LANDS VALUATION APPEAL COURT, COURT OF SESSION
	[2014] CSIH 28
Lord President Lady Dorrian Lord Malcolm	XA2/14 OPINION OF THE LORD PRESIDENT in the Appeal THE ASSESSOR FOR LOTHIAN VALUATION JOINT BOARD Appellant; against OVER THE COUNTER LIMITED Respondent: _______________

For the Appellant: Stuart, QC; Simpson & Marwick

For the Respondent: MacIver; Morton Fraser

13 March 2014

Introduction

[1] This is an appeal by the assessor against a decision of the Lothian Valuation Appeal Committee dated 3 October 2013 by which it allowed an appeal by the respondent against an entry in the Valuation Roll relating to the respondent's basement shop at 8(BF)-14 Stafford Street, Edinburgh.

The history
The 2005 Revaluation

[2] In the 2005 Revaluation the subjects formed part of a two-storey shop whose principal sales area was on the ground floor. The gross internal floor area of the basement was measured at 263.26sm. The assessor applied a reduction factor for the basement of 0.125. That produced a reduced area of 24.98 sm. In proceeding in this way the assessor treated the basement as being ancillary to the main ground floor area of the shop.

The 2009 alteration to the Roll

[3] Thereafter the subjects were divided into two separate shops. The assessor therefore altered the Roll with effect from 15 February 2009 by making two new entries. The basement shop was assessed at 263.26 sm and with a reduction factor of 0.125, as before. That produced a reduced floor area of 24.98 sm to which the assessor applied a rate of £350 psm. With an end allowance that produced a net annual value/rateable value of £8,100.

The 2010 Revaluation

[4] The subjects were not re-surveyed in preparation for the 2010 Revaluation. In the result, they were valued on the same basis as before. The assessor applied a rate of £600 psm which, with end allowances, produced an NAV/RV of £13,900.

The 2011 alteration to the Roll

[5] In the course of negotiations with the respondent's surveyor relating to other subjects, it came to the notice of the assessor that the valuation of the basement shop at the 2010 Revaluation had involved an apparent error, namely that it had been valued as the basement of a two-storey shop where the principal trading floor was at ground floor level, whereas it should have been valued as a basement shop in its own right. Valuation as a separate shop would have involved a different methodology, namely the zoning of the floorspace.

[6] Accordingly, in May 2011 the assessor served notice on the respondent, under section 3(2) of the Local Government (Scotland) Act 1975, of an altered entry in the Roll. For the purposes of the altered entry the assessor valued the entire subjects at a uniform Zone A rate, with an appropriate end allowance for the disadvantage that the shop was below street level. The assessor based that valuation on a reduced floor area of 199.77 sm to which she applied a rate of £500 psm. The lower rate resulted from negotiations with the respondent's agents who also represented occupiers of other properties in Stafford Street. The assessor's revised valuation produced an NAV/RV of £36,000. The detailed calculation of this valuation was set out in a schedule that was in due course before the Committee (Pro 1/9).

[7] The respondent appealed against the revised entry on the ground that there had been no error falling within the scope of section 2(1)(f) of 1975 Act and therefore that the alteration of the Roll was invalid.

Pre-hearing events

[8] A hearing in the appeal was fixed for 7 June 2013. By email dated 9 May 2013 the Divisional Assessor, Mr Gary Elliott, answered the respondent's ground of appeal by saying that the 2010 Revaluation entry had been erroneous and had been corrected under section 2(1)(f) (supra). He said:

" ... A number of errors have been corrected including those of measurement, survey and classification. Further, it is my opinion that the original storey reduction factor applied can be corrected in terms of section 2(1)(f) as the Revaluation Appeal survey identified that the appeal subject is not the basement of a two storey shop: instead and in fact it is a shop that has its principal sales floor below ground level.

The error was identified during Revaluation appeal discussions with your firm following the citation of the Revaluation Appeal ... "

[9] The June hearing did not go ahead. The hearing was re-fixed for 3 October 2013. On 5 September 2013 the Divisional Assessor emailed the respondent's surveyor, Mr Kevin Elder. He notified him that the gross floor area was in fact 228.23 sm and that he now based his valuation on a reduced area of 128.83 sm. That, with appropriate end allowances, produced an NAV/RV of £24,200.

[10] Mr Elliott's reduced valuation was set out in a detailed schedule that was in the hands of Mr Elder for about three weeks before the hearing. The same schedule was also before the Committee (Pro 1/10).

The hearing

[11] It was agreed that Mr Elliott would be the first witness in the case. When he came to speak to his revised valuation, counsel for the respondent objected on the basis that this was not the valuation on which the alteration had been made to the Roll. Instead, it was a valuation based on a revised floor space and with a significantly lower NAV/RV. Counsel for the respondent contended that it was therefore the duty of the assessor to serve a new notice under section 3(2) of the 1975 Act setting out the revised valuation.

The decision of the Committee

[12] The Committee sustained the objection and allowed the respondent's appeal. The revised entry was therefore quashed and the valuation of £13,900 NAV/RV was restored to the Roll. The Committee was not satisfied that the assessor had given the respondent notice of the reduction in the floor area before the morning of the hearing. The information before us clearly shows that notice of that was given in advance of the hearing. The Committee says by way of reasons that

"The Committee saw no purpose in hearing further evidence without an accurate area being put into evidence because the decision they were likely to arrive at would be wrong and require further correction."

It therefore allowed the appeal so that the entry reverted to the Revaluation figure until it was "properly corrected".

Conclusions
Competency

[13] The respondent gave notice of an objection to the competency of the present appeal on the basis that it did not raise a question of valuation. That objection was plainly groundless (Marks and Spencer plc v Highland Ass, 2014 SLT 241) and was rightly abandoned during the hearing.

The assessor's revised valuation

[14] The question for the Committee was whether there had been an error falling within section 2(1)(f) of the 1975 Act. Because of the objection taken by counsel for the respondent, that question was never reached. Nevertheless, the Committee in its reasons says that it

"considered that the evidence (sc of Mr Elliott) pointed to an error having been made in assuming that the basement was subsidiary whereas it had become the main shop. A re-assessment was required - at least on the evidence of Mr Elliott to this stage, which had not been cross-examined or commented on by [counsel for the respondent]."

[15] We have to decide the important question that the respondent has raised, namely whether, even if there was a relevant error, the assessor's altered entry in the Roll was nullified as soon as the Divisional Assessor departed from the figure at which the entry had been made.

[16] It would not have been open to the assessor's witness to argue for a higher figure than that shown in the altered entry. But this case is quite different. All that happened here was that the assessor, in the belief that there had been an error, revalued the subjects on what she considered to be the proper basis and made an appropriate alteration to the Roll.

[17] The Divisional Assessor did not depart from that position. He continued to insist that the subjects should be valued as a separate shop. The only change in his position was that on further enquiry it had been ascertained that the relevant floor area was less than had previously been understood; and that, with the consequent reduction in the reduced area, the NAV/RV was about one-third less. The nature of the alleged error and the principle of valuation that prompted the alteration remained the same.

[18] Since the Divisional Assessor was of that view, he acted with complete propriety in speaking to the lower value (Marks and Spencer plc v Highland Ass, supra). There was no duty on the assessor to serve a fresh notice.

[19] At the hearing before the Committee and at the hearing of this appeal, counsel for the respondent was unable to point to the slightest prejudice that had been sustained by the respondent as a result of the revised valuation. Counsel was unable to tell us with any clarity what the burden of Mr Elder's evidence would have been had he given it. I infer that Mr Elder had adequate time to study and to understand the revised valuation (Pro 1/10) and was in no way disadvantaged by it, particularly since the ground of appeal related to the application of section 2(1)(f) of the 1975 Act to the facts.

[20] All that counsel for the respondent could say by way of justification for his objection was that instead of intimating the proposed reduced valuation informally (Pro 1/10), the assessor was under a duty to issue a fresh notice. If the assessor had had such a duty, which I do not accept, the notice would have been in the form specified by article 3 of the Valuation and Valuation Notice (Scotland) Order 1989 (SI No 2385) and would therefore have included "the information which is required to be shown in the valuation roll" in respect of the subjects. It would therefore have given less information than was given in Production 1/10. Moreover, the guidance notes set out in the Schedule to the Order which would have been appended to the notice would have been unnecessary since the respondent was represented by an experienced rating surveyor.

[21] I conclude that the respondent's objection had no merit.

[22] In any event, the Committee went too far. It should have heard all of the evidence and then decided if there had been an error. If it did so decide, it should then have considered on the whole evidence whether the respondent was at any disadvantage in relation to the valuation exercise. The respondent's objection should therefore have been held over. The decision of the Committee has served only to defer the resolution of the respondent's appeal.

Disposal

[23] I propose to your Ladyship and to your Lordship that we should allow the appeal and return the case to the Committee to proceed as accords. The effect of that will be that the Committee will have to decide the question whether there was an error in the statutory sense.

[24] If that question is decided in favour of the respondent the original revaluation entry will therefore stand. If the question is decided in favour of the assessor, the Committee will then have to make a decision on the appropriate value to be given to the subjects in the light of the error.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
	[2014] CSIH 28
Lord President Lady Dorrian Lord Malcolm	XA2/14 OPINION OF LADY DORRIAN in the Appeal THE ASSESSOR FOR LOTHIAN VALUATION JOINT BOARD Appellant; against OVER THE COUNTER LIMITED Respondent: _______________

For the Appellant: Stuart, QC; Simpson & Marwick

For the Respondent: MacIver; Morton Fraser

13 March 2014

[25] I agree with the reasons given by your Lordship in the chair that the appeal should be allowed and have nothing further to add.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
	[2014] CSIH 28
Lord President Lady Dorrian Lord Malcolm	XA2/14 OPINION OF LORD MALCOLM in the Appeal THE ASSESSOR FOR LOTHIAN VALUATION JOINT BOARD Appellant; against OVER THE COUNTER LIMITED Respondent: _______________

For the Appellant: Stuart, QC; Simpson & Marwick

For the Respondent: MacIver; Morton Fraser

13 March 2014

[26] For the reasons given by your Lordship in the chair, I agree that the appeal should be allowed, and the case returned to the Committee to proceed as accords.