CO/442/2014 
Neutral Citation Number: [2014] EWHC 4142 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION 
THE ADMINISTRATIVE COURT 
Royal Courts of Justice 
Strand
London WC2A 2LL 

Tuesday, 18 November 2014
 
B e f o r e: 

HIS HONOUR JUDGE WORSTER 
(Sitting as a Judge of the High Court) 

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Between: 
DARREN JAMES PENGELLY 
Appellant

v 

THE LISTING OFFICER 
Respondent 
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Computer‑Aided Transcript of the Stenograph Notes of  
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The Appellant appeared in person (assisted by his father)

Mr T Buley (instructed by HMRC Solicitors office) appeared on behalf of the Respondent
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JUDGMENT
HH JUDGE WORSTER:  
1.	This is an appeal brought by Mr Darren Pengelly against a decision of the Valuation Tribunal Pursuant to Regulation 43 of The Valuation Tribunal for England (Council Tax and Rating Appeals) Regulations 2009. As with many statutory appeals, it is an appeal on a point of law.  It is not a rehearing on the merits. The test is essentially the public law test. There are two relevant principles in this case. Firstly whether the decision the tribunal made was so unreasonable as to be irrational, for example if there were simply no evidence to support its findings. Secondly has the decision maker applied the wrong principles of law, or (put in simple terms) asked itself the right question, or taken into account irrelevant matters  Those are the two central issues of the public law test that arise in this case.

2.	Mr Pengelly is the owner of a flat at 21 Gournay Road in Hailsham in East Sussex (“the property”). Unusually for a flat it is a freehold property.  It is built over three garages. I have seen a diagram of it, and as Mr Pengelly's father has pointed out, he was keen to ensure that his son had a freehold property when it was purchased.  

3.	In June 2011 the property was entered on the list at band C.  Mr Pengelly, assisted by his father, asked the Listing Officer to consider that.  On 11 October 2012, the Listing Officer confirmed the decision in a letter in which he decided that the property was indeed within the range of band C. I have that letter at page 115 of the bundle.  

4.	Mr Pengelly appealed to the Valuation Tribunal.  That is an expert tribunal, and it deals with appeals from decisions of Listing Officers.  It has the power to look at the whole of the evidence and to make a finding of fact. In this case that was a finding as to which band this property should be placed. 

5.	That is an appeal on the merits. The parties put forward evidence and the Valuation Tribunal come to its conclusion on the basis of that evidence.  That is in contrast to the appeal that is before me, which is, as I say, simply on a question of law. Mr Buley, who appears for the Listing Officer on the appeal, reminds me that the findings of fact are only challengeable if they are irrational; so far out of the band of what is reasonable that no tribunal properly directing itself could come to that conclusion.

6.	The appeal was heard by two members, with a senior member in the chair. I have the written decision which was sent out dated 10 September 2013 and I have read that. That decision is the starting point for my consideration of this appeal, for those written reasons express what it is the tribunal decided, and why.  

7.	The tribunal dismissed the appeal and confirmed band C. What it was not about, and what is was not obliged to do nor did, was actually provide a valuation, a figure, for this property.  For that is not the question it is asked.  What it is asked is to decide the correct band for this property when assessed in accordance with the statutory basis of valuation.  There is no need for the Valuation Tribunal to actually come up with a precise figure.  What it has to do is assess what is the correct band.

8.	The appellant sought a review of that decision straightaway, but the Vice President of the tribunal decided it was not an appropriate case to review. Hence the appeal to this court.  There are no issues taken as to timing.  

9.	The grounds are set out in the appellant's notice. The first issue is whether the tribunal asked itself the right question. It now seems to be agreed that it did. When I read the papers it seemed to me that at the heart of the appeal was the argument that in reaching its decision the tribunal took account of material that it should not have taken into account. That appears to be the principal complaint. Ground 1 refers to the fact that:
 
... the Listing Officer used a market valuation of the property that does not comply with the 1992 Regulations and is therefore unlawful.  This error prevented the appellant from obtaining a fair reassessment of the property's council tax banding.  
The point is expanded upon at paragraphs 14, 15 and 16: 

The Listing Officer was informed that the use of the freehold sale price did not comply with the requirements of the 1992 Regulations prior to the hearing but made no attempt to comply with the legislation and continued to use an unlawful open market freehold valuation for a flat in his evidence submissions.  

Additionally, it was apparent that none of the Listing Officer's comparable properties were compliant with the 99 year lease assumption requirement, with six being open market sale prices with 125 year leases and the four appellant's property comparisons being freehold open market sale prices.  

These facts were given to the Valuation Tribunal but despite this the Valuation Tribunal have also made a direct comparison using the freehold sale price in its decision notice, demonstrating they have also used a valuation that does not comply with Regulations 6 and 7 of the 1992 Regulations.

10.	That impression was confirmed in the course of submissions from Mr Pengelly (the appellant) assisted by his father. One of the central complaints is that the Listing Officer and (more relevantly for my purposes) the Valuation Tribunal, have used a valuation of the appeal property which is a freehold valuation, rather than the 99 year lease valuation as required by the terms of the Regulations.   
11.	Thirdly, Mr Pengelly was arguing that the conclusion of the tribunal that for valuation purposes there was no material difference between leasehold and freehold, was irrational. Those are the three areas for consideration.   

12.	Mr Pengelly is not a lawyer, nor is his father, and I have given them considerable latitude in the way they have made their submissions, allowing both of them to speak.  It seemed to me that this was an appeal where the appellant had a real sense that something had gone wrong.  I suspect it is not about the money. He seems sincerely convinced that errors have been made. What he is after is a fair decision. In cases such as that I think it is right to allow a degree of latitude.

13.	Regulation 6 of the 1992 Regulations provides that the valuation exercise undertaken both by the Listing Officer, and by the Valuation Tribunal, proceed on a series of common assumptions. Those assumptions include a valuation on the basis of a sale was with vacant possession, that the interest sold was the freehold, or in the case of the flat, a lease for 99 years at a nominal rent. 

14.	It is a simple point but it is worth emphasising that these are Regulations which relate to the valuation exercise - the banding exercise. This not a Regulation which provides, in terms or by implication, that only flats with a lease of 99 years at a nominal rent can be considered in coming to that conclusion.  To make such a provision would be absurd, for there are probably very few cases where you would be able to get a comparable, or a decent set of comparables, if all you could refer to were flats on 99 year leases at a nominal rent. The reason for  having these valuation assumptions is that the valuation is always done on the same basis.  That does not mean to say that all the evidence must also be on that basis.  As I say, to make that sort of requirement would be absurd and unnecessary. Listing Officers and Valuation Tribunals have an expertise and are used to taking information of values in relation to properties which are similar but different, taking account of those differences and then reaching a conclusion.  That is the process by which experts and tribunals usually operate.  If there was something which was identical, the art of valuation would be a very simple one.  

15.	It is a misunderstanding of the requirement of the 1992 Regulations that a Listing Officer or a Valuation Tribunal is only allowed to look at 99 year lease properties.  I raised that with Mr Pengelly in the course of his submissions. In response, his father formulated a secondary argument to the effect that if you are valuing flats, you should not look at freehold because of the significant difference between freehold and leasehold valuation. 
  
16.	There is then the question of whether the tribunal was entitled to conclude as it did that there was no material difference on the facts of this case between the leasehold and the freehold position when considered in 1991. The starting point for a consideration of that issue is that the tribunal is the judge of the facts, and that I am not entitled to interfere with its conclusion on the facts unless there has been an error of law. So I turn to the decision and the written reasons of the tribunal in making the decision to see how it went about its task.

17.	It is not (now) in issue that it asked itself the correct question. That is put beyond doubt when you look at the decision.  Paragraph 7 identifies the issue, and refers to the statutory basis of valuation.  Paragraph 10 records the Listing Officer's submission that whilst the appeal dwelling was freehold he had to consider that the property was held on a 99 year lease at a nominal rate as per the assumptions set out in the Regulations. That was also the case put by the appellant.  It is inconceivable that the tribunal asked itself any other question.  

18.	The written reasons first of all set out the evidence and submissions put to it on behalf of the Listing Officer.  That includes a review of the matters put before it as evidence in support of the Listing Officer's case.  Paragraphs 11 and 12 can be cross referenced to the document at pages 80 and 81 of the bundle.  In reply, Mr Pengelly raised the question of the accuracy of some of the details of what are recorded in relation to the properties on those two pages. But the tribunal had that information before it and was entitled to accept it. It was that information that was analysed at paragraphs 11 and 12 of the written reasons. It took values in 2011 and 2012 and reduced them by a factor (which is explained in the workings) to reach the value in 1991.  

19.	Paragraph 14 records that the Listing Officer accepted there were 27 “broadly similar flats” (is the phrase) in Gournay Road that had been placed in band C, and two other proposals that had been lodged but had not proceeded to appeal.  That is relevant to the “tone of the list”, which is a factor that the tribunal is entitled to take account of.  

20.	There is then a record of the matters that were put by the appellant.  A bundle was provided by Mr Pengelly and his father. It included a significant amount of material: a statement of case; external and internal photographs of the appeal dwelling; a graph showing the property asking prices and selling prices and the number of dwellings that had sold in Hailsham; marketing details of Badger's Walk, Hailsham; Council Tax Practice Notes; details of the purchase of the appeal dwelling; an estate agent's valuation in December 2012; evidence of value of new houses against old properties; marketing details of dwellings in Anglesey Avenue; an extract of the Valuation List for properties in Old Bricklayer, Hailsham which were banded A; and details of a property on the development which was similar to the property but had been marketed as a one bedroom flat with a study.  At paragraph 17 there is a discussion of the new build price premium and concern expressed about the effect that that might have had.  There is then a reference to the flat being freehold.

21.	It is the fact that the property is freehold which is the essential theme of the appellant’s submissions, and particularly those made for him by his father.  Paragraph 18 of the Tribunal’s written reasons records this:

"He understood that although freehold the appeal dwelling had to be valued as a flat and assuming that the lease held was for 99 years at a nominal rent."
I go on to paragraph 21.  The appellant’s argument is summarised in these terms: 

"The Listing Officer had not treated the sale values of the appeal dwelling and other flats within the same development with caution.  He stated that in December 2012 he requested a valuation of the appeal dwellings from a local Estate Agents who gave a value at that time of between £125,000 and £135,000.  He stated that whilst the appeal dwelling was purchased for £164,950 in February 2012 this value included both the premium for being a new build and also for the new fixtures and fittings."

22.	There is then a reference to a Lloyds Bank report showing the difference between old and new properties, and a record of the fact that Mr Pengelly did not agree with the comparables, that they were not relevant as they were "different from the appeal dwelling and therefore would achieve different values and did not assist in providing a value in 1991 of the appeal dwelling". Further details of two flats in Anglesey Avenue are provided and two properties currently being marketed which had been in band A.

23.	So the tribunal took some care to record the matters that were put before it and then went on to make its decision, giving its reasons.  I should emphasise for the benefit of the appellant that it is this decision that I have to consider.  The evidence of the Listing Officer before the tribunal was simply that: evidence.  The tribunal was not bound by what the Listing Officer had concluded but obviously would take into account what was put before it on behalf of the Listing Officer as evidence, as it would take account of the matters that Mr Pengelly and his father had put before it.  

24.	At paragraph 28 of its reasons the Tribunal state as follows:

"The Panel had to consider what value the appeal dwelling would have realised had it been sold on the open market by a willing vendor at the 1 April 1991 but as it stood on the relevant date which was the date it was entered into the Valuation List".  
Again, if confirmation were needed, that demonstrates that the correct question was asked.  

25.	At paragraph 29, there is a reference to the need to exercise caution over new build properties.  The conclusion of the tribunal was that whilst caution should be taken when comparing the value of the new properties to the value of the second‑hand properties, the value of the premium should be disregarded as it formed part of the value of the new dwelling.  

26.		Then at paragraph 30 what seems to me to be an important finding:

"The Panel had been provided with details of other flats within the same development and the differences between them such as the benefit of a garage.  The appeal dwelling was purchased by the appellant for a slightly higher value than other flats in the locality but it accepted that this was due to it being a freehold property and not a leasehold property."  

27.	The Tribunal there recognised that there was a difference between a freehold and a leasehold property. It cannot be argued that that point was not in the mind of the tribunal. For it then went on to find as follows: 

"However, the difference between leasehold flats and a freehold flat was, in 1991 terms, minimal as evidence by the 2012 sales.  The value of fittings and appliances would have made no material difference."

28.	That is a conclusion that Mr Pengelly disagrees with and he produces evidence which he says would demonstrate that it was wrong.  But it is a conclusion that the tribunal was entitled to come to.  There was evidence to support it and it cannot be argued that as a matter of law it is in error.  If this were a complete rehearing on the facts the position might be different but, as I have endeavoured to explain, that is not the nature of this appeal.  

29.	Mr Pengelly senior complains that the Listing Officer's use of the comparables was a disgrace, that his choice of property was appalling and that what they want is a fair valuation and, if there had been a valuation of the property, that would have clarified it.  I accept, if it be relevant, that the views expressed by Mr Pengelly and his father are entirely sincere. They believe something has gone wrong, but I do not detect in the approach of the tribunal or in that finding an error of law in the sense that I have endeavoured to explain.

30.	The tribunal then proceeds to consider other properties. What it is doing here is making its own decision, looking at the evidence that it considers relevant and seeing where that leads it.  It is making that decision with some of the points that Mr Pengelly made in mind, for one can see at the foot of paragraph 32 these words:

"Even allowing for Mr Pengelly's points in relation to the Anglesey Avenue sales and the fact that Mr Pengelly was prepared to pay a good price for the subject property for the reasons stated by his father, the Panel was of the opinion that this and the fact that the subject property benefits from an integral garage, point to 21 Gournay Road as having a value for council tax above the higher limit of band B."

31.	I return to the three grounds of appeal.  Firstly, did the tribunal have the correct statutory assumption in mind in asking itself the question on appeal?  Plainly so.  Secondly, is the tribunal entitled to take account of valuation evidence which refers to freehold or 125 year leasehold properties?  Yes, there is no error of law in that.  Thirdly, is the conclusion that it reached on the facts one which is irrational or Wednesbury unreasonable?  No, it is not.  If the Valuation Tribunal had proceeded on the wrong valuation assumption, that would have been an error of law.  But it did not and, it is not an error to have regard to the purchase of the freehold in reaching its decision.  The Tribunal needs to be alive to the fact that it is not precisely the same valuation basis, but it plainly is alive to that, for it recognises that there is a difference, albeit a minimal difference, between the values of freehold and leasehold in 1991 terms. So for those reasons, none of the grounds of appeal that are raised before this court can succeed and the appeal is dismissed.

MR BULEY:  My Lord, I am very grateful.  I do have an application for costs.  My Lord, there are two issues, obviously, that arise in relation to that.  First of all, the principle and, secondly, the amount, if your Lordship were minded to summarily assess, which would be the ordinary thing to do in a case like this, which has lasted less than a day.  My Lord, on principle I say only two things.  First of all, obviously, the ordinary rule is that costs follow the event, and so we say that applies, subject to anything Mr Pengelly may want to say about it.  Secondly, I do draw your Lordship to the fact that on 4 April this year my instructing solicitor wrote to Mr Pengelly specifically flagging up the fact that he might be liable to pay costs as a losing party and suggesting that he might want to consider taking legal advice.  I can show you the letter if your Lordship wants to see it.  So that may have some relevance.  My Lord, as to amount, we have a schedule of costs, which was sent to Mr Pengelly yesterday by email and he has confirmed that he has seen it.  I am glad to be able to say that the amount that was recorded in that schedule is rather too much, (a) because of an error in the maths and (b) because in the event the hearing has gone shorter than the estimate provided.  Can I hand up to your Lordship a copy of the schedule and also give Mr Pengelly a revised version.  My Lord, in those circumstances, the amount that I am seeking is £5,502.70 in total.  If I just show your Lordship that there are some handwritten amendments, which I will just explain.  First of all, Mr Hothersall's attendance at court was estimated at 4 hours but, in fact, we are simply claiming 2 hours.  So that brings the figure down by £634.  Secondly, I am afraid the maths was just wrong in arriving at the figure recorded in the box of £7,164.  So that has been revised down.  Thirdly, my fee was estimated on the basis again of 4 hours at court and again that has been taken down by 2 hours to £600.  So that hopefully explains the figure.  I am in your Lordship's hands whether you want to hear from Mr Pengelly now or whether you want to ask me about these figures.
JUDGE WORSTER:  Shall I hear from Mr Pengelly first of all on the principle of costs.  Leave the figures to one side for a moment, Mr Pengelly.  The application is that in principle you the pay the costs of the appeal, the principal argument being that the loser normally pays the winner when one gets to a court of this sort.  Is there anything you want to say about that?  I am told you were sent a letter in April.
THE APPELLANT:  Yeah, it didn't allude to what those costs would be.
JUDGE WORSTER:  No, that is why I am dealing with the principle first and then we will come onto figures.
THE APPELLANT:  I understand that there would be costs for this.
JUDGE WORSTER:  I think that must be right, particularly if you had been put on notice of the fact that that is something the court can do.  It would be the normal order.  I will make an order that you should pay the respondent's costs of the appeal.  Then the second step is the amount.  Now, it is normal for the judge to try and assess the amount in a case which has lasted a relatively short time.  The alternative is to go off and get a costs judge to assess it but that takes more time and you have got the costs of the assessment.  So the general rule is that I try and assess it.  I appreciate you are not a lawyer and this might look a frightening amount of money but it is divided up, this schedule, into the first heading: attendances on clients, and you can see hours and various rates, two different rates, a grade A solicitor and a grade D.  Then attendances on opponents, which would be you.  Then attendances on others, which is counsel and the court and that sort of thing, and then the biggest sum: work on documents, there is not a schedule attached to my statement of costs and it may be Mr Buley needs to tell me a bit more about what was done on documents.
MR BULEY:  Are we looking at the entry "work done on documents"?
JUDGE WORSTER:  Yes.
MR BULEY:  I think, in fact, the £3,518 figure there is simply the total of the figures which precede it, it is not a separate item.  That is simply the sum of what I made to be ‑‑ yes, that is the explanation.
JUDGE WORSTER:  That was going to be my question, given that this was not your appeal.
MR BULEY:  What we did do was prepare the bundle for the court.  But it is not £3,500 on documents.  That is my understanding.  Let me check.
JUDGE WORSTER:  I am not sure that is right. 
THE APPELLANT:  Have you got a copy of the work done on documents?
JUDGE WORSTER:  We are just identifying what that box actually means, Mr Pengelly.
MR BULEY:  I had better just check that, my Lord.  My Lord, I am so sorry, I think I have misunderstood this schedule.  I think what I am going to invite your Lordship to do is as follows: if you look at the number of hours claimed prior to the heading "work done on documents", that comes to seven and a half hours.  Can I invite your Lordship to say in addition to that that it was reasonable to spend two and a half hours on documents, effectively, preparing the court bundle, which would make a figure of 10 hours at the rate which is £317 per hour.  I suspect I am underselling Mr Hothersall's work there but in the circumstances, given where we are, I am going to do it that way rather than try and justify a higher figure.  That would be 10 hours work altogether, plus the 2 hours for him, which is separately accounted for below.  I will do the maths in a moment.  Plus attendance at court is £6,34 and then plus the fee for me, which is in total £1,350, which makes £5,054, my Lord.  
JUDGE WORSTER:  I got to £4,854.  Anyway, around about £5,000.  Mr Pengelly? 
THE APPELLANT:  The query I have is the attendances on opponents, telephone calls, would that be telephone calls with myself? 
JUDGE WORSTER:  It depends under which heading.  Some telephone calls to you; letters out is point 8; and telephone calls, point 8.
THE APPELLANT:  Would that be to myself?
JUDGE WORSTER:  I assume so.
THE APPELLANT:  'Cos I've not spoken to Mr Hothersall.  So I'd like to know who he was speaking to 'cos he's not spoken to me or my father on that one.
JUDGE WORSTER:  Right.  Any other queries you have got?  The work done on documents, effectively has been ‑‑ I say removed, what Mr Buley has put forward is a slightly less complex calculation, which is that overall his solicitor has spent about 10 hours on this, two and a half hours being the preparation of the bundle.
THE APPELLANT'S FATHER:  He didn't say he was going to charge for that, to be honest.
JUDGE WORSTER:  A bundle needs to be prepared.
THE APPELLANT'S FATHER:  It would have been nice if he'd told us that up front 'cos we could have just done that.
THE APPELLANT:  The interpretation was that he was doing us a favour, not it was going to cost us.
THE APPELLANT'S FATHER:  And not how much it was going to cost us.
JUDGE WORSTER:  So what is it you say? 
THE APPELLANT:  The telephone call is ‑‑ I haven't spoken to ‑‑
THE APPELLANT'S FATHER:  So we don't really know what that's going to.  Just to say we're not entirely happy with the fact that he's collated it and what he's done and he's going to charge us for it.  He didn't say that at all.  So I'm not too happy with that.
THE APPELLANT:  There is no (Inaudible) compile the bundle. 
JUDGE WORSTER:  Anything else you want to say? 
THE APPELLANT:  It's just an opportunist moment to ‑‑
JUDGE WORSTER:  Sorry?
THE APPELLANT:  I think it was an opportunist moment to say we'll do that.
JUDGE WORSTER:  Mr Buley, before I had seen the statement of costs, it seemed to me to be between £4,000 and £5,000.  So I am minded to assess at £4,500.
MR BULEY:  I am in your Lordship's hands. 
JUDGE WORSTER:  It seems to me 10 hours is probably not out of the way and £4,500 takes account of the points that have just been made by Mr Pengelly and his father.
MR BULEY:  I am content with that.
JUDGE WORSTER:  It seems to me broadly about right.  So what I am going to do, Mr Pengelly, is summarily assess the costs at £4,500.  I have taken account of what you have said and I have reduced the figure from the figure that might be reasonable.  How you pay that is a matter that you might like to speak to Mr Buley about.  The order requires payment within 14 days unless some other agreement it made but you may be able to speak to the lawyers about that before you leave, so at least you know what is going forward.  No doubt you will deal with that, Mr Buley.  Thank you very much.