Act: Cleland; Solicitor, Glasgow City Council

Alt: No appearance

19 November 2013

[1] I agree with the Opinion of Lord Doherty and with the disposal that he proposes.

Alt: Cleland; Solicitor, Glasgow City Council

Alt: No appearance

19 November 2013

[2] Having had the benefit of reading in draft the opinion of Lord Doherty, I am in agreement, for the reasons stated therein, that this appeal be allowed and the case returned to the Committee for a rehearing.

Act: Cleland; Solicitor, Glasgow City Council

Alt: No Appearance

19 November 2013

Introduction

[3] The appeal subjects are shop premises at 235 Buchannan Street, Glasgow. Following the 2005 revaluation the Assessor and professional agents for the then tenants agreed an N.A.V. of £709,800 for them. In early 2009 they were let to the respondent ratepayers. The ratepayers appealed against the entry in the valuation roll on the ground that there had been a material change of circumstances since the entry was made (Local Government (Scotland) Act 1975, s. 3(4)). On 14 December 2011 the Valuation Appeal Committee at Glasgow heard the appeal. On the following day it issued its decision:

"The Committee found that the appeal subjects had been valued at the same zone A rate as certain properties in Sauchiehall Street. The Sauchiehall Street units had had their rateable value reduced by a decision of a Glasgow Valuation Appeal Committee.

The Committee agreed that the Sauchiehall Street decision was relevant and that the value of the appeal subjects had fallen in line with the value of the subjects in Sauchiehall Street.

The Committee agreed that there had been a decline in rental values affecting these particular subjects. The rental income of the landlord had fallen by more than 50% between 2004 and 2009. In 2004 the rent review had resulted in a rent of £886,500 but by early 2009 the base rent was only £400,000.

[X] acquired a nearby unit at a rental of £70,000 per annum in April 2010, which compared with the 2005 rateable value of £139,500. [Y] acquired a unit at a rent of £55,000 compared with a rateable value of £93,500.

The H&M rent was not considered by the Committee to be an open market rent. This was a situation where H&M had agreed to give up another unit in order to take on this particular unit and it was the view of the Committee that it could not be said that H&M were in a position comparable with that of the hypothetical tenant. The Committee considered that H&M had been in a position very different from that of the hypothetical tenant.

The evidence in its totality pointed to a material change of circumstances affecting value but the Committee decided not to reduce the net annual value by 64% since it considered that to do so would be to rely on the single rent for HMV as the sole indicator. The committee considered that the net annual value should be reduced by 35% in accordance with the Sauchiehall Street case and the appeal was allowed to that extent."

[4] The Assessor appealed against that decision. A stated case was prepared and lodged. Meantime, the ratepayers went into administration. The appeal was put out for hearing on the same day as the appeal in Schuh Ltd & Ors v Assessor for Glasgow [2013] CSIH [93]. The assessor was represented by Mr Cleland. There was no appearance for the ratepayers.

[5] The "Sauchiehall Street case" which the Committee referred to in its reasons was the Committee hearing of 9 February 2011 in the case of Schuh Limited and others. I refer to paragraphs [3] and [4] of your Lordship in the Chair's Opinion in Schuh Ltd & Ors v Assessor for Glasgow (supra) for a convenient summary of the decision of the Committee in that case and of the decision of this Court in the appeal from the Committee's decision:

"[3] The Committee found in favour of the ratepayers. It found that a combination of events consisting of the opening of out of town shopping centres, the economic downturn, the withdrawal from the market place of various traders and the expansion and improvement of the St Enoch Centre brought about a material change of circumstances affecting rental values in virtually all retail premises within the principal trading sections of Sauchiehall Street (First stated case, paras 14 and 17). It directed that the values in the roll should be altered with effect from 1April 2009 in accordance with the ratepayers' proposed Zone A rates (Ass for Glasgow v Schuh Ltd 2012 SLT 903, at para [21]). The altered values represented a reduction of the order of 30%.

[4] The assessor appealed to this Court. We held that only the economic crisis constituted a relevant material change of circumstances in terms of section 3(4) of the Local Government (Scotland) Act 1975 and that the Committee should have allowed reductions only to the extent that they were caused by it. We therefore sustained the appeal and returned the case to the Committee to rehear the appeals and to make a decision on them in accordance with the conclusions that I had expressed in my opinion in that case (Ass for Glasgow v Schuh Ltd, supra, at para [57])."

The case was reheard by the Committee on 7 January 2013. The Committee applied the guidance which had been provided by this Court in Assessor for Glasgow v Schuh Ltd (2012 SLT 903). It determined that there had indeed been a material change of circumstances which was attributable to the economic downturn, but that the relevant reduction in rental values was only 6.6%. Both parties appealed that decision. We refused both appeals and upheld the decision of the Committee (Schuh Ltd & Ors v Assessor for Glasgow, supra).

Submissions for the Assessor

[6] Before this Court Mr Cleland's principal submission was that since the Committee's decision had had as its foundation the Sauchiehall Street decision of 9 February 2011, it could not stand. His secondary submission was that the Committee had also erred in failing to give adequate reasons for concluding that the H&M rent was not an open market rent. (H&M were tenants of a shop at 182 Buchanan Street). Neither submission was expanded upon by Mr Cleland, nor did he argue that in the absence of the ratepayers we should simply uphold the Assessor's net annual value. Rather, the appropriate course was that the appeal be allowed, but that the case be returned to the Committee to rehear it, and to decide it having regard to the guidance on the law which the Court has provided in Assessor for Glasgow v Schuh Ltd (supra) and Schuh Ltd & Ors v Assessor for Glasgow (supra).

Conclusions
[7] I agree with Mr Cleland's principal submission. It is unnecessary for the Court to dispose of the secondary submission. The Committee found that the H&M let formed only one part of a larger transaction between the ratepayers and the landlords (findings 13 and 15). At the very least, they were entitled to treat the rent with caution in such circumstances. As we did not have the advantage of the submission being developed by Mr Cleland, or the benefit of a contradictor, I am disinclined to express any further view on the submission.

Disposal

[8] I propose to your Lordship in the Chair and to your Ladyship that the appeal be allowed and that the case be returned to the Committee to rehear it and to decide it having regard to the guidance now provided by Assessor for Glasgow v Schuh Ltd (supra) and Schuh Ltd & Ors v Assessor for Glasgow (supra).