Rating — General Rate Act 1967 — Date as at which hereditaments should be valued — Shop premises in Regent Street, Westminster — Whether premises should be valued as at April 1 1973, as valuation officer and rating authority contended, or as at late 1970, as appellant ratepayers submitted — Appellants’ arguments based on supposed difficulty of valuing premises as at a date in advance of the actual valuation and on sections 20 and 64 of 1967 Act rejected — Also rejected were alleged indications from a ‘tonogram’ and deductions by the professed science of ‘tonometry’ that, on average, rent estimates in the Westminster rating area corresponded more closely to rents current in 1970 than to those in 1973 — Valuations should reflect rental values at the date when the valuation list is to take effect, the common valuation date, which in this case was April 1 1973 — Appeal from decision of Court of Appeal dismissed — Observations on ratepayers’ rights when dissatisfied
This was an
appeal by the ratepayers, K Shoe Shops Ltd and others, against the decision of
the Court of Appeal upholding the valuation officer’s estimate of rental values
of the appellants’ premises as values prevailing on the common valuation date,
namely April 1 1973. The decision of the Court of Appeal, reported at (1982)
266 EG 119, was given an appeals and cross-appeals from a decision of the Lands
Tribunal (RC Walmsley FRICS), reported at (1980) 256 EG 927, 1019. The first
respondent was the valuation officer for Westminster and the second respondents
were the rating authority.
David
Widdicombe QC and Guy Roots (instructed by Titmuss, Sainer & Webb) appeared
on behalf of the appellants; W J Glover QC and Alan Fletcher (instructed by the
Solicitor of Inland Revenue) represented the first respondent; R Tucker QC and
R Hone (instructed by the solicitor to the City of Westminster) represented the
second respondent.
In his speech,
LORD TEMPLEMAN said: These appeals call for the determination of a question of
construction which arises under the General Rate Act 1967. The appellants are
ratepayers of shop premises at Regent Street in Westminster. The first
respondent is the valuation officer and the second respondents are the rating
authority for Westminster. The question is whether the appellants’ premises
should be valued as at late 1970 as the appellants contend or whether they
should be valued as at April 1 1973 as the respondents maintain and as the
Court of Appeal held for the purposes of the rating valuation list which came
into force on April 1 1973.
The General
Rate Act 1967 received the Royal Assent on March 22 1967 and has since been
amended, but the amendments are not relevant to the present question. Section
1(1) of the Act establishes rating areas and rating authorities corresponding
to borough and district areas and authorities. By section 1(2):
Every rating
authority shall have power in accordance with this Act to make and levy rates
on the basis of an assessment in respect of the yearly value of property in
their rating area . . .
By section
2(4):
. . . The
general rate for any rating area . . . (b) shall be made and levied in accordance
with the valuation list in force for the time being . . .
Sections 12 to
15 enable county councils and the Greater London Council and certain other
authorities to issue precepts requiring the rating authorities within their
jurisdiction to levy rates for the purposes of the precepting authorities.
By section 19
the rateable value of a hereditament shall be based on:
The rent at
which it is estimated the hereditament might reasonably be expected to let from
year to year
on certain
specified assumptions as to the burden of the usual covenants entered into
between landlord and tenant.
Section 68(1)
provides that:
In the case
of each rating area, new valuation lists shall be prepared and made by the
valuation officer so as to come into force on 1st April in 1973 and each fifth
year thereafter.
A valuation
officer as defined by section 115(1) means any officer of the Commissioners of
Inland Revenue appointed by the Commissioners in relation to each valuation
list.
Section 68(2)
requires that the valuation officer:
. . . shall,
not later than the end of the month of December preceding the date on which the
list is to come into force (or if in any particular case the Minister, either
before or after the end of that month allows an extended period, then not later
than the end of that period) sign the list and transmit it . . . to the rating
authority . . .
The Act thus
provides for a quinquennial valuation which will bring all rateable values up
to date when each new list comes into force and which will last for the next
five years. The Act does not require the valuation officer to begin to make his
estimates of rateable value on any particular date. The date fixed for the
completion of his task, December 31, may be extended by the minister. But the
task of every valuation officer is the same and every valuation list must come
into force on the same day. Consistently with the principles of uniformity and
fairness which are applicable to rating valuations, each valuation officer must
value each property by reference to the same date. It is not conceivable that
Parliament intended that, for example, the valuation officer of Westminster
should value some premises in his area on the assumption of an annual tenancy
granted and commencing at the end of 1970 but should value other premises in
his area on the assumption of an annual tenancy granted and commencing on
December 31 1972 or April 1 1973. Nor is it conceivable that Parliament
intended that premises in different rating areas in the same or different
precept areas could be valued by reference to different dates. The only fixed
and immutable date provided by the Act is the relevant quinquennial April 1, in
the present case April 1 1973, and the Act directs that each valuation officer
shall prepare and make a new list ‘so as to come into force on 1st April in
1973’. In the words of Sir Patrick Browne delivering the judgment of the Court
of Appeal in the instant case, ‘uniformity and fairness as between all rating
areas can only be achieved if all rating areas are valued by reference to the
same date, and the only possible common date is . . . the date when the
valuation list comes into force — in this case April 1 1973’. Similar views
were expressed, albeit by obiter dicta, by Lord Denning MR in
Reg v Paddington Valuation Officer ex parte Peachey Property
Corporation Ltd [1966] 1 QB 380 at 405 where, dealing with the statutory
predecessor of the 1967 Act, Lord Denning said that the valuation was ‘to be
based on current values so as to reflect, as far as possible, the values
prevailing at the time when the list was to take effect’. In my opinion the
1967 Act requires the rateable value of each of the appellants’ hereditaments,
as entered in the 1973 valuation list, to be based on an estimate of the rent
which the landlord of that hereditament could reasonably expect to negotiate on
April 1 1973 for an annual tenancy commencing on that date.
The appellants
deny that the Act requires that the valuation list which came into force on
April 1 1973 should reflect rental values current at that date. They rely on
the fact that the 1967 Act does not contain an express requirement that
hereditaments should be valued as at April 1 1973. But such a requirement must
be implied because a common valuation date is necessary, the language of
section 68 points to April 1 1973 as that common valuation date and there is no
provision in the Act for the determination or ascertainment of any other common
valuation date.
The appellants
assert that the valuation officer could not make in advance correct estimates
of rents payable on April 1 1973. The Westminster valuation list was based on
information sought from the public in 1970 and supplied to the valuation
officer in 1971 and the estimate was prepared during 1972. But it does not seem
to me that the Westminster valuation officer or any other trained valuer would
have any great difficulty in estimating the rents obtainable on April 1 1973.
The valuation officer could, down to the date when he finalised his estimates,
take account of any information which became available. He would take into
consideration rents negotiated for each hereditament and for comparable
premises down to the date when he finally completed his estimate. He would
consider the state and history of the hereditament and of the neighbourhood,
the pattern of past rents and such other information as, in his professional
opinion, assisted him to estimate the rent which the landlord could reasonably
expect to obtain on the common valuation date April 1 1973. If the valuation
officer’s estimate was not accepted after the publication of the list on
December 31 1972, the ratepayer and the rating authority could, as envisaged by
the Act, propose an alteration to the valuation list to the valuation officer
and if he demurred then to the local valuation court and could appeal from that
court to the Lands Tribunal. Both the local valuation court and the Lands
Tribunal would inevitably not be able to consider the validity of the estimate
until after April 1 1973 and all parties could then check the valuation
officer’s estimate with lettings made up to April 1 1973. Thus the correctness
of the valuation officer’s estimate can be checked after the valuation list has
come into force and the common valuation date has passed. In the present case a
comparison of the valuation officer’s estimate of rents reasonably obtainable
for the appellants’ premises with the rents proved to be obtained or obtainable
in the first quarter of 1973 for comparable premises showed that the valuation
officer’s estimate was accurate. So much is now conceded.
On behalf of
the appellants it was submitted that the provisions of section 20 and section
68(4) of the 1967 Act are inconsistent with any implication that the Act
created a common valuation date which was April 1 1973.
Section 20
does not deal with the making of the valuation list but with the alteration of
a list after it has come into force on April 1 1973. Such an alteration to a
valuation list must not result in the value of the hereditament exceeding ‘the
value which would have been ascribed thereto in that list if the hereditament
had been subsisting throughout the year before that in which the valuation list
came into force, on the assumptions that at the time by reference to which that
value would have been ascertained’ the hereditament was in the same state and
the locality in which the hereditament is situated was in the same state as at
the date of the proposal for alteration of the valuation list. In the present
case this section merely prevents an alteration to the list reflecting
increases in rent value for any period after April 1 1973. The appellants
contend that if the original valuation list was intended to reflect values as
at April 1 1973, that being the common valuation date, the draftsman of section
20 would not have used the cumbersome expression ‘time by reference to which
that value would have been ascertained’ but would have referred to the common
valuation date or the date when the valuation list came into force. I do not
accept this inference; section 20 is appropriately worded to fulfil its
purpose, it does not contradict section 68(1) or suggest any common valuation
date for the purposes of the valuation list other than April 1 1973.
The appellants
also suggested that section 68(3) and (4) were inconsistent with any inference
that there was a common valuation date of April 1 1973. Section 68(3) and (4)
do not deal with the preparation of a valuation list but enable a valuation
officer to revise a list between December 31 1972 after it has been completed
and April 1 1973 when it comes into force. Section 68(3) enables a valuation
officer to revise the list in the light of any material change of circumstance
defined by section 68(4) which occurs after ‘the time by reference to which the
valuation officer prepared so much of the list as is affected by that change of
circumstances’. Section 68(4) sheds no light on the common valuation date, the
date when each hereditament must be deemed to be let for the purposes of
preparing the list. Section 68(3) and (4) deal only with the hereditament which
suffers a change of circumstances occurring after the date when the valuation
officer ascertained the relevant facts on which his estimate was based.
In the result
I can find nothing in the Act inconsistent with the inference that section
68(1) established April 1 1973 as the common valuation date by reference to
which each valuation officer must estimate the rental value of each
hereditament. The appellants admitted that nothing in the Act indicated any
common valuation date save April 1 1973. They accepted that the principles of
rating valuation required that all valuation officers should accept the same
common valuation date. The appellants’ counsel was quite unable to provide any
convincing answer to the questions posed by my noble and learned friend, Lord
Bridge of Harwich, as to how the common valuation date, if not April 1 1973,
was to be ascertained and by whom it was to be determined. The appellants
asserted by reference to a graph which their surveyor dignified by the name of
a tonogram and by deductions from that graph by a process which their surveyor
exalted to the science or art of ‘tonometry’ that in relation to premises in
Oxford Street and Bond Street and elsewhere consisting of 182 hereditaments out
of 135,000 hereditaments comprised in the Westminster rating area, it was
possible to show that on average the rent estimates made by the valuation
officer corresponded more closely to rents current in late 1970 than they
corresponded to rents payable subsequently. Therefore, according to the
argument of the appellants, the valuation officer had intentionally or
accidentally determined that the common valuation date for the Westminster
rating area should be late 1970. The rental value for the appellants’ premises
estimated by the valuation officer was £250 per square metre of zone A
floorspace (a rent for the basic unit from which, it is common ground, the rent
of the whole shop can be calculated) corresponding to rents prevailing on April
1 1973; the zone A rent should be reduced uniformly to £175 equivalent to
average rents prevailing in late 1970. It must be assumed that a common
valuation date of late 1970 had been co-ordinated by the Commissioners of
Inland Revenue with all valuation officers. This assumption was flatly
contradicted by the actual instructions of the Commissioners of Inland Revenue
which plainly indicated to valuation officers that they ought to estimate rents
payable on a common valuation date of April 1 1973.
The evolution
of the thoroughly fallacious reasoning of the appellants followed a tortuous
path. The valuation officer for Westminster duly signed the valuation list by December
31 1972. On August 2 1973 the appellants, unhelpfully, but in accordance with
recognised practice, proposed a reduction in the rateable values of their
Regent Street premises to the nominal sum of £1. In December 1975, January 1976
and April 1976, the appellants’ surveyor acting on behalf of certain other
ratepayers in Oxford Street and Bond Street secured the agreement of the
valuation officer to a reduction of the rateable values of his clients’
premises. The reductions were not uniform but varied in terms of zone A rent
from £25 to £95. No such agreement was reached with regard to the appellants’
premises in Regent Street. The appellants pursued their proposals for
alteration of the valuation list pursuant to section 76(5) of the 1976 Act to
the local valuation court, which is required to ‘give such directions with
respect to the manner in which the hereditament in question is to be treated in
the valuation list as appear to them to be necessary to give effect to the
contention of the appellant if and so far as that contention appears to the
court to
respondents appealed to the Lands Tribunal on quantum. The appellants appealed
to the Lands Tribunal on the grounds that their hereditaments ought to be
valued by reference to rents ‘equivalent to 1969 rental levels’. By section 77
of the Act, the Lands Tribunal ‘may give any directions which the local
valuation court might have given’. The Lands Tribunal rejected the jargon of
tonometry which provided the argument in favour of a common valuation date of
late 1970. The Lands Tribunal, however, fell victim to alternative jargon which
involved the determination of a ‘stop date’ by means of which it was argued,
and accepted by the Lands Tribunal, the appellants’ premises should be valued
as though they had been let at the end of 1971.
The
appellants, pursuant to section 3(4) of the Lands Tribunal Act 1949, required
the Lands Tribunal to state a case for the decision of the Court of Appeal on
the grounds that the decision of the Lands Tribunal was ‘erroneous in point of
law’. All three parties appealed to the Court of Appeal. On December 9 1982 the
Court of Appeal, in an impeccable judgment of the court delivered by Sir
Patrick Browne, ignored the tonogram and the stop date, construed the General
Rate Act 1967 according to its terms and intentions and upheld the valuation
officer’s estimate of the rental values of the appellants’ premises because
those estimates corresponded to rental values prevailing on the common
valuation date, April 1 1973, pointed out by the Act. The Court of Appeal
granted the appellants leave to appeal to your lordships’ House.
While I
acknowledge the ingenuity, sincerity and experience of the surveyor who was
responsible for the ‘tonogram’, I reject this method of approach entirely. It
is always open to a ratepayer to urge that his rateable value should be
decreased because other comparable properties have been assessed at lower
figures. Disputed questions of fact and fairness lie within the province of the
local valuation court and the Lands Tribunal. But a ratepayer cannot as a
matter of law require his assessment to be reduced to the lowest plausible
common denominator said to be deducible from a comparison of rents and
estimates of other hereditaments on a time basis. In the case of each
hereditament it is for the valuation officer, the local valuation court and the
Lands Tribunal to determine the rental value appropriate to that hereditament
in the light of all the circumstances and available information. If as in the
present case the estimate of the valuation officer reflects the rental value of
the hereditament on the common valuation date, April 1 1973, the ratepayer has
no cause for complaint. Estimates for other premises which are too high can be
reduced at the behest of the ratepayer. Estimates which are too low can be
increased on the initiative of the valuation officer or the rating authority.
The appeals must be dismissed and the appellants must pay the costs of the
first respondent valuation officer of the appeal to your lordships’ House. The
second respondents, the rating authority, were financially interested in the
results of these appeals but their interests were identical to those of the
valuation officer. Moreover it was in my opinion the task of the valuation
officer rather than the task of the rating authority to ascertain whether as a
matter of law all the estimates of all valuation officers should be based on a
common valuation date, which was the quinquennial 1st day of April. The rating
authority were entitled to appeal before your lordships but must pay their own
costs of exercising that privilege.
LORDS FRASER
OF TULLYBELTON, KEITH OF KINKEL, SCARMAN and BRIDGE OF HARWICH agreed that the
appeal should be dismissed for the reasons given in the speech of Lord
Templeman and did not add anything.
