In this appeal against the decision of the local Valuation Appeal Committee not to refer the appellants’ appeal to the Tribunal, it is not in dispute that the subjects are a shop which the Assessor has valued using an ‘overall’ basis whereas he has used the ‘zoning’ basis for other shops in the immediate locality. The appellants contend that in doing so the Assessor erred in principle and that the appeal satisfies the test for referral in that it “raises a fundamental or general issue likely to be used as a precedent in other cases.” The Tribunal is, however, not persuaded that this test is met and we accordingly refuse this appeal.
Regulation 4 of the Valuation Appeal Committee (Procedure in Appeals under the Valuation Acts) (Scotland) Regulations 1995 provides for either the Assessor or the appellant to seek referral of appeals to the Tribunal. Regulation 5(1) provides as follows:-
“(1) Where an application under regulation 4(1) has been made, and it appears to the Committee that –
(a) the facts of the case are complex or highly technical;
(b) the evidence to be given by expert opinion is complex or highly technical;
(c) the law applicable to the case is uncertain or difficult to apply;
(d) the case raises a fundamental or general issue likely to be used as a precedent in other cases; or
(e) the lands and heritages to which the appeal relates are part of larger subjects situated in more than one valuation area and the valuation of those subjects is appealed in more than one such area,
the Committee shall refer the appeal to the Tribunal for determination … ”
Section 1(3BA) of the Lands Tribunal Act 1949 provides a right of appeal to the Tribunal against a decision not to refer. It is established, and the parties accepted, that such an appeal is ‘open’ in the sense that the Tribunal is not confined to considering whether the Committee erred in its reasons for its decision but rather has to reach its own decision on all the materials placed before it.
The appellants’ appeal relates to the subjects at Unit A, Drummer’s Corner, Peterhead. The Assessor entered the subjects in the Valuation Roll at £60,000 with effect from 1 April 2000. The appeal is a revaluation appeal. The appellants duly applied under regulation 4. Their application relies on ground (d) in regulation 5(1). The Committee, having followed the procedure laid down in the Regulations, refused the application. The Committee gave reasons indicating that they were of the opinion that the case did not raise a fundamental or general issue likely to be used as a precedent in other cases, and added:-
“It appears that in principle both sides are looking to the comparative principle of valuation and that the Committee can deal with such differences and arguments as may emerge and be fully stated during the course of the Hearing and reach a decision.”
The appellants have appealed timeously against that refusal. The Assessor resists the appeal.
In terms of regulation 5, there is no discretion in the matter of referral if any of the grounds is established. Accordingly, the sole question which we have to decide is whether, on the material before us, the appellants’ appeal against the Assessor’s valuation falls within ground (d).
The appeal was heard at an oral hearing on 30 May 2002. The appellants were represented by Anthony MacIver, Advocate, instructed by Messrs Montagu Evans, Chartered Surveyors. The Assessor was represented by Christopher Haddow, QC, instructed by the Assessor for Grampian Valuation Joint Board.
In addition to the written grounds of Appeal and Answers, the material before us comprised:-
Location plans lodged by each side;
The correspondence which was before the Committee, viz. the application to the Committee dated 19 February 2002, the Assessor’s letter of 13 March 2002 giving reasons for opposing the application and the appellants’ agents’ letter of 22 March 2002 responding to the Assessor’s letter;
Two tables, lodged by the Assessor, analysing “Zone ‘A’ as a Percentage of Reduced Area” and “Net Annual Value as a Percentage of Rent” at various locations in Peterhead.
The appellants contend in the Grounds of Appeal that the Assessor has valued the subjects of appeal on a different basis to subjects falling within the same genus and derived his assessment by a method (the ‘overall’ method) which does not stand comparison with any other similar genus of subject within Peterhead Town Centre, all the other shops being assessed using the ‘Zoning’ method. He had thus contravened basic valuation law governing the comparative principle concerning a particular genus of subject. If his position were upheld, this would establish a fundamental departure from established valuation principles in Scotland which could then be used as a precedent in other situations elsewhere in Scotland. Mr MacIver explained the factual position, emphasising that all other shops within the Town Centre, including large ones, and in particular including one shop larger than the subjects of appeal, had been valued on the zoning basis. The assessor had simply ignored all those shop comparisons and therefore ignored directly comparable rental evidence. The factors on which the Assessor relied in opposing the referral did not alter that position. If this were upheld it could be used as a precedent. While Mr MacIver did not confine that possibility to other Argos shops, he did refer to the appellants having a number of other shops in Scotland which might raise similar issues.
Mr MacIver referred to Armour on Valuation at 19-02,10,11,19,20,21,23,24 and 27 and 20-42,43 and 44 and to Glasgow Corporation and Hertz Rent-A-Car v Assessor for Renfrewshire 1969 SLT 240. The fundamental issue was whether the Assessor can depart from a zoning basis which has been arrived at in a locality on the basis of rentals or valuations of property of the same genus, size and type. Debenhams PLC v Assessor for Grampian Region 1992 SLT 309 was distinguishable in that the comparable evidence in that case did not include other large stores. There was no issue here of categorisation. Mr MacIver indicated that the evidence which was likely to be led in support of the appeal would consist of the valuation of the subjects on the appellants’ basis, analysis to derive rates per square metre, analysis of the Assessor's valuation, the valuation of the other large shop (Woolworths), and evidence of valuations of Woolworths in Elgin and Argos in Dunfermline.
For the Assessor, Mr Haddow first noted that there was no suggestion of complexity, etc. in terms of grounds (a), (b) or (c). He submitted that there was no fundamental issue and the difference between the parties was not one of principle or law but rather of practice or opinion. It was not unusual to find a shop in a shopping centre, e.g. a supermarket, not valued on the zoning basis, although it might still be classified as a shop – Armour 19-21. The Assessor had looked at the subjects and decided that zoning did not seem to work. There was a problem of shape. The Assessor had remembered that zoning was ‘a servant, not a master’. Mr Haddow also referred to Armour at 19-07,11 and 12, to Debenhams supra, particularly at page 311, Simmons Furniture Store Ltd. V Assessor for Dumfries and Galloway 1989 SLT 4, Post Office Counters Ltd. v Assessor for Grampian Region 1992 SLT 314 at 315, and Hardman Hi-Fi Centres Ltd. and Argos Distributors Ltd. v Assessor for Grampian Region 23.11.1989, unreported.
Mr Haddow also moved for expenses in the event of his opposition being successful. He recognised that this was a departure from well recognised practice and also that this motion had not been intimated. His submission was that the Tribunal could competently award expenses despite rule 33(6) of the Lands Tribunal for Scotland Rules 1971, which removed that power in cases under Part VC of the rules, i.e. appeals referred to the Tribunal by a valuation appeal committee: this was not such a case. The Tribunal accordingly had a discretion to award expenses, and might apply a test as to whether the appeal was wholly without merit. Any award of expenses should be on the Court of Session scale with sanction for the employment of senior counsel.
The Tribunal are not persuaded that there is in this case a fundamental or general issue likely to be used as a precedent in other cases.
We recognise – as Mr Haddow did when asked about this – that an issue of valuation method which may raise no question of law or perhaps even general principle might satisfy the test in ground (d). We can imagine cases where, perhaps at a revaluation, an Assessor proposes to use some new method or refinement of valuation method which might apply in other cases and such use is questioned. We do not, however, see that in the present case there is anything of that kind. As there clearly is an appeal issue in this case and we do not wish to say anything which might appear to indicate any view on the merits, we think it sufficient to indicate that in our view the matter involves simply an application of well known principles to the particular circumstances. The issue is, what, in the particular circumstances of this case, is the best way of arriving at a proper comparative principle valuation. The treatment of the valuation of shops in Armour at 20-42, 43 and 44, along with the references given to us by Mr Haddow, makes clear that there can be cases where, although subjects may correctly be classified within the same genus as others, a question arises as to whether the same valuation method can be applied so as to produce a fair valuation, or whether either the result produced by that method requires modification or another method has to be used. The particular relevant circumstances then have to be examined. At other locations, the same process will have to be carried through even if it appears that there is some similarity in their situations. One element which clearly has been considered by the Assessor in the present case is the actual rent of the subjects of appeal – again, the principles involved in such a case have been well rehearsed in a number of cases.
In these circumstances, we refuse this appeal. As regards the Assessor’s motion for expenses, as this did appear to be an unusual motion, which had not been intimated, we indicated that it would be more appropriate to allow any motion for expenses to be the subject of written submission. Accordingly, if the motion for expenses is to be insisted upon, we direct that it should be lodged together with submissions on competency and the merits with the Tribunal’s clerk within 21 days of this decision. It should be intimated to the appellants, who will then have 21 days to lodge any submission in answer.