England and Wales Lands Tribunal

[2004] EWLands RA_60_2000 (15 January 2004)

RA/60/2000

LANDS TRIBUNAL ACT 1949

RATING – hereditament – harbour undertaking – headquarters building – whether to be entered in rating list or included in authority's operational land cumulo hereditament – Non-Domestic Rating (Miscellaneous Provisions) (No 2) Regulations 1989 reg 5 – held not operational land and must be entered in list

IN THE MATTER OF AN APPEAL AGAINST THE DECISION OF THE

TEESSIDE VALUATION TRIBUNAL

BETWEEN

ARTHUR BARRATCLOUGH

Appellant

(Valuation Officer)

and

TEES AND HARTLEPOOL PORT AUTHORITY

Respondent

Re:

Offices and Premises

17-29 Queens Square

Middlesbrough

TS1 1AA

Before: The President

Sitting at Darlington County Court, 4 Coniscliffe Road,

Darlington, County Durham DL3 7RL

on Tuesday 6 January 2004

Timothy Mould instructed by Solicitor of Inland Revenue for the appellant

J P Scrafton solicitor for the respondent

The following cases are referred to in this decision:

R v Minister of Fuel and Power, ex p Warwickshire County Council [1957] 1 WLR 861

Halliday (VO) v British Railways Board [1994] RA 297
 


DECISION

Introduction

1. This is an appeal against a decision of the Teesside Valuation Tribunal. It relates to premises at 17-29 Queens Square, Middlesbrough, occupied by the respondents as their headquarters offices. They were entered in the rating list as a separate hereditament but the VT, allowing the ratepayer's appeal, ordered that the entry be deleted from the list. The respondent is a harbour undertaking and, under the specific provisions made in relation to such undertakings, those of its hereditaments as consist exclusively of operational land are to be treated as a single hereditament and valued accordingly. The question in this case is whether the VT was right to hold as it did that the hereditament consists exclusively of operational land so that it ought not to be entered as a separate hereditament in the valuation list.

Statutory provisions

2. Section 64(3)(b) of the Local Government Finance Act 1988 empowers the Secretary of State to make regulations providing that in prescribed cases anything which should (apart from the regulations) be more than one hereditament shall be treated as one hereditament. Under this power the Secretary of State has made regulation 5 of the Non-Domestic Rating (Miscellaneous Provisions) (No 2) Regulations 1989 in respect of dock and harbour undertakings. So far as material, this regulation provides as follows:

"5.–(1) This regulation applies to any hereditament which consists of or includes a dock or harbour undertaking carried on under authority conferred by or under any enactment, and in relation to which on the relevant day the conditions set out in paragraph (2) are satisfied.

(2) The conditions are –

(a) ….

(b) ….

(c) that the hereditament consists of or contains operational land.

(3) So much of any hereditament to which this regulation applies as consists exclusively of operational land shall be treated as a hereditament ('the new hereditament') separate from the remainder.

(4) Where more than one new hereditament is on the relevant day occupied by the same undertakers, those hereditaments shall be treated as one hereditament, and as situated throughout the relevant period in the area of the billing authority in which is situated such of those new hereditaments as contains on the relevant day the larger or the largest area, measured at ground level.

(5) In this regulation –

….

'operational land' means land which is used for the purpose of the carrying on of the undertaking, not being land which, in respect of its nature and situation, is comparable rather with land in general than with land which is used for the purpose of the carrying on of statutory undertakings within the meaning of the Town and Country Planning Act 1971."

3. Section 290(1) of the Town and Country Planning Act 1990 contained the following definition:

"'statutory undertakers' means persons authorised by any enactment, to carry on any railway, light railway, tramway, road transport, water transport, canal, inland navigation, dock, harbour, pier or lighthouse undertaking, or any undertaking for the supply of electricity, gas, hydraulic power or water, and 'statutory undertaking' shall be construed accordingly…"

This definition has now been replaced by section 262(1) and of the Town and Country Planning Act 1990, which excludes from the list electricity, gas and water undertakings and includes additionally airport operators; and (although nothing turns on this) under section 2(4) of the Planning (Consequential Provisions) Act 1990 it is the definition in the later Act that falls to be applied.

4. Whether land is comparable rather with land in general than with land which is used for the purpose of the carrying on of statutory undertaking is a question of fact: see R v Minister of Fuel and Power, ex p Warwickshire County Council [1957] 1 WLR 861 per Lord Goddard CJ at 865, referring to the very similar definition of operational land in section 119(1) of the Town and Country Planning Act 1947.

Valuation list entry

5. An entry relating to the appeal hereditament appeared in the 1990 Middlesbrough rating list as it was originally compiled under the description "Offices and Premises" at a rateable value of £23,750. On 26 July 1991 the entry was altered to show a rateable value of £27,825 following the conversion of former living accommodation to the rear of the premises into office space occupied as part of the hereditament. The rating list also included an entry for the respondent's "new hereditament", as provided for by regulation 5 of the 1989 Regulations, under the description "Dock hereditament" with a rateable value of £1,990,114.
6. On 31 March 1995 Bissett Kenning and Newiss, agents for the respondents, made a proposal for the alteration of the list by the inclusion of the appeal hereditament in the new hereditament. Following a hearing, the valuation tribunal on 27 October 2000 allowed the respondent's appeal, ordered the deletion of the entry relating to the appeal hereditament and said that the assessment would be included in the cumulo assessment. It is against this decision that the appellant now appeals.

The facts

7. The parties agreed a statement of facts. Additional documentary material was included in the trial bundle. Evidence was given at the hearing, on the basis of reports lodged previously, by Martin George Jones MRICS CDip AF on behalf of the appellant and by Colin Hunter MRICS IRRV, associate director of Bissett Kenning and Newiss, chartered surveyors of Leeds, on behalf of the respondent. This evidence was directed to the issue of secondary fact – whether the hereditament was operational land. It was agreed that the hereditament was used for the purpose of the carrying on of the respondent's undertaking, and the evidence therefore related to the question whether or not in respect of its nature and situation it was comparable with land in general rather than with land used for the purpose of statutory undertakings. Following the hearing I inspected the appeal hereditament and the surrounding area. The material date in this case is 26 July 1991, over 12 years ago. Except in respect of matters, to which I will refer later, I was told that there had been no significant changes since then. In the light of these sources, and leaving aside for the moment the issue of secondary fact, I find as follows.
8. The respondent was incorporated by the Tees and Hartlepool Port Authority Act 1966, under which it derives its statutory powers and duties. It was privatised in 1992. It is the successor of the Tees Conservancy Commissioners, to whom, under the Tees and Stockton Dock Act 1852, had been transferred from the Tees Navigation Company the responsibility for the administration and improvement of the River Tees. Under section 12 of the 1966 Act the authority have the duty of taking such steps as they may consider necessary for conserving, maintaining and improving the harbour and its facilities and for the reclamation of land. The principal elements of the respondent's operational land are Hartlepool Dock, situated 4 miles north of the entrance to the River Tees and, on the south side of the river, Tees Dock, which lies about 3 miles upstream of the entrance to the river, and Tees Offshore Base, a mile or so further on. Tees Dock provides deep-water port facilities, including a ferry terminal, and Tees Offshore Base contains deep-water jetties and a range of marine facilities. About 3 miles upstream of Tees Dock is the old Middlesbrough Dock, first opened in 1842 and the principal dock on the Tees until the need for deep water facilities led to its decline and eventual redundancy a decade or so ago. At the material date it remained within the respondent's ownership, but it was disposed of soon after.
9. The appeal hereditament is situated facing east onto Queen's Square. To the south it is bounded by Bridge Street West, on the south side of which is Middlesbrough railway station. Queen's Square ends at the railway, where Albert Bridge carries the railway over the road, which, on the south side, becomes Exchange Place. About 300 yards to the north of the railway, and roughly parallel to it, is the River Tees. The transporter bridge, the most notable Teesside landmark, crosses the river here. Adjacent to it and fronting the river is the respondent's conservancy depot. To the east of Queen's Square, Bridge Street East leads eastwards into Dock Street, adjacent to which lies Middlesbrough Dock, the nearest point of which is about a quarter of a mile from the appeal hereditament. In the past, railway lines on the south side of Bridge Street East fanned out eastwards to form a great array of lines alongside the dock. All these have now been removed and at the time of my inspection the only vessel visible in the dock was a former passenger ferry, now a nightclub, which was formerly moored on the River Tyne. Beyond this vessel is the recently built Riverside Stadium of Middlesbrough Football Club.
10. The area between the railway and the river formerly contained extensive iron and engineering works, streets of terraced housing dating from the nineteenth century, warehouses, churches, clubs and public houses. At the north end of Queen's Square there was a stone-built bank. Queen's Terrace, adjoining the appeal hereditament to the north, was a terrace of large houses. All this area is now greatly changed. Most of the old housing has been cleared and some new housing has been built. There is much vacant and under-used land. The extensive engineering works have gone, and there are smaller scale industrial and warehousing uses. In the vicinity of the appeal hereditament Queen's Terrace is now empty, having previously been in use as offices. On the opposite side of Queen's Square are two modern office buildings (one occupied by Business Link (TEC) and the other, Erinus House, containing suites of offices) and a late Victorian building, New Exchange Buildings, housing the offices of Vantis Walkers. To the rear of the appeal hereditament, buildings on the corner of Albert Street to the west contain a club, the Bongo Club, a kitchen warehouse, and former offices of the Benefits Agency, which are now vacant. On the west side of Albert Street the land use is predominantly residential. Beyond the office buildings on the east side of Queen's Square the land use is mainly workshops and warehousing. There is an electrical warehouse, some disused shops, a car body repair shop and a printing works, the German consulate at 15 Bridge Street East, and a firm of marine surveyors.
11. The appeal hereditament is within a conservation area and is itself a Grade II listed building. The main building was built in about 1900 as the headquarters building of the Tees Conservancy Commissioners to replace their previous offices in Bridge Road, Stockton. Externally it is a typical late-Victorian red brick public building with terracotta features under a tiled roof. The side and rear elevations are brick. It appears to have been constructed as two separate properties, the southerly being two-storey and the northerly three-storey. The distinctive features of the building are primarily in the northerly part of the building. At the rear of the three-storey part is a building which was formerly the caretaker's house. It has no internal access from the main building. It is now used as a computer centre. Adjacent to it is a detached single storey office annexe built in the 1970s.
12. The basement of the main building is used for storage. It also contains a boiler room and a former canteen and kitchen area. Three of the rooms are secure stores, with safe-type doors (and there is also a strong room on each of the ground, first and second floors). There are offices on the ground and first floors and these retain many of their original features, including oak panelling, coats of arms in moulded plaster and decorative glazing. On the first floor is a double-height boardroom which runs the full depth of the building. It is panelled and contains coats of arms and other moulded plaster features, large chandeliers and stained-glass panels in the windows. Most sections of the original very large board table remain. On the second floor there are further offices and a meeting room. Two of the office rooms were formerly drawing offices and had both east facing windows and west facing roof lights. The respondent's drawing offices are now housed in the respondent's conservancy depot.

Appellant's case

13. Mr Jones said that he had been involved in rating valuation and practice for more than 30 years. Between February 1996 and his retirement in October 2002 he was a member of the utilities rating team of the Valuation Office. From April 2000 his work consisted mainly in the rating valuation of large ports and giving advice in connection with whether a particular hereditament was operation land.
14. Mr Jones said that most of the land and buildings used for the purposes of port undertakings were, in their nature, very similar to land and buildings used for other purposes. Typically, they would be warehouses, workshops, offices and land used for open storage. So far as the warehouses and workshops were concerned many would have been built with a specific purpose in mind, and the size, height, access provisions and services would have been designed accordingly. In that respect, however, they did not differ from the generality of warehouse and workshop buildings elsewhere. This was especially true of older buildings, which were not in the main constructed with flexibility of future use in mind. In the same way, offices at ports generally differed very little from their counterparts elsewhere. Older port offices were often built with a view to the port's specific requirements at the time of construction, such as those in respect of the numbers and status of staff, but in that respect they were no different from other offices elsewhere of a similar age. Thus they would typically be constructed with cellular offices where the partitions were structural walls, leading to inflexibility in the provision of accommodation. Mr Jones said that the only buildings regularly found at ports which he had seen and which were not comparable with land in general in respect of their nature were passenger and freight terminals. Most ports had large areas of land devoted to open storage, and car and lorry parks. Those areas were similar in nature to land used for the same purposes elsewhere. Mr Jones thought that the only land which, by its nature, was not comparable with land elsewhere was land which immediately adjoined the water, such as wharves, quaysides, slipways, loch and dock gates.
15. Mr Jones said that he thought that the definition of operational land in the 1989 Order meant that all land is "land in general" unless it is not. Therefore, he said, land in general could, in a sense, be defined simply in a negative sense. He thought that a useful practical test for deciding whether land (or a building) was, in its nature land in general (or not) might be formulated as a question as follows:

"If the land or building were vacant, would I conclude after inspection, and ignoring its situation, that because of its nature the most likely occupier would be a port authority, who would use for operational purposes, rather than any other class of occupier?"

16. In deciding whether the situation of land (or a building) used for the purposes of a port undertaking was not comparable with land in general, Mr Jones said that he would take account of its closeness to dockside operations, its closeness to other operational land and the surrounding uses and occupations. He would adopt the following test to determine whether the situation of the land (or a building) was land in general:

"If the land were vacant, and there were no buildings upon it, would I conclude, after inspection of the land and buildings in the vicinity, that because of its situation the most likely occupier of the land or any building erected on it would be a port authority who would use it for operational purposes, rather than any other class of occupier?"

17. Mr Jones said that in his opinion the appeal hereditament was in its nature land in general. The general impression given by the building both internally and externally was precisely what it was, namely that it was constructed as the main offices of a public body or financial institution built at the end of the Victorian era. Externally there was nothing to distinguish the offices from many other buildings throughout the country built for similar purposes and of the same era. Internally there were three features which were unusual but by no means unique: the double height boardroom, the second floor with its roof lights, and the extensive facilities for documents storage. The double height boardroom was unusual. Mr Jones could not recall seeing another one quite like it, either at port offices or elsewhere. The nearest thing he could think of was a council chamber in local authority offices or perhaps a lecture theatre in a college. He thought, however, that it was by no means unusual to find a boardroom in offices, both public and private. There was no reason why a double height boardroom should be considered as peculiarly appropriate to a port operation. The secure document stores were not dissimilar to those found in solicitors' offices and banks of a similar vintage. The fact that they were not now, in the main, used for the purpose for which they were originally intended did not make him think that they were such a specialised feature of the building that it should be considered to be other than of a general nature. Similar considerations applied to the former drawing offices. Mr Jones thought that it was significant that most of those had now had full ceilings installed. There was nothing which would prevent their use for any general type of office purpose.
18. As far as the situation of the appeal hereditament was concerned, Mr Jones said that he had no hesitation in concluding that the situation was that of land in general. The land in the vicinity of the appeal hereditament was used partly for office purposes, partly for residential purposes and partly for mixed warehouse and industrial purposes. The only indication that one might be in the proximity of a port was the office of the German consulate at 15 Bridge Street East, which also housed a firm of marine surveyors. Thus both in terms of its nature and situation the appeal hereditament Mr Jones said was comparable with land in general.
19. In his submissions, Mr Timothy Mould relied on the decision of this Tribunal in Halliday (VO) v British Railways Board [1994] RA 297. Although it was accepted in the present case that the appeal hereditament formed a necessary part of the respondent's undertaking, on the approach adopted in Halliday that, he said, was not in itself material. On the evidence the building was not of a nature special to headquarters buildings for statutory undertakings rather than head offices for public and private corporate bodies in general. As to its situation, the appeal hereditament was within an urban area of mixed commercial and some residential use. Such surroundings were typical for head office buildings situated in towns and cities throughout the country.

Respondent's case

20. In his evidence Mr Hunter said that it appeared that under the definition of operational land in the regulations the test to be applied was a comparison, and it implied that there were two extreme possibilities. At one end of the range were properties of such a generalised nature that they were indistinguishable from land in general. At the other extreme were properties so specialised that only a port authority could beneficially occupy them. Either extreme said Mr Hunter was difficult to visualise. The majority of properties would fall somewhere between the two extremes. It was not therefore a simple yes or no test but a balance of probabilities that had to be applied. The distinction was not a straightforward physical matter. There were numerous dock properties, privately owned and operated, which appeared as separate hereditaments in the local list. Within the cumulo assessment of statutory undertakings there were land and buildings which, if viewed in isolation were warehouses, offices, storage yards etc and were physically indistinguishable from similar properties entered separately in the same local list. In the case of Tees & Hartlepool Port Authority the undertaking included operational land in Middlesbrough and in Hartlepool on a number of sites. It was not possible, said Mr Hunter, to say how many sites were included in the hereditament that was included in the rating list pursuant to regulation 5(4). However, at the very least the sites would include Tees Dock, Tees Offshore Base, the conservancy depot and Hartlepool Dock.
21. As far as the nature of the property was concerned, Mr Hunter said that he had drawn upon his experience of dealing with office properties generally, and his specific knowledge of working in Middlesbrough, as a civil servant based at Corporation House, Middlesbrough, and in his former role as an associate of Hepper Robinson based in Leeds and in his current post as an associate director of Bisset Kenning and Newiss. Externally the head office was, said Mr Hunter, a typical late Victorian red brick public building with terracotta decorative features. He pointed out that the main building appeared to have been erected as two separate properties and that the distinctive features of the building were primarily to be found in the right hand portion. He identified four special features which, he said, set the building apart from general offices. They were: secure document stores on each level; a double height, full depth, boardroom on the first floor at the junction of the left hand and right hand portions of the building; the third floor drawing office with roof lights; and the unusual architectural style of archways in-filled with wood and glass partitioning.
22. With the exception of the boardroom none of those features would prevent the property from being occupied by a third party as offices, with minor modifications. However, he was not required to ask that question as part of the test set by the regulations. The test which he was considering was whether by its nature the building was comparable rather with land in general than with land which was used for the purposes of carrying on of statutory undertakings. The head office had specific features which distinguished it from offices in general. Overall the building was similar in nature to styles of public buildings of which he was aware, such as small town halls, general post offices, and museums. Those were specialised types of building and were not typical of land in general. He thus concluded that the head office was not by its nature comparable with land in general but was more comparable with the purpose built properties of statutory undertakers and public bodies, and was in fact a purpose build office for a port authority.
23. As far as situation was concerned, Mr Hunter thought that, when considering the situation of the head office, he should consider its location both currently and historically. At the date of construction the property was at the edge of the existing Middlesbrough Dock Estate, on a site chosen for its location. The position of the head office gave immediate access to the dock as well as being on the same road as the conservancy depot, and was well located for access to the railway station and a short walk from Middlesbrough town centre. The location also gave access to the north bank of the Tees and the authority's outlying properties via the transporter bridge. He drew attention to a booklet that had been produced on the centenary of the Tees Harbour Commissioners in 1952. It recounted the reasons for the building of the new headquarters and it referred to them as "handsome new offices which provided architectural distinction to the somewhat drab neighbourhood of the dock".
24. Taking account of the combination of the two ports in Tees and Hartlepool, Mr Hunter said that if the position was considered at 1966 (ie the year in which the Tees and Hartlepool Port Authority Act was passed) the head office was ideally placed for access to the port authority's properties on both sides of the Tees and for access via the transporter bridge to the coast road to Hartlepool. At that date that was the quickest road route between the two centres and access to the railway station would have provided excellent communication between the two ports. Currently the head office was still strategically placed at the centre of the port of authority's undertakings. The test was not that the hereditament should be on operational land but that the hereditament should consist of operational land. The fact that the building was not on the dock side did not preclude it from being operational land. In his opinion the situation of the head office was commensurate with its pivotal role as the headquarters of the port authority and its situation did not make it more akin to land in general.
25. In cross-examination Mr Hunter said that the issue of the situation of the land required one to consider why the building was where it was as well as the locality in terms of its surroundings. He agreed that its surroundings consisted of mixed uses in an area typical of an urban area, but the same would go, he said, for the surroundings of any dock. The nearest point on the authority's land had been the nearby marshalling yards that served the original Middlesbrough Dock, now disused. The nearest part of the authority's land was now the conservancy depot. It was to be noted, however, that at the material day in July 1991 Middlesbrough Dock was still operational land.
26. In his submissions Mr Scrafton said that under regulation 5 the primary test to be applied in determining whether the building was a new hereditament its use and ownership. Under the definition in regulation 5(5) operational land was land which was used for the purpose of carrying on the undertaking, and land fell to be so treated unless it was shown that in respect of its nature and situation it was comparable rather with land in general than with land which was use for the purpose of carrying on of statutory undertakings. Here the building had been built for the port authority, and no one other than such an authority would take it on. The situation of the building in an arc of the river made it more likely that it would be so used.

Conclusions

27. The question for decision is whether the appeal hereditament, which, it is agreed is used for the carrying on of the respondent's undertaking, is not land which, in respect of its nature and situation is comparable rather with land in general than with land which is used for the purpose of carrying on of statutory undertakings. The two aspects of the comparison to which the provision refers are the nature and situation of the land, and there is no dispute that "land" in this context includes buildings. Mr Jones suggested two tests for determining the comparison, one dealing with nature and the other dealing with situation. While it may well be that the questions that Mr Jones suggests as the tests are ones that are worth asking, I do not think that the answers to them could be determinative or, indeed, that other useful questions might not also be asked. In particular it would be wrong in my judgment to treat the provision as identifying two separate criteria, nature and situation, which need to be individually determined. What is required, in my view, is an overall comparison that takes both the nature of the land and its situation into account. The land itself, for example, might have features that were only weakly suggestive of use by a statutory undertaker or that were equivocal (for instance features of a sort also to be found in land used by other authorities that were not statutory undertakers) so that it was impossible to say that the land in this respect was not more comparable with land in general. However, taking these features together with the situation of the land might lead to the view that the land was not more comparable with land in general. It is this overall comparison that the provision, in my view, requires to be made.
28. There is nothing in the external appearance of the building to suggest either that it was built for or that it is in the occupation of a statutory undertaker. Its exterior could belong to a commercial office building or to public offices or to a building in institutional use. The same applies, in my view, to the interior. The four features to which particular attention is drawn – the secure documents stores, the remarkable boardroom on the first floor, the rooms on the second floor designed as a drawing-office, and the unusual style of the wood and glass partitioning – show, I believe, that the building must have been built with a particular user in mind. The secure storerooms and the drawing-offices could perhaps have been what a number of potential office occupiers might have required. But the boardroom, which the plan shows to be over 45 feet long, was specifically required because the commissioners were large in number (about 30) and constituted a representative body of great importance on Teesside.
29. The evidence does not suggest that the respondent requires a boardroom like this to operate its business. It does not require extensive secure stores, and it does not use the drawing-offices for the purposes for which they were designed. The fact that it occupies these premises is the result of its succession to the functions of the Commissioners, but it conducts its affairs in a different way and in a different world.
30. When considering the situation of the hereditament it is right in my view to have regard both to its location in relation to other parts of the respondent's undertaking and to its surroundings. It was evidently built where it was because of the proximity of the site to the Commissioners' principal asset, Middlesbrough Dock, to port-associated uses in the vicinity, and to the railway station. At the material date, however, Middlesbrough Dock had been run down and its closure lay not far into the future. The principal assets of the respondent, Tees Dock, Tees Offshore Base and Hartlepool Dock are situated some miles from the hereditament, and the river and respondent's conservancy depot lie about 300 yards to the north.
31. The surroundings of the hereditament consist of buildings in a variety of urban uses and open and derelict land. Apart from the German consulate and the offices of marine surveyors in Bridge Street East, none of these uses appear to be port-related. Taking account of these surroundings, the situation of the hereditament in relation to the other parts of the undertaking, and the nature of the building in terms of its design and function, I am in no doubt that it is comparable rather with land in general than with statutory undertaking land.
32. It follows that the appeal must be allowed and the entry relating to the hereditament that the valuation tribunal ordered to be deleted from the rating list should be restored. The parties agreed at the hearing that costs should follow the event, and the respondent must therefore pay the appellant's costs of the appeal, such costs if not agreed to be the subject of a detailed assessment by the Registrar on the standard basis.

Dated 15 January 2004

George Bartlett QC, President