FC Brown Steel Equipment Ltd v Karl Hopkins

The primary geographical test for identifying a hereditament requires an assessment of the physical premises as a whole. Visual or cartographic unity and substantial physical intercommunication may establish a single hereditament even where properties are separated by a public road and the link is principally used to move goods.

There is no rigid requirement that people must be able to pass freely between all parts. The decision-maker must avoid giving disproportionate weight to the occupier’s business use or to the purpose of a particular link. A split-site allowance is a matter of valuation judgment informed by appropriate comparables and the continuing operational disadvantages of the divided site.

FC Brown Steel Equipment Ltd occupied a factory and a warehouse on opposite sides of an estate road. The properties were connected by an enclosed conveyor bridge, used principally to transport finished goods. They had previously been entered as separate hereditaments.

The Valuation Tribunal for Wales accepted the ratepayer’s proposal to merge the assessments and valued the combined hereditament at £1,040,000, including a 4% split-site allowance. The ratepayer appealed against the allowance. The Valuation Officer cross-appealed against the merger. The central issues were whether the factory, warehouse and bridge formed one hereditament and, if so, the appropriate allowance.

1. Disposition. The ratepayer’s appeal was allowed and the Valuation Officer’s cross-appeal was dismissed. The merged hereditament was to be entered in the rating list at a rateable value of £1 million with effect from 2 September 2013.
2. The definition of hereditament under the Local Government Finance Act 1988 adopts the judge-made principles governing the unit of assessment. Following Woolway (VO) v Mazars [2015] UKSC 53, the geographical test has primacy. The question is whether the premises form a single unit of property, assessed by visual and cartographic unity and the physical relationship between the component parts.
3. The geographical test does not impose a rigid requirement that every part must be freely accessible on foot. In industrial premises, a substantial connection used principally for manufactured goods, goods in production or raw materials may be relevant even if pedestrian use is limited. The assessment remains fact-sensitive and must focus on the physical characteristics of the premises rather than the particular occupier’s business needs.
4. The conveyor bridge was a massive and highly visible structure which physically and visually connected the factory and warehouse. Together with the shared branding and the ability to reach every part of the site without leaving the ratepayer’s occupation, it established a single geographical unit. The bridge could not be treated as equivalent to a concealed pipe or cable.
5. The split-site allowance was an evaluative valuation judgment. The Hasbro and Tri-Wall comparables established a range of 5% to 10%. The Vion comparable was useful but required caution because the Tribunal lacked sufficient information about the wider site. The appropriate allowance was 7.5%. The cost of constructing the bridge did not provide a satisfactory basis for calculating the allowance, which had to reflect continuing inconvenience and operating costs.
6. The Tribunal added that treating the properties as separate hereditaments could leave the bridge and conveyor without any attributable value under the rating hypothesis. That observation reinforced the common-sense result but was not relied upon in deciding the unit-of-assessment issue.

Upper Tribunal (Lands Chamber): allowed the ratepayer’s appeal and dismissed the Valuation Officer’s cross-appeal. The Tribunal’s decision was varied so that the merged hereditament had a rateable value of £1 million with effect from 2 September 2013.

Valuation Tribunal for Wales: allowed the ratepayer’s appeal against refusal to merge the hereditaments, determined a combined rateable value of £1,040,000 and applied a 4% split-site allowance.