Council tax – Dwelling-house – Valuation list – Respondents living near motorway – Traffic on motorway increasing – Respondents seeking lower band rate owing to material reduction in value – Appellant listing officer refusing alteration – Decision overturned – Section 24(10) of Local Government Finance Act 1992 – Whether increased traffic amounting to change in physical state of locality – Appeal allowed
The respondents, who occupied properties close to a motorway, applied to have their homes placed in a lower council tax band. They argued that the increased noise and fumes resulting from the intensified use of the motorway had given rise to a material reduction in the value of their houses, caused in whole or in part by a change in the physical state of the dwellings’ locality, within section 24(4)(a)(ii) and 24(10) of the Local Government Finance Act 1992. The appellant listing officer refused their application on the basis that, in the absence of any alteration to the motorway, the increased noise was only an environmental change and not “physical” in nature within the meaning of section 24(10).
Allowing an appeal by the respondents, the local valuation tribunal found that the increased volume of traffic and its attendant noise had caused a change in the physical state of the locality of the dwellings that affected their value. Dismissing the appellant’s appeal, the High Court held that those changes were capable of amounting to a change in the physical state of the dwellings within section 24(10) when that provision was construed in the light of its purpose, which was to produce a fair valuation for the purposes of the payment of council tax.
The appellant appealed. He contended that section 24(10) was intended to deal with observable changes in the physical fabric of the local area and did not cover fluctuating matters such as traffic and its environmental consequences. He pointed to the absence from the 1992 Act of any wording similar to para 2(7)(d) of Schedule 6 to the Local Government Finance Act 1988, which referred to matters that “though not affecting the physical state of the locality, are nonetheless physically manifest there”. He contended that valuations under the 1992 Act were to be made by reference to the market values of an earlier date, but assuming the state of the property and its locality to be as at the later date at which they fell to be valued, thereby reflecting the first limb of the doctrine of rebus sic stantibus, dealing with physical state, but not, unlike 1988 Act, the second limb regarding use.
Held: The appeal was allowed.
In valuing a property for council tax purposes, the listing officer was concerned only with the essential fabric and character of the house and its locality. He was not concerned with other matters that went to their enjoyment, use, occupation or activity, such as the particular degree of traffic to be met on a particular date. A house had to be valued according to the physical state of its locality but otherwise according to a “bible” of information regarding values at an earlier date, prepared by the commissioners of the Inland Revenue, and that contained comparative guidelines as to how the value of a house might differ, in general, depending upon the physical location on a road of a particular category or configuration. Although the dwelling and locality had to be taken as they were at the time of the list or its alteration, rather than at its base 1991 valuation date, that was so only in certain respects that were set out in legislation. The emphasis in section 24(10) on the “physical” state of a dwelling was intended to distinguish matters of physical fabric, and perhaps character, from matters of use, activity, enjoyment and occupation. A distinction had to be made between the first limb of rebus sic stantibus, dealing with the physical state of the property, and the second limb, which dealt with use.
That construction of the 1992 Act was supported by the difference in language between its provisions and those of the 1988 Act. The expression “physical state of the locality” was given a deliberately narrow meaning. A greater level of traffic, together with its environmental consequences, on a motorway whose physical state had not changed throughout the relevant period was not capable of coming within the language of the 1992 Act. That Act, as a matter of policy, placed a much tighter restriction upon the possibilities of altering a valuation list in the case of domestic property than did the 1988 Act with non-domestic property. It would be contrary to that policy to alter the list for a reason that, although manifesting itself locally, was part of a nationwide trend: Addis v Clement (VO) [1987] 1 EGLR 168; [1987] 281 EG 683, CA and [1988] 1 EGLR 157; [1988] 10 EG 129, HL considered.
Timothy Mould QC and Daniel Kolinsky (instructed by the legal department of HMRC) appeared for the appellant; Tim Buley (instructed by the Treasury Solicitor) appeared as advocate to the court; the respondents did not appear and were not represented.
Sally Dobson, barrister