1. In this appeal under sec 1(3A) of the Lands Tribunal Act 1949 we are asked to make the same reference to the Court of Justice of the European Union (“CJEU”) under art 267 of the Treaty on the Functioning of the European Union as the Upper Tribunal (“UT”) in England refused to make in similar proceedings involving the same appellants earlier this year (Interoute Vtesse Limited (Formerly Vtesse Networks Limited) v Gidman  UKUT (LC) 13, hereinafter referred to as “the English proceedings”). That decision was issued on 22 April 2020. Permission to appeal was refused, first by the UT itself and then by the Court of Appeal, the latter’s decision becoming available only on 4 December. Against the procedural background we narrate below, the matter came before us for a hearing on 7 December 2020 when the appellants were represented by Mr Aidan O’Neill QC (who had appeared in the English proceedings) with Mr David Welsh, advocate, and the respondents by the Dean of Faculty with Mr B J Gill, advocate.
2. The Tribunal advised parties of its decision to refuse to make a reference by email on 17 December 2020 and said written reasons would follow. This opinion sets out these reasons.
3. This is not by any means a routine rating appeal, where some aspect of an entry on the valuation roll is being challenged by the ratepayer. It is, instead, (to quote from the appellants’ note of argument at para 2.2) “a full frontal challenge to the lawfulness – in the sense of EU law compatibility – of the manner in which the Assessor, as an emanation of the State, has proceeded in his assessment of the liability of the Appellant to make payment to it of a tax levied on its provision of electronic communications services”.
4. As the wording just quoted tells us, the appellants are providers of electronic communications services. At the time with which appeal is concerned they provided those services to commercial customers in Scotland as well as in England, through fibre optic cables run through underground ducts. Most of the fibre optic cables they used were leased from other electronic communications providers but some were owned. Their complaint – one which has been exercising them (and similar operators) for nigh on 20 years – is that the way in which the rating systems in the UK treat them in comparison with a small number of other providers, most notably the former state monopoly operator, British Telecommunications plc (“BT”), is grossly unfair and offends against EU law principles of equality and non-discrimination. (Although two other providers, Kingston Communications (KCOM) and Virgin Media are treated in the same way as BT it will suffice in what follows to refer only to the treatment of BT.)
5. More particularly, the complaint is that, because of differences in the rating methodology applied, BT pays far less in Non-Domestic Rates (NDR) per kilometre of fibre occupied than the appellants (and most other communications providers). BT is valued for rating purposes as a single hereditament (to use the English term), inclusive of all its buildings and multifarious apparatus, of which its fibre network is only one part, using the Revenue and Expenditure (“R & E”) method. Although the appellants are also valued as a single hereditament, the rateable value of its undertaking is calculated on the comparative principle. Because of the size of BT’s undertaking and its very diverse nature, it is difficult, some say impossible, to work out what proportion of its rateable value is attributable to its fibre network. No such difficulty is encountered with the appellants’ undertaking, however, because it is so much smaller and less diverse. Although comparison is, therefore, difficult, it seems to be generally accepted that there exists what the Competition and Markets Authority (“CMA”) in a complaint by TalkTalk (TalkTalk Telecom Group plc v Office of Communications CAT Case 1259/3/3/16) called an NDR Differential by virtue of which other communications providers pay between 11 and 35 times the rate BT pays in NDR for lengths of up to 20 km.
6. The appeal came to the Tribunal as long ago as 12 July 2013 when a notice of reference under Part IV of the Lands Tribunal for Scotland Rules 2003 was received from the Renfrewshire Valuation Joint Board. In essence, both parties agreed that the matter was of such complexity that it should be dealt with by the Tribunal, rather than by the local Valuation Appeal Committee (“VAC”).
7. The appeal was against an entry in the 2010 Valuation Roll in which the appellants’ “Scottish Telecom Undertakings” were entered at a rateable value of £132,000. A letter from the appellants dated 4 July 2013 informed the Tribunal that the matter would “potentially hinge to a large degree on the outcome of similar appeals in Scotland, England and Wales”. The appellants do indeed have other appeals outstanding before this Tribunal but the decision must have been taken to make the running by way of their foresaid English appeal. In any event the present appeal lay dormant until 17 April 2020 when an email in the following terms was received from the appellants’ Mr Aidan Paul:
“As you are aware, we stayed the proceedings in Scotland, pending resolution in the English appeals.
Mr Aidan O’Neill QC has made submissions that the matters need resolution under EU Law, and the best way of doing so is by reference to the CJEU under Article 267. …
We risk being run out of time in the English Courts, as the option of an art 267 reference expires at the end of the transition period.
We would like to know whether the Lands Tribunal in Scotland would consider hearing an application for an Art 267 reference from Mr O’Neill, on the papers, in order to consider an Art 267 reference in good time.”
8. The matter was not, in fact, pursued by way of a decision on the papers but the coronavirus pandemic caused delay in fixing an oral hearing until that of 7 December 2020.
9. The appellants invite us to submit the following questions to the CJEU:
(i) Given that the ‘event’ which triggers the Appellant’s liability for NDR is its ‘lighting’ or ‘data activation’ of optical fibres leased or owned by it – this lighting being necessary to allow it to provide its electronic communication services to its customers – does this mean that, as a matter of EU law, the NDR at issue in this case is to be classified and treated for the purposed of EU law as a tax on the Appellant’s provision of electronic communications services?
(ii) Is the differential treatment by the Assessor among electronic communications providers as regards the triggering event for their liability for NDR (with some electronic communications providers – including the Appellant – incurring such liability when they ‘light’ optical fibres, while for others, such as BT, the lighting of optical fibres does not trigger any NDR liability) permitted under EU law?
(iii) Is the different methodology adopted by the Assessor among electronic communications providers as regards the manner in which their liability for NDR is quantified – in that for some electronic communications providers, such as the Appellant, the Assessor’s quantification is undertaken by reference to its ‘valuation’ of the individual optical fibre assets actually lit by the Appellant; whereas for other electronic communications providers, notably BT, the Assessor does not carry out a valuation for the individual fibre assets used or owned by it and instead makes a cumulative estimate of the total rateable assets of the provider without disaggregating this cumulative valuation down to individual assets – permitted under EU Law?
(iv) Does EU law permit the quantification of the Appellant’s NDR liability to be calculated by the Assessor on the basis of the length of fibre optic cable which is used by the Appellant to provide its electronic communication services to its customers, (thereby making the calculation of NDR tax due dependent upon the distance between the location of the relevant fixed assets of the Appellant taxpayer and the location of the customers’ premises to which it supplies economic communication services)?
(v) On the basis that the evidence shows that use of the buildings/fixed assets occupied by the Appellant is inextricably linked to (because wholly necessary for) the provision of its electronic communication services along the optical fibres which it leased, does the proportion of NDR which is assessed by the Assessor as referable to the heritable property and fixed assets (in the form of building and street cabinets) which the Appellant occupied for the purposes of providing its electronic communications services to its customers fall to be assessed for its compatibility with EU law (including, among other things, the EU law general principles of equal treatment, fiscal neutrality, fair competition and transparency)?
10. The learned Dean of Faculty opposed the application as incompetent, failing which it should be refused on the merits. Two competency grounds were advanced in his note of argument but the first of these – that the entry in the valuation roll appealed against had been superseded in such a way that there was no point in the appeal – was not pressed in oral argument and we say no more about it.
11. The second competency ground was that the Tribunal had no jurisdiction to make the reference sought. We were reminded that this Tribunal is a creature of statute and has only the powers conferred on it by statute (McCreight v West Lothian Council 2009 SC2 58 at para 18). In the present context it simply stood in the shoes of the local VAC, the two jurisdictions being co-extensive and confined to questions of (rateable) value (Armour on Valuation for Rating, 5th ed, paras 5-41-42). It was clear, on the authorities, that it was the ordinary courts that had jurisdiction where the Assessor’s decision to make an entry on the Valuation Roll was being challenged as ultra vires (Dante v Assessor for Ayr 1922 SC 109, P. 121; Russo v Assessor for Lanarkshire Valuation Joint Board  CSOH 167 at paras 7-9). Similarly this Tribunal had no power “to determine a fundamental and antecedent question” (Glasgow Airport v Renfrewshire Assessor 2014 SLT (Lands Tr) 46, para 9).
12. It would be quite extraordinary for a VAC to say that it would ignore domestic law; to hold, in fact, that domestic law was not law and should not be followed. Yet that is what the appellants’ approach required whenever anyone with a colourable argument showed up at a VAC demanding a reference to the CJEU. The proper remedy for someone making a “full frontal challenge” to the lawfulness of what the Assessor had done was by way of judicial review, to which all relevant parties – including, notably, here, the Scottish Ministers – could be convened. But the basic competency point was that a reference was beyond the powers of a VAC and, consequently, beyond ours, since we simply stood in their shoes.
13. As to whether (if we were against him on the competency point) we should make a reference, the learned Dean advanced a number of arguments. Firstly, a reference was premature. A reference was only appropriate once the national court had determined the factual matrix; Information Note on references from national courts for a preliminary ruling issued by the Court of Justice (2009/C 297/01). Here there was a sharp difference of fact between the parties as to whether the subjects of appeal and the BT network were comparable and the Tribunal had not yet heard evidence.
14. Secondly, a reference should be made only where one was necessary to enable the national court to give judgment and, in assessing that, a measure of restraint was appropriate; Trinity Mirror v Commissioners of Customs and Excise  EWCA Civ 65, para 52. Here the Tribunal could only assess whether a reference was necessary when it had determined the factual dispute. A similar request – for a reference to be made without evidence having been heard – had been made and refused in the English proceedings which had then gone on to hear six witnesses, five of them experts, in a five-day hearing.
15. Thirdly, none of the factors desiderated in the Trinity Mirror case (supra) was present here. At para 52 of that judgement a range of situations was posited within which a reference might be made by a court which was not a court of last resort. At the “most appropriate” end of that range were cases where the question was one of general importance and the ruling was likely to promote the uniform application of the law throughout the European Union. At the “least appropriate” end were situations where there was an established body of case law available which could be transposed to the facts of the instant case or where the point involved was a narrow one, specific to its facts and unlikely to have any application beyond the instant case. Here we were at the less appropriate end of that range.
16. Fourthly, the appellants had not set out any sound basis on which a reference should be made. One could only have a valid complaint of discrimination where the things being compared were truly comparable. The one court which had looked at that question (the UT) had concluded that the appellants’ and BT’s hereditaments were not at all comparable. What was the CJEU to make of that?
17. The Dean closed by adopting in full the reasoning of the EU in the English proceedings and drawing our attention to the terms in which the Court of Appeal had refused permission to appeal.
18. As to competency, Mr O’Neill drew our attention to certain CJEU cases which, he submitted, made clear that the principle of the primacy of EU law permeated the whole of a member state’s institutions, administrative as well as judicial. In particular reference was made to Fratelli Constanzo v Comune Di Milano (Case 103/88) at paras 28-31 and Commissioner of An Garda Siochana v Workplace Relations Commission (Case C-378/17) at paras 35-39, the latter emphasising (at para 35) the duty on national courts to refuse to apply any conflicting provision of national law without requesting or awaiting the prior setting aside of that provision by the legislature and (at para 38) the fact that the duty to disapply conflicting national legislation applies not only to national courts “but also [to] all organs of the state – including administrative authorities - … called upon to apply EU law”. This duty clearly covered VACs and this tribunal. Although this tribunal’s jurisdiction was statutorily circumscribed it had to be remembered that one of the statutes which applied was the European Communities Act 1972, the conduit of European law into domestic law. It’s jurisdiction to make a reference came “from above”, as a matter of EU law, not from below, as replicating the jurisdiction of the VAC. The Scottish Land Court, whose jurisdiction was similarly statutorily circumscribed, had made a reference to the CJEU (Feakins v Scottish Ministers  SLCR 52) and, if it could do so, so could this tribunal.
19. As to the “all parties not called” argument, what happened when a reference was made to the CJEU was that the member state was automatically convened as a party and, where that reference was from a Scottish court, it was the Scottish Ministers who appeared. Accordingly their interests would not be overlooked in the procedure proposed.
20. As to the need for the factual matrix to be established, that had been done here in the form of the determination of the CMA in the TalkTalk reference. Mr O’Neill took us to several passages in that determination, including paras 4.24-4.31, 4.40, 4.48, 4.74ff and 4.142ff and 4.228. The facts found by the CMA were not specific to TalkTalk; they applied to all communications providers except BT, KCOM and Virgin. These facts included the existence of a vast NDR differential caused, not by differences of scale, but because of the different methodologies applied by the rating authorities. That difference in methodology was distorting competition and was not shown to be justified.
21. Faced with these facts, it was not good enough to say that BT was so different that it could not be compared with other communications providers and that the task of disaggregating its global hereditament so as to arrive at a rateable value for its fibre network was impossible. The primacy of EU law required a different approach to be taken. The provision of electronic communication services was a field occupied by EU Law and, therefore, the following principles of EU law applied: the principle of equal treatment, the principle of fair competition and the obligation of transparency; C-112/15 Persidera SpA EU:C:2017.597.
22. The UT in the English proceedings had failed to apply the EU principle of equal treatment. It had said that even if the issue in the case was to be classified as the imposition of a tax on the appellants’ provision of services that would make no difference to its approach or to the decision reached because domestic law already gave effect to the principle of equality in the valuation of subjects for NDR purposes. In so saying, it had misdirected itself in law because it was not the purposes, principles and objectives of domestic law in this area which were relevant but the principles, aims and objectives of the Common Regulatory Framework (“CRF”) (Directive 2002/21/EC). In particular the UT had failed to have regard to the fact that the CRF carved out a particular class of undertakings, namely the providers to the public, for remuneration, of electronic communications services. That classification was made without reference to the size or scale of the undertaking. That meant that it was not open to the UT to seek to justify the differential treatment in NDR terms of the appellants, on one hand, and BT on the other.
23. The UT’s approach ran completely counter to the undisputed purpose of the CRF, which was to establish a genuine internal market for electronic communications characterised by market conditions allowing for fair and undistorted competition among all communications service providers, whatever their size.
24. The UT’s findings were also criticised in Mr O’Neill’s note of argument as having no evidential basis, particularly its conclusion that the application of domestic rating law in the case before them was “transparent, applie[d] equally and fairly to all electronic communications services providers … and [did] not distort competition among them” [original emphasis], a description described as perverse.
25. Further the UT was criticised for having uncritically adopted the Valuation Office Agency’s repeated assertion that it was not possible to disaggregate the BT hereditament. If that was indeed the case it breached the EU law obligation of transparency.
26. The UT had turned a “Nelsonian eye” to EU law. It had come to a conclusion entirely at odds with the facts. These issues were not going to go away, even if this tribunal also refused to make a reference, so it was preferable that a reference now be made by this tribunal as “the last court left standing” rather than leave the courts to speculate on what the CJEU would have said. A definitive ruling was preferable to a succession of fruitless appeals. Duties of good faith continued to apply during the transition phase. There was also, in terms of art 19(1) of the Treaty on European Union, a duty on member states to provide remedies sufficient to ensure effective legal protection in the fields covered by Union law. In terms of art 47 of the EU Charter of Fundamental Rights, everyone whose rights were guaranteed by EU law had a right to an effective remedy. A reference would not add greatly to expense and the issue would be put to bed once and for all. Not only should a reference be made, our duties were such under EU law that one must be made.
27. On the matter of denial of an effective remedy in the absence of a referral, the Dean of Faculty submitted that no one here was being denied a remedy: it was just that the remedy in domestic law was different (i.e. judicial review). Where third party rights were involved a court or tribunal of limited jurisdiction was not the appropriate forum; the Glasgow Airport case at page 48A.
28. As to the use of the CMA’s findings in the TalkTalk case as the factual matrix for a reference in this case, it was trite that findings-in-fact make in a different forum were neither relevant nor admissible; Calyon v Michailaidis 2009 UKPC 34, per Lord Rodger of Earlsferry. In this case the findings of the CMA investigation could not simply be “bolted on” to our decision. There was, in any event, a fundamental difference as to fact between the parties here, one not dealt with by the CMA, as to whether the lighting of the fibre gave rise to the imposition of a tax and, therefore, opened up EU issues of equality and consistency in taxation, as was the appellant’s position, or was only an indicator of occupancy, as was the Assessor’s position.
29. The learned Dean of Faculty was taking more from Calyon than was justified. The tribunal could not simply pretend that the CMA inquiry had not happened. It had happened and it had found that the present approach of the rating authorities was causing distortions. That gave rise to live questions of EU law. EU law overarched the rating and the competition “silos”. It was possible to become used to thinking that EU law was not relevant – and it wasn’t in an area not regulated by EU law – but this was a highly regulated area. That had the effect of “dragging the NDR world out of its silo” and made a reference to the CJEU not only appropriate but necessary.
30. It seems to us that the question of competency arises at two levels. First, whether the appeal itself is competent and then, second, if it is, whether a reference to the CJEU is competent.
31. In order to answer the first question one has to identify what the appellants seek to achieve by bringing this appeal. It may be thought that a full frontal, root and branch attack on what the Assessor has done raises a question of vires or something that can be characterised as a “fundamental and antecedent question” which would, as happened in the Glasgow Airport case, take it out of the Tribunal’s jurisdiction which is primarily to do with questions of value; Armour supra.
32. All challenges to an entry in the valuation roll begin life as appeals to the local VAC under sec 3(2) of the Local Government (Scotland) Act 1975 which allow such appeals by any proprietor, tenant or occupier of lands and heritages who “considers himself aggrieved” by an entry (relating to him) in the valuation roll. Paragraphs 2.5 and 2.6 of the Notice of Appeal in this case spell out the basis upon which the appellants consider themselves “aggrieved” by the entry make in the 2010 roll:
“2.5 The assessor’s approach on this matter was fundamentally vitiated by his error (in classification (in classifying the Appellant as being in rateable occupation of the property collected under Property Reference Number 05/99/Z99655/0103 when it “lit” the fibres, but in not applying the same classification criteria to, among others, BT) and in his approach to the survey and valuation of the property deemed to be occupied by the Appellant by applying the Direct Rental Comparison (“DRC”) method to individual lengths of fibre used by the Appellant in supplying its electronic communications services while adopting for BT a methodology which was wholly non-transparent and did not allow for individual valuation of individual lengths of fibre used by BT in supplying its electronic communications services.
2.6 It is on these grounds that the Appellant considers itself to be ‘aggrieved’ by the 2010 entries … .”
33. We consider that the questions there raised are questions to do with valuation methodology and therefore within our jurisdiction. This seems to be confirmed by what the appellants say we should do in the event of the appeal being successful. That is dealt with in the next paragraph of the Notice:
“2.7 If the Tribunal ultimately accepts the Appellant’s submissions as to the fundamental incompatibility with EU law of the Assessor’s approach then it should simply specify the amount of the valuation which should be substituted for that entered in the Valuation Roll at nil, since there is no proper basis in national law for the NDRs to be levied on the Appellant’s use of the specified collection of telecommunications fibre and equipment … in its provision of electronic communications services”.
34. Although the reference to there being no basis in national law for NDR to be levied on the appellant suggests something more fundamental than a question of value, the fact that what we are asked to do is vary the rateable value to “nil” allows us to treat the matter as one of valuation and, therefore, within our jurisdiction, rather than some extraneous fundamental and antecedent question with which we cannot deal.
35. We now turn to the competency of making the reference. On that matter we accept that the jurisdiction of the Tribunal, as a matter of domestic law, is co-extensive with that of the VAC. That does not take us very far, however, because the question that matters is how EU law applies to each. On that question the answer seems very clear from the decisions of the CJEU in the two cases relied upon my Mr O’Neill. The fourth question referred to the Court in Fratelli was “whether administrative authorities, including municipal authorities, are under the same obligation as a national court to apply the provisions of [the relevant Directive] and to refrain from applying provisions of national law which conflict with them”. Under reference to earlier cases the Court held (at para 29) that “wherever the provisions of a directive appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may be relied upon by an individual against the State where that State has failed to implement the directive in national law by the end of the period prescribed or where it had failed to implement the Directive correctly” and went on (at para 31) to conclude:
“It would … be contradictory to rule that an individual may rely upon the provisions of a directive which fulfil the conditions defined above in proceedings before the national courts seeking an order against the administrative authorities, and yet to hold that those authorities are under no obligation to apply the provisions of the directive and refrain from applying a provision of national law which conflicts with them. It follows that when the conditions under which the Court has held that individuals may rely on the provisions of a directive before the national court are met, all organs of the administration, including decentralised authorities such as municipalities, are obliged to apply those provisions.”
36. The matter is even more emphatically stated in the Garda Siochana case, where the Court said, at para 38 and 39:
“38. As the Court has repeatedly held, [the] duty to disapply national legislation that is contrary to EU law is owed not only by national courts, but also by all organs of the State – including administrative authorities – called upon, within the exercise of their respective powers, to apply EU law.
39. It follows that the principle of primacy of EU law requires not only the courts but all the bodies of the Member States to give full effect to EU rules”
37. It seems clear from all of that that Scottish VACs were obliged to apply EU law, where it was applicable, while the United Kingdom remained a member of the European Union and during the transition period. It would certainly have been surprising to see a VAC make a reference to the CJEU, if only because a case of that complexity would almost certainly have been referred, like this one, to this tribunal, but that is not to say that it would have been incompetent. Even if we are wrong in that, we have no doubt that this tribunal, which functions much more like a court of law than many tribunals, has the power to make a reference. It was done by our sister organisation, the Scottish Land Court, in Feakins (supra) without anyone questioning its competency. Although the Land Court is, in both name and substance, a court and not a tribunal, we see no ground for a distinction between it and the Lands Tribunal on this question. Finally, for what it’s worth, we note that no one seems to have suggested, in the English proceedings, that the UT lacked the power to make the reference which was being asked of it.
38. Accordingly we reject the Assessor’s challenge to the competency of making a reference.
39. The circumstances in which we are asked to make this reference are unfortunate in that they have not allowed us time for a full exploration of the facts and issues. After lying dormant for almost seven years this appeal was hastily reactivated in May of this year for fear that time was running out in the English courts. As it happened, time did not run out in the English courts in that the UT issued its decision only five days after Mr Paul’s email, referred to above but that decision was, of course, adverse to the appellants. The hearing before us therefore had the character of a last desperate attempt to get to the CJEU in the dying days of the Brexit transition period. That is not reprehensible in any way but it has had the practical effect that we were being asked to decide on the basis of a half-day debate something which had occupied the UT for five days and behind which there is a longer history, to which we now turn.
40. Up until now we have been referring to the UT case as “the English proceedings” but there have been other English, and, indeed, European, proceedings involving the appellants going back almost 20 years. They are referred to in the decision of the UT, from which we take the following chronology.
41. The starting point is 2003 when Vtesse (the appellants have been known by various names over the years as their company structure has changed but, for convenience, we will refer to them in what follows simply as “Vtesse”) proposed an amendment to the rating list for the District of Slough for the five-year period from 1 April 2000 on the basis that it was only in rateable occupation of its “own build” part of its fibre network, not the fibres leased from others. On 16 July 2004 the local Valuation Tribunal agreed. Their decision was appealed to the Lands Tribunal (the precursor, for rating purposes, of the Lands Chamber of the UT) by the Valuation Officer (“VO”).
42. On 23 November 2005 the Lands Tribunal upheld the VO’s appeal against the July 2004 decision of the local Valuation Tribunal and held that Vtesse were in rateable occupation of the leased fibres as well as the owned ones (Bradford (VO) v Vtesse Networks Ltd reported at  RA 57).
43. That decision was appealed to the Court of Appeal. On 19 October 2006 the Court of Appeal dismissed the appeal (Vtesse Networks Ltd v Bradford (VO)  RA 427) with the result that, as a matter of domestic law, Vtesse were liable to pay NDR on the whole of their fibre network. The matter was then remitted to the Lands Tribunal to hear valuation evidence.
44. The matter having been remitted to it by the Court of Appeal, the Lands Tribunal issued its decision on valuation on 7 November 2008 (Bradford (VO) v Vtesse Networks Ltd  RA 105). That decision led to appeals by both the VO and Vtesse.
45. Among the arguments advanced by Vtesse in that appeal were (i) that the VO was required to take account of BT’s assessment in deciding Vtesse’s rateable value because of EU competition law and (ii) that the Tribunal had been wrong to reject an argument based on European Commission Directive 2002/77 on competition in the market for electronic communication networks and services because of the European Commission’s decision on a complaint of unlawful state aid to BT made to the Commission by Vtesse under art 88(2) of the Treaty Establishing the European Community (as to which see below). A request was also made for a reference to the CJEU under art 267. These arguments and that request were rejected by the Court of Appeal on 28 January 2010, essentially on the grounds that equality of rating was a fundamental principle of rating law and that English domestic law did exactly that which European law required (Vtesse Networks Ltd v Bradford (VO)  RA 69).
46. While all of that was going on the European Commission were investigating a complaint made by Vtesse on 17 February 2004 alleging unlawful state aid to BT. It issued its decision on 12 October 2006 (Vtesse Networks Ltd, Re the Complaint of  RVR 59). At page 77 it said this:
“174. In conclusion, it should be recalled that business rates are a tax on the value of the property concerned. They are not a tax on profits or revenues. They are normally applied on all non domestic properties, and consequently are applied to all telecommunications networks. According to British case-law, all telecommunications networks are valued as a whole. There are several methods for valuing such property. When all methods can be applied, they should result in the same valuation, the use of a specific valuation method depends on the circumstances of the case.
175. It now appears that the VOA has applied to BT and Kingston the general rules concerning business rates as laid down in the legislation and case-law. It is clear that the valuation of BT’s and Kingston’s hereditaments as well as the revisions of these rateable values, are carried out on the basis of a different method than in the case of their competitors. However, the Commission can conclude that there is no evidence that the use of this different method is not justified by the objective differences between those firms and their competitors and by the extent of the evidence available to the VOA.”
47. It will be seen, therefore, that by the time of what we have been calling “the English proceedings” came about the following things had already happened:
(a) Vtesse had been found to be in rateable occupation of all the fibres comprising their network, leased as well as owned;
(b) on the European front there had been (i) a determination from the European Commission that business rates were a tax on the value of property, not a tax on profits or revenues, (ii) an acknowledgement by the Commission that the application of different rating methodology to different hereditaments could be objectively justified by differences between operators and (iii) a finding by the Commission that there was no evidence that the different treatment of BT had resulted in a competitive advantage to them over Vtesse;
(c) it had been decided that a Valuation Officer was not obliged to make a comparison between BT’s assessment and Vtesse’s assessment;
(d) it had been held that that European law added nothing to domestic (English) rating law in that equality of rating treatment was already a fundamental principle of domestic law; and
(e) a request for an art 267 reference had been refused.
48. The purpose of setting out the foregoing history is to show how thoroughly the ground on which we now find ourselves had been traversed even before the stage of the proceedings before the UT. It shows that by the time matters came before the UT many of the issues with which this appeal is concerned had been subject to judicial determination, in every case unfavourably to Vtesse’s position.
49. We now come to the matters decided by the UT in the English proceedings. We note, first, that Vtesse’s position there was something short of the “full-frontal challenge” we have in the present case, as appears from para 62 of the UT’s decision where their position was summed up by one of their witness, the foresaid Mr Paul, in answer to a question from the Tribunal as to why no valuation evidence had been led:
“Mr Paul said, in answer to the Tribunal’s question, that the point of these proceedings was to establish fair and equal treatment of the ratepayer with the dominant operator in the market with which the ratepayer competes, namely BT. The ratepayer’s contention on this appeal is that EU law mandates that it and BT be treated equally as regards (the quantification of) liability to NDR, and that accordingly the valuation officer is required to apply the same value (£20/km) that is alleged to represent what BT pays by way of NDR for its long-distance network and the same value as for BT’s operational building and plant and machinery.”
50. As is clear from that quotation, it was not Vtesse’s position that the same rating methodology as was applied to BT should be applied to them but that the same result, in terms of rateable value per kilometre, should be applied.
51. That position raised two issues. Firstly, whether the BT hereditament could be disaggregated so as to arrive at a reasonably accurate rate/km for the fibre network component. That was something Vtesse offered to prove before the UT. The second issue was what the proper comparison was. Was it a comparison of the two hereditaments or was it, as was Vtesse’s position, between the two companies, as telecommunications operators and competitors in the same market.
52. The conclusion the UT arrived at, having heard evidence, on these matters was that disaggregation of the BT hereditament in the way described was not possible and (accepting that the proper comparison was between the hereditaments) that the two hereditaments were vastly different and, therefore, not comparable. On the comparability issue the UT said this;
“164. [The] distinction between the ratepayer’s and BT hereditaments has been recognised many times by courts, tribunals and regulators in recent years, both domestic and European. These decisions have been described at length above and none of them supports the contention that the two hereditaments are comparable. They are not comparable and there is no evidence to support the argument that they should properly be valued by the same method; on the contrary, the ratepayer is properly valued by the direct rental comparison method and BT by the R & E method, given the very substantial difference between the hereditaments that we have summarised in detail above.”
53. The UT then went on to hold that the VO had correctly valued Vtesse’s hereditament “in accordance with conventional valuation principles”, summarising the position as follows:
“177. … The ratepayer’s concern is that the two operators should be treated the same for the assessment of NDR in respect of market sectors where they compete directly. The ratepayer considers that by being valued as a single hereditament on the R & E method BT gains a competitive advantage. That perceived discrepancy can be resolved either by valuing BT’s fibre network at £250 per route km for a fibre pair or, as the ratepayer seeks, by reducing the ratepayer’s rateable value in line with the basis upon which the BT fibre network has been assessed by Mr Paul by an attribution of cost. Neither approach is justified in our view. The ratepayer and BT hereditaments have been fairly and properly valued on their own terms but, necessarily, by different valuation methods. That is because the hereditaments are fundamentally distinct. The mode and category of occupation of the ratepayer’s hereditament is but a subset of the mode and category of occupation of the BT hereditament, which must be valued as a whole and which is orders of magnitude larger in scale and diversity.”
54. Having reached that position on the basis of domestic law, the UT then went on to consider whether EU law required a different approach. The same arguments were urged upon it as have been urged on us and the questions which we were asked to refer to the CJEU are also the same. Having set out these arguments and questions the UT went to what we consider to be the heart of the matters in the following passage, starting half-way through para 189:
“189. … The relevant question is: by what criteria is difference or similarity to be assessed in a case of this nature? For cases to have to be treated alike, is it sufficient that the occupiers of two different hereditaments are both providers of electronic communications services; or must there also be similarity in the characteristics of the hereditaments? The appellant’s case is that it suffices that it and BT are both electronic communications providers and that a component part of BT’s hereditament is the same or similar to the ratepayer’s hereditament.
190 It seems to us that, even if one accepts the applicability of the principles of non-discrimination, on the basis that EU law would regard the NDR levied on BT and the ratepayer as a tax on the provision of services, the necessary next step when addressing comparability and equal treatment is to recognise the nature and purpose of the fiscal measure. NDR are a tax triggered by the occupation of business property where the amount of the tax depends on the value of the property:
“The comparability of the situations must be determined and assessed in particular in the light of the subject matter and purposes of the measure in question. The principles and the objectives of the field to which the act relates must also be taken into account …” (Case C-112/16 Persidera SpA EU:C:2017:597 at [para46])
The criteria of difference or similarity that is fundamental to NDR is the identity and characteristics of the property itself, not the occupier, even though specialist property may only be occupied by certain types of business. In other words, in the context of NDR, it cannot be sufficient – for EU law purposes – to use as the criterion of similarity or difference the fact that the rateable occupiers are competitors in the electronic communications market.”
55. We find that reasoning compelling. In this appeal the appellants are not saying that this is not a rating matter at all. They do not, therefore, ask for the deletion of the relevant entry from the Roll nor for a finding that their occupation of the fibre network is not rateable, only that the assessment should be changed to nil. The appeal therefore has to be resolved as a matter of rating law. (Were it otherwise, we would certainly not have jurisdiction.) NDR are a tax on the value of property, as the European Commission in its determination acknowledged. Of necessity, therefore, any comparison has to be between hereditaments, not their occupiers. For such a comparison to be valid and meaningful it has to be between two comparable hereditaments. We do not have that here: the conclusion of the various litigations in England being that the hereditaments of Vtesse and BT are vastly different.
56. At para 194 of their decision the UT asked themselves what the effect would be if the CJEU answered the first question in the proposed reference in the affirmative, saying this:
“Accordingly, if we were to refer the first question to the CJEU and the ratepayer succeeded in persuading that court that the answer to the question is that, for EU law purposes, the NDR are to be classified as a tax on the provision of electronic communication services the answer seems to us to get the ratepayer nowhere. It simply imports into the process of valuing the ratepayers long distance twin-fibre network principles of equal treatment that are already inherent in the valuation approach and in domestic law, as the Court of Appeal explained in its judgment on the ratepayer’s appeal over 10 years ago.”
57. The reference to the Court of Appeal judgment 10 years ago is a reference to a passage from the opinion of Lloyd LJ in that case (Bradford (VO) v Vtesse Networks Ltd  RA 69) which is reproduced at para 46 of the UT’s decision:
“36. Equality of rating is a fundamental principle of rating law … Accordingly it does not seem to me that the ratepayer’s contentions gain any additional force from reliance on European Union law. In the end counsel for the ratepayer relied on European law for the proposition that the burden was on the Government to ensure, and where relevant to demonstrate, that there was equality between ratepayers. This case is altogether unlike those he cited as examples of unequal treatment, where the inequality, whether obvious or not, was built into the system in one way or another. Here the whole basis of English domestic law is exactly that which European law requires it to be, namely that like cases are to be treated alike.”
58. In Scotland, as in England, the rating system treats all ratepayers alike in the sense, and to the extent, that it applies to each hereditament the methodology best calculated to arrive at its annual value. There is a common aim – to arrive at an annual value – but a variety of methods of getting there. To apply the same methodology to all hereditaments would be unfair because hereditaments vary so greatly. So the application of the R & E method to BT and the comparative method to the appellants is not unfair. That it produces what the CMA called an NDR differential seems beyond dispute and that seems to the appellants, and others in their position, to be very unfair but they are making the wrong comparison. Unfairness, from a rating point of view, would only arise where other ratepayers with comparable hereditaments were being treated preferentially.
59. That seems to us to dispose of what the UT called the “gateway” question as to whether NDR are a tax on the appellants’ provision of electronic communications services in EU law. Even if they are, the valuation exercise remains the same and incorporates the requirements that the methodology appropriate to the particular subjects being assessed is employed and that like cases are treated alike. We do not, see, any more than the UT did, what the importation of EU principles of fairness, non-discrimination and transparency adds to that. Nor would we find the answers to the remaining questions of assistance, indeed, not having had the benefit of a full exploration of the facts and issues, we would have been in some difficulty as to how to put these questions to the CJEU in a properly informed way.
60. Notwithstanding the foregoing reasoning we considered whether we should, with time running out and being the “last court left standing”, make the reference asked for on a pragmatic basis, to allow these questions which have been exercising the appellants so long to be answered quantum valeat. That would, however, be to shirk our responsibilities. As the Dean of Faculty reminded us, national courts should apply a measure of restraint in the matter of making references and to make a reference without being clear that it was necessary to do so, on the basis of inadequate information (not having heard evidence) and in the face of two refusals to make such a reference from English courts with much greater familiarity with the issues than we have, would simply have been wrong. We would say, however, that in deciding not to make the reference we were greatly comforted by the description of the European Commission of the nature of NDR as a tax on property, not profits and revenue, and their acknowledgement that the use of different methods of calculating that tax, depending on the nature of the property, could be justifiable. The Commission is not the CJEU, of course, but it cannot be without significance that the only organ of the EU which has looked at this situation came to a conclusion adverse to Vtesse.
61. We have ordained the appellants to submit written proposals for further procedure, if any, in the appeal within 21 days.