UT Neutral citation number: [2010] UKUT 350 (LC)

LT Case Number: RA/54/2008

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

RATING – alteration of rating list – application of regulation 13A of The Non Domestic Rating (Alteration of Lists and Appeals) Regulations 1993.

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

SOUTH YORKSHIRE VALUATION TRIBUNAL

BETWEEN CHRISTIAN AND STEVEN WRAGG Appellants

and

MARK HARWOOD Respondent

(Valuation Officer)

Re: 748, Eccleshall Road, Sheffield, S11 8TB

Before: His Honour Judge Mole QC

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

on 14th September 2010

Mr David Wragg, with permission of the Tribunal for the appellants

The respondent in person

DECISION

Introduction

1.           This is an appeal against a decision of the South Yorkshire Valuation Tribunal dated the 14th of August 2008.  The appeal followed a proposal that was made on the 15th of August 2006 by Mrs Bown, the owner of the appeal property.  The proposal was submitted following the service of a Valuation Officer Notice on the 14th of February 2006.  This had brought in to the 2000 rating list an assessment for the appeal property of £6,300 RV which was effective from the first of October 2001.  Mrs Bown challenged the effective date on the grounds that the change should be effective from the 31st of December 2001.  However before the hearing before the Valuation Tribunal Mrs Bown had accepted that the alterations had been made to the appeal property by the first of October 2001 and had withdrawn her appeal.  The appellants, however, remained unhappy with the backdating and pursued their appeal before both the Valuation Tribunal and this Tribunal.

2.           The appeal property was one in a terrace of shops.  The appellants took a lease dated 18th of December 2001 of what was described as 'ground floor shop premises known as 748 Ecclesall Road, Sheffield' and occupied the shop to run their hairdressing business. The first payment of rent, payable quarterly in advance, was due on the 29th of January 2002 .  (I observe that some of these details are slightly different from the facts found by the VT, which did not have the benefit of the lease before it.  It is agreed that the differences are not material to the decision.)  The shop was entered in the 2000 rating list at £2,700 RV.  Mr Wragg said that then the appellants were visited by a firm of agents who held out the promise of a rate reduction if they were instructed.  The agents duly made a proposal and an appeal.  This led to an inspection by the VO on the 22nd of November 2005.  The premises were found to have modern lighting, full central heating and to be finished to a very good standard.  It also became apparent that the shop had been extended into areas that had formerly been in domestic use.  When the agents were made aware of this they withdrew the appeal and themselves.  On the 14th of February 2006 the rating list was amended by the service of a VO notice to bring the list into accord with the premises that were being occupied at that time at a substantially increased rateable value (as set out above).  This was over a month before the 31^st of March 2006, which was the cut-off date for notices to backdate increases in the 2000 list.  It is the backdating of that increase to 1 October 2001 that concerns the Appellants.

3.           Mr Wragg showed me the Enquiries Before Lease dated 26 October 2001.  Enquiry number 24 read “please confirm that all necessary bylaws approvals and building regulation consents have been obtained in relation to the property and provide copies.”  The answer was “Confirmed so far as the Landlord is aware.  No copies are available.”

Appearances and Submissions

4.           Mr David Wragg appeared for the appellants, his sons, Christian and Steven Wragg, with the permission of the Tribunal, and was assisted by Christian Wragg.  (Hereafter All references to “Mr Wragg” , unqualified by any other name, are to Mr David Wragg.)

5.           Mr Harwood, the valuation officer, appeared for himself.  I repeat my thanks to both Mr Wragg and Mr Harwood for the intelligent and measured way they made their submissions, while Mr Wragg made no secret of the strong sense of injustice that he and the appellants felt.

6.           Mr Wragg started by explaining that the appellant's position had changed.  He had researched the planning and building regulations situation on the Council's website and had discovered that there had never been any application for either planning consent or building regulations approval in respect of the extension to the appellants' shop, contrary to what had been said by the landlord and had been accepted to be the case before the LVT.  The appellants' stance had changed as a result.  Mr Wragg criticised the VO for accepting that the alterations had been carried out legally and for not correcting the position at the LVT.  He put before me a copy of the lease that he had obtained from the appellants' solicitors.  It was dated 12th of December 2006.  My attention was taken to the Inquiries made before taking on the lease and in particular the question relating to necessary approvals of any works undertaken and the response to it.  (Question 24) It would seem very unlikely that the works of extension to incorporate the upper floors of the building into the shop had not required.  These building regulation approval, given that the work had involved, amongst other things, the removal of a staircase.

7.           There had been some discussion about the actual day upon which the appellants occupied the premises.  The LVT recorded that it had been taken to be the 1st of October.  After some thought and investigation before me it was eventually agreed that it was still fair to take the 1st of October as the appropriate date when the occupation should be said to have started.  The Appellants were confident that their works had started some months before the lease began and were reasonably sure that the alterations were complete by that time.

8.           Mr Wragg’s main argument was that the Appellants had done everything that could have been expected of them.  They had taken proper advice and made sensible inquiries.  It now appeared that they had been seriously misled, probably by the landlord,  he said. Hence, Mr Wragg argued, the lease had been invalidated for deception and that therefore the appellants were not liable for backdated business rates.

9.           Mr Harwood is employed as a Chartered Surveyor by the Valuation Office Agency.  The valuation Officer has a duty to maintain the list which includes correcting errors that come to his notice, so far as he is able.  He confirmed to me that his view is as set out in his expert witness statement.  The circumstance that gave rise to the alteration to the rateable value of the appeal property was the extension of the ground floor by incorporating the ground floor part of the separately assessed living accommodation.  In his opinion the effect of that was the a new hereditament came into existence consisting partly of the former living accommodation at the rear of shop and the shop itself.  This was a new and separately identifiable hereditament.  The alteration therefore fell within regulation 13A (3), as explained by (4), and the alteration should have effect on the day on which the circumstances giving rise the alteration occurred.  He took this date to be the 1^st of October 2001.  He was not of the view that the day when the alteration arose was not reasonably ascertainable and therefore paragraph 11 did not apply.  The alteration was made before the cut-off date for VO notices of the 31st of March 2006.  The liability to rates is therefore properly backdated to the first of October 2001.

The Law

10.        The Non-Domestic Rating (Material Day For List Alterations) Regulations 1992 define for rating purposes the "material day", that is, broadly, the day on which the relevant circumstances of the premises have to be assessed.  Regulation 3(4) provides that

“where the determination is with a view to making an alteration so as to show in .... the list any hereditament weight which –

(a) has come into existence or ceased to exist;

.....

the material day is ....  the day on which the circumstances giving rise to the alteration occurred.”

11.        Regulation 3(a) provides that

“the reference in paragraph (4) above to a hereditament coming into existence or ceasing to exist includes a reference to a hereditament which comes into existence or ceases to exist by virtue of --

(c) any part of a hereditament becoming part of a different hereditament.”

12.        It is not in dispute that when the shop was extended to include the parts that were previously in domestic occupation the shop hereditament became part of a different and extended shop hereditament.  The material day is therefore the day on which the circumstances of that alteration are to be assumed to have arisen.  It was a matter of agreement before the VT and, after some discussion, this Tribunal, that it was fair to assume that 1^st October 2001 was the material day.

13.        The time from which the alteration to the list is to have effect is governed by regulation 13A of The Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993, as amended by The Non-Domestic Rating (Alteration of Lists and Appeals) (Amendment) (England) Regulations 2000.  This provides as follows:

13A

“(3) Subject to paragraph (11), any alteration made as a consequence of a hereditament coming into existence or ceasing to exist in the circumstances described in paragraph (4) shall have effect from the day on which the circumstances giving rise to the alteration occurred.

(4) The circumstances mentioned in paragraph (3) of those in which --

(c) any part of a hereditament becomes part of a different hereditament.”

14.        Regulation 13A of the 1993 Regulations was further amended in 2005 by the addition of paragraph (14A) which provided that

“Notwithstanding the foregoing provisions of this regulation, where an alteration falls to be made after 31 March 2006 it shall have retrospective effect only if it is made in pursuance of a proposal.”

Conclusions

15.        It is the occupier who is liable for rates.  There can be no doubt that the Appellants were lawfully in occupation under a lease that was valid at the time.  Whether or not it could have been challenged by the Appellants as being voidable for fraud is not for me to say.  That is possibly a matter between the appellants and their ex-landlord.  I do not see, from what Mr Wragg said to me, that it is something that either the VO or the Council are likely to have any responsibility for; but it is for the appellants to take their own advice about that.

16.        Mr Wragg does not challenge the various important dates.  The effect of the regulations is as Mr Harwood stated it.  The appellants were in occupation of the premises from 1^st October 2001and that date is assumed by agreement to be the date by which the circumstances giving rise to the alteration, namely the extension, are taken to have been completed.  That date is therefore taken to be ‘the material day’.  Because the VO made the alteration before 31^st March 2006 the regulation applicable is regulation 13A and the alteration takes effect from 1^st October 2001.  The appellants are unfortunately liable to pay the extra rates at the higher rateable value backdated to that date.

17.        This Tribunal can only operate in accordance with the law.  If the law is clear and compels an inevitable conclusion when it is applied to the agreed facts, that conclusion cannot be set aside out of sympathy.  That is the case here.  I am afraid that, despite Mr Wragg’s best efforts, the appellants have no arguable case for escaping the grasp of the regulations and the appeal must be dismissed.

Dated 30 September 2010

His Honour Judge David Mole QC,

Judge of the Upper Tribunal