LANDS VALUATION APPEAL COURT
	[2013] CSIH 96
Lord President Lady Dorrian Lord Doherty	XA108/13 OPINION OF THE LORD PRESIDENT   in the appeal by   MARKS AND SPENCER PLC Appellant:   against   THE ASSESSOR FOR HIGHLAND AND WESTERN ISLES VALUATION JOINT BOARD Respondent: _______________

Act: Haddow, QC; DWF Biggart Baillie

Alt: Cleland; Drummond Miller LLP

 

25 October 2013

 

Introduction

[1] This case is stated by the Highland and Western Isles Valuation Appeal Committee. It relates to a decision of the Committee dated 9 April 2013 by which it dismissed an appeal by the appellant against the entry in the roll at the 2010 Revaluation for its retail premises at Eastgate, Inverness, at a rateable value of £875,000.

[2] The question is whether the Committee was right to dismiss the appeal on the ground that the appellant's written statement in support of it did not comply with the relevant Regulations.

 

The Regulations
[3] The Valuation Appeal Committee (Procedure in Appeals under the Valuation Acts) (Scotland) Regulations 1995 (the 1995 Regulations), so far as material to this case, provide as follows:

"Requirements as to appeal

3-(1) An appeal to the Committee shall be made be made by way of notice, which shall specify the particular lands and heritages in respect of which the appeal is made ...

 

Information to be furnished by parties to an appeal

10-(1) An appellant shall, not later than 35 days before the date set for the hearing, furnish to the assessor a written statement specifying -

(a) the grounds for his appeal, and

(b) if the appeal relates to the valuation entered in the valuation
roll, the valuation which the appellant considers should be entered in the roll and the grounds on which that valuation is arrived at ...

 

(3) If an appellant fails timeously to -

(a) furnish the statement required under paragraph (1) ...

 

the assessor may apply to the Committee to have the appeal dismissed and the Committee may grant that application if it thinks fit ...

 

(5) Either party to an appeal may, not later than 21 days before the date set for the hearing, furnish to the other party to the appeal a list of any lands and heritages, and hereditaments in England and Wales, on which he proposes to found by way of comparison at the hearing, and may at the same time as he furnishes that list make a written request to the other party to provide him with a list of lands and heritages and hereditaments on which that other party proposes to found by way of comparison at the hearing; and any party so requested shall furnish such a list not later than 14 days before the date fixed for the hearing ...

 

Relaxation of time limits
19 Without prejudice to regulations 10(4) and 15(2), the Committee may extend the time appointed by these Regulations for the doing of any act, other than the time within which an application may be made for referral to the Tribunal in terms of paragraph (1) or (4) of regulation 4, provided that it is satisfied that no substantial prejudice would thereby be caused to either party to the appeal, and it may do so notwithstanding that the time so appointed has expired before an application for an extension is made."

 

 

The appellant's written statement
[4] On 5 March 2013 the appellant's agents, GL Hearn, sent a letter to the assessor by post and by fax which, so far as material, was in the following terms:

"2010 Rating Revaluation

Valuation Appeal Committee Hearing - 9 April 2013

Marks and Spencer

Shop - 9 Eastgate Inverness

 

We refer to the above named subjects and in accordance with the procedural timetable, we now write to confirm our grounds of appeal and alternative valuation.

 

We believe that the assessment is incorrect and wrong in law. We believe that the RV is incorrect and excessive, and we dispute the appropriateness of the proposed valuation rate.

 

We take this opportunity to confirm that it is our intention to proceed before the Valuation Appeal Committee should an amicable settlement not be reached.

 

We believe that a suitable alternative Rateable Value of £585,000 should be substituted in the Valuation Roll at a rate of £86 psm ..."

 

This letter was posted on the last possible day for compliance with Regulation 10(1). It was faxed to the assessor at 5.25pm.

[5] On 22 March 2013, GL Hearn wrote to the assessor proposing a revised valuation of £605,000.

 

The hearing before the Committee
[6] On 9 April 2013, at the outset of the hearing, counsel for the assessor moved that the appeal should be dismissed. Counsel for the appellant intimated that if the appeal were to proceed, the appellant would now propose a valuation of £750,000.

[7] Counsel for the assessor submitted that GL Hearn's letter of 5 March 2013 failed to comply with the requirements of Regulation 10(1) because (a) it failed to specify the grounds of appeal; and (b) in intimating a proposed valuation of £585,000, it failed to specify the grounds on which that valuation was arrived at.

[8] Counsel for the appellant submitted (a) that the letter of 5 March sufficiently complied with Regulation 10(1); and (b) that if it did not, the Committee should have regard to the negotiations that preceded it and, in light of that, exercise its discretion in favour of the appellant under regulation 10(3).

 

The decision of the Committee
[9] The Committee found that the letter of 5 March 2013 did not comply with regulation 10. In its statement of reasons, the Committee says that it was common ground that the valuation proposed in the letter was no longer the figure for which the appellant's agents would contend before the Committee; and that the Committee could find nothing in the letter that specified how the valuation was arrived at. Since it was of the view that the third of the requirements of regulation 10(1) was plainly lacking, the Committee found it unnecessary to consider whether the appellant's grounds of appeal were specific or generic.

[10] The Committee then considered whether to exercise its discretion under regulation 10(3). It concluded that when considering the terms of regulation 10(1) it could not look beyond the plain terms of the letter. Therefore the extraneous matters referred to by counsel for the appellant failed to get round the problem caused by the lack of specification in the letter itself. The Committee concluded that the assessor had not been given fair notice as to how the valuation to be contended for had been arrived at. In its view, that was a particularly important consideration in circumstances where the appellant had submitted three different valuations in the space of 23 days, two of which were apparently lacking in specification as to how they were arrived at, and two of which had been put forward less than 35 days before the hearing of the appeal. In the circumstances, the Committee, having been expressly invited by counsel for the appellant not to exercise its powers under regulation 19 (supra), unanimously dismissed the appeal.

 

The competency of the present appeal

[11] Counsel for the assessor raised with us the preliminary question whether the present appeal is competent. He submitted that the decision appealed against was a procedural decision that raised no question of valuation. There is nothing in this point. The effect of the decision was that the appeal failed and the appellant lost the opportunity to have the assessor's valuation reviewed. That decision was not merely procedural. It was a final decision that disposed of the appeal. In my opinion, the appeal to this court is competent.

 

Conclusions on the stated case

The 1995 Regulations
[12] Before 1995, a ratepayer who wished to contest an entry in the Roll on the question of value had to specify his proposed valuation in his notice of appeal. That was disadvantageous to a ratepayer who required time to consider and to take advice on his grounds of appeal and on the appropriate valuation. The 1995 Regulations remedied that problem. The ratepayer has now to lodge only a formal notice of appeal (reg 3(1), (2)). He has until 35 days before the hearing to submit his written statement under regulation 10(1). He then has until 21 days before the hearing to intimate his list of comparisons (reg 19(5)).

[13] The written statement under regulation 10(1) is not a mere formality. Its purpose is to give fair and adequate notice to the assessor of the case that is to be made; but the essential elements in it are simple, particularly in a valuation of the kind that was to be made in this case.

 

The issue between the ratepayer and the assessor

[14] The valuation method in this case was straightforward. This being a large retail unit, the zoning method was not appropriate. The value was to be found by multiplying the relevant floorspace by a straight rate per square metre. The subjects had been valued in this way in previous revaluations. The subjects were familiar to the assessor. There seems to have been no dispute about the relevant floorspace; so the only issue was the rate per square metre. Although both parties would have other comparisons on which to found, it was to be expected that the primary consideration would be the relativity between these subjects and Debenhams, which was situated at the other end of the mall (cf Ass for Highland v Marks and Spencer plc [2010] RA 235).

 

Did the letter of 5 March 2013 comply with regulation 10(1)?

[15] The letter had to intimate three essential points; namely (1) the grounds of appeal; (2) the value for which the appellant contended; and (3) the basis on which that value was arrived at.

[16] Counsel for the assessor submitted that the letter failed to specify the ground of appeal. I do not agree. The letter contended inter alia that the assessor's valuation was incorrect and excessive and that G L Hearn disputed the proposed valuation rate. I fail to see how that simple yet meaningful statement was capable of any further elaboration; still less why any such further elaboration was required. Counsel for the assessor was unable to describe to us what, in his submission, an appropriate wording would have been.

[17] Counsel for the assessor submitted that the letter failed also to specify the methodology of the ratepayer's valuation. That submission overlooks the fact that the methodology was agreed. It consisted of multiplying the relevant floorspace by the rate per square metre. Counsel also suggested that the letter was deficient on this point because it failed to mention any comparisons from which the appellant's proposed valuation was derived. That cannot be right because in terms of regulation 10(5) there was no obligation on the appellant to intimate its comparisons to the assessor until 14 days later. In my opinion, the letter fully complied with regulation 10.

 

Discretion under regulation 10(3)(a)

[18] Since the Committee concluded that the letter did not comply with regulation 10(1), it had to decide under regulation 10(3)(a) whether to allow the appeal to be heard or simply to dismiss it. That was a matter for its discretion. On the view that I have reached on the first issue, the question of discretion does not arise. I should add, however, that in my view the Committee's purported exercise of its discretion was unsound. The Committee's discretion had to be exercised on a consideration of the whole circumstances. One of the key considerations, and perhaps even the determining consideration, was the balancing of the prejudice that would be suffered on either outcome. On the assumption that the letter did not comply with regulation 10(1), I cannot see in what way the assessor was prejudiced. He knew exactly what the short issue was and he knew that it would be resolved by the Committee on a consideration of the parties' respective comparisons. That point had been gone into at the previous revaluation (cf Ass for Highland v Marks and Spencer plc, supra). On the other hand, there would be substantial prejudice to the appellant if it were to be deprived of the opportunity to contest a six-figure valuation. The Committee failed even to consider this point. If the question had arisen, I would therefore have considered that the Committee's decision did not constitute a proper exercise of its discretion.

[19] On the whole matter I think that the assessor's motion for dismissal of the appeal should not have been made.

 

Other matters

The appellant's revised valuation

[20] The history of this case shows that after sending the letter of 5 March 2013, the appellant's surveyor twice revised the valuation that he had intimated, increasing it each time. Counsel for the assessor made the extraordinary suggestion that if the hearing of the appeal had gone ahead, the appellant would have been obliged to argue for the valuation set out in the letter and no other. I have never heard of such an idea. Common sense, reflected in invariable practice in the matter, tells us that if the appellant's valuer has occasion to revise his valuation, he should intimate his change of view to the assessor and at the hearing should speak only to the valuation that he can properly defend.

 

The Jane Norman postscript

[21] In a postscript to my opinion in Ass for Lanarkshire v Jane Norman Ltd ([2012] RA 387, at paras [26]-[29]) I emphasised the importance of proper observance of the 1995 Regulations and reminded Committees of their responsibility to enforce them. Those comments are irrelevant to this case because the appellant complied with the Regulations. However, at the hearing before the Committee counsel for the appellant said of those comments:

" ... it was for quite a few of the people involved in the hearing of the Jane Norman and Others appeal in the Lands Valuation Appeal Court quite a surprise to find the post-script and that includes not only me but my opposite number."

 

Then, with reference to paragraph [28] of my opinion, counsel added:

"But you should note perhaps that the other two Judges simply agree with the refusal of the Assessor's appeal. They do not, as sometimes is the case, ally themselves with [obiter] dicta from another Judge."

 

[22] I am disappointed to read those remarks. If my colleagues in that case had disagreed with my comments, we may be sure that they would have said so. It would be unfortunate if practitioners or Committees were to think that the Jane Norman postscript represents only one judge's view.

 

Disposal
[23] I propose to your Ladyship and to your Lordship that we should allow the appeal.

 

LANDS VALUATION APPEAL COURT
	[2013] CSIH 96
Lord President Lady Dorrian Lord Doherty	XA108/13 OPINION OF LADY DORRIAN   in the appeal by   MARKS AND SPENCER PLC Appellant:   against   THE ASSESSOR FOR HIGHLAND AND WESTERN ISLES VALUATION JOINT BOARD Respondent: _______________

Act: Haddow, QC; DWF Biggart Baillie

Alt: Cleland; Drummond Miller LLP

 

25 October 2013

 

[24] For the reasons given by your Lordship in the Chair I agree that the appeal should be allowed.

[25] Lest there be any doubt, I should indicate that I also agree with the emphasis placed by your Lordship on the need for proper observance of the 1995 Regulations, under reference to the comments made by your Lordship in Jane Norman Ltd, supra.

LANDS VALUATION APPEAL COURT
	[2013] CSIH 96
Lord President Lady Dorrian Lord Doherty	XA108/13 OPINION OF LORD DOHERTY   in the appeal by   MARKS AND SPENCER PLC Appellant:   against   THE ASSESSOR FOR HIGHLAND AND WESTERN ISLES VALUATION JOINT BOARD Respondent: _______________

Act: Haddow, QC; DWF Biggart Baillie

Alt: Cleland; Drummond Miller LLP

 

25 October 2013

 

[26] For the reasons given by your Lordship in the Chair I agree that the appeal should be allowed.

[27] I also concur with your Lordship in the Chair's reminder of the importance of proper observance of the 1995 Regulations. I agree with the observations on that topic in the postscript to your Lordship's Opinion in Ass for Lanarkshire v Jane Norman Ltd, supra, at paragraphs [26]-[29].