Network Rail Infrastructure Limited v Karl List [2026] EWCA Civ 7

[2026] EWCA Civ 7

Case No CA-2025-000073

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE UPPER TRIBUNAL

(LANDS CHAMBER)

Martin Rodger KC, Deputy Chamber President and Peter D McCrea

[2024] UKUT 351 (LC)

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 15/01/2026

Before

LORD JUSTICE POPPLEWELL

LORD JUSTICE NUGEE

LORD JUSTICE HOLGATE

Between

Network Rail Infrastructure LimitedAppellant

Mr. Karl List (Valuation Officer)Respondent

Daniel Kolinsky KC and Luke Wilcox (instructed by Dentons UK and Middle East LLP) for Appellant

Galina Ward KC and Hugh Flanagan (instructed by HMRC Solicitors Office) for Respondent

Hearing Hearing dates: 3 and 4 December 2025

Approved Judgment

This judgment was handed down remotely at 10am on 15 January 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

.............................

Introduction

[1]The central issue in this appeal is whether advertising rights at Victoria Station and Liverpool Street Station in London conferred by the appellant, Network Rail Infrastructure Limited (“Network Rail”), on J.C. Decaux Limited (“Decaux”) should be treated for business rates as part of a single hereditament comprising the national railway network in the rateable occupation of Network Rail, or whether they should each be treated as a separate hereditament in respect of which Decaux is the ratepayer.

[2]Westminster City Council and the City of London are the billing authorities for their respective administrative areas under the Local Government Finance Act 1988 (“LGFA 1988”). Each authority is responsible for sending a notice to each ratepayer in its area stating the amount of non-domestic rates (“NDR”) that party is liable to pay for a hereditament on the local rating list and for taking proceedings to recover the sums due.

[3]Mr. Andrew Ricketts is the valuation officer for both the City of Westminster and the City of London. He is an official of the Valuation Office Agency (“VOA”), an executive agency of HMRC, and is responsible for compiling and maintaining the local non-domestic rating list for each area setting out each relevant non-domestic hereditament (a unit of rateable property) and its rateable value (ss.41 and 42 of the LGFA 1988). A valuation officer may make certain alterations to the list (pursuant to regulations under s.55 of the LGFA 1988) in order to maintain its accuracy. The information in the list is used by the billing authority to compute the amount of NDR payable by the ratepayer for each hereditament shown.

[4]The appellant, Mr. Karl List, is also a valuation officer and since 2017 the Complex Case and Appeals manager for the Inner London team, in which capacity he has handled these matters for the VOA.

[5]Network Rail’s national railway network is one of a number of “en bloc” hereditaments required to be entered on the central non-domestic rating list compiled and maintained by the central valuation officer (s.52 of the LGFA 1988). The ratepayer is required to pay the NDR due to the Secretary of State for Housing, Communities and Local Government (s.54 and sched.9 of the LGFA 1988).

[6]On 9 December 2020 Mr. Ricketts altered the rating list for the City of Westminster with effect from 1 April 2017 to show as a new entry an “advertising right” belonging to Decaux located above the central concourse of Victoria Station, with a rateable value of £83,000. The advertising site is a static, back lit box 6m by 1.6m with two sides used for advertising.

[7]Decaux operate 179 advertising sites at Victoria Station.

[8]On 9 December 2020 Mr. Ricketts altered the rating list for the City of London with effect from 1 April 2017 to show as a new entry an “advertising right” belonging to Decaux over the exit to Broadgate Circle at Liverpool Street Station, with a rateable value of £77,500. This advertising site is a digital installation measuring 4m by 2.3m.

[9]Decaux operate 135 advertising sites at Liverpool Street Station.

[10]At the material date, 1 April 2017, Decaux exercised the advertising rights over the two advertising sites in question and also the other sites at Liverpool Street, Victoria and 16 other stations, conferred by the Rail Advertising Concession Agreement dated 10 December 2010 between Network Rail and Decaux (“the 2010 agreement”). On 29 September 2014 this was extended to 31 March 2018.

[11]On 5 July 2021 Network Rail made proposals that the valuation officer’s new entries to the two lists be deleted Network Rail made its proposals under reg.4(2)(a) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (SI 2009 No. 2268) as an “interested person” within subpara.(b)(ii) of the definition in reg.2(1) ofthose Regulations. . The valuation officer considered the proposals to delete the entries to be “not well-founded” and so the appellant appealed to the Valuation Tribunal for England (“VTE”) Regulation 13A of SI 2009 No. 2268. . The parties to the appeals were Network Rail and the valuation officer. Decaux was aware of but did not participate in the appeals Under clause 8.18 of the 2010 agreement Network Rail agreed to be responsible for the payment of any business rates for the “Sites” containing the “Advertising Space” and any land on which advertising “Structures” were erected. . On 1 June 2023 the VTE allowed the appeal, deciding that the advertising rights were not separate hereditaments and formed part of Network Rail’s railway hereditament in the central rating list. The tribunal directed the valuation officer to delete the two new entries in the list.

[12]The valuation officer appealed against that decision to the Lands Chamber of the Upper Tribunal (“UT”). Following a hearing in October 2024 the UT, Mr. Martin Rodger KC, Deputy Chamber President, and Mr. Peter McCrea, issued their decision allowing the appeal and directing that the entries for the two advertising hereditaments be restored to the relevant local rating lists.

[13]With the permission of the UT, Network Rail now appeals against their decision to this court. I express my gratitude to all counsel for their helpful written and oral submissions.

[14]This judgment is set out under the following headings: The statutory framework as at 1 April 2017 The 2010 agreement The UT’s decision The grounds of appeal Legislative history The Southern Railway line of cases and paramountcy of occupation A summary of the appellant’s submissions Ground 1 Ground 2 Ground 4 Ground 3. The statutory framework as at 1 April 2017 Local rating list provisions

The statutory framework as at 1 April 2017

[15]Section 41(1) of the LGFA 1988 requires the valuation officer to compile and then maintain a local non-domestic rating list for the area of a billing authority. The list had to be compiled on 1 April 1990 and then on 1 April in every fifth year thereafter (s.41(2)). But the compilation of a list on 1 April 2015 was deferred to 1 April 2017, followed by 1 April 2023 and thereafter on 1 April in every third year (s.41(2A)).

[16]Section 42 deals with the contents of a local rating list. Section 42(1) provides:

“(1) A local non-domestic rating list must show, for each day in each chargeable financial year for which it is in force, each hereditament which fulfils the following conditions on the day concerned— (a) it is situated in the authority's area, (b) it is a relevant non-domestic hereditament, (c) at least some of it is neither domestic property nor exempt from local non-domestic rating, and (d) it is not a hereditament which must be shown for the day in a central non-domestic rating list.”

Section 42(4) provides that for each day on which a hereditament is shown in the list, it must also show that hereditament’s rateable value.

[17]Section 43 deals with the liability to pay NDR on occupied hereditaments. Where a hereditament is shown in a local non-domestic rating list, a person who is in occupation of all or part of the hereditament is liable to pay NDR to the billing authority for each chargeable day (s.43(1) and (7)). Generally, the amount payable for any chargeable day is the rateable value shown for the hereditament in the rating list multiplied by the national non-domestic rating multiplier (s.43(4)). In broad terms, rateable value is based on an annual letting value.

[18]Section 45 deals with the liability to pay NDR on unoccupied hereditaments. By s.45(1) and (7) a person is liable to pay to the billing authority NDR for any day of the financial year on which a hereditament is shown in the local non-domestic rating list, it falls within a class prescribed by regulations, none of the hereditament is occupied, and that person is the “owner” of the whole of the hereditament. Generally the amount payable is the same as that which would have been payable if the hereditament had been occupied (s.45(4)).

[19]Thus, the liability to pay NDR arises on a daily basis. For an occupied hereditament that liability is imposed on the occupier of that property. For an unoccupied hereditament the liability is imposed on the owner of that property.

[20]Section 65(2) provides that whether a hereditament or land is occupied, and who is the occupier, is to be determined by reference to the rules which would have applied for the purposes of the former General Rate Act 1967 (“GRA 1967”), that is to say the principles established by case law. It has been laid down by John Laing & Son v Assessment Committee for Kingswood Assessment Area

[1949] 1 KB 344

, 350; Cardtronics UK Limited v Sykes (Valuation Officer)

[2020] UKSC 21

;

[2020] 1 WLR 2184

at [13] and Rossendale Borough Council v Hurstwood Properties (A) Limited

[2021] UKSC 16

;

[2022] AC 300

at [21] that there are four essential ingredients of rateable occupation: (1) actual occupation; which is (2) exclusive for the particular purposes of the possessor; and (3) of some value or benefit to the possessor; and which (4) must not be for too transient a period.

[21]Section 65(1) defines the “owner”:

“(1) The owner of a hereditament or land is the person entitled to the possession of it.”

[22]Section 64 defines a “hereditament” for the purposes of rating. Section 64(1) lays down the general rule:

“A hereditament is anything which, by virtue of the definition of hereditament in section 115(1) of the 1967 Act, would have been a hereditament for the purposes of that Act had this Act not been passed.”

[23]The definition of “hereditament” in s.115(1) of the GRA 1967 was as follows:

“‘hereditament’ means 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;”

The statute enshrines a general principle that a hereditament is a unit of rateable property which is capable of separate assessment. Subject to any specific rules to different effect, the general principle is that a property is a hereditament if it is capable of rateable occupation (SJ & J Monk v Newbigin

[2017] UKSC 14

;

[2017] 1 WLR 851

at [22]). As Lord Carnwath stated in Cardtronics at [15] the concepts of “hereditament” and “rateable occupation” are linked.

[24]Incorporeal rights such as easements are generally not rateable in themselves. The rights granted by many easements are capable of being exercised over a servient tenement without the holder of that right being in exclusive occupation of that land. But where an incorporeal right includes an entitlement to exclusive occupation for the exercise of that right, or as a matter of fact exclusive occupation is necessary for its exercise, then the holder of that right may be in rateable occupation of the land he so occupies (Holywell Union and Halkyn Parish v Halkyn Drainage Company

[1895] AC 117

). Thus, the holder of a right to lay, maintain and use a water main may be in exclusive occupation of the soil occupied by that conduit and to that extent rateable. Hereditaments of this nature fall within the general definition of “hereditament” in s.115(1) of the GRA 1967 and thus s.64(1) of the LGFA 1988.

[25]However, s.64(2) and (2A) LGFA 1988 add two provisions which deem certain types of right to be a hereditament without requiring that they be capable of rateable occupation:

“(2) In addition, a right is a hereditament if it is a right to use any land for the purpose of exhibiting advertisements and— (a) the right is let out or reserved to any person other than the occupier of the land, or (b) where the land is not occupied for any other purpose, the right is let out or reserved to any person other than the owner of the land. (2A) In addition, a right is a hereditament if— (a) it is a right to use any land for the purpose of operating a meter to measure a supply of gas or electricity or such other service as the appropriate national authority may by order specify, and ... (b) the meter is owned by a person other than the consumer of the service.”

The opening words “in addition” make it plain that the rights in each subsection are rateable hereditaments if the conditions stated in the relevant subsection are met, without needing to satisfy the tests for a rateable hereditament imposed by the general provision in s.64(1). (a) the right is let out or reserved to any person other than the occupier of the land, or (b) where the land is not occupied for any other purpose, the right is let out or reserved to any person other than the owner of the land. (a) it is a right to use any land for the purpose of operating a meter to measure a supply of gas or electricity or such other service as the appropriate national authority may by order specify, and ... (b) the meter is owned by a person other than the consumer of the service.”

[26]The “relevant non-domestic hereditaments” which by s.42(1)(b) must be included in a local rating list are defined by section 64(4):

“(4) A hereditament is a relevant hereditament if it consists of property of any of the following descriptions— (a) lands; (b) coal mines; (c) mines of any other description, other than a mine of which the royalty or dues are for the time being wholly reserved in kind; ... (e) any right which is a hereditament by virtue of subsection (2) or (2A) above.” (a) lands; (b) coal mines; (c) mines of any other description, other than a mine of which the royalty or dues are for the time being wholly reserved in kind; (e) any right which is a hereditament by virtue of subsection (2) or (2A) above.”

[27]The hereditament defined by s.64(2) applies to a right to use any land for the purpose of exhibiting advertisements both(a) where that land is occupied for any other purpose and

(b) where it is not so occupied. Where the land in respect of which the right is exercisable is occupied, the advertising right must be either let out or reserved to someone who is not the occupier of that land. Where the land is unoccupied, the advertising right must be let out or reserved to someone who is not the owner (as defined in s.65(1)) of that land.

[28]Section 64(11) provides:

“(11) In subsection (2) above “land” includes a wall or other part of a building and a sign, hoarding, frame, post or other structure erected or to be erected on land.”

[29]Section 65(8) provides that the person entitled to an advertising right falling with s.64(2) is deemed to be the rateable occupier of that separate hereditament:

“(8) A right which is a hereditament by virtue of section 64(2) above shall be treated as occupied by the person for the time being entitled to the right.”

[30]Where s.64(2) does not apply, but land consisting of a hereditament is used to exhibit advertisements or for the erection of a structure for advertising, and the land is otherwise unoccupied, s.65(8A) treats the hereditament as occupied by the person permitting it to be so used, or if that person is not ascertainable, the owner: “(8A) In a case where—(a) land consisting of a hereditament is used (permanently or temporarily) for the exhibition of advertisements or for the erection of a structure used for the exhibition of advertisements,

(b) section 64(2) above does not apply, and

(c) apart from this subsection, the hereditament is not occupied, the hereditament shall be treated as occupied by the person permitting it to be so used or, if that person cannot be ascertained, its owner.” (a) land consisting of a hereditament is used (permanently or temporarily) for the exhibition of advertisements or for the erection of a structure used for the exhibition of advertisements, (b) section 64(2) above does not apply, and (c) apart from this subsection, the hereditament is not occupied,

[31]Regulation 14 of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (SI 2009 No. 2268) sets out the general rules for determining the date from which an alteration of a rating list is to have effect. Regulation 15(1) specifies the date on which an “advertising hereditament” within s.64(2) is deemed to come into existence:

“(1) Regulation 14 shall have effect, where the circumstances giving rise to the alteration are the coming into existence of an advertising hereditament, as if those circumstances occurred when— (a) any structure or sign is erected, after the right constituting the hereditament has been let out or reserved, to enable the right to be exercised; or (b) any advertisement is exhibited in exercise of the right, whichever is earlier; and such a hereditament shall be treated for the purposes of Part 3 of the Act as coming into occupation at that time. (2) … (3) In this regulation— “advertising hereditament” means a hereditament consisting of a right to which section 64(2) of the Act applies; “advertising right” means a right which is such a hereditament; and “structure” includes a hoarding, frame, post or wall.” (a) any structure or sign is erected, after the right constituting the hereditament has been let out or reserved, to enable the right to be exercised; or (b) any advertisement is exhibited in exercise of the right, “advertising hereditament” means a hereditament consisting of a right to which section 64(2) of the Act applies; “advertising right” means a right which is such a hereditament; and “structure” includes a hoarding, frame, post or wall.”

[32]Thus, reg.15(3) confirms that an advertising right falling within s.64(2) is itself a hereditament. But such a hereditament is treated as coming into existence only when an advertisement is displayed in exercise of the right or, if earlier, a sign or structure is erected to enable the right to be exercised.

The central rating list and railway hereditaments

[33]Section 42(1)(d) provides that a local list may not contain a hereditament which is required to be shown on a central rating list.

[34]By s.53(1) and (2) the Secretary of State may by regulations prescribe a designated person and its relevant non-domestic hereditaments. A central rating list must set out the name of the designated person and each such hereditament which it occupies or (if unoccupied) it owns:

“(1) With a view to securing the central rating en bloc of certain hereditaments, the Secretary of State may by regulations designate a person and prescribe in relation to him one or more descriptions of relevant non-domestic hereditament. (2) Where the regulations so require, a central non-domestic rating list must show, for each day in each chargeable financial year for which it is in force, the name of the designated person and, against it, each hereditament (wherever situated) which on the day concerned— (a) is occupied or (if unoccupied) owned by him, and (b) falls within any description prescribed in relation to him.” (a) is occupied or (if unoccupied) owned by him, and (b) falls within any description prescribed in relation to him.”

[35]According to s.53(1), an objective of central rating is to rate hereditaments of a designated person “en bloc”. Section 64(3) enables the Secretary of State to make regulations which inter alia treat several hereditaments as one hereditament.

[36]Section 53(3) requires the central rating list to show the rateable value of a designated person’s hereditaments as a whole.

[37]The relevant regulations are the Central Rating List (England) Regulations 2005 (SI 2005 No 551) (“the 2005 Regulations”). Regulation 3 and para.1 of sched.1 identify Network Rail as a designated person and prescribes in relation to that company the hereditament described in reg.6(1).

[38]Regulation 6(1) of the 2005 Regulations provides: “(1) Where … Network Rail Infrastructure Limited …. –(a) occupies or, if it is unoccupied, owns any hereditament; or

(b) lets or licenses a hereditament to– (i) a licence holder or a licence exempt operator, other than a licence holder or licence exempt operator who is also a designated person under Parts 1 or 2 of the Schedule to these Regulations or under Part 2 of the Schedule to the Non-Domestic Rating (Communications and Light Railways) (England) Regulations 2005, and the lessee, licensee or British Transport Police Authority occupies, or, if unoccupied, owns the hereditament; or (ii) the British Transport Police Authority, and it occupies, or, if unoccupied, owns the hereditament, and if, apart from these Regulations, those hereditaments would be more than one hereditament, and each separate hereditament satisfies the conditions in paragraph (3), those separate hereditaments shall be treated as one hereditament.” (a) occupies or, if it is unoccupied, owns any hereditament; or (b) lets or licenses a hereditament to– (i) a licence holder or a licence exempt operator, other than a licence holder or licence exempt operator who is also a designated person under Parts 1 or 2 of the Schedule to these Regulations or under Part 2 of the Schedule to the Non-Domestic Rating (Communications and Light Railways) (England) Regulations 2005, and the lessee, licensee or British Transport Police Authority occupies, or, if unoccupied, owns the hereditament; or (ii) the British Transport Police Authority, and it occupies, or, if unoccupied, owns the hereditament,

[39]In reg.6(1)(a) the word “hereditament” refers to a “relevant non-domestic hereditament” (reg.1(3)(b)) and would therefore include an advertising right which is a hereditament let out to or reserved to Network Rail (s.64(2) and (4) of the LGFA 1988).

[40]The final part of reg.6(1) requires hereditaments occupied (or, if unoccupied, owned) by Network Rail (or which fall within reg.6(1)(b)), and which satisfy the conditions in reg.6(3), to be treated as one hereditament.

[41]By reg.6(3) Network Rail hereditaments only fall within the “en bloc” hereditament prescribed by reg.6(1) if(a) they are used wholly or mainly for “railway purposes” and

(b) they are not an “excepted hereditament”.

[42]By reg.6(4):

““railway purposes” means the purposes of providing railway services, within the meaning given by section 82(1) of the Railways Act 1993, or for purposes ancillary to those purposes (including the purposes of providing policing services or the exhibiting of advertisements).”

Section 82(1) of the Railways Act 1993 provides:

“(1) In this Part, “railway services” means services of any of the following descriptions, that is to say— (a) services for the carriage of passengers by railway; (b) services for the carriage of goods by railway; (c) light maintenance services; (d) station services; (e) network services.”

Thus, the exhibiting of advertisements is an ancillary, rather than a primary, function of Network Rail. (a) services for the carriage of passengers by railway; (b) services for the carriage of goods by railway; (c) light maintenance services; (d) station services; (e) network services.”

[43]Also by reg.6(4):

““excepted hereditament” means a hereditament consisting of or comprising– (a) premises used as a shop, hotel, museum or place of public refreshment; (b) … (c) premises or rights so let out as to be capable of separate assessment, other than those falling within paragraph (1)(b) or (2)(b); or (d) …”

The appellant’s submissions relied substantially on limb (c) of the definition of “excepted hereditament” in reg.6(4).

(b) or (2)(b); or

[44]Network Rail’s hereditament described in reg.6(1) is to be treated as occupied by that company (reg.6(5)).

The 2010 agreement

[45]The agreement dated 10 December 2010 is entitled “Rail Advertising Concession Agreement”. Clause 1 contains a set of definitions. “Concession” was defined as:

“the advertising rights made available to the Concessionaire [Decaux] as set out in Clause 3”

[46]Clause 3 is entitled “Scope of the concession”. Clause 3.1 granted the following exclusive right to Decaux: “Subject to the provisions of this Agreement and in consideration of the Signing-On Fee, Network Rail grants to the Concessionaire from the Effective Date and thereafter during the Term, and subject to Clause 3.3, the exclusive right to maintain, manage, promote and exploit the sale of Advertising Space.” “Advertising Space” was defined in clause 1 as comprising the space on structures designated by Network Rail for accommodating advertisements (e.g. panels, electronic screens and video installations) and “ambient advertising space” (including walls, banners, floors, etc.) designated by Network Rail. Each such space was set out in sched. 4 to the agreement. Clause 2 defined the original term as 5 years from 1 September 2010, although this was subsequently extended to 31 March 2018.

[47]Clause 3.3 allowed Network Rail to install and display information signage for “the safe efficient running of the Railway Network” and for providing directions to any location occupied by any third party at any of the 18 stations within the scope of the agreement.

[48]Clause 3.5 provided that the ownership of all structures designed to accommodate advertisements remained vested in Network Rail unless otherwise agreed in writing.

[49]Clause 4 dealt with adjustments to the “advertising space”. Clauses4.1 and

4.2 covered space in additional stations which Network Rail became responsible for managing. Clause

4.3 dealt with Network Rail ceasing to manage a railway station, resulting in a reduction in the fees payable by Decaux.

[50]Clauses 4.5 and 4.6 dealt with Network Rail’s right to withdraw “advertising space” at any time:

“4.5 Subject to Clause 4.6, Network Rail may by notice at any time and from time to time in its absolute discretion, withdraw any Advertising Space (and Advertising Space shall be deemed to be withdrawn if Network Rail permanently disturbs or obstructs any Structure, Ambient Advertising Space or Site) or to dispose of any Site at any time, and, except where such withdrawal or disposal takes place in connection with the removal of a Managed Station from the scope of the Concession (to which Clause 4.3 applies) then: 4.5.1 the provisions of Clause 4.10 shall apply; and 4.5.2 other than as set out in this Clause 4.5, Network Rail shall not be responsible to the Concessionaire, or to any Advertiser or any other third party for any compensation payment or any other expenses, damages, costs, losses or liabilities in the event it exercises any of its rights under this Clause 4.5. 4.6 Any Advertising Space that is withdrawn by Network Rail under Clause 4.5 may be re-offered by Network Rail at any time with immediate effect upon notice in writing to the Concessionaire but any Advertising Space will not be offered to any third party during the Term.”

If space was withdrawn under clause 4.5, clause 4.10 provided for the adjustment of the fees payable by Decaux. 4.5.1 the provisions of Clause 4.10 shall apply; and 4.5.2 other than as set out in this Clause 4.5, Network Rail shall not be responsible to the Concessionaire, or to any Advertiser or any other third party for any compensation payment or any other expenses, damages, costs, losses or liabilities in the event it exercises any of its rights under this Clause 4.5.

[51]Clause 4.7 entitled Network Rail temporarily to disturb, remove or obstruct any structure or surface for advertising if in its opinion it was necessary or desirable to do so, including for the operation of the railway undertaking. Clause 4.8 entitled the appellant to close a managed station or track at any time for operational reasons.

[52]Section 6 set out Decaux’s duties. Clauses 6.3 and 7 required Decaux to operate the concession in accordance with specified standards and “key performance indicators”. Clause 6.16 restricted the ability of Decaux to discount the rates at which it sold advertising at the stations within the agreement.

[53]Section 8 of the agreement set out the fees payable by Decaux to Network Rail. They included a minimum payment each year and a profit share calculated according to a formula.

[54]Clause 11 required Decaux to maintain all structures and fixings.

[55]Clause 17 prevented Decaux from entering into contracts with advertisers restricting or regulating the rights and powers of Network Rail under the 2010 agreement.

[56]Clause 18 obliged Decaux to use reasonable endeavours to make available each year to Network Rail or its tenants or business partners advertising space to a specified value at average media-only rates payable in the previous concession year.

[57]Clause 19.2 allowed Network Rail in its absolute discretion to refuse access to its premises at any time to any person employed by Decaux, its agents, sub-contractors and advertisers.

[58]Clauses 20.6 and 21.5 gave Network Rail rights to monitor Decaux’s compliance with the agreement by requiring the provision of information.

The Upper Tribunal’s decision

[59]At [37] the UT said:

“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?”

[60]The valuation officer submitted that ss.64(2) and 65(8) of the LGFA 1988 created a specific regime for rating advertising hereditaments which is distinct from the general regime in ss.64(1) and 65(2). The 2010 Agreement let out the advertising rights to Decaux. A separate hereditament for each right was thereby created and was deemed to be in the occupation of Decaux as the person entitled to that right. The advertising hereditament could not be included in the central list because none of the conditions in regulation 6(1) of the 2005 Regulations were satisfied. The valuation officer therefore asked for the entries he had made in the local lists to be reinstated.

[61]Network Rail submitted that the VTE had been correct to delete the two entries for the advertising rights from the local lists. Those 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) of the LGFA 1988 therefore had no application. 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. A contextual analysis of the relationship between an advertising right and the host’s occupation of the site was required.

[62]Network Rail submitted that the UT should assess which occupation was paramount and which subordinate as between Decaux and itself, based on the 2010 agreement and its implementation. It was submitted that this showed that Network Rail remained in overall control of the advertising sites and were therefore in rateable occupation of those sites. Because the use of those sites to exhibit advertisements was a “railway purpose” within reg.6(4) of the 2005 Regulations, they should be included in the central list and valued as part of Network Rail’s hereditament. The concept of a hereditament being let out involved the separation of the right to display advertisements from the occupation of the land and so it was necessary to determine the degree and quality of separation required to achieve that “carving out”.

[63]The UT decided that advertising rights were the subject of their own self-contained regime. Parliament had chosen not to base those rules on the characteristics of rateable occupation or the rateable occupier, but had instead simply decided to deem the person entitled to exercise such rights to be the occupier. Sections 64(2) and 65(8) were designed to resolve the questions relating to occupation which would otherwise have involved the application of the general case law on rateable occupation ([42] to [45]).

[64]The UT said that whether a right was “let out” was critical to deciding whether it fell within s.64(2) of the LGFA 1988 and so could not be included in a central list. However, the case law which dealt with the application of the statutory expression “so let out as to be capable of separate assessment” was concerned with properties which were capable of rateable occupation, and hence the paramount occupation test, and so did not assist on the rateability of advertising rights ([49] to [55]).

[65]The UT added that the words in limb (c) of the definition of “excepted hereditament” in reg.6(4) of the 2005 Regulations did not assist because whether a land or a right was capable of separate assessment might depend on the general law on rateable occupation, whereas that is unnecessary for the application of ss.64(2) and 65(8) of the LGFA 1988. The absence of that additional language in s.64(2) indicated that Parliament did not consider any inquiry as to paramountcy was necessary for the rating of advertising sites [56].

[66]The UT decided that “let out” in s.64(2) did not denote a letting or grant in a technical or proprietary sense, but a transfer or conferral of the right in question to some other person to use for their own purposes [58].

[67]If Parliament had intended a paramountcy or landlord control principle to determine whether an advertising right had been let out, it would have been unnecessary for it to enact s.65(8) of the LGFA 1988.

[68]However, in the alternative, at [61]-[62] the UT set out its findings if it had considered paramountcy of control to be a relevant consideration:

“61. Had we taken the opposite view we would nevertheless have found it difficult to accept that Network Rail had retained paramount control of the advertising rights. Under the 2010 Agreement there is no question of JC Decaux acting as a manager of Network Rail’s advertising business. The relationship created by the contract is a matter of law and the views of members of Network Rail’s staff cannot assist in determining its nature. Subject to the terms of the agreement JC Decaux had complete control of advertising at the stations and it took all of the commercial risks on its own account. Network Rail gave away, in return for a significant minimum fee and a profit share, “the exclusive right to maintain, manage, promote and exploit the sale of Advertising Space”. 62. It is true that Network Rail retained the right, at its discretion, permanently to withdraw any particular hoarding or display from the Schedule of Advertising Space annexed to the 2010 Agreement, but if it did so it could not then offer that site to anyone else and it would cease to be a commercial advertising site for the remainder of the term. That is akin to a termination of the right in relation to an individual site, rather than a power of relocation such as was found in Ludgate House to be indicative of control having been retained. It is also true that Network Rail had the right for operational reasons and on notice temporarily to suspend the use of any structure or site and to make use of the rights where it required them (such as to display messages to its customers in the event of travel disruption). The former right is not unlike the right of the station operator in Southern Railway to close the station temporarily for any special occasion, to bar staff of its licensees from access to the station and to require them to comply with bylaws. The latter entitlement is used infrequently in relation to individual sites (and only then for digital sites) and we do not consider that it detracts from JC Decaux’s control of the sites. In Case, the club premises were required to be made available to the Board for its purposes “as and when required”

. In neither Case nor SouthernRailway were very similar rights to interfere in the licensees’ use of the premises sufficient to prevent the licensee from being in rateable occupation.”

[69]At [63] to [65] the UT explained why they did not attach significance to the fact that the valuation officer’s interpretation and application of the legislation departed from a longstanding practice of the VOA to treat advertising sites in railway stations as forming part of a railway hereditament on the central list, or to the suggestion that chaos or inconvenience would result from the valuation officer’s case.

The grounds of appeal

[70]The appellant advances the following grounds of appeal: Ground 1 The UT was wrong to find that the structure and language of s.64(2) of the LGFA 1988 indicated a parliamentary intention for the advertising rights regime to operate wholly independently of established rating concepts on the identification of the hereditament; on the contrary, Parliament chose a form of words (“let out”) that, properly understood, indicates an intention for the advertising rights regime to exist as separate hereditaments only when they are sufficiently separated from the host’s occupation of land. Ground 2 The UT was wrong in its approach to the 2005 Regulations which govern the identification of those properties which are assessed “en bloc” and irrespective of their geographical locations. Properly understood, the Regulations bring advertising at railway stations into the central list railway hereditament. Ground 3 The UT erred in its interpretation of the agreement between Network Rail and its advertising contractor. In particular, the UT was wrong to find that Decaux’s exclusive entitlement to advertise at the sites was an indicator of a position analogous to exclusive occupation of the sites. Ground 4 The UT erred in holding that the practical difficulties which the valuation officer’s approach would cause were irrelevant to the exercise of statutory interpretation. On the contrary, where there is a dispute about the correct interpretation of a statute, the administrative inconvenience caused by the various options is relevant to identifying Parliament’s intended approach. That is particularly so where, as here, those difficulties would occur as a result of a departure from previous practice. Ground 4 goes with Network Rail’s case on the interpretation of the legislation (grounds 1 and 2). However, Network Rail accepts that ground 3 does not arise unless it succeeds on grounds 1 or 2. Legislative history Advertising hereditaments.

Legislative history

[71]Late 19th century case law reveals difficulties in the then practice for the rating of advertising sites. For example, in R v The Assessment Committee of St. Pancras

(1877) 2 QBD 581

the court decided that advertisement hoardings on two different sites which were unoccupied were not rateable. One hoarding rested on the ground and was held in place by lateral fixings to a wall and railings. An annual rent was paid for the right to “affix” the hoardings. In the second case scaffolding poles had been put into the earth and a horizontal framework attached upon which advertisements were displayed. Angled struts resting on the ground were used to provide further support. An advertising right was granted in each case. Mellor J held that the holders of those rights had not been granted an exclusive right of permanent occupation, but merely an easement. Lush J held that in neither case was there occupation of the land by means of the hoarding. The hoarding and the poles had not been permanently attached or annexed to the soil so as to become a fixture.

[72]However, in Taylor v Pendleton Overseers

(1887) 19 QBD 288

two rights granted to use an advertising hoarding or structure fixed into the ground were held to be rateable. The court held that in each case the agreements granted to the advertiser a right of permanent occupation amounting to a tenancy.

[73]Parliament enacted the Advertising Stations (Rating) Act 1889, the long title of which recited that:

“difficulties have arisen in relation to the assessment to poor and other rates of land used for exhibition of advertisements and it is expedient to remove the same.”

[74]Section 3 of the 1889 Act provided:

“3. Rating land used for advertisements and not otherwise occupied Where any land is used temporarily or permanently for the exhibition of advertisements, or for the erection of any hoarding frame post wall or structure used for the exhibition of advertisements but not otherwise occupied, the person who shall permit the same to be so used, or (if he cannot be ascertained) the owner thereof shall be deemed to be in beneficial occupation of such land or part thereof, and shall be rateable in respect thereof to the relief of the poor and to all local rates, according to the value of such use as aforesaid.”

[75]Section 4 provided:

“4. Rating occupied hereditaments used for advertisements Where any land or hereditament occupied for other purposes, and rateable in respect thereof to the relief of the poor and local rates, is used temporarily or permanently for the exhibition of advertisements, or for the erection thereon or attachment thereto of any hoarding frame post wall or structure used for the exhibition of advertisements, the gross and rateable value of such land or hereditament shall be so estimated as to include the increased value from such use as aforesaid.”

[76]Neither s.3 nor s.4 treated an advertising right as a separate hereditament in itself. Instead, s.3 deemed that unoccupied land used for the display of advertisements or for the erections of an advertising hoarding was in the rateable occupation of the person permitting the land to be so used (or in default the owner), according to the value of such use. Where land was rateably occupied for other purposes and used also for the display of advertisements or the erection of an advertising hoarding, section 4 required that the rateable value of the land should include the increased value attributable to that use for advertising.

[77]Amies Law of Rating (1965) explains at p.13 that twoissues arose from ss.3 and 4 of the 1889 Act, First, in neither case was the advertiser made liable for rates. Second, where a landlord let a property to a tenant and separately let a side wall of that property to another party for advertising, section 4 of the 1889 Act increased the tenant’s liability for rates on his property by the value of the advertising use, although he derived no benefit from that use.

[78]To address both of those points s.56 of the Local Government Act 1948 (“LGA 1948”) deemed a right to use land (or any hoarding, wall or structure) for advertising, a separate rateable hereditament:

“56. Where the right to use any land (including any hoarding, frame, post, wall or structure erected or to be erected on the land, and including also any wall or other part of a building) for the purpose of exhibiting advertisements is let out or reserved to any person other than the occupier of the land, or when the land is not occupied for any other purpose, to any person other than the owner of the land, that right shall be deemed for rating purposes to be a separate hereditament in the occupation of the person for the time being entitled to the right, and shall be included in the valuation list as a separate hereditament accordingly, and, notwithstanding anything in section three or section four of the Advertising Stations (Rating) Act 1889, in estimating the value of the land for rating purposes no account shall be taken of any value or, as the case may be, of any increased value arising from the use of the land for the purpose of exhibiting advertisements in accordance with that right.”

[79]Section 56 of the LGA 1948 contained the same main elements as the provisions now to be found in s.64(2) and (11) and s.65(8):(1) The right to use any land for advertising included the use of any hoarding, wall, structure or part of a building;

(2) The right had to be “let out or reserved” to any person other than the occupier of the land (if occupied) or to any person other than the owner of the land (if unoccupied);

(3) The right was “deemed for rating purposes to be a separate hereditament” in the occupation of the person entitled to the right and was to be included in the valuation list as a separate hereditament.

[80]In Imperial Tobacco Company (of Great Britain and Northern Ireland) Limited v Pierson

[1961] AC 463

the House of Lords held that s.56 of the LGA 1948 made rateable the grant of the advertising right let out (or reserved), not the exercise of that right. Accordingly, the grantee’s subsequent erection of an advertising structure was not to be taken into account in the assessment of the rateable value of the right.

[81]Section 9(1) and (2) of the Rating and Valuation Act 1961 (“RVA 1961”) reversed the effect of the decision in Imperial Tobacco. First, the rateable value of the right was to include a proper amount for any structure for the time being available for use for the display of advertisements. Second, the separate hereditament referred to in s.56 of the LGA 1948 came into existence at the earliest time when any advertisement was displayed or a structure was erected enabling the right to advertise to be used:

“9. —(1) In valuing for rating purposes any right which constitutes a separate hereditament by virtue of section fifty-six of the Act of 1948 (rating of advertising stations), the rent at which the hereditament might be expected to be let shall be estimated on the footing that it would include a proper amount in respect of any structure for the time being available for use, for the purpose of exhibiting advertisements, by the occupier of the separate hereditament, notwithstanding that the structure was provided by him or was provided after the right was let out or reserved. (2) Notwithstanding anything in the said section fifty-six the separate hereditament shall be treated as coming into existence at the earliest time at which either any structure is erected, after the right constituting the hereditament has been let out or reserved, for enabling the right to be exercised or any advertisement is exhibited in the pursuance of the right, and not before, …”

[82]Section 9 of the RVA 1961 reveals two significant points. First, Parliament confirmed that it was the advertising right falling within s.48 of the LGA which was deemed to constitute a separate rateable hereditament. Second, the coming into existence of that deemed hereditament was defined by reference to a point in time “after the right constituting the hereditament has been let out or reserved…” (see also the end of s.9(1)). In other words, “let out or reserved” was a straightforward concept referring to the creation of the right and not to some qualitative assessment of the degree of separation of a right to display advertisements from the occupation of the host property.

[83]The GRA 1967 was a consolidating statute. Section 28 dealt with “advertising stations”. In summary:(1) Section 28(1) re-enacted s.56 of the LGA 1948 and s.9(1) of the RVA 1961;

(2) Section 28(2) re-enacted s.9(2) of the RVA 1961;

(3) Section 28(3) re-enacted s.3 of the 1889 Act;

(4) Section 28(4) re-enacted s.4 of the 1889 Act. Section 28(3) and (4) only applied where s.28(1) did not.

[84]Section 28(1) has been carried forward into ss.64(2) and 65(8) of the LGFA 1988. Section 28(2) has been carried forward into reg.15(1) of SI 2009 No. 2268 (see [31] above).

Railway hereditaments

[85]Up until the Railways (Valuation for Rating) Act 1930 (“RVRA 1930”), each rating authority valued the section of a railway situated within the boundaries of its own area. Under the RVRA 1930 each of the main railways was valued as an entire entity using the profits or receipts and expenditure method to arrive at an annual letting value for the undertaking as a whole, which was then apportioned between the “railway hereditaments” occupied by that company. Properties occupied by a railway company falling outside the definition of “railway hereditaments” were separately valued and entered on a local valuation list.

[86]Section 1(3) of the RVRA 1930 defined a “railway hereditament” as follows:

“‘Railway hereditament’ means, subject as hereinafter provided, any hereditament occupied for the purposes of the undertaking of a railway company: Provided that no premises occupied as a dwelling-house, hotel or place of public refreshment, or so let out as to be capable of separate assessment, shall be deemed to be, or to form part of, a railway hereditament.”

The division between a “railway hereditament” and premises “so let out as to be capable of separate assessment” was interpreted and applied by the House of Lords in Westminster City Council v Southern Railway Company

[1936] AC 511

(see below). This lies at the heart of much of the appellant’s case.

[87]The railway industry was nationalised by the Transport Act 1947. Railway and other transport undertakings were vested in the British Transport Commission with effect from 1 January 1948. The Commission’s Railway Executive ran the railways. It was replaced by the British Railways Board in 1953.

[88]Section 88 of the LGA 1948 repealed most of the RVRA 1930. Section 85 of the LGA 1948 provided that no premises forming part of a railway hereditament was liable to be included in any valuation list or to be rated. Instead, the British Transport Commission would make payments “for the benefit of local authorities” “in lieu of the rates” which would otherwise be payable. Sections 93 to 95 of the LGA 1948 fixed the sum of money which would be paid by the commission for the first year of the scheme and how that sum would be adjusted for subsequent years. These fixed payments were paid to central Government and then apportioned between rating authorities.

[89]It was because of the new regime created by s.85 of the LGA 1948, that s.86(2) described the purposes of a railway hereditament as “non-rateable”. It was in this context that s.86(1) continued to exclude from a “railway hereditament” certain premises “so let out as to be capable of separate assessment”, which would be included as hereditaments in local valuation lists. Section 86(1) and (2) provided: “86. —(1). In this Part of this Act, except where the contrary is expressly provided, the expression "railway or canal hereditament" means a hereditament occupied for any of the purposes of the British Transport Commission specified in subsection (2) of this section : Provided that no premises occupied as a dwelling-house, hotel or place of public refreshment, or so let out as to be capable of separate assessment, shall be deemed to be, or to form part of, a railway or canal hereditament. (2) The purposes referred to in subsection (1) of this section (elsewhere in this Act referred to as “non-rateable purposes”) are—(a) all purposes of the parts of the undertaking of the Commission which are concerned with the carriage of goods or passengers by rail or inland waterway or the provision of facilities for traffic by inland waterway; and

(b) all purposes of any parts of their undertaking which are subsidiary or incidental to any such part as aforesaid, not being parts thereof concerned with road transport, sea transport or harbours or parts thereof subsidiary or incidental to the parts thereof concerned with road transport, sea transport or harbours: …” (a) all purposes of the parts of the undertaking of the Commission which are concerned with the carriage of goods or passengers by rail or inland waterway or the provision of facilities for traffic by inland waterway; and (b) all purposes of any parts of their undertaking which are subsidiary or incidental to any such part as aforesaid, not being parts thereof concerned with road transport, sea transport or harbours or parts thereof subsidiary or incidental to the parts thereof concerned with road transport, sea transport or harbours:

[90]Section 9 of the Rating and Valuation (Miscellaneous Provisions) Act 1955 (“RVMPA 1955”) dealt with a number of different reliefs from rates. Section 9(5) disapplied s.56 of the LGA 1948 in relation to advertising rights exercisable on land forming part of a railway hereditament:

“(5) Section fifty-six of the Act of 1948 (which provides that where the right to use land, including hoardings or other structures, for the purpose of exhibiting advertisements is separately let out or reserved, that right is to be treated as a separate hereditament for rating purposes) shall not apply to any right to use for that purpose any land forming part of a railway or canal hereditament (as defined by section eighty-six of that Act).”

[91]The regime whereby the British Railways Board made payments in lieu of rates for “railway premises” continued under s.32 of the GRA 1967. Section 32(2) continued to exclude from such property “premises so let out as to be capable of separate assessment”. In addition, s.28(6) disapplied s.28(1) of the GRA 1967 in relation to rights to use land forming part of “railway premises” for advertising. It is common ground that there is no equivalent to s.28(6) of the GRA 1967 in current rating legislation.

[92]Under the LGFA 1988, railway hereditaments have become rateable and the system for paying rates in lieu has ceased. Such hereditaments are now entered on the central rating list. But the main elements of the definition of a railway hereditament and the exclusions therefrom have been continued. Mr Kolinsky drew attention to one difference. The definition of an “excepted hereditament” (one excluded from a railway hereditament) in The Central Lists Regulations 1989 (SI 1989 No. 2263) (now in reg.6(4) of the 2005 Regulations) reads:

“premises or rights so let out as to be capable of separate assessment…”

The words “or rights” have been added to “premises.” He suggests that this was necessary because the regime under the LGFA 1988 no longer disapplies the provision (now contained in s.64(2)) which deems advertising rights to be rateable hereditaments where they are exercisable over a railway hereditament.

[93]Finally, from the Non-Domestic Rating (Railways) and Central Rating Lists (Amendment) Regulations 1994 (SI 1994 No 834) onwards, the various railway hereditaments in the occupation of a railway undertaking have been deemed to be a single hereditament in the occupation of that undertaking and entered as such on the central rating list.

The Southern Railway line of cases and paramountcy of occupation

[94]The general principle is that the liability to pay rates for an occupied hereditament falls on the person who is the rateable occupier of that property. There can only be one such occupier for each hereditament. Therefore, if in fact a hereditament is occupied by more than one party, the established principle is that the person who is in paramount occupation of that property is treated as the rateable occupier. Thus, in Holywell Union Lord Herschell L.C. stated at p.126: “There are many cases where two persons may, without impropriety, be said to occupy the same land, and the question has sometimes arisen which of them is rateable. Where a person already in possession has given to another possession of a part of his premises, if that possession be not exclusive he does not cease to be liable to the rate, nor does the other become so. A familiar illustration of this occurs in the case of a landlord and his lodger. Both are, in a sense, in occupation, but the occupation of the landlord is paramount, that of the lodger subordinate.” (see also Lord Davey at pp.133-4)

[95]In Southern Railway the House of Lords had to consider whether premises on the concourse of Victoria Station, such as bookstalls run by WH Smith and a bank were in the rateable occupation of the operators of those premises or of the railway company. The House interpreted and applied the proviso to s.1(3) of the RVRA 1930, whether the premises were “so let out as to be capable of separate assessment”. To do so they relied upon the paramountcy of occupation principle derived from Holywell. This judicial principle applies not only for determining who is the rateable occupier of a single hereditament occupied by more than one party, but also whether multiple occupation has resulted in part of a hereditament becoming a separate hereditament in separate rateable occupation. The principle applies in such situations, irrespective of whether a provision such as the proviso to s.1(3) of the RVRA 1930 is applicable.

[96]The leading judgment in Southern Railway was given by Lord Wright MR. He held at p.550 that the phrase “so let out as to be capable of separate assessment” referred to the carving out of the railway hereditament in the occupation of the railway company of a separate hereditament in the occupation of a third party (i.e. one of the two situations described in [95] above). He said that it was necessary to have regard to:(1) The character and conditions of the letting;

(2) The purpose for which the premises are let;

(3) The legal principles in the case law on rateable occupation, including paramountcy of occupation (pp. 552 to 565).

[97]At p.551 Lord Wright defined the issue to be determined in that case:

“The question then is whether the premises in question have been so carved out of the railway hereditament, to which they or their sites belonged, as to be capable of a separate assessment, or whether they have, though let out, been so let out as still to leave them in the occupation of the Railway Company.”

Taking the bookstalls as an example, the House of Lords held that they were independent hereditaments, capable of independent occupation and in fact occupied by WH Smith. The bookstalls were let out for a separate business of selling books and newspapers and were not subject to paramount control by the railway company (pp.535 to 537 and pp.560-561).

[98]In Case v British Railways Board [1972] RA 97 the Court of Appeal held, applying the paramountcy of occupation principle, that a railway staff association social club was a separate hereditament in the occupation of the local branch and did not form part of the railway hereditament of the British Railways Board (pp. 118 to 123). Buckley LJ (with whom Phillimore LJ agreed) stated that the words “let out” did not require a tenancy to have been granted. A licence or a contractual arrangement amounting to the creation of a right of occupation would suffice (p.115 and see also Lord Russell in Southern Railway

[1936] AC 511

, at pp.532-3).

[99]Buckley LJ held that s.86(1) of the LGA 1948 provided that a railway hereditament could only include premises occupied for any of the purposes of the British Railways Board specified in s.86(2). Those purposes were(a) all purposes of the parts of their undertaking concerned with the carriage of goods or passengers by rail and

(b) all purposes of any part of their undertaking subsidiary or incidental to (a). A hereditament occupied for the purposes of the undertaking of some body other than and independent of the Board could not fall within the definition of a railway hereditament (p.114).

[100]Buckley LJ went on at pp.115-116 to consider the words in the proviso to s.86(1), “premises … so let out as to be capable of separate assessment”, which were one of the exclusions from a railway hereditament. He decided that those words were surplusage:

“Letting out for the purposes of the provision must, in my judgment, at least involve this, that the ratepayers who, but for the letting out, would be in occupation of the hereditament or be entitled to occupy it for their own purposes, have permitted some other body to occupy it for purposes other than purposes of the ratepayers. Only in these circumstances, it seems to me, could the letting out result in the hereditament being capable of separate assessment. I can think of no kind of transaction which would have this result while the purposes for which the hereditament was used continued to be purposes of the ratepayer’s undertaking. It follows, if this is right, that as soon as a hereditament, which would otherwise be a railway hereditament, is “so let out as to be capable of separate assessment” it must cease to be a railway hereditament at all, so that the proviso to s 86(1) could not operate in respect of it, since that subsection as a whole would not apply. This leads me to the conclusion that the words “or so let out as to be capable of separate assessment” are strictly surplusage. Their inclusion in the proviso is perhaps precautionary…”

[101]In Cardtronics the Supreme Court held that ATMs located inside a supermarket, or in an external wall of a supermarket, were in the rateable occupation of the supermarket operator not the bank whose banking service was provided through the machine.

[102]In his judgment, with which the other members of the court agreed, Lord Carnwath warned of the dangers of over-analysis of the case law on core concepts such as hereditament, occupation and paramount and subordinate occupation. The principles stated in Southern Railway provide no more than a framework for the evaluation of the facts of any particular case ([26] to [27]).

[103]The Supreme Court held that all but one of the ATMs was capable of being a separate hereditament from that of the supermarket and therefore capable of being entered in the local rating list separately from the supermarket in which it was located ([28] to [39]).

[104]The Court then went on to consider whether each ATM was in the rateable occupation of the retailer as part of its supermarket, or was in the separate rateable occupation of the bank. Issues as to general control and interference with control may be important in determining paramountcy of occupation as between what Lord Russell in Southern Railway had referred to at p 529 as the “rival” occupations of two different occupiers of the same property. Lord Carnwath explained that this did not refer to rivalry in any commercial sense (e.g. between the railway company and retailers at the station), but simply to “distinct business activities”, for example selling newspapers or running a railway, and as such, competing candidates for identification as paramount occupancy [42].

[105]In Cardtronics the Supreme Court decided that there was no “rivalry” in this sense between retailers and banks in relation to the ATMs. Both the retailers and the banks shared a common interest in the success of the ATMs and their purpose was to facilitate that operation. The court applied the statement of Lord Herschell in Holywell Union cited at [94] above. The starting point was that the retailers were in exclusive occupation of their stores. The question was whether, despite the transfer of operation and limited possession given by a supermarket operator to an associated banking company, each retailer remained in paramount occupation of its store, as in the case of the control exercised by a landlord over the whole of a lodgings house. This was referred to as the “landlord-control principle” [43].

[106]The Supreme Court decided at [48] to [49] that the following findings of the UT supported their conclusion that each retailer remained in occupation of the ATMs as part of their stores:

“The store has not, in any of these cases, parted with possession of the site of the ATM, but it has agreed to confer rights on the bank which substantially restrict the store’s use of that small part of its premises which comprises the ATM site. The store has agreed to that restriction because the presence of the ATM furthers its own general business purposes and because the operation of the ATM by the bank provides the store with an income.” “Both parties derive a direct benefit from the use of the site for the same purpose and share the economic fruits of the specific activity for which the space is used.”

[107]In Ludgate House Limited v Ricketts

[2021] 1 WLR 1750

the Court of Appeal held that the UT had been wrong to hold that individual rooms in an empty office block licensed by a security company for occupation by full-time residents as property guardians to secure the building against trespass were separate hereditaments in the rateable occupation of the resident licensees. Instead, those rooms along with the rest of the building, were in the rateable occupation of the freehold owner.

[108]The court decided that the purposes of the guardians on the one hand and of the owner and security company on the other were complementary and mutually reinforcing, in that the purpose of the guardians living in the property was to facilitate the security company’s activity of providing property guardianship services to the owner. That common purpose was of direct benefit to the owner and/or the security company, either or both of which retained at least contractual control over the building for that purpose. The court held that this was therefore a case of general control, not paramount control, of the building for that purpose. The position of the guardians was analogous to service occupiers, caretakers or lodgers ([64] to [67], [71], [76] and [81] to [82]). So, as in Cardtronics, this case did not involve “rivalry” as between the occupiers of the building.

[109]In addition, the Court of Appeal held that contractual rights and obligations governing the occupation of the premises are relevant, even if they have not been exercised. The relevant question is whether, if exercised, those terms would interfere with an occupier’s enjoyment of premises [43]. So the security company’s right to require a guardian to relocate to a different room within the building [18] would be a significant interference with the use of that room to live in while that person’s licence remained in force, as compared with the termination of a tenancy. Furthermore, a lack of constant interference with the day to day running of a business may not equate to lack of control if on the facts the person in control has established a system which makes that unnecessary ([77]-[81]). A summary of the appellant’s submissions Ground 1

A summary of the appellant’s submissions

[110]Network Rail does not dispute that rates are payable in respect of the advertising sites. The issue is the statutory mechanism by which that result is achieved and hence whether the appellant or Decaux are liable under the LGFA 1988 for the NDR due.

[111]Section 64(2) does not lay down a separate principle for the identification of an advertising hereditament which disregards general rating law concepts on the identification of a hereditament. Section 64(2) is not simply concerned with the creation of advertising rights for a third party. Instead, there has to be a “letting out” which achieves sufficient separation between an advertising right and the hereditament out of which it is carved.

[112]Here the advertising right is situated within an operational railway station. The question is whether it is separated from, or an aspect of and subservient to, Network Rail’s occupation of the station for “railway purposes”. Those purposes include advertising.

[113]An analogy should be drawn with the principle which determines which of two rival occupiers of a hereditament is in paramount occupation (see SouthernRailway and Case). “Let out” indicates that the advertising right must have a significant degree of independence from the host hereditament and a lack of connection with the host’s purposes.

[114]The concept of paramountcy was further elucidated by the Supreme Court in Cardtronics. Sometimes a purpose is shared by both the occupier of the host hereditament and a party who is allowed to use part of that property. Where the host allows someone else to use its land as a way of achieving the host’s purpose, the mutually beneficial use of the land for that purpose leaves the host in paramount occupation. The land has not been “let out” to the third party. Thus, the term “let out” requires an evaluative judgment as to the extent of separation between the host’s occupation and the third party’s use of part of the host hereditament.

[115]Network Rail accepts that s.65(8) of the LGFA 1988 makes it unnecessary for an occupier to be identified. The holder of the advertising right is treated as the rateable occupier in relation to that right. But the concept of the letting out of such a right is intended to identify a holder of a right in a position analogous to that of a rateable occupier, at least in the sense of being sufficiently separated from the host occupation (para.70 of skeleton). To say that ss.64(2) and 65(8) deal with advertising rights as a separate regime does not assist on the question whether the regime applies when there are connections between the host’s occupation and the advertising right (para.69 of skeleton).

Ground 2

[116]Quite apart from the scope of ss.64(2) and 65(8) of the LGFA 1988 in relation to advertising rights generally, the appellant submits that the appeal should be allowed because of the legislation which is specific to the rating of railway hereditaments.

[117]The appellant submits that, under the regimes which preceded the current statutory scheme going back to the LGFA 1948, for an advertising right to be carved out of a wider railway hereditament, it would have had to be “let out so as to be capable of separate assessment.” In the context of advertising rights, it is submitted that that phrase imports from the Southern Railway line of cases “considerations analogous to paramountcy requiring an evaluation of the extent of separation”. The appellant says that this approach continues to apply in reg.6(4) of the 2005 Regulations.

[118]By failing to adopt that approach, the UT has rendered sub-para (c) in the definition of “excepted hereditament” in reg.6(4) of the 2005 Regulations otiose as it applies to advertising rights. On the UT’s interpretation of s.64(2) of the LGFA 1988, any such right would be excluded from consideration for inclusion in the railway hereditament entered on the central rating list under reg.6.

[119]The draftsman of the 2005 Regulations widened the scope of hereditaments excepted from railway hereditaments under sub-para (c) by adding the words “or rights” to “premises”. The only type of “right” defined as a hereditament which in practice would be found in a railway station is an advertising right. Thus, Parliament contemplated that “advertising rights” could fall within a railway hereditament entered on the central rating list, provided that it was not a right so let out as to be capable of separate assessment.

Ground 4

[120]The appellant submits that the UT wrongly treated the practical difficulties which would result from the valuation officer’s interpretation of the legislation as irrelevant to the interpretation exercise. Ground 3

[121]This ground arises if the appellant succeeds under grounds 1 or 2. In short, it is submitted that [61] to [62] of the UT’s decision are tainted by errors of law.

[122]Network Rail submits that on a proper reading of the 2010 agreement, in the context of its occupation of the 18 railway stations and the purposes of that occupation, Network Rail was in paramount control of the advertising sites made available to Decaux, including the two sites the subject of the UT’s decision. It was able to interfere significantly with Decaux’s exercise of the advertising rights while the 2010 agreement continued to subsist. Decaux was unable to interfere with the appellant’s railway purposes at the sites. Decaux’s operation of the rights at the advertising sites was in furtherance of the appellant’s purposes. Given that advertising was carried out for the mutual benefit of both Network Rail and Decaux, separate advertising hereditaments had not come into existence. The UT also failed to apply a distinction drawn in Cardtronics between exclusive use rights and exclusivity of occupation; the presence of the former does not include the latter.

Ground 1

[123]I have reached the conclusion that the appellant’s interpretation of s.64(2) of the LGFA 1988 must be rejected for a number of reasons.

[124]Much of the appellant’s analysis of s.64(2) is influenced by the fact that the advertising sites are located within railway stations and by a claimed interrelationship with the definition of railway hereditaments. However, Parliament has enacted s.64(2) to deal with advertising rights in general, and not simply those located on land which falls within a railway hereditament, or any other specialist hereditament.

[125]The appellant’s argument depends upon the words “let out” in s.64(2) and the interpretation it seeks to give them. It says that “letting out” does not refer simply to the creation of an advertising right. In addition, there is a qualitative requirement that there be a sufficient separation between an advertising right and the hereditament “out of which it is carved”. The appellant submits that the concept of letting out is intended to identify a holder of a right in a position analogous to that of a rateable occupier. Particularly where parties who confer or acquire an advertising right both have an interest in the activity of advertising pursuant to that right, the issue whether that right is rateable as a separate hereditament should be determined by analogy with the paramountcy of occupation principle.

[126]Why does the appellant contend for a principle only analogous with paramountcy of occupation? Mr Kolinsky accepted that this is because the deeming provisions in s.64(2) and s.65(8) of the LGFA 1988 treat principles of rateable occupation as irrelevant to advertising hereditaments. But then the problem is that the appellant has not explained the nature of the analogy it seeks to draw with paramountcy of occupation. How close is the suggested analogy and in what respects does it differ? Does the language of s.64(2) and s.65(8) disapplying principles for determining rateable occupation still allow room for some analogous principle to operate?

[127]In my view, the appellant’s approach is inconsistent with the plain language Parliament decided to use in the LGFA 1988. Section 64(2) simply deems that a qualifying right to use land for the purpose of exhibiting advertisements is a hereditament. It is irrelevant to the application of s.64(2) whether the exercise of that right would involve rateable occupation or whether the conferrer or conferee I do not use the words grantor and grantee because, in accordance with general principles of rating law, an advertising right may be created by a contractual agreement. of that right would qualify as a rateable occupier. Section 64(2) disregards such matters. Section 65(8) then supplies the necessary link between an advertising right deemed to be a hereditament by s.64(2) and liability to pay rates, by a further deeming provision that that hereditament is occupied by the person entitled to the right (see O’Brien v Secker [1996] RA 409, 412-414).

[128]Section 64(2) lays down an additional qualification that the right in question be let out (or reserved) to “any person” other than(a) the occupier of the land (if occupied) or

(b) the owner of the land (if unoccupied). The explanation for this is straightforward. The occupier of occupied land is liable for the rates payable on that land under s.43 and the owner of unoccupied land is liable for the rates payable on that land under s.45. In the case of an advertising right falling within s.64(2) the person entitled to that right is liable to pay rates on that right treated by the legislation as a separate hereditament (s.65(8)). The statutory scheme provides the necessary separation between these different liabilities for rates in simple and clear terms.

[129]Section 64(2) means what it says. It is a straightforward description of which advertising rights qualify under that provision. The phrase “let out or reserved” simply refers to the creation of such a right.

[130]This uncomplicated reading of s.64(2) of the LGFA 1988 is confirmed by s.9(1) and (2) of the RVA 1961 (now reg.15 of SI 2009 No. 2268). An advertising hereditament is deemed to come into existence at the earliest time after the right was “let out or reserved”. The deeming provision applies by reference to the creation of the right, not by reference to concepts analogous to occupation or paramountcy of occupation.

[131]“Reservation” is a property law term. It typically applies where a grantor of land reserves to himself an incorporeal right over that land which he will be entitled to exercise (see e.g. Halsbury’s Laws of England (5th ed.) Vol.32 para.438 and Megarry and Wade: The Law of Real Property (10th ed.) para.27-009). Read in context, “let out” also refers to the creation of such a right. There is nothing in the language used to suggest that there is a qualitative restriction on the meaning of “let out or reserved” based upon the degree of separation as between the conferrer and the conferee, whether in relation to the control and purpose of the advertising right or otherwise.

[132]The appellant’s argument conflicts with s.65(8) which stipulates who is to be treated as the rateable occupier of, and thus the party liable for the rates on, an advertising hereditament. That person is the party “entitled” to the advertising right defined in s64(2). The language used by Parliament does not allow any scope for importing a paramountcy of occupation principle, or the landlord-control principle, or some analogous version thereof, which, on the appellant’s case, could result in someone other than the party entitled to the right being treated as the rateable occupier.

[133]The appellant’s argument also conflicts with the structure of ss.64 and 65. Sections 64(1) and 65(2) are of general application. They invoke the considerable body of case law which lays down principles for defining and identifying hereditaments, rateable occupation and the rateable occupier. That case law includes the paramountcy of occupation principle where there are rival occupations and activities (see [94] to [109] above). By contrast, it is plain that ss.64(2) and 65(8) rely on deeming provisions for the creation of an advertising hereditament and the identification of a rateable occupier in substitution for that body of case law upon which the general rules in ss.64(1) and 65(2) depend.

[134]However, the appellant’s case involves the court accepting that, although when enacting s.64(2) and s.65(8) Parliament disapplied that case law by deeming an advertising right to be a hereditament in the rateable occupation of the person entitled to that right, it nevertheless managed to reapply that case law (in particular a paramountcy type principle) merely through the use of the words “let out or reserved” in s.64(2). Fortunately, there is nothing in the LGFA 1988 which would require the court to import an intention on the part of Parliament to legislate in that internally inconsistent, irrational manner.

[135]In addition, the appellant’s argument ignores limb (b) of s.64(2) where the words “let out or reserved” are also used. That language must have the same meaning in both limbs (a) and (b). In limb (b), the relevant land is, by definition, unoccupied. There is no rateable occupation or rateable occupier. There will be an “owner”, namely the person entitled to possession of the land (s.65(1)), and a letting out or reservation of an advertising right to someone other than the owner. The owner will be liable to pay rates on the unoccupied land under s.45 of the LGFA 1988 as the owner, but plainly not on the basis of being in rateable occupation.

[136]The approach suggested by the appellant (see e.g. the skeleton at paras.59-60 and 70) is not applicable to limb (b). That limb simply requires an advertising right to be let out to someone other than the owner of the land used for that purpose. It is irrelevant to consider sufficiency of separation between the position of the right holder and that of a “host owner” (or for that matter a “host occupier”). There is no scope within the language used, nor any need, to consider the nature of the host owner’s ownership (or occupation), or the relationship between the display of advertisements and that ownership (e.g. the extent to which it serves the host owner’s purposes or is subject to control by that owner). Under limb (b) there is no question of identifying a rights holder in a position analogous to that of a rateable occupier sufficiently separated from the host occupation. The language of limb (a) does not differ materially from that of limb (b) so as to indicate that the appellant’s interpretation can be applied to limb (a), although it could not to limb (b).

[137]For completeness I simply add that there is nothing in the language of limb (b) which indicates that the position of the holder of the advertising right should be sufficiently separated from that of the owner of the unoccupied land.

[138]Mr. Kolinsky submitted that it is possible to imagine situations where there is a close functional relationship between a right to advertise and the host occupation of a property in which the right is exercised. He submits that the UT’s interpretation of the LGFA 1988 is wrong because it requires that consideration to be treated as irrelevant and the party entitled to the advertising right to be treated as liable to rates rather than the host occupier. A functional connection (or separation) test is needed so that liability for rates is distributed rationally and fairly.

[139]He referred to a cinema as an example of a host hereditament where a film company may display an advertisement for one of its films showing in the cinema. He claimed that, on the UT’s interpretation of s.64(2) a film company could potentially be liable to be rated under that provision, which would therefore operate in a fragmented manner and create anomalies.

[140]No evidence was produced of the arrangements made for cinemas to support this claim. But even taking it at face value, what is the appellant’s solution for tackling this supposed issue? The court sought Mr. Kolinsky’s assistance on how his analogous paramountcy principle should be defined and operate. What would be the test? He gave a range of different responses presenting, with respect, a confused picture. For example, he submitted that regard should be had to purpose and control to see the extent to which the advertising arrangements between the conferrer and conferee achieve the purposes of the host occupier and are subject to the host’s control for the benefit of that occupation, and the extent to which those arrangements achieve the purposes of the advertiser and are subject to the advertiser’s control. This formulation still begged the question how would it be decided that an advertising right does or does not fall within s.64(2)? What test should be used to distinguish these two situations?

[141]Mr. Kolinsky suggested that there would need to be an absence of “any meaningful connection” between the advertising and the host use, or, at one point, the absence of “any connection”. Alternatively, the test should be whether advertising is “obviously a separate use of land” from, for example, running a railway. Another formulation was whether the advertising rights granted are subject to such control by the appellant as not to have been separated from the railway use. The appellant’s difficulty in formulating a test was not overcome by the suggestion that the test should be dependent upon the context of each case. There is no reason to think that Parliament, when enacting s.64(2) and (11) and s.65(8), intended that the creation of a deemed advertising hereditament should be the subject of so much conceptual uncertainty. This uncertainty in the appellant’s interpretation of the legislation would itself result in anomalies.

[142]Instead, s.64(2) simply applies where a right to use land for advertising has been let out (or reserved) to someone who is not the occupier or the owner, according to whether the land is otherwise occupied or unoccupied. Paramountcy of control and/or purpose, or any analogous concept, is not a relevant factor.

[143]Whether Mr Kolinsky’s cinema example would involve the letting out of a right to use land for the purpose of displaying advertisements would turn upon the facts and arrangements in any particular case, which are not before this court. It would therefore be inappropriate to comment any further.

[144]The appellant has sought to support its interpretation of s.64(2) by relying on the fiscal policy underlying s.56 of the LGA 1948. However, the appellant focused on only one of the purposes of s.56, namely to remedy the anomaly in the application of s.4 of the 1889 Act. But s.56 also addressed s.3 of that Act by imposing liability for rates on the party entitled to exercise an advertising right, the advertiser, rather than on the party who granted that right (see [77] – [78] above). The interpretation in [142] above is consistent with that policy. By contrast, the appellant’s approach assumes that Parliament’s fiscal purpose was to impose liability for rates on a right to use land for advertising by reference to paramountcy of purpose and/or control, when neither the wording of the LGFA 1988 nor the legislative history lend any support to that view.

[145]In any event, the parties to the letting out of an advertising right can be expected to agree the consideration payable for that right, taking into account the liability of the conferee to pay rates under s.65(8).

[146]For all these reasons, I would reject ground 1 of this appeal.

Ground 2

[147]The appellant’s approach to the interpretation of s.64(2) is heavily influenced by its reliance upon legislation since 1930 on the rating of railway hereditaments, despite the obvious difficulty of using that material to construe a provision of general application to property of all kinds throughout the country. The appellant’s case is that the phrase “premises” or “premises or rights” “so let out as to be capable of separate assessment” (from s.1 of the RVRA 1930 to reg.6(4) of the 2005 Regulations) explains or elucidates what is meant by “let out” in the provisions running from s.56 of the LGA 1948, through s.28 of the GRA 1967 to s.64(2) of the LGFA 1988. It submits that the words “let out” are common throughout and cannot be taken to have different meanings according to whether they are applied to a corporeal or an incorporeal right.

[148]With respect, this argument is untenable. Section 64(2) simply asks whether a right to use land for the purpose of displaying advertisements has been let out (or reserved). It is not preceded by the word “so” and followed by the words “as to be capable of separate assessment”. Those additional words form part of a compound expression which did not need to be included in s.56 of the LGA 1948 through to s.64(2) and s.65(8) of the LGFA 1988, because under those provisions a qualifying advertising right is itself deemed to be a hereditament in the rateable occupation of the holder of that right.

[149]Furthermore, the context for the decision in Southern Railway, when the House of Lords considered the words in the proviso to s.1(3) of the RVRA 1930, “so let out as to be capable of separate assessment”, was wholly different (see [86] and [95] above). It pre-dated the statutory creation in 1948 of separately rateable advertising rights in the deemed occupation of the right holder. The case was concerned with the application of judicial principles on rateable occupation and paramountcy of occupation to railway hereditaments, such as a railway station. Those principles were also applicable to other properties used for multiple purposes by rival occupiers (see [95]-[96] above). This was the context for the issue defined by Lord Wright MR at p.551 cited at [97] above. For a railway hereditament, it was necessary to ask whether, in the circumstances of the case, something had been “carved out” of that hereditament which was capable of separate rateable occupation so as to constitute a separate hereditament. But in the case of advertising hereditaments, that inquiry is irrelevant, because s.64(2) and s.65(8) supply the answer.

[150]In addition, it can be seen from that same passage of Lord Wright’s judgment that, when applying the proviso to s.1(3) of the RVRA 1930, he considered that premises may be “let out” but incapable of separate assessment, referring to premises not in separate rateable occupation. In other words, he did not regard the meaning of the term “let out” in the proviso as being affected by the tests for rateable occupation.

[151]In any event, in Case the Court of Appeal decided that language equivalent to that in reg.6(4) of the 2005 Regulations upon which the appellant relies so heavily, is surplusage (see [100] above). Regulation 6(1) and (3)(a) of the 2005 Regulations are sufficient to apply the case law on rateable occupation and paramountcy of occupation to railway hereditaments generally. Ms. Galina Ward correctly submitted that, on the basis of the analysis in Case, para.(c) of the definition of “excepted hereditament” in reg.6(4) of the 2005 Regulations is surplusage, other than the cross-reference to reg.6(1)(b) and 6(2)(b) (which are not material to the issues raised by this appeal). The appellant made no contrary submission. Surplus language, now contained in delegated legislation, cannot provide a foundation for overriding or modifying the plain language of the relevant primary legislation.

[152]It also follows that the addition in 1989 of the words “or rights” to “premises” (see [92] above) in text which is surplusage is of no significance for resolving the issue of interpretation. In any event, the exclusion from railway hereditaments of property “so let out as to be capable of separate assessment” had previously applied since 1930. That exclusion was expressed in terms of “premises”, not “premises or rights”, from the RVRA 1930, through s.86(1) of the LGA 1948, to s.32(2) of the GRA 1967. But it was not until the RVMPA 1955 that Parliament introduced the exemption from rates for advertising rights exercisable on a railway hereditament.

[153]The appellant relies on s.42(1)(d) of the LGFA 1988, the effect of which is that a hereditament which must be shown in a central rating list cannot be shown in a local rating list. So plainly, a “railway hereditament” as defined in reg.6(1) and (3) of the 2005 Regulations cannot be entered on a local rating list. But this provision does not override s.64(2) of the LGFA 1988.

[154]Regulation 6(1) has the effect of amalgamating into a single railway hereditament certain property occupied (or if unoccupied, owned) by Network Rail which would otherwise be treated as more than one hereditament. If, an advertising right on such land falls within s.64(2) of the LGFA 1988 then, by virtue of s.65(8), the party entitled to that right will be deemed to be the occupier of that advertising hereditament, not Network Rail. Accordingly, reg.6(1) and s.42(1)(d) will not be engaged in relation to that right. The statutory scheme does not prevent that right from being entered on a local rating list. Regulation 6(3) and (4) does not alter this analysis. These provisions only have effect for the purposes of further defining which hereditaments occupied (or if unoccupied, owned) by Network Rail are to be amalgamated under reg.6(1).

[155]The appellant submits that the UT’s interpretation would render limb (c) of the definition of “excepted hereditament” in reg.6(4) otiose in so far as it applies to advertising rights. But that submission has no real force given that it is based upon a provision which was held in Case to be surplusage. In any event, s.64(2) as interpreted by the UT would not prevent determinations being made as to whether advertising hereditaments should or should not be included in the central rating list. For example, that list could include an advertising right which has been let by a third party to Network Rail. Alternatively, instead of letting out an advertising right, Network Rail could enter into a management agreement with an agent which operates an advertising site on Network Rail’s behalf (see e.g. Esso Petroleum Company Limited v Walker (VO) [2013] RA 355).

[156]Accordingly, for these reasons I would reject ground 2.

Ground 4

[157]This ground can be dealt with briefly. The material relied upon by the appellant to indicate practical difficulties that would result from the adoption of the UT’s interpretation of the legislation is insubstantial and carries no persuasive weight. In addition, it appears that the VOA did not have access to the 2010 agreement between the appellant and Decaux until it was disclosed in these proceedings. As the UT pointed out, the advice in the VOA’s Rating Manual appeared to have proceeded on an assumption that Network Rail’s advertising rights were being managed on its behalf by contractors.

[158]In any event, the points made by the appellant do not detract from the clear language which Parliament employed when enacting the LGFA 1988. Previous practice and guidance, and any basing of commercial relationships upon such material, do not alter the meaning of that language.

[159]The interpretation of s.64(2) and s.65(8) adopted by the UT, and with which I agree, would not lead to any real uncertainty. It is plainly preferable to the apparent uncertainty which would result from the appellant’s suggested interpretation.

[160]I would reject ground 4.

Ground 3

[161]Given that the appeal has failed in relation to grounds 1, 2 and 4 , ground 3 does not arise for decision. Accordingly, it can be dealt with relatively briefly.

[162]I do not consider that the test applied by the UT, namely whether the appellant had paramountcy of control in relation to the advertising rights created by the 2010 agreement, is open to criticism. The appellant accepts that s.64(2) disapplies judicial principles on rateable occupation and so, on any view, a test based on paramountcy of occupation would have been inappropriate.

[163]I do not consider that the UT’s findings, applying the paramountcy of control test, are open to criticism on appeal. A central complaint is that the UT relied upon Network Rail’s grant to Decaux under clause 3.1 of “the exclusive right to maintain, manage, promote, and exploit the sale of Advertising Space” in return for a significant minimum fee and profit share. The appellant says that the UT was wrong to treat this as an indicator analogous to exclusive occupation of the sites. I do not read the UT’s decision at [61]-[62] as having approached the matter in that way. Their reasoning was focused on control. In so far as the appellant may be suggesting that the UT ought to have considered, and failed to consider, exclusivity (or paramountcy) of occupation, that would have been an inappropriate test for the reasons already given. When dealing with the application of s 64(2) under ground 3, the exclusivity of the advertising rights conferred on Decaux by clause 3.1 was plainly an important factor. Only Decaux had an exclusive right to advertise from the advertising space. Network Rail did not.

[164]Clause 3.1 was subject to the right reserved to the appellant under clause 3.3 to install and display information signage for the safe and efficient running of the railway network and for providing directions. But that did not detract materially from Decaux’s exclusive right to exploit the right to advertise using the Advertising Space shown in the agreed schedule. Likewise, several of the clauses in the agreement dealing with Decaux’s rights to access the railway stations have been drafted so as to respect the operational requirements of those stations (clauses 6, 12 and 19).

[165]In my judgment no criticism can be made of the UT’s findings that Decaux controlled advertising at the 18 railway stations and took all of the commercial risk on its own account. Decaux did not act as the manager of the appellant’s advertising business.

[166]The appellant submits that the UT’s analysis should have been different because the advertising at the stations was for the mutual benefit of both Network Rail’s own occupation purposes and Decaux’s purposes as the advertiser. It is suggested that in such a case the expectation that the host will interfere with the operations of the contractor is reduced because of the mutuality of purpose and benefit.

[167]The appellant places much emphasis on the statutory definitions of “railway purposes” in reg.6 of the 2005 Regulations ([38]-[42] above). Section 82(1) of the Railways Act 1993 defines “railway services” so as to comprise the carriage of passengers or goods by railway, light maintenance services, station services and network services. By reg.6(1) and (3) a hereditament does not qualify for inclusion in the single railway hereditament entered in the central rating list unless it is used wholly or mainly for “railway purposes”, which refers to the purposes of providing “railway services”, or for purposes ancillary to those purposes, including the display of advertisements.

[168]So it is plain that the display of advertisements can only be an ancillary function of Network Rail, not a primary purpose. The appellant’s business is concerned with the running of the railway network, stations and other defined services, not advertising. The running of a railway station and the business of advertising are two distinct activities. The position is different to that in Cardtronics where the ATMs furthered the supermarket operator’s retail business as well as the business of the bank and in Ludgate House where the residential use by the licensees furthered the provision of property guardianship services by the contractor and the freeholder’s management to ensure the security of its otherwise vacant property. In those cases the activity in question was for the mutual or shared benefit of each party’s business purposes.

[169]That is not the position in the present case. There was no evidence to suggest that advertising provided by Decaux on the sites at the 18 railway stations furthers the running of a railway network, stations or railway services. It was merely suggested that advertising had taken place on railway stations since the 1870s, “and so passengers expect to see it as part of their travelling experience” (para. 13 of Mr Wood’s witness statement). Essentially advertising is simply an important source of income for Network Rail.

[170]The UT did not accept the appellant’s approach. They treated the relationship as a classic one of the letting out of exclusive rights in return for a valuable income stream. They were entitled to reach that conclusion.

[171]The appellant says that the 2010 agreement did not allow Decaux to interfere with the appellant’s running of the stations for railway purposes. There is nothing in this point. An advertising right would not be expected to do so.

[172]The issue under ground 3 comes down to paramountcy of control over the advertising right given to Decaux. Ultimately, the appellant’s main argument rested on clauses 4.5 and 4.6 which enable it to withdraw any advertising space in its absolute discretion at any time upon giving notice to Decaux. Where that provision is operated there is a consequential reduction in the consideration payable by Decaux (clause 4.10) and Network Rail is prohibited from offering the space to any third party for the remainder of the term of the agreement (clause 4.6).

[173]Clauses 4.5 and 4.6 operate alongside other “adjustments to advertising space” in section 4 of the agreement, such as clause 4.3 where Network Rail ceased to be responsible for managing a station covered by the agreement, or clause 4.1 where it took on the management of an additional station. Clause 4.7 entitled the appellant temporarily to disturb, remove or obstruct any structure or space for advertising if it considered it necessary or desirable to do so. Thus, the 2010 agreement was set up so as to cope with all such adjustments or fluctuations. However, none of this detracted from the exclusive nature of the right conferred on Decaux in relation to any advertising space while that particular space remained within the scope of the agreement. I agree with the UT that clause 4.5 provided for the termination of a right to use an advertising space, but it did not point to the appellant having paramount control over that space while Decaux’s right to use it still subsisted.

[174]I do not think that clause 18 of the 2010 agreement materially alters this analysis. It merely required Decaux to use reasonable endeavours to make available to the appellant advertising space to a specified value at specified rates and subject to the payment of certain costs. However, this obligation was subject to a number of exclusions aimed at protecting the principal commercial objectives of the agreement, such as previous bookings and campaigns, repairs, and advertising on the best assets or at the busiest times. The value of the appellant’s entitlement was relatively modest compared to the payments to which it was entitled from Decaux. Clause 18 is consistent with the appellant having transferred exclusive advertising rights to Decaux. It did not in any way detract from Decaux’s exclusive rights, alternatively the latter’s paramount control over such rights.

[175]For all these reasons, I would reject ground 3.

Conclusion

[176]For all these reasons, I would dismiss this appeal.

[177]I agree.

[178]I also agree.