England and Wales Lands Tribunal

Lane v Peter v Valuation Officer [2006] EWLands RA_57_2005 (09 August 2006)

RA/57/2005

LANDS TRIBUNAL ACT 1949

RATING – valuation – 2000 rating list – private members club – scaffolding to neighbouring building works severely impeding access – previous assessment omitting value of part of hereditament – whether assessment to be deleted ... deduction appropriate to reflect disability ( relevance of previous underassessment ( assessment reduced temporarily to RV £5,500.

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

CENTRAL LONDON VALUATION TRIBUNAL

BETWEEN RODNEY PAUL LANE Appellant

and

PETER ROBIN WOOLWAY FRICS Respondent

(Valuation Officer)

Re: First to third floors

2 Brydges Place

London

WC2H 4HP

Before: N J Rose FRICS

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

on 31 July 2006

Appellant in person.

Respondent in person with permission of the Tribunal.

The following cases are referred to in this decision:

O'Brien v Clark (VO), RA/39/2005, unreported

John Laing and Son Limited v Kingswood Assessment Committee [1949] 1 All ER 224.

Consett Iron Co Ltd v North Western Area Durham Assessment Committee [1931] AC 396.

Corus UK Ltd v Valuation Office Agency [2002] RA 1.

DECISION

Introduction

1. This is an appeal by the ratepayer, Mr R P Lane, against the decision of the Central London Valuation Tribunal, confirming the assessment in the 2000 rating list of a club and premises known as First to third floors, 2 Brydges Place, London, WC2H 4HP at RV £10,900. The appeal was conducted in accordance with the Tribunal's simplified procedure. Mr Lane appeared in person. The respondent valuation officer, Mr P R Woolway FRICS, also appeared in person with permission of the Tribunal. I inspected the hereditament and the immediately surrounding area in company with both parties shortly after the hearing.
2. The appeal arises as a result of a programme of substantial building works to the London Coliseum ("the Coliseum"), home of the English National Opera in St Martin's Lane, which has a return frontage to the north side of Brydges Place opposite the entrance to the hereditament. Works to the Coliseum started in 2000. In April 2002 scaffolding was erected at the St Martin's Lane end of Brydges Place and was gradually extended until, by 4 August 2002, it completely surrounded the entrance to the hereditament. The works to the Coliseum came to an end on 30 June 2004.
3. Mr Lane's originating proposal was received by the Valuation Office Agency on 28 April 2003. It identified as the alteration proposed the deletion of the existing entry with effect from 4 August 2002. It gave as the grounds for making the proposal that circumstances affecting the value of the property had changed. It provided the following reasons for believing that the rating list was inaccurate:

"The London Coliseum is covered in scaffolding to the extent that my front door is almost completely inaccessible and I cannot conduct my business more than approx 10%."

4. Notwithstanding the apparent inconsistency in the proposal form, Mr Woolway considered that it sought to advance two matters ... first, that the hereditament should be deleted from the list with effect from 4 August 2002 because it was no longer capable of rateable occupation; and, second, that the rateable value of the hereditament should be reduced because of a change in circumstances consisting of interference from scaffolding. In my view Mr Woolway was right to approach the matter in this way (see O'Brien v Clark (VO), RA/39/2005, unreported).
5. Mr Alan considered that he should not have to pay any rates while the access to his property was disturbed. Mr Woolway submitted that, on the facts, there was no justification for deleting the appeal hereditament from the list. He agreed that the rental value of the property had been adversely affected by the building works to a significant degree. This was, however, more than offset by the fact that the rateable value in the list seriously undervalued the hereditament, because it attributed no value to the second and third floor accommodation. Mr Woolway's calculation of value is attached to this decision (Appendix 1).

Facts

6. In the light of the evidence and a statement of agreed facts, I find the following facts. The hereditament is a private members' dining club arranged over three floors. It comprises a small entrance lobby on the ground floor, three rooms on the first floor used for dining purposes with associated bar facilities, two further dining rooms together with separate male and female wcs on the second floor, and a kitchen, pantry room, wine store and office on the third floor.
7. The floor areas are as follows:

First floor	54.67 m2
Second floor	28.75 m2
Third floor	42.49 m2
	125.91 m2

8. The principal frontage of the building in which the hereditament is situated is to Chandos Place, almost directly opposite Charing Cross police station and close to Charing Cross railway station. The building is constructed on basement to third floors, the ground floor comprising two shop properties known as 49 and 50 Chandos Place occupied as a café and a newsagent. Immediately adjoining the building is the Marquis of Granby public house, which also has an entrance into Brydges Place. The rear of the Harp public house at 47 Chandos Place adjoins the entrance door to the hereditament.
9. There are two windows on the Chandos Place frontage on each floor and two smaller windows on the rear elevation overlooking Brydges Place. There was no scaffolding on the Chandos Place frontage. The dining rooms are intercommunicating. The maximum number of diners at any one time is 65. The club is open from midday to midnight Mondays to Fridays, but not at weekends or bank holidays. The current membership is approximately 1,000, many of whom have connections with the theatre. At the date of the proposal members paid a membership fee of around £225 per annum, plus the cost of any food or drink consumed. During the building works which gave rise to this appeal approximately 300 members suspended their membership.
10. If the proposal succeeds in deleting the assessment the material day for valuation purposes is 4 August 2002. If the proposal relates to a material change of circumstances, the material day is 28 April 2003.
11. Access to the hereditament is only via Brydges Place, an alleyway joining St Martin's Lane with Bedfordbury. The alley is very narrow at the St Martin's Lane end, being approximately 0.9 metres wide. Most visitors approach from the Bedfordbury end, where the alleyway is approximately 1.9 metres wide. Previously there was an additional access available to club members, using the covered way on the ground floor of the Institute of Chinese Medicine at 45/46 Chandos Place. This covered way was also available as an escape route for patrons of the Coliseum in the event of an emergency evacuation. Before the date of the proposal, the owner of 45/46 Chandos Place erected shuttered doors on both the Chandos Place and Brydges Place elevations. These doors are normally closed. They are, however, locked in an open position on days when there are performances at the Coliseum, starting some time before each performance and finishing afterwards.
12. The only identification that the club exists is a small brass plate on the door, advising that the premises are for members only.
13. The hereditament was entered in the 2000 rating list from 1 April 2000 with a rateable value of £10,900 and referring to premises on the first to third floors. In previous rating lists the hereditament was treated as composite, as it comprised both domestic and non-domestic property, no value being attributed to the domestic parts. The non-domestic parts were previously on the first floor only and the second and third floors were used as the club steward's flat. There was shared used of the kitchen on the third floor and the public wcs were situated on the second floor, but no value was attributed to these areas. Although the domestic use had ceased by 2000 no action was taken to include the value of the former domestic parts, which by April 2000 were being used for non-domestic purposes. No proposals were made against the entry in the compiled list.
14. Mr Lane has occupied the hereditament since 1982, when he took an assignment of a lease that was due to expire in 1990. The lease was renewed from 1990 for a period of 25 years and provided for five yearly rent reviews. The rent was reviewed in October 1997 to £22,000 per annum, following negotiations in which Mr Lane was represented by a surveyor. The tenant is responsible for all repairs and insurance. A further rent review was due to take place in 2002. However, as a result of the sale of the building, the landlords did not take any steps to increase the rent until the middle of 2004 and the current rent passing of £28,000 did not become payable until October 2004. Mr Lane was not professionally represented in the course of the 2004 rent review negotiations.

Issues

15. The issues in this appeal are these. Firstly, should the hereditament be deleted from the list with effect from 4 August 2002? Secondly, if deletion is not justified, what is the appropriate percentage which should be deducted to reflect the presence of the scaffolding? Thirdly, what is the value from which such percentage should be deducted? Fourthly, during which period should the reduction be effective?

Whether deletion justified

16. The hereditament should be deleted from the list if on the material day, 4 August 2002, it was not capable of rateable occupation. There are four ingredients to such occupation:

"First, there must be actual occupation; secondly, it must be exclusive for the particular purpose of the possessor; thirdly the possession must be of some value or benefit to the possessor; and, fourthly, the possession must not be for too transient a period." (John Laing and Son Limited v Kingswood Assessment Committee [1949] 1 All ER 224. Tucker LJ at page 228).

That Mr Lane's occupation of the hereditament on 4 August 2002 possessed the first, second and fourth of those ingredients seems to me to be clear beyond argument. Mr Lane continued to operate the club throughout the period of disruption. He submits that the third ingredient was absent because, as a result of the drastic reduction in trade caused by the interference with access to his premises, the business became unprofitable. Indeed, it was only his tenacity that enabled him to continue.

17. I am unable to accept that submission. Beneficial possession is not synonymous with profitable possession. A comparable situation was considered by the House of Lords in Consett Iron Co Ltd v North Western Area Durham Assessment Committee [1931] AC 396. That case concerned certain coal mines which had been operated at a loss for some years. At page 410 Lord Sankey LC, with whom Viscount Dunedin and Lord Warrington of Cliffe agreed, said:

"There may be circumstances which prevent the occupier of a coal mine from using it for the purpose of producing coal, and if there are such circumstances he may be entitled to have excluded from consideration, in fixing the amount of the assessment, the expectation that at some future time circumstances will change so as to allow him to use it for that purpose. But where, as in this appeal, a colliery is actually being worked by the occupier for the production of coal, the expectation of better trade subsequent to the year of assessment is a consideration which may be taken into account in arriving at the true assessment."

18. In the present appeal it is clear that Mr Lane continued to run his club, albeit at a greatly reduced level of trade and unprofitably, because he expected that business would improve substantially once the scaffolding was removed. In those circumstances, I am satisfied that all four ingredients of rateable occupation were present and that there is no justification for deleting the assessment from the list.

The appropriate disability allowance

19. I therefore turn to consider the size of the deduction which is appropriate to reflect the impaired access to the hereditament. Mr Lane argues that the value of the property should be reduced by 100% whilst its access was impeded by scaffolding. Mr Woolway accepts that access was unsatisfactory during the period of the works. He says that he has dealt with many change of circumstances proposals relating to building works in the locality of a hereditament. In his experience, the presence of scaffolding on office premises does not normally cause rental values to be reduced, unless there are ongoing building works which themselves contribute to the severity of the impact. On the other hand, lengthy periods of scaffolding on retail premises can lead to value adjustments of 10 to 25%, depending on the impact the scaffolding has on the use of the property. The fact that the entrance to the hereditament was nearly obliterated by the scaffolding suggests that an allowance at the highest level of similar temporary allowances is appropriate. His colleague, Mr Jones, told the VT hearing that he felt that a 25% allowance was appropriate. The VT considered the appropriate reduction should be 50%. Mr Woolway decided to adopt 50%, even though such a level of adjustment is without precedent in his experience.
20. Although Mr Woolway has had considerable experience of temporary allowances to reflect building works, he does not seek to rely on any specific settlement in support of his valuation. Nor does he produce any rental evidence ... apart from that relating to the hereditament itself ( to justify his rental valuation before the material change of circumstances took place. That approach is entirely understandable. As Mr Woolway accepts, the hereditament is probably unique. It is situated in a very narrow alleyway, where it is the only occupied property. It does not rely on any passing trade. All its customers are obtained by word of mouth. They must each be nominated by four existing members. In practice, the only means of access during the period in question ( for building materials as well as club members ( was from the Bedfordbury end of Brydges Place. At that point, Brydges Place is 1.9m wide. The scaffolding was supported on both walls of the alleyway, which thus became a narrow tunnel. The height of the tunnel was restricted, resulting in the need to bend one's head at certain points. When the external wall of the theatre was being washed down, the passageway flooded. No new members joined the club during the relevant period and 30% of the existing members resigned. Although a limited number of members continued to visit, takings from the sale of food and drink were greatly reduced. There were no bookings for private functions, such as book launches, which usually produce substantial income.
21. Mr Woolway considers that, at the material day, the hypothetical tenant would probably have been told that the building works would be likely to be completed within 12 months and would have assumed that the scaffolding would be removed within a few months. In fact, the scaffolding was removed early in 2004 and the freeholders, who purchased the property during the course of 2003, agreed to a 20% reduction in the rent payable during the last three quarters of that year.
22. Mr Woolway gave his evidence in a commendably fair manner. He accepts that the 20% rent reduction which was offered by the landlords as a goodwill gesture to Mr Lane, who had a contractual liability to pay the full rent reserved under the lease, is not a reliable guide to the rent which would have been paid by a new tenant fresh to the scene. On the evidence I find that, on 28 April 2003, such a tenant would have assumed that he would be unlikely to attract more than a handful of visitors to the club for the next nine months whilst the scaffolding was in place and that, although he could look forward to earning a significant profit once the club was properly established, that was unlikely to happen for a number of years. Taking all these factors into account, I find that the presence of the scaffolding would have resulted in the hypothetical parties agreeing a temporary rent reduction of 75%.

The appropriate starting value

23. Mr Lane considers that this disability allowance should be deducted from £10,900, being the value previously attributed to the hereditament in the list. Mr Woolway argues that that value should be adjusted upwards so as to include the top two floors before the end allowance is applied. Whilst I entirely understand Mr Lane's frustration and even annoyance at the fact that the VT endorsed the valuation officer's approach on this issue, I am afraid that the law on the point is quite clear. It was expressed succinctly by Sullivan J in Corus UK Ltd v Valuation Office Agency [2002] RA 1 at page 14 as follows:

"I accept the submission of counsel for the valuation officer that if the valuation officer's duty to compile and maintain the list is to mean anything, it must be a duty to compile and then maintain an accurate list."

24. In the present case, as a result of Mr Lane's proposal Mr Jones, the valuation officer then dealing with the matter, realised that the assessment in the list was inaccurate, since it only attributed a value to one of the three floors. Mr Jones was then duty bound to correct the inaccuracy in order to maintain an accurate list. To do so he had, firstly, to estimate the value of the entire property before the scaffolding was erected, and then to deduct from that figure a percentage to reflect the degree of disability that was suffered.
25. Mr Lane submits that the VT wrongly considered the undervaluation of his property and, by doing so, imposed an unlawful retrospective valuation. I do not think that that is an accurate analysis of the position. Mr Woolway is not seeking to increase the assessment of the hereditament with retrospective effect. He accepts that the assessment will not be increased above £10,900 for the duration of the 2000 list. He is merely insisting, rightly in my judgment, that any reduction in the assessment to reflect the temporary disability is calculated starting with the correct value, and not an incorrect one.
26. Mr Woolway says that the correct starting value is £22,750. That figure is based on the rent of £22,000 which, with professional advice, Mr Lane agreed for the rent review in September 1997, adjusted to reflect the small movement in rents between the review date and 1 April 1998, the antecedent valuation date. In the absence of any other evidence I accept that valuation, with one qualification. At the rent review date the hereditament was served by an access at 45/46 Chandos Place, which was much wider and more prominent than the alternative approaches at either end of Brydges Place. By the material day, the Chandos Place access had been blocked off for much of the week. In my view, that change in circumstances would justify a small reduction from a rent which reflects a rather better access position. I find that the rental value of the hereditament, disregarding the presence of the scaffolding, was £22,250. Taking account of the scaffolding, my valuation is £5,500, calculated as follows:

Rental value	22,250
Less temporary allowance ... 75%	£16,688
	£ 5,562
Say RV	£ 5,500

The effective period for the reduction

27. The appeal is allowed. I direct that the assessment of the First to third floors, 2 Brydges Place, London, WC2H 4HP in the 2000 rating list be altered to RV £5,500 with effect from 1 April 2003, reverting to £10,900 when the scaffolding was removed, which I find took place on 2 January 2004.
28. In appeals conducted in accordance with the simplified procedure, the Tribunal is only authorised to award costs in certain limited circumstances. In my view no such circumstances arise in this case and I make no order as to costs.

Dated: 9 August 2006

N J Rose FRICS

Appendix 1

1^st to 3^rd FLOORS, 2 BRYDGES PLACE, LONDON, WC2H 4HP

VALUATION BY MR P R WOOLWAY FRICS (VALUATION OFFICER)

Valuation in accordance with paragraph 2 (1) of Schedule 6 to the

Local Government Finance Act 1988:-

Material day 28 April 2003

First Floor	m2	@	£	£
Reception, bar and lounge	54.67	£200	10,934
Second Floor
Two dining rooms and toilets	28.75	£180	5,175
Third Floor
Kitchen, stores and office	42.49	£160	6,798
			22,907	Say 22,750

Less temporary allowance for material change in circumstances

50%	-11,375
RV	£11,375

Effective from 1 April 2003 until 30 June 2004