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Cite as: [2010] UKUT 417 (LC)

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UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2010] UKUT 417 (LC)

UTLC Case Number: RA/27/2011

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

RATING – valuation – shop – compiled list inaccuracy – material change of circumstances – valuation officer making single alteration to list – effective date – held different effective dates applied – appeal allowed in part

IN THE MATTER OF AN APPEAL

BETWEEN WILLIAM BRUCE GOULBORN Appellant

and

OWAIN WYNN COWELL (VALUATION OFFICER) Respondent

Re: 4 Sussex Street,

Rhyl,

Denbighshire,

LL18 1SG

Before: A J Trott FRICS

Sitting at Chester Civil Justice Centre, Trident House, Little St John Street,

Chester CH1 1SN

on 24 August 2011

The following cases are referred to in this decision:

Lotus and Delta v Culverwell (VO) and Leicester City Council [1976] RA 141

Futures London Limited v Stratford (VO) [2006] RA 75

Mainstream Ventures Ltd v Woolway (Valuation Officer) [2000] RA 395 (LT)

Re The Appeal of Kendrick (Valuation Officer) [2009] RA 145 (LT)

Chilton-Merryweather (LO) v Hunt [2008] EWCA Civ 1025, [2008] RA 357

DECISION

Introduction

1. This is an appeal by Mr William Goulborn (the appellant) against a decision of the Valuation Tribunal for Wales (VTW) dated 21 February 2011 confirming the assessment in the 2005 local non-domestic rating list of the shop and premises known as 4 Sussex Street, Rhyl, Denbighshire LL18 1SG at a rateable value of £8,200 with effect from 23 March 2006.

2. The respondent is Mr Owain Wynn Cowell BSc, MRICS, the duly authorised valuation officer.

3. Both parties appeared in person.

4. The appeal was heard under the simplified procedure.

Facts

5. The parties prepared a statement of agreed facts from which, together with the evidence, I derive the following facts.

6. The appeal hereditament is a ground floor lock up shop, trading as the Rhyl Coin and Stamp Centre, located on the southern side of Sussex Street in Rhyl, Denbighshire. Sussex Street is a secondary retail location forming part of the pedestrianised retail core of the town that includes the High Street, Market Street and the White Rose Shopping Centre. The appeal hereditament is located at the northern end of Sussex Street close to its junction with the High Street.

7. The appeal hereditament comprises a retail area measuring 29.08 m² (all Zone A) and a rear workshop measuring 31.3 m². The total area expressed in terms of Zone A is 32.21 m².

8. The property was let on an internal repairing lease to Mr Marco Fontana for a term of nine years from 7 January 2005 at an initial rent of £15,000 pa with upward only rent reviews on 17 January 2008 and thereafter at three yearly intervals. There was no increase in rent at the first review and no notice of review has been given in respect of the 2011 review. There was a rent free period of one quarter from 24 April 2005 to 23 July 2005 in respect of fitting out works.

9. Mr Fontana is a director of Brandon Court Limited which trades from the appeal property. The appellant, Mr Goulborn, is the company secretary.

Rating history of the appeal hereditament

10. The appeal hereditament was entered in the 2005 local non-domestic rating list as 2 Sussex Street, a shop and premises with a rateable value of £5,300. The address was subsequently changed to 4 Sussex Street.

11. The list was altered by the valuation officer on 8 August 2006 increasing the rateable value to £9,600 with effect from 23 March 2006. The respondent said that the reason for the alteration was twofold. Firstly, the rateable value shown in the rating list for the appeal hereditament was inaccurate on the day the list was compiled. Secondly, the rateable value was inaccurate due to a material change of circumstances comprising the opening of 8 Sussex Street (Savers) and 10-12 Sussex Street (Peacocks), which had been redeveloped by the conversion of the Old Market Hall, an indoor covered market, into two large shops behind a retained façade. The material change of circumstances took place on 23 March 2006.

12. The material change of circumstances led to a number of list alterations in Sussex Street. Two of these, at No. 6-8 and No. 18, resulted in appeals to the Valuation Tribunal. Both appeals were heard and determined on 24 September 2007. The Valuation Tribunal determined that the Zone A value for No. 6-8 was £255 per m² and that for No. 18 was £175 per m². No. 6-8 adjoins the appeal hereditament and No.18 is a short distance to the south, further away from the High Street.

13. Immediately following the decisions of the Valuation Tribunal the valuation officer made further list alterations on 25 September 2007. The list entry for the appeal hereditament was reduced to £8,200, based upon a Zone A value of £255 per m²,with effect from 23 March 2006.

14. Mr Goulborn made a proposal to alter the list on 29 March 2010 on the grounds, inter alia, that the valuation officer’s alteration to the list entry to £8,200 “through the introduction of Peacocks and Savers, [was] made totally without foundation”. The valuation officer did not consider the proposal to be well-founded and it was referred as an appeal to the VTW who dismissed the appeal on 7 March 2011. The VTW accepted that a Zone A value of £255 per m² was appropriate for the appeal hereditament. Mr Goulborn appeals to this Tribunal against that decision.

The case for the appellant

15. Mr Goulborn said that the valuation officer had used the material change of circumstances arising from the redevelopment of the Old Market to justify correcting a very substantial error in the 2005 compiled list in which the appeal hereditament was valued at £165 per m² Zone A. The VTW found in relation to 6-8 and 18 Sussex Street that the positive impact of the material change of circumstances was “nominal” and the valuation officer had accepted in correspondence in March 2011 that the VTW’s decision to increase the Zone A rate “was mainly due to an incorrect tone being applied at the compilation list stage…”

16. The Valuation Office Agency had previously said that the increase in value was only due to the material change of circumstances. The appellant in the appeal at 18 Sussex Street stated in written evidence:

“I have been told by Valuation Officer Sarah Nash, that the only justification for this rise [from £145 per m² to £200 per m² Zone A] is because of the Peacock Chainstore opening at the bottom of Sussex Street in March 2006, where once independent shops traded and the Indoor Market was located.”

Mr Goulborn also referred to a letter received from his MP, Mr Chris Ruane, dated 8 April 2011 in which Mr Ruane said:

“From my recollection of the meetings we held three or four years ago the Valuation Office’s justification for increasing rates at that time was because of the improvements brought about [by] Peacocks locating to the area and the subsequent ‘increase in footfall’ that this apparently created.”

17. Mr Goulborn said that the rateable value had increased from £5,300 to £8,200, an increase of 54.7%. He considered this to be an unfair increase and one that could not be justified by reference to a material change of circumstances. He submitted that to be “material” a change of circumstances had to be “significant, major, substantial or possibly even dramatic”. The change arising from the redevelopment of the Old Market had been immaterial and minor, a position that had been accepted by the VTW when describing its effect on value as “nominal”.

18. Mr Goulborn referred to the Valuation Office Agency’s Rating Manual (Volume 2, section 5) for guidance about material changes of circumstance. He cited paragraph 9.45:

“A useful working rule is for the valuer to envisage the hypothetical landlord and tenant inspecting the hereditament to be valued and consider what would impress them as physically observable or physically manifest features in the locality of the hereditament. These might include…pedestrian flow or footfall…

If any of these change to a degree which would be perceptible as between the date of compilation of the list and the material day, then there is a MCC.”

19. Mr Goulborn said that there had been no change in pedestrian flows since the new shops had been opened at 8 and 10-12 Sussex Street. But the number of transactions in shops in Sussex Street had fallen between April 2005 and April 2006. He had undertaken a survey of retailers in the street. He asked them:

“Can you please let me know what % change, if any, there was in the number of transactions you had in April 2006 compared to the month of April 2005.”

He received four responses each of which showed a decrease in transactions. These ranged from 2.7 to 3.2%. The number of transactions undertaken by Rhyl Coin and Stamp Centre, the trading name of the occupier at the appeal hereditament, declined by 1.3%. The new shops had had a negative effect rather than a nominal positive effect as found by the VTW. There had been no material change of circumstances that could justify a substantial increase in rateable value.

20. On 16 November 2006 Ms Zammit-Willson of the Valuation Office Agency wrote to Mr Goulborn to say that the:

“original level of value of £165/m² … [was] too low…I think the revaluation should have resulted in a value of £180/m² being adopted. However, I have no power to increase rateable values from 1 April 2005 due to an error, any increase would be restricted to the date I altered the rating list.”

Taking these values to apply to the appeal hereditament Mr Goulborn argued that the error made by the Valuation Office Agency when compiling the 2005 list was £15 per m², ie £180 less £165. Applying this figure to the area of 4 Sussex Street gave an increase in rateable value of £483 or 9% compared with the 54.7% rise awarded by the VTW, which determined the Zone A value at £255 per m². This figure must have included the error made by the Valuation Office Agency, identified by them at £15 per m². So the amount allowed by the VTW in respect of the material change of circumstances was actually £255 less £180, or £75 per m². And yet it said in its decisions in the appeals on both 6-8 and 18 Sussex Street that the “positive impact [of the material change of circumstances] would be nominal.” £75 per m² (or 41.7% of £180 per m²) could not properly be described as “nominal”. The correct rateable value, reflecting both the error in the compiled list and the absence of any value effect caused by the material change of circumstances, was £5,798 per m² (£180 per m² multiplied by 32.21 m²).

The case for the respondent

21. Mr Wynn Cowell said that there were two issues to be determined:

(i) Whether the redevelopment of the Old Market was a material change of circumstances, and

(ii) Whether the valuation officer is required to correct errors in the compiled list as they become known or whether he must wait until a new list is compiled.

22. Mr Wynn Cowell reviewed the statutory basis for a material change of circumstances. This was contained in paragraph 2(6) and (7) of Schedule 6 to the Local Government Finance Act 1988. Where the rateable value is determined with a view to making an alteration to a list which has been compiled the matters mentioned in sub-paragraph 2(7) shall be taken as they are assumed to be on the material day. In so far as relevant to this appeal those matters are:

“2(7)(d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and

(e) the use or occupation of other premises situated in the locality of the hereditament.”

If these matters had changed then there was a material change of circumstances and the material day was the date when the change occurred. The rateable value was the value based upon the physical circumstances as at the material day but applying the levels of value that existed on the antecedent valuation date (1 April 2003).

23. The Old Market originally comprised a covered market with an entrance onto Sussex Street (known as No. 10A) with two kiosk shop units on either side of the entrance, Nos. 8 and 8A to the north and 12 and 12A to the south. No. 8A was deleted from the rating list on 14 July 2005 and the other kiosk units, together with the Old Market were deleted on 1 August 2005. A redevelopment of the Old Market was undertaken between August 2005 and March 2006.

24. Following the redevelopment of the Old Market the two new shops were opened on 23 March 2006 which was therefore the material day. The two new shops, occupied by high street multiples and fitted out to a modern specification, had replaced four small kiosk units and a poorly patronised market. It was only 12m between the appeal hereditament and the redevelopment and Mr Wynn Cowell said that in his opinion the physical state of the locality had changed as had the use and occupation of other premises situated in the locality of the appeal property. The physical factors (d) and (e) above had therefore altered as a matter of fact.

25. Turning to the second issue Mr Wynn Cowell said that section 41(1) of the Local Government Finance Act 1988 conferred a duty to “maintain” the rating list on the valuation officer. He considered that this duty (not discretion) extended to both correcting inaccuracies in the rating list and amending the list in response to material changes of circumstance.

26. Mr Wynn Cowell proceeded to analyse the rental evidence and first considered background market information which showed generally static values between June 2001 – June 2005, an increase in value in the year to June 2006 followed by a decline in value over the next two years. He then went on to consider the rental evidence in relation to shops in the locality. He said that shops opposite the appeal hereditament on the north side of Sussex Street were not reliable comparables. He also excluded evidence from the prime retail areas of the High Street and the White Rose Shopping Centre.

27. Prior to the meeting with Mr Chris Ruane MP in October 2006 (see paragraph 16 above) the Valuation Office Agency issued forms of return for properties in Sussex Street. Mr Wynn Cowell said that no rental evidence beyond that obtained at that time had since been discovered. He had revisited the answers given on the forms of return and prepared a rental analysis of Sussex Street shops in terms of Zone A which differed from that previously prepared by the Valuation Office Agency. This analysis was appended to the statement of agreed facts as a “summary of rental evidence.”

28 When considering the rental evidence Mr Wynn Cowell had regard to the established propositions set out by the Lands Tribunal in Lotus and Delta v Culverwell (VO) and Leicester City Council [1976] RA 141 and began his consideration of the rental evidence by examining the actual letting of the appeal hereditament. The property was let from 7 January 2005 at £15,000 per annum. Adjusting for the landlord’s responsibility for external repairs gave a net rental value, on FRI terms, of £14,250 per annum. This was a new letting between unconnected parties and as such was at the top of the “hierarchy of evidence.” Mr Wynn Cowell acknowledged that the appellant had been forced to leave his previous premises at 12A Sussex Street (one of the kiosk units taken over as part of the Old Market redevelopment) and that he may not have been in a strong negotiating position when taking the new lease at No. 4. Nor was there any specific evidence of rental trends in secondary retailing positions between the antecedent valuation date (AVD) and January 2005. But he thought on balance that any adjustment to the actual letting value of £442.41 per m²Zone A would not bring it below the applied tone of £255 per m².

29 6-8 Sussex Street, the property adjoining the appeal hereditament to the west, was subject to a rent review in January 1997 at £215.32 per m²Zone A. In July 2005 the lease was renewed at £238.53 per m². Both leases were on FRI terms. Although No. 6-8 was larger in terms of Zone A than the appeal hereditament it was smaller overall because it lacked the advantage of a rear work room. The rental evidence also preceded the re-development of the Old Market.

30. Mr Wynn Cowell then analysed the lettings of the two new shops at 8 (Savers) and 10-12 (Peacocks) Sussex Street. Both lettings required adjustments. At No. 8 the landlord paid a reverse premium while at No. 10-12 the landlord contributed to the fitting out costs. The results of the rental analysis showed a rental value of £606.11 per m²at No. 8 and £412.32 per m²at No. 10-12. The dates of the lettings were February and January 2006 respectively, nearly three years after the AVD. Mr Wynn Cowell felt that the presence of these strong multiples (Savers being in the same group of companies as Superdrug and the Perfume Shop and Peacocks being in the same group of companies as Bon Marche) would act as a magnet to draw trade southwards down Sussex Street from the High Street to the benefit of the appeal hereditament.

31. Mr Wynn Cowell attached little weight to the rental evidence from 14A Sussex Street because of doubts about the consistency of the information shown on the two forms of return. In addition the letting took place in February 2005, shortly before work on the redevelopment of the Old Market commenced, the potential disruption from which may have influenced the negotiations.

32. No weight was given to lettings at 14B and 18 Sussex Street since they were both transactions between connected persons.

33. The final letting considered by Mr Wynn Cowell was a new lease of 28 Sussex Street from 1 April 2004 at an adjusted Zone A rent of £191.51 per m². Mr Wynn Cowell attached some weight to this transaction but thought it was of little assistance because No. 28 was located at the far end of Sussex Street close to its junction with Queen Street and away from the primary retail area of the High Street.

34. Based upon his analysis Mr Wynn Cowell was satisfied that there was no evidence to support a lower figure than the applied tone of £255 per m². He said that this tone had now become established in accordance with the decision of the Lands Tribunal in Futures London Limited v Stratford (VO) [2006] RA 75. Applying the figure of £255 per m²to the agreed area of the appeal hereditament in terms of Zone A gave a rateable value of £8,214 which he rounded down to £8,200.

Conclusions

35. Under section 41(1) of the Local Government Act 1988 the valuation officer “shall compile, and then maintain, lists for the [Billing] Authority.” This imposes a duty upon the valuation officer which extends under section 41(4) “to take such steps as are reasonably practical to ensure that [the list] is accurately compiled on 1 April concerned.”

36. Ryde on Rating notes at paragraph F [116] that while there is no express power conferred on valuation officers to alter local non-domestic rating lists on their own initiative, such a power is implicit in the duty imposed on valuation officers under section 41(1) of the 1998 Act to maintain local rating lists once they have been compiled. Although the valuation officer must take all reasonably practical steps to ensure the accuracy of the compiled list at its commencement, in my opinion that does not preclude the valuation officer from altering that list on his own initiative where the list is shown to be inaccurate because of errors in an original assessment. This ability is reflected in paragraph 14(6) of the Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005 (the “Regulations”) – see paragraph 41 et seq below.

37 In this appeal the valuation officer altered the list in respect of the appeal hereditament on 25 September 2007, immediately following the VTW’s decisions in the appeals on 6-8 and 18 Sussex Street. The VTW said of the valuation officer’s evidence in those two appeals that:

“…really a two element increase was being pursued in that it was contended that the ‘2005 compiled list’ entries from 1 April 2005 were too low, then a further increase was appropriate consequent on the opening of Peacocks/Savers: which had enhanced the rental levels in Sussex Street.”

In both appeals the VTW said that the valuation officer had placed too much reliance on the rents payable by Peacocks and Savers and that:

“The Tribunal felt the bigger picture showed that the positive impact would be nominal.”

The VTW in the present appeal accepted that the value of £255 per m², as determined in respect of the appeal on 6-8 Sussex Street, was fair and reasonable on the evidence.

38. In his reply to the appellant’s statement of case in this appeal the valuation officer said:

“The respondent accepts ‘that the main reason for the increase was understatement of the 2005 valuation’ that is to say the Zone A value in the list on the day it was compiled was insufficient. The quantum of increase in Zone A value was partly attributable to the correction of the error in the compiled list and partly due to the opening of the re-developed shops.”

39 The position therefore appears to be that the valuation officer made a single alteration to the list, the main reason for which was to correct an inaccuracy in the compiled list but which was conflated with another reason, namely that of a material change of circumstances (the re-development of the Old Market). The alteration was, in effect, a compound of these two reasons as the VTW noted.

40. The valuation officer did not distinguish the value effect of the two circumstances that gave rise to his single alteration of the list. The VTW said in their decisions on the appeals at 6-8 and 18 Sussex Street that the positive impact of the opening of Peacocks and Savers would be nominal, although they did not specify what this meant in monetary terms.

41. The conflation of two reasons for making a single alteration causes procedural, as well as valuation, difficulties. Regulation 14 of the Regulations deals with the time from which an alteration is to have effect in the 2005 and subsequent lists. Regulation 14(2) deals with the effective date in respect of material changes of circumstance:

“… where an alteration is made to correct any inaccuracy in the list on or after the day it is compiled, the alteration shall have effect from the day on which the circumstances giving rise to the alteration first occurred.”

Applying this regulation in the present appeal means that the alteration to correct the list to reflect the material change of circumstances said by the valuation officer to have occurred following the redevelopment of the Old Market has effect from 23 March 2006, the date when the two new shops opened.

42. Regulation 14(6) deals with the effective date where there is an inaccuracy in the list as compiled:

“An alteration made to correct an inaccuracy (other than one which has arisen by reason of an error or default on the part of a ratepayer) –

(a) in the list on the day it was compiled, or

(b) which arose in the course of making a previous alteration in connection with the matters mentioned in the foregoing paragraphs,

which increases the rateable value shown in the list for the hereditament to which the inaccuracy relates, shall have effect from the day on which the alteration is made.”

Applying this regulation in the present appeal means that the correction of the initial inaccuracy in the compiled list should have effect from 25 September 2007 which is the day that the valuation officer made the alteration.

43. Mr Wynn Cowell explained his interpretation of these regulations in his expert report:

“28. Regulation 14…concerns the effective date to be applied to any list alteration. The general rule is that the effective date is the day on which the circumstances giving rise to the alteration first occurred. Where an MCC has occurred the alteration is backdated to the material day of that MCC as per regulation 14(2). The material day being the day the change occurred.

29. Where an alteration simply corrects an inaccuracy without an MCC and that alteration increases the rateable value, the effective date is the day on which the alteration is made. The alteration is not backdated under these circumstances as per regulation 14(6)(b).” (Emphasis added)

Mr Wynn Cowell’s interpretation of the Regulations leads him to take the effective date in this appeal as 23 March 2006, which is the material day when the material change of circumstances occurred, notwithstanding that he did not alter the list until 25 September 2007.

44. Where an interested person makes a composite proposal on ground (a) (initial inaccuracy of the compiled list) and ground (b) (material change of circumstances) as set out in regulation 4(1) of the Regulations, then regulation 4(3) applies. This states:

“No proposal may be made –

(a) by reference to more than one ground unless for each of the grounds relied upon, the material day and the effective date are the same:

…”

This Regulation precludes a single proposal being made by an interested party which is based on grounds (a) and (b) since, as explained above, these grounds do not have the same effective date.

45. Mr Goulborn’s proposal dated 29 March 2010 (received by the valuation officer on the 30^th) reflected the valuation officer’s double reason for altering the list. In Part C of the proposal form, identifying the grounds for the proposed list alteration, Mr Goulborn relied upon grounds A and B. Ground A is that the rateable value in the rating list on 1 April 2005 was inaccurate. Ground B is that the rateable value shown in the list by reason of an alteration made by the valuation officer on 26 (sic) September 2007 was inaccurate. Although Mr Goulborn did not tick the box against ground C he did complete the date box in the question. Ground C is that the effective date of the alteration made by the valuation officer on 23 March 2006 is inaccurate. Mr Goulborn proposed that the rateable value should be altered to £5,500 with effect from 23 March 2006. The proposal was therefore made (ostensibly) on three grounds.

46. The valuation officer did not serve an invalidity notice on the proposer (Mr Goulborn) under regulation 8 of the Regulations. But regulation 8(11) states that nothing done under regulation 8 shall be construed as preventing any party to an appeal under regulation 13 (disagreement as to a proposed alteration) from contending for the purposes of that appeal that the proposal to which the appeal relates was not validly made. So, following the decision in Mainstream Ventures Ltd v Woolway (Valuation Officer) [2000] RA 395 (LT), it might have been possible for the valuation officer to challenge the validity of the proposal in the present appeal even though he had not done so by way of an invalidity notice. However, Mr Wynn Cowell made no such challenge and therefore the respondent consistently accepted that the proposal was validly made.

47. The VTW has the power to direct the date upon which an alteration to the list is to take effect since, under regulation 4(1)(f) of the Regulations, it is a ground for making a proposal that the day from which an alteration is shown in the list as having effect is wrong (ground C of Mr Goulborn’s proposal).

48. Under regulation 37(5) of the Regulations the Upper Tribunal (Lands Chamber):

“…may confirm, vary, set aside, revoke or remit the decision or order of the Valuation Tribunal for Wales, and may make any order the tribunal could have made.”

49. Having described the statutory background I now consider its consequences in this appeal in relation to the effective date. In dismissing the appeal the VTW accepted the valuation officer’s opinion that the effective date was 23 March 2006. I think that they were wrong to do so. The proposal was accepted as valid by the valuation officer despite it being based upon grounds which, for the reasons given above, involved different effective dates. I infer from the emphasised passage in paragraph 29 of Mr Wynn Cowell’s expert report (see paragraph 43 above) that where an inaccuracy in the compiled list has been identified and a material change of circumstances has occurred Mr Wynn Cowell takes the effective date for both matters as being the material day for the material change of circumstances. In doing so he refers to regulation 14(6)(b) of the Regulations. But regulation 14 (6), whether paragraph (a) or (b) applies (and in my opinion it is the former), states that an alteration shall have effect from the day on which the alteration is made. I can see no justification for taking the effective date for the alteration regarding the inaccuracy in the list on the day it was compiled as being the day on which the material change of circumstances occurred.

50. In my opinion, given that the validity of the appellant’s proposal was not challenged, there are two effective dates to be determined in this appeal; one in respect of the correction to the inaccurately compiled list (25 September 2007, per regulation 14(6)(a)) and one in respect of the material change of circumstances (23 March 2006, per regulation 14(2)).

51. The consequence of my decision is that it is necessary to determine what increase in rateable value, if any, is attributable to the inaccurately compiled list and what increase is attributable to the material change of circumstances.

52. The VTW said in its decisions on the appeals at Nos. 6-8 and 18 Sussex Street that the material change of circumstances would have a “nominal” positive impact, but they did not express a view as to what this meant in monetary terms. Mr Goulborn argues that a nominal impact on value cannot, by definition, be caused by a material change of circumstances. Mr Wynn Cowell does not distinguish between the increase due to the material change of circumstances and that due to the inaccurately compiled list. He considers them together.

53. A “material change of circumstances” is defined in regulation 3(1) of the Regulations as meaning, in relation to a hereditament:

“a change in any of the matters mentioned in paragraph 2(7) of Schedule 6 to the Act”

Such a change does not itself have to be material; it is sufficient that it is perceptible and observable “on the ground” (see Re The Appeal of Kendrick (Valuation Officer) [2009] RA 145 (LT) and Chilton-Merryweather (LO) v Hunt [2008] EWCA Civ 1025, [2008] RA 357). I accept Mr Wynn Cowell’s view that the redevelopment of the Old Market and the opening of the two new shops was a perceptible change that constituted a material change of circumstances under paragraph 2(7)(d) and (e).

54. Mr Goulborn sought to show that the new shops had not had any beneficial impact upon trade in the locality by referring to the results of a (rudimentary) survey questionnaire that he had sent to local traders. I accept Mr Wynn Cowell’s criticism of these results, namely that they referred to transactions rather than to (or at least as well as) turnover and compared months (April 2005 and April 2006) that were differentially affected by the Easter holidays. Nor was there a control survey to establish any difference in transactions for retailers in Rhyl who were not affected by the new shops. I attach no weight to this survey.

55. Mr Wynn Cowell considers comparable evidence to derive a rateable value that both corrects the inaccuracy of the compiled list and which takes account of the material change of circumstances, effective from the date of the latter. While he does not separately identify the value effect of these two matters he accepts in his reply to the appellant’s statement of case that the main reason for the increase in the rateable value was due to the understatement of value in the compiled list. He also says in paragraph 59 of his expert report that:

“My own analysis of zone A values differs to that presented by the valuation officer’s previous representatives.”

This is presumably a reference to Ms Zammit-Willson’s view in November 2006 that, firstly, the correct rateable value of the appeal hereditament was £180 per m² at the date the list was compiled, based upon rents agreed at or around the AVD; and, secondly, that the lettings of 8 and 10-12 Sussex Street in early 2006 averaged £408 per m² compared with Mr Wynn Cowell’s figure of £509 per m².

56. Ms Zammit-Willson based her view of the correct value of the hereditament at the AVD upon four comparables, only one of which, No.28, was subsequently referred to by Mr Wynn Cowell, although he found it to be of little assistance (see paragraph 33 above). Two of Ms Zammit-Willson’s other comparables, at Nos. 13 and 27 Sussex Street, are on the north side of the street (which Mr Wynn Cowell does not consider comparable). 27 Sussex Street is considerably further south, beyond the junction of that street with Queen Street. The remaining comparable is at 12 Sussex Street, one of the units that adjoined the entrance to the Old Market. According to the schedule attached to a letter to the appellant from Ms Zammit-Willson dated 1 November 2006 the property was in fact occupied by Rhyl Coin and Stamp Centre, the appellant’s business. The rent commencement date was 3 April 2003 which is within two days of the AVD. Mr Wynn Cowell does not refer to this comparable. Ms Zammit-Willson does not say whether the rents she relies upon are new lettings, rent reviews or lease renewals. The average of her four comparables is £176 per m² which Ms Zammit-Willson rounds to £180 per m².

57. I agree with Mr Wynn Cowell’s rejection of the comparables at 27 and 28 Sussex Street. Both these properties are considerably further away from the High Street than the appeal hereditament. The rental evidence from No.13, a shop and premises on the south side of the entrance to Queens Market on the opposite side of the street to the new shop at No. 10-12, refers to a transaction that took place two years before the AVD and is therefore historic. I also accept Mr Wynn Cowell’s view that properties on the north side of Sussex Street are less valuable than those to the south. The rental evidence from 12 Sussex Street does appear to be relevant and has the advantage of being a transaction that occurred at the AVD. It is surprising that Mr Wynn Cowell does not at least refer to it in his expert report. He says in that report that “I have not discovered any rents immediately around the AVD” despite Ms Zammit-Willson’s letters to the appellant dated 1 and 16 November 2006 in which reference is made to No.12. Ms Zammit-Willson’s analysis of No.12 shows a (rounded) value of £185 per m² adjusted from a rent payable of £166 per m². I have no details of the transaction, or the reasons for the (unexpected) upward adjustment of the rent. I also note that the appeal hereditament has a total area which is 3.5 times that of No.12 and an area in terms of Zone A which is nearly twice as large. I place little weight upon No.12 as a comparable.

58. A schedule of comparables, prepared by Mr Wynn Cowell, is attached to the statement of agreed facts. The analysis of those comparables provided by Mr Wynn Cowell in his expert report, and as explained at the hearing, is, in my opinion, reasonable and carefully considered. I accept the results. The difficulty with this comparable evidence is that, with the exception of No.28 which Mr Wynn Cowell rejects, it is either historic (and not relied upon) or postdates the AVD by some two to three years. Mr Wynn Cowell refers in general terms to market movements in the intervening period and relies upon “Focus” town reports for Rhyl and other centres to establish that prime shop rents were stable in Rhyl between 2001 and 2005, rising by some 9% to June 2006 before falling by 25% over the next three years. Mr Wynn Cowell acknowledges that the Focus reports are only concerned with prime property and that the appeal hereditament does not fall into that category. He says:

“I am of the opinion that this research, derived from aggregated information, is insufficiently specific to be regarded as direct evidence for this valuation.”

No other evidence was adduced about the change in values, if any, between the AVD and the dates of the comparable transactions.

59. Mr Wynn Cowell relies mainly upon five comparables. Excluding No.8 (Savers) and 10-12 (Peacocks) for the purposes of considering the accuracy of the list as compiled, leaves No.4 (the appeal hereditament), No. 6-8 and 14A. Of these three, the analysis of the new letting of No.4 shows that the rent was much higher (£442.41 per m², January 2005) than either No.6-8 (£238.53 per m², January 2005) or No.14A (£179.15 per m², February 2005). It is worth noting that No.4 and No.14A are very similar in area, both in terms of the total floorspace and in terms of Zone A. Mr Wynn Cowell explains the high value of No.4 by saying that its new tenant was relocating from No.12A (or No.12 according to Ms Zammit-Willson) which was being lost as part of the redevelopment of the Old Market. He also says that the tenant at No.14A would have been aware of the forthcoming redevelopment and may have negotiated a lower rent to reflect the prospective disruption due to the building works immediately next door. I agree with Mr Wynn Cowell on these points. (It might also be argued that the rent at No.6-8 was similarly low since that property also adjoined the redevelopment site. However there was a small gap between No.6-8 and the redevelopment site which meant that it was not so directly affected.)

60. I conclude from this review of the evidence that Ms Zammit-Willson’s estimate of £180 per m² as being the correct value of the appeal hereditament at the AVD was an underestimate, based as it was on comparables on the opposite side of Sussex Street and further to the south; in all instances further away from the High Street than the appeal hereditament. No.12 was on the same side of the road but was very much smaller and again further to the south. Adjusting the rents to reflect these disadvantages and taking account of the subsequent evidence in 2005 (albeit to a limited extent given the lack of detailed objective evidence of market movements in the intervening period for this type of shop) I consider that the correct value in the compiled list, before any material change of circumstances, should have been £220 per m².

61. I am satisfied that the redevelopment of the Old Market was a material change of circumstances that has helped to consolidate the trading position of the appeal hereditament and revitalised what had become a tired trading format. The presence of Savers and Peacocks in close proximity to No.4 strengthens its retail location. I am not persuaded by the VTW’s comment that the impact on values will only be nominally positive. In my opinion that impact would be at least 15%. The figure of £255 per m² determined by the VTW as the value of the appeal hereditament following the material change of circumstances represents an increase of approximately 16% and is supported by the evidence.

62. The effect of my conclusions is as follows:

(i) The effective date for the alteration of the list for the material change of circumstances is 23 March 2006.

(ii) The effective date for the alteration to correct the inaccuracy in the compiled list is 25 September 2007.

(iii) I determine the rateable value as £6,100 with effect from 23 March 2006, being the value in the compiled list (£5,300) increased by 16% to reflect the effect of the material change in circumstances.

(iv) I determine the rateable value as £8,200 with effect from 25 September 2007, being the corrected value in the compiled list (£220 per m²) adjusted to reflect the effect of the material change in circumstances (32.21 m² at £255 per m²).

The appeal therefore succeeds in part.

63. At the hearing the appellant asked for his costs. He said that the circumstances of the case were exceptional. The respondent had originally said that the alteration to the list was exclusively due to a material change in circumstances and not to any inaccuracy in the compiled list. The true position had only been revealed in subsequent correspondence when it became clear that the valuation officer had used a material change of circumstances to justify correcting a substantial error in the compiled list. It had not been possible to reach any agreement about the reason for the alteration with the respondent and because of the uncertain approach of the respondent Mr Goulborn had incurred costs in arranging meetings with traders, his MP and the valuation officer.

64. The respondent said that he would not make an application for costs.

65. The appeal was heard under the simplified procedure. Practice direction 12.8 of the Lands Chamber’s Practice Directions issued on 29 November 2010 states:

“Where proceedings are determined in accordance with the simplified procedure…, costs will only be awarded if there has been an unreasonable failure on the part of the claimant to accept an offer to settle, or if either party has behaved otherwise unreasonably, or the circumstances are in some other respect exceptional.”

I do not consider the respondent’s behaviour in this appeal to have been unreasonable and I do not consider that Mr Goulborn’s arguments have established that the circumstances surrounding the appeal were an exception justifying the award of costs. I therefore make no award of costs.

Dated 28 November, 2011

A J Trott FRICS