Commissioners for Customs and Excise v Zielinski Baker and Partners Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Aldous,Lord Justice Tuckey,Lord Justice Rix |
| Judgment Date | 17 May 2002 |
| Neutral Citation | [2002] EWCA Civ 692 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 May 2002 |
| Docket Number | Case No: A3/2001/1003 |
[2002] EWCA Civ 692
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE ETHERTON
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Aldous
Lord Justice Tuckey and
Lord Justice Rix
Case No: A3/2001/1003
Mr John Walters QC and Mr Philip Brunt (instructed by Wallace & Partners) for the Appellant
Mr Paul Lasok QC and Mr Paul Harris (instructed by Solicitors for Customs & Excise) for the Respondent
The appellant Zielinski Baker & Partners Limited appeal with leave of this Court against the order of Etherton J of 9th May 2001 which allowed the Commissioners of Customs & Excise's appeal against the decision of the Birmingham VAT and Duties Tribunal of 4th July 2000.
The dispute arises from part of an assessment for VAT raised by the Commissioners amounting in total to £32,639.31. The appellants appealed against that assessment contending that the relevant work was zero-rated as it constituted approved alterations to a listed building.
The factual background to the dispute can be derived from the facts as found by the Tribunal.
"6. Mere Court ("the House") was erected in about 1830 as a dower house for a much large[r] estate. It is a listed building. It is a large two storied house facing west. The front and the north and the south facing sides are built of red brick and are covered with stucco, the back of the house being built of sandstone. Slate and timber are also used throughout the construction. The northern side of the house (i.e. the left as one faces it) incorporated a wing for servants, now occupied as separate dwellings.
7. To the rear of the house and touching the east/south corner is the beginning of a wall, approximately 9 feet high and 15 feet long. The wall runs eastwards, i.e. directly away from and at right angles to the back of the house. The wall was built at the same time as the house and was also built of sandstone. The far end of the wall touched into the outbuilding which is central to this dispute. The wall does not have and indeed never did have any structural purpose and was described by Mr Dutton in his evidence as aesthetic.
8. The outbuilding was also built of sandstone at the same time as the house. It was in essence a long narrow building, its long sides facing east and west and the wall therefore linked into the corner between the long west wall and the short northern wall. I was shown an extract from an 1885 ordinance survey map. This clearly showed the house, the wall and the out building and there was also pointed out to me another outbuilding since demolished because it was unsafe which had been built directly behind the house and parallel to it, the short southerly wall of which ran along side the northern wall of the disputed outbuilding. There was therefore in effect a courtyard at the back of the house formed by the back wall of the house, the back of the servants' quarters on its left, the now demolished outbuilding at the top and the wall on its right-hand side.
9. In 1945 Mr Dutton's father, Mr Arrowsmith, took over the tenancy of Mere House and from it farmed about 1,800 acres. He purchased the house in 1954 and continued to live there with his wife and family until his death. After his death, Mrs Arrowsmith continued to live in the house which was eventually sub-divided into three self contained units of which she occupied the largest and the other two were tenanted. The tenancies fell in and in 1984 Mr and Mrs Dutton purchased the property from Mrs Arrowsmith and the house was returned to one single residential unit, Mrs Arrowsmith moving out to the newly constructed bungalow in the grounds when it was ready for her occupation.
10. The outbuilding appears to have had various uses over the years. In its early years it was used as a tack room, it stabled the family's horses and housed the family's carriage. It also housed the scullery. In 1945 for about 12 months, a Romanian refugee lived in the scullery until he met and married an English girl and this is the only known residential use of the building. At the time of the Dutton's purchase, the outbuilding was divided up. A part of it was used as a garage in which Mrs Arrowsmith garaged her car, a part of it was a tack room which I understand was used for storage and the old scullery was used as a laundry and to house her freezer. There was also a potting shed attached.
11. As far as Mr Dutton knew mains water and electricity had been run to the outbuilding ever since they were introduced to the house and from the same common supply. Gas had not been supplied to the outbuilding until recently when it was supplied as part of the conversion. Before mains water was available the house and outbuildings were both supplied from a series of wells.
12. When the Duttons purchased the property, application was made on their behalf by the Appellants for permission, inter alia, to construct an indoor swimming pool and convert the outbuilding into changing and games facilities. Because the swimming pool was going to extend quite extensively beyond the outbuilding, permission was also sought and granted to take down two trees which had been situated immediately behind the scullery. Because the house was a listed building and the outbuilding was within its curtilage, listed building consent was necessary for the proposed works and this was granted on the 30th August 1995, consent being given to "construction of indoor swimming pool and conversion of existing barn into changing and games facilities together with detached garage at The Mere, Bedford Road, Little Houghton."
13. I was shown a plan of the new complex which is a two storey structure consisting of a billiard room, plant room and changing room on the ground floor with a games room overhead. Attached is a single-storey area housing the swimming pool.
14. The linking wall between the house and the building remained, as it had always stood, although some renovation to it has had to be done, and specifically what had been just an opening in the wall in 1994 had a gate inserted into it. It should be noted that the opening did not go to the top of the wall and did not form any break in it. A cornice was also added over the gateway to match the house."
It was not in dispute that the House was a listed house and that what was called the "outbuilding" fell within its curtilage such that it was protected under the Planning (Listed Buildings and Conservation Areas) Act 1990. The basic contention of the appellants was and is that in those circumstances the cost of the work done on the outbuilding was zero-rated having regard to section 30 of the Value Added Tax Act 1994 as amended. That submission found favour with the Tribunal, but was rejected by the judge.
Section 30 of the Act provides that where supplies, goods or services are zero-rated, no VAT shall be charged. Subsection (2) states that a supply of goods or services is zero-rated if the goods or services are of a description specified in schedule 8.
Schedule 8 contains 8 Groups of which Group 6 relates to protected buildings. The relevant parts of that Group are in these terms.
"GROUP 6—PROTECTED BUILDINGS
Item No
1 The first grant by a person substantially reconstructing a protected building, of a major interest in, or in any part of, the building or its site.
2 The supply, in the course of an approved alteration of a protected building, of any services other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.
3 The supply of building materials to a person to whom the supplier is supplying services within item 2 of this Group which include the incorporation of the materials into the building(or its site) in question.
Notes:
(1) "Protected building" means a building which is designed to remain as or become a dwelling or a number of dwellings (as defined in Note (2) below) or is intended for use solely for a relevant residential purpose or a relevant charitable purpose after the reconstruction or alteration and which, in either case, is—
(a) a listed building, within the meaning of—
(i) the Planning (Listed Buildings and Conservation Areas) Act 1990; or
(ii) …
(iii) …
(b) a scheduled monument, within the meaning of —
(i) the Ancient Monuments of Archaeological Areas Act 1990; or
(ii) ….
(2) A building is designed to remain as or become a dwelling or number of dwellings where in relation to each dwelling the following conditions are satisfied—
(a) the dwelling consists of self-contained living accommodation;
(b) there is no provision for direct internal access from the dwelling to any other dwelling or part of a dwelling;
(c) the separate use, or disposal of the dwelling is not prohibited by the terms of any covenant, statutory planning consent or similar provision,
and includes a garage (occupied together with a dwelling) either constructed at the same time as the building or where the building has been substantially reconstructed at the same time as that reconstruction.
(3) Notes (1), (4), (6), (12), to (14) and (22) to (24) of Group 5 apply in relation to this Group as they apply in relation to that Group but subject to any appropriate modifications.
(4) …..
(5) …..
(6) "Approved alteration" means—
(a) …
(b) …
(c) in any other case, works of alteration which may not, or but for the existence of a Crown interest or Duchy interest could not, be carried out unless authorised under, or under any provision of—
(i) Part 1 of the Planning (Listed Buildings and Conservation Areas) Act 1990,
(ii) …
(ii) …
(iv) …
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