THE VALUATION TRIBUNAL FOR ENGLAND

Summary of Interim Decision: ndr, jurisdiction, whether a challenge to an entry in

the rating list through no valid completion notice being served should be by way of

judicial review or proposal. President found that the matter could be decided by way

of proposal.

Summary of Substantive Issue: ndr, deletion of list, whether completion notices

capable of being served, whether work structural, one building or parts treated as

buildings, appeals allowed for ground floor and first floor but dismissed for the

second floor.

Re: 1st Floor, The Horizon, 99 Burleys Way, Leicester,

2nd Floor, The Horizon, 99 Burleys Way, Leicester,

Ground Floor, The Horizon, 99 Burleys Way, Leicester,

Ground Floor, Thames Tower, 99 Burleys Way, Leicester,

1st Floor, Thames Tower, 99 Burleys Way, Leicester,

2nd Floor, Thames Tower, 99 Burleys Way, Leicester

APPEAL NOs: 246525454690/538N10

246525454849/538N10

246525454856/538N10

246525454862/538N10

246525454867/538N10

246525454875/538N10

BETWEEN: Delph Property Group Ltd (Appellant)

and

Mrs Janet Alexander (Respondent 1)

(Valuation Officer)

Leicester City Council (Respondent 2)

(Billing Authority)

BEFORE: Mr G Garland, President

SITTING AT: NSPCC National Training Centre, 3 Gilmour Close, Leicester LE4 1EZ

ON: 17 January 2018

AND AT: The Tribunal Offices, Leman St, London, E1 8EU

ON: 11 May 2018

APPEARANCES: Mr Luke Wilcox of Landmark Chambers for the Appellant

Mr George Mackenzie of Francis Taylor Building for the Valuation Office Agency

(Respondent 1).

Mr Tom Gosling of 23 Essex Street for the Billing Authority (Respondent 2)

Summary of Decision on Preliminary Points

1. The Tribunal has jurisdiction to hear the appeals.

2. Any time constraints to challenging the entry in the list on the basis that it

shows a hereditament that ought not to be shown must meet the regulatory

timeframe for proposals (and appeals where they apply) and, any other

regulatory requirements such as those in respect of the material day

provisions. The Tribunal cannot prescribe its own time constraints.

Summary of Decision on Substantive Point

3. In respect of the substantive matter I find that completion notices cannot be

served in accordance with s.46(A)(6) in respect of the Ground Floor and First

Floor as the parts under appeal were not produced by structural alterations of

those parts of the building and the entries in the Rating List are deleted for the

periods requested. In respect of the Second Floor I find that s.46 (A) (6) is

satisfied and the appeal is dismissed.

Introduction (containing agreed facts)

4. The property at 99 Burleys Way, Leicester (previously known as Thames

Tower and now known as The Horizon) was originally constructed in the

1970s as an office building with floor plates on the ground to second floors

comprising more than 1,200 m2 per floor. Above the wide frontage there was

a central tower forming the third to sixteenth floors of the building, with

available office space of less than 500 m2 per floor.

5. In late 2006 the then owners, Brampton Asset Management (Leicester) Ltd,

began a scheme of redevelopment with the tower floors being converted into

112 dwellings whilst the ground to second floors were refurbished but

remained office accommodation.

6. All rating assessments were deleted from the rating list with effect from 23

October 2006. At the time that works commenced the building included the

following hereditaments:

a. 1st, 2nd (Part) and 3rd to 9th Floors – RV £172,000

b. Part Ground Floor RV £31,500

c. Part Ground Floor (Stiches Clothing) RV £6,400

d. Part Second Floor RV £38,000

7. The residential accommodation created on the third to sixteenth floors came

into the council tax valuation list on various dates from the end of 2008.

8. There is no detailed schedule of works undertaken to the building available as

the former owner went into administration in 2010 and was subsequently

wound up. The contractor, J H Hallam, also went into liquidation in 2013.

9. The only evidence available relating to the works carried out to the offices

under appeal is provided by Corrigan Gore Project Management who, in 2010,

carried out a due diligence investigation into the building on behalf of the

Appellant, at the time of their purchase of the building which completed on 3

November 2010, and that provided by Leicester City Council for the hearing.

10. The ground floor offices comprised two separate office areas either side of the

central core and reception with the first and second floors being single spaces

but capable of division. The rating assessments for the office floors were

deleted from the rating list in accordance with Valuation Office Agency

practice at the time.

11. The works undertaken on the appeal floors were certified as complete by

Leicester City Council’s building control department for building regulations

purposes on 3 October 2008. An enquiry officer from Leicester City Council

conducted an inspection of the property on 27 January 2009 accompanied by

Ivan Lloyd, the managing agent of Brampton. The enquiry officer considered

the works to have reached practical completion and recommended service of

a completion notice.

12. The offices were marketed by agents as refurbished and available for letting

both by Brampton and, from November 2010, by Delph. At practical

completion of the refurbishment project, the offices were complete to what is

understood as ‘Category A’ that is beyond ‘shell and core’ with raised floors,

suspended ceilings, lighting, cooling and power cabling and sockets all

installed. The space was therefore available and ready for bespoke fit out by

the incoming tenant.

13. Completion Notices under Schedule 4A to the Local Government Finance Act

1988 were issued by post setting a completion date of 6 February 2009. The

precise date on which the notices were issued is unclear but they were

headed ‘Date of Service: 06/02/2009’. The notices were issued by ordinary

post and sent to the correspondence address held at Companies House for

both the company secretary and a director, rather than to the company’s

registered office address. It is not known whether this address was given

either by the company or by their agent for service of notices. The

memorandums drawn up by the Council’s enquiry officer on 3 February 2009,

subsequent to the meeting of 27 January 2009, record Brampton’s address as

20 Brampton Grove, London NW4 4AG.

14. It is not known whether the completion notices were received by the owner but

they were not returned undelivered to the council and the owner did not

appeal or challenge the notices, therefore in the absence of evidence to the

contrary one must conclude they were served.

15. The rating list was altered by the VO on 9 March 2009 to assess the three

separate floors from 9 February 2009 and the entries were carried forward

into the 2010 rating list. On 6 September 2010, with effect from 4 August

2010, the rating list was altered to change the address of the appeal floors

from ‘Thames Towers’ to ‘The Horizon’. No other changes to the

assessments were made at this time.

16. Following practical completion of the works in 2008, the following lettings took

place:

a. Small Ground Floor Suite of 106 m2 from March 2013

b. Large Ground Floor Suite of 600 m2 from June 2014

c. First Floor from March 2015.

17. At the time of the letting of both the large ground floor suite and the first floor,

the landlord and tenants entered into specific licenses for alterations and

fitting out works to take place.

The appeals and proceedings

18. On 31 March 2015, Delph’s former agent, Knight Frank, made proposals

seeking both the deletion of the hereditaments on the ground to second floors

and a reduction in the rateable values. The effective date of all the changes

sought was 1 April 2010. Altus Group was instructed to take over all the

proposals in July 2016 (which by then had become appeals) and recently

agreed a reduction in the rating assessments which left those appeals

seeking a deletion outstanding.

19. The detailed reasons in the proposal (appeals) were set out as being:

This assessment is incapable of occupation and should not have been

entered into the list. VTE decision 0119M27310/212N05 Tull Properties

Ltd V South Gloucestershire Council issued on 7th October 2013

determined that a refurbished building is not a new building so the

completion notice procedure is not valid. In addition under 120131

UKUT 0430 (LC) Aviva Investors and PPG Southern V Whitby (VO) it

was determined that a hereditament should only be assessed for rating

purposes when it is fully fitted out and ready for occupation . This

assessment is incapable of beneficial occupation for office purposes

and should be deleted.

20. The parties made application for the appeals to be treated as complex in

accordance with the Tribunal’s Consolidated Practice Statements (CPS3). I

agreed to the request and also decided to add the Billing Authority as a party

to the appeals, as in part the issues in dispute could have required evidence

on the service of the completion notices. The VTE made Directions which the

parties complied with and a bundle of evidence was provided prior to the

hearing.

Preliminary Issue - Jurisdiction

21. The first respondent raised a preliminary issue as to whether the VTE was

able to override, dis-apply or otherwise overlook the mandatory statutory

deeming provision in s.46A(2) of the Local Government Finance Act 1988 in

circumstances where a completion notice has not been quashed or set aside

by the High Court in judicial review.

22. The second respondent remained neutral on this point. I must add that this

argument was only introduced for the first time by the first Respondent within

his skeleton argument a week before the hearing. The Appellant initially

sought a postponement which I declined, bearing in mind the need to

progress cases and determine them promptly, but by the time of the hearing a

second skeleton argument addressing the issue had been provided, so the

case could proceed.

23. In order to decide this point it was necessary to review the legislation, case

law and previous decisions of this Tribunal.

24. I found the convenient way to set out the process by recording the wise

words of Mr Justice Holgate when he heard the judicial review application in

Reeves (VO) v. VTE (and others) [2015] EWHC 973 (Admin):

“5. The general legal principle is that a building in the course of

construction is treated as not constituting a hereditament for rating

purposes because it cannot be occupied for its intended purpose

(Arbuckle Smith & Co Limited v Greenock Corporation [1960] AC 813).

The same principle may also apply where a building cannot be

occupied while it is being modified so that it may be used for a new

purpose. But where a newly constructed or altered building becomes

capable of occupation for its intended purpose, it is then treated as a

hereditament which may be entered in the rating list (Porter (Valuation

officer) v Trustees of Gladman Sipps [2011] RA 337, paragraph 41).

6. These principles are supplemented by the completion notice code

contained in section 46A and Schedule 4A of the 1988 Act. Two types

of notice may be served. First, where a billing authority is of the view

that a new building can reasonably be expected to be completed within

three months, the authority is to serve a completion notice on the

owner of the building as soon as reasonably practicable (Schedule 4A,

paragraph 1(1)). The notice must specify the completion day proposed

by the authority (paragraph 2(1)), being no later than 3 months from the

date of service.

7. The second type of notice covers a situation where the billing

authority considers that a new building has already been completed

(paragraph 1(2)), in which case the completion date in the notice must

be the date upon which it is served (paragraph 2(3)).

8. In either case, if the owner does not agree with the completion

date specified in the notice he may appeal to the Valuation Tribunal for

England ("VTE") under paragraph 4(1). The only ground of appeal

under that provision is that the building to which the notice relates has

not been, or cannot reasonably be expected to be, completed by the

date stated in the notice.

9. In effect, Schedule 4A contains provisions for determining the

date on which the new building is deemed to be completed. Under

paragraph 3 an agreement may be made between the owner and the

billing authority as to the completion date, in which case the completion

notice is treated as having been withdrawn. Under paragraph 5 if no

appeal is made against the completion notice, and no agreement

reached under paragraph 3, the completion date is taken to be the date

stated in the notice. But where an appeal is made the completion date

is the date determined by the Tribunal (paragraph 4(2)).

10. Where an appeal against a completion notice is made, the only

question which the Tribunal is asked by Schedule 4A to answer is:

what is the completion date?”

25. The matter before me was “what is the correct approach for a challenge

where the Appellant was of the opinion that no valid completion notice had

been served” (my emphasis). I also considered it might be helpful to set out a

full review of the correct route for all of those matters that might be appealed

in connection with a completion notice dispute (as encouraged to do so in

Reeves).

26. In order to understand the point counsel for the Respondent was making, he

helpfully set out the legislation which for convenience I set out below. Section

42 of the Act which is referred to in s. 46A, provides as follows:

42.-Contents of local lists

(1) A local non-domestic rating list must show, for each day in each

chargeable financial year for which it is in force, each hereditament which

fulfils the following conditions on the day concerned-

(a) it is situated in the authority’s area,

(b) it is a relevant non-domestic hereditament,

(c) at least some of it is neither domestic property nor exempt from

local non-domestic rating, and

(d) it is not a hereditament which must be shown for the day in a central

non-domestic rating list.

27. Office premises are relevant non-domestic hereditaments within the meaning

of s. 42(1)(b) of the Act.

28. Counsel argued that the combined effect of s. 46A(2) and s. 42(1) is that

where a completion notice takes effect (whether because no appeal is made

against it or because the VTE determines the relevant completion day on a

statutory appeal under Sch. 4A to the Act), the Valuation Officer is bound to

enter it in the relevant local list with effect from the completion date.

29. The appeals before the Tribunal which were the subject of this dispute, were

made through a proposal seeking removal of the entry in the rating list on the

basis that the appeal hereditaments ‘ought not to be shown in the list’.

30. Counsel concluded that where the Valuation Officer is bound to enter a

hereditament into the relevant local rating list as a result of mandatory

statutory provisions, it cannot be said that a hereditament shown in the list

‘ought not to be shown in the list’ unless there is a subsequent material

change in circumstances which leads to a valid completion notice being

overtaken/superseded by later events.

31. In my view the correct way in which to challenge whether a ‘valid’ completion

notice was in force was through a proposal seeking a removal of the entry in

the rating list on the basis that it ‘ought not to be shown in the list’. I make this

decision for a number of reasons.

32. In Foster v. Chief Adjudication Officer and another [1993], Lord Bridge sitting

in the House of Lords found, when addressing the issue of the jurisdiction of

the social security commissioner, the following at page 764 (E):

It is said that, if the commissioner were intended to have power to hold

a provision in a regulation to be ultra vires and to determine whether or

not it was severable, one would expect to find that he was also

empowered to make a declaration to that effect, which he is not. This,

again, I find quite unconvincing. The commissioner has no power and

no authority to decide anything but the issue which arises in the case

before him, typically, as in this case, whether in particular

circumstances a claimant is or is not entitled to the benefit claimed. If

the success of the claim depends, as here, on whether a particular

provision in a regulation is both ultra vires and severable, the

commissioner’s decision of that question is merely incidental to his

decision as to whether the claim should be upheld or rejected. If not

appealed, his opinion on the question may be followed by other

commissioners, but it has, per se, no binding force in law. To my mind

it would be very surprising if the commissioners were empowered to

make declarations of any kind and the absence of such a power does

not, in my opinion, throw any light on the question presently in issue.

33. As counsel for the Appellant put to me, the Respondent’s opinion is incorrect

as he seems to have misunderstood what is being appealed and sought from

the Tribunal. A proposal to remove from the list a hereditament which ‘ought

not to be shown’ does so, on the basis that the hereditament is not complete

and no (valid) completion notice was served. The Tribunal simply had to find

whether or not there should be an entry in the list. There was no need for the

Tribunal to decide to quash the completion notice for which it held no power to

do so. As part of that test the Tribunal had to decide whether a (valid)

completion notice had been served and if it wasn’t, whether there should be

an entry in the list. If the building was complete and ready for occupation,

then the Tribunal would be justified in leaving the entry alone (as suggested in

Reeves).

34. This in a nutshell addresses counsel’s point. Mr Mackenzie’s starting point

was an assumption that a valid completion notice had been served and on

that basis the entry made and the list altered. If the Tribunal found that no

completion notice (valid) had been served, then the question was whether the

list was correct and the hereditament ought to be shown in it? When I say no

(valid) completion notice had been served, it might be on one of a number of

grounds. These included whether service took place or that whilst service

took place, the document purporting to be a completion notice was so

defective in law that it could not possibly be said to be a completion notice, or

as in the appeals before me, there is no provision in law to serve a completion

notice.

35. Counsel for the Appellant drew to my attention the Court of Appeal’s decision

in UKI (Kingsway) Ltd v Westminster City Council [2017] EWCA Civ 430

where the past President of this Tribunal was found to be correct in deleting

the rating list entry in accordance with a proposal when proper service had not

taken place. At no time did the Court of Appeal question jurisdiction, which of

course they were entitled to do so. The question wasn’t whether to quash the

completion notice but whether a completion notice had been served? If no

completion notice had been served then, in that appeal, there should be no

entry in the rating list as a completion notice was relied upon.

36. The decision of the President of the Upper Tribunal (Lands Chamber) in

Reeves (but when sitting as a High Court judge) found that a challenge to the

validity of a completion notice could be made through a proposal:

“60. I would add, in relation to paragraph 13 of the VTE's decision in

December 2013, a few comments. The making by this Court of an

order to quash the Tribunal's order to delete the hereditament from the

rating list does not render the VTE's decision on the invalidity of the

completion notice academic, or indeed improperly require the ratepayer

to re‑litigate an issue. The position remains that the deeming effect of

the completion notice could not be relied upon in this case. The correct

procedure for the ratepayer to have followed would have been to make

a proposal challenging the entry of Beluga House in the list. That could

have been dealt with at the same time as any completion notice

appeal. That course was open to the first interested party but was not

taken.”

37. Furthermore, despite the observations of Mr Justice Holgate that it wasn’t an

academic exercise in Reeves, the fact of the matter was that the decision in

Beluga House that no valid completion notice had been served and therefore

the building was not capable of occupation meant that the decision of this

Tribunal was ineffective. This resulted in the rating list being inaccurate, an

issue which concerned the President of the Lands Tribunal in Simpsons Malt

Ltd & Others v. Mr Craig Jones & Others (VOs) [2017] UKUT 460 (LC):

…That is not to say that the special features of rating are irrelevant,

including in particular the need, in the public interest, to ensure that the

rating list is accurate…

38. When questioned, Respondent’s counsel was of the opinion that a judicial

review challenge could only decide whether a valid completion notice had

been served. It could not alter the list (see Reeves). This meant that a

finding of such would only result in the Valuation Officer altering the rating list

if he were able to and felt inclined to do so. He would be under no obligation

to do so (although he would have a duty to maintain an accurate list but might

decide it remained accurate without a completion notice being served) and the

remedy would then be for the Appellant to make a proposal to delete the

entry.

39. It would appear to me that a solution was being proposed by the Respondent

which wouldn’t necessarily remedy the point in question.

40. As found in UKI Kingsway the service (or indeed the contents) of a completion

notice, which is a statutory notice and can have significant repercussions for

ratepayers, should not been taken lightly by the Billing Authority or in a

shambolic way. The onus is on the Billing Authority to ensure they undertake

the process properly. Indeed Valuation Officers should satisfy themselves

that the notice they receive complies with the law and that they are correctly

making an entry in the rating list. It would be wrong to require the recipient to

undertake judicial review as a check for both the Billing Authority and

Valuation Officer.

41. However, a word of caution for Tribunal panels and parties. The Tribunal

should not allow frivolous appeals seeking deletion of the entry in the rating

list where the completion notice can be read in such a way to give force to the

intention of the Billing Authority or that a challenge could be made through a

completion notice appeal.

42. The Tribunal put to counsel for the Respondent examples where it would be

clear to everyone that no valid completion notice had been served, one where

the date set was nine months in advance for the work to be completed and

the other where the notice failed to name the building to which it related.

Counsel was quite clear that despite the obvious flaws the Valuation Officer

would enter what he considered to be the properties in the list, even though

he knew the notices were defective and that the Appellants would need to

challenge the notices by judicial review. In fact, time and again the higher

courts have referred to the Tribunal dealing with matters that are obviously

wrong within its own jurisdiction without requiring parties to launch off into

expensive and often sterile litigation where the outcome is plain to all before it

begins: this must be the right and just approach.

43. I also add, that encouraging parties to seek judicial review when a much more

proportionate and less burdensome solution is available does not seem an

attractive proposition for the parties or the higher courts. Whilst the

Respondent Billing Authority remained neutral on this point, I’m not sure

continual visits to the High Court for judicial review applications would be an

attractive proposition to the vast majority of Billing Authorities in this country,

particularly when it comes to the added costs and delay in resolving disputes..

44. I have also reviewed the correct approach on a completion notice appeal. In

Reeves Mr Justice Holgate stated, when confronted with an argument as to

the matters the Tribunal can decide on a completion notice appeal, the

following:

“26. All of these points only serve to emphasise that the question

whether there is jurisdiction in a schedule 4A appeal to consider the

invalidity of a completion notice needs to be determined in a contested

case, or at least one where an undisputed assumption that jurisdiction

exists is tested with the assistance of counsel appointed as a friend of

the court. Full argument and citation of the relevant statutory

provisions and authorities would be necessary.”

45. For completeness, I have decided that the only issue for the Tribunal to

decide where an appeal is made against a completion notice is the date. This

is confirmed in Reeves (para. 10) and indeed was acknowledged by the past

President of this Tribunal in Prudential Assurance Company Limited v

Valuation Officer [2011] RA 490 and as recorded as such in Reeves when

confronted with a completion notice appeal:

“58. I therefore conclude from this review of the legislation that the

Tribunal in this case was not empowered to make the order that the

subject hereditament, namely Beluga House, be deleted from the 2005

rating list.

59. I do not find that conclusion surprising for a series of reasons.

First, the completion notice code simply provides a deeming provision

for the completion date of new buildings. However, a completion notice

may be invalid simply because it was incorrectly served or because the

new structure does not fall within the definition of a new building, that is

to say reasons which have nothing to do with the date when a new

development is completed. Second, treating a completion notice as

invalid merely prevents reliance upon that notice in order to create a

deemed completion date. Thirdly, that does not alter the continuing

duty of the valuation officer under section 41(1) of the 1988 Act to

maintain an accurate list based on the information that comes to his

attention. In most cases a building is likely to be completed at some

point in time, if not by the date deemed to be the completion date under

Schedule 4A. Fourthly, it seems to me to have been unlikely that

Parliament would have intended to confer on the VTE a power to direct

the deletion of a hereditament simply because a completion notice is

held to have been invalid and, as a result, the deeming provisions in

section 46A and Schedule 4A do not apply, bearing in mind the

valuation officer's continuing duty under section 41(1) and the fact that

he is not the originator of a completion notice.

…Indeed, at paragraph 6 of the decision in the Prudential case the

Tribunal took a completely different view of its jurisdiction, in contrast to

the present case, by stating that an appeal against a completion notice

under Schedule 4A is limited to challenging the date of completion and

does not cover any wider or more fundamental aspects”.

46. Both parties before me agreed that this was correct, and whilst not fully

argued , the wording of the legislation and the views of the High Court and the

past President of the Tribunal, confirm that. Therefore in respect of an appeal

against a completion notice the Tribunal can only decide the date. However,

Appellants would do well to heed the decision of the High Court in Reeves, in

that all the Tribunal can do is amend (or quash – see Spears Brothers v.

Rushmoor District Council [2006] RA 86) the notice, and this may still leave

an inaccuracy in the list.

47. Therefore, if an Appellant is of the opinion the outstanding work cannot be

completed within three months, an appeal against a completion notice will not

necessarily, if he is successful, produce the desired outcome which is a

removal of the entry from a rating list. It may be that, as in the case of

Reeves, the list is closed and no alteration can take place but it may also be

because despite the decision of the Tribunal, the Valuation Officer is satisfied

that the list is correct regardless of whether or not a completion notice exists

(a completion notice is not a prerequisite of a new entry in the Rating List).

Preliminary Issue - Time Constraints

48. There was a second preliminary point raised by the second Respondent in

respect of the appeals before me. Counsel stated there was an irrebuttable

presumption that the completion notices were valid arising from the

Appellant’s excessive delay in advancing the appeals (making proposals).

49. The completion notices were served on or about the 6 February 2009. The

original owner did not seek to challenge or appeal those notices. The

Appellant acquired its interest in the hereditaments on 3 November 2010,

following apparently extensive enquiries and investigations. It must have

known of the hereditaments’ appearance in the rating list and/or the

completion notices at the time. A challenge to the list on the basis of a lack of

a valid completion notice was not made until 31 March 2015. The Appellant

had provided no evidence to the contrary or to explain the delay.

50. In support of this contention the second Respondent relied on the decision of

the past President in Friends Life Company v. Alexander (VO) (June 2012 –

052019398853/036N10) where Professor Zellick recorded that a challenge to

a completion notice must be timely and excessive delay will create an

irrebuttable presumption that the notice is valid.

51. I can deal with this point quite shortly . Once I decided that the correct appeal

procedure was to submit a proposal on the grounds stated by the Appellant,

any time constraints must be the subject of those contained within the

relevant regulations. The artificial constraints created by Professor Zellick as

far as I can see have no statutory force and simply don’t exist.

52. This is not to criticise Professor Zellick, in fact I can see clearly what he was

seeking to achieve and indeed from reviewing a number of the decisions, the

very narrow point raised by the Respondent Valuation Officer earlier has

never been fully tested and, therefore the President was, in considering these

matters under a proposal, developing law which I believe to be correct (and

confirmed by the Court of Appeal). However, on the true construction of the

the law there is not a time limit that operates to frustrate the Appellants case.

53. Appellant’s counsel did make one concession on this point and that was to

clarify all he was seeking was to address the periods where he believed no

lawful completion notice had been served, the hereditaments were not

occupied and were not capable of occupation.

54. Time delays of such magnitude as provided in these appeals do not sit

happily with me. It might be very difficult for parties to ascertain the condition

of each hereditament at any one time. Indeed both the Respondents in this

appeal will consider they have been placed in a difficult position.

55. The persuasive or legal burden of proof on these appeals to satisfy me that

they were not capable of occupation during the period of dispute (provided I

find that no valid completion notice could have been served), and therefore

the Valuation Officer should not have entered them into the list, falls on the

Appellant. If he, in this appeal or any Appellant in any other, is unable to

satisfy the panel as to the condition of the hereditament under appeal, then

the appeal should not be allowed.

56. Finally these appeals (proposals) were not made by the initial owner or indeed

during the life of the hereditaments’ entries in the previous list. The question

to be asked was whether at the date the list was compiled (or when removal is

being sought) the entry in the list was correct on the basis that it allegedly

showed a hereditament that ought not to be shown. It would be quite wrong

in law to continue to allow an entry to exist where it relied exclusively on a

completion notice that has never been served or did not exist even when a

new list came into force or ownership of the building changed hands. This

does mean though that if at the ‘material day’ the hereditament was occupied

or indeed capable of occupation the appeal (if other panels follow my

reasoning) cannot be allowed.

57. As a result of my interim decision (published on 9 February 2018) the parties

were directed to advise me within 28 days of receipt whether:

a. The matter was to be appealed;

b. A substantive issue hearing was required; or

c. The appeals were to be settled.

58. I was advised by the parties that a substantive hearing was required and this

was arranged for Friday 11 May 2018 to determine whether the hereditaments

should have been entered in to the List.

The Substantive Issue

59. The parties referred me at the outset of the second hearing to the statement

of agreed facts where there had been a concession by the Respondents. It

was now agreed that the parts of the building in dispute were not capable of

beneficial occupation following practical completion of the works. In essence

this meant that if I found that completion notices had not (or could not have)

been served, the entries must be deleted for the periods in dispute.

60. The Appellant informed me that he wasn’t seeking deletion of all the entries

which arose through the service of completion notices for the life of the 2010

Rating List but a temporary removal in respect of the Ground Floor for the

period 1 April 2010 to 6 March 2013 and for the period 1 April 2010 to 15

March 2015 for the 1st Floor. In respect of the Second Floor I understood that

the deletion was sought for the period of the Rating List.

61. This left the following list of factual matters not agreed:

a. The condition of the property prior to the works being carried out;

b. The scope and extent of the works carried out;

c. Whether those works included alterations that were ‘structural’ in

nature; and

d. The condition that the property was in once the works had reached

practical completion.

62. I set out previously (paragraphs 24 onwards) the completion notice process

and what it sought to achieve. I was required by the parties to decide, and it

seemed to me the natural starting point, whether the whole of The Horizon

was a new property following the redevelopment works.

63. The first Respondent informed me, and it was not disputed by the Appellant,

that it was apparent from s.46A and the decision of the past President of this

Tribunal that there are two sub-categories of buildings which are ‘new

buildings’ (or part thereof) in accordance with s. 46A(1), namely:

a. Buildings which are new in the conventional sense, i.e. ‘brand new’

buildings (the conventional test); and

b. Buildings which are not ‘brand new’ but which qualify as ‘new buildings’

for the purposes of s.46A(1) because they have been so transformed

by alterations (and not necessarily structural alterations) that it is apt to

describe them as new buildings.

64. The first Respondent argued in the first instance that the whole of the building

(referred to as ‘the Building’) was a new building. He accepted that it was not

‘brand new’ but that the conversion of an office block, to offices and domestic

accommodation was such a significant change that it transformed the building

in to a new building.

65. The first Respondent drew my attention to the following changes:

a. prior to the redevelopment the Building was in an office-only use;

b. after the redevelopment the upper floors of the Building had been

wholly re-purposed for a residential use comprising 112 brand new

residential units;

c. the shear core of the Building had been altered and external balconies

added to the tower floors;

d. in order to support the residential use of the Tower floors, a ‘domestic

support’ area at Ground Floor level within the Building had been carved

out from the previous office unit;

e. the separation between residential and office uses at the Building was

reflected in the creation of separate access points within the Building

for these two separate uses;

f. the existing office accommodation at Ground, First and Second Floor

levels had been renewed to Category A specification in order to obtain

a letting;

g. the atrium of the premises comprising the Second Floor was in-filled to

create a roof terrace for the residential units; and

h. the Building was re-named in 2010 to reflect the fact that the

redevelopment had, in form and in substance, resulted in the creation

of a new building in Leicester.

66. In support of this he referred to the past President of this Tribunal’s decision in

Tull Properties Ltd V South Gloucestershire Council (0119M27310/212N05 -

issued on 7th October 2013) as to how he is able to form such a view. In that

appeal Professor Zellick stated:

“26. I have no hesitation in rejecting the respondents first argument that the

alterations to Beluga House created a “new building” according to the ordinary

meaning of that expression. In my judgment, it was plainly the same building

after the alterations as it was before. I am sure there can be buildings so

transformed by alterations that it is apt to describe them as new

buildings, but it takes more than a new floor, a lift, some windows,

additional lavatories and a reception desk. “(my emphasis in bold)

67. There had been a number of significant alterations to the building, but were

they so significant to transform it in to something else? I do not believe so.

With the exception of new cladding and the addition of balconies, the building

is basically the same. If you look at the skyline of the building before and after

you would notice little difference. The footprint of the shell has had little

significant change. I believe there would need to be a clear and significant

change to the shape or size of the building or to its character to create a new

building out of an existing one. A change of use from full non-domestic to part

non-domestic and domestic was not sufficient in my opinion to change its

character.

68. In conclusion I found that what occurred was not the creation of a ‘new

building’ but the redevelopment of an existing one. The identity of the

Building remained the same although it has moved from being purely office, to

office with domestic accommodation. I’m sure if the good folk of Leicester

were asked whether the building after the works was the same as before, the

answer would be yes but providing an additional facility, namely domestic

accommodation.

69. Furthermore, even if I am wrong on this point, the Billing Authority didn’t serve

one completion notice but a number for various parts. It is each of those parts

I needed to focus on as new buildings and in each case; they were not the

elements where significant alterations occurred to convert from offices to

domestic accommodation.

70. The question then for me to answer was whether each part meets the criteria

in s.46A(6)( that is the three areas subject to individual completion notices).

71. The past President set out in his decision in Tull Properties his understanding

of the law on this point:

“7. The legislation governing this matter is found in the Local Government

Finance Act 1988, s. 46A and Sched. 4A. The notice in this case was issued

under para. 1(1) of Sched. 4A, where a new building is incomplete but can be

completed within three months. The respondent contends that Beluga House

is a new building in the ordinary, everyday sense of the language or

alternatively that it falls within what Mr Lewsley calls the expanded meaning of

new building which is found in s. 46A(6), which is the only provision that

needs to be set out in full:

“In this section –

(a) “building” includes part of a building, and

(b) references to a new building include references to a building produced by

the structural alteration of an existing building where the existing building is

comprised in a hereditament which, by virtue of the alteration, becomes, or

becomes part of, a different hereditament or different hereditaments.”

8. I accept Mr Lewsley’s submission that subsection (6)(b) introduces an

alternative test so that under the Act the building must either be “new” under

subsection (1) or a building that satisfies the requirements of subsection (6)(b)

and is thus regarded as or deemed to be new for this specific purpose. He

calls this the expanded meaning which goes beyond the natural meaning in

ordinary English.

9. He asserts, and I accept, that the two components of the test under

subsection (6)(b) are –

(i) was the present building produced by the structural alteration of an

existing building; and

(ii) has the hereditament, by virtue of the alteration, become a different

hereditament or different hereditaments?

10. The questions for me, therefore, are (i) whether the works done to

Beluga House have produced a “new building” in the ordinary sense of

that expression or (ii) whether they constitute a structural alteration to the

hereditament which in consequence becomes a different hereditament or

hereditaments. There is no dispute over the meaning of “hereditament”, so

I shall not lengthen this decision by exploring its meaning. “

72. Counsel for the Appellant introduced six tests or hurdles when considering

this point. Similarly counsel for the first Respondent introduced four.

However, in my opinion all they were doing was breaking down Professor

Zellick’s approach in to smaller bite size chunks, which may be intellectually

interesting but of little real assistance in determining the issue: I prefer

Professor Zellick’s formula. There was one exception which does require

further investigation, and that is in connection with the language used.

73. Counsel for the Appellant argued that the existing building, to which the

structural works have taken place, must (prior to the works) have been

‘comprised in a hereditament’. Counsel argued that this suggested (and he

put no stronger word on the point) that where the existing building was

comprised in multiple hereditaments, s. 46A(6)(b) did not apply. Whilst he

conceded it produced a curious outcome, he argued that the reference to

‘hereditament’ singular was deliberate. That could be seen by the express

adoption, at the end of s.46A(6)(b), of the phrase ‘a different hereditament or

different hereditaments’ in the context of the post-works building.

74. Counsel for the first Respondent quite rightly drew me to the fact that when

interpreting legal provisions, unless clearly inappropriate, the singular term

should also be construed to mean the plural. Indeed, to do anything other

than this would create nonsense in cases such as these, where if the original

building as a whole was in one occupation and therefore one hereditament, it

would be treated differently to where the building was split. Not because of

any structural changes, but purely down to the nature of the occupations.

Indeed, there must be an argument that in the appeal before me there was

only one hereditament in one ownership prior to the work commencing.

Counsel for the first Respondent also drew my attention to other parts of the

legislation where the term ‘hereditament’ is used but can mean

‘hereditaments’. I am afraid that whilst, this was a bold and brave stance by

Mr Wilcox, it doesn’t even get out of the starting blocks and one argument I

am happy to dismiss without the need for further consideration.

75. This then leaves me with the questions set out by Professor Zellick. As

mentioned above both parties sought to break them down further which I

believed I did not need to do. The one concession I gave to Mr Wilcox was

that I had to be mindful that there must be a causative link between the

structural alteration and the building that is produced.

76. Much time was spent by the parties on the meaning of ‘structural alteration’.

One reference provided by the Appellant was the recent Court of Appeal

decision in Keith Newbigin (Valuation Officer) v. SJ & J Monk (A Firm) [2015]

EWCA Civ 78. This decision, in respect of the legal assumption of a state of

reasonable repair, was overturned by the Supreme Court. Counsel for the

Appellant informed me that the non-structural nature of the stripped-out

elements was not addressed by the Supreme Court and that this aspect of the

Court of Appeals approach remains undisturbed.

77. The state of the building was described by the Court of Appeal in the following

terms:

It was agreed that on 6 January 2012, which is the material date, the physical

state of the hereditament was as follows:

i) The first floor was vacant.

ii) The majority of the ceiling tiles and suspended ceiling grid and

light fittings had been removed.

iii) Approximately 50% of the raised floor had been removed.

iv) The comfort cooling system including all internal and external

plant had been removed.

v) The sanitary fittings had been removed and the block walls to

the WCs demolished.

vi) The electrical wiring had been stripped out.

vii) Plasterboard partitions had been erected and plastered to form

the outline for the WCs and a partition had been erected and

plastered across the floor at the east side of the building.

viii) First fix electrical installations to the WC area had been completed

and alterations made to the drainage.

78. The Court of Appeal held (at paragraph 30):

The subject-matter under discussion in our case is the hereditament as a

whole. In my judgment the replacement of the stripped out elements (none of

which was structural) can fairly be described as the replacement of subsidiary

parts of that whole. I would hold, therefore, applying Buckley LJ’s test that the

works in question can fairly be described as repairs…

79. One assumes that was a matter of fact, and indeed the elements described

would not appear to me to fall in to the category of ‘structural work’.

80. In Tull Properties the past President found that Beluga House didn’t meet the

test in s. 46A(6)(b). The work undertaken included the blocking up of

doorways, the creation of new windows, and the installation of new reception

areas and the enlargement of toilet areas.

81. Mr Wilcox concluded that all of the works undertaken at the buildings under

appeal were not structural and therefore didn’t meet the test. In support of his

contention, he referred to the Elliot Wood Partnership report of a structural

engineer which identified two areas where structural work had been

undertaken:

a. New balcony connections (not part of the buildings in dispute); and

b. Opening up of shear walls (also not relevant).

82. This report highlighted structural risks and was issued in May 2010 (two years

after the work). Clearly any item included in the list that covered work

undertaken during the conversion would be structural but its absence doesn’t

mean that structural alterations hadn’t taken place. The report wasn’t

prepared for the purpose of the hearing and the absence of any works from it

doesn’t mean they didn’t occur.

83. Mr Wilcox concluded that on the basis of the reports no structural alterations

occurred on any of the three floors in question. However, I am required to

examine all the evidence available given the limitations of the report.

The First Floor

84. It is not disputed by the parties that no structural alteration took place of any

consequence. On that basis a completion notice cannot be served and the

entry in the rating list must be deleted for the period 1 April 2010 to 15 March

2015.

The Second Floor

85. In respect of this area a large atrium in the ceiling was removed and in-filled.

Counsel for the second Respondent put to me that the external area had been

altered in both size and nature. It also created a roof garden above. This

was, in my opinion, a significant element of structural work with a large

amount of concrete and steel used. The works removed an atrium and

created an area of floor/roof which was utilised as a garden; by definition this

work must be structural as it clearly altered the use of the area involved and

even without of expert professional evidence from either side, it would defy

common sense to suggest these works were not of a structural nature.

Therefore, I find as a fact that as the works were structural in nature,

undertaken at the time of the conversion and affected the size and nature of

the floor it met the criteria set out by Professor Zellick in his two questions

(see above).

The Ground Floor

86. This was probably the hardest building to resolve. First of all, there appeared

to be little hard evidence of what did take place at the time of the works and

with the burden on the Appellant to prove his case, the evidence advanced

was not as clear cut as one might have hoped. However, having said that

there was some evidence of what took place and a number of assumptions

could be made from the layout of the area post the works as to what had

happened.

87. The parties don’t agree on whether any structural works were undertaken

during the redevelopment of the ground floor. From the evidence provided it

would appear an area was partitioned off to create a domestic entrance to the

flats above, a bin storage area and other associated services. An area

marked retail sales with a separate entrance on the plans was never

developed, leaving the only works described above that created what I have

called the ‘associated domestic support zone’.

88. On their own they would, in my opinion create a sufficient change to the

previous office area to create different hereditaments passing the second

question set by Professor Zellick. However, did any structural alterations

create these areas and consequently the Ground Floor in dispute? On the

findings of the Court of Appeal in Newbigin and the observations of Professor

Zellick in Tull Properties the works that took place could not be said to be

structural.

89. All parties seemed to consider that if I find for the Appellant in these appeals it

created a lacuna in the legislation, in that buildings which were developed but

not structurally altered could not be brought back in to the Rating List. The

Respondents argued that this cannot have been the intention of Parliament,

whereas the Appellant contended that I should not read words in to legislation

which were not present and created a different interpretation.

90. Simply put, as Professor Zellick found, I must read the legislation as it exists

and there is no scope for reading in to the statute words that are not there. It

may be that as a result of the Upper Tribunal decision in Porter v. Gladman

Sipps Tewkesbury Ltd [2011] UKUT 204 (LC) the test to bring a hereditament

in to the Rating List, or indeed back in to the Rating List, is much harder than

before and relies much more, if empty, on a completion notice being served.

But, that is the correct test as far as I can see and if a lacuna exists it is for

Parliament to address, not me.

91. On that basis the appeals in respect of the Ground Floor and First Floor are

allowed, whereas the appeal in respect of the Second Floor is dismissed.

92. May I conclude my extending my thanks to counsel for all parties for the most

professional and helpful way they conducted their arguments with a refreshing

brevity and lack of repetition, that one sees in some cases that have not been

as well prepared.

Order:

As a result of this decision the Valuation Officer is ordered to delete the entries in the

Rating List in accordance with Regulation 38 of the Valuation Tribunal for England

(Council Tax and Rating Appeals) (Procedure) Regulations 2009 as follows for the

periods stated:

Ground Floor, Thames Tower, 99 Burleys Way, Leicester for the period 1 April

2010 to 3 August 2010;

Ground Floor, The Horizon, 99 Burleys Way, Leicester for the period 4 August

2010 to 6 March 2013;

1st Floor, Thames Tower, 99 Burleys Way, Leicester for the period 1 April

2010 to 3 August 2010; and

1st Floor, The Horizon, 99 Burleys Way, Leicester for the period 4 August

2010 to 15 March 2015.

The Valuation Officer must comply with this Order within two weeks.

Mr G Garland

President

Mr J Bestow

Registrar

APPEAL NOs: 246525454690/538N10

246525454849/538N10

246525454856/538N10

246525454862/538N10

246525454867/538N10

22 May 2018 246525454875/538N10