England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LANDS TRIBUNAL
(Mr George Bartlett QC President)

		Royal Courts of Justice Strand, London, WC2A 2LL Thursday 5th April 2001

LORD JUSTICE JONATHAN PARKER

INTRODUCTION

1. This appeal raises a short point on the interpretation of The Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993, as amended, in the form in which they stood at the material time ("the 1993 Regulations").
2. The appeal is brought by way of case stated by Lamb and Shirley Ltd, the rateable occupier of premises at 27 Harcourt Street, London W1 ("the Premises"), against a decision of the Lands Tribunal (Mr George Bartlett QC, President) dated 21 June 1999. The decision is reported at [1999] RA 373. By that decision, the Lands Tribunal allowed an appeal by Mr Stephen Bliss (the Valuation Officer for Westminster City Council) against a decision of the Central London Valuation Tribunal dated 3 May 1996 in relation to the appellant's liability for rates as occupier of the Premises. Mr Bliss is the respondent to this appeal. Permission to appeal was granted by Pill LJ on the papers on 24 April 2000.
3. The appellant appears by Mr David Mole QC; the respondent by Mr David Holgate QC.

THE FACTUAL BACKGROUND

4. The background facts are not in dispute and can be shortly stated.
5. The appellant has been the rateable occupier of the Premises since February 1986. Prior to February 1986 the Premises, then known as 27 and 28 Harcourt Street, were occupied as two separate units, but the appellant converted the Premises into a single unit and has since occupied and used them as a single unit. In the local non-domestic rating list compiled by the Valuation Officer for Westminster City Council as at 1 April 1973 the Premises were shown as comprising two units, each with its own rateable value. That reflected the true position as at that date. However, the Premises were similarly shown in the valuation list as at 1 April 1990 ("the 1990 list"), notwithstanding that as at that date the Premises were (and had for some time been) occupied and used by the appellant as a single unit. The 1990 list was accordingly inaccurate in that respect. In about October 1994 the respondent proposed an alteration to the 1990 list by substituting a single entry for the Premises in place of the two existing entries. The appellant appealed against that proposal. On 20 March 1995, while the appeal was pending, the respondent made the proposed alteration and assessed the rateable value of the Premises (now shown as a single unit) in a sum which substantially exceeded the aggregate of the rateable values attributed to the two units which had previously appeared in the 1990 list. The alteration was expressed to take effect from 1 April 1990.
6. In August 1995 the appellant challenged the new entry in the 1990 list on the grounds that the assessment of rateable value was excessive, and that by virtue of the 1993 Regulations the effective date of the alteration should be 20 March 1995 (i.e. the day on which the alteration was made). This led to the dispute being referred to the Central London Valuation Tribunal. Agreement was subsequently reached as to rateable value – albeit at a figure which still substantially exceeded the aggregate of the rateable values of the two units previously shown in the 1990 list – with the consequence that the only issue before the Valuation Tribunal was as to the date on which the alteration became effective.
7. The Valuation Tribunal held in favour of the appellant that the alteration fell within regulation 13(8A) of the 1993 Regulations and was accordingly effective as from 20 March 1995. The Respondent appealed to the Lands Tribunal, and by his Decision (against which the appellant now appeals) the President of the Lands Tribunal allowed the respondent's appeal and held that the alteration was effective retrospectively as from 1 April 1990 (i.e. the date of the 1990 list).

THE LEGISLATIVE BACKGROUND

8. I begin by noting the relevant provisions of the Local Government Finance Act 1988 ("the 1998 Act"), being the Act pursuant to which the 1993 Regulations were made.
9. Section 41(1) of the 1988 Act requires the valuation officer for a billing authority to compile and thereafter to maintain local non-domestic rating lists. Subsection (2) of section 41 provides that such a list is to be compiled on 1 April 1990 and thereafter at five-yearly intervals. Section 42(1) of the 1988 Act provides that the list must show each relevant non-domestic hereditament which is situated in the authority's area, unless it is completely exempted from rating or is required to be shown on a central rating list (for example, national utilities). Section 42(4) of the 1988 Act, as amended by the Local Government and Housing Act 1989, provides that for each day on which a hereditament is shown in the list, the list must also show the rateable value of the hereditament. Section 42(5) provides that the list must also contain such information about hereditaments shown in it as may be prescribed by the Secretary of State by regulations. The 1993 Regulations were made partly pursuant to section 42(5). Earlier regulations made under the subsection, known as The Non-Domestic Rating (Miscellaneous Provision) Regulations 1989 (SI 1989/1060), require the list to show for each hereditament (a) a description, (b) the address, and (c) any reference number given by the valuation officer.
10. Section 43 of the 1988 Act deals with liability to pay rates. Under the section, liability to pay rates depends upon the ratepayer being in occupation of all or part of a hereditament shown in the list. By virtue of sections 43(4) and 44(2) of the 1988 Act the chargeable amount is to be calculated by reference to "the rateable value shown .... as regards the hereditament".
11. Section 55 of the 1988 Act deals with alteration of lists. The 1993 Regulations were made partly under this section. Section 55(2) empowers the Secretary of State to make regulations about the alteration of lists. Section 55(6) provides that such regulations may make provision for the date from which an alteration is to have effect, including provisions having retrospective effect.
12. Section 56 of the 1988 Act provides that Schedule 6 of the Act shall have effect in relation to the determination of rateable values. Paragraph 2(1) of Schedule 6 provides that the rateable value of a non-domestic hereditament shall be taken to be an amount equivalent to the rental value of the hereditament under a hypothetical annual tenancy. Paragraph 2(3)(b) of Schedule 6 provides that the day by reference to which the rateable value is to be determined is to be such day (preceding the day on which the list is to be compiled) as the Secretary of State may specify. By the Rating Lists (Valuation Date) Order 1988 (SI 1988/2146) the Secretary of State specified 1 April 1988 as being the relevant date. Paragraph 2(5) of the Schedule provides that where the rateable value is determined for the purpose of compiling a list, the matters listed in subparagraph (7) are to be taken as they were on the day on which the list is compiled. Such matters include "matters affecting the physical state or physical enjoyment of the hereditament" (see paragraph (7)(a)) and "the mode or category of occupation of the hereditament" (see paragraph (7)(b)). The effect of these provisions so far as the compilation of the 1990 list is concerned is that the matters in question are taken as they were on 1 April 1990, and they are assumed to have been in existence on 1 April 1988. Where an alteration is made to an existing list, such matters are taken to be as they were on the day when the list was compiled (i.e. in this case 1 April 1990).
13. Section 64(1) of the 1988 Act provides that:

"A hereditament is anything which, by virtue of the definition of a hereditament in section 115(1) of the [General Rate Act 1967] would have been a hereditament for the purposes of that Act had this Act not been passed."

14. Section 115(1) of the General Rate Act 1967 defines "hereditament" as meaning:

" .... property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list".

15. Against that statutory background I can now turn to the 1993 Regulations. The only parts of the 1993 Regulations which have been relied on in argument as being relevant to the issue raised on this appeal are regulations 13 and 15.
16. Regulation 13 provided, so far as material, as follows (the words in italics having been added by amendment with effect from 9 July 1994):

(1) This regulation has effect subject to regulations 15, 16 and 44.

(2) Subject to the following provisions of this regulation, an alteration effected so as –

(a) to show in or, as the case may be, to delete from a list any hereditament which, since the list was compiled, -

(i) has come into existence or ceased to exist;

(ii) ....

(iii) ....

(iv) ....; or

(b) to reflect in a list part of a hereditament becoming, or ceasing to be, .... exempt shall have effect from the day on which the circumstances giving rise to the alteration occurred.

......

(6A) Subject to paragraphs 8A and 8B, an alteration made to correct an inaccuracy in a list which arose in the course of making an alteration in connection with any of the matters mentioned in paragraph (2) or (5) shall have effect from the day from which that previous alteration fell to have effect.

(7) Subject to paragraph[s] (8A) ..... an alteration made to correct an inaccuracy in a list on the day it was compiled shall have effect from that day.

.....

(8A) An alteration made to correct an inaccuracy (other than one which has arisen by reason of an error or default on the part of a ratepayer) –

(a) in a list on the day it was compiled; ...

(b) .....

which increases the rateable value shown in the list for the hereditament to which the inaccuracy relates shall have effect from the day on which the valuation is made.

.....

(9) Any reference in the foregoing provisions of this regulation to a hereditament coming into existence or ceasing to exist includes a reference to a hereditament which comes into existence or ceases to exist by virtue of –

(a) property previously rated as a single hereditament becoming liable to be rated in parts, or

(b) property previously rated in parts becoming liable to be rated as a single hereditament, or

(c) any part of a hereditament becoming part of a different hereditament.

17. Regulation 15 deals with alterations made on or after 1 April 1992, and prevents backdating of alterations beyond that date save in special circumstances, one of which is that the alteration falls within paragraph (3E) of the regulation. Paragraph (3E) applies (among other things) to an alteration made:

a) .....

(i) .....

(ii) to show in a list a hereditament which has come into existence by virtue of the matters referred to in sub-paragraph .... (b) .... of Regulation 13(9) at any time before or after the list was compiled.

18. The word "hereditament" is not defined in the 1993 Regulations themselves, but it is common ground that definition in the General Rate Act 1967 applies.

THE DECISION OF THE VALUATION TRIBUNAL

19. The Valuation Tribunal concluded that there was at all material times a single hereditament, namely the Premises, which was wrongly identified in the 1990 list as being two hereditaments. On that premise, the Tribunal went on to conclude that the alteration had had the effect of increasing the rateable value of the hereditament within the meaning of regulation 13(8A). The Valuation Tribunal accordingly allowed the appellant's appeal.

THE DECISION UNDER APPEAL

20. The Lands Tribunal rejected the appellant's contention that in referring to "the rateable value shown in the list for the hereditament", regulation 13(8A) is to be taken to refer, in the context of the instant case, to the aggregate of the rateable values of the two hereditaments which previously appeared in the 1990 list.
21. In paragraph 12 of his Decision the President of the Lands Tribunal observed that under the 1988 Act the expression "rateable value" only has meaning in terms of the specific hereditament to which it relates. Then, after referring to section 42(1) and (4) of the 1988 Act and to paragraph 2(1) of Schedule 6, he continued as follows:

"13. Thus the Act provides, as it seems to me, firstly that every hereditament has to have its own rateable value and secondly that every rateable value appertains to a particular hereditament. The attribution to a hereditament, as its rateable value, of the rateable values shown in the list for two other hereditaments has no basis in the provisions of the Act, and it would indeed run contrary to them. Furthermore it must be borne in mind, as the facts in the present case demonstrate, that the rateable value of property assessed as a single hereditament will not necessarily be the same as the total of the rateable values of the same property assessed in parts as two or more hereditaments. Considerations of quantum on the one hand or the advantages to be derived from common occupation of the parts on the other may result in a value that is less or greater than the aggregate value of the parts; and differences in the mode or category of occupation could similarly affect matters. In my judgment, therefore, as a matter of construction, "the rateable value shown in the list for the hereditament" in paragraph (8A) refers to the rateable value ascertained in accordance with Schedule 6 paragraph 2(1) for the particular hereditament that is shown in the list, and it cannot be read as referring to rateable values so ascertained for other hereditaments ....

14. I would add that I can see no reason to adopt a different approach from this to the construction of paragraph (8A) on the basis of a consideration of the underlying purpose of the provision. Mr Mole's submission was that its purpose "was to give ratepayers some relief from the rigours of backdating where there was a mistake in the original list that was none of their fault". It is clear, however, that it was not part of its purpose to give relief from the effect of backdating in every case in which there was a mistake in the original list that was not the fault of the ratepayer. The paragraph does not purport to give relief in all cases where the effect of correcting such a mistake would be to increase the amount of rates payable. To extend the scope of its operation beyond that for which it expressly provides would in my judgment require the identification of a clearly defined purpose to justify it. But no such clearly defined purpose has been advanced, and reliance on general considerations of "fairness", which also featured in Mr Mole's submissions, is insufficient.

15. In any event, I am by no means sure that the alteration has operated unfairly in the case of these ratepayers. It was obvious to them that the entries on the list, on the basis of which they were billed, constitute a misdescription, in that the premises were occupied as a single unit and were no longer used as a warehouse and as a workshop. They themselves initiated the correction process, and advice from a rating surveyor, had they sought it, would have made clear that if the premises were assessed correctly as a single unit by reference to their actual mode or category of use, the rateable value might be higher than the aggregate of the rateable values in the two erroneous entries.

16. On the facts of the case, therefore, I conclude that paragraph (8A) does not come into operation because there was no rateable value shown in the list for the hereditament and thus the alteration to correct the inaccuracy did not increase such rateable value. For this reason the appeal must succeed."

THE ISSUE ON THIS APPEAL

22. The sole issue on this appeal is whether the alteration made to the 1990 list on 20 March 1995 was an alteration which "increases the rateable value shown in the list for the hereditament to which the inaccuracy relates" within the meaning of regulation 13(8A) of the 1993 Regulations. If it was, the appeal succeeds; if (as the President of the Lands Tribunal concluded) it was not, the appeal fails.

THE ARGUMENTS ON THIS APPEAL

23. Mr Mole QC (for the appellant) submits, as he submitted below, that the Premises have constituted a single hereditament, both in fact and in law, since February 1986. He submits that the (single) hereditament came into existence in February 1986, and that a rateable value for that hereditament was shown in the 1990 list, notwithstanding that the 1990 list erroneously showed the hereditament as two hereditaments, each with its own rateable value. He submits that that inaccuracy did not affect the ability of anyone examining the 1990 list to understand what value was shown for the (actual) hereditament. He submits that the regulation 13(8A) does not require that the hereditament be shown in the valuation list; rather it refers to "the rateable value shown in the list". The rateable value for the hereditament was shown in the list in the instant case, he submits, in that by showing separate rateable values for what were in substance two parts of a single property the 1990 list showed a rateable value for the single hereditament comprising the entire property, that rateable value being the aggregate of the two rateable values shown.
24. Mr Mole accepts that the legislation proceeds on the basis that, as the President of the Lands Tribunal observed, every hereditament has to have its own rateable value, but points out that the purpose of regulation 13 is to allow the correction of inaccuracies in the list. In that context, it would (he submits) be wrong to interpret the regulation on the basis that Parliament contemplated that the relation between a hereditament and its value is always accurately represented in the valuation list. He takes as an example a case in which the Valuation Officer makes a mistake in calculating the rateable value for a hereditament, and points out that for the purposes of paragraph (8A) it is that inaccurate figure which has to be compared with the new (supposedly accurate) figure. Thus, he submits, it matters not that in the instant case the sum of the two rateable values shown in the list pre-alteration may not truly represent the rateable value of the single hereditament shown post-alteration.
25. On that basis, Mr Mole submits that in the context of the instant case the reference to "the rateable value shown in the list" in paragraph (8A) of regulation 13 is a reference to the aggregate of the rateable values of the two hereditaments as previously shown in the 1990 list. It being the case that the substituted rateable value exceeds the sum of the two rateable values previously shown, Mr Mole's construction of the paragraph leads to the conclusion that alteration falls within the paragraph since it "increases the rateable value shown in the list for the hereditament to which the inaccuracy relates". Mr Mole submits that the construction of paragraph (8A) for which he contends has the merit of staying in touch with the practicalities of real life, whilst giving rise to no unfair or anomalous results.
26. Mr Holgate QC (for the respondent) submits that the President of the Lands Tribunal was correct in saying (in paragraph 13 of his Decision, quoted earlier) that the 1988 Act provides "firstly that every hereditament has to have its own rateable value and secondly that every rateable value appertains to a particular hereditament". Mr Holgate points out that the rateable value of a hereditament depends (among other things) on the mode or category of occupation of that hereditament. He submits that the President did not assume that the relationship between a hereditament and its rateable value was always accurately shown in the valuation list, and that the interpretation which the President placed on regulation 13(8A) allows for cases where a hereditament is inaccurately described.
27. Mr Holgate submits that the alteration made on 20 March 1995 did not involve an increase in either of the two rateable values previously shown in the 1990 list. Rather, the effect of the alteration, as he submits, was (a) to delete the references to the two hereditaments and the rateable values ascribed to them, (b) to substitute a reference to a single hereditament in place of the two hereditaments previously shown, and (c) to ascribe a rateable value to the (new) single hereditament. He submits that so far as the application of regulation 13 is concerned the instant case is no different from a case in which a list is altered so as to include a building which was in rateable occupation on the date on which the list was compiled but which was erroneously omitted from the list.
28. Mr Holgate submits that it is something of a truism, in a rating context, that the rateable value of a property assessed as a single unit may not be equivalent to the rateable value of its component parts valued as separate units: in some cases it may be less, in others more. He submits that the comparison which is required by regulation 13(8A) is between rateable values for the same hereditament, before and after the alteration, so as to be on a like for like basis. He submits that it is a fallacy to speak of the hereditament in question being inaccurately described as being in two parts, since the two hereditaments shown pre-alteration were not parts of the single hereditament shown post-alteration. He submits that Mr Mole's argument fails to distinguish between property on the one hand and hereditament on the other: a distinction which he says is crucial to the correct interpretation of the 1993 Regulations.
29. Mr Holgate also relies on the provisions of regulations 13(2) and 15 as supporting his construction of regulation 13(8A). However, in a supplementary written skeleton argument (expanded in the course of oral submissions) Mr Mole submits that regulations 13(2) and 15 afford no justification for preferring the construction of regulation 13(8A) for which Mr Holgate contends.

CONCLUSIONS

30. As I said at the beginning of this judgment, the point at issue is a short one.
31. In order to determine whether an alteration to correct an inaccuracy in a list "increases the rateable value shown in the list for the hereditament to which the inaccuracy relates" one has to compare the rateable value for the hereditament as shown following the alteration with the rateable value, if any, previously shown "for the hereditament to which the inaccuracy relates". The first question, therefore, is what is "the hereditament to which the inaccuracy relates" in the context of the instant case: is it the (new) single hereditament which is shown post-alteration, or is it the two separate hereditaments shown pre-alteration? The next question is: What are the rateable values (if any) shown in the 1990 list pre-alteration and post-alteration for the relevant hereditament or hereditaments? If a rateable value was shown for a hereditament pre-alteration which was less than the rateable value for that hereditament post-alteration, then regulation 13(8A) will apply in respect of that alteration.
32. As to the first question, both sides accept that in the context of an alteration to correct an inaccuracy the expression "the hereditament to which the inaccuracy relates" in paragraph (8A) must refer to the hereditament as shown post-alteration, that is to say in the instant case the single hereditament comprising the entirety of the Premises.
33. Thus the central question, which the President of the Lands Tribunal addressed in his Decision, is whether the 1990 list showed a rateable value for that hereditament: that is to say, whether the sum of the rateable values shown for the two separate hereditaments pre-alteration falls to be treated as the rateable value of the single hereditament shown post-alteration, in order to ascertain whether there has been an increase in rateable value for that single hereditament within the meaning and for the purposes of regulation 13(8A).
34. In my judgment, and without intending any disrespect to Mr Mole's submissions, it is impossible to construe paragraph (8A) in such a way as to reach the result for which he contends. I have no difficulty in accepting his submission that the reference to "rateable value" in paragraph (8A) includes a rateable value calculated on an incorrect basis; but it does not follow from that proposition that in the instant case the two rateable values shown pre-alteration, taken together, constitute the rateable value shown in the list for the single hereditament as shown post-alteration for the purposes of paragraph (8A). In my judgment they plainly do not. They do not purport to be rateable values for that hereditament; whether correctly calculated or not, they purport to be rateable values for the (different) hereditaments to which they are expressed to relate. In this respect, I accept Mr Holgate's submission that the fallacy underlying Mr Mole's argument is the failure to distinguish between property and hereditament, which in turn leads to the treatment of the two hereditaments shown pre-alteration as being parts of the single hereditament shown post-alteration. In my judgment the list pre-alteration showed no rateable value for that single hereditament.
35. Moreover, I confess that I can for my part see no logical basis for treating the aggregate of the rateable values of hereditaments consisting of the constituent parts of the Premises let as separate units as constituting the rateable value of a hereditament consisting of the entirety of the Premises when let as a single unit: indeed, to do so would to my mind be not only illogical but unreal. As the President of the Lands Tribunal rightly pointed out, and as Mr Holgate has echoed in argument, such a process would run contrary to the everyday experience of valuers in this field. Thus there is in my judgment no warrant for taking the rateable values of the separate units shown pre-alteration, adding them together, and treating them as the rateable value of the single hereditament shown post-alteration so as to establish that the alteration has had the effect of increasing the rateable value of that single hereditament.
36. Finally I should add that although each of Mr Mole and Mr Holgate contended that his construction of regulation 13(8A) was at least consistent with, if not positively supported by, references to other provisions of the 1993 Regulations, I have for my part derived little or no assistance from such references. To my mind there is nothing in the remainder of the 1993 Regulations, or for that matter in the 1988 Act, which suggests that regulation 13(8A) should be given anything other than its natural meaning. So construed, it does not in my judgment apply in the instant case.
37. I therefore conclude that the President of the Lands Tribunal reached the right conclusion for the right reasons. Accordingly, I would dismiss this appeal.

LORD JUSTICE PILL

38. I agree

BUTLER-SLOSS P.

39. I also agree.
ORDER: Costs to be paid by the appellant in the figure of £6,772.50. (Order does not form part of approved Judgment)