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 appeals relating to entries in the valuation roll in respect of timeshare units at Coylumbridge Highland Lodges, Coylumbridge, Aviemore.
The appellants referred to grounds (a), (b), (c) and (d) of Regulation 5. However, having considered the various papers lodged in support of the appeal we noted various assertions on behalf of the assessor to the effect that the law as set out in the decisions in Forest Hills Trossachs Club v Assessor for Central Region 1992 SLT 295 and Assessor for Highland and Western Isles Valuation Joint Board v Barratt International Resorts Ltd 1997 SC 384 was clear and lucid. We also noted a summary on behalf of the Scottish Assessors Association which could be read as suggesting that the latter case provided that all time share properties should be value in comparison with house rents. As we were not satisfied that either of these cases had a direct bearing on the issues likely to be raised in the present case nor that the latter laid down a positive rule, we invited the respondent’s counsel, Mr Stuart, to attempt to set out shortly what the relevant law was thought to be.
It was agreed that the decisions established broadly that the individual proprietors of time share units are to be treated as owner-occupiers and that the problems raised by the statutory definitions of “dwelling” for the purposes of Council Tax Legislation are not relevant to the present issue of valuation. It was also clear that the valuation should be on a comparative basis. In the Barratt case, the Assessor had drawn attention to the distinction between self-catering accommodation and timeshare units. In the latter situation the holidaymaker, or successive holidaymakers, in the timeshare unit were the rateable occupiers, using their property for the purposes of a dwellinghouse. In the former case, it was not the holidaymaker who was the user or occupier for purposes of valuation and rating. It was rather his landlord who was in occupation of the accommodation and using it commercially for holiday lets. Mr Stuart accepted that there could be circumstances in which timeshare units would fall to be assessed by comparison with self-catering units. He accepted that this would apply where the units were shown to be predominantly used for letting purposes. Shortly put, however, his submission was that this was solely an issue of fact. The Committee would require to examine the detailed evidence and decide whether as a matter of fact, the predominant use was for letting.
We invited Mr MacIver, to set out his submissions in light of that clarification. He agreed that no particular difficulty of fact arose from a situation where units were let out to third parties. It would be a matter of seeing how often that occurred. However, it was said that a proper understanding of the factual basis of “exchanges” would require expert evidence. It was explained that timeshare exchanges operated through independent companies who ran a system based essentially on allocation of “points” to allow for the balancing of units of exchange, having regard to their relative desirability in terms of date, location and other factors. He suggested that this evidence would be complex within the meaning of Regulation 5(A). It was agreed that the test of complexity was not simply that of the man in the street. Committees were expected to deal with complex rating problems. When assessing questions of complexity we had to have regard to the type of material with which Committees were accustomed to deal. We did not require to hold that they were beyond the scope of a Committee. It was enough to find that by the standards of a Committee they were properly to be regarded as complex.
We have little doubt that the evidence to be led would be complex in the sense that it would involve consideration of a great deal of detail covering a large number of units and, of course, a significant number of separate letting weeks. However, the system was plainly one which a reasonable unit holder would require to be able to understand. Such a holder would, indeed, be expected to understand the system on the basis of written material. A Committee with the assistance of expert evidence would not be expected to find the material unduly complex. In short, having regard to the nature of the material to be explained by the expert, we are not satisfied that the case comes within the terms of either ground (a) or (b) of Regulation 5.
The appeal based on ground (c) raises more difficult considerations. Mr Stuart contended strongly that the law was neither uncertain or difficult to apply. The issues were solely questions of fact. It would be for the Committee to decide whether it was satisfied on the evidence of the nature of the use, that such use was “predominantly of a nature equivalent to letting”. That would simply require examination of the detail of the exchange mechanisms. That would be a question of fact.
Mr MacIver contended that the law was uncertain and, in any event, difficult to apply. It was clear that the present issues had not required to be addressed in the Forest Hills case. He referred to a passage from the opinion of Lord Prosser at page 299K in the following terms: “There are obviously innumerable ways in which any subjects, with the physical characteristics of a dwellinghouse, may actually be used and occupied. If there are, in any case “rival” occupiers, and in particular if the subjects are let for profit over parts of a given year, it may become hard to decide whether the subjects are still a dwellinghouse, and who is in rateable occupation.” He also pointed to the comment at page 300A as making it clear that it was “in the absence of any other ‘rival’ occupier,” that the Court found that the units should be valued as dwellinghouses. Other passages in that case were to the effect.
The dicta demonstrated the importance of looking at the detail of use but gave no guidance as to the criteria to apply. At least three distinct issues of law were uncertain. There was a question as to whether an occupier was using the subjects as a dwelling house when he was not using them to stay in but was allowing a third party to use the subjects in consideration of a right to stay in their subjects: that is, a straight exchange. If more was required to demonstrate that there was a “commercial transaction” it was not clear what would have to be founded on. In some cases there might be a cash element to the consideration. In others the consideration would, essentially, be measured by reference to the points allocated and available. Secondly, evidence was now available showing the nature of use for a period of over five years. Use varied from year to year. Was the Committee to look at the whole period by way of either an overall average or a mean; or should it look at the evidence of the year of the “tone date” or, perhaps, the most recent evidence at valuation date. This was, he submitted, an undoubted area of difficulty. Thirdly, a question arose as to what would be required to a constitute a “predominant” use. The respondents appeared to accept that test although there was no direct authority for its use. He submitted that it would be appropriate to have regard to the Council Tax (Dwellings) (Scotland) Regulations 1992 and the exclusion from dwellings of land and heritages which are available for letting for at least 140 days in the year. This could be taken to show that subjects were not to be regarded as in use as a dwelling if they were available for letting for at least 38 per cent of the time (allowing for maintenance time).
Mr Stuart submitted that these three points raise no difficulty in law. As we understood it his submission was that they were clearly wrong. A direct exchange could not be the equivalent of a “letting”; it would be necessary to look at the pattern established over the whole five year period available and not simply any particular year; and that, although “predominant” was simply a question of fact to be determined by the Committee, it would plainly be insufficient to establish use for less than 50% of the time.
The Tribunal has made clear their view that, as Regulation 5 is not a provision altering or affecting the substantive rights of parties, the question of determining the most appropriate means of disposal requires to be dealt with as simply and expeditiously as possible. It is not appropriate to attempt a refined analysis of issues or submission. We must, however, be careful to guard against attempts to bring applications within the scope of ground (c) merely by stating questions of law which may be said to be uncertain. We are not persuaded that all three issues can properly be said to be uncertain. However, we do accept that they are not all clear and in the circumstances we think it unnecessary and inappropriate to express any further view at this stage.
We are not satisfied that the law is clear and unequivocal. We were not wholly successful in eliciting from Mr Stuart the criteria which the Committee would have to apply to the evidence of the exchange mechanism to determine whether it was equivalent to letting. We have not yet been persuaded that something equivalent to full commercial letting is necessary to be a “rival” use as that term was used in Forest Hills.
In any event, we are satisfied that on the broad approach appropriate to our consideration of appeals under the 1995 Regulations, the present appeals fall within ground (c). This means that it must, almost inevitably also fall under ground (d). The appeals must, therefore, be allowed and the cases must be dealt with by the Tribunal.
It is right to add that it was agreed that appeals under the 1995 Regulations should be dealt with as open appeals. Inevitable this meant that the material presented to us both in written form and orally, covered much more ground and much more detail than that available to the Committee. We recognise that until the hearing before us the ratepayers had not set out much detail of the factual position on which they rely. For example, we heard that in relation to particular subjects, figures were available for 2003 suggesting that something of the order of 90% of the usage had not been by the unit owners but by third parties. Mention was made of other years where lower figures, comfortably exceeding 50%, were said to be shown by proper analysis. Had this material been available to the Assessor it is possible that he might have taken a different view of certain individual cases. It may also be added that, although the appellants written material referred to a change in actual use, that may have been misleading. The appeals may not require to rely on a change in fact, but merely on a change in the presentation of material in light of clearer evidence of fact.
In the circumstances, although, in form, the present procedure is an appeal from a decision of the Committee, our decision to allow the appeal implies no criticism of their decision.
Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 24 July 2007
Neil M Tainsh – Clerk to the Tribunal