Chilton-Merryweather (Listing Officer) v Hunt

JurisdictionEngland & Wales
JudgeLord Justice Rix :,Lord Justice Dyson,Lord Justice Waller
Judgment Date19 September 2008
Neutral Citation[2008] EWCA Civ 1025
Docket NumberCase No: C1/2008/0185
CourtCourt of Appeal (Civil Division)
Date19 September 2008

[2008] EWCA Civ 1025

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM ADMIN COURT

MR JUSTICE COLLINS

[2007] EWHC 3190 (Admin)

Before:

Lord Justice Waller

Lord Justice Rix and

Lord Justice Dyson

Case No: C1/2008/0185

Between
Chilton-Merryweather
Appellant
and
Hunt & Ors
Respondents

Mr T Mould QC, Daniel Kolinsky (instructed by solicitors for HM Revenue & Customs) for the Appellent

Mr T Buley (instructed by the Treasury Solicitor appeared as Advocate to the Court)

Hearing dates: 9 th July 2008

Lord Justice Rix :
1

Can the owner of a house next to a motorway apply for a reduction of council tax because traffic on the motorway, with attendant noise and pollution, has increased over the years so much that it has possibly reduced the value of his house to a lower tax band? That is essentially the issue raised by this appeal. In the semantic terms of the relevant statute the issue is whether the change in the volume of traffic (noise and pollution) is a “change in the physical state of the dwelling's locality” (see section 24(10) of the Local Government Finance Act 1992).

The facts

2

Four householders, Messrs Hunt, Bradley, Gibson and Crompton, live in bungalows on Winslow Road, Bolton, a street that runs parallel to the northern carriageway of the M61 motorway near to its junction 5. The motorway runs at an elevated level higher than the bungalows. The householders' evidence spoke of enhanced noise and pollution levels; of a sound barrier which had been promised but had not materialised because the department of transport had underestimated the costs; of resurfacing of the motorway to make it lighter on tyres and less noisy, but not on stretches close to the bungalows; of the inability to open windows because of noise and dust and of other difficulties of living close to the motorway. They were all of the opinion that there was increased traffic, noise and pollution levels and had requested that the valuation band of their properties for council tax purposes should be reduced. They said that properties for sale in their locality had only achieved sales after prices had been considerably reduced, by up to £60,000.

3

On behalf of the council tax listing officer, Mr Chilton-Merryweather, it was accepted that traffic had increased, but it was said that this was only an environmental change and not such a “physical change” as would justify a reduction of the houses' council tax under the legislation by reason of a “material reduction” in their value. It was common ground that there had been no alteration to the motorway itself, such as the addition of an extra lane. He had sympathy for the householders but had been required to reject their proposals, on the grounds that they were not validly made.

4

The householders had appealed from the listing officer's rejection of their claims to the Manchester North Valuation Tribunal which on 8 June 2006 had sat to hear their appeal. The tribunal's decision was in favour of the householders. The increase in traffic volume was accepted to be a physical increase. The noise pollution was measurable. The tribunal believed that the increased noise and pollution levels had caused a change in the physical state of the dwellings' locality and that that had impacted on the value of the dwellings. Therefore, the appeals would be relisted for the tribunal to consider and determine the issue of valuation and whether the bungalows' reduction of value was such as to require a change in their council tax banding. They warned the householders, however, that

“according to regulations, the value of a dwelling for Council Tax purposes is the amount a property would have sold for in the housing market of April 1991, taking account of the physical situation of the property and its locality as at the date of the proposal (March/April 2006).”

The appeal to the Administrative Court

5

The Council Tax (Alteration of Lists and Appeals) Regulations 1993, by its regulation 32, grants a further appeal to the high court, but only on a point of law. The listing officer's appeal came before Collins J, and this further appeal arises out of his judgment in favour of the householders, upholding the tribunal's decision. He said:

“I put in the course of argument…the situation dealing with roads where a local traffic management scheme resulted in traffic having to use what had hitherto been a relatively quiet route. The new traffic scheme resulted in a substantial increase in traffic and that had a damaging effect upon the values of the houses of those who lived in the particular road. Their locality, as a result of that new traffic management scheme, was changed for the worse. It seems to me that was entirely capable of falling within the expression “change in the physical locality of the dwelling” [sic, in fact “change in the physical state of the dwelling's locality”]. One must not forget that the purpose behind these provisions is to try to produce a fair valuation for the purposes of the payment of council tax. And if there has been a change which clearly affects the value of the property, it would seem consistent with the purpose behind the legislation that it should be possible to reduce in fairness to the individual taxpayer. He should not have to pay more than the amount based upon the present value of his dwelling. Of course, there have to be hurdles, there has to be a degree of limitation, and there are always likely to be some hard cases and some situations where it is not possible to take advantage of the provisions allowing for valuation. But I see no good reason to give a narrow construction to the relevant provisions unless it is clearly right that that should be done, particularly when to give such a narrow construction seems to me not to accord with the obvious purpose of the legislation.”

The statutory scheme

6

To understand the issues of statutory interpretation and policy debated on this appeal, it is necessary to set out something about the council tax scheme introduced by the Local Government Finance Act 1992 (the “1992 Act”) and its historical background.

7

The council tax replaced the ill-fated community charge or “poll tax” introduced by the predecessor Local Government Finance Act 1988 (the “1988 Act”). The 1988 Act had dealt with both non-domestic and domestic property: non-domestic property by means of a rating scheme based on units of rateable property, known as hereditaments, whose rateable value was made the basis of the ratepayer's liability to rates; and domestic property by means of the community charge, which was levied on a head-count, and not on the value of the dwelling in which the taxpayer resided.

8

Prior to the 1988 Act, rates were payable on both non-domestic and domestic property under the General Rate Act 1967 (the “1967 Act”). The basic scheme of rateable values under the 1967 Act was common to both non-domestic and domestic property. With the failure of the community charge, the 1992 Act which introduced the council tax for the purpose of the taxation of domestic property returned to the basic scheme of valuing individual properties by a common yardstick, in this case their capital value. Council tax in England is paid according to which of eight valuation bands, fixed by the statute, an individual dwelling falls into. Thus, in essence, council tax is payable by the resident of a chargeable dwelling on an annual basis and the amount of tax is based on the valuation band against which the dwelling is entered on the valuation list. That value and thus the appropriate valuation band are determined by listing officers in accordance with valuation principles prescribed by the 1992 Act and its regulations.

9

For the purpose of council tax, the valuation had to be done by reference to two dates, 1 April 1991 and 1 April 1993 (the “1991 date” and the “1993 date” respectively). The yardstick for valuation was fixed according to the open market price at which the dwelling might reasonably have been expected to have sold at the 1991 date, but the size, layout and character of the dwelling and the physical state of its locality, on the basis of which the 1991 date valuation had to be fixed, was to be taken as at the date of its actual valuation, which (broadly speaking) was in the run-up to and conventionally as at the 1993 date. In terms of the statutory language, the 1991 date valuation had to be made on the assumption that dwelling and locality were as they were at the date of actual valuation. Certain other assumptions also applied, such as that the dwelling was in a reasonable state of repair. The valuation list was then compiled on 1 April 1993 and came into effect on that day. The general effect of these provisions is that inspection and valuation are all done, within a tight time regime, in relation to the physical configuration of the dwelling and the physical state of the locality, but by reference to certain conventional yardsticks, such as a common assumption that the dwelling is in a reasonable state of repair, and, importantly, a common “bible” of market values as of a single day, 1 April 1991.

10

The statutory regime also contemplated possible challenges to and alterations of the listed valuations. A challenge by an existing taxpayer essentially on the basis that a dwelling had been wrongly valued and banded could only be made during a period of approximately 8 months ending on 30 November 1993. If a new taxpayer buys a dwelling, he or she is entitled to challenge the valuation, but only within a period of six months of becoming the taxpayer...

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