Scottish Court of Session Decisions

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URL: http://www.bailii.org/scot/cases/ScotCS/2008/CSIH_61.html
Cite as: [2008] CSIH 61, [2008] RA 470, 2008 GWD 39-590, [2008] ScotCS CSIH_61

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LANDS VALUATION APPEAL COURT, COURT OF SESSION

Lord Justice Clerk

Lord Kingarth

Lord Clarke

[2008] CSIH 61

XA96/08

OPINION OF THE LORD JUSTICE CLERK

on the STATED CASE

in the appeal by

THE ASSESSOR FOR LOTHIAN

Appellant;

against

BBW LEISURE LIMITED

Respondent:

______

For the appellant: Clarke; Simpson & Marwick

For the respondent: No appearance

11 November 2008

Introduction

[1] This is an appeal by the assessor against a decision of the Valuation Appeal Committee at Edinburgh dated 28 February 2008 relating to the respondent's licensed premises at 47 Buckstone Terrace, Edinburgh. The subjects were entered in the Valuation Roll at the 2005 Revaluation at a net annual value and rateable value of £84,700. The respondent appealed against the entry. The Committee allowed the appeal to the extent of substituting a NAV/RV of £81,000.

The subjects

[2] The subjects consist of a restaurant, the Tusitala, and a public bar, the Pavilion. I shall refer to them as the Tusitala. The respondent's shareholders are Mr and Mrs James Wilkie. The respondent built the subjects in 1987. In 2001 it acquired two-thirds of an acre to the rear, on which it built a new restaurant and laid out 46 parking spaces. The restaurant was fitted out to a high standard and with attention to detail. These works cost about £800,000. They increased the restaurant capacity from 35 to 80 covers and created a private dining area for 30 covers. In the ten months after the reopening in June 2001 food sales increased from £194,000 to £471,000 and liquor sales increased from £345,000 to £465,000.

[3] The Committee found that the Tusitala was comparable with restaurants in the city centre, but was unusual in providing good quality and high standards of service in a suburban setting. It was in a good location on a main arterial route leading into the city and had good views to the Pentlands. The surge in turnover after the alterations in 2001 was attributable to Mr and Mrs Wilkie's hard work, experience and planning, and their commitment to create a superior establishment.

The valuations

[4] The assessor valued the subjects in accordance with the Scottish Assessors Association (SAA) scheme for the valuation of licensed premises in the 2005 Revaluation (cf Ass for Lothian v Belhaven Brewery Co Ltd, [2008] CSIH 60; Suburban Taverns (Glasgow) Ltd v Ass for Glasgow, 2008 SC 299). That produced the value entered in the Roll. At the hearing she reduced it to £84,500 to remove a minor issue.

[5] The respondent's representative, Mr Peter Henry FRICS, started from the agreed turnover but, relying on a point that the Committee rejected, took only 75% of the food turnover in excess of £35,000. He applied the scheme percentage to his adjusted turnover and deducted an end allowance of 10% on the basis that there was over-performance attributable to the personal qualities, local knowledge, skill and hard work of Mr and Mrs Wilkie.

The decision of the Committee

[6] The Committee found that, of the comparisons submitted to it, the only restaurant that out-performed the Tusitala was the Steading, a smaller and more traditional type of public house/restaurant. It was a managed operation. It targeted a more traditional market and was operated differently. It held that the Hunter's Tryst, the Balmwell and the Fairmile Inn were all "approximately comparable," but achieved significantly lower turnovers than the Tusitala. Of these, the closest competitor was the Hunter's Tryst, but it did not match the Tusitala in quality of design and operation or in turnover. The Committee made no findings about the Balmwell in relation to any features of possible comparability. It found that the Fairmile Inn had closed by then, having been failing for some time.

[7] The Committee found that the turnover of the Tusitala was "high by comparison with some other competitor businesses in the area," and that the knowledge and skill of Mr and Mrs Wilkie was and had been a major factor in the achievement of it. This was its conclusion.

"On the second issue [sc over-performance] the Committee accepted that Mr and Mrs Wilkie are very hard working and that they developed a great deal of experience which they used to good effect in the design and fitting out of the public house/restaurant building. It is a very good building in a very good location. The alterations down to reopening in June 2001 were very well thought out and effective and food turnover, in particular, immediately surged achieving £471,000 over ten months compared to £194,000 in the year before. Liquor turnover also improved. The Committee accepted that a lot of hard work and reorganization of staff and working arrangements was required. They had a good staff in the main although some changes had to be made. It was thought that this property with that record would achieve a high rent. A hypothetical tenant would be able to use the advantages of the building and the methods. He might doubt whether he would match the Wilkies' turnover, at least in an initial period, but an allowance of 10% against rent seemed unlikely. The Committee initially was minded to allow 21/2% deducting £2,112.50, reducing the figure to £82,387.50 rounded to £82,300 but came to the conclusion that somewhat more than that would be looked for in a negotiation with a hypothetical tenant and they rounded the figure further to £81,000, which they considered a reasonable reflection of the doubt that there might be about matching the performance."