Orange PCS v Bradford (Valuation Officer)

For rating purposes, the value of a hereditament is the value of its beneficial occupation to a hypothetical tenant, assessed under the statutory rating hypothesis. A statutory right enabling a particular class of occupiers to use land free of charge does not necessarily reduce that value to nil. The court must distinguish the price actually payable under the statutory regime from the value of the occupation itself. Personal rights or qualifications of the actual occupier are excluded where they do not affect the hereditament or its beneficial occupation generally. The principle of reality requires attention to real-world conditions, but does not permit an unreal hypothetical market or negotiations where the statutory right removes any market in the relevant occupation.

The appeal concerned the rateable value of a small highway verge hereditament occupied by a mobile telecommunications mast and associated land. The statutory Telecommunications Code gave licensed operators rights to install apparatus on or along a highway without payment. Orange argued that the land therefore had no rateable value, while the Valuation Officer contended that its beneficial occupation had a value comparable with sites occupied on private land.

The Nottinghamshire Valuation Tribunal rejected Orange’s nil valuation and assessed the land at £1,000, producing a total rateable value of £1,100. The Lands Tribunal upheld that decision, applying the approach in Poplar Assessment Committee v Roberts. The central issue before the Court of Appeal was whether the statutory right of free occupation had to be taken into account in valuing the occupation under the rating hypothesis.

1. Appeal dismissed. The Lands Tribunal’s decision was upheld. The agreed rateable value was £1,100, comprising £1,000 for the land and £100 for the mast.
2. Under paragraph 2(1) of Schedule 6 to the Local Government Finance Act 1988, the rent is the amount reasonably expected for the hereditament under the statutory assumptions. It represents the value of occupation to the hypothetical tenant, not the actual rent or charge payable by the actual occupier.
3. The majority principles in Poplar Assessment Committee v Roberts apply. Statutory restrictions affecting the contractual relations of the actual landlord and tenant do not determine the value of beneficial occupation. The valuation must take account of relevant conditions affecting the hereditament, while excluding personal skill, industry or qualifications of the occupier.
4. The right under paragraph 2(9) of Schedule 2 to the Telecommunications Act 1984 to install apparatus on highway land without payment determined the price payable for occupation by the operator. It did not determine the value of that occupation. The right was personal to licensed telecommunications operators and did not affect the value of the hereditament to other occupiers or the rating principle of equality.
5. The principle of reality did not support Orange’s proposed nil valuation. There could be no genuine bargaining or market between a hypothetical landlord and tenant for highway land where the statutory regime itself supplied free occupation. Highway sites could not serve as meaningful comparables on that basis. A true comparable was a similar occupancy subject to the ordinary incidents of the market, such as a privately owned site for which rent was paid.
6. The court rejected attempts to distinguish Poplar because the statutory regime operated on the tenant rather than the landlord. Both regimes affected the actual parties and not the value of beneficial occupation. The statutory rights were not shown to have been intended to confer a collateral rates benefit or to displace equality between occupiers.

Lord Justice Thomas gave the judgment of the court. Lord Justice Jacob and Lord Justice Auld agreed.

• Court of Appeal (Civil Division) ([2004] EWCA Civ 155): Appeal from the Lands Tribunal dismissed. The court upheld the decision that the land had a rateable value of £1,000, giving a total rateable value of £1,100.
• Lands Tribunal: George Bartlett QC, President, upheld the Nottinghamshire Valuation Tribunal’s decision and rejected a nil valuation for the land.
• Nottinghamshire Valuation Tribunal: Rejected Orange’s contention that the land was valueless for rating purposes and accepted a rateable value of £1,100.