England and Wales Lands Tribunal

[2001] EWLands RA_57_2000 (08 June 2001)

RA/57/2000

LANDS TRIBUNAL ACT 1949

RATING – High Street shop – effect of public works – temporary reduction in value – turnover – comparison with nearby premises –appeal dismissed

IN THE MATTER of an APPEAL against a DECISION of

SURREY VALUATION TRIBUNAL

BETWEEN LA BOULANGERIE LIMITED Appellant

and

MICHAEL JACOBS Respondent

(Valuation Officer)

Re: 142 High Street, Guildford, Surrey, GU1 3HJ

Tribunal Member: P R Francis FRICS

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

on

21 May 2001

Cases referred to in this decision:

Berrill v Hill (VO) [2000] RA 194

Kenneth J Joyner, Chairman, La Boulangerie Limited for the appellant Company, with leave of the Tribunal

Michael A G Jacobs MRICS, 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 La Boulangerie Ltd ("the appellant"), occupier and ratepayer of shop premises at 142 High Street, Guildford, Surrey ("the appeal premises") against a decision of the Surrey Valuation Tribunal ("the VT") confirming the Valuation Officer's ("the VO") refusal to approve a temporary reduction in the assessment in the 1995 rating list resulting from nearby public works.
2. Mr. Kenneth Joyner, Chairman of the appellant Company, appeared in person and gave evidence of fact. The respondent VO, Mr. Michael Jacobs MRICS, appeared in person with leave of the Tribunal, and gave evidence.

FACTS

3. From the written and oral evidence presented by the parties, and from the inspection I made of the subject premises and surrounding area on 22 May 2001, I find the following facts:

3.1 The appeal premises comprise a ground floor lock-up shop and bakery situated on the southern side of a cobbled section of the High Street, slightly off the peak retail area and approximately midway between Tunsgate Arch (a secondary shopping street linking High Street with Sydenham Road) and Holy Trinity Church.

3.2 The bakery shop has, immediately to the left (when viewing from the front), a narrow covered passageway which leads from the High Street into Milkhouse Gate, a pedestrian walkway that leads to Milkhouse Gate Square and Sydenham Road. The passageway is over-sailed towards the forward section of the appeal premises by part of Tudor Rose Restaurant which occupies two upper floors of this 17^th Century building, and is subject to a separate rating assessment. There are approximately 5 steps up into the passage from the High Street, and towards the rear of the covered area it is approximately 1 metre wide. It then broadens out into a slightly wider pedestrian lane immediately to the rear of the appeal premises, into which there is a secondary access adjacent to the only entrance to Tudor Rose Restaurant.

3.3 Milkhouse Gate continues uphill, past a small restaurant and specialist shops and leads into Milkhouse Gate Square which is immediately adjacent to the new Sydenham Road car park (the construction of which and the disruption and disturbance caused by it being the reason for this appeal). Milkhouse Gate Square also has a pedestrian access onto Tunsgate.

3.4 The appeal premises are occupied leasehold by the appellant, and trade as "La Boulangerie". The appellant also occupies the first and second floor premises above, but they are understood to be subject to a different lease, and are the subject of a separate appeal.

3.6 On 31 January 1999 Guildford Borough Council closed the Sydenham Road multi-storey car park for the purposes of demolishing it, and constructing a new, smaller multi-storey car park with a roof-top restaurant and a high-level pedestrian link into the rear of Sainsbury's supermarket ("the works"). The principal pedestrian access and egress point would be onto Sydenham Road at street level, a few metres from the top of Milkhouse Gate Square.

3.7 The demolition works necessitated the temporary, short-term closure of Sydenham Road and Milkhouse Gate, following which, for the duration of re-building, Sydenham Road was restricted to one-way traffic, and Milkhouse Gate Square was partially sectioned off by builders' hoardings, although pedestrian access through to the High Street was still possible.

3.8 The reconstruction works took about 18 months, the new car-park being partially opened on 15 August 2000 and declared fully open on 7 November 2000.

3.9 An assessment of £41,400 was entered into the 1995 rating list for the appeal premises with an effective date of 14 March 1996 (due to an address change). On 14 June 1999 the appellant made a proposal seeking a reduction to £1 as from 1 February 1999 on both the Tudor Rose Restaurant and the appeal premises on the grounds that the joint turnover of the two businesses had been reduced by approximately £1,000 per week due to the southern end of Milkhouse Gate being largely hidden from public view by the builders' hoardings, and regularly obstructed by lorries and building materials. Shoppers who would normally have used Milkhouse Gate as a route to the High Street from the Sydenham Road car-park, and the other parking facilities at Bright Hill and in the adjacent roads were, therefore, forced to use Tunsgate or the footpaths on either side of Holy Trinity Church.

3.10 Failure to reach agreement on the proposal resulted in an appeal to the Surrey Valuation Tribunal on 25 July 2000. By its decision of 25 September 2000 the appeal was dismissed, and no alteration was made to the rating list.

3.11 Notice of Appeal was made to the Lands Tribunal on 9 October 2000.

ISSUE

4. It is not in dispute that the rateable value of the appeal premises disregarding the effects of the works is £41,400. The issue is whether there should be a reduction from this figure for the effects of those works, and if so what percentage. Although the appellant did not specify a percentage reduction that would be acceptable, the respondent VO contended that it should be nil.
5. Although the initial proposal referred to in para 3.9 above related to both La Boulangerie and The Tudor Rose Restaurant, this appeal relates only to the former.

APPELLANT'S CASE

6. Mr. Joyner said that the loss of turnover suffered by the appeal premises could only be attributable to the fact that customers, who used purchases of bread and cakes as a 'last port of call' before returning to their cars, were not using Milkhouse Gate for the duration of the works. They had to park in other car-parks, or in the mainly residential streets off Sydenham Road and due to the obstructions and difficulties they would encounter if they tried to walk through Milkhouse Gate, had to use other routes such as Tunsgate, or the footpaths to the side of Holy Trinity Church.
7. He said that, whilst accepting the shop's principal frontage was onto the High Street, there was a secondary access at the rear onto Milkhouse Gate which customers often used, this being adjacent to the small display window that faced up the footpath - one of the busiest medieval gateways and a 'short cut' into the High Street.
8. With the southern end of Milkhouse Gate and Milkhouse Gate Square being totally blocked off to the public for a period of one month when the demolition was taking place and sporadically closed thereafter, and for the rest of the construction period being severely restricted, a substantial amount of passing trade had been lost. It was illogical, Mr Joyner said, for the VT to conclude that the rental value would not have been reduced when customers were having to walk round three sides of a rectangle, whereas previously they could have walked down just one side.
9. Mr. Joyner said that he could not accept the VO's contention that because none of the shops in the High Street had been affected by the works, the appeal premises were also not entitled to a reduction. La Boulangerie was, in effect, a corner shop and derived a substantial proportion of its trade from the side road that was Milkhouse Gate. All the other shops in Milkhouse Gate had been offered reductions of 25 per cent (including the Tudor Rose Restaurant) and several in Tunsgate and Sydenham Road had also had their rates temporarily reduced. The VO's opinion was, therefore inconsistent.
10. In cross-examination Mr. Joyner said he did not accept the argument that Mr. Jacobs had used in referring to the Lands Tribunal case of Berrill v Hill (VO) [2000] RA 194 that the nature of the appellant's trade could not be taken into account. The drop in turnover that (in response to a question from me) was only attributable to the effect of the works, and to no other factors such as competition, must, he said, affect the rental value. In his view, whilst the effect on his particular type of business was greater, for the reasons he had stated, any trader would have suffered to some extent. No evidence had been produced to disprove this theory.

RESPONDENT'S CASE

11. Mr. Jacobs is a chartered surveyor with the Valuation Office Agency and has 32 years valuation experience in London and the South-East, 10 years of which have been spent in the Guildford area. He said that Guildford town-centre is well served by paying car-parks, there being 17 surface and 5 multi-storey car parks (including the new Sydenham Road car-park – now known as Castle Car Park) and there are in excess of 5,000 spaces in total. There was sufficient capacity, therefore, for the temporary loss of about 10 per cent of the spaces not to make a material difference.
12. Although unable to produce any direct rental evidence to show the effect of the works, Mr. Jacobs produced plans and schedules showing the level of the reductions that had been negotiated with town-centre retail and office occupiers in connection with the works in question and 3 other major redevelopment schemes. As to the Sydenham Road car-park scheme, a range of reductions had been agreed from 5 to 15 per cent in Tunsgate, 20 per cent for two shops in Sydenham Road and from 10 to 25 per cent in Milkhouse Gate.
13. He said that the reason for the reductions in Milkhouse Gate was because all of the premises in question had access only onto that footpath, whereas the appeal premises was principally a High Street property and the access onto Milkhouse Gate referred to by the appellant was very secondary and rarely used. Tunsgate was a major access route between Sydenham Road and the High Street, whereas Milkhouse Gate was extremely narrow especially where it passed the appeal premises – being only the width of an adult's shoulders and therefore less used.
14. The fact that only five proposals had been received from High Street traders out of a possible hundred or so was an indication, Mr. Jacobs said, that there was no reduction in value to High Street properties. This was especially so as 4 of the proposals had been settled at nil reduction, the only one remaining being the appeal premises.
15. In respect of the three other schemes, Mr. Jacobs said that his schedules showed that in two of them reductions of 5 to 10 per cent had been given to premises that were very close and in the third, the major redevelopment of the House of Fraser store, no reductions had been given despite the size of the scheme. This was because Guildford, being second only to Kingston-upon-Thames as a major retail centre in Surrey had a retail economy that was robust enough to withstand such disruptions in terms of demand and rental values. With no evidence having been forthcoming from the parties to a VT appeal, all appeals were withdrawn prior to a hearing.
16. Refuting the appellant's contention that the appeal premises' position adjacent to Milkhouse Gate made it an important last port of call for people collecting bread, Mr. Jacobs said there are many more cut-throughs between the High Street and Sydenham Road including Tunsgate, Holy Trinity churchyard and Chapel Street. The temporary closure and obstruction of Milkhouse Gate would not, in his opinion, affect the rental value of the appeal premises. In any event, the Lands Tribunal decision in Berrill meant that the premises had to be valued vacant and to let, and the measure of rateable value is rental value and not turnover. Prospective occupiers of High Street premises would not reduce their bid as a result of the works because they would not see their trading opportunities being affected.
17. In cross-examination Mr. Jacobs accepted that the car-park works would have caused a 'blip' in trade and trading patterns but only on those premises upon which he had agreed or offered reductions. He could offer no explanation for the appellant's alleged fall in turnover during the contract period but reiterated that turnover was not a relevant factor to be taken into consideration in valuation terms.

DECISION

18. To succeed in this appeal, the burden of proof is upon the appellant to show that the VT was wrong to conclude that, in accordance with the definition of Rateable Value as contained in Schedule 6 of The Local Government Finance Act 1988 as amended by the Rating (Valuation) Act 1999, a hypothetical landlord would not have accepted a lower rental bid for the premises as a result of the works.
19. The only evidence that Mr. Joyner produced was a schedule of turnover figures that, he said, showed reduced weekly income during the period that the car-park works were being carried out. He said that many of his customers who used Milkhouse Gate as a short cut to the car-parks in and off Sydenham Road used the secondary entrance at the rear of his premises, immediately adjoining the only entrance to the Tudor Rose Restaurant, to pick up their fresh bread and cakes. As a result of the temporary closure of, and obstructions to, Milkhouse Gate those customers had to use other routes to get to their cars.
20. Mr. Jacobs, correctly in my judgment, referred to the decision in Berrill in which the member, P H Clarke FRICS said at para 29 in response to turnover figures submitted in evidence by the appellant:

"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".

Even if I were to accept Mr. Joyner's submissions that a temporary reduction in turnover caused by outside influences would affect the rental, and thus the rateable value, I found his schedule to be of little assistance. It commenced in the week that the old car-park was closed (6 February 1999) and ran up to only 9 February 2000 – almost a full year before the appellant suggested business was beginning to get back to normal. I am unable therefore to observe the pattern of trading in the period before the works started, and for some 6 months before they were completed. What is evident, however, is that during the pre-Christmas trading period in November and December 1999 turnover in comparison with the previous year was down between 30 and 70 per cent.

21. If anything, taking into account the narrow, winding and inconvenient section of Milkhouse Gate at the High Street end, and the fact that (as was clear to me when inspecting the premises and surrounds) the accesses through Tunsgate and Holy Trinity churchyard are easily accessible and very close-by, the figures suggest to me that there must have been other influences affecting trade. However, for the reasons given I attach no weight to the turnover figures.
22. What could be argued to affect rental value would be the temporary closure of a return frontage, and an important secondary access from it. There can be no doubt that the principal frontage of the appeal premises is onto the High Street, and it would only be those customers and potential customers who use Milkhouse Gate as an access to the car-parks in and around Sydenham Road who would be likely to use a side or rear door. In my view, there is no reason for them to do so. The large step down into the rear of the shop from pavement level from this rear access, together with the configuration of the shop being as it is – with the main High Street frontage area being at a lower level, indicates to me that its use for public access is both unsafe and unnecessary.
23. Mr. Joyner produced no evidence to satisfy me that this secondary access was anything other than a convenient entrance to the rear of the shop and the bakery area behind for staff, which was also, occasionally, used by customers.
24. With the lower section of Milkhouse Gate, where it adjoins the appeal premises, being a narrow alleyway having a set of steep steps onto the High Street, and the only 'return' window being the small display window facing south down the lane at the back of the shop, I cannot accept the appellants suggestion that it is a corner shop gaining trade from both thoroughfares. Users of this short cut to the car-park with pushchairs would find it, in my view, extremely inconvenient and those with disabilities would find the steps and narrow passageway impossible to negotiate.
25. I accept Mr. Jacobs' submissions that the majority of people would use Tunsgate, which is a wide street, and the imposing Tunsgate Arch, a wide, covered and paved area, or the footpaths to either side of Holy Trinity Church to gain access to the High Street. There are also a number of other car-parks serving the centre of Guildford and the suggestion that the temporary loss of the parking facilities in Sydenham Road would create little effect on trading patterns in the High Street area seems to me to be entirely reasonable.
26. The arguments for temporary reductions in the assessments of the shops in Milkhouse Gate, including the Tudor Rose Restaurant, are entirely different in that they all have access solely off that passageway. There is no doubt in my mind that the appeal premises are, to all intents and purposes, a High Street shop, with their principal customer access from there. Even if there was any merit in the appellant's argument that the bakers' is the last port of call before customers return to their cars there is, in my judgment, no material difference if they have to walk a few metres further via Tunsgate or the churchyard.
27. As I have said, the burden was upon Mr. Joyner to prove that the rental value of the appeal premises has been temporarily reduced, but I am not persuaded that it has. The key factor is what the market would pay for the premises and in my judgment, despite the lack of transactional evidence, a prospective occupier would consider the premises to be a High Street unit, and would attach little if any value to Milkhouse Gate in terms of an increased rental bid.
28. The appellant has therefore failed to show that the Surrey Valuation Tribunal was wrong and the appeal is dismissed. The appeal was heard under the Simplified Procedure and, in the absence of any exceptional circumstances, I make no award as to costs.

DATED 8 June 2001

(Signed) P R Francis FRICS