ASSESSOR for STRATHCLYDE REGION v B.P. REFINERY GRANGEMOUTH Ltd
| Jurisdiction | Scotland |
| Judgment Date | 06 May 1982 |
| Date | 06 May 1982 |
| Docket Number | No. 3. |
| Court | Court of Session |
SC
L.V.A.C. Lords Avonside, Robertson, Ross.
Valuation—Industrial derating—Unum quid—Refinery supplied with oil by 58-mile pipeline from ocean tanker terminal—Whether ocean terminal and pipeline entitled to industrial derating—Meaning of "used"—Meaning of "contiguous"—Rating and Valuation (Apportionment) Act 1928 (cap. 44). sec. 3 (3), as applied by sec. 9 (2).1
A company operated an oil refinery at Grangemouth. Initially the tankers supplying the refinery docked at Grangemouth, but as a result of increases in refinery capacity and tanker size, the company was obliged to build an ocean terminal at Finnart. Oil was pumped from tankers into storage tanks at the terminal. From there, it was pumped along an underground pipeline, some 58 miles long and 20 inches in diameter, to other tanks within the refinery perimeter, from where it was carried by pipes directly into the refinery itself. For reasons of time and cost, it was not possible to pump oil from tankers directly into the pipeline. The pumping operations at Finnart were under the control of a production controller at Grangemouth. An assistant works manager based at Grangemouth was in overall charge of the terminal. Maintenance of the terminal was determined by Grangemouth staff. The transmission of oil from the terminal's tanks was decided at Grangemouth and controlled by the needs of the refinery.
The refinery, the storage tanks at the refinery and the pipes between them enjoyed full industrial derating. The company contended that the pipeline and the ocean terminal should also have industrial derating under sec. 3 (3) of the Rating and Valuation (Apportionment) Act 1928.
The valuation appeal committee decided that the pipeline and the ocean terminal were entitled to industrial derating. The assessor appealed.Held, refusing the assessor's appeal, that the subjects of appeal fell within sec. 3 (3) of the Rating and Valuation (Apportionment) Act 1928, and were entitled to be derated because the ocean terminal was part of the refinery complex, the size and length of the pipeline did not matter provided it was in fact, as it was here, used as part of the "factory" or refinery, and, if "contiguous" meant "touching," there was a series of properties (including refinery, pipeline and ocean terminal) forming a chain each touching another in the series.
Observed by Lord Ross that the word "used," in sec. 3 (3) of the 1928 Act, meant "used to any extent" and not "primarily or substantially used."
Opinions reserved on whether the word "contiguous" meant "touching."
At a meeting of the valuation appeal committee of the Dunbarton sub-region of Strathclyde Region on 17th March 1981, B.P. Refinery Grangemouth Limited appealed against entries made by the assessor in the valuation roll for the year 1978–79. The entries were for an ocean terminal at Finnart, Garelochhead, for which the assessor had entered a net annual value and a rateable value of £1,216,000; and for a pipeline, 20 inches wide, Finnart to Croftamie, for which the assessor had entered a net annual value and a rateable value of £247,000.
No evidence was led before the committee. The parties produced an agreed statement of facts in the following terms:—
Statement of Facts
"1. General Historical Background
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1.1 The appellants, B.P. Oil Grangemouth Refinery Ltd., whose Registered Office is at Bo'ness Road, Grangemouth are a wholly owned subsidiary of B.P. Oil Ltd., whose Registered Office is at B.P. House, Victoria Street, London, SW1E 5NT.
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1.2 B.P. Oil Grangemouth Refinery Ltd., hereinafter referred to as the Company are engaged in the refining of crude oil into a wide variety of products such as petrol, kerosene, fuel oils, lubricating oils, liquified petroleum gases etc., etc.
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1.3 Since 1924, the Company and their predecessors have occupied and operatedinter alia an oil refinery at Grangemouth, Central Region.
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1.4 This refinery is entered in the valuation roll for Central Region and is fully derated.
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1.5 Until 1952, the crude oil for the refinery was obtained either by tankers unloading at Grangemouth Docks or else by rail car tankers from indigenous sources.
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1.6 In the period 1948/1952 the Company embarked on a major expansion of the refinery to increase the capacity from 360,000 tons per annum to 2·2 million tons per annum.
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1.7 About the same time oil tankers increased considerably in size to minimise the cost of transporting the crude oil.
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1.8 Grangemouth docks were and still are inadequate to handle the size of oil tankers which came into general use then, nor could the docks handle the volume of smaller tankers if available which would have been required to supply the refinery.
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1.9 To overcome this problem, the Company built an oil terminal at Finnart, Loch Long in Strathclyde Region where there is sufficient water at low tide to permit the large tankers to berth.
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1.10 To transfer the oil from Finnart to Grangemouth the Company leased a 12″ pipeline from what is now the Ministry of Defence which ran from Finnart to Auchendennan, Loch Lomond, and laid a 12″ pipeline from Auchendennan to the refinery.
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1.11 Various expansion took place between 1952 and 1968 increasing the refinery capacity from 2·2 million tons per annum to 4·5 million tons per annum.
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1.12 A further expansion of the refinery took place in the period 1968/71 increasing capacity from 4·5 million tons per annum to 9 million tons per annum.
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1.13 As a result the 12″ pipeline was inadequate to meet the increased needs of the refinery.
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1.14 To overcome this new situation the Company laid a 20″ pipeline from Finnart to Grangemouth and disconnected and rendered unusable the 12″ pipeline. The Company also constructed a tank farm at Kinneil Kerse.
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1.15 The Finnart terminal and part of the 20″ pipeline are entered in the valuation roll for Strathclyde Region, the remainder of the 20″ pipeline is entered in the valuation roll for Central Region.
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1.16 None of these entries have been given the benefit of derating.
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1.17 The Kinneil tank farm is entered in the valuation roll for Central Region and is fully derated.
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1.18 The interconnecting pipework between Kinneil and the refinery is included in the refinery valuation which is derated.
2. Finnart Oil Terminal
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2.1Subject Description—2.1.1 The terminal is situated towards the southern end of Loch Long.—2.1.2 It occupies an area of land owned by the Company, partly by the Ministry of Defence and partly by the Crown Estate Commissioners.—2.1.3 The Company hold the land owned by the Ministry of Defence and the Crown Estate Commissioners on leases for periods exceeding 21 years.—2.1.4 The site is sub-divided by the main Garelochhead/Arrochar Road. The part to the east is partly owned by the Company and partly the subject of a lease from the Ministry of Defence. The part to the west is partly owned by the Company and partly leased from the M.O.D. save the foreshore which is leased from the Crown Estate Commissioners.—2.1.5 Included in the lease from the Ministry of Defence are certain storage tanks.—2.1.6 Apart from the leased land and the tanks on lease from the Ministry of Defence, all the assets are owned by the Company.—2.1.7 The land to the west has been extensively developed by the Company, this development comprising:—2.1.7.1Jetty No. 3. Concrete 450′ 0″ long projecting some 350′ 0″ into the Loch and having the necessary dolphins or mooring points. This jetty has a mean tidal depth of 95′ 0″ and is capable of handling tankers up to 250,000 tons.—2.1.7.2Jetty No. 2. Concrete 330′ 0″ long projecting some 300′ 0″ into the loch and capable of handling tankers up to 125,000 tons.—2.1.7.3 Tanks. (1) Four crude oil storage tanks each 220′ 0″ diameter and 60′ 0″ high each having a capacity of 50,000 tons, shown as tanks numbers, 13, 14, 15 and 16. (2) Four storage tanks number 1 to 4 about 144′ 0″ diameter and 57′ 6″ high each having a capacity of 22,000 tons. (3) Four storage tanks number 7 to 10 about 144′ 0″ diameter and 60′ 0″ high each having a capacity of 23,000 tons. (4) Two storage tanks number 11 and 12 about 160′ 0″ diameter and 60′ 0″ high each having a capacity of 28,000 tons. (5) Two fuel oil tanks (now disused) numbers 5 and 6 about 120′ 0″ diameter and 42′ 0″ high each having a capacity of 10,000 tons.—2.1.7.4 Buildings. Various buildings consisting of office block, pumphouse control room, fire trailer houses etc.—2.1.7.5 Roads. There is a system of roads serving the tankage.—2.1.7.6 Pipes. There is a system of interconnecting pipework.
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2.2Registration Under the Factory & Workshop Acts. The Terminal is registered under the Factory Acts and has a separate registration from that of the refinery.
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2.3Valuation.—2.3.1 On 20th March 1978, the Strathclyde Regional Assessor issued a Valuation Notice stating the Company as owners, the Company as occupiers, and a Net Annual Value and rateable value of £1,216,000, effective from 1st April 1978.—2.3.2 This Net Annual Value has been arrived at by an application of the Contractors' Principle of valuation.—2.3.3 By agreement, the Net Annual Value has been amended to £1,180,000 subject to 2.3.5 below.—2.3.4 The rateable value is in dispute.—2.3.5 Parties are agreed that the amended NAV £1,180,000 is correct subject only to a dispute as to (1) the appropriate index to be used for the purposes of updating costs; and (2) the appropriate decapitalisation rate; and that any dispute on these matters would be resolved by the parties after consideration of the ultimate decision in the case of Distillers Company (Bottling Services) Ltd. v. Assessor for Fife.
3. 20″ Pipeline
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3.1Subject Description.—3.1.1 The pipeline consists of an underground steel pipeline 20″ internal diameter.—3.1.2 It runs a distance of some 58 miles continuously from the terminal to the refinery's tank farm at Kinneil through lands not...
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