UT Neutral citation number: [2010] UKUT 411 (LC)

LT Case Number: RA/2/2010

                            TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

RATING – hereditament – whether car parking spaces in a car park licensed to residential occupiers and used by them in connection with nearby residential premises were domestic property and so exempt from rating – held they were not – appeal allowed – Local Government Finance Act 1988, s 66(1)

    IN THE MATTER OF AN APPEAL FROM THE EXETER VALUATION TRIBUNAL

BETWEEN                                             JOHN REEVES                                          Appellant

                                                              (Valuation Officer)

                                                                           and

                                              LAURENCE TOBIAS AND OTHERS                  Respondents

                                                    Re: Various car parking spaces at

                                                           Mill Street Car Park,

                                                           Mill Street, Sidmouth,

                                                           Devon, EX10 8DW

                                                           Before: The President

                                  Sitting at 43-45 Bedford Square, London WC1B 3AS

                                                            on 18 November 2010

Timothy Morshead instructed by HMRC Solicitor for the appellant

None of the respondents appeared or were represented

The following cases are referred to in this decision:

Renore Ltd v Hounslow LBC (1970) 15 RRC 378

Porter (VO) v Gray, Son and Cook (1952) R & IT 28

Martin v Hewitt (VO) [2003] RA 275

Andrews (VO) v Lumb [1993] RA

Walker v Lothian Region Assessor [1990] RA 283

Hamilton v Lothian Region Assessor [1993] RA 133

                                                                    DECISION

Introduction

1.           The issue for determination in this appeal is whether each of 10 parking spaces in a car park constitutes a rateable hereditament or is domestic property within the meaning of section 66(1) of the Local Government Finance Act 1988 and so exempt from rating.  The valuation tribunal held that they fell within section 66(1).  The valuation officer appeals against this decision.  None of the ratepayers gave notice of intention to respond to the appeal.

2.           The essential facts are contained in the VO’s expert witness report.  Mill Street car park is owned by East Devon District Council and contains 69 marked spaces on either side of Mill Street.  It is within walking distance of the main shopping street and the sea front.  It is also close to a number of terraced dwelling houses that do not have car parking immediately available to them.  The council lets allocated parking spaces on annual licences to both domestic and commercial business.  Of the 69 spaces 23 are licensed to commercial licensees and 46 to residential licensees.  That part of the car park on the east side of Mill Street has a lockable barrier to which each licensee with a space there has a key.  The part of the car park on the west side has no barrier.  All the parking spaces with the exception of one that abuts the dwelling house occupied by the licensee of the space were entered in the Non-Domestic Rating List at £230 RV.  (Thus, in what is perhaps a marginal case, the VO treated the spaces as separate hereditaments rather than as parts of a car park hereditament occupied by the council: cf Renore Ltd v Hounslow LBC (1970) 15 RRC 378 and Porter (VO) v Gray, Son and Cook (1952) R & IT 28.)

3.           Under sections 43(1) and 45(1) of the 1988 Act liability to the non-domestic rate depends on the hereditament being shown in the non-domestic rating lists; under section 42(1) only a hereditament that is a non-domestic hereditament falls to be included in the list; and under section 64(8)(a) a hereditament is non-domestic if it consists entirely of property which is not domestic.  “Domestic property” is defined in section 66.  Subsection (1) of that section provides:

(1)     Subject to subsections (2), (2B) and (2E) below, property is domestic if –

(a)     it is used wholly for the purposes of living accommodation,

(b)     it is a yard, garden, outhouse or other appurtenance belonging to or enjoyed with property falling within paragraph (a) above,

(c)     it is a private garage which either has a floor area of 25 square metres or less or is used wholly or mainly for the accommodation of a private motor vehicle, or

(d)     it is private storage premises used wholly or mainly for the storage of articles of domestic use.”

4.           In its decision the VT, having held that the spaces in issue did not fall within paragraph (c) of section 66(1), said this:

“The tribunal is therefore required to consider the arguments of the appellants in the alternative that the parking spaces may fall within s66(1)(d) as ‘private storage premises used wholly or mainly for the storage of articles of domestic use’.  This was not a matter directly addressed in Mr Lewis’s submission.  The appellants’ spokesman noted, referring to Scottish cases, that a bicycle may be considered an article of domestic use though it is clearly not used within the home but as a means of transport having the same function as a private motor car. 

Scottish law can only be persuasive and rests on different legislation.  The cases referred to, understood to be Walker v Lothian Region Assessor [1990] RA 283 and Hamilton v Lothian Region Assessor [1993] RA 133, are concerned with Regulation 3(1) of the Abolition of Domestic Rates (Domestic and Part Residential Subjects) (Scotland) Regulations 1988 and it would be incorrect to rely on them when attempting to decide what are private storage premises’ within the provisions of section 66(1)(d) of the Local Government Finance Act 1988.

However, the equivalent of s66(1)(c) relating to garages does provide a more extensive list at Regulation 3(1)(a) of ‘Private car parking premises, being lands and heritages which are a garage, a car port or, as the case may be, a parking stance’ followed by clauses linking their use to residential property, as also under 3(1)(b) are ‘Private storage premises … which are used wholly or mainly for the storage of articles of domestic use (including cycles and other similar vehicles).’

It seems implausible that Parliament should have decided to place a tax on English and Welsh car parking spaces but not on Scottish parking ‘stances’ or English and Welsh garages, even when recognisably a garage building but not used wholly or mainly for the accommodation of a private motor vehicle.  It seems no less plausible that the draftsman would not advert to the question of the status of a parking space having regard to the extent of the Scottish list.

The most reasonable explanation would seem to be that the more succinct English legislation embraces land, when used as private storage premises for a private motor vehicle, within the ambit s 66(1)(d) as ‘private storage premises used wholly or mainly for the storage of articles of domestic use’.

The primary definition of ‘domestic’ in the Shorter Oxford English Dictionary reads:-  ‘Of or pertaining to the home, house or household, pertaining to one’s home or family affairs’  That, more than the reference to vehicles in the Scottish legislation, leads the panel to the conclusion that section 66 (1)(d) is not confined to ‘articles of domestic use’ used only within the home.

The evidence was that the motor cars stored on the car parking spaces are private cars, insured.  As both Mr Tobias and Mr Swire in his letter pointed out, under terms which typically restrict the driver to social, domestic and leisure use.  The licences they enjoy conferring on them the exclusive right to occupy the parking spaces are only useful to them, and only available to them, on account of their dwellings nearby and they pay a reduced fee for the spaces as domestic users rather than commercial ones.

The panel is satisfied accordingly that the car parking spaces in question are domestic property within the terms of Section 66(1) of the Local Government Finance Act 1988 and should be deleted from the 2005 Non-domestic Rating List accordingly.”

5.           For the VO Mr Timothy Morshead submits that the VT was in error for two principal reasons in holding that the car parking spaces fell within paragraph (d).  Firstly, he says, a car is not “an article of domestic use” for the purposes of that provision.  Secondly, he says, Parliament has made specific provision for the “accommodation” of “a private motor vehicle” in paragraph (c), and the provision therefore involves recognition that a “private motor vehicle” is not an “article of domestic use” for the purposes of section 66.  If it were, paragraph (c) would be otiose.  Mr Morshead draws attention to the fact that the words in paragraph (c) “which either has a floor area of 25 metres or less or is” were inserted by statutory instrument in 1990.  If, he says, a car is an article of domestic use within the meaning of paragraph (d) the insertion of a size restriction would be nonsensical.  The fact that private parking spaces were not included in paragraph (c) should not be assumed to be an unintended omission; and, even if it were, it is simply not possible to say what the legislative response in order to make it good would be.

6.           The structure of the definition of domestic property in section 66(1) is in my view clear.  Paragraph (a) contains the primary element – living accommodation – and paragraph (b) adds to it appurtenances that are enjoyed with the living accommodation.  Paragraphs (c) and (d) then go on to cover two other classes of property, which, though they may not be appurtenances (because they are outside the curtilage of the living accommodation) and so not within paragraph (b), are nevertheless brought within the definition.  The wording of the two paragraphs – “(c) it is a private garage …” and “(d) it is private storage premises … – suggests strongly that two specific additions are being made that are separate and do not overlap.

7.           Consideration of the words used in the two paragraphs confirms this view and gives rise to the clear inference that the parking of cars is not a matter with which paragraph (d) is concerned.  A car parking space would not normally be described as “storage premises”; car parking would not normally be termed “storage”; and cars would not normally be referred to as “articles of domestic use”.  But, conclusively, since paragraph (c) deals expressly with premises used for the accommodation of private motor vehicles, there is no justification for treating paragraph (d) as doing so also.

8.           In my judgment, therefore, there can be no doubt that, as a matter of construction, paragraph (d) does not extend to car parking spaces.  Nor, in my view, is there any basis for thinking that it was part of the purpose of subsection (1) that they should constitute domestic property, so justifying a strained, purposive, construction of paragraph (d).  Reference to the equivalent Scottish provisions, relied on by the VT in this respect, is simply a distraction.  Regulation 3(1) of the Abolition of Domestic Rates (Domestic and Part Residential Subjects) (Scotland) Regulations, as referred to in Walker v Lothian Region Assessor  [1990] RA 283 and Hamilton v Lothian Region Assessor [1993] RA 133, and considered by the LVT provided as follows:

“3 (1)  (a)  Private car parking premises, being lands and heritages which are a garage, a car port or, as the case may be, a car parking stance – (i) whose use is ancillary to, and which is used wholly in connection with, other domestic subjects or the residential use made of part residential subjects, and (ii) which is used wholly or mainly for the accommodation of one or more private motor vehicles.

            (b)  Private storage premises, being lands and heritages – (i) whose use is ancillary to, and which are used wholly in connection with, other domestic subjects or the residential use made of part residential subjects, and (ii) which are used wholly or mainly for the storage of articles of domestic use (including cycles and other similar vehicles).”

9.           Those provisions merely have to be set out for the contrast with the provisions of section 66(1)(c) and (d) to be seen.  In particular not only does regulation 3(1)(a) extend to “Private car parking premises”, which are expressed to include car ports and parking stances as well as garages, but it imposes the restriction that the use of such premises must be ancillary to the residential use of residential property.  Section 66(1)(c) is both narrower than this provision, in that it refers only to garages, and wider, in that it does not require the use of the garage to be ancillary to living accommodation.  Paragraph (d) similarly does not require that the private storage premises should be ancillary to living accommodation.

10.        It is not possible, in my judgment, to conclude on the basis of these provisions, as the VT did, that it is “implausible that Parliament intended to place a tax on English and Welsh car parking spaces but not on Scottish parking ‘stances’”.  Moreover, if paragraph (d) were to be construed so that a car used by a person for transport to and from the place where he lives is an article of domestic use and a parking space is private storage premises, the effect would apparently be that all parking spaces anywhere for such cars would constitute domestic property whether or not they were ancillary to living accommodation, provided only that they were “private”.  In the case of the Mill Street car park this could have the effect (depending on the facts and the meaning given to “private” in this context) that all the “commercial” spaces would be non-rateable.  Certainly any space licensed to an individual and used by him for parking, near his place of work, the car that he drives from his home would apparently fall to be so treated.

11.        The conclusion in the present appeal seems to me so inescapable as a matter of statutory construction that there is no need to refer to any of the authorities cited, none of which are directly in point.  It is sufficient to say that none of them, in my view, are in any respect inconsistent with the conclusion I have reached.  In Martin v Hewitt I held that boats in boathouse separate from the occupiers’ houses and used for recreation away from the houses were not articles of domestic use within paragraph (d).  In Andrews (VO) v Lumb [1993] RA 124 the Lands Tribunal (Judge Marder QC, President) held that premises used to house a collection of vintage vehicles and transport memorabilia did not fall within paragraph (c), since the vehicles were not private motor vehicles, or within paragraph (d), because they were not articles of domestic use.  In Walker v Lothian the Land Valuation Appeal Court held that storage premises did not fall within regulation 3(1)(b) because, although certain items, including dinghies, were articles of domestic use, other items were not.  It is to be noted that Lord Milligan ([1990] RA 283 at 288) considered that mechanically propelled vehicles were impliedly excluded from that provision.  And in Hamilton v Lothian the Land Valuation Appeal Court held that a store for unroadworthy cars and furniture was not ancillary to the use of the ratepayer’s house; and Lord Prosser (1993] RA 133 at 137) said that he was satisfied that motor vehicles were a special case and were not within regulation 3(1)(b).

12.        The appeal is allowed.  The entries in the list that the VT ordered to be deleted must be restored.

Dated 22 November 2010

George Bartlett QC, President