Decision Nº RA 46 2011. Upper Tribunal (Lands Chamber), 10-11-2014
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS Martin Rodger QC, Deputy President |
| Date | 10 November 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | RA 46 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2014] UKUT 0458 (LC)
UTLC Case Number: RA/46/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
RATING – hereditament - whether food processing centre operated from two buildings separated by public highway one hereditament or two – rateable as one hereditament – appeal dismissed - valuation – basic rate – relative value of first floor production and storage space – fragmentation allowance - assessment reduced
IN THE MATTER OF AN APPEAL FROM A DECISION OF THE VALUATION TRIBUNAL FOR ENGLAND
BETWEEN NICOLA JANE JOHNSON (VO) Appellantand
H & B FOODS LTD Respondent
Re: 32 & 44-54 Stewarts Road,
London SW8 4DR
Before: Martin Rodger QC, Deputy President and A J Trott FRICS
Sitting at: The Royal Courts of Justice, Strand, London WC2A 2LL
on
6-7 October 2014
Sarabjit Singh, instructed by the solicitor to HMRC, for the appellant
Richard Glover QC, instructed by the Jones Granville, for the respondent
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Vtesse Networks Limited v Bradford (VO) [2006] EWCA Civ 1339
Gilbert v Hickinbottom & Sons Limited [1955] DRA 49 (LT)
Gilbert v Hickinbottom & Sons Limited [1956] 2 QB 40 (CA)
Re the Appeal of Woolway (VO) [2012] UKUT (LC) 165
Woolway (VO) v Mazars [2013] EWCA Civ 368
Rennick (VO) v Weathershields Limited (1957) 1 RRC 185
Rank Xerox (UK) v Johnson (VO) [1987] RA 139
The following further cases were referred to in argument:
Newbold (VO) v Bibby & Baron Ltd (1959) 4 RRC 345
Burn Stewart Distillers plc v Lanarkshire Valuation Joint Board [2001] RA 110
Catton & Co Ltd v Burge (VO) (1957) 1 RRC 343
City of Leicester v Burkitt (VO) (1958) 3 RRC 45
Rennick (VO) v Weathershields Ltd (1957) 1 RRC 185
Hughes (VO) v ICI Ltd (1959) 30 DRA 132
Pritchard (VO) v William Crawford & Sons Ltd (1959) 4 RRC 351
Wilkins (VO) v Matineaus Ltd (1959) 5 RRC 1
Butterley Co Ltd v Tasker (VO) (1961) 32 DRA 337
Redcar Welding Co v Mark (VO) (1961) 8 RRC 115
Scaife (VO) v Birds Eye Foods Ltd [1962] RA 47
Edwards (VO) v BP Refinery (Llandarcy) Ltd [1974] RA 1
Harris Graphics v Williams (VO) [1989] RA 211
Coventry and Solihull Waste Disposal Co Ltd v Russell (VO) [1998] RA 427
Re the Appeal of Evans (VO) [2003] RA 173
Trunkfield (VO) v Camden London Borough Council [2011] RA 1
Davidson Brothers (Shotts) Ltd v Lanarkshire Valuation Joint Board Assessor [2011] RA 360
Shearson Lehman Brothers Ltd v Humphrys (VO) [1991] RA 125
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H & B Foods Limited processes and distributes cheese from two buildings in Stewart’s Road, London SW8. The first issue in this appeal is whether the two buildings constitute a single hereditament for the purpose of rating, as the respondent contends, or whether they are two separate hereditaments, as the appellant valuation officer (“VO”) contends. If we find that the buildings are a single hereditament a second issue arises, namely, the rateable value of that single hereditament.
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The decision of the Valuation Tribunal for England dated 15 August 2011 was that the appeal premises at 44-54 and 60-62 Stewart’s Road, London SW8 4DF (“Number 44”) and at 32 Stewart’s Road (“Number 32”) should be merged and shown in the 2005 Rating List as a factory and premises with a rateable value of £290,000 effective from 1 April 2005.
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This appeal from the VTE’s decision has already been the subject of a decision by the Tribunal on a preliminary issue (see [2013] UKUT 0539 (LC)). By that decision the Tribunal (Sir Keith Lindblom, President and Mr A J Trott FRICS) determined that the appeal was to proceed as a de novo hearing. The Tribunal also permitted the parties to resile from a compromise which they had reached before the VTE hearing and by which they agreed that the rateable value of the appeal premises, assuming them to be a single hereditament, was £290,000.
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At the substantive hearing of the appeal the VO, Ms Nicola Jane Johnson BSc MRICS, was represented by Mr Sarabjit Singh of counsel and gave expert evidence in her own right. The respondent was represented by Mr Richard Glover QC who called Mr Gareth W Jones FRICS to give expert valuation evidence and Mr Nick Martin, the Managing Director of the respondent, and Mr Carlos Herrera, its chief engineer, to give evidence regarding the operation of the respondent’s business from the appeal premises.
The proceedings
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The premises occupied by the respondent, and which are the subject of the appeal, comprise two buildings, 32 Stewarts Road and 44-54 (including 60-62) Stewarts Road, London SW8.
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The respondent trades from the appeal premises as “The Cheese Cellar” and describes itself as a national wholesaler, processor and distributor of cheese, dairy products and speciality foods to the UK food service sector. It has occupied Number 44 since 1985 and acquired the site of Number 32 in 1995 before erecting the present building to suit the purposes of its own business. Both buildings were in the respondent’s freehold ownership until 2007 when they were the subject of a sale and leaseback arrangement.
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When compiling the 2005 Rating List the VO entered the appeal premises as two separate hereditaments. Number 44 was entered as “factory office and premises” with an initial rateable value of £270,000 with effect from 1 April 2005. Following an earlier appeal, this rateable value was subsequently settled by agreement with a reduction to £248,000 with effect from the same date. This settlement was agreed between Mr Jones and the VO then acting, and was analysed by the VO at a basic rate of £102.78 per m2.
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Number 32 was entered into the 2005 Rating List as “warehouse and premises” with an initial rateable value of £132,000.
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By a proposal dated 15 April 2008 the respondent proposed that the two hereditaments be merged with effect from 1 April 2005. The VO did not agree and the matter was referred to the VTE as an appeal against the refusal to amend the list. Before the appeal was heard by the VTE the parties agreed rateable values on alternative assumptions. On the basis that the premises were to remain in the list as two separate hereditaments they agreed rateable values of £248,000 and £132,000 for Numbers 44 and 32 respectively. In the event that the premises were to be merged as a single hereditament the parties agreed that a rateable value of £290,000 was appropriate.
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The VTE found that the two entries should be merged into a single assessment at the agreed rateable value of £290,000. The VO then amended the 2005 List with effect from 1 April 2005 to show the combined hereditament as a “Factory and Premises” at the agreed figure.
Issue 1: one hereditament or two?
Relevant legal principles
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It is the duty of the VO, imposed by section 41 of the Local Government Finance Act 1988 (“the 1988 Act”), to compile and maintain a local non-domestic rating list for each billing authority’s area every 5 years. Section 42 of the 1988 Act requires that each local non-domestic rating list must show all non-domestic hereditaments.
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In some of its most fundamental aspects, the law of rating is obscure and inaccessible. One such aspect arises from the omission of Parliament to provide a clear definition of the basic unit of assessment, the hereditament. Section 64(1) of the 1988 Act defines a hereditament as follows:
“A hereditament is anything which, by virtue of the definition of hereditament in section 115(1) of the 1967 Act [the General Rate Act 1967], would have been a hereditament for the purposes of that Act had this Act not been passed.”
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It is therefore necessary to look to section 115(1) of the General Rate Act 1967 for the appropriate definition. Unfortunately, that definition sheds little light on the problem, as it provides only that:
“‘Hereditament’ means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list.”
As Sedley LJ pointed out in Vtesse Networks Limited v Bradford (VO) [2006] EWCA Civ 1339 “the key to the apparently circular definition…. is that it assumes and relies on an existing fund of knowledge...
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