Cereals Ltd. v. Assessor for Lothian RegionUNK 1980 S.L.T. 133, distinguished.
Observed that the committee ought to have given a decision on the question of industrial de-rating on the hypothesis that it was wrong on the first point so that if the court had differed in its opinion it would have had the benefit of the committee's conclusions on the factual matters.
At a meeting of the valuation appeal committee of Grampian Region, held for the purpose of hearing and determining appeals against entries in the valuation roll, Union Grain Storage (Aberdeen) Limited appealed against the local assessor's decision to enter in the valuation roll a grain store complex on the ground that these subjects fell to be treated as agricultural lands and heritages by virtue of sec. 7 (a) of the Rating Act 1971.
The following narrative is taken from the opinion of Lord Jauncey:"The salient facts, as found by the committee, may be summarised as follows. The respondents are a non-profit making organisation whose objects are to carry on for the benefit of and as agent for its members the business of a co-operative association of agricultural producers providing facilities for the dressing, drying and storage of grain or other agricultural produce grown by members on land occupied by them and used for agriculture. The facilities of the respondents are not available to non-members except with the consent of a majority of the members. The purposes of the respondents do not include the marketing or selling of grain and they have no staff engaged in this activity. Each member of the respondents enters into a storage contract which commits him to supply a contracted quantity of grain for storage, screening and drying and each member is required to enter into a marketing agreement with another co-operative society, Union Grain (Marketing) Limited (hereinafter referred to as U.G.M.). The subjects consist of an office block, laboratory, weigh-bridge, main storage building, self-emptying bins, grain drying plant and conveyors and grading/screening equipment. All grain comes from the farms of members and no grain is handled from other sources. After delivery to the subjects grain is tested for quality and moisture content, screened, and then dried and stored in controlled conditions. All these operations are carried out by the respondents' servants who also take samples of each members' grain when delivered as evidence of quality assessment. None of the respondents' servants at the subjects are engaged in the marketing or selling of grain. In terms of the storage contract ownership of the grain remains with the member but with the risk passing to the respondents subject to insurance limits. Grain is stored in pools of like quality. At or about the time when the respondents came into existence there was formed a further co-operative society, U.G.M., whose registered office is in Skegness, Lincolnshire, and whose purpose is to arrange for the selling or marketing of grain produced by its members. In 1984 all members of the respondents were members of U.G.M. And by virtue of their marketing agreements they required to enter into individual marketing contracts with U.G.M. whereby all their grain was sold by that society. U.G.M. also had 14 English members who were not members of the respondents. U.G.M. did not use physically or occupy any part of the subjects of appeal. Marketing of the grain was carried out by U.G.M. from Skegness who entered into contracts of sale as agents for an undisclosed principal. The general manager of both the respondents and U.G.M. was an individual based in Lincolnshire but he visited the subjects of appeal about once a month. After the final sales net sums due to members of U.G.M. were paid but they could obtain advance payments of up to 80 per cent of the projected value of the grain which they had supplied. U.G.M. entered into sales contracts which were normally for delivery at some future date, but made no provision for ownership passing prior to delivery. During the period between the contract and delivery the grain remained in the respondents' premises and no charge for the storage thereof was made by the respondents against U.G.M. or against a purchaser. Not only was the grain of members stored by the respondents in pools of like quality but sale proceeds were pooled and distributed by U.G.M. between members according to the quantity and quality of their respective contributions."
The valuation appeal committee allowed the appeal and deleted the subjects from the valuation roll. The assessor thereafter appealed to the Lands Valuation Appeal Court. The valuation appeal committee's decision and reasoning appear sufficiently from the opinions of their Lordships in that court.
The cause called before the Lands Valuation Appeal Court, comprising Lord Jauncey, Lord Clyde and Lord Coulsfield for a hearing thereon.
At advising, on 22nd January 1988;
LORD JAUNCEY.This appeal relates to a grain store complex at Whiterashes, Aberdeenshire, which is owned and occupied by the respondents. In 1983 25 farmers in the north east of Scotland joined together to form a co-operative organisation having central facilities of sufficient size and quality for the drying and storage of grain. Joining such an organisation resulted in certain financial advantages to a farmer. The organisation was registered under the Industrial and Provident Societies Act 1965 and became the respondents, whose membership as at 17th December 1986 had increased to 38. The assessor entered the subjects in the roll but the committee deleted them therefrom, on appeal by the respondents, on the ground that they fell to be treated as agricultural lands and heritages by virtue of sec. 7 (a) of the Rating Act 1971. [After the narrative quotedsupra his Lordship continued.]
Against this factual background the question for consideration of the committee and for this court was whether the subjects, being occupied by the respondents, a body corporate, were used solely in connection with agricultural operations carried on by any member of the respondents on any agricultural land within the meaning of sec. 7 (a) of the Rating Act 1971. It is perhaps worth bearing in mind at the outset that this Act is entitled:"an Act to extend the provisions relating to the exemption from rating of land and buildings used in connection with agriculture". The words "used solely in connection with agricultural operations" appeared in sec. 2 (2) of the Rating and Valuation (Apportionment) Act 1928 and in sec. 7 (2) of the Valuation and Rating (Scotland) Act 1956 and have been the subject of judicial consideration on a number of occasions. I do not think that I can do better than start with a reference to Eastwood Ltd. v. HerrodELR [1971] A.C. 160 in which Lord Reid pointed out at p. 168B that it did not matter whether the uses made of the buildings were in themselves agricultural operations, and that what did matter was whether those uses were solely "in connection with" such operations. His Lordship, after referring to the strong impression that agricultural de-rating was intended to benefit agriculturalists but not those conducting commercial enterprises where the use of land played only a small part, continued at p. 168G:"I do not foresee serious difficulty if used in connection with is held to mean use consequential on or ancillary to the agricultural operations on the land which is occupied together with the buildings."
At page 169D he said:"The whole object of producing a crop on the agricultural land is to market it in one form or another, and I think that anything done...
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