Rating of cold store divided internally by insulated walls–Lands Tribunal properly directed as to law–Tribunal’s finding that each internal chamber was ‘a chamber for . . . refrigerating’ not open to challenge on appeal–Conceded by ratepayers that on this basis each chamber was ‘in the nature of a . . . structure’–Whole insulation assembly deemed part of hereditament
This was an
appeal by Union Cold Storage Co Ltd from a decision of the Court of Appeal on
July 17 1975 holding that the insulation assembly in a cold store at
Fairbrother Street, Salford, was deemed under section 21 (1) (a) of the General
Rate Act 1967 to be part of the hereditament for the purpose of ascertainment
of rateable value. The Lands Tribunal’s decision was reported at (1973) 226 EG
1965 and the Court of Appeal’s decision at (1975) 236 EG 125, [1975] 2 EGLR 97.
M Chavasse QC
and F A Amies (instructed by R A Roberts) appeared for the appellants, and P
Medd QC and A Fletcher (instructed by the Solicitor of Inland Revenue)
represented the respondent valuation officer.
In a brief
speech, LORD WILBERFORCE said that he had had the benefit of reading Lord
Diplock’s opinion in advance. He entirely agreed with it, and would dismiss the
appeal.
LORD DIPLOCK:
The question in this appeal is whether the insulation assembly in a cold store
occupied by the rate-payers is to be deemed to be part of the hereditament
under section 21 (1) (a) of the General Rate Act 1967 for the purpose of
ascertaining the rateable value of the hereditament This depends upon whether
the insulation is plant or machinery falling within class 4 of the Plant and
Machinery (Rating) Order 1960. Class 4 contains a lengthy list of various items
of plant or machinery introduced by the words:
The following
items, except:
(a) any such item which is not, and is not in
the nature of, a building or structure; and
(b) any part of any such item which does not
form an integral part of such item as a building or structure or as being in
the nature of a building or structure.
The list which
follows includes ‘chambers, vessels and containers for . . .
refrigerating.’ That part of the
hereditament in which the insulation assembly is housed consists of an outer
shell of brick and concrete walls, enclosing an insulated floor and covered by
a corrugated asbestos roof. Within this is an inner shell of insulated walls
attached to rails fixed to the outer walls so as to leave a space between the
two walls, and an insulated ceiling suspended from steel girders attached to
the roof joists of the outer shell. The insulated space thus formed is divided
by internal insulated walls into 16 separate chambers for refrigerating, two of
which were used for freezing and the remainder as cold stores, and includes a
corridor providing a means of access to some of the chambers. Full details of
the method of construction are to be found in the case stated by the Lands
Tribunal and the various drawings attached thereto. A more condensed
description is to be found in the judgment of Buckley LJ in the Court of
Appeal. Before the Lands Tribunal, the argument for the ratepayers was put in
two ways. One was on the basis that each of the 16 rooms into which the cold
store was divided constituted a separate item under class 4 of the 1960 order.
The alternative argument was on the basis that the outer shell constituted a
single chamber for refrigerating. On the 16-items basis, the ratepayers
contended that none of the individual chambers formed by the insulating walls,
ceiling and floor which enclosed it, was in the nature of a building or
structure. On the single-item basis, they argued that the insulating walls
lining the outer shell, the ceiling and the partition walls did not form an
integral part of the chamber formed by the external walls and the roof and
floor. Before your Lordships’ House, however, the contention that if there were
16 chambers the insulating walls and ceilings which constituted each chamber
were not in the nature of a building or structure was abandoned by the ratepayers.
Moreover, it was never contended on the basis of there being not one but 16
chambers that the panels and other components from which they were built were
not integral parts of the walls and ceilings. In other words, if it be right
that there are 16 chambers for refrigerating, it is conceded that they do not
fall within either of the exceptions to class 4 of the 1960 order.
The initial
question for the Lands Tribunal to determine was whether the disputed part of
the hereditament comprised 16 chambers for refrigerating or only one. This is
in my view a question of fact for the Lands Tribunal, and provided that the
tribunal did not misdirect itself in law as to the tests to be applied in
identifying what constitutes an ‘item,’ its finding on this matter is
conclusive for the purposes of an appeal to the Court of Appeal. The finding of
the Lands Tribunal was expressed as follows:
For my part,
having seen the premises, I think there are on the appeal hereditament 16
chambers for refrigerating which are ‘items’ included in class 4 of the 1960
order. Each of the rooms seems to me to be properly described as a chamber and
each chamber is used for refrigerating. It is first necessary, therefore, to
consider the disputed ‘bits’ in order to decide whether they by themselves can
properly be said to constitute the chambers for refrigerating which are on the
hereditament. In my opinion they clearly do, and I can think of no other words
more appropriate
manner described than a ‘chamber.’
It is evident
from the reference to ‘bits’ that the Lands Tribunal was following the
direction given by Lord Reid in Shell-Mex & BP Ltd v Holyoak
(VO) [1959] 1 WLR 188 at 198:
. . . looking
to the descriptions of a number of the items in it [sc class 4] such as
burners, crane gantries and stagings, it seems to me to be clear that they need
not be, and in some cases cannot be, capable of working as self-sufficient
units. So the order requires one to pick out of the whole installation of plant
and machinery those bits which correspond to any of the items mentioned in the
list irrespective of whether or not they require to be associated with other
things in order to produce any useful result. Then the next step is to consider
whether each bit of plant so picked out is or is not, taken by itself, a
building or structure or in the nature of a building or structure.
Lord Reid was
dealing with an earlier order, the Plant and Machinery (Valuation for Rating)
Order 1927, in which the wording of the introductory words in class 4 was not
identical with the introductory words in the 1960 order which I have set out
above, but in my view the passage which I have cited from Lord Reid’s speech is
applicable also to the 1960 order.
The Lands
Tribunal accordingly did not misdirect itself in law. With its findings that
the disputed part of the hereditament comprised 16 chambers for refrigerating,
neither the Court of Appeal nor your Lordships’ House has any jurisdiction to
interfere. Since it is now conceded that the Lands Tribunal was right in
finding that each of the chambers was in the nature of a structure and so do
not fall within exception (a) of class 4, it follows that this appeal must
fail. The Court of Appeal did not consider whether the Lands Tribunal had
misdirected itself in law in finding that the disputed part of the hereditament
did not constitute a single chamber for refrigerating, but comprised 16
chambers. The court dismissed the appeal upon the grounds that even assuming
that the whole space within the outer shell constituted a single chamber for
refrigerating, the internal insulating walls and ceiling were structurally an
integral part of it and so would not fall within exception (b) of class 4. In
the absence of any finding by the Lands Tribunal as to the structural
integration of the internal insulating walls and ceiling with the outer shell,
Mr Medd, for the valuation officer, has not sought in your Lordships House to
rely upon this ground. I would accordingly dismiss the appeal upon the ground
that the Lands Tribunal’s finding that there were 16 chambers for refrigerating
has not been shown to have been wrong in law. It is accordingly conclusive, and
in the light of the concession that the chambers are a structure, or in the
nature of a structure, is sufficient to dispose of this appeal.
LORD SIMON OF
GLAISDALE: I have had the advantage of reading in draft the speech delivered by
my noble and learned friend, Lord Diplock. I agree with it, and would therefore
dismiss the appeal. The crucial issue is to identify the ‘item’ for the purpose
of the words introducing class 4 in the schedule to the Plant and Machinery
(Rating) Order 1960 (SI 1960/122). There was an unimpugnable finding of fact by
the Lands Tribunal that each of the 16 insulated chambers within the
hereditament was such an ‘item,’ each being a ‘chamber . . . for . . .
refrigerating,’ one of the ‘items’ in the class 4 list. Do any of these 16
‘items,’ then, fall within either of the exceptions in the introductory
words? It is conceded that each was a
structure or in the nature of a structure: thus they cannot fall within (a).
Exception (b) is concerned with excepting part of any such ‘item’ (here
each of 16 insulated chambers) which does not form part of such ‘item’ as a
structure or something in the nature of a structure. So far as concerns any
matter in this appeal, there was no part of any of these 16 insulated chambers
which did not form part of it as a structure or something in the nature of a
structure. It follows that each of the 16 insulated chambers was, for the
purposes of rateability, ‘deemed to be part of the hereditament’ by virtue of
the schedule to the statutory instrument.
I would only
add that in my respectful opinion, contrary to the contention on behalf of the
appellant, Manchester Marine Ltd v Duckworth (VO) [1973] 1
WLR 1431 correctly distinguished Inland Revenue Commissioners v Barclay,
Curle & Co Ltd [1969] 1 WLR 675, though both were concerned with
consideration of a dry dock as ‘plant.’
But the former was a rating, the latter a revenue, case. The revenue
case was concerned with an ‘initial allowance’ when the taxpayer incurred
expenditure on the installation of plant. The purpose of the revenue
provisions–to encourage investment–demanded that the whole installation in
question should be regarded as a ‘functional entity.’ The prime purpose of the rating legislation
is, however, to promote fairness in the valuation list between one ratepayer
and another. Both this general approach and the statutory language itself show,
in the words of Lord Reid, that it is ‘the purpose of this legislation to split
up for rating purposes installations which are for practical purposes indivisible’
(Shell-Mex & BP Ltd v Holyoak (VO) [1959] 1 WLR 188, 199).
Thus the Lands Tribunal was fully entitled to consider that each of the 16
insulated chambers within the hereditament, each being a ‘chamber for . . .
refrigerating,’ was a separate ‘item’ within class 4.
LORD
KILBRANDON: For the reasons given by my noble and learned friend, Lord Diplock,
in his speech, which I have had the advantage of seeing in draft, I would hold
that the decision of the Lands Tribunal was right, and that this appeal must
accordingly be dismissed.
LORD
EDMUND-DAVIES: In my judgment, the decision of the Lands Tribunal was clearly
right, and this for the reasons given in the speech of my noble and learned
friend, Lord Diplock. I therefore concur in holding that this appeal should be
dismissed.
