Act: Gill, Advocate; Simpson & Marwick

Alt: MacIver, Advocate; Brodies LLP

2 July 2010

[1] This appeal relates to shop premises occupied by the respondents (1) at 47‑52 Princes Street, Edinburgh (Jenners store) and (2) at 146 Princes Street, Edinburgh (House of Fraser store). Following a hearing on 10 December 2009 the Lothian Valuation Committee (a) refused an appeal by the respondents in respect of the House of Fraser store against an entry for its rateable value in the roll in respect of the period 1 May 2008 to 31 August 2008, (that entry representing a 20% reduction from the entry made at 2005 Revaluation to take account of a material change of circumstances caused by the first stage of tramworks forming part of the Edinburgh tramway project, which reduction the respondents argued was too small) and (b) allowed an appeal by the respondents against the entries made in the 2005 Revaluation in respect of both premises for the period 21 February 2009 to 29 November 2009, on the grounds that there had been a material change of circumstances by reason of the second stage of tramworks. A 20% reduction was allowed in respect of both premises for the relevant period, consistent with the earlier reduction allowed in respect of the House of Fraser store. The Assessor has appealed against the Committee's decision, in particular in the latter respect.

[2] This appeal gives rise to the same broad questions as are raised by the Assessor in the appeal taken by her against H & M Hennes and Mauritz UK Limited and Others and Royal Bank of Scotland Plc, and this decision should be read with the decisions issued today in these appeals. The House of Fraser store stands in the same part of Princes Street as the premises in the Royal Bank of Scotland Plc appeal.

[3] At the outset of the Stated Case, the Committee record that:

"The findings in the Stated Cases Lothian Assessor v H M Hennes & Mauritz UK Limited and Others, relating to various retail properties situated on Princes Street, and Assessor v Royal Bank of Scotland plc relating to 142‑144 Princes Street are held as repeated herein brevitatis causa."

[4] In a further section of findings headed "The effect on value" the Committee record that it was found inter alia:

"The Respondents' third production shows footfall outside Marks & Spencer in Princes Street, including the period of tram-work disruption in 2008, compared to footfall at positions outside their other stores in Birmingham and elsewhere, showing a match before and after the tram-works but a drop in Edinburgh during the tram-works. There was no significant increase in November/December 2008 which is usually busy. Shoppers had to some degree deserted Princes Street. The Respondents' first production, following the material about Croydon, Nottingham, Buchanan Street and Paisley contains a plan of Edinburgh City Centre with red dots to show the position of footfall counters installed by the City Council. The following sheet shows average footfall by location in the second quarter of 2009 and substantial reductions since the previous year outside Marks & Spencer, Next and Frasers. The bottom table on the following page shows the average footfall in the third quarter, also reduced during tram-works. Princes Street is not an exceptionally high quality street for shop value. It is occupied largely by chain stores. High quality shops are now located in George Street. Princes Street is not a particularly unique shopping destination and is similar to retail shopping malls elsewhere. Respondents' first production towards the end contains tables showing differentials in sales figures at Jenners and Frasers. There was a cumulative reduction at Frasers of 17.83% and at Jenners of 15.2% comparing 2008 and 2009 to the 2007 level. Respondents' fourth production, an article from the Herald on 8^th September 2009, at the fourth paragraph, mention gross profit at House of Fraser being down 11/2% on the year before which was probably partly caused by the tram-works.

... During the period 1^st February 2009 to 29^th November 2009 there was a material change of circumstances, the effect of which was to reduce the value of both of the subjects of appeal. The change of circumstances materially reduced the extent to which beneficial occupation of the subjects can be enjoyed".

[5] Detailed findings are also made in relation to what happened in Croydon and Nottingham when tramworks were undertaken, and in Buchanan Street, Glasgow during resurfacing of the pedestrian precinct. These lead to a conclusion that "A clear effect of tramworks on value was recognised in England where a scheme for provision of end allowances against valuation was used. The circumstances during resurfacing of the pedestrian area in Buchanan Street, Glasgow were similar and also support the effect of that type of work on value ...".

[6] In a short section headed "The Assessor's Practice" it is said:

"In December 2008 the Assessor decided to remove allowances from 1^st September previously in Princes Street. The Assessor adopted a practice of making an end allowance of 20% in the valuation of all properties of a retail nature relying on public resort when stages of tram work were undertaken outside in the first stage of preparatory work between Haymarket and Shandwick Place and St Andrew Square and Leith Walk. The practice was applied to the House of Fraser store during the first stage of works in the street outside."

[7] Junior counsel for the Assessor in effect sought to present the same arguments as were advanced in the other appeals previously mentioned.

[8] For the same reasons, I am not persuaded by any of them. Indeed it might be thought that in this appeal they carry even less weight.

[9] It is entirely clear in this case that the starting point for the Committee's decision was their finding of the effect on value of the tramworks outside the two stores and that the Committee did not seek to invert the legal onus having regard to the Assessor's practice. In the body of the Reasons the decision is explained in this way:

"The Committee considered that on the evidence in this case, and as adopted from the earlier cases, that such an effect on value to justify a 20% end allowance was proved and also had become the Assessor's practice for the reasons given in the earlier appeals".

In so far as the Committee founded on the practice of the Assessor, it was again mainly, if not wholly, in relation to the assessment of the percentage figure to be allowed. In any event it formed simply one element of the Committee's assessment - an element which was of particular importance in respect of the House of Fraser store where such an allowance had already been allowed in respect of the 2008 tramworks. For reasons similar to those expressed in the Royal Bank of Scotland Plc case, the Committee were not prepared to accept the Assessor's position that an error had been made. The Committee specifically found that Princes Street was not a particularly unique shopping destination and was similar to retail shopping elsewhere.

[10] Moreover, there was manifestly sufficient evidence in this case, including "hard" evidence, to entitle the Committee to come to their conclusion. There was plainly additional evidence before the Committee not only of general disruption and its effects but some detailed evidence as to the effect on footfall and sales figures. Although counsel questioned how much the Committee could properly take from a particular production relating to sales figures, this, in my opinion, was a matter for the Committee. The Committee's findings were plainly based on an acceptance of the evidence of Mr McRitchie, a surveyor who gave evidence on behalf of the respondents. In particular, the Committee said that they found him to have been a very impressive and convincing witness and that they preferred his evidence of the probable effect of the tramworks and value to the evidence of the Assessor given previously. He was, it was said, the most impressive surveyor witness heard by the Committee in these matters so far. They found his evidence about the allowances in Croydon and Nottingham detailed and convincing. Although counsel sought to make something of the use of the word "probable" in the Committee's summary of his evidence, I am not persuaded that there is anything in this, given that the effect on value requires to be established on the balance of probabilities. Ultimately, the Committee was able to conclude in this case "The evidence in this case fortified the earlier decisions and strengthened the evidence in support of the 20% end allowance, which it was decided to award."

[11] In all these circumstances, I propose that this appeal be refused.

Act: Gill, Advocate; Simpson & Marwick

Alt: MacIver, Advocate; Brodies LLP

2 July 2010

[12] For the reasons given by your Lordship in the chair, and those given in my opinion in the related appeal of H & M Hennes & Mauritz UK Limited and Others, I am of the view that this appeal falls to be refused.

Act: Gill, Advocate; Simpson & Marwick

Alt: Maciver, Advocate; Brodies, LLP

2 July 2010

[13] I have had the benefit of reading a draft of Lord Kingarth's opinion. For the reasons he gives, I agree that the appeal should be dismissed. There is nothing that I can usefully add.