Mid-Northamptonshire Water Board v Lee (Valuation Officer)
| Jurisdiction | England & Wales |
| Judge | Lord Morton of Henryton,Lord Radcliffe,Lord Cohen,Lord Keith of Avonholm |
| Judgment Date | 04 April 1957 |
| Judgment citation (vLex) | [1957] UKHL J0404-1 |
| Court | House of Lords |
| Date | 04 April 1957 |
[1957] UKHL J0404-1
House of Lords
Lord Morton of Henryton
Lord Radcliffe
Lord Cohen
Lord Keith of Avonholm
Lord Evershed
Upon Report from the Appellate Committee, to whom was referred the Cause Mid-Northamptonshire Water Board against Lee (Valuation Officer), that the Committee had heard Counsel, as well on Monday the 25th, as on Tuesday the 26th, Wednesday the 27th and Thursday the 28th, days of February last, upon the Petition and Appeal of the Mid-Northamptonshire Water Board, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 27th of March 1956, might be reviewed before Her Majesty the Queen, in Her 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 Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of William Harold Lee (Valuation Officer), lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 27th day of March 1956, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
The question arising on this appeal is how the method of valuation approved by your Lordships' House in Kingston Union Assessment Committee v. Metropolitan Water Board [1926] A.C. 331, and generally known as "the profits basis" should be applied in the circumstances of the present case.
The Respondent is the Valuation Officer for the Wellingborough Urban District Rating Area. He was appointed by the Commissioners of Inland Revenue pursuant to the Local Government Act, 1948, which transferred to such valuation officers the duty of preparing and amending rating valuation lists; he is hereafter referred to as "the Valuation Officer". The Appellants are a body formed by the amalgamation of a number of water undertakings previously supplying water in various parts of the county of Northampton, including Wellingborough, and are hereafter referred to as "the Board".
It is convenient to turn at once to the exposition of the profits basis as a method of valuation which was given by Viscount Cave, L.C., in the Kingston case. The learned Lord Chancellor pointed out the difficulty of applying to a body supplying water in a number of different parishes, and having in those parishes reservoirs, mains and other property necessary for the purposes of its undertaking, the "cardinal principle" that the rateable value of a hereditament is the rent at which it might reasonably be expected to let from year to year on certain assumed terms, and continued:
"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 [Parochial Assessments] Act of 1836, began to assess waterworks and other like concerns, such as railways, canals, gas works, etc., 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."
The Lord Chancellor then described the method adopted for this purpose, and continued:—
"Thus, a series of assessments was reached which, while giving to each individual parish a fair proportion, based upon the hereditaments which it contained and the revenue which it produced, of the total rateable value, did not in the aggregate exceed the rental which the undertakers or any other possible tenants might be expected to pay for the whole undertaking in any year."
My Lords, it is common ground between the parties that the method of valuation to be applied is the method approved in the Kingston case; the controversy has related only to the ascertainment of "the rent which a tenant might be expected to pay for the whole undertaking", or "the rateable value of the entire concern" (generally known as "the cumulo value"), and now relates only to one element in the ascertainment of the cumulo value, namely, the "gross receipts". The moneys in fact received by the Board in the relevant year, the year ended 31st March, 1952, included £66,170 received pursuant to "precepts" issued by the Board to various local authorities under its statutory powers. The Valuation Officer contends (and the Court of Appeal held) that the whole of this sum of £66,170 should be included in the gross receipts. The Board contends that this sum should be reduced by £3,365, for reasons which I shall state after setting out the relevant facts.
The hereditaments occupied by the Board extend into 14 rating areas. The proceedings in which this appeal arises relate only to hereditaments in the Wellingborough Urban District Rating Area, and originated in two proposals, one made on the 29th September, 1952, by the Valuation Officer and the other on the 26th March, 1953, by the Board, for alterations in the values attributed in the valuation lists to these hereditaments. It was, however, agreed between the parties, when the matter came before the Lands Tribunal on appeal from the Local Valuation Court, that the Tribunal should decide in the first instance the cumulo net annual value for the whole of the hereditaments comprised in the undertaking of the Board. The Tribunal having given its decision, the parties agreed the values which, on that basis, should be attributed to the hereditaments to which the said two proposals related; the Tribunal then ordered that the assessments of those hereditaments should be determined accordingly. The Court of Appeal allowed an appeal by the Valuation Officer, held that the cumulo value had been wrongly decided by the Lands Tribunal, set aside the Order of the Tribunal and remitted the case to the Tribunal, but the revised values of the particular hereditaments in question have not yet been determined pending the appeal to this House.
The Board came into existence on 1st July, 1949, under the Mid-Northamptonshire Water Board Order Confirmation (Special Procedure) Act, 1949, confirming the Mid-Northamptonshire Water Board Order, 1948. Under this Order, during the period from 1st July, 1949, to the 31st March, 1954, the revenue of the Board was to be derived partly from charges made to consumers in accordance with the enactments relating to the supply of water previously applicable in the various areas within the Board's limits of supply, and partly from "precepts" issued under Clause 29 of the Order. After the 31st March, 1954, the whole of the Board's revenue (except charges for water supplied for non-domestic purposes) was to be derived from such precepts.
The Board's financial year ends on the 31st March in each year. It is the duty of the Board to make, before the beginning of each financial year, estimates of its probable revenue and expenditure (other than capital expenditure) during that year, including any credit or debit balance carried forward from any previous year. If these estimates show that the expenditure will exceed the revenue, it is the duty of the Board to apportion (on a basis laid down by the Order) the sum required to meet the deficiency in revenue among the local authorities whose districts are covered by its undertaking, and to issue to each of such authorities, before the beginning of the financial year in question, a precept for a sum equal to the amount so apportioned to that authority; each authority is bound to pay to the Board within two months after the commencement of the year (or by such instalments as may be specified in the precept) the sum stated in the precept.
The Order contains no provision for the separation of any part of the revenue of the Board for any specific purpose, and Clause 27 provides that, except as otherwise expressly provided, all the receipts of the Board shall be carried to a common fund and all expenses incurred by the Board defrayed out of that fund. By Clause 30, all moneys received by the Board in respect of its undertaking, including amounts brought forward from any previous year (except certain specified moneys of a capital nature) must be applied for specified purposes in a specified order of priority. These purposes include the extension, improvement and construction...
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