Bradford (Valuation Officer) v Vtesse Networks Ltd

Rateable value is the hypothetical annual rent of the hereditament. Available valuation methods are different routes to the same figure. A tribunal may decide, as a matter of valuation judgment, that a large incumbent’s assessment cannot usefully be disaggregated for comparison with a smaller, materially different network.

Equality of rating is already a principle of domestic law, so European competition and State-aid provisions add no separate duty to make that comparison. A reasons challenge fails where the evidence said to be omitted provided only general support and was not part of the expert valuation advanced. On an appeal that increases rateable value above the proposal, statutory protection against retrospective increases does not prevent the increase taking effect from the Valuation Tribunal’s decision.

These conjoined appeals concerned the valuation and effective dates of entries for a fibre-optic telecommunications network in the 2000 rating list. The earlier rateability issue had been resolved by this court in [2006] EWCA Civ 1339. The Lands Tribunal later fixed rateable values of £110,000 and £470,000, with the latter taking effect from 7 November 2008.

The Valuation Officer challenged the effective dates and the omission of an intermediate £125,000 entry. Vtesse challenged the valuation methodology, arguing that the Lands Tribunal had failed to consider the rateable value of BT’s network, an Ofcom report, and relevant European law. The central issues were whether the Tribunal’s reasons disclosed an error of law and when an increased valuation could take effect under the applicable rating regulations.

1. Disposition. By a majority, Vtesse’s appeal was dismissed. The Valuation Officer’s appeal was allowed in part. The 2000 list was to include £125,000 with effect from 27 June 2003, and the £470,000 entry was to take effect from 15 October 2004, the date of the Berkshire Valuation Tribunal’s decision.

2. Valuation. Under paragraph 1 of Schedule 6 to the Local Government Finance Act 1988, rateable value is the estimated hypothetical annual rent. The rental, tone of the list, receipts and expenditure, and contractor’s methods are alternative means of identifying that figure. Equality and uniformity are fundamental principles of domestic rating law. European law added no separate obligation to compare Vtesse’s network with BT’s.

3. Whether BT’s assessment could usefully be disaggregated was a question of valuation judgment for the Lands Tribunal, to be determined from the evidence. The Tribunal was entitled to accept the Valuation Officer’s evidence that BT’s much larger and more diverse hereditament was not a useful comparable. The fact that it rejected Vtesse’s expert valuation was not itself an error of law.

4. The Ofcom 2008 report showed, at most, that BT’s costs could be analysed for another regulatory purpose. It was not used as the basis of Vtesse’s expert valuation. Its omission from the Tribunal’s reasons therefore did not establish a reasons failure. The binding effect of the European Commission’s decision did not need to be decided. The Tribunal had decided the valuation issue on the evidence before it, consistently with the guidance in Crehan v Inntrepreneur Pub Co [2006] UKHL 38.

5. The applicable provisions of the Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993 protected a ratepayer against certain retrospective increases. A ratepayer could waive that protection by agreement, but the supplementary statement of agreed facts was only an agreement about facts, including network length. It did not constitute agreement to waive the statutory effective-date protection. Nor could an additional exception be implied where delay resulted from alleged misleading conduct by the ratepayer. The regulations contained an elaborate scheme and expressly addressed error or default in another context.

6. On an appeal, the Lands Tribunal could make any order available to the Valuation Tribunal. The protection against retrospective increases did not extend through the period of an appeal, since that would create an incentive to delay. The increased valuation could therefore take effect from the Valuation Tribunal’s decision. No reference to the European Court of Justice was necessary under article 267 of the Treaty on the Functioning of the European Union.

7. Lord Justice Sullivan agreed with Lord Justice Lloyd. Lord Justice Sedley dissented on Vtesse’s appeal. He considered that the Ofcom report arguably demonstrated a basis for disaggregating BT’s assessment and would have remitted the issue to the Lands Tribunal for fuller argument and determination.

• Court of Appeal (Civil Division): In the present judgment, [2010] EWCA Civ 16, Vtesse’s appeal was dismissed and the Valuation Officer’s appeal was allowed in part.
• Court of Appeal (Civil Division): In the earlier same-litigation decision, [2006] EWCA Civ 1339, Vtesse’s appeal on the preliminary rateability issue was dismissed.
• Lands Tribunal: By order dated 12 February 2009 in Cases RA/50/2004 and RA/63/2004, the Tribunal fixed the relevant rateable values and initially made the £470,000 entry effective from 7 November 2008.
• Berkshire Valuation Tribunal: Decisions dated 16 July 2004 and 15 October 2004 deleted the relevant entries, leading to the appeals to the Lands Tribunal.