Rating – Non-domestic rates – Alteration of rating list – Appellant operating theme park – Visitor numbers dropping following accident in park – Appellant proposing material change of circumstances occurred for rating purposes – Whether proposal dealing with intrinsic characteristics of hereditament or locality – Whether proposal falling within true ambit of para 2(7)(d) of schedule 6 to Local Government Finance Act 1988 – Appeal dismissed
The appellant owned and operated a theme park at Alton Towers in Staffordshire. On 2 June 2015, a rollercoaster crashed, resulting in serious injury to five passengers. The park was closed for five days while investigations were carried out but the rollercoaster did not reopen until 19 March 2016. It was common ground that the annual number of visitors to Alton Towers fell following the crash and the appellant made a proposal to alter the assessment of the park in the 2010 Rating List, which at that time was £6,625,000 with effect from 11 April 2015. The reason stated for the proposal was that the crash had resulted in a diminution in the value of the hereditament.
The valuation officer considered that the proposal was not well-founded, and a subsequent appeal to the Valuation Tribunal for England (VTE) was dismissed. The appellant appealed against that decision. The Upper Tribunal was asked to determine as a preliminary issue whether the attitude of members of the public to the thrill ride, as a result of the crash, was a matter which was physically manifest in the locality of the hereditament at the material day such that it fell within the para 2(7)(d) of schedule 6 to the Local Government Finance Act 1988.
Held: The appeal was dismissed.
(1) The change in circumstances relied upon by the appellant was not an “essential” or relevant characteristic of either the hereditament or its locality. The appellant had accepted full responsibility for the accident and pleaded guilty to offences involving breaches of section 3 of the Health and Safety at Work, etc Act 1974. It was plain that the crash and the public’s reaction to it were matters concerned with the way in which the leisure park business was operated on the hereditament. The failings under the 1974 Act, or any other failings, which resulted in the crash taking place, were attributes of the actual occupier of park. Such personal attributes were not characteristics of the hereditament for which a rateable value had to be assessed. It was well-established that the circumstances upon which the appellant sought to rely were irrelevant because they were concerned with the way in which it operated its business on the hereditament and the reaction of potential customers thereto. They had nothing to do with any intrinsic or essential characteristic of the hereditament itself or its locality. Those principles also protected a ratepayer against an attempt to increase the rateable value of his property by virtue of his personal success in running his business. Such success (or failure) was no more than an attribute of the actual occupier and not a characteristic of the property being valued or of its locality. Accordingly, the appeal had to be dismissed.
(2) Paragraphs 2(7)(a) to (cc) of schedule 6 to the 1988 Act were concerned with matters affecting the physical state or physical enjoyment or the use of the hereditament on the relevant day. Paragraph 2(7)(e) referred to “the locality of the hereditament” in terms of “other premises” within that area. The term “locality” plainly excluded the “hereditament” being valued. There was no reason to think that in para 2(7)(d), Parliament used “locality” in a different sense to include the hereditament. The phrase “the locality in which the hereditament is situated” was consistent with the manner in which “locality” was used in para 2(7)(e). There was nothing in 1988 Act to suggest that the current rating regime intended “locality” to include the hereditament being valued. Accordingly, para 2(7)(a) and para 2(7)(d) of schedule 6 to 1988 Act were mutually exclusive. The term “locality” referred to an area external to the hereditament being valued for rating purposes.
(3) The appellant’s case had nothing to do with a change in the locality as such. The changes it described in the area outside the hereditament, along with the decline in usage of car parks and accommodation within the resort, were all concerned with a reduction in demand to visit the hereditament because of a change in public attitudes to thrill rides resulting from the crash. Those were not matters affecting the physical state or physical enjoyment of the hereditament and therefore did not qualify as a material change of circumstances falling within para 2(7)(a). Furthermore, the change upon which the appellant sought to rely did not represent an alteration in the characteristics of the locality any more than it represented a change affecting the hereditament. Therefore, the appellant’s proposal was to do with the conduct of the appellant’s business on the hereditament. It did not fall within para 2(7)(d).
(4) When a rating list was compiled, para 2(7) required the valuer to take into account as at the date of that list matters affecting the physical state of the hereditament and of the locality, the use of the hereditament, and the use or occupation of other premises in the locality. Those factors representing the intrinsic, physical characteristics of the hereditament defined what was to be valued, taking into account also the intrinsic, physical characteristics of the locality. Paragraph 2(7)(d) extended that exercise to include “matters….which, though not affecting the physical state of the locality, are nonetheless physically manifest there”. That phrase had been carefully embedded as an extension to the preceding language of para 2(7)(d). It applied to matters which, though not themselves affecting a locality’s physical state, nonetheless were “physically manifest there”. Paragraph 2(7)(d) applied to a physical characteristic of the locality. It had to be a matter which itself was physically manifest in the locality. Paragraph 2(7)(d) operated so as to take that physical matter as it was on a date postdating the date on which the list was to come into force. Looking overall at the material before the tribunal, the appellant had not provided sufficient evidence to demonstrate that the reduction in the numbers of visitors in the locality of the hereditament was properly attributable to a change in the attitude of members of the public to thrill rides as a result of the crash. The change defined by the appellant was not something which was “physically manifest” in the locality at the material day.
Per curiam: In most cases it was relatively straightforward to identify whether something fell within para 2(7) of the 1988 Act, either when a list was compiled or subsequently when a material change of circumstances occurred. Where the issue was not straightforward, it might be helpful to consider: (i) whether the matter concerned an intrinsic characteristic of the hereditament or of the locality, or an extraneous matter, for example, something to do with the personal attributes of the actual occupier or the way in which a party conducts its business. If the latter, then generally it would not fall within para 2(7); (ii) whether the matter concerned a characteristic of the hereditament. If so, the issue was whether it fell within para 2(7)(a) or (b) (or either (c) or (cc) in the case of minerals or waste deposit hereditaments); (iii) if the matter did not concern a characteristic of the hereditament, whether it concerned a characteristic of the locality in which the hereditament was situated. If so, whether it fell within para 2(7)(d) or (e); (iv) if the matter concerned a characteristic of the locality, but did not affect the physical state of the locality or concern the use or occupation of other premises there, whether it nonetheless fell within the second limb of para 2(7)(d). Under that limb the question was whether the matter was itself physically manifest in the locality.
Cain Ormondroyd (instructed by Geoffrey Leaver Solicitors LLP, of Milton Keynes) appeared for the appellant; Hui Ling McCarthy QC (instructed by the Solicitor to HM Revenue and Customs) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Merlin Entertainments Group Ltd v Cox (VO)
