United Kingdom Upper Tribunal (Lands Chamber)
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Cite as: [2014] UKUT 183 (LC)
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2014] UKUT 0183 (LC)
UTLC Case Number: RA/1/2009
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
RATING – valuation – alteration of list – whether appeal settled by agreement – whether appeal withdrawn – whether procedural fairness or avoidance of abuse of process require that appeal be revived – valuation of corridors – office values – addition for air conditioning – valuation of car parking spaces – end allowance – rateable value determined at £6.45m – appeal allowed in part
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE CENTRAL LONDON VALUATION TRIBUNAL
BETWEEN
THE COMMISSIONER OF THE POLICE OF THE METROPOLIS Appellant
and
PETER ROBIN WOOLWAY (VALUATION OFFICER) Respondent
Re: New Scotland Yard,
10 Broadway,
London,
SW1H 0BQ
Before: Martin Rodger QC, Deputy President and A J Trott FRICS
Sitting at: 45 Bedford Square,
London,
WC1B 3AS
On 27 and 28 January 2014
Melanie McIntosh, instructed by Wilks Head & Eve, Chartered Surveyors, for the Appellant
Galina Ward, instructed by Solicitor’s Office, HM Revenue & Customs, for the Respondent
No cases are referred to in this decision. The following cases were referred to in argument:
National Car Parks Ltd v Baird (VO) and another [2004] EWCA Civ 967
Robinson Brothers (Brewers) Ltd v Houghton and Chester-Le-Street Assessment Committee [1937] 2 All ER 298
Tower Hamlets London Borough Council v St Katherine by the Tower Ltd [1982] RA 261
Regent Lion Properties Ltd v Westminster City Council [1990] RA 121
DECISION
Introduction
1. New Scotland Yard at 10 Broadway, London SW1 was first occupied as the headquarters of the Metropolitan Police shortly after its construction in 1964. For the last 13 years the Commissioner of the Police of the Metropolis (“the Commissioner”) has been in dispute with the Valuation Office Agency (“the VOA”) over the building’s rateable value in the 2000 local non-domestic rating list. This appeal by the Commissioner is against two decisions of the Central London Valuation Tribunal (“the Valuation Tribunal”) made on 20 March 2008 and 9 January 2009, the combined effect of which was to confirm the Valuation Officer’s original decision ascribing New Scotland Yard a rateable value of £6,754,000 in the compiled 2000 rating list.
The issues
2. Most of the issues between the parties concern matters of valuation, but a number of legal issues also arise. The following brief procedural history should be sufficient to enable those legal issues to be understood.
3. Two proposals were made on behalf of the Commissioner challenging the rateable value of £6,754,000 attributed to New Scotland Yard in the 2000 list. The first of these proposals was served by the Commissioner’s agents, Wilks Head & Eve, on 26 September 2000 and sought a reduction in rateable value to £1 with effect from 1 April 2000. The Commissioner’s case is that a subsequent appeal in relation to that proposal was settled by an oral agreement concluded in January 2002 at a rateable value of £5,400,000 following discussions between the VOA case officer and the Commissioner’s agent. The VO’s case is that while an oral agreement was reached at the suggested value, that agreement was not “signified in writing” as required by regulation 11 of the Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993, and was not ratified by the VO. The appeal itself was subsequently withdrawn by the Commissioner’s agent signing a withdrawal form (mistakenly says the Commissioner) on 9 May 2003. In its preliminary decision on 20 March 2008 the Valuation Tribunal found in favour of the VO that the appeal had not been settled, but had been withdrawn.
4. A second proposal was made on behalf of the Commissioner on 24 March 2005 again seeking a reduction to £1 with effect from 1 April 2000. It is common ground that the effective date for the second proposal is 1 April 2004. The second proposal was not accepted by the VO and was referred by way of appeal to the Valuation Tribunal which rejected the appeal by its decision of 9 January 2009.
5. The parties formulated three legal issues for the Tribunal’s consideration, which we express in our own words as follows:
(1) Was the Appeal against the first proposal settled at a revised rateable value of £5,400,000?
(2) What was the effect of the submission to the Valuation Tribunal of a form, signed by both parties, purporting to withdraw the appeal against the first proposal?
(3) If the appeal against the first proposal was withdrawn, should that appeal nonetheless have been considered by the Valuation Tribunal because of some procedural unfairness or abuse of process by the VOA?
6. The valuation issues between the parties are the same in relation to both proposals and can be summarised as:
(1) The proper approach to the valuation of the corridors in New Scotland Yard;
(2) The appropriate rate per m2 to be derived from the agreed comparables;
(3) The appropriate addition to be made for the presence of air-conditioning;
(4) The value of the car parking spaces; and
(5) Whether end allowances are required to reflect the size and shape of New Scotland Yard.
7. The Commissioner was represented before the Tribunal by Ms Melanie McIntosh of counsel, who called two expert witnesses, Mr Andrew Williams MRICS FIRRV of Wilks Head & Eve and Mr Simon Worthy MRICS senior partner of Synergy Construction and Property Consultants LLP. The Valuation Officer, Mr Peter Woolway FRICS, was represented by Ms Galina Ward of counsel, who called the VO himself and two additional expert witnesses, Mr Nimal Rajapakse CEng, MCIBSE and Mr Adrian Jones MRICS, both of the VOA.
The legal issues
8. Although the Valuation Tribunal had considered the effect of the oral agreement and the withdrawal of the appeal against the Commissioner’s first proposal as preliminary issues, neither party suggested that the Tribunal hold a separate hearing on those matters. Nonetheless it is convenient to deal with them at this stage, before passing on to consider the issues of valuation which arise.
The facts relevant to the legal issues
9. The parties helpfully agreed a statement of facts. We were also shown certain documents and received evidence from Mr Williams and Mr Woolway, none of which was significantly contentious. From that material we base our consideration of the legal issues on the following facts.
10. Before the 2000 rating list was compiled the occupation of New Scotland Yard was treated as occupation by the Crown and, on that account, as not being liable to rates in the normal way. A contribution in lieu of rates was nonetheless made to Westminster City Council based on an assessment by the Treasury Valuer of the rental value of the occupied space in the building.
11. From 1 April 2000 responsibility for bringing hereditaments occupied by the Crown into assessment passed to the VO who took charge of the files formerly held by the Treasury Valuer. The information contained in the file relating to New Scotland Yard was based on an inspection carried out in 1993 by the Treasury Valuer and the assessment of £6,754,000 entered in the compiled list with effect from 1 April 2000 was based on that information. New Scotland Yard was first inspected by VOA staff on 22 August 2006.
12. The first proposal against the compiled list entry in the 2000 rating list was submitted by Wilks Head & Eve on behalf of the Commissioner on 26 September 2000. It was not accepted by the VO as well founded, and so was transmitted as an appeal to the Valuation Tribunal on 12 December 2000. It was allocated by the VOA to a programme of similar rating appeals and a target date of 11 January 2002 for the conclusion of discussions was given to it.
13. The appeal was listed to be heard on 25 January 2002. On 21 January 2002 a meeting took place between the VOA case officer, Mr Stephen Martin, and Mr Simon Layfield of Wilks Head & Eve, acting on behalf of the Commissioner. It is common ground that an oral agreement of that rateable value was achieved at that meeting. Neither Mr Martin nor Mr Layfield gave evidence to the Tribunal but we were shown a letter dated 31 January 2002 in which Mr Layfield, the partner at Wilks Head & Eve supervising the file, reported to the Property Services Department of the Metropolitan Police Service that “the appeals were successful” and that an “end settlement” of the rateable value in the sum of £5,400,000 had been negotiated with effect from 1 April 2000.
14. On 22 January 2002 at 10.25 am Mr Martin faxed a document bearing the words “Agreement of Rating Appeal” to Mr Layfield. At 4.56 pm on the same day Mr Layfield returned it to Mr Martin by fax, signed by him on behalf of his firm as the makers of the proposal.
15. The document signed and returned by Mr Layfield comprised a single page which commenced with details of the sender and recipient and with the following message:
“Further to our recent discussion below is an Agreement for your signature. Please sign where indicated and return to me as soon as possible. The agreement will not take effect until the form is signed by all relevant parties. I, as Valuation Officer, will be the last to sign it.”
The document then went on in what was obviously a standard form to give Mr Martin’s name as Valuer and the date of the forthcoming appeal to the Valuation Tribunal before stating: “this is an agreement to alter the rating list in respect of the following appeal made by Wilks Head & Eve” and giving the appeal reference. It went on:
“The parties whose signatures appear on this document agree that the Rating List shall be altered by amending the entry to that shown below.”
The amendment shown below described New Scotland Yard as “Office & Premises” having a rateable value of £5,400,000 with an effective date of 1 April 2000. The document concluded with spaces for up to seven signatures including those of the maker of the proposal and of the Valuation Officer.
16. We were shown copies of the original fax from the files of Wilks Head & Eve, and of the returned fax from the files of the VOA. Both are signed by the Commissioner’s agents but neither is signed by Mr Martin or any other Valuation Officer.
17. The appeal in relation to the first proposal had been listed to be heard with a number of other appeals, but it did not proceed on 25 January 2002. In a letter dated 7 December 2005 from the clerk to the Valuation Tribunal, Mr Shaw, to Wilks Head & Eve, it was explained that the hearing on that day had been cancelled “as all appeals were either settled or postponed, your appeal being advised as agreed”.
18. The VOA’s practice in relation to listed appeals before the Valuation Tribunal was the subject of evidence from both Mr Williams and Mr Woolway. Mr Williams had formerly been employed by the VOA and in his experience the valuer responsible for all the appeals listed to be heard on a particular day would generally telephone the clerk to the Valuation Tribunal a few days in advance of the hearing to report on cases in which agreements had been reached or appeals had been withdrawn. He understood that a copy of the agenda for the hearing (which could include up to 150 appeals) would also be sent by the Principal Valuer to the clerk.
19. Mr Woolway confirmed that there were standard case management arrangements in place at the relevant time which involved the VOA informing the clerk to the Valuation Tribunal of the status of appeals listed to be heard on a particular day. A status report was prepared identifying each appeal and recording the state of negotiations. There were 6 possible entries which could be made against each appeal: the letter “A” signified that an appeal had been fully agreed and documented in a form signed by all relevant parties; the letter “AF” signified an appeal on which agreement had been reached but which had not been documented and where signature of an agreement form was awaited; other entries signified an unconditional withdrawal confirmed in writing, a verbal indication that an appeal would be withdrawn but which had not yet been confirmed, an appeal which was to be postponed and, finally, an entry indicating that none of the alternative disposals had been achieved and that the appeal would need to be heard.
20. Neither Mr Woolway nor Mr Williams had seen a status report in relation to the appeals listed for hearing on 25 January 2002, and (on the reasonable assumption that such a document had come into existence) neither of them knew what it would have said. Mr Woolway thought that the most that it could have indicated was an “AF” listing, as although an oral agreement had been reached that agreement had not been documented.
21. The only other contemporaneous document which we were shown was an e-mail on the morning of 31 January 2002 from Mr Martin to Mr Layfield. This suggested second thoughts by the VO after the hearing date had passed. It referred to “our recent discussion” and went on:
“Phil Manning has suggested that I have a quick look at the premises before I process the appeal as no one from this office has ever been in the building. Can you or Chris arrange to take me around. I don’t need to see everywhere only a typical floor to say I have been in the building.”
22. There is no record of any reply to that e-mail or of any inspection having been undertaken at that time. No steps were taken by the VOA to alter the Rating List and the fax of 22 January 2002 recording the agreement of the appeal was never signed by a Valuation Officer.
23. On 31 March 2002 the VOA received four further identical proposals for the alteration of the New Scotland Yard entry in the rating list, each citing a material change of circumstances said to have occurred on 11 September 2001 as a result of the attack on the World Trade Centre in New York. Those appeals (which were similar to many made at that time) were transmitted to the Valuation Tribunal on 20 June 2002 and were heard and summarily dismissed on 25 September 2003, no appearance having been entered on behalf of the Commissioner.
24. On 9 May 2003 Mr Williams met Mr Manning of the VOA to discuss a number of outstanding appeals. Mr Williams had no very clear recollection of the subject of those discussions although he recalled that Mr Manning had produced a list of duplicate appeals and that he had agreed that he would withdraw them. Mr Manning subsequently sent Mr Williams a pro forma withdrawal form for each of the appeals which Mr Williams duly signed. One of those forms, which is dated 9 May 2003, related to the first proposal made on behalf of the Commissioner on 26 September 2000. The form was headed “withdrawal of 2000 rating proposal/appeal” and identified New Scotland Yard by its name and a reference number and the proposal by its original date. The substance of the form was the statement:
“The persons whose signatures are shown below agree that the proposal/appeal made on 26th September 2000 shall be withdrawn.”
Mr Williams signed and returned the form and it was countersigned by Mr Manning on 13 June 2003.
25. In his witness statement Mr Williams said that he was not then responsible for New Scotland Yard matters and that he had been unaware that the form he signed in May or June 2003 related to the appeal in relation to the first proposal; he described his signature as “mistaken”. In his oral evidence in chief Mr Williams said that when he signed the withdrawal of the appeal relating to the first proposal he had known that his colleague Mr Layfield had reached agreement on that proposal in 2002, and that he had assumed that there had been a duplicate of that proposal and that it was that duplicate which he was withdrawing. That evidence, which was given entirely honestly, struck us as Mr Williams doing his best to reconstruct what he must have been thinking when he signed the withdrawal. He also said that he had no recollection of signing the document, which we accept, and we therefore make no finding about Mr Williams’s intention or state of mind when he signed the form. We do accept, however, that whatever he thought he was doing, Mr Williams did not appreciate that he was withdrawing the only outstanding appeal in relation to the first proposal on which an oral agreement had yet to be finally signed off by the VOA.
26. Wilks Head & Eve subsequently made a formal complaint against the VOA’s handling of the first proposal. That complaint was pursued through several levels and was eventually the subject of a report by Dame Barbara Mills QC as Adjudicator. In her report the Adjudicator found that there had been serious mistakes by the VOA which had led to an incorrect offer being made by Mr Martin, and agreed that it had been appropriate for the VOA to apologise for the offer having been made at all, as it had done. The Adjudicator nonetheless dismissed the complaint.
27. We are not concerned with the Adjudicator’s investigation or its conclusions, but we note that in her report delivered on 17 March 2009 the Adjudicator referred to the fact that the VOA’s records show that on 12 September 2002 the appeal against the first proposal was “re-allocated” and that on 14 October 2002 it was included in a new programme of work with a new target date for the conclusion of negotiations of 9 May 2002. That action (the Adjudicator reported) “would have resulted in the issuing of a letter on 14 October 2002”. Mr Woolway explained that such letters were generated automatically and no copy was retained on the VOA’s file. No copy of such a letter has been produced to us, and Mr Williams said that he was not aware of one having been received, although as he was not the member of staff dealing with New Scotland Yard he would not expect to have seen it at the time.
28. The Commissioner’s staff did not become aware that the agreement about which they had been informed in January 2002 was in doubt until early in 2005 when they asked for an explanation why no rebates had been received. Enquiries by Wilks Head & Eve disclosed that the rating list had not in fact been amended and that the VOA’s position was that no agreement had ever been formalised. As a result on 24 March 2005 a further proposal was made by Wilks Head & Eve on behalf of the Commissioner. The resulting appeal was originally listed for hearing on 11 October 2006 but was postponed before eventually being heard and dismissed by the Valuation Tribunal in its decision of 9 January 2009 which gives rise to this appeal.
Agreement and withdrawal of proposals and appeals – the regulations
29. At the time with which this appeal is concerned the procedural rules governing proposals to alter non-domestic rating lists were the Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993 (“the 1993 Regulations”).
30. Provision for the withdrawal of proposals was made by regulation 10(1) which, so far as material, provided simply that: “The proposer may … withdraw the proposal by notice in writing served on the valuation officer”.
31. Regulation 11(1) of the 1993 Regulations concerned alterations by agreement following the making of a proposal, and provided as follows:
“(1) Where, following the making of the proposal all the persons mentioned in paragraph (2) agree on an alteration of the list in accordance with this Part in terms other than those contained in the proposal, and that agreement is signified in writing –
(a) subject to paragraph (4), the valuation officer shall, not later than the expiry of the period of two weeks beginning on the day on which the agreement was made, alter the list to give effect to the agreement; and
(b) the proposal shall be treated as having been withdrawn.”
The persons mentioned in paragraph 2 of regulation 11 whose agreement to an alteration is required include the maker of the proposal and the VO.
32. Where there was disagreement over the contents of a proposal the VO was responsible at the relevant time for its onward transmission to the Valuation Tribunal under regulation 12 which provided as follows:
“(1) Where the valuation officer is not of the opinion that a proposal is well-founded, and
(a) The proposal is not withdrawn, and
(b) There is no agreement as provided in regulation 11, the disagreement shall no later than the expiry of the period of six months beginning on the day on which the proposal was served on him, be referred by the valuation officer, as an appeal by the proposer against his refusal to alter the list, to the relevant tribunal.”
33. The withdrawal of appeals is the subject of regulation 34 of the 1993 Regulations, which provided:
“(1) Without prejudice to regulation 7(2) and subject to paragraph (2) below, an appeal may be withdrawn before the commencement of a hearing or of consideration of written representations, where notice to that effect is given to the clerk –
(a) in the case of an appeal against a completion notice, by the appellant in writing, and
(b) in any other case, but subject to paragraph (2), by the valuation officer.
(2) Subject to paragraphs (4) and (5), notice may not be given by a valuation officer under paragraph (1) unless every other party to the appeal has given written consent to him for the withdrawal of the appeal.
(3) The clerk shall notify the appellant when he has received the notice of withdrawal under paragraph (1)(a), and shall serve a copy of his notice of receipt on all the other parties to the appeal.
(4) Where, after the referral of an appeal under regulation 12 … there is an agreement under regulation 11 or 27, the valuation officer … shall notify the clerk accordingly, and the appeal shall be deemed to have been withdrawn.”
34. Reference was also made in the course of argument to a power which did not become available until after the decision of the Valuation Tribunal against which this appeal is brought. Local valuation tribunals were replaced on 1 October 2009 by the Valuation Tribunal for England (the “VTE”) and transitional provisions were made in the Valuation Tribunal for England (Membership and Transitional Provisions) Regulations 2009, regulation 6(4) to (5) of which provide as follows:
“(4) Paragraph (5) applies where –
(a) before 1 October 2009 a person has withdrawn an appeal made in relation to a matter as regards which jurisdiction is transferred to the VTE on 1 October 2009; and
(b) on or after that date the person notifies the President in writing that the withdrawal was made in error or under duress and that the person wishes to revive the appeal.
(5) Where this paragraph applies, the President, having made such enquiries as the President thinks fit, may notify in writing the person by whom the notice under paragraph (4)(b) was given that the President consents to the appeal being revived.”
Legal issue 1: was the appeal against the first proposal settled at a revised rateable value of £5,400,000?
35. Ms McIntosh submitted on behalf of the Commissioner that Mr Martin and Mr Layfield had reached agreement at the meeting on 21 January 2002 that the entry for New Scotland Yard in the 2000 rating list should be altered to a rateable value of £5,400,000. That agreement was reflected in the fax from Mr Martin on 22 January 2002 which Mr Layfield had signed and returned. Although regulation 11(1) of the 1993 Regulations required that an agreement must be “signified in writing” it did not require that the agreement itself be in writing, nor that any particular form of words be used, nor even that the writing be signed. The document headed Agreement of Rating Appeal prepared by Mr Martin was sufficient to satisfy the requirement of signification in writing even before it was sent by fax of 22 January 2002, and certainly once it was received and before it was signed and returned. The absence of a signature on the part of any VO was immaterial.
36. Ms Ward responded by accepting that agreement had been reached on 21 January 2002, but pointed out that the only document relied on as “signifying” that agreement had quite the opposite effect and signified an absence of agreement by stating in clear terms that the agreement would not take effect until the form was signed by all relevant parties. As the form had never been signed by the Valuation Officer it could not be taken to signify agreement. There might be interesting arguments about whether a signature was necessary on an otherwise unqualified written record of agreement, such as a note of a meeting, or a status report recording an appeal as having been withdrawn following agreement, but those need not be considered in this case as the only document relied on by the Commissioner was clearly insufficient.
37. We are satisfied that the Valuation Tribunal was right to accept the VO’s case on this issue, for the reasons which we now explain.
38. Regulation 11(1) of the 1993 Regulations was a procedural provision which had effect in accordance with its terms. If the requirements of the regulation were complied with two consequences would follow: the VO came under an obligation to alter the list to give effect to the agreement, and the proposal was “treated as having been withdrawn”. No further step was required by either party for that consequence to accrue.
39. Where an appeal had already been referred to the Valuation Tribunal under regulation 12 and an agreement was then reached under regulation 11, the VO was additionally required to notify the clerk under regulation 34(4) and the appeal was deemed to have been withdrawn. Whether or not the VO altered the list or informed the clerk, the effect of an agreement to alter the list in terms other than those contained in the proposal was the same, namely that the proposal was treated as having been withdrawn under regulation 11(1) and the appeal was deemed to have been withdrawn under regulation 34(4).
40. If the requirements of regulation 11(1) were not met the proposal remained extant, as did any appeal. An oral agreement could not mature into an agreement with the consequences provided for by regulation 11(1) and 34(4) unless and until it was signified in writing. No misunderstanding or mistaken belief on the part of the representatives of one or both of the parties as to the significance of an oral or otherwise inchoate agreement could make any difference to the operation of the regulation.
41. The purpose of these provisions was clearly the promotion of certainty and the avoidance of disputes over whether a proposal or a subsequent appeal had or had not been resolved by agreement.
42. As it is accepted by the VO that the parties did reach an agreement on an alteration of the list in terms which were not those contained in the Commissioner’s proposal of 26 September 2000, the only question is whether that agreement was “signified in writing”. As Ms Ward pointed out, the only writing relied on is the document of 22 January 2002.
43. As an oral agreement had no effect unless and until it was signified in writing it was clearly open to both parties to withdraw their agreement to the alteration in the list which had been discussed and agreed on 21 January 2002 or to seek to renegotiate or attach conditions to it at any time before the necessary writing came into existence. One might assume that both parties would have negotiated with knowledge of the effect of regulation 11(1) and to have understood that writing was essential for the existence of an operative agreement. Nonetheless, for the reasons we have given, whether or not they understood that their oral agreement was not sufficient to dispose of the proposal and of the appeal is irrelevant to the operation of regulation 11(1).
44. We are also satisfied that the fax of 22 January 2002 did not signify or record the existence of the oral agreement which had been reached the previous day; on the contrary, the document reflected an absence of agreement and introduced a condition which prevented agreement from being achieved until the condition was satisfied. The fax made the achievement of an agreement conditional on the signature of both parties to the document. By stipulating that the agreement “will not take effect until the form is signed by all relevant parties” and in particular by specifying that the last person to sign would be the VO, the fax made it clear that whatever had been said the previous day, agreement had not yet been reached and would not be reached and signified until the signature conditions had been fulfilled. As no VO counter-signed the fax the final condition was never satisfied and an operative agreement for the purpose of regulation 11(1) was never achieved.
45. We are therefore satisfied that the Valuation Tribunal was correct to decide that the appeal against the first proposal had not been settled by agreement.
Legal issue 2: what was the effect of the submission to the Valuation Tribunal of a form, signed by both parties, withdrawing the appeal against the first proposal?
46. Ms McIntosh suggested that Mr Williams was mistaken when he signed the notice of withdrawal of the first proposal and of the outstanding appeal on or shortly after 9 May 2003 and that as a result the withdrawal was not valid, but she offered no analysis or explanation why Mr Williams’s subjective understanding of the effect of the notice of withdrawal was relevant to its formal validity. She advanced no suggestion that Mr Manning or any other officer of the VOA had acted dishonestly or in bad faith or in any way designed deliberately to induce a mistake on the part of Mr Williams.
47. We are satisfied that, whatever Mr Williams thought he was doing, the document he signed unequivocally consented to the withdrawal of the outstanding appeal against the first proposal. Having received the consent of the only other party to the appeal, as required by regulation 34(2), Mr Manning was entitled to countersign it and submit it to the clerk to the Valuation Tribunal as required by regulation 34(1)(b). The appeal against the first proposal was therefore disposed of by withdrawal, and the fact that Mr Williams did not appreciate that that was the consequence of his actions is of no relevance to their validity.
Legal issue 3: the appeal against the first proposal having been withdrawn, should it nonetheless have been considered by the Valuation Tribunal because of some procedural unfairness or abuse of process by the VOA?
48. This aspect of the appeal was not significantly developed by Ms McIntosh in submissions beyond the bare assertion that there had been procedural unfairness or abuse of process by the VO. It was suggested there was a failure by the respondent to comply with regulation 12 of the 1993 regulations within the prescribed time limits.
49. The abuse or unfairness alleged against the VOA is that after it resiled from the oral agreement reached on 12 January 2002, its officers did nothing either to alert Wilks Head & Eve of their change of mind or to re-instate the appeal within a reasonable time. These omissions were said to have had the result that the Commissioner was “precluded” from the appeal process and would be denied the benefit of an alteration in the 2000 list with effect from 1 April 2000 in the event of the original appeal succeeding, rather than taking effect from the much later date which could be achieved from the further proposal of 24 March 2005.
50. The Tribunal was also asked to consider the issue of procedural unfairness in the light of regulation 6 of the 2009 Transitional Regulations which came into force on 30 September 2009, after the Valuation Tribunal had made its decision. It was said that if the matter had come before the VTE now, the Commissioner would have had the opportunity to apply to have the withdrawn appeal reinstated. Ms McIntosh submitted that as a matter of natural justice and procedural fairness, the Commissioner should have the opportunity to have the appeal in respect of the first proposal re-instated and determined.
51. It was not suggested by Ms McIntosh that the VO could be held to the original oral agreement to alter the 2000 list to show a rateable value of £5,400,000. For the reasons we have already given we agree. The purpose of the allegation of unfairness was to secure the revival of the original appeal so that any benefit which was derived from a substantive challenge to the rateable value shown in the 2000 list could take effect from an earlier date than would be the case if only the March 2005 proposal was adjudicated on.
52. Ms McIntosh provided us with no explanation or analysis of the route by which an allegation of procedural unfairness or abuse of process in connection with a withdrawn appeal could result in an order for the appeal to be reinstated. It is not necessary for us to undertake an analysis of our own because we are satisfied that nothing in the VOA’s conduct in connection with the original proposal justifies the suggestion that the Commissioner has been treated unfairly. No allegation of bad faith or misconduct is made against any of the VOA’s staff, nor is it suggested that the VO was bound by the oral agreement. Given those two concessions we see no basis on which the operation of the 1993 Regulations could be interfered with.
53. Mr Layfield could not have been misled by anything done by Mr Martin. We have not had the benefit of evidence from Mr Layfield but it is clear from the letter he wrote to his client on 31 January 2002 that he considered that the appeal had been concluded. Nonetheless, Mr Layfield knew that the agreement he had reached was dependent on the signature of the VO because the document he had signed and returned on 22 January made that clear. Assuming he read the e-mail sent to him by Mr Martin on 31 January (and there is no reason to assume that he did not) he also knew that the appeal had not been “processed” by Mr Martin because he had been told by Mr Manning that an inspection was first required. That would have made it clear to Mr Layfield that the matter was not finally resolved, but even if Mr Layfield did not receive the e-mail (as Ms McIntosh suggested may have been the case) he would have known that he had never seen a copy of the agreement signed by the VO. Any assumption he made that the appeal was at an end was no more than an assumption, and we do not think it is appropriate to attribute blame to Mr Martin for allowing that assumption to be created. Mr Martin had made the position clear in his original fax and the subsequent e-mail (whether received by Mr Layfield or not).
54. We entirely acquit Mr Martin of any failure to comply with regulation 12 of the 1993 Regulations. The only step required by regulation 12(1) in the event that the VO was not of the opinion that a proposal was well founded had already been taken when the appeal was referred to the Valuation Tribunal on 26 September 2000. The suggestion that the appeal should have been re-referred contemplates a procedure for which the1993 Regulations made no provision. The appeal remained outstanding even after the hearing due to take place on 25 January 2002 had been cancelled; it had neither been withdrawn by notice under regulation 34(1) nor was it deemed to have been withdrawn under regulation 34(4) because no agreement signified in writing and satisfying regulation 11 had been concluded.
55. We have set out the relevant parts of regulation 6 of the 2009 Transitional Regulations at paragraph 34 above, but these were not in force at the time the Valuation Tribunal made its decision. The position under the current procedures of the VTE is governed by regulation 19(3) of the Valuation Tribunal for England (Council Tax and Rating Appeals)(Procedure) Regulations 2009, which provides that a party which has withdrawn its appeal may apply to the VTE for the appeal to be reinstated.
56. Neither the transitional entitlement to apply to the President of the VTE in the case of appeals withdrawn before 1 October 2009, nor the current power to apply to the VTE to request that an appeal be reinstated, was available to the Commissioner at the time the Valuation Tribunal made its original decision on the preliminary legal issues on 20 March 2008 or when it made its final decision on 9 January 2009. Ms McIntosh confirmed that no application had ever been made to have the appeal against the first proposal reinstated. In those circumstances we do not see how any unfairness can be said to have been caused to the Commissioner by his inability to seek reinstatement (for which the VOA was not responsible).
57. We are satisfied that the only prejudice caused to the Commissioner in this case derives entirely from the voluntary act of his own agent in withdrawing the appeal against the original proposal, and we dismiss the suggestion that that appeal should be treated as being before us by reason of procedural unfairness or abuse of process.
58. Whether the three legal issues we have so far considered are of any practical significance depends of course on the substantive question whether the rateable value for New Scotland Yard of £6,754,000 shown in the compiled 2000 rating list is inaccurate. That question raises the issues of valuation, to which we now turn.
The valuation issues
The facts about the hereditament
59. The parties agreed the description of the hereditament.
60. New Scotland Yard is situated on a triangular island site between Victoria Street, Broadway, Dacre Street and Dean Farrer Street in the Victoria district of London. It was constructed in the 1960s to form three interlinked office structures with a main entrance on Broadway. It is approximately 450m west of the Houses of Parliament. The hereditament comprises mainly office accommodation with associated plant rooms at basement and roof level. There is covered car parking in the basement and a limited amount of surface level car parking.
61 New Scotland Yard comprises two main office buildings connected by a link building. The three buildings are of framed construction with concrete floors, plastered walls, suspended ceilings and fixed glazed windows. There are toilets on each floor and lifts serving all floors.
62. The tallest building ("the tower") has offices on the ground to nineteenth floors and air conditioning plant, boiler rooms, chillers and water tanks for the whole hereditament located on the twentieth floor. The tower fronts onto Broadway.
63. The Victoria wing is on ground to eighth floors and fronts onto Victoria Street. The tower and the Victoria wing are linked by an office building on ground to fifth floors. Part of the ground floor is let separately to HSBC Bank and does not form part of the New Scotland Yard hereditament.
64. The parties agreed that the total net internal area ("NIA") of the three buildings, including corridors, was 34,589.8 m2. The corridors accounted for 5,603.2 m2 (16.2%) of this area.
65. The corridors are formed from non-load bearing walls and do not have raised floors. Of the partitioned offices, 8,993.3 m2 (31%) have raised floors. There are no raised floors in the link building.
66. The appeal hereditament was built with an induction comfort cooling air-conditioning system. Heated or cooled primary air is delivered at high velocity from air handling units to induction units in each room. In cooling mode the room’s secondary air is induced across the local cooler to provide further cooling to suit the room load. In heating mode the induction unit is only able to control the supply air volume. There are 2,800 such induction units in the appeal hereditament.
67. There is no zonal adjustment of the outlet temperature of the heated tempered air and the low occupancy rooms dictate the supplied temperature in heating mode which sometimes makes high occupancy rooms uncomfortably hot. The opposite is true of the cooling mode where high occupancy rooms dictate the supply temperature.
68. Although the induction units have been upgraded and the chillers and main fans were replaced in 1985, the overall design of the system is essentially unchanged since its installation in 1965. The system is unable to maintain an acceptable level of cooling during periods of peak summer temperatures in areas with high solar gain or high occupancy. The corridors are heated and cooled via passive air from the cellular offices.
69. The parties agreed that compared to a modern system available at the antecedent valuation date the system in the appeal hereditament has the following characteristics:
· Lack of return air heat recovery.
· No isolation of areas in low-occupancy or use.
· Possible under capacity for a modern office use.
· Lack of humidification control.
· Inability to control the air volumes.
· Limited heating controls.
· No direct ventilation of corridors.
· Lack of controlled extract vents from offices.
70. There are 61 basement car parking spaces with clear headroom to the floor slab above. There are another 64 basement spaces which have headroom restricted to 2m because of pipes and ducting fixed to the ceiling. A further 21 basement spaces are "tandem" spaces, i.e. they can be blocked by cars parking in adjoining spaces. There are a total of 18 surface (uncovered) car parking spaces within a secure area to the north of the Victoria wing. There is therefore a total of 164 car parking spaces.
71. A lease dated 5 November 1965 was granted to the Receiver for the Metropolitan Police District for a term of 99 years from 5 February1966 at a rent of £570,000 per annum subject to a review in November 1986 and thereafter at 21 year intervals. Under the lease the Receiver agreed to pay a capital sum of £6m on 4 May 1966 (which we take to have been in consideration of fitting out work).
72. At the first review the rent was increased to £4,335,000 which was the product of multiplying an open market rental value by an appropriate fraction as prescribed in the lease.
73. In July 1984 the lease was varied to allow the granite clad external façade to be replaced by stainless steel cladding, an alteration which took place between 1984 and 1989. As varied, the lease provides that for rent review purposes it is to be assumed that the building is still granite clad.
74. The five valuation issues are summarised in paragraph 6 above and we consider each of them in turn. The appellant valued the appeal hereditament at £4,924,673 and the respondent at £6,810,000. The VT determined the rateable value in the sum of £6,754,000.
Valuation issue 1: the proper approach to the valuation of corridors
75. Mr Worthy and Mr Jones agreed a joint statement of facts which included agreement about the physical and functional characteristics of the corridors.
76. The corridors link the main core and the main escape routes from the buildings. The means of escape in case of fire was good with alternative escape routes from most areas. The partitions which create the corridors were generally of non-load bearing construction and spanned between the floor slab and the underside of a return air duct within the suspended ceiling or the downstand beam to the floor above. The framing to the partition system was covered with panels, a large number of which contained asbestos. The partitions had aluminium cover strips to the junctions between panels and had an overall thickness of 60mm.
77. The partitions were unlikely to contain any insulation and would provide a nominal fire resistance but they would not be classed as fire rated under the building regulations. The partitions could be easily dismantled provided there was compliance with health and safety guidelines. Some, but not all, doors within the main corridor partitions were fire resistant and some were fitted with self-closing springs.
78. The partitions that divided the individual offices were of a very similar construction but they did not extend to the underside of the structural soffit, there being a gap of around 100mm between the top of the partition and the concrete floor above.
79. For the appellant Mr Worthy said that the corridor partitions were not demountable and, in any event, they could not be re-used even in the absence of asbestos. He described the air conditioning in New Scotland Yard as comprising two different systems; one serving the offices to maintain a suitable environment for employees to work at their desk and the other, serving the corridors, to maintain a suitable environment for circulation but also in the event of a fire to create a safe haven for the evacuation of the building. Mr Worthy said that the corridors were fundamentally the same as when the building was first occupied and had been built in a fire rated product to eliminate the need for a very expensive smoke extractor system or sprinklers within the offices. If the corridor partition was removed to create an open plan office arrangement the two systems would be in conflict and it would no longer be possible to use the office system as a smoke extract system without substantial modifications. Without the partitions there would be minimal protection to life and to the building.
80. Mr Worthy said that as the corridor partitions formed the current means of escape they were of a "essential nature" since they were fire corridors/smoke lobbies and without them a significant amount of work would be required to make the space compliant with the principles of the building regulations.
81. Mr Williams referred to the RICS Code of Measuring Practice, Fourth Edition, which described how buildings should be measured. The core definition of NIA excluded, at paragraph 3.14:
"Corridors and other circulation areas, where used in common with other occupiers of a permanent essential nature (e.g. fire corridors, smoke lobbies etc)."
Mr Williams concluded that:
(i) the corridors formed fire corridors and smoke lobbies;
(ii) the partitions were not easily demountable; and
(iii) the air conditioning would have to be substantially altered for the corridors to be removed to allow an open plan office arrangement. He considered that such alteration would not conform to the rebus sic stantibus rule and he placed no value on the corridor space.
82. In cross-examination Mr Williams accepted the following propositions:
(i) that the RICS Code of measuring practice was a code of measurement and not of valuation method;
(ii) that the NIA of the appeal hereditament had been agreed and included the area of the corridors;
(iii) that the primary use of the corridors in the appeal hereditament was to provide access to cellular offices;
(iv) that because of their primary use the corridors added value (although Mr Williams said that he placed a higher value on the offices than the corridors); and
(v) that the comparables had been measured to include corridors.
83. For the respondent Mr Jones said that he had been asked to give his opinion on two matters. Firstly, the likely form of construction of the corridor partitions and secondly, whether the partitions could be easily removed. The form of corridor construction had been agreed with Mr Worthy as part of the statement of agreed facts. Mr Jones concluded that, apart from localised alterations, the removal of most of the corridor partitioning would involve a substantial refurbishment of each floor plate requiring controlled handling of the asbestos. Such major works would need building regulations approval and the local authority might require the provision of new fire safety and smoke control measures. Mr Jones said that he was not a costs expert but having recently consulted a quantity surveyor he accepted Mr Worthy's estimate of £20m and a two year programme to remove the corridors and convert the offices to an open plan layout.
84. Mr Woolway explained that it was no part of his case that the valuation of the appeal hereditament should assume an open plan office layout. He was obliged to value the hereditament rebus sic stantibus and this meant that it fell to be valued on the basis that the corridors remained.
85. When analysing the valuation comparables Mr Woolway said that he had included the corridors within the NIA measurements and had calculated the value per square metre by using the total NIA. That was, he said, generally accepted practice. He had done the same with the appeal hereditament because it was important to be consistent as between analysis and valuation. He knew of no other examples of Mr Williams' approach that included the corridors within the NIA but then attributed no value to them and applied the rate per square metre derived from the comparables to the NIA of the appeal property net of the corridor space. The corridors and their associated partitions were express requirements of the ratepayer who wanted cellular offices and the corridors added value.
Valuation issue 1: conclusion
86. It was no part of the respondent's case that the corridor partitions could or should be removed. As Mr Woolway said that would be contrary to the rebus sic stantibus principle. Consequently the evidence about whether the partitions were demountable and, if so, how easily and at what cost the offices could be turned into an open plan layout was largely redundant.
87. In our opinion this issue is simply dealt with. The parties agreed that the NIA of the appeal hereditament included the corridor space. That agreement having been reached it seems to us, as Ms Ward submitted, that the appellant is now trying to re-categorise such space as an area "of a permanent essential nature" and effectively to exclude it from the NIA by attributing no value to it. That is an unattractive argument and goes against Mr Williams' acceptance that the corridors add value. The comparables have been measured inclusive of corridor space and therefore the price per square metre which is derived from the analysis of their rents must be applied to the appeal hereditament on a like for like basis, namely by reference to the total NIA of New Scotland Yard, inclusive of corridor space.
Valuation issue 2: the appropriate rate per m2
Evidence
88. For the appellant Mr Williams took a rate of £190 per m2 for all the office space excluding the area of the corridors which he took at nil value. For the respondent, Mr Woolway took a figure of £210 per m2 for offices with raised floors and £205 per m2 for offices without raised floors (including the corridors).
89. The parties helpfully produced a schedule of agreed comparables. These were rating settlements rather than open market letting transactions. Of a total of nine comparables the parties agreed the basic rate before adjustments of only the following six:
(iv) Esso House, 96 Victoria Street: £190 per m2 (settled by agreement).
(v) Selbourne House, 54-60 Victoria Street: £190 per m2 (settled by agreement)
(vi) NIOC House, 4 Victoria Street: £224 per m2 (settled by agreement)
(vii) Albany House (part), 84-98 Petty France: £210 per m2 (appeal withdrawn)
(viii) 50 Queen Anne’s Gate: £200 per m2 (appeal withdrawn)
(ix) TfL Headquarters Building (part), 55 Broadway: £190 per m2 (appeal withdrawn).
90. The difference between the parties on the remaining three comparables was due in each case to the VOA not having recorded the presence of air conditioning in the buildings concerned. Consequently the appellant’s analysis which adjusted for air conditioning showed a lower basic rate:
(i) Monsanto House, 10-18 Victoria Street: appellant £190 per m2 (10% allowance for air conditioning); respondent £210 per m2 (appeal withdrawn)
(ii) City Hall, 65 Victoria Street: appellant £190 per m2 (5% allowance for air conditioning); respondent £200 per m2 (appeal withdrawn)
(iii) Kingsgate House, 66-74 Victoria Street: appellant £180 per m2 (5% allowance for air conditioning); respondent £190 per m2 (appeal withdrawn).
91. The experts also disagreed about which of the comparables had raised floors. Mr Williams said NIOC House, 50 Queen Anne’s Gate and Kingsgate House all had raised floors which Mr Woolway denied. Mr Woolway said that he had inspected NIOC House on several occasions but had seen no raised floors. He said that 50 Queen Anne’s Gate had floor channelling to receive cables but did not have raised floors. He said that the VOA’s records made no mention of raised floors at Kingsgate House. On the other hand, Mr Woolway said that raised floors had been installed at Albany House when refurbishment works were undertaken in the 1980s. Mr Williams said that Albany House was a 1960’s building without raised floors.
92. Mr Williams said that the raised floors in the appeal hereditament added no value because they were not properly used and the old perimeter wall trunking was still in place. The raised floors had reduced the room height and disabled access was prevented by the presence of significant steps between the floor of the corridors and the raised floors of the cellular offices. Mr Woolway said that there were raised floors in 26% of the floor area (30% of the office area) and that these added sufficient value to cause these improvements to be carried out. He only proposed a small allowance for the raised floors of £5 per m2 or 2.4%.
93. Mr Woolway said that there was a difference in basic value between the comparables to the west of Buckingham Gate (Kingsgate House, City Hall, Selbourne House, and Esso House) and the remaining comparables to the east which he said were in a better location and therefore more valuable.
Valuation issue 2: conclusion
94. In our opinion the best evidence of value in this case is obtained from agreed settlements rather than from withdrawn appeals. Mr Woolway accepted in answer to the Tribunal’s questions that greater weight should be given to settlements and, as he said, a settlement demonstrates what the two parties thought was an appropriate value for the comparable building. Only three of the nine comparables were settlements (Esso House, Selbourne House and NIOC House). It seems to us probable that the withdrawal of several of the appeals was due to the VOA’s failure to record the existence of air-conditioning. When such assessments were analysed by the ratepayers they showed a favourable basic rate that was relatively low (because they correctly made a reduction for the presence of their conditioning). When they were analysed by the VOA they showed a relatively high basic rate (because they made no such deduction). Had the VOA realised that the buildings had air conditioning they would have reflected this by adding an allowance to the basic rate. It is therefore unsurprising that the appeals were withdrawn without discussion. The effect of the VOA’s failure to record air-conditioning is to create a range of basic values for each of the three appeals where this occurred; the lower end being the ratepayers’ estimate and the higher end being that of the VOA.
95. Three of the comparables are more modern that the appeal hereditament. NIOC House was built in 1976, 50 Queen Anne’s Gate was built in 1977 and Albany House, originally built in the 1960s, was refurbished in part in the 1980s. In our opinion the relative modernity of these buildings is reflected in their basic value (£224, £200 and £210 per m2 respectively).
96. From the evidence we consider that Albany House, Monsanto House and Kingsgate House had raised floors.
97. We are not persuaded by Mr Woolway’s opinion that there is a distinction in values depending upon whether a comparable is located to the west or the east of Buckingham Gate. This seems to us to be an arbitrary distinction that is not supported by the evidence.
98. Of the three appeals that were settled by agreement, two involved 1960s buildings without raised floors (Esso House and Selbourne House). Both had a basic rate of £190 per m2. The third such appeal was NIOC House with a basic rate of £224 per m2 (no raised floor). But this was a more modern building.
99. We do not place weight on 55 Broadway which is a much older (1930s building). Albany House and Queen Anne’s Gate are more modern buildings and, in our opinion, carry less weight as comparables.
100. Monsanto House, City Hall and Kingsgate House are all a similar age to the appeal hereditament but carry less weight because of the lack of agreement about the presence of air-conditioning at the time the list was compiled. Monsanto House and Kingsgate House both had raised floors but, even accepting Mr Woolway’s analysis of their basic value (£210 and £190 per m2 respectively) only Monsanto House supports his figure for raised floor offices at the appeal hereditament. Nor does City Hall at £200 per m2 support his figure of £205 per m2 for offices without raised floors. In our opinion Albany House does not support a figure of £210 per m2 for the raised floors of the appeal hereditament because it is more modern accommodation.
101. In our opinion the evidence supports a figure of £195 per m2 for the value of offices without raised floors at the appeal hereditament. We agree with Mr Woolway that the raised floors add a small amount of value and we add 2.5% to give a rounded figure of £200 per m2.
Valuation issue 3: the appropriate addition for air-conditioning
102. For the appellant Mr Worthy said that the air-conditioning at the appeal hereditament was fundamentally the original system with limited zonal control but with no dehumidification possible. The installation of new chillers in the 1980s had not upgraded the system to institutional standards and it remained very inflexible, inefficient and expensive to run. The institutional standards of the time would have had ceiling mounted units which released valuable floor space for other uses. Floor mounted induction units such as those at the appeal hereditament were wasteful of space and became very unpopular.
103. By 2000 the replaced plant was 15 years old and was inefficient. Supplementary summer cooling of south-facing offices was required by portable air conditioning units placed in corridors. In winter the system was able to heat the accommodation but it was inefficient because there was no heat recovery. Such a system would never be installed new in 2000 and Mr Worthy rated its efficiency as 0-5 out of 10. Nonetheless Mr Worthy said “it was not in dispute” that in large areas of the appeal hereditament the system was adequate.
104. For the respondent Mr Rajapakse said that he had attended a site visit on 9 April 2013, with, among others, Mr Mark Samson, the Metropolitan Police’s maintenance engineer for New Scotland Yard. Mr Rajapakse said that that Mr Samson had told him that in 2000 the air conditioning system was able to maintain ideal climatic conditions to about 90% of the area of the appeal hereditament. In the remaining areas during peak load conditions at the height of summer the system could not maintain the ideal temperature of 21oC but still maintained approximately 23oC. Mr Samson had also said that 82% of the induction units had been replaced at the same time as the chillers.
105. Mr Rajapakse agreed that the system was inefficient but considered that the fact that only the chillers and induction units were replaced in the 1980s rather than the entire system, suggested that the system was sufficient to maintain reasonable climatic conditions in the offices, as confirmed by Mr Samson. Mr Rajapakse believed that there was not a strict requirement to have humidity control in an office building of this nature.
106. Mr Williams only allowed an addition of 2.5% for the air conditioning system which he considered to be very inflexible and inefficient.
107. Mr Woolway said that he did not consider it appropriate to treat the air conditioning system as a full system even though it was considered to be so when it was installed. He said that by “convention” he adopted half the rate that would be applied if the appeal hereditament had a modern full system and he made an addition of 5% in line with comparables and the figure generally adopted by rating surveyors. Mr Woolway said that none of the comparables supported a value uplift for air conditioning that was as low as 2.5%.
Valuation issue 3: conclusion
108. Air conditioning constitutes rateable plant and machinery but in the context of an office it is not usually valued by the contractor’s basis of valuation. Instead the basic value of non air conditioned office space is increased by a percentage to allow for the benefits of the air conditioning. Both parties have adopted this approach. There is therefore no dispute that there should be an uplift in value to reflect the presence of air conditioning in the appeal hereditament; the dispute is about the size of such an allowance.
109. The system, although old, remains functional 14 years after the material day. It does not comply with modern institutional standards and, in respect of some 10% of the floor area, struggles to cope in the summer, requiring the use of supplemental mobile air conditioning units at times. The system is inefficient and relatively expensive.
110. The comparable evidence shows agreed adjustments for air conditioning of 5% at Selbourne House and NIOC House and 0% at Esso House (where Mr Woolway says the air conditioning did not function as such). None of the comparables where there was air conditioning had an adjustment as low as 2.5%. (1 Horseguards Road, a property included in an exhibit to Mr Williams’ evidence regarding size allowances, was said to have an addition for air conditioning of “2.5-5.0%”. Mr Woolway said that this property only had a ventilation system and not air conditioning).
111. We do not consider that the comparable evidence supports a figure as low as 2.5% and nor are we persuaded that the system is so dysfunctional as to justify an allowance lower than the 5% determined from the comparables. In our opinion therefore an adjustment of 5% is the appropriate allowance.
Valuation issue 4: the value of car parking spaces
112. Both parties valued the car parking separately from the office accommodation. At the hearing the experts agreed that the number and type of car parking spaces was as follows:
Covered basement spaces:
(i) Normal height: 61
(ii) Restricted height 64
(iii) Tandem: 21
Total covered spaces: 146
Open spaces: 18
Total car parking spaces: 164
113. The experts further agreed that the value of each normal height basement space was £2,250. Mr Woolway also took this figure as the value of the restricted height basement spaces and the open surface spaces. Mr Williams said that the restricted height and open spaces should both be valued at half this rate, namely £1,125. Both experts took a lower figure for the tandem spaces in the basement. These were spaces that could be blocked by other parked vehicles. Mr Woolway took £1,125 per space and Mr Williams took £750 per space.
114. In summary, Mr Williams said that the total value of car parking was £245,250 while Mr Woolway spoke to a figure of £345,375 (this figure was incorrectly stated as £345,155 in the revised summary sheet submitted at the hearing).
115. Mr Williams said in his expert report that his adopted figure of £1,125 per space for the restricted height and open spaces “was agreed on Selbourne House and 55/60 Victoria Street.” He accepted in cross-examination that these properties were in fact the same building. Mr Williams also accepted that his reference in his appendix to 12 “surfaced open” spaces at Selbourne House was in fact a reference to 12 tandem spaces. Mr Williams adduced two other comparables where there were both covered and open car parking spaces (64 Victoria Street and NIOC House) and these were valued at the same rate of £2,250 in each case. Mr Williams further accepted in cross-examination that (i) the evidence showed a 50% reduction in value for a tandem space, (ii) the comparables did not support a reduction in value for open spaces, (iii) the problem with the reduced height spaces was for the parking of high-sided vans and not 4x4 vehicles and (iv) the predominant use of the car park was for office employees.
116. Mr Woolway said that a proper analysis of the comparable evidence showed that covered and open spaces were valued at the same rate of £2,250. There was no evidence to support Mr Williams’ opinion either that the reduced height spaces should be valued at half the unit rate or that tandem spaces should be valued at one third of the unit rate. The evidence supported a figure of £1,125 for tandem spaces.
Valuation issue 4: conclusion
117. In our opinion there is no evidence that supports Mr Williams’ view that uncovered surfaced car parking should be valued at half the rate for covered space. Indeed the evidence, adduced by Mr Williams himself, shows the same rate of £2,250 having been adopted in two cases, 64 Victoria Street and NIOC House. Mr Williams appears to have relied solely upon the analysis of the assessment at Selbourne House which refers to “surfaced open” spaces being taken at a rate of £1,125. In fairness to Mr Williams it was not until the hearing that Mr Woolway explained that this reference was in fact to tandem rather than open spaces. We adopt the rate of £2,250 for both covered and open car parking spaces.
118. Similarly there was no evidence to support Mr Williams’ adoption of one third of the covered rate as being appropriate for tandem spaces. The evidence of Selbourne House supported Mr Woolway’s discount of 50% which we consider to be a reasonable allowance. We therefore adopt a rate of £1,125 for tandem spaces.
119. There was no comparable evidence of restricted height spaces. The restricted headroom caused by the attachment of service pipes to the floor slab above the car park was not severe enough to stop large 4x4 vehicles parking in these spaces. It only precluded taller vehicles such as transit vans from parking there. Mr Williams accepted that the predominant use of the basement car park was for office workers and we are not persuaded that the existence of the restricted height spaces would pose material problems for an incoming tenant. We accept Mr Woolway’s opinion that there should be no discount in value to reflect restricted headroom and that such spaces should be taken at a rate of £2,250 (or £1,125 if a tandem space).
120. For the foregoing reasons we adopt Mr Woolway’s figure of £345,375 for car parking spaces.
Valuation issue 5: end allowances
121. Mr Williams made two sequential end allowances. Firstly, he deducted 14% for size (including car parking spaces). He then deducted a further 2.5% for layout.
122. Mr Woolway deducted 13.5% for size (this being the figure adopted by the Valuation Tribunal) but did not apply this to the value of the car parking. He made no separate adjustment for layout.
123. Mr Williams relied upon a schedule showing the size allowances given by the VO on large office buildings in central London. In particular he noted the allowances given on 64 Victoria Street (16,565m2: 7%), Somerset House (21,186 m2: 11.5%), the Foreign Office Building (26,508m2: 14%) and The Treasury Building at 1 Horseguards Road (42,641 m2: 20%). From these comparables he concluded that a building of the size of New Scotland Yard (which in this context he said was 34,500 m2, i.e. including the corridors) should be 14%.
124. Mr Woolway relied upon comparable evidence for offices with an NIA greater than 25,000m2 as close as possible to Broadway. He identified five such properties. 1-19 Victoria Street was redeveloped in 1994 to provide 30,537m2 of accommodation. An appeal was settled by agreement reflecting a size adjustment of 5%. 1 Horseguards Road, which Mr Woolway said had an NIA of 45,705 m2, was the subject of an appeal that was settled on the basis of a 20% size adjustment. 2 Marsham Street, a significantly larger property described by Mr Woolway as having an NIA of 53,451m2, was the subject of an appeal that was subsequently withdrawn. The assessment included a size adjustment of 15%. The Foreign Office Building at King Charles Street had an NIA of 28,879m2 and the assessment was settled by agreement reflecting a size adjustment of 14%. Finally 50 Queen Anne’s Gate, which Mr Woolway considered the best evidence, comprised an NIA of 29,998m2 and was the subject of a withdrawn appeal at a valuation including an end allowance of 12%. Mr Woolway considered that this evidence supported a size allowance at the appeal hereditament of 13.5%.
125. Mr Woolway said that this adjustment should only be applied to the value of the NIA of the office accommodation, as increased by the air conditioning allowance, but that it should not apply to the parking spaces that had been separately valued. He said that he did not think the car parking value would be influenced by the large size of the property since the car park valuation produced an additional value element uninfluenced by the size of the occupation on the facts of this appeal.
126. Turning to an allowance for layout Mr Williams said that the appeal hereditament comprised three linked buildings which distinguished it from the comparables. He said that both 1 Horseguards Road (2.5%) and Somerset House (10.5%) had received allowances for layout.
127. Mr Woolway said that it was usual for large office buildings to be designed with wings, light wells and other means of maximising natural light. It was not possible to design large floor plans as a simple rectangle because that led to poor natural light in the middle of the floorspace. The “H” shape design of the appeal hereditament was not different from other large buildings of a similar age and its design was better than that of 50 Queen Anne’s Gate where the “U” shape of the building and the presence of a tower led to difficulties in going from one area to another. No separate layout allowance was considered appropriate for that property. Mr Woolway said that in his experience end adjustments tended to encompass size and layout factors together and were not separately identified. That was what the Valuation Tribunal had done in this case in reaching their end allowance figure of 13.5% and although Mr Woolway did not think any layout allowance was justified, he had accepted the Valuation Tribunal’s figure.
Valuation issue 5: conclusion
128. Mr Williams makes sequential allowances of 14% and 2.5% for size and layout respectively. Expressed as a single allowance this represents a deduction of 16.15%. This compares with Mr Woolway’s adjustment of 13.5%, albeit that Mr Woolway does not apply this to the value of the car parking spaces. Mr Woolway is content to accept the Valuation Tribunal’s decision that such an adjustment reflects both size and layout.
129. In our opinion it is appropriate to make a single allowance to reflect the effects of size and layout. We note that Mr Williams bases his comparisons on the area of the appeal hereditament being 34,500m2. We find this to be inconsistent with his adopted valuation approach of not placing any value on the corridor space. We consider that his comparisons should have been made by deducting the area of the corridors (5,603m2) to give a area of 28,897m2. But the relationship between the size of an office hereditament and the amount of a size allowance is not linear and is a matter of judgment on the facts. We do not place much weight on the comparisons with buildings such as Somerset House, The Treasury Building or The Foreign Office Building which are very different to the appeal hereditament in age and design. In terms of size and age the best comparison is with 50 Queen Anne’s Gate which had an end allowance of 12%. This reflected not only its size but also its design and layout. In our opinion an allowance of 13.5% for the appeal hereditament is, by comparison, reasonable and we accept it.
130. The remaining question is whether the end allowance of 13.5% should be applied to the value of the car parking spaces as well as to the value of the office floorspace. As Mr Woolway noted the value of the car parking was derived from its own settled level of £2,250 per space and there was no separate evidence to suggest that the number of car parking spaces indicated a size allowance. Against that was Mr Williams’ evidence showing how ratepayers had analysed the settlements/compiled list assessments of the comparable properties by applying size/layout discounts to the total value, including car parking spaces. The Valuation Tribunal also applied the end allowance of 13.5% to the total value.
131. Six of the nine comparables referred to in the statement of agreed facts include an end allowance. All six have car parking spaces included in the assessment. The analysis of the assessments for these comparables adduced in evidence by Mr Williams shows that in five out of the six cases the end allowance has been applied to the total value of the hereditament, including the car parking spaces. The exception is NIOC House where the end allowance (3%) has only been applied to the value of the office accommodation.
132. The proportion of the total value (before adjusting for end allowances) represented by the car parking spaces ranges from 2.4% (Kingsgate House) to 6.3% (Selbourne House). The figure for the appeal hereditament is 4.6%. In each case the car parking is an ancillary use to the main office use. Although the car parking is valued separately to the office accommodation it is not a separate hereditament and it forms part of a larger whole. The evidence suggests that the appropriate way to value a large office block with ancillary car parking is to apply an end allowance to the total value and not just to the value of the office accommodation. We so determine in this appeal.
Valuation
133. Our valuation of the appeal hereditament is given in Appendix 1 and is in the sum of £6,450,000 with effect from 1 April 2004.
Determination
134. We determine that the appeal hereditament must be entered in the local non-domestic rating list with a rateable value of £6,450,000 with effect from 1 April 2004. The appeal is therefore allowed in part.
135. This decision is final on all matters other than costs. The parties may now make submissions on all costs issues and a letter giving directions for the exchange of submissions accompanies this decision.
Martin Rodger QC
Deputy President
A J Trott FRICS
Member
23 June 2014
Appendix 1
VALUATION OF THE UPPER TRIBUNAL (LANDS CHAMBER)
Description NIA m2 £/m2 £ £
Offices
Offices with raised floors 8,993.3 200 1,798,660
Offices without raised floors 25,508.37 195 4,974,132
(including corridors) 6,772,792
Air conditioning: 338,640
add 5%
Value of offices: 7,111,432
Car parking
Covered basement spaces
125 spaces @ £2,250 per space: 281,250
Basement tandem spaces
21 spaces @ £1,125 per space: 23,625
Open surface spaces
18 spaces @ £2,250 per space: 40,500
Value of car parking 345,375
£7,456,807
Deduct end allowance for
size/layout @ 13.5% £1,006,669
£6,450,138
Rateable value, say £6,450,000