Williams (Valuation Officer) v Scottish and Newcastle Retail Ltd and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ROBERT WALKER,Lady Justice Hale,Lord Justice Aldous |
| Judgment Date | 15 February 2001 |
| Neutral Citation | [2001] EWCA Civ 185 |
| Docket Number | Case No: C/2000/2147 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 February 2001 |
[2001] EWCA Civ 185
Lord Justice Aldous
Lord Justice Robert Walker
Lady Justice Hale
Case No: C/2000/2147
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM APPEAL TRIBUNALS
(LANDS TRIBUNAL)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr D Holgate QC and Mr T Mould (instructed by the Solicitor of Inland Revenue for the appellant)
Mr D Widdicombe QC and Mr M Druce (instructed by Mr J P Scrafton for the respondents)
Introduction
These appeals raise an issue of general importance in the valuation of property for the purposes of non-domestic rates. They are appeals by the Valuation Officer (Mr R F Williams) from a decision of the Lands Tribunal (Mr George Bartlett QC President, and Mr P H Clarke FRICS) made on 8 March 2000. The Lands Tribunal allowed appeals from decisions of the Buckinghamshire Valuation Tribunal made as long ago as 18 November 1993.
The decision of the Lands Tribunal determined two separate appeals relating to two units in the covered shopping centre in Central Milton Keynes, Buckinghamshire. One unit is the Rose and Castle public house at 122 Midsummer Arcade occupied by Scottish and Newcastle Retail Limited ("Scottish and Newcastle"). The other is the premises known as City Duck and City Fayre (consisting partly of a public house and partly of a licensed cafe-bar) at 44 Midsummer Arcade occupied by Allied Domecq Retailing Limited ("Allied Domecq").
The two units have full on-licences for the sale of intoxicating liquor. They share the characteristics (relevant to the main issue in this appeal) that their basic construction is similar to that of other units in the shopping centre which are let as shops, but that the rents which they command as licensed premises are a good deal lower than would be commanded by shops in the same position. Shop rents in the shopping centre have risen steeply but public house rents have not.
The essential difference between the parties is whether these two sets of licensed premises ought (as the Buckinghamshire Valuation Tribunal decided, and as the Valuation Officer contends in this court) to have been valued so as to take account of their more lucrative potential as shops, or ought (as the Lands Tribunal decided, and as Scottish and Newcastle and Allied Domecq contend in this court) to have been valued simply for what they were. That way of putting the issue oversimplifies a complex matter on which this court has had the benefit of a careful and thorough decision of the Lands Tribunal, examining case law going back to the eighteenth century. But it gives a general indication of the difference between the parties.
What is at stake has been quantified in money terms by agreement between the parties, and the difference is striking. It was agreed that if the Valuation Officer's contentions were fully upheld the rateable values ought to be £132,000 for the Rose and Castle and £210,000 for the City Fayre/City Duck. If on the other hand the ratepayers' contentions were fully upheld the values would be £29,500 and £50,000 respectively. The former values were adopted by the Valuation Tribunal. The latter values are adopted in the orders of the Lands Tribunal now under appeal.
The facts
There was no dispute as to the primary facts and they are clearly set out in the statement agreed by the parties, and at paras.154 ff of the Lands Tribunal's decision. What follows is a brief summary. The Lands Tribunal was concerned with proposals made on 14 August 1990 in relation to the Local Non-Domestic Rating List for the Rating Area of Milton Keynes, for which the antecedent valuation date (explained in para 20 below) was 1 April 1988. Since then various changes have taken place (especially in relation to the City Duck premises) but those recent changes can be disregarded.
The covered shopping centre was opened in 1979. It contains about 100,000 square metres of enclosed retail space let by Milton Keynes Development Corporation to about 160 traders. These include major retailers (such as Marks & Spencer, Boots, W H Smith and British Home Stores), financial institutions and restaurants and cafes. The development is linear in shape with two parallel raised roadways (Silbury Boulevard and Midsummer Boulevard) on either side of the development and within it two parallel covered pedestrian ways (Silbury Arcade and Midsummer Arcade) running along its length, connected by several lateral walks. The Rose and Castle and the City Fayre/City Duck premises both have frontages to Midsummer Boulevard and Midsummer Arcade, and one open side elevation (on to Market Square and Borough Walk respectively).
The shopping centre is of steel frame construction, on two storeys, with reinforced concrete floors. Most of the dividing walls are non-load-bearing. Each of the licensed units has its trading space on the ground floor (about 222 square metres in the case of the Rose and Castle and about 311 square metres in the case of the City Fayre/City Duck) and a smaller area (including chilled cellarage, wine and spirits store, and offices) on the first floor, with access from the roadway.
The shopping centre is open six days a week, closing at 6.30pm on Monday, Tuesday, Wednesday and Saturday and at 8.30pm on Thursday and Friday. The licensed units do not therefore stay open as late as an ordinary public house.
Each unit is let for a term of years with full tenant's repairing and insuring covenants, and with five-yearly rent reviews. The Rose and Castle was let in 1988 for a term of 35 years from 1 October 1979. The rent on review from 1 October 1989 was £32,000 a year. The permitted use is "as a public house with facilities for the service preparation and consumption of food".
The City Fayre/City Duck was let in 1983 for a term of 25 years from 1 July 1979. The rent on review from 1 July 1989 was £48,000 a year. The permitted use is "as a fully licensed public house and wine bar/coffee shop with or without provision for the sale of food".
The Rose and Castle was described in the 1973 valuation list as 'public house and premises', and the same description appeared in the 1990 list. The City Fayre/City Duck premises were described in the 1973 valuation list as 'public house, wine bar and premises', and the same description appeared in the 1990 list in its original form. The Valuation Tribunal changed the description to 'cafe, public house and premises'. In the decision under appeal the Lands Tribunal again changed the description to 'public house and licensed cafe bar'.
The Lands Tribunal's findings as to the physical state of the premises are set out partly in paras 154 and 155 of the decision and partly in the discussion and conclusions in later paragraphs. Both premises are fitted out with bars, food serving areas and kitchens; and the Rose and Castle has a raised floor over most of its ground floor area. Both premises have hoists communicating with the chilled cellarage and storage on the first floor. The parties agreed that the cost of works to strip out all the specialised fittings, so as to restore the basic shell, would be £23,595 for the Rose and Castle (or £20,407 if the raised floor were retained) and £26,050 for the City Fayre/City Duck.
The Lands Tribunal considered (para 171) that it was not useful to distinguish between structural and non-structural works which might be undertaken by a hypothetical tenant who wished to use the premises to the best financial advantage. It asked itself, as a question of impression and common sense, whether the works which such a tenant would undertake could reasonably be described as minor works, and concluded (para 173) that the works would not be minor works, but substantial works.
In para 190 of its decision the Lands Tribunal summarised its conclusions as to the principal characteristics of the premises:
"The Rose and Castle is a typical public house. On the ground floor is a saloon bar with a food servery, kitchen and customer toilets. The bar has a traditional bar counter where alcoholic and non-alcoholic drinks are served and an adjoining food servery selling typical pub food. There are several entrances to the bar and servery. There are the usual bar stools and tables and two gaming machines. On the first floor the floor space has been divided to provide chilled cellarage, wine and spirits store, office, plant room, staff toilets and storage. We find that the principal characteristic of the use is the sale of alcoholic and non-alcoholic drinks and food for consumption on the premises. The City Fayre/City Duck has slightly different characteristics. It has a composite use. On the ground floor part is a typical public house with bar and tables and three gaming machines and part is a licensed self-service cafe/bar. The kitchen and customer toilets are common to both uses. The first floor, like the Rose and Castle, has been divided into similar ancillary accommodation. As with the Rose and Castle the principal characteristic of this use is the sale of alcoholic and non-alcoholic drinks and food for consumption on the premises."
The Lands Tribunal concluded (para 191) that these uses are distinct from those of a shop or restaurant, notwithstanding that these uses are all within classes A1 and A3 of the Town and Country Planning (Use Classes) Order 1987 (referred to in para 23 below).
The statutory provisions
The law of rating is statutory and ancient, going back even before the Poor Relief Act 1601. Apart from comparatively recent upheavals...
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