Church Commissioners for England v Mummery (VO)

Rates and rating — Assessment — Multi-storey car park — Effect of free local car parking policy — Effect of operating costs and car parking receipts — Whether valuation on basis of profits or tone of the list The appeal hereditament consists of a multi-storey car park situated on Marlowes shopping centre, Hemel Hempstead, containing 1,165 spaces. The local authority made no charge for the use of public car parks in the area. The valuation tribunal reduced the rating assessments to a rateable value of £158,085 from October 1 1990 and to a rateable value of £209,520 with effect from April 2 1992. The Church Commissioners appealed. The issues between the parties included, inter alia, the weight, if any, that should be given to the profits method of valuation and comparable evidence of capital values, rents and assessments. The appellant’s valuer spoke to a nominal rateable value of £1 on the profits method and rental values of £21,273 and £31,372, for the two material dates respectively, on the percentage of gross receipts method. The valuation officer also spoke to a nominal rateable value of £1 on the two alternative profits methods and values of £132,000 and £161,000 at March 1991 and July 1992. Decision: The rateable value on March 21 1991 should be £100,000 and for July 20 1992 £132,000. Evidence of rents and assessments in St Albans, Watford and Luton was admissible but had to be adjusted to reflect the free car parking policies in Hemel Hempstead, producing a range of £125 to £135.60 per car parking space. No weight was placed on that profits method of valuations. The value of car park spaces in frequent use was £130 and that of surplus spaces was £85 per space. For the first material date a pioneering allowance of 25% should be applied. The following cases are referred to in this report. Garton v Hunter (VO) [1969] 2 QB 37; [1969] 1 All ER 451; [1968] 2 WLR 86; (1968) 67 LGR 229; [1969] RA 11,CA Halsall v Brizell [1957] Ch 169; [1957] 2 WLR 123; [1957] 1 All ER 371 Hoare (VO) v National Trust [1997] 2 EGLR 229 Hodgkinson (VO) v Strathclyde Regional Council Superannuation Fund [1996] RA 129, LT K Shoe Shops Ltd v Hardy (VO) [1980] 2 EGLR 177; (1980) 256 EG 927; [1980] RA 333 Ladies Hosiery & Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679, CA Liverpool City Council v Irwin [1977] AC 239; [1976] 2 WLR 562; [1976] 2 All ER 39; (1976) 74 LGR 392; [1976] 1 EGLR 53; 238 EG 879, HL Lotus & Delta v Culverwell (VO) (1976) 239 EG 287; [1976] RA 141, LT Mills v Peak (VO) (1965) 195 EG 551; [1965] RVR 496; 11 RRC 237; [1965] RA 300; [1965] JPL 749, LT Shrewsbury School Governors v Shrewsbury Borough Council [1960] EGD 361;(1960) 176 EG 143;[1960] JPL 653; 7 RRC 313; (1960) 53 R&IT 497, LT Waltham Forest London Borough Council v Andrews (VO) [1996] RA 155, LT Ware (Thomas) & Sons Ltd v Toovey (VO) (1959) 6 RRC 216 This was an appeal by the Church Commissioners for England from the decision of the local valuation tribunal following proposals made by the respondent valuation officer. JP Scrafton, solicitor, appeared for the appellant; David Holgate QC (instructed by the solicitor to the Inland Revenue) represented the respondent. Giving his decision, MR AP MUSTO said: These are appeals by the Church Commissioners for England (the appellant) against a decision of the valuation tribunal in respect of a multi-storey car park forming part of Marlowes shopping centre (the shopping centre) at Hemel Hempstead, Hertfordshire, reducing the rating assessment from: (a) rateable value £240,000 to rateable value £158,085 with effect from October 1 1990; and (b) rateable value £238,600 to rateable value £209,520 with effect from April 2 1992. Mr JP Scrafton appeared for the appellant and called Mr Bruce Fowler ASVA IRRV, Mr Charles Martin Birks ASVA IRRV and Mr John Roberts FRICS FICM. Mr David Holgate QC appeared for the respondent and called Mr Stephen George Mummery ARICS and Mr George Kilburn ARICS. The facts The parties had agreed a statement of facts and issues from which I have extracted those matters that are relevant to these appeals: Location The appeal hereditament comprises a multi-storey car park that has been constructed and is situated immediately above the shopping centre, which is set behind the eastern frontage of Marlowes. The car park forms part of the street block bounded by Wolsey Road to the east and Selden Hill to the south. The land rises sharply to the east from Marlowes and the main shopping complex is built into the side of a hill. Vehicular access to the appeal hereditament is from Wolsey Road via two entrance ramps The exit ramp is a circular central ramp leading to two exits — one is mainly used for access across Wolsey Road into Albion Hill and the other leads directly on to Wolsey Road. 210 Pedestrian access to the appeal hereditament is by means of a series of lifts located at the centre and at either end of the car park comprising: (a) at the southern end, two lifts feed directly into the first-floor shopping centre at Selden Hill and the ground-floor shopping centre adjacent to C&A; (b) at the southern end, there are two further lifts that feed from the car park to the ground floor, but do not stop at the first floor; (c) at the centre, there are four lifts that descend directly into the middle of the ground-floor central mall of the shopping centre. A further two lifts descend into the ground-floor shopping area at the side of the mall; and (d) at the northern end, there are three lifts that go directly from the car park to the ground-floor shopping area at the junction that is formed by the central and north malls. Additionally, there are staircases at each end of the appeal hereditament leading from the car park into the shopping mall. Construction The appeal hereditament is of concrete-framed construction with concrete floors and roofs. Strip fluorescent lighting is provided throughout. The external cladding comprises large coated-metal facing panels. The car park provides car spaces on each of eight or 10 levels with a capacity of 1,165 spaces. The majority of the car parking is covered, with the exception of 288 spaces on the top three floors, which are open. Details of the spaces on each level are as follows: Level Number of spaces A B C D E F G H I J Total 30 (disabled — shopmobility) 120 137 159 139 160 138 145 36 101 1,165 Use The main users of the car park are shoppers. Some contract spaces were let to Hemel Hempstead General Hospital from January 1 1993 (after the second material day). At the material days the number of spaces provided in the appeal hereditament exceeded demand. Town planning history Planning permission was granted on September 9 1987 for construction of the shopping centre. This permission was based upon the district plan for the Dacorum Borough Council area, which required 1,200 car spaces to be provided as follows: (a) the replacement of spaces previously existing in the three car park sites that were absorbed into the new shopping centre development and extended to 450 spaces; (b) an additional requirement, based upon one car parking space for each 35m2 of gross floor area, namely 756 spaces. The planning requirement was intended to provide car parking in accordance with the public car parking guidelines set out in the district plan for short-term parking in those locations most convenient to the central shopping area. The planning permission, which was for the construction of a shopping centre, included a multi-storey car park and new road construction works. The permission was subject to some 16 conditions. Conditions 13 and 14 related to the operation of the car park: 13. No barriers, gates, or ticket machines shall be provided at the entrances to or the exits from the car park without the prior approval of the local planning authority; 14. Automatic counters shall be provided at the entrances and exits of the car park and these shall be linked to signs, which are to be provided at the entrances to the car park to indicate when the car park is full History of the appeals The respondent served a notice of alteration to the rating list, dated March 21 1991, to incorporate a new entry in the list for the newly built and completed hereditament as ‘car park’, rateable value £240,000 from October 1 1990. The respondent served a further notice of alteration to the existing rating list entry, dated July 20 1992, at rateable value £238,600 from April 2 1992. A proposal to alter the rating list was served by the appellant, dated April 15 1991, seeking a reduction in the assessment of rateable value £240,000 to rateable value £1 on the grounds that the present assessment was incorrect, unfair and wrong in law. The matter was referred to Hertfordshire Valuation Tribunal, which, in a decision dated January 12 1994, reduced the assessments to rateable value £158,085 and £209,520 respectively. Appeals against these decisions were lodged by the appellant to this tribunal on February 8 1994 on the grounds that the assessments were incorrect, excessive and bad in law and should be substantially reduced. Hemel Hempstead public car parks The number of public car parking spaces available in Hemel Hempstead on the following dates were: Date Event Total car spaces (nominal capacity) April 1 1988 April 1 1990 October 1 1990 March 21 1991 July 20 1992 Antecedent valuation date (AVD) The 1990 list came into effect The day Marlowes shopping centre opened The first material day The second material day 1,846 1,669 1,669 2,842 2,648 In addition, the civic centre car park had 238 free car parking spaces that were available during weekday evenings and on Saturdays, Sundays and bank holidays. From 1988 to the second material day the car parks owned by Dacorum Borough Council were free of charge. By the first material day the circular car park was no longer available for use by British Petroleum following demolition of Hempstead House, with a net internal area of 11,500m2, resulting in the loss of 140 car spaces. The planning standard for car parking provision in new office development at the first material day was one car space for every 25m2 of gross internal floor area. The shortfall in the car parking provision in respect of the total office and retail floorspace, calculated in accordance with the requirements of the district plan, at the following dates was: Date April 1 1988 March 21 1991 July 20 1992 Shortfall in car spaces 1,345 0,712 0,906 Standard form of lease The standard form of occupational lease for the shop and store units in the shopping centre contains no specific rights for the tenants, window-shoppers or visitors to use the multi-storey car park, although the demise, which is defined in Schedule 1 Part II, para 3, includes both the right, during ‘normal business hours’ and such other times as the centre may be open to trading, to use the shopping malls on foot only for the purposes of access to and egress from the demised premises (subpara (a)) and the right (not limited to pedestrian use), during the periods 30 minutes before and after trading hours to use ‘– such of the entrances staircases passages escalators and lifts in the centre as are necessary for the purpose of access to and egress from… premises demised to a shop tenant’ (para (b)). The provisions of the standard form of lease are specific as to the obligations of the landlord to maintain the structure of the shopping centre (Schedule 6, para 1) and as to the entitlement of the landlord to be reimbursed, by way of a service charge, for moneys that he may spend in respect of outgoings at the centre. 211 Demand The parties have agreed that it is reasonable to assume that: (i) the Commission for the New Towns (CNT) would not lease the appeal hereditament due to their policy of disengagement; (ii) Dacorum Borough Council (DBC) would not lease the appeal hereditament due to there being available sufficient free car parking spaces of their own at October 1 1990. This was confirmed in a letter, dated September 8 1997, from the town centre’s project manager of DBC; (iii) office occupiers would not lease the appeal hereditament. This was supported by a tentative approach by the owners of 1 Park Lane (an office building that had been vacant since November 24 1989) for 200 contract spaces that had not materialised; (iv) one car parking contract with Hemel Hempstead General Hospital for 100 spaces had been granted with effect from January 1 1993. This requirement was reduced to 90 spaces with effect from July 1 1993 and to 65 spaces from September 1 1994. Apart from a small number of season-ticket holders no other approaches or inquiries for contract spaces had been received; and (v) no approach had been made to the appellant by any third party offering to manage the car park, and no approach had been made by the appellant, or the centre manager, to any third party with a similar request. Income and expenditure The parties have agreed: (a) the cashflows for the periods September 1990 to December 1993; (b) the retail price index for April 1988 at 105.8, and at May 1992 at 139.3; (c) the original ‘pay and display’ method and machinery, installed in 1990, was replaced on December 4 1995 in favour of a new ‘pay on foot’ method and machinery. Pioneering allowance At the first material day a pioneering allowance of 25% given to the shops should be given also in respect of the appeal hereditament. This allowance should be removed at the second material day. Rental evidence The only evidence in relation to a letting of a car park in Hemel Hempstead is in respect of a site in Maynard Road, where a three-year lease from January 1 1993 at £17,000 pa exclusive was granted outside the provisions of Part II of the Landlord and Tenant Act 1954. This lease was negotiated by the respondent and included a landlord’s option to break on three months’ prior notice. The use was restricted to the hospital only, who were responsible for keeping the surface of the car park and all boundaries in good and tenantable repair. The agreed analysis of this rent was £107.68 per space. This lease was renewed for six months on January 1 1996 at £64.72 per car parking space. Comparable rating assessments in Hemel Hempstead A summary of the assessments of other car parks in Hemel Hempstead is as follows: Name of car park and type No of car spaces RV per car space £ Maynards Road 158 185 (surface) Hillfield Road 212 135* (multi-storey — 1960) note:     *Agreed by consent order before Lands Tribunal — see evidence of Mr CM Birks (decision of valuation tribunal — rateable value £170 per space). Car parks in surrounding towns of Luton, St Albans and Watford Details of the rents and assessments of multi-storey car parks in Luton, St Albans and Watford have been agreed by the parties as has also their devaluation. Similar figures have also been agreed in respect of a number of other car parks. Issues The parties have agreed the following principal outstanding issues, namely: 1. What effect does the free parking policy of CNT and DBC have on the value of the appeal hereditament? 2. What effect has the increase in the supply of parking spaces, as a result of the construction of the appeal hereditament, had on the value of the subject property? 3. What evidential weight should be given to the rental evidence of multi-storey car parks within the locality (if any) and elsewhere? 4. What assistance can be derived from rents paid for surface car parks within the locality (if any) and elsewhere? 5. What evidential weight should be given to the determinations by the valuation tribunal on various multi-storey car parks? 6. What evidential weight should be given to the Lands Tribunal consent orders on multi-storey car parks in Watford and St Albans? 7. What evidential weight should be given to the settlements reached in adjoining rating areas? 8. What assistance can be derived from valuation tribunal determinations and settlements on surface car parks both within the locality and elsewhere? 9. What assistance can be derived from consideration of operational costs on surface car parks? 10. What assistance can be derived from receipts on car parks as an aid to determining the rateable value of the appeal hereditament? 11. What rights can be implied over the appeal car park in favour of the shop tenants, their customers, window-shoppers and visitors? 12. What is the effect on value of the appeal car park as a result of any implied rights? 13. What assistance is derived from consideration of the rents paid for shops in Marlowes and the shopping centre? 14. What assistance is derived from consideration of the assessments agreed with Chestertons for shops in Marlowes and the shopping centre? Evidence for the appellant Mr Bruce Fowler gave evidence of fact, as a witness of fact, on his role as chairman of the co-ordination group of valuers who advised local authorities in respect of the rating of their car parks. He said that the group was drawn from well-known firms of surveyors with the objective of seeking agreement with the chief executive’s office of the valuation office agency on the basis of assessment for car parks. A meeting was held at which the cost implications of a tenant taking a multi-storey structure as opposed to a surface car park were considered. These included such matters as the costs of security, insurance and repairs. He referred to the expenditure needed by a local authority to meet the Riband standards. He produced a letter, dated June 26 1997, to Chestertons, setting out his understanding of the policy adopted by the valuation office agency in dealing with the valuation of multi-storey car parks. He said that no policy had been set by regional offices and that, in valuing multi-storey car parks, each case must be considered on its own merits. He confirmed, in evidence, that the draft of his letter had been circulated to all surveyors and was based upon the notes taken during the course of his meeting. In answer to a question from the tribunal, Mr Fowler said that medals were issued under the Riband standards to local authorities where multi-storey car parks met required standards of cleanliness and security. Mr Charles Martin Birks gave evidence, as a witness of fact, on the settlement of the outstanding appeal to this tribunal in respect of the car park in Hillfield Road, Hemel Hempstead, which is operated by National Car Parks Ltd. Mr Birks is the group rating manager of the company and his role is that of client rather than agent. He said that the settlement, at rateable value £28,600, was based on two considerations, namely first, the economic viability of the appeal in its own right and, second, the need to protect the company’s commercial information. 212 In so far as the economic viability of the appeal was concerned Mr Birks concluded that, in view of the fact that the appeal was set down for five days, the cost:benefit ratio made the pursuit of the appeal a very unlikely proposition. In so far as the question of commercial confidentiality was concerned, he said that the information about the company’s operations and its income was extremely sensitive in what was regarded as a highly competitive business. In the circumstances, Mr Birks said that he rejected and overrode the advice from his agent, Mr Stevens, of Grimley’s, and his opinion that the car park had a value of £1 and his advice that, for valuation purposes, a pragmatic solution of rateable value £15,000 might be appropriate. Mr Birks conceded, in cross-examination, that the sum of £15,000 was his own personal opinion of the rent that National Car Parks would have been happy to pay between 1991 to 1994. This figure was based upon his experience. He conceded, however, that he had no experience prior to 1988. He said that the settlement at £135 per car space was based upon a Calderbank offer at that figure, on the assumption that each party paid their own costs. Mr Birks also conceded that if there was a chance to obtain a reduction by pursuing the case before this tribunal at a figure below £135 per car space, there was every reason to continue the action as the company’s costs would be protected. He agreed in re-examination, however, that the award of costs was in the discretion of this tribunal and that on taxation a bill of costs might be subject to a substantial reduction. Mr John Roberts gave evidence on value. He is a consultant to Chesterton plc on non-domestic rating appeals, advising public bodies, private companies and education and charitable organisations. He qualified as a chartered surveyor in 1954 and has a wide experience, having been employed by Legal & General, George Wimpey and Wilkes Head & Eve. He spoke to a valuation of £1. His primary valuation was based upon a profits method of valuation, which he supported by reference to a valuation based upon a capital method. He referred also to an alternative valuation based upon a percentage of gross receipts. Details of his primary valuation and alternative valuations are reproduced in annexure 1 forming part of this decision. Mr Roberts referred to the location of Hemel Hempstead in relation to competing retail towns. He said that St Albans and Watford both had new shopping centres that had been completed since the AVD and that, as a result, Marlowes shopping centre had been under steadily increasing competition that had further limited the catchment area of Hemel Hempstead. He referred to the history of free public parking policies of CNT and DBC, which operated all public car parks from the AVD. He said that these policies had a profound and fundamental effect on the value of other privately owned car parks provided for the use of the general public. He said that over 50% of the car spaces were available throughout the year at no cost and this represented a most devastating competition for the private owner of car spaces provided for public use in trying to cover their costs. The shopping centre was developed in accordance with planning guidelines that resulted in an overprovision of car spaces and this, together with the grossly unfair competition due to the car parking policies of CNT and DBC, resulted in a loss-making hereditament with little or no chance of improvement. He concluded that, at the first and second material days, no hypothetical tenant could be expected to make more than a nominal bid. He found support from this conclusion from the capital valuation of Chesterton International (see annexure 1). He said that, in his experience, profit performance could not be improved by increasing charges, as the introduction of higher charges would result in driving customers away with even greater losses being incurred. Mr Roberts found some support for his valuation from the following disposals of multi-storey municipal car parks: (a) the transfer of all but the Hillfield Road multi-storey car park by CNT to DBC on September 2 1991 for nil consideration; (b) the refusal of DBC to accept the transfer of the Hillfield Road multi-storey car park from CNT without a payment for outstanding repairs, to include the risk that the structure contained high alumina cement (HAC); and (c) the subsequent sale of the whole of the corner development, including Hillfield Road multi-storey car park, to National Car Parks by CNT. In this regard, he referred to the valuation of the car park at £100,000 by Jones Lang Wootton, for the vendors, and the subsequent valuation, for internal purposes, by the purchasers at nil consideration. Mr Roberts referred to the demand and supply of public car parking in Hemel Hempstead. He concluded that the DBC free car parks were usually full and that the private car parks for public use had a lower occupancy rate. He referred to the agreements reached by the valuation officer in central Hemel Hempstead in respect of private ancillary car parking spaces, occupied together with offices, at £200 per space. However, he distinguished the value of private car parking spaces from public spaces, which, he said, suffered all the attendant operating costs. He also distinguished, on the same grounds, agreements reached by the valuation officer in respect of surface car spaces occupied together with industrial property in central Hemel Hempstead at £100 per car space. He referred to the zone A rates in the shopping centre, which had been agreed at £600/m2 ITZA at the first material day and £790/m2 ITZA at the second material day. These reflected the availability of car parking immediately above in the appeal hereditament. He compared these zone A rates with £875/m2 lTZA agreed for prime locations in Marlowes. Mr Roberts said that the prime retail area had an overprovision of car parking spaces, with two car parks in the Water Gardens, car parks at Moor End Road and at the Plough roundabout all being available without charge. He said that at the appeal hereditament during 1992 the four levels, B, C, D and E, accommodated 87.81% of the vehicles parked, while the six remaining levels, A, F, G, H, I and J, accommodated the remaining 12.19% with level, A being reserved for shopmobility. Mr Roberts said that at 11am on Saturday September 27 1997 he had inspected the appeal hereditament and found that, of the 580 car spaces on levels F, J, H and I, only 44 spaces were occupied and that the occupancy levels at the DBC free car parks were as follows: Name of car park Occupancy % Water gardens (north) 100 A (Lower level) 100 B (Upper level) 099 Water gardens (south) 100 Moor End Road 100 Plough roundabout 100 Maynard Road 012.5 Hempstead main car park 030 He said that while these inspections had taken place long after the AVD it confirmed his opinion that there was a very strong oversupply of car spaces within the central area. He justified this conclusion by reference to the lack of demand, from shoppers and season ticket holders, for car spaces in the appeal hereditament despite the low initial charge of 10p per hour levied during the initial period following the opening of the shopping centre. He said that the policy of the original owners, which was carried on by the appellant, was to operate the appeal hereditament as a shoppers’ car park. If shop tenants wished to lease car spaces these were available. Spaces were also available to season-ticket holders, and in 1993 the appellant leased 100 spaces to the local hospital. This was reduced at a later date to 90 spaces and was now limited to only 65 spaces. Mr Roberts said that the figures of shortfall calculated by the respondent were based upon a theoretical calculation based upon the planning authority’s car parking standard of one space for every 25m2 213 of floorspace. If there was a shortfall car users would come to the appeal hereditament, but that demand was not there. Mr Roberts said that after inspecting the Hemel Hempstead car parks he had visited the other car parks used by the respondent as comparables. He said that his honest impression from these inspections was that the free car parks in Hemel Hempstead were chock-a-block, while the appeal hereditament had 536 vacant spaces and the Hillfield Road car park was only 50% occupied. The car park at Somerfield supermarket in Hemel Hempstead was 100% occupied at first-floor level, and 75% of the spaces at underground level were occupied. This car park was free to customers of the store. The civic centre car park was 30% occupied. Mr Roberts said that the car parks in St Albans were chock-a-block with cars and that the car parks at Rugby, Luton, Watford and Walthamstow were very, very full. He said that the position at each of the material days was virtually exactly the same as at the date of his inspection on September 29 1997. Mr Roberts commented on the weight that he would place on the comparable evidence as follows: (a) Maynard Road — Mr Roberts said that this represented the only rental evidence of a public car park in Hemel Hempstead where the respondent had recommended a rent of £107.60 per car space at October 1992. Maynard Road was the nearest car park to Marlowes. The terms of the lease were outside the protection of the Landlord and Tenant Acts and the use of the site and its access were restricted. The site was earmarked for potential development, and Mr Roberts said that the rent was fixed looking at what was available in the appeal hereditament. He said that it was rather unsafe to use this transaction as a basis on which to value the appeal hereditament, as it appeared to produce a low rate per car space when compared with other settlements where higher rates had been agreed. He noted that the car parking charges at Maynard Road in 1993 were £1.50 for up to two hours and £2 thereafter. He said that the agreed rateable value at £82.70 per car space must be right, but, however, this agreement was in respect of a surface car park and, in order to make comparison with the appeal hereditament, adjustments were required to reflect the additional costs of operating a multi-storey car park. He found support for this from my decision in Selbourne Walk, Walthamstow. He said that if such deductions were made from the agreed figure of £82.70 per car space, the result would be a minus figure. (b) Hillfield Road car park — Mr Roberts said that Hillfield Road car park was located opposite the Market Square. It comprised a small development with a niche clientele, having a contract with Hemel Hempstead Hospital. The car park had a high level of security that did not compare with the appeal hereditament. He said that the agreed rateable value represented 25% of the gross receipts, which provided some guidance so far as his alternative valuations were concerned. (c) Other car parks — Mr Roberts said that he attached no weight to the evidence of rents and assessments of the car parks in the other towns cited by the respondent, as the economic and competitive situations in those towns were completely opposite to the factors affecting the appeal hereditament. Mr Roberts said that the vehicle count records from January to December 1992 indicated that of the 1,200 spaces provided at the appeal hereditament only 555 spaces (levels B, C, D and E) were occupied for the great majority of the year. He concluded that the district plan requirements had proved to be considerably overstated, by some 53%, which was equivalent to 635 car spaces. He said that these surplus spaces should be valued at nil and that the remaining spaces should bear the burden not only of their own proportion of the overhead costs but the overhead costs of the superfluous spaces as well. He said that such opinion was evidenced by the financial performance, which resulted in a loss. He said that, in the circumstances, it was reasonable to assume that in the open market: (i) no bid for the appeal hereditament would be forthcoming from CNT due to their policy of disengagement; (ii) no bid for the appeal hereditament would be forthcoming from DBC, who had sufficient car spaces of their own; (iii) no bid for the appeal hereditament would be forthcoming from office occupiers. In support of this view, Mr Roberts said that a tentative approach was made in relation to 1 Park Lane — an office building vacant since November 1989 — for 200 contract spaces, but this had not materialised; and (iv) apart from the single contract parking arrangement with Hemel Hempstead General Hospital and a small number of ordinary season-ticket holders no other approach or inquiry had been made for car parking spaces. (d) Implied rights of access — Mr Roberts said that tenants, window shoppers and/or visitors had implied rights to use the car park. Shop tenants of the shopping centre agreed rents for their shop units in the full knowledge of the existence of the multi-storey car park. The landlord was required to maintain the lifts and staircases leading directly from the car park to the shopping mall, but such costs could be recovered as part of the service charge. He said that if the tenants and their invitees were excluded from the use of the car park there would be a breach of the provisions of the town planning agreements. He presumed that the planning authority would take action to redress the position. He concluded that had the multi-storey car park not existed the tenants would have sought lower levels of rent. Consequently, the presence of the appeal hereditament was reflected in the value of the shops. (e) Valuation approach by the appellant — Mr Roberts said that the only true comparables to be adopted in arriving at the value of the appeal hereditament were those located in Hemel Hempstead itself with its free parking. The only rental evidence of a car park for public use was in respect of Maynard Road, but, for the reasons previously stated, Mr Roberts found this transaction totally unacceptable as a basis of valuing the appeal hereditament. He concluded, therefore, that the only reliable and safe basis of valuation was the profits method, details of which are reproduced in annexure 1. He found support for this conclusion from a letter from Mr Fowler of WS Atkins Consultants Ltd dated June 26 1997. As a check to his primary valuation of rateable value £1, Mr Roberts produced the capital valuation carried out by Chesterton International, which showed that the car park had no capital value on its own. He concluded that this confirmed that any value was already reflected in the shop rents and their own capital value. He found some support for this conclusion from the agreement reached in respect of surface and multi-storeyed car parks at Brent Cross shopping centre, where the rateable values had been reduced by agreement from rateable value £857,000 and £1.73m respectively to rateable value £1 for each of the 1990 and 1995 rating lists. Mr Roberts said, although satisfied with his primary valuation, based on a profits method, he had considered two alternative approaches, first, that if the plans of the shopping mall had not included a multi-storey car park with capacity to comply with the parking guidelines of DBC, he doubted whether planning permission would have been granted. On this basis, he said that it could be argued that the value of the multi-storey car park was included in the rateable value of the stores and shops. Second, a valuation by adopting a percentage of the gross receipts. This alternative valuation was prepared on the assumption that this tribunal should find against Mr Roberts’ primary valuation (see annexure 1). In commenting on the expert report of Mr Mummery, Mr Roberts said: (i) that the car parking charges for the private car parks were of necessity small, because of the free car parking provided in the town centre. If the charges were higher there would be no customers at all; (ii) he did not accept that contract car parking exacerbated car parking shortages, as at the appeal hereditament there was an excess of unused spaces and any contract parking would have been a welcome addition; 214 (iii) he did not accept that there were adequate free car parking facilities in the town centre; (iv) he did not accept that a hypothetical tenant would introduce a more commercial charging regime as both the appellant and the previous owner of the appeal hereditament were commercial bodies; (v) he did not accept that it was unusual to find surface car parks and multi-storey car parks in the same economic locality in value terms and that a comparison of such costs and value was generally of little benefit. In this regard Mr Roberts referred to the appeal hereditament and Water Gardens and, in Fareham, the borough council’s multi-storey and adjoining surface car parks; (vi) he accepted that the most direct evidence, in the instant appeal, would come from other multi-storey car parks, but only if the comparison were made with car parks that were free of charge; (vii) he did not accept that the level of repairs required during the prospect of continuance of the hypothetical tenancy would not be exceptional in the longer term after, say, three to five years; (viii) he did not accept that Watford and St Albans were in the same locality as Hemel Hempstead because, for example, of a different car parking and charging policy in both towns to the free charging policy in Hemel Hempstead; (ix) he accepted that the schedule of rents introduced in evidence by Mr Mummery showed a general picture of the rents paid within a variety of locations, but, more particularly, within each locality the rents reflected the demand and supply for car parking based upon local economic factors, which for each town would be different; (x) he also accepted that the rents paid by commercial car park operators would have regard to the demand and supply of car parking within the locality relative to the commercial activity in that district; and (xi) he did not accept that the appeal hereditament was not run purely for profit, because it was operated as a shoppers’ car park. In cross-examination Mr Roberts said that the car parking charges were set by the initial partners and the managing agents. He agreed that Bourne End Properties plc (Bourne End), the purchasers of the shopping centre on March 23 1995, had plenty of experience in running shopping centres and high street properties. He conceded that high parking charges levied at the centre by the appellant for parking above four hours in length were likely to discourage family shopping trips that, in a high proportion of cases, on a Saturday, were likely to last between five to six hours with an average shopping trip of some two hours. He conceded that following the purchase by Bourne End the charges had been reduced from £5 to £1.20 for a period of five hours. He also agreed that car parking charges for one hour at the appeal hereditament were 10p in 1991 and 20p in 1992 and 1993. Mr Roberts agreed, in cross-examination, that the appeal hereditament was operated as a shoppers’ car park and that the charging policy adopted at the appeal hereditament was geared to discourage office workers parking long term. He also conceded that Gateway was also being operated on this basis and that there was a disparity between the charging rates for the appeal hereditament and Hillfield Road in 1991 and Gateway in 1990; No of hours up to Appeal hereditament Hillfield Road Gateway 1 2 3 10p 20p 30p 40p 40p 60p ü ý þ free 4 £1 60p £1 5 £5 £1.20 £2 6 £5 £1.20 £3 7 £5 £2.20 £4 8 £5 £2.20 £5 Mr Roberts conceded that the charges adopted by Gateway, as a shoppers’ car park, were closer to those introduced at the appeal hereditament by Bourne End in 1995, but he was unable to assist the tribunal, and the reason why the appellant had not adopted a similar charging policy was that the management files were no longer available, having been passed to Bourne End. Mr Roberts agreed that the profits and contractor’s method of valuation should be given less weight as a starting point than other methods of valuation under the positions formulated by the member of this tribunal in Lotus & Delta v Culverwell (VO) [1976] RA 141. Mr Roberts said that the order of weight that should be given to his valuations was, first, the profits method, with the capital value as a backup to his profits valuation. Second, a percentage of the gross receipts and, third, to reflect implied rights. Mr Roberts conceded that the issue of implied rights would arise in the case of all hereditaments that were built as shopping centres with ancillary multi-storey car parks. Mr Roberts confirmed, in cross-examination, that he did not rely upon the evidence of surface car parks by making adjustments to this evidence to reflect the additional costs involved in the occupation of a multi-storey car park. He said that he also did not rely upon the settlement reached at Hillfield Road, due to the way in which the matter was settled by consent order and because it was only one-sixth of the size of the appeal hereditament. Also, he did not seek to rely upon the purchase price and resultant capital value. However, he found some support for his valuation, based upon the percentage of gross receipts, from the settlement at Hillfield, which was equivalent to 25%. Mr Roberts conceded, in cross-examination, that the agreement reached at the multi-storey car parks in Cerise Road, Peckham Rye, where the unused car parking spaces had been valued at nil, did not support his valuation of £1 rateable value for the appeal hereditament. He conceded also that at Peckham Rye some of the floors were barred to prevent access, which was not the case at the appeal hereditament. He conceded, in cross-examination, that the only reason he considered the car parks in Luton, St Albans and Watford were not comparable was because charges were made in respect of public car parks and that the towns were outside the locality of Hemel Hempstead. He also conceded that he had not regarded the evidence in Southend or Brent Cross as being comparable. He agreed, in cross-examination, that in valuing the appeal hereditament he had assumed that a tenancy from year to year, with an expectation of continuance, was equivalent to an institutional lease for between 15 to 25 years with rent reviews at five-year intervals. He agreed that there was a greater expectation of the cost of repairs increasing in the longer term, but this liability was not unusual for the purposes of letting. He did not accept that multi-storey car parks built in the 1960s and 1970s had a greater potential liability for repairs than the appeal hereditament. He agreed that the rating hypothesis required a valuer to take into account the value of a hereditament to a potential occupier, taking into account the advantages to him. In commenting on the respondent’s valuation Mr Roberts conceded that if this tribunal accepted the respondent’s case that the agreed assessments of multi-storey car parks in St Albans and Watford were relevant, the value of the appeal hereditament was in the same ‘ballpark’ as £160 per car space. However, Mr Roberts did not accept that it necessarily followed that he would need to increase his valuation without first looking at all the comparables. Mr Roberts conceded that the problems relating to high alumina cement, which affected the Hillfield Road multi-storey car park, would have been known to a lessee in 1990, and this factor would have been reflected in the price or rent paid for the property. He agreed that a similar problem did not exist at the appeal hereditament. Mr Roberts agreed that the public car parks were open for 24 hours each day, whereas the appeal hereditament opened only for normal shopping hours, including late-night shopping on Thursday. He agreed that at the first and second material days access to the Maynards Road car park was from Park Lane and not restricted through the hospital grounds. He also agreed that the car park was not seen as a long-term car park or designed for direct access to the shopping centre. 215 Mr Roberts agreed that to be in the same ‘locality’ for rating purposes a property should be within an area having the same geographic and economic factors. Mr Roberts conceded that para 9(ii)(a) of the statement of case relied upon by the appellant referred to the opening of Marlowes shopping centre as being partially offset by the construction and opening of competing shopping centres in Watford and St Albans. He also agreed that in his evidence in chief he had referred to the competition from the centres steadily increasing and further limiting the Hemel Hempstead shopping catchment areas. He also conceded that the St Albans new shopping development had opened in 1987 and that stage 2 of the Harlequin Centre in Watford opened in 1990, with stage 3 opening in 1992. In cross-examination, Mr Roberts said that, generally, multi-storey car parks had a design capacity that was calculated to meet normal demand and provide sufficient parking (but also to take into account the judgment of town planners), which was normally based upon a gross floor area of the shopping content. It would not be economic to provide a capacity to deal with peak demand such as the Christmas period. He agreed that the demand for car parking at the appeal hereditament arose when all the free spaces were occupied. He agreed also that if the appeal hereditament was always full he would accept Mr Mummery’s approach, as a valuation on a profits basis would produce a positive figure. However, if some car spaces were free, it was necessary to consider the question of supply and demand in order to consider whether income exceeded expenditure. He agreed that the occupancy rate in 1992 for the appeal hereditament was 2.14, which compared with the occupancy rate for the four satellite car parks in Watford in the same year of 1.81. Mr Roberts said that a comparison between occupancy levels at St Albans and Watford with the appeal hereditament did not affect his view on the value of the subject hereditament, as an occupancy rate of 2.14 was not sufficient to produce a total income that exceeded costs. The occupancy levels did not show the length of stay of a car, and the income could be adversely affected if a higher percentage of cars stayed for only short periods. Mr Roberts conceded that in October 1990 there was a general parking problem in the town centre of Hemel Hempstead. He maintained, however, that there was no demand from shoppers for 450 spaces and that the appeal hereditament was superfluous to requirements. The increase in car parking charges for periods of more than four hours was to discourage long-term parking, office and workers’ cars. He did not accept that it was possible to reduce these charges to encourage others to park as the centre management had the firm belief that the appeal hereditament should be operated as a shoppers’ car park in accordance with policy 14 of the town plan. He conceded, however, that there was no legal basis for this policy except the user clause in the headlease, which required the demised premises, including the car park, to be used as a high-class shopping centre. Mr Roberts was invited to comment, in cross-examination, on the calculations made by the respondent, to show the amount of car parking required in the three years 1988, 1991 and 1992. He agreed with the figures, but said that they were theoretical and based upon planning guidelines. He did not accept that if a similar parking standard was used for Watford, St Albans and Hemel Hempstead, this would provide a common basis for the purposes of comparison, as, in order to calculate the need for long-term parking in Hemel Hempstead, it was necessary to exclude the provision at the appeal hereditament and at Gateway, which were shoppers’ car parks. He said that the loss of 262 on-street parking spaces should also be taken into account. He concluded that if these adjustments were made, the shortfall of long-term parking for offices and retail space in 1992 was not much better than that provided in 1988. Mr Roberts conceded that if this tribunal found that a different pricing structure should apply, the profits basis should be adjusted to reflect this finding. He also confirmed that his valuation on a profits basis did not take into account any long-term unsatisfied demand for car parking and this tribunal could adjust the figures to take this into account if necessary. However, Mr Roberts conceded that in arriving at the average net profit for the 3.33 years from September 1 1990 he had included the start-up expenditure, despite the fact that it had been agreed that a ‘pioneering’ allowance of 25% would apply for the years 1990 and 1991. Mr Roberts conceded that he had included the actual rate bill in his calculation of expenditure based upon the rateable value which is the subject of this appeal. He also conceded that some adjustment was necessary to his valuations because of the changes in the retail price index for the years 1992/1993. He also agreed there was no need to apply a 1% compound gross factor for the years 1992 and 1993 to arrive at the value at the AVD, as this was reflected in the RPI. He conceded that if a ‘pay on foot’ system had operated in 1990, with the resultant increased security, revenue would have increased and expenditure would have decreased. He said in 1996 the annual car parking costs, adjusted by RPI to 1992 prices, showed £37,000 as opposed to the actual cost of the ‘pay and display’ of £33,578.26. He agreed, however, that the 1996 costs might not have been very reliable. Mr Roberts was invited, in cross-examination, to compare the quarterly and daily contract charges paid by Hemel Hempstead Hospital for car parking spaces at Hillfield Road and the appeal hereditament. He found the differences very surprising, but said that, despite a diligent search of the records, they were unable to explain the reasons why the hospital paid more at Hillfield Road than at the appeal hereditament. In re-examination Mr Roberts said that the £160 per space adopted by the respondent for the four satellite car parks in Watford would not be right for the appeal hereditament, because the economic factors were different: the competition came from free car parks. He also did not accept that the car parking policy operated at the appeal hereditament depressed revenue, as the management reports indicated that they had followed the best policy. Case for the respondent Mr George Kilburn gave evidence, as a witness of fact, on the meeting held on October 26 1966 between the chief executive’s office of the valuation office agency and the consortium representing local authorities. He is employed as a principal valuer in the chief executive’s office of the valuation office agency. He said that the purpose of the meeting of October 26 was to identify the individual classes of local authority properties, which included car parks falling within class IV. It was agreed at the meeting that central negotiation would take place on local authority car parks with representatives of the consortium from Montagu Evans, King Sturge, WS Atkins, Gerald Eve, Wilkes, Head & Eve and Cluttons. Mr Kilburn said that he led the discussions for the respondent. At a meeting on March 5 1997 discussions were held on a number of issues raised by Mr Fowler. The meeting dealt with the following topics, which exclusively concerned local authority car parks: (a) Superfluity, where Mr Kilburn said that the contractor’s basis of valuation remained a valid approach where local authority car parks were incapable of being operated profitably. However, it was necessary to make a stage 2 adjustment for a modern equivalent replacement. Mr Kilburn said that this view was not shared by Mr Fowler, who felt that the correct approach was by direct comparison with agreed assessments with other privately operated multi-storey car parks. In the case where the capacity of a car park was not fully utilised, the assessment should be based on the maximum number of car spaces that were used at any one time. (b) Free car parks, where Mr Kilburn said that they should be valued by reference to comparable car parking or by the contractor’s basis. He added that local authority car parks could not be valued, prima facie, on receipts, as this had no regard to any socio-economic value in the car park. (c) Multi-storey and surface car parks, where Mr Kilburn said that at the meeting on March 5 he had expressed the view of the agency 216 that any attempt to value multi-storey car parks by reference to surface car parks was prone to error. He said that the location itself was so value-sensitive for car parks that even geographically adjacent properties may command different levels of value. He said that the preferred method of comparison was to compare surface with surface and multi-storey with multi-storey. He said that Mr Fowler had misinterpreted the acceptance of the agency that a multi-storey car park may indeed have higher overheads than a surface car park. He said also that the agency had not directed regional offices that a maximum percentage of net receipts should be applied as a profits method of valuation. Mr SG Mummery gave evidence on value. He spoke to a rateable value of £132,000 as at March 21 1991 and rateable value of £161,000 as at July 20 1992. Details of these valuations are set out in annexure 2 forming part of this decision. Mr Mummery has had over 25 years’ experience with the Inland Revenue valuation office agency. Since 1967 he has served in the Luton, Watford and Haringey valuation offices prior to his present appointment at the St Albans office in June 1983. Since that date he has worked extensively within Dacorum district on the valuation of properties for rating, taxation and on work for public authorities. For the 1990 revaluation he valued all shops and offices within the town centre of Hemel Hempstead. He has defended, for rating, the assessments on various car parks, including multi-storey car parks, and he appeared before the valuation tribunal hearing in respect of the appeal hereditament. Mr Mummery said that as a result of historical factors at the material days, there was an imbalance of parking as between short-term and long-term parking requirements for people working in the town centre. He concluded that, because of the amount of office space within the town centre without car parking and the underprovision of parking within the town centre, there was a latent demand at the right price for long-term parking. Unsatisfied demand could be catered for in the appeal hereditament if a different pricing policy had been adopted. In support of this conclusion, Mr Mummery identified the historical factors that had led to the shortfall in car parking provision: (a) In 1983 public parking, without charge, was provided on a first-come, first-served basis, the 10 public car parks in Hemel Hempstead providing 1,552 spaces together with significant on-street parking. (b) Between 1986 and 1988 considerable problems were experienced in trying to find parking within the main town centre, and the NTC and DBC adopted measures to deal with this demand and the increased demand likely from any future redevelopment of the site behind Marlowes. At April 1 1988 there existed 1,846 parking spaces. This figure rose with the completion of the Marlowes centre to 2,842 spaces at the first material day and 2,648 spaces for the second material day. (c) Mr Mummery said that the material changes that had taken place between 1987 to 1992 included the opening of the Marlowes centre, which caused a shift in the additional shopping patterns within Marlowes. Most of the national retailers were now located at the southern end of Marlowes, while the northern end was sustained by the presence of the market and the post office. He said that the following additional material changes of circumstances had taken place in and around the town centre during the late 1980s and early 1990s: (i) the construction and opening of Marlowes shopping centre; (ii) the decision of the health authority to designate Hemel Hempstead as the main hospital serving St Albans and Hemel Hempstead. This created a demand for additional parking for visitors to the hospital and the need to find alternative parking to supplement the inadequate provision on the hospital site itself; (iii) the temporary relocation of the market in June 1991 while the redevelopment of the Market Square took place. However, the market moved back to the square in November 1991; (iv) the pedestrianisation of Marlowes was started in August 1992 and was completed in September 1994; and (v) alterations to the existing roads as a result of the development of Marlowes shopping centre and alterations to the waiting restrictions and short-term parking arrangements. Mr Mummery gave evidence on the shopping background in Hemel Hempstead. He said that the justification for the new Marlowes shopping centre was to help Hemel Hempstead retain its base in the light of further competition from new shopping centres in St Albans and Watford, which were located some eight miles and six miles away respectively. Mr Mummery outlined the demand for parking that arose as a result of the opening of Marlowes shopping centre. He said that the provision of car parking within the shopping centre was a planning requirement to ensure that the increased demand resulting from the completion of the centre could be met. He said that at the AVD there was a steeply rising commercial market and considerable demand for both offices and shops within the town centre. Mr Mummery gave evidence on the office background in Hemel Hempstead. He identified the office blocks in the town centre that, at the AVD, had inadequate car parking, and, adopting the car parking guidelines of the local planning authority for any new office development, there would be a requirement for 1,420 car spaces. There was an imbalance therefore as between the office long-stay requirement and the short-stay shopping parking requirement. During the period from 1987 to 1990 other office developments had taken place in the vicinity of Marlowes shopping centre including 1 Park Lane, comprising 10,629m2 (GIA) of offices with 320 car spaces; Bryanston Court, Selden Hill comprising 5,041m2 (GIA) of office space with 146 car spaces; and in King Harry Street adjacent to the hospital. He pointed also to the continuing development of the hospital, which generated demand for both short- and long-stay car parking. Mr Mummery said that he had calculated the shortfall in car parking based upon the guidelines contained in the district plan of one car space for every 25m2 of offices and one car space for every 25m2 of retail space as follows: Total spaces required for retail and office space existing  at April 1 1988 4,328 Total car spaces existing at April 1 1988 (a) Public car parks 1,846 (b) Office car parks 1,173 2,983 Shortfall 1,345 He had calculated also on a similar basis the overall shortfall for offices and retail space at March 1991 (712 spaces) and at July 20 1992 (906 spaces). These figures did not include the 262 on-street car parking spaces lost as a result of the Marlowes development. However, the shortfall from the district plan standards for offices at the material days was 1,597, and an overprovision of car spaces for retail of 885 car spaces at the first material day and 691 spaces at the second material day, if the car parks provided were used solely for shoppers and not all categories of users. Mr Mummery said the car parking on streets around the edge of the town centre showed that the potential of the long-term parking market within Hemel Hempstead had not been fully exploited. Approach to valuation (1) Rental evidence Mr Mummery said he had followed the six propositions formulated by the member of this tribunal in Lotus & Delta in considering the question of evidence in the instant case. He concluded that the best evidence to accord with the statutory definition was provided by the rents of properties of a similar type, as the greater the similarity of the physical nature of the property and the locality the better the evidence was. He referred to following rental evidence: (a) Watford Watford, although a regional shopping centre, was only six miles from Hemel Hempstead. It had a different balance of shopping to other 217 uses within the town centre, but, by comparison with Hemel Hempstead, had a better provision of parking for shoppers. Watford was within the same locality as Hemel Hempstead and could be regarded as an appropriate comparable. He referred to the historical background of Watford town centre and to the development of the Harlequin Centre, where construction started on September 1 1988. The centre opened in four phases on August 15 1990, April 9 1991, June 18 1991 and June 16 1992. Mr Mummery said that prior to the development of the Harlequin Centre there were four main car parks serving the town centre in Charter Place, Church, Sutton, and the Gade; following the completion of the Harlequin Centre these had become known as the satellite car parks. The site of the Harlequin Centre was originally used as a large surface car park, but was no longer available following the redevelopment of the Harlequin Centre. He said that in Watford there was not the same imbalance in the demand of long- and short-term parking spaces as in Hemel Hempstead. At the date of opening of the Harlequin Centre on June 16 1992 there was an overall surplus of spaces over demand of 1,342 spaces based upon the guidelines contained in the district plan. Mr Mummery said that in 1988 the four satellite car parks were the subject of an agreement for lease between Watford Borough Council and the developers of the Harlequin Centre and it was envisaged that when the lease was executed the owners of the Harlequin Centre would be responsible for all multi-storey car parks within the town centre. The lease was entered into on November 26 1990 for a term of 35 years from April 1 1990. The rent at the date of the agreement for lease was £400,000, which by November 1990 had risen to £463,050 pa. It was agreed that this represented open market value. Mr Mummery had devalued this rent to: £169.50 per space in respect of Charter Place and Church car parks; £149.50 per space in respect of the Sutton car park; and £139.50 per space in respect of the Gade car park. Mr Mummery said that the rents paid reflected: (i) the effect that the Harlequin Centre would have on these car parks, which became satellites to the new car parks provided in the Harlequin Centre; (ii) that the developers were prepared to pay this level of rent despite the fact that the lease allowed the local authority the power to restrict future increases in car parking fees; and (iii) that the agreement for lease provided that the landlord was to put the satellite car parks, built in the 1960s and 1970s, into repair. (b) Wellington Road, Watford Mr Mummery referred to an award by an arbitrator effective from September 1988 at £43 per car parking space. The car park served an adjacent hotel and the general public. He said that it had no relevance to the shopping centre of Watford or the prime office location. He considered that the rent was an indication that, even with limited demand, a car park still commanded a rent of £43 per car space and showed that the appellant’s valuation of £1 rateable value was unsustainable. (c) St Albans Mr Mummery outlined the background to the St Albans centre. He said that car parking within the town centre had been a problem for many years until 1987, when extra parking was provided by the Maltings car park and an extension of the local authority’s car park in Drovers Way. He said that there was an underprovision of some 1,124 car spaces in St Albans in respect of the retail and office space based upon the guidelines contained in the district plan. He referred to the rent being paid on the Christopher Place car park, which he said supported his valuation of the appeal hereditament. The car park was held on a licence for 10 years from October 26 1984 at a basic licence fee that was increased in line with the retail price index from a base date of January 1 1985. In addition, a turnover fee was charged based upon a percentage of gross receipts less expenses as at January 1 1985, but increased in line with the retail price index. Mr Mummery calculated that the rent of a car parking space payable under the agreement was £137 in 1988, £186 in 1990, £167 in 1991 and £162 in 1992. He said that he had checked to see whether the rents in Watford and St Albans were reliable in relation to the rents of other car parks in other locations, including suburban London and surrounding areas including Reading, Windsor, Richmond, Orpington, Rugby and Sutton. He concluded that: (a) Watford and St Albans were within the same locality. The rental evidence of satellite car parks to the town centre showed £139.50 to £169.50 per car space. (b) The rents for suburban London and surrounding areas showed a range between £56 to £375 per car space, which suggested the rents in St Albans and Watford were reliable. (c) The rents showed a general picture in a variety of locations and reflected the demand and supply for car parking based upon local economic factors, which he accepted would be different for each town. (d) The rental evidence showed a broad picture of the range of rents paid to operate car parks, and took into account the regard had by commercial car park operators to the demand and supply of car parking within the locality relative to commercial activity within that district. (e) The rents showed the extremes of rent of very popular shopping locations, like Reading, with tourist areas, like Windsor, the not so successful shopping centres like Orpington and the poor locations at Rugby and Wellington Road, Watford. (f) The rents showed that there was a demand to operate car parks attached to shopping centres. (g) The operator of the shopping centre required the maximum flexibility to enable him to maximise the returns from all aspects of his enterprise. To that end, he would ensure that his interest was not fettered by rights that would restrict his control of the centre. (2) Receipts Mr Mummery said that the major factor determining the value of a car park to a commercial operator was location. He concluded that the demand for parking could be very sensitive to location and to major attractions that may be crucial to its commercial value, particularly if there is a surfeit of parking. The product of the levels of use and the charges at a car park will translate into gross receipts that will give some indicator of the likely rental bid of a commercial operator. The rental evidence at Windsor, Orpington and Rugby showed that some relationship between rent and receipts was a not uncommon basis for car park lettings and it had the advantage of reflecting all factors, including location, relative pricing and excess supply at the valuation date. He said that all multi-storey car parks in Watford town centre were under the control of one private landlord, and the relative merits of the location of each car park could be reasonably measured in relation to the 1993 receipts, which were made available on appeal to this tribunal and represented the first year following the completion of the Harlequin Centre. Mr Mummery gave details of the gross receipts for all car parks during 1993 with details of other trading periods that had been made available to him. He also gave details of the car parking charges in respect of each of the car parks for the years 1991 to 1993. Mr Mummery also referred to the rateable values of the four satellite car parks in Watford, which had been agreed by consent orders before this tribunal. He had calculated that such rateable values represented between 30% to 47.8% of the gross receipts, where available, for the year 1993. Mr Mummery concluded in relation to receipts that: (a) the relative merits of location and value of Marlowes shopping centre could not be measured by reference to the actual receipts; (b) the charges at the appeal hereditament for the first three hours were considerably less than any other car park in Watford or St Albans and represented a level of 50% of the charges made by NCP at Hillfield Road; (c) the charges rose very sharply, so that for periods over four hours a standard charge of £5 was made, which was more than double the charges at Hillfield Road; (d) the charges for up to seven hours were also considerably in excess of those charged at the car parks at St Albans, Hemel 218 Hempstead and Watford, and for over seven hours compared with the prices charged at the Harlequin Centre, Church or Charter car parks; and (e) there was an imbalance within the town centre of Hemel Hempstead, between short- and long-term car parking and, in the opinion of the witness, the appellant had not maximised the revenue from the appeal hereditament in a way desired to attract shoppers. (3) Assessments agreed by consent order Mr Mummery said that he regarded the valuations agreed by consent orders before this tribunal as strong evidence as to the value of the appeal hereditament. He produced details of the settlements in respect of multi-storey car parks in Watford, St Albans and Hemel Hempstead, details of which are set out in annexure 4 forming part of this decision. The consented values range from £140 per car space to £200 per car space and reflect size, location, access, demand, supply and the condition of the car park within the context of the statutory definition. Mr Mummery said that, in determining the question of supply and demand, the gross receipts for each car park for the year 1993 were compared and used as a basis for discussion. He referred specifically to item 4(h) on annexure 4, which related to the assessment in respect of the Maltings car park in St Albans, where the settled rateable value represented 35.6% of the gross receipts. (4) Hillfield Road car park, Hemel Hempstead Mr Mummery referred to the settlement reached at the Hillfield Road car park at rateable value £28,600, which was equivalent to £135 per car space. He said that the car park was inferior in design and layout to the other car park shown on the schedule. It was built in 1960 and carried the risk of high repair costs. It extended to only 212 spaces and did not offer the economies of scale of a larger car park. Mr Mummery said that the location of the subject hereditament was similar to the Gade car park in Watford and the demand for space was similar being attractive to long-term parkers. He said that shortly after the material days in the instant appeal, car spaces were let on contract at Hillfield Road for which, although providing security of income, the revenue was generally less than would be achieved on a ‘first-come, first-served’ basis. It was agreed, having regard to its location, such an approach would not be unreasonable, as the hypothetical tenant would adopt the same rationale. Mr Mummery concluded that, because of the location of the appeal hereditament, the value adopted should be higher than the agreement reached at Hillfield Road. (5) Other comparable assessments Mr Mummery referred to the agreements reached on the other multi-storey car parks in the district, details of which are set out in annexure 5. He referred in particular to the agreement reached in respect of the Christopher Place car park in St Albans, which had a capacity of 156 spaces in an underground car park. The agreed rateable value was equivalent to £200 per space or 34.12% of gross receipts. He said that this showed the level appropriate for a town centre car park used primarily by shoppers. It showed also the value within St Albans and Watford both in terms of value and also percentage of gross receipts. Mr Mummery said that the car park was small, and because of its position would be more popular in terms of occupancy than the appeal hereditament. Mr Mummery also referred to the agreements reached in respect of the car parks in Luton at between £186 to £199 per car space. The relationship of the agreed rateable value of £188 per space to the gross receipts at the Regent Street, Luton, car park, which is a long-term car park for season ticket holders, represented 36.9% of gross receipts. Town centre parking, Hemel Hempstead Mr Mummery said that the district plan requirement for car parking made it necessary to provide 756 car spaces in respect of Marlowes shopping centre. In addition, it was a requirement of the planning consent that the car spaces that previously existed in King Harry Street should be replaced. This resulted in a total of 1,171 spaces being available at the first material day. Mr Mummery said that be had reached the conclusion that, even taking into account the economic factors existing at the AVD, the requirement to provide these extra spaces created a surplus of car parking for shopping purposes within the town centre. In these circumstances, Mr Mummery concluded that it would be inappropriate to value all the car spaces at the same price. For these reasons, at the first material day he valued 756 spaces at £160 per car space and the remaining 415 spaces at £100 per car space. In addition, he had allowed 25% as representing a ‘pioneering allowance’, which is similar to that granted for a period of time on the retail units in the shopping centre. Value of appeal hereditament included in value of shops Mr Mummery said that he did not accept the contention of the appellant that the value of the car park was included in the rents and, therefore, the rateable value of the shop units in the shopping centre for the following reasons: (i) the shop rents in Marlowes and the shopping centre did not support this opinion; (ii) the rating hypothesis required the appeal hereditament to be considered vacant and to let as a separate entity; (iii) in any commercial centre the value of one hereditament reflected the value of others in the locality; (iv) the rental value for shops will be affected by the amount of car parking that was within the locality of that centre; (v) the demand for the public to use the services within the centre is reflected not only in the shops but also in the car park; and (vi) the payment of a service charge cannot grant any legal rights to any customers in relation to the appeal hereditament. Mr Mummery confirmed that at no time during the negotiations in respect of the shop assessments was any mention made of the fact that the rents of the shop units included any value of the appeal hereditament. Conclusions Mr Mummery said that between the AVD and two material days in the instant appeal there were not only changes in economic circumstances but also physical changes in the locality, namely the opening of the shopping centre. He said it was necessary to consider what impact the physical changes would have on the locality in the context of economic factors at the AVD. Mr Mummery said that the town centre suffered a shortage of car parking and has continued to suffer from this imbalance between long-term and short-term parking. Mr Mummery said that to provide evidence of value he had looked at towns in the locality where similar developments had occurred. He had looked at all rents from a much wider area, which gave no reason to doubt those achieved at St Albans and Watford. He had looked also at a comparison on the basis of a percentage of gross takings, together with evidence of settled assessments in the locality. He had concluded that the current income did not give a direct indication of rental value, because the car park was not operated purely for profit. In his opinion, the minimum price per car parking space to be considered as a starting point was as agreed at the Gade car park in Watford, which catered solely for long-term parking needs. Mr Mummery said to this should be added a sum to reflect the potential of short-term parking, where the returns can be greater than pure long-term parking. Added to the changes in economic circumstances between the two material days, he concluded that £160 per space was the right figure to adopt. He said that a sum of £160 per space was similar to that adopted at Paradise and was similar to that agreed, and the level of rent that was agreed at the Maynard Road car park. He said that it also followed the ratio shown by the rent in Reading. Mr Mummery, in commenting on the valuation of the appellant attached to the statement of case, said that the occupancy rate for the appeal hereditament for the year 1993 was 2.13 per car space overall. 219 This compared with occupancy rates at the Palace car park and the King and Queen’s car park in Watford of 2.25, and with the four satellite car parks in Watford of 1.76. The occupancy rate on the basis that 780 car spaces would be sufficient at the appeal hereditament would be 3.18. Mr Mummery did not accept that the terms of the planning consent and the section 52 agreement specified that the appeal hereditament was to be used specifically for people shopping at Marlowes shopping centre. He said that there were a large number of local office workers who would be prepared to pay for long-term parking and the security of such a car park if the pricing structure encouraged such use. In so far as valuation B attached to the statement of case was concerned, he said that the use of the appeal hereditament was to service the shopping centre, and the receipts reflected such use. This invalidated the use of a profits basis in this case. He did not consider that it was appropriate to average the annual incomes over a period of time and said that each year should be taken individually, so that any material change in circumstances that has taken place can be properly reflected. In the case of Watford, Mr Mummery said that he had used the 1993 income receipt figures for comparison purposes because of the material changes in circumstances in the earlier years. If the same comparison were made in the case of the appeal hereditament it was unnecessary to backdate the receipts to 1988. Mr Mummery did not accept that car ownership and the increased reluctance of people to walk meant the car parking receipts had exceeded inflation by at least 1% pa. He pointed to the fact that the retail price index had increased by 38%, but the receipts for the Maltings car park had increased by only 19% and Christopher Place by only 16%. He said that no evidence had been adduced to support a tenant share of 15% of the estimated income. He did not accept that the ‘pay and display’ system was the state of the art in 1990 as the agreement for lease at Watford envisaged that the ‘pay on foot’ machinery was to be installed in 1988. Mr Mummery’s sensitivity analyses of Mr Roberts’ alternative valuation, taking into account potential revenue from long-stay parking assuming either 10%, 20% or 30% of the 906 spaces were available for long-term parking, produced sums available for rent of either £94,101, £120,743 and £147,384 respectively. Mr Mummery agreed, in cross-examination, that the majority of visitors were short-stay parkers. He conceded that he had no evidence to support his opinion, but higher occupancy levels could be achieved if there was a reduction in charging rates. Mr Mummery said that the charging regime when the car park opened in 1990 was not right, as an investor would seek to recover his cost before moving into profit. He conceded, however, that the appeal hereditament was not run other than for profit. Mr Mummery agreed that by policy 14 of the district plan DBC wanted to secure sufficient short-term car parking for shoppers that was most convenient to shops; the report did not state that the council were seeking control over the appeal hereditament to secure that aim. Mr Mummery said he had assumed, for the purposes of his valuation, that at both of the material days the appeal hereditament was vacant and to let, but that the other office premises in Hemel Hempstead were occupied. He had taken into account physical factors at each of the material days and then added economic factors present at the AVD. Mr Mummery conceded that the daily season-ticket rates at the appeal hereditament compared favourably with those charged at Hillfield Road in 1993. Mr Mummery said, in cross-examination, that he was unable to identify who would be in the market to take a lease of the appeal hereditament at each of the valuation days, as he had assumed that the appeal hereditament was vacant and to let. Mr Mummery conceded that, in every case except the appeal hereditament, he had regard to the receipts. However, in the case of the appeal hereditament he had found the receipts unhelpful, as it was not run commercially and the appellant was operating the shopping centre and car park as a single entity. In re-examination Mr Mummery agreed that the owner of the shopping centre would be a potential bidder in the open market in order to secure control of the appeal hereditament. Legal submissions Mr JP Scrafton, for the appellant, said that the ratepayer was entitled to expect that each hereditament should be independently assessed and that the correctness of any assessment should not be sacrificed for the sake of uniformity: Ladies Hosiery & Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679. He said that the appellant acknowledged that there was a general principle that all relevant evidence should be admitted and argument as to the value should go to the weight to be attributed to that evidence: Garton v Hunter [1969] RA 11 and Lotus & Delta. Mr Scrafton said that while evidence from outside the rating area should not be excluded, it should be of the same class (Shrewsbury School Governors v Shrewsbury Borough Council (1960) 53 R&IT 497) and that in considering the question of what represented the locality in which the appeal hereditament was situated, he relied upon the definition at p345 of K Shoe Shops Ltd v Hardy (VO) [1980] RA 333*, where the member of this tribunal said that it ‘represented an area in which it was likely that there would be sufficient rental evidence to produce a reasonably expected rent and outside which the reasonably expected rent might be different’. *Editor’s note: Also reported at [1980] 2 EGLR 177 Mr Scrafton submitted that locality was a matter of physical, geographic and economic factors. It was not to be tied to administrative boundaries; it was a matter for evidence. The appellant in the instant case said the locality was Hemel Hempstead. Mr Scrafton submitted that only local lists can have a tone and that each list has its own tone: Waltham Forest London Borough Council v Andrews (VO) [1996] RA 155. Mr Scrafton said Hemel Hempstead had no charging policy; in this it was unique in comparison with the towns referred to as comparable. He submitted that this was an influential economic factor present both at the AVD and the material days. While rental evidence may be good evidence elsewhere it was not relevant to Hemel Hempstead. Mr Scrafton agreed that while there was no legal bar against use of the appeal hereditament for long-term parking, the planning history and correspondence with DBC clearly demonstrated that it was the intention of DBC that the appeal hereditament should be used as shoppers’ car park. He submitted that a potential tenant might fear that enforcement action could be taken by the council to prevent long-term parking: Thomas Ware & Sons Ltd v Toovey (VO) (1959) 6 RRC 216. Mr Scrafton said while there were no formal rights in the standard operational lease for the tenants, window-shoppers or visitors to use the multi-storey car park, there were implied rights to use it. The shop tenants agreed rents in the full knowledge of the existence of the car park and there was a service charge provision to enable the landlord to recover the costs of maintenance and repair. The value of the appeal hereditament should take these implied rights into account: Hodgkinson (VO) v Strathclyde Regional Council Superannuation Fund [1996] RA 129. In addition, the hypothetical tenancy could be drawn on the basis so as to exclude shoppers by letting the whole car park to office workers, but no evidence had been offered on this basis. Mr Scrafton submitted that the evidence of demand by the respondent was entirely theoretical and a line needed to be drawn between comparables and statistics that contained extrapolation of figures from time to time in order to make a series of car parks valued in the same manner without having regard to the appropriate matters: Garton. He submitted that the key issue in the instant case was that the economic factors were not the same, as in none of the comparisons made by the respondent did the local authority have a no-charging policy for their public car parks. The first car park to have a policy of 220 fee-paying was the appeal hereditament, which was followed by NCP at Hillfield Road. Mr Scrafton said that there was not sufficient demand for parking in Hemel Hempstead to command more than a nominal rent for the appeal hereditament. He said that in the event that Mr Roberts’ alternative valuation fell to be considered, the appellant was content to accept the decision as to the use of gross receipts by this tribunal: Hoare (VO) v National Trust [1997] 2 EGLR 229. In conclusion, Mr Scrafton invited the tribunal to allow the appeal and determine a rateable value of £1. In the alternative, if Mr Roberts’ primary valuation was not accepted, he invited the tribunal to determine a rateable value of £21,275 at the first material day and rateable value £31,375 at the second material day. Mr David Holgate, for the respondent, said that the parties were in general agreement on the principles underlying the valuation contained in Schedule 6, para 2(1) and (7) of the LGFA 1988. He said that the terms of the hypothetical tenancy were to be assumed to be from year to year, with a reasonable prospect of continuance, not for a fixed term of years. The appeal hereditament was newly constructed, and, as there was no evidence of disrepair, it was likely that, over the length of the hypothetical tenancy, the appeal hereditament would not be subject to any exceptional repairing liability. He submitted that the appeal hereditament was in a better state than other car parks in Hemel Hempstead and Watford that were built in the 1960s and 1970s. The existing occupier was to be assumed to be among the potential bidders, and regard must be had to the motives of that occupier to take a tenancy and the extent to which these motives would induce him to pay a rent: Ryde on Rating para E154–156 and Mills v Peak (VO) [1965] RA 300. In so far as the issue of the mode or category of the occupation of the car park was concerned Mr Holgate submitted that: (i) It was agreed that planning policies may be material to deciding the range of alternative uses falling within the ‘mode or category of occupation of the hereditament’. For the purpose of para 2(7) of Schedule 6 these factors must be taken as at the material days. (ii) Whether such policies could have any effect at the material days was dependent on whether there was any legal control under the planning legislation to enable the policy of the local authority to be enforced or applied. Mr Holgate said that policy 14 set out the objectives of the council. The legal mechanism for enforcement would be either a condition imposed on the grant of planning consent or the terms of a section 52 agreement under the Town and Country Planning Acts. Mr Holgate submitted that the only point relied upon by the appellant to justify its contention that the local authority could have restricted the car park to short-term car parking or parking by shoppers was condition 13 of the planning permission, dated September 9 1987. He submitted that: (a) it was an issue of construction of the terms of condition. Neither the condition or the reason for the imposition referred to the length or nature of occupation; (b) the condition referred only to the location of the physical barriers or ticket machines at entrances or exits; (c) the condition did not impose any control over the provision of ticket machines away from entrances or exits of the car park; (d) there was no evidence that the authority gave planning approval for the ticket machines and that such approval had been subject to a condition as to charges; (e) the letter from DBC did not suggest that the council had any legal control over charging despite the concerns expressed on the subject; and (f) it was suggested by the appellant that there was a risk of enforcement, but there was no evidence from the local authority to support that assertion. Mr Holgate submitted that the appellant had not discharged the burden of proof and said no weight should be attached to this evidence. Mr Holgate submitted that regard must be had to the buildings, their use and occupation at the material days (paras 2(7)(d) and (e) of Schedule 6). He said that the agreed analysis had been prepared on that basis. The figures did not include the additional loss of the 262 on-street parking spaces that were agreed to be material. Mr Holgate submitted that a prospective hypothetical tenant would have been informed by the policies of the town-centre plan and that person would have envisaged at the AVD that the office allocations would be developed and occupied in the future and the demand for parking would have flowed therefrom. Accordingly, the fact that 1 Park Lane was vacant at the material days would not affect the valuation exercise significantly, as in all towns a proportion of office space is likely to be vacant at any one time. There was no evidence that the level of vacancies in Hemel Hempstead was unusually high so as to require a reduction in value. Mr Holgate said that the appellant admitted that the leases of the shop units did not give express rights over the appeal hereditament and Mr Roberts had accepted that the value of the shops reflected the presence of a car park nearby. This, Mr Holgate submitted, was true of all other town centre uses that render the shops more attractive. Mr Roberts had accepted that the ‘presence’ argument did not require any adjustment to be made to his valuation of the appeal hereditament. Mr Holgate submitted that the implied right argument was inconsistent with the facts: (i) the shop tenants and visitors had to pay the same parking charges as anyone else; (ii) if the shop tenants had an implied right to use the car park, having already paid a consideration as part of their rent, they would not pay the same charges as the general public, but would pay nothing or a lesser sum; (iii) the car park was available to all who pay, including everyone visiting the town centre. The shop tenants had no right to occupy any particular car space. Mr Holgate distinguished the decisions in Hodgkinson, Halsall v Brizell [1957] Ch 169 and Liverpool City Council v Irwin [1977] AC 239 from the facts in the instant appeal. Valuation evidence Mr Holgate submitted that if this tribunal considered that were the properties sufficiently comparable to the appeal hereditament, it was agreed that more weight should be given to that evidence than a profits valuation. Lotus & Delta was to be taken to provide guidance of the weight to be given to rental evidence and evidence of agreed assessments. Mr Holgate said that the only issue taken in relation to properties in Watford and St Albans was that they were not comparable, because there were no free car parks in those towns. Mr Holgate said that if there was no direct evidence in the immediate vicinity of the appeal hereditament there was no bar to a hereditament being valued by reference to evidence drawn from a much wider geographical area: Shrewsbury School Governors and Waltham Forest LBC. Mr Holgate distinguished the decision in Hoare v National Trust, which he said was a special case dealing with listed buildings. In conclusion, Mr Holgate invited this tribunal to allow the appeal to the extent that the assessment at the first material date be rateable value £132,000 and that the second be rateable value £161,000. Inspection I have carried out an inspection of the appeal hereditament and a selection of the comparable properties referred to by the parties during the course of these proceedings. Decision The issues between the parties in this appeal relate to matters of valuation and legal interpretation. They have identified 14 principal issues in this appeal as part of the agreed statement of facts, but, after hearing the evidence and legal submissions, I find that the questions to be determined by this tribunal in the instant appeal are: (i) What use could be made, if any, of the appeal hereditament by long-stay parkers? 221 (ii) What rights, if any, can be implied over the appeal hereditament by shoppers, window-shoppers and members of the public? (iii) What demand, if any, for car parking at the appeal hereditament arises from long-stay parkers, for example office workers? (iv) What weight, if any, should be given to the profits method of valuation, or a valuation based upon a percentage of gross profits in arriving at the rateable value of the appeal hereditament? (v) From what locality should the comparable evidence of rents and assessments be drawn? (vi) What weight, if any, should be given to the comparable evidence of capital values, rents and assessments in arriving at the rateable value of the appeal hereditament? (vii) What assistance can be derived from evidence derived from the rents and assessments of surface car parks in Hemel Hempstead? I now consider each of these issues as follows: (1) Use by long-stay parkers In so far as the first issue is concerned, the appellant contends that the use of the appeal hereditament is restricted to that of a shoppers’ car park while the respondent contends that the appeal hereditament can be used by both short-stay and long-stay parkers. The appellant’s case rests, first, upon the contents of the draft town-centre plan; second, the conditions imposed on the grant of planning consent; third, the contents of a letter from the director of planning, dated June 19 1990; and fourth, the policy adopted by the appellant to use the appeal hereditament as a shoppers’ car park. I consider, first, the contents of the draft town-centre plan, which, after public consultation during the summer of 1987, was formally adopted by DBC in June 1988, some two months after the AVD. Policy 14 of the approved plan states: Within these constraints the Borough Council will aim to ensure that public car parks are located around and close to the commercial centre and that these are arranged to provide adequate space for short-term parking in those spaces most convenient to the shops. In cases where existing car parks will be affected by new development, the developers will be required to provide new parking to replace the existing number of spaces and to, at least, construct additional spaces in accordance with the planning standards appropriate for the development. Note by tribunal: Marlowes shopping centre provided 1,200 spaces, including a replacement of the existing 450 spaces that were present on the site prior to the redevelopment. The net gain was 750 spaces against the then current planning standards, which indicated a need for 740 spaces. Second, the terms of the planning consent approved by DBC, on April 1 1987 in conditions 13 and 14 and the reason for their imposition. The conditions are as follows: 13 — No barriers, gates or ticket machines shall be provided at the entrances to and the exits from the car park without the prior approval of the local planning authority. The reason: To enable the local planning authority to maintain control of this aspect of the development. 14 — Automatic vehicle counters shall be provided at the entrances and exits of the car park and these shall be linked to signs which are to be provided at the entrances to the car park to indicate when the car park is full. Reason: In the interest of highway safety. As part of the grant of planning permission the appellant was required to enter into an agreement under section 52 of the Town and Country Planning Act 1971, section 111 of the Local Government (Miscellaneous Provisions) Act 1972 and section 33 of the Highways Act 1980 in respect of the scheme, which was defined as the shopping centre including a multi-storey car park and new road construction. It is accepted that this agreement did not impose conditions on the future use of the appeal hereditament. Third, the contents of a letter of June 19 1990 that was written by Mr CGB Barnard, the council’s director of planning, to Bernard Engle — architects to the developer — in which he referred to the following: (i) Concern at the loss of 10 spaces to be reserved for staff that he said, although satisfactory in the short term, was not acceptable when long-term car parks were identified. (ii) DBC were keen to optimise the amount of car parking for shoppers and he was concerned that an additional 25 spaces would be required for pay-and-display machinery, giving an overall loss of 8% of the available parking. (iii) The extreme disquiet that the developer proposed to make a charge for car parking in view of the council’s policy of free parking in Hemel Hempstead, which he said would be in direct conflict with the agreement that the council had reached with Gateway and would undermine the policy of the council that car parking was free. He expressed the opinion that it would make sense in that situation for uniform charges to be made for shoppers’ car parking (whether privately or by the local authority) and for uniform charges to be made for long-stay car parking. Fourth, the policy of the centre management to operate the appeal hereditament as a shoppers’ car park with a pricing structure to deter long-stay parkers. I find from the evidence that although Mr Barnard viewed the appeal hereditament as providing part of the car parking allocation for shoppers, the policy of DBC has not been translated into either conditions on the grant of planning permission or in the form of restrictive covenants contained in the agreement entered into under section 52 of the Town and Country Planning Act. Consequently, in my view, a prospective hypothetical tenant would be unlikely to envisage circumstances where the local authority would be successful in enforcement proceedings in preventing the use of the appeal hereditament by long-stay parking in addition to parking by shoppers. I find that the use of the car park by long-stay parkers, including office workers, is not prevented by conditions imposed on the grant of planning permission or by the terms of the section 52 agreement. (2) Appurtenant rights This issue arises from submissions made by Mr Scrafton that it could be implied in the standard form of occupational lease that the shop tenants and others had an implied right to use the car park that should be taken into account in arriving at the value of the appeal hereditament. Alternatively, Mr Scrafton submitted that the shop tenants might be denied the use of the car park if, on a grant of a hypothetical tenancy envisaged by the statute, the appeal hereditament was let solely for the use of office workers so as to exclude shop tenants. I have carefully considered the terms of the standard occupational lease and the case law referred to by the parties. I agree with the submissions made by Mr Holgate that the applied rights argument is inconsistent with the facts as: (a) the shop tenants, their staff and visitors have to pay the same parking charges as members of the public. If there was an implied right for which the shop tenant had already paid as part of his rent, he would not pay the same charges as general members of the public; and (b) the shop tenants and others do not have the right to occupy any particular car space(s). If they had such a right they would expect to have an overriding right at peak times to occupy specific spaces. I also agree with Mr Holgate that: (a) the right of access to the shops over shopping malls, entrances, staircases, passages and lifts in the centre, does not give a right, expressly or impliedly, for the tenant and others to use the car park; and (b) although the landlord may be obliged to repair the structure of the centre including the car parks and to recover such costs by way of a service charge, this does not give the tenant a right to occupy those parts of the centre over which the liability to repair extends. In these circumstances I would distinguish the decision in Hodgkinson where it was an agreed fact that the standard form of occupational lease implied at least a right to the tenants to use the public toilets and an obligation to keep them open. It was also an agreed fact in that case that the food outlets could not operate as such 222 without the conveniences being available and that the 13 units without staff toilets would be seriously inhibited from their use without such facilities being available in the appeal hereditament. I do not consider it necessary to consider Mr Scrafton’s alternative submission as he conceded that no expert evidence had been adduced to support it. In summary, therefore, I find that the tenants, their staff and others, had no implied rights to use the car park without charge. The value of the appeal hereditament should assume therefore that it is vacant and to be let without being encumbered with any rights from tenants and others to use the car parking spaces. (3) Demand for car parking I now consider the third issue between the parties, which can more fully be stated to be whether, if a different pricing policy had been adopted by the appellant, this would have resulted in a greater demand for car spaces in the appeal hereditament from short-stay and long-stay parkers, including office workers, and resulted in increased receipts and profitability. First, I consider the question of demand where the respondent compares the existing number of public and office car parking spaces with a calculation of car parking requirements for retail and office development based upon the guidelines adopted by the planning authority for new development schemes. It is an agreed fact that the town-centre plan provides a fair picture of the parking situation in the town centre in 1988 as a result of the increased use of the car for both shopping and work-related journeys. The town plan records that there were occasions when severe parking difficulties occurred and shoppers were unable to use the car parks nearest the shops, resulting in an overspill of vehicles on to nearby residential streets. The district plan survey at 1988 shows the availability of 2,289 off-street public car spaces and 274 on-street parking spaces. The parties have agreed also that an imbalance exists between the number of parking spaces provided in public and office car parks and the number of spaces required to be provided if the local planning authority’s guidelines for parking in new developments are strictly applied. These result in a shortfall in the provision for retail and offices at the AVD of 1,345 spaces, at the first material day of 712 spaces and at the second material day of 906 spaces. I agree with Mr Roberts, for the appellant, that these figures show a theoretical shortfall in car parking spaces within the town centre, but they do not, by themselves, indicate the level of actual demand for car parking. However, Mr Mummery was able to give direct evidence from his own knowledge and experience on the car parking situation at the AVD on the two material days that goes some way to support the theoretical calculations. There remains, however, the question of whether any imbalance between short-stay and long-stay parking would be accommodated in the appeal hereditament rather than remain in on-street parking facilities. The answer to this question, in my view, is dependent on the convenience of the alternative parking facilities and their cost. I am satisfied from my inspection of the appeal hereditament and the surrounding area and also from the evidence that both the car park in Hillfield Road and the appeal hereditament are conveniently sited and within easy walking distance of the main office areas within the town centre. Prima facie, therefore, both car parks would be suitable for use by office workers or other long-stay parking users subject, however, to car spaces being available at a reasonable cost. In fixing the appropriate level of charge for parking at the appeal hereditament a hypothetical tenant would have regard to a likely demand from shoppers and office workers within the catchment area and the level of competition from other car park operators within both the public and private sectors. While wishing to provide adequate car parking for shoppers, it is reasonable to assume that a hypothetical tenant, in the private sector, would wish to maximise gross income and profitability and, with this in view, he would look to fill surplus capacity within the appeal hereditament with long-stay parkers holding season tickets. In the instant case competition comes from two main sources: first, from NCP who operate the multi-storey car park in Hillfield Road, which is occupied by long-stay parkers holding season tickets and shoppers; and, second, from public car parks, where DBC operate a free parking policy in respect of approximately 50% of the available public car parking in order to attract shoppers to Hemel Hempstead from neighbouring towns of St Albans, Watford and Luton, where local authorities make a charge in all shoppers’ car parks. The hypothetical tenant would find that his main competition would come from the NCP car park and the car park operated by Gateway. He would consider that the greater competition would come from the NCP car park in Hillfield Road, which is located closer to the appeal hereditament than the Gateway car park. In order to maximise occupancy he would be likely to fix charges for both long- and short-stay parkers at levels that were comparable but slightly below those charged by NCP at Hillfield Road, and therefore above the levels charged by the appellant at each of the material days. I am satisfied from the evidence that this would lead to increased gross receipts and generate a higher level of profitability. I find some support for this finding from the sensitivity calculations produced by Mr Mummery. The parties have agreed that the potential number of prospective hypothetical tenants for the appeal hereditament is limited, but would include the owner of the shopping centre. No evidence was adduced by the appellant, however, to demonstrate a lack of potential occupiers, as the appeal hereditament has not been fully marketed. (4) Profits basis of valuation The fourth issue concerns the weight that I shall place on a profits method of valuation, which is the preferred basis adopted by Mr Roberts. The respondent rejects a valuation on this basis for the following main reasons: (a) a profits basis is not appropriate in the instant case where there is evidence of rents and assessment of comparable properties within the same locality; (b) the appeal hereditament is used by the owners as a shoppers’ car park and the receipts reflect that use; (c) the charging policy discourages use by office workers in the town centre and a hypothetical tenant would adopt a charging policy to attract long-term parking; (d) the averaging method of annual incomes over a period of time is not appropriate as it does not allow any material changes in circumstance to be properly reflected; (e) the benefits of a pay-on-foot system as opposed to a pay-and-display system, which could have been introduced at the AVD, is not reflected in the valuation. I agree with Mr Mummery that a hypothetical tenant in the open market would operate the car park to attract both shoppers and long-term parkers. With this in view, he would base car parking charges in line or just below those charged by NCP at Hillfield Road. On that assumption I find that the income for two years ending December 1993 is understated. I agree also with Mr Mummery that a pay-on-foot system would, if introduced in 1990, have resulted in a reduction in the expenditure and an increase in the gross profits. For these reasons I find that I can place little weight on a profits method of valuation or a valuation that is based upon a percentage of the gross receipts for the two years ending December 31 1993. I was invited, during the course of proceedings, to make such adjustments to Mr Roberts’ profits method of valuation as I felt to be justified by the evidence. However, in view of the number of adjustments that will be necessary to accommodate the major points of valid criticism raised by the respondent, the greater would be the margin for error and therefore the less weight that can be attached to the profits method of valuation in this case. I find some support for this conclusion from my decision in Waltham Forest London Borough Council v Andrews (VO) [1996] RA 155 where at p195, in the last paragraph, I said: 223 However, I do not consider that a profits method of valuation which is based upon income for the year 1992/93 discounted back to values at the AVD, and expenditure for the same year adjusted for inflation in line with the retail price index provides a reliable basis of valuation. Additionally I accept the valuation officer’s reservation that the income and expenditure may not have been maximised in view of the policies of the ratepayer council and a possible lack of profit motivation. I agree with the evidence of Mr Mummery that major factors in determining the rental value of a car park to a commercial occupier are the location of the car park, the competition from other car parks in the private sector and the proximity to a major attraction. I believe that a commercial operator would also take into account the parking policy of the local authority and whether a charge was made by that authority for parking in public car parks. An estimate of the likely use of a car park and the charges will produce an estimate of gross receipts, which will give an indication of the likely rental bid by the operator for that car park. I also agree that some indication of value can be gained by comparison of the receipts of one multi-storey car park with another. However, in the instant case, for the reasons previously stated in this decision, I do not find such comparison of assistance, as the appeal hereditament operated as a shoppers’ car park. (5) Locality The fifth issue between the parties is the extent of the area from which comparable evidence can be drawn. The appellant restricts the locality to Hemel Hempstead and the respondent contends that the towns of St Albans, Watford and Luton are all within the same locality. During the course of the proceedings I was referred to a number of legal authorities on this issue: First, in Shrewsbury School Governors, in a joint decision of Mr Erskine Simes QC and Mr HP Hobbs (members of this tribunal), reference was made to the admissibility of evidence of agreed assessments of 99 public schools at p500: With regard to the admissibility of the assessments of other public schools we are definitely of the opinion that such assessments are admissible as evidence on the grounds stated by Atkins LJ in Pointer v Norwich Assessment Committee [1922] 2 KB 477. Having regard to the transfer of the duties of preparing the list to valuation officers of the Inland Revenue by the Local Government Act 1948, it seems to us that the admission is no longer effective only in relation to the particular list of the rating area. The valuation officer is the agent of the Inland Revenue and in our view the scope of the admission must now be extended to all lists in England and Wales … It is of course true that in the majority of cases evidence of other assessments a distance from the hereditament in question is of little value and indeed of no value if rental evidence in the immediate vicinity is available, but in the case of a special class of hereditament for which there is no rental evidence they do afford some evidence of comparative values for hereditaments of the same class. I was referred also to the decision of Winn LJ in Garton v Hunter [1969] RA 11 where at p16 he said: Where the particular hereditament is let at what is plainly a rack rent and there are similar hereditaments and similar economic sites which are so let that they are truly comparable, that evidence should be classified in respect of cogency as a category of admissible evidence properly described as superior: in some but not all cases that category may be exclusive. Any indirect evidence, albeit relevant, should be placed in a different category; reference to the latter category may or may not be proper, or indeed necessary, according to the degree of weight of the former kind of evidence … I was referred also to my decision in Waltham Forest London Borough Council at pp194–195, in considering the approach adopted by each valuation expert to the comparable evidence. I said: In the absence of adequate rental evidence in the immediate vicinity of the appeal hereditament I find it necessary to consider comparable evidence at a distance from the appeal hereditament. However, I would give greater weight to evidence of properties which are located in the immediate vicinity of the appeal hereditament which share common characteristics in terms of physical features, location, social and economic factors in the area in which they serve as fewer adjustments would be necessary in order to make such evidence truly comparable to the appeal hereditament. Where such evidence is not available and the appeal hereditament is of a special class for which there is little reliable rental evidence (in this case a multistorey car park) it may be necessary to extend the area of search to find a hereditament of the same class which may afford some evidence of comparable values (Shrewsbury School Governors v Shrewsbury Borough Council) … I was referred also to the decision of this tribunal in K Shoe Shops Ltd v Hardy (VO) [1980] RA 333 where at p345 the tribunal defined locality as representing: ‘an area with which it was likely that there would be sufficient evidence to produce a reasonably expected rent and outside which the reasonably expected rent might be different’. In the instant case the main reason for distinguishing Hemel Hempstead from, for example, St Albans, Watford and Luton is the free car parking policy that DBC operate through their public car parks. I accept this is an economic factor that needs to be taken into account in arriving at the rateable value of the appeal hereditament. I also accept that this policy is not adopted by the local authorities in the town centres of Luton, Watford and St Albans or indeed in any of the towns that the valuation officer has cited as being comparable. In the circumstances, comparison with the multi-storey car parks in Hemel Hempstead is to be preferred. Mr Mummery contended that the parking policy of the council did not affect value, as the occupancy level for the appeal hereditament compared favourably with the levels sustained, for example, in the satellite car parks in Watford. However, his calculations of the occupancy levels do not take into account the differing levels of parking charge made at each location for differing lengths of stay, which, in my view, are factors that must affect the rent that a hypothetical tenant would pay for each car park. In this regard I note that the charging policy at the satellite car parks after the first hour is substantially higher than that charged at Hillfield Road. Also, it was apparent from my inspection of the town centre car parks in Hemel Hempstead, on Thursday February 12 and Saturday February 14 1998, that shoppers and visitors to the town centre prefer to use the public car parks for which no charge is levied to the facilities available in Hillfield Road and within the appeal hereditament. I found on both visits that the free car parking spaces were fully occupied and short-term parkers preferred to queue and wait for one of the 12 car spaces to become available at Bank Court, Waterhouse Street, rather than to use the facilities at Hillfield Road or within the appeal hereditament, where there was adequate space available on Saturday to park without the inconvenience of waiting. On Thursday I found that the Hillfield Road car park was full as adequate space was available at the appeal hereditament. The overall effect of the parking policy of DBC is therefore to limit the demand for space in car parks that have a policy of charging. This is in contra-distinction to the position in other towns where there is a very restrictive on-street car parking policy and where a charge is made for using town centre multi-storey car parks. In conclusion, therefore, I find that, although the evidence of rents and assessments in St Albans, Watford and Luton is admissible, it is necessary to make an adjustment in order to make comparison with multi-storey car parks in Hemel Hempstead to reflect the free car parking policies of DBC. However, the greater number of adjustments that are required, the less weight can be attached to that evidence. (6) Comparable evidence — weight to be applied I now consider the weight that I should place on the comparable evidence adduced by the parties during the course of the proceedings. In this regard, both parties agreed that I should be guided by the six propositions formulated by the member of this tribunal (Mr JH Emlyn Jones) in Lotus & Delta dealing with value evidence. He said at pp153–154: In the light of the authorities, I think that the following propositions are now established: (i) Where the hereditament which is the subject of consideration is actually let that rent should be taken as the starting point. 224 (ii) The more closely the circumstances under which the rent is agreed both as to time, subject matter and conditions relate to the statutory requirements… the more weight should be attached to it. (iii) Where rents of similar properties are available they too are properly to be looked at through the eye of the valuer in order to confirm or otherwise the level of value indicated by the actual rent of the subject hereditament. (iv) Assessments of other comparable properties are also relevant. When a valuation list [now a rating list] is prepared these assessments are to be taken as indicating comparative values as estimated by the valuation officer. In subsequent proceedings on that list therefore they can properly be referred to as giving some indication of that opinion. (v) In the light of all the evidence an opinion can be formed of the value of the appeal hereditament, the weight to be attributed to the different types of evidence depending on the one hand on the nature of the actual rent and, on the other hand, on the degree of comparability found in other properties. (vi) In those cases where there are no rents of comparable properties a review of other assessments may be helpful but in such circumstances it would clearly be more difficult to reject the evidence of an actual rent. The guidelines formulated in Lotus & Delta have been followed in a number of subsequent cases before this tribunal and have become an established method of determining the weight to be attached to various groups of evidence. I find also these guidelines helpful. Accordingly, I propose to consider the comparable evidence in the instant case in the light of those guidelines. Before doing so, however, I first summarise the categories of comparable evidence as follows: (a) Opinion of rental value at Hillfield Road car park in Hemel Hempstead. (b) Letting of a surface car park to Hemel Hempstead General Hospital. (c) Letting of multi-storey car parks in Watford, St Albans and Luton. (d) Other rental evidence of multi-storey car parks in other towns. (e) Opinions of capital value in Hemel Hempstead. (f) Agreed assessments of Hillfield Road car park, Hemel Hempstead. (g) Agreed assessments of multi-storey car parks in St Albans, Watford and Luton. (h) Agreed assessments of multi-storey car parks in other towns. (7) Rent of appeal hereditament The appeal hereditament forms part of the premises known as Marlowes shopping centre, which was subject to a lease for 125 years from June 1988 at a peppercorn rent payable throughout the term. A premium was paid on the grant of the lease. Subsequently, the freehold interest was acquired by the appellant. There is therefore no rental evidence that falls to be considered within the first two propositions formulated in Lotus & Delta. (8) Rents of other car parks in Hemel Hempstead This evidence falls to be considered under proposition (3) in Lotus & Delta and comprises: (a) The letting of a surface car park in Maynard Road to the Hemel Hempstead Hospital for a term of three years from January 1 1993 at a rent of £107.68 per car space. The letting was outside Part II of the Landlord and Tenant Act 1954 and the lease contained a landlord’s option to break on three months’ prior notice. The use was restricted to the hospital only, who were responsible for keeping the surface of the car park and all boundaries in good and tenantable repair. The site forms part of an area earmarked by CNT in connection with the Paradise redevelopment scheme. The evidence represents that of a short-term letting of the site earmarked for redevelopment with a restriction on access and user. I find this to be of no assistance in arriving at the rateable value of the appeal hereditament. At this point I should also address the more general matter as to whether I derive assistance from a comparison with transactions in respect of surface car parks in arriving at the value of the appeal hereditament. I agree with the evidence of Mr Kilburn that to attempt to value multi-storey car parks by reference to surface car parks is prone to error. I find that a more direct and accurate method will be to compare one multi-storey with another. However, I also accept Mr Kilburn’s evidence that location is so value-sensitive for car parks that even geographically adjacent properties may command different levels of value. (b) During the course of his evidence Mr Birks, on behalf of NCP, has said that the company would have been happy to pay a rent of £15,000 pa for the Hillfield Road car park for the years 1992 to 1993. This opinion of value was based on his own experience. Mr Birks was appearing as a witness of fact and not an expert witness in his own right. (9) Evidence of capital values Although not falling within the guidelines formulated in Lotus & Delta it would be convenient at this stage for me to consider the evidence adduced of capital values that Mr Roberts adopted to support his valuation of rateable value of £1. The evidence comprised: (a) first, the property valuation carried out for the appellant by Chesterton International as at December 31 1991 and December 31 1992 in respect of Marlowes shopping centre. Mr Roberts said that as the expenditure of the appeal hereditament exceeded income, no capital value was attributable to the appeal hereditament in either valuation; (b) second, the sale by tender of Hillfield Road development comprising shops at 93–105 Marlowes, 12 lock-up garages and a multi-storey car park. The highest offer was received from NCP and on the vendor’s agent’s analysis a sum of £100,000 was attributable to the multi-storey car park. The offer was submitted by NCP on December 7 1990; and (c) an internal memorandum of NCP dated November 20 1990 from the property division to the board of NCP seeking approval for submitting a bid for the freehold interest in the Hillfield Road property. The report referred to the policy of DBC that the council’s car parks were currently free of charge, but it was likely that charges would be introduced at a future date. The report referred also to the charges by Gateway and at Imry shopping centre and provided a projection showing the suggested charges at the Hillfield Road car park. The writer of the report expressed concern that the figure could be open to question. He therefore considered in the circumstances that the multi-storey car park currently had no value. Mr Mummery provided an alternative analysis of the sale price adopting different yield rates and arrived at estimates of rental value ranging between £23,406 to £37,235 pa. The evidence of capital values of the appeal hereditament and the Hillfield Road multi-storey car park are based upon the opinions expressed by either reputable firms of chartered surveyors or NCP, who have very wide experience in the operation of multi-storey car parks. In the case of Hillfield Road the valuers differ on the value attributable to the car park. The different analyses put forward by the appellant and the valuation officer illustrated the wide range of rental values that can be achieved adopting different yield rates. In the case of the appeal hereditament no direct evidence was available to me to support the views expressed by Mr Roberts. For these reasons I find evidence of capital transactions and unsupported valuations of little assistance and I place no weight on this evidence. (d) Rents of other car parks The third proposition formulated by Mr Emlyn Jones in Lotus & Delta concerned the rental evidence of other comparable properties. I propose to consider this evidence under two main headings: first, the evidence in St Albans and Watford; and, second, other evidence of car parks outside this area. (i) Rental evidence in Watford and St Albans (a) Watford Evidence of a letting of four satellite car parks in Watford for which Mr Mummery analyses the 1988 rent at between £169.50 and £139.50 per car space. Watford is a regional shopping centre with a number of departmental stores and shops providing a full range of shops and supporting services. It provides, therefore, a greater attraction for 225 shoppers than the facilities offered in Hemel Hempstead. The local authority do not provide free parking at their town centre car parks and they control the parking charges of the satellite car parks under the terms of the lease. They also operate a very restrictive on-street parking policy. The overall result is to increase the demand and therefore the charging potential of privately operated car parks. This is in contra-distinction to Hemel Hempstead where free car parking is available. For all these reasons I would regard this transaction as a starting-point for arriving at the value of the appeal hereditament. I consider, however, that downward adjustments are necessary to reflect the charging policy of Watford Borough Council and their more restrictive on-street parking policy within the town centre. (b) St Albans Evidence of a letting of the Christopher Place car park on a lease dated March 1987 for a period of 10 years from October 1984. The initial licence fee is increased in line with the RPI and there is also a turnover licence fee based upon a percentage of the gross receipts less expenses set at 1985 levels, but increased in line with the RPI. The lease fee at 1988 analyses to £137 per car space. The car parking charges are higher than those charged at the NCP car park in Hillfield Road and the car park is well used. I note from the evidence that the rent of £137 does not represent market value at the AVD as it was a combination of a fixed initial rent plus a percentage of the adjusted net profit. For these reasons I place little weight upon this transaction in arriving at the rateable value for the appeal hereditament. (ii) Other car parks Mr Mummery introduced rental evidence in respect of multi-storey car parks in Reading, Windsor, Richmond, Orpington, Rugby and Sutton with a view to demonstrating that the rental levels in St Albans and Watford were reliable. The evidence relates to open-market transactions or rent reviews with effective dates from 1987 to 1992 with rents ranging between £56 to £375 per car space. I note from the evidence that in his devaluation of the rents paid he has adopted a lower value per car space where a car park is considerably larger and when the upper floors are not used, or only used at peak times and around Christmas. For example, in the case of the multi-storey car park at Jarrard Street, Reading, he adopts £375 per car space for 700 spaces, which are in frequent use, and £245 per space to reflect the limited demand for the remaining car spaces (a discount of 35%). In the case of the Walnuts, Orpington, a nil value was placed upon 124 spaces that were totally unused with barriers preventing access. I do not find that the level of rents paid within a variety of locations where the supply, demand and economic factors for each town are different is of assistance to justify the rents paid in St Albans and Watford except to show that they fall within a very broad band of rents per car space. (e) Assessments I now consider the evidence of assessments within the fourth proposition formulated in Lotus & Delta. The assessments relied upon by Mr Mummery can be conveniently grouped as follows: (1) Assessment agreed by consent order at Hillfield Road, Hemel Hempstead. (2) Assessments agreed by consent order in Watford and St Albans. (3) Assessments determined by the valuation tribunal. (4) Assessments agreed with ratepayers in St Albans and Luton. Details of these agreements are set out in annexures 4 and 5 forming part of this decision. I now consider this evidence in more detail: (1) Hemel Hempstead The assessment on the Hillfield Road car park operated by NCP was agreed by consent order at £28,600, which is equivalent to £135 per car space or 25% of the 1993 gross receipts. I was told by Mr Birks that for commercial reasons the company settled this assessment against professional advice, which, in taking a pragmatic view, was that a fair figure would be rateable value £15,000 (£70.75 per car space). I accept Mr Birks’ evidence that these were factors that were taken into account in settling the outstanding appeal. I find that a fair figure per car space would lie between £70.75 per car space and £135 per car space. I adopt a figure of £125 per car space for the purposes of comparison with the appeal hereditament. I consider that the Hillfield Road car park provides the best comparable to the appeal hereditament as it is situated within the same locality where DBC operate a free car parking policy. Although located in an inferior shopping position in Marlowes, it is opposite the Market Square, close to the Post Office and within easy walking distance of the hospital. The location is also convenient to the main office locations within the town centre and a hypothetical tenant would consider that demand for parking during the weekday would be mainly from long-stay parkers. The car park has a capacity of some 212 spaces on three levels, some of which provide covered parking. It was built in 1960 with slightly higher costs of repair in the short term than the appeal hereditament. (2) Assessments agreed by consent order (1) Watford The assessments agreed in respect of the multi-storey car parks in Watford fall into two groups, first, the car parks within the Harlequin Centre at between £180 and £200 per car space and, second, the satellite car parks at between £140 and £170 per car space. For the reasons previously stated I find that generally these car parks are more valuable than the appeal hereditament. In addition, a discount needs to be made to reflect the differences in the parking policy adopted by Watford Borough Council and DBC. Doing the best I can from the evidence in respect of the satellite car parks, I adopt, for comparison purposes, a figure of £130 per car space. (2) St Albans The agreement reached for the Maltings car park at St Albans by consent orders was £157.50. The car park was built in 1987 and is located within the town centre. It is a busy car park in an area where the local authority operate a very restrictive on-street parking policy, resulting in a higher demand for off-street parking. The car parking charges are higher than the levels at the NCP car park in Hillfield Road, Hemel Hempstead. I find that some discount is required from the agreed figure of £157.50 per car space to reflect the different charging policy between the two local authorities. Doing the best I can from the evidence and from my inspection, I arrive at £134 per car space for each car parking space in frequent use. In summary, therefore, I find the evidence of agreements by consent order represents a substantial body of evidence and I attach weight to it. (3) Assessments determined by the valuation tribunal The rateable value of the multi-storey basement car park at Christopher Place, St Albans, was determined by the valuation tribunal at £200 per car space. No appeal was lodged against this determination to this tribunal. The figure determined by the valuation tribunal is substantially above the rent of £137 per car space paid at AVD and is also above the figure of £157.50 per space agreed by consent order at the Maltings car park. I note also that the 1993 receipts for this car park are some 9% above the income of the Maltings car park. In the circumstances I derive no assistance from this comparable. (4) Agreements on other car parks The assessments of the three multi-storey car parks in Luton have been agreed at between £186 and £199 per car space. I would attach less weight to these comparables as Luton is located some distance from the appeal hereditament in a town where the local authority levies 226 charges in public car parks and exercises a very restrictive on-street parking policy resulting in a higher demand for off-street parking. Conclusions on evidence I now summarise the comparable evidence and consider this within the fifth and sixth propositions formulated in Lotus & Delta as follows: (1) Rent of appeal hereditament The appeal hereditament is not held on a lease, and no rent is paid. The first two propositions in Lotus & Delta do not apply. (2) Other rental evidence I consider this evidence under two main headings, first, evidence within Hemel Hempstead and, second, rental evidence in towns within 10 miles of Hemel Hempstead: (a) Evidence within Hemel Hempstead There is no rental evidence for multi-storey car parks in the town centre of Hemel Hempstead. There is a single letting of a surface car park to Hemel Hempstead Hospital. However, in view of the fact that the site forms part of an area earmarked for development, the lease has a break clause exercisable by the landlord on three months’ prior notice and the use of the site is restricted to Hemel Hempstead Hospital, I find that it is of no assistance and I place no weight on it. (b) Evidence in Watford and St Albans I find that the letting of the four satellite car parks in Watford at AVD at rates of £139.50 to £169.50 per car space to be of some assistance and I attach some weight to this evidence. I also agree with Mr Mummery that it is necessary to adjust these rents to reflect the better quality and higher charging policy in Watford in order to reflect the lower value of the appeal hereditament. However, I consider that a further deduction should be made to reflect the differences in the parking and charging policies between the two councils. Doing the best I can from the evidence, I find that the adjusted rent on this basis for the appeal hereditament would be £135.60 per car parking space for those spaces in frequent use. The rent of the Christopher Place car park in St Albans, at March 1988, was £137 per space. This rent was calculated in accordance with the formula contained in the lease dated 1984 and does not necessarily represent open-market value at the AVD. I would place limited weight on this evidence. For comparison purposes with the appeal hereditament, however, I would make a deduction to reflect the difference in the parking and charging policy between St Albans and DBC. This would be offset, to some extent, by an upward adjustment to reflect the fact that Christopher Place is a basement car park. Doing the best I can from the evidence, and from my inspection, I find that the comparative figure to the appeal hereditament would be £125 per car space. In summary, therefore, the limited rental evidence available would show a range from between £125 to £135.60 per car space. (3) Assessments The agreements made by the valuation officer can be summarised as follows: (a) Consent orders before this tribunal (i) In Hemel Hempstead the Hillfield Road car park has been agreed at £135 per car space, but, for the reasons previously stated in this decision, for comparison purposes I adopt £125 per space. (ii) In Watford the car parks in the Harlequin Centre were agreed at between £180 to £200 per car space and at the satellite car parks at between £140 to £170 per space. For comparison purposes I find that the settlements reached at the four satellite car parks provide better comparable evidence and for comparison purposes with the subject hereditament I adopt £130 per car space. (ii) Maltings car park, St Albans — this has been agreed at £157.50, but for comparison purposes I adopt £134 per car space. (b) Decisions by valuation tribunal There is a single determination by the valuation tribunal in respect of the Christopher Place car park at £200 per car space. For the reasons previously stated I place no reliance on this decision. (c) Agreed assessments Agreement was reached on three multi-storey car parks at between £186 to £199 per space. For the reasons previously stated I place little weight on this evidence. (d) Capital valuations For the reasons previously stated I ascribe no weight to these valuations. It now becomes a question of what weight to apply to this evidence and to a valuation on the profits basis of valuation. I consider the best evidence is represented by those transactions where only a limited number of adjustments are necessary in order to compare such evidence with the appeal hereditament. The more adjustments that are necessary the less reliable the evidence becomes. In the case of multi-storey car parks that are not located within the area of DBC as well as making adjustments for size, location, access, demand, supply, condition, geographical and local economic factors, it is necessary to take into account the effect of the charging policies and the restrictive controls in on-street parking imposed by the individual local authorities, which makes such comparison less reliable. The order of weight that I would give to the evidence in the instant case to accord with proposition 5 in Lotus & Delta is as follows: (a) rental evidence of satellite car parks in Watford; (b) consented assessment of NCP car park in Hillfield Road, Hemel Hempstead; (c) consented assessment of Maltings car park, St Albans; (d) rental evidence of Christopher Place car park, St Albans; (e) other consented assessments in Watford; (f) other agreed assessments in Luton; and (g) rents and assessments of other multi-storey car parks. I now consider what weight I should apply to the profits basis of valuation and Mr Roberts’ alternative valuation, which is based upon a percentage of gross receipts. In view of my previous findings, I am not satisfied that a hypothetical tenant would restrict the use to the appeal hereditament to that of a shoppers’ car park, but would seek to maximise income by attracting long-stay parkers and would adopt a different pricing policy, closer to the charges levied by NCP at Hillfield Road. In the circumstances I find that the actual income and expenditure is not a reliable basis to adopt in order to arrive at the rateable value of the hereditament and I place no weight on this basis of valuation. (e) Basis of valuation I prefer Mr Mummery’s general approach, which he adopts in arriving at his valuation. I do not consider that he has given sufficient weight to the effects of a free car parking policy, which DBC adopt, in so far as the council’s public car parks are concerned. Having weighed all the evidence I conclude that the value of the car spaces in frequent use is £130 per car space. The parties have agreed that at both the first and second material days some 420 car spaces were surplus to requirements and that they were not normally required and remain largely unused throughout the year. The evidence put before me on the question of value of surplus spaces related to a multi-storey car park at Garrard Street, Reading, where Mr Mummery devalued the rent payable at March 25 1989 at £375 per car space for the spaces in frequent use and £245 per car space for those spaces that were surplus to requirements. This represents a discount of approximately 35%. Mr Roberts referred to an agreement reached by the Lambeth valuation officer where surplus spaces were valued at nil. I note that the car park in Reading is of a similar size to the appeal hereditament and that the percentage of surplus spaces to those used more frequently is 33.7%. In the instant case the percentage of surplus spaces is slightly higher at 35.9%. Having weighed all the evidence I find the value of the surplus spaces in the instant case is £85 per car space. The second issue between the parties is whether the pioneering allowance made at the first material day should apply to the totality of the valuation or be restricted to the valuation of the car spaces that are 227 in frequent use. It is an agreed fact that an allowance of 25% was given at the first material day in respect of the retail units in Marlowes shopping centre. No evidence was adduced by the respondent why a similar approach should not be adopted in so far as the appeal hereditament is concerned. I note that in the decision of the valuation tribunal of January 12 1994 the tribunal commented at p2: With regard to the proposal dated April 17 1991 in respect of the car park at Marlowes shopping centre, Hemel Hempstead, the tribunal was of the opinion that a pioneering allowance of 25% in line with the allowance of shops assessments, was warranted. In the decision, set out on p3, a pioneering allowance of 25% was applied to the value of 1,171 car spaces. I have carefully considered all the evidence on this issue and I find that the pioneering allowance should be applied to the value of the 1,171 spaces at the first material day. I find that the value at the first material day (March 21 1991) is as follows: 751 car spaces at £130 per car space £97,630 420 car spaces at £85 per car space £35,700 Total £133,330 Deduct pioneering allowance (as for shops) 25% £33,332 £99,998 Rateable value, say, £100,000 I find the value at the second material day (July 20 1992): 745 car spaces at £130 per car space £96,850 420 car spaces at £85 per car space £35,700 £132,550 Rateable value, say, £132,500 In summary the appeals are allowed and it is ordered that the rating list be amended as follows: (a) from October 1 1990 to car park, rateable value £100,000; and (b) from April 2 1992 to car park, rateable value £132,500 This decision determines the substantive issues raised between the parties and the tribunal’s award is final. The parties are invited to make such submissions as they are advised as to the cost of the hearing, and a letter accompanies this decision as to the procedure for submissions in writing. The tribunal will, in due course, incorporate an order as to cost in an addendum to this decision. Rights of appeal under section 3(4) of the Lands Tribunal Act 1949 and the Rules of the Supreme Court Ord 61 will not accrue until the decision has been thus completed, ie from the date of the addendum. Addendum The parties have made submissions in writing relating to the costs of this appeal, which I have carefully considered. The appellant claimed costs on the High Court scale. The respondent said that regard should be had to the parties’ measure of success in relation to the various matters in issue and that in view of the fact that my awards were at figures only marginally below the offers made by the valuation officer, the respondent was substantially successful and should be awarded the whole or at least a substantial proportion of his costs. Neither party in this appeal has been successful in obtaining the valuations that they spoke to in evidence before me. The amount of my awards is less than the offers contained in the valuation officer’s offer to settle these appeals and therefore offers no protection as to the respondent’s costs of this appeal. I find that in these circumstances justice would be best served by making no award as to costs. Annexure 1 Valuation of Mr John Roberts frics ficm for the appellant (a) Valuation by profits method Income — Average annual income for the period Sept 1 1990 to Dec 31 1993 Income for period Sept 1–Dec 31 1990 £26,516.09 Income for period Jan 1–Dec 31 1991 £151,882.26 Income for period Jan 1–Dec 31 1992 £175,481.22 Income for period Jan 1–Dec 31 1993 £209,444.09 Total £563,323.66 ÷ 3.33 £169,166.26 Less backdate to Apr 1 1998 in accordance with RPI (see note 2) × 0.7595 £128,481.77 Less anticipated real increase in receipts from AVD to May 1 1992 (mid point) 4 years at 1% pa (see note 3) ÷ 1.0406 £123,468.93 Less expenditure Average annual expenditure for the period Sept 1 1990 to Dec 31 1993 Expenditure for the period Sept 1–Dec 31 1990 £45,132.18 Expenditure for the period Jan 1–Dec 31 1991 £188,046.77 Expenditure for the period Jan 1–Dec 31 1992 £157,423.94 Expenditure for the period Jan 1–Dec 31 1993 £184,848.86 Total £575,451.75 ÷ 3.33 £172,808.33 Less backdate to April 1 1988 £172,808.33 in accordance with RPI (see note 2) × 0.7595 Estimated annual expenditure at April 1 1988 £131,247.92 Loss £7,778.99 Less tenants’ share Tenants’ share at 15% of estimated income at April 1 1988 £18,520.34 Average annual loss for period Sept 1– Dec 31 1993 £26,299.33 Rent The minus sum £26,299.33 Rateable value, say £1 at the most Notes 1. The income and expenditure figures (excluding VAT) are taken from computer printouts produced by the Centre Management. 2. RPI (Base Jan 1987: 100) April 1988 105.8. May 1992 (mid-point between Sept 1 1990 and Dec 31 1993) 139.3. 3. Increased car ownership and increased reluctance of people to walk means car parking receipts have generally exceeded inflation by at least 1% each year. 4. The tenants’ share at 15% of the estimated income as at April 1 1988 reflects the return that commercial car park operators usually require. 5. The original ‘Pay and display’ method and machinery installed in 1990 was scrapped on December 4 1995 in favour of the new ‘Pay on foot’ method and machinery. As the valuation is based upon income and expenditure over the period from September 1 1990 to December 31 1993 no deduction is made for method and equipment obsolescence but, with the benefit of hindsight, a provision for such exceptional expenditure could have been made. 6. Due to the conventions resulting in a rating valuation of £1 both the pioneering allowance of 25% and the valuation of superfluous spaces at nil value with a discount on the remainder have not needed to be brought into play. However, the pioneering allowance of 25% given by the Hertfordshire Valuation Tribunal and the valuation of superfluous spaces at nil value with a 20% discount on the remainder agreed by the Lambeth valuation officer should be borne in mind. (b) Valuation by capital method Chesterton International Ltd carried out property valuations for the appellant as at December 31 1991 and December 31 1992. Although mentioned in the description of the Marlowes Shopping Centre ‘1200 car parking spaces’ the income from the multi-storey car park was not included in the net income due to the expenditure exceeding the income. Therefore, no capital value was attributable to the multi-storey car park. Having no value of its own it was simply regarded as an infrastructure facility for the benefit of the shopping centre similar to malls, service areas, lifts, staircase, escalators and other common parts (c) Alternative valuation by percentage of gross receipts method (i) As at first material day — March 21 1991 Gross receipts (excluding VAT) for year October 1–September 30 1991 £110,295 Backdate to April 1 1988 in accordance with RPI × 0.794891 £87,672.50 228 Compound 1% pa for 3 years ÷ 1.0303 in accordance with RPI £85,094 Rentalisation at 25% £21,273.50 (ii) As at second material day — July 20 1992 Gross receipts (excluding VAT) for year October 1–September 30 1992 £171,313 Compound 1% for 4 years 0.7622478 £130,582 Backdate to April 1 1988 in accordance with RPI ÷ 1.0406 £125,487 Rentalisation at 25% £31,372 Note to Tribunal The alternative valuation set out above was amended by Mr Roberts during the course of the hearing to incorporate the adjustments for increase in car ownership and RPI. These items were referred to in a footnote to his original valuation and not incorporated into the valuation. Annexure 2 Alternative valuations by profits method by Mr John Roberts FRICS, FICM for the appellant. (1) For the year January 1 1992 to December 31 1992 Income Income for the period Jan 1–Dec 31 1992 £175,481.22 Less Backdate to AVD in accordance with RPI (see note 2) at AVD index — 105.8 At July 1992 (mid point) — 138.8 × 0.7622478 £133,760.17 Less expenditure Expenditure for the period Jan 1 1992 to Dec 31 1992 £157,423.94 less Uniform business rates £86,410.87 Staff Costs Direct £33,578.26 £119,989.13 £37,434.81 less Backdate to AVD by RPI (as above) × 0.7622478 £28,534.60 add Bourne End Properties plc Staff Costs Direct for 1996 The first year of pay on foot £41,173.00 Backdated to AVD RPI AVD 105.8 July 1996 (mid point) 152.4 × 0.6942257 £28,583.35 £57,117.95 Divisible balance £76,642.22 less Rates at AVD RV £29,097 @ £2,609 £75,914.07 Balance available for rent and rates £728.15 less Tenants’ share 15% of £133,760.17 £20,064.02 Balance — rent Minus £19,335.87 Therefore RV at most £1 (2) For year January 1 to December 31 1993 Income Income for the period Jan 1–Dec 31 1993 £209,444.09 Less Backdate to AVD in accordance with RPI (see note 2) at AVD Index — 105.8 At July 1993 (mid point) — 140.7 × 0.7519545 £157,492.42 Less expenditure Expenditure for the period Jan 1 1993 to Dec 31 1993 £184,848.86 less Uniform business rates £108,765.29 Staff Costs Direct £33,978.09 £142,743.38 £42.105.48 less Backdate to AVD by RPI x 0.7519545 £31,661.41 add Bourne End Properties plc Staff Costs Direct for 1996 adjusted as above £28,583.35 £60,244.76 Divisible balance £97,247.66 less Rates at AVD as above £75,914.07 £21,333.59 less Tenants’ share at 15% of £157,492.42 £23,623.86 Balance — rent Minus £2,290.27 therefore RV at most £1 Annexure 3 Valuation of Mr SG Mummery arics for respondent (1) Valuation at March 21 1991 Car spaces 751 spaces @ £160 per space £120,160 Pioneering allowance (as for shops) @ 25% £30,040 £90,120 Add 420 spaces @ £100 per space £42,000 £132,120 say £132,000 (2) Valuation at July 20 1992 Car Spaces 745 spaces @ £160 per space £119,200 Add 420 spaces @ £100 per space £42,000 £161,200 say £161,000 229 Annexure 4 Schedule of rating assessments settled by consent orders VO ref Address description Date built Number of spaces Agreed rateable value RV per space Remarks £ 4a Palace car park 1991 595 119,000 200 To show the assessment The Harlequin agreed by consent in a Watford nearby town 4b King’s car park 1991 769 153,800 200 To show the assessment The Harlequin agreed by consent in a Watford nearby town 4c King’s/Queen’s car park 1991 1,424 256,300 180 To show the assessment The Harlequin agreed by consent in a Watford nearby town 4d Charter Place car park 1970s 747 127,000 170 To show the assessment Charter Place agreed by consent in a Watford nearby town 4e Church car park 1960s 622 105,750 170 To show the assessment Exchange Road agreed by consent in a Watford nearby town 4f Sutton car park 1960s 488 073,200 150 To show the assessment Sutton Road agreed by consent in a Watford nearby town 4g Gade car park 1960s 678 094,900 140 To show the assessment Rosslyn Road agreed by consent in a Watford nearby town 4h The Maltings car park 1986 750 118,125 157.5 To show the assessment New Kent Road agreed by consent in a St Albans nearby town 4i National car park 1960 212 028,600 135 To show the assessment Hillfield Road agreed by consent in Hemel Hempstead Hemel Hempstead Annexure 5 Schedule of rating assessments agreed by valuation officer VO Ref Address description Date built Number  of spaces Agreed rateable value RV per space Remarks £ £ 5a Christopher Place car park 1986 156 031,200 200 To show the assessment Upper Dagnall Street determined by a valuation St Albans tribunal on a car park in a nearby town 5b Arndale car park — 2,266 450,000 199 To show the assessment Arndale Centre agreed on a car park in a Luton nearby town 5c Bute Street car park 1968 613 114,000 186 To show the assessment Bute Street agreed on a car park in a Luton nearby town 5d Car park 1968 397 074,500 188 To show the assessment Regent Street agreed on a car park in a Luton nearby town 230