LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Malcolm	[2010] CSIH 94 XA66/10 OPINION OF THE LORD JUSTICE CLERK in the Appeal by THE TRUSTEES OF THE NATIONAL GALLERY OF SCOTLAND Appellants; against LOTHIAN ASSESSOR Respondent: (Subjects: Gallery and Restaurant, The Mound, Edinburgh) _______

For appellants: MacIver; Dundas & Wilson

For respondent: Clarke, QC; Simpson & Marwick

10 December 2010

Introduction

[1] The appellants are the proprietors of The National Gallery at 1 The Mound, Edinburgh. At the 2005 Revaluation it was entered in the Valuation Roll at a rateable value of £355,000. The appellants are also the proprietors of a restaurant at 1(A) The Mound, Edinburgh. At the 2005 Revaluation it was entered in the Roll at a rateable value of £54,000.

[2] In July 2009 the appellants appealed against these entries on the basis that the gallery and the restaurant should be entered and valued as a unum quid.

[3] On 25 February 2010 the Lothian Valuation Appeal Committee dismissed the appeals. That is the decision appealed against.

The facts

[4] In 2004 the buildings housing the National Gallery and the Royal Scottish Academy were linked and within the extension that the link created, a restaurant was built. These developments came into use in August 2004. At about that time the appellants entered into a contract for catering services at the restaurant (the service contract).

The previous valuation Roll

The restaurant

[5] The assessor entered the restaurant in the previous Roll with effect from August 2004. The appellants appealed against the entry. In May 2006 their agents, GVA Grimley (Grimleys), withdrew the appeal.

[6] At the 2005 Revaluation, the appellants appealed against the entry solely on the question of value, but withdrew the appeal.

The gallery

[7] The assessor amended the entry of the gallery in the previous Roll by increasing the rateable value with effect from August 2004. The appellants appealed against the amended entry solely on the question of value, but withdrew the appeal.

The 2005 Revaluation

[8] It is agreed that at the 2005 Revaluation the appellants appealed against the valuations of the gallery and the restaurant; and that these appeals were settled.

The appeals

[9] In July 2009 Grimleys lodged these appeals on the grounds that (1) the assessments for the Gallery and the restaurant were excessive; and (2) that with effect from 1 April 2009 the subjects should be treated as a unum quid.

The legislation

[10] Section 2(1)(f) of the Local Government (Scotland) Act 1975 (the 1975 Act), so far as relevant to this appeal, provides as follows:

"2(1) ... the assessor for any valuation area shall, as respects that area, at any time while the valuation roll is in force, alter the roll - ...

(f) to correct any error of measurement, survey or classification or any clerical or arithmetical error in any entry therein."

Section 3(2) provides a general right of appeal against the making of an entry in the Roll. Section 3(4), so far as material to these appeals, provides as follows:

"(4) Without prejudice to subsection (2) above, the proprietor, tenant or occupier of lands and heritages which are included in the valuation roll may appeal against the relevant entry but only on the ground that there has been a material change of circumstances since the entry was made or that there is such an error in the entry as is referred to in section 2(1)(f) of this Act ... "

Section 3(4A)(b) provides inter alia that

"An appeal under subsection (4) above shall be made -

... (b) on the ground that there has been such an error in the entry as is referred to in section 2(1)(f) of this Act, at any time while the roll is in force."

The proceedings before the Committee

[11] The appellants contended that the Roll could be corrected at any time during its currency. The service contract indicated that the gallery and restaurant should have been entered in the Roll as a unum quid. Until the summer of 2009 Grimleys had been unaware of the terms of the contract. They had therefore failed at the time of the Revaluation to take the unum quid point. This had given rise to an error in the Roll that could be corrected under section 2(1)(f).

[12] The assessor submitted that it had been agreed that there should be separate entries for the gallery and the restaurant when the appeals were settled in 2004. When the present Roll came into force, again with separate entries, the values had been settled. Alternatively, the appellants were personally barred from contending that there had been an error in the entries.

The decision appealed against

[13] The Committee commented that the appellants were raising the issue in the last year in which the 2005 Roll would be in force. A further right of appeal would arise in April 2010 when the new Roll came into force. It was not prepared to accept that a valid appealable issue remained alive in the circumstances. It upheld the submission that the matter had been contractually settled in 2008; and that, alternatively, the appellants were personally barred from asserting that there had been an error. Since counsel for the appellants had given the Committee no information as to what might be unusual about the terms of the service contract, it was not satisfied that he would be able to advance sufficient evidence in the circumstances to overcome the contractual settlement or the plea of personal bar.

Submissions for the parties

[14] Counsel for the appellants contended that the Committee misdirected itself in refusing the appeals without having heard evidence (Ass for Inverness-shire v Caledonian Associated Cinemas 1959 SLT 281; Whitbread plc v Ass for Central Region 1993 SC 552); in deciding that there was no appealable issue; in deciding that in any event that the appellants were personally barred from pursuing the appeals, and in considering that the proximity of the next revaluation was relevant. When an error in the Roll came to the notice of an assessor, he had duty to correct it (1975 Act, s 2(1)). If he failed to do so, the ratepayer had a right of appeal at any time while the Roll was in force (s 3(4A)(b)). The error in this case was that the gallery and the restaurant had been entered as separate subjects. It was an error both of classification and of survey (s 2(1)(f)). It did not matter how the error had arisen; or who was responsible for it; or when it came to light (Prestonfield House Hotel Co Ltd v Ass for Lothian Region 1982 SC 52; Armour, Valuation for Rating, 5th ed, para 3-35). 

[15] In inviting us to remit the case to the Committee to hear his evidence, counsel for the appellants said that he would seek to prove (a) that the appellants failed at the time of the Revaluation to consider the terms of the service contract or to show it to Grimleys; (b) that Grimleys agreed the entries with the assessor without knowing that the terms of the service contract were such that the gallery and the restaurant should have been entered as a unum quid; and (c) that it was only in 2009 that Grimleys realised that it was open to the appellants to take the point. On proof of these facts, he would submit to the Committee that both subjects should have been entered as a unum quid; and that, since the appellants had reached agreement with the assessor at the Revaluation in ignorance of the true legal position, there had been an error of both "survey" and "classification."

[16] Counsel for the assessor submitted that the unum quid argument had been ascertainable from the outset and could have been pursued at the time of the Revaluation. By then the appellants had given the assessor a copy of the service contract. All that had happened was that by 2009 Grimleys had come to the view that the unum quid point could have been taken at the time of the Revaluation. That was not an error falling within section 2(1)(f).

Conclusions
The Committee's reasons

[17] In my opinion, the Committee reached the right decision but for the wrong reasons. At the 2005 Revaluation the assessor entered the gallery and the restaurant in the new Roll as separate lands and heritages. The appellants appealed against both entries on the question of value only. Those were revaluation appeals under section 3(2) of the 1975 Act. Thereafter there were final disposals in both appeals. In the normal course of events, that would have fixed the values of the subjects for the entire period of the Revaluation.

[18] The appellants have brought these appeals under section 2(1)(f) of the 1975 Act. Since the proposition in both appeals is that the entry was vitiated by an error, I consider that the acceptance of the current entries at the time of the Revaluation does not of itself preclude the bringing of these appeals or found a plea of personal bar (cf Prestonfield House Hotel Co Ltd v Ass for Lothian, supra).

[19] The Committee's comment in its statement of reasons that the appellants had raised the question of error only in the last year of the 2005 Revaluation is beside the point. An error may come to light in an intermediate year. That is why an appeal under section 2(1)(f) may be taken "at any time while the Roll is in force" (s 3(4A)(b)).

The proposed remit to the Committee

[20] Since the Committee misdirected itself, in my view, the next question is whether we should make a decision on the relevancy of the appeals or remit the case to the Committee. In moving for a remit, counsel for the appellants relied on dicta on that question in Ass for Inverness-shire v Caledonian Associated Cinemas (supra). In that case the agent for the appellants indicated the line of a legal argument that he was to present and suggested that, if the Committee were to uphold it, that would be conclusive of the appeal. With the agreement of the assessor, the Committee made a decision on the parties' submissions on the point, reserving to them the right to lead evidence in due course. In considering that procedure, Lord Patrick observed that

"The case on the facts and the law should be fully developed before a decision on the law is given by the Committee. If the hearing before the Committee takes the form of a debate on the law, the proof of facts being reserved, and if this court should decide that the decision of the Committee on the law was wrong, the case cannot be brought to a conclusion save by a remit to the Committee for a further hearing. This is a course the court takes only in the most exceptional circumstances. Moreover there may be a second appeal to this court if either party is dissatisfied with the decision of the Committee after the second hearing, a state of affairs which must be discouraged" (at p 283; cf Lord Guest at p 285).

[21] I agree with the generality of that statement; but I think that there is a further category of case where it is proper for this court to dispose of an appeal against a decision of that kind without remitting the case at all, namely where the case is manifestly irrelevant. In my opinion, we are justified in doing so in these cases. We now know exactly what the appellants seek to prove and therefore, taking their proposed evidence pro veritate, can decide on its relevancy. That material is supplemented by the facts already found by the Committee as to the history of events. On that basis, I consider that we should make our own decision on the applicability of section 2(1)(f) to these appeals.

The interpretation of section 2(1)(f) of the 1975 Act

[22] The first provision for the correction of errors in the Roll was section 9 of the Local Government (Financial Provisions, etc) (Scotland) Act 1962 (the 1962 Act). It permitted the assessor to alter the Roll where that was necessary to correct any "clerical or arithmetical error" in it. In John Hunter & Son (Transport) Ltd v Lanarkshire Ass ([1963] RA 320) this court held that the section did not apply to an error in measurement.

[23] Section 2(1)(f) of the 1975 Act was enacted, on the recommendation of the Scottish Valuation Advisory Council, on the view that the previous provision was unduly restrictive. Section 2(1)(f) allows a ratepayer to bring an appeal of this kind with a view to having the Roll altered to correct any error of measurement, survey or classification or any clerical or arithmetical error in the relevant entry. In my opinion, it applies where information comes to light during the currency of the Roll that, if known when the entry was made, would have materially affected the description of the subjects in the entry or the value at which they were entered.

[24] In advance of each revaluation the assessor surveys the lands and heritages in his valuation area. The entries in the new Roll are based on the information that the assessor has obtained directly by his own enquiries or indirectly from information supplied to him in survey returns. It is, I think, significant that it is the assessor who makes the entry (1975 Act, s 1(1)) and that the appeal is an appeal against "the relevant entry" (s 3(4)). The basis of the appeal is that the entry is erroneous. In my view, this means that the error is formally that of the assessor, even though the assessor may have made the erroneous entry on inaccurate information given to him during his survey; for example, as in Prestonfield House Hotel Co Ltd v Ass for Lothian, (supra). I conclude that section 2(1)(f) applies only to an error that has predated the entry and has caused it to be made. An error of the ratepayer unrelated to the making of the entry has no relevance to section 2(1)(f).

[25] It cannot be said that in this case there was an error that caused the making of the entries appealed against. When the restaurant was entered in the Roll in 2004, the appellants failed to take their opportunity to appeal on the ground that the gallery and the restaurant were a unum quid. When the assessor drew up the new Roll for the 2005 Revaluation she was entitled to assume that the appellants accepted her judgment that they were separate subjects. The error on which these appeals are founded is the failure of the appellants and their advisers to think of the unum quid point as a possible ground of appeal. That did not cause the entry to be made. On the facts, that error was made after the new entry came into force. The only error that I can see in all of this is the failure of the appellants and their advisers to take their point timeously by way of a revaluation appeal under section 3(2). In my view, section 2(1)(f) has no relevance to this case.

[26] If I am wrong in this view, the question then arises as to whether the error is within the limited categories set out in section 2(1)(f). Counsel for the appellant has submitted that the error was one of survey or classification involving law or opinion.

[27] In my view, it cannot be said that the appellants' failure to take the unum quid point was an error of survey or classification. The assessor surveyed the subjects and measured the floorspace. The accuracy of her survey is not challenged. She then classified them as a gallery and a restaurant respectively. These designations are not challenged. I therefore reject the appellants' submission on this point.

[28] I am further of the view that the error relied on by the appellants' cannot be described as an error of law or opinion. Counsel for the appellant has founded on the views expressed in Armour (op cit) that errors of survey can include errors of opinion or judgement as well as errors of fact (para 3-37); that "error" in the context of classification extends beyond observable characteristics and may include matters of opinion and matters of law (para 3-38); that "operations of survey and indeed of classification can involve matters of opinion and judgment and even matters of law as well as matters of fact" (para 3-35), and that in relation to the making of any error of opinion or judgment by a valuer in carrying out his survey or in the operation of the classification of subjects, section 2(1)(f) is wide enough in its terms to include all such kinds of error within its scope (ibid). None of these propositions is vouched by authority.

[29] Assuming for the moment that Armour is right in these views, I consider that neither the assessor nor the appellants and their advisers committed any error of opinion or law. The assessor was entitled, for the reasons I have given, to proceed on the basis that the appellants accepted her judgment that the subjects should be separately rated. The appellants and their advisers simply failed to consider the law at all, and in particular failed to think of a point that might possibly have given them an argument for a unum quid valuation.

[30] For these reasons I consider that these appeals are irrelevant. There would be no useful purpose in our remitting them.

[31] However, I wish to say that in my opinion the interpretation of section 2(1)(f) that is set out in Armour is misconceived. My own view is that section 2(1)(f) applies only to errors on matters that are empirically verifiable. "Measurement" denotes matters such as the floor area of a superstore. "Survey," in my opinion, relates to matters such as the extent of the curtilage of a building. "Classification" relates to the identification of the character of the lands and heritages in question; for example, whether they are a hotel or a bed and breakfast. Questions of arithmetical and clerical error are even more obviously factual in nature. Section 2(1)(f) widened the categories of factual errors to which section 9 of the 1962 Act had been held to apply; but it went no further. On all of the questions that arise under the present provision the relevant information is either right or wrong. Its accuracy can be tested objectively by counting, by measurement, by inspection and so on. In short, section 2(1)(f) applies to errors on matters of objectively ascertainable fact. Questions of opinion and law belong in a different conceptual world.

[32] In discussing errors of opinion, Armour suggests that the assessor's survey may include the recording of an opinion on the amenity of the subjects or their environment (para 3-35). I disagree. An opinion on amenity is a subjective matter. I fail to see how an entry that is based on such an opinion, or on any other aesthetic question on which views may reasonably differ, can be said to be erroneous. If the ratepayer disagrees with the assessor's opinion on such a question, his obvious, and in my view only, recourse is to appeal against the entry under section 3(2) as soon as it is made. The same can be said in relation to an error of law; for example, on the question of rateable occupation. It would subvert the whole system of quinquennial valuations if section 2(1)(f) provided a right of appeal on such grounds at any time while the Roll was in force.

[33] In support of the view expressed in Armour, counsel for the appellants referred to a suggestion from this court in BP Oil Grangemouth Refinery Limited v Ass for Lothian Region (1985 SC 27) to the effect that the word "classification" should be interpreted in a wide rather than a narrow sense. I do not think that that case supports counsel's argument. The subjects in that case were freight transport lands and heritages. As such, they had to be specially identified in the Roll "by a distinguishing mark or otherwise." That was an essential matter of classification since the subjects thereby qualified for de-rating. The court held that the assessor's failure to identify them in this way constituted an error of classification. The statutory definition of freight transport lands and heritages related to the physical characteristics of the subjects, to the use made of them and to the purposes for which that use was made. In my view, the assessor's failure to identify the special nature of the subjects was an error of fact. It related to a matter that should have been apparent from survey and inspection. That decision is entirely consistent with the interpretation of section 2(1)(f) that I have proposed.

Disposal

[34] I propose to your Lordships that we should refuse the appeal.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Malcolm	[2010] CSIH 94 XA66/10 OPINION OF LORD HARDIE in the Appeal by THE TRUSTEES OF THE NATIONAL GALLERIES FOR SCOTLAND Appellants; against LOTHIAN ASSESSOR Respondent: (Subjects: Gallery and Restaurant, The Mound, Edinburgh) _______

For appellants: MacIver; Dundas & Wilson

For respondent: Clarke, QC; Simpson & Marwick

10 December 2010

[35] For the reasons given by your Lordship in the chair, I agree that we should refuse the appeal. I wish, however, to add a few observations of my own.

[36] From the history outlined by your Lordship in the chair it is apparent that in August 2004 a new entry was made in the Valuation Roll for the restaurant. At the same date the rateable value of the gallery was increased following the extension and linking of the two buildings. Although appeals in respect of both entries were discussed with the respondent by no fewer than three surveyors acting on behalf of the appellants, each of these appeals was subsequently withdrawn. Following the revaluation in 2005 an appeal against the entry relating to the restaurant was discussed with a fourth surveyor acting on behalf of the appellants and was subsequently withdrawn. A fifth and sixth surveyor were involved in discussing an appeal against the 2005 revaluation entry relating to the gallery and was eventually settled. In the course of these latter discussions the firm of surveyors acting on behalf of the appellants sought and obtained confirmation that "the assessor has excluded the area attributable to the separate Restaurant area from the 2211.88 square metres included in the Gallery's valuation." Following confirmation to that effect the appeal relating to the gallery was regarded as settled.

[37] The present appeal, initially lodged with the Lothian Valuation Joint Board in July 2009, cannot succeed unless the appellants can establish that there has been an "error of measurement, survey or classification or any clerical or arithmetical error" in the entries in the Roll relating to the gallery and the restaurant. (Local Government (Scotland) Act 1975, section 2(1)(f)). The submissions on behalf of the appellants relied upon an alleged error of survey or classification in respect that there should have been a single entry for both subjects treating them as a unum quid. I respectfully agree with your Lordship in the chair that neither the acceptance of the entries at the date of the Revaluation nor the point of time at which the issue of alleged error is raised is relevant to the determination of this appeal. It is sufficient if the issue is raised while the Roll is in force.

[38] It is clear from section 2(1)(f) that the error complained of must be an error in the entry in the Valuation Roll (Assessor for Strathclyde Region v Dass Nicholas 1981 SLT (Notes) 116). Moreover the error must fall within one of the categories specified in that subsection. Apart from errors of survey or classification the other categories of error are errors of measurement, clerical errors or arithmetical errors. Errors of measurement and clerical or arithmetical errors are, in my opinion, confined to errors of fact. Similarly errors of survey or of classification could be so categorised. Essentially the survey involves recording the relevant details of the subjects, their geographical location and their environment; classification involves placing the subjects into the appropriate category in the scheme of valuation. Before the appellants can avail themselves of section 2(1)(f) they must be able to point to a factual error resulting in an error in the entries in the Roll. In the present case they are unable to do so. Whether the entries should be conjoined and treated as a unum quid is a question of law. In 2004 and following the revaluation in 2005 the appellants ultimately accepted the separate entries in the Valuation Roll for the gallery and the restaurant. In the absence of any obvious factual error it is, in my view, too late to seek alteration of the Roll in that regard. In the context of the current revaluation which is underway, it will, of course, be open to the appellants to raise the question of treating both subjects as a unum quid if they wish to do so.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Malcolm	[2010] CSIH 94 XA66/10 OPINION OF LORD MALCOLM in the Appeal by THE TRUSTEES OF THE NATIONAL GALLERY OF SCOTLAND Appellants; against LOTHIAN ASSESSOR Respondent: (Subjects: Gallery and Restaurant, The Mound, Edinburgh) _______

For appellants: MacIver; Dundas & Wilson

For respondent: Clarke, QC; Simpson & Marwick

10 December 2010

[39] For the reasons given by your Lordships, I agree that the appeal should be refused.