The property world has waited eagerly for the Supreme Court decision on the status of cash machines at supermarkets, shops, and petrol filling station. Are such sites capable in law of being separate hereditaments and, if so, who is in rateable occupation? And its decision – in Cardtronics Europe Ltd v Sykes (Valuation Officer) [2018] EWCA Civ 2472 – will not disappoint retailers who have been hoping for £300m, or more, in rates refunds.
The litigation resulted from changes to the rating list, as a result of which the sites of cash machines became listed as separate hereditaments with their own rateable values (even though the machines themselves were not rateable thanks to the Valuation for Rating (Plant and Machinery) (England) Regulations 2000). And Sainsbury’s, Tesco and the Co-op, which all host cash machines provided by banks within their own corporate structures, and Cardtronics, the provider of more than 16,000 cash machines in convenience stores run by independent retailers, all appealed against the Valuation Office’s decisions.
The Upper Tribunal decided that cash machine sites that were permanent and substantial and that had been specially adapted for that purpose were capable of constituting separate hereditaments. Furthermore, the sites of external “hole in the wall” cash machines were in the rateable occupation of the banks that operated them. But the sites of internal machines, aimed primarily at shoppers, were occupied by the stores. However, the Court of Appeal took the view that the retailers had retained “general control” of all the cash machine sites, in contractual, physical and functional terms. So they were in rateable occupation of them all.
The Supreme Court agreed with the Upper Tribunal and Court of Appeal that the sites were capable in law of being separate hereditaments. And it endorsed the Court of Appeal’s decision that it was the stores – and not the banks – that were in rateable occupation.
It was clear that typical “hole in the wall” ATMs in the external walls of high street banks are part of the same hereditament as the rest of the bank, and are no different in that respect from a similar machine within the bank. It seemed equally clear that an ATM in a building adjacent to the bank, whose occupation has no direct link with the function of the ATM, may be treated as a separate hereditament. But where should the line be drawn in cases such as this where the functions of the ATM and of the host building are not wholly disconnected?
Holywell Union Assessment Committee v Halkyn District Mines Drainage Co [1895] AC 117 established that, where a person already in possession has given possession of a part of his premises to another, he does not cease to be liable for rates, and the other does not become liable, unless that possession is exclusive. So, although a lodger may occupy his own room for his own purposes, the house in which it is situated is treated as a single hereditament in the occupation of the landlord.
The Upper Tribunal had found that the retailers retained occupation of the ATM sites. And, although the ATMs that were external were available to a wider market, at all times of the day or night, and were “physically separated” from the other facilities in the store, these factors did not detract from that finding. The ATMs furthered the retailers’ general business purposes and remained in their rateable occupation.
Allyson Colby, property law consultant
