[2024] UKUT 351 (LC)

Although we were provided with a considerable body of evidence on how the advertising rights at the two railway stations are exercised in practice, as well as on the views of the parties on the meaning and effect of the 2010 Agreement, the appeal turns mainly on the proper interpretation of section 64(2) of the 1988 Act. Materially, in addition to the more usual form of hereditament referred to in section 64(1) which are to be identified by applying long established principles of rating law, section 64(2) provides that a right to use land for exhibiting advertisement is a hereditament if it is “let out or reserved to any person other than the occupier of the land”. If that requirement is satisfied section 65(8) then provides that the resulting hereditament “shall be treated as occupied by the person for the time being entitled to the right”.

The issue in the appeal is whether, for an advertising right to be “let out” within the meaning of section 64(2), the characteristics of the right and the way it is exercised must be comparable to the rateable occupation of other forms of hereditament. More specifically, where an advertising right is exercised in respect of a site which is in the occupation of someone else, is it relevant to consider the “landlord control” principle and to determine whether the owner of the right or the occupier of the site is in paramount occupation?

In support of the appeal, Miss Galina Ward KC, who appeared for the Valuation Officer with Mr Hugh Flanagan, submitted that in section 64(2) and 65(8) of the 1988 Act Parliament had created a specific statutory framework for the rating of advertising hereditaments which is distinct from the general regime of sections 64(1) and 65(2). By the 2010 Agreement the advertising rights were let out to JC Decaux. A separate hereditament was thereby created which is deemed to be in the occupation of JC Decaux as the person entitled to the right. The advertising hereditament cannot be included in the central list because none of the conditions in regulation 6(1) of the 2005 Regulations are satisfied. The entries made by the VO in the local lists should therefore be reinstated.

For Network Rail, Mr Kolinsky KC, who appeared with Mr Luke Wilcox, submitted that the VTE had been right to delete the entries from the local lists. The correct analysis was that the advertising rights had not been separated from Network Rail’s occupation of the stations for railway purposes. They had not been “let out” and sections 64(2) and 65(8) therefore had no application. Mr Kolinsky KC argued that section 64(2) and the requirement that an advertising right must be “let out” before it may be separately rated should be construed consistently with established principles of rating law and specifically with the normal approach to hereditaments occupied by more than one person. What was required, he suggested, was a contextual analysis of the relationship between the advertising right and the host’s occupation of the site.

Mr Kolinsky KC invited us to conduct a conventional inquiry, as between Network Rail and JC Decaux, into whose occupation of the advertising sites was paramount and whose was subordinate. That required consideration of the 2010 Agreement and how it had been implemented and he relied on evidence from current and former employees of Network Rail, Olivia Jamin-Smith and Steven Wood, and a member of J C Decaux’s staff, Simon Wildman, to explain the arrangements. Our conclusion, Mr Kolinsky suggested, should be that Network Rail retained overall control of the sites. The sites were therefore in the rateable occupation of Network Rail and, as the use of land for the purpose of exhibiting advertisements was a railway purpose within the definition in regulation 6(4), 2005 Regulations, they should be included in the central list and valued as part of Network Rail’s hereditament.