List (VO) v Network Rail Infrastructure Ltd

Rating – Non-domestic rates – Advertising rights – Respondent company granting advertising rights in railway stations – Valuation Tribunal for England deciding that rights treated for rating purposes as part of single hereditament – Appellant valuation officer appealing – Whether rights separately rateable in local list as in occupation of company to whom rights granted or in central list as in occupation of respondent – Appeal allowed By two separate decisions, the Valuation Tribunal for England decided that advertising rights at Liverpool Street Station and Victoria Station in London should be treated for rating purposes as part of a single hereditament comprising the national railway network in the occupation of the respondent. It directed that separate entries made by the appellant valuation officer in the local rating lists for the City of London and for Westminster should be deleted. The appellant appealed against those decisions. The assessments entered in the local lists at the request of the billing authorities were in respect of: i) the right to display advertisements on a static, two-sided, back-lit box suspended above the central concourse at Victoria Station and measuring approximately 6m by 1.6m with a rateable value of £83,000; and ii) a digital “transvision” installation attached to the upper level pedestrian walkway over the Broadgate Circus exit from Liverpool Street Station which measured about 4m by 2.3m and had a rateable value of £77,500. The sites were made available by the respondent to JCD Ltd under the terms of a Rail Advertising Concession Agreement entered into on 10 December 2010. Clause 3.1 of the 2010 agreement was a grant by the respondent to JCD of “the exclusive right to maintain, manage, promote and exploit the sale of advertising space” at 18 major railway stations, including Victoria and Liverpool Street. Held: The appeal was allowed. (1) The appeal turned mainly on the proper interpretation of section 64(2) of the Local Government Finance Act 1988 which provided that a right was a hereditament if it was a right to use any land for the purposes of exhibiting advertisements and the right was let out or reserved to any person other than the occupier of the land, or where the land was not occupied for any purpose, the right was let out or reserved to any person other than the owner of the land. If that requirement was satisfied, section 65(8) provided that the resulting hereditament “shall be treated as occupied by the person for the time being entitled to the right”.  The issue was whether, for an advertising right to be “let out” within the meaning of section 64(2), the characteristics of the right and the way it was exercised had to be comparable to the rateable occupation of other forms of hereditament. The question was whether, where an advertising right was exercised in respect of a site which was in the occupation of someone else, it was relevant to consider the “landlord-control” principle and determine whether the owner of the right or the occupier of the site was in paramount occupation. (2) The legislation referred in section 64(2) of the 1988 Act and in regulation 6(4) of the Central Rating List (England) Regulations 2005 to a “right… let out or reserved to any person other than the occupier” and to “rights so let out as to be capable of separate assessment”. Whether a right was “let out” was therefore critical to its treatment as an advertising hereditament or as an excluded hereditament which could not appear in a central list. There was no difficulty in understanding how a right might be “reserved” to a person other than the occupier. A reservation was simply some right in respect of land which had been saved or excepted from a grant to someone else: see Woodfall’s Law of Landlord and Tenant, 5.045. A right might be reserved by a landlord to exhibit advertisements on the side of a building which was let to a tenant and, once the tenant had taken occupation, the right would be reserved to someone other than the occupier.           (3) In the case of advertising, section 64(2) itself deemed a right which had been let out to be a hereditament and section 65(8) identified the rateable occupier. Although read in isolation the word “let” might suggest a letting or demise and therefore the creation of an interest in land, “let out” was not a term of art. Rating was primarily concerned with occupation rather than with the relationship or tenure to which the occupation was referable. The crucial question was always what in fact was the occupation in respect of which someone was alleged to be rateable, and it was immaterial whether the title to occupy was attributable to a lease, a licence or an easement: Westminster City Council v Southern Railway Co Ltd [1936] AC 511 considered. The same flexible approach ought logically to be applied to the question of whether land or a right had been “let out”; the words did not denote a letting or a grant in a technical or proprietary sense, but some transfer or conferral of the right in question by the person entitled to it to some other person to use for their own purposes. Practicality suggested that some degree of longevity and exclusivity was likely to be required in that arrangement, and that a right of a “fleeting nature” would not be sufficient to create a separate hereditament. But the present agreement was initially for five years and there was no need in this appeal to consider where, at the margin, a short-term advertising right would meet the requirement of having been let out.  (4) As far as advertising hereditaments were concerned, the issue of rateable occupation was dealt with in section 65(8). It was not necessary to apply the landlord-control or paramountcy principle to determine who was in occupation of an advertising hereditament. As a matter of statutory interpretation, advertising hereditaments were governed by their own rules which did not depend on or require consideration of any wider rating principles. The advertising rights at the two stations had been “let out” to JCD with the result that they were designated as hereditaments by section 64(2) and were treated as in the occupation of JCD by section 65(8).  They could not therefore be in the occupation of the respondent and could not satisfy the requirement of regulation 6(1) of the 2005 Regulations and they belonged in the local lists and not in a central list. Galina Ward KC and Hugh Flanagan (instructed by HMRC Solicitors) appeared for the appellant; Daniel Kolinsky KC and Luke Wilcox (instructed by Dentons) appeared for the respondent. Click here to read a transcript of List (VO) v Network Rail Infrastructure Ltd Eileen O’Grady, barrister