Decision Nº RA 24 2010. Upper Tribunal (Lands Chamber), 11-06-2012
| Jurisdiction | UK Non-devolved |
| Judge | George Bartlett QC President |
| Date | 11 June 2012 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | RA 24 2010 |
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UT Neutral citation number: [2012] UKUT 165 (LC)
UTLC Case Number: RA/24/2010
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
RATING – hereditament – whether two floors in modern office block to be entered as single hereditament though separated by other floors – held they were – valuation – end allowance – whether allowance to be made to reflect disadvantage of separation – held no evidence to justify this – appeal allowed in part
IN THE MATTER OF AN APPEAL
FROM A DECISION OF THE VALUATION TRIBUNAL FOR ENGLAND
by
Re:Tower Bridge House
Level 2 and Level 6
St Katherine’s Wa
London E1 1AA
Before: The President
Sitting at: 43-45 Bedford Square, London WC1B 3AS
on 15 May 2012
Daniel Kolinsky instructed by HMRC Solicitor for the appellant
The ratepayer did not respond to the appeal
The following cases are referred to in this decision:
Gilbert (VO) v S Hickinbottom & Sons Ltd [1956] 2 QB 40
Coppin (VO) v East Midlands Airport Joint Committee [1971] RA 449
Ladies Hosiery and Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679
British Railways Board v Hopkins (VO) [1981] RA 328
Baker (VO) v Citibank NA [2007] RA 93
Trunkfield (VO) v Camden London Borough Council [2011] RA 1
The following further cases were referred to in argument:
University of Glasgow v Assessor for Glasgow 1952 SC 504
Rennick (VO) v Weathershields Ltd (1957) 8 RRC 185
Rank Xerox (UK) Ltd v Johnson (VO) [1987] RA 139
Burn Stewart Distllers Plc v Lanarkshire Valuation Joint Board [2001] RA 110
Skerritts of Nottingham Ltd v Secretary of State for the Environment, Transport and the Regions [2001] QB 59
Martin v Hewitt (VO) [2003] RA 275
Winchester City Council v Handcock (VO) [2006] RA 265
Allen (VO) v Mansfield District Council [2008] RA 338
Orange PCS Ltd v Bradford (VO) [2004 RA 61
DECISION
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This appeal by the valuation officer, to which the ratepayer does not respond, concerns two floors in a modern city office block which are not next to each other but are in the same occupation. The VO had entered them in the rating list as separate hereditaments, but the Valuation Tribunal for England determined that they should be entered as a single hereditament and that an end allowance should be given to reflect the disadvantage of their separation within the building. The VO contends that the decision was in error in both respects. He says that the two floors are two separate hereditaments and that there is no evidence to justify an end allowance.
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Tower Bridge House is a modern 8-storey office building, which was completed in 2005. Although in Tower Hamlets it is on the opposite side of the road from the Tower of London and thus effectively serves a City of London office function. In plan form it is in the shape of an extended “U”. The open space between the three inner sides of the building consists of a glass covered atrium with a central lift shaft housing six high speed lifts that serve six floors of the building. On the first floor there is a common reception area that provides security for the entire building. On the ground floor there are restaurants and there are seven floors of offices above. The solicitors Reynolds Porter Chamberlain have offices on levels 1, 3, 4 and 5, the accountants Mazar LLP on levels 2 and 6, which are the subject of the present appeals, and there are two occupiers of space on level 7. The floorplate of levels 2 to 6 is about 2,400 sq m net, although there are small differences between levels. Mazar hold the two floors under separate leases dated 24 June 2007. Each is for a 15 year term with effect from May 2007. The rent for level 2 was £1,008,422.50 per annum and the rent for level 6 was £1,053,010 per annum, and there are five yearly reviews.
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In the 2005 rating list there were separate entries for the Reynolds Porter Chamberlain offices on level 1, for each of the levels occupied by Mazar and for each of the two occupancies on level 7. Levels 3, 4 and 5 were entered as a single hereditament. A rate of £250 per sq m was applied to all levels, but the hereditament consisting of levels 3, 4 and 5 was accorded an end allowance for size of 6.25%. Level 2 was entered at £600,000 with effect from 24 August 2006 and level 6 at £605,000 with effect from 26 November 2007. On 10 February 2010 Paul Rabbette Ltd made a proposal on behalf of the ratepayer to merge the two entries with effect from 26 November 2007. It was this proposal that was the subject of the appeal before the VTE.
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The ratepayer’s case before the VTE was that, although the levels occupied by them were separated, there was a functional dependency between them and they therefore ought to be entered as a single hereditament with effect from 26 November 2007 when they had begun to occupy the two floors. It was contended that there should be an end allowance for fragmentation of 10%.
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In dealing with the question whether the two floors should be entered as separate hereditaments or as a single hereditament the Tribunal referred to Gilbert (VO) v S Hickinbottom & Sons Ltd [1956] 2 QB 40, placing reliance in particular on the first and third “general rules” in the judgment of Denning LJ: that where two or more properties within the same curtilage are in the same occupation they are as a general rule a single hereditament; and that where two properties are separated by a public highway, they may form a single hereditament if they are so essential in use the one to the other that they should be regarded as one single hereditament. In the light of this the tribunal considered that it should address itself to the questions whether the two floors were within the same curtilage and whether there was an essential functional link between them. In relation to the first question it said:
“33. In seeking to establish whether the premises are two or more properties within the same curtilage and in the same occupation, the Panel considers that the Tower Bridge House development is contained within a single curtilage. It is the Panel’s view that the ‘curtilage’ contains the two floor levels. It considers that the structure of the building provides a visible enclosure around the development which included the two levels in question.
34. While the Panel accepts that level 2 and level 6 are linked by the high speed lift it remains satisfied that they are separate floors. However, in terms of the occupation of both levels which form the appeal entries, the Panel is satisfied that they are in the ‘same occupation’”…
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In relation to the second question that the tribunal considered that it should address it said:
“42. In determining the question of an essential functional link, the Panel notes the Valuation Officer’s analysis of the case law and contentions that Mr Rabette had not demonstrated the existence of an essential functional connection between the operations carried on by the appellant on the two floors. In particular, the Panel notes the Valuation Officer’s opinion that the link was merely one of convenience.
43. However, the Panel considers that these views and contentions are based on case law in respect of primarily manufacturing premises, which in the case of Gilbert is now more than 50 years old. It is the Panel’s view that the criteria for the test of ‘functionally essential’ should not be restricted to manufacturing processes but should also be adapted to reflect the modern era of service industries which also have ‘processes’ in creating service products. As such, the Panel considers that the Valuation Officer is contending for a degree in the level of necessity which is too high for non-manufacturing premises in the modern era.
44. The Panel considers that the appellant has demonstrated that there is a link between the floors which is essential to the efficiency of the working of Mazars’ overall service-provision business. While the Panel accepts that it was presented with no evidence that Mazars would cease to operate if it did not occupy the two floors at Tower Bridge House, it considers that the function carried out between the two levels, as described earlier, are sufficiently integrated that they are essential to the effective business as a whole.
45. It is the Panel’s view that, while the actual layout of occupation is, to use the Valuation Officer’s term, ‘convenient’ to Mazarss, the evidence presented by the appellant indicated that the occupation of the accommodation provided by the two floor levels went beyond ‘convenience’ but was essential to the efficient operation and functioning of the business operated by the company.
46. Therefore, the Panel accepts the appellant’s contention that there is a sufficient degree of propinquity and an essential functional link between the two floors. Thus, the Panel also finds that on the...
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