Rating — General Rate Act 1967 — Appeal by rating authority against decision of Lands Tribunal reducing the rating assessment of Space House, Kingsway, London WC2, two office blocks occupied by the Civil Aviation Authority, to the nominal figure of £1 — At the date of a proposal by the CAA works were necessary to complete the building, to carry out repairs because of deterioration during previous years, and to remedy structural defects due to the use of high alumina cement concrete (HAC) in beams and to the existence of stresses and strains in ‘Y’ columns — The Lands Tribunal assumed for the purpose of this decision that the building was in a completed state and that, with the exception of the remedial work required for the HAC beams and the ‘Y’ columns, the rest of the work was repairs — The tribunal concluded that, by reason of this remedial work, which differed from ordinary repairs within the meaning of section 19, and the general doubt and uncertainty about the state of the building, the premises were for rating purposes unlettable — Held that the appellants had failed to establish any error of law in the tribunal’s conclusions — Appeal dismissed — Observations by Megaw LJ on the need for appellants to formulate with clarity and precision the questions of law which the court is asked to consider.
This was an
appeal by the London Borough of Camden against the decision of the Lands
Tribunal (1978) 248 EG 957, 1019, whereby the assessment for rating of the two
large office blocks known as Space House in Kingsway, which had been shown as
gross value £1,200,000, rateable value £999,972, was reduced to the nominal
figure of £1. The first respondents to the appeal were the Civil Aviation
Authority, the lessees of the hereditament, and the second respondent was the
valuation officer, A J Langford.
G E Moriarty
QC and G R G Roots (instructed by the Solicitor, London Borough of Camden)
appeared on behalf of the appellants; J C Taylor and P H Morgan (instructed by
Richards, Butler & Co) represented the first respondents; A P Fletcher
(instructed by the Solicitor of Inland Revenue) represented the second
respondent.
Giving the
first judgment at the invitation of Megaw LJ, EVELEIGH LJ said: This is an
appeal from the decision of the Lands Tribunal, where the assessment of a
hereditament described as ‘Offices, Showrooms and Premises, Sub-basement and
1st-5th Floors, Space House, 43-59 Kingsway, London WC2’ was reduced to the
nominal value of £1. The premises which are the subject of the appeal comprise
two large office blocks known as Space House situated in Kingsway in the London
Borough of Camden. Those offices were completed as a shell in or about 1966.
There then remained a substantial amount of work to be done before the building
was in its final completed state and, by 1968, the work was far from complete.
In consequence of that a notice was served upon the owners by virtue of
Schedule 1 to the General Rate Act of 1967. By that notice and with the
agreement of the parties concerned, December 1968 was fixed as the date for
completion. The property was assessed and rates were in fact paid thereafter;
and, in 1973, in the new valuation list which came into force on April 1 of
that year, the premises were shown with an assessment of gross value
£1,200,000, rateable value £999,972.
At about the
end of 1974 the Civil Aviation Authority took an interest in the building and
finally entered into a lease to begin in February 1975. The premises were still
incomplete. There remained a great deal of work to be done and, in addition to
that, the premises had deteriorated, having stood empty, and substantial
repairs were needed. Furthermore, it had been discovered that the concrete
referred to as HAC was suspect; and, also, the reinforced concrete columns,
which were in the shape of a ‘Y’ and called in this case ‘Y’ beams, had been
subjected to strain and some of them showed minor cracks which led to some
anxiety as to their future stability and duration.
The authority,
none the less, were prepared to take the property and they entered into
occupation on June 5 1975, that is to say, of part of the premises, and
occupied other parts of the premises from time to time as work was done upon
the building, making them fit for occupation.
On March 21
1975, some two months before the occupation began, a proposal for the
alteration of the valuation list was made on behalf of the Civil Aviation
Authority, and it was in relation to that proposal that the decision of the
Lands Tribunal was given and with which this court is concerned. The principles
applicable to a case of this nature were referred to in the decision of the
Lands Tribunal. The first principle, as to which there is no dispute in this
court, is that the premises have to be assessed as at the date of the proposal,
namely March 21 1975. The valuation is governed by section 19(6) of the General
Rate Act 1967, which provides as follows:
‘Gross
value’, in relation to a hereditament, means the rent at which the hereditament
might reasonably be expected to let from year to year if the tenant undertook
to pay all usual tenant’s rates and taxes and the landlord undertook to bear
the cost of the repairs and insurance and the other expenses, if any, necessary
to maintain the hereditament in a state to command that rent.
Schedule 1 to
the Act was also relevant to the determination of the case and, in the decision
of the tribunal, that schedule is referred to in detail. There is no need to
repeat it here in this judgment.
Now, the
condition of the premises as at the date of the proposal is of considerable
importance. It is agreed as a general principle that the valuation should be
arrived at rebus sic stantibus, that is to say, taking into
consideration the existing state of affairs as at that date. The existing state
of affairs in so far as is relevant for consideration of this appeal was the
condition of the property. There were three categories of work that required to
be attended to: firstly, the work necessary to complete the building, the work
that should have been done by December 1968; secondly, the work necessary to
make good the decay that had occurred in the intervening period, which can
unequivocally be called repair work; then a third category of work which, at
the moment, I forbear from giving any particular name, the work that related to
the concrete and the ‘Y’ beams.
The actual
extent to which work might be done, or might be thought advisable, in respect
of those two matters — the cement and the ‘Y’ beams — was not precisely known.
What was certainly known was that attention ought to be given to it; but it was
work
required to be done there and then. It has been submitted in this court,
indeed, that, in so far as that work would produce a condition that made the
building unlettable, it need not be done for a very considerable time; but I
shall return in greater detail to that matter in a moment.
Faced with
that position — the condition of the building on March 21 1975 — the member
decided that the premises were in fact unlettable and, accordingly, made the
nominal assessment. Referring to the work of the ‘Y’ beams or columns and the
work of the HAC beams, he said this:
I do not
consider that these two items can in any sense be deemed to be work of repair,
still less that they can be considered as repairs which the hypothetical
landlord is to be deemed to have carried out. They both represent substantial
structural defects going far beyond what would ordinarily be considered to be
repair. They had their origin in defects of design or construction, and the
remedying of these defects has the result of producing a building which was in
a material and significant way better than and different from that which
existed before.
That being so,
he came to the conclusion that this work, which was not to be regarded as work
of repair, was such, however, as made the building unlettable.
It was
submitted on behalf of the appellants that the building should be treated as
though it had been completed and all necessary works done. It was said that
their failure to comply with the notice specifying December 1968 as the
completion date meant that the building should be deemed to have been completed
on that date and that it should be deemed to be in a lettable condition
thereafter. The member assumed, for the purpose of his decision, that the
building was in a completed state; in other words, he ignored the work that was
done for the purpose of completing the building and, furthermore, he ignored the
effect of work done for carrying out the repairs in respect of those defects
that were the result of deterioration. He however regarded the HAC beams and
the ‘Y’ columns as in a category of their own and held that they were
responsible for the building being unlettable.
In the notice
of appeal the grounds stated were as follows:
That the Lands
Tribunal was wrong in law in deciding that the Y column work and the work on
the HAC beams were not works of repair which were to be deemed for the purposes
of section 19 of the General Rate Act 1967 to have been done at the date of the
proposal; and
(2) That there was no evidence that at any time
after the date of deemed completion the hereditament was for any substantial
period incapable of occupation by reason only of the Y column work or the work
on the HAC beams.
There have
been various reports received in relation to the ‘Y’ columns and evidence was
given to the effect that the cracks in those columns indicated to the expert, a
Mr D A S Lloyd, that there was movement in the building which, to some extent,
might jeopardise its stability and work eventually was done, that is to say,
subsequent to March 21 1975, the total cost of which work to the ‘Y’ columns
amounted to £330,000. The cracks were sealed, struts were inserted between the
columns and, as an extra precaution, an extra ring or collar was added to the
building to prevent movement. In so far as the cement is concerned, there had
been considerable interest as a result of the fall in the roof of the swimming
pool at the Sir John Cass and Red Coat School in Stepney, and the Department of
the Environment had circulated local properties, drawing attention to the
suspicion that surrounded this particular concrete, high alumina cement (HAC),
and one passage in that circular reads:
It follows
from this that there is now greater cause for concern, and that all buildings
with roofs of a type similar to the Stepney school, that is to say having
isolated pre-stressed beams of high alumina cement concrete . . . must be
regarded as suspect.
A report
obtained from consulting engineers dated September 20 1974 contained this
sentence:
To date we
have not yet found any reasons which would cause us to believe that serious
manufacturing faults have occurred in the production of the HAC floors in this
building.
A subsequent
report on March 18 1975 contained this statement. It related to the fact that
test cores or holes had been drilled and samples taken from examination:
Since of the
60 cores tested as many as 32 per cent have an equivalent cube strength below
20 N/mm2 (2,900 lbs/sq in) and 13 per cent have a strength lower
than 15 N/mm2 (2,175 lbs/sq in) we are seriously concerned with the
problems which may arise due to high porosity of the concrete which would
accompany such low strengths. The possibility of corrosion of reinforcement
should be given more serious consideration than merely the slight likelihood of
further deterioration of the strength of the already highly converted concrete.
I draw
particular attention to the passages quoted from these reports because they do
not state a positive condition in the building but, in effect, are cautioning
against the possibility of the concrete being defective to a serious degree.
This is a matter that will be of importance in considering the nature of the
repairs that were contemplated and when and whether they might be done.
I say
‘repairs’; that is, in fact, begging the question. It is important to have this
in mind when considering whether the work in relation to the HAC beams and ‘Y’
columns can truly be described as work of repair. At March 21 a considerable
amount of work was being done and it is agreed on all sides that, as a result
of that work, the premises could not be let and they could not be occupied for
the purpose for which they were intended. Against those facts and the precise
details of the work being carried on which has been stated with great
particularity in the very thorough decision of the tribunal that is before this
court — I do not propose to reiterate them here–one can now consider the two
grounds of appeal.
As to ground
1, namely that the work to the ‘Y’ columns and the HAC work should be treated
as works of repair, this, to my mind, is a question of fact. Are they works of
repair as contemplated by section 19 of the General Rate Act? The work that would be done — or was, in
fact, ultimately done — was work which resulted in the building being a
stronger and better building than it had been before that work was done. It
cannot, in my opinion, be said that the fact that the building must be deemed
to be completed in December 1968 also means that the building must be deemed to
be in the condition in which it would be after the remedial work to the ‘Y’
columns and the HAC beams was carried out. It can only mean that the building
would be deemed to be completed to the extent that those responsible for its
design had contemplated that it would be completed in December 1968, and that
certainly did not include this particular work. Therefore, one asks: Is this
work to be regarded as repairs? That is
to say, is it to be regarded as repairs for which the landlord would make
himself responsible? Whether or not
something is to be treated as repair is a question usually of fact and degree.
In the case of Brew Brothers v Snax [1970] 1 QB 612, which was
dealing with the tenant’s liability under a repairing covenant but, mutatis
mutandis the decision would apply clearly to a landlord’s liability, the
headnote at p 614 reads:
. . . that
whether the end-product of work requiring to be done properly constituted
‘repair’ was a question of degree in every case; that (Harman LJ dissenting)
the correct approach was for the court to conclude, on a fair interpretation of
the precise terms of the lease in relation to the state of the property at the
date of the lease whether the work could fairly be called repair or not; and
that in coming to its conclusion the court must look at the work as a whole and
not at individual component parts thereof . . .
Phillimore LJ
at p 645 said this:
Megaw J had of
course specifically held that with the exception of the foundation to the flank
wall the underpinning of the other two main walls of the premises would be
necessary to render the building safe in accordance with the Pynford report and
the notice of dilapidations served by the landlords.
I agree with
the judge, who concluded after reviewing the authorities and particularly the
observations of Lord Esher MR in Lister v Lane & Nesham
[1893] 2 QB 212, 216 and those of Buckley LJ in Lurcott v Wakeley
& Wheeler [1911] 1 KB 905, 924, that the vital question in each case is
whether the total work to be done can properly be described as repair since it
involves no more than renewal or replacement of defective parts, or whether it
is in effect renewal or replacement of substantially the whole. It is, as Megaw
J held, a question of degree in each case. It is well established that a tenant
is not liable to produce a different thing from that which he took when he
entered into the lease or to remedy the results of bad design.
In the present
case I would have come to the same conclusion as that of the Lands Tribunal.
This was work that, in effect, produced a building of a different quality from
that which was contemplated in 1968 and was work which, to my mind, would not
be said to fall within the landlord’s repairing covenant. For one thing it was
not
that, as a result of the ‘Y’ columns and the HAC beams, it could not be used as
offices. The condition of those members was such that a prudent landlord might
well, at some time, decide, for the continuing and ultimate stability and
duration of the building, to carry out such work as those investigations
indicated was desirable — at some time and a time of his choosing. It happened
in this case, by agreement between the tenant and the landlords, the work was
begun — the investigatory work anyway — before March 21 and was in the process
of being done during March 21. But the effect of the uncertainty that then
overshadowed the building was to make that building unlettable in the view of
the Lands Tribunal. So, in so far as the first ground of appeal is concerned, I
would reject that contention for those reasons. It is a question of fact, but,
for myself, I would have come, for the reasons I have stated, to the same
conclusion.
I now turn to
the second ground. The way the member approached the matter was to assume, for
the purpose of his conclusion, that the works of completion should be deemed to
have been done, and that any disturbance that existed from the fact that those
works were in the course of being done was to be ignored. He further assumed
that, with the exception of the ‘Y’ column work and the HAC beams, the other
work was to be regarded as work of repair. He reached his conclusion,
therefore, upon the basis that the disturbance and, as a result, the fact that
the premises were made unlettable, was due to the ‘Y’ columns and the HAC
beams. He referred to the fact that work was going on at the relevant date in
relation to those two items. He said:
The fact is
that it — that is to say, the work — was going on at the relevant date and is a
material circumstance in valuing the hereditament at that date rebus sic
stantibus. This extends not only to the work in the beams and the work in
preparation for the Y columns. It also includes, in my judgment, all the
necessary consequential disturbance involving the making good of damaged
decorations, the delivery of scaffolding and the erection of the hoarding.
Finally, and probably as important a factor as any, there was the general doubt
and uncertainty.
The hoarding
was the hoarding that was put around the building to enable this work to be
carried out without interference. So what he did was to regard all the
circumstances and the ‘Y’ columns and the HAC beams as if they would have
affected a prospective tenant and the landlord at that time and to come to the
conclusion that all those circumstances, and in particular the general doubt
and uncertainty, would have made the premises unlettable.
Before this
court it has been contended that, although it is right from the point of view
of assessing the gross value of the premises to ignore the fact that repairs
were going on, the fact that repairs were going on are relevant for the court’s
consideration in deciding what is the cause of the unlettability — if one can
use that expression — of this hereditament. Mr Moriarty has submitted that the
actual repair work being carried on was so extensive as, of itself, to make the
premises unlettable; and, if not that work, then the work of completion that
was actually being carried on. He says that, although for the purpose of
deciding whether or not the premises are to be treated as occupied, the deeming
provision must be applied and the premises must be deemed to be complete. He
also says that in so far as the valuation side of the problem is concerned, the
actual state of affairs must be considered and, if the works being done are
having an effect upon the value of the property, then it cannot be said that
the work on the ‘Y’ columns and the HAC beams was the only cause of the
property being unlettable. In that event, he has asked the court to remit the
matter to the member for further consideration, submitting to this court that
there should have been a detailed examination of the amount of disturbance
attributable to each of these factors and, as I understand it, for how long
that disturbance was likely to persist.
That argument,
to my mind, does not take proper account of section 19. That section requires
assessment to be made on the basis that the landlord is responsible for
repairs, and it is assumed that he will do them and that the tenant will be
content to pay the rent that the premises will, in consequence, command.
Therefore, the fact that repair will be required will not affect the assessment
so as to produce a lower rent. See Wexler v Playle [1960] 1 QB
217. The same principle must apply if the repairs are actually done, so that
the normal use of the building is being interrupted.
Now, this does
not mean that repair activity is outside the principle that the matter must be
considered rebus sic stantibus at the date of the proposal. The
condition of the premises is not regarded as an adverse factor affecting the
tenant’s willingness to pay rent and the landlord’s acceptance of it, so long
as the condition is remediable by the landlord fulfilling his obligation to
repair. So the court is not precluded from having regard to what is going on,
to looking at what is going on and then deciding this is repair for which the
landlord will be responsible. The conclusion from a valuation point of view is
that the value is in no way diminished on that account. The valuation for
rating purposes (and I would emphasise those words) is not affected by
repairs and, therefore, the premises are not, for rating purposes, to be
treated as unlettable on that account.
On all sides
in the present case it is agreed that these premises were unlettable; and, if
they are not to be treated as unlettable because of the repairs, they can, in
my opinion, only be so regarded as a result of the other work, namely, the ‘Y’
columns and the HAC beams. In so far as the work of completion is concerned,
again, they have no effect upon the valuation. They have to be treated as being
done, and it follows from this, in my opinion, that the only relevant cause of
the premises being unlettable from a rating valuation point of view in
accordance with section 19 would be structural conditions relating to HAC beams
and the ‘Y’ columns.
For those
reasons I would reject the second ground of appeal also and would dismiss this
appeal.
OLIVER LJ
agreed.
Also agreeing,
MEGAW LJ said I agree so completely with the conclusions expressed by Eveleigh
LJ, with the reasons which he has given and with the clarity with which he has
expressed those reasons that it would be otiose verbiage if I were to try to
express any of the reasons in words of my own. I shall, therefore, avoid the
conventional judicial meiosis expressed in the phrase ‘adding a few words of my
own’. But I qualify that with two observations.
The first is
that I would like to pay tribute to the attractive presentation and the
ingenuity with which Mr Moriarty for the appellants sought to demonstrate that
questions which were essentially questions of fact were questions of law. That leads
up to the second observation: while I appreciate that there may be difficulties
in the way of dealing with the matter in the way which I think would be
desirable, it does seem to me that there is grave danger of waste of time and
money if, in matters of this sort coming on appeal from the Lands Tribunal, the
questions of law which the court are asked to decide are not stated in the case
to the court with reasonable clarity and precision. The actual case stated to
this court in the present case was:
. . . whether
upon the findings of fact I came to a correct decision in law.
That very
carefully reasoned decision setting out the views of the member of the Lands
Tribunal on facts and on law, without any unnecessary verbiage, occupies some
31 pages. It is apparent that, in those 31 pages, there may well be a large
number of questions which could be described as questions of law. It is not,
therefore, very helpful in this court to be asked to decide whether the member
of the tribunal came to a correct decision in law. It would certainly have very
great advantages in saving time and money for all concerned if it were possible
that the true questions of law which it is sought to bring before this court
could be defined with reasonable precision in the case stated for the
consideration of this court. It should, I think, be for the intended appellant
to formulate with precision the question or questions of law which he regards
as arising in the decision of the tribunal or which he wishes to contend have
been wrongly decided. It would then be for the tribunal to consider whether or
not that question or those questions is or are properly formulated as a
question or questions of law and whether or not it or they can properly be said
to arise in the tribunal’s decision.
The appeal
was dismissed, the first respondents, the Civil Aviation Authority, being given
the costs of the appeal. No order was made as to the costs of the second
respondent, the valuation officer.
