England and Wales Lands Tribunal

[2003] EWLands RA_52_2002 (02 July 2003)


 


RA/52/2002

LANDS TRIBUNAL ACT 1949

RATING – Offices and premises – description of hereditament - condition at material day – planning permission - rateable value – appeal dismissed – rateable value determined at £850

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

Before P R Francis FRICS

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

on

19 June 2003

The following cases are referred to in this decision:

Henriques v Stephens (VO) [2001] RA 366

Scottish and Newcastle Retail Ltd v Williams (VO) (2000) RA 119

The appellant in person

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

© CROWN COPYRIGHT 2003

DECISION

1. This is an appeal by the ratepayer, Mr O S Henriques ("the appellant") against a decision of the London (South East) Valuation Tribunal ("the LVT") dated 30 October 2002 in which it confirmed that the appeal property fell to be included in the 2000 Non-Domestic Rating List; that it was correctly entered therein as 'Office and Premises' and that its rateable value, proposed at £850, was fair and reasonable.
2. The appeal was heard under the Simplified Procedure (Rule 28, Lands Tribunal Rules 1996) and the appellant appeared in person, as did the respondent valuation officer, Mr. Brian Stephens FRICS ("the VO"), with permission of the Tribunal. At the start of the hearing, the appellant made submissions claiming that Mr. Stephens was not authorised to act as valuation officer. Mr. Mark Jorgensen BSc FRICS, the Group Valuation Officer who was the named respondent had withdrawn from the proceedings, and as that was the case, the appellant said I should allow the appeal in just the same way that, if he had withdrawn, the appeal would not have proceeded. Mr Henriques said the circumstances in this case were different to those that applied in the last appeal to this Tribunal in August 2001, in connection with the 1995 Rating List (Henriques v Stephens (VO) [2001] RA 366). In that case, Mr Stephens had been authorised to represent the Valuation Officer (VO), but in the present appeal, he stated that he 'was authorised to act as VO'
3. Mr Stephens pointed out that the Notice of Intention to Respond sent to the Tribunal on 17 February 2003 confirmed that he was "authorised to act as Valuation Officer for the purposes of this appeal by the Valuation Officer appointed by the Commissioners of the Inland Revenue", that "it was his intention to appear personally" and that "I intend to appear separately". He advised that Mr Jorgensen had now moved to another valuation office area, and the new Group Valuation Officer for his charging area was a Mr Neil Burdett who granted similar authority to his staff to act as VO.
4. The appellant's submissions regarding the admissibility of Mr Stephens as VO appeared to me to be basically the same as the arguments he had put forward at the 2001 hearing, but with a slightly different slant. I advised Mr Henriques that I accepted that Mr Stephens was correctly named as respondent, and that the appeal should proceed on that basis.
5. 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 hearing Mr. Henriques said he was not prepared to agree the statement, particularly in respect of the description of the premises, in rating terms, as "Office and Premises". This was plainly wrong, he said, the description of the rooms he occupied being the key to his appeal.
6. However, similar problems had arisen in respect of the draft statement of agreed facts and issues prepared by Mr Stephens for the 2001 appeal, and in order to move things on, I obtained confirmation from the appellant that "to all intents and purposes" the accommodation he occupied was the same as it was when I inspected it immediately after the last hearing. Therefore, from that draft statement and the facts I previously found, and the evidence before me in this hearing, I find the following facts:

6.1 The appeal property comprises the first floor front accommodation in a four-storey mid-terraced brick and tiled property that had been built around 1900. There are shop premises on the ground floor with, immediately adjacent to them, a recessed entrance lobby from the street, with access through an external door and into a communal hallway leading to stairs and a landing. The accommodation within the hereditament is divided into two rooms, accessed off each other, and the total net internal area of the appeal unit is 19.55 sq.m. (210 sq.ft.).

6.2 There is a wc located on the half-landing between the first and second floors, that having been shared with the occupier of the first floor rear accommodation when it was occupied for office use. There is no central heating or air conditioning, and the building is not served by a lift.

6.3 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 dated 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. In my determination in respect of the appeal from that decision, I accepted Mr Stephens' opinion that, on a re-assessment of the rental and comparable evidence, the appropriate rateable value to apply would be £585. I dismissed the appellant's arguments for a nil assessment.

6.4 Pursuant to the 2000 Revaluation the premises were then entered in the 2000 rating list as Offices and Premises at a rateable value of £1,225 with effect from 1 April 2000. Mr Henriques appealed again for a nil assessment and, following a reassessment by the VO whereby on the basis of other appeal settlements, the entry was accepted as too high, his revised proposal of £850 rateable value was submitted as appropriate to the Valuation Tribunal hearing on 3 October 2002. In its decision of 30 October 2002, as I have said above, the tribunal found for the VO and the revised figure was entered into the rating list.

6.5 The appellant gave Notice of Appeal to this Tribunal on 17 December 2002, and Mr Stephens' Notice of Intention to Respond was dated 17 February 2003.

6.6 Planning permission on 338 Streatham High Road was granted to Anglo Irish Developments by London Borough of Lambeth on 23 March 2000 for "conversion of first, second and third floors to use as 3 self-contained flats and associated alterations". The conversion of the former offices to the rear of the first floor, and the second and third floors has subsequently been carried out in accordance with that permission, the rooms to the front of the first floor, the subject of this appeal, remaining in the occupation of the appellant.

7. Mr. Henriques reiterated, in his statement of case, many of the arguments that had been before me in the last appeal including his assertion that the rooms he occupied were not "offices and premises", being non-commercial and from which no trade or business had been carried out since 1991 when he retired from his former practice as a solicitor. He referred again to the state of the wc and the premises generally, and in evidence said that despite the fact that a desk, office chairs, bureau, typewriters and filing cabinets were still present none of them had been used for office purposes for 12 years. Part of the subject accommodation that he described as "tiny, ancient, dilapidated space" was unusable due to the fact that a section of the ceiling had collapsed.
8. He said that it was the purpose for which the accommodation was used that was the relevant factor in determining its use in rating terms, and as he occupied one of the rooms purely for domestic purposes – as a living room, a quiet place to sit an eat, it should be treated as residential. The telephone and the electricity supply were on domestic rather than business contracts, there was no intercom from the ground floor entrance hall and there were no business entries in any directories.
9. The real difference, Mr Henriques said, in this appeal as opposed to the last one, was that there was a valid planning permission in place at the material date for conversion of the first, second and third floors to residential accommodation. To continue to use the rooms as offices would, therefore, be contrary to the terms of the planning permission and would, in his view, be illegal. It was the provisions of the Town and Country Planning Act 1990 that determined the use of the accommodation and not the respondent or the respondent's valuer. He said that when the building was originally constructed at the turn of the last century the upper floors had been residential, and the new permission was thus reverting to the original use. The valuation tribunal had been wrong, he said, to conclude that the appeal unit "fell to be entered in the [rating] list" because it was a hereditament. A hereditament applied equally to domestic premises, which these unequivocally were, and was not confined to describing business space.
10. Mr Henriques also said that the valuation tribunal's opinion that, as yet, there had been no change of use (to residential) was otiose, an opinion being a guess or an unproven belief. It was a fact that the premises had not been used as an office since 1991 and it was a fact that the existence of the planning permission, gained before the material date, prevented the accommodation being used for offices, even if he wanted to use it for that purpose. The valuation tribunal had erred, he said, in stating that it considered that the permission to change the use was merely permission and not a requirement to make such change. Use, under the provisions of the 1990 Act was a legal requirement and any breach, such as using the accommodation as offices, would result in enforcement action being taken.
11. As to Mr Stephens' comparables, Mr Henriques said that his use of offices in buildings other than those in which the appeal accommodation was located were not comparable. As the former offices within 338 Streatham High Road (at the rear of the first floor and on the second and third floors) had proved unlettable (hence the landlord obtaining planning permission for conversion to residential), that evidence should carry the most weight.
12. In conclusion, Mr Henriques sought a determination that his appeal be allowed, with an order that the accommodation be removed from the non-domestic rating list, that all monies paid in non-domestic rates since March 1991 should be refunded, and that all costs and hearing fees that he had paid in respect of the various appeals should be reimbursed.
13. Mr Stephens, who has worked in the Lambeth Valuation Office for the past 14 years, and has, in total, 22 years valuation experience since qualifying as a chartered surveyor, produced a comprehensive proof of evidence and supporting documents.
14. He said that Mr Henriques' arguments regarding the state of repair of the building were the same as had been used in the last appeal and, at the material date, there was no marked difference from how they had been at 1 April 1995. For Rating List purposes the property has to be valued in accordance with the provisions of para 2 of Schedule 6 to the Local Government Finance Acts 1988, as amended by section 1(2) of The Rating (Valuation) Act 1999 ("the 1988 Act"). 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.
15. The appellant's case regarding his use of the premises had to be considered, Mr Stephens said, in the light of Schedule 6, para 2(7) of the 1988 Act where at the material day:

a) Matters affecting the physical state or physical enjoyment of the hereditament

b) The mode or category of occupation of the hereditament

had to be taken into account. This was the rule of "rebus sic stantibus" that was considered in Scottish and Newcastle Retail Ltd v Williams (VO) (2000) RA 119. In their conclusions the President and Mr P H Clarke FRICS said (at para 152):

"The rebus sic stantibus rule identifies for the purpose of valuation the hereditament, the physical changes which may be made to it, and the mode or category of occupation. The rule rests on the concept that what has to be determined in rating is the value to the occupier of his occupation of the hereditament, measured by the rent on an assumed yearly tenancy. In carrying out a valuation under the rating hypothesis the following assumptions are to be made about the hereditament:

(a) That the hereditament was in the same physical state as on the material day. Alterations which the hypothetical tenant might make to the hereditament may be taken into account if, taken overall, they are minor. All other prospective alterations to the hereditament are to be ignored.

(b) That the hereditament could only be occupied for a purpose within the same mode or category of purpose as that for which it was being occupied on the material day. Any prospective change of use outside that mode or category is to be ignored….."

16. Mr Stephens said that at the material day the premises were fitted out as offices, and although extremely dusty, untidy, and in a poor overall state, were capable of being used as offices. That was the use to which they had formerly been put, and there was no evidence that they had been used for domestic purposes, despite Mr Henriques' claims that he had, on occasion, slept there. That was the conclusion, he said, that the Lands Tribunal had come to in the last appeal, and there was, in his professional opinion, nothing different now.
17. The fact that planning permission for conversion of the former offices on the first, second and third floors of the building to residential existed at the material date did not, Mr Stephens said, forbid business use. That permission had been granted just over a week before and was merely a permission for change of use which, if it was to be implemented, had to be begun no later than 5 years from the date of the permission. It was not a statutory requirement to change use merely because permission had been granted, and that permission certainly did not forbid business use. In order for a use to be prohibited, a planning authority would need to issue an enforcement notice stating grounds and reasons. To his knowledge, Mr Stephens said, no such order had been made.
18. Mr Stephens then produced the comparables upon which he had based his opinion that the appropriate rateable value (based upon £43.50 per sq m) was £850. He said the best comparable in terms of location and facilities was the assessment on the first floor front and rear offices at 326-328 Streatham High Road which were in the same parade as the subject premises. Those assessments had been agreed at £43.50 per sq m.
19. He acknowledged that he was no longer able to rely upon the offices within the same building as the appeal property as they were, at the material date, no longer occupied. They were, in fact, deleted from the Rating List on 12 April 2000 and, following the conversion to residential units, were brought into the Council Tax List with effect from 1 July 2000. However, there was sufficient evidence of similar units above shops in Streatham High Road to support his assessment and he therefore sought for this Tribunal to uphold the valuation tribunal's decision and confirm the rateable value at £850.

Conclusions

20. The issues raised in this appeal are, in reality, no different from those upon which I based my conclusions in Mr Henriques' last appeal in connection with the 1995 Rating list. The parties agreed that the appeal property was, to all intents and purposes, in the same state and condition at the material date of 1 April 2000 as it was on 1 April 1995. The only difference was that the appellant now has exclusive use of the wc that was previously shared with the occupier of the first floor rear offices.
21. Mr Henriques argued that the valuation tribunal had been wrong to conclude that the appeal unit fell to be included in the Rating List because it was a hereditament, and that the term hereditament could apply equally to domestic premises. I dealt with this point in the last decision and said (at para 30):

"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."

22. The appellant's reconstituted arguments on this point are, in my judgment, fallacious and I do not accept them.
23. There has been no material change in circumstances since I issued my last determination, other than the fact that, at the material date, planning permission for change of use to residential was in existence. I cannot accept Mr Henriques submissions that just because planning permission has been granted, to continue to use the accommodation for commercial purposes would be unlawful, and therefore they cannot be liable for non-domestic rates. As Mr Stephens rightly pointed out the subject of rateable occupation was dealt with in the Scottish and Newcastle decision, which was subsequently upheld in the Court of Appeal ([2001] EWCA Civ 185). In that judgment, Robert Walker LJ, although not having to determine the point, said (at para 72):

"Both sides agreed that use classes and classes of permitted development, as determined from time to time for the purposes of town and country planning law, cannot be determinative as to 'mode or category of occupation'….".

24. As I have said, the premises have not physically changed, and with Mr Henriques' 'new' arguments on the subject of planning not being accepted, there are no grounds for them to be taken out of the list.
25. The appellant has produced no evidence to disprove Mr Stephens's comparables, his argument being for a nil assessment. He has not produced any comparables of his own to support, in the alternative to a nil assessment, a lower rateable value should I, as I did last time, dismiss his appeal. I therefore have no reason not to accept Mr Stephens's evidence and his professional opinion that the rents passing on the comparable premises justify a rateable value based upon £43.50 per sq m. The valuation tribunal accepted these figures, and the appellant has done nothing to prove them wrong.
26. I therefore dismiss the appeal and determine the rateable value of the premises at the material date, 1 April 2000, at £850. Mr Henriques application to me for waiver of the hearing fee is not, as I explained, a matter for me and should be dealt within an application to the Registrar following this decision being issued.
27. This matter having been heard under the Simplified Procedure, and there being no application by either party, I make no award as to costs.

DATED: 2 July 2003

(Signed) P R Francis FRICS