England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2
		18th December 2007

1. MR JUSTICE COLLINS: This is an appeal by the Listing Officer against four decisions of the Manchester North Valuation Tribunal decided on 16th August 2006. The appeals are made pursuant to Regulation 32 of the Council Tax (Alteration of Lists and Appeals) Regulations 1993, SI1993 No 290. Those Regulations, putting it broadly (and I do not think it is necessary for this purpose to look at the detailed provisions), permit an individual council taxpayer to make a proposal that his premises should be put into a lower banding for the purpose of payment of the tax, and he has to establish, in order to achieve that, that there has been a material change. I will shortly come to what that precisely involves because it is central to this appeal.
2. If he fails to persuade the Listing Officer that he is correct, then he has a right of appeal to the Valuation Tribunal and whatever decision the Valuation Tribunal makes is appealable to this court but only on a point of law. The appeal may be brought either by the Listing Officer or by any of the individuals who sought to have their banding varied.
3. There are, as is well known by all who have to pay council tax, a number of different bands which depend upon the overall value of the dwelling house in question, and they run from A to H.
4. The relevant value was laid down on 1st April 1993, and as yet there has been no general revision of the bands. Accordingly, any changes have depended upon an individual being able to show that the provisions of the Act enabling a change have come into effect. It can work the other way round in certain circumstances because changes may result in the Listing Officer being able to say that there has, by whatever change has taken place, been an increase in value so that it should fall into a higher banding.
5. The relevant section of the Local Government Finance Act 1992, which introduced the council tax following the demise of the so-called poll tax which was not universally popular, to put it mildly, set out for domestic premises the new council tax system. As I say, the lists are based at the moment upon the situation that existed on 1st April 1993. There have been indications by the Government that there is to be a general revision but that has not yet taken place, at least not in England although I gather that the Welsh are ahead of us in that respect.
6. The relevant section which deals with alteration of the lists is section 24. That provides by subsection (1):

"The Secretary of State may make regulations about the alteration by listing officers of valuation lists which have been compiled under this Chapter..."

Then it applies the following subsections of section 24. Section 24(4) provides, so far as material for the purposes of this appeal:

"The regulations may include provision that no alteration shall be made of a valuation band shown in the list as applicable to any dwelling unless -

(a) since the valuation band was first shown in the list as applicable to the dwelling - ...

(ii) there has been a material reduction in the value of the dwelling."

7. In order to decide whether there has been a material reduction one has to go to subsection (10), which provides:

"... 'material reduction', in relation to the value of a dwelling, means any reduction which is caused (in whole or in part) by the demolition of any part of the dwelling, any change in the physical state of the dwelling's locality or any adaptation of the dwelling to make it suitable for use by a physically disabled person."

8. The circumstances that led to the applications being made by the council taxpayers were these. All four live close to the M61 motorway. That motorway existed and was in use on 1st April 1993. But what the individual taxpayers asserted was that there has been a considerable increase in the volume of traffic using the motorway so that the noise and fumes create a much greater disturbance than was the case in 1993, and so there has been an impact on the value of their dwellings which has resulted in their decrease to such an extent as would justify the change of the band to a lower band than that in which they are now placed.
9. They have produced evidence that there has indeed been a considerable increase in the noise levels. There were decibel and pollution levels measured which showed, so far as the decibel levels were concerned, that they were considerably above those which would be regarded as normally tolerable. They also had evidence that three similar properties had failed to achieve the prices that had been asked for but there had been considerable reductions in the asking price and that was due to the proximity of the motorway.
10. The Tribunal decided that the increase in noise and the increase in pollution and the effect that that had had upon the value of the dwellings was capable of falling within the expression "a change in the physical state of the dwellings' locality" and therefore could properly be regarded as the basis for a change of banding, provided that the valuation as a result had indeed changed. Accordingly, they adjourned the hearing of the issue as to whether there had indeed been a change in what the valuation would now be and what band that would mean the various dwellings fell into.
11. The appeal has been brought on the basis that, as a matter of law, the alleged changes resulting from the increase in noise and pollution are not such as can fall within the expression "change in the physical state of the dwellings' locality" and accordingly the Tribunal erred in law in so finding.
12. I note that in its decision the Tribunal indicated that what was required from the regulations was that any material reduction in the value of a property must have been caused by a physical change in the state of a dwelling's locality. As I have indicated, from the words of the statute that is not entirely accurate because what is required is a change in the physical state of the dwelling's locality, not a physical change in the state of the locality. Whether that makes any significant difference to the decision I am not sure. But it matters not because what I have to decide is whether the facts which were put forward and accepted by the Tribunal are such as can, as a matter of law, fall within the expression in the Act.
13. Mr Mould's submission, putting it broadly, is that the expression "change in the physical state", must mean that there is something done that is visible, there must be some change to something in the locality which creates the effect in question. Thus, the mere increase in traffic levels does not qualify because that is not a change in the physical state of the locality. He accepts that if, for example, a new slip road was constructed in the location and that resulted in greater traffic use, that might come within the expression and that would be because there was a visible effect upon the location in question.
14. Equally, he would assert that if there were, for example, a change of use in nearby premises which resulted in an increase in noise or pollution of one sort or another that would not qualify unless, in addition do that change of use, there was some adaptation of some sort to the relevant premises.
15. It all requires, he submits, that something be done that changes a building or a feature in the location in question. Thus the word "physical" in section 24(10) of the Act has a narrower construction than the word itself could if used without any context there. He accepts, for example, that the word "physical" attached, for example, to the word "factor", as contained in section 1 of the Land Compensation Act 1973, can include such matters as noise, vibration, smell, food, smoke, artificial lighting and discharge onto land.
16. Effectively, I would suggest that the general approach where the word "physical" is used without any need to narrow it in context is that it is something which has an effect upon the senses of an individual, whether those senses be hearing, feeling, sense of smell or vision. And that, generally, would be, in my view, a proper approach to the construction of the word "physical".
17. Mr Mould has drawn my attention to Schedule 6 to the Local Government Finance Act 1988 which deals with non-domestic rating. Paragraph (2) subparagraph (1) of the Schedule provides:

"The ratable 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 three assumptions."

That of course is the old approach to rating which existed in relation not only to non-domestic but also domestic before the introduction of the poll tax and later the council tax.

18. The ratable value by subparagraph (4) was to be determined when there was a question of making an alteration to the list as being the day on which the list came into force. Then subparagraph (6) provide:

"Where the ratable value is determined with a view to making an alteration to a list which has been compiled (whether or not it is still in force) the matters mentioned in sub-paragraph (7) below shall be taken to be as they are assumed to be on the [material day]."

And included in those matters by subparagraph 7(d):

"matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there... "

19. Mr Mould relies on this because, he submits, it is in the same context of local taxation of premises (in that case non-domestic) and uses the same approach in the first half of subparagraph (d), namely the physical state of the locality in which the hereditament is situated.
20. The draftsman found it necessary to add to that the possibility of relying upon matters which, although not affecting the physical state of the locality, were nonetheless physically manifest there. That would include, or could include, as Mr Mould submits, indeed accepts, matters such as noise; and it may well be that on the construction of 7(d) the situation that exists here could be material for the purposes of non-domestic rating were these non-domestic hereditaments. But he submits without the clarification or the extension which should be found in paragraph 7(d), the narrower approach for which he contends should be applied here.
21. Mr Mould accepts, as he must, that in the Sixth Schedule paragraph 7(d) the word "physical", when used in relation to the state of the locality, must bear a narrower meaning than the word "physically" which is used with the verb "manifest", although if it had been put in a slightly different way it could have referred to the "physical manifestations" rather than the words "physically manifest". Accordingly the word "physically" must be regarded as effectively the same word as "physical", but it must bear a slightly different meaning in context. That, of course, is not impossible, although no doubt it would be somewhat unusual when one finds the same word being used in the same section or subsection or subparagraph of a schedule to an Act of Parliament.
22. If one looks at the existence of the road without any traffic it has, of course, no adverse effect in itself. It is only because it bears traffic and the traffic has an effect on the adjoining properties that there is any relevance to the existence of the road. If a road is built and is left unused, as I say there is no effect from it. Once it begins to be used it seems to me that it is appropriate and proper to regard that as a change in the physical state of the locality, the change being that instead of a road with nothing on it there is a road which carries traffic and that has an effect upon the adjoining properties; namely, noise and pollution from the road.
23. Now I accept, of course, that that is an entirely artificial approach because a road would not be left with nothing running on it for any time at all once it was completed. But I use the illustration to make the point because, as it seems to me, there is no difference in principle between the commencement of traffic use and the intensification of traffic use. That change, namely the intensification, produces a different result. And the physical state of the locality is the physical state as it stands at April 1993 with the existing level of noise and pollution. If, for example, a dwelling is near, let us say, a quarry or works which can be used and those works are not being used but a change of use is permitted or the use starts up again without the need for any permission, once that use starts there is a marked effect upon the nearby dwellings and it would be curious, in my judgment, that that was not capable of being dealt with by a reduction in banding if the effect of the commencement of that use were to reduce, as it would be likely to do, the value of the dwelling in question. But if Mr Mould's argument is correct, the change of use which results in the working of that particular quarry, or whatever it may be, is not capable of falling within the expression "the physical state of the locality".
24. I see no reason why the narrow approach to the word "physical" should be needed within section 24(10). I appreciate that there may be difficulties in deciding when the particular moment arrives when the change should take place. And in that context Mr Mould has referred me to paragraph 5 of the 1993 Regulations. That deals with the circumstances in which proposals can be made to change the banding. Regulation 5 of the 1993 Regulations provides, so far as material:

"(1) Subject to the following paragraphs of this regulation, where a billing authority or an interested person is of the opinion that a list is inaccurate because -

(d) since the valuation band was first shown in the list as applicable to the dwelling, one (or more) of the events mentioned in subparagraph (a) of paragraph (1) of regulation 4 has occurred."

And the events in subparagraph (1) of Regulation 4 are:

"(i) there has been a material increase in the value of the dwelling and a relevant transaction has been subsequently carried out in relation to the whole or any part of it; or

(ii) subject to paragraph (2), there has been a material reduction in the value of the dwelling; or

(iii) the dwelling has become or ceased to be a composite hereditament for the purposes of Part III of the 1998 Act; or

(iv) in the case of a dwelling which continues to be a composite hereditament, there has been an increase or reduction in its domestic use."

25. Whether the word "event" is entirely appropriate to comprehend each of those sub-subparagraphs is to be questioned. But I do not think one can read the word "event" as indicating that there must be some visibly physical change to the locality in order to bring the matter within the scope of the possibility of reduction. The event is simply in this context that there has been material reduction. And one notes that sub-subparagraph (4) refers to there having been an increase or reduction in the domestic use. That will only affect things if that increase or reduction has had an effect upon the value and that may be a question of degree. Mr Mould accepts that even in the case of changes to the physical location, assuming his submissions to be correct, there will be cases when it is not necessarily easy to determine that precise moment at which the change should be said to take place. He has indeed drawn my attention to a decision of Jowitt J in Tilly v Listing Officer of Tower Hamlets RVR 2001 at 250. Jowitt J in that case (which was decided in 1996) simply made the point that there might be circumstances in which the change in the value did not follow immediately upon whatever was the change to the physical location or any change which was material for the purposes of section 24.
26. There might be a buildup, there might be many circumstances which would mean that there was a delay between the relevant change and the decrease in value, and equally the change might be gradual in the circumstances of a case such as this. But there comes a time when the situation is such that the line is crossed and the value is reduced to an extent that justifies a change of banding.
27. Mr Mould further submitted that what this particular subsection was concerned with was a local change, not something that occurred as a result of general changes of, for example in this case, traffic levels countrywide. This was not a local situation; this was simply a result of the increased use of cars or lorries and so the increased use of the motorway system. But that, as it seems to me, is not a material factor because we are concerned here with the effect of the conditions locally on those who live in a particular vicinity. And whether or not those changes result from a general nationwide increase of traffic in this case or whatever may be relevant in any other case, seems to me to be nothing to the point: it is the effect on the individual householder that matters for the purpose of the valuation of his property and so his liability to pay council tax in whatever sum.
28. Accordingly as I say, I do not regard that particular matter as helping Mr Mould's submissions.
29. I put in the course of argument to Mr Mould the situation dealing with roads where a local traffic management scheme resulted in traffic having to use what had thitherto been a relatively quiet route. The new traffic scheme resulted in a substantial increase in traffic and that had a damaging effect upon the values of the houses of those who lived in that particular road. Their locality, as a result of that new traffic management scheme, was changed for the worse. It seems to me that was entirely capable of falling within the expression "change in the physical locality of the dwelling". One must not forgot that the purpose behind these provisions is to try to produce a fair valuation for the purposes of the payment of council tax. And if there has been a change which clearly affects the value of the property, it would seem consistent with the purpose behind the legislation that it should be possible to reduce in fairness to the individual taxpayer. He should not have to pay more than the amount based upon the present value of his dwelling. Of course there have to be hurdles, there has to be a degree of limitation and there are always likely to be some hard cases and some situations where it is not possible to take advantage of the provisions allowing for variation. But I see no good reason to give a narrow construction to the relevant provisions unless it is clearly right that that should be done, particularly when to give such a narrow construction seems to me not to accord with the obvious purpose of the legislation. I recognise, going back to Mr Mould's point on 7(2)(d) of Schedule 6 to the 1988 Act, that Parliament there put the matter beyond doubt. Why, submits Mr Mould, should they have left it out of the 1992 Act when they could so easily have made the matter clear in favour of the taxpayer? That can only mean, he submits, that it should have the narrower construction which he espouses. The other way of looking at it is that paragraph 7(d) was put in that wider form so that there could be no doubt at all, and that what was intended there was that there might be situations where there was an effect upon the relevant hereditament even though it could not be said to have resulted from any change affecting the physical state of the locality. It meant that one did not have to go into questions of whether any change was within the locality or not; it was sufficient that even if it was a change which could be regarded as outside the locality it had a relevant effect upon the hereditament in question. That would mean that the word "physical" and the word "physically" were not given a different construction and would make sense of the provision. The only narrowing here is that it is perhaps necessary to decide that the relevant change is within the locality. It is not possible to look to changes outside the locality which have the relevant effect. There may be very few situations where that would be material. I recognise that. But nonetheless I do not read the difference, even assuming it is material to have regard to the wording in a different Act, to affect the construction which I regard as the correct one.
30. In all those circumstances, in my judgment, the Tribunal was correct, albeit they phrased it in a slightly erroneous fashion, to decide that the changes in question were within the meaning of section 24(10) and accordingly were correct to decide in favour of the proposals. That means that this appeal is dismissed.
31. MR MOULD: The only matter that arises in the light of your Lordship's judgment is the question of an appeal.
32. MR JUSTICE COLLINS: Yes.
33. MR MOULD: And plainly the issues which arise in this case.
34. MR JUSTICE COLLINS: I recognise that we are breaking new ground and it is an important point. I would not be averse to granting you leave to appeal if you wish it in those circumstances.
35. MR MOULD: I would be grateful for that.
36. MR JUSTICE COLLINS: But I think that I should indicate that it must be on terms, the terms being -- and from what you said earlier I don't imagine you will want to resist these -- that whatever the outcome you do not seek costs from either the Tribunal or any of the interested parties.
37. MR MOULD: Yes, that's absolutely right. Forgive me, my Lord.
38. MR JUSTICE COLLINS: Yes.
39. MR MOULD: As to costs we would certainly give that undertaking, and the only other matter relates to time limits, actually. We want to obviously think carefully about your Lordship's judgment.
40. MR JUSTICE COLLINS: I am quite happy to let time run from when you get a copy of my judgment. It looks to me we had better say it will have to start from the beginning of next term.
41. MR MOULD: As your Lordship will recall under the rules your Lordship can give a specific direction as to time within I think a range of up to 35 days maximum. I think that's the practice.
42. MR JUSTICE COLLINS: What I would be minded to do -- it sounds as if I can't guarantee getting you a copy of the judgment before the end of term, but I can by the very beginning of next term. So if I say that your time for putting in an appeal runs from the date when you receive a perfected copy of the judgment that should give you enough time.
43. MR MOULD: I would be grateful if we could have 28 days from that point. That would be helpful.
44. MR JUSTICE COLLINS: What is the normal period?
45. MR MOULD: Twenty-one.
46. MR JUSTICE COLLINS: I don't see why you need more than 21. You have made a note of what I said so you know broadly what I have said.
47. MR MOULD: Yes.
48. MR JUSTICE COLLINS: You simply want the perfected transcript. I don't see why you should have more than 21 days from the date that you receive the transcript.
49. MR MOULD: We are assuming that won't be until next term.
50. MR JUSTICE COLLINS: You might be lucky but I doubt it.
51. MR MOULD: It may not actually be very lucky in the sense -- because if we get it by Friday --
52. MR JUSTICE COLLINS: In any event have you 21 days from the beginning of next term or from the date you receive the transcript, whichever be later.
53. MR MOULD: That's very kind, thank you.
54. MR JUSTICE COLLINS: I think that's the best way of dealing with it.
55. MR MOULD: Thank you very much indeed. (Pause).
56. MR JUSTICE COLLINS: Mr Mould, I have to fill in a form, as you know. What I say is the reasons for decision: a point which has a possibly wide effect and which involves a not altogether straightforward construction with the relevant provisions of the statute.
57. MR MOULD: That's very helpful, thank you.