Part 4: Scope of Proposal
The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.
Executive Summary
Proposals: Part 4 covers the scope of proposal in relation to the grounds of proposal. cases considered include Patel v Jackson (2018), Merlin Group Entertainments v Cox VO (2018), Courtney PLX v Murphy (1998) Davey v O’Kelly (1999), Galgate Cricket Club v Doyle (VO) (2000), O’Brien v Clark (VO)(2006), Leda Properties v Howells (2009), British American Typewriters v Hill VO (1962 Firkins v Dyer (VO) (1972) and, S Thomas and Co (Nottingham) Ltd v Emett (VO) (1955)
1.1 CONSIDERING THE GROUNDS
The grounds stated in the proposal should be carefully considered because they may limit the alteration which can be made to a list consequent on that proposal.
You cannot agree to delete an entry on a proposal that has sought a reduction, although you may following discussion of that proposal decide it is appropriate to delete the entry by VO notice. Similarly you cannot agree to reduce a rateable value on a proposal that has only sought a deletion of the Rating list entry.
There is a common although misplaced belief, that you can agree anything on a proposal; you can’t, any agreement must be within the scope of the proposal, just as any VT or Upper Tribunal decision must also be within the scope of the proposal.
Case law confirms this.
The specific wording on the proposal is critical to how it is treated (eg invalid - Wales (all lists) and England 2010 and earlier, or incomplete/ unsubstantiated for England 2017 (CCA) and to the extent of any action that may follow to the Rating List as a consequent. It should be clear and stand on its own merits as to its grounds and requirements. The VO/ Tribunal cannot infer any additional knowledge that may be in their possession as to the intentions of the Proposer.
1.2 APPROACH
It is well-established that when considering a proposal is limited to its scope on which it has been made. See Courtney Plc v Murphy (VO), Davey (VO) v O’Kelly and Leda Properties v Howells (VO).
The grounds for making a proposal are set out in Reg 4(1) of the Alterations Regulations (SI 2009/2268) for England and the corresponding legislation for Wales.
Reg 6(4) requires the proposal to include the grounds on which it is based and details of the proposed alteration of the list. (For CCA there are further requirements following amendments to the regulations in 2017 and 2018 - see Part 8 of this Section of the Rating Manual)
For example, there is a clear distinction Reg 4(1)(h)between proposals asking for deletion and those asking for reduction under Reg4(1)(d).
Therefore if a proposal was submitted under Reg 4(1)(d) - alteration the grounds should be confined to this and the option to delete a property cannot form part of the scope of the proposal.
It is therefore important that the exact wording on the form is carefully examined in detail when considering its scope and what can be construed from the proposal when strictly interpreting the language used .
In Leda Properties, the words ‘incorrect, excessive and bad in law’ were held to be ‘patiently insufficient’ to permit the ratepayer to seek a change in description or reduction when it was not ‘reasonably possible to construe the completed form as encompassing’ either alteration
Following the decision of the Supreme Court in Newbiggin v Monk (2018),a proposal to reduce an assessment to RV£0 because it was incapable of beneficial occupation was considered to be akin to deleting an assessment following VO practice of keeping entries in the rating list.
However for 2017, it is important that the scope of proposal is strictly followed, if a proposal has requested a reduction and the property on the facts should actually be deleted, then the correct course of action is that the proposal should be withdrawn and a VON issued to delete the assessment from the list. Likewise, if a proposal is asking for a deletion and should be reduced, then the proposal should be withdrawn and a VON issued for the amendment.
2.1 Patel v Jackson (VO) [2018] UKUT 420 RA/37/2018
The proposal, completed by a rating professional, stated clearly that there had been a material change of circumstances (MCC) at the subject property (a hotel), “comprising the loss of one bedroom to provide staff accommodation”.
However, the alteration sought by the appellant in his statement of case was on the grounds of an MCC in that the physical change was due to a kitchen breakfast room being extended resulting in the loss of a bed-room and additional floor space being lost from a second bedroom. This had involved the relocation of a partition wall.
Both the VTE and the Upper Tribunal were limited in their jurisdiction to considering the scope of the proposal. Here, the reason stated in the proposal was quite different was that put forward at the hearing, so the Tribunal did not have jurisdiction to consider the correct rateable value. The appeal was therefore dismissed.
2.2 Merlin Group Entertainments v Cox (VO) [2018] UKUT 0406 RA/24/2018 - Alton Towers
This recent case considered proposals made on the grounds of an MCC and to what extent various factors could be considered when looking at the scope of the proposal
The assessment of Alton Towers theme park was the subject of a proposal for a reduction on the grounds that a crash on the Smiler ride in 2015 resulted in a material change of circumstances (MCC). It was contended that the attitude of members of the public to thrill rides after the crash, particularly at Alton Towers, was a matter that was physically manifest in the hereditament’s locality at the material day.
Alton Towers was said to be the major generator of traffic movement in the locality and there had been an average drop in traffic volume be-tween 2014 and 2016 of 27.5%. There had been an impact on local businesses and queue times for rides had also reduced by 26%. While weather and pricing strategies could also affect visitor numbers, the appellant’s representative could not show that either of these was unusual during the period. Merlin would have undertaken more marketing but for the crash.
By reference to case law, the Upper Tribunal (UT) noted that rateable value represents the annual market value of the hereditament to the hypothetical tenant and so specific circumstances which are personal to the actual occupier are to be disregarded. From Dawkins v Ash [1969], the valuer must have regard to the “essential” or “intrinsic” qualities or characteristics of the hereditament and to disregard factors which are non-essential or “accidental” to that property. For a given property, the rateable value is the same whether the actual occupier runs a flourishing business or trades at a loss.
The UT noted that para. 2(7) of Sch. 6 to the Local Government Finance act 1988 fell into two parts: sub-paragraphs (a)
to (cc) dealing with the hereditament; sub-paragraphs (d) to (e) dealing with the locality. Sub-paragraph (a) is to do with the physical state of the hereditament itself or its use. Sub-paragraph (d) has two strands: “matters affecting the physical state of the locality” and “matters which (i) do not affect the physical state of the locality but which (ii) are nonetheless physically manifest there”.
The appellant accepted that the crash itself did not in fact fall within para. 2(7) and at the UT relied on the alleged “result” of the crash as a matter falling within para. 2(7)(d).
The Tribunal decided that the proposal was not concerned with any intrinsic or essential characteristic of the hereditament or locality. This alone would be sufficient to dismiss the appeal. However, the UT went on to decide other matters.
The Tribunal determined that paras. 2(7)(a) and 2(7)(d) in Sch. 6 are mutually exclusive.
As the appellant’s proposal was to do with the hereditament rather than the locality, the UT decided that the appeal failed because the appellant could not demonstrate a material change of circum-stances in a matter falling within 2(7)(a).
The UT rejected the appellant’s assumption that the proper construction of para. 2(7)(d) includes any economic or intangible matter, if it has an effect which is physically manifest in the locality. The matter itself must be physically manifest there.
In any event, the change which was argued to have been physically manifest was the fall in visitor numbers. However, the data showed that there had been decreases in other years due, for example, to competing attractions. The UT concluded that there was not sufficient evidence presented to show that the reduction in numbers was attributable to the crash.
Having dismissed the appeal, the UT offered the following guidance to surveyors and tribunals where the issue of applicability of 2(7) is not straightforward:
1 – “Does the matter concern an intrinsic characteristic of the hereditament or of the locality, or is it an extraneous matter, for example, some-thing to do with the personal attributes of the actual occu-pier or the way in which a party conducts its business? If the latter, then generally it will not fall within para. 2(7)”.
2 –“Does the matter concern a characteristic of the hereditament? If so the issue is whether it falls within para
2(7)(a) or (b) (or either (c) or (cc) in the case of minerals or waste deposit hereditaments)”.
3 – “If the matter does not concern a characteristic of the hereditament, does it concern a characteristic of the locality in which the hereditament is situated? If so, does it fall within para. 2(7)(d) or (e)?”
Finally – “If the matter concerns a characteristic of the locality, but does not affect the physical state of the locality or concern the use or occupation of other premises there, does it nonetheless fall within the second limb of para. 2(7)(d)? Under that limb the question is whether the matter is itself physically manifest in the locality”.
2.3 Courtney plc v Murphy (VO) [1998] RA 77
This case confirms the scope of proposal and the jurisdiction of Tribunals when making decisions
This case involved consideration of two proposals made seeking deletion/reduction of an assessment because of extensive building works. Both proposals gave 30 January 1995 as the date works began.
The valuation tribunal reduced the assessment with effect from 30 January 1995. The ratepayer appealed, seeking an earlier effective date of 1 April 1990. They claimed that the air conditioning system which was being replaced/refurbished at the dates in February and March 1995 on which the proposals were made, had been defective throughout the ratepayer’s tenancy.
The Lands Tribunal agreed with the valuation officer that the proposals limited the scope of the appeals. The grounds were quite clearly citing a material change of circumstances and there was no mention in either of the proposals of a date prior to 30 January 1995 and in fact the question of an earlier effective date had not been raised prior to the appeal to Lands Tribunal.
The Lands Tribunal accepted the valuation officer’s contention that it was not possible to order an earlier effective date than 30 January 1995 because this was outside the scope of the disagreement that led the valuation officer to transmit the proposal to the clerk to the valuation tribunal as an appeal.
The Lands Tribunal member, Mr Clarke, stated (page 86)
“the jurisdiction of a local valuation tribunal is limited to determining the appeal or “disagreement” under Reg 12(1) … which arises out of the originating proposal.”
And further (page 87)
“is settled law under the 1988 Act and the 1993 regulations that the jurisdiction of a local valuation tribunal and this tribunal on appeal is limited to the issues raised by the proposal giving rise to the appeal.”
2.4 Davey (VO) v O’Kelly [1999] RA 245.
This case clarifies the extent of authority of the Tribunal when considering the grounds of proposal
In this case a proposal was made on the grounds that the hereditament should be exempt from non-domestic rating under the provisions of paragraph 16(1)(c) of Schedule 5 Local Government Finance Act 1988.
Mr O’Kelly was registered under the Disabled Persons (Employment) Acts 1944 and 1958 and had been provided with a motorised wheelchair by the Employment Service under the Access to Work scheme for use in the appeal hereditament.
There were two issues for the Lands Tribunal to decide; the scope of the appeal and whether the ratepayer was entitled to exemption. In connection with the first issue the Lands Tribunal members Mr Clarke and Mr Francis said (page 253)
“In our view the scope of the “disagreement” and the VO’s “refusal to alter the list” are limited by the wording of the proposal …..
“The jurisdiction of a local valuation tribunal is limited to determining the appeal or “disagreement” under Reg 12(1), which arises out of the originating proposal (see 2(1) definition of appeal)
“The Lands Tribunal may make any order which the valuation tribunal could have made but has no power to make an order which the lower tribunal could not have made. It is not open to this tribunal to go further than the valuation tribunal and extend the scope of the appeal or disagreement referred to that tribunal, which in turn is limited by the originating proposal.”
and later at page 255
“In our judgment this proposal must be construed as a claim for exemption solely under para 16(1)(c) of schedule 5 to the 1988 Act. It specifically refers to this sub-para but not to the other grounds for exemption under para 16(1). ….. We do not think that the reasons for the proposal can be interpreted to extend to the other grounds of exemption under para 16(1) of schedule 5 to the 1988 Act. Accordingly, we hold that this appeal is limited by the originating proposal to the issue of exemption under para 16(1)(c) of schedule 5 to the 1988 Act.”
2.5 Galgate Cricket Club v Doyle (VO) [2000] RA 21
This case considers poorly worded proposals
In this case the originating proposal sought a reduction in assessment to RV £1 and included as one of the grounds for seeking the alteration
“that the assessment(s) of the hereditament(s) is/are bad in law.”
An issue raised by the valuation officer at Lands Tribunal was whether the scope of proposal was sufficiently wide to encompass the issue of exemption under paragraph 15 of schedule 5 of the Local Government Finance Act 1988 which gives exemption to parks.
The proposal sought a reduction in assessment but made no mention of seeking exemption. This had not previously been raised as an issue by the valuation officer.
The President of the Lands Tribunal held that the wording was wide enough to encompass the question of exemption.
It is considered that the Galgate decision does not change the position as indicated by the earlier cases. It does however, illustrate that inclusion of the general wording “bad in law” in a proposal will not limit consideration of the legality of a list entry. For example, if a hereditament should be exempt or deleted from the list.
As for factual matters, it is considered that this decision will not enable these matters to be expanded upon from those identified in the proposal. For example, a material change of circumstance proposal cannot be converted into a compiled list proposal as a result of inclusion of catch-all wording.
Such an interpretation would negate the different grounds for making proposals contained in Reg 4 and the effective date provisions contained in Reg 14.
2.6 O’Brien v Clark (VO) [2006] RA 403
This case confirms that for any proposal it can only have 1 material and effective date when considering its grounds
A 2000 List appeal, the ratepayer argued for two alternative grounds for his appeal, firstly that the list ought to be deleted, and secondly, in the alternative, that the assessment should be reduced.
In the proposal form, the ratepayer asked for the existing entry to be deleted and in the grounds for the proposed alteration, he stated that circumstances affecting the rateable value of the property changed with the reasons for believing that the rating list is inaccurate being
” This site was described as land used for advertising but fell into disrepair and effectively ceased to be so used as per it is 2000”.
In the first hearing for preliminary issue, the Lands Tribunal decided it was tolerably clear that the ratepayer, in completing the proposal form as he did, was seeking to advance two matters and the proposal completed by the ratepayer has sufficiently identified both matters and hence determined that the ratepayer’s proposal was made on two grounds.
In a further hearing on the substantive issue of this appeal O’Brien (t/a Poster Sites Southern) v Harding (VO) [2008] RA 73, the Tribunal affirmed the importance of the proper interpretation of a proposal in order to consider whether a proposal should be read as amounting to one made on more than one ground, so far as [the alternative ground] could be understood.
For the 2005 Lists, the scope of a proposal should be considered in connection with the provision in Regulation 4(3) (a) which specifies that no proposal may be made by reference to more than one ground unless for each of the grounds relied upon, the material day and the effective date are the same. Even if it is accepted that a proposal should be interpreted as being made on more than one ground, it should still be treated as invalid if the material day and effective date for the different grounds involved are not the same to one another.
2.7 Leda Properties v Howells (2009) RA 165
This case considers the concept of the scope of proposal and the duties of the VO
The ratepayer sought a deletion or alternatively a reduction in the RV. However the proposal only made reference to a single ground being deletion. The detailed reasons provided in support of the proposal simply made reference to the property being incapable of beneficial occupation and beyond economic repair.
Galgate distinguished:
“The ratepayer’s alternative contention – that the hereditament should be entered in the list as a store at a rateable value of £90,000 – would require two alterations to be made to the list. The description would require to be changed from “Computer Centre and Premises” to “Store and Premises” and the rateable value would have to be reduced. It is not in my view reasonably possible to construe the completed form as encompassing a proposal for a change in the description of the hereditament or the reduction in its rateable value. The option to specify these (alterations B and G in Part B) was not exercised, and the ground specified in Part C was deletion. In these circumstances the inclusion of the standard formulaic words
“The present assessment is incorrect excessive and bad in law”*
was in my judgment patently insufficient to permit the proposal. This is not one of those cases (cf Galgate Cricket Club v Doyle (VO) [2001] RA 21) where a proposal can properly be treated as encompassing two grounds. It was quite evidently one for deletion alone.
It is moreover to be noted that on the same day Wilks Head and Eve made two other alternative proposals, each seeking deletion but specifying different effective dates. I have no doubt at all that if the intention had been, as a further alternative, to seek an alteration in the hereditament’s description and a reduction in rateable value a proposal to this effect would have been made.”
The reason for scope:
“The purpose of requiring that the alterations proposed should be identified and that the reasons for the alterations should be specified is so that the VO is able to deal with the proposal in the way that he is required to deal with it under the Regulations. Reading the form as submitted he could not possibly have known that he was, or even might be, being asked to alter the description of the hereditament to “Store” or to reduce the rateable value to one that reflected its use for that purpose.”
“So that the VO is able to deal with the proposal in the way that he is required to deal with it under the Regulations”
In the preamble the president highlights relevant regulations and notes
“The duty of the VO is to give effect to the proposal if he considers it to be well-founded or otherwise to refer the matter to the valuation tribunal as an appeal: regulations 9 and 12.”
From this it seems the test may be that the proposal must identify the alterations required so that VO may well found if he is in agreement with proposal. The matters are not sufficiently identified then it is beyond the scope of the proposal and cannot be dealt with in the proceedings under Reg 12 (now Reg 13)
In cases of doubt advice should be sought from the Technical Adviser to whom a copy of the proposal should be provided.
2.8 British American Typewriters v Hill VO (1962) RA 298 9RRC 353 LT
Firkins v Dyer (Valuation Officer) (1972) 17 RRC 363, Lands Tribunal.
A hereditament comprising a shop at the front and a workshop at the rear had been split into two hereditaments by closing a passageway and a door. The valuation officer, following a suggestion that there should be revaluation separately, made a proposal to assess the part occupied by the appellants on the grounds ‘that structural alterations have been made and that the present assessment is incorrect and insufficient’. The ratepayers contended that the use of the word ‘insufficient’ in relation to the ‘present assessment’ made nonsense of the proposal, which was accordingly invalid.
The Lands Tribunal held that the proposal was reasonably clear for an aggrieved person to be able to act upon it without legal assistance and proceeded to hear an appeal. But in Firkins v Dyer (Valuation Officer)2, a proposal to increase the assessment of a hereditament which it described as ‘House (Ag) and workshop’ was held invalid where the valuation officer who had made it conceded in a subsequent letter to the ratepayer that the description was wrong and contended at the hearing that the house was not an agricultural dwelling.
2.9 S Thomas and Co (Nottingham) Ltd v Emett (Valuation Officer) (1955) 48 R and IT 761
It was held by the Lands Tribunal that where a proposal was to increase and assessment on the ground of structural additions, the Tribunal could review the whole assessment and not limited to the value of the additions.
This means, if the grounds of proposal are met resulting in a change in the assessment, then a full and correct valuation should be carried out before any reduction is given.