England and Wales Lands Tribunal

[2000] EWLands RA_28_1999 (15 March 2000)

RA/28/1999

LANDS TRIBUNAL ACT 1949

RATING – Factory and Premises – replacement of part destroyed by fire – alteration to list – evidence of value – tone of list – rateable value £85,400 – appeal dismissed.

IN THE MATTER of an APPEAL against a DECISION of the

BIRMINGHAM VALUATION TRIBUNAL

BETWEEN DUNNETTS (BIRMINGHAM) LIMITED Appellant

and

ERICH ANDREAS GUTT Respondent

(Valuation Officer)

Re: Factory & Premises, 170-172 Kings Road

Tyseley, Birmingham, B11 2AS

Before: P R Francis FRICS

Sitting at: West Midlands Rent Assessment Committee,

Somerset House, 37 Temple Street, Birmingham

on

29 February 2000

Mr Hanbury William Dunnett for the appellant company.

The respondent valuation officer, with leave of the Tribunal.


 


DECISION

1. This is an appeal, heard under the simplified procedure (rule 28, Lands Tribunal Rules 1996) by Dunnetts (Birmingham) Limited ("the appellant company"), the ratepayer, against a decision of the Birmingham Valuation Tribunal ("the VT") relating to a factory and premises at 170-172 Kings Road, Tyseley, Birmingham B11 2AS ("the subject premises"), determining the assessment in the 1995 rating list at Rateable Value £85,400.
2. Mr Hanbury William Dunnett appeared for the appellant company. The respondent valuation officer, Mr. Erich Andreas Gutt ARICS appeared in person with leave of the Tribunal, and gave valuation evidence. It was agreed that the material date for the consideration of this appeal was 26 August 1998.
3. The parties had agreed a statement of facts and issues. From this, and the evidence given at the hearing, I find the following facts:

3.1 The sole issue to be determined by this Tribunal is to establish the correct rateable value for the appeal hereditament, at the material day, having regard to the prevailing values as at 1 April 1993.

3.2 The subject premises comprise a purpose built industrial property, part constructed in c.1910 of brick and slate and extending to 3,469 sq m (37,341 sq ft), and part of modern portal frame construction, extending to 1,774.6 sq m (19,102 sq ft), built in 1998. The total area is thus 5,243.6 sq m (56,443 sq ft). They are located in an established industrial location in Tyseley, about 3 miles south-east of Birmingham City Centre.

3.3 The property had a compiled list entry, under the 1995 re-valuation, in the local Non-Domestic Rating List for Birmingham City Council at Rateable Value ("RV") £51,000. In April 1997 approximately one third of the subject premises was destroyed by fire and the Valuation Officer altered the list to RV £37,750, a reduction of £13,250, with an effective date of 15 April 1997.

3.4 Following re-construction of the fire damaged area (the portal framed section) in 1998, the Valuation Officer altered the list to RV £90,000 with an effective date of 9 April 1998. On 3 September 1998 the appellant company submitted a proposal challenging the revised rateable value of £90,000.. As the proposal was not withdrawn, and no alternative valuation was agreed, the Valuation Officer submitted an appeal to the Birmingham Valuation Tribunal. In a decision dated 26 May 1999, the VT determined a RV of £85,400 and confirmed the effective date at 9 April 1998.

3.5 Notice of Appeal to the Lands Tribunal was given by the appellant company on 15 June 1999.

Appellant's case.

4. Mr. Dunnett said that the reason his company had submitted an appeal to this Tribunal was that it wants to establish "that non-domestic rating is unfair, unintelligible and bordering upon the farcical." In respect of its own premises, the Valuation Officer had given insufficient weight to the circumstances of the fire, in that the new part of the building was a straight replacement of the old, and should have been valued as such. Mr. Dunnett could not comprehend why the RV had been so substantially increased when the building was to all intents and purposes a direct replacement of the part that was destroyed by fire, had no water laid on hence no sprinkler system and no toilets. As to the works offices, within the new part of the building, he said that the four original ones had been replaced by four new ones, so there was no difference there.
5. Furthermore, the new building was some 140 sq m (1,500 sq ft) smaller than that which it replaced, so how could a reduction of £13,250 (which was obviously what the Valuation Officer thought the part destroyed by fire had been worth), convert into an increase to £51,250 in the latest assessment? It was not, he said, as if a new building was necessarily trouble and maintenance free. He said that when it was finished, there was a snagging list of 116 items that needed to be attended to.
6. Mr. Dunnett said that the Valuation Officer's rateable values (used in his comparables) were inconsistent, some thirty-three different rates being shown in all, and it was his submission that there should be a single rate for industrial/manufacturing areas and one rate for offices. He was also suspicious of the VO's methodology, especially in reference to the fact that despite the value of the premises having been calculated by the referencer at £88,000 for the latest alteration, the VO had proposed £90,000. Therefore, if that figure had been accepted by the appellant, it would have been paying rates based upon an overstated amount, and the VO would have thus been breaking the law.
7. Mr Dunnett concluded by saying that under the circumstances the appellant company was prepared to "double Mr. Gutt's figure of £13,250 which when added to the previous rateable value of £51,000 makes £64,250, which I suggest should be rounded up to £65,000."
8. In cross-examination Mr. Dunnett accepted that Tyseley had a mixture of old and new buildings and that whilst he had originally been saying that the new part of the premises should be valued at exactly the same figure as the old part, he was now offering a compromise that acknowledged some increase was appropriate. To construct a new building identical to the 1910 original would also have cost double what the new portal frame unit cost. He accepted that, in 1995 when the re-valuation was first carried out, values for new and old buildings were also different. Mr. Dunnett said that in essence, he was unhappy with the way in which the VO had re-assessed the premises – he had not asked for the fire, and could not understand why he was now having to pay so much more.

Respondent's case.

9. Mr. Gutt explained that, following the fire in 1997, he had not valued the destroyed part in isolation at £13,250 as Mr. Dunnett had suggested. He said that he had reduced the overall assessment by that amount, and that took into account an element of quantity allowance. He said it was not possible to value parts of the building in isolation, and the overall picture needed to be considered. For instance, if the two parts were valued as separate hereditaments, the total rateable value would be more than if the same area were valued singly. This was because the larger the hereditament in terms of area, the lower the value per sq m would be – "the quantity allowance".
10. He explained the legal basis of valuation as set out in Schedule 6 to the Local Government Finance Act 1988, the net effect of which is that rateable value is determined by reference to the general level of rental values prevailing as at 1 April 1993, but the physical state of the hereditament, and its locality, are to be taken at the material day which, in this case, was 26 August 1998. The effective date, i.e., the date upon which the circumstances giving rise to the alteration arose, namely the date the replacement building was completed, was agreed at 9 April 1998.
11. Mr. Gutt said it was the respondent's contention that the replacement building, being of new, portal frame construction, should be valued having regard to the levels of value agreed on comparable assessments for modern properties, or older properties which benefit from modern additions; in other words, a like for like comparison. In his valuation (set out at Appendix 1) he had taken the workshop/manufacturing space in the original, 1910 part of the building at £10 per sq m, and applied a 35 per cent uplift to the offices and 20 per cent for staff-rooms, canteen and store. In respect of the new addition, he had taken a figure for the warehouse space, including a 10 per cent allowance for the fact that it was an addition to an original building, at £30 per sq m with a ten per cent uplift, to £33 per sq m for the two small works offices contained therein. He had then made a 5 per cent reduction from the total figure for the new part to reflect the lack of water and toilet facilities. This, in total, amounted to £85,400 (the figure applied by the VT – Mr. Gutt acknowledging that tribunal's reduction from his original proposal), and is the value now proposed.
12. Mr. Gutt referred to his comparables which, he said, fully supported his figures for the subject property, and clearly demonstrated to the appellant how the system of assessment worked. Firstly, 107-111 Great Barr Street, Birmingham, B.9 which was a modern, purpose built industrial premises of portal frame construction in an established industrial area 1 mile east of the city centre. That building had a total area of 2,783 sq m, so was somewhat smaller than the appeal property. The workshops had been assessed at £35 per sq m and the offices at £47.25 per sq m giving a rateable value of £97,500.
13. 33 Pitsford Street, Birmingham B.18 was a very large (7,893 sq m) modern Portal frame industrial property 1 mile north-west of the city centre, constructed in 1983 and extended in 1995. A quantity allowance had been applied and the workshop/primary stores were assessed at £32.35 per sq m and the offices at £43.70 giving a rateable value of £260,000 which had been agreed with the occupiers' surveyors in October 1996.
14. Acorn Storage (former Bus Depot), Harborne Lane, Birmingham B.17. A large industrial/storage premises with high eaves and located in a mixed commercial/residential area of Selly Oak, about three miles from the city centre. Originally constructed in 1910-1920, and partly refurbished by the present occupier, the warehouse is assessed at £13 per sq m. The building has a small reception area (£15.50 per sq m) and some good quality stores (£15.50 and £13.00 per sq m). The overall area is 5,329 sq m and Mr. Gutt said that formerly, when it had been a bus depot it had been assessed to the main areas at £11.00 per sq m, but the figures of £13.00 represented its current warehouse use. He said this comparable, in particular, demonstrated the level of values applicable to older buildings.
15. 27 Factory Road, Birmingham, B.18 is another c.1920 purpose built industrial property of 5,551 sq m where the primary workshops and stores had been agreed at £10.60 per sq m, with offices at £14.30 and from which a 2.5 per cent overall reduction had been made to reflect its poor access and location. The rateable value of £59,000 was agreed with the occupiers' surveyors in July 1995.
16. 203-207 Tame Road, Birmingham, B6 comprises commercial premises of mixed origin including an area of pre 1919 workshops (£12.00 per sq m), pre 1919 terraced house converted to offices (£16.20 per sq m), inter-war workshops (£17.80 per sq m) and a workshop built in 1993 (£37.50 per sq m) and small modern office (£50.60 per sq m). The total area amounts to 1620 sq m, and with allowances for car parking and plant and machinery, the assessment was agreed with the occupiers' surveyors in April 1996 at £47,500.
17. 76 Wharfedale Road, Tyseley, Birmingham, B.11. Located about half a mile from the subject property, this is a purpose built industrial premises where the original part was constructed in 1957, with a modern workshop extension added in 1995. The older part was assessed at £27.00 per sq m for the workshops and £37.45 per sq m for the offices, with the new part (all workshops) assessed at £35.65 per sq m. Both this property, and 203-207 Tame Road demonstrated, Mr. Gutt said, the range of values that applied between older and more modern buildings.
18. 198 Kings Road, Birmingham, B11. Close to the subject property, and extending to 2,326 sq m, this is 1945 built industrial property where the workshops were assessed at £15.40 per sq m with offices at £20.80 per sq m. This property had been referred to by the appellant at the VT hearing and Mr Dunnett queried the disparity in areas between those on a set of estate agents sales particulars, and those in the Valuation Office's calculations. An explanation was provided as to the difference between gross internal areas, which had probably been used by the agents, and net internal areas taken, in accordance with the RICS Code of Measuring Practice, by the Valuation Office. Mr. Dunnett also pointed out that the Valuation Officer's plan of the premises, in his evidence, was incorrect.
19. Mr. Gutt concluded by saying that the comparable evidence clearly showed that the assessments of £10.00 per sq m for the older part of the subject property, with a 35 per cent uplift for the offices, and £30.00 per sq m for the newer part (which included a ten per cent allowance for the fact that it was an addition) was fair. He said that Mr. Dunnett had conceded that the modern addition supports a higher figure, but had failed to adduce any evidence to support his "offer" of £65,000. Mr. Gutt therefore sought confirmation of the assessment at £85,400 and dismissal of the appeal.
20. Mr. Dunnett said that whilst he was not disputing the figures in Mr. Gutt's comparables, he noted that the assessments did not relate to rents actually paid, and asked how the Valuation Officer could arrive at figures without having that knowledge. Mr. Gutt explained how the Valuation Office set about establishing rental values at the antecedent valuation date and that by the time the new list had been in operation for a period of time, a "Tone of List" was set. Thus, by the time the re-assessment of the appeal premises took place, there was a plethora of evidence of settlements and agreements that made establishing the true value a straightforward and accurate exercise.

Decision.

21. At the hearing, I explained to Mr Dunnett that the jurisdiction of the Lands Tribunal did not extend to a review of the non-domestic rating system, and it was not for me to devise a new system, or comment upon his opinion that "non-domestic rating is unfair, unintelligible and bordering upon the farcical."
22. I inspected the subject property on the afternoon of the hearing in the company of Mr. Dunnett.
23. I am satisfied, on the evidence produced by the respondent Valuation Officer, that his assessment of the appeal premises fairly reflects the tone of the list. In respect of the older part of the premises, a figure of £10.00 per sq m had been applied and not one of his comparables had been assessed at less. The nearest was 27 Factory Road, a smaller 1920 built property at £10.60 per sq m.
24. Likewise, the new addition, valued at £30 per sq m for the warehouse/workshop part appears reasonable in the light of the comparables, and in my judgment, more than adequately takes into account the fact that this is an addition to the original premises, rather than a separate hereditament. Whilst it might be argued (although it was not) that the comparables produced were selective, I found them to be a representative selection of broadly similar properties, and the inclusion of those which had both old and modern constructions was particularly helpful. In respect of Mr. Dunnett's comment that there were thirty-three different figures, of per sq m value, in the Valuation Officer's comparables I am satisfied that the reasons for variations due to location, access, layout etc., were adequately explained at the hearing.
25. Also, at the hearing, Mr Dunnett accepted the fact that even though the new part of the premises was a direct replacement of the area that had been destroyed by fire a higher figure was applicable for rating purposes, but did not produce any evidence to support his suggested figure, or any figure lower than that proposed by the respondent Valuation Officer. The burden of proof was on the appellant company to prove that the decision of the Birmingham Valuation Tribunal was wrong, but it has failed to do so.
26. I therefore find for the respondent and determine the rateable value of the subject property at £85,400. The appeal is dismissed.
27. I sought submissions on costs from both parties, in the light of Rule 28 (11) of the Lands Tribunal Rules 1996, which provides that no award shall be made in relation to the costs of the proceedings, except:

a) in cases where an offer of settlement has been made by a party and the Tribunal considers it appropriate to have regard to the fact that such an offer has been made; or

b) in cases in which the Tribunal regards the circumstances as exceptional.

Neither party wished to make an application, and as I do not consider any of the circumstances to be exceptional, I make no award as to costs.

DATED: 15 March 2000

(Signed) P.R.Francis FRICS