DESCRIPTIVE RUBRIC

Valuation for Rating - Comparative principle of valuation - Shopping-centre unit used as fast-food restaurant - 'Actual State' rule of valuation - whether subjects correctly described and valued as shop - whether having same value as adjoining shops - relevant factors considered, including actual rent of subjects.

Spudulike Group Limited v Assessor for Tayside Valuation Joint Board
22 March 2002
LTS/VA/2001/6

The tenants and ratepayers of subjects comprising a unit of a modern shopping centre which they used as a fast-food restaurant serving baked potatoes and fillings, etc., appealed against the Assessor's proposed valuation of the subjects as a shop and by comparison with the values of the adjoining shop units. The applicants, relying on the 'actual state' rule of valuation, whereby subjects are to be valued in their existing physical state and in accordance with their existing use, contended that the subjects should be entered and valued as a café, at a lower value arrived at in comparison with certain open café areas in the mall at the centre, or alternatively at a value to be arrived at on what they described as a 'quasi-turnover' basis. There was no real dispute about the principles of the actual state rule. If the subjects were to be valued as a café, the respondent argued in the alternative that they nevertheless had the same value as the adjoining shops and in any event did not accept either of the applicants' values.

Held (1) The subjects were correctly described for valuation purposes, and should be entered on the Roll, as a restaurant : although their physical state was substantially that of a shop and the cost of stripping them out for shop use would be minor, cafés or restaurants were in a different general category of use from shops and, having regard to the extent of preparation and cooking of food, the subjects were properly considered as a restaurant; and (2) on a consideration of all the circumstances relied on, including the values of shops and café areas in the centre, the position in the nearby city centre, the position at another modern shopping centre referred to, negotiations between the landlord and a similar user for an adjoining unit, and the rent and lease terms for the subjects themselves, in the particular case the subjects did not have the same value as the adjoining shops ; the actual rent, together with a number of 'checks', indicated the extent of concession from shop values which the hypothetical landlord and tenant would agree at around 15%, in preference to direct comparison with the café areas or a turnover basis ; the applicants' argument for exclusion of certain toilet areas from the valuation in the particular circumstances rejected ; and appeal allowed to the extent of reducing the Assessor's proposed Zone A rate from £815m2 to £693m2 and his proposed Net Annual Value from £87,700 to £74,500.

Authorities referred to:

Assessor for Lanarkshire v Smith 1962 S. C. 517
Assessor for Moray and Nairn v Elgin High Church Trs. 1962 S. C. 524
Assessor for Stirling v Myles and Binnie 1962 S. C. 530
Scottish and Newcastle Retail Limited and Another v Williams [2000] R. A. 119 (Lands Tribunal) and [2001] R.A. 41 (Court of Appeal, sub. nom. Williams v Scottish and Newcastle Retail Limited and Another)
Texstyle World v Assessor for Strathclyde 1995 S. C. 588
Wood v Aberdeenshire Assessor [1963] R. A. 101
Assessor for Highland and Western Isles v Barratt International Resorts Limited and Others 1997 S. C. 384


See full decision:  LTS/VA/2001/6