W A P Fyfe V. Assessor For Fife
| Jurisdiction | Scotland |
| Judge | Lord Doherty,Lord Clarke,Lord Justice Clerk |
| Neutral Citation | [2011] CSIH 78 |
| Docket Number | XA77/11 |
| Court | Court of Session |
| Date | 22 November 2011 |
| Published date | 05 December 2011 |
| LANDS VALUATION APPEAL COURT, COURT OF SESSION | |
| Lord Justice Clerk Lord Clarke Lord Doherty | [2011] CSIH 78 XA77/11 OPINION OF THE LORD JUSTICE CLERK In the Appeal by Stated Case by W A P FYFE Appellant; against ASSESSOR FOR FIFE Respondent: _______ |
Alt: Stuart QC; Simpson & Marwick
22 November 2011
Introduction
[1] This is an appeal against a decision of Fife Valuation Appeal Committee (the Committee) relating to the entry in the 2005 Valuation Roll for subjects known as Fife Off-Road Centre, Kinkell Farm, St Andrews.
[2] At the 2005 Revaluation the assessor entered the subjects in the Roll as "Land and Buildings" at an NAV/RV of £2,400. With effect from 1 June 2006 the assessor amended the entry by substituting a NAV/RV of £4,300. This reflected the occurrence of a material change of circumstances.
[3] With effect from 1 April 2009 the assessor amended the entry by substituting an NAV/RV of £25,400 to reflect a further material change of circumstances. The assessor calculated this valuation on the contractor's principle.
[4] The appellant appealed against the amendment. He did not dispute that there had been a material change of circumstances; but he contended that the subjects should be valued on the comparative principle at an NAV/RV of £7,600.
[5] The Committee decided that a valuation on the contractor's principle was appropriate. It upheld the assessor's valuation and refused the appeal. That is the decision appealed against.
The history
[6] When the land and buildings at Kinkell Farm were in agricultural use, they were exempt from being entered in the roll. In 2001 the appellant carried out a farm diversification project in which he developed part of the farm for off-road driving and quad biking. The entry at the 2005 Revaluation related to the off-road track and to a former cottage that had been converted into a reception building.
[7] The amendment to the Roll in 2006, which added £1,900 to the net annual value, reflected the addition of a toilet block. It resulted from an inspection carried out on behalf of the assessor. At that time the assessor understood that the toilet block was erected to support the off-road track and the corporate events that were being held there. The assessor was not aware that since April 2003 the byre had been used as a function suite known as "Kinkell Byre" and that the toilet block principally served the function suite. When the byre was seen from the outside there was nothing to indicate that it was not in agricultural use. Speaking of this inspection, the assessor's valuer, Mrs Heather Honeyman, told the Committee -
"I would like to make it quite clear that when we went there in 2006, we did not go round what is the function suite, and we didn't go into the storage area. What was visited at that time and what was shown at that time was the toilet block."
It is regrettable that on that occasion the use of the byre as a function suite was not brought to Mrs Honeyman's attention.
[8] In 2008 the appellant applied for and obtained planning permission to use the byre for functions. That brought the true position to the assessor's notice. The assessor thereupon amended the entry in the Roll to reflect the addition to the subjects of byre areas 1 to 6 and two storage areas, one of them on a mezzanine floor. These constituted the function suite. The Byre has a floor area of over 12,000 sq ft.
Methods of valuation
Valuation principles
[9] In the assessment of the net annual value of lands and heritages under section 6(8) of the Valuation and Rating (Scotland) Act 1956 the primary evidence of value is the rent passing. Where the subjects are not let, certain indirect methods have to be used to arrive at the net annual value. The principal method is the comparative method. By this method the subjects can be compared with other let properties that are similar in character, size and location. Where there is no suitable evidence of rents, the assessor can have recourse to the values of comparable subjects that are entered in the roll (Armour, Valuation for Rating, 5th ed, paras 19-28ff). It is preferable to compare subjects in the same valuation area (ibid, para 19-34). Certain subjects are valued on the revenue principle; but that has no relevance to this case and I need say no more about it.
[10] Where no proper comparisons are available, and the revenue principle is inapplicable, the valuer must resort to the contractor's principle (Post Office v Ass for Fife Region 1981 SC 214, Lord Avonside at p 223). This rather contrived method proceeds on the theory that a tenant would not pay more in rent than the annual cost of finance to build similar premises. Using this method the valuer first assesses the capital value of the subjects. Then he applies to that figure a decapitalisation rate to arrive at the annual cost of the capital required. This method has been repeatedly described as a method of last resort (eg Shotts Iron Co v Ass for Edinburgh 1946 SC 283, Lord Keith at p 295; Post Office v Ass for Fife Region, supra; Western Heritable Investment Co Ltd v Husband 1983 SC (HL) 60, Lord Keith of Kinkel at p 74).
Valuation schemes
[11] Licensed premises are valued by a scheme of the Scottish Assessors' Association (SAA). The Scheme is revised at each revaluation (Belhaven Brewery Group v Glasgow City Ass 2003 SC 395, para [16]). It is based on turnover adjusted for certain specific features (cf Ass for Lothian v Belhaven Brewery Co Ltd 2009 SC 120, Lord Justice Clerk Gill at para [4]).
[12] Halls too are assessed in accordance with an SAA scheme (cf SAA Practice Note 17, Revaluation 2005, Valuation of Halls, etc). The scheme applies to ten categories of premises, such as Hall (meeting, concert, exhibition); Community hall; Masonic hall and Community centre (for meetings, recreation, exhibitions). The Note includes recommendations for the valuation of the subjects listed "together with any other subjects of comparable character and use (where there is no bar or table licence or where commercial usage is not the reason for provision)." This scheme applies the contractor's principle to assess net annual value. Therefore the calculation of a percentage of income is irrelevant to it. The Planning Note also advises on the making of allowances for age, obsolescence and so on.
The facts
The subjects
[13] Kinkell Byre is a substantial building of traditional construction. It extends to over 12,000 square feet. The appellant hires it out for ad hoc events such as wedding receptions, discos, ceilidhs and the like. For this purpose he has installed a semi-permanent wooden floor in the dancing area. The hirer has freedom to organize all aspects of the event. It is left to the hirer to arrange his own catering. Kinkell Byre is not licensed for the sale of liquor. The hirer can either employ caterers who can obtain an occasional licence; or engage the appellant to obtain a licence for the event and operate the bar. The Byre is a licensed venue for civil weddings.
[14] After the Byre was opened in 2003, the lack of adequate toilet facilities was a deterrent to some customers. Therefore in 2006 the appellant built toilets appropriate for the size of the venue.
[15] The appellant's income from the Byre consists only of the receipts from hires. The turnovers of the Byre in the years 2003 to 2008 were £23,800; £22,700; £25,232; £27,912, £57,876 and £87,049 respectively.
The comparisons
[16] The appellant's valuer, Mr Calum Innes, relied on two comparisons, Fingask Pavilion, Rait, Perth and Glentanar Ballroom, Aboyne. Fingask Pavilion is a permanent marquee, of about half the size of Kinkell Byre, installed at Fingask Castle. The Committee found that the Assessor for Tayside had valued it on the contractor's principle. However, Mr Innes had obtained figures for turnover in the years 2004 to 2006,...
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