Stormhill Properties Ltd v Roberts (VO)

Rating – Non-domestic rates – Rating list – Alteration – Hereditament – Appellant making proposal to merge contiguous and interconnected hereditaments in multi-floored office building – Valuation Tribunal for England finding proposal invalid – Appellant appealing – Whether appellant’s merger proposal satisfying conditions in section 64(3ZB)(b) and (c) of Local Government Finance Act 1988 – Appeal dismissed The appellant ratepayer appealed against a decision of the Valuation Tribunal for England (VTE) which found to be invalid the appellant’s proposal to alter the rating list in respect of a nine-storey office building known as Alpha House, Rowlandsway, Manchester. Since the early 1990’s, the building had had 14 separate assessments totalling £202,450. In fact, the building had been vacant since 2009 and should have had a single assessment with effect from 1 April 2010. The proposal relied on ground 4(1)(k) of the Non-Domestic Rating (Alterations of Lists and Appeals)(England) Regulations 2009 – that property shown in the list as more than one hereditament ought to be shown as one or more different hereditaments. In Woolway (VO) v Mazars LLP [2015] UKSC 53; [2015] EGLR 56, the Supreme Court held that separate but contiguous units, albeit in the same occupation, should be entered in the rating list as separate hereditaments. Parliament then enacted the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018 (the PICO Act), which inserted section 64(3ZA) to 64(3ZD) into the Local Government Finance Act 1988 with retrospective effect from 1 April 2010, to reinstate the previous practice of entering contiguous units of property occupied by the same ratepayer as if they were a single hereditament. Here, the window for altering the 2010 rating list closed on 31 March 2017, except in respect of proposals that satisfied the 2018 Act. The VTE found that the proposal did not satisfy the requirements of the 2018 Act and was therefore invalid. The deputy president of the chamber directed the determination, on written representations, of a preliminary issue whether the appellant’s merger proposal satisfied the conditions in section 64(3ZB)(b) and (c) of the PICO Act. Held: The appeal was dismissed. (1) By section 64(3ZA), where two or more hereditaments (whether in the same building or otherwise) were occupied by the same person, the hereditaments should be treated as one hereditament. The provisions in section 64(3ZB) were clear and unambiguous in stating the criteria for unoccupied properties to be merged further to the reversal of Mazars: the hereditaments must have ceased to be occupied on the same day; and have each remained unoccupied since that day. Although the appellant offered an alternative interpretation of the relevant provisions in that the date in question referred to the effective date sought for the merger, there was no indication in the drafting of the provisions that that was the intention. Even if that was to be the case, under section 64(3ZB)(c), it was a requirement that all the properties to be merged were previously in the same occupation prior to being unoccupied and would have been considered ripe for merging under (3ZA). In the present case, it was clear that, even if all the properties had become unoccupied on the same date, they would fail the further criteria set out in 3ZB(c). Therefore, the proposal to merge the appeal properties was invalid. (2) Were it not for the failure to meet the criteria of 3ZB, the tribunal would be obliged to consider the findings of the Upper Tribunal in Libra Textiles Ltd (t/a Boundary Mills Stores) and another v Roberts and another (VO) [2020] UKUT 237 (LC). At the material day all of the appeal hereditaments, apart possibly from part of the ground floor, were unoccupied and in the same ownership. They were contiguous and interconnected by common areas. The appellant had stated in response to the Libra Textiles decision that there was no interconnection between the properties which would have prevented them from being merged subsequent to Mazars. If, as the respondent contended, at the material day, 1 April 2010, the ground floor was still occupied then not all twelve hereditaments shown in the list were unoccupied and the proposal was invalid, because there would remain two hereditaments in different ownership/occupation which could not be merged. The appellant had stated that, at the material date, all twelve were unoccupied. If that was the case, the common areas which provided the interconnection between the hereditaments were in the demise of the owner of the appeal hereditaments. They could therefore have been merged, had the appellant made a proposal at any time under regulation 4(1)(k) of the 2009 Regulations whilst the list was in force, if the whole building was unoccupied and in the same ownership. As no proposal was made before 31 March 2017, the PICO legislation to make a proposal under regulation 4(1)(k) after that date did not, in accordance with the Libra Textiles decision, allow such a proposal. Therefore, the assessments for which a merger was proposed, were unaffected by the Mazars judgment because the whole building was in the same occupation/ownership and the Mazars reversal (the PICO legislation) did not help the appellant. (3) To satisfy the requirements of section 64(3ZB), separate hereditaments should be treated as one hereditament if, among other things, they ceased to be occupied on the same day. The question whether that meant that all hereditaments ceased to be occupied, in a rateable sense, on the same day, or whether they had all ceased to be occupied by the same day, did not need to be decided in the present case. In any event, the tribunal would be reluctant to do so in an appeal conducted under the tribunal’s written representations procedure where the appellant was not legally represented. The appellant’s proposal was made on 7 November 2019. It was therefore out of time and invalid, unless it satisfied the requirements of the PICO legislation. On 31 March 2017, even on the appellant’s evidence, the building was vacant and the appellant had rateable occupation of each floor and of the common parts. The various hereditaments were therefore both contiguous and interconnected. The law relating to hereditaments that were both contiguous and interconnected was not changed by the PICO Act. The VTE correctly assessed the position when it observed that the Supreme Court’s decision in Mazars did not affect the appeal property. Accordingly, the proposal was invalid. Written representations for the appellant were made by its representative; Admas Habteslasie (instructed by HMRC solicitors) made written representations for the respondents. Eileen O’Grady, barrister Click here to read a transcript of Stormhill Properties Ltd v Roberts (VO)