Decision of the Lands Valuation Appeal Court in which a number of ratepayers appealed against the values entered in the roll at the time of the 2005 Revaluation and for their retail premises in Sauchiehall Street in Glasgow. Following the appeal, the Glasgow Valuation Appeal Committee found that a combination of events consisting of the opening of out of town shopping centres, the economic downturn, the withdrawal from the market place of various traders and the expansion and improvement of the St Enoch Centre brought about a material change of circumstances[1] affecting rental values in virtually all retail premises within the principal trading sections of Sauchiehall Street. As such, the values were reduced by 30%.

The Assessor appealed and the Lands Valuation Appeal Court found that only the economic crisis constituted a relevant material change of circumstances and returned the case to the Appeal Committee. After hearing expert evidence from both sides as to how much of the reduction was due to the economic crisis, the Committee allowed the appeals and found that the valuations should be reduced by 6.66%[2]. The ratepayers argued that the reduction should have been the full 30% and requested that the Committee state a case for the Appeal Court. The Assessor cross appealed arguing that there should be no reduction at all.

Before the Appeal Court the ratepayers argued that the court should:

1. resile from its previous decision in this case and decide instead that any change in rental value in an intermediate year, whatever the cause, was per se a material change of circumstances, except where it was trivial;
2. restore the original decision of the Committee (and reduce the values by 30%).

The Appeal Court rejected those arguments and refused the appeal (and cross appeal). The court was satisfied its previous decision was sound in law. It noted that, while a material change of circumstances may now[3] consist of a fall in rental value, not every fall in rental value constitutes a material change of circumstances. If that were the case the whole system of quinquennial revaluation would be undermined:

 “The system of quinquennial revaluation is based on the principle that subjects entered in the roll at a revaluation will remain at the same value until the next revaluation, unless a material change of circumstances occurs in the interim. In reality, the rental values of commercial subjects of all kinds may fluctuate constantly throughout the quinquennium. The submission for the appellants, if sound, would apply to all lands and heritages that are entered in the roll. If every downward fluctuation, whatever the cause, constituted a material change of circumstances, the whole basis of quinquennial revaluation would be undermined. The quinquennium would consist of an endless series of material change appeals relating to all kinds of lands and heritages.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

On 27 November the Scottish Government announced it is postponing the next revaluation of non-domestic rates until 2017.  In addition it has announced a comprehensive review of the non-domestic rates system.

The Scottish Government consultation, “Supporting Business – Promoting Growth” can be found here.  The consultation ends 22 February 2013.

Decision of the Lands Valuation Appeal Court regarding an appeal by the assessor against a decision of the Dundee Valuation Appeal Committee. (After noting that strict adherence with the legislation would create a situation that was inequitable and unfair) the Committee had allowed 49 appeals by Land Securities and others against the valuation of shops in the Overgate Centre in Dundee on the basis that a fall in the retail rental values caused by the recession (agreed to have happened on 1 April 2009) amounted to a material change in circumstances after the valuation date. The valuation date was 1 April 2008 and took effect two years later on 1 April 2010.

The issue for the court was whether a material change of circumstances which had occurred during the 2005 roll at a date (agreed to be 1 April 2009) after the valuation date for the 2010 roll should be reflected in the 2010 roll. The ratepayers did not argue that the values entered on the 2010 roll should be reduced due to a supervening material change of circumstances. Instead their contention was that the values should not have been entered into the roll in the first place.

 This argument did not find favour with the court. The Lord President said:

 “In my opinion, this argument is fallacious. It overlooks the basis on which a revaluation is carried out. It confuses the date at which a value has to be struck with the date on which it will come into force. The fundamental principle on which a revaluation is carried out is that all of the lands and heritages entered in the new roll are valued to a common base. With one exception, there is no warrant in the legislation for the assessor’s adjusting tone date[1] valuations in respect of changes in value that occur between the tone date and the revaluation date. Inevitably, there will be increases and decreases in the values of various groups or classes of lands and heritages during that period; but for there to be consistency in the roll it is essential that all lands and heritages in the new roll must be valued as at one fixed date. The exception is the power given to the assessor in section 1(6)(c) of the 1975 Act (supra) to take account of a material change of circumstances in the period after the roll has been made up and before it has come into force.”

Appeals can be made under s 3(2) and 3(4) of the Local Government (Scotland) Act 1975. The right of appeal under section 3(4) extends to a material change of circumstances occurring between the date of delivery of the roll and the date on which the roll comes into force. It does not apply to a material change of circumstances occurring before the entry was made.

Section 3(2) also provides a general right of appeal against a new entry. It would have been open to the ratepayers to appeal under section 3(2) (within the 6 month time limit) in respect of a material change of circumstances occurring after the date of delivery of the roll. That did not assist the ratepayers in this case. The change of circumstances on which they relied had affected values by 1 April 2009 and there was no suggestion that the 2010 roll had been made up by that date.

The court allowed the assessor’s appeal and recalled the decision of the Committee.

The full judgement is available from Scottish Courts here.

A similar decision was reached in respect of properties at the Mercat Shopping Centre in Kirkcaldy in The Assessor for Fife v. Mercat Kirkcaldy Limited and others. The full text of that judgement is available here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case considering whether a rating authority was entitled to levy rates on the owner of a newly erected and unoccupied building without first having served a completion notice (under schedule 3 to the Local Government (Scotland) Act 1966) on the owner.

Cosmopolitan and Almondvale argued that demands for rates at office premises in Bellshill were illegal as the Council had not served a completion notice on them to establish a deemed date of completion of the office. As such they sought repayment of £289k on the grounds of unjustified enrichment.

However, Lord Hodge held that the action by Cosmopolitan and Almondvale was irrelevant. He found that the language in the 1966 Act did not indicate that the completion notice procedure was intended to be the only method by which the owner and rating authority could establish the date of completion of a building. There was also no policy reason for adopting such an approach.

Taken together, s24 of the 1966 Act and regulation 2 of the Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 1994 require the levying of rates on all relevant buildings which have been unoccupied for a continuous period of more than three months. In order to be classified as unoccupied for rating purposes a newly erected building must be complete in the sense that it is capable of occupation. The date of completion of a building is a question of fact and is one which the rating authority and the owner can agree upon or contest in litigation. The completion notice procedure provides an additional mechanism by which a rating authority can establish an undisputed deemed date of completion.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.