LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Philip Lord Kingarth	[2006] CSIH 50 XA71/06 OPINION OF THE LORD JUSTICE CLERK   in the Appeal by   B & Q plc Appellant;   against   THE ASSESSOR FOR DUNBARTONSHIRE AND ARGYLL & BUTE VALUATION JOINT BOARD Respondent: _______

For the Appellant: MacIver; Brodies

For the Respondent: Clarke; Simpson & Marwick

 

24 October 2006

 

Introduction

[1] This is an appeal against a decision of a Valuation Appeal Committee dated 16 November 2005 relating to a retail warehouse at Strathkelvin Retail Park, Bishopbriggs, of which the appellant is the tenant.

[2] The assessor entered the subjects in the Valuation Roll with effect from 19 August 2004 at a net annual value and rateable value of £1,135,000. This being a new entry in an intermediate year, the valuation had to be made according to the tone of the Roll at the 2000 Revaluation (Local Government (Scotland) Act 1966, s 15). The appellant appealed against the assessor's valuation. The VAC refused the appeal.

[3] The subjects are of the "large box" type. They are close to the Glasgow boundary on a busy arterial road and are about 6 miles from the city centre. The appellant took entry to the subjects on 27 June 2004 on a 20-year lease at an initial rent of £1,275,000 pa, with a 20-week rent-free period and a premium paid by the landlord of £1,250,000.

[4] It is common for the landlord in such cases to give the tenant a reverse premium and A rent-free period at the outset of the lease. Rental evidence relating to such subjects is therefore not straightforward. There are few operators of retail warehouses of this size. They operate in their own marketplace. Rental evidence from other types of retail outlets is of little, if any, value as a guide (cf B & Q plc v Ass for Renfrewshire Valuation Joint Board, [2004] RA 220).

 

The comparison evidence

[5] There are ten other such warehouses in Scotland. Three are in Edinburgh, Dundee and Aberdeen and were disregarded for the purposes of this case. Of the others, three are in Glasgow, two are in Renfrewshire and two are in Lanarkshire. The parties valued the appeal subjects by reference to these comparisons on the basis of rates per square metre as at the tone date. These rates were derived from the rateable value and the so-called "reduced area" of the comparisons. All of these subjects had a reduced area within the narrow band of 9,548.86 sm to 11,360 sm.

[6] The three Glasgow comparisons were situated at the Great Western Retail Park, Leggatstone Road and Forge Retail Park. Each was entered in the Roll at the 2000 Revaluation at a value based on a rate of £95 psm. These values were settled with the assessor by professional agents.

[7] The Renfrewshire comparisons were situated at Abbotsinch Retail Park, Paisley, and at Braehead Retail Park, Renfrew. The valuation of the warehouse at Abbotsinch was fixed by a decision of the Lands Tribunal for Scotland (B & Q plc v Ass for Renfrewshire Valuation Joint Board, supra). It represented a rate of £96 psm. When the warehouse at Braehead was entered in the Roll, it straddled the boundary between the Glasgow and Renfrewshire valuation areas. The valuation was made by the Glasgow Assessor. It was based on a rate of £95 psm. When a boundary change brought the entire warehouse within the Renfrewshire valuation area, the Renfrewshire Assessor was not disposed to disturb the valuation.

[8] The Lanarkshire comparisons were warehouses at East Kilbride and at Coatbridge situated about 7.5 miles and 10.5 miles respectively from the centre of Glasgow. The Lanarkshire Assessor valued both of these at a rate of £85 psm from which he deducted a 15% quantum allowance, giving a net rate of £72.25 psm.

 

The assessor's valuation

[9] The assessor considered that the location of the subjects of appeal was similar to those of the Glasgow and Renfrewshire comparisons, and should be valued by reference to them. Since the £95 and £96 psm rates reflected the prominent locations of the Glasgow and Renfrewshire comparisons in relation to main roads and the motorway network, he considered that a rate of £85 psm for the appeal subjects adequately reflected their less advantageous location. He then made a quantum allowance of 2% for two reasons, namely (1) that the appeal subjects, at a reduced area of 11,636.76 sm, were marginally larger than any of the other comparisons and (2) that although the appeal subjects were larger than had been originally proposed, the pre-agreed level of rent had not been increased. The assessor rejected the evidence of the Lanarkshire comparisons because they were in a different market and because, since all of the comparisons were "large boxes" of similar size, the quantum allowance given to them was not appropriate.

 

The appellant's valuation

[10] The appellant's advisers valued the subjects by reference to the net rate psm of the Lanarkshire comparisons at an NAV/RV of £845,000.

 

Decision of the Committee

[11] The Committee's decision was intimated in the following terms:

"The appellant's evidence is not sufficient to satisfy the Committee that the Assessor's valuation was incorrect. It was not appropriate to confine the comparisons only to East Kilbride and Coatbridge. The location of Bishopbriggs had been taken into account in the reduced rate of £85 with a quantum adjustment of 2%. Accordingly the Assessor's figure is upheld".

 

 

Submissions for the parties

[12] Counsel for the appellant submitted that the VAC erred in law in upholding the assessor's valuation in the absence of any rental evidence to support the rate of £85 psm or the quantum allowance of 2%. Since the assessor had discarded the rates on which the Glasgow and Renfrewshire comparisons were based, it was incumbent on him to justify the adoption of the rate of £85 psm. He had failed to produce any rental evidence from the Bishopbriggs area. Therefore the only rate that the VAC could properly accept was that of the Lanarkshire comparisons. The VAC had further erred in its approach to onus. The onus was on the assessor to explain and justify his valuation. He had failed to do so. The VAC had erred in accepting the assessor's unsubstantiated valuation. The court should set aside the decision and substitute the valuation contended for by the appellant.

[13] Counsel for the assessor submitted that it was for the VAC to decide which were the appropriate comparisons. It decided that the Glasgow and Renfrewshire comparisons were the most cogent, but recognised that the appeal subjects were at a locational disadvantage which the assessor's rate of £85 psm, with a quantum allowance of 2%, adequately reflected. It also accepted that the Lanarkshire comparisons were not valid for the reasons given by the assessor.

 

Conclusions

[14] In my opinion, the Committee was entitled to uphold the assessor's valuation. The case for the appellant was based on the rate applied in the Lanarkshire comparisons. Since all of the comparisons relied on by the parties were similar "large box" retail warehouses having reduced floor areas within such a narrow range, I cannot see why in the Lanarkshire cases the assessor allowed a 15% quantum discount. The appellant tendered no evidence to the VAC to explain or justify that allowance.

[15] The essential submission for the appellant was that the assessor discarded the Glasgow and Renfrewshire rates and provided no rental evidence from the Bishopbriggs area to substantiate the rate of £85 psm. In my opinion, the assessor did not discard the Glasgow and Renfrewshire rates at all. He started with those rates and adjusted them to reflect the relative disadvantage of the appeal subjects. In the circumstances of this case, the assessment of the amount of the adjustment was not dependent on evidence. Given the special nature of the appeal subjects, there could be no relevant rental evidence from other retail subjects in the Bishopbriggs area. The amount of the adjustment therefore fell to be made in the exercise of the valuer's professional skill (cf Western Heritable Inv Co v Husband, 1983 SC (HL) 60, Lord Keith of Kinkel at p 75). Why the assessor adjusted the rate to £85 psm, rather than to any other figure, was in the circumstances incapable of mathematical proof. It was a professional judgment which the VAC was entitled to accept if it considered it to be reasonable. The essential point was that the assessor had to explain, as he did, what the amount of the adjustment was and why he had made it.

[16] I should add that in my opinion the submission for the appellant on the question of onus is misconceived. When a proposed valuation is challenged by the ratepayer, the assessor must justify it and explain his approach (cf Drybrough & Co Ltd v Assessor for Strathclyde, 1982 SLT 426). But when the parties have presented their cases, the question of onus falls away. This case involved a straightforward assessment of comparison evidence. The essential facts about the relevant comparisons were not in dispute. The assessor clearly and adequately explained his reasoning. I do not interpret the VAC's decision to mean that it regarded the appellant as having failed to discharge an onus. The appellant's advisers knew how the assessor's valuation was arrived at. When the parties had explained their respective valuations, it was for the VAC to weigh them up and make its decision (Dunfermline Corporation v Assessor for Fife, 1962 SC 321, Lord Patrick at p 329.

 

Decision

[17] I propose to your Lordships that we should refuse the appeal.

 

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Philip Lord Kingarth	[2006] CSIH 50 XA71/06 OPINION OF LORD PHILIP   in the Appeal by   B & Q plc Appellant;   against   THE ASSESSOR FOR DUNBARTONSHIRE AND ARGYLL & BUTE VALUATION JOINT BOARD Respondent: _______

 

For the Appellant: MacIver; Brodies

For the Respondent: Clarke; Simpson & Marwick

 

24 October 2006

 

[18] I agree that the appeal should be refused for the reasons set out by your Lordship in the Chair.

 

 

LANDS VALUATION APPEAL COURT, COURT OF SESSION
Lord Justice Clerk Lord Philip Lord Kingarth	[2006] CSIH 50 XA71/06 OPINION OF LORD KINGARTH   in the Appeal by   B & Q plc Appellant;   against   THE ASSESSOR FOR DUNBARTONSHIRE AND ARGYLL & BUTE VALUATION JOINT BOARD Respondent: _______

For the Appellant: MacIver; Brodies

For the Respondent: Clarke; Simpson & Marwick

 

24 October 2006

 

[19] I agree, for the reasons given by your Lordship in the Chair, that the appeal should be refused.