Valuation for rating - Mineral water springs etc - Right to take water - Whether heritable - Basis of assessment - Royalties - Indexation - RPI - Period of assessment - Relevant figures after tone date - Whether volume bottled was a physical circumstance - Whether element of royalty payment was not truly attributable to rent - Valuation Timetable (Scotland) Order 1995
The ratepayers leased various small plots on a large estate on Campsie Hills. The lease gave a right to abstract running water and to run pipes etc from the plots to their bottling plant, some two miles away. It also gave the ratepayers an exclusive right to use of water from the estate for bottling. Any subsequent plots required by them were to be subject of agreement. The ratepayers had contended that the right to take water was not heritable and should not have been reflected in the annual value. However at the hearing before the Tribunal it was conceded that the right to extract water was a use of the plot and was properly to be included as a rateable element although the water itself was moveable. It was agreed that the annual royalties paid provided a proper basis for assessment of rent, calculated at the statutory date of 1 April 1993. It was contended by the ratepayers that an appropriate basis of assessment would be to take the average of the royalties over five years ending at the tone year. It was contended that there was no justification for including figures from any subsequent period. Although the royalties paid from year to year were adjusted to take account of changes in the Retail Prices Index from the date of entry under the lease, it was contended that there was no justification for adjusting the figures to the tone date in a similar way. Although royalties were agreed to provide an appropriate basis for assessment it was argued that a deduction of fifteen per cent ought to be made to reflect the fact that payment under the lease included a grant of exclusive right to take the water from the rest of the estate. This was not properly an element of rent for the plots. These propositions were resisted by the assessor who also argued that it was appropriate to have regard to the varying volumes of water in determining the "physical characteristics" of the heritable subjects at valuation date.
Held (1) a hypothetical landlord and tenant would have regard to inflation when using historical figures as a basis for calculation of rent; (2) the agreement of the actual parties to the lease that the RPI should be used was persuasive evidence that this was an appropriate approach in the present case; (3) that the hypothetical parties would have regard to the pattern of increased use of the right to take water when determining rent and would allow for this by taking the average of the latest of three years rather than five; (4) there was no justification for taking account of figures subsequent to the date of assessment; and (5) although the lease did include a right in addition to the right to occupy the land there was no sufficient evidence to demonstrate that any significant element of annual payment should be attributed to that.
Cairngorm Chairlift Company Ltd v Assessor for Highland Region 1995 SLT (Lands Tr) 35
John Menzies v Assessor for Glasgow (No.2) 1937 SC288
See full decision: LTS/VA/1999/85