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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Magell Ltd v Dumfries And Galloway Regional Assessor [2004] ScotCS 179 (15 July 2004) URL: http://www.bailii.org/scot/cases/ScotCS/2004/179.html Cite as: [2004] ScotCS 179 |
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LANDS VALUATION APPEAL COURT, COURT OF SESSION |
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Lord Justice Clerk Lord Nimmo Smith Lord Clarke
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XA8/04 OPINION OF THE LORD JUSTICE CLERK in STATED CASE in the cause MAGELL LIMITED Appellants; against DUMFRIES and GALLOWAY REGIONAL ASSESSOR Respondent: (Subjects: Factory at Edingham, Dalbeattie) _______ |
Act: MacIver; Morton Fraser
Alt: Stuart; Drummond Miller
15 July 2004
[1] This appeal relates to a complex of industrial buildings occupying a site on the Edingham Industrial Estate, near Dalbeattie. They have been entered in the Roll at a rateable value of £142,000. [2] The original buildings were built about 60 years ago; but on most of the site there are modern buildings that form a purpose-built unit, 300 metres long, accommodating a fully-automated production line with storage buildings in a side wing. [3] In 1999, the then owners, Sutex Limited, let the site to Express Dairy Property Company Limited (Express Dairies) on a 15 year full repairing and insuring lease with effect from 1 January 2000 at an annual rent of £75,000 and with a three-yearly mutual break option and rent review. In 1999 the appellant bought the property subject to the lease for £505,000. In 2002 Express Dairies assigned the lease to Milklink Processing Limited. The buildings are used for storage and distribution. [4] The site is about one mile from Dalbeattie and about thirteen miles from Dumfries. Although there is no finding in fact on the point, it is not disputed that the site is about 7 miles from the A75, the nearest arterial road. [5] The valuation date for the 2000 Revaluation was 1 April 1998. In the course of the Revaluation the assessor valued 60 factories and 1,809 stores and workshops in his area. All of the values were accepted by the ratepayers, or agreed after negotiation, on the basis of the assessor's quantum and layout scheme. Before the Committee the parties agreed that the gross valuation of the appeal subjects should be assessed in accordance with the scheme at £192,475. That was based on a basic rate of £20. The issues between them related to the application of end allowances for layout and location. [6] The assessor tendered comparisons of larger factory units in the area to show that the quantum scheme had been uniformly applied and accepted, and that in accordance with that scheme the valuation in this case included a quantum allowance of 27%. He made an end allowance of 5% for layout. [7] The assessor's witness said that the £20 basic rate was derived from rental analysis the evidence for which included evidence from the Dalbeattie area and from industrial property on the Edingham Industrial Estate. The rate reflected the level of value in the Dalbeattie area and was influenced by the location. The quantum scheme reflected the influence of size on the level of value. The interplay of the basic rate and of the quantum allowance reflected location and size in relation to location. The quantum and layout allowances produced a net figure, rounded down, of £133,000 which he asked the Committee to substitute for the figure entered in the roll. [8] The appellant's surveyor contended that the letting of the subjects at a yearly rent of £75,000 less than 20 months after the valuation date was evidence of prime importance because there was no rental evidence for subjects of comparable size, type and location, and because there had not been a general downturn in rents for industrial properties in Dalbeattie between the valuation date and the date of the lease. An arms' length transaction of this kind, concluded after proper marketing and professional representation, was the best available guide to the hypothetical rent on which the valuation was based. The only suitable use for the appeal site was for large storage and distribution or major manufacturing operations. It would be unlikely to attract such uses, in view of its remoteness and inaccessibility, except at a substantially discounted rent. It was unique in the valuation area in this respect and was at a significant disadvantage to the assessor's comparison sites. A prospective tenant would expect a discount on rent of at least 25%. The agreed total value of the buildings, less the agreed quantum allowance, with end adjustments of 22% for layout and 25% for location produced a rateable value, rounded up, of £75,000. [9] The Committee held inter alia that the quantum allowance was correctly and fairly set at 27%; that the subjects did not merit any layout allowance beyond that applied to other large purpose-built factories; and that the layout allowance of 5% was reasonable and proper. It therefore refused the appeal, subject to the substitution of the assessor's revised figure. [10] The Committee did not make any findings in fact on the subject of the location and its disadvantages, or on the comparisons cited by the assessor; nor did it explain how it had interpreted the comparison evidence. [11] The Committee's reasons, so far as relevant to this appeal, were as follows:"[1] The calculation of the assessment of the revised rateable value of £133,000 as detailed by the assessor was accepted by the Committee [by a majority] ...
[3] The assessor had given proper consideration to the layout and location of the appeal subjects in reaching his calculation of the revised rateable value; and [4] The Committee by a majority did not accept [the appellant's] argument regarding the current rent of £75,000 per annum payable by the tenants for the appeal subjects as being applicable or relevant in assessing the rateable value in the appeal under consideration, as the said rent was set after the valuation date".|
LANDS VALUATION APPEAL COURT, COURT OF SESSION |
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Lord Justice Clerk Lord Nimmo Smith Lord Clarke
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OPINION OF LORD NIMMO SMITH in STATED CASE in the cause MAGELL LIMITED Appellant; against DUMFRIES and GALLOWAY REGIONAL ASSESSOR Respondent: (Subjects: Factory at Edingham, Dalbeattie) _______ |
Act: MacIver; Morton Fraser
Alt: Stuart; Drummond Miller
15 July 2004
[21] I agree with your Lordship in the chair that the appeal should be allowed, the decision appealed against should be recalled and that the case should be remitted back to the Committee in the manner proposed by your Lordship. Since I am in entire agreement with the reasons given by your Lordship for this disposal, there are only a few further observations which I wish to make. [22] As Lord Clyde said in Simmons Furniture Store Ltd v Assessor for Dumfries and Galloway 1989 SLT 4 at page 9K-L, the rent payable under a lease of the subjects is an element to be taken into consideration in arriving at the valuation, but the weight to be given to it depends upon the circumstances of the particular case. In some cases consideration of the terms of the letting or the circumstances in which it was entered into may lead to it being treated as of very little weight or even discredited and put aside altogether. Even where the rent seems otherwise reliable the weight to be given to it remains a matter of the circumstances. Where other evidence is deficient or non-existent, an actual rent may become of very great importance or even be conclusive (see Debenham's plc v Assessor for Grampian Region 1992 SLT 309). Where there is a substantial body of rental evidence which provides a clear indication of the proper level of value, then the particular rent may be of very little weight. Where, as here, the lease has been entered into after the valuation date, consideration will have to be given to the question whether there has been any material change in the level of rents payable for comparable properties in the valuation period between the valuation date and the date when the lease was entered into. These, however, are all considerations which go to the weight to be given to the rent payable under a lease of the subjects, which is a matter for the Committee. [23] In my opinion the majority decision of the Committee that the current rent was not "applicable or relevant" in assessing the rateable value of the subjects, as the rent was set after the valuation date, constituted a material misdirection. If the Committee had taken account of the rent, it might well have been led to look more critically at the evidence for the assessor that location was adequately reflected in the assessor's scheme, and more favourably on the contention for the appellant that there should be a further end allowance for location. Although counsel for the appellant invited us to perform this exercise ourselves, by accepting the 25% end allowance for location contended for by the appellant's surveyor before the Committee, I agree that this is not a course which we should follow. It involves the making of a finding of fact which should properly be made by the Committee. In addition, the acceptance by counsel for the appellant of the layout allowance of 5% proposed for the assessor, rather than the 22% contended for before the Committee, may in any event affect the view to be taken of the appropriate percentage, if any, to be allowed for location. All of these are matters for the Committee to consider in deciding what weight to give to the current rent for the subjects. [24] I am in no doubt that it is open to the Committee to have a further hearing and to make a fresh decision, as directed by this court, notwithstanding the provisions of the 1995 Order. The order governed the timetable up to the point when the Committee disposed of the appeal. Further procedure before the Committee will be governed by the directions of this court rather than the 1995 Order.Magell Ltd v Dumfries And Galloway Regional Assessor [2004] ScotCS 179 (15 July 2004)
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LANDS VALUATION APPEAL COURT, COURT OF SESSION |
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Lord Justice Clerk Lord Nimmo Smith Lord Clarke
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OPINION OF LORD CLARKE in STATED CASE in the cause MAGELL LIMITED Appellant; against DUMFRIES and GALLOWAY REGIONAL ASSESSOR Respondent: (Subjects: Factory at Edingham, Dalbeattie) _______ |
Act: MacIver; Morton Fraser
Alt: Stuart; Drummond Miller
15 July 2004
[26] There is only one point remaining in these appeals and it is determinative of the way in which they should be disposed of. Counsel for the assessor conceded that the Committee were wrong to regard the current rent payable by the tenants for the appeal subjects as being an irrelevant consideration in arriving at the proper valuation of the subjects. He, somewhat faintly, contended, however, that, had the Committee taken this factor into account the result would have been the same. I do not agree that this is a conclusion that this court could arrive at. The Committee closed their mind to a relevant factor for a palpably wrong reason. Had they not committed that error, and had they taken the rent into account, as a relevant consideration, they may well have arrived at a different result and, in particular, they may have reached the conclusion that the valuation proposed by the assessor was, at the very least, questionable. They should, accordingly, in my judgment, be required to re-hear the appeal, taking into account the evidence of the rent currently payable for the subjects for whatever weight they consider that evidence has in the circumstances. For the reasons given by your Lordship in the chair I do not consider that the appellant's counsel's concern as to whether it was competent for the Committee now to reconsider the matter under direction from this court has any foundation.
