Lands Tribunal for Scotland


Clydesdale Bank plc v Assessor for Lanarkshire Valuation Joint Board
Marks & Spencer plc v Assessor for Lanarkshire Valuation Joint Board
Marks & Spencer plc v Assessor for Renfrewshire Valuation Joint Board

We heard two sets of applications together. They arise by way of appeal from entries in the valuation roll. The appeal subjects are sites used for Auto Teller Machines (ATMs) within various shops and stores. The issue is whether such sites are in rateable occupation of the Company which occupies the shop or store or are to be regarded as separate units in occupation of the Bank or Building Society which owns the machines. Alternative valuations were agreed and it is unnecessary for us to deal with the detail of valuation.

For convenience we use the term "Bank" to cover both the Clydesdale Bank and the Nationwide which is, of course, a building society. Where appropriate the term "stores" can be taken to apply to the premises occupied by Marks and Spencer plc and "shops" to the premises occupied by Botterills, trading under the name Spar but in some contexts it will be clear that the terms are used indiscriminately. The term "company" will refer to Marks and Spencer or Botterills or both depending on context. We discuss further below the problem of defining "the subjects" but use the expression to refer to the parts of the floor on which the ATMs are placed.

At the hearing on 4 and 5 November 2003, Mr Christopher Haddow, QC, appeared on behalf of the appellants and Mr Raymond Doherty, QC, for the assessors. Although we did not consider it necessary to carry out any site inspection it is right that we make clear we have been unable to avoid awareness of ATMs in other Marks and Spencers' stores and have taken into account our awareness of ATMs in a variety of situations including other Spar stores and filling stations. Our focus, however, is on the particular subjects in issue and about which we heard evidence.


Assessor for Aberdeenshire v Pye Telecommunications Ltd 1973 SC 157
Assessor for Renfrewshire v Old Consort Co Ltd 1960 SC 226
ITA v Assessor for Lanarkshire 1968 SC 249
James Mackie (Paisley) Limited v Assessor for Renfrewshire 1964 SC 373
London and North Eastern Railway Co v Glasgow Assessor 1937 SC 309
London Midland and Scottish Railway Co v Assessor for Public Undertakings 1937 SC 773
London Midland and Scottish Railway Co and John Menzies & Co v Assessor for Glasgow 1937 SC 288
Stringer (VO) v J Sainsbury PLC 1992 R A 16
Westminster Council v Southern Railways and Others
1936 AC 511

Reference was also made to a drafted Stated Case prepared in November 2000 following a decision of the Lanarkshire Valuation Appeal Panel in relation to entries relating to autotellers at Asda and Sainsbury stores in Blantyre and Hamilton.


Armour on Valuation for Rating

General background

ATMs are items of machinery and are not rateable. They may be situated in a variety of sites. A broad distinction can be drawn between ATMs popularly known as "hole in the wall" (HIW) machines and machines which are wholly situated within shop or store premises. The latter are loosely referred to as "free standing" although that is not a necessarily a wholly accurate term. It was not disputed before us that the sites of HIW machines were potentially rateable as units of lands and heritage in separate occupation from the buildings of which they formed part. However, circumstances vary. Some HIW machines are situated within shopping malls or other public places such as hospitals. They are not invariably on external walls nor open to the public at all hours. Some are in stores.

It is understood that there has been a measure of agreement as to the criteria to be applied throughout Scotland and England to determine whether the site of any particular HIW machine is to be regarded as part of the subjects of which it forms part or is entered separately in the roll. The English criteria look, inter alia at who is responsible for the physical servicing of the ATMs. We did not hear detail of the tests applied by other Scottish assessors.

ATMs are now very familiar and it is unnecessary to describe them in detail. Their initial function was to dispense bank notes but they now provide some other banking services. The banking institutions issue cards to their customers. Customers then have access to their accounts through a computer controlled service. The machines are operated by use of a keyboard and screen. In the traditional HIW machines, the screen and keyboard are presented externally through an aperture in the wall. The main mechanism and compartments for holding bank notes are housed internally within a suitable safe cabinet. In normal operation the functioning of the machine is entirely automatic. Routine attendance is required for the replenishment of the supply of bank notes, replenishing of the paper rolls which provide printed receipts to customers, and external cleaning.

The ATMs in question are NCR Personas Type 70 or 74 machines. The dimensions of the latter type are: height 1,419 mm; width 630 mm; depth 939 mm. They accordingly occupy a floor space of approximately 0.59 square metres. The type 70 machines are slightly smaller taking up 0.34 square metre.

Different types of arrangements exist for provision of ATMs in Britain. Most are provided by banks or building societies. However, we heard of machines provided and managed by businesses such as Moneybox Corporation Limited which is not a banking institution. A branch of this company, "Moneybox Direct" provides a service allowing shop owners to own and operate the machines with support if required. Other companies also sell ATMs like the banks' machines; such machines allow customers with appropriate bank cards to access their own bank accounts.

Most banks do not charge their own customers for use of ATMs. They, accordingly, make no direct income from use of such machines by their own customers. As between banks and other financial institutions, however, there is an arrangement whereby each pays for their customers' use of ATMs belonging to another bank. This has meant that banks have an interest in the provision of ATMs at appropriate sites: (a) to obtain revenue from the use of such machines by customers of other banks; and (b) to try to limit their own customers use of other machines by ensuring adequate provision of their own machines. Some banks do make a direct charge for use of machines by customers of other banks.

History (Marks and Spencer appeals)

Installation of the machines within the stores was initiated by the applicants. In early 1998 they were seeking ways to improve customer facilities and, in particular, to provide additional access to cash to be spent in the store. The Company had a long standing policy of not accepting debit or credit cards other than their own charge cards. Consultants were instructed to consider the various options. Eventually the company invited tenders from a short list of major financial institutions with a view to provision of in-store ATMs. The contract for provision of these machines was awarded to Nationwide Building Society. It was initially intended that the machines should be capable of issuing not only cash but also company gift vouchers and be capable of accepting Company credit cards. The machines were capable of these purposes but suitable regulatory approval was not available for gift vouchers. The system as installed provides a limited range of banking services. It provides cash. It accepts Company credit cards. The arrangement is regulated by a Licence Agreement.

The machine can be used to obtain cash by customers of the wide range of banks and building societies with reciprocal arrangements for use of each other's ATMs. Users of the machine do not pay any fee to do so. The arrangement is that other banks and building societies pay a fee to the Nationwide for each transaction. The Nationwide benefit from having the ATMs in the store because of such fees and because the availability of the machines for their own customers reduces their customers' use of other ATMs and, accordingly, reduces the fees Nationwide would have to pay to other banks or societies.

Licence Agreement

There was no dispute that the unsigned printed version of a Licence Agreement which was produced could be accepted as accurately setting out the detailed provisions for installation and maintenance of ATMs in each of the relevant stores. The main points of the agreement can be set out briefly as follows. The agreement defined the "space" as the "area at each Property within which the ATM is to be installed the location of which is to be agreed between the Company and the Society on the understanding that such location shall be in a prominent position within the Property in a prime location." The applicants granted to the Society "licence … to install and operate the ATM from the space". They agreed not to let anyone else operate an ATM in the store.

The right given by the licence was limited to designated shop opening hours (other than in relation to maintenance etc). The licence expressly included access for the Society and all others authorised by it for the purposes of gaining access and egress from the ATM "to comply with the obligations of the Society contained in [the] Agreement". The applicants had the right to specify the route to be taken through each store. The Society was also given a licence for installation and maintenance of telecommunication equipment required to operate the ATM. Under the Agreement the applicants were responsible for provision of the suitable electrical supplies to the machine.

The Society accepted an obligation to install and maintain an ATM in each of the specified stores. The machines were to be installed in a good and workmanlike manner. The Society was entitled to erect its own signage adjacent to the machines and directional signs within the stores. The form and style of signage was subject to approval of the Company.

The main provisions of the licence for the ordinary operation of the machines set out that the Society would supply cash and stationery materials. The Company accepted responsibility for all cash supplied from the time it was delivered to the store. The Company staff was responsible for operation of the ATM including the re-stocking with both cash and stationery consumables supplied by the Society. The Company had to keep the machines clean and tidy - the main requirement being the disposal of customers' discarded receipts. The Society was obliged to deal with any faults in the machines either with the assistance of the Company's staff, guided by telecommunication link or, if necessary, by instructing suitable engineers with a view to rectifying faults as soon as reasonably practicable.

Amongst other things, the Agreement narrated that: "The Society has a policy of not surcharging individual users of the ATM with a unit charge for the use of the ATM and agrees that it will not seek to do so in respect of the ATMs at any Property without having obtained consent from the Company (such consent not to be unreasonably withheld)."

The Society agreed to pay a basic annual fee of £1,000 together with a "transactional charge calculated …by multiplying the number of withdrawals from each ATM by [a specified sum]".

The Licence Agreement included a provision that for the better performance of the Agreement a "Service Level Agreement" should be completed between the Company and the Society which was to supplement the Agreement. We had no detail of any such service level agreement. It may also be noted that the style of licence produced had attached to it a schedule allowing for the addition of new branches or additional ATMs beyond the originally agreed list. A note attached to this schedule read: "Please ensure that a plan showing the Space at the Property in which the ATM is to be installed is annexed".

Operation in Practice

Day to day cleaning, maintenance, and supervision of the ATMs is carried out by the Company's staff. Two keys are needed to open the machine. These are held by two separate members of their staff. The Society has no means of access to the machines without these keys. Cash is delivered to the store in sealed cassettes for insertion in the machines. The cash cassettes typically require to be changed once a fortnight. The paper rolls which provide printed receipts to customers also require to be changed about a once a fortnight. The Society can supervise maintenance operations at the machine using remote links. They are able to give direct instructions to staff by a telephone link. The operation of routine replenishment of the machine takes about fifteen minutes.

Simple repairs can be carried out by the applicant's staff under guidance from remote link, as necessary. Minor malfunctions usually involve printing problems. Months can go by without the need for such attention. If staff cannot deal with any particular problem they will call in engineers employed by the Society. Arrangements will usually be made for such engineers to attend when the store is closed to customers. In addition to attendance of company staff to use the keys, the engineers require to complete a coded telephone security link with the Society in order to get access to the cash compartments.


In each of the stores the machines are situated in front of structural pillars. The space between the pillar and the back of the machine is boxed in and accommodates necessary electrical, alarm and telecommunication equipment including a telephone. Access to the machines for most purposes, including replenishment of cash is, however, available from the front of the machines.

At East Kilbride the store is situated within the Plaza Shopping Centre. It is on three floors with a total area of 4,784 square metres. The ATM is located on the ground floor. It is not visible from outside the store. There are no external signs to indicate its presence. Internal signs used to direct attention to the ATM are consistent with the overall ambience of the store. However, the name "Nationwide" is clearly visible above the machine. It is also visible on the operating screen. The boxed space between the machine and the adjacent pillar has a decorative covering with a pattern of alternating Company and Society logos. This space is used to hold electrical connections and communication equipment.

At Hamilton the applicant's store is within the Regents Way Shopping Centre. This is also on three floors. It has a total area of 5,277 square metres. The machine is on the ground floor within the ladies fashion section, adjacent to customer enquiries and the cash desk. The overall style of its location is similar to that described at East Kilbride.

The store at Greenock is similar with a total area of 4,194 square metres. The machine is situated within the ladies clothing section. This ATM had some 53,000 withdrawals in the year to 31 December 2002. The other company sites had somewhat lower levels of transactions.

The position of the ATMs within each store was decided by discussion between the applicants and the Society. We accept that, in practice, the applicant's views would be dominant in such discussions. The positioning would have to fit into the operational requirements of the store. However, as much regard as possible would be paid to the wishes of the Society and to the needs of security.

Although there was evidence that in some fifty stores the ATMs had required to be moved at short notice by the Society to meet the refurbishment plans of the Company, the ATMs which are subject of appeal have not moved since their initial installation.

Nature of Use

Although we accept that some banking customers may deliberately seek out interior machines such as those situated within the Company stores for reasons of personal security, we have little doubt, having regard to the position of the machines within the store and absence of external signs, that the overwhelming majority of users of the ATMs are also routinely customers of the Company. Customers of the Company can use the machines with Company credit cards. Although the machines can be used to provide other banking services such as statements of balances, we are satisfied that most transactions using the ATMs at the subject sites are to provide cash for customers of the Company. It is not suggested that all cash drawn from the machines is spent in the stores nor that users of the machines will necessarily make purchases on the day they make use of the machine.

Because of the original Company policy which prevented customer use of debit or credit cards other than those operated by the Company there has been an important benefit to the Company in providing easy access to cash for their own customers. Policy has now changed and the Company does accept well known debit and credit cards as a means of settling transactions.

We heard no evidence of the percentage of machine users within the stores who would, in fact, be existing customers of the Society. There was evidence of a tendency of bank customers to prefer to use machines designated as being operated by their own banks but the machines are freely available for use by customers of any major bank or building society. Such use is encouraged by providers of ATMs because of the charging arrangement referred to above. We would be surprised if as many as a majority of users were otherwise customers of Nationwide but it is unnecessary to make a finding to that effect.

History (Clydesdale Bank appeals)

We did not hear specific detail of the history of discussion leading to the installation of the ATMs at the appeal subjects. However Mr Fisher gave unchallenged evidence of the applicant bank's attitude to putting such machines in place. He is an employee of the bank with responsibility of business development. Part of that responsibility involves placing of ATMs in appropriate sites.

The bank sees positioning of such machines within convenience stores as a good business development. Convenience stores combine a high foot-fall with a demand for cash. They are often situated in places where there is no local banking facility. The company was anxious to have such machines in their shops. Because of the overall value to the bank of having the company business, the bank would have supplied an ATM to any shops belonging to the company even if their assessment of the location was that it did not meet their usual criteria. We heard no explicit evidence that the bank would have tried to install ATMs in the shops in issue had the bank simply been applying its own criteria without regard to the wishes of the company. However, it is reasonable to proceed on the basis that both bank and company would have wanted to have an ATM in the shops for their own business reasons.


The agreement between Botterills who were the owners of the relevant "Spar" shops covered all ATMs supplied to Botterills ("the Company") and included those supplied on an external wall as well as those situated within shop premises. There was nothing in the Agreement specifying the precise position of the machine in any particular shop. However, six months notice was required for any change in position.

In exchange for payment of "the annual fee" the Company granted to the bank the right to install and maintain the machine. The annual fee was calculated on the basis of a specified sum for each transaction. There was no fixed element. The bank had a right to install the necessary electrical supply and appropriate telecommunication cables. The Company would be responsible for the cost of electricity and the bank for costs associated with the telecommunications. The bank had a right to install signage subject to reasonable approval of the Company.

The bank was obliged to keep the ATM in good repair and in working order. They were responsible for periodic cleaning.

The Company had an obligation to maintain its premises to a high standard and maintain an acceptable operating environment for each ATM. Under the Agreement the Company had no responsibility for operation of the ATM. It was expressly obliged not to open or gain access to the interior of the machine. It had no obligation in relation to operation of the machine or security of cash.

Operation in Practice

Although Company staff might occasionally "give the machine a wipe" to keep it clean they had no real involvement with the machine.

Customers of the Company could not use the machine unless they were also customers of a bank or building society within the Clydesdales sharing arrangement.


The ATM at East Kilbride is located within a Spar shop at Mossneuk neighbourhood shopping development on Severn Road. The shop property is part of a two storey building with shops on the ground floor and flats above. The front of the shop is open to Severn Road but is set back from the carriageway and separated from it by a railing. The shop has 84 square metres of retail space and 26 square metres of storage and staff facilities. The ATM is an NCR Personas Type 70 the dimensions of which are: height 1360 mm; width 470 mm; depth 720 mm. It accordingly occupies 0.34 square metres.

The machine sits in the front corner of a shop in a prominent location. A large sign on an adjacent wall displays the well known Clydesdale Bank logo. This is also prominent on the machine where it forms part of a notice telling users that the staff at the shop cannot override the security systems and that queries should be addressed to the bank or building society which issued their card. The ATM is not readily visible from outside the shop. However there is a bank sign attached to the front of the building and clearly visible from Severn Road.

Electrical and telecommunication equipment associated with operation of the machine is in an overhead box or cupboard above the machine itself.

In the first year of operation there were 34,085 cash withdrawals.

At Kirkmuirhill, the ATM is situated at a Spar filling station. The shop is a single storey building selling a wide range of groceries and convenience items. It also serves as the cash reception for the petrol filling station. The ATM is within the shop itself and is positioned at a front corner near the plate glass frontage. It is visible from outside the shop. A moveable swinging sign advertising the ATM is habitually placed outside the shop.

The bank logo is very prominent above the machine. As at East Kilbride, a notice containing the bank logo is attached to the front of the machine. The necessary electrical connections and telecommunication equipment are situated in a bright red box or compartment which sits on the floor alongside the machine.

The machine is an NCR Personas Type 74. height. The shop itself has 218 square metres retail space, stock area of 81 square metres, and toilet facilities of 11 square metres.

In the year 2000 there were 94,123 cash withdrawals from the ATM.


Submission for ratepayers

Mr Haddow referred to the background of current practice in relation to ATMs. He accepted that many HIW type ATMs were properly on the Roll. But there had been no proper examination of the internal or free standing machines. On any view it was important to note that there was agreement that the machines were not rateable by heritable accession. The dispute related not to the machines but to the sites.

It was submitted that in listing the internal sites, the assessor had taken the wrong starting point. If the question was, indeed, whether the use of the footprint of the ATM was for banking transactions, no doubt the answer would be affirmative. This could lead naturally to the conclusion that the use was for bank and not for shop purposes. However this was a blinkered starting point. The proper start was to see whether there was any distinct unit of lands and heritages. The starting point was Section 42 of the Lands Valuation (Scotland) Act 1854. More specifically, the starting point was to be able to see an obvious item of heritable property. It was usual to have obvious walls or definite boundaries. Where that was not so, great care was obviously required. It was only after a candidate for separate entry had been identified that there was a need to consider the question of use.

An example of the appropriate approach could be found by reference to cases dealing with shops and kiosks on railway premises: Armour 17-02D. Mr Haddow took us carefully through many of the cases in 1937 dealing with sites within railway subjects. In each case the process started with a given. A unit was clearly identifiable and identified as separate lands and heritages before any question of use arose. He examined the findings and dicta in the Old Consort case. There clearly were separate heritable units in all these cases. By comparison, they supported the proposition that the assessor here had assumed the existence of separate units and, accordingly, that the rest of his approach to the matter was blinkered by that. It was begging the question to say that there was a separate site, used for banking transactions.

The case of Assessor for Aberdeenshire v Pye Telecommunications Ltd was quite different. Mr Haddow accepted that it showed the need to approach these matters without being hidebound by traditional views of lands and heritages. However it was an unusual case about plant, heritable by accession.

Finally he turned to the decision of the English Lands Tribunal in Stringer (VO) v J. Sainsbury plc and Others 1992 RA16. He accepted that the facts of that case were closer to the stores cases than the shops but, in any event, it was an HIW case. He took us through the detail of the decision. Although the Member had viewed the essential question as that of occupation and proceeded on the basis that this was a pure question of fact, his reasons could be deduced from his eight salient findings. Mr Haddow compared each with the circumstances of the present cases. He noted that that Tribunal had not required to find a dominant purpose because it had found that there was a joint purpose. The supply of a mutually beneficial service to customers was treated as being a complementary joint venture. The degree of control was not dissimilar to the present. The Tribunal had held that this control made Sainsbury's occupation paramount. It was important to note the narrative of the respondent's submission that the correct approach was to ask whether each financial institution was in rateable occupation of a sufficiently defined piece of land to create a separate hereditament. That was in accord with Mr Haddow's submission. It was important to realise that what was a separate secure room in the Stringer case was in effect provided by the whole store and shop in the present circumstances. The appellants had control of the whole premises in which the ATMs were situated. They could bring the supply of money to an end.

Dicta about rival use and predominant purpose were, in his submission, irrelevant. Here, use of the site for the supply of money was one use benefiting both parties. It was clear on the evidence that the stores and shops both wanted this. There was no distinction to be drawn between cash supply and ordinary retail shopping services. Indeed Marks & Spencer provided financial services in the shape of cash back, gift vouchers and charge cards. They did derive an income direct from the supply of cash because an element in the payment was based on this.

Mr Haddow concluded by referring to some broad background detail. It appeared that the only similar entries in the Roll were from the two assessors' areas in the present case. It was clear that Marks & Spencer had similar ATMs in other areas. None were on the Roll. There was no evidence that Valuation Rolls in other areas included ATMs within shops. Such ATMs were not included in England and Wales.

He raised the flood gates issue. If such ATMs were to be in separate rateable occupancy because of ownership of the machines, the same could probably be said about many photocopiers, photo booths, and, for example lottery terminals. Another unusual feature of the present case was the issue of value. If the heritable subject in question was in occupancy of the appellants it would be valued at only about £90.00 per metre. However if it was in the occupancy contended for by the assessor the value would go up to levels nearer £2,500. He accepted that it was recognised that cash machines did not add significant value to the overall shopping value. It was just part of the overall trading of the business. A shopkeeper could buy a cash machine. Why should a bought machine be different from one under a licence arrangement with a bank? It was important to remember that the agreement was a licence agreement for provision of a machine. The machines could not float so the right to put in a machine had to be exercised by putting it somewhere. This did not give a right of exclusive occupation to the financial institutions. In a sense it was like the lodgings cases. The Bank obtained "lodgings" because that was part of the business of the shop. It could not be said that any new heritable subject was created when the use made was something desired by the shops.

The assessor reached his conclusion by a self defining purpose. By describing the operation of the ATM as a banking purpose the use was a bank use. However, what went on at the machine could more accurately be described as provision of financial services. This was part of the business of the stores.

Submission for respondents

Mr Doherty invited us to refuse the appeal. The starting point, he said, was that each site obviously comprised lands and heritages. The question was whether they were to be regarded on their own or as part of the lands and heritages which consisted of the overall shop. The only issue in his submission, was one of rateable occupation. It was clear that there was actual possession and actual use. He submitted that there was no real room for dispute that the possession was sufficiently permanent as a matter of duration. The place was adequately defined. In the case of the stores the position was identified on plan as part of the agreement. In any event in relation to both the stores and the shops the actual positioning was mutually agreed at the outset. Thereafter the position of the ATM defined the site adequately: London Midland and Scottish Railway at pages 781 and 782. In any event it was to be noted that in relation to the shop at Kirkmuirhill, the machine was on the site before the current agreement. The important point was the de facto position and not the formal legal title: Westminster Council. Although it was true that the agreements in relation to the stores allowed the applicants to require relocation, all the machines had been in situ for lengthy periods.

Accordingly, the real issue was whether the bank had exclusive or paramount occupation: Old Consort Company Ltd. There were two important factors. It was important to have regard to the purpose of occupation of the particular areas in dispute and not the purpose of occupation of the subjects out of which it had been carved as a part. Secondly, the test of control was the extent to which it would interfere with the enjoyment by the bank of the use of the site for their purposes. Their purpose was clear. They were operating the sites as a way of providing the usual banking services. There was no relevant interference with that.

He submitted that it was irrelevant that the occupier of the larger lands and heritages had an interest in the service provided. There was no question of rival occupancy here. That would only arise if there was some way in which two parties shared physical occupation.

It was accepted that both companies benefited from the particular use of the sites. In addition to the direct payment they had the advantage of cash being available to their customers. That was not sufficient to mean that the machines could be said to be used for the retailing purposes of the shops or stores. The proper customers in relation to the ATMs were all who used the machines. The machines were run on profit lines according to Mr Fisher. This was supported by evidence of the agreed values if they were to be taken as separate rateable units. The fact that the applicants wanted such a service in their premises was irrelevant because the person using the site was the bank doing so "in its own right". There was no question of the banks acting as agent for the applicants.

In any event, looking at the possible issue of rival occupation, it could be said that there was precious little evidence of this in the case of the shops. It was true that in the stores, staff replenished the machine and dealt with minor faults. However these were not acts of occupation interfering with the enjoyment of the subjects. They facilitated that enjoyment. In any event they were plainly subordinate to occupation by the bank.

If questions of degree arose it might be relevant to consider whether the applicants could control use by bringing it to an end. This could not be done legally because of the terms of contract. Under the agreement the applicants in fact had very restricted rights to terminate. They could not be said to exercise control if this required illegal actings.

In relation to the question of competing use, he referred to Mackie. It was true that the right to control opening and closing hours placed certain limits on the use. However this did not amount to rival occupation. In the Westminster Council case the station had been closed at night. Shopping Centres typically had restricted hours.

In summary, on a proper examination of the position it was clear that all the requirements of rateable occupation were satisfied. There was no rival occupation, any rights in the applicants did not interfere with the bank use nor detract from it.

He turned to examine the detail of the decision in Stringer. He submitted that it was an unsatisfactory case. There were many difficult issues of mixed fact and law. In treating the matter as one solely of fact it was not persuasive. It was important that the Tribunal should follow established law and practice rather than any policy which might have been thought to follow from that decision. He understood that the policy of the Valuation Office was to proceed on the basis of a distinction as to who provisioned the machines. This was not a logical basis for distinction. There were two specific problems. In the first case it was irrelevant to say that making available bank notes served the purpose of both Sainsbury and the bank. That was not the proper test. The use of the subjects by one party might very well suit the purpose of another. That was not a test of occupation. The question was the purpose for which the subjects were actually used by the occupier. Plainly the ATMs were being used for banking purposes. The fact that this might benefit retail trade in the shop did not transfer use to being a shop purpose rather than banking use by the bank. On any view the approach in Stringer was a woolly one. It avoided the question of identification of the use of the sites. It was wrong to dismiss as artificial a distinction between the provision of financial services and the ready availability of bank notes to be spent in the supermarket. No doubt Marks & Spencer had a choice as to how they could provide ready availability of bank notes. However once they went down the road of bringing in a bank to provide the service, it was the bank which operated its own business from the site.

Secondly, he observed that although it had been said in that case that there was no hereditament capable of definition and of being separately occupied, that did not arise in the present case. The site occupied was clear. It might have also have been thought to be clear in the Sainsbury case.

The Tribunal had erred in its approach to the question of maintenance services to the machines. On the basis of the authorities it was clear that the provision of services did not interfere with or impede the use of the site for banking purposes. In any event it was subordinate or ancillary.

He pointed out that the decision in Stringer had not been followed by committees. It was not reflected in the practice in Scotland where he understood that most HIW machines, even if serviced by shop staff, were separately entered as sites. He referred to the decision of the Lanarkshire Valuation Appeal Committee in various cases involving such machines at premises occupied by Asda and Sainsbury. He adopted the reasoning in the stated case prepared by the committee. The reasoning was clear and was to be preferred to the decision in Stringer.


Although we have attempted to summarise most of the detailed evidence dealing with the nature and operation of the machines, it is agreed that the machines are not rateable items. The subjects of appeal are entered in the roll as "site for an auto-teller", or equivalent, but a more neutral starting point is that the subjects in dispute are the parts of the floor of a store or shop on which an ATM is situated.

It is contended that the method chosen to supply cash services within the stores has given rise to the creation of a separate heritable unit and that this is in separate rateable occupation. The argument presented in support of this proceeded in a series of logical steps. A particular part of the floor could be identified. It was said to be obvious that the floor was "lands and heritages". It had been given over to a particular use for a substantial period of time. Accordingly the question was said to be simply one of rateable occupation and it was contended that the answer to that question had to be found by looking only at the piece of floor selected for scrutiny. Such scrutiny led to the conclusion that the selected heritable unit was used for banking purposes because it was wholly occupied by the bank's machinery.         This argument was attractively presented and supported by appropriate reference to authority including, of course, the Westminster Council and the Old Consort cases.

Although we heard evidence that, in some instances, the ATMs would be bolted to the floor, the Assessor's argument made no attempt to found on any element of physical connection between the moveable equipment and the heritable subjects. It was enough that the ATMs occupied a defined piece of land. The evidence of Mr Pacitti, a Senior Valuer, employed by the Renfrewshire Assessor was that his starting point had been that a new autoteller site had come into existence carved out of another subject, namely the store. The logic of his approach was that there were two separate subjects. If both were occupied by Marks & Spencer they would, of course, be treated as a unum quid.

We accept Mr Haddow's criticism of the step by step approach, essentially on the basis that the supposed existence of a heritable unit is not a sound starting point when that unit can only be identified by examination of contractual arrangements for its use. For example, it seems clear that if there was no separate occupation of the floor in question it would simply be part of the store. There would be no question of having two units to be treated as one. It could be said that, the step by step or linear analysis would itself have demonstrated that the assumption made as the first step was unfounded. The result would not be inconsistent with the validity of the linear approach as a tool for analysis. The real question is whether there should be a separate entry and the analysis produces the conclusion that there should not be. However, the difficulty is not, as was suggested, that this approach puts the cart before the horse, but that it allows the assumption made in the first stage to have a presumptive weight influencing the analysis at the final stage. It is not the order of analysis which, itself, creates the difficulty but the fact that it does not give proper weight to the inter-relationship of the issues.

It is not disputed that the effect of the dicta in the Westminster Council and Old Consort cases is to require any issue of rival occupancy of a hereditament or unit of lands and heritages to be determined solely by reference to the premises as "carved out": see, for example the third principle set out by Lord Guest in the latter case, p 241. As it seems to us, the substantive issue is whether the question of rateable occupation can reliably be determined by reference solely to the subjects as a separate unit when the existence of the subjects as a separate unit is in issue and to be resolved by examination of the nature of the occupancy.

There is, of course, no difficulty in accepting that a site may be identified only by the use made of it. The cases dealing with sites for advertising boards on railway premises provide examples. We were referred to dicta in LMSR Co v Assessor of Public Undertakings. Lord Robertson said, "In the result, when selected sites on the undertakings have been delimited and approved and occupied in a more or less permanent fashion, then these sites are so let out as to be capable of separate assessment": p 782. This does not positively support the proposition that analysis can proceed on a step by step basis with the identification of a potential unit being enough to restrict examination of the issue to the features of that unit. It appears to show that his Lordship's conclusion was reached after consideration of the whole circumstances including the nature of occupation. But it is clear the Court was not dealing with the issues which arise in the present case. The argument had been that there was no lease of heritable subjects. The issue of rival occupancy did not arise.

As was apparent from Mr Doherty's submissions, dicta in the Westminster Council and Old Consort cases are wide enough to apply to subjects defined as "sites" as well as to subjects whose distinct physical character might seem more readily apparent: for example, Lord Russell of Killowen in Westminster Council at page 532. However, dicta must always be read secundum materiam subjectam. They need not be given effect beyond their original context unless it is clear that this was intended.

An approach appropriate to distinct, well recognised, heritable units such as banks, shops and bars will not necessarily be appropriate to subjects which cannot be identified without examination of agreements relating to the nature of their occupation. The dividing line between a recognised hereditament or heritable unit and one which requires analysis of the arrangements for its use for identification may not always be clear. But that is not critical to acceptance of a difference and it cannot be assumed that dicta applying to the former should be applied, without qualification, to the latter.

It can be observed that the subjects in dispute in the Westminster case were described in terms which leave no doubt that the Court had in mind their obvious character as potentially separate units. Although most of the premises were within the precincts of a railway station, it cannot be supposed that the Court faced any great difficulty in saying that a bank, shop, or hairdressing saloon was not part of the "railway hereditament". After examination of the circumstances of the bank, Lord Russell of Killowen said "I can find nothing in these provisions inconsistent with the bank having and enjoying the exclusive occupation and possession of the bank premises for the purposes for which they are occupied namely, for the purposes of a bank": p 534. This seems to us to be indicative of a robust approach to the problem. The Court there was dealing with a bank. Despite the contractual constraints it was clear that the banking company was using it as a bank. We consider that this approach to use of a bank for the purposes of a bank is a far cry from the question of how to approach use of a piece of shop floor to support a cash machine. The same robust approach was apparent in relation to the various shops and offices and kiosks. The only subjects remotely comparable to ATMs in physical characteristics might possibly have been the "show cases" but these were recognised as heritable units. They were accordingly self-contained premises. They were manifestly distinct hereditaments not related to the business of operating a transport undertaking.

Looking at the nature of the subjects in the present case, we think it realistic to recognise a distinction between them and the subjects under discussion in Westminster and other cases relied on. The hereditaments there were all familiar types of heritable subjects with a characteristic use and purpose quite distinct from the characteristic use and purpose of the host subjects. In the present case, the subjects in issue are the piece of floor upon which a piece of moveable machinery happens to have been placed for the benefit of the business of the host subjects. They also provide a benefit for the banks. Examination of the arrangements relative to the use to which they are put is necessary to see whether they can properly be said to have been carved out of the shop as a whole. It is not disputed that the use of the subjects to hold a cash machine would simply be regarded as part of the routine business of the store if the storekeeper owned and serviced the machines. On any view use of such premises is part of the business activity of the shop in a way which cannot readily be said of the "premises" in issue in other cases.

It is clear that no independently identifiable unit of lands and heritages existed before the use was made of a particular part of the shop as a site for the ATM. There is no question of the subjects having any identifiable characteristics prior to installation of the machine. The starting point of Mr Doherty's argument was, in essence, that as the subject under discussion was heritable and capable of definition as a unit, it fell to be treated as a hereditament or distinct unit of lands and heritages for the purpose of rating legislation. However, the criteria used to define a unit must be relevant to the context. We are satisfied that an ability to describe a particular piece of heritable property cannot, in itself, suffice to create a hereditament or unit of lands and heritages. In any event, it is not a sufficient basis to allow the question of rateable occupation to be determined by looking only at the "premises" as so defined. The dicta in Westminster Council or Old Consort cannot safely be regarded as justifying such a result.

Mere identification could depend simply on accident of decoration or design. Within many shops it would be possible to identify "units" of heritable property by reference to use. Subjects such as, "site for ice cream cabinet"; "site for photocopier" or "site for soft drinks machine" could expect to be identified in many convenience stores. It would seem fanciful to start by treating these as separate units of lands and heritages requiring further investigation in each case. We suspect that although the supposed basis of a separate unit in the stores was that a new "autoteller site" had come into existence, Mr Pacitti was implicitly regarding it as a site of a "bank autoteller". If the feature of apparent use by a bank had not been there, it must be doubtful whether there would have been any thought that the subjects had been "carved out" of the shop or store. It is clear that in each of these examples there would be no thought of a relevant hereditament or heritable unit unless some question about the nature of occupation or use was raised. If they had been identified as, say, "site for Wall's ice cream cabinet"; "site for Xerox photocopier" or "site for Coco-cola machine" a need for further investigation might have been perceived. The step by step approach does not take proper account of the inter-related questions of use and identity. The process of creating heritable units by reference to use inevitably makes that use the dominant characteristic of occupation. This can not be regarded as a sound approach.

We are not concerned by the so-called "flood gates" argument. If it is correct to treat individual sites as separate hereditaments, and they are in separate occupation, there may be no difficulty in saying that they should go on the roll. They can be valued in accordance with normal principles. The importance of the examples lies in reinforcing the commonsense view that the status of the "sites" as part of the shop is a predominant characteristic. An approach which seeks to reduce or exclude the weight to be given to this is artificial and unrealistic. It is unnecessary for us to consider whether it is also impracticable.

Examination of the detail of the subjects in question confirms that the supposed heritable units for rating purposes cannot be identified as being in any way distinct from the premises, of which they are part, unless reference is made to the whole arrangements relating to their use. In relation to the shops, the agreement between the Bank and the Company was to enable ATMs to be installed within certain named shop premises. No attempt was made to stipulate where the machine was to go. The equipment to be installed was the ATM and all associated equipment, apparatus and telecommunications. These latter elements would obviously have to be fitted in a convenient place. They could be boxed in so as to take up an identified floor area or be mounted in a cupboard which might possibly be regarded as taking up wall space. We might have had as separate subjects "site of ATM equipment."

The design and positioning of an ATM must allow for the screen and keyboard to be at a convenient height for customers. But all ATMs are not floor standing. HIW machines are set in the wall rather than on the ground. We heard evidence of models such as the NCR Easy Point 53 where the screen was brought up to a convenient height by having the machine set on a metal support. The shop agreement made no attempt to specify the type of ATM. In operational terms, a suitable machine could have been set on casters or mounted on a wall, counter or desk. Not all parts of the shops would be suitable for such machines, but there was nothing which an assessor could have valued until the machines were actually installed. Similarly, as Mr Haddow put it, the subjects would simply disappear if the machine was removed - or indeed moved.

In the stores, the agreement purported to define a "space" but it was not suggested that the definition in the agreement was enough to create the heritable unit. In any event it did not attempt to define a precise site and it is implicit in the assessor's argument that it is the site defined by reasonable permanency of use which forms the subjects of appeal. It was the feature that the subjects had in fact been used for the ATM owned by the bank which defined the subjects as "lands and heritages".

Mr Doherty contended that the effect of the agreement was to give the bank a status as tenants. He accepted that if the scheme of agreement between company and bank had been to appoint the bank as agent of the company to operate cash machines, there would be no separate occupancy. We think this also means that there would have been no relevant lands and heritages. The hereditament said to be in issue would not exist but for the nature of the agreement.

To give proper weight to the inter-relationship of the elements of analysis we think it necessary to consider the nature of the subjects and the arrangements for their use in light of the nature of the shops and stores and the role of ATMs in them. A fundamental characteristic of each of the subjects is that it is part of shop premises. The use made of it is part of the business of the shop. It is not disputed that if the cash machines were owned and operated by the storekeeper, they would be viewed as a routine part of his trading operation. We consider that before they could be treated as having been carved out of the shop so as to be in the rateable occupation of the bank it would be necessary to identify some rival occupation by the bank which in a realistic way could be said to interfere with use of the whole premises for the shop or storekeeper's purposes. We are unable to find a realistic basis for any such conclusion.

We think it abundantly clear that the machines in the stores are primarily for the benefit of the Company in operating their stores efficiently as trading units. Balancing the whole evidence as to the physical circumstances, the arrangements for use of the machines and the practical purpose of occupation of the subjects, we are satisfied that there is no basis for treating the store subjects as separate units of lands and heritages.

In relation to the shops the matter is, perhaps, less obvious. However, although cash machines are, of course, a comparatively recent innovation, we consider that they fit comfortably into the pattern of shop use. The Botterills' shops are operated as convenience stores. It is the business of the shopkeeper to meet the everyday needs of customers across a wide range of goods and services. The return to the company comes from supplying that need. The ATMs provide a service for customers and a benefit to the shop keeper. Supply of cash can, no doubt, be described as part of a banking business in much the same way as supply of stamps can be seen to be part of a postal service. But customers welcome both as a service provided by shops. The use of part of the premises to supply cash from the bank's machines, provides the shopkeeper with a direct income by way of payment for each cash withdrawal. He gets a payment based directly on each use of the machine.

The shopkeeper also gets an important indirect benefit from the availability of ready cash for potential customers to spend. A further benefit may arise from the attraction of potential new customers. We are satisfied that the use of part of the shop or store for a cash machine is an aspect of the business carried out by the occupier of the shop or store. The business carried on by the bank does not, in any sense, interfere with the dominant occupation of the shop or store.

Of course, viewed from the other side, assuming a separate hereditament, there is no doubt that it can be said that the activities of the companies do not interfere with the banks' enjoyment of use of their machines. In the stores, the company does take an active part in the operational management of the machine, but it does so to facilitate the efficient working of the machine. It is not a restriction of the bank's use. On the other hand, the provision by the bank of a machine which has to sit on the floor does not interfere with the company's enjoyment of that part of the store. It brings them the very benefit they wished to obtain.

Where a supposed hereditament can be said to be occupied by two potential occupants at the same time, the question of rateable occupancy depends upon the question of whose possession is paramount and that is to be considered in regard to the purpose of occupation: the third principle set out in the Old Consort case, p241. The fourth principle appears to elaborate that by reference to the test of "control" but it is not always clear that this test can provide an answer where the supposed occupiers are not truly rivals but are both deriving a direct benefit from the same use of the subjects. We think that the question of control must be seen as essentially subordinate to the broad question of purpose.

There was no dispute that Marks & Spencer plc had decided to have such machines in its stores as a matter of policy relating to its routine trading operations. The subjects are used for a purpose integral to the basic operation of the store. Although physically occupied by the machine owned by the bank, the substantive purpose of use of the site can properly be described in terms of being to facilitate ready access to cash for customers of the company. In practical terms, that was the dominant use of the subjects. We see no reason not to take a realistic view of purpose rather than one fettered by the specifics of the contractual arrangements. The agreements did not purport to be a lease of heritable subjects. They were primarily agreements relating to the use of moveable equipment. At the end of the day there was, or was expected to be, a net payment from bank to company. This was part of a trading arrangement relating to use of a machine. It was not directly related to use of any particular part of the shop. Although the agreement relating to the stores made reference to an identified "space" where the machine was to go, the company could in practice, and without breach of agreement, use the subjects in any way it wished as long as another similar site could be found for the ATM. Even viewed narrowly, the company might well be described as dominant occupier of the subjects.

However, we did not hear a full argument to that effect in relation to either the stores or the shops. Indeed, Mr Haddow's submissions were based on the the forceful observation that, if the argument was defined by the assessor's identification of separate subjects, it would almost inevitably follow that use for banking purposes would be treated as the dominant occupation. We are not at all persuaded of the inevitability of this but it is unnecessary for us to express a concluded view.

It is also unnecessary for us to deal with dicta in Stringer. The case was concerned with heritable sites specially adapted to accommodate HIW machines. If the machines were absent, the special nature of the site would remain readily apparent. The subjects were not within the established hereditament, the store. They were, of course, physically close to it and the use made of them was closely connected with it. The question of whether they were to be regarded as part of the shop unit or as separate subjects was one arising from the nature of the two distinct heritable units. Mr Doherty pointed out that the discussion did not appear to distinguish between the subjects which were actually in issue - the actual sites of the machines - and the supporting secure premises. He suggested that the emphasis on the question as being a question of fact did not give due recognition to the reality that the issues were essentially questions of mixed fact and law. We think there is some force in these comments but, in any event, are satisfied that the question which arises in the present case is quite a different one. The decision in Stringer was expressed as simply resolving a question of fact. We need not expect to find it of assistance in the different circumstances of the present case.

Similarly, we see no need to cast doubt on the decision of the Lanarkshire Valuation Appeal Committee finding that HIW machines at certain Asda and Sainsbury stores should appear separately on the roll. Difficult issues undoubtedly arise in relation to occupation of such machines but we accept that the Committee was entitled to proceed on the basis that the subjects in question were properly characterised from the outset as "sites of an autoteller". That was their dominant characteristic. They were not in fact within another unit of heritage. The question of whether they were in separate occupation from the adjoining store unit was to be decided in that context.


Having regard to the whole relevant facts bearing on the nature and use of the subjects, including their characteristic feature as part of a shop or store, we are satisfied that they should not be treated as separate units. They should not enter the roll.