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UPPER TRIBUNAL
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UT Neutral citation number: [2011] UKUT 115 (LC)
LT
Case Number: RA/28/2009
TRIBUNALS,
COURTS AND ENFORCEMENT ACT 2007
RATING
- valuation - 2005 list - restaurant and premises - proposal for temporary
reduction due to interference resulting from neighbouring development works -
20% reduction agreed - subsequent proposal for further reduction due to road
closure - whether further reduction justified - held it was not - appeal
dismissed.
IN
THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
SOUTH WALES VALUATION TRIBUNAL
BETWEEN MANDARIN
CORPORATION LIMITED Appellant
(formerly THAI
CONCEPT AND CUISINE LTD)
and
KATHRYN
PATRICIA PHILLIPS Respondent
(Valuation
Officer)
Re: Ground
and First Floor
Restaurant
& Premises
Unit
8
Old
Brewery Quarter
Caroline Street
Cardiff
CF10
1AD
Before:
N J Rose FRICS
Sitting
at Birmingham Civil Justice Centre,
Priory
Courts, 33 Bull Street, Birmingham, B4 6DS
on
8 March 2011
Paul Wintle BSc (Hons), MRICS
for Appellant
Respondent in person
DECISION
Introduction
1.
This is an appeal by the ratepayer, Mandarin Corporation Limited
(formerly Thai Concept and Cuisine Limited), against the decision of the South
Wales Valuation Tribunal (the VT). The VT refused to reduce the assessment in
the 2005 rating list (RV £94,000) of a restaurant and premises known as Ground
and First Floor, Unit 8, Old Brewery Quarter, Caroline Street, Cardiff, CF10
1AD with effect from 1 August 2007 on the basis of a material change in circumstances
(MCC) from that date.
2.
Mr Paul Wintle BSc (Hons), MRICS, principal of Paul Wintle & Co of Worcester appeared for the appellant. Mr Wintle did not give expert evidence, but he
called a witness of fact, Mr Michael Oliver, the appellant’s operations
manager. The respondent valuation officer, Mrs Kathryn Phillips BSc (Hons),
MRICS appeared in person and gave expert evidence. Mrs Phillips is currently
based at the Cardiff office of the Valuation Office Agency, where she is the
team leader responsible for the operational delivery of Revaluation 2010.
3.
It was agreed that I would not be assisted by an inspection of the
appeal hereditament in view of the changes which have taken place in the area
since the material day.
Facts
4.
From the evidence I find the following facts. The appeal hereditament
is located in the Old Brewery Quarter of Cardiff, which has access to Caroline Street and St Mary Street. The quarter is situated between St Mary Street and The
Hayes, which have historically been secondary shopping locations within Cardiff city centre. It is to the south-west of the prime shopping location, comprising Queen Street and St David’s shopping centre (SD1), and to the west of the new St David’s 2
shopping centre (SD2) which opened on 22 October 2009. SD2 links to SD1 and
also fronts onto the Hayes. The Old Brewery Quarter was completed in 2003. It
forms the major part of an award winning regeneration scheme of the former Brains
Brewery and Caroline Street comprising 44 loft style apartments, leisure,
restaurant, retail and office accommodation. The appeal hereditament is part
of the restaurant/bar complex; other occupiers include Hard Rock Café, La Tasca,
Starbucks, Chiquitos, Nandos and Bella Italia. It is a self contained unit
with restaurant accommodation on ground and first floors, serving Thai and Indian
food respectively. It has frontages to the central thoroughfare of the Old
Brewery Quarter and to Caroline Street, a pedestrianised street comprising
mainly food takeaways.
5.
SD2 is a retail-led, mixed use development of 967,500 sq ft. It includes
a major John Lewis department store, a significant number of new shops, cafes,
restaurants and bars, 300 residential apartments, new public amenities and
public spaces, 3,000 car parking spaces and a civic library of 55,000 sq ft.
6.
The redevelopment included the regeneration and pedestrianisation of The
Hayes, a new Grand Arcade running south from the existing St David’s centre to
a new department store, together with three main east-west pedestrianised
routes at Hill Street, Bridge Street and Tredegar Street. There is a mix of
uses above the Grand Arcade blocks including a new multi storey car park on the
eastern side of the scheme with access from Mary Ann Street.
7.
The scheme also included significant improvements to the public realm in
order to create effective and integrated pedestrian links and circuits around
the city connecting the existing prime retail area, the Millennium Stadium,
central station to the west and Callaghan Square to the south, Cardiff
International Arena and Queen Street Station to the east. Demolition works
started in The Hayes, Hill Street and Frederick Street in January 2007. Works
to SD2 and the city centre generally continued until the opening of the centre
in October 2009. St Mary Street was closed to general traffic (but not buses
and taxis) on 6 August 2007. Works to St Mary Street were carried out in
stages and there were times when little activity occurred.
8.
The appeal hereditament is held on a 25 year lease from 28 August 2003
on internal repairing and insuring terms at an initial rent of £130,000 per
annum, subject to five yearly rent reviews. There was a six month rent free
period at the start of the lease. A service charge is payable to cover common
costs including external repairs.
9.
The hereditament was originally included in the 2000 rating list as two
separate entries and these assessments were agreed with the appellant late in
the life of the list. A proposal was received from the appellant on 7 July 2005
seeking a merger of the two separate compiled list entries as at 1 April 2005.
Following settlement of the 2000 list appeals the merger was effected by the VO
altering the 2005 list by notice dated 28 September 2005 after discussions with
the appellant. An RV of £118,000 was agreed, effective from 1 April 2005.
Following this alteration the assessments were also merged in the 2000 list at
RV £66,000, effective from 15 February 2005. The VO notice for the 2000 list
alteration was issued on 8 December 2005.
10.
A proposal to alter the 2005 list was served by the appellant on 21
September 2007. The proposal cited a MCC and sought a reduction from 1 March
2006. The proposer’s detailed reasons for believing the rating list to be
inaccurate were stated to be:
“… that major demolition and
construction works commenced on the site immediately to the rear of the
property, resulting in noise and vibration and causing a reduction in trade.
Accordingly the rateable value is considered inaccurate, unfair, incorrect and
should be reduced to £1 with effect from 1 March 2006 as it bears no relation
to the statutory definition of rateable value as at the antecedent valuation
date.”
11.
A further proposal to alter the 2005 list was served by the appellant on
4 December 2007. The proposal also cited a MCC and sought a reduction from 1
August 2007. The proposer’s detailed reasons for believing the rating list to
be inaccurate were said to be:
“… that the closure of St Mary Street on or around 1 August 2007 has seriously affected trade to the premises due
to access problems. Accordingly, the rateable value is considered inaccurate,
unfair, incorrect, bad in law and should be reduced to £1 with effect from 1
August 2007 as it bears no relation to the statutory definition of rateable
value as at the antecedent valuation date.”
12.
The first MCC proposal was agreed on the basis of an allowance of 20%.
The RV of £118,000 was reduced to £94,000 with effect from 10 January 2007. When
this agreement was reached the VO caseworker considered that the allowance
reflected all public realm works, including any effects of the closure of St Mary Street on 6 August 2007, together with the works that occurred at various times
between that date and 23 October 2009 when SD2 opened. Mr Wintle was advised
accordingly, but he did not agree and indicated that he wished to pursue a
further allowance using the second MCC proposal. The latter was referred to
the VT, which dismissed the appeal on 23 November 2009. That decision forms
the subject of the present appeal.
13.
A third proposal citing a MCC was submitted by the appellant on 27
October 2009, eight days after the VT hearing. It sought a reduction from 14
July 2008 on the following grounds:
“The loss of the loading bay in Mill Lane on 14 July 2008
together with an alteration to the loading times together with other roadworks
have meant that the property has become difficult to supply with goods. This
will therefore adversely affect the rental bid of the hypothetical tenant and
accordingly the rateable value of the property should be reduced to £1 with
effect from 14 July 2008 as the assessment bears no relation to the statutory
definition of rateable value as at the antecedent valuation date.”
This proposal remains outstanding and the VO has not discussed
it with the appellant.
14.
The antecedent valuation date (AVD) is 1 April 2003 and the material day
is 4 December 2007.
Case for the Valuation Officer
15.
Mrs Phillips said that, in March 2009, she attended a meeting with the Committee
for Cardiff of the Rating Surveyors Association (The RSA Committee) to discuss
the allowances to be granted to reflect the disruption to the city centre
associated with the construction of SD2. Mr John Pyrke took the lead on behalf
of the VO as the Cardiff rating team leader. The RSA Committee comprised
surveyors from Messrs DTZ, Gerald Eve and G L Hearn.
16.
Since rental and footfall evidence was inconclusive, it was decided to
adopt a pragmatic approach in dealing with MCC proposals. A series of
allowances was agreed for different shopping locations, which recognised that
there were periods of relative quiet but also more disruptive periods including
re-paving works. Although this approach was not strictly in accordance with
the regulations, it was adopted in view of the considerable number of
outstanding proposals and in line with similar approaches which had been agreed
in other city centre locations nationally.
17.
It was agreed that the most severely affected location was The Hayes,
the area in the immediate vicinity of the new development. This was granted an
allowance of 25% from an agreed equated effective date, namely 10 January
2007. All other allowances were ranked in comparison with this part of The
Hayes.
18.
Mrs Phillips said that, following the RSA Committee agreement,
negotiations were entered into with various agents in respect of those
locations which had been excluded from it. These included St Mary Street,
where a 10% allowance was agreed to reflect SD2 and public realm works. This
allowance reflected the disability caused by all the works in the town centre
from 10 January 2007 until the opening of SD2 on 22 October 2009. It did not
represent an additional 10% over and above the 20% allowance which had already
been given to the appeal hereditament.
Case for the appellant
19.
Mr Wintle said that a large number of MCC appeals were listed for
hearing by the VT on 19 October 2009. They included the appeal resulting from
his second MCC proposal dated 4 December 2007. Shortly before the VT hearing
the VO caseworker, Mr Jones, agreed to grant an allowance of 10% in respect of
all outstanding appeals relating to shops in St Mary Street and its
continuation, High Street. An allowance of 5% was agreed for arcades opening
off High Street, which were less severely affected by the road works.
20.
Mr Wintle submitted that, in considering the appeal hereditament, the VO
and the VT had completely ignored the various road works to St Mary Street,
which adversely affected the appellant’s business and would similarly have
affected any other restaurant business, thus reducing the bid of the
hypothetical tenant. Furthermore, the established tone of the list included a
10% reduction for all premises with frontages to or access off St Mary Street. It was inexplicable that the appellant was the only ratepayer who had been
denied such an allowance. The main entrance to the appeal property was between
The Yard public house and Starbucks, both of which front St Mary Street.
Properties in The Old Brewery Quarter were as badly affected as those with
direct frontage to St Mary Street.
Conclusions
21.
Mr Oliver gave evidence as to the impact of the closure of St Mary Street and the subsequent road works on the appeal hereditament. He was a
straightforward witness, but his evidence did not assist me in determining the
fundamental issue in this appeal, namely whether or not the effects on the
appeal hereditament of the works to St Mary Street were reflected in the
allowance of 20% which was granted in respect of the first MCC proposal.
22.
In the absence of any oral evidence from the surveyors who were present
at the meeting at which the allowance for St Mary Street was agreed, I consider
that the answer to that question can be obtained from two documents. The first
is a report from the RSA Committee to its members, following the agreement
reached with Mr Pyrke in March 2009. The report said:
“Thank you for the information you have kindly provided
regarding the impact upon trade following the disruption of the city centre as
a result of the works associated with the construction of the St David’s 2 centre,
the closure of car parks, and changes to street utilities.
There is no reliable rental evidence which we could use in
support of our general contentions and we relied upon limited trade information
and our involvement in other cities including Bristol, Leicester, Bath and Newport and our detailed knowledge of Cardiff over many years.
Following negotiations with John Pyrke and his team we
have been able to reach agreement on allowances as follows:
Location Allowance
%
1. St David’s Way
(a) From Cathedral Walk to junction with former
Town Wall 20
(b) From Town Wall to Working Street 15
(c) Cathedral Walk 15
2. Queens Arcade 10
3. Queen Street including Capitol Centre
5
4. The Hayes 25
We did not discuss other central streets and these will
be for individual discussion and having regard to the above allowances.
The allowances will be with
effect from 10 January 2007 when the demolition works commenced in The Hayes, Hill Street and Frederick Street and will continue until a date yet to be agreed …” (Emphasis
added).
23.
The second relevant document is an e-mail dated 29 September 2009 from
Mr Jones of the VOA to Mr Marsden of Messrs Cooke and Arkwright, who was acting
for a number of occupiers in St Mary Street. It said
“Further to yesterday’s meeting relating to outstanding St
Davids 2 Development appeals which are not covered by the RSA
discussions/agreement, I confirm that I can agree the following allowances:
St Mary Street/High Street
Works commenced here 6/8/07, and continued at various
points along the street in stages until all works have been completed on
30/8/09. The works are intrinsically linked to SD2 and I am prepared to agree
an allowance of 10%, effective from 10/1/07 to all of the outstanding SD2
appeals …”
The e-mail continued by setting out the proposed allowances
for High Street, Duke Street and Castle Arcades (5%), Duke Street/Castle Street
(5%), St John Street (7.5%) and Charles Street (20%). Mr Jones added that he would
contact Mr Marsden regarding the allowances for Central Square/Wood Street once
he had confirmed exactly what had taken place there and when.
24.
In the light of Mr Jones’s e-mail, Mr Wintle’s assertion that the 10%
allowance granted to St Mary Street ratepayers was “wholly separate” from the
20% which had been granted to the appellant is, in my judgment, untenable. The
agreement reached with the RSA Committee related to the effects of the SD2
redevelopment on the town centre generally, but the agreed percentages only
related to certain streets. Mr Wintle accepted that the 20% reduction agreed for
the appeal hereditament following his first MCC proposal reflected the disruption
which had been taken into account when the first set of reductions was agreed
by the RSA Committee. That is not surprising, given the italicised sentences
in the RSA report, which make it clear that the other streets in the central
area would be the subject of subsequent discussions in the light of the
allowances agreed with the Committee. Mr Jones’s e-mail in turn made it clear
that the 10% reduction in St Mary Street followed another such set of
discussions, and formed part of the same overall negotiations.
25.
Mr Wintle placed reliance on the contents of an e-mail he had received
from Mr Marsden on 15 October 2009, which said:
“To confirm, I agreed a 10%
allowance on St Mary Street to reflect both the SD2 works and the St Mary Street road works/pedestrian works. This was 5% allowance for SD2 effective 10
January 2007 and 5% allowance for St Mary Street. Although the MCC date for St Mary Street was August 2007 it was agreed to apply the full 10% allowance as of 10
January 2007. This will then run to the end of the list.”
26.
Although the works to St Mary Street did not commence until August 2007,
Mr Jones was prepared to back-date the reduction to the equated effective date
which had been agreed by the RSA Committee, and which Mr Wintle had also agreed
when he negotiated a reduction of 20% for the appeal hereditament. The
reduction negotiated for St Mary Street by Mr Marsden was part of a series of discussions
between the VO and surveyors advising ratepayers throughout the city centre, all
associated with the SD2 redevelopment and settled having regard to the range of
percentages which had been agreed for certain streets by the RSA Committee.
There is therefore no justification for any further allowance to be granted to
the appeal hereditament.
27.
I would add that Mrs Phillips said that, following her inspection of the
appeal hereditament she considered that the areas which had previously been agreed
by valuers in her office were incorrect. Her valuation based on the revised
areas was RV £125,000 before any end allowance and not £118,000. Mr Wintle,
however, declined Mrs Phillips’s repeated requests for a site meeting to agree
areas prior to the Lands Tribunal hearing. The VO is under a statutory duty to
maintain an accurate rating list. If the area previously agreed was wrong, Mrs
Phillips is entitled (indeed, obliged) to revise the assessment to reflect the
correct area. In view, however, of the conclusion I have reached in the
previous paragraph, there is no need for me to resolve the floor area issue in
this decision.
28.
The appeal is dismissed. A letter concerning costs accompanies this
decision, which will take effect when the question of costs is determined.
Dated 21 March 2011
N J Rose FRICS
