[2024] UKUT 356 (LC)

Should a hereditament which was temporarily incapable of beneficial occupation be removed from the rating list or, for administrative convenience, have its rateable value reduced to a nominal £1?

In SJ & J Monk v Newbigin [2017] 1 WLR 851 the Supreme Court held that the rating list could be changed in that way where office premises were being radically altered by extensive works, so that their mode or category of occupation could no longer be described as “offices and premises” and, in reality, had become a “building undergoing reconstruction”. The statutory valuation assumption that the hereditament was in a state of reasonable repair (paragraph 2(1)(b) of Schedule 6, Local Government Finance Act 1988) did not require that that reality be ignored.

This appeal concerns office premises (the Property) on the lower floors of a newly constructed building which, it is agreed, were incapable of beneficial occupation between March 2020 and April 2021. The cause of that condition was not, as it had been in Monk, a programme of works undertaken by the owner of the building. Instead, the premises were rendered unoccupiable when water penetrated the basement through a joint in the exterior wall and ponded beneath the raised office floor, creating damp conditions in which mould and fungi flourished, giving rise to an unacceptable hazard to health. The problem was solved, and the hereditament returned to use, by remedial work to seal the joint.

It has not been argued that the admitted fact that the Property was incapable of beneficial occupation was enough, by itself, to justify its removal from the rating list, and we are not required to address that issue. The ratepayer’s case, presented by Mr Cain Ormondroyd, is that the remedial works which were necessary to prevent the ingress of water are not capable of being described as “repair”, and that there is therefore no basis on which the real condition of the premises can be ignored when determining their rateable value. The valuation officer, represented by Mr Matthew Donmall, disagrees and contends that the statutory assumption concerning the state of repair of the hereditament is engaged, that the remedial work was work of repair, and that it must therefore be taken to have been carried out at the date of the ratepayer’s proposal to reduce the rateable value in the 2017 list to £1.