England and Wales Lands Tribunal

[2001] EWLands TMA_207_2000 (13 November 2001)

TMA/207/2000

LANDS TRIBUNAL ACT 1949

CAPITAL GAINS TAX- s47(1) of Taxes Management Act 1970 - valuation of half-share in house and garden - value as a vacant house - comparables - evidential value of anonymised comparables - whether adjustment to reflect lettings - development value of rear garden - adjustment to reflect half share - whether sale prices disclosed to Inland Revenue for stamp duty purposes admissible as evidence with consent of Tribunal - Inland Revenue valuation confirmed.

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN G NEWMAN Applicant

(H M Inspector of Taxes)

and

F D L HATT Respondent

Re: 61 Fordbridge Road

Ashford

Middlesex

Before: N J Rose FRICS

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

on 26 July 2001

The following cases are referred to in this decision:

Lonrho v Fayed No.4 [1994] QB 775

BSC v Grenada TV [1981] AC 1096

Marcel v Commissioner of Police of the Metropolis [1992] Ch 225

Re Arrows Ltd (No.4) [1995] 2 AC 75

R v Abadom [1983] 1WLR 126

English Exporters v Eldonwall [1973] Ch 415

Timothy Morshead, instructed by solicitor of Inland Revenue, for the Applicant

The Respondent in person


 


DECISION

1. This is a reference under s47(1) of the Taxes Management Act 1970 by Mr G Newman, H M Inspector of Taxes of Staines district (the applicant), to determine the market value as at 31 March 1982 of a 50 per cent share of the undivided freehold interest in a house and premises known as 61 Fordbridge Road, Ashford, Middlesex (the subject property). At the relevant date the house was owned jointly by the tax payer, Mr F D L Hatt and his wife, Mrs P M Hatt. It was subsequently sold for £190,000 with vacant possession, the sale being completed on 6 April 1995. The applicant's valuation of Mr Hatt's 50 per cent interest was £29,250. Before me Mr Hatt's valuation was between £42,500 and £45,000. Mr Timothy Morshead, counsel for the applicant, called Mr C R Whitehill, BSc, MRICS, a principal valuer of the valuation office agency in the revenue and land services team dealing with property in the Surrey area. Mr Hatt appeared in person and gave evidence.
2. From the evidence I find the following facts. The subject property is situated off the west side of B377 Fordbridge Road, approximately a quarter of a mile south of Ashford village. It is today just over two miles from the Staines junction of the M25 motorway, although this section of the M25 had not been constructed in 1982. Various re-development and infill schemes have been implemented in Fordbridge Road at different times throughout the twentieth century, producing a road frontage with properties of different sizes, ages and architectural styles. In more recent times there has been limited redevelopment of larger plots and back land developments; in particular in the rear garden of Nos.63 and 65. The back land development was broadly residential, again undertaken at various dates.
3. The subject property comprises a turn of the century detached villa style dwelling, part constructed in brick and part cement rendered under a tiled roof. It is set back from Fordbridge Road behind mature trees, with a single in-out driveway access. Although in 1982 the plot depth was some 100 metres, it was only a maximum of some 13 metres wide at the widest point at the front. The house itself is set at an angle within the plot, which is only marginally wider than the dwelling. In consequence there is no potential vehicular access from the front into the rear garden. There has at some stage been an extension to the rear elevation, of brick with a flat roof. To the rear of the garden is a garage, part only of which was in a useable condition at the valuation date. A pair of double wooden gates fronted the turning circle off Gable Avenue, a cul-de-sac off Fordbridge Road, terminating close to the rear of the eastern boundary of the plot.
4. Internally, the property comprised four reception rooms on the ground floor and five bedrooms on the first floor. There were also two attic rooms, but these were uninhabitable. There were in addition a kitchen, a bathroom and two WCs, plus a cellar access from the hall. Whilst all main services were connected to the property at the valuation date, there was no central heating. The gross external area on the ground and first floors was 243m², with a further 24 m² on the second floor. The property (apart from the uninhabitable attic) was in a clean but indifferent condition, consistent with its use as a house in multiple occupation. At the time it was purchased by Mr Hatt and his wife in 1967 it enjoyed a planning consent for occupation as a nursing home. However, during the entire period of their ownership it was occupied (apart from the second floor) as letting rooms.
5. In 1977 an outline planning application for the redevelopment of the subject property and the adjoining site, No.63, with 18 flats and garages was refused. The grounds of refusal were excessive density, piecemeal development and access difficulties. In 1978, an application for development of part of the rear garden of the subject property and the entirety of No.63, following its demolition, with 12 flats together with garages was refused for similar reasons. In 1989 detailed consent was granted for the erection of three 4-bedroom houses and one 5-bedroom house on the land at the rear of Nos.63,65 and 67 Fordbridge Road. This consent was implemented and the site now comprises Badgers Close, a private road with provision made at the cul-de-sac hammerhead for future access to the rear garden of the subject property. On 29 March 1995 consent was granted for the change of use of the subject property to a single family house. In 1997 consent was granted for the construction of one detached dwelling in its rear garden, but with access from Badgers Close.
6. Mr Whitehill approached the valuation, firstly, by estimating the value for residential use with vacant possession. To do so, he prepared a summary of seventeen sales, based on information contained in Particulars Delivered forms (PDs). In three cases, he succeeded in securing the consent of the parties to disclose the transaction details, which he summarised as follows:

Plane Tree, Blacksmith Lane, Laleham

Pre first world war detached. 255 m² gross external area (gea). Price £80,300. Sale completed 20 April 1982. Four rooms on ground floor and five rooms on first floor. Garage. Part central heating. Double garage built subsequently.

54 Fordbridge Road, Ashford

Post second world war detached. 265m² gea. Price £120,000. Sale completed 9 March 1982. Four rooms on ground floor and five rooms on first floor. Double garage, central heating.

39 Manor Road, Ashford

Pre first world war detached. 170 m² gea. Price £68,483. Sale completed 22 January 1982. Double garage. Garage access at rear of Fontmell Park.

7. Plane Tree is located in the heart of Laleham village, close to the river Thames and approximately 2 miles from the subject property. 54 Fordbridge Road is situated on the east side of the road, almost diagonally opposite the subject property, and backs on to the golf course. 39 Manor Road is about 400 metres from the subject property, with views from the front to the golf course.
8. In the absence of the parties' consent and in accordance with the policy of the Commissioners of Inland Revenue, Mr Whitehill was unable to present full details of the remaining 14 sales which had coloured his opinion. Nevertheless, in an effort to assist the Tribunal he presented this information in a generalised summary form, with the dates of transactions stated by reference to the quarter in which they occurred and with the price to the nearest £5,000. He did not provide the addresses of these properties, although he said that all were located within one half of a mile of the subject property. Having considered the comparables and borne in mind the narrow plot and poor condition of the subject property, Mr Whitehill formed the view that its residential value with vacant possession could not have exceeded £75,000.
9. Although it was agreed that the subject property was let in rooms, there were no specific details of the terms of those lettings at the material date. Nevertheless in a letter to the environmental health officer at Spelthorne Borough Council dated 29 May 1979, Mr Hatt had referred to:

"… not the normal run of the mill in-and-out accommodation but permanent tenants with long standing tenancy agreements … their stays to date range from 2½ to 7 years …"

10. In the light of that letter, Mr Whitehill assumed that vacant possession could not have been given on the valuation date. Nevertheless, he considered that bedsit accommodation, with shared bathroom facilities, was frequently occupied by the more transient element of the population and was thus likely to result in a steady turnover. Although he had not discovered any registered "fair rents", he concluded that the occupations would very likely have fallen within the ambit of Rent Act protection if the necessary applications had been made. The value effect of this was, however, likely to have been less serious than for self-contained accommodation.
11. In order to assess this value effect he produced details of 13 sales of residential investments in Surrey in 1982 and 1983. He had formed his own view as to the relevant vacant possession values at the date of sale and he showed each sale price as a percentage of his view of the vacant possession value. The considerations paid for those investments showed discounts from their vacant possession values ranging from 45.1% to 71%, with an average of 54.1%. Such a wide spread was not surprising, given the number of variables involved. He made a 25% deduction from the vacant possession value of the subject property, producing a tenanted value of £56,250.
12. To this figure he added £8,500, to reflect what he considered to be the remote possibility of development of one additional house in the rear garden. At the valuation date applications for joint development of all or part of the subject property with No.63 had been refused in 1977 and 1978. On the face of it potential existed for development of the rear garden, but whilst the plot could (and as subsequent circumstances had shown did) provide potential for one dwelling accessed via a more recently constructed road at the rear, it was a very narrow plot which would make acceptable access from the front too difficult. He believed, therefore, that such development could only have stood a realistic chance as a joint scheme together with the land at the rear of Nos.63 and 65. An offer of £34,000 had been made in 1986 for the area of the subject property required for such a development. That figure represented an apportionment of the value of the entire development site. It was made on the assumption that full planning consent would be obtained and followed a period of considerable increase in value for residential development plots. Any possible development to be realised in 1982 would have required the co-operation of at least two other owners. The 1995 development which took place in the rear of the subject property did so after the construction of Badgers Close pursuant to the 1988 planning consent. It would not have been a possibility in 1982.
13. The subject property was too narrow to develop in isolation off Fordbridge Road and Mr Whitehill doubted whether there was any realistic possibility of development off Gables Avenue; if such potential did exist in 1982 he did not see why it would not also have existed in 1995 (when the site was finally developed) and there was no evidence that any consideration was paid for such potential at that date. Mr Whitehill also considered the site value of the subject property on the basis of a comprehensive redevelopment. He concluded that such value would only be of the order of £8,500 and that the planning permission for a nursing home, that existed at the valuation date but was not implemented by Mr Hatt, had no material effect on the property's value.
14. Thus, Mr Whitehill's valuation of the entire freehold interest in the subject property was £65,000, as follows:

Residential value £56,250

Rear garden development potential £ 8,500

£64,750

Say £65,000

15. It was, however, necessary to value an undivided half share. Evidence of sales of such interests in the open market was limited. The accepted practice was to arrive at the value by discounting the entirety value. This was in recognition of the fact that ownership of less than the entirety potentially created restrictions and difficulties in dealing with the asset and the market would reflect such restrictions by reducing the capital value. In his view, the appropriate approach was to deduct 10% to reflect the half share. His valuation of the undivided half share interest in the subject property was therefore:

Entirety value £65,000

One half share of entirety £32,500

Less 10% to reflect share £ 3,250

Value of half share £29,250

16. Mr Hatt suggested that the entirety value of the subject property was between £85,000 and £90,000. In support he referred to 8 auction sales of vacant properties reported in the Estates Gazette close to the valuation date. Brief details of the properties concerned are as follows:

427-435 (odd) Mile End Road, Bow	5 Grade II listed period terrace houses with a total of 10 rooms.	Sold for £139,000 15 September 1982
Hillside, Jacksons Lane, Highgate, N6	Grade II listed detached house (6 Beds) including coach house. Grounds extended to 0.52 acres.	Sold for £190,000 22 September 1982
Strawberry House, Church Road, Barnes, SW13	Period residence (5 beds) two adjacent self contained flats of 2 beds and 3 beds respectively. Grounds extended to 0.85 acres.	Sold for £400,000 2 September 1982
The Old Vicarage Waltham Road, White Waltham, Berks	Detached house (11 bedrooms) in grounds of 1.09 acres.	Sold for £118,000 14 October 1982
10 Marchmont Road, Richmond	Semi-detached house with 10 rooms on four floors. Subject to closing order.	Sold for £90,000 30 November 1982
101 Strawberry Vale, Twickenham	Detached period house with 7 bedrooms, stabling and river frontage.	Sold for £183,000 20 October 1982
Church Hill House, Midhurst	Grade II listed period house with 4 bedrooms, studio flat plus large garage block. Garden extended to 0.17 acres.	Sold for £170,000 14 October 1982
Offices in Newbury	Period building in town centre, office content, in need of substantial refurbishment.	For Sale.

17. Mr Hatt also produced an advertisement that appeared in the Middlesex Chronicle on 15 January 1982 and which included the following details:

(1) £58,950: Ashford	Delightful detached 4 bedroom house built 1938 in Meadway. Gas central heating, two receptions, good size kitchen, bathroom and separate wc in colour, separate drive, garage, 65 ft garden overlooking fields.
(2) £85,950: Staines	New detached 4 bedroom house, a few yards from river and towpath. Gas central heating, double glazing, cloakroom, study, spacious "L" shaped lounge, large kitchen, two bathrooms in colour, garage for two cars, medium garden.

(3) £79,950: Ashford

Charming detached 5 bedroom house built 1958 near town centre. Gas central heating, part double glazing, cloakroom, 27 ft through lounge, 13 ft dining room, large kitchen, bathroom and separate wc in colour, separate drive, integral garage for two cars, good garden.

18. Mr Hatt made the following additional points. The subject property contained 12 rooms, it had 5 marble fireplaces and attractive, old fashioned ceilings. A developer had offered £34,000 for the rear land in 1986. Subsequent to Mr Hatt's sale in 1995, the new purchaser had sold the rear land for separate development. The redevelopment of the site of 63 Fordbridge Road, which took place subsequent to the valuation date, had adversely affected the value of the subject property by bringing development to within 1 yard of the existing house. It had previously been 15 yards away. There was very considerable market interest when the subject property was offered for sale in 1995; this resulted in three bids of £190,000. Although valuation after such a long time was extremely difficult, he considered that the value of his share was one-half of the entirety value of £85,000/£90,000.
19. Subsequent to the hearing, I made an unaccompanied external inspection of the subject property and certain other properties that had been referred to as comparables.
20. There are four valuation issues in this case and they are these. Firstly, what was the value of the subject property, as a house with vacant possession, on the valuation date? Secondly, what was the additional value attributable to the prospects of development? Thirdly, what deduction, if any, was appropriate to reflect the fact that it was tenanted? Finally, what discount, if any, should be made to reflect Mr Hatt's half share?
21. I deal firstly with the value as a vacant house. Mr Whitehill produced details of three houses, situated close or reasonably close to the subject property, whose sales were completed between 22 January and 20 April 1982. The closest geographically is 54 Fordbridge Road. This comprises a detached dwelling constructed since 1946. If one includes the two uninhabitable rooms in the subject property, the two properties are almost identical in size. No.54, however, is arranged on only two floors, and is much more modern, with two bathrooms, central heating and a double garage. It is also, in my view, in a more valuable location backing onto the golf course. I consider that the value of the subject property was very substantially lower than the £120,000 paid for No.54.
22. Plane Tree, Laleham is also of a similar size; it is 255 m² as opposed to the subject property's 267 m². It was sold very close to the valuation date and, like the subject property, it is a substantial turn of the century detached house. Plane Tree, however, has several significant advantages. It is in a more attractive location in the heart of Laleham village close to the river; it is not on a main road; it is set back in its plot from Blacksmith Lane behind a plane tree of local note; it had partial central heating and its garden surrounded the property, in contrast to the subject property whose plot was long and thin. For these reasons, I would expect the value of the subject property to be appreciably below the figure of £80,300 paid for Plane Tree. Mr Hatt suggested that Plane Tree suffered from the presence of a narrow passage way at the side, which provided a right of way for six properties. In the light of my inspection, I agree with Mr Whitehill that the single track road leading down the side of the house and providing vehicular access to the plots of six dwellings does not have a materially depreciating effect on the value of Plane Tree.
23. Of Mr Whitehill's comparables, 54 Fordbridge Road and Plane Tree are closest in size to the subject property. Considered in isolation, they both suggest that Mr Whitehill's valuation of £75,000 is, if anything, on the high side. His third comparable, 39 Manor Road, whilst in the near vicinity, at 170 m² is substantially smaller. Mr Whitehill considered that the larger size of the subject property was offset by the better location and condition of 39 Manor Road. I agree that the position of No.39, overlooking the golf course, is superior. Mr Whitehill did not have details of its exact condition or degree of modernisation at the relevant date, but he assumed that these were better than in the case of the subject property. Mr Hatt did not comment on the condition of No.39. Bearing in mind that the second floor of the subject property was uninhabitable and that the remainder had been used as letting accommodation, I think on the balance of probability that Mr Whitehill's assumption as to the relative condition of the two houses is justified. The price of £68,483 paid for No.39, therefore, adds further support to Mr Whitehill's valuation.
24. Mr Hatt objected to the introduction of Mr Whitehill's remaining 14 comparables on the ground that they were hearsay. In the course of the hearing I indicated that I was not inclined to attribute any material weight to them, for three reasons. Firstly, Mr Whitehill said that his valuation would have been the same with or without them. Secondly, most of the 14 were significantly smaller than the subject property. Thirdly, in the absence of an address for each, I was reluctant to rely on Mr Whitehill's conclusion as to their respective merits, since Mr Hatt had not had an opportunity of investigating them in a meaningful way. Nevertheless, Mr Morshead asked me to rule on the admissibility of such evidence, in order to provide guidance in the future. I indicated that I was prepared to do so de bene esse and I deal with the matter later in this decision.
25. Mr Hatt relied in support of his valuation on eight auction sales reported close to the valuation date. Mr Whitehill considered that this information was of no assistance. In formulating an opinion of value he considered it was essential to consider comparison evidence as close as possible in terms of location, size, facilities and condition. Whilst all of the properties referred to by Mr Hatt were freehold sales with vacant possession, they were all in very different locations which were not comparable. The Bow property was a terrace of five houses in the east end of London; the Highgate and Barnes properties were in locations of substantially greater value, standing on much larger plots; the Strawberry Vale property with stabling and river frontage was much more attractive; the Midhurst property with its studio flat and very large garage was situated in a much more desirable area; the White Waltham property was in the country and on a much large plot and the Richmond property was in a completely different location in south London. Finally, an office building in Newbury was not comparable with a house in Ashford even if - which was not the case - the selling price were known.
26. I agree with Mr Whitehill on this aspect. The eight properties in question would all have appealed to an entirely different market from the property with which I am concerned. The prices paid for them are therefore of little or no assistance in the current valuation exercise. Mr Hatt also referred at the hearing to three houses in Staines and Ashford which were advertised for sale in 1982. In terms of location these are all potentially useful comparables. Their usefulness, however, is severely diminished by the fact that the prices quoted were mere asking prices, not achieved figures and, as Mr Whitehill observed, the two were not necessarily the same. Indeed, the advertisement specifically described the market at the time as "depressed" and it is entirely possible that the houses were not sold, or that the vendors accepted figures appreciably below the prices quoted. To the extent, however, that the limited information available on these properties can be used as a check, I do not consider that it indicates that Mr Whitehill's valuation of £75,000 is necessarily too low. For these reasons I prefer Mr Whitehill's vacant possession valuation of £75,000 to Mr Hatt's range of £85/£90,000.
27. Mr Whitehill then added £8,500 for the prospect of redevelopment of part of the back garden. Although Mr Hatt referred to an offer that was subsequently made for that land, assuming planning permission would be granted and after residential land values had increased appreciably, he did not himself identify a specific development value that existed at the relevant date. I agree with Mr Whitehill that any development at that date would have been speculative, being entirely dependent on co-operation with the owners of Nos.63 and 65. Mr Whitehill said that his valuation of £8,500 was a maximum figure, to reflect the remote possibility of such development taking place. I agree that he has, if anything, been generous in this aspect of the valuation and I accept his figure.
28. I would observe that, at this stage of the valuation, namely the entire vacant possession value including any prospect of development, there is very little difference between the parties; Mr Whitehill's total of £83,500 (£75,000 plus £8,500) comparing with Mr Hatt's range of £85/90,000. It is therefore clear that the most significant issues are the effect on value of the absence of vacant possession and whether a more than proportionate deduction should be made to reflect the shared ownership.
29. I therefore turn to the reduction, if any, to be made to reflect the fact that the property was not vacant at the valuation date. Mr Whitehill makes an adjustment of 25% and Mr Hatt makes no allowance. Mr Whitehill has produced details of 13 sales of residential investments in Surrey in 1982 and 1983. They show discounts varying from 45.1% to 71%. Mr Hatt did not produce any evidence to support his assertion that there should be no allowance and he did not cross-examine Mr Whitehill on his 13 comparables. In my opinion Mr Whitehill's deduction of 25% is, if anything, conservative and I accept it.
30. The final issue relates to the discount, if any, that should be made to reflect the fact that Mr Hatt only owned one-half of the subject property. Mr Whitehill considered that a deduction of 10% was appropriate, whereas Mr Hatt made no allowance. I agree with Mr Whitehill that the owner of such a share would face difficulties in realising his asset, which would not arise if he controlled the entirety of the property and, in the absence of any other evidence, I accept his deduction of 10%.
31. Mr Hatt emphasised the difficulty of valuing the subject property accurately after such a long time. Indeed, in the course of his closing submissions he suggested in effect that the exercise was impossible. I agree that the required valuation is far from easy, in view of the great difficulty in obtaining comprehensive information about comparable sales after so long. Parliament has, however, decided that capital gains tax is to be assessed by reference to values current in March 1982 and, as time passes, it inevitably becomes more difficult to assess such values with accuracy. Nevertheless, I am satisfied that Mr Whitehill has done his best to produce an accurate valuation on the limited evidence that is available and that, where appropriate, he has given Mr Hatt the benefit of any doubt that may exist, particularly on the question of the appropriate deduction to reflect the absence of vacant possession. I therefore determine that the market value of Mr Hatt's 50% share in the freehold interest in the subject property on 31 March 1982 was £29,250.
32. As I have said, I indicated at the hearing that I would accept Mr Morshead's invitation to comment on Mr Hatt's objection to the admissibility of Mr Whitehill's schedule of anonymised comparables even though, in this particular case, I had ruled that they did not assist me in determining the value in issue. In his submissions in support of the admissibility of the schedule, Mr Morshead relied on s182 of the Finance Act 1989 which, so far as is relevant, provides as follows.

"(1) A person who discloses any information which he holds or has held in the exercise of tax functions is guilty of an offence if it is information about any matter relevant, for the purposes of those functions, to tax or duty in the case of any identifiable person …

(4) A person who discloses any information which …

(b) is, or is derived from, information which was held by any person in the exercise of tax functions, and

(c) is information about any matter relevant, for the purposes of tax functions, to tax or duty in the case of any identifiable person,

is guilty of an offence.

(5) Subsections (1) and (4) above do not apply to any disclosure of information -

(a) with lawful authority,

(b) with the consent of any person in whose case the information is about a matter relevant to tax or duty, or

(c) which has been lawfully made available to the public before the disclosure is made.

(6) For the purposes of this section a disclosure of any information is made with lawful authority if, and only if, it is made …

(d) in pursuance of any enactment or of any order of a court …"

33. Mr Morshead referred in particular to the provisions of subsection (6)(d). He submitted that it would be appropriate for the Tribunal to make an order under this subsection, authorising the applicant to disclose the information contained in Mr Whitehill's schedule. He pointed out that, in Lonrho v Fayed No.4 [1994] QB 775 a majority of the Court of Appeal held that the Inland Revenue's records were subject to public immunity, albeit that the immunity did not prevent individual taxpayers from consenting to disclosure of their private information. However, the Court of Appeal took a different approach in Marcel v Commissioner of Police of the Metropolis [1992] Ch 225, in that they treated documents seized by the police as being subject to a mere duty of confidentiality, not as immune from disclosure. Mr Morshead pointed out that the right being considered in Marcel was at least as fundamental as the privacy of a taxpayer's documents and that Marcel was referred to in Lonrho only in the judgment of Roch LJ. In Re Arrows Ltd (No.4) [1995] 2 AC 75 the House of Lords considered whether information obtained by the use of statutory powers could only be used for the purpose for which the statutory power was conferred. It rejected that contention, holding that it was a question for the judge.
34. Mr Morshead accepted that there was not a direct equivalent to these cases in the statutory framework with which the present case was concerned. Here the Inspector has no power to interrogate people submitting stamp duty forms. All he obtained from Re Arrows was the House of Lords approving the idea that it was relevant to consider the particular class of material in question and the circumstances in which it was collected, as part of the consideration whether it attracted public interest immunity. Even though the Court of Appeal decided in Lonrho that the documents were the subject of public immunity, Lord Bingham MR had envisaged in that decision that this could be overridden if there were "very strong grounds" for doing so. Mr Morshead concluded that, in substance, it was immaterial whether the comparables attracted a duty of confidentiality, or public interest immunity subject to such a large qualification.
35. The Human Rights Act 1998, incorporating the European Convention on Human Rights and Fundamental Freedoms, now also had a role to play. There was a balance to be struck between the individual taxpayer's right to a fair trial (Article 6) and other taxpayers' rights to respect for their privacy (Article 8). Mr Morshead suggested that this Tribunal should make the same balancing exercise as in the cases cited, namely a consideration of all the circumstances. In his submission, the guidance to be obtained from the House of Lords' approach in Re Arrows Limited, coupled with the contemplation in s182 that a court might order disclosure of the records, favoured regarding those records as being subject to a duty of confidentiality only. He did not rely on Lonrho as supporting the contention that taxpayers' records attracted public interest immunity. However, in considering whether to make an order for production of details, the Tribunal ought (like any court exercising its discretion in a case of confidentiality) to consider whether it was necessary to do so (eg. BSC v Grenada TV [1981] AC 1096). The anonymised details produced by the Inland Revenue in this case were sufficient to enable the Tribunal to assess the comparables fairly, giving due weight to the fact that they were not as precise as other comparables and to the fact that they were hearsay evidence. If, however, the Tribunal concluded that disclosure of the details was necessary in order for the Inland Revenue to rely on the anonymised comparables as comparables, then the Tribunal could make an appropriate order under Rule 34 of the Lands Tribunal Rules 1996. In that case, the Tribunal should consider how much detail it was necessary to disclose.
36. Mr Morshead's alternative submission was that, if the material was not admissible as comparables, then it was admissible as an indication of the "unpublished material" which formed part of the expert's expertise. It was established that an expert may - and should - rely on unpublished material in his knowledge (R v Abadom [1983] 1WLR 126). Such information was relevant to the question of his expertise and may lend weight to his opinion about values (English Exporters v Eldonwall [1973] Ch 415).
37. Apart from objecting in principle to the introduction of hearsay evidence, Mr Hatt did not make any observations on the admissibility of the anonymised comparables, in view of my indication that I would not be placing any weight on them.
38. In English Exporters, Megarry J said that a valuer giving expert evidence may not give hearsay evidence stating the details of any transaction not within his personal knowledge in order to establish them as matters of fact. This aspect of the judgment has been subsequently overruled by the Civil Evidence Act 1995. The valuer is now entitled to give evidence of transactions with which he was not directly involved, subject to complying with certain requirements, although the weight to be given to such evidence is not necessarily the same as to primary evidence. Mr Hatt's objection in principle on the grounds of hearsay to the introduction of the fourteen comparables where the purchasers' consent had not been obtained is, therefore, not justified.
39. In my opinion, information relating to sale prices provided to the Inland Revenue for stamp duty purposes does not attract public interest immunity. In this instance, the nature of the relationship between the taxpayer and the Inland Revenue does not involve issues of great confidentiality. Although s28 of the Finance Act 1931 as amended only requires details of the consideration paid on certain transfers of freehold or leasehold interests to be notified to the Inland Revenue by the transferee or lessee, this information will also be known by the transferor or lessor. Moreover, if the sale is effected with the assistance of an estate agent, and if the parties are represented by solicitors, the information will also be known by those professional advisers. The involvement of an estate agent, in particular, is liable to result in the agreed price becoming known even more widely, in view of the common practice of estate agents to advise on asking prices in the light of prices previously agreed for other properties. Furthermore, with effect from 1 April 2000, any person is entitled, subject to certain conditions and on payment of a fee, to inspect and make copies of Land Registry entries, including the price paid on the last change of proprietorship (Land Registration Act 1988 s1(1) and The Land Registration (No.3) Rules 1999).
40. Against that background, there is in my view no longer a very strong presumption against sale price information being disclosed without the consent of the party who provided it, if such disclosure in this Tribunal is necessary to enable the Inland Revenue or the taxpayer to put forward an accurate valuation of an interest in land as at March 1982. To be set against what I consider is the limited weight which now attaches to the taxpayer's right of confidentiality in this respect, is the fact that in the present case over 19 years have elapsed since the valuation date. It is probably not practicable after so long for a taxpayer's surveyor to obtain adequate details of contemporaneous sales from his own records or by inquiry of other surveyors. The details contained in the PDs are therefore likely in many cases to constitute the only reliable evidence available.
41. If, therefore, it were necessary for me to consider a request for an order for disclosure of the information in the Inland Revenue's possession relating to Mr Whitehill's anonymised comparables, I would be inclined to make such an order, bearing in mind that full details have only been provided in relation to three other transactions. The disclosure ordered would only relate to the first five sales on Mr Whitehill's schedule, where the respective floor areas range from 175m² to 215m². The remaining nine properties are all below 150m² and, as such, are unlikely to add materially to the evidence provided by sales of eight much larger properties. I would add that the disclosure should not be in an anonymised form. It should include all the available information, including the precise address of the property, the price paid, and the name and address of the party providing the particulars. The latter information would be required, in my view, to assist the taxpayer if he so desired in making further inquiries into the circumstances of the transaction such as, for example, the condition of the property at the sale date.
42. I turn finally to consider whether the Inland Revenue can rely on information which has been provided by a taxpayer who has not consented to its disclosure and where no court order authorising such disclosure has been made. In his judgment in R v Abadon, Kerr LJ said, in relation to expert witnesses:

"Once the primary facts on which their opinion is based have been proved by admissible evidence, they are entitled to draw on the work of others as part of the process of arriving at their conclusion. However, where they have done so, they should refer to this material in their evidence so that the cogency and probative value of their conclusion can be tested and evaluated by reference to it."

43. It is true that these observations were made in a criminal case. Nevertheless, they apply equally in my view to cases involving an expert opinion on value. It would be unfair to call to give evidence an expert who had relied on information provided in PDs, where consent to disclosure had not been given, if the cogency of the expert's conclusion could not be properly tested. If, therefore, for reasons of policy, the Inland Revenue did not wish to apply for an order under s182(6)(d) to disclose such information, they should inform the taxpayer of its existence at an early stage in the Tribunal proceedings, so that the taxpayer can decide whether to apply for an order himself. Should the Tribunal refuse to make an order, or should the taxpayer decide not to apply for one, then it would be open to the Inland Revenue to produce the information in anonymised form.
44. What I have said so far concludes my determination of the substantive issues in this case. It will take effect as a decision when the question of costs is decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands
     
    

Tribunal Act 1949 and Order 61 rule 1(1) of the Civil Procedure Rules will come into operation. The parties are invited to make submissions as to the costs of this reference and a letter accompanying this decision sets out the procedure for submissions in writing.

Dated: 13 November 2001

(Signed) N J Rose

ADDENDUM

45. On publication of my decision, the parties were invited to make submissions as to the costs of the reference. They were advised that any application for an award of costs should be accompanied by a detailed explanation, with supporting documentation, of the amount claimed.
46. The Respondent, Mr Hatt, replied by way of a four page letter. His only reference to costs, however, was as follows:

"Mr Hatt (sic) costs on the day of 26 July 2001 was £10.00"

47. The submissions on behalf of the applicant Inspector of Taxes were made by the Inland Revenue solicitor. His principal submission was that he had been successful on every issue in dispute and therefore he ought to have his costs in the usual way. He nevertheless accepted that a certain proportion of his costs arose from dealing with comparables for which the District Valuer had been unable to secure disclosure consent, and the presentation of anonymised comparables. Two concessions, he said, must be made in respect of these issues. Firstly, they added little of value, since the Tribunal had indicated that its decision would be based solely on the strength of the three comparables for which disclosure consent had been obtained. Secondly, after these observations had been made, the Applicant pressed the Tribunal to express its views on the subject of anonymised comparables, as the Inland Revenue felt that they may provide it with some useful guidance for future cases. Since those views were a matter of indifference to Mr Hatt, it was inappropriate that he should be asked to pay the costs of obtaining such guidance. Whilst it was difficult to quantify that portion of the costs incurred which were attributable to the anonymised comparables issue, the Applicant suggested that Mr Hatt should be ordered to pay 75% of the total costs incurred by the Applicant.
48. I agree that the Applicant has been successful and the award of costs should reflect that fact. However, the District Valuer referred in his evidence to seventeen comparables sales, only three of which were of assistance to my determination. Moreover, the Inland Revenue was clearly anxious to take advantage of Mr Hatt's objection to the anonymised comparables to obtain guidance for future cases. Had that not been the position, it is in my view unlikely that the Inland Revenue would have considered it appropriate to be represented by counsel.
49. Against that background, I consider that Mr Hatt should pay only a modest proportion of the Applicant's costs. Despite a specific request, no attempt has been made to quantify those costs. Accordingly, and doing the best I can, I order Mr Hatt to pay £500.00 towards the costs incurred by the Applicant.

DATED: 13 November 2001

(Signed) N J Rose