The decision of the Upper Tribunal (Lands Chamber) in Jackson (VO) v Canary Wharf Limited (2019) UKUT 0136 (LC) will, we hope, finally clarify the approach to be adopted when valuing for rating properties undergoing redevelopment or refurbishment. The case concerned two floors of a tower block (One Canada Square) at Canary Wharf, which had been stripped out in 2011 following a previous tenant vacating them, and which remained stripped out until 2014. The ratepayer, who was the owner of the building, had sought a nominal value for the floors whilst they remained in a stripped-out condition. The Valuation Tribunal for England had determined that this was the correct approach and applied a nominal rateable value. The Valuation Officer appealed to the Upper Tribunal against that determination.
In the Upper Tribunal the Valuation Officer contended that the question to be considered was whether the appeal property was a “building under reconstruction”. If this was a case then the reasoning given by the Supreme Court in SJ & J Monk v Newbigin (VO) would apply and a nominal rateable value would result. However, if the appeal property could not be shown to be undergoing reconstruction, then the assumed reasonable state of repair, contained in rating legislation, would apply.
It was the Valuation Officer’s contention that the appeal property could not be shown to be a building under reconstruction at the relevant date because there was, at that date, no contract of works for redevelopment or refurbishment of the appeal property, and no evidence of constructive works taking place at the property on the relevant date. Whilst the building owner may have had a clear intention to reinstate the property, the basis of valuation for rating did not allow subjective intentions of the actual landlord to be considered.
The Upper Tribunal dismissed the Valuation Officer’s appeal, noting that the Valuation Officer’s contentions were “plainly contrary to the decision of the Supreme Court in Monk”. The Supreme Court’s decision did not create a category of “buildings undergoing reconstruction” which represented an exception to the repairing assumption. Instead, that decision made clear that, before applying the repair assumption, there was a logically prior question as to whether the appeal property is capable of beneficial occupation, and can therefore represent a hereditament. Premises which are not capable of beneficial occupation cannot represent a hereditament, and therefore should not be included in the rating list, other than by inclusion at a nominal rateable value “as an administrative convenience”.
There was nothing in the Supreme Court’s decision that required the existence of a detailed programme of works. Instead, what was required was an objective assessment of whether or not the appeal property was capable beneficial occupation. It was also wrong to suggest that the actions of the actual landlord must be ignored because only those of a hypothetical landlord should be taken into account. The assessment of whether or not the property was capable of beneficial occupation is a matter of objective fact requiring no hypothetical assumptions.
The Upper Tribunal dismissed the Valuation Officers appeal, and the nominal assessment of rateable value £1, determined by the Valuation Tribunal, was upheld.
It is hard for the external observer to understand the reasoning that led the Valuation Officer to pursue this appeal. There is, apparently, little distinction in fact between this case and that determined by the Supreme Court in Monk. It was Albert Einstein who said “the definition of insanity is doing the same thing over and over again and expecting different results”. The Upper Tribunal seemed to think the same, giving short shrift to the Valuation Officer’s submissions as to the difference between this case and Monk. We understand that the Valuation Office Agency will now rewrite its rating manual, and hope that any remaining cases on this topic can be disposed of without further delay or dispute.