Lands Tribunal for Scotland

NOTE

B & Q
v
Assessor for Renfrewshire Valuation Joint Board

This is an appeal under the provisions of Regulation 6(1) of the Valuation Appeal Committee (Procedure in Appeals under the Valuation Acts) (Scotland) Regulations 1995 against the refusal of the Valuation Appeal Committee to refer to the Tribunal an appeal in respect of an entry in the Valuation Roll relating to the B & Q Store, Unit 1, Abbotsinch Retail Park, Paisley. The entry, effective from 1 April 2000 shows a net annual value of £1,444,000. The appellants contend for a valuation of £957,000.

Regulation 4 of said Regulations provides for either the Assessor or the appellant to seek referral of appeals to the Tribunal. The criteria for referral appear in Regulation 5 which reads as follows: "(1) Where an application under regulation 4(1) has been made, and it appears to the Committee that -

  1. the facts of the case are complex or highly technical;
  2. the evidence to be given by expert opinion is complex or highly technical;
  3. the law applicable to the case is uncertain or difficult to apply;
  4. the case raises a fundamental or general issue likely to be used as a precedent in other cases; or
  5. 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 area,

the Committee shall refer the appeal to the Tribunal for determination, …".

It was not disputed that an appeal made to the Tribunal under the provisions of Regulation 6(1) is to be treated as an open appeal. In other words, the Lands Tribunal is entitled to have regard to all the material before it and to reach its own decision on that material without regard to the decision of the local Committee. The Committee is, however, bound by the provisions of Regulation 5(3) to notify the parties "with reasons in writing". In the present case, however, the reasons given were in fairly formal terms: it was said that it was not demonstrated to the Committee's satisfaction that the facts or evidence to be given were complex or highly technical; that no representations had been made on behalf of the appellants to support the contention that the law was uncertain or difficult to apply; and it had not been demonstrated to their satisfaction that the case raised a fundamental or general issue likely to be used as a precedent in other cases.

It is clear that Regulation 5 is not a provision altering or affecting the substantive rights of parties. It is a method of determining the most appropriate means of disposal of disputes. When the issue is purely a matter of procedure, it requires to be dealt with as simply and expeditiously as possible. It may be noted that the approach taken by both parties in this case helped to achieve that end. The appellants submitted full written Grounds of Appeal narrating the relevant history of proceedings before the Committee and setting out in detail their submission to the Tribunal on each Ground. We did not invite written answers but our hearing started with the Assessor setting out his response. Mr MacIver, Advocate, for the appellants, then replied. As it was recognised that this was an open appeal it was unnecessary for parties to attempt to deal with the basis upon which the Committee had reached their conclusion. Their decision may well have been an entirely appropriate one on the material presented to them. We, however, must determine the matter on the material presented to us. Inevitably, the full discussion at our hearing will have provided a much more complete picture than would have been available to the Committee.

Both sides recognised that it was important to focus on the nature of the potential issues rather than to make submissions on the merits. The main thrust of the appellants' argument was that the subjects were of a size, range, format and character relatively unique (sic) in Scotland. There were approximately 10 similar units in the Country. The analysis and interpretation of rental evidence derived from these other units ought to have been the primary approach to valuation. The Assessor did not dispute the relevance of this material but his approach placed greater weight on the evidence derived from analysis of local rental evidence. Differences in size could be accommodated by way of appropriate "quantum" allowance. The appellants pointed to the danger of relying on a quantum allowance if that figure was comparatively large. This was an issue of principle which supported the contention that primary weight should be given to the nationwide comparison rather than the local smaller units.

We do not consider it appropriate, when dealing with appeals under Regulation 6(1) to attempt a refined analysis of issues or submissions. As we have observed, the question before us relates to the proper means of procedure, not one which affects the substantive rights of parties. There cannot be a full proof on the issue of complexity and provided there is material to demonstrate a significant likelihood of appropriate complexity we think it necessary to proceed on the basis of our impression without over rigorous analysis. No worthwhile purpose would be served by having a full exploration of all the issues simply to determine which forum should be entrusted with the task of the ultimate decision.

It can be expected that most applications under the Regulation will be made in respect of issues which can fairly be described, in popular terms, as "complex or highly technical". However, having regard to the purpose of the legislation, it is plain that the standard to be applied cannot be that of the man in the street. Committees have a long history of dealing with complex rating problems. The legislature must have been aware of this.

Parties implicitly accepted that complexity was a matter of degree and that we would have to take a view as to whether matters were of such a degree as to fall within the meaning of the term as used in the Regulations. Under (a) the term is to be applied to the facts and under (b) to the evidence to be given by expert opinion. The same approach appears to be required for each. We heard no explicit suggestions as to what test of complexity should be applied. Implicit in the submissions on behalf of the Assessor, was the contention that the appropriate standard of complexity related to the capability of the Committee. If the facts were not too complex for a Committee they would not be "complex" within the meaning of the Regulation. However we find no basis for any implication that the word "complex" is to be tested by making a finding that issues are beyond the scope of a Committee. In Whitbread plc v Assessor for Central Region LTS/VA/1992/13 the Tribunal rejected the suggestion of a test based by reference to the competence of a particular Committee. Mr Duffy, indeed, accepted that competence was not the sole test.

For the purposes of the present case, we follow the approach of parties and accept that it is for the Tribunal to decide as a matter of impression whether the facts as disclosed and the nature of the evidence likely to be lead can properly be described as "complex" in the context of legislation intended to identify circumstance where it is appropriate to use the Tribunal as the means of determining a ratepayers appeal.

We accept that as a starting point it is sensible to have regard to the type of issues of fact and expert opinion with which a local Committee has a well established ability to deal. However, that can only be a factor to be used in assessment. It helps to indicate a level of complexity which would not be expected to require referral to the tribunal. However, there may well be cases where the facts or the evidence, lie within the competence of a Committee but nevertheless justify the term "complex". In absence of more explicit submission, we find it unnecessary to attempt further definition of the term.

We have considered the whole material available to us bearing upon the nature of the facts and evidence which will require to be considered. We are satisfied that it can properly be described as "complex" for the purposes of the Regulation. An attempt was made to demonstrate that the facts of the case were also "highly technical" in that they related to detailed valuation principles. We had difficulty with this as a proper approach to Regulation (a) although we accept that the "facts" in issue include all those facts material to the valuation of the subjects for rating. A similar assertion was made in relation to the evidence. We did not find this persuasive and, accordingly, it is unnecessary to express any view as to whether the expression as used in (b) is wide enough to cover evidence of valuation practice as opposed to the technical detail of the subjects under discussion.

As we have said, both sides recognised that it was important at this stage to focus on the nature of the issues rather than the merits. One specific matter founded on by the appellants was an assertion that the landlords made a particular payment to the appellants as an inducement to take the tenancy. Mr Duffy pointed out that no evidence of any payment made as an inducement had ever been presented to him. This might have seemed to be a straight issue of fact but it became apparent that the dispute lay at a deeper level. Mr Duffy's well-considered approach to focusing the issue had the effect of highlighting the merits. He accepted that dealings between the landlord and appellants should be treated as arms length transactions between independent parties while recognising that both companies were part of the group of companies held by Kinggfisher plc and he agreed that the understanding of the appellants, as expressed in the written Grounds of Appeal, that there was a dispute as to whether the payment was a true inducement, was ill-founded. The real issue was whether any payment by way of inducement had been made. Mr MacIver then explained that a substantial payment had been made to the appellants partly in exchange for their renunciation of an existing lease of buildings on the subjects and partly as the purchase price of a small area of land, formerly owned by them, and now forming part of the subjects of appeal. It was said that the figure included an element of inducement.

Plainly the appellants will face some difficulty in demonstrating that a payment passing between independent parties, acting at arms length, and ostensibly for one valid purpose, should be treated in the context of valuation, as if it was for a quite different purpose. Evidence bearing on legal, accounting, and taxation aspects may well be required. We think that the question of whether any part of the payment can be regarded as a "true inducement" may be one of some delicacy. In other words, complex questions may arise before the relevance of the payment to the exercise of valuation can be resolved. These questions are plainly more appropriate for the Tribunal than for a valuation committee.

For the purposes of head (d) we consider that use of the terms "fundamental" and "precedent" require identification of a distinct issue with an appreciable bearing on valuation practice. It is not sufficient to say that the Tribunal's approach to it might help throw light on the proper approach to other cases. The relative weight to be given to different bodies of evidence will normally be a matter which requires to be left to the discretion of the adjudicating body in any particular case. The expression of an opinion, in a particular case, that a particular body of valuation evidence should be given primary weight, will normally be a question of fact bearing on the case in question. It is, accordingly, with some hesitation that we have accepted that the issues in this case may raise a general issue sufficiently distinct and important to bring the matter within head (d). If, as the appellants contend, these large stores are identifiably different in kind from the smaller stores it will be important to attempt to identify the criteria to be applied in drawing the distinction. The fact that the Assessor contends, with some force, that they are not distinct, goes to the merits of the dispute. There may be force in Mr MacIver's submission that to deal with differences in size by application of a large quantum allowance is suggestive of an approach which is not properly valuation. If any reliable criteria bearing on this can be identified they will be of value.

In the event, our conclusion is that this is a case which, as a matter of impression falls under heads (a) and (b) and one which can properly be said to fall under (d). We must allow the appeal.