Schuh Limited+the Royal Bank Of Scotland Plc+the Body Shop International Plc+bank Of Scotland Plc+j & W Greaves Limited+sports World International Ltd+phones 4 U Ltd+savers Health And Beauty Plc+optical Express (souther) Ltd+thorntons Plc+lush Retail Ltd+abbey National Plc+barrats Shoes Ltd+superdrug Stores Plc+m.m. Henderson Ltd V. Assessor For Glasgow
| Jurisdiction | Scotland |
| Judge | Lady Dorrian,Lord Doherty,Lord President |
| Neutral Citation | [2013] CSIH 93 |
| Court | Court of Session |
| Published date | 19 November 2013 |
| Year | 2013 |
| Date | 19 November 2013 |
| Docket Number | XA121/13 |
| LANDS VALUATION APPEAL COURT, COURT OF SESSION | |
| Lord President Lady Dorrian Lord Doherty | [2013] CSIH 93 XA121/13 OPINION OF THE LORD PRESIDENT in the Appeal by Stated Case by (1) SCHUH LIMITED; (2) THE ROYAL BANK OF SCOTLAND PLC; (3) THE BODY SHOP INTERNATIONAL PLC; (4) BANK OF SCOTLAND PLC; (5) J & W GREAVES LTD; (6) SPORTS WORLD INTERNATIONAL LTD; (7) PHONES 4 U LTD; (8) SAVERS HEALTH & BEAUTY PLC; (9) OPTICAL EXPRESS (SOUTHERN) LTD; (10) THORNTONS PLC; (11) LUSH RETAIL LTD; (12) ABBEY NATIONAL PLC; (13) BARRATTS SHOES LTD; (14) SUPERDRUG STORES PLC; (15) and (16) OUTDOOR GROUP LTD; (17) M M HENDERSON LTD Appellants; against ASSESSOR FOR GLASGOW Respondent: _______ |
Act: Haddow QC; Brodies LLP
Alt: Clarke QC; Solicitor, Glasgow City Council19 November 2013
Introduction
[1] In each of these cases the ratepayers appealed against the values entered in the roll at the 2005 Revaluation for their retail premises in Sauchiehall Street, Glasgow. The appeals were taken on the ground that there had been a material change of circumstances that had reduced each of the values appealed against.
[2] The appeals were heard by the Glasgow Valuation Appeal Committee on 9 February 2011. The ratepayers' case was that the valuations had been reduced in consequence of three main factors, namely the impact of certain out of town shopping centres, the decline of Sauchiehall Street as a retail location and the economic crisis of 2008 and thereafter. The assessor's case was that there had been no reduction at all.
[3] The Committee found in favour of the ratepayers. It found that a combination of events consisting of the opening of out of town shopping centres, the economic downturn, the withdrawal from the market place of various traders and the expansion and improvement of the St Enoch Centre brought about a material change of circumstances affecting rental values in virtually all retail premises within the principal trading sections of Sauchiehall Street (First stated case, paras 14 and 17). It directed that the values in the roll should be altered with effect from 1 April 2009 in accordance with the ratepayers' proposed Zone A rates (Ass for Glasgow v Schuh Ltd 2012 SLT 903, at para [21]). The altered values represented a reduction of the order of 30%.
[4] The assessor appealed to this Court. We held that only the economic crisis constituted a relevant material change of circumstances in terms of section 3(4) of the Local Government (Scotland) Act 1975 and that the Committee should have allowed reductions only to the extent that they were caused by it. We therefore sustained the appeal and returned the case to the Committee to rehear the appeals and to make a decision on them in accordance with the conclusions that I had expressed in my opinion in that case (Ass for Glasgow v Schuh Ltd, supra, at para [57]).
[5] At the rehearing on 7 January 2013 the ratepayers' witness Mr Rogan, on further consideration in the light of our decision, expressed the view that the Committee should grant reductions to the levels sought at the original hearing because the whole amount of those reductions was attributable to the abnormal economic crisis (Precognition, paras 1.5, 1.9). The ratepayers' witness Mr Reith dealt with the same question by saying that in his opinion at least 90% of the downturn in rents on Sauchiehall Street had been caused by the economic crisis (Precognition, p 3).
[6] The assessor's witness, Mr Adams, adhered to the view that there had been no reduction in rental value at all; but submitted that if the Committee were to hold that such a reduction had occurred, it should be of the order of only 6.66%.
[7] The Committee allowed the appeals, but only to the extent of reducing the valuations by 6.66%.
[8] This case has been stated at the request of the ratepayers. They appeal against the decision on the ground that the Committee should have granted the full reduction that they sought. The assessor has cross-appealed on the ground that the Committee should not have allowed any reduction.
The Committee's findings and conclusions
[9] The Committee made detailed findings on various retail subjects in the relevant location, mostly in relation to new lettings, lease renewals and rent reviews in the years 2007 to 2010. It found that the evidence showed a mixed picture. Some rents had increased. Some rents, however, had decreased from the prevailing Zone A rates. The lettings showed an inconsistent pattern. Notwithstanding the existence of some evidence to the contrary, there had been a fall in the value of units in Sauchiehall Street, but where there had been a fall in rental value resulting from normal manifestations of the free retail market or resulting from a fluctuation in the economy, that fall could not be said to constitute a material change of circumstances. There was no comparison evidence from which a valuer could disaggregate the impact of the economic downturn from other factors which might have a bearing on rental value or movements in rental value.
[10] The Committee found that openings of the shopping centres at Braehead and Glasgow Fort, in 1999 and 2004 respectively, could not be said to be material changes of circumstances affecting value since they had been in existence at the date on which the valuation roll came into effect. The Committee's overall findings and conclusions were as follows.
"(25) The Committee found that when the evidence was looked at in its totality, there was some support for the position that there had been a fall in value in the units in Sauchiehall Street which might be related to increased footfall at the shopping centres outwith Glasgow but might also be linked to some extent with the decline in demand for units which must inevitably occur where a number of major retailers, such as Woolworths have gone into administration. However, there was expert opinion evidence accepted by the Committee, in particular from Mr Reith and Mr Rogan, that established that any continuing effect of recent out of town shopping centres by 1 April 2009 was very minor in comparison with the effect of the economic downturn and the reduced demand for units. There had been no evidence of material reductions of rental levels in Sauchiehall Street or in other shopping areas in Glasgow in 2008 consequent on the opening of Silverburn the previous year.
(26) The Committee considered the ratepayers' agreed summary of rental evidence in production B which indicated a material fall in rental values. The Committee found that the economic downturn was a main cause but not the sole cause of the falls in rental values. The Committee accepted that this constituted a material change. The Committee also considered the summary of rental evidence led by the assessor with additional notes and Appendix 1 (comparison of average rents). In column 3 of Appendix 1 the Assessor excluded from the rental analysis those rental transactions which appeared to have special circumstances attached to them. The remaining evidence supported the offer of the assessor to reduce the net annual value of the subjects under appeal by 6.6% (in the case of the subjects with a Zone A rate of £1500). Applying this reduction to all the subjects the Committee found that the Zone A rate of £1600 should be amended to £1490; the Zone A rate of £1500 should be amended to £1400; the Zone A rate of £1300 should be amended to £1210; and the Zone A...
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