Five unoccupied floors in reconstructed and refurbished Liverpool office building on 10 levels — VO’s proposal to bring into assessment — Section 17 completion notice served by rating authority some four months later and not appealed — At proposal date premises had fitted carpets and blinds but no partitions, lighting, telephones or final coat of paint and were being advertised as vacant and to let in that state — Whether premises complete and capable of occupation as offices — Tribunal emphasises that question before it is one of valuation and deals with issue in two stages, viz (i) the position as it would have been before the enactment of the rating of unoccupied property provisions in section 17 and Schedule 1, (ii) the extent, if at all, to which the application of the pre-existing law is varied as a result of those provisions — Telephones, being in the nature of furniture, do not form part
John Grove
(instructed by Bates & Partners, of Colchester) appeared for the appellant
company; A J Gunz, for Solicitor of Inland Revenue, for the first respondent,
the valuation officer; R W G Hayes (solicitor for Liverpool City Council) for
the second respondent, the rating authority.
Giving his
decision, MR EMLYN JONES said: This case provides another illustration of the
difficulties which can arise when the long-established principle of rates as a
charge on the occupation of land is distorted by the provisions now contained
in section 17 of and Schedule 1 to the General Rate Act 1967 whereby in certain
circumstances unoccupied premises are deemed to be occupied by the owner.
The appeal
property comprises the second-sixth floors inclusive of an office building
known as West Africa House and situated at 25 Water Street, Liverpool, at its
junction with the Strand. West Africa House was built in 1914. It is a building
of neo-classical design faced with Portland stone and has accommodation on
basement, ground, mezzanine and seven upper floors. The building lies close to
the River Mersey and is separated from the Pier Head by the Cunard Building and
the Royal Liver Building.
A
long-leasehold interest in the whole building was acquired by the appellants,
French Kier Property Investments Ltd, in 1978 and a substantial programme of
reconstruction and refurbishment was put in hand at that time. There had
previously existed three separate entries in the valuation list in respect of
three separate occupations in the building. During the period of reconstruction
these hereditaments became incapable of beneficial use, and by a proposal the
valuation officer for the City of Liverpool caused the valuation list to be
amended to give an assessment of gross value £1, rateable value £1, in respect
of each hereditament.
On or about
June 14 1980 the basement, ground floor, mezzanine and first floors were
occupied by Standard Chartered Bank, and that company carried out further
works, including the installation of air-conditioning and the fitting-out and
completion of these floors for banking purposes. On or about September 4 1980,
the seventh floor was occupied by a company known as Oriel Foods Ltd. That
floor was completed by the landlords (the appellants in these proceedings) by
the installation of light fittings some time after an agreement for the lease
had been entered into. Subsequently office partitions were also installed.
The rest of
West Africa House, that is to say the second-sixth floors inclusive, forms the
subject of the present appeal. There is a floor area of about 335 m2
on each floor and a total internal area of 1,673 m2 or thereabouts.
On March 27
1981, the valuation officer made a proposal to bring into assessment for the
first time three new hereditaments as follows:
Bank and
premises, basement, ground, mezzanine and first floors, gross value £15,200,
rateable value £12,638,
Offices,
7th floor, gross value £4,725, rateable value £3,909,
Offices
2nd-6th floors inclusive, gross value £22,600, rateable value £18,805,
and to delete
the three existing entries each of gross value £1 on the grounds that ‘the
present assessements are incorrect and do not coincide with the present
occupations’. The first two new entries relate to the occupations to which I
have already referred. At the date of the valuation officer’s proposal the
premises on the second-sixth floors were unoccupied.
On July 23
1981, that is to say about four months after the date of the proposal, the
Liverpool City Council served notice upon the appellants that in the opinion of
the council the appeal premises could reasonably be expected to be completed
within seven days, and that ‘for the purpose of Schedule 1 of the General Rate
Act 1967 as amended by the Local Government Act 1974 and the Council’s
resolution made under . . . section 17’ of the 1967 Act, the second-sixth
floors inclusive should be regarded as completed on July 31 1981. There was no
appeal against this notice.
Objections to
the valuation officer’s proposal of March 27 1981 were subsequently referred to
the Merseyside Valuation Court. By a decision dated November 2 1982 the court
determined the following assessments:
Bank and
premises, gross value £13,700, rateable value £11,388.
Offices,
7th floor, gross value £4,550, rateable value £3,763.
Offices,
2nd-6th floors, gross value £21,750, rateable value £18,097.
The appeal to
the Lands Tribunal with which I am concerned is made by French Kier Property
Investments Ltd against the third of these entries. I am not concerned with the
other two hereditaments. The first respondent, Mr Philip Ronald Grice, is the
valuation officer appointed in relation to the valuation list for the Liverpool
Metropolitan District. The second respondent is the rating authority, the
Liverpool City Council. Both respondents support the decision of the local
valuation court. For the appellants it is contended that the appeal premises
were not completed at the date of the valuation officer’s proposal and did not,
therefore, constitute a rateable hereditament. Mr John Grove, who appeared on
their behalf, submitted that the valuation officer’s proposal was therefore
premature and of no effect. In the alternative, he relied on the effect of para
10 of Schedule 1 to the Act as indicating that a new hereditament cannot come
into existence until the completion of structural alterations, which expression
is to be understood as including a deemed completion following the service of a
notice. If the appeal premises are properly to be regarded as a hereditament
completed and capable of occupation as offices, it is agreed that the
assessment determined by the local valuation court is a proper one.
The state of
the appeal premises at the date of the valuation officer’s proposal was agreed
to have been as follows:
(1) The walls were plastered and covered with
woodchip wallpaper and painted with white emulsion paint;
(ii) There were suspended acoustic tiled ceilings
to each of the five floors;
(iii) The floors were fitted with carpet;
(iv) The windows were fitted with vertical louvre
drape blinds;
(v) Doors were hung on each floor separating the
lift lobbies and main landings from the main accommodation;
(vi) There were 38 electrical power points per
floor;
(vii) Central heating radiators were installed;
(viii) There was access to the external
fire escape from each of the five floors.
The following
works had not been carried out:
(i) No lighting had been installed apart from
the lifts and staircase and lavatories; junction boxes were installed on the
landings of the common parts on each floor;
(ii) No office partitioning had been installed;
(iii) No telephones had been installed although
there was a British Telecom frame rig in the basement from which lines were
taken to the occupied parts of the building
(iv) All wall surfaces of the appeal premises
received a final coat of paint after the date of the valuation officer’s
proposal.
The question
which I am asked to determine is to decide whether the premises at the date of
the valuation officer’s proposal could be said to be complete and capable of
occupation as offices, taking into account the effect, if any, on that proposal
of para 10 of Schedule 1 to the General Rate Act 1967 and the subsequent
completion notice served by the rating authority on July 23 1981. If I am to
find that the premises were not so complete then I am asked by the appellants
to determine an assessment of gross value £1, rateable value £1.
It is
convenient if at this stage I set out those sections of the Act which deal with
the question of unoccupied property. Section 17 as far as it is material
provides as follows:
— (1) A rating
authority may resolve that the provisions of Schedule 1 to this Act with
respect to the rating of unoccupied property —
(a) shall
apply, . . .
(b) . . .
to their
area, and in that case those provisions shall come into operation . . . in that
area on such day as may be specified in the resolution.
It is common
ground that the rating authority had made such a resolution and that it did
apply in the case of the appeal premises at the material time.
The provisions
of Schedule 1, as amended by the Local Government, Planning and Land Act 1980,
in so far as they are relevant are as follows:
Liability
to be rated in respect of certain unoccupied property
1 — (1)
Where, in the case of any rating area in which, by virtue of a resolution under
section 17 of this Act, this Schedule is in operation, any relevant
hereditament in that area is unoccupied for a continuous period exceeding the
standard period, the owner shall, subject to the provisions of this Schedule,
be rated in respect of that hereditament for any relevant period of vacancy;
and the provisions of this Act shall apply accordingly as if the hereditament
were occupied during that relevant period of vacancy by the owner.
‘Relevant
hereditament’ as defined in para 15:
means any
hereditament consisting of a . . . office, . . . or other building whatsoever,
and ‘relevant
period of vacancy’
in relation
to any relevant hereditament, means . . . any period beginning with the day
following the end of a period of three months during which the hereditament has
been continuously unoccupied and ending with the day preceding that on which
the hereditament becomes or next becomes occupied or ceases to exist.
Para 15
further provides that:
references to
a newly erected building . . . include references to a building . . . produced
by the structural alteration of a building included in a relevant hereditament
which by virtue of paragraph 10 of this Schedule has ceased or will cease to
exist on the completion of the structural alteration and, in relation to a
building . . . so produced, references to erection of a building shall be
construed as references to the structural alteration . . .
It is
necessary to consider the following further paragraphs in the Schedule:
5 — (1)
Subject to the provisions of this Schedule, the rateable value of a
hereditament for the purposes of paragraph 1 thereof shall be the rateable
value ascribed to it in the valuation list in force for the area in which the
hereditament is situated or, if the hereditament is not included in that list,
the first rateable value subsequently ascribed to the hereditament in a
valuation list in force for that area.
7 For the purposes of paragraph 1 of this
Schedule, a newly erected building which is not occupied on the date determined
under the subsequent provisions of this Schedule as the date on which the
erection of the building is completed shall be deemed to become unoccupied on
that date.
8 — (1) Where
a rating authority are of opinion —
(a) that the erection of a building within their
area has been completed; or
(b) that the work remaining to be done on a
building within their area is such that the erection of the building can
reasonably be expected to be completed within three months, and that the
building is, or when completed will be, comprised in a relevant hereditament,
the authority may serve on the owner of the building a notice . . . stating
that the erection of the building is to be treated for the purposes of this
Schedule as completed on the date of service of the notice or on such later
date as may be specified by the notice.
9 In the case of a building to which work
remains to be done of a kind which is customarily done to a building of the
type in question after the erection of the building has been substantially
completed, it shall be assumed for the purposes of paragraph 8 of this Schedule
that the erection of the building has been or can reasonably be expected to be
completed at the expiration of such period beginning with the date of its
completion apart from the work as is reasonably required for carrying out the
work.
10 Where by reason of the structural alteration
of any building a relevant hereditament becomes or becomes part of a different
hereditament or different hereditaments, the relevant hereditament shall be
deemed for the purposes of this Schedule to have ceased to exist on the date
(as determined in pursuance of the foregoing provisions of this Schedule) of
the completion of the structural alteration and, in particular, to have been
omitted on that date from any valuation list in which it is then included; but
nothing in this paragraph shall be construed as affecting any liability for
rates under paragraph 1 of this Schedule in respect of the hereditament for any
period before that date.
For the
appellants Mr Grove called evidence from Mr Michael John Davies FRICS, a
partner in the firm of Matthews & Son, chartered surveyors. In the opinion
of Mr Davies, the premises at the material date were not capable of occupation,
since any tenant entering into a lease would need further work to be carried
out under the four main headings to which I have referred, the installation of
lighting, partitioning, telephones and the final coat of paint. Of these he
considered that the wiring and partitioning were the most important. In
particular, the installation of lighting would almost certainly involve the
movement of removable ceiling panels which would conceal the new wiring leading
to electric light fittings. He referred to the size of each floor extending, as
he expressed it, to something like 3,600 sq ft, and, while admitting that parts
of the area could be left as ‘open plan’, considered that some partitions would
be necessary if only to provide private offices for senior executives. In his
experience he knew of no office premises entirely devoid of partitioning.
Mr Davies
accepted that office premises could be let without partitions and lighting,
since the common practice was to ascertain the requirements of a particular
tenant for partitioning, and the pattern of lighting could not be decided until
the layout was known. In these circumstances, either the landlord carried out
the works before the tenants moved in or the tenants received a reduction in
rent covering the period when the work was to be done. In neither case were the
premises ready for occupation until the work had been done.
In the light
of this evidence, Mr Grove submitted that the premises could not be described
as complete and ready for occupation and he relied on R v Malden
Overseers (1869) LR4 QB 326 as establishing that in those circumstances the
premises did not constitute a rateable hereditament and could not be entered in
the valuation list. Mr Grove also referred me to a number of cases in the
courts which were concerned with the application of the provisions of Schedule
1 to unoccupied premises; in particular to Watford Borough Council v
Parcourt Property Investment Co Ltd (1971) 17 RRC 19; 218 EG 1006, Ravenseft
Properties Ltd v Newham London Borough Council (1975) 18 RRC 159;
237 EG 35, [1976] 1 EGLR 109, The Post Office v Nottingham City
Council (1976) 19 RRC 42; 240 EG 211, and also to Hounslow London
Borough v Rank Audio Visual Ltd and Bryant (VO) (1970) 17 RRC 82;
217 EG 1225, 1421.
Mr A J Gunz,
the Solicitor of Inland Revenue, called the valuation officer, Mr Philip Grice
FRICS FRVA, who has had 25 years’ experience on Merseyside and is the deputy
valuation officer for the district. Mr Grice disagreed with Mr Davies that the
hereditament was incapable of occupation in the state in which it existed at
the date of his proposal. In his opinion it was not necessary to wait until the
premises had been tailored to meet the requirements of a particular tenant
before deciding that there was in existence a hereditament which was properly
to be entered in the valuation list.
He referred me
to other large office blocks in the immediate locality which consisted of very
large open areas, where in some cases the small areas partitioned for private
offices were screened by easily movable partitions or screens which were not
rateable and formed no part of the hereditament. In these cases the
hereditament which existed after the installation of screens was identical to
that which existed before screens were installed. In Mr Grice’s opinion, the
telephones were to be regarded as furniture and were to be treated in no
different way from other items of office furniture such as desks, chairs and
typewriters. The premises would not be ready for occupation by an office tenant
until these items were available and the same would apply in the case of
telephones and indeed of screens. The final coat of paint was to be regarded as
de minimis.
The same could
be said, suggested Mr Grice, for the lighting. It was not correct to say that
the premises could not be let, since there were 38 electrical power points on
each floor, all of which could have been used as an electricity supply for
lighting. To sum up his evidence, Mr Grice said that, in his opinion, the
appeal hereditament was ready for occupation as offices at the date of his
proposal and any work remaining to be done at that date would not offend the
doctrine of rebus sic stantibus.
At the date of
the valuation officer’s proposal, said Mr Gunz, the appeal premises clearly
qualified as a hereditament and the circumstances at that date were not
affected by a serving of the completion notice by the rating authority some
four months later. The serving of the notice might be of significance for the
purpose of establishing the period during which the owners of the premises
would be liable for the unoccupied rate but were irrelevant for
He also
referred to the cases quoted by Mr Grove, and additionally to Graylaw
Investments Ltd v Ipswich Borough Council [1979] RA 111; 250 EG
1079, Easiwork Homes Ltd v Redbridge London Borough Council
[1970] RA 227; 214 EG 1356, and Camden London Borough v Post Office
(1977) 20 RRC 153; 243 EG 131, [1977] 2 EGLR 104. On the question of
partitions, Mr Gunz referred me to MacGregor v Somerville (1889) 27 SLR 52 in
which it was held that ‘some lath and standard partitions’ were not to be
considered as ‘alterations on the structure of the existing building’ for the
purposes of obtaining a Dean of Guild Court warrant. On the question of
electric wiring, Mr Gunz referred me to In re Clarke’s Settlement [1902]
2 Ch 327, where electrical wiring was held not to be a structural addition for
the purposes of the Settled Land Act 1890.
For the rating
authority, the second respondent, Mr Hayes, called the assistant city
treasurer, Mr J G Pursall FRVA. Mr Pursall referred to the difficulties which
would arise if Mr Grove’s first submission were to be accepted. If no entry was
to be made in the valuation list following the valuation officer’s proposal,
then the figure in the list, he suggested, which would be operative as provided
in para 5(1) of the Schedule would be rateable value £1. This would be
operative until such time as a further proposal was made, by which time two or
more separate rate periods would have elapsed.
Mr Pursall observed
that the rating authority had not been consulted with regard to the making of
the valuation officer’s proposal and he confirmed that the valuation officer
had not been consulted regarding the issue of the completion notice.
Mr Hayes
adopted the submissions of Mr Gunz and suggested that para 10 of Schedule 1
should be read in conjunction with paras 7, 8 and 9. He referred me to Hastings
Borough Council v Tarmac Properties Ltd [1984] RA 1, where Forbes J
in the Queen’s Bench Division decided that the owners of unoccupied premises
should not be held liable for rates in respect of earlier years based on
rateable values entered for the first time in later years.* Mr Hayes submitted
that the powers of the valuation officer to make a proposal under section 69(2)
of the General Rate Act 1967 and the powers of a rating authority to make a
proposal under section 69(1) and (3) of the Act were not affected by the
unoccupied rate provisions, and that the valuation officer’s proposal of March
27 1981 was validly made.
*Editor’s
note: An appeal by the rating authority against this decision was allowed by
the Court of Appeal on March 20 1985 — see p 161 ante.
I propose to
deal with the question raised in this appeal in two stages; firstly, examining
the position as it would have been before the statutory provisions relating to
the rating of unoccupied property were enacted; and secondly, to consider to
what extent, if at all, those conclusions are affected by the provisions of
section 17 of and Schedule 1 to the General Rate Act 1967.
The first
stage is to identify the premises which are said to constitute a rateable
hereditament and in particular to establish the state of these premises at the
material date, that is to say at the date of the valuation officer’s proposal.
If the premises as thus identified can properly be said to be a rateable
hereditament, then the next stage is to determine the value of the hereditament
assumed to be vacant and to let at that date, and valued in accordance with the
doctrine of rebus sic stantibus.
For the
purposes of rating law a hereditament is defined in section 115(1) of the
General Rate Act as follows:
‘Hereditament’
means property which is or may become liable to a rate, being a unit of such
property which is, or would fall to be, shown as a separate item in the
valuation list.
On the
authority of R v Malden, new houses completely finished and ready
for occupation but not let or occupied at the time of returning the valuation
list of a parish are ‘rateable hereditaments within the meaning of the Union
Assessment Committee Act 1862, and ought to be inserted in the list’.
At the date of
the valuation officer’s proposal in the instant case there were three
assessments in the list each of gross value £1, rateable value £1, in respect
of three hereditaments which had ceased to exist. None of these three
assessments related to the subject premises as they existed at the time, and for
this reason I think the fears expressed by the rating authority as to the first
entry relating to the appeal premises are misplaced. In any case I am not
concerned with questions of rating; although I understand that in any case it
is conceded that rates cannot be collected for any period prior to the expiry
of three months following the period specified in the completion notice.
Question of
valuation
The question
before the Lands Tribunal is one of valuation. With regard to the earlier
assessments, a proposal was necessary to remove these assessments from the list
and to insert in their place, first of all, assessments in respect of the
hereditaments occupied respectively by the Standard Chartered Bank and Oriel
Foods. It was also clearly open to the valuation officer to propose an entry in
the valuation list in respect of the rest of West Africa House if it was a unit
of property which might become liable to a rate and would fall to be shown as a
separate item in the valuation list, so long as it was completely finished and
ready for occupation.
The facts show
that the premises were in fact being advertised as vacant and to let in the
state in which they existed, with fitted carpets and blinds, but no partitions,
no lighting, no telephones and no final coat of paint. In my opinion, the last
two items can properly be disregarded. The telephones do not form part of the
rateable hereditament, being in the nature of furniture, and their installation
by connection to the Post Office frame in the basement could be made with no
structural alteration to the hereditament (see also Kennet District Council v
British Telecommunications [1983] RA 43). Similarly, the application of the
final coat of paint is properly to be regarded as de minimis, as
contended by Mr Gunz. Furthermore, in the statutory definition of gross value
contained in section 19(6) of the Act the hypothetical landlord is to be deemed
to undertake [to bear] the costs of repairs, which in the normal case would
include the cost of decorations.
Dealing with
the question of the partitioning and the lighting, I am prepared to accept that
the most likely sequence of events would be for the premises to be let and for
the tenants to adapt them for their own purposes by the installation of
partitioning and lighting designed to suit their own requirements. I am not
prepared to say, however, that the premises in the state in which they were
advertised to let were incapable of occupation. In particular, the size of the
separate floors was not inappropriate for open plan use, and the shape of the
floors in the form of an L suggested a means of separation of the smaller area
from the main area by way of lightweight screens or partitions which would not
form part of the hereditament. A supply of electricity was available on all
floors.
It is
significant that the completion notice issued in July 1981, when, as I
understand it, the premises were in the same physical state as at the date of
the proposal in March, specified seven days as being the period required for
the completion of the building. There was no appeal against the notice.
I can see no
justification, therefore, for treating the appeal premises in any way different
from that adopted for the other parts of the building. In my judgment, applying
the ordinary law of rating, they constituted at the material date a separate
rateable hereditament, liable to be entered as a separate item in the valuation
list; and in the physical state in which they existed were complete and ready
for occupation.
In these
circumstances it is agreed, as I have indicated, that the correct assessment is
gross value £21,750, rateable value £18,097.
That seems to
me to be the position which would have been reached prior to the statutory
provisions governing the rating of unoccupied property. I think further that,
since at that time no rates were payable where premises were unoccupied, their
entry in the valuation list would not have been challenged.
It remains,
therefore, to consider to what extent, if at all, the application of the
pre-existing law is to be varied as a result of the statutory provisions
relating to the rating of unoccupied property. I should say, first of all, that
Schedule 1 to the Act is largely concerned with the liability to be rated and
with questions of collection and procedural matters related thereto. In
particular, the provisions of the Schedule are stated to be ‘for the purposes
of’ the Schedule itself or for one or more of its paragraphs. I have already
set out the relevant paragraphs.
Paragraph 5(1)
defines the rateable value for the purposes of paragraph 1 as the rateable
value entered in the valuation list, or the first rateable value subsequently
ascribed. On any view of the matter, the first rateable value to be entered in
the list in this case is the value entered in pursuance of the valuation
officer’s proposal dated March 27 1981 — assuming only that that proposal was
validly made. For
and nothing contained in paragraph 5 leads to any other conclusion.
Paragraph 10
is related solely to matters of rate collection. It may well be that my finding
that the structural alterations at the appeal premises had been completed by
March 27 1981 may bring the provisions of paragraph 10 into operation. The
provisions of this paragraph deal with questions of rate liability for periods
before and after the date when structural alterations were completed. It
cannot, in my view, have any effect on the validity of a proposal, dependent as
it is on a valuation of the subject premises in the state in which they exist
at the date when the proposal is made. Furthermore, the paragraph refers to the
completion of structural alterations and clearly envisages that certain
alterations which are not structural in character can remain outstanding.
It will be
seen, therefore, that the cases arising under Schedule 1 to which I was
referred by the parties are not directly concerned with questions of valuation.
In Watford v Parcourt no completion notice was served under paragraph
8(1) of the Schedule and the question for determination was whether in the
absence of such a notice the premises could be said to be complete. A proposal
was made by the valuation officer on December 4 1967 by which date the rating
authority had already resolved to bring Schedule 1 into operation. The premises
were subsequently leased and some few weeks after the date of the proposal the
lessees started to carry out works adapting the premises for their own
occupation. This work involved among other things the installation of
partitions.
Bridge J in
the course of his judgment referred to the decision of the Court of Appeal in Jarrold
(Inspector of Taxes) v John Good & Sons Ltd [1963] 1 WLR 214
described by the learned judge as ‘the high water mark of authority . . . that
the absence of partitioning in these office areas did not mean that the
building was incomplete’. The case was an income tax case in which the question
for determination was whether certain office partitioning was plant for the purpose
of the Income Tax Acts.
On p 28 of the
report [(1971) 17 RRC 19] in Watford v Parcourt Bridge J continued:
. . . counsel
on both sides accept that this is a relevant decision for the purpose of the
rating issue arising in the present case. They accept that a decision that
partitioning was plant for the purpose of the provisions of the Income Tax Act
referred to connotes in rating terms that such partitioning is not part of the
hereditament. The decision of Pennycuick J was affirmed by the Court of Appeal.
There is only
one passage from the judgments, however, to which I think it necessary to
refer, and that is from the judgment of Pearson LJ (as he then was) at p 225:
‘There can be no doubt, therefore, as to
the main principles to be applied, and the short question in this case is
whether the partitioning is part of the premises in which the business is
carried on or part of the plant with which the business is carried on. Either
view could have been taken. It could have been said that the so-called partitioning,
when erected, constitutes the internal walls of the building, which have the
advantage of being movable but until moved will stand firm and solid, fully
performing the functions of internal walls. So regarded, the partitioning would
be part of the premises and not plant. The other possible view is that the
respondent company, instead of having internal walls in their office building,
need to have, and do have, for the special requirements of their business,
movable partitioning by means of which they can, in response to changing
volumes of business in their departments or to the cessation of departments or
the emergence of new departments, rapidly and cheaply and without much
interruption of business alter the subdivisions of their office building. On
that view of the facts, the partitioning undoubtedly can be regarded as
‘plant’. I think the commissioners have, in effect, preferred the second view,
and it cannot be said that there was no evidence to support it, or that any
error of principle was involved.’
Bridge J
continued:
The argument
on behalf of the plaintiffs here is that since on the authority of that
decision it is possible, as a matter of law, for internal office partitioning
to be provided in a form which will not make it part of the rateable
hereditament but rather part of the furniture of the office, therefore the
absence of partitioning at 60 Exchange Road did not prevent that office
building from being complete, from being a hereditament.
I reject that
argument, because it seems to me it is totally unrealistic to look at a
building of this size and character with, as I have said, its 60,000 sq ft odd
of office space on five floors in very large open blocks and contemplate the
possibility that any ordinary occupier would dream of entering into occupation
without a substantial measure of partitioning in the shape of internal walls.
It seems to me
that the decision in the Watford case was firstly a finding of fact that
a building of that ‘size and character’ with 60,000 sq ft could not be said to
be complete in the absence of partitions. That issue was not one of valuation;
the rateable value was subsequently agreed, and, as it appears from the report,
this was in settlement of the valuation officer’s proposal. What Bridge J
decided, secondly, was that the rating authority were not empowered to demand
rates in the absence of a completion notice. The serving of such a notice is,
of course, at the discretion of the local authority; in the instant case a
completion notice was subsequently served, some four months after the date of
the valuation officer’s proposal.
Similarly, in Ravenseft
v Newham the issues were concerned with the completion notice
procedure. Completion notices were served, but on appeal the county court judge
quashed the notice on the grounds that the work remaining to be done could not
be completed in the time specified in the notices. The Court of Appeal held
that the building should not be regarded as having been completed until it was
ready for occupation and that on the facts in that case, where the offices
extended to some 14 storeys, it was not capable of occupation in the absence of
partitioning.
The finding of
the Divisional Court in the earlier case of Easiwork Homes Ltd v Redbridge
established that the fact that structural alterations were being carried out
did not remove the liability to pay rates in respect of unoccupied property.
But as the Lands Tribunal decided in Hounslow v Rank Audio Visual Ltd
the ordinary rules for the making of proposals to alter the entry in the
valuation list, contained in section 69 of the Act, are still applicable where
the premises are unoccupied. In the instant case there was no pre-existing
entry in respect of the appeal premises, since none of the three assessments of
gross value £1 related to the unit of property comprised in the second-sixth
floors inclusive of West Africa House. The valuation officer’s proposal
properly brought into assessment the two new occupations which were existing at
that date.
In my
judgment, there is nothing in paragraph 10 or elsewhere in Schedule 1 to
prevent the making of a proposal in respect of the appeal premises.
No alteration
in law
I have
therefore come to the conclusion that the provisions regarding the rating of
unoccupied property contained in section 17 of and Schedule 1 to the Act do not
alter the pre-existing law as applied to the facts of the present case. The
cases dealing with the unoccupied rate are concerned, in my opinion, with a
different aspect of completion, that is in relation to the serving of a
completion notice as a condition precedent to the issuing of a rate demand. The
comments regarding the size and character of the premises referred to in those
cases are such as to be distinguished from the facts in the instant case where,
as I have indicated, the size and character of the premises lend themselves to
the possibility of being ready for occupation as they are, subject to the
provision of non-rateable items such as furniture, telephones, screens,
lighting and so on.
I find some
support for this conclusion in a passage in the judgment of Waller LJ in Graylaw
Investments Ltd v Ipswich, where he says, on p 115 of the report:
The date when
the erection of a building has been or can reasonably be expected to be
completed is a date which should not depend on notices. The date on which the
erection of the building is to be treated for the purposes of this schedule [the
emphasis is mine] as completed is the date of service of the notice, or on such
later date as may be specified in the notice. Service of the notice is a
condition precedent to liability to rates, and the date on which liability
commences depends on the notice.
Finally, Drake
Investments Ltd v Lewisham London Borough Council (1983) 269 EG 135,
[1984] 1 EGLR 151 was a case which had certain features similar to those found
in the instant case. A hereditament was assessed at gross value £1 during a
period of reconstruction. Subsequently the valuation officer made a proposal to
increase the assessment to gross value £47,500, a figure which was duly entered
in the valuation list. The building then changed hands and the new owners made
a proposal for a reduction in the assessment, subsequently agreed at gross
value £31,750.
Sitting in the
Queen’s Bench Divisional Court, Sir Douglas Frank QC, in granting a declaration
to the ratepayers, accepted their two submissions, firstly that the building
was not a completed building, because no tenant would dream of using the
premises without partitioning; and secondly, that the building remained a newly
erected building until occupied, and in order for there to be a liability
to the unoccupied rate a completion notice must be served. With regard to the
first finding, the hereditament consisted of an office building with a total
area of some 40,000 sq ft, on four floors and a basement, each office floor
having a floor area of just under 10,000 sq ft.
The learned
deputy judge followed the Watford and the Newham cases which, he
said, were indistinguishable on the facts. With regard to the second
submission, he said that the words of the statute were clear and no rates could
be charged on unoccupied premises in the absence of a completion notice. In his
judgment there is the following passage:
It seems to
me that the question of the amount of the rateable value is nothing to the
point. A building or any hereditament may have a rateable value and yet no rate
can be charged . . . it has always been the law since the Poor Rate was first
levied in the reign of Elizabeth I that rates can only be levied on an occupier
so until the change in the law no rate could be levied in respect of an
unoccupied building. However, that did not stop a building having a rateable
value. It seems to me that whatever the rateable value and whether there had
been one or a dozen entries that cannot go to the question of whether a
building has been completed.
So here again,
a clear distinction is drawn between completion of a hereditament for the
purposes of Schedule 1 and the unoccupied rate, and completion of a
hereditament for the purposes of establishing an entry of rateable value in the
valuation list. For reasons which I have given, I have decided that the appeal
premises satisfy the requirements necessary for entry in the valuation list as
a hereditament. The question of their completion for the purposes of the
unoccupied rates is not before me. The appeal is accordingly dismissed and the
decision of the local valuation court upheld.
The appellant
company will pay seven-eights of the costs of the first respondent and
one-eighth of the costs of the second respondent, such costs failing agreement
to be taxed by the Registrar of the Lands Tribunal on the High Court Scale.
