England and Wales Lands Tribunal

[2001] EWLands RA_45_2000 (31 August 2001)


 


RA/45/2000

LANDS TRIBUNAL ACT 1949

RATING – Offices and premises – description of hereditament - condition at material day – rateable value - appeal allowed in part – rateable value determined at £585

IN THE MATTER of an APPEAL against a DECISION of the

LONDON SOUTH EAST VALUATION TRIBUNAL

BETWEEN O S HENRIQUES Appellant

and

BRIAN STEPHENS Respondent

(Valuation Officer)

Re: Office and Premises, First Floor Front,

338 Streatham High Road, London, SW16 6HH

Tribunal Member: P R Francis FRICS

Sitting at: 48/49 Chancery Lane, London, WC2A 1JR

on

6 August 2001

The following cases are referred to in this decision:

Laing (John) & Son Ltd v Kingswood Area Assessment Committee [1949] 1 KB 344

London County Council v Wilkins (VO) [1957] AC 362

The appellant in person

The respondent valuation officer in person, with leave of the Tribunal

© CROWN COPYRIGHT 2001

DECISION

1. Following a proposal for a nil assessment by the ratepayer of offices, this is an appeal by the ratepayer against the decision of a local valuation tribunal which confirmed the valuation officer's reduced assessment in the 1995 rating list at Rateable Value £810. It was heard under the Simplified Procedure (Rule 28, Lands Tribunal Rules 1996).
2. The appellant ratepayer, Mr. O S Henriques, appeared in person. The respondent valuation officer, Mr. Brian Stephens FRICS ("the VO"), appeared in person. In his statement of case, and at the start of the hearing, the appellant made submissions claiming that Mr. Stephens was not authorised to act as valuation officer, but that Mr. Mark Jorgensen BSc FRICS, whose name appeared upon the Valuation Office's letterheading as 'District Valuer and Valuation Officer, London South Group', should have been appearing. In any event, he said, the notice of intention to respond, served on the Lands Tribunal on 14 September 2000 was out of time, according to rule 7 of the Lands Tribunal Rules 1996 (as amended) and his appeal should therefore be upheld with costs.
3. I explained the rules and procedure adopted by the Lands Tribunal in the matter of rating appeals, and confirmed that I was satisfied from the correspondence on the Registrar's file that Mr. Stephens did have such authority, and had leave of this Tribunal to appear. Under rule 7, the respondent has 28 days to give written notice of its intention to respond from the date upon which it was served a copy of the notice of appeal. Mr. Henriques notice of appeal was dated 8 August 2000, and was received by the Lands Tribunal on 11 August 2000. A copy was served on the VO on 22 August 2000, and the notice of intention to respond was received by this Tribunal on 15 September, well within the 28 day period. The VO's notice of intention to respond was dated 14 September 2000 and was signed and given by Mr. Stephens. A copy of the notice was sent to Mr. Henriques with a covering letter of the same date from Mr. Jorgensen (but signed by Mr. Stephens) stating that Mr. Stephens was authorised to act on his behalf as VO. Although Mr. Henriques said that Mr. Stephens could not authorise himself to act as VO, a further letter of authorisation signed by Mr. Jorgensen, and dated 8 September was received by this Tribunal.
4. Prior to the hearing, Mr. Stephens had prepared and submitted to the appellant the draft of a proposed agreed statement of facts, to which he had not responded. At the commencement of the hearing Mr. Henriques said he was prepared to agree the statement "as far as it goes" subject to two points upon which he made lengthy submissions. The first of these related to the description of the hereditament as entered in the rating list, and goes to the heart of the appeal. He said that the draft statement of agreed facts commenced with the words: "The appeal hereditament comprises Offices and Premises known as…….." and this description was wrong. Firstly, in the 1990 rating list it had been described as "Office" in the singular. In both the 1995 and 2000 rating lists, the hereditament was described as "Offices and Premises". Why, he asked, had the description changed when the unit had not?
5. Furthermore, and relating directly to the grounds of appeal, Mr. Henriques said that the Oxford English Dictionary definition of an office was: 'a room or building used as a place of business'. Business was described as 'a trade….buying or selling….a commercial firm….a shop'. His occupation of the unit was not as a place of business, so it could not be described as an office. Also, 'premises' as defined in the dictionary, were 'a house or other building with its grounds and outbuildings'. Patently, therefore the whole description was totally wrong. Mr. Stephens responded by saying that 'offices and premises' was a standard description as it was not possible to include everything that goes to make up a hereditament. It was a 'catch-all' title and the reason it changed in the 1995 rating list was purely to do with the VO's computer system.
6. Mr. Henriques' second point concerned Mr. Stephens's description of the physical nature of the premises, viz: "The accommodation of the appeal hereditament comprises two rooms with painted plastered walls, single glazed double hung sash windows and suspended timber floors". He insisted that it was not two rooms, but that the unit should more accurately be described as: "one room, subdivided". He did, however, confirm that the dividing wall that separated the two 'areas', and which contained a single door allowing movement between the two, had been constructed prior to the date upon which he originally took occupation.
7. From the evidence, and taking into account the above submissions regarding the proposed statement of agreed facts, I find the following facts:

8.1 The appeal property comprised the first floor front accommodation in a four-storey mid-terraced brick and tiled property that had been built around 1900. There were a total of 6 office units on first, second and third floors with two units on each floor known as front and rear respectively. The total net internal area of the appeal unit was agreed at 19.55 sq.m. (210 sq.ft.).

8.2 The access, at the antecedent valuation date, had been from a recessed entrance lobby from the street, through an external door and into a communal hallway, stairs and landing. There was a wc shared with the occupier of the first floor rear office unit located on the half-landing between the first and second floors. There was no central heating or air conditioning, and the building was not served by a lift.

8.3 The premises had been entered in the 1990 rating list as offices at £1,650 RV. An appeal by Mr. Henriques was settled by agreement in November 1992 at £1,000 RV. Following the 1995 revaluation the hereditament had been entered in the 1995 rating list as offices and premises at £810 RV with effect from 1 April 1995. The appeal against that assessment, resulting from an originating proposal date 3 March 2000, was heard by the London South East Valuation Tribunal on 6 July 2000 and by its decision of 27 July 2000 the tribunal confirmed the assessment at that sum, saying it was fair, reasonable and in line with comparable evidence. Notice of appeal to that decision was submitted to the Lands Tribunal on 8 August 2000.

8. Mr. Henriques said, in connection with his grounds of appeal and statement of case, that the decision of the local valuation tribunal did not reflect the evidence that had been before it. The unit, which he had occupied since 1969, but from which he had ceased to trade in February 1991, was comparable to a space for personal, private and voluntary unpaid charitable purposes. There was no fax, internet, sign-board or entryphone, and the telephone number was ex-directory. It was, at the antecedent valuation date, not used for business, commercial or industrial purposes and its description as an office, or offices and premises was therefore incorrect.
9. The building was in exceptionally poor repair and structurally defective. The single shared wc off the landing between the first and second floors was in a disgusting state. There was no seat to the toilet, cold water only to the wash basin, no lock on the door, no clothes peg, no electric light and both loose and missing floorboards. It was a serious health hazard.
10. Of the six units that there had originally been on the first, second, and third floors of the building, all, apart from the space that he occupied, eventually became vacant. Despite the landlord's attempts at re-letting, and the inducements offered, new tenants could not be found. As a result, the landlord eventually sought and obtained, in March 2000, planning permission for conversion of the three upper floors into 3 self-contained flats. There was no market for offices, and therefore the building did not, Mr. Henriques said, fall within the criteria for inclusion within the rating list as it was not rateable and had no rateable value.
11. Mr. Henriques also referred to the fact that the building had been severely damaged by fire on the 30 March 1993 and was therefore, in terms of the fact that the rateable value represented the annual open market rental value at 1 April 1993, unlettable on that date. Again, for this reason, it would have no value.
12. Finally, in his statement of case to this Tribunal, Mr. Henriques suggested that there may have been procedural irregularities in connection with the hearing before the lower tribunal. He did not expand upon those allegations at the hearing. I cannot see how, in the circumstances of this appeal, such suggestions could assist Mr. Henriques. An appeal to the Lands Tribunal, which may be made as of right, involves a complete re-hearing and is not a review of the decision of the LVT. The Lands Tribunal makes its own decision on the evidence and submissions before it. The VO by putting forward, as he has, a lower RV than the £810 fixed by the LVT now accepts that the LVT decision should not stand. He is suggesting that the appeal be allowed to the extent of reducing the RV to £585. I do not therefore propose to deal with Mr. Henriques' allegations of procedural irregularities at the lower tribunal in this decision.
13. Mr. Stephens, who has worked in the Lambeth Valuation Office for the past 12 years, and has, in total, 20 years valuation experience since qualifying as a chartered surveyor, produced a comprehensive proof of evidence and supporting documents. He said that he had been authorised to act as valuation officer in respect of this appeal, having taken over the case from a colleague, who had dealt with the local valuation tribunal appeal. His proof set out the background and recent rating history of the appeal premises, its description, use, rental evidence and comparables, together with his valuation which was less than the figure contended for, and accepted, in the local valuation tribunal appeal.
14. Although Mr. Henriques did not agree the description of the premises, Mr. Stephens said that that area was made up as to two rooms, the larger having an area of 11.97 sq.m. (129 sq.ft.) and the smaller room an area of 7.58 sq.m. (81 sq.ft.). Whilst disputing the appellant's contentions regarding the non-commercial use of the premises, Mr. Stephens said he had re-considered the RV on the basis of the rental and comparable evidence, and had concluded that a revised assessment in the sum of £585 was appropriate.
15. He said that in his opinion the premises were correctly included in the Non-Domestic Rating List, and referred to Laing (John) & Son Ltd v Kingswood Area Assessment Committee [1949] 1 KB 344 and London County Council v Wilkins (VO) [1957] AC 362 which established that there were four ingredients of rateable occupation. Firstly, there must be actual occupation, secondly it must be exclusive for the particular purpose of the occupier, thirdly the occupation must be of some value or benefit to the occupier and fourthly, the occupation must not be for too transient a period.
16. The fact that the appeal premises contained office furniture and equipment, and the fact that contact with the appellant had always been at that address was, Mr. Stephens said, a clear indication of actual occupation. Whilst there was shared access and wc facilities, the appellant had exclusive use of the appeal premises through a single door from the first floor landing. As to beneficial occupation, that did not necessarily mean profitable. It meant it had to be of value to the occupier, and for which he would pay rent. Mr. Henriques had been paying rent on the premises from 1969. Bearing in mind that was some 25 years at the antecedent valuation date, that occupation could certainly not be described as transient.
17. Mr. Stephens accepted that the rent Mr. Henriques paid for the premises was not necessarily conclusive evidence of value for rating purposes, but it should not be disregarded and should be considered in the light of all other available evidence.
18. That evidence included details of the other lettings within the same building as the appeal premises which had been adjusted to take account of the landlords liability for external and internal repairs, buildings insurance and an assumed amount towards the cost of services including cleaning and lighting of communal parts. The third floor rear had been let from 20 May 1991 at £900 pa which his analysis devalued to £38.50 per sq.m. The third floor front had been let from 1 September 1992 at £1,080 pa (£39.50 per sq.m.). The first floor rear had been let from 1 February 1993 at £1,644 pa (£45.50 per sq.m.). The appeal premises, from the return submitted by the appellant, showed a rent that equated to £1,075 pa and that devalued to £42 per sq.m.
19. In cross-examination, Mr. Stephens accepted that he had not inspected any of the other offices internally, as they had now been converted into residential accommodation. His analyses and devaluation had been taken from the rating returns he had referred to, from his external inspection of the building as a whole, and from his internal inspection of the appeal premises. As to the rental figure of £1,075 pa, Mr. Henriques handed in a copy of the judgment of the Wandsworth County Court which appeared to have been received by him on 28 May 1992, relating to an application by him for a review of his tenancy under Part II of the Landlord and Tenant Act 1954. That judgment, Mr. Henriques said, determined an inclusive rent based upon 215 sq.ft. at £5 per sq.ft., which equated to £1,075 per annum but was for a monthly tenancy. It was not an annual lease, and as it was imposed by the court, had less value than a freely negotiated lease upon which the landlord would have the ability to dictate terms. Mr. Stephens said he was not aware of that judgment, but had calculated the annual figure from the information in Mr. Henriques' return for rating purposes.
20. Mr. Stephens also produced a breakdown of 5 assessments on what he considered to be similar premises in Streatham High Road, these having been agreed with occupiers or their acting agents. These showed devaluations ranging from £30 to £42.50 per square metre. The two that were most similar were the first floor front and first floor rear units at 326/328 Streatham High Road, in the same parade as the appeal premises and similar in terms of facilities. These had both been agreed with Dixon Rankin at £30 per sq.m.
21. In his professional opinion, Mr. Stephens said, the rents passing on the other units in 338 Streatham High Road provided the best evidence to reflect the condition of the property, its location and its lack of facilities. The notices requesting the supply of information for Non-Domestic Rating received from the three other occupiers in the building were completed by them in May, June and August 1993 respectively, and this demonstrated that there was a demand for this type of accommodation and that, at those times, the offices were occupied.
22. It was accepted that the rents on the offices in the same building had been subject to various adjustments and, bearing in mind the agreements that had been reached on the very similar units at 326/328 Streatham High Road, it was Mr. Stephens's opinion that, on an analysis of all the available evidence, the appeal premises should also have a rateable value based upon £30 per sq.m., or £585.
23. Accepting that this figure was less than that confirmed by the lower tribunal, Mr. Stephens explained that following the Lands Tribunal hearing on 18 December 2000, at which the appellant failed to appear, and the subsequent Order that the appeal be dismissed, the VO issued a Valuation Office notice on 30 January 2001 reducing the RV of the appeal premises to £585. That was the figure that the respondent had been prepared to defend at the proposed December hearing. The appellant having subsequently applied for a reinstatement of the appeal, and upon production of a medical report succeeding in having the Order set aside, and a new appeal date set, the figure of £585 RV was, Mr. Stephens said, the appropriate figure to be applied in this appeal.
24. Mr. Henriques said he had not received the 30 January notice, but had previously received a letter from Mr. Jorgensen dated 17 November 2000 explaining that Mr. Stephens had reconsidered the matter, and was proposing to revise the RV to £585. In response to questions from the appellant, Mr. Stephens repeated that he had only taken over the papers relating to this case following Mr. Henriques' notice of appeal to the Lands Tribunal, and had not been involved with the earlier assessment. Following his own review and research, and his visit to the appeal premises on 8 November 2000, Mr. Stephens said he concluded a figure based upon £30 per sq.m. was appropriate, and, having been admitted to hospital the very next day, had telephoned Mr. Jorgensen and made arrangements for the revised proposal to be put in hand. Hence Mr. Jorgensen's letter to the appellant of 17 November.
25. In response to the appellant's argument relating to the fire damage in which he had alleged the premises were not capable of being let at 1 April 1993, Mr. Stephens explained that the Antecent Valuation Date for the 1995 rating list was 1 April 1993 (Rating Lists (valuation date) Order 1992 SI 1992/1643). That was the date upon which the rental value falls to be determined reflecting the economic factors at that date. The physical factors are assessed as at the material day - 1 April 1995, the date when the 1995 Rating List came into force (Local Government Finance Act 1988, Schedule 6, para 2(5)) ("the 1988 Act"). No evidence had been produced to prove that the effect of the fire was relevant at that date.
26. Similarly, as to the appellant's references to the overall condition of the property, Mr. Stephens said that the valuation of the appeal hereditament had to be made in accordance with the provisions of Schedule 6 para 2 of the 1988 Act as amended by section 1(2) of the Rating (Valuation) Act 1999. That required the assumption to be made that the hereditament was in a reasonable state of repair but excluding from that assumption any repairs which a reasonable landlord would consider uneconomic. In his view, the landlord would not regard any of the repairs necessary to remedy the stated areas of disrepair to be uneconomic, and there should, therefore, be no reduction in rateable value due to the condition of the property. The lack of cleaning and hygeine relating to the shared wc were not matters relevant to determining the rateable value.
27. Finally, in connection with the fact that planning permission was granted for conversion of parts of the building, including the appeal hereditament, to residential use had no bearing on this appeal as it post-dated the material day. There were no planning issues, Mr. Stephens said, that would have affected the property at the relevant date.

DECISION

28. I have already dealt with the appellant's submissions regarding the valuation officer's authority to act in respect of this appeal, the validity of his notice of intention to respond and the matter of alleged procedural discrepancies at the local valuation tribunal hearing. I deal now, and very shortly, with Mr. Henriques' second initial submission regarding Mr. Stephens's physical description of the premises. Having inspected the property in the afternoon immediately following the hearing, I am satisfied that the appeal premises do indeed comprise two rooms, and I therefore accept that description. However nothing whatsoever turns on that point in terms of the determination of this appeal. The total net internal area was agreed at 19.55 sq.m. (210 sq.ft.), and whether or not the premises comprised one room with a sub-division, or two rooms with an intercommunicating door, makes no difference in determining the dispute.
29. The sole substantive issues remaining for my determination therefore, and the ones that are key to this appeal, are the questions of whether the premises were, at the material date, a hereditament and if so what was the appropriate description and at what value should they be entered into the rating list. I do not think that, as argued by Mr Stephens, the issue of rateable occupation is relevant to this decision. In general, issues of occupation only arise in a proposal where it is necessary to determine the extent of a hereditament. For instance, it may be necessary to determine whether a separate hereditament has been carved out from some more extensive premises. Such an issue does not arise in this case as it was not being suggested by the appellant that his rooms were part of some larger hereditament. Mr Henriques was contending that the condition of the premises was such that they were unlettable on the antecedent valuation date and there was no market for offices in that location on that date; therefore they had no value and were thus not a hereditament. Whether or not he was actually occupying the premises at the relevant date, for whatever purpose, does not, in my judgment, affect the issues to be determined.
30. A hereditament is "property which is, or may become, liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list" (General Rate Act 1967, s.115(1), applied by the Local Government Finance Act 1988, s.64(1)). The appellant's rooms were a unit of property that he had used as a solicitor's office until 1991. Whatever their condition they were clearly capable of some independent use at the material date, at the least for some limited storage. Thus they were a hereditament and fall to be entered within the list.
31. In fact, there was no evidence to suggest that at the material day the premises were not fitted out as offices or capable of use as such. Where premises are fitted out as offices it would not therefore be incorrect to describe them as such simply because the work carried on there, as submitted by Mr Henriques, was private or charitable. At the time of my inspection, although extremely dusty, untidy and in a poor overall state (with the suspended ceiling in the smaller office having recently collapsed), the premises still contained office furniture, typewriters, filing cabinets and an operational telephone. Whatever Mr Henriques is now using the premises for, they are fitted out as offices, and there is nothing to stop them being used for that purpose at any time. They have not physically changed and therefore there are no grounds for them to be taken out of the list.
32. I accept Mr Stephens's explanation that the reason for the change in the description of the appeal premises between the 1990 and 1995 rating lists was purely administrative and related to the computer set up. The dictionary definitions of office and premises as argued by the appellant cannot, in my view, absolve him from liability just because he might not use the hereditament for commercial purposes, or because the part of the property he occupies does not constitute the whole building.
33. Regarding the condition of the premises as a result of the fire on 30 March 1993, I accept Mr Stephens's submissions on this aspect. The material day for the purposes of this appeal was 1 April 1995 and I have heard no evidence to the effect that the premises were not capable of rateable occupation on that date. In any event, as Mr Stephens said, under the provisions of Schedule 6, para 2 of the 1988 Act, as amended by s.1(2) of the Rating (Valuation) Act 1999 required the assumption to be made that the hereditament was in a reasonable state of repair, excluding any repairs that a reasonable landlord would find uneconomic. There was no evidence that any repairs necessitated by the fire had not been carried out by the time of my inspection, or that they had not been effected by the material day.
34. There was no doubt that the shared wc was in an appalling state, and at the time of my inspection, urgent repairs and remediation works were required. This is a matter for the tenant to take up with the landlord (which I believe he has done on numerous occasions). The assumptions to be made, as set out in the above paragraph, apply equally in respect of the state of the wc and I do not think that any repairs, or improvements that may be required to conform with Health and Safety legislation could be considered uneconomic.
35. Finally, in connection with the fact that planning permission has been obtained for the conversion of the premises to residential accommodation, whilst Mr Henriques may well have some justification in suggesting that that is an indicator of substantially reduced demand for office accommodation in the vicinity, it has no relevance to this decision. The permission was not granted until 2000, and was not, therefore, extant at the material day. That was some 5 years earlier, and the justification for an owner seeking permission for alternative use at that time might not have been so strong, in terms of market demand. Even if it were, and if planning permission had existed for a residential conversion at the material day, the non-domestic rates would have continued to be payable until vacant possession was obtained, and the premises vacated.
36. In the light of the above, and on the basis that no evidence has been produced by the appellant to prove that the local valuation tribunal was wrong, I dismiss Mr Henriques' appeal for the determination of a nil value. However, the appeal does succeed to the extent that, in reviewing the case in preparation for this hearing, the VO concluded that a lower rateable value should apply than the one determined by the lower tribunal, in acceptance of the VO's submissions to it.
37. I accept Mr Stephens's evidence, and his professional opinion that the rents passing on the other units at 338 Streatham High Road reflected the condition of the property, and that the agreements reached with agents acting for occupiers of two units at 326/328 Streatham High Road provided the most appropriate evidence for a rateable value based upon £30 per sq.m. or £585. The appellant produced no comparable evidence to support a lower figure, his case being for a nil value, and I therefore determine the rateable value of the premises at the material date, 1 April 1995, at £585.
38. This case having been heard under the Simplified Procedure, I make no award as to costs.

DATED: 31 August 2001

(Signed) P R Francis FRICS