LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Doherty	[2011] CSIH 79 XA94/11 OPINION OF THE LORD JUSTICE CLERK in the Appeal by Stated Case by ASSESSOR FOR DUNBARTONSHIRE & ARGYLL AND BUTE Appellant; against MOHAMMED AKRAM and IFTEKHAR ALI Respondents: ______

For appellant: Miss Locke

For respondent: MacIver; McClure Naismith

7 December 2011

Introduction

[1] This is an appeal by the assessor against a decision of the Valuation Appeal Committee for Dunbartonshire and Argyll and Bute (the Committee) by which it allowed an appeal by the respondents against the entry in the 2005 Valuation Roll relating to the Boulevard Hotel, Clydebank. The Committee heard the appeal along with an appeal relating to the Roundabout Inn, Balloch, which it also allowed (cf Ass for Dunbartonshire and Argyll and Bute v Hagen [2011] CSIH 80).

[2] The ground of appeal in this case was that there had been a material change of circumstances affecting the value of the subjects during the currency of the Roll. The basis of the appeal was that in preparation for the 2010 Revaluation the assessor had valued the subjects as at 1 April 2008, the tone date for that Revaluation, at a lower rateable value than that which was entered in the 2005 Roll. Therefore, the appellants argued, since the rateable value had fallen by 1 April 2008, which was within the currency of the 2005 Roll, it followed that there had been a material change of circumstances affecting the value entered in the 2005 Roll.

[3] The Committee accepted that proposition. It varied the entry accordingly with effect from 1 April 2009. The assessor contends that that was an error of law.

Some general principles

[4] A valuation roll continues in force until a new roll is prepared after a further revaluation (Local Government (Scotland) Act 1975 Act, s.1(2)). Revaluations are based on values applying at a date two years before the revaluation comes into force (Valuation Timetable (Scotland) Order). The two most recent revaluations came into force on 1 April 2005 and 1 April 2010 respectively. They were based on values assessed as at 1 April 2003 and 1 April 2008 respectively, which were the tone dates for those rolls.

[5] It is a cardinal principle of a revaluation that the new roll should be based on a new assessment of the values of the subjects in the existing roll and not simply on an adjustment of those values. The assessment in a revaluation is based on a fresh appraisal of the subjects without any necessary regard to their earlier values (Whitwell v Ass for Strathclyde Region 1986 SC 37, Lord Clyde at p 42). Each revaluation is therefore a fresh start (Ass for Orkney and Shetland v Beattie 1987 SC 68, Lord Robertson at p.69; Belhaven Brewery Group plc v Glasgow City Ass, 2003 SC 395, Lord Justice Clerk Gill at para [16]).

[6] An essential feature of the system is that a value entered in the roll remains fixed for the duration of the roll unless during its currency there should be a material change of circumstances affecting that value (Local Government (Scotland) Act 1975, ss 2(1)(d); 3(4); 37(1)).

[7] Since the assessor has to revalue the subjects for the new roll at a tone date that invariably falls within the currency of the existing roll, it follows that in almost every case, the new value will be different from that which is in the current roll.

[8] It is of critical importance that the values in the roll should be consistent with one another. Therefore, when a material change of circumstances has been proved, the revised value must be adjusted to the tone of the roll; that is to say, revised to the value that would have applied at the tone date. In this way a common valuation base is maintained throughout the currency of the roll.

The issue

[9] This brief survey of general principles provides the framework in which we have to decide the key issue in this appeal.

[10] I would formulate the issue in the following way: Where the assessor revalues the subjects for the purpose of a forthcoming revaluation as at a tone date that is in an intermediate year, and where the new value is lower than that in the current roll, does the new valuation constitute a material change of circumstances affecting the current value?

The facts

[11] In the 2005 Revaluation the subjects were valued as a hotel in accordance with the 2005 Revaluation Scheme of the Scottish Assessors' Association (SAA) (cf Suburban Taverns (Glasgow) Ltd v Glasgow Ass 2008 SC 298). They were entered in the roll at a net annual value/rateable value of £127,500. That figure was assessed as at 1 April 2003 on the basis of an adjusted turnover of £1,646,580 in the tone year.

[12] In the 2010 Revaluation the subjects were valued in accordance with the SAA Revaluation Scheme for licensed premises/public houses. They were entered in the roll at a NAV/RV of £102,500. That figure was assessed as at 1 April 2008 on the basis of an adjusted turnover of £1,115,076.

The hearing before the Committee

[13] The respondents submitted that as the valuation of the subjects in the 2010 Roll was based on a tone date of 1 April 2008, it was clear that at that date the NAV/RV of the subjects was significantly less than that entered in the 2005 Roll. The NAV/RV assessed for the 2010 Revaluation was calculated on the same statutory definition as that assessed for the 2005 Roll. Therefore if at a date in an intermediate year the NAV/RV of the subjects had fallen significantly, that fall constituted a material change of circumstances affecting the value of the subjects that was entered in the 2005 Roll.

[14] The assessor contended that the onus was on the respondents to demonstrate there had been a material change in circumstances. They had not discharged it. No evidence had been produced as to what the change was, when it occurred, whether it was material and whether it had affected value. General rental values had increased since the 2005 Revaluation. Although a fall in turnover had been referred to in evidence, this was insufficient in itself to establish a material change (Tesco Stores Ltd v Ass for Fife 2011 SC 316). The valuation made for the 2010 Revaluation had no bearing on the validity of the values on the 2005 Roll. A fresh approach was required for the 2010 Revaluation. If the ratepayer's argument were correct, any revaluation that resulted in lower values for certain subjects at the tone date would trigger countless appeals against entries in the current roll.

The decision of the Committee

[15] The Committee made the following finding in both cases:

" ... clearly from the Assessor's actions [sc in arriving at a lower valuation for the 2010 Roll] it appears he believes that the tone of the value from 1st April 2008 onwards is at a level lower than the figure appearing on the valuation roll. There appears to have been a change of circumstances affecting their value subsequent to revaluation 2005. This change has affected the value of the particular subjects of appeal, hence the Assessor's opinion of value as published for 1st April 2010"

It concluded as follows:

"The Assessor led no evidence in law to show that his information [sic] that the 2010 revaluation figure could not be used in the appeal.

Arriving at that point the Committee were of the view that the evidence of downturn in turnover in both premises amounted to a valid material change in circumstances."

It varied both entries with effect from 1 April 2009.

The grounds of appeal

[16] The assessor has three propositions; namely, (1) that the Committee erred in allowing the appeal because (a) the grounds of appeal did not identify the material change of circumstances that was alleged to have occurred, and (b) no evidence was led as to what the change was, whether it was material and whether it had an effect on value; (2) that the Committee erred in treating the 2010 Revaluation as constituting a material change in circumstances, or at any rate as evidence relevant to that question; and (3) that the Committee erred in treating a fall in turnover as a material change of circumstances per se.

Conclusions

[17] The respondents say that the publication of the assessor's revised valuation of the subjects as at 1 April 2008 demonstrates that, on the evidence available to him, he accepts that there has been a significant fall in the net annual value of the subjects during the currency of the 2005 Roll.

[18] The respondents led no evidence of value. They relied instead on the assessor's new valuation as proof per se that the subjects had suffered a material change of circumstances affecting value. Counsel for the respondents accepted that if that was not so, the respondents' case must fail (cf Tesco Stores Ltd v Ass for Fife, supra).

[19] There is an attractive simplicity about the respondents' argument; but in my opinion it is fallacious. The short question in this appeal is whether the assessor's 2010 valuation is proof per se of a material change of circumstances within the meaning of that expression in sections 3(4) and 37(1) of the 1975 Act. In my opinion, it is not.

[20] Where an appeal is based on an alleged material change of circumstances affecting the net annual value of the subjects, as defined in the Valuation and Rating (Scotland) Act 1956 (s 6(8)), the best evidence is evidence of actual rents (cf Argos Distributors Ltd v Ass for Fife 2011 SC 272). A mere fall in turnover can never constitute proof of a fall in value (Tesco Stores Ltd v Ass for Fife, supra, at paras [10]-[15]). The respondents therefore can succeed in their appeal only if the assessor's new valuation, being based on rental evidence gathered in the course of his pre-revaluation survey, is to be taken as proof not only that there has been a material change but also that it has affected value (Ass for Lothian v Ministry of Defence [2010] RA 55).

[21] In my opinion, the mere making of the new valuation does not have that probative effect. The assessor's published revaluation of the subjects has no legal effect until the new Roll comes into force. The new valuation is subject to reconsideration by the assessor up to that date. Once the Roll comes into force, the valuation is open to challenge by the normal process of appeal to the local committee or by a complaint by an interested party under section 13 of the Lands Valuation (Scotland) Act 1854. Furthermore, the SAA Revaluation Scheme for licensed premises is revised at each revaluation. As a result, while the new valuation may follow the general principle that the valuation is based on adjusted turnover (Ass for Lothian v Belhaven Brewery Co Ltd 2008 SC 120, para [8]; Suburban Taverns (Glasgow) Ltd v Ass for Glasgow 2008 SC 298), the details of the scheme may vary significantly from one valuation to the next (Belhaven Brewery Group plc v Glasgow City Ass 2003 SC 395, para [16]; Suburban Taverns (Glasgow) Ltd v Ass for Glasgow, supra, paras [13]-[14]). Each revaluation being a fresh start, I do not accept that it is proper to use a valuation made under one revaluation scheme as a means of challenging a valuation made under another. In particular, I do not accept that a valuation carried out under the 2010 Scheme can be taken as proof of a loss of net annual value in an entry in the 2005 Roll.

[22] Furthermore, it is significant that when the Committee came to express its conclusion on both of these appeals, the words that I have quoted suggest that it fell into the familiar error of treating loss of turnover as a material change of circumstances per se.

[23] In this case, there is the added consideration that at the 2005 Revaluation the subjects were valued as a hotel; whereas for the purposes of the 2010 Revaluation they have been valued as licensed premises/public house. The new value is therefore no guide to the value of the subjects in the 2005 Roll.

[24] For these reasons, I consider that the respondents' case fails for lack of proof of a change in value.

[25] Since this appeal involves a question of the interpretation of the relevant provisions of the 1975 Act, the practical implications of the respondents' case, if it were to be upheld, and in that event the disruptive consequences that counsel for the assessor apprehends, are irrelevant to our decision.

Disposal

[26] I propose to your Lordships that we should allow the assessor's appeal, set aside the decision of the Committee and restore the entry that it varied.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Doherty	[2011] CSIH 79 XA94/11 OPINION OF LORD CLARKE in the Appeal by Stated Case by ASSESSOR FOR DUNBARTONSHIRE & ARGYLL AND BUTE Appellant; against MOHAMMED AKRAM and IFTEKHAR ALI Respondents: ______

For appellant: Miss Locke

For respondent: MacIver; McClure Naismith

7 December 2011

[27] I agree with your Lordship in the chair and there is nothing I can usefully add.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Doherty	[2011] CSIH 79 XA94/11 OPINION OF LORD DOHERTY in the Appeal by Stated Case by ASSESSOR FOR DUNBARTONSHIRE & ARGYLL AND BUTE Appellant; against MOHAMMED AKRAM and IFTEKHAR ALI Respondents: ______

For appellant: Miss Locke

For respondent: MacIver; McClure Naismith

7 December 2011

[28] I agree with your Lordship in the chair and I have nothing further to add.