For the appellant: Stuart QC; Simpson & Marwick

For the respondents: Haddow QC; Shepherd & Wedderburn

6 September 2012

Introduction
[1] This is an appeal by the assessor against a decision of the Valuation Appeal Committee for Fife (the Committee) [j1] by which it allowed 42 appeals by the respondents against the valuation of 26 shops in the Mercat Shopping Centre, Kirkcaldy (the Centre) at the 2010 Revaluation. The 2010 Revaluation took effect on 1 April 2010. The tone date for it was 1 April 2008.

[2] During the currency of the 2005 Roll, there were numerous appeals relating to shops in the Centre under section 3(4) of the Local Government (Scotland) Act 1975 (the 1975 Act). Those appeals were based on the contention that the fall in retail rental values caused by the economic recession constituted a material change of circumstances that had occurred after the Roll came into force. On 18 February 2010 the Committee found that there had been such a change and that it had caused a reduction in values of 20% with effect from 1 September 2009. On 10 December 2010, on the ratepayers' further appeal, this court substituted a reduction of 40% (Argos Distributors Ltd v Ass for Fife 2011 SC 272).

The legislation
[3] In my Opinion in Ass for Tayside VJB v Land Securities plc ([2012] CSIH 68), which we heard with this case, I have set out the relevant legislation.

The ratepayers' appeals
[4] In the present case the basis of each of the ratepayers' appeals was that since the rateable values entered in the 2010 Roll were assessed as at 1 April 2008, the Committee's finding that a material change of circumstances affecting the values in the 2005 Roll had occurred as at 1 September 2009 should be taken into account in the 2010 Revaluation, and that the values in the 2010 Roll should be reduced accordingly.

[5] In Ass for Tayside VJB v Land Securities plc (supra), in similar circumstances, the ratepayers' appeals were presented as revaluation appeals under section 3(2) of the Local Government (Scotland) Act 1975, as amended. In this case, the ratepayers' appeals were presented as "material change of circumstances" appeals under section 3(4) of the 1975 Act. The proposition for the ratepayers was that the values of the subjects in the 2010 Roll, struck at 1 April 2008, were excessive at the date on which the Roll came into force, by reason of a material change of circumstances that had occurred on 1 September 2009.

The Committee's findings in fact
[6] The Committee found that the Centre occupies the prime pitch on Kirkcaldy High Street. It has a total retail floorspace of around 20,000 square metres. In recent years tenant demand has fallen. The incidence of voids has increased. Units have been offered on licences at nil or negligible rents.

[7] The parties were agreed that the values assessed at the tone date were based on a Zone A rate of £690 psm; and that if the entries in the new Roll were to reflect the material change that occurred on 1 September 2009, the rate should be £350 psm. The parties were agreed that there had been no change in rental values after 1 September 2009.

[8] With one exception, the parties were agreed as to the appropriate values that should be entered in the Roll if the appeals should be allowed or should be refused. The exception concerned 22-24 The Mercat (HMV UK Ltd) where there had been an error in survey. It was agreed that that would be corrected by a new assessment in due course.

[9] The Committee found that entries of the subjects on the portal of the Scottish Assessors' Association had been made in June-August 2009, except for two subjects entered in March 2010. Most draft entries were intimated to the Scottish Ministers in August 2009. The Committee made no finding as to the date on which the entries were "made" for the purposes of section 3(4) of the 1975 Act.

The Committee's decision
[10] The Committee held that the obvious implication of the 1975 Act was that a material change in circumstances could occur at any point after the tone date, even a date before the roll came into force. Section 15 of the Local Government (Scotland) Act 1966 (the 1966 Act) and sections 1 to 3 of the 1975 Act were enacted in a time of stable or rising property values. Section 1(6)(c) of the 1975 Act allowed the assessor to give effect to any alteration in value that resulted from a material change arising between the date on which the roll was made up and the date on which it came into force. Section 2(1)(d) of the 1975 Act required the assessor to give effect to any alteration in value that resulted from a material change while the roll was in force. Section 3(4) permitted an appeal on the ground of a material change "since the entry was made." The Act did not provide for the occurrence of a fall in value after the tone date but before the roll came into force. The draftsman did not have such a possibility in mind. Parliament could not have intended that a dramatic downturn of the order of 40% would be ignored. Such an outcome was "unjust, absurd and contrary to the whole import of the rating legislation." In the view of the Committee it defied common sense. If the draftsman had foreseen this possibility, section 3(4) would instead have referred to a material change occurring since the tone date, rather than the date on which the entry was made. Section 3(4) should be read as if it was so worded.

[11] In effect, therefore, the Committee accepted that a fall in rental values during the currency of the 2005 Roll that constituted a material change of circumstances in relation to that Roll also constituted a material change of circumstances in relation to the 2010 Roll almost seven months before the assessor had to deliver copies of the Roll to the rating authority.

The assessor's appeal
[12] The assessor has appealed on the ground that a material change of circumstances occurring before the new Roll came into existence cannot constitute a material change of circumstances affecting an entry in the new Roll in terms of section 3(4) (supra).

Conclusions

[13] The Committee decided (1) that there was a lacuna in section 3 of the 1975 Act, namely that it failed to provide for the occurrence of a fall in value in the period between the tone date and the date on which the roll came into force; (2) that where there had been a fall in value in that period of the extent that has occurred in these cases, adherence to tone date values was unjust, absurd and so on, and (3) that section 3(4) should therefore be read as permitting an appeal to be brought if there had been a material change of circumstances since the tone date.

[14] That decision is insupportable. It is the duty of the Committee to decide appeals on the basis of what the legislation says and not what it would wish it to say. The wording of section 3(4), as the Committee has accepted, does not extend to the occurrence of a material change of circumstances after the tone date; and, to my mind, that is that.

[15] In its preoccupation with the substantial fall in values in these cases, the Committee lost sight of the essential point of law, namely to decide the period of time within which a material change of circumstances could occur for the purposes of section 3(4). As I said in Ass for Tayside VJB v Land Securities plc (supra, at para [22]), it is inevitable that values will fluctuate between the tone date and the revaluation date; but it is essential to any revaluation that there should be one fixed date at which all valuations are assessed. It would undermine the whole structure of the legislation if individual lands and heritages, or classes of lands and heritages, were to be valued as at some date later than the tone date simply because the values had fallen since then. It is obvious that the Committee chose to re-interpret section 3(4) as it did simply because the fall in value in this case was, in its view, dramatic.

[16] Section 3(4) specifies a period of time within which a relevant material change of circumstances can occur. It runs from the date on which the relevant entry is "made." The question in this appeal is to determine the date on which it can be said that an entry in the roll has been made. The point is not dealt with directly in Armour (Valuation for Rating, 5th ed, para 3-14); and we are not assisted, in my view, by the elusive dicta on the point in Ass for Grampian v Barclays Menswear Enterprises Ltd (1990 SLT 569).

[17] In my view, in the process by which a revaluation comes into force there are two key events, namely the delivery of copies of the new roll to the rating authority by the assessor (1975 Act, s 1(4)) and the revaluation date itself.

[18] The Valuation Timetable (Scotland) Order 1995 (supra) requires the assessor to deliver copies of the new roll to the rating authority on 15 March in the financial year before the year of revaluation (1995 Order, Sched); that is to say, about two weeks before the revaluation date (1995 Order, art 3). By that date, the lengthy process of survey, valuation and compilation of the new roll is assumed to be complete; although in practice that is not always the case (Armour, op cit, para 2-14).

[19] In my opinion, in the period up to its delivery to the rating authority, the new roll has no legal status. It is a draft only. It is subject to constant revision as further and better information comes to hand. The assessor is free to alter any draft entry at any time before delivery. In my opinion, any entry in the draft roll cannot, in the context of section 3(4), be regarded as an entry that is "made" in the roll.

[20] When copies of the new roll are delivered to the rating authority, the status of the roll changes. From that date the roll has a legally recognised existence (1975 Act, s 1(4)). It can then be said that the roll has been made up, and for that reason, in my view, it can be said that an individual entry has been "made."

[21] I am confirmed in that view by the fact that after the statutory act of delivering the roll, the assessor is no longer free to alter it at will. In the period "after the valuation roll has been made up and before the roll has come into force," he may alter the roll in only the four situations specified in section 1(6) of the 1975 Act. One of these is where there has been an "alteration in the value of any lands and heritages which is due to a material change of circumstances" (s 1(6)(c)). In my opinion, the material change of circumstances to which that provision refers must be one that occurs after the date of delivery of the roll and before the revaluation date.

[22] In the present case the alleged material change of circumstances is said to have occurred on 1 September 2009. That is a date when the 2010 Roll was still in the process of being made up. I conclude therefore that 1 September 2009 is not a date that is within the period contemplated in section 3(4).

[23] The Committee also floated the idea that the decision of this court in Argos Distributors Ltd v Ass for Fife (2011 SC 272), in which we held that the Committee in that case had been entitled to hold that 1 September 2009 was the effective date of a material change of circumstances, was itself a material change of circumstances in the form of a "relevant decision" of this court (1975 Act, s 37(1)). In my opinion, that idea simply repeats the Committee's error in having regard to a material change of circumstances affecting the previous roll at a date when the new roll did not exist.

[24] For these reasons I consider that the assessor's appeal is well founded.

Disposal
[25] I propose to your Lordships that we should allow the appeal except in relation to 22-24 The Mercat, the entry for which will be corrected by the assessor in the normal way.

For the appellant: Stuart QC; Simpson & Marwick

For the respondents: Haddow QC; Shepherd & Wedderburn

6 September 2012

[26] For the reasons given by your Lordship in the chair I agree that we should allow the appeal except in relation to 22-24 The Mercat, the entry for which will be corrected by the assessor.

For the appellant: Stuart QC; Simpson & Marwick

For the respondents: Haddow QC; Shepherd &Wedderburn

6 September 2012

[27] I agree with the opinion of your Lordship in the chair and have nothing to add.