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Cite as: [2006] CSIH 55, [2006] ScotCS CSIH_55

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SECOND DIVISION, INNER HOUSE, COURT OF SESSION

Lord Justice Clerk

Lord Philip

Lord Kingarth

[2006] CSIH 55

XA129/05

OPINION OF THE LORD JUSTICE CLERK

in the Appeal by

THE ASSESSOR FOR GRAMPIAN VALUATION JOINT BOARD

Appellant;

against

IAN FRASER

Respondent:

_______

For the appellant: Docherty, QC; Gillespie MacAndrew, WS

For the respondent: No appearance

16 November 2006

Introduction

[1] This is an appeal by the assessor for Grampian under section 82(4) of the Local Government Finance Act 1992 against a decision of the Valuation Appeal Committee for Moray dated 15 November 2005. It arises from the assessor's decision to alter the Valuation List in relation to a house at 81 Highfield, Forres by transferring it from valuation band C to band D with effect from 10 August 2001. The former owner of the house, Mr Ian Fraser, appealed to the Committee on the ground that the alteration should have been made with effect from 30 November 2004. The Committee allowed the appeal and directed that the alteration should have effect from the latter date.

The statutory framework

[2 ] Part II of the Local Government Finance Act 1992 (the 1992 Act) imposes a liability to Council tax in respect dwellings situated in each local authority area. The amount of the tax is based on the allocation of the dwelling to one of eight bands of capital value determined as at 1 April 1991 (Council Tax (Valuation of Dwellings) (Scotland) Regulations 1992 (SI No 1329), r 2). The 1992 Act provides for the alteration of the Valuation List by the assessor where, inter alia, there has been a material increase in the value of a dwelling and the dwelling, or any part of it, has subsequently been sold (s 87(1), (4)). For this purpose, a "material increase " in relation to the value of a dwelling means

"any increase which is caused (in whole or in part) by any building, engineering or other operation carried out in relation to the dwelling, whether or not constituting development for which planning permission is required ..." (s 87(10).

The Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993 (SI No 355) (the 1993 Regulations) provide, inter alia, as follows

"4-(1) No alteration shall be made of a valuation band shown in the list as applicable to any dwelling unless-

(a) since the valuation band was first shown in the list as applicable to the

dwelling-

(i) there has been a material increase in the value of the dwelling

and it, or any part of it, has subsequently been sold ...

19-(1) Any alteration of the list effected so as to reflect a material increase in the value of a dwelling shall have effect from the day on which the first sale of the dwelling, or any part of it, subsequent to the material increase was completed ... "

The facts

[3 ] In 1999-2000 the then owner, Mrs Pacitti, erected a conservatory at the house. The house was then in valuation band C. The work was completed in January 2000. On 10 August 2001 Mrs Pacitti sold the house to Mr Fraser. On 13 August 2001 Mrs Pacitti applied for a building warrant completion certificate relating to the work. On 28 August 2001 the certificate was granted.

In March 2002 the assessor inspected the house, having been notified, I assume, of the grant of the completion certificate. He concluded that it fell within valuation band D. At that time the assessor understood that the conservatory had been completed after the sale to Mr Fraser.

[4 ] On 30 November 2004 Mr Fraser sold the house to Mr and Mrs Munoz. The assessor then altered the Valuation List by placing the house in band D with effect from that date. It is plain that the assessor did this on the understanding that the sale to Mr and Mrs Munoz was the first sale of the house after the building of the conservatory.

[5 ] Mr and Mrs Munoz challenged the assessor's decision. On further investigation, it became clear to the assessor that the conservatory had been completed before the sale to Mr Fraser. He therefore altered the Valuation List to show that the dwelling was in band D with effect from 10 August 2001.

The decision of the Committee

[6 ] The Committee first considered when the material increase in value had occurred. It considered three possible dates, namely (1) a date some time in January 2000 when the alterations were physically completed; (2) 28 August 2001, when the completion certificate was issued; and (3) 26 March 2002, when the assessor revalued the dwelling. It concluded that the date of physical completion lacked specification and that it was therefore difficult to have confidence in the assessor's contention that that was when the material increase occurred. It considered that even if the assessor had specified that date, it was the completion certificate that represented the critical step in the completion of the works. The Committee, however, did not accept the date of the certificate either. It considered that the material date was the date on which the assessor revalued the dwelling, namely 26 March 2002. These were its reasons:

" ... the Committee's view is that only the Assessor can determine whether and to what extent there has been a material increase in value, bearing in mind the legislative parameters set for the Assessor. The only way the Assessor can do this is by revaluing the dwelling. The new value was only assessed when the Assessor's Office completed their revaluation on 26 March 2002 and accordingly the material increase in value was only determined at that point.

Regulation 19 refers to any alteration of the list effected so as to reflect a material increase in the value of a dwelling. The use of the word 'reflect' does not impart the ability to view retrospectively and there is no evidence that Parliament intended the provision to be retrospective."

[7 ] The Committee found support for its view in a dictum of Lord Hamilton in Ass for Grampian Valuation Joint Board v Macdonald (2002 SLT 817, at para [12]) to the effect that Parliament in enacting section 87(4) of the 1992 Act envisaged that regulations made under it would restrict in particular ways the circumstances in which alterations might be made to the Valuation List and, in particular, that a material increase in the valuation of a dwelling would not of itself warrant the application of a higher band.

Conclusions

[8 ] In my opinion, the Committee has misdirected itself. Its decision shows a confusion between the event that causes the material increase in the value of a dwelling and the subsequent events by which the occurrence of that increase comes to the notice of the assessor. The assessor's duty to alter the Valuation List arises from two events, namely the occurrence of the material increase, as defined by section 87(10) of the 1992 Act, and the first subsequent sale (1992 Act, s 87(4); 1993 Regs, r 4(1)). The alteration has to take effect from the date of the first subsequent sale (1993 Regs, r 19(1)).

[9 ] On the agreed facts, the material increase occurred in this case in January 2000 when the building operation was completed. The lack of an exact date is neither here nor there. The first subsequent sale of the dwelling was that by Mrs Pacitti to Mr Fraser. The assessor was bound to alter the Valuation List with effect from the date of that sale, and from no other date. The fact that the assessor did not discover until much later the true date on which the material increase occurred is irrelevant.

[10 ] I cannot understand why the Committee thought that regulation 19 could not operate retrospectively. The assessor can alter the Valuation List only if there has been a sale, and only if the sale has been preceded by the occurrence of a material increase in value. It follows therefore that the valuation exercise that the assessor has to carry out will inevitably be retrospective in nature.

[11 ] The decision of the Committee is not supported by the dictum in Ass for Grampian Joint Valuation Board v Macdonald (supra) to which the Committee has referred. The question in that case was what constituted a subsequent sale. Lord Hamilton's observation that the making of a material increase in value does not of itself warrant the application of a higher band, but has effect only upon the first subsequent sale of the dwelling gives no support to the Committee's view.

Decision

[12 ] I propose that we should allow the appeal, recall the decision complained of and remit the case to the Committee with a direction to it to determine that the subjects were properly entered by the assessor in the Valuation List at band D with effect from 10 August 2001.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION