UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2012] UKUT 248 (LC)

UTLC Case Number: RA/22/2010

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

RATING – occupation – offices – proposal to delete hereditament from 2005 rating list because premises incapable of beneficial occupation – whether burden of proof on appellant satisfied – appeal dismissed

 

 

IN THE MATTER OF AN APPEAL

AGAINST A DECISION OF THE VALUATION TRIBUNAL FOR ENGLAND

 

 

 

BETWEEN JOHN TOWNEND Appellant

(TRADING AS JOHN’S RADIO)

and

JULIAN GOTT Respondent

(Valuation Officer)

 

 

 

Re: Millside House

Bradford Road

Batley

West Yorkshire

WF17 8NN

 

 

 

Before: N J Rose FRICS

 

Sitting at: Bradford Immigration and Asylum Chamber, Phoenix House, Rushton Avenue, Thornbury, Bradford, BD3 7BH

on 28 June 2012

 

Appellant in person

Sarabjit Singh, instructed by HMRC Solicitor for Respondent

The following case is referred to in this decision:

Townend (trading as John’s Radio) v Goodall (VO) [2005] RA 209

 

The following cases were also mentioned:

Proudfoot v Hart (1890) 25 QBD 42

Austruther - Gough - Calthorpe v McOscar [1924] 1KB 716

Lurcott v Wakeley v Wheeler [1911] 1KB 905

Morcom v Campbell-Johnson [1955] All ER 264

McDougall v Easington DC [1989] 25 EG 104

 

DECISION

Introduction

1.           This is an appeal by Mr John Townend, trading as John’s Radio, against a decision of the Valuation Tribunal for England, refusing to delete an office building known as Millside House, Bradford Road, Batley, West Yorkshire, WF17 8NN from the 2005 rating list for the period 1 April 2006 to 31 December 2007.

2.           Mr Townend appeared in person and gave evidence.  Mr Sarabjit Singh of counsel appeared for the respondent valuation officer, Mr Julian Gott BSc, LLB, FRICS.  Mr Singh called expert evidence from Mr Gott and also from Mr Adrian Jones BSc (Hons), MSc, MRICS, senior consultant building surveyor for the National Assets and Building Surveyors Team of the Valuation Office Agency.  At the conclusion of the hearing I inspected Millside House accompanied by representatives of the parties.

Facts

3.           From the evidence I find the following facts.

4.           The appeal hereditament is situated on the south west side of the A652, approximately one mile from Batley town centre and 1½ miles from the M62.  It is part of what was previously a woollen mill known as Smithies Mill.  It is of mainly stone construction with a slate roof.  The building is on a sloping site producing split level accommodation, with two storeys to the road frontage and three storeys to the rear, and with a lower ground floor that, to the front, is partly below road and footpath level.  It has uPVC double glazing, suspended acoustic tiled ceilings with recessed lighting, comfort cooling on ground and first floors and perimeter trunking for electric power and computer networking connections.  The principal entrance is directly from the pavement at the front of the property.  There is a secondary entrance from the car park at the rear.

5. The net internal area is 580.7m2

6. In addition to Millside House, Smithies Mill contains 21 buildings, mainly in light industrial or warehouse use.  Smithies Mill was acquired by Mr Townend in 1997 and Millside House was substantially refurbished in 1999 to form a self-contained office building.  A new open-tread staircase was installed, leading from the reception area on the ground floor to the first floor, and a secondary internal fire-escape staircase serving all three floors was provided at the rear in place of the former external fire escape.

7. Following completion of the refurbishment, Millside House was leased to Manufacturing and Products Services Ltd.  The rent originally agreed was £38,720 per annum, but this was subsequently substantially reduced in the light of the tenant’s trading difficulties and the property was eventually vacated in March 2005. 

8. On 28 January 2008 Mr Townend leased Millside House to Sigmakalon UK Ltd for a term of 5 years from that date on full repairing and insuring terms and at a rent of £40,000 per annum.

9. The appeal hereditament was included in the compiled 2005 rating list as Offices and Premises, RV £27,500.  Following a decision of the Lands Tribunal dated 3 May 2005 on an appeal against the 2000 list assessment (Townend trading as John’s Radio v Goodall (VO) [2005] RA 209), a Valuation Officer Notice was served, reducing the RV in the 2005 list to £26,250.  The assessment was subsequently reduced further by agreement to RV £23,000 pursuant to a proposal made on behalf of the then occupier.  In every case the effective date was 1 April 2005.

10. On 25 January 2010 the VOA received a proposal from Mr Townend.  In section 15 he asked for the entry in the list to be deleted for reasons other than E (“the property has been demolished or no longer exists”) and F (“the property is now domestic or exempt from rating and is no longer rateable”).  The detailed reasons for the proposal were stated in section 16 as follows:

“Building repair undertaken making the building unuseable until completed.  Rate relief required between building work 01-04-2006/31-12-2007.”

The appellant’s case

11. In oral evidence Mr Townend said that in April 2006 he had decided to carry out works of improvement to the hereditament, including in particular the installation of a more substantial metal fire escape staircase between ground and first floor levels at the rear.  That decision was prompted by an expression of interest from a member of the Kalon Group of Companies, who wished to occupy the building with up to 30 members of staff.  That would have constituted a much more intensive use of the building than in the past.  It would have meant that the rear door (and the staircase leading to it) would be used regularly for entry and exit to the building, not just in case of emergency as previously.

12. In the course of his evidence Mr Townend said that the building works undertaken in the period in question included, in addition to the strengthened rear staircase, fire sealing work in the roof section of the fire escape; scaffolding externally and internally; repairs to the roof, gutters and downpipes; re-hanging access doors to the rear staircase; alterations to the front staircase, new lighting system; refurbishment of WCs; tanking and plastering to the basement; an enlarged doorway to the basement; rebuilding the front wall between Bradford Road and the front building protection wall; moving the front doorway back to its original position.

13. Mr Townend estimated the cost of these works at approximately £100,000.  He accepted that the period for which he was claiming relief was longer than might normally be expected for such works, but he said the building programme was protracted as a result of his serious illness in 2006, which meant that he had been unable to work for a lengthy period.

14. Mr Townend said that it was indicative of the extensive nature of the works which had been carried out that, when the 2010 rating list was compiled, the RV was increased from £23,000 to £39,000.

15. In cross examination Mr Townend explained that he was not suggesting that there had been continuous building work carried out between 1 April 2006 and 31 December 2007.  Work had started in April 2006 and continued in stages until December 2007.

The respondent’s case

16. The VO’s case, put simply, is that Mr Townend has failed to prove (a) that works were carried out to the appeal hereditament between 1 April 2006 and 31 December 2007 and (b) that those works were sufficiently extensive in nature to render the hereditament incapable of occupation for any purpose in that period. 

17. Mr Jones said that he had inspected the appeal hereditament on 22 March 2011.  He had been provided with a series of photographs taken by the VOA in June 2000 and February 2005, site notes made on 8 June 2000 by the valuation office referencer and the Lands Tribunal decision on the 2000 list assessment dated 3 May 2005.  He concluded that no substantial work had been undertaken to the external envelope of the building during the period in question.  There had been some limited work carried out to the interior, in particular some plastering to the front wall in the basement.  It was possible that some additional air conditioning units had been provided, although it appeared that most had been in place before April 2006.  The general internal surfaces, electrics, heating, lighting and general fittings, including the main accommodation staircase, had been completed by February 2005.  There was no evidence of the building control approval which would have been required for any further fire escape improvement works.  It was not clear whether any sanitary fittings had been replaced in the relevant period.  The sanitary ware in the building, however, was limited in quantity and basic in quality.  Assuming it had all been replaced, the cost based on prices at the antecedent valuation date (1 April 2003) would have been only in the region of £8,000, to include making good, decoration and a limited amount of tiling.

18. Mr Gott said that he had visited the Halifax office of the VOA on 18 March 2010 and examined a box of invoices which had been provided by Mr Townend.  His initial conclusion was that the invoices indicated that substantial works had taken place during the period stated in the proposal.  Approximately 200 invoices had been supplied.  Since he was looking for evidence of significant work he concentrated on bills for £1,000 and above, of which there were approximately 40.

19. Mr Gott said that he had decided to investigate further because most of the invoices did not state that they related to Millside House.  Furthermore, the works and/or materials referred to in many invoices did not obviously relate to office premises.  That was significant, because Mr Townend owned several other industrial and commercial properties in the area.

20. Mr Gott said that he had studied his office’s records relating to the appeal hereditament, and in particular notes made by referencing staff employed by the VOA following inspections made on 8 June 2000, and in January 2004 and February 2005.  He also had regard to the evidence of Mr Jones, various photographs of the property taken in June 2000 and February 2005, and the description of the property in paragraph 5 of the Lands Tribunal decision dated 3 May 2005.  On the basis of this evidence and his site inspection on 30 March 2010 Mr Gott concluded that there had been no significant change to the premises and that any required minor works of repair were deemed to have been carried out by the hypothetical landlord.  He referred in this regard to the definition of rateable value in Schedule 6 to the Local Government Finance Act 1988 as amended by the Rating (Valuation) Act 1999, which includes the assumption that immediately before the commencement of the hypothetical tenancy the hereditament is in a reasonable state of repair, excluding any repairs which a reasonable landlord would consider uneconomic.

21. Mr Gott also produced file notes prepared by Mr David Furniss, a VAO referencer, between 13 June and 11 July 2006.  These indicated that the intended building works had been put on hold owing to Mr Townend’s serious illness.

Conclusions

22. The VT concluded that Mr Townend had failed to discharge the onus of proving that the appeal hereditament was incapable of rateable occupation throughout the period in question.  A similar burden rests on Mr Townend in this Tribunal to prove that the VT’s decision was wrong.

23. In a letter to Mr Townend’s then solicitors dated 18 July 2011, the VO’s solicitor said this:

“… in order that the parties can agree the facts in the appeal as far as possible and assist the Tribunal by narrowing the issues to be considered at the hearing, I should be grateful if your client would consider providing in evidence copies of the following documents:

·                 Invoices for any building work carried out at the appeal property between 1 April 2006 and 31 December 2007 (Note that copies were not retained by the Valuation Officer following an initial review for the purposes of the Valuation Tribunal appeal)

·                  Any contracts detailing the cost and timing of such works

·                 Any itemised schedule of works provided by the contractor(s), ideally indicating the start and completion dates

·                  Any building certificates or planning documents in relation to such works

·                  Any contemporaneous photographic evidence

·                 Evidence of the value of the building immediately before the works were undertaken

·                  Evidence of the value of the building after the works were completed

·                 Any other supporting evidence in relation to the nature, timing and cost of the works described in the statement of case.”

24. Mr Townend did not provide a substantive response to that request prior to the hearing.  When the matter was raised in cross examination he made the following points.  He no longer had the box of invoices, which was being held by another branch of HMRC as part of an investigation into his tax affairs going back 20 years.  The invoices were addressed to Smithies Mill, which was where the building materials were to be delivered.  It was of no concern to the supplier to identify on the invoice the exact building in Smithies Mill where the materials were to be used.  He had not provided any contracts indicating the cost or timing of the works because he used cheap but good builders and did not become involved with paperwork.  No schedules of works had been prepared.  No building certificates or planning documents had been obtained because they were not required.  He had been physically incapable of taking photographs showing the progress of the work because of his illness.  There would have been no point in providing before and after valuations because the works had made no difference to the value of the property.  There was no other supporting evidence to be produced.

25. Apart from the absence of any documentation or photographs to support the appeal, Mr Townend’s evidence was in some respects inconsistent.  He asked that his statement of case dated 24 November 2010 should stand as part of his evidence in chief.  Para 7 of that statement read as follows:

“It is true that Millside House had already been previously used as offices but, prior to the works which are the subject of this appeal, such conversion as had taken place had been fairly basic and particularly had one major deficiency which was the absence of a high quality internal fire escape which had to be built within the three-storey building from roof to basement.”

In the course of cross-examination, on the other hand, Mr Townend said that the defects to the original fire escape had been confined to the top section only, the section between basement and ground floor being made of concrete and in sound condition.

26. At the hearing before me Mr Townend said that his personal assistant, Mrs Smith, had overseen the building works in his absence due to ill health.  Mr Furniss’s case notes, however, stated that, on 14 June 2006

“Changes are all proposed.  No work undertaken as yet.  All put on hold due to ill health of owner, Mr Townend”

and on 11 July 2006

“Rang Mrs Smith.  Mr T just come home but still very ill.  No progress yet.  I asked if she would contact me as and when any changes (didn’t want to keep pestering her under circumstances).  She will.  No action.”

27. When it was put to Mr Townend that these contemporaneous notes were inconsistent with his evidence that Mrs Smith had carried on with the works, Mr Townend replied that he could not speak for Mrs Smith.  Asked to explain the change in his evidence regarding the extent of the fire escape staircase which had required strengthening, he replied that the events in question had taken place quite a few years ago and he had lost a lot of memory since then because of his illness.

28. That final answer was significant, given that the appeal is in effect supported only by Mr Townend’s recollection of events in 2006 and 2007.  In the light of the evidence and my site inspection I think it is quite possible that strengthening works were carried out to part of the fire escape staircase and that some, if not all, of the remaining works which Mr Townend described were also undertaken.  There is, however, no cogent evidence to show the precise dates of such works, or whether they interfered with the use of the building to such an extent that it became incapable of occupation and the absence of such evidence is fatal to the appeal.  There is therefore no need for me to consider whether such defects as existed in the appeal hereditament are deemed to have been remedied by the hypothetical landlord.  I should add that I accept Mr Gott’s evidence that the increase in the assessment of the appeal hereditament in the 2010 list was based purely on the available rental evidence of office premises and did not reflect any change in the specification of the building.

29. The appeal is dismissed.  A letter concerning costs accompanies this decision, which will become final when the question of costs is determined.

 

Dated  25 July 2012

 

 

N J Rose FRICS

 

 

Addendum

30.        I have received written submissions on costs from the Respondent only.

31.        The Respondent has decided not to seek any order for costs although he is the successful party.  This decision was reached in consideration of the Appellant’s particular circumstances, notably his health and financial problems.

32.        Accordingly I make no order as to costs.

 

 

Dated 14 August 2012

 

 

N J Rose FRICS