Propane Co Ltd v Bunyan (VO)

Rating – Rateable property – Equestrian facilities – Appellant company appealing against decision of Valuation Tribunal for England (VTE) reducing rateable value of stables and premises entered in 2010 list – Preliminary issue arising – Whether stables in separate ownership from house were “appurtenance” belonging to or enjoyed with house – Appeal allowed in part  The appellant owned and ran a farming business from a family estate across 3,500 acres in East Sussex and Kent. The Court Lodge Estate was an 800-acre block of farm land which included the Oast House and equestrian buildings at Court Lodge Farm, in East Sussex, together with further houses and buildings at Old Place Farm, in Kent. A mile-long track through the estate connected the two farm centres. The equestrian centre and associated paddocks and facilities at Court Lodge Farm covered approximately 3.5 acres. The Oast House was a five-bedroom detached house in the personal ownership and occupation of a member of the Sternberg family, members of which were directors of the appellant. The family were keen equestrians who competed internationally for Great Britain, in the western riding sport of reining. To be eligible to compete, individuals had to be non-professionals who earned no income from training or showing astride in any equestrian discipline. Therefore, no commercial enterprise was run at Court Lodge Farm. A rateable value of £20,250 was entered in the 2010 rating list for the stables and premises. The Valuation Tribunal for England (VTE) allowed in part an appeal against that rateable value and reduced the assessment to £19,750 with effect from 1 April 2015, but determined that stables in the ownership of the appellant could not be considered a domestic appurtenance to an adjacent dwelling in separate ownership. The appellant valuation officer appealed to the Upper Tribunal (UT). A preliminary issue arose whether at the material day (1 April 2010 for the 2010 Non-Domestic Rating List) any part of the non-domestic hereditament (stables and premises) constituted domestic property as an appurtenance enjoyed with property used wholly for the purposes of living accommodation at the Oast House and/or at Old Place. Held: The appeal was allowed in part. (1) In Corkish (VO) v Bigwood [2019] UKUT 191; [2019] PLSCS 111, the tribunal had provided recent guidance on appurtenance. It stated that the question was whether the facilities came within section 66(1)(b) of the Local Government Finance Act 1988 as being an “appurtenance belonging to or enjoyed with” the house. The question to be answered was whether the land was properly to be described as an appurtenance in all the circumstances of the case. In considering that question account was to be taken of the nature and function of the buildings and other facilities themselves, their proximity to each other and the general layout of the site: Clymo v Shell-Mex & BP Ltd [1963] RA 191 applied. Corkish followed. In the present case, those criteria would be used in considering whether the disputed buildings (labelled stables 1, stables 2, Hay store and mess room) were capable of being considered appurtenances for the purposes of rating. Although the parties had treated the two stable buildings as a single entity, there were differences between them. (2) On the evidence, until 1991, stables 1 was used exclusively by a family member (F) who lived at the Oast House which was sufficient for her use as a rider and competitor, and the functional link of use and enjoyment between the two buildings was established by that date. The provision of stabling at the hereditament was extended in 1991, by the construction of stables 2, after which twice as many horses could be stabled at Court Lodge Farm. From 1991 onwards, the use and enjoyment of all the stables was shared between F, her sister and their respective families. So, the functional link with the Oast House continued through to the material day, with an additional functional link of use and enjoyment with the living accommodation at Old Place. The connection between the two buildings was apparent and the layout reinforced the functional link between the Oast House and stables 1 which had existed since the stables were constructed. At the material day, the mess room in the courtyard between the two buildings was in use as a grooms’ rest room, tack room and hay store associated with both stables 1 and stables 2. (3) As the UT confirmed in Bigwood, in the context of that sort of building, size was less important than function. Had their proximity and layout been different, it might have been possible to conclude that both stable buildings and all 20 stables had a functional link with the Oast House. However, stables 2 was situated outside the gated area and had no direct connection with stables 1, the courtyard or the Oast House. The hay store sat beyond stables 2 and had no obvious functional link. Therefore, at the material day, stables 1 and the mess room were appurtenant to the Oast House, because of their historic and continuing nature and function, their proximity to each other and the general layout of the site. However, stables 2 and the hay store were not appurtenant to the living accommodation and were not domestic property within the meaning of section 66(1). At the material day, the appellant owned not only the stables but also the courtyard area, which was not transferred to another family member until December 2010. The barn and the mess room stood within the courtyard. Both buildings were originally treated by the appellant as non-domestic but, by the date of the hearing, the appellant had rightly conceded that the barn was domestic property. That concession was supported by its function and the physical layout of the courtyard, and the same approach would be applied to the mess room. (4) Stables 1 was different because at all times since its construction it had been in separate ownership from the Oast House. However, in the present case, the appellant was a company which managed the commercial and financial affairs of one family. The separate ownerships had not diluted the functional link which had existed between the Oast House and stables 1 since that building was constructed in the mid-1980s because the separate ownerships were hand in glove. Accordingly, stables 1 and the mess room were appurtenances to living accommodation at the Oast House at the material day and fell to be treated as domestic property. Stables 2 and the hay store were not appurtenances and fell to be treated as non-domestic property. Cain Ormondroyd (instructed by Altus) appeared for the appellant; Mark Westmoreland Smith (instructed by HMRC Solicitors) appeared for the respondent Eileen O’Grady, barrister Click here to read a transcript of Propane Co Ltd v Bunyan (VO)