SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Mackay of Drumadoon	[2010] CSIH 53 XA58/09 XA59/09 OPINION OF THE LORD JUSTICE CLERK in the Appeals by THE ASSESSOR FOR LOTHIAN Appellant; against (1) MRS AGI HOLLAND; (2) MR ALAN SUTHERLAND; Respondents: _______

For the Appellant: Cleland; Simpson & Marwick

(Non Participating Party - The Respondents)

29 June 2010

Introduction

[1] The Assessor for Lothian has appealed under section 82(4) of the Local Government Finance Act 1992 (the 1992 Act) against a decision of the Lothian Valuation Appeal Committee (the Committee) dated 5 March 2009 by which it upheld appeals by Mrs Agi Holland and Mr Alan Sutherland against the entries of their respective houses at 54 and 52 Carnbee Park, Edinburgh at band F in the Council Tax List (the List).

The statutory framework

Valuation for Council Tax

[2] The 1992 Act provides inter alia that the amount of council tax payable in respect of a dwelling is to be calculated by reference to the valuation band in which the dwelling is entered in the List (ss 70-74). Section 84 of the Act requires the assessor to compile on 1 April 1993, and thereafter to maintain, a valuation list showing each dwelling in the relevant area and the valuation band applicable to it. Section 86 provides inter alia that the valuation for this purpose shall be carried out on such assumptions and in accordance with such principles as may be prescribed.

[3] The valuation principle and the assumptions on which it must be applied are prescribed in regulation 2 of The Council Tax (Valuation of Dwellings) (Scotland) Regulations 1992 (SI No 1329) (the 1992 Regulations). Regulation 2, so far as relevant to these appeals, provides as follows:

"2.-(1) For the purposes of valuations under section 86(2) of the Local Government Finance Act 1992 and valuations carried out in connection with proposals for the alteration of a valuation list, the value of any dwelling shall be taken to be the amount which the dwelling might reasonably have been expected to realise if it had been sold in the open market by a willing seller on 1^st April 1991, having applied the assumptions mentioned in paragraph (2) below ...

(2) The assumptions referred to in paragraph (1) above are -

(a) that the sale was with vacant possession ...

(d) that the dwelling was in a state of reasonable repair ...

(3) In determining what is 'reasonable repair' in relation to a dwelling for the purposes of paragraph (2) above, the age and character of the dwelling and its locality shall be taken into account."

Alteration of the valuation bands

[4] Section 87 of the 1992 Act empowers the assessor to alter the List. The exercise of that power is governed by The Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993 (SI No 355) (the 1993 Regulations). Regulation 4, so far as relevant to these appeals, provides as follows:

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

(b) the local assessor is satisfied that -

(i) a different valuation band should have been determined by him as applicable to the dwelling; or

(ii) the valuation band shown in the list is not that determined by him as so applicable."

The background to these appeals

[5] It came to the notice of the assessor that the houses of the respondents were in band E, whereas all of the other 25 houses in the Carnbee Park development were in band F. The assessor carried out a re-assessment and decided that these houses should be in band F.

The hearing before the Committee

[6] The evidence for the assessor was in two parts. First, the assessor's witness said that in 1997, shortly after these houses were built, they were entered in band E by a straightforward error. The original valuation sheets showed an intention to enter them in band F. Second, the witness gave detailed evidence to demonstrate that the banding in band F was correct. The evidence consisted of photographs, location plans, floor plans, a detailed schedule of 21 open market sales of comparable houses in the period 1990-1992 and an analysis of the sales evidence.

[7] The first respondent submitted evidence of house price indices for Scotland and Edinburgh and of comparison sales in other housing developments in the same postcode area. She submitted that those of the assessor's comparisons that came from the Murrays, a housing development about two-thirds of a mile to the south, should be disregarded, being from a different postcode area. The second respondent adopted her evidence.

The decision of the Committee

[8] The Committee summarised the evidence and set out its reasons as follows.

"The Assessor produced -

1 A booklet relating to Mr Sutherland's house running to fifteen pages; and

2 A similar and almost identical booklet relating to Mrs Holland's house running to fifteen pages.

Mrs Holland produced a Location Plan; a letter ... with her various submissions attached to it; a copy of a Disposition showing the original price paid for what turned out not to be her house but Number 52; Sales Particulars prepared in relation to various comparisons; a number of sheets given to her by one of the Assessor's staff about bandings at other addresses; and, as Appendix D, a printout of house prices by Post Code obtained from a computer site. The banding of both houses had been increased from E to F in April 2008 to take effect in June 2008. The cause of the issuing of the Notice was an appeal by a neighbour founding on the lower Band and seeking to compare her house with those two.

[The assessor's witness] relied on Rule 4(1)(b)(i) of The Council Tax (Alteration of Lists and Appeals) (Scotland) (Regulations) 1993, which provides that no alteration shall be made of a Valuation Band shown in the List unless a different Valuation Band should have been determined by the Assessor - in other words that there had been an error. [The assessor's witness] told the Committee that he did not do the original valuation but that there was a Valuation Sheet written at the time showing the intention to band these houses as F, which had been mistransposed as E. However, the Sheet was not produced to the Committee. It turned out that these two houses were different from the other 25 in the development, which had been banded F from the outset. On the evidence the Committee concluded that these houses could be regarded as worth something on or about the threshold to Band F. Their values seemed to be on the margin. The original Valuer may have given the tax payer the benefit of the doubt and have deliberately listed the houses at the lower Band. They did appear to look poorer quality than the other 25 which had been banded F.

Mrs Holland was quite convincing and presented her information well. It caused enough doubt on the part of the Committee that there had been any mistranscription of E for F. It was certainly true that her reference to general price indices is not normally regarded as reliable in these matters. In the whole circumstances the Committee considered that it was not proved that the higher Band should have been determined or was wrongly transposed. The Committee upheld the appeal and returned both houses to Band E."

Conclusions

[9] In my opinion, the Committee has seriously erred. It has taken a misguided approach to the evidence and has misinterpreted the law. In the normal case, it is not for this court to disturb findings in fact made by a Valuation Appeal Committee: but in cases where the evidence is recited by the Committee in its decision and where, as in this case, we have read the documentary evidence that the Committee was not prepared to accept, we are entitled to consider whether the Committee's findings in fact have any proper basis; and whether the Committee has taken a proper and reasonable approach to its assessment of the evidence.

[10] The starting point in this case was the evidence for the assessor that by an error these two houses were entered in the wrong band when they were first valued. Since that evidence was undisputed and since the Committee has not cast doubt on the credibility or reliability of the assessor's witness, I fail to see how it could reasonably hold that the assessor had failed to prove that the error was made and that the appropriate banding at that time was band F.

[11] Moreover, the Committee was not entitled to speculate, on no evidence at all, that the original valuer may have given the taxpayer the benefit of the doubt and deliberately listed the houses in band E.

[12] The Committee was also misguided in its treatment of the comparison evidence. The assessor was empowered to alter the list if she was satisfied as to any of the matters referred to in regulation 4 of the 1993 Regulations. The breadth of regulation 4(1)(b) is such that the assessor can alter the entry, quite apart from any question of error, if a valuation carried out on a re-assessment of the property shows that that is the right and proper thing to do. The Committee has given no good reason for having dissented from the assessor's judgment on the matter. In the absence of any such reason, the Committee had no basis, in my view, on which to substitute its own decision.

[13] The assessor produced detailed evidence to support her conclusion that the houses should be entered in band F. It was based on the primary evidence that is appropriate in such cases, namely evidence of open market sales relating to comparable properties at or near the valuation date. That evidence was largely unchallenged, yet in its reasons the Committee does not refer to it at all. In contrast with the valuation evidence of the assessor, which the Committee does not discuss, the Committee relied on certain evidence tendered on behalf of the respondents. It has failed to specify on what parts of that evidence it relied, or to explain the reasoning by which that evidence led it to its conclusion.

[14] In every valuation exercise, it is good practice at the final stage to take the valuation that has been brought out, look at it in its context and consider whether it produces a seemingly reasonable result. The Committee should have tested the reliability of its own conclusion by considering why, of all 27 similar houses in the same development, these two houses should be the only ones entered in band E. The Committee's only comment on that was the suggestion that these particular houses "looked somehow of poorer quality than neighbouring properties." That vague comment was scarcely an explanation; but in any event if it was a reference to the state of repair of the houses, it was an irrelevant consideration in the light of the statutory assumption that the 1992 Regulations required the Committee to make (reg 2(2)(d); cf Ass for Lanarkshire VJB v Valuation Appeal Committee 2003 SC 249).

Disposal

[15] I propose to your Lordships that we should allow the appeal and return both cases to the Committee for reconsideration.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Mackay of Drumadoon	[2010] CSIH 53 XA58/09 XA59/09 OPINION OF LORD HARDIE in the Appeals by THE ASSESSOR FOR LOTHIAN Appellant; against (1) MRS AGI HOLLAND; (2) MR ALAN SUTHERLAND Respondents: _______

For the Appellant: Cleland; Simpson & Marwick

(Non Participating Party - The Respondents)

29 June 2010

[16] For the reasons given by your Lordship in the chair I agree that we should allow the appeal and return both cases to the Committee for reconsideration.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Mackay of Drumadoon	[2010] CSIH 53 XA58/09 XA59/09 OPINION OF LORD MACKAY OF DRUMADOON in the Appeals by THE ASSESSOR FOR LOTHIAN Appellant; against (1) MRS AGI HOLLAND; (2) MR ALAN SUTHERLAND Respondents: _______

For the Appellant: Cleland; Simpson & Marwick

(Non Participating Party - The Respondents)

29 June 2010

[17] For the reasons given by your Lordship in the chair I also agree that we should allow the appeal and return both cases to the Committee for reconsideration.