DESCRIPTIVE RUBRIC

Valuation for rating – Coastal super quarry – Running at a loss – Evidence of comparative valuation – Basis of assessment – Two separate elements – Contractor’s principle and royalty rates – Identification of hypothetical landlord – Hypothetical tenant –Agreement of parties ambiguous – Choice of royalty rate – End allowances

Foster Yeoman Limited v Assessor for Highland and Western Isles Valuation Joint Board
20 January 2005
LTS/VA/2004/01

This was an appeal against the entry in the Valuation Roll for subjects known as Glensanda Quarry, Morvern, Lochaber, described as a coastal super quarry. There was no prospect of assessment on a direct comparative basis. However reference was made to figures derived from a similar quarry operated by the ratepayers at Torr, Devon. The entry reflected normal practice for quarries in being assessed on two separate elements: land buildings, plant and machinery, assessed in accordance with the contractor’s principle, and minerals based on reducing royalty rates for increasing volume output. Parties were agreed on this approach.

It was clear that the quarry was operating at a loss and would be likely to continue to do so. It was accepted, however, that as the ratepayers themselves were continuing to operate it, it could properly be assessed on the basis of a rental value. It had unusually high overheads. The applicants required to maintain a fleet of vessels to transport the granite. They required to provide accommodation and services for their work force. A particular problem was that the method of extraction involved the hollowing out of a mountain. The material extracted and crushed at the top was then transmitted to the harbour by way of a vertical “glory hole” and a horizontal transport system. Attrition of the rock as it descended the glory hole stage was unexpectedly high. It produced substantial “scalpings” which could not be sold without further processing. This was carried out partly on site and partly at a dedicated receiving facility, described as a “virtual quarry” established at the Isle of Grain in Kent.

Parties relied on an exchange of letters purporting to agreed certain matters. This was unclear in its terms. The Tribunal took the view that it was necessary to attempt to reconcile parties’ positions as best it could.

Held that in all the circumstances the approach taken by the assessor of choosing the lowest available comparable rate as a starting point for assessment of royalty was reasonable but that he had misdirected himself as to the appropriate rate; and that greater allowance could properly be made on the contractor’s basis of assessment for plant and equipment for the particular problems of processing encountered on site.

Authorities

Assessor for Lothian Region v British Airports Authority 1981 SC 141
Civil Aviation Authority v Assessor for Strathclyde Region 1990 SLT 378
Colville & Sons v Assessor for Lanarkshire 1922 SC 460
Heart of Midlothian Football Club Limited v Assessor for Lothian Region 1988 SLT (Lands Tr) 61
Hoare (VO) v National Trust [1998] RA 391
Scottish Exhibition Centre Ltd v Assessor for Strathclyde Region [1994] VA 209

Textbook

Armour on Valuation for Rating, 5th Edition


See full decision:  LTS/VA/2004/01