Where different parts of an office building are occupied by the same occupier, they are usually treated as a single hereditament if they are contiguous – but as separate hereditaments, if they are not. The question that the Supreme Court had to answer in Woolway (VO) v Mazars LLP [2015] UKSC 53; [2015] PLSCS 240 was whether the ratepayer’s premises on the second and sixth floors of an eight-storey office block should be treated as a single hereditament, or should be rated separately.
A hereditament is usually a self-contained property, containing parts that are all physically accessible without having to step outside the property itself. However, the ratepayer argued that its offices should be rated as a single hereditament because they were functionally interdependent. The Supreme Court disagreed. It explained that business rates are a tax on property, not a tax on businesses, and the fact that one business may occupy two separate heriditaments does not alter the character of the premises themselves.
Lord Sumption explained that the primary test of whether distinct spaces under common occupation form a single hereditament is geographical, and is based on visual or cartographic unity. However, where adjoining houses in a terrace, or vertically contiguous units in an office block, do not intercommunicate and can be accessed only via other property that is not exclusively occupied by the ratepayer (such as a public street or the common parts of a building), this will be a strong indication that the premises are separate hereditaments. On the other hand, properties that are discontiguous, but which are nonetheless geographically linked, such as buildings in a university campus, may constitute one hereditament if the occupation of one part would be pointless without the other.
Two geographically distinct spaces may constitute a single hereditament where the use of the one is necessary to the effectual enjoyment of the other. This depends not on the business needs of the ratepayer, and the way in which it chooses to use premises, but on the objectively ascertainable character of the premises themselves. Lord Gill explained that this is to be determined by reference to the interdependence of the parts, whilst Lord Neuberger considered that if one property cannot sensibly be occupied or let, except together with other property, then the properties can properly be treated as a single hereditament. For example, a golf course or shipyard divided by a public road might constitute a single hereditament.
The ratepayer’s offices were separate heriditaments. In order to pass between the different floors, the ratepayer had to use the common parts of the building. This was no different, either geographically or functionally, from leaving a building that is exclusively occupied by the ratepayer, crossing land belonging to someone else, and entering another building used by the same occupier.
It is worth adding that Lord Neuberger and Lord Gill also took the view that, absent very unusual facts, two separate but contiguous self-contained floors in the same office building, would also constitute separate heriditaments. However, if such premises ceased to be self-contained, following the construction of an internal staircase, then the two hereditaments would be treated as having been converted into one larger hereditament.
Allyson Colby is a property law consultant
