British Transport Commission v Hingley
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HOLROYD PEARCE |
| Judgment Date | 16 February 1961 |
| Judgment citation (vLex) | [1961] EWCA Civ J0216-3 |
| Docket Number | LVC/1109/1958 |
| Court | Court of Appeal |
| Date | 16 February 1961 |
[1961] EWCA Civ J0216-3
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Holroyd Pearce,
Lord Justice Harman and
Lord Justice Davies.
In the Matter of the Local Government Act, 1948
In the Matter of the Rating and Valuation Acts 1925 to 1957
In the Matter of an Appeal from the Lands Tribunal.
THE SOLICITOR-GENERAL (Sir Jocelyn Simon, Q.C.) and Mr ALAN S. ORR (instructed by The Solicitor of Inland Revenue) appeared on behalf of the Appellant Valuation Officer.
Mr ALAN S. ORR (instructed by the Town Clerk and Solicitor, Grimsby Corporation) appeared on behalf of the Appellant Corporation.
Mr PATRICK BROWNE, Q.C., Mr HAROLD HARNHAM and Mr CHARLES FAY (instructed by Mr M.H.B. Gilmour, Chief Solicitor, British Transport Commission) appeared on behalf of the Respondents.
: The Judgment I am about to deliver is the Judgment of the Court.
This is an appeal by the Valuation Officer and the Grimsby Corporation from a decision of the Lands Tribunal in respect of the assessments of two hered it aments comprising the Grimsby Docks which are part of the undertaking of the British Transport Commission.
It raises the question whether a profits basis of assessment should be applied to these hered it aments, and if so how it should be applied. If it is to be applied In the normal form, the result must be a nil assessment, for the Docks have consistently made large losses for many years past, and the parties were agreed that a valuation on the normal profits basis produces a substantial deficit.
The Local Valuation Court ordered the two hered it aments to be entered respectively at net annual value £6,177 (with rateable value £1,562) in the Grimsby County Borough and net annual value £70 (with rateable value £11) in the adjoining Borough of Cleethorpes. The Local Valuation Officer had caused the hered it aments to be entered at those figures. No basis for those figures was put forward, and no evidence was given by the Local Valuation Officer to support them.
The Lands Tribunal allowed the appeal from the decision of the Local Valuation Court, and reduced the assessments to nil. The Solicitor-General for the appellant argues that such a decision cannot be right. These docks, he argues, are a large industrial enterprise. They have had some millions of capital spent on them; they extend over some hundreds of acres they employ directly 1,000 persons, and have many others dependent on the enterprise. They must surely, he urged, make some contribution to the rates from which the enterprise draws inter alia the benefits of so wage and lighting, and education for the children of its employees.
It was admitted by the Chief Estate and Rating Surveyor for the British Transport Commission that the prosperity of the town is bound up with the port, that it was unthinkable that the docks would be allowed to close down, and that if the Commission did not operate them somebody would be required to do so. The same witness said that he would not complain of the Local Valuation Officer's assessments totalling £6,247 if the strict profits basis were not applicable, but that this was not a view based upon any matter of method or indeed valuation, and involved the assumption that the loss at Grimsby was not brought into valuation.
The first of the docks was constructed in 1852, and the most recent In about 1930. The hered it aments have always been Railway Docks. Under the 1926 Scheme they were grouped with London & North Eastern Railway, and they were nationalised in 1947.
Certain properties on or near the docks and within the hered it aments are lot out by the Commission at rents totalling about £80,000. Those properties are separately assessed, and have little relevance to this case save that it was argued before the Lands Tribunal that their existence created a moral or legal duty on the Commission to keep the docks open because of those lettings. But we cannot think that such a duty exists. It was not argued that these receipts ought to be set off against, or absorbed in, the losses of the rest of the dock undertaking.
It was conceded that the dock undertaking was properly treated as a separate undertaking, that being the method that the Revenue has applied to other docks. The dock is in fact a part of the undertaking of the British Transport Commission which by, section 3 (4) of the Transport Act 1947 forms one undertaking. That one undertaking is to be so conducted "as to secure that the revenue of the Commission is not less than sufficient for making provision for the meeting of charges properly chargeable to revenue taking one year with another". Any loss made by the Commission was met, we are told, by loans first from the Bank and latterly by the Exchequer. These loans at all material times were theoretically repayable by the Commission (see Transport (Railway Finance) Act 1957). It is not, therefore, strictly correct to say that any losses are made good by the taxpayer, though in the end the taxpayer will probably have to assume liability for the loans to the Commission.
The Commission has by section 25 (1) (e) of the Transport Act 1953 a general duty to "provide port facilities in such places as may appear to be expedient…… due regard being had as respects all the services and facilities to efficiency economy and safety of operation and to the needs of the public, agriculture, commerce and industry". It continues to maintain these docks, albeit at a loss, because no doubt in the light of the above mentioned matters it appears to it expedient to do so.
The hered it aments were entered in the third quinquennial roll under the Railways (Valuation for Rating) Act 1930, section 3, at 56,000, and there was later an addition of 5247 in respect of a new export shed at the docks. The figure of 56,000 does not, however, have any contemporary significance since it was apparently computed on a profits basis from the traffic receipts over the whole London & North Eastern Railway between 1936 and 1941 (see sections 4, 5 and 6) apportioned according to an apportionment scheme under sections 6 and 13. Moreover it was not a Valuation of the docks as a separate entity, but was an apportioned part of the value of the whole railway undertaking.
This value of £6,247 was apparently the sole foundation for the Rating Valuation Officer's present figure of 56,247, divided between the two hered it aments into two sums of 56,177 and 570. No particulars or computations in support of such valuations were lodged under Rule 10 (3) of the Lands Tribunal Rules. In the absence of evidence to support those figures they can claim no merit save that the Commission's witness, while contending that they were wrong, conceded that he would not complain of them.
The Lands Tribunal decided that there were no special circumstances justifying a departure from the profits basis. In accepting that basis it said "We find no unreality in deciding that a tenant might be found who either for moral, social or statutory reasons would accept liability for running the docks, but would not be prepared to pay any rent". And again it concluded: "It has been argued that the boundaries of the docks are arbitrary; that the accounts are largely an inter-departmental matter; that the railways benefit from dock traffic, and that any loss in running Grimsby Docks is made up from other sources within the Commission, but it seems to us that all these and other similar matters would have received full consideration following the decision of the Court of Appeal in the Manchester Ship Canal case, and we do not think that they can be held to be special circumstances such as to invalidate the use of the profits basis.
"We think that the British Transport Commission or possibly some other body viewing the docks vacant and to let would be willing to enter into a tenancy, and when deciding upon the rent would know that for many years the docks had been run at a loss; they would be aware that a profits valuation produced a substantial deficit before any allowance for tenants share; they would know that part of the income arose from rents from properties so let out as to be capable of separate assessment, and that the prosperity of the tenants of those properties depended largely upon the docks; they would realise the size and importance of the docks, but they would also consider that the loss in operating was such that they would not be justified in offering anything as rent, and we believe that the landlord would accept such an offer knowing that the docks would be operated and kept in good order".
That question of railway bone fit from dock traffic was dealt with somewhat cursorily, no doubt for the following reason. Immediately after hearing the present case (and before giving their decision upon it) the same Tribunal heard an appeal concerning the immingham Docks which lie a few miles away from Grimsby Docks and are also part of the Commission's undertaking. The Immingham Docks showed a profit on accounts drawn on a like principle as Grimsby, and the Revenue there put forward a valuation on a profits basis, and there was in that case an investigation of figures in relation to railway benefit from Dock traffic. But in the present case the Solicitor-General did not investigate such figures in cross-examination, since the loss on those Docks was so great that obviously no cross-examination on figures could turn the loss into a profit; this argument was directed to excluding the profits basis on principle.
The sole statutory authority for the valuation of a hered it ament is contained in section 22 (1) (b) of the Rating and Valuation Act 1925 which provides that...
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