Orange PCS Ltd v Bradford
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE THOMAS,LORD JUSTICE JACOB,LORD JUSTICE AULD |
| Judgment Date | 17 February 2004 |
| Neutral Citation | [2004] EWCA Civ 155 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 February 2004 |
| Docket Number | Case No: C/2003/1023 |
[2004] EWCA Civ 155
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL
(George Bartlett QC, President)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Auld
Lord Justice Thomas
Lord Justice Jacob
Case No: C/2003/1023
Richard Glover (instructed by Stephenson Harwood) for the Appellant
Timothy Morshead (instructed by Solicitor to the Inland Revenue) for the Respondent
The issue in this appeal is the correct approach for the purposes of rating to the valuation of a hereditament comprising a very small piece of land within the limits of the public highway on which a mobile phone aerial mast had been sited together with its associated equipment and cabling. The matter is of some importance to telecommunications operators such as the appellants (Orange) who have constructed networks which include similar sites across England and Wales.
Background
Orange and other companies who hold telecommunications licences, such as Vodafone, mmO2 and T-Mobile, have constructed large networks to enable their mobile phone services to be provided nationwide. The network comprises, essentially, two types of aerials attached to masts – macrocells and microcells. Macrocell aerials are sited on masts which vary in size from 15m to 200m and, depending upon local conditions, can transmit signals up to a distance of 8km. Microcell aerials, with which the present appeal is concerned, are sited on smaller masts and in contradistinction have a much smaller range of up to 500m to 800m; their purpose is to provide services to areas which would otherwise be blind spots and enhance the service during busy periods.
The siting of microcell aerials depends on a number of factors, including the layout of the land, buildings and trees and the availability of power connections. The planning regime is liberal; prior to 3 June 1995 masts and poles less than 15m in height were permitted development under Part 24 of Schedule 2 to the Town and Country Planning General Development Order 1988, subject to what is commonly known as the 28 day prior approval procedure. From 3 June 1995 the erection of masts was permitted development under the Town and Country Planning (General Permitted Development Order) 1995, as amended, and subject to certain exceptions and provided prior notice was given to the local planning authority which did not object within a stipulated period.
Orange as an operator with a licence under the Telecommunications Act 1984 was subject to the Code contained in Schedule 2 to that Act. The one important provision relevant to the way in which mobile operators have sited microcells and to the particular microcell with which this case is concerned is paragraph 2(9) of the Code. This paragraph (as amended by the New Roads and Street Works Act 1991) confers powers to install and maintain telecommunication apparatus on a highway:
"The operator shall, for the statutory purposes, have the right to do any of the following things, that is to say –
(a) install telecommunication apparatus, or keep telecommunication apparatus installed, under, over, in, on, along or across the street …
(b) inspect, maintain, adjust, repair or alter any telecommunication apparatus so installed; and
(c) execute any works requisite for or incidental to the purposes of any works falling within paragraph (a) or (b) above, including for those purposes the following kinds of works, that is to say –
(i) breaking up or opening a street …
(ii) tunnelling or boring under a street …
(iii) breaking up or opening a sewer, drain or tunnel."
Under the Code no payment or compensation is made either to the highway
authority or to the owner of the land within the lateral limits of the highway
which is not vested in the highway authority.
It is because of these provisions that Orange and other mobile telecommunications operators sought to locate microcells on highway land wherever possible. As at 1 November 1999, 211 out of 259 such installations were on highway land. Of the 48 which were on private land these were normally subject to rental payments made either under a lease or licence agreement negotiated with the owner of the land.
The approach to valuation
The assessment of the rateable value of the hereditament was carried out in accordance with the provisions set out in Schedule 6 to the Local Government Finance Act 1988. Paragraph 2(1) of the Schedule provides for what is known as the statutory or rating hypothesis:
"The rateable value of a non-domestic hereditament … shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on these three assumptions –
(a) the first assumption is that the tenancy begins on the day by reference to which the determination is to be made;
(b) the second assumption is that immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic;
(c) the third assumption is that the tenant undertakes to pay all usual tenant's rates and taxes and to bear the cost of the repairs and insurance"
It was common ground that the specific assumptions were not material to the dispute in the present appeal. The valuation is to be made at a given date.
There are many descriptions of the rating hypothesis; Viscount Maughan's in Townley Mill (1919) Limited v Oldham Assessment Committee [1937] AC 419 at 436 was: "a hypothetical tenant and a hypothetical rent, but … a real and concrete hereditament".
However, although the valuation has to be made on this hypothesis, there are many other principles that have developed in case law over the centuries since rates were first imposed as a form of taxation; it is necessary to refer briefly to one of these which, it was common ground, was relevant – "the principle of reality." This was recently considered in Hoare (Valuation Officer) v National Trust [1998] RA 319 where, Peter Gibson LJ described it at 415:
"In particular I would emphasise the necessity to adhere to reality subject only to giving full effect to the statutory hypothesis, so that the hypothetical lessor and lessee act as a prudent lessor and lessee. I would call this the principle of reality"
Scheimann LJ made clear the importance of this (at 408) ;
"The statutory hypothesis is only a mechanism for enabling one to arrive at a value for a particular hereditament for rating purposes. It does not entitle the valuer to depart from the real world further than the hypothesis compels."
The dispute in this appeal
The hereditament under appeal was located on the grass verge of Rotherham Baulk, a publicly maintained highway in Carlton-in-Lindrick, Worksop, Nottinghamshire; it comprised a piece of land on which there had been erected a hollow mast pole 11.5m high with telecommunications aerials and a steel cabinet 1.5m wide by 0.65 m deep and 1.30m high standing on a concrete base; the aerials and equipment were not rateable. The hereditament was entered in the 1995 non-domestic rating list for Bassethorpe District under the description "communications station and premises" at a rateable value of £2,200 with effect from 1 November 1999. After notice had duly been given to Orange, Orange disputed this.
In essence Orange's contention was that no value should be attributed to the land on which the equipment was sited as they were entitled to free occupation under the statutory Telecommunications Code referred to at paragraph 4; however, they accepted that the mast itself was rateable for a small amount under Class 3(f) of the Valuation for Rating (Plant and Machinery) Regulations 1994, SI 1994/2680.
The dispute was heard by the Nottinghamshire Valuation Tribunal before whom the Valuation Officer contended for a rateable value of £1,100 in place of the rateable value of £2,200; Orange contended for a value of £100 – that being the agreed value for the mast- but with a nil value for the land. In a written decision of 16 November 2001 the Valuation Tribunal rejected Orange's contention that a nil value should be attributed to the land on account of Orange's right under the Code to occupy free of charge; they accepted the Valuation Officer's valuation of the value of the occupation of the land. It is of interest to note that the Tribunal took into consideration in arriving at the value for the occupation of the land a site used for the same purposes on private land. An appeal was made to the Lands Tribunal.
It was agreed between the parties before the Lands Tribunal and before this Court that, if Orange were correct in their contention, then the valuation should be £100; this was comprised of a nil value being attributed to the land and £100 for the decapitalised cost of the mast. If the Valuation Officer was correct, then the valuation should be £1,100; the difference was the value of £1000 attributable to the land which the Nottinghamshire Valuation Tribunal had determined. In these circumstances it is not therefore necessary to refer to the different methods of valuation, such as the comparative method, the profits basis or the contractors basis, that could have been employed if the actual value of the occupation of the land, ignoring the free right under the Code, had been in issue.
The decision of the Valuation Tribunal was upheld by the Lands Tribunal (George Bartlett QC, President) ; the President concluded that the fact that the Telecommunications Code did not provide for payment for the...
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