Non-domestic rates – Rating appeal – Costs – Applicant appealing against decision of Valuation Tribunal for England – Appeal allocated for hearing under simplified procedure – Respondent valuation officer conceding appeal shortly before hearing – Applicant applying for costs under r 10(3) of Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 – Whether unreasonable conduct by valuation officer justifying departure from general “no costs” rule in simplified procedure cases – Application dismissed
The applicant appealed against a decision of the Valuation Tribunal for England (VTE) confirming the assessment of a valuation officer that certain loose boxes at the applicant’s property in Whitehaven, Cumbria, should be entered in the list as a separate hereditament, with a rateable value of £480, with effect from August 2011. The applicant’s case was that the loose boxes were not liable to non-domestic rating since they fell within the curtilage of her home.
The appeal was allocated for determination under the tribunal’s simplified procedure. Just under three weeks before the hearing of the appeal, the respondent, who had taken over the case from the previous valuation officer, informed the tribunal that after inspecting the property he was willing to concede the appeal and delete the entry from the rating list. The tribunal accordingly made a consent order deleting the relevant entry, while noting that the applicant reserved the right to make a claim for her costs under r 10(3) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010.
The applicant subsequently made her application for costs, claiming that a departure from the general “no costs” rule under the simplified procedure was justified on account of the unreasonable conduct of the valuation officer. She claimed a total of £5,000 costs. Part of her complaint was that the VTE proceedings had gone on for almost five years, during which time she had attended three appeal hearings, one of which had been postponed after she had waited for an hour, at another of which the valuation officer had not attended, and at the third of which the VTE had rejected her case owing to an error of law, on which ground she had now successfully appealed.
The respondent argued that the decision to concede the appeal had been taken, after inspecting the property, in the light of the decision of the president of the VTE on a series of test cases as to the correct approach to the borderline between domestic and non-domestic, and, in particular, whether equestrian facilities should be treated as appurtenances to domestic property. He submitted that, accordingly, the dispute had not been prolonged unduly and that there were no exceptional circumstances that warranted an order for costs.
Held: The application was dismissed.
The power conferred by r 10(6)(d) to award costs in appeals from the VTE was modified by para 12.8 of the Upper Tribunal’s Practice Direction, such that, in a simplified procedure case, costs would only be awarded in exceptional circumstances. Such circumstances would include cases where a party had behaved unreasonably. The power to award costs where a party had behaved unreasonably was conferred by r 10(3)(b); r 10(3)(a) also conferred a separate power to order a party to pay “wasted costs”, which encompassed cases where costs had been incurred as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative. Such behaviour would also be exceptional and could result in an award of costs even in a case proceeding under the simplified procedure.
Where an appeal was assigned to the simplified procedure, the parties would know that, save in exceptional circumstances, they would not recover the costs that they incurred in dealing with the proceedings. Assignment of a case to the simplified procedure only took place after the parties had expressed their preference. In most cases, the option for the simplified procedure would be the informed choice of both parties, made in the expectation that they would have to bear their own costs even if they were wholly successful. In ordinary circumstances, and in the absence of unreasonable behaviour, parties to an appeal under the simplified procedure should not be discouraged from withdrawing the appeal, or conceding it, due to the threat of a costs order being made against them.
It was for the applicant to show that the valuation officer had acted unreasonably, or that there were some other exceptional circumstances that should cause the tribunal to depart from the general “no costs” rule under the simplified procedure. She had not done so. The merits of whether the property should be entered into the rating list were not patently hopeless, since the VTE had determined that it should be so assessed. While ratepayers should, to an extent, be entitled to expect the Valuation Office Agency to speak with one voice, each valuation officer was required to apply his or her own judgment to the situation presented to them, and, in marginal cases, differences of opinion were reasonably to be expected.
Shortly after taking over the case and inspecting the property, the respondent had come to a conclusion that was different from that of his predecessor with regard to the entry in the rating list. By agreeing that the entry should be deleted, he had avoided both sides incurring further costs in attending the scheduled appeal hearing. It was relevant to consider what might have been the implications for costs had the appeal proceeded to a hearing and the tribunal had made a finding in favour of the applicant. There was nothing to suggest that she would have been awarded her costs in that event.
In part, the applicant’s application for costs was based on the inconvenience and expense to which she had been put in connection with the hearings before the VTE; however, the Upper Tribunal had no power to award costs in respect of expenses incurred before the VTE. In any event, there was nothing to suggest that the valuation officer had acted unreasonably before the VTE.
There were no other exceptional circumstances that justified a departure from the general rule of no costs under the simplified procedure. Accordingly, no order for costs should be made in the appeal: Total Fulfilment Logistics Ltd v May (VO) [2014] UKUT 354 (LC); [2014] PLSCS 267 and McDonough (VO) v O’Keeffe [2015] UKUT 74 (LC); [2015] PLSCS 79 considered.
The appeal was determined on the written representations of the parties.
Sally Dobson, barrister
Click here to read the transcript of Brophy v Simmonds (VO).