Newbigin (Valuation Officer) v S J & J Monk (a firm) [2015] EWCA Civ 78

[2015] EWCA Civ 78Case No C3/2014/1549
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
The Upper Tribunal (Lands Chamber)
RA/62/2012, [2014] UKUT 14 (LC)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Friday 13 th February 2015
Before
LADY JUSTICE ARDENLORD JUSTICE DAVISLORD JUSTICE LEWISON
Between
KEITH NEWBIGINAppellantS J & J MONK (A FIRM)Respondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Sarabjit Singh & Matthew Donmall (instructed by HMRC Solicitors Office) for AppellantDavid Reade QC & Dominic Bayne (instructed by S J & J Monk) for RespondentHearing Hearing date : 4 February 2015
Judgment
[1]This case concerns a floor in an office building that was undergoing refurbishment on 6 January 2012. It raises a question of interpretation of Schedule 6 paragraph 2 (1) (b) of the Local Government Finance Act 1988. The question is: what physical state is it to be assumed to be in for the purpose of liability for rates? The Upper Tribunal held that it was not capable of beneficial occupation as offices and premises due to its actual physical state; and that in consequence its rateable value should be assessed at the nominal amount of £1. In so holding it disagreed with the conclusion of the Valuation Tribunal. With the permission of the Upper Tribunal the Valuation Officer appeals. For the reasons that follow I would allow the appeal.[2]We are concerned with the first floor of the building known as Avalon House, a modern three-storey office block built in the late 1990s overlooking the riverside at Sunderland Enterprise Park, which lies to the west of the city centre in a former enterprise zone area. There is a car park to the front and side of the building. At the relevant date it was described in the non-domestic rating list as “Offices and Premises, 1st Floor, Avalon House, St Catherine’s Court, Sunderland Enterprise Park, Sunderland SR5 3XJ” and had a rateable value of £102,000. It has been vacant since 15 March 2006. Messrs Monk are the freehold owners of the building, and they accepted a surrender of a lease of the first floor in December 2009. At the time of the surrender the hereditament consisted of office accommodation with raised floors, suspended ceilings, category 2 lighting and comfort cooling. It also included male, female and disabled access WCs. The whole consisted of a single office suite of 795.73 m 2. In March 2010 the freeholders entered into a contract with a construction company for the following works: i) Removing all internal elements, excluding only the lift and staircase enclosure which give access to the upper floor, but including stripping out the existing cooling system including all internal and external plant, the lighting and power installations, the fire alarm system, the suspended ceiling, all sanitary fittings and drainage connections, the timber joisted and modular raised flooring, and existing masonry walls and metal stud partitions. ii) Constructing new common parts to the first floor of the building and new communal sanitary accommodation, including new solid partitioning, raised floor, new sanitary fittings, new drainage and plumbing systems, new electric metering, lighting, alarm and heating. iii) Constructing three proposed new letting areas within the property, including the provision of three self-contained electrical distribution circuits and three self-contained air conditioning and heating systems.[3]It was agreed that on 6 January 2012, which is the material date, the physical state of the hereditament was as follows: i) The first floor was vacant. ii) The majority of the ceiling tiles and suspended ceiling grid and light fittings had been removed. iii) Approximately 50% of the raised floor had been removed. iv) The comfort cooling system including all internal and external plant had been removed. v) The sanitary fittings had been removed and the block walls to the WCs demolished. vi) The electrical wiring had been stripped out. vii) Plasterboard partitions had been erected and plastered to form the outline for the WCs and a partition had been erected and plastered across the floor at the east side of the building. viii) First fix electrical installations to the WC area had been completed and alterations made to the drainage.[4]There was a dispute about whether first fix air conditioning installations had been completed by 6 January 2012; but the Upper Tribunal does not appear to have resolved that dispute, on the ground that it did not affect the valuation.[5]The rating of non-domestic hereditaments is governed by the Local Government Finance Act 1988 as amended. Paragraph 2 of Schedule 6 says:
“(1) The rateable value of a non-domestic hereditament (none of which consists of domestic property and none of which is exempt from local non-domestic rating) shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on these three assumptions – (a) the first assumption is that the tenancy begins on the day by reference to which the determination is to be made; (b) the second assumption is that immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic; (c) the third assumption is that the tenant undertakes to pay all usual tenant’s rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command the rent mentioned above.” … (6) Where the rateable value is determined with a view to making an alteration to a list which has been compiled (whether or not it is still in force) the matters mentioned in sub-paragraph (7) below shall be taken as they are assumed to be on the material day. … (7) The matters are – (a) matters affecting the physical state or physical enjoyment of the hereditament, … … (8A) For the purposes of this paragraph the state of repair of a hereditament at any time relevant for the purposes of a list shall be assumed to be the state of repair in which, under sub-paragraph (1) above, it is assumed to be immediately before the assumed tenancy begins.”
[6]A “hereditament” according to section 64 (1) of the Act, referring to section 115 of the General Rate Act 1967, is “property which is or may become liable to a rate, being a unit of such property which is or would fall to be, shown as a separate item in the valuation list.”[7]It is a well-known principle of valuation, not confined to rating, that in principle you must value the property as it stands on the valuation date. This is the principle of reality; or as classicists prefer to call it, the principle that property must be valued rebus sic stantibus. This principle can be displaced by contrary instructions in the statute or contract under which the valuation takes place. In our case paragraph 2 (1) (b) is a required assumption which is potentially counter-factual. The issue is whether it applies and, if so, to what extent.[8]Mr Singh for the Valuation Officer submits that paragraph 2 (1) (b) requires the assumption of a particular state: namely that the hereditament is in a state of reasonable repair. In concentrating on the word “state” in paragraph 2 (1) (b) he has the support of Fletcher Moulton LJ in Lurcott v Wakely [1911] 1 KB 905, 918:
“Now I will go to the second covenant, which is to keep in thorough repair. Here we get more into the realm of previous decisions by reason of the fact that in some of them it has been treated as a covenant the language of which pointed to the mode in which or the means by which the covenantor is to perform his duty. They leave it, however, a matter on which one is free to express one's opinion, and personally I think that to keep in thorough repair does not in any way confine the duty of the person who is liable under the covenant to the doing of what are ordinarily called repairs. A house is spoken of as being in thorough repair when it is a house to which no repairs have to be done. But it is a description of a state and not of a mode by which that state has been arrived at, and, therefore, in my own mind I draw no wide distinction between keeping in thorough repair and keeping in good condition; they both appear to me to describe the condition of the house. What a surveyor would call in good condition and what a surveyor would call in thorough repair may differ somewhat, but they would be something very like, the one to the other. As I have said, the legal obligation is to keep the house in that state, and I confess that I do not think that from the legal point of view there is much difference between the nature of the two obligations.”
[9]Mr Singh goes on to say that whatever works are required to put the hereditament into that state are covered by the word “repairs” in paragraph 2 (b), as long as they are not uneconomic. There is no need to distinguish between repairs and improvements, or between repairs and alterations. Once the Valuation Officer has formed the view that the hereditament is not in a state of reasonable repair, then by definition any works required to put it into that state are repairs. He warned us, by reference to Easiwork Homes Ltd v Redbridge LBC [1970] 2 QB 406, 415, of the danger of ratepayers abusing the system by removing sanitary facilities or windows, and then claiming that the hereditament was incapable of beneficial occupation.[10]Mr Reade QC for Messrs Monk says that this approach pays no attention to the reasons why Schedule 6 paragraph 2 was enacted. In order to understand this it is necessary to go back to the principles that the courts had developed before the enactment of the Local Government Finance Act 1988. The old valuation formula by which rateable value was determined proceeded by reference to the rent at which the hereditament might reasonably be expected to let if the landlord had undertaken to bear the cost of the repairs and insurance, and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent. From this the courts reasoned that in striking their bargain the hypothetical landlord and the hypothetical tenant would agree that the landlord would carry out any necessary repairs before the tenant was put into possession. Accordingly it was to be assumed that the hereditament was in the state in which it would have been if those repairs had been carried out: Wexler v Playle [1960] 1 QB 217. However, the courts subsequently added a qualification to this assumption. The qualification was that if the repairs were such that they were uneconomic to carry out, then it was to be assumed that the hypothetical landlord would be content to let at the lower rent commanded by the hereditament in its actual condition: Saunders v Maltby [1976] RA 109.[11]When the Local Government Finance Act 1988 was originally enacted, rateable value was simply defined as:
“… an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant's rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command that rent.”
[12]Since the burden of repairs had been transferred from the hypothetical landlord to the hypothetical tenant, there could be no room for an assumption that the landlord had carried out any repairs before the start of the hypothetical tenancy: Benjamin v Anston Properties Ltd [1988] 2 EGLR 147. Thus the reality principle prevailed, and a hereditament had to be valued in its actual condition, even if it was in a state of disrepair that could be economically remedied.[13]It was this that paragraph 2 was designed to reverse. Mr Reade says that this was made clear by Baroness Farrington introducing the amendment in the House of Lords on 5 May 1999. The decision of the House of Lords in Pepper v Hart [1993] AC 594 permits reference to statements of this kind where(a) legislation is ambiguous or obscure, or leads to an absurdity(b) the material relied upon consists of one or more statements by a Minister or other promoter of the Bill together if necessary with such other Parliamentary material as is necessary to understand such statements and(c) the statements relied on are clear. I will assume that this statement is admissible in evidence, although I confess that, to my mind, the legislation is neither ambiguous nor obscure and it does not lead to an absurdity.[14]Baroness Farrington began by saying that her intention was that her statement should be an aid to the interpretation of the amendment. She must, therefore, have had Pepper v Hart in mind in so saying. She continued by outlining the history of valuation for rating, referring both to Wexler v Playle and Saunders v Maltby. She then said the lacuna in the new legislation had been exposed by Benjamin v Anston Properties Ltd and that:
“It is this lacuna, and this alone, that the Bill seeks to address.”
[15]She continued by saying that the Government and the Valuation Office had only one intention:
“That is to ensure that the assumption as to repair is that which was established by earlier case law and made by the VOA in preparing rating valuations before the Lands Tribunal decision in Anston. It is nothing more and nothing less than that.”
[16]On the assumption that Baroness Farrington’s statement is admissible in my judgment its value is confined to the statement of the Government’s intention that the assumption established by earlier case law should be reinstated. That was the purpose of the amending legislation. I do not, however, consider that a Minister’s view of what the case law amounts to is a matter on which a Pepper v Hart statement is of any value. What the case law decides is a matter for the judiciary: not for Parliament or the Executive.[17]The case law also decides that what is or is not repair is to be decided according to the common law that applies as between landlord and tenant. This is clear from Camden LBC v Langford [1980] RA 369 which applied the case of Brew Brothers v Snax [1970] 1 QB 612 (a case of a repairing covenant in a lease) in order to decide whether works were works of repair for the purposes of the then prevailing rating hypothesis. The common law has to some extent moved on since then.[18]Parts of the Valuation Office Rating Manual suggest that regard should be had to whether the outcome of an ongoing scheme of works would result in a different hereditament. If it would, then the works required to complete the scheme are not works of repair and the assumption does not apply. I agree with Mr Singh that this violates the long-standing principle expressed by Lush J in Metropolitan Board of Works v Overseers of West Ham (1870) LR 6 QB 193 at 198:
“The rateable quality of land is not to be determined by what it once was, or by what it may hereafter become.”
[19]The Valuation Office Rating Manual relies on what Lord Wilberforce said in Dawkins v Ash Brothers and Heaton Ltd [1969] 2 AC 366 at 385:
“The principle that the property must be valued as it exists at the relevant date is an old one, certainly older than the Parochial Assessments Act, 1836. It has been spelt out in modern terminology in Poplar Metropolitan Borough Assessment Committee v Roberts [1922] 2 AC 93, 120, and in Robinson Bros (Brewers) Ltd v Houghton and Chester-le-Street Assessment Committee [1937] 2 KB 469 in passages which have been cited. The principle was mainly devised to meet, and it does deal with, an obvious type of case where the character or condition of the property either has undergone a change or is about to do so: thus, a house in course of construction cannot be rated: nor can a building be rated by reference to changes which might be made in it either as to its structure or its use.”
[20]However, these observations were not directed to the judge-made law about whether any and if so what repairs should be assumed to have been carried out; still less to the statutory assumption that is now required to be made. Lord Wilberforce’s first example is that of a house under construction. That example is one which envisages the creation of a new building that did not exist before. The second example refers to the possibility of future changes to the structure of an existing building. That example emphasises the rule that it is impermissible to peer into the future to see what the hereditament might become. But the suggestion that the Valuation Officer must enquire whether the outcome of a particular scheme of works would create a new hereditament seems to be in direct contradiction of what Lord Wilberforce said. In addition the assumption contained in paragraph 2 (1) (b) itself requires a departure from reality; and that departure is part of the valuation hypothesis.[21]The Valuation Office Rating Manual also suggests that there is a sharp distinction between repairs and improvements, based on the judgment of Denning LJ in Morcom v Campbell-Johnson [1956] 1 QB 106. In that case the court was concerned to interpret the statutory phrase:
“Where the landlord has … incurred, or hereafter incurs, expenditure on the improvement or structural alteration of the dwelling-house (not including expenditure on decoration or repairs)…”
[22]Thus the statute regarded repairs and improvements as mutually exclusive categories of work. It was in that context that Denning LJ said:
“I find great difficulty in framing a definition of what is an "improvement" as distinct from a "repair."… It seems to me that the test, so far as one can give any test in these matters, is this: if the work which is done is the provision of something new for the benefit of the occupier, that is, properly speaking, an improvement; but if it is only the replacement of something already there, which has become dilapidated or worn out, then, albeit that it is a replacement by its modern equivalent, it comes within the category of repairs and not improvements.” (Emphasis added)
[23]In the context of the statutory provision in question it was necessary to devise a test to distinguish between the two; but in the context of the common law it is not necessary to do so. In my judgment what the Valuation Officer (and on appeal the Valuation Tribunal) must do is to apply the common law.[24]Whether property is in a state of reasonable repair is traditionally described as such repair as, having regard to the age, character, and locality of the property, would make it reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it: Proudfoot v Hart (1890) 25 QBD 42. This is a formula well-known to lawyers, surveyors and valuers. So the Valuation Officer must begin by asking whether the hereditament in its actual state is in a condition such as to make it reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it. Mr Reade submitted that this begged the question. The first problem was to identify what the hereditament was. If it was incapable of beneficial occupation there is no class of tenant likely to take it. But the hereditament is required to be described in the rating list and that seems to me to be the natural starting point. Here the hereditament was described in the list as “offices and premises” and so the inquiry is whether it is in reasonable repair as offices and premises.[25]On the facts found by the Upper Tribunal the hereditament was plainly not in that state on 6 January 2012. Accordingly the assumption required by paragraph 2 (1) (b) requires it to be assumed that the hereditament was in that state, unless the exclusion of “any repairs which a reasonable landlord would consider uneconomic” applies. The fact that the exclusion applies only to repairs colours the assumption itself. The word “repairs” also appears in paragraph 2 (1) (c) describing the hypothetical tenant’s obligation under the hypothetical tenancy; and in that context it can only mean repairs as traditionally understood in the law of landlord and tenant. In addition paragraph 2 (1) (b) works by excluding certain works from the assumption of a reasonable state of repair. It would be extraordinary if works amounting to uneconomic repairs were excluded, but uneconomic works going beyond repairs were not. In my judgment what this paragraph means is that the only kind of work that can be assumed to have been carried out is work that can properly be described as work of repair. I therefore reject Mr Singh’s broad proposition that it does not matter how the works are characterised in order for them to be assumed to have been carried out.[26]Repair is the converse of disrepair. A state of disrepair connotes a deterioration from some previous physical condition. Accordingly, that which requires repair is in a condition worse than it was at some earlier time: Quick v Taff Ely Borough Council [1986] QB 809; Post Office v Aquarius Properties Ltd (1987) 54 P & CR 61. If it is shown that property is worse than it was at some earlier time, it does not matter whether the deterioration resulted from error in design, or in workmanship, or from deliberate parsimony or any other cause: Post Office v Aquarius Properties Ltd. In our case the hereditament was, in this sense, worse than it was at some earlier time because of the decision to strip out the interior. Why that decision was taken does not matter. The intentions of the particular property owner or ratepayer are irrelevant since value must be objectively assessed; and in any event we are in a world of hypothetical parties. Mr Reade objected that this violated the principle stated by Lush J because it was looking back into the past at what the hereditament had once been. But as I have said, the principle of reality must yield to any counter-factual assumption which the valuation framework requires. In order to decide whether works are works of repair fairly so–called it is necessary to compare the hereditament in its actual state with its previous state. This comparison is a necessary preliminary to the making of the assumption that the statute requires. I thus agree with the Valuation Tribunal that on the material date the hereditament was “an office suite in disrepair”.[27]The next question is whether the replacement of the stripped out elements can fairly be described as repairs. To return to Lurcott v Wakely, Buckley LJ said:
“Repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal, as distinguished from repair, is reconstruction of the entirety, meaning by the entirety not necessarily the whole but substantially the whole subject-matter under discussion.”
[28]In McDougall v Easington BC (1989) 58 P & CR 201 this court held that there were in fact three different tests that emerged from the cases which may be applied separately or concurrently as the nature of the case requires:
“(i) Whether the alterations went to the whole or substantially the whole of the structure or only to a subsidiary part; (ii) Whether the effect of the alterations was to produce a building of a wholly different character than that which had been let; (iii) What was the cost of the works in relation to the previous value of the building, and what was their effect on the value and lifespan of the building.”
[29]The Valuation Tribunal found that the hereditament could be put back into its former state economically; and this was not challenged in the Upper Tribunal. Mr Monk and his expert Mr Farr said they did not know anyone who would have wanted to do this. But as the Valuation Officer correctly submitted (as recorded at [71] (iv) of the decision) the question was not whether it would be done in practice but whether it could be done economically. Accordingly on the facts found by the Upper Tribunal, the works in question are not excluded on economic grounds.[30]The subject-matter under discussion in our case is the hereditament as a whole. In my judgment the replacement of the stripped out elements (none of which was structural) can fairly be described as the replacement of subsidiary parts of that whole. I would hold, therefore, applying Buckley LJ’s test that the works in question can fairly be described as repairs. Although it might be said that the part of the Valuation Office Rating Manual to which I have referred at [18] above applies the second test adumbrated in McDougall, in my judgment it misapplies it. The misapplication is to confuse the subjective intention of the actual ratepayer as regards future works with the objective question whether hypothetical works required to put the hereditament into a reasonable state of repair satisfy that test. The approach that I favour also, as it seems to me, prevents the kind of abuse against which Mr Singh warned us.[31]Why, then, did the Upper Tribunal reach the conclusion that it did? The key reasoning is as follows:
“82. I do not accept the respondent’s argument that paragraph 2(1)(b) of Schedule 6 requires the assumption (provided the cost is not uneconomic) that the hereditament has been reinstated from its actual physical state on the material day to its former physical state prior to the commencement of the works that gave rise to the proposal. 83. I am satisfied that at the material day the hereditament was not capable of beneficial occupation as an office and premises due to its actual physical state, the details of which are substantially agreed. The hereditament had been stripped out to such an extent that to replace major building elements such as an entire electrical circuit and heating and air conditioning systems would go beyond the meaning of repair, regardless of whether such works were economic. This conclusion echoes paragraph 8.5 of Section 1, Volume 4 of the VOA’s Rating Manual: “In such cases [schemes of reconstruction/refurbishment] the works required to make the property capable of beneficial occupation are clearly not works of repair and therefore fall outside the repair assumption.”
The hereditament is assumed to be in a state of reasonable repair but this assumption does not extend to the replacement of systems that had been completely removed. In my opinion a hypothetical tenant would not pay more than a nominal amount for the hereditament in its assumed physical state under paragraph 2(1)(b) at the material day. The hereditament was affected by a material change of circumstances and the rating list should be altered to show a nominal (£1) value with a description of “building undergoing reconstruction”.[32]There seem to me to be three strands in the reasoning. The first is that the replacement of major building elements goes beyond repair. But apart from expressing that conclusion, the Upper Tribunal did not explain why it took that view, and why the replacement of those building elements was more than the replacement of subsidiary parts of the whole hereditament. The Upper Tribunal did not in fact articulate what test it applied. It said that the works in question would go beyond the “meaning of repair”. But nowhere in that paragraph did the Upper Tribunal say what it understood that meaning to be. This is not, therefore, simply a case of a question of fact for the Upper Tribunal. We simply do not know from this paragraph what view of the law it took.[33]There is perhaps a clue in what the Upper Tribunal said at [84]:
“In common English usage the word “repair” has a meaning that is not appropriate in circumstances such as those in this appeal where the subjects of repair have effectively ceased to exist, eg electrical circuitry, heating and air conditioning.”
[34]But this, with respect, loses sight of what the “subjects of repair” are. The statutory assumption is not to be applied to the electrical circuitry as an independent “subject”; but as part of the hereditament viewed as a whole. The same goes for the heating and air conditioning. If the Lurcott v Wakely test is applied, they are plainly subsidiary parts of the whole. But applying the second test suggested in McDougall would not yield a different answer. Reinstating stripped out services would not result in a building different in kind from what was there before. We do not have the facts which would allow the application of the third test suggested in McDougall, but I would be very surprised if it yielded a different answer.[35]The second strand in the Upper Tribunal’s reasoning is that repair does not encompass the replacement of systems that have been completely removed. I do not understand this part of the reasoning. Suppose that a building has an old and worn out air-conditioning system that needs to be replaced. It can fairly be described as out of repair. On the approach of the Upper Tribunal if the worn out system is in situ on the valuation date it can be assumed to be in repair, but if it has been removed as a preliminary to its replacement it cannot. I do not think that this arbitrary distinction can be the law. Nor do I understand exactly what the Upper Tribunal had in mind by its reference to “systems”. If it meant plant and machinery then I consider that it was wrong in law; because an obligation to keep a building in repair will usually require the replacement of plant and machinery once they have ceased to function. I cannot see that it matters whether they have ceased to function because they are old and worn out or whether they have ceased to function because they have been removed.[36]The third strand relies on what was said in the Valuation Office Rating Manual. In so far as the Manual suggests that the intention of the particular ratepayer or building owner about the end product of a partly executed scheme of works is a relevant factor I think that it is wrong. The mere fact that the ratepayer intends to produce at some future date a building which will be different in kind from that which exists on the valuation date cannot determine whether or not the hereditament can or cannot be put into a state of reasonable repair at economic cost on the valuation date itself. As the Manual itself says in section 8.1:
“Where extensive alterations are being carried out, and in the course of these the existing building has been stripped out to such an extent that to simply reinstate it would now be uneconomic, then the repairing assumption will no longer apply and the hereditament will fall to be valued … in its present physical state. Each case will fall to be considered on its own facts.”
[37]On the facts of our case it was not uneconomic simply to reinstate the building. The Manual does not, therefore, compel the conclusion that the statutory assumption cannot be applied.[38]Accordingly I do not consider that the Upper Tribunal’s reasoning can stand. I would allow the appeal.[39]I agree that this appeal should be allowed for the reasons given by Lewison LJ, with whose judgment I concur.[40]Such a conclusion does, I appreciate, represent, in part at least, a departure from aspects of what had been stated in the Valuation Office Rating Manual itself as to the potential operation of paragraph 2(1)(b): that view itself in part being based on what was previously said by Baroness Farrington in the House of Lords. But as I read it, the language of paragraph 2(1)(b) is unambiguous. Moreover, interpreted according to their natural and literal wording the provisions of paragraph 2(1)(b) are, I think, capable of ready and workable application in practice.[41]The state of the hereditament to be assumed is “reasonable repair”: a notion well understood by valuers, surveyors and property lawyers. The “repairs” – again a word well understood by valuers, surveyors and property lawyers – then mentioned in the exclusion part of paragraph 2(1)(b) plainly link back to the state of “reasonable repair”. Accordingly, the “repairs” so mentioned are to be taken as meaning those works (sc. of repair) required to place the hereditament into a state of reasonable repair, provided they are not uneconomic.[42]I appreciate that disputes on this may give rise to questions of fact and degree. In this regard, the Upper Tribunal thought that the works involved would go beyond being “repairs”. But, for the reasons given by Lewison LJ, paragraph 83 of the determination of the Upper Tribunal Judge is legally flawed: and this court is accordingly entitled to reach its own conclusion on the point. Given the facts, and applying the approach called for by the statutory provisions, I too think that such works can properly be categorised as works of repair. This was a conclusion, I note, which accords with the conclusion the Valuation Tribunal had previously reached.[43]I agree with both judgments.

Cited in 2 later judgments