LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Kingarth Lord Clarke Lord Malcolm	[2010] CSIH 63 Case Ref: XA28/10 OPINION OF LORD KINGARTH on the STATED CASE in the Appeal by THE ASSESSOR FOR LOTHIAN Appellant; against ROYAL BANK OF SCOTLAND PLC Respondents: _______

Act: Gill, Advocate; Simpson & Marwick

Alt: MacIver, Advocate; Dundas & Wilson

2 July 2010

[1] This appeal relates to premises occupied by the respondents at 142-144 Princes Street, Edinburgh. Following a hearing on 8 December 2009, the Lothian Valuation Committee (a) refused an appeal by the respondents against the rateable value of £447, 600 entered in the roll in respect of the period 1 May to 31 August 2008, the entry representing a reduction from the entry of £523,000 made at the 2005 Revaluation to take account of a material change of circumstances caused by the first stage of works forming part of the Edinburgh tramway project (the respondents having claimed entitlement to a greater reduction), and (b) allowed an appeal by the respondents against the said entry of £523,000 for the period between 21 February 2009 and December 2009 on the ground that there had been a material change of circumstances by reason of the second stage of tramworks. A 20% reduction in respect of the relevant period (albeit calculated only by reference to the lower floors), consistent with the previous reduction, was allowed. The Assessor has appealed against the Committee's decision, in particular in the latter respect.

[2] This appeal gives rise to the same broad questions as are raised in the appeal The Assessor for Lothian v H & M Hennes & Mauritz UK Limited, and this decision falls to be read with the decision issued today in respect of that matter.

[3] The premises are sited next to the House of Fraser department store at the West End of Princes Street. They are situated within that short section of Princes Street shops from the foot of Lothian Road to South Charlotte Street which was affected by the first stage of tramworks at the same time as works in Shandwick Place. The top two floors are used for private banking and offices for the branch of the bank, the floors below being valued by comparison with shop premises.

[4] The Committee begin to record their findings in fact by stating that "the findings in the Stated Case in Lothian Assessor v H & M Hennes and Mauritz UK Limited and Others are repeated herein brevitatis causa."

[5] In a section headed "The effect on Value", and apparently relating to both periods during which the premises were affected by tramworks, the Committee make certain findings as to the effects on the premises. It is found inter alia

"On a joint site visit by Mr Martin of GVA Grimley and Mr Skinner of the Assessor's department, the Branch Manager confirmed the physical impact of the tramworks at the subjects to include noise, vibration (shaking windows), a reduction in customer numbers to the branch and confirmation that reasons for this included the disruptive nature of the tramworks at the branch, as explained by customers the branch had contacted. The pavement outside the property had been reduced in width as a result of the barricades by approximately 1.7 metres. He also mentioned breaks from time to time in water and electric supplies. All of these circumstances affected adversely the value of the subjects of appeal, at least as to areas valued on the retail basis, being the basement, ground and first floor areas, during the period of the tram construction works. The extent to which beneficial occupation of the subjects of appeal can be enjoyed has been materially reduced during the period of the tram construction works.

... ...

Respondents Production 2/5 (City Centre Footfall Statistics) shows footfall recorded at four counters on Princes Street installed by the City Council. The first at a Car Phone Warehouse was at an area not affected by tram-works. The other three were affected and the average reduction in footfall was 20.70% compared to the previous year."

That these findings encompass both periods is, it seems, confirmed by the statement in the body of the Reasons that "The material change of circumstances in the period 21 February to December 2009 was exactly the same in its effects as the earlier stage...".

[6] In a separate section headed "The Assessor's Practice" the Committee record that it was found inter alia

"The Assessor made an end allowance of 20% restricted to the basement, ground and the first floors during the first phase of the tram-works 1^st May to 31^st August 2008. The second stage claimed by the Respondents covered 21^st February to 29^th November 2009. The Assessor treated the second and third floors as offices and valued them accordingly. Respondents' production 2/1 (Tramworks Disruption Allowances Across Edinburgh) and 2/4 (List of Comparisons in Edinburgh extending to seven pages) shows other comparable properties which had been awarded a standard 20% end allowance during tram-works outside. Respondents Production 3/1 (Summary of Comparisons) lists the types of subjects given the end allowance during the first stage of works in Edinburgh. Respondents production 3/2 shows a photograph of the Royal Bank of Scotland Branch at 34 Leith Walk, the whole of which property was granted a temporary allowance of 20% after negotiation by the Assessor for the period that the tram construction works were being carried on at that location.

... ...

The Harvey Nichols Department Store in St Andrew Square and the House of Fraser Department Store next door to the present subjects were both given a 20% end allowance during the first stage of tram-works outside, as was Halifax Bank of Scotland in Shandwick Place."

[7] In rejecting the respondents' appeal against the reduction allowed in respect of the works in 2008, the Committee explained that they were not satisfied that there was any evidence available to them proving an effect on the value of the office accommodation caused by the tramworks.

[8] Section 2(1)(d) of the Local Government (Scotland) Act 1975 (the 1975 Act) entitles the Assessor, at any time while the valuation roll is in force, to alter the roll to give effect to any alteration in the value of any lands and heritages that is due to a material change of circumstances. Section 37(1) defines "material change of circumstances" as a change of circumstances affecting their value.

[9] Section 3(4), so far as relevant to this case, provides that, without prejudice to Section 3(2), which relates to the right of appeal against a new entry in the Roll;

"... the proprietor, tenant or occupier of lands and heritages which are included in the valuation roll may appeal against the relevant entry but only on the ground that there has been a material change of circumstances since the entry was made ... and, notwithstanding the definition of "material change of circumstances" as set out in section 37(1) of this Act, if in an appeal under this subsection on the ground of a material change of circumstances it is proved that there has been a change of circumstances which has materially reduced the extent to which beneficial occupation of the lands and heritages can be enjoyed, the appeal shall not be refused by reason only that the change of circumstances has not been proved to have affected the value of the lands and heritages to any specific extent."

[10] In support of this appeal, junior counsel for the Assessor adopted the two principal arguments, mutatis mutandis, which had been advanced by senior counsel in the H & M Hennes and Mauritz UK Limited and Others appeal. I deal with each of these in turn. It is again, however, important to stress that it was made clear at the outset that the challenge advanced was to the Committee's finding that there had been a material change of circumstances, but not to the percentage reduction applied.

[11] As previously noted, the first submission was that it was clear from the decision, in particular the section headed Reasons, that the Committee had proceeded on the erroneous basis that, having established a practice relative to retail premises affected by tramworks elsewhere, the Assessor was bound to follow that practice in respect of Princes Street; or putting it another way, that the Committee proceeded wrongly on the basis that the practice established created an irrebutable presumption in favour of a similar reduction. Alternatively, it could be said that the Committee had erroneously proceeded on the view that, against the background of previous practice, the legal onus was on the Assessor to establish that no allowance should be made.

[12] I am not persuaded that the Committee erred in this respect in this appeal any more than in the H & M Hennes and Mauritz UK Limited and Others appeal. Although matters could at times have been better expressed, a fair reading of the decision as a whole suggests that the starting point for it was the Committee's findings (in addition to the findings already made in the H & M Hennes and Mauritz UK Limited and Others appeal) in relation to the particular effects of the works carried on outside the premises.

[13] It is true that, in this appeal, there could be said to have been a particular concentration on the practice of the Assessor, especially in the section of the Reasons at page 7 of the Stated Case. Once more, however, it appears, on a fair reading, that this concentration is related mainly, if not entirely, to the question of what percentage deduction should be applied - a matter not challenged. In so far as the Committee founded upon practice in relation to the primary underlying question of whether there had been a material change of circumstances, it was, it seems clear, prayed in aid as one element in the overall assessment, which (subject to the question of error, to which I turn below) the Committee was entitled to do. The reason, however, that there could be said to have been particular concentration on practice in this appeal is quite simply that it was inevitably a material factor that the Assessor had not only generally in respect of other premises allowed a 20% reduction, but had specifically allowed such a reduction (at least so far as relating to the lower floors) in respect of these very premises in respect of works carried out during the first stage. In these circumstances, the Committee, in my view, was perfectly entitled to take the view that the specific history relating to these premises placed at least an evidential onus on the Assessor to explain why if, as the Committee found, there was no material difference in the effects of the tramworks between in the two periods, there should be no similar reduction for the later period. The Committee was plainly not satisfied that any such distinction could be drawn, concluding in the relevant paragraph of their Reasons that

"The material change of circumstances in the period 21st February to December 2009 was exactly the same in its effects as the earlier stage and the Committee considered that, as a matter of consistency and good practice, the same allowance should apply during that second stage."

[14] In the course of her evidence the Assessor, it seems, endeavoured to meet that evidential onus by submitting that the relevant allowance, and allowances in respect of certain other premises, had been made in error. Valuation staff, it was said, had applied allowances made in respect of properties in Shandwick Place (and elsewhere) without the application of professional opinion as to whether there should have been any reduction, and had not understood the intention of the Assessor and the Deputy Assessor that specific assessment should have been made in respect of effects on premises in Princes Street. Counsel for the appellant submitted that in so far as the Committee had rejected this evidence it had erred, in particular in so far as it said "The Committee was not persuaded on the evidence that there had been an error in the valuation of this subject or the application of the 20% elsewhere, and were not prepared to make a finding, which Mr Gill invited them to do, which might trigger corrective notices under section 2(1A)." It was argued that the Assessor's evidence had not been directly challenged and that no proper basis had been set out, nor could there be, for regarding her testimony as incredible.

[15] If the Committee had truly purported to question the Assessor's integrity or honesty, I would have had complete sympathy with counsel's submission, but that, in my opinion, is not a proper reading of what the Committee says, nor was this ever suggested on behalf of the respondents. On a fair reading of the decision at the relevant point, it seems to me to be reasonably clear that the Committee is saying that they were not satisfied that they had sufficient direct evidence as to the circumstances in which the entries were made to enable them to be satisfied that they were not the result of the application of any valuation opinion, which was the thrust of the Assessor's position (and in this connection it may be noted that the Committee refer to the Assessor's claim of "a mistake, the details and origin of which were not disclosed fully or not known", and the Assessor was cross-examined on the basis inter alia that the valuers who made the relevant entries were qualified surveyors). If not, the Committee was saying simply that it could not be satisfied, in light of the findings in this and the other appeal, that the decision to award a 20% allowance could be said to have been wrong. In either case the Committee was expressing a decision on the evidence which was open to it, and with which this court could not interfere.

[16] As to the second principal argument adopted - which related to the lack of "hard" evidence to justify the Committee's conclusion - I am not persuaded that there is any more force in it in this appeal than in the H & M Hennes and Mauritz UK Limited appeal, and I reject it for similar reasons. It may be noted that the specific findings made included, in this case, in addition to findings of the physical effects etc of the tramworks, findings of reduction in numbers of customers to the branch and footfall reductions.

[17] In the course of argument, counsel also criticised the refusal by the Committee to allow certain proposed adjustments. I am not persuaded that it can be said that, in respect of any of these, recognition of the matters referred to would have made any material difference to the Committee's decision.

[18] Finally, counsel submitted, albeit only tentatively, that if the court was with him on all of the arguments previously advanced, it would be open to hold that the Committee should have made a finding that the relevant entry in respect of the 2008 period had been made in error, which finding the Assessor would have had to give effect to under section 2(1A) of the Local Government (Scotland) Act 1975. That section provides so far as relevant

"... the Assessor for any valuation area shall, as respects that area, alter the roll to give effect to any decision following an appeal ... to a court, tribunal or valuation appeal committee and such alteration shall have effect from such date as shall be determined by the court, tribunal or committee".

Such a finding, it was argued, would have been open given that the respondents had challenged the relevant entry before the Committee, and notwithstanding that the error was not of a kind which the Assessor could have corrected at his own hand (in particular "any error of measurement, survey or classification or any clerical or any arithmetical error in any entry therein" - section 2(1)(f).)

[19] Given my opinion on all of the other matters raised by counsel, it is unnecessary to deal with this submission, save to say that I do not find it in any way persuasive - not least because it is not open to a Committee, on appeal, to increase an Assessor's valuation (Armour, para 5-37).

[20] In all the circumstances, I propose that this appeal should be refused.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Kingarth Lord Clarke Lord Malcolm	[2010] CSIH 63 Case Ref: XA28/10 OPINION OF LORD CLARKE on the STATED CASE in the Appeal by THE ASSESSOR FOR LOTHIAN Appellant; against ROYAL BANK OF SCOTLAND PLC Respondents: _______

Act: Gill, Advocate; Simpson & Marwick

Alt: MacIver, Advocate; Dundas & Wilson

2 July 2010

[21] I agree with your Lordship in the chair that, for the reasons given by your Lordship, this appeal falls to be refused. In that connection I would refer to my own opinion in the case of Lothian Assessor v H & M Hennes & Mauritz UK Limited and Others. As regards the present appeal, I am in full agreement with your Lordship in the chair that the Committee's decision does not fall to be read as questioning the Assessor's integrity or honesty. The Committee were, for the reasons given by your Lordship, simply, in my view, stating, perhaps in fairly robust language, that the evidence placed before them did not allow them to reach the conclusion that entries in respect of other subjects, where a 20% allowance had been allowed, had not been arrived at by the application of any evaluation opinion.

[22] Lastly, although the point is not necessary for the determination of this appeal, like your Lordship in the chair, I found totally unpersuasive the argument advanced on behalf of the Assessor regarding the possibility of section 2(1A) of the 1975 Act, allowing the court to make a finding on the lines put forward by counsel for the Assessor.

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Kingarth Lord Clarke Lord Malcolm	[2010] CSIH 63 Case Ref: XA28/10 OPINION OF LORD MALCOLM on the STATED CASE in the Appeal by THE ASSESSOR FOR LOTHIAN Appellant; against ROYAL BANK OF SCOTLAND PLC Respondents: _______

Act: Gill, Advocate; Simpson & Marwick

Alt: Maciver, Advocate; Dundas & Wilson

2 July 2010

[23] I have had the benefit of reading a draft of Lord Kingarth's opinion. For the reasons he gives, I agree that the appeal should be dismissed. There is nothing that I can usefully add.