England and Wales Lands Tribunal

O'Brien v Valuation Officer [2006] EWLands RA_39_2005_SP (04 September 2006)

RA/39/2005

LANDS TRIBUNAL ACT 1949

RATING ... Alteration of rating list – advertisement hoardings – deletion – hereditament ceasing to exist – beneficial occupation – appeal dismissed – remitted to Valuation Tribunal to determine rateable value

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

LONDON SOUTH EAST VALUATION TRIBUNAL

BETWEEN BARRY O'BRIEN Appellant

and

ROBERT JOHN PETER CLARK Respondent

(Valuation Officer)

Re: Land used for advertising

1-3 Penge Road

London SE25 4EJ

Before: A J Trott FRICS

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

On 3 August 2006

The appellant in person

John Harding MRICS, Valuation Office Agency, for the respondent.

The following cases are referred to in this decision:

Crowther-Smith v The Assessment Committee of the New Forest Union (1889) Ryde Rat App 1886-90 311, CA.

Black v Oliver [1978] QB 870

Dawkins (Valuation Officer) v Ash Bros and Heaton Limited [1969] 2 AC 366, HL

The following cases were also cited:

Gilbert v S Hickinbottom & Sons Ltd [1956] 2 QB 40

R v Melladew [1907] 1 KB 192

LCC v Erith Parish (Churchwardens) and Dartford Union Assessment Committee [1893] AC 562

Archer Ltd v Robinson (Valuation Officer) [2003] EWCA Civ 642

DECISION

Introduction

1. This is an appeal heard under the simplified procedure regarding the assessment in the 2000 rating list of land used for the support and erection of advertisement hoardings. The hereditament was entered in that list as "land used for advertising" at a rateable value of £7,240. The entry had effect from the start of the 2000 list on 1 April 2000.
2. On 8 October 2002 the valuation officer altered the list by deleting the hereditament with effect from 17 September 2002. On 20 January 2003 Mr O'Brien made a proposal against the (by then) historic entry in his capacity as freehold owner of the land. The proposal sought to delete the entry with effect from 1 January 2001 on the grounds that:

"This site was described as land used for advertising but fell into disrepair and effectively ceased to be so used as per end 2000"

3. The proposal proceeded to appeal before the valuation tribunal following disagreement between the parties as to whether it was well founded. As an alternative to the deletion of the entry from the list the appellant argued that there should be a reduction in the rateable value of the hereditament. The respondent contested this alternative approach and argued that the issue of valuation should not form part of the appeal. In its decision dated 16 June 2005 the VT agreed with the respondent that the scope of the proposal was limited to the matter of deletion from the list. The VT also accepted the respondent's arguments that the entry was correctly deleted from the list with effect from 17 September 2002.
4. Mr O'Brien appealed the VT's decision to this Tribunal. The President determined as a preliminary issue whether the appeal was limited by the scope of the appellant's proposal in the manner determined by the VT. In his decision dated 21 April 2006 the President stated:

"I determine the preliminary issue in the appellant's favour. It is open to him, if he fails to establish that the entry in the list should be deleted with effect from an earlier date than the 17 September 2002, to contend that the rateable value of the hereditament should be reduced. Since the question of value was not considered by the VT ... if the issue of deletion is decided in the VO's favour, the case should be remitted to the VT....."

5. The jurisdiction of the present hearing is therefore limited to the determination of the correct date for the deletion of the entry from the list.
6. Mr Barry O'Brien appeared in person and gave evidence. Mr John Harding MRICS appeared for the respondent VO with the permission of the Tribunal.

Facts

7. The hereditament was located within a triangular shaped plot of land on the north western side of Penge Road adjoining No.5 and the London to Croydon railway line to the west. This land comprised two hereditaments in the 2000 list. At the front of the site, along Penge Road, was a hereditament described as "land used for car sales". The hereditament that is the subject of this appeal was at the rear of the site and comprised a collection of three free standing timber framed hoardings attached directly to the land. The total display area was for four advertisements each of a size known as 48 sheet.
8. Mr O'Brien acquired the freehold interest in 1-3 Penge Road in January 1991 having previously held a licence to use the advertising hoardings. The appeal hereditament has at all material times during the life of the 2000 list been owned or occupied by the appellant trading as Poster Sites Southern.
9. The parties agreed that the date the hoardings were removed from the site was at or around 20 July 2002 and not the 17 September 2002 as was previously stated at both the VT hearing and the hearing of the preliminary issue before this Tribunal.
10. Deemed consent for the display of the advertisements was granted under regulation 6 and Class 13 of Part 1 of Schedule 3 of the Town and Country Planning (Control of Advertisements) Regulations 1992 (the 1992 Regulations). This regulation applied because the advertisements were displayed on the site without express consent on 1 April 1974 and, for the purposes of that regulation, the site was used continually for that purpose from that date until 20 July 2002.

The case for the appellant

11. Mr O'Brien said that, with one exception, he was unable to let out the advertising hoardings by the end of 2000 because the specialist agencies would no longer deal with him. He had tried hard to sell the space and would have done so had be been able to but it had proved impossible to do so. Eventually he let the site to More O'Ferrall at or around 20 July 2002. They constructed their own hoardings on the site.
12. Mr O'Brien submitted that his inability to let the site meant that he was in neither actual nor beneficial occupation of the site from 1 January 2001. As such he was not in rateable occupation of the hereditament from that date. In support of this argument Mr O'Brien referred the Tribunal to the case of Crowther-Smith v The Assessment Committee of the New Forest Union (1889) Ryde Rat App 1886-90 311, CA. In that case Lopes LJ said at 313:

"To bring a legal ownership and occupation within the statute 43 Eliz. c. 2, there must be a use and enjoyment, which is, or is capable of being, beneficial. Here there is no evidence of any such use and enjoyment, nor indeed of any use and enjoyment by the appellant at all."

13. Mr O'Brien said that he could not remove the advertising hoarding structures because to do so would have meant the loss of the deemed consent that he enjoyed under the 1992 Regulations. After the passage of time those structures fell into disrepair and nobody would have paid any rent for them in that condition. He considered that they were beyond economic repair. That being so the rateable value of the hereditament should be nil because the land was effectively "struck with sterility". In support of his submission Mr O'Brien referred the Tribunal to the case of Black v Oliver [1978] QB 870 in which Browne LJ said at 880G:

"If the Tribunal of fact ... comes to the conclusion that if factors personal to the actual occupier are disregarded no one would give any rent for the hereditament, there is in my judgment no reason in law why it should not find a nil value."

14. Mr O'Brien also queried whether it was possible for the hereditament to be deleted from the list once the hoardings had been removed. He submitted that he had an established right to use the land for advertising and that the word "land" under the Interpretation Act 1978 includes any right in or over land. The definition of a hereditament under section 64(1) of the Local Government Finance Act 1988 meant property which is or may become liable to a rate (by reference to the General Rate Act 1967). Property includes land and land includes rights in or over that land. Therefore although the structures were removed the rights would remain since the land remains upon which those rights were exercised.

The case for the respondent

15. Mr Harding submitted that the appeal property was a hereditament within the meaning of section 64(1) of the 1988 Act on the material day and was not a right, or therefore a hereditament, for the purposes of section 64(2) because it was not let out or reserved to any person other than Mr O'Brien as the occupier or owner of the land. The extent of the hereditament was readily capable of identification.
16. Mr Harding submitted that since the Local Government Finance Act 1966 there had existed the power to rate owners and a hereditament might exist and create a liability where there was no actual occupation. The liability for owners to be rated was now contained in section 45(1) of the 1988 Act. Under section 65(1) of that act the owner of a hereditament or land is the person entitled to possession of it. Section 65(8A) provided that in a case, such as this, where section 64(2) did not apply, a hereditament used for the exhibition of advertisements, but which was not occupied, should be treated as occupied by the person permitting it to be so used or, if that person could not be ascertained, by the owner. The combined effect of sections 45 and 65 was that a hereditament could exist without occupation and that liability for the rate could rest with the owner. In the case of the display of advertisements that liability was a strict one. Applying these provisions to the present case meant that Mr O'Brien, as owner, was liable for the rate until the advertising hoarding and structures were removed on 20 July 2002.
17. Mr Harding noted that Mr O'Brien had argued that the hereditament had no value to him and therefore had no value at all and should not appear in the rating list. Although Mr Harding acknowledged that the question of value fell outside the jurisdiction of this hearing he commented that the cases cited by Mr O'Brien had both been historic and dealt with liability issues which were not relevant to the present case. He referred instead to the three assumptions that paragraph 2 of Schedule 6 of the 1988 Act required to be made when determining the rent at which it is estimated the hereditament might reasonably be expected to let from year to year. These embodied the concept of the hypothetical tenant and the hypothetical tenancy. Mr Harding cited Ryde on Rating at E [154]:

"The statute requires the assumption that the property to be valued is to be let and therefore the fact that it is occupied by the owner is immaterial. All possible occupiers, including the actual occupier, must be taken into account as possible tenants from year to year."

Mr Harding submitted that there were at all material times potential hypothetical owners and occupiers of the appeal property.

18. Mr Harding contested the statement made in Mr O'Brien's statement of case that the hoardings had fallen into a state of repair such that nobody would have given any rent in that condition for advertising purposes. There was no evidence to support Mr O'Brien's assertion and the proposal alleging disrepair was not made until 2003 which was long after the material day. Under the assumptions contained in paragraph 2 of Schedule 6 to the 1988 Act the hereditament is assumed to be in a reasonable state of repair but excluding from that assumption any repairs which a reasonable landlord would consider uneconomic. Mr Harding submitted that in the present case Mr O'Brien had not produced any evidence of the disrepair that he asserted. The parties had agreed that the total cost of constructing the advertising hoardings as at the antecedent valuation date of 1 April 1998 was £4,740. On the photographic evidence produced at the hearing it was probable that the cost of repair would have been much less than this. At any subsequent hearing Mr Harding stated that the VO will defend a rateable value of £6,950 for the hereditament. He concluded that a hypothetical landlord would have expended a maximum of £4,740 to enable an income from the land and hoardings of £6,950 for a tenancy from year to year with a reasonable prospect of continuance.
19. Mr Harding submitted that the VO had a duty to maintain accurate rating lists and that he had performed that duty by making and maintaining an entry in the relevant non-domestic rating list for the appeal hereditament. On the facts such a hereditament existed and it was correctly shown in the list. It had not fallen into such a state of disrepair as to be incapable of beneficial occupation over the 18 months that it had not been used for advertising. There was no evidence to justify deleting the entry earlier than 20 July 2002. The question of rateable value and whether there was still a hereditament today were not matters for this hearing.

Conclusions

20. The issue to be decided in this case is whether, and, if so, when, the hereditament should be deleted from the 2000 list. It seems to me that there are two grounds upon which such deletion may be justified. Firstly, if the hereditament has ceased to exist and, secondly, if the hereditament has become incapable of beneficial occupation and is therefore unusable. The question of whether the appellant was in actual occupation does not seem to me to be relevant to the issue in hand. Rather it goes to the point of whether the appellant was in rateable occupation after 1 January 2001 which is not an issue under consideration in this hearing. The absence of actual occupation is not a ground for deleting a hereditament from the rating list for the reasons set out by Mr Harding in his submissions and with which I agree.
21. The hereditament in this case is defined under section 64(1) of the 1988 Act. The display of advertisements on the appeal property was not a right forming a hereditament for the purposes of section 64(2) of the 1988 Act because the appeal property was not let out or reserved to any person other than the occupier or owner of the land. The parties have now agreed that the advertising hoardings and their supporting structures were removed on 20 July 2002. That is therefore the date from which the hereditament ceased to exist. This is some two months earlier than the date previously submitted by the respondent at the preliminary hearing. I do not accept Mr O'Brien's argument that it is not possible for the hereditament under section 64(1) to cease to exist because land cannot cease to exist and the advertising rights in or over land are part of that land by virtue of the Interpretation Act 1978. Whether or not the advertising rights, which had deemed consent under the 1992 Regulations but which were not a contractual right for the purposes of section 64(2) of the 1988 Act, ceased to exist, the hereditament, which appeared in the 2000 list as "land used for advertising", was capable of deletion from the list upon the cessation of that use by removal of the very structures by means of which it was exercised.
22. Mr O'Brien argued that he was not in beneficial occupation of the hereditament from 1 January 2001 because he could not sell the advertising space and because over time the hoardings fell into uneconomic disrepair. Despite repeated prompting Mr O'Brien was either unable or unwilling to explain why he was now unable to let the advertising space having done so for many years. He said that specialist agencies would no longer deal with him but gave no coherent reason as to why this should be so. There were no material structural changes in the industry nor any significant change in trading conditions.
23. I accept Mr Harding's submission that all possible occupiers must be taken into account as possible tenants from year to year and that I am concerned with the hypothetical occupier. Mr Harding cited the case of Dawkins (Valuation Officer) v Ash Bros and Heaton Limited [1969] 2 AC 366, HL in which Lord Pearce said that in assuming such a hypothetical letting one excludes human realities insofar as they are accidental to the letting; they are acknowledged insofar as they are essential to the hereditament itself. I consider that Mr O'Brien's inability to let the advertising space falls into the former category. No evidence was presented to suggest that the hypothetical tenant would not be able to enjoy beneficial occupation of the appeal property. Mr O'Brien did not produce any objective reason why this should be so.
24. Mr O'Brien submitted that the advertising structures and hoardings fell into disrepair following their disuse and that they would have been uneconomic to repair and thus incapable of beneficial occupation. I do not agree with this for two reasons. Firstly, there are photographs taken on 2 July 2002 that show the structures and hoarding still in situ and apparently still capable of being used. Secondly, the respondent's analysis of the cost effectiveness of repair is reasonable and is based upon agreed figures. I do not consider that these repairs would be uneconomic even if the structures had to be replaced (which is unlikely) and that the hypothetical landlord would consider it reasonable to undertake them. Mr O'Brien submitted that he was not able to afford to undertake such repair at the time but, as stated above, the reality of his personal circumstances is accidental to the hypothetical letting and not essential to it and are therefore not taken into account.
25. It follows that I do not accept Mr O'Brien's argument that the appeal property is struck with sterility. I do not consider this to be an appropriate phrase to use in circumstances other than those where the occupation of a hereditament is, and would be, of no value to anyone. That is not the case here.
26. I conclude that the appeal property should be deleted as a hereditament from the 2000 list with effect from 20 July 2002. Mr Harding submitted, in response to questions from the Tribunal, that because this date is earlier than 17 September 2002 the President's decision on the preliminary issue meant that the case should not be remitted to the VT. He appears to have based this view upon the following passage of the President's decision:

"20. .... It is open to him [the appellant], if he fails to establish that the entry in the list should be deleted with effect from an earlier date 17 September 2002, to contend that the rateable value of the hereditament should be reduced ...." (my emphasis).

Because the date now agreed for the removal of the advertising hoardings, 20 July 2002, is earlier than 17 September 2002 Mr Harding submitted that the opportunity to argue for a reduced value did not exist. In the agreed statement of facts the parties stated that the case would be remitted to the VT if neither 1 January 2001 nor 20 July 2002 were found by the Tribunal to be the correct date for the deletion of the entry from the list. Since one of these dates has now been found to be correct the case should not be remitted.

27. I do not accept the respondent's position on this point. At the preliminary hearing the President was informed that the VO had altered the list by deleting the hereditament from it with effect from 17 September 2002. This was the date that the VO had supported before the VT hearing. There was apparently no evidence given at the preliminary hearing that an earlier date would be appropriate. The revised date of 20 July 2002 was agreed by the parties between the preliminary hearing and the current hearing. I have no doubt that had this revised date been known to the President at the time of the preliminary hearing he would have substituted it for 17 September 2002. It seems to me that the effect of the President's decision was to enable the appellant to contend before the VT that the rateable value of the hereditament in the 2000 list should be reduced in the event that the issue of deletion is decided in the VO's favour. The revised date now accepted by the VO does not alter that principle.
28. My decision is in favour of the VO and the appeal, insofar as it relates to the deletion of the entry from the 2000 list, is dismissed. The case must therefore be remitted to the VT to determine the rateable value. In remitting the case the parties shall be entitled to argue before the VT what is the correct rateable value of the hereditament in the 2000 list and what is the appropriate effective date and material day for the purposes of the appeal. An order to this effect shall be made accordingly.
29. This case was heard under the simplified procedure. No offer of settlement was made by either party and I do not regard any of the circumstances of the case as exceptional. Neither party submitted that they were. I therefore make no award in relation to costs and this decision shall take immediate effect.

Dated 4 September 2006

A J Trott FRICS