Metropolitan Water Board v Kingston Union Assessment Committee
| Jurisdiction | England & Wales |
| Judge | The Lord Chancellor,Lord Atkinson,Lord Carson,Lord Buckmaster,Lord Blanesburgh (read by Lord Carson) |
| Judgment Date | 29 January 1926 |
| Judgment citation (vLex) | [1926] UKHL J0129-2 |
| Date | 29 January 1926 |
| Court | House of Lords |
[1926] UKHL J0129-2
House of Lords
Lord Chancellor.
Lord Atkinson.
Lord Buckmaster.
Lord Carson.
Lord Blanesburgh.
After hearing Counsel for the Appellants, as well on Monday the 23d, as Tuesday the 24th and Thursday the 26th, days of November last, upon the Petition and Appeal of the Assessment Committee of the Kingston Union and the Overseers of the Poor of the Parish of Hampton, praying, That the Matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 29th of April 1925, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the Petition and Appeal of the said Assessment Committee of the Kingston Union and the Overseers of the Poor of the Parish of Teddington, praying, That the Matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 29th of April 1925, might be reviewed before His Majesty the King in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the Petition and Appeal of the said Assessment Committee of the Kingston Union and the Overseers of the Poor of the Parish of Hampton Wick, praying, That the Matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 29th of April 1925, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet (which said three Appeals were, by an Order of this House, of the 21st day of July last, ordered to be consolidated); as also upon the printed Case of the Metropolitan Water Board, lodged in answer to the said three Appeals; and Counsel appearing for the Respondents, but not being called upon; and due consideration had this day of what was offered for the said Appellants.
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Orders of His Majesty's Court of Appeal, of the 29th day of April 1925, complained of in the said Appeals be, and the same are hereby, Affirmed, and that the said Petitions and Appeals be, and the same are hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents, the Costs incurred by them in respect of the said Appeals, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
These appeals are concerned with the method in which the Metropolitan Water Board should be assessed for rating purposes in the Kingston Union.
The Board was incorporated by the Metropolitan Water Act, 1902, for the purpose of taking over, either for cash or for water stock to be issued by the Board, and carrying on the undertakings of eight Metropolitan Water Companies. The Board was to provide, by the creation of a sinking fund, for the redemption of the water stock within a period of 100 years from the 31st of March 1903, and was to pay interest on such stock until redemption. It was to supply water for domestic purposes within the limits of supply at a rate per annum which (under an amending Act of 1907) was not to exceed 5 per centum of the rateable value of the premises supplied; and any deficiency in its funds, whether for meeting the expenses of the undertaking or for paying or providing for the interest and sinking fund of the water stock, was to be levied by a deficiency rate. The Act of 1902 was further amended by the Metropolitan Water Board (Charges) Act, 1921; but as that statute did not apply to the assessment now in question, it is unnecessary further to refer to it.
The Board in due course took over the undertakings of the water companies and issued the necessary stock; and it now supplies water for domestic purposes throughout the limits of supply, which include not only the administrative county of London but also considerable parts of the counties of Middlesex, Surrey, Kent, Essex and Hertford.
From the establishment of the Board down to the year 1920 the rateable hereditaments belonging to the Board, which are scattered over many parishes and include waterworks, reservoirs, filter beds and main and service pipes, were assessed throughout the area of supply on what is known as the "profits basis," that is to say, upon a calculation based (in a manner to which I will refer later) on the profits earned by the whole undertaking; but in October 1920 the assessing authorities in the Kingston Union became dissatisfied with that method of assessment and claimed to make the assessments upon what is known as the "contractor's basis," that is to say, upon an estimate of what would be an adequate annual remuneration to a contractor for providing the rateable hereditaments of the Board in each parish without regard to the profits of the undertaking as a whole. The Board objected, contending that the profits basis should be adhered to, and in respect of the three Middlesex parishes in the Kingston Union (Hampton, Teddington and Hampton Wick) appealed against the rate to the Middlesex Quarter Sessions. The justices in Quarter Sessions confirmed the rate, subject to a Special Case which they stated for the opinion of the High Court; but on the argument of the Special Case a Divisional Court of the King's Bench Division upheld the contention of the Board and reduced the assessments accordingly, and that decision has been affirmed by the Court of Appeal. Hence the present Appeal.
It may be added that the question to be determined is one of principle only and not of figures; for it is expressly stated in the Special Case that "it was admitted or proved that if the method of assessment for which the appellants [the Board] contended was applied the assessment appealed against should be reduced to the amounts claimed by them, and if the method of assessment contended for by the respondents [the Assessment Committee] was applied, the assessment appealed against was right." But the figures at issue are large, for the effect of the decision of the High Court is to reduce the assessment of the Board (to take an example) in the parish of Hampton from 85,446 l. gross and 67,862 l. rateable to 52,220 l. gross and 34,220 l. rateable.
My Lords, the cardinal principle upon which hereditaments are by law assessable for rating purposes is still that which is set out in section 1 of the Parochial Assessments Act, 1836, and which requires the rate to be made "upon an estimate of the net annual value of the several hereditaments rated thereunto, that is to say, of the rent at which the same might reasonably be expected to let from year to year free of all usual tenants' rates and taxes and tithe commutation rentcharge (if any), and deducting therefrom the probable average annual cost of repairs, insurance and other expenses (if any) necessary to maintain them in a state to command such rent." But in applying that principle, so simple in appearance, to certain classes of hereditaments, great difficulties were encountered, and it was found necessary for rating experts and the Courts to have recourse to hypotheses of a more or less violent character. In particular, there was an obvious difficulty in applying the general principle laid down in section 1 of the Act to a water company or other body supplying water in a number of different parishes and possessed in those parishes of reservoirs, mains and other property necessary for the purposes of its undertaking. The mains and other works in any particular parish, taken by themselves, might conceivably produce no rent at all, for it is almost impossible to suppose that any person would wish to become the tenant of them; but the same hereditaments, if looked upon as part of a great undertaking extending over a large and populous area, might be quite indispensable to the undertakers (who must be regarded as possible tenants) and so might command an extortionate rent. In these circumstances it was desirable, in order that a fair assessment might be arrived at, to devise some formula which, while allowing a fair value to the hereditaments in each parish, would not compel the undertakers to pay rates on an aggregate sum exceeding the whole yearly value of their undertaking; and accordingly rating surveyors, soon after the passing of the Act of 1836, began to assess waterworks and other like concerns, such as railways, canals, gasworks, &c., upon the basis of the profits earned by the whole undertaking. From the gross receipts of the undertakers for the preceding year they deducted working expenses, an allowance for tenant's profit, and the cost of repairs and other statutable deductions, and treated the balance remaining (which would presumably represent the rent which a tenant would be willing to pay for the undertaking) as the rateable value of the entire concern. It was then necessary to distribute this rateable value among the various parishes into which the undertaking extended, and this was effected by dividing the hereditaments in each parish into indirectly productive assets (such as intakes, filter-beds, reservoirs, pumping stations and carrying or pumping mains) and directly productive assets (such as the service pipes which actually carried the water to the consumers), and by allowing...
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