Railway Assessment Authority v Southern Railway Co; London County Council v Southern Railway Company
| Jurisdiction | England & Wales |
| Judge | The Lord Chancellor,Lord Russell of Killowen,Lord Roche |
| Judgment Date | 24 January 1936 |
| Judgment citation (vLex) | [1936] UKHL J0124-2 |
| Date | 24 January 1936 |
| Court | House of Lords |
[1936] UKHL J0124-2
House of Lords
Lord Chancellor.
Lord Thankerton.
Lord Russell of Killowen.
Lord Maugham.
Lord Roche.
After hearing Counsel, as well on Friday, the 22d, as on Monday the 25th, Tuesday the 26th, and Thursday the 28th days of November last, upon the Petition and Appeal of the London County Council, the County Valuation Committee for the County of Middlesex, the Mayor Aldermen and Burgesses of the Borough of Croydon and the Mayor Aldermen and Burgesses of the Borough of Brighton, praying, that the matter of the Order set forth in the Schedule thereto, namely an Order of His Majesty's Court of the Railway and Canal Commission, of the 6th of February 1935, 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 printed Case of the Southern Railway Company, 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 His Majesty the King assembled, That the said Order of His Majesty's Court of the Railway and Canal Commission, of the 6th day of February 1935, 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 Respondents, the Southern Railway Company, the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
There are before you two Appeals, one by the Railway Assessment Authority and the other by certain Local Authorities, from an Order of the Court of the Railway and Canal Commission dated the 6th February, 1935, allowing an appeal by the Southern Railway Company from the determination and certificate of the Appellants the Railway Assessment Authority determining the net annual value of the undertaking of the Respondent Company as a whole for rating purposes to be the sum of ?2,180,000. The Commissioners, allowing the appeal of the Respondent Company, directed the Appellants to substitute for that sum the sum of ?1,077,131 as the net annual value of the undertaking, of the Railway Company for rating purposes. There is an appeal direct to this House by the joint effect of the Railway and Canal Traffic Act, 1888 (as amended) and of Section 9 (4) of the Railways (Valuation for Rating) Act, 1930, but only on questions of law, the decision of the Commissioners on questions of fact being final. The Railway Assessment Authority not being interested parties, appeared before your Lordships mainly for the purpose of obtaining directions from this House which would guide them in the performance of their difficult and important duties under the Act of 1930. The London County Council and other Local Authorities were of course interested in supporting the decision of the Railway Assessment Authority, or at least of obtaining a decision which might enable them to secure from the Commissioners the fixing of a higher figure than ?1,077,131. The interested Appellants did not present arguments precisely on the same lines as those put forward by the Railway Assessment Authority; but your Lordships have had the advantage of hearing a full and able discussion of the problems arising in connexion with the rating of railways under the Act of 1930 so far as questions of law are concerned and have been enabled to arrive at their opinions on them.
Although the actual points for decision turn mainly, if not entirely, upon the construction to be placed on certain Sections of the Railways (Valuation for Rating) Act, 1930, all parties were agreed that in order to reach a proper conclusion on the questions at issue, it was essential to bear in mind the law with regard to the rating of railways as it stood at the date of the passing of the Act. Accordingly, before turning to the language of the Act, I propose to state shortly what I apprehend to be the legal position as it then was.
The foundation of our rating law is the Poor Relief Act of 1601, which imposed liability on the inhabitants and occupiers of every parish to contribute to the relief of the poor in that parish. It was early established that the contributions were to be levied according to the value of holdings in the parish; and, after some diversity of practice, Parliament enacted that the liability should rest only on the occupiers of rateable hereditaments and not on inhabitants in respect of their personalty. In 1836 the Parochial Assessments Act of that year provided by Section 1 that the rate was to be based "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 tenant's rates and taxes, and tithe commutation rent-charge, if any, and deducting therefrom the probable average annual cost of the repairs, insurance, and other expenses, if any, necessary to maintain them in a state to command such rent." Substantially the same language is used in the Parochial Assessment Act, 1862, and in the Valuation of Property Metropolis Act, 1869, with regard to London. My Lords, this method of assessing liability for rates was no doubt very suitable for the simple conditions which prevailed in the reign of Queen Elizabeth; but when it was sought to apply it to modern conditions, and especially to the assessment of great public utility undertakings, such as railways, water-works, gas-works and the like, whose operations might easily extend over great areas, stretching far beyond the limits of any individual parish, the greatest difficulty was found in adapting the statutory provisions to the facts of such a case. The courts, more than once, appealed to the legislature to relieve them from the burden thus cast upon them; see, for example, the judgment of Lord Campbell in ( R. v. The G.W.R. Co. 15 Q.B. 379, at pp. 396 and 397), and the judgment of Wightman J. in ( R. v. The West Middlesex Water Works 1 Ellis & Ellis 716, at p. 728). Unfortunately, the legislature did not see its way to intervene and the courts were compelled to evolve a system of calculation, with the assistance of the expert advisers to the rating authorities and to the undertakings, which involved a number of very difficult assumptions, but which received the approval of your Lordships' House on a number of occasions, and which became recognized as the standard method of assessing the rateable value of hereditaments in these cases. So far as the railways were concerned, the method adopted was to divide the undertaking into those portions which were regarded as directly productive of profit, such as the permanent way, and those portions which were regarded as only indirectly productive, such as stations and other hereditaments of that kind. The latter were usually valued by taking the cost of erection and allowing a percentage upon that cost, on the theory that the companies would not have erected them unless they had regarded them as worth at least a fair average rate of interest upon the money invested in their construction This method was commonly described as the "contractor's basis." So far as the directly productive portions of the undertaking were concerned, it is obvious that, if the permanent way was treated as an isolated entity without continuation at either end of the parish, its rateable value would be practically nothing: on the other hand, if it were regarded as a vital link between lines existing up to the borders of the parish, its value would be very great indeed. The former method would have been plainly unjust to the rating authorities; the latter would have been equally unjust to the companies. The method of assessment of the rateable value which was in fact adopted was the method which was commonly described as the "profits basis."
In order to apply the profits basis, the calculation commenced by ascertaining the gross receipts earned in the parish for the latest period prior to the date of the rate. It was held improper to take the total gross receipts of the whole system and to allocate them to the parish according to mileage— ( R. v. London, Brighton & South Coast Railway 15 Q.B. 313). From the gross receipts earned in the parish, a proper proportion of the working expenses throughout the system had to be deducted and a deduction had further to be made for the portion allocated to the parish of rent hypothetically paid for the use of stations and other indirectly productive assets, and for the rates payable in respect thereof. The amount remaining after making these deductions from the gross receipts earned in the parish was taken as the net profit divisible between the owner and the hypothetical tenant. Since the hypothetical tenant was only rateable in respect of hereditaments which he was supposed to occupy, it was necessary to make a fair deduction for the use of his personalty and stock in trade; the method adopted was to estimate the amount of capital required to work the whole system, to calculate a fair proportion of this amount as being fairly allocated to the particular parish and to allow the deduction of a certain percentage on the capital so ascertained from the amount of the divisible net profit. The percentage to be allowed on this capital was fixed at a sum considered to be sufficient to give the tenant interest upon his money and a...
To continue reading
Request your trial
-
Almond v Ash Brothers & Heaton Ltd ; Dawkins (Valuation Officer) v Ash Bros & Heaton Ltd
...the principles of the law of rating as far as they can be made applicable." 12 In Railway Assessment Authority v. Southern Railway Co. [1936] A.C. 266, Viscount Hailsham L.C. at page 284 said: "The definition requires an estimate of the sum which a hypothetical tenant might be expected to p......
-
Best Origin Ltd v Commissioner Of Rating And Valuation
...apply it to modern conditions. All this was explained by Viscount Hailsham LC in Railway Assessment Authority v Southern Railway Company [1936] AC 266, 273, cited by Tang Ag CJHC in para 2 of his 11. On this occasion the legislature has intervened, and the courts have to work out the full i......
-
Decision Nº RA 48 2011. Upper Tribunal (Lands Chamber), 13-02-2015
...Co Ltd v Assessment Committee for North-Western Area of County Durham [1931] AC 396 Railway Assessment Authority v Southern Railway Co [1936] AC 266 R v Adams (1832) 4 B&Ad 61 R v Audley (1700) 2 Salk 526; 1 Const 110 Dawkins v Ash Brothers & Heaton [1969] 2 AC 366 Port of London Authority ......
-
Almond v Ash Brothers & Heaton Ltd ; Dawkins (Valuation Officer) v Ash Bros & Heaton Ltd
...been repeatedly followed in later cases, notably by the House of Lords in Railway Assessment Authority v. Southern Railway Company, ( 1936 Appeal Cases, 266)" This being so, it is contended, it would be quite wrong to pay regard to the likelihood of demolition within about a year, for the s......