LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Malcolm	[2012] CSIH 36 XA122/11 OPINION OF THE LORD JUSTICE CLERK In the Appeals by Stated Case by (1) WINCANTON PLC; (2) NEXT PLC; and (3) LIGHTBODY OF HAMILTON LIMITED Appellants; against ASSESSOR FOR LANARKSHIRE VJB Respondent: _______

Act: McIver; Morton Fraser

Alt: Clelland; Simpson & Marwick

5 April 2012

Introduction

[1] These appeals relate to five warehouses situated in the Eurocentral development at Holytown, Lanarkshire. There were seven appeals to the Valuation Appeal Committee for Lanarkshire (the Committee). By a decision dated 21 April 2011 the Committee refused them all. The appellants appealed to this court; but only six of the appeals are now insisted in.

The valuations appealed against

[2] All of the valuations in this case relate to the 2005 Roll, the tone date for which was 1 April 2003.

[3] The subjects of appeal, the competing valuations and the effective dates are as follows.

(1) 21 Coddington Crescent, Eurocentral (Wincanton Plc)

[4] This is a new interest appeal under section 3(2A) of the Local Government (Scotland) Act 1975 (the 1975 Act) against a valuation entered by the assessor in an intermediate year. The assessor entered the subjects in the Roll with effect from 11 January 2010 at a net annual value/rateable value of £551,000. The appellant contends for a NAV/RV of £389,000 with effect from the same date.

(2) Apollo, 2 Dovecote Road, Eurocentral (Wincanton Plc)

[5] This is a new entry appeal under section 3(2) of the 1975 Act against an entry made by the assessor with effect from 1 November 2008. The assessor entered the subjects in their then state as a shell unit at a NAV/RV of £227,000. The appellant contends for a NAV/RV of £160,000 with effect from the same date.

(3) Apollo, 2 Dovecote Road, Eurocentral (Wincanton Plc)

[6] This is an appeal under section 3(1) of the 1975 Act in relation to the previous subjects against an altered entry made in the Roll with effect from 20 February 2009 when the subjects had become fully fitted-out. The assessor entered the subjects at a revised NAV/RV of £286,000. The appellant contends for a NAV/RV of £208,000 with effect from the same date.

(4) Plot E, North & South, 1 Brittain Way, Eurocentral (Wincanton Plc)

[7] This is a material change of circumstances appeal under section 3(4) of the 1975 Act. The assessor entered the subjects in the Roll at a NAV/RV of £787,000. The appellant contends that, by reason of the material change of circumstances, the NAV/RV should be £550,000 with effect from 1 April 2009.

(5) Plot L, Woodrow, Eurocentral (Next Plc)

[8] This is a material change of circumstances appeal on the same basis as appeal (4). The assessor entered the subjects in the Roll at an NAV/RV of £376,000. The appellant contends for an NAV/RV of £275,000 with effect from 1 April 2009.

(6) Plot D South, 4 Brittain Way, Eurocentral (Lightbody of Hamilton Limited)

[9] This is a material change of circumstances appeal also presented on the same basis as appeal (4). The assessor entered the subjects in the Roll at a NAV/RV of £292,000. The appellant contends for a NAV/RV of £204,000 with effect from 6 August 2009, that being the date on which the appellant took entry to the subjects.

[10] There was also a new interest appeal in respect of these subjects, with effect from the appellant's date of entry; but it was dropped during the hearing.

Enterprise Zones

[11] Enterprise zones were introduced by the Finance Act 1980 to stimulate new building in areas of physical and economic decay. The benefits included 100% allowances for income tax purposes for capital expenditure on industrial and commercial buildings; 100% allowances for corporation tax purposes for capital expenditure on industrial and commercial buildings, rates exemption on industrial and commercial property and a simplified planning regime. The designation of an enterprise zone lasts for ten years. Relief can also be obtained for construction contracted for within ten years of the designation and carried out within 20 years of it. Such contracts are known as golden contracts. The former Lanarkshire Enterprise Zone was designated with effect from 1 February 1993.

The Eurocentral Development

[12] Eurocentral lies partly within the former Lanarkshire Enterprise Zone. It is one of Scotland's key commercial developments. It is situated on the A8/M8 Glasgow to Edinburgh arterial route 11 miles east of Glasgow and 31 miles west of Edinburgh. It is in a strategic location. It has excellent transport links. It has direct access to and from the M8/A8. It is linked to the Channel Tunnel rail freight terminal. On the site there is a modern, high quality commercial environment. There are distribution facilities, industrial properties and office pavilions, and hotel, retail and leisure units.

The investment mechanism

[13] In the typical scheme of investment in an Enterprise Zone a syndicate of investors or a unit trust buys land from an appointed developer who constructs and lets the buildings. The developer's price covers the build cost, fees and developers' profit. The landlord and the developer agree on a headline rent. The developer then creates a rent guarantee fund, the amount of which represents about 7 to 11 years' rental income. From this fund the developer pays the headline rent to the landlord. If the developer gives a financial inducement, such as a rent-free period, to the tenant, that inducement is in effect funded from the rent guarantee fund. Such inducements can be substantial. Rent free periods are generally for years rather than months. If the developer cannot find a tenant, the headline rent continues to be paid to the landlord, thereby depleting the guarantee fund.

[14] It is the developer's responsibility to obtain a "qualifying tenant," that is to say a tenant that can meet certain strict financial criteria and will take a lease on terms that include payment of the headline rent. The entry of a qualifying tenant relieves the developer of liability to the landlord for the headline rent. The developer can then uplift what remains of the guarantee fund by way of profit.

[15] A developer can accept a non-qualifying tenant, but in that case the developer cannot uplift the guarantee fund and must meet from it any shortfall or default in the payment of rent.

[16] The developer also has an incentive to build before the expiry of the golden contract period.

[17] This therefore is not the usual straightforward relationship of landlord and tenant. The landlord acts to take advantage of the tax incentives available. The developer brokers the rental agreements and has an interest to offer inducements to obtain a qualifying tenant and thereby to be able to uplift the residue of the guarantee fund as developer's profit.

[18] For these reasons investment in an Enterprise Zone or under a golden contract has the effect that future development of the site is likely to be driven by tax considerations.

Investment at Eurocentral

[19] The documentary evidence before the Committee included inter alia an offer to let by developers' agents to tenants' agents; the Investment Memorandum for Tritax Eurocentral Enterprise Zone Unit Trust, which owns and funds part of the Eurocentral development; and a simple guide to Enterprise Zone syndicates, who own most of the remainder of Eurocentral so far as it is within the former Enterprise Zone.

[20] The Tritax Memorandum indicates that an occupational tenant must have a qualifying use for the Enterprise Zone; must provide three consecutive years of audited accounts for the immediately preceding period, showing net profits before tax and net assets of at least three times the rent applicable to the space to be occupied, with the latest accounts being for a period ending not more than 12 months from the date of occupation; and must take a full repairing and insuring lease for a minimum term of ten years, with upward only rent reviews that are either five-yearly to market value or uplifts that are fixed or index-linked.

[21] The Committee found that at Eurocentral prospective new tenants who would be qualifying tenants would expect to receive extended rent free periods for units within the former Enterprise Zone that were still the subject of golden contracts.

The statutory provisions

[22] The Valuation and Rating (Scotland) Act 1956 (the 1956 Act), section 6(8) provides:

" ... the net annual value of any lands and heritages shall be the rent at which the lands and heritages might reasonably be expected to let from year to year if no grassum or consideration other than the rent were payable in respect of the lease and if the tenant undertook to pay all rates and to bear the cost of the repairs and insurance and the other expenses, if any, necessary to maintain the lands and heritages in a state to command that rent."

The basis of these appeals

[23] Three of the appeals are brought under sections 3(1), 3(2) and 3(2A) of the 1975 Act respectively. Three are brought under section 3(4). In relation to the altered entry, new entry and new interest appeals the submission for the appellant is that by reason of a fall in rental values at Eurocentral, the NAVs as at the effective dates were lower than those prevailing at the tone date. In the appeals brought under section 3(4) the material change of circumstances is said to be the impact of the economic recession on rental values throughout Eurocentral in the period after the tone date and, in particular, after the financial crisis in September 2008. In each case, the evidence relied on by the appellants is confined to rent transactions on units within Eurocentral.

The case for the appellants

The basis of valuation

[24] The appellants rely on five lettings. They relate to three of the appeal subjects and to two comparisons at the Eurocentral site. They submit that all of these were lettings on the open market after appropriate marketing and that the rent-free periods generally available at Eurocentral should be taken into account in a comparative principle valuation (Renfrewshire Ass v W Muir Goodfellow & Co Ltd [1962] RA 239, Lord Sorn at pp 135E-136A). They therefore take the headline rent passing in each case and adjust it for the rent-free period and for the tone of the Roll. The figures for the adjusted rents have been agreed by the assessor. The appellants submit that these figures are a reliable guide to the net annual value in terms of section 6(8) of the 1956 Act (supra) and that they demonstrate that by the relevant dates in each case, rental values on Eurocentral had fallen significantly from values at the tone date.

[25] The valuation witnesses for the appellants, Mr Niall Rankin for Wincanton plc and Next plc and Mr Gordon Martin for Lightbody of Hamilton Ltd, were adamant that the contractual structure involving the landlord, the developer and the tenant had no significance in the valuation. That explains why neither witness had considered the provisions of section 6(8) of the 1956 Act in the context of the contractual structure, the tax incentives and the role of the third party developer in the negotiation of the lease. Their approach was to take the transactions at Eurocentral as primary evidence of open market rents and adjust them for incentives; and to argue that in the period after the financial crisis in 2008 the market had collapsed. Mr Rankin said in his statement that the point of dispute was over the inclusion of incentives in the analysis. In cross-examination he described the involvement of the developer as being of no consequence. Mr Martin's evidence on the point was to similar effect. He said that the contractual structure was an irrelevance.

[26] In the result Mr Rankin submitted that the Eurocentral transactions were on average 36% below the tone of the Roll. He proposed a reduction in each of his client's appeals of 30% from the value appealed against on the view that that was a reasonable figure in light of the evidence available. Mr Martin proposed that in his client's appeal the Committee should substitute a rateable value of £171,000, failing which a value of £186,000.

The appellants' comparisons

21 Coddington Crescent, Eurocentral (Wincanton)

[27] This was let for eight years from 11 January 2010, with a stepped rent starting at £171,406 pa, with 84 days rent-free, rising to £368,000 pa, with a tenant break option in year six. The adjusted rent is £326,976 pa or £20.67 psm.

[28] 21 Coddington Crescent is within the former Enterprise Zone and still had a tax efficient vehicle as landlord. The lease to the first tenants, Internacionale, was for 17 years from 10 September 2007 at a rent of £836,094 pa with five-yearly rent reviews. There was no information concerning incentives. Internacionale became a qualifying tenant after entry. The lease was terminated by an irritancy. The ground leased to Internacionale extended to 3.85 hectares. When the property was re-let to Wincanton, an area extending to 1.35 hectares which was still the subject of a golden contract was retained for development of three smaller industrial units. It was likely that work on this would begin before the expiry of the golden contract period.

Apollo, 2 Dovecote Road, Eurocentral (Wincanton)

[29] This was let for 15 years from 1 November 2008 with five-yearly rent reviews, a break option to the tenant in year ten and 39 months rent-free. The headline rent was £293,887 pa, which gave an adjusted rent of £166,500 pa or £28.80 psm.

4 Brittain Way, Eurocentral (Lightbody of Hamilton Ltd)

[30] This was let for ten years from 11 October 2004 with five-yearly rent reviews. The lease was assigned in August 2009 with 2.5 years rent-free and with an option to the tenants to extend for a further 5 years. The headline rent was £376,425 pa, which gave an adjusted rent of £171,000 pa or £22.85 psm.

Athena, 5 Dovecote Road, Eurocentral (Trac International)

[31] This was let for 15 years from 1 December 2008 with five-yearly reviews, a break clause for the tenant in year ten and three years rent-free. The headline rent was £226,963 pa, which gave an adjusted rent of £135,000 pa or £30.21 psm.

10 McNeil Drive, Eurocentral (Morrisons)

[32] This was cited as a comparison by both the appellants and the assessor. The lease had been extended for five years from 4 April 2010, the rent was £350,000 pa, the tenant had a break option in 2013 and there were no incentives. The rent in this case took effect within the period of the 2010 Revaluation. This unit was within the former Enterprise Zone but no longer had a tax efficient vehicle as landlord because it had been sold on. In the 2005 Roll NAV/RV was £470,000. The figure of £671,000 for the 2005 Revaluation referred to in the appellants' productions had been the figure before the property was split.

[33] The rental analyses for 21 Coddington Crescent and 10 McNeil Drive related to second lettings. The appellants submitted that they were therefore untainted by the relationship between the developer and the landlord.

Vacant units

[34] The appellants also led evidence that the units at 6 Dovecote Road, Eurocentral had been vacant since 2008; that the unit at 7 Dovecote Road had been completed since 2008 and remained vacant; and that the unit at 12 Dovecote Road had been vacant for 21/2 years.

The case for the assessor

The appellants' comparisons

[35] The assessor submitted that, with the exception of 10 McNeil Drive, the appellants' comparisons did not satisfy the statutory hypothesis. They were affected by the complex financial arrangements designed to take advantage of tax benefits. In normal circumstances the headline rate could be adjusted for inducements in order to arrive at the annual equivalent rent; but in this case, the inducements were not driven by an arms' length agreement between landlord and tenant. They were driven by the financial position of a third party, namely the developer. The developer was acting effectively as a broker for the lease. The rent free periods were of exceptional length. The longer the developer was tied in, the more the guarantee fund became depleted. The developer therefore offered substantial inducements to find qualifying tenants quickly in order to maximise his profit. The landlord was not acting as a normal landlord would do. It played no active part in the letting process. It received the headline rent out of the rent guarantee fund until a qualifying tenant took entry. The market itself was limited because of the restrictive conditions for qualifying tenants. The tax-driven lettings within the Enterprise Zone bore no resemblance to a simple landlord and tenant relationship and therefore bore no relationship to the statutory hypothesis.

[36] The assessor therefore did not attribute much evidential value to the headline rents or to the adjusted rents derived from them. Since these rents were influenced by special factors, he considered that it was legitimate to look for comparative evidence from subjects outwith Eurocentral (B & Q v Ass for Renfrewshire [2004] RA 220).

The assessor's comparisons

3 North Caldeen Road, Coatbridge.

[37] This was a factory; but was a similar industrial property. It was four miles from Eurocentral; but industrial units were less sensitive when it came to location. In July 2008 there was a rental increase on review from £521,685 to £530,000.

401 Edinburgh Road, Newhouse.

[38] This was a shell lease with a £1,000,000 capital payment for fit-out. This analysed back to £45.58 psm. The effective date was 25 August 2010 but the deal appeared to have been struck in July 2009. This was larger than any of the appeal subjects at Eurocentral but could have been located there.

2 Lancaster Avenue, Chapelhall.

[39] This was a shell let with a reduced area of 2,673 sm. analysed at £42.84 psm. The effective date was 20 November 2010. The subjects had been unoccupied and available to let for 13 years since they had been built. Although these subjects were never occupied during the course of the 2005 Roll, they had now been let at a rent which was greater than the NAV/RV in the 2005 Roll. The subjects were used for recycling tyres. This use was unlikely to have been welcomed at Eurocentral.

25 Coddington Crescent, Eurocentral

[40] The headline rent increase was agreed in May 2007 but the direct consequential rental increase on the sublease took effect in June 2009. The tenants had the opportunity to exercise a break clause at the time of the 2009 rent review, but did not do so. The subtenants received a six months rent-free period as a result of their not exercising the break option. This indicated an adjusted building rent rate of £35.03.

50 Condor Glen, Eurocentral.

[41] This was not a true open market rent, but a sale and leaseback transaction and as such was part of a larger series of financial transactions. The tenants also entered into a sale and leaseback deal on nine other sites.

10 McNeil Drive, Eurocentral

[42] This comparison was also relied on by the appellants. The assessor's evidence was that there had been a transaction subsequent to the original letting. There was no rent free period. The NAV/RV in the 2005 Roll was £470,000. The figure of £671,000 for the 2005 Revaluation referred to in the appellants' productions had been the figure before the property was split. According to the assessor's witness, this had always been a low rent, analysing to £29.88 psm for the 2005 Revaluation. The current rent analysed was £29.38 psm. This was a slight reduction, being 74.3% of 2005 rateable value.

The decision of the Committee

[43] The Committee accepted the assessor's arguments and adopted his approach. It found that developers were driven to construct units at Eurocentral for tax reasons and that there was an incentive to build within 20 years of the designation of the Zone. Qualifying tenants could expect lengthy rent-free periods. The Committee concluded that because of the complex financial arrangements affecting the Eurocentral leases, evidence based on adjusted rent figures for such leases could not be relied on.

[44] The Committee had reservations about the rent for 21 Coddington Crescent. Although the current lease was not the original letting, it accepted the assessor's contention that it remained a tax-driven arrangement in view of the retention of tax benefits by the landlords and the residual opportunity to sell on the investment. It noted also that as part of this transaction ground was retained for further development. That would enable further tax incentives to be accessed under a golden contract. This was likely to have affected the terms of let. These considerations affected the weight that could be placed on this as evidence of actual rental. It could not be accepted as a valid comparison.

[45] On the view that it took of the nature of Eurocentral lettings, the Committee considered that the rental analyses put forward by the appellants in relation to 4 Brittain Way, 21 Coddington Crescent, and 2 and 5 Dovecote Road were incorrect. Therefore it did not accept the adjusted rentals as evidence of actual rental value for 2 Dovecote Road and 4 Brittain Way nor did it consider that 2 and 5 Dovecote Road, and 4 Brittain Way could be accepted as valid comparisons based on the adjusted rent.

[46] Both parties agreed that 10 McNeil Drive was a valid comparison. The Committee concluded that this was evidence of a low rent, but that it was not in itself conclusive evidence of falling rentals.

[47] The Committee decided that it was appropriate also to look at comparisons outwith Eurocentral. It then evaluated the assessor's comparisons.

[48] It accepted that the subjects at 3 North Caldeen Road, Coatbridge were a suitable comparison. It accepted the assessor's contention that industrial units were less sensitive when it came to location. Less weight could be placed on this comparison since the rent review took place in July 2008; but it was still relevant since the effects of the financial upheaval that gave rise to the recession were already being felt at that date.

[49] The Committee accepted that the subjects at 25 Coddington Crescent, Eurocentral were a suitable comparison. The rent had been struck in May 2007; but it was still a valid comparison since the tenant had a break option in 2009 but did not exercise it. The Committee treated this comparison with caution in the absence of a proper rent analysis.

[50] The Committee also accepted that 401 Edinburgh Road, Newhouse was a suitable comparison. It acknowledged that the effective date of 25 August 2010 came after the 2005 Roll had lapsed; but it considered that this was still relevant because the bargain appeared to have been struck in July 2009 and because the appellants' argument was based on there being a continuing decline in rents. The subjects were larger than anything at Eurocentral but they could have been located there. The Committee accepted the assessor's submission that the larger a building is, the lower its value per square metre tends to be.

[51] The Committee accepted that while the letting at 2 Lancaster Avenue, agreed in 2010, was remote in time; it was relevant because although the subjects had lain dormant for 13 years and were outwith Eurocentral, the landlord had nevertheless secured a let with a passing rent in excess of the NAV/RV.

[52] Since 50 Condor Glen was a sale and leaseback transaction, the Committee rejected it as a comparison.

[53] The Committee agreed that the transaction at 10 McNeil Drive, Eurocentral was relevant evidence of the position as at the relevant date. While the rent was below the tone of the Roll, that was not of itself evidence that rents were falling. A single rent was not conclusive.

[54] The Committee therefore did not accept that rental levels within Eurocentral at the effective dates were lower than those prevailing at the tone date, whether as a result of the economic recession or otherwise.

[55] From the comparisons within and outwith Eurocentral the Committee concluded that the evidence as a whole did not support the appellant's contention that rents were falling or that the occupancy rate at Eurocentral was abnormally low. Although the appellants led evidence that there were empty units at 6, 7 and 12 Dovecote Road, the Committee found that at the date of the hearing there were 28 industrial premises on the site, of which 23 were occupied. That represented an occupancy rate in the industrial units of around 82%, which was similar to that in nearby industrial estates.

[56] Finally, the Committee looked to the result of the appellants' case, namely that rateable values on Eurocentral would be lower than those of similar subjects in poorer locations nearby. Since Eurocentral was arguably the best industrial location in Scotland, that, in the Committee's view, made no sense.

Grounds of appeal

[57] The appellants' primary contention is that the Committee erred in finding that certain lettings in Eurocentral were affected by complex financial arrangements which made them unreliable comparators. They also make detailed criticisms of the Committee's approach to individual comparators.

Conclusions

[58] The case for the appellants, repeated before this court, is straightforward. Counsel for the appellants put it in this way: (1) the lettings at Eurocentral on which they rely were concluded in the open market after due marketing; (2) the headline rents have been adjusted for the rent-free periods and the calculations of the adjustments are agreed by the assessor; (3) the adjusted rents demonstrate that at the relevant date in each case there had been a significant fall in rental values from those that applied at the tone date, and (4) the vacancies on the site supported the inference that rental levels had fallen. This reflects the line taken by the appellants' witnesses before the Committee.

[59] In my opinion, the Committee's findings and conclusions are fatal to the appellants' contentions. It was a matter for the Committee to decide on the cogency of the parties' comparison evidence. It was open to the Committee on the evidence in this case to conclude that the complex financial arrangements that lay behind the lettings at Eurocentral, so far as it lay within the former Enterprise Zone, were such that the headline rents, as adjusted, did not give reliable guidance to the assessment of NAV/RV under section 6(8) of the 1956 Act. It was therefore open to the Committee to look to rental evidence from similar subjects in locations elsewhere in north Lanarkshire. The Committee decided that certain of those lettings were a reliable source of evidence. It concluded from that evidence that the alleged general fall in rental values in the period after the tone date had not occurred. In my opinion, the evidence for the assessor warranted the Committee's findings and its findings warranted its conclusions.

[60] I should add that in my opinion the conclusions of the Committee were correct. The starting point in the appellants' case is that the lettings on which they rely are evidence of open market transactions on the Eurocentral site itself and therefore that the Committee erred in rejecting that evidence in favour of evidence of transactions at other locations. That is an incomplete view of the issue.

[61] In my opinion, the Eurocentral subjects were not let on the open market. There is a distinction between a letting in open market competition, as described by Hoffman LJ, as he then was, in IRC v Gray ([1994] STC 360, at p 372) and a letting in open competition in a restricted market. On the Committee's findings, Eurocentral is a specialised and restricted market of its own. The requirements that have to be met by a qualifying tenant greatly restrict the range of possible tenants. They restrict the range of qualifying uses. They impose stringent financial requirements for qualifying tenants. They oblige a qualifying tenant to accept a full repairing and insuring lease with upward-only rent reviews.

[62] Furthermore, it is apparent on the Committee's findings that the statutory hypothesis cannot be sustained in relation to such transactions. The appellants argue that the headline rents can be adjusted for the rent-free periods and that the adjusted figures are not contentious. That argument is, I think, misconceived. I accept that where the landlord gives a rent-free period or other financial concession to the tenant, the equivalent annual rent can be calculated by recognised valuation methods (cf RICS Valuation Information Paper No 8, Analysis of Commercial Lease Transactions); but the rent passing, even if so adjusted, is not conclusive evidence of annual value (Magell Ltd v Dumfries and Galloway Regional Assessor 2005 SLT 453; 2006 SC 627). The special feature in the present cases is the fact that the negotiation by which the rent is arrived at is not of the kind that is envisaged in section 6(8) of the 1956 Act.

[63] In the hypothetical transaction the landlord and the tenant negotiate at arms' length on the statutory terms, each seeking the best achievable outcome from his own point of view. Eurocentral derives its raison d'être from a legislative policy that is supported by tax incentives. The landlord negotiates the headline rent with the developer in the knowledge of the significant tax advantages that are available to its investors. The relevant letting, for the purposes of valuation for rating, is the lease to the qualifying tenant. In that transaction the landlord plays no part. The lease is negotiated by a third party, the developer, who is motivated by his own financial gain. The developer is influenced by the fact that unless and until a qualifying tenant takes entry, the developer must pay the headline rent and cannot get access to the residue of the guarantee fund. The longer the delay in the entry of a qualifying tenant the more the guarantee fund, and the developer's profit, will be depleted. The incentives that the developer offers may not be related to the prevailing market conditions at the time of the let. They may be offered by the developer according to his own needs and priorities. The letting is of no concern to the landlord because the landlord will receive the headline rent from the conclusion of the agreement, even if nothing has yet been built. All of these points will be known to the prospective tenant's advisers.

[64] It follows, in my view, that the rent agreed with the qualifying tenant may not be the rent that would be realised for the same subjects in a truly open market. It is simply an incident of a larger and more complex contractual scheme. I agree with the comment of one of the assessor's witnesses that the whole contractual and fiscal arrangement from which these lettings result is alien to the property world and to that envisaged by the rating hypothesis.

[65] The appeal subjects in these cases have been built to the highest contemporary standards. They are situated in a purpose-built park of high amenity with exceptional transport links. They are collocated with subjects that are in other complementary uses. If the appellants' proposed valuations were sound, the rateable values of the subjects would be significantly less than those of poorer subjects in poorer locations nearby, some of which involve uses that would not be acceptable at Eurocentral. I agree with the Committee that that would seem to be an unreasonable result.

Disposal

[66] I propose to your Lordships that we should refuse these appeals.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Malcolm	[2011] CSIH 36 XA122/11 OPINION OF LORD CLARKE In the Appeals by Stated Case by (1) WINCANTON PLC; (2) NEXT PLC; and (3) LIGHTBODY OF HAMILTON LIMITED Appellants; against ASSESSOR FOR LANARKSHIRE VJB Respondent: _______

Act: McIver; Morton Fraser

Alt: Clelland; [solicitors]

5 April 2012

[67] For the reasons given by your Lordship in the chair, to which there is nothing that I can usefully add, I agree that these appeals should be refused.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Malcolm	[2011] CSIH 36 XA122/11 OPINION OF LORD MALCOLM In the Appeals by Stated Case by (1) WINCANTON PLC; (2) NEXT PLC; and (3) LIGHTBODY OF HAMILTON LIMITED Appellants; against ASSESSOR FOR LANARKSHIRE VJB Respondent: _______

Act: McIver; Morton Fraser

Alt: Clelland; Simpson & Marwick

5 April 2012

[68] For the reasons given by your Lordship in the chair, I agree that these appeals should be refused.