These appeals against decisions of the local Valuation Appeal Committees not to refer the appellants’ appeals to the Tribunal have raised issues as to time bar as well as on the ‘merits’ of whether the statutory grounds for referral to the Tribunal were satisfied. In summary, we have decided as follows:-
We have therefore refused these appeals.
Section 1(3A) of the Lands Tribunal Act 1949 (inserted by the Rating and Valuation (Amendment) (Scotland) Act 1984) authorises determination by the Tribunal of appeals referred to it by local valuation appeal committees. Section 1(3BA) (inserted by the Local Government and Housing Act 1989) confers on the Tribunal jurisdiction to hear appeals against decisions of valuation appeal committee not to exercise the power to refer.
Regulation 4 of the 1995 Regulations provides for either the assessor or the appellants to seek referral. 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;
(d) the case raises a fundamental or general issue likely to be used as a precedent in other cases; or
the Committee shall refer the appeal to the Tribunal for determination … ”
If any one of the grounds in Regulation 5(1) is established, the case must be referred. An appeal under Section 1(3BA) is ‘open’, in the sense that the Tribunal is not confined to considering whether the Committee erred in its decision but rather has to reach its own decision on all the materials placed before it.
Regulation 6(2) provides that a Section 1(3BA) appeal “shall be made by way of notice given by the applicant to the Clerk to the Tribunal” within a time limit of 21 days after the date of notification (under regulation 5(3)) of the Committee’s decision not to refer. Regulation 19 provides as follows:-
“19 … the Committee may extend the time appointed by these Regulations for the doing of any act, other than the time within which an application may be made for referral to the Tribunal in terms of paragraph (1) or (4) of regulation 4, provided that it is satisfied that no substantial prejudice would thereby be caused to either party to the appeal, and it may do so notwithstanding that the time so appointed has expired before an application for an extension is made”.
The Lands Tribunal for Scotland Rules 1971, as amended, contain some provisions (Rules 18G – 18I) in relation to procedure in appeals which have been referred to the Tribunal by valuation appeal committees under section 1(3A). These rules, however, have not been amended since 1989 (when the jurisdiction over appeals against decisions not to refer was created) and contain no specific provision regarding Section 1(3BA) appeals. Rule 28(a) authorises the Tribunal to extend any time limit under the Rules notwithstanding that the time may have expired.
The subjects of appeal are the Gretna Hall Hotel, Gretna Green and Greens Hotel, 23-26 Eglinton Crescent, Edinburgh. In each case, the appellants have an outstanding appeal against the Assessor’s proposed valuation at the 2000 Revaluation. In each case, the valuation appeal committee refused the appellants’ application to refer the appeal to the Tribunal. The notices under Regulation 6(2) were each given on 4 September 2003, which in the Gretna case was admittedly some 24 days late and in the Greens Hotel case admittedly some 12 days late. The relevant Assessors each opposed the applications as time-barred, arguing that there was no discretion to allow an appeal to be made late or alternatively that any such discretion should not be exercised. The Assessors did not claim any particular prejudice other than the normal disruption to the timetable for disposal of appeals before the valuation appeal committees. Each Assessor also opposed on the ‘merits’.
The appeals were heard together, both on ‘time bar’ and on the ‘merits’, at an oral hearing on 6 October 2003. The appellants were represented by Alastair Kinroy, Advocate, instructed by Anderson Strathern, W.S. Both assessors were represented by Raymond Doherty, QC, instructed by Drummond Miller, W.S. The Tribunal is indebted to both counsel for their submissions.
In addition to written Grounds of Appeal and Answers, the Tribunal were provided with certain correspondence with the two valuation appeal committee Secretaries; some material in relation to the merits of the appellants’ appeals against the proposed valuations; a C.V. for Peter Henry FRICS, the appellants’ rating surveyor who was representing them (without solicitors) in the appeals until after the Section 1(3BA) appeals were lodged; and a medical certificate to the effect that Mr Henry was admitted for surgery on a serious medical condition between 21 July and 28 July and again from 4 August to 5 August in respect of a post-operative complication, and further that “it is not unreasonable to assume that Mr Henry’s thoughts may have been distracted peri-operatively as he has undergone major surgery … “
Mr Kinroy submitted that the time limit in Regulation 6(2) was to be construed as ‘directory’ not ‘mandatory’. The Tribunal had a discretion to entertain a late appeal where the failure to comply was caused by excusable mistake or some cause over which the party who failed had no control (the formula expressed by Lord Patrick in National Commercial Bank of Scotland v Assessor for Fife 1963 SC 197 at 202, in the context of a failure to lodge an appeal within the time specified in the Valuation (Timetable) (Scotland) (No. 2) Order 1962 under Section 13 of the Valuation and Rating (Scotland) Act 1956). Mr Kinroy accepted that no specific power to extend the time had been conferred on the Tribunal. In that situation, the principles of construction to be applied involved consideration as to whether any sanction for failure had been provided and also of the gravity of the consequences of not excusing the failure. Any prejudice to the other party would be a factor to be weighed. Absence of prejudice would not necessarily lead to excusing the failure. The existence of a power of the valuation appeal committee to extend the time limit was not fatal to the construction in favour of a discretion in the Tribunal. As well as reviewing the provisions reproduced above, Mr Kinroy referred to National Commercial Bank, supra; Teesdale v Assessor for Renfrew 1963 SLT (Notes) 65; Cobbinshaw Angling Association v Assessor for Midlothian 1968 SLT (Notes) 29; and Bank of Scotland v Fife Assessor 1982 SLT Reports 221.
On the basis that the Tribunal did have a discretion, Mr Kinroy put the matter in two alternative ways. The failure to observe the time limit was either solely the product of the surveyor’s illness; or alternatively, it was the combined product of the illness and the surveyor’s failure properly to appreciate the nature of the discretion to extend time limits. The surveyor had been diagnosed with a very serious condition. He had been told on his first release from hospital not to attempt work. He was still not fully fit. He was a sole practitioner, operating with the assistance only of a secretary. Although a very experienced rating surveyor with a specialist practice in which he was frequently involved before valuation appeal committees, he did not have experience of appeals to the Tribunal. He had hoped to arrange to have the operation during the normal summer vacation and minimise disruption of his practice. He had been distracted mentally, as suggested in the medical certificate. He knew that there would be a time limit, but had telephoned the offices of the Tribunal in August and gained the impression that there would not be a problem. In his mental state, he had failed properly to appreciate the position, by contrast with the situation when he consulted senior counsel about the matter on 3 September, when he was advised that there would indeed be a problem. The appeals had been lodged immediately thereafter. The time limit situation would have cried out more clamantly to a lawyer. The mistake was excusable. There was no particular prejudice to the Assessors. The period of delay was relatively short. By the time the mistake was discovered, it was felt to be too late to go back to the local committees. The Tribunal apparently did not have power to refer the issue back to the committees to indicate their views on the exercise of the discretion.
Mr Doherty submitted that the Tribunal did not have discretion to excuse the failure. Construction of the 1995 Regulations did not require to follow the authority of National Commercial Bank, supra, because the 1995 Regulations were promulgated under a different statutory power, viz. Section 15(2A)(d) of the Local Government (Finacial Provisions) (Scotland) Act 1963. That said, Mr Doherty generally accepted the principles of construction indicated by Mr Kinroy, except that in Mr Doherty’s formulation the question was whether there was either an express or an implied sanction for failure. Properly construed, the period within which the application required, under Regulation 6(2), to be made to the Tribunal, was something already outwith the jurisdiction of the Committee. Regulation 19 therefore did not give the committee power to extend the time limit. By implication, the sanction for failure to apply in time to the Tribunal was automatic. In the analogous situation of appeals to the court, the Committee did not have any jurisdiction to extend (Act of Sederunt (Valuation Appeal Rules Amendment) 1982). Mr Doherty fairly acknowledged that if, contrary to his argument, Regulation 19 did give the Committee power to extend the period, his argument for an implied sanction could not stand.
If the Tribunal did have discretion, Mr Doherty very fairly indicated that, although the material regarding the medical condition had only been made available on the morning of the hearing, neither Assessor sought any continuation to consider the position and both were content to leave the matter to the Tribunal. Mr Doherty did, however, point out that the potential prejudice to the appellants in these cases was not as serious as in other situations, because they would not lose their substantive appeals, which in the event of refusal of the present appeals would still proceed before the valuation appeal committees.
This appears to be the first occasion on which the Tribunal has had to consider an issue of ‘time bar’ in relation to appeals under Section 1(3BA). We are of the clear opinion that the proper construction of such provisions as there are is that we do have a discretion to excuse failure to adhere to the time limit, to be exercised in very exceptional circumstances and applying the principles indicated by Lord Patrick in National Commercial Bank, supra. Further, having regard to the particular medical evidence in this case, we are prepared to exercise the discretion and consider these appeals on their ‘merits’.
There is no express provision either way and parties are agreed that we have to consider whether a sanction of automatic refusal to entertain any late appeal is to be implied. Mr Doherty conceded that if Regulation 19 is to be construed as allowing the Committee to extend the time limit (even after its expiry), no such sanction can be implied. In our view, that is indeed the clear meaning of Regulation 19: firstly, it in terms applies to ‘ … the time appointed by these Regulations for the doing of any act … ‘, which clearly describes the time limit in Regulation 6(2); secondly, the recognition of one exception reinforces the application to all the other time limits expressed – expressio unius est exclusio alterius; and thirdly, that exception relates to applications to refer to the Tribunal, indicating a discriminating approach recognising the particular importance of the first time limit in the procedural scheme and according a slightly lesser significance to the second. We do not accept Mr Doherty’s submission that the regulations treat the period within which applications should be made to the Tribunal as being outwith the jurisdiction of the committee: the Regulations apply to ‘any appeal to a Committee’ (Regulation 1(2)), which is a correct description of appeals in which applications to refer have been refused. There does not seem to us to be anything inappropriate in conferring a discretion on the body from which the appeal is taken to extend the time limit for appealing against its decision. In considering the scheme of procedural regulations, we note that there has been no amendment of the Tribunal’s rules to take account of Section 1(3BA). Had a provision similar to Regulation 6(2) been inserted in the Tribunal’s rules, Rule 28(a) thereof would have applied to give the Tribunal discretion. The omission to amend the Tribunal’s rules may possibly be either a deliberate decision (it being thought adequate to provide for these matters in the Committee regulations) or simple oversight, and neither explanation seems to us to assist the argument for an implied sanction.
We accept that the decision in National Commercial Bank, supra, is not directly binding on us, but we find the recognition in that and other cases in this field of a discretion, not just in the Court but also in valuation appeal committees, accompanied by Lord Patrick’s clear and authoritative statement of the principles to be applied in its exercise, persuasive. It would be unfortunate if we were constrained to follow a different approach in the present context.
We appreciate that the prejudice to appellants in cases of this sort would not be so extreme, in that the substantive appeal right would not be lost. We do point out, however, that applications to refer do not receive oral hearings before valuation appeal committees; committee reasons in such cases are often, entirely understandably, very brief; and accordingly the loss of the right to seek to persuade the Tribunal that the grounds of referral are established is not negligible. The degree of prejudice – on either side – in the particular case should be a relevant factor in the exercise of the discretion.
We accordingly prefer the appellants’ submissions on the existence of the discretion. We should, however, emphasise, as Lord Patrick did, that this time limit is not to be lightly disregarded; the normal consequence of failure to apply in time will be loss of this right of appeal; and the discretion to admit the appeal will only be exercised in very exceptional circumstances.
In the present case we feel able to exercise the discretion because, and only because, we can accept that during the relevant period the appellants’ surveyor was distracted by the existence of a serious medical condition which has been appropriately vouched to us. There could be a question as to the length of the period for which he was so distracted but we are in no doubt in the circumstances explained to us that we should give the appellants the benefit of any doubt on that matter. Matters were not entirely out of the control of the appellants, but the failures to apply in time in each case are, in the particular circumstances, excusable mistakes. In relation to prejudice, we note that the Assessor does not indicate any particular prejudice and although reference is correctly made to the disruption to the timetable for the disposal of appeals some such disruption would have occurred anyway. As far as prejudice to the appellants is concerned, we take into account that the substantial right of appeal would not be lost, but we think the loss of the opportunity to argue for these appeals to come before the Tribunal (with consequences, possibly, for some other appeals by the appellants) would in the particular circumstances be inappropriate. It can also be said that the statement of the Committee’s reasons for refusal to refer in one of these two appeals was very brief, and in the other, apparently, non-existent.
We should emphasise that were it not for the medical condition we would have been unimpressed by the distinction to which Mr Kinroy referred between lawyer representatives and surveyor representatives. It is no doubt true that lawyers may have a particular awareness of the importance of time limits, but when other professionals undertake representation in particular areas they are in our view obliged to make themselves familiar with procedural requirements, particularly time limits. Surveyors frequently, and very appropriately, represent ratepayers in the valuation appeal process before valuation appeal committees and, in doing so, accept responsibility for compliance with the requirements. The particular time limit is clearly expressed, and failure by a professional representative to adhere to it will almost invariably lead to loss of this appeal right.
Further, were it not for the particular circumstances, we would not have found the reference, in very vague terms, to a conversation with the Tribunal’s assistant clerk, and the suggestion that Mr Henry relied on this in some way, convincing. However, as we have accepted that Mr Henry had a medical reason for his failure to act appropriately we need not comment further on this matter.
Mr Kinroy advanced arguments in relation to grounds (a), (b) and (d) in Regulation 5. He explained that the appellants were seeking to challenge the value levels applied by the Assessor in comparative valuations of hotels in the 2000 Revaluation. The pool of rented hotels in Scotland on which the Assessor had reached his value levels, which involved, broadly, an increase of about 1% all round from the levels applied in the 1995 revaluation, was small. Of 52 let hotels relied on by the assessor, it was claimed that 3 were not let; 31 or 32 were not true comparators; and application of the scheme percentages to the remaining hotels showed such discrepancies as to indicate that the scheme was defective or at least needed to be thoroughly examined. He referred to meetings between Assessors and a private practice group of surveyors, including Mr Henry, where it was said not to have been possible to reach agreement on a scheme. Some appeals had been settled for reasons of economic necessity or involving some compromise with which the ratepayers had been unhappy. The appellants proposed to demonstrate the defects in the current scheme by exploring the statistics in relation to comparability of the hotels used to devise the current scheme. It was also hoped to make comparisons with English let hotels, which was competent, under section 15(1A)(b) of the Local Government (Financial Provisions) (Scotland) Act 1963, in certain circumstances. It was hoped to compare with a large number of English hotels, and also to demonstrate the inadequacy of the 2000 scheme by reference to the lower percentages in the 1995 scheme.
In these circumstances, Mr Kinroy said, the appeals would involve copious evidence in relation to the location, physical characteristics, lease terms, actual and potential turnover, and profitability of subjects both north and south of the Border, and also of trends between 1995 and 2000 and the statistics underlying the current English scheme. Taking grounds (a) and (b) together, Mr Kinroy identified four areas in which the facts, and also the expert opinion evidence, would be complex: lease terms and conditions, where issues as to lease terms, nature of transactions, insurance obligations, lease periods and brewery ties arose; decreasing profitability, and its causes; cross-border comparison of terms and conditions; and methodology under the English scheme. Mr Kinroy accepted that the issue was one of value level, not methodology: although the English method was slightly different, it was not contended that it should be applied in Scotland. Ground (d) was also satisfied, because, as appeared from the answers, there were 131 comparable cases (the outstanding hotel appeals) and successful challenge of the scheme could also lead to ‘material change’ appeals for other hotels. The fundamental issue in question was the level of value to be applied to hotels.
Mr Doherty submitted that neither the facts nor the opinion evidence was likely to be complex within the meaning of the regulation. This should be tested, not by the standard of the man in the street but rather in the context of appeals to valuation appeal committees. It was a matter of degree, and of impression, having regard to the type of issues of which committees have well-established expertise to deal. Adjustment of the terms of leases not on the statutory basis was commonplace; there was nothing to suggest issues as to profitability would be beyond the ability of committees; the law in relation to cross-border comparisons was clear, it being difficult to make reference to English subjects if there were sufficient Scottish comparisons; and that consideration also applied to the question of English methodology.
Mr Doherty indicated that there were some 2700 hotel subjects in Scotland, of which just over half had been appealed but by the date of the hearing only some 78 outstanding, including the 53 in which Mr Henry was involved. The Assessors’ position was that the private practice group (other than Mr Henry) had accepted the scheme. On ground (d), the appellants had failed to identify a distinct issue which was likely to be used in other cases, as distinct from the outcome being of interest in other cases. In a revaluation appeal, any ratepayer could challenge the Assessor’s scheme, and the result could then be used in other cases, but that did not establish that there was a general principle ‘likely’ to be used in other cases.
We are not satisfied that either of these two appeals comes within any of the three grounds relied on.
Appeals under section 1(3BA) require to be decided on the basis of the Tribunal’s impression on the materials referred to, and not on any assessment as to the likely outcome of the appeals. We should make clear that it is accepted that the appellants are entitled to test the Assessors’ valuations at the time of revaluation not simply on the basis of the individual circumstances relating to the appeal subjects but also on the basis of challenging the scheme applied. This is what we are told the present appellants intend to do. Nothing we say should be taken as indicating any view on the appellants’ prospects of success.
Taking grounds (a) and (b) together as Mr Kinroy invited us to do, we consider that the facts and the opinion evidence essentially relate to assessment of comparative material which, in relation to hotels, does not appear to us, in the context of commercial rating valuation, to be a complex task. The method, which we note is not under challenge, involves, we are told, the application of percentages to the three elements of turnover achieved by categories of hotels. Placing the hotels into categories, and considering whether rents require adjustment, or indeed settled values involve recognition of particular local factors which have called for adjustment, all seem to us to involve the sort of facts, and the sort of opinion evidence, which is commonly considered in valuation appeals before committees and which in this context does not come up to the standard of complexity. We recognise that whatever decision may eventually be reached as to whether comparison with English values is competent, the appellants will initially be entitled, within reason, to lead evidence from England, but we are not persuaded that the introduction of such evidence in relation to this type of subject involves anything different from evidence from other locations in Scotland. To the extent that profitability, as opposed to rental evidence, may be relevant, we have difficulty also in accepting this as complex. We take the same view about evidence in relation to the increased value levels applied under the Assessors’ scheme in the present revaluation.
As far as ground (d) is concerned, it is not enough to indicate that the result will be used in other cases. That could be said of many appeals, whoever succeeds. It is necessary to identify a fundamental issue or general principle; and also to persuade us, as a matter of impression, that this is likely to be used as a precedent in other cases. In this connection we do again note that the issue in these appeals is not the methodology used in the valuations, but simply the levels of value under the scheme. The issue is not fundamental or general, but whether the Assessors have reached the right level of value. Further, having regard to the number of hotels in which – it is not in dispute – settlements have been reached on the basis of the scheme, we do not have the impression that the outcome, either way, of the present appeals, is likely to be used in other cases. The position in these appeals seems to us to be rather different from that in Marks and Spencer plc v Assessor for Glasgow, LTS/VA/2003/9, 12.5.2003. In that case the Tribunal, while not being satisfied in relation to any of the other grounds, was satisfied where there was an issue as to the applicability of Section 15(1A) of the 1963 Act, in relation to comparison with English subjects, that there was a general issue, which was likely to be used as a precedent. In that case, however, the situation in relation to comparative material in Scotland was, as a matter of impression to us, very different, and there did also appear to be an issue of some importance in relation to the application of Section 15(1A).
For these reasons, while we have exercised our discretion to admit these appeals for consideration, we refuse both appeals.