Section 400: floating hereditaments
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
This is a Group Class.
2.1 This section deals with the principles to be followed in assessing all types of floating hereditaments, including floating public houses, restaurants, club houses, other ‘commercial’ enterprises. A separate Council Tax Manual Practice Note has been issued for residential boats, but the same principles apply to non-domestic properties on a number of matters.
2.2 Following the decision of the Lands Tribunal in Floatels (UK) Ltd v A C Perrin LT 1995 RA 326 it is essential that the Non-Domestic Rating List description correctly identifies the hereditament comprising the unit of assessment.
2.3 In the Floatels case the description referred to “Hotel and Premises”. It clearly extended beyond the river bed occupied by the floating structure and included a substantial area of dry land. The Lands Tribunal rejected the argument that “Hotel” was capable of referring to the whole hereditament or “complex”. Accordingly, it was necessary to consider whether the word “premises” was capable of referring to the land beneath the floating structure. The Floatels decision turned upon the Tribunal’s analysis and application of the Court of Appeals’ decisions in R v Northants LVC ex parte AWA (1990) RA 93, and Westminster City Council and Woodbury (VO) v The Yard Arm Club (1992) RA1.
2.4 In the Yard Arm case the Court of Appeal rejected the suggestion that the Victoria Embankment (land lying to the side of the vessel rather than beneath it,) was included by the word “premises” but it did not expressly decide whether the “ordinary reader” would treat the river bed as being within that expression.
2.5 In order to avoid litigation it should now be common practice for valuation officers to refer in the description expressly to land occupied by “rateable chattels” such as a floating vessel. A better description than “land and premises used for moorings” would be “river and river bed occupied by floating (nightclub), moorings, (floating nightclub), (car park) and premises”. [insert and delete as appropriate]
3. The hereditament and rateable occupation
3.1 Identifying the hereditament
When considering such property it is important to apply the proper tests to establish that there is a hereditament capable of separate assessment, which meets the requirements of rateable occupation, following the principles of Gilbert v Hickinbottom 2 QB40.
The hereditament will normally comprise the land covered with water over which the vessel or other property floats, together with the necessary moorings and resting places for the gangways on the quay or bank, plus the vessel itself as a chattel annexed to, and enjoyed with, the land. In many cases there will also be a land based car park for customers and staff.
3.2 Land covered with water
In Thomas (VO) v Witney Aquatic Co Ltd 1972 RA 493 the LT said:
“The expression land (in s.16 GRA 1967) is in my opinion wide enough to include water lying on the surface of the earth, so that the lake in the present case is capable of being part of the hereditament, if it satisfies the other tests of rateability ….”
(See also Mersey Master Mariners Club and Another v West Derby AC and Another LT 1951 44 R&IT 358).
3.3 Rateable occupation
3.3.1 In the majority of cases a vessel will be a chattel, and it will be necessary to show that it has become rateable as a structure occupied and enjoyed with the land. Per Lord Denning in Field Place Caravan Park Ltd v Harding (VO) 1966 RA 393:
“…. although a chattel is not a rateable hereditament by itself nevertheless it may become rateable together with land, if it is placed on a piece of land and enjoyed with it in such circumstances and with such a degree of permanence that the chattel with the land can together be regarded as a unit of occupation”.
The necessary proof will be provided by the facts of each particular case, in the light of the character of the occupation and the intentions of the occupier. Factors for consideration will be:
3.3.2 Danckwerts L J made it clear in the Field Place case that rateability does not depend on whether the chattels have became part of the land by annexation. It is sufficient that a chattel rests firmly on site by its own weight, and in the case of floating vessels, the application of Lord Denning’s test should not be made to turn on the precise means by which the vessel is anchored. All relevant factors must be taken into account, and in many cases the means of anchorage may only be relevant to determining whether the vessel is kept in one particular position over the river bed for a sufficient length of time. The lack of a direct connection between the boat of the river bed beneath it is not a critical factor, and rateability will not depend on whether the boat is moored to the soil beneath it, since that could encourage ratepayers to avoid liability by making artificial arrangements.
3.3.3 A chattel enjoyed permanently in one position will normally be treated as having been placed upon and enjoyed with the land which lies below it. The fact that the vessel has motors and is capable of being moved by its own method of propulsion does not affect rateability; whether an object is a “chattel” as opposed to “land” is not determined by whether it can move under its own steam. A ship will be a chattel, the only question is whether this particular chattel has been enjoyed together with the river bed below, with a sufficient degree of permanence. In both the Field Place and Witney Aquatic cases the key finding was that there was a sufficiently permanent link between the chattel and a defined piece of land; the chattel returned to the same spot.
3.3.4 What has to be considered carefully in deciding whether an occupation is sufficiently permanent is primarily its character and as part of that exercise, its duration.
3.3.5 In the dicta of Lord Radcliffe in LCC v Williams (VO) 3 All E.R. 38 he said
“Certainly, it is time that the law demands that an occupation to be rateable should be permanent …. An occupation is not the less permanent because it is that of a lessee who holds under a lease for a fixed term. In other words there is permanent occupation however clearly the end in sight. More than that, an occupation can be permanent even though the structure or other chattel which is the means of occupation is removable on notice …”
3.3.6 In Sir Robert McApine & Sons Ltd v Payne (VO) (1969) RRC 240 the Lands Tribunal rejected any idea of a working rule of 12 months for rateability and said that the degree of permanence required depended on the nature of the occupation.
3.3.7 For further guidance to ascertain whether the property as identified above meets the requirements of rateable occupation, the tests as set out in RM4:2 should be applied.
Clearly not all floating structures will meet the tests. Each case must be decided on its own facts having regard to the factors referred to above.
3.3.8 In cases where the tests of rateability are not satisfied in respect of the floating vessel itself, the mooring and other facilities may still be rateable. However, it will be preferable for VOs to continue to separately assess such moorings rather than adopt the discretionary provisions for a group assessment (for Moorings refer to RM5:670).
3.3.9 Any case of difficulty should be referred with full details and the hereditament file to Rating Section CEO for advice.
4. Case Law
4.1 The decision of the Court of Appeal in Westminster City Council v Woodbury (VO) and the Yard Arm Club Ltd 1992 RA 1 only applies to land vested in the Port of London Authority so far as the 1973 valuation lists are concerned, and is not applicable to the 1990 Rating Lists by virtue of s.67(12) LGFA 1988. This was confirmed in the decision of the Lands Tribunal in Woodbury (VO) v Toby Restaurants Ltd 1998 RA 315. Although the decision in favour of the VO was based on a preliminary hearing for the purpose of considering whether a floating restaurant, bars, moorings and premises located on the River Thames and known as the T.S. Queen Mary is exempt from rating by virtue of Section 178(1) of the Port of London Act 1968, no appeal was made against the Order of the President of the Lands Tribunal that the decision determines the substantive issues raised between the parties. Rateability of the vessel has therefore been accepted, together with the moorings and that part of the river bed under the vessel. Other related cases were settled by Consent.
4.2 In Felgate (VO) v Lotus Leisure Enterprises Ltd 2000 RA 89 the President of the Lands Tribunal considered the rateability of a floating restaurant moored in Millwall Dock, and described in the rating list as dock bed, floating restaurant, moorings and premises. The vessel had been towed to this country and a superstructure of two storeys in the form of a Chinese building with a pitched roof had been erected on the deck. It had not moved from its mooring since 1994, except on two occasions each year when it was towed away by a tug to the other side of the dock to undertake essential maintenance to the hull. It had no means of propulsion. The vessel was connected to all services via flexible and detachable connections. The company owned the vessel but moored the vessel and enjoyed the service connections under the terms of a lease of all the area of water in which the vessel floated, being part of the dock. It was held the VO was correct in identifying as a rateable hereditament the dock bed, floating restaurant and its moorings, and just because the vessel was floating did not prevent it forming part of the hereditament that consisted of the dock bed immediately beneath the vessel, the space above it that was filled with water, the vessel itself, and the moorings on the dock side. Although the water was not land it provided the intermediate means of support and was the medium through which the vessel was connected to the dock bed. The occupation of the respondent company fulfilled all the ingredients of rateable occupation and the harbour authority did not interfere with the use the respondent company made of the dock bed, which was exclusive for their purposes, and plainly paramount.
4.3 The Lotus case was followed by the President in his subsequent decision in the case of Rudd (VO) v Cinderella Rockerfellas Ltd 2002 RA 131. The appeals concerned the rateability of a vessel known as the Tuxedo Royale, which was moored at Hillgate Quay on the River Tyne at Gateshead between 1989 and 1999. It was a former ferry converted to use as a night club, restaurant and disco, and although it retained a means of propulsion it only moved away from its mooring on one occasion in order to demonstrate that it could be moved away from its mooring. There was a water supply from the quay by means of a hose, the vessel generated its own electricity, and had sewage tanks that were emptied and serviced by a private contractor. Land adjoining was used as a car park.
Practice Note 1 : 2000 : Floating Hereditaments : National Co-ordination
Floating Hereditaments are subject to co-ordination by Technical Advisors, and therefore it is their responsibility to ensure a uniform approach is adopted.
The appellant placed particular reliance on a Hong Kong case Commissioner of Rating and Valuation v Yiu Lan Machinery Repairing Works Ltd . The President reviewed this case in detail but found it of no assistance. The Tuxedo Royale was held to be rateable for the same reasons as the Lotus. The fact that it is a vessel is no bar to rateability, and the occupation of the vessel, the river bed, and the quay had the same characteristics in terms of permanence and exclusiveness as in the case of a nightclub in a building on dry land, notwithstanding the potential mobility of the vessel.