England and Wales Lands Tribunal

[2000] EWLands RA_34_1999 (02 February 2000)

RA/34/99

LANDS TRIBUNAL ACT 1949

RATING - shop -public works - reduction in value - rents - turnover - agreed assessments - uniformity and correctness - 30% reduction by valuation officer upheld.

IN THE MATTER of an APPEAL against a DECISION

of the LONDON SOUTH EAST VALUATION TRIBUNAL

BETWEEN CHRISTOPHER JOHN BERRILL Appellant

(T/A Cobweb Antiques)

and

WILLIAM JOSEPH HILL

(Valuation Officer) Respondent

Re: 89 Church Street, Croydon

Tribunal Member: P.H.CLARKE Esq FRICS

Hearing under the simplified procedure at 48/49 Chancery Lane,

London WC2 on 13 December 1999

The following cases are referred to in this decision:

Kahn v. Brook (VO) [1971] RA 86

Marsh v. Weston (VO) (1985) 25 RVR 128

Sole v. Henning (VO) [1959] 3 All ER 398

Ladies Hosiery & Underwear Ltd v. West Middlesex Assessment

Committee[1932] 2 KB 679

Dawkins (VO) v. Ash Brothers & Heaton Ltd [1969] 2 AC 366

Howarth v. Price (VO) (1965) 11 RRC 196

K Shoe Shops Ltd v. Hardy (VO) [1980] RA 333, LT

The appellant in person

The respondent valuation officer in person with leave of the Tribunal


 


DECISION OF THE LANDS TRIBUNAL

1. This is an appeal by the ratepayer of a shop against the decision of a local valuation tribunal confirming the valuation officer's reduction of 30% in the assessment in the 1995 rating list for public works. The appeal was heard under the simplified procedure.
2. The appellant ratepayer, Mr Christopher John Berrill, appeared in person and gave evidence. The respondent valuation officer, Mr William Joseph Hill FRICS, appeared in person with leave of the Tribunal and gave evidence.

FACTS

3. 89 Church Street ("the appeal property") is situated on the south side of Church Street in a secondary shopping location in the centre of Croydon. Accommodation is on the basement and ground floor. Mr Berrill occupies the property, trading as Cobweb Antiques, for the sale and refurbishment of antiques with basement storage and a workshop and office at the rear of the ground floor.
4. Mr Berrill holds the appeal property and the second floor flat over on a fifteen year lease from 30 September 1991 at a rent of £8,000 per annum from September 1996. The flat is sub-let at a rent of £4,624.40 per annum fixed in May 1995.
5. Works to construct the Croydon Tramlink through the centre of Croydon ("the Tramlink works") commenced on 6 January 1997 and were largely completed by mid-July 1999. The tramline will stretch for about 28 kilometres. The route through the centre of Croydon is along George Street, Crown Hill and Church Street.
6. The appeal property was originally entered in the 1995 rating list with a rateable value of £8,200. On 21 March 1997 Mr Berrill's then agents made the originating proposal in this appeal to reduce the rateable value on the grounds that:-

"There has been considerable physical change in the locality due to Croydon Tramlink works. The road pattern has changed, parking bays removed, public car parks nearby closed, and considerable disruption has been caused in the locality by general long term road works"

On 21 September 1998 the valuation officer served notice to reduce the rateable value of the appeal property to £7,850. The reason for this notice was that he considered the assessment to be too high having regard to the established tone of the list for Church Street. On 5 October 1998 the valuation officer, having been unable to reach agreement on a reduction due to the Tramlink works, served notice to reduce the assessment of the appeal property by 30% to £5,495.

7. The resultant appeal against the ratepayer's proposal of 21 March 1997 was heard by London South East Valuation Tribunal on 12 May 1999. By a decision dated 11 June 1999 the tribunal confirmed the valuation officer's reduced assessment of £5,495 rateable value. On 8 July 1999 Mr Berrill appealed against that decision to this Tribunal.

ISSUE

8. It is not in dispute that the rateable value of the appeal property disregarding the effects of the Tramlink works is £7,850. The issue is whether the reduction from this figure for the effects of those works should be 55-60% as contended by the appellant or 30% as contended by the valuation officer and determined by the local valuation tribunal.

APPELLANT'S CASE

9. The appellant's case, in a nutshell, is that a reduction of 30% for the Tramlink works is too low for the appeal property compared to the same reduction for properties in the higher part of Church Street (to the east of Old Palace Road) and at Reeves Corner at the junction of Church Street and Drummond Road, where the disruption due to the works was much less. The reduction for the appeal property should be 55-60%.
10. Mr Berrill said that the valuation officer has failed to recognise that Church Street is in two parts, each affected differently by the Tramlink works. There has been more disruption in the lower part and this area was also affected when the higher end of the street was closed.
11. The valuation officer has said that the occupiers of 79, 95, 96 and 103 Church Street have accepted reductions of 30%. This can be rebutted. 79 Church Street is in the higher part of the street. The occupiers of numbers 95 and 96 are not happy with these reductions (see letters dated 4 and 10 May 1999). 103 Church Street is now vacant.
12. The lower end of Church Street has suffered almost twice as much disruption by the works compared to the higher end of the street. A letter dated 10 May 1999 from Tramlink states that the lower end of Church Street was closed for 64 weeks and the higher end for 37 weeks over the same period. A further letter dated 10 November 1999 states that the lower end of Church Street has been closed to traffic since 4 January 1999. Although the works were largely completed in June the closure will be permanent, this part of the street will remain "tram only". The higher end of Church Street has been open to traffic during the year and will remain so. Mr Berrill said that the higher end of Church Street has been closed for 37 weeks (reduction of 30%) and the lower end for 91 weeks (still only 30% reduction).
13. Mr Berrill's turnover has reduced as a result of the Tramlink works. In 1996 it was £116,910; it fell to £88,860 in 1997; and fell again to £76,571 in 1998. The projected turnover for 1999 is £50,000.
14. A comparison of original rateable values and rents shows that the rent 'reasonably expected' in the definition of rateable value at the lower end of Church Street is far below the rateable value and in most cases zero (properties vacant and to let). The rateable value of the appeal property was originally £8,200 and the apportioned rent is £3,320, less than 60% of the rateable value. Numerous shops were to let in the lower part of Church Street (9 out of 20 or 45%) compared to the higher part of the street (two out of 35 properties to let or 6%).
15. Other factors pointing to a substantial reduction for the appeal property are: re-routing of buses, inaccessibility of pavement routes, removal of loading facilities, greater restrictions on parking and the use of the lower end of Church Street for contractors' vehicles and materials.

VALUATION OFFICER'S CASE

16. The lower end of Church Street was not closed for almost double the time that the higher end was closed. To December 1998 the figures were 41 weeks for the higher part and 29 weeks for the lower end. At no time was any part of the street closed to pedestrians. George Street West was closed from April 1997 to August 1999, longer than any period in Church Street, and a 25% reduction has been accepted.
17. Mr Hill said that the material date is 21 March 1997. At that date his valuation reflects a 30% allowance for the effect of the Tramlink works on the rateable value of the appeal property. Apart from the appellant this has been universally accepted throughout Church Street. Furthermore, following liaison meetings in December 1997 and March 1998 and meetings with agents and occupiers in February and April 1998, a valuation report was prepared in May 1998 with offers of a scale of reductions from 20% in George Street (near East Croydon station) to 30% in Church Street. These figures were calculated following a comprehensive review of all the information regarding the effect of the Tramlink works and included consideration of the effect of works at Sheffield, Manchester and Lewisham. The settlements achieved with occupiers are fair and reasonable.
18. Mr Hill referred to a schedule of ten rents for properties in Church Street and George Street which show an increase in rental value from a period before the Tramlink works to various dates during the works. Having regard to these rents the reductions are reasonable. During the investigation and liaison exercise no rental evidence was submitted regarding the effect of the Tramlink works.
19. Mr Hill said that the reductions had regard to turnover and trade and did not rely solely on disruption due to the Tramlink works. Mr Berrill's turnover rose between 1994 and 1995 and then fell in 1996, 1997 and 1998. Other turnover figures provided to the valuation officer were in the range of 4% to 36% during 1997 and 1998. Mr Hill referred to the decisions of this Tribunal in Kahn v. Brook (VO) and Marsh v. Weston (VO).
20. Comparable assessments in Church Street, High Street, Crown Hill and George Street West show that reductions of 30%, 25% and 25% respectively have been accepted by numerous agents and occupiers. These settlements support a 30% reduction for the appeal property.
21. Mr Hill produced details of vacancy rates for Church Street. These show that six shops were vacant at various times at the higher end of the street and nine shops were vacant at the lower end. Of these nine, three face Reeves Corner and had vacancy periods before the Tramlink works commenced. Nothing turns on occupancy levels: they provide no justification for a higher reduction than 30% for 89 Church Street.

DECISION

22. I have inspected Church Street and the centre of Croydon. The Tramlink works had been largely completed at the time of my inspection and I was unable to see at first hand the effect of the works on the appeal property. I have seen the photographs of the works in progress.
23. On the evidence it is impossible to be certain as to the exact effect of the Tramlink works on the rental value of the appeal property (or any other affected property). The burden of proof is therefore important. This is on Mr Berrill, the appellant. To succeed he must prove, on the evidence before me, that the local valuation tribunal were wrong to accept the 30% reduction in the rateable value of 89 Church Street proposed by the valuation officer. In Sole v. Henning (VO) Lord Evershead said (page 399H):-

"...my view is that the [Lands] Tribunal...is entitled to say, and properly performs its function if it does so, 'I am not going to overturn the decision of the court below unless I am satisfied by him who complains of it that there is something wrong as a matter of fact in that court's findings.'"

24. I would emphasise that I am only concerned in this appeal with the accuracy of the rateable value of 89 Church Street. I am not concerned with the accuracy or otherwise of the 30% reduction for the whole of Church Street nor whether the properties at Reeves Corner should have received the same reduction, both matters raised by Mr Berrill to show that a 30% reduction for his property is too low. If this reduction is not found to be incorrect, then evidence that other properties have been assessed incorrectly is generally irrelevant and not evidence to justify a greater reduction for 89 Church Street (Ladies Hosiery Underwear Limited v. West Middlesex Assessment Committee).
25. The rateable value of 89 Church Street in the circumstances of this appeal is equal to the rent on an annual tenancy (on full repairing and insuring terms) on the assumption that the property and locality are as they were on the date of the proposal, 21 March 1997, having regard to the level of values as at 1 April 1993. Matters affecting the property and locality as at 21 March 1997 include those affecting the physical state of the locality. In this appeal the matters affecting the property are the Tramlink works. It is not in dispute that the rateable value of the appeal property, disregarding the works, is £7,850. The scope of the appeal is limited by the originating proposal to the effect of the Tramlink works. The issue is whether the reduction due to those works should be 30% or up to 60% The works affecting the appeal property are those works which affected the property on 21 March 1997 but regard can be had to possible future changes in the scale of those works. In Dawkins (V0) v Ash Brothers and Heaton Limited Lord Wilberforce said ( page 386A): -

"But it would surely be unreasonable to suppose that the hypothetical tenant is so inescapably imprisoned in the present that no anticipation is permitted of what is to come. Whether the test is what would influence his judgment, or what intrinsic qualities the hereditament possesses, any occupier in real life has to ascertain and to consider whatever may make his tenancy more or less advantageous over the period for which he takes it. I appreciate that the statutory hypothesis as to the length of the tenancy may have a bearing on what the tenant may take into account, but, apart from this, it would seem clear that any occupier would take into account, not only any immediately actual defects or disadvantages...but disadvantages or advantages, which he can see coming."

26. The Tramlink works commenced on 6 January 1997 and were in progress at the date of the proposal. They were largely completed by mid-July 1999. The parties have not agreed the scale of the works affecting the appeal property in March 1997 or at any other time. Mr Berrill put in evidence numerous information sheets issued weekly by Tramlink reporting on the progress of the works. The issue dated 17 March 1997 contains details of works to be carried out during the week which included 21 March. These works were to the east of Church Street, in Crown Hill, Middle Street and Bell Hill and in the higher part of Church Street, but apparently no works affected number 89. This is confirmed by a photograph of the lower end of Church Street taken by the valuation officer in April 1997. This shows only minor works which may have been in progress affecting the south side of Church Street close to the appeal property. It is clear therefore that at the date of the proposal, the Tramlink works affecting the appeal property were minor. Future works can, however, be taken into account and would have been in the minds of the hypothetical landlord and the hypothetical tenant negotiating the annual rent (rateable value) on 21 March 1997. The works in progress at that time do not justify a 30% reduction but the future intensification of those works might justify this reduction, or as argued by Mr Berrill, a higher figure. In an attempt to obtain a general picture of the progress of the works, I have looked at the photographs produced by the valuation officer and the Tramlink information sheets put in evidence by Mr Berrill.
27. A photograph dated October 1998 shows works taking place outside the appeal property. In February 1999 extensive works were in progress on the carriageway outside 89 Church Street, (laying of rails) and these were still in progress the following April. By July 1999 the works affecting the lower end of Church Street, were largely complete with the rails laid and the carriageway reinstated. This general picture is confirmed by the Tramlink information sheets. In July 1997 the lower end of Church Street (Old Palace Road to Drummond Road) was closed for a week and then for further periods from August to November 1997, January to February 1998, July to September 1998 and from January 1999.
28. This brief description of the Tramlink works forms the background to the question of the reduction in rental value caused by those works. The extent of the works gives only an indirect indication of the scale of the reduction. For guidance as to this, it is necessary to examine the evidence relating to rents, turnover and comparable assessments.
29. I look first at the rental evidence. The rent of the appeal property is of no assistance in fixing the reduction in rental value due to the Tramlink works. The rent current at the date of the proposal was determined as at September 1996, before the works commenced. I assume that it was fixed on review and that the next review will be September 2001. It is therefore not possible to compare rents of 89 Church Street fixed before and during the works in order to gauge the effect of those works on rental value.
30. The valuation officer put in evidence a schedule of rents for shops in Church Street showing a general rise between 1992 and 1998. I do not find this evidence helpful. All that it shows is that rental levels were generally higher during the period of the works than before the works commenced. It gives no indication whether the rent at the second date in each case (all during the period of the Tramlink works) was depressed due to the works, and, if so, by how much. I give no weight to this evidence.
31. I consider next the turnover of Mr Berrill's business. This was £132, 626 in 1994; it rose to £142,251 in 1995; and then fell to £116,911 in 1996, £88,860 in 1997, £76,571 in 1998 and £50,000 (est) in 1999. Mr Berrill relied on the reduction in turnover each year between 1996 and 1999 to support his claim for a 55-60% reduction in rateable value. He said that turnover between 1996 and 1999 fell by 57%.
32. I do not find these turnover figures helpful for three reasons. First, in the rating hypothesis the appeal property must be assumed to be vacant and to let to a hypothetical tenant and therefore the trade of the actual occupier is not relevant (Marsh v. Weston (VO) ) Secondly, the measure of rateable value (and any reduction in that value) is rental value and not turnover. There is no direct correlation between turnover and rent. Thirdly, Mr Berrill's turnover started to fall before the start of the Tramlink works. There is no evidence to show that the continued fall was wholly or partly caused by the works. I give no weight to this evidence.
33. Finally, I look at comparable assessments. Mr Hill referred to these as "compelling evidence". I would not use that description but they are the best evidence I have of the reduction in value due to the Tramlink works.
34. Mr Hill referred to seven assessments in Church Street where a 30% reduction for the effect of the works has been agreed with the ratepayer or his agent. Five of the properties are shops in the lower part of Church Street, numbers 76-80, 82 and 96 on the opposite side of the road to the appeal property and numbers 95 and 103 on the same side. The assessments for number 76-80, 96, 95 and 103 were agreed with the ratepayer's agents and for number 82 with the ratepayer. To rebut this evidence Mr Berrill produced letters from the occupiers of numbers 95 and 96 stating that the 30% reduction was agreed under duress or misapprehension. These occupiers were both represented by Stuart Edwards Fuller Moon, the agents who submitted the proposal on behalf of Mr Berrill. He also produced a letter from the occupier of 94 Church Street (not on the valuation officer's list) stating that he only accepted the reduction "under duress of circumstances", namely the need for a cash refund. Mr Berrill also drew attention to the fact that 103 Church Street is now empty.
35. Where assessments in the ratings list have been agreed, particularly where the ratepayers were represented by rating surveyors, they provide indirect evidence of value and carry weight, particularly where (as in this appeal) there is no direct rental evidence ...see Howarth v. Price (VO)) Where assessments have been agreed on a common basis this is referred to as 'the tone of the list' and the correctness or otherwise of a challenged assessment falls to be decided by reference to that tone (see K Shoe Shops Limited v. Hardy (VO) at page 54). I hesitate to refer to the valuation officer's five comparables in the lower part of Church Street as establishing a tone (a 30% reduction for the effect of the Tramlink Works) but they are good evidence in this appeal. In four out of the five cases the ratepayers were represented by surveyors, one of them a leading firm of specialist rating surveyors. I treat the letters put in evidence by Mr Berrill with some caution.
36. I return to the scale of the Tramlink works at the lower end of Church Street. From my above review of the evidence regarding those works and my inspection I can accept Mr Berrill's opinion that his shop was more adversely affected by the works than the shops in the higher part of Church Street and the shops on Reeves Corner. I particularly noted on my inspection that a raised tram stop has been built opposite 89 Church Street and that the carriageway at the lower end of Church Street has been re-laid with blocks and made tram only. My clear impression is that the higher part of Church Street suffered less disruption from less extensive works, no tram stop and no relaying of the carriageway. I also agree with Mr Berrill that the shops on Reeves Corner probably did not suffer to the same extent as the nearby shops in Church Street.
37. Thus, the evidence in this appeal points in different directions. On the one hand a 30% reduction has been agreed by five ratepayers at the lower end of Church Street, four of them professionally advised. These are agreements which cannot be ignored. They support the valuation officer's 30% reduction for the appeal property. On the other hand, other evidence points to the conclusion that the Tramlink works at the lower end of Church Street were more extensive than those at the higher end of the street and affecting Reeves Corner. If, therefore, as Mr Berrill contends, 30% is the reduction for the higher end of Church Street and Reeves Corner, then the reduction for his shop should be greater. How is this conflicting evidence to be reconciled?
38. In my judgement the greatest weight should be given to the agreed assessments. They indicate that a 30% reduction is correct for the appeal property. At the hearing, I raised the question of the maximum reduction which would be agreed between a landlord and a tenant in the rating hypothesis. I think it unlikely, and I had no evidence from Mr Berrill on this point, that the hypothetical landlord would have agreed to a reduction in rent greater than 30% for the effect of works of temporary duration. I note from the valuation officer's evidence that tribunal decisions in Sheffield for the effect of the Tramline works from the city centre to Meadowhall were in the bracket of 5 to 25% reductions for city centre shops. At Manchester the reductions were 5 to 20% for the Metro works and in Lewisham, the Lewisham 2000 works resulted in reductions in Lewisham High Street, Lewis Grove and Lee High Road of 10 to 20%. I regard a 30% reduction in central Croydon to be the maximum figure.
39. Although I am not concerned in this appeal with the correctness of assessments other than 89 Church Street, my impression, with the benefit of hindsight, is that the 30% reduction for the higher part of Church Street and for Reeves Corner may be too high having regard to the Tramlink works which affected those locations. This does not, however, assist Mr Berrill. If the maximum reduction of 30% is correct for the appeal property (as evidenced by the agreements) evidence that other properties assessed at the same reduction but less adversely affected by the works cannot be used to justify a further reduction for the appeal property. I referred earlier to the Ladies Hosiery decision, which deals with this point. In the Court of Appeal Scrutton LJ said (page 688): -

"The appellants here, however, say that besides the principle of independent valuation, there is another vital principle: that as between......different hereditaments in the same class, the valuation should be fair and equal. I agree, but in my view there is a third qualification, that the assessing authority should not sacrifice correctness to ensure uniformity, but, if possible, obtain uniformity by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error."

In other words, in the context of this appeal, I should not increase the reduction for the appeal property from the correct level of 30% evidenced by agreements, because the reductions given for other properties may be too high. Correctness should not be sacrificed to uniformity.

40. I find that the best evidence in this appeal is the evidence of comparable assessments indicating that a reduction of 30% for the Tramlink works is correct for the appeal property. The burden of proof is on Mr Berrill and he has not persuaded me that this reduction is too low. He has been unable to show that the decision of the local valuation tribunal is wrong. This is confirmed and the appeal dismissed. I make no order as to costs.

DATED: 2 February 2000

(Signed P H Clarke)