For the appellant: Stuart QC; Simpson and Marwick

For the respondents: Haddow QC; Dundas & Wilson

6 September 2012

Introduction
[1] This is an appeal by the assessor against a decision of the Dundee Valuation Appeal Committee (the Committee) by which it allowed 49 appeals by the respondents against the valuation of shops in the Overgate Centre, Dundee (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 in relation 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. The appeals were settled with the assessor on an agreement that the recession had constituted a material change of circumstances and that it had occurred as at 1 April 2009.

The legislation

Local Government (Scotland) Act 1966
[3] Section 15(1) of the Local Government (Scotland) Act 1966 (as amended) (the 1966 Act) provides inter alia as follows:

"For the purposes of any new or altered entry to be made in a valuation roll after the passing of this Act for a year other than a year of revaluation at any time the valuation roll is in force, the value or altered value to be ascribed to lands and heritages shall not exceed the value which would have been ascribed thereto in that roll if the lands and heritages to which the entry relates had for valuation purposes been subsisting throughout the year before the last year of revaluation ... "

This is the "tone of the roll" provision that ensures that the valuations made at a revaluation and those that are made during the currency of the Roll are related to a common base. It provides that during the currency of the roll, the value ascribed to the subjects in a new or altered entry shall not exceed the value that would have been ascribed to them at the tone date; but, by implication, the value ascribed to them may be less than that. The respondents submit that that is a significant consideration.

Local Government (Scotland) Act 1975

[4] Section 1 of the Local Government (Scotland) Act 1975 (the 1975 Act), as amended, provides inter alia as follows:

" ... (2) Subject to any alterations to the valuation roll made under this section and section 2 of this Act, every valuation roll shall remain in force until it is superseded by a new valuation roll ...

(6) The assessor for any valuation area may as respects that area, at any time after the valuation roll has been made up and before the roll has come into force, alter the roll ...

(c) to give effect to any alteration in the value of any lands and heritages which is due to a material change of circumstances ... "

Section 2, as amended, provides inter alia as follows:

"2(1) ... the assessor for any valuation area shall, as respects that area, at any time while the valuation roll is in force, alter the roll ...

(d) to give effect to any alteration in the value of any lands and heritages which is due to a material change of circumstances ...

(f) to correct any error of measurement, survey or classification or any clerical or arithmetical error in any entry therein ... "

(2) Any alteration to the roll- ...

(c) made under subsection (1)(d) above, shall have effect only as from the date of the event by reason of which the alteration is made or as from the beginning of the year in which the alteration is made, whichever is the later ...

Section 3, as amended, provides inter alia as follows:

"3(2) The assessor for each valuation area shall send to each person who is a proprietor, tenant or occupier of lands and heritages which are included in the valuation roll a notice in the prescribed form ... and any such person ... if he considers himself aggrieved by the entry, may appeal to the valuation appeal committee ...

(4) Without prejudice to subsection (2) above, the proprietor, tenant or occupier of lands and heritages which are included in the valuation roll may appeal against the relevant entry but only on the ground that there has been a material change of circumstances since the entry was made or that there is such an error in the entry as is referred to in section 2(1)(f) of this Act ...

(4A) An appeal under subsection (4) above shall be made-

(a) on the ground that there has been a material change of circumstances since the entry was made, not more than six months after the roll ceases to be in force;

(b) on the ground that there has been such an error in the entry as is referred to in section 2(1)(f) of this Act, at any time while the roll is in force ... "

Valuation Timetable (Scotland) Order 1995
[5] For the 2010 Revaluation the effects of the Valuation Timetable (Scotland) Order 1995 (SI No 164) (the 1995 Order) are that (i) valuations are to be made on the basis of rental levels prevailing at 1 April 2008 (the tone date); (ii) valuations are to be made on the basis of the physical circumstances of the properties as at 1 January 2010; (iii) the assessor is to deliver copies of the valuation roll to the rating authority by 15 March 2010; and (iv) the deadline for lodging an appeal under section 3(2) of the 1975 Act is the later of 30 September 2010 or a date within six months of the period beginning with the date on which the assessor sent to the ratepayer the relevant notice under section 3(2) of the 1975 Act (supra).

The ratepayers' appeals
[6] The appeals by the ratepayers against the entries in the 2005 Roll were "material change of circumstances" appeals under section 3(4) of the 1975 Act (supra). The stated case raises a doubt as to the status of the ratepayers' present appeals. There are various references in it to a material change of circumstances. The note of the parties' submissions to the Committee indicate that the appeals were discussed in the context of section 3(4) of the 1975 Act (supra). Counsel for the ratepayers relied on section 3(4) at the hearing of this appeal. If these are to be regarded as material change of circumstances appeals under section 3(4), they must fail, in my view, for the reasons that I have given in Ass for Fife v Mercat Kirkcaldy Ltd ([2012] CSIH 67). However, I agree with the submission of counsel for the assessor that since these appeals were lodged against the entries in the new Roll, they are in reality straightforward revaluation appeals under section 3(2) of the 1975 Act.

[7] The basis of each of the appeals is that since the rateable values entered in the 2010 Roll were values assessed as at 1 April 2008, the assessor's agreement that a material change of circumstances affecting the values in the 2005 Roll had occurred as at 1 April 2009 should be taken into account in the 2010 Revaluation, and that the values in the 2010 Roll should be reduced accordingly.

[8] The parties are agreed on the rateable values of each of the appeal subjects as at the tone date of the current Revaluation.

The Committee's findings and its decision

The findings in fact
[9] The Committee found that all of the appeal subjects were situated within the Lower Mall of the Centre.[j1] Entries in the 2005 Roll had originally been based on a Zone A rate of £1,050 psm.

[10] The parties were agreed that as at 1 April 2008, the tone date for the 2010 revaluation, the appropriate rate was £875 psm.

[11] The appeals against entries in the 2005 Roll on the basis of a material change of circumstances were settled on the basis that for subjects in the Lower Mall values based on a Zone A rate of £700 psm should be substituted with effect from 1 April 2009.

[12] Rents struck between 1 April 2008 and 1 April 2010 had been at materially lower levels than at the tone date. If that change could properly be taken into account, the appropriate Zone A rate should be £700 psm.[j2]

[13] The Committee also made a finding that the 2010 Roll was "not extant in a completed format" before 15 March 2010.[j3]

The decision
[14] The Committee observed that "strictly speaking" the assessor fulfilled his statutory duty because the figures that he assessed were correct as at the tone date. However, strict adherence to the legislation would create a situation that was inequitable and unfair; and was most unlikely to have been intended by the legislature. It was common ground that the economic downturn had caused a fall in rents that amounted to a material change of circumstances as at 1 April 2009 in respect of the 2005 Roll. Nothing had changed in terms of the levels of rent passing between that date and 1 April 2010 when the 2010 Roll had come into force; yet strict adherence to the legislation would mean that the fall in value could not be reflected in the 2010 Roll. This was anomalous. A further anomaly was that when altered or new entries were made in the 2010 Roll, they would be based on the then prevailing rental values, which, in the Committee's view, would be lower than the tone value. The Committee therefore allowed the ratepayers' appeals.

Conclusions

[15] The issue in this appeal is whether a material change of circumstances that is agreed to have occurred during the currency of the 2005 Roll at a date after the tone date of the 2010 Roll should be reflected in the rateable values entered in the 2010 Roll.

[16] In Ass for Dunbartonshire, Argyll and Bute v Akram ([2011] CSIH 79) this court considered the general principles that apply to an entry made at a revaluation (ibid, at paras [4]-[7]). The basic principles are (i) that each revaluation constitutes a fresh start; (ii) that the values in the new roll result from a re-assessment of the subjects that supersedes the values that were entered in the previous roll when it came into effect, or any revised values that were entered during its currency in consequence of a material change of circumstances; and (iii) that it is not proper to use a valuation made under a valuation scheme for a previous roll as a basis on which to challenge the valuation made under the scheme for a new roll (Belhaven Brewery Group plc v Glasgow City Ass [2003] RA 98).

[17] The practical effects of the revaluation provisions are well understood. The exigencies of a re-assessment of all of the lands and heritages within a valuation area for the purposes of a new roll necessitate the adoption of a valuation date that is earlier than the date on which the roll will come into force. Under the present legislation, lands and heritages are revalued as at a date two years before the new roll comes into force (cf 1995 Order, art 3; Sched).

[18] In Ass for Dunbartonshire, Argyll and Bute v Akram (supra) we observed that since the tone date for a revaluation falls within the currency of the previous roll, it is almost inevitable that the new value will be different from that in the existing roll. We therefore rejected the contention for the ratepayers that a new value assessed at the tone date for a forthcoming revaluation can constitute a material change of circumstances in relation to the value entered in the current roll.

[19] The contention for the ratepayers in this case is that a fall in value constituting a material change of circumstances for the purposes of the previous roll should govern the valuation of the same subjects in the new roll.

[20] The Committee acknowledged that in entering the subjects of appeal in the 2010 Roll at the values appealed against, the assessor fulfilled his statutory duty. Nevertheless, it based its decision on its own view as to the fairness of the result and on its inference as to the intention of the legislature. The Committee was also influenced by the fact that in terms of section 15 of the 1966 Act, the value assessed for subjects in a new or altered entry made after the 2010 Roll came into force would be the then current rental value of the subjects, if that was less than the tone value. In my opinion, all of these considerations are irrelevant.

[21] The starting point is that the ratepayers brought these appeals at the time of the 2010 Revaluation against the relevant entries in the new Roll. They do not contend that the values entered in the Roll should be reduced by reason of a supervening material change of circumstances. They say that the values should not have been entered in the Roll in the first place. The argument is that during the currency of the 2005 Roll the assessor accepted that a material change of circumstances had occurred, and that the effect of it was to reduce the Zone A rate for these subjects from £1050 psm to £700 psm as at 1 April 2009. The value at the tone date, 1 April 2008 was £875. Therefore, in compiling the new Roll the assessor, while valuing other lands and heritages as at 1 April 2008, should nevertheless have valued these subjects, with hindsight, as at 1 April 2009, in keeping with the agreement that he had made with the ratepayers.

[22] In my opinion, this argument is fallacious. It overlooks the basis on which a revaluation is carried out. It confuses the date at which a value has to be struck with the date on which it will come into force. The fundamental principle on which a revaluation is carried out is that all of the lands and heritages entered in the new roll are valued to a common base. With one exception, there is no warrant in the legislation for the assessor's adjusting tone date valuations in respect of changes in value that occur between the tone date and the revaluation date. Inevitably, there will be increases and decreases in the values of various groups or classes of lands and heritages during that period; but for there to be consistency in the roll it is essential that all lands and heritages in the new roll must be valued as at one fixed date. The exception is the power given to the assessor in section 1(6)(c) of the 1975 Act (supra) to take account of a material change of circumstances in the period after the roll has been made up and before it has come into force.

[23] Section 3(4) allows an appeal to be brought on the ground that there has been a material change of circumstances since the entry was made. If I am right in my view that the date on which an entry in a new roll is made is the date on which the assessor delivers copies of the new roll to the rating authority (cf Ass for Fife v Mercat Kirkcaldy Ltd [2012] CSIH 67, at paras [16]-[20]), it follows that the right of appeal under section 3(4) against such an entry will extend to a material change of circumstances occurring between the date of delivery of the roll and the date on which the roll comes into force. On the plain wording of section 3(4) it cannot apply to a material change of circumstances that occurred before the entry was made.

[24] However, section 3(4) is without prejudice to section 3(2). Section 3(2) provides a general right of appeal against a new entry. In my view, it would have been open to the ratepayers to appeal under section 3(2), within the relevant time limit, in respect of a material change of circumstances occurring after the date of delivery of the roll. But that does not assist the ratepayers in this case. The material change of circumstances on which they rely had affected values by 1 April 2009. There is no finding in fact, and no suggestion in counsel's submissions, that the 2010 Roll had been made up by that date.

[25] Counsel for the assessor presented a separate argument based on the fact that to give effect to any alteration in value that is due to a material change of circumstances, the assessor can alter the roll either before it has come into force (1975 Act, s 1(6)(c), supra) or at any time while it is in force (1975 Act, s 2(1)(d), supra). Counsel submitted that the court should interpret the ratepayer's right of appeal on the ground of a material change of circumstances in symmetry with the assessor's power to alter the roll on the same ground. For this submission he relied on dicta to that effect by the majority in Ass for Renfrewshire v Hendry (1969 SC 211, Lord Fraser at pp 214-215; Lord Avonside at p 217). Those dicta, however, must be read in the context of the entirely different legislation that preceded the running roll system introduced by the 1975 Act. I derive no help from that case. Nevertheless, I agree that there is a symmetry of the kind to which counsel referred. In my opinion, section 3(4), in applying at any time after delivery of the roll, provides a right of appeal on the ground of a material change of circumstances that is co-extensive with the assessor's power to alter the roll on the same ground under section 1(6)(c) of the 1975 Act between delivery of the roll and the valuation date and under section 2(1)(d) thereafter.

Disposal

[26] I propose to your Lordships that we should allow the appeal and recall the decision of the Committee. The effect of that disposal will be that, in line with the Committee's findings in fact, the values in the Roll for the subjects of appeal will be those set out in column I of Production 4 for the assessor.

For the appellant: Stuart QC; Simpson and Marwick

For the respondents: Haddow QC; Dundas & Wilson

6 September 2012

[25] The statutory framework which your Lordship in the chair has helpfully summarised distinguishes between the date on which the valuation roll is made up and the date on which it comes into force (1975 Act, s 1(6)(c)). In Ass for Fife v Mercat Kirkcaldy Ltd and Others [2012} CSIH 67, your Lordship in the chair considered the effect of that distinction (paras [16]-21]) and concluded that the date on which the role has been made up should be equiparated with the date of delivery of copies of the new roll to the rating authority. Prior to delivery of the new roll to the rating authority the assessor may alter any of the entries in it but once it is delivered the status of the roll alters. At the date of delivery, the roll can be described as having been made up and the individual entries in the roll as having been made. I respectfully agree with the analysis and conclusions of your Lordship in the chair in that case. I would only add that assessors should publish the date of delivery of the new roll to the rating authority to avoid any unnecessary disputes about that date in future cases.

[26] For the reasons given by your Lordship in the chair I agree that we should allow the appeal and recall the decision of the Committee.

For the appellant: Stuart QC; Simpson and Marwick

For the respondents: Haddow QC; Dundas & Wilson

6 September 2012

[27] I agree with the opinion of your Lordship in the chair and with your proposed disposal of the appeal.

[28] In my opinion the right of appeal by an aggrieved person under section 3(2) of the 1975 Act encompasses "a material change of circumstances since the entry was made". Section 3(4), which contains those words, is stated to be "without prejudice to subsection (2)" and I infer from that that Parliament intended section 3(2) to cover that ground.

[29] This means that it is important to know the date when the assessor delivers the completed valuation roll to the rating authority, which is in my view the date when the entry is made. It would be helpful if assessors were to publicise that date so that it can be an undisputed fact in future appeals.

[30] As the date when the entry is made generally occurs shortly before the date when the roll comes into force, the window of opportunity for a material change of circumstances appeal under section 3(2) is small. But I do not think that the Committee or this court is entitled to do violence to the words which Parliament has used which would be needed to uphold the Committee's decision.