Woolway (Valuation Officer) v Mazars LLP

In identifying a hereditament for non-domestic rating, the geographical or physical test remains important, but it is not a rigid rule of contiguity. Floors occupied by the same ratepayer within one building may form a single hereditament even where intervening floors separate them. The question is one of fact and degree. The tribunal must make a common-sense assessment of the premises, their physical relationship and the purpose of the occupation. The statutory phrase “a unit of such property” does not itself define the unit, since the statutory definition assumes an existing understanding of what may be entered as a separate item in the rating list. A detailed investigation of functional interdependence is unnecessary where the physical circumstances and common occupation establish the appropriate unit. On the facts, the separated floors formed one hereditament.

The Valuation Officer appealed against the decision of the Upper Tribunal (Lands Chamber), [2012] UKUT 165 (LC), which had upheld the merger of two entries in the 2005 rating list relating to levels 2 and 6 of Tower Bridge House, occupied by Mazars LLP. The Upper Tribunal treated the floors as a single hereditament and removed an end allowance previously granted because the floors were separated.

The appellant argued that each floor was a physically separate unit and that contiguity was decisive or, at least, the essential starting point. The court was assisted by an advocate appointed to present the opposing case. The central issue was whether non-contiguous floors in the same modern office building and occupied by the same firm could constitute one hereditament.

1. Appeal dismissed. The Upper Tribunal’s conclusion that levels 2 and 6 constituted one hereditament was upheld.
2. The definition of hereditament in section 115 of the General Rate Act 1967 did not change the law. The reference to “a unit of such property” refers to a separate item of rateable property in the valuation list and does not identify what that item must be. The definition is circular and assumes an existing fund of knowledge about what may be separately entered.
3. The geographical or physical test remains important, but the issue is one of fact and degree. The approach in Gilbert (VO) v S Hickinbottom & Sons Ltd [1956] 2 QB 40 required a common-sense assessment of the features of the case rather than a rigid formula. The tribunal’s findings therefore had to be respected if the conclusion was reasonably open to it.
4. The President had applied a physical test in the context of a single modern office building. The floors were in the same occupation, communication between them was through common parts, there was no significant practical difference between adjoining and separated floors from the occupier’s perspective, and swift lift access connected them. Those facts meant that contiguity was not decisive.
5. A single hereditament does not require the occupied floors to form a contiguous physical cube. A building may be treated as the relevant geographical unit where the occupier’s premises can sensibly be regarded as falling within one physical area. Detailed investigation of the functional interrelationship between floors was unnecessary on these facts. The President’s conclusion was a legitimate application of established principles.

• Court of Appeal (Civil Division) — appeal dismissed. The court upheld the Upper Tribunal’s decision that levels 2 and 6 were one hereditament.
• Upper Tribunal (Lands Chamber) — in [2012] UKUT 165 (LC), George Bartlett QC allowed the Valuation Officer’s appeal in part but held that the two floors should be entered as a single hereditament.
• Valuation Tribunal for England — found a sufficient degree of propinquity and an essential functional link for the premises to be treated as one hereditament.