Garton v Hunter

We are here concerned with a caravan site known as the Kartello Tower Camp at Valton-on-the-Naze. The question is, what is the rateable value of the caravan site?

In 1958 the owner let 27.7 acres to Mr. Garton for seven years, starting at 1,000 and rising to 5,000 a year. Mr. Garton put on it 775 caravans. In 1962 there were negotiations thereby Mr. Garton was to use some five acres of that land for cars and recreational purposes, but, to make up for those 5 acres, the owner let him another five acres. So in 1962 Mr. Garton surrendered his existing lease (which had some three years to run) and took a. new lease of 33.1 acres for seven years at 3,000 for the first year and 5,000 for the following six years.

In order to ascertain the rateable value, we take the words of section 22(1)(b) of the Rating Act, 1925, which says that; "there shall be estimated the rent at which the hereditaments might reasonably be expected to let from year to year" on the terms there set out.

Before the Lands Tribunal, the ratepayer's valuer submitted that the value should be estimated on the "contractor's basis". He took the capital cost of the land and of erecting the buildings, and allowed a percentage on the capital cost. On that basis the ratepayer's valuer put the figure at 5,100. On the other hand, the Valuation Officer submitted that it ought to be estimated on the "profits basis". He imagined a tenant who was going to take the camp. Such a tenant would estimate his income and expenses, take off the tenant's share, and then find the rent which he would be willing to pay. On that basis the Valuation Officer put the figure at 8,700.

The Tribunal rejected both submissions. It said: "I do not think either of the valuations tendered is admissible". He went his own way. He started with the actual rent which was reservedin the 1962 lease. It was 5,000 a year. He adjusted it because he realised that the tenant had an existing lease (the 1958 lease) which had three years to run. In addition the tenant would have a right under the Landlord and Tenant Act, 1954, to a new lease at a rent which would be less than to a stranger, because the tenant had himself erected buildings on that land. The Tribunal started therefore with the rent of 5,000 a year in the 1962 lease. He added 750 a year for the surrender value, and arrived at a figure of 59750. Now there is an appeal to this Court.

The Tribunal relied on the well-known dictum of Lord Justice Scott in Robinson Brothers (Brewers) Ltd. v. Houghton and Chester-le-Street Assessment Committee (1937 2 K.B.) on pages 468 and 469, when he said: "Where the particular hereditament is let at what is plainly a rack rent or where similar hereditaments in similar economic sites are so let, so that they are truly comparable, that evidence is the best evidence, and for that reason is alone admissible; indirect evidence is excluded not because it is not logically relevant to the economic inquiry, but because it is not the best evidence". It is plain that Lord Justice Scott had in mind the old rule that a party must produce the best evidence that the nature of the case will allow, and that any less good evidence is to be excluded. That old rule has gone by the board long ago. The only remaining instance of it that I know is that if an original document is available in your hands, you must produce it. You cannot give secondary evidence by producing a copy. Nowadays we do not confine ourselves to the best evidence. We admit all relevant evidence. The goodness or badness of it goes only to weight, and not to admissibility. So I fear that Lord Justice Scott was in error. The dictum has been criticised before. In Honeyman & Co. Ltd. and Scottish Co-operative Wholesale Society Ltd. v. Fife Assessor in 1962 Rating Appeals at page 217, Lord Sorn said ha was not prepared to adopt the observations of Lord Justice Scott. And today Mr. Albery has felt unable to support the dictum. So we reject it. I would amend the dictum so as to say that, when the particular hereditament is let at what is plainly a rack rent or when similar hereditaments in similar economic sites are so let, so that they are truly comparable, that is admissible evidence of what the hypothetical tenant would pay; but it is not in itself decisive. All other relevant considerations are admissible. He considered all the cases on this subject in the Feachey Property Case, 1966, 1 Q.B., page 380, and pointed out that, in case after case, actual rent is no useful guide."The rent is only of use when it is a rent freely fixed in the market without a premium or any special condition. And even then you may find variations from one case to the next", in which case you look at comparable cases to form an opinion.

In the present case of a caravan site, there are no comparables. Caravan sites are usually occupied by the owner. They are not often let out to a tenant. We have only the rent of this particular site. And it was fixed in special circumstances because of the surrender of the previous lease. So it may not be of great use. And it would be wise to take other considerations into account, such as the figures reached on a- "profits basis'" or on a "contractor's basis". There is one case in the books where a caravan site was assessed on the profits basis. It was in 1957, Bailey and the Bognor Regis U.D.C., 1 Ryde's Rating Cases at page 288, and no one took exception to it.

In my opinion the Tribunal was wrong in limiting the enquiry to the actual rent and making adjustments to it. He should also have taken into account the estimates given by the opposing valuers on the "contractor's basis" and the "profits basis". From the sum of all the available material he should have come to an estimate of the sum which a hypothetical tenant would pay as rent for this caravan site.

Mr. Albery acknowledged that he could not support Lord Justice Scott's dictum2 but urged that the actual rent wasentitled to such great weight (as adjusted) that the other figures would have no influence on the result. I cannot go with that argument. It is plain that the Tribunal misdirected itself. The only thing we can do is to remit it to the Tribunal to reconsider having regard to our judgment. I would allow the appeal accordingly.

It is rightly conceded by counsel that the dictum of Lord Justice Scott upon which the Lands Tribunal relied cannot be supported in law. Relying on that dictum, the Lands Tribunal put aside the two valuations, one on a contractor's basis and the other on a profits basis, put forward by the parties, as being evidence that he was not allowed to look at having regard to the existence of the leases and, further, of course, the Lands Tribunal never resolved such criticism of those valuations as were offered by the opposing sides. Mr. Albery submits that although the Lands Tribunal admittedly erred in law in that regard, it could have made no difference to the ultimate estimation under the statute, for he says it would have been an error of law if the Lands Tribunal had, after considering those other two methods of valuation, attached any weight at all to either of them in light of the fact that there was in...