Rating — Appeals and cross-appeals by case stated from a decision of the Lands Tribunal — Test case concerning rating of shops in Regent Street, London — Proposals by ratepayers for reduction of values appearing in valuation list in August and September 1973 — Effect of section 20 of General Rate Act 1967 — ‘Valuation according to tone of the list’ — Value in accordance with section 20(1) not to exceed the value which would have been ascribed to the hereditaments in the list which came into force on April 1 1973 ‘at the time by reference to which that value would have been ascertained’ — Dispute as to what was that time — Ratepayers contended that the time was late 1970 (the ‘tone date’), whereas valuation officer and rating authority submitted that it was April 1 1973 — Ratepayers argued that valuation officer had a discretion as to the date which he chose for valuation in his area — Valuation officer and rating authority accepted that valuations could not literally be made on April 1 1973, and in practice had to be carried out some time before, but argued that it was the valuation officer’s duty to aim at that date and to seek to achieve values (using projection as necessary) which would then be correct — Arguments of valuation officer and rating authority accepted by Court of Appeal — Valuations to be by reference to the date when the list came into force, namely April 1 1973 — Statements in Ryde on Rating that the date mentioned in section 20 was the date when the list was prepared and that the intention of the legislature was to put an end to the rule in the Ladies Hosiery case disapproved — Leave given to appeal to House of Lords
These were
appeals and cross-appeals following a decision of the Lands Tribunal (1980) 256
EG 927, 1019 on appeal from a local valuation court. The member of the Lands
Tribunal was R C Walmsley FRICS. The cases concerned the gross values for
rating of shop premises in Regent Street, London W1, nos 203 (K Shoe Shops Ltd)
and 241 (Saxone Shoe Co Ltd). The decision of the Lands Tribunal is summarised
in the judgment of Sir Patrick Browne, who gave the judgment of the court. The
appellants in the first appeal were K Shoe Shops Ltd, the first respondent was
David Brian Hardy (valuation officer) and the second respondents Westminster
City Council (rating authority). The appellants in the second appeal were
Saxone Shoe Co Ltd, the first and second respondents being the same as in the
first appeal.
Guy Roots and
Miss Susan Hamilton (instructed by Titmuss, Sainer & Webb) appeared on
behalf of the appellant ratepayers; William Glover QC and Alan Fletcher
(instructed by Solicitor for Inland Revenue) represented the valuation officer;
Richard Tucker QC and Richard Hone (instructed by the acting city solicitor)
represented Westminster City Council.
Giving the
judgment of the court at the invitation of Stephenson LJ, SIR PATRICK BROWNE
said: These are an appeal and cross-appeals from a decision of the Lands
Tribunal given on October 13 1980 on appeal from a local valuation court as to
the gross value for rating purposes of two shops in Regent Street, London W1
(nos 241 and 203). We are told that they have been taken as test cases for 65
shops in Regent Street.
The appeal to
this court is by way of case stated and can only lie if the decision of the
tribunal is ‘erroneous in point of law’ (Lands Tribunal Act 1949 section 3(4)).
The parties to
the appeal are the occupiers of the shops (to whom we shall refer as ‘the
ratepayers’), Mr Hardy, the valuation officer appointed by the Inland Revenue
(to whom we shall refer as ‘the valuation officer’), and the City of
Westminster (to whom we shall refer as ‘the rating authority’); a geographical
description of the rating authority’s area is given in the decision of the
Lands Tribunal ((1980) 256 EG 927) and it is shown on the map, Exhibit WCC/3.
For administrative reasons the area is divided into Westminster 1 and
Westminster 2 but it is not suggested that this division has any significance
in law. The valuation list of the Westminster area comprises some 135,000
entries and covers over 6,700 pages (see the decision of the Lands Tribunal (p
1019)).
During the
hearing of the appeal both the ratepayers and the rating authority wished to
refer us to documents which had been in evidence before the tribunal but were
not annexed to the case stated. No one objected, and we decided to admit the
documents, though we emphasised the importance of maintaining the general rule
that on an appeal by way of case stated the appellate court cannot look outside
the case stated and the documents annexed thereto.
The case is
concerned solely with gross values and there is no dispute as to the method of
valuation to be applied to shops, which can be described as the ‘zoning
method’. This is based on the theory that the most valuable part of a shop is
the ground-floor street frontage. The ground floor of the shop is divided into
‘zones’, running parallel with the shop front. The ‘zone’ nearest the front is
called ‘zone A’, the next zone behind that ‘zone B’ and so on. A gross value
per square metre is fixed for zone A; the values of zone B and of other parts
of the shop are taken to be a fraction of the zone A value. The working of this
method can be seen in the valuations of the shops to which these appeals relate
set out in the decision of the tribunal (pp 927 and 1022). In these cases,
there is no dispute as to the depth of zone A (30 ft) or as to the fractions to
be applied to the zone A price to ascertain the values of the rest of the shop,
so the sole question is the figure of gross value to be attributed to zone A
(see p 927 of decision). The abbreviation ‘ITZA’ used in the decision means ‘in
terms of zone A’.
The gross
values and zone A values found or contended for in this case are as follows:
|
|
Valuation List |
Lands Tribunal |
Ratepayers |
Valuation |
|
241 Regent Street |
|
|
|
|
|
Gross value |
£15,350 |
£12,850 |
£10,500 |
£14,950 |
|
Zone A |
£250 |
£215 |
£175 |
£250 |
|
203 Regent Street |
|
|
|
|
|
Gross value |
£33,550 |
£28,150 |
£21.900 |
£32,750 |
|
Zone A |
£250 |
£215 |
£175 |
£250 |
We do not think it is necessary to set out the figures put forward
by the rating authority; they differed only marginally from those contended for
by the valuation officer, were based on the same contentions in law and it was
not suggested that any effect should be given to them.
The ratepayers
made proposals for the reduction of the values appearing in the valuation list
on September 28 1973 in respect of no 241, and on August 2 1973 in respect of
no 203.
All the
relevant statutory provisions are contained in the General Rate Act 1967, but
it must be remembered that that was a consolidating Act. A helpful table
showing the derivation of the various sections is at pp 1288 et seq of Ryde
on Rating 13th ed.
The relevant
provisions of the 1967 Act are as follows: Section 1(1) defines ‘rating area’
and ‘rating authority’.
Section 1(2)
provides:
Every rating
authority shall have power in accordance with this Act to make and levy rates
on the basis of an assessment in respect of the yearly value of property in
their rating area for the purpose of applying the proceeds thereof to local
purposes of a public nature.
Section 2(1):
Every rating
authority shall from time to time in exercise of their powers under section
1(2) of this Act make such rates as will be sufficient to provide for such part
of the total estimated expenditure to be incurred by the authority during the
period in respect of which the rate is made as is not to be met by other means
. . ., including in that expenditure any sums payable to any other authority
under precepts issued by that other authority . . .
Section 2(4):
Subject to
the provisions of this Act, the general rate for any rating area — (a) shall be
a rate at a uniform amount per pound on the rateable value of each hereditament
in that area . . ., (b) shall be made and levied in accordance with the
valuation list in force for the time being . . .
Part V of the
Act deals with valuation lists. By section 67(1):
For the
purposes of rates, there shall be maintained for each rating area a valuation
list prepared, and from time to time caused to be altered, in accordance with
the provisions of this Part of this Act, by the valuation officer.
Section 67(2)
prescribes particulars which must be inserted in the valuation list.
Section 68(1):
In the case
of each rating area, new valuation lists shall be prepared and made by the
valuation officer so as to come into force on April 1 in 1973 and each fifth
year thereafter.
This date is
derived from section 16 of the Local Government Act 1966 which postponed the
next revaluation from 1968 to 1973 and extended the period for which the 1963
list was to remain in force accordingly. Section 17 of the 1966 Act is
re-enacted by section 20 of the 1967 Act. These provisions were enacted when
the list which came into force on April 1 1963 had already been in force for
three years and was still in force.
Section 68(2)
of the 1967 Act:
The valuation
officer by whom a new valuation list is prepared shall, not later than the end
of the month of December preceding the date on which the list is to come into
force . . . sign the list and transmit it, together with a copy thereof, to the
rating authority, who shall deposit the list at the offices of the authority.
Section 68(3):
Where, after
the valuation officer has transmitted the list to the rating authority, but
before the date on which the list is to come into force, it appears to him
that, by reason of a material change of circumstances which has occurred since
the time of valuation, the list needs to be altered in any respect, he shall
cause the list to be altered accordingly before that date.
Subsection (4)
defines ‘material change of circumstances’ under eight headings, all of which,
except possibly (c), may be roughly described as physical changes in a
particular hereditament and goes on ‘and the expression ‘the time of
valuation’, in relation to a change of circumstances, means the time by
reference to which the valuation officer prepared so much of the list as is
affected by that change of circumstances’.
Section 69
deals with proposals. By section 69(1):
. . . any
person (including a rating authority) who is aggrieved . . . (b) by any value
ascribed in the list to a hereditament . . . may at any time make a proposal
for the alteration of the list so far as it relates to that hereditament.
By subsection
(2):
. . . the
valuation officer may at any time make a proposal for any alteration of a
valuation list . . .
Section 70 to
section 78 deal with procedure after a proposal has been made, including
appeals to a local valuation court and to the Lands Tribunal.
By section
79(1):
. . . where
an alteration is made in a valuation list by virtue of sections 71 to 78 of
this Act, then, in relation to any rate current at the date when the proposal
in pursuance of which the amendment so made was served on the valuation
officer, or, where the proposal was made by the valuation officer, current at
the date when notice of the proposal was served on the occupier of the
hereditament in question, that alteration shall be deemed to have had effect as
from the commencement of the period in respect of which the rate was made, and
shall, subject to the provisions of this section, have effect for the purposes
of any subsequent rate.
By section
82(1):
In every case
where a new valuation list is to be made for any rating area, the valuation
officer may serve a notice on the occupier, owner or lessee of any hereditament
or premises in the area, . . . requiring him . . . to make a return containing
such particulars as may be reasonably required for the purpose of enabling him
accurately to compile the list.
By section
19(1):
Subject to
the provisions of this Part of this Act . . . the rateable value of a
hereditament shall be taken to be the net annual value of that hereditament
ascertained in accordance with subsections (2) to (4) of this section.
Subsection (2)
provides for the ascertainment of net annual value by the making of certain
deductions from gross value. In this case there is no dispute as to
ascertainment of the net annual value once gross value has been ascertained.
Gross value is defined by subsection (6):
‘gross
value’, in relation to a hereditament, means the rent at which the hereditament
might reasonably be expected to let from year to year if the tenant undertook
to pay all usual tenant’s rates and taxes and the landlord undertook to bear
the cost of the repairs and insurance and the other expenses, if any, necessary
to maintain the hereditament in a state to command that rent.
By section
20(1), which, as I have said, is a re-enactment of section 17 of the 1966 Act:
For the
purposes of any alteration of a valuation list to be made under Part V of this
Act in respect of a hereditament in pursuance of a proposal, the value or
altered value to be ascribed to the hereditament under section 19 of this Act
shall not exceed the value which would have been ascribed thereto in that list
if the hereditament had been subsisting throughout the year before that in
which the valuation list came into force, on the assumptions that at the time
by reference to which that value would have been ascertained — (a) the
hereditament was in the same state as at the time of valuation and any relevant
factors (as defined by subsection (2) of this section) were those subsisting at
the last-mentioned time; and (b) the locality in which the hereditament is
situated was in the same state, so far as concerns the other premises situated
in that locality and the occupation and use of those premises, the transport
services and other facilities available in the locality, and other matters
affecting the amenities of the locality, as at the time of valuation.
By subsection
(2):
In this
section, the expression ‘relevant factors’ means any of the following, so far
as material to the valuation of a hereditament, namely — (a) the mode or
category of occupation of the hereditament; . . .
By subsection
(3):
References in
this section to the time of valuation are references to the time by reference
to which the valuation of a hereditament would have fallen to be ascertained if
this section had not been enacted.
The only
previous references in the section to ‘time of valuation’ are in (a) and (b)
under subsection (1) and it is common ground that in this context the phrase
means the date of the proposal (see Barratt v Gravesend Assessment
Committee [1941] 2 KB 107).
The side note
to section 20 is ‘Valuation according to tone of list’ and the heading of
Schedule 2 is ‘Transitional Provisions as to Valuation According to Tone of
List’, but Mr Roots, counsel for the ratepayers, did not rely on the side note
or the heading as aids to the construction of the section (see Chandler v
Director of Public Prosecutions [1964] AC 763, Lord Reid at p 789; and R
v Schildkamp [1971] AC 1, Lord Reid at p 10, Viscount Dilhorne at pp
19-20 and Lord Upjohn at pp 26-28). By section 30 of the Local Government,
Planning and Land Act 1980, sections 19 and 20 have been amended by the
addition of new sections 19A and 19B; fortunately, we do not have to consider
in this case the effect of those sections.
The effect of
section 20 is to provide a ceiling which the values determined on the proposals
of August and September 1973 must not exceed and the question in this case is
the effect of the words ‘the value which would have been ascribed thereto in
that list’ (ie the list which came into force on April 1 1973), ‘. . . at the
time by reference to which that value would have been ascertained’. The
ratepayers say that that time was late 1970; the valuation officer and the
rating authority say it is April 1 1973. The Lands Tribunal has recorded that:
there is no
dispute that on values current in late 1970 the gross value based on a zone A
price of £175 would be proper. Neither is there any dispute that on values current
at April 1973 a gross value based on a zone A price of £250 would not be
excessive.
It is obvious
that the valuations for the list which came into force on April 1 1973 could
not in fact be made on that date. The list had to be transmitted to the rating
authority by December 31 1972, and in practice the valuations had to be made
some time before that date. The tribunal set out the dates at which the various
stages of the revaluation were done in Westminster (p 1019). The valuation had
to be related to the evidence of actual rents obtained by the valuation
officer. The tribunal found that:
in these
circumstances ‘the time by reference to which’ a value for any particular
hereditament would have been ascertained would thus have to depend on when its
class or category was being dealt with (p 1019) . . . For the purpose of fixing
values there would have to be for each class or category a single date after
which ‘the shutters came down’ and ‘the books were closed’ (to adopt
expressions used at the hearing), in the sense that rental evidence relating to
any later date would not be brought into consideration in deciding the level of
the assessment. This date was conveniently referred to by the witnesses in the
present appeal as the stop-date. In this connection no reason was suggested why
Regent Street should have been valued after, rather than before, Bond Street
and Oxford Street. On the evidence before me the stop-date for the principal
shopping streets in Westminster was the end of 1971. Accordingly, I find that
the time by reference to which the value which would have been ascribed to the
hereditament in the 1973 list would have been ascertained was the end of 1971
(p 1020).
He said that
rental evidence for Regent Street for 1972 and 1973 ‘are nothing to the point
for the present purpose because those rents came after the stop-date’ (p 1020).
He held, however, that the valuation officer would have to ‘cast his mind
ahead’ from the rental evidence available up to the stop-date (p 1020), because
of the desirability of the list being up to date when it came into force, and
‘project’ to that date the values on the evidence available at the Stop-Date.
He said (p 1021):
In the
present appeal, as has been seen, there had been a rising trend of rental
values in Regent Street over the four years up to the stop-date. Faced with
this circumstance there were two options open to the valuation officer. One was
to adopt a cautious view and project the ascertained level of rental value at
the stop-date horizontally forward to April 1973; the other option was
to project that ascertained value upwards to 1973. The test to be
applied and the question to be asked is whether the value that was actually
ascribed could reasonably be said to have resulted from the proper application
by the then valuation officer of his expertise as a valuer, having regard to
the evidence available to him at the stop-date.
He held that it
was right to make some upward projection of the value of these particular
hereditaments as at the stop-date, but that the valuation officer had made too
great an increase, having regard to the amount of the increase made in the
projections for Oxford Street. He therefore fixed the zone A price at £215 per
square metre instead of the £250 per square metre claimed by the valuation
officer (p 1021).
None of the
parties to this appeal supported this approach. In effect, it amounted to a
revision of the method of valuation which was adopted by the valuation officer,
and we agree that this cannot in any event be appropriate on the true
construction of the critical words of section 20 which we have quoted.
Moreover, his findings seem to us somewhat contradictory. If the valuation
officer, having fixed the value as at the stop-date (p 1020) ‘would have to
cast his mind ahead’ to April 1 1973 and decide whether to project that value
upwards or to make no increase, which we suppose is what is meant by
‘horizontal projection’ (p 1021), it seems to us that he would be valuing by
reference to April 1 1973 and not by reference to the stop-date.
In this court
Mr Roots, for the ratepayers, submitted that: 1. All hereditaments in the same
rating area must be valued as at the same date. This is common ground so far as
it goes. 2. There is no duty on a valuation officer in making a new valuation
list to value as at any particular date and in particular no duty to value for
the 1973 list as at April 1 1973. 3. The valuation officer therefore has a
discretion as to the date he chooses for the valuation of his area. 4. Since
the choice of date is a matter of discretion for the valuation officer one must
look to see what he in fact did in order to find out the date as at which he
valued. 5. What has to be found is the time at which the values in the list
coincide most closely with rents in the market (of course adjusted to
correspond with the definition of gross value). All hereditaments in the list
should then be valued as at that same time, or, in other words, at that level
of values. Mr Roots and Mr Hilary Eve, the very experienced valuer advising the
ratepayers, described that time as ‘the tone date’ or ‘the tone year’. 6. In
this case ‘the tone date’ is late 1970, and that is ‘the time by reference to
which that value would have been ascertained’ for the purposes of section 20.
Mr Glover and
Mr Alan Fletcher, for the valuation officer, and Mr Tucker, for the rating
authority, submit that it is the duty of every valuation officer to value for a
new list as at the same date and that for the 1973 list that date can only be
April 1 1973. That is ‘the time by reference to which that value would have
been ascertained’ for the purposes of section 20. Of course, they accept that
the valuation could not in fact be made on that date. The list had to be
completed and transmitted to the rating authority by December 31 1972, and in
practice the work had to be done some long time before that, but valuation as
at some future date, involving projection, is a familiar process.
We have no
doubt about the mischief at which section 20 of the 1967 Act and its
predecessors were aimed. During the last 40 years or so there has been a series
of postponements of revaluations for rating. Revaluations have taken place in
1939, 1956, 1963 and 1973; the 1973 valuation list is still in force and so far
as we know there is not yet any certainty as to the date of the next
revaluation. When a proposal to reduce the value of a hereditament is made
during the currency of the list, the general rule is that it must be valued as
at the date of the proposal (Barratt v Gravesend Assessment Committee
[1941] KB 107). In a time of rising rents, this value would almost always
be higher than the values of comparable hereditaments appearing in the list,
but in Ladies Hosiery and Underwear Ltd v West Middlesex Assessment
Committee [1932] 2 KB 679 it was held by this court that if a hereditament
is correctly assessed it is no ground for reducing that assessment to show that
other similar hereditaments are assessed at lower values. The headnote reads:
Held, that as
the appellant’s hereditament had been entered in the valuation list at the
proper figure, evidence that the seven other hereditaments had been assessed at
a lower figure was irrelevant and could not be used to justify a reduction of
the appellant’s assessment.
Scrutton LJ
said, at p 688: ‘The assessing authority should not sacrifice correctness to
ensure uniformity; but, if possible, obtain uniformity by correcting
inaccuracies rather than by making an inaccurate assessment in order to secure
uniform error.’ The result was that
there was a growing disparity, due to inflation, between the values of
hereditaments appearing in the list and the values determined on proposals made
during the currency of the list; the longer it was between revaluations, the
greater this disparity became. The object of section 20 and its predecessors
was clearly to remedy this unfairness by providing a ceiling which valuations
on proposals made during the currency of the list were not to exceed.
Parliament
dealt with this unfairness in stages. The Valuation for Rating Act 1953 applied
only to dwelling-houses and private garage or private storage premises and
applied only to ‘the making or altering of the first valuation list made after
the passing of this Act’, which turned out to be the 1956 revaluation. The
effect of section 2 was to impose as a ceiling of value the rent at which the
hereditament might reasonably have been expected to let on or about June 30
1939. The assumptions required by section 2(3) to be made correspond closely
with those required by section 20(1) and (2) of the 1967 Act, but the 1953 Act,
unlike the 1967 Act, specified a date by reference to which the valuation was
to be made. Then came section 17 of the Local Government Act 1966, re-enacted
by section 20 of the 1967 Act.
As the Lands
Tribunal said: ‘Section 20 of the General Rate Act 1967 is not one of those
statutory provisions that yield up their meaning at a glance’ (p 1019). But we
have no doubt that its general intention and effect were and are to protect
ratepayers against the
of the proposals; at the date of the proposals in this case the relevant list
was the 1973 list. That figure is a ceiling — the value could be reduced below
it. Section 20 has no application to the making of a new valuation list.
In Ryde on
Rating, 13th ed, p 479, it is said: ‘It cannot be doubted that the
intention of the legislature was to put an end to the rule in the Ladies
Hosiery case.’ We do not agree. The
effect of the section is not that correctness must now be sacrificed to
uniformity but that if the correct value of the hereditament as at the date of
a proposal is higher than the value which would have been ascribed to it in the
1973 list, the extent to which effect can be given to the correct value is
limited; the date of the proposal is no longer to be the governing factor. If
the correct value is lower than the value ascribed in the list effect can be
given to it. In Baker Britt & Co Ltd v Hampsher (Valuation
Officer) (1976) 19 RRC 62, Viscount Dilhorne at p 93 cited the Ladies
Hosiery case with approval (see also Lord Morris of Borth-y-Gest at p 89).
In our view section 20 has no application (except as to the date of valuation)
to the ascertainment of the value which would have been ascribed to a
hereditament in the 1973 list; for example, Ladies Hosiery still
establishes that it would be no reason for reducing the assessment of shops in
Regent Street to show that shops in Oxford Street or Bond Street were
undervalued. The section deals merely with proposals made for the valuation of
new or altered hereditaments in the context of the current valuation list, or
the revaluation of hereditaments included in the current list. As mentioned
below, it seems that it was primarily the former category which Parliament had
in mind.
It is fair to
say that increases in value are now limited by the ‘tone’ of the 1973 list, in
the sense of the level of values appearing in that list, and the side note is
therefore a convenient label to the section.
Our impression
from the wording of section 20 is that Parliament had primarily in mind
hereditaments newly created after the passing of the Act, or so altered after
that date as to become new hereditaments, but having regard to the words ‘any
alteration’ it must in our view apply to all hereditaments in respect of
which a proposal is made after that time, as Mr Glover does not dispute. We
confess that we are puzzled about the intention of the words ‘if the
hereditament had been subsisting throughout the year before that in which the
valuation list came into force’, but no one has suggested that they help one
way or the other in this case; the hereditaments with which we are concerned
were of course in fact subsisting throughout that year. The crucial
words for the purposes of this case are ‘the value which would have been
ascribed thereto . . . at the time by reference to which that value would have
been ascertained’. We have no doubt that this means the value which ought to
have been ascribed or, as the tribunal put it, the value which would properly
or correctly have been ascribed (see p 1020), otherwise the valuation officer
could simply say (in the case of a proposal for revaluation) that the value
which was in fact ascribed is the value which would have been ascribed.
Valuations for
rating are related to real rents in the market, which of course are different
at different dates, as this case abundantly illustrates. The amount of a
valuation for rating therefore depends on the time as at which (or ‘by reference
to which’) it is made, and that time is therefore crucial to value.
As we have
already said, counsel for the valuation officer and the rating authority say
that that time for the purpose of section 20 is in this case, and can only be,
April 1 1973; counsel for the ratepayers says that it is some earlier time
chosen at the discretion of the valuation officer, and in this case late 1970.
We see great difficulties in the way of the ratepayers’ contention. Their
counsel accepts that the time as at which hereditaments are valued must be the
same for the whole of any given rating area, but he says that it can be
different in other areas. Plainly it may well be different in every area if
each valuation officer has a discretion to choose the time as at which he will
value, and especially if he is to value in accordance with the principle
contended for by the ratepayers. A basic principle of rating law is that there
should be uniformity and fairness as between ratepayers. This principle is
clearly not limited to fairness and uniformity within one rating area. Lord
Pearce said in Dawkins (Valuation Officer) v Ash Brothers &
Heaton Ltd [1969] 2 AC 366 at p 381 — ‘Rating seeks a standard by which
every hereditament in this country can be measured in relation to every other
hereditament. It is not seeking to establish the true value of any particular
hereditament but rather its value in comparison with the respective value of
the rest.’ See also Arsenal Football
Club Ltd v Smith (Valuation Officer) [1979] AC 1 as to precepting
areas. If each individual valuation officer has a discretion to choose the time
by reference to which he will ascertain the values for his area, it is clear
that there can be no prospect of uniformity between different areas.
The difficulty
of discovering a ‘tone year’ or ‘tone date’, in the sense defined by the
ratepayers (ie the time at which the values in the list most nearly coincided
with rents in the market) is obvious. Mr Eve seems to have based his opinion on
51 hereditaments out of a total of 135,000 in Westminster. As this is a
valuer’s problem, we hesitate to say that it is impossible. But whether or not
there is such a ‘tone year’ or ‘tone date’ in Westminster is a question of
fact, and the Lands Tribunal seems to have found that there is not (see p
1021). A further difficulty is what was called in the argument ‘recessive
tone’. As we understand Mr Roots’ argument, the values to be taken into account
in ascertaining the ‘tone date’ are not the values as they originally appeared
in the list, but those values as later reduced by agreement or decision on
proposals made after the list came into force. This has two consequences.
Although the 1973 list has now been in force for nearly 10 years, its ‘tone
date’ cannot be discovered until after the last proposal for a reduction has
been determined, which is not yet. And, in a time of rising rents, reductions
in the values in the list will push back the time when they coincide with
market rents.
We can see one
difficulty about the contention of the valuation officer and the rating
authority. On their argument, the valuations inserted in the list must
necessarily be based on projections from the earlier date when the valuation
was actually made. If, on a proposal made after the list has come into force,
the problem is to determine the value which would have been ascribed to the
hereditaments on April 1 1973, evidence of market rents up to that date would
in our view be admissible (see Bwllfa and Merthyr Dare Steam Collieries v
Pontypridd Waterworks Co [1903] AC 426, the principle of which has been
applied in various other fields of the law). We understand this to be the basis
of the agreement that ‘on values current at April 1973 a gross value based on a
zone A price of £250 would not be excessive’. The Lands Tribunal admitted such
evidence in Thomas Cook Group Ltd v Prince [1981] RA 17, though
apparently without objection. The evidence of rents, after the valuation was in
fact made, may show that the valuation officer’s projection was wrong and so give
rise to proposals relating to other hereditaments, though in the present case
his projection was right, or at any rate not excessively upwards.
Mr Roots says
that the real question in this case is whether a valuation officer, in making
the 1973 new list, was under a duty to value as at April 1 1973, or whether he
had a discretion to choose the date as at which he would value. We think this
is right.
As we have
said, section 20 has nothing to do with the preparation of a new list; it is
concerned only with protecting ratepayers against inflation after the
list comes into force.
The
preparation of the list is governed by sections 68 and 19. Mr Roots rightly
says that the Act does not expressly impose any duty on the valuation officer
to assess values in the 1973 list as at April 1 1973 or as at the date of the
coming into force of that list. Section 68(3) and (4) do, however, impose on
him a duty to bring the list up to date as at the date when it comes into force
in respect of what may be roughly described as physical changes in
hereditaments. We think it would be odd if the physical characteristics of such
hereditaments were to be taken at one time and their value at another. We do
not think that the definition of ‘the time of valuation’ in section 68(4) for
the purposes of section 68(3) throws any light on the meaning of different
words in a different context in section 20. Moreover, some of the basic
principles of rating law do not depend on express statutory enactment — for
example, the principles that hereditaments must be valued rebus sic
stantibus (see eg Dawkins v Ash [1969] 2 AC 366, Lord
Wilberforce at p 385) and as at the date of the proposal (Barratt v Gravesend
Assessment Committee) both of which still remain in force, though their
application has been modified by section 20, and the principle of uniformity
and fairness.
Nor does
section 20 define ‘the time by reference to which that value would have been
ascertained’. It would have been difficult to provide for a date in that
section. When section 17 of the 1966 Act was passed, and when it was re-enacted
by section 20 of the 1967 Act,
apply not only to that list, but also to the next list, which had been
postponed to April 1 1973 by the immediately preceding section of the 1966 Act,
and presumably also to future lists after that. The section could, we suppose,
by some rather complicated drafting have referred to the dates when the 1963
list came into force and when any future lists would or might come into force,
but the argument that Parliament could have said something different is not
very attractive. We note that in section 20(3) Parliament did not simply say
‘references . . . to the time of the proposal’, although it is common ground
that this is the effect of this provision.
Mr Roots
relies in support of his argument that a valuation officer has a discretion and
not a duty as to the date as at which he will assess the values for a new list
on what was said by Widgery J (as he then was) in delivering the judgment of
the Divisional Court in R v Paddington Valuation Officer, exp Peachey
Property Corporation Ltd [1964] 1 WLR 1186 at p 1205:
Both parties
have assumed that the valuation list should reflect the values prevailing when
it takes effect; and though there is no express statutory direction that he
should do so, this is highly desirable if a spate of proposals to amend the
list is to be avoided. It is, however, to be noted that there is no express
duty upon a valuation officer to anticipate general changes in rental levels
which may occur between the completion of the list and its taking effect. There
is in any case no need to anticipate changes in the value of money since these
will not affect the relative value of the various hereditaments one to another.
In the opinion of the court a valuation officer should have regard to the
desirability of his list being up to date when it takes effect . . . he may
give effect to anticipating future trends if his skill and experience tell him
that these trends are sufficiently established . . .
But in that
case there was no issue as to the choice between discretion and duty in
relation to the date as at which value should be determined. In the Court of
Appeal [1966] 1 QB 380, Mr Desmond Ackner QC, in opening the ratepayers’
appeal, said (at p 386): ‘Although the Act does not lay down a date when the
properties should be deemed to be valued it is common ground that the valuation
officer should make his valuation as near April 1 as possible even if that
requires him to look ahead and prognosticate . . .’ It appears that the
argument in the Divisional Court had been the same. We feel that this common ground
between counsel of the eminence of those engaged in that case is of persuasive
effect. Lord Denning MR said (at p 405) that the 1963 revaluation was ‘to be
based on current values so as to reflect, as far as possible, the values
prevailing at the time when the list was to take effect’.
In our view,
that case does not support Mr Roots’ submission.
In our
judgment, the decisive factor in this case is the principle of uniformity and
fairness. As we have said, Mr Roots accepts that if the valuation officer of
each rating area has a discretion to choose the date as at which he will value,
the values in different rating areas are likely to be at different levels,
because values must depend on date of valuation. Values might for example be at
different levels even within the same precepting area — see the Arsenal
Football Club case, [1979] AC 1. Some other examples of the importance of
uniformity as between different rating areas are given in Ryde on Rating,
13th ed p 477. Uniformity and fairness as between all rating areas can be
achieved only if all rating areas are valued by reference to the same date, and
the only possible common date is in our view the date when the valuation list
comes into force — in this case April 1 1973.
Because values
for a new list must in practice be determined some time before the list comes
into force, it cannot be the duty of a valuation officer to determine a value
which will be absolutely correct at that date, because that would be
impossible. But in our judgment it is his duty to aim at that date and to seek
to achieve values which will then be correct. This will necessarily involve the
consideration of projection and how he does this is a matter for his
discretion.
In the Lands
Tribunal counsel for the ratepayers (not Mr Roots) rather rashly asked the
witness called for the valuation officer to produce the instructions given by
the Revenue to valuation officers for the preparation of the 1973 list. These
were produced and are included in the additional documents to which the rating
authority wished to refer. These documents are of course inadmissible on the
construction of the Act, but it is satisfactory to note that in Circular 26,
issued on July 10 1969, the Revenue took what we think is the right view of the
law.
If our view as
to the duty of the valuation officer is right, it follows that ‘the time by
reference to which that value would have been ascertained’ in section 20(1)
means the date when the list comes into force, in this case April 1 1973. We do
not agree with the statements in Ryde on Rating, 13th ed, that it means
the date at which the list was prepared (see pp 467, 473 — twice — and 476).
In our
judgment, the question asked in the case stated at the request of the
ratepayers should be answered ‘No’, and the question asked in the cases stated
at the request of the valuation officer and the rating authority should be
answered ‘Yes’. We understand that the values on this basis are agreed, and we
therefore dismiss the appeal of the ratepayers and allow the appeals of the
valuation officer and the rating authority.
In conclusion,
we should like to express our great debt to Mr Roots. He was bereft of both his
leaders, but no one could have presented the case for the ratepayers more ably
or more attractively, and his clients did not suffer the slightest disadvantage
from the absence of their leading counsel.
The valuation
officer’s appeal was allowed and the ratepayers’ appeal dismissed, with half
costs in the Court of Appeal and below. Leave to appeal to the House of Lords
was granted.
