[2025] UKUT 104 (LC)

We agree with Mr Donmall that, following Monk, the distinction between works to remedy a lack of repair and redevelopment works is critical in cases like this. The distinction is one of fact, which must be assessed objectively, taking account of the condition of the building and the works which are being undertaken to it. Mr Donmall asserted that an end of tenancy refurbishment did not come close to justifying deletion because it did not involve reconstruction or redevelopment, which were the activities considered by Lord Hodge in Monk. But redevelopment, in the sense that a surveyor might deploy the word, generally refers to the construction of new buildings after clearing a site of whatever occupied it before. There is no doubt that such buildings would not be rateable until they were complete and capable of occupation (or deemed to be). Similarly, reconstruction is not a word of precise meaning and might involve different degrees of rebuilding, repairing or restoring a building or property. Rather than debating semantics we consider it is necessary to focus on the known facts about the condition of the building.

There is no real doubt that, having regard to the circumstances on the ground at the material day and the programme of works, the Property could not have been beneficially occupied as a warehouse. Mr Donmall’s submissions recognised that beneficial occupation would have required at least the reinstallation of electrical fittings which had just been removed. There is certainly evidence that, in some respects, the Property was in disrepair, with some damaged cladding panels and broken roof lights. But the preparation of the internal parts of the building in readiness for McDonald’s phase of the works was not work of repair, it involved the removal of items which were not replaced and significant remodelling of the interior parts, akin to the works envisaged in Monk and Canary Wharf. Considered in the round, the facts show that the Property was not simply being subjected to a programme of end of tenancy repairs, it was being repurposed from a warehouse to a delivery kitchen. This involved a material change of use in planning terms (and perhaps also a change in the mode or category of occupation for rating purposes, although we have insufficient evidence about the ‘dark kitchen’ operation being conducted from the Property to form a view on that and we do not base our decision on it). What is indisputable is that the substantial programme of works which had been embarked on was not simply remedying defects but would additionally include the provision of new services and a substantial reduction in the useable floor area. In our judgment, although the landlord undertook the initial works to prepare the building for McDonald’s to fit out to their own specification, the object and timing of the two projects means that they should be viewed as a single scheme.

In Carey Group Ltd v Ricketts (VO) [2024] UKUT 356 LC, we said that Monk had involved a building ‘being radically altered by extensive works.’ That description applies equally in this case. An objective assessment of the works leads us to the conclusion that at the material day, a programme had been embarked on such that the Property had become a building undergoing redevelopment. The Property had no heat or light and with the mezzanine platform still in place it would have been too dark to occupy safely. The full programme of works extended over a period of some five months and went far beyond the minor fitting works and corporate rebranding envisaged in Scottish & Newcastle. It would therefore be contrary to reality to consider the works which had already been completed by the material day out of contextas if they could easily be reversed. That would be to ignore the fact that they were the initial stages of a much larger programme. This is not a case, like De Silva,where works can be judged to have been repairs.

We see some force in Mr Wilcox’s reliance on the principle of equality of treatment between the owners of properties in a similar condition. The fact that the completion notice regime enables buildings to be brought into the list on a deemed basis, whether or not they are in fact capable of beneficial occupation, does not undermine the point. The Tribunal’s decisions in Porter and Aviva were not concerned with completion notices. They support the proposition that a building which, for reasons other than disrepair, lacks attributes and features that are a prerequisite for beneficial occupation is not a hereditament. We do not see why a building which has never been in the list should be treated more favourably than one which has, when both are in substantially the same condition.

Determining whether a building is capable of beneficial occupation or not requires an exercise of judgment about the facts of each case. Our conclusion that the assessment of the Property should be reduced to a nominal level (in the absence of a proposal to remove it altogether), is based on the facts of this case and neither establishes nor illustrates any new principle.