Rating – Valuation – Telecommunications network – Whether Lands Tribunal erring in law in valuation – Whether incorrectly omitting to take relevant comparator into account – Whether European competition law affecting decision – Appropriate date for alteration to rating list to take effect – Ratepayer’s appeal dismissed – Valuation officer’s appeal allowed in part
Vtesse operated a fibre-optic telecommunications network, which consisted partly of “own-build” cables, located in ducts that belonged to Vtesse and partly of “leased fibres” in cables and ducts that belonged to third parties. The leased fibres formed the greater part of the network. On an appeal by the valuation officer (VO) from a valuation tribunal decision of October 2004, the Lands Tribunal (LT) held that Vtesse was in rateable occupation of the leased fibres as well as the own-build cables and that the entire network was a single rateable hereditament: see [2006] PLSCS 73. The Court of Appeal upheld decision: see [2006] EWCA Civ 1339; [2006] PLSCS 212.
In a subsequent decision, the LT held that the assessment of the network in the 2000 rating list should be altered to £110,000 with effect from April 2003, and £470,000 with effect from November 2008.
The VO appealed, contending that the effective date of the £470,000 entry should be either March 2004 or October 2004, and further challenging the omission to provide for an intermediate entry of £125,000 as of June 2003. Vtesse accepted the latter point, subject to its own grounds of appeal on the correct figures. It submitted that the LT’s valuation was flawed since it failed to take into account the rateable value of the comparable and competing fibre-optic network operated by BT. In that connection, an issue arose as to whether any meaningful comparison could be made between Vtesse’s network and that of BT, since the size and character were different, and whether the BT network could relevantly be disaggregated in order to identify a figure that was attributable to the fibre-optic network component that provided similar services to those of Vtesse. Vtesse contended that the LT had erred in failing to take into account an Ofcom report that contained figures relating to BT’s services. It further raised arguments relating to European competition law, and contended that the LT had erred in considering itself bound by a European Commission decision on that subject, which had been given following a formal investigation that the Commission had instigated in response to a complaint by the respondent alleging preferential tax treatment of BT.
Held: Vtesse’s appeal was dismissed; the VO’s appeal was allowed in part.
(1) Although the LT might have erred in regarding itself as being bound by the Commission decision, that did not vitiate its conclusions since it had not reached its decision on that basis but had decided the case on the evidence before it and rejected the respondent’s valuation. Further, it had not erred in omitting to deal with the Ofcom report in its decision. That report had not been a central or significant element of the respondent’s case but had merely been used to support, in a general way, its proposition that it was possible, relevant and appropriate to disaggregate the BT assessment to make a comparison with the respondent’s network. The respondent had produced its own expert evidence as to the possibility and utility of disaggregation and as to how that was to be done.
Since the fundamental basis of rating law in the UK was one of equality as between hereditaments, neither the general principle of equal treatment under EC law, nor Commission Directive 2002/77 on competition in the market for electronic communications networks and services, added anything to the general domestic law. The valuation officer was not obliged to make a comparison between BT’s assessment and that of the respondent; whether such a comparison could usefully be made was a matter of valuation judgment to be made on the basis of relevant material, and could legitimately be raised before the LT. Since the parties’ respective valuers had differed on the issue, the tribunal had to decide on a consideration of the evidence adduced and it had been entitled to reject the respondent’s case. The onus had not been on the valuation officer to adduce additional evidence as to the basis of the BT assessment. Accordingly, the entry of £110,000 from April 2003 should stand, and the list should be amended by the inclusion of an intermediate entry of £125,000 with effect from June 2003.
(2) The £470,000 entry was an alteration that could be made only by the valuation tribunal, the LT or the court. Accordingly, the general rule was that it took place from the date on which the list became inaccurate, pursuant to regulation 13A(12) of the Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993, unless, as in the instant case, it increased the rateable value above the amount in the list at the date of the ratepayer’s proposal, in which case the increase took effect from the date of the decision, pursuant to regulation 44(4). The respondent had not waived the protection of regulation 44(4), or agreed not to invoke it, by agreeing a supplementary statement of facts that set out matters such as the length of the network in March 2004. An agreement that recorded the extended length of the network at that date did not amount to an agreement that any alteration to the list to reflect that extended length should have effect from March 2004 notwithstanding regulation 44(4).
Nor could the respondent be denied the protection of regulation 44(4) against retrospective increases on the ground that it had misled the valuation officer as to relevant circumstances and the legislation should not be construed so as to allow it to gain an advantage from its own wrongful act. The wrongful gain principle gave way to contrary indication in the relevant legislation and could not be applied in the instant case since the 1993 Regulations expressly provided for the consequences of error or default by a ratepayer where such consequences were intended to result and had not done so in respect of regulation 44(4).
However, the period of protection built into regulation 44(4) did not extend to the period of any appeal from a decision of the valuation tribunal, whether to the LT or to the courts; otherwise an inbuilt incentive would operate in favour of delay. Although the LT had a discretion under regulation 47(5), there were no grounds in the instant case for making any other order than that the increase should take effect from the date of the valuation tribunal’s decision in October 2004.
Christopher Vajda QC, Timothy Morshead and Alan Bates (instructed by the legal department of HM Revenue & Customs) appeared for the VO; Nicholas Green QC, Hugh Mercer QC and Tony Singla (on Vtesse’s appeal) and Christopher Lewsley (responding to the VO’s appeal) (instructed by Harbottle & Lewis LLP) appeared for Vtesse.
Sally Dobson, barrister