“1 Council tax in respect of dwellings. (1) As regards the financial year beginning in 1993 and subsequent financial years, each billing authority shall, in accordance with this Part, levy and collect a tax, to be called council tax, which shall be payable in respect of dwellings situated in its area.”
“5. The question which arises in a case like this is a very simple one. Given that non-domestic rates are a tax on individual properties, what is the property in question? In principle, the fact that the same occupier holds two or more properties is irrelevant to the rateable status of any of them. He must pay rates separately on each. If the law is to be rational and consistent, the circumstances in which a continuous territorial block is to be treated as several separate properties or in which geographically separate properties are to be treated as one for rating purposes, must be determined according to some ascertainable and defensible principle. 6. There are two principles on which these questions might be decided. One is geographical and depends simply on whether the premises said to constitute a hereditament constitute a single unit on a plan. The other is functional and depends on the use that is or might be made of it. The distinction was first applied in a series of rating cases in Scotland, where the question was essentially the same as the one which arises on this appeal, namely whether property should be assessed for local rates as a number of distinct heritable subjects or as unum quid (“one thing”). These cases establish that the primary test is geographical, but that a functional test may in certain cases be relevant either to break up a geographical unit into several subjects for rating purposes or to unite geographically dispersed units in unum quid. By far the commonest application of the functional test is in de-rating cases. In these cases, the functional test serves to divide a single territorial block into different hereditaments where severable parts of it are used for quite different purposes. Thus, a garage used in conjunction with a residence within the same curtilage will readily be treated as part of the same hereditament, whereas a factory within the same curtilage which is operated by the same occupier may not be. There are, however, rare cases in which function may also serve to aggregate geographically distinct subjects. It is with this latter question that the present appeal is concerned.”
“12. I derive from these decisions three broad principles relevant to cases like this one where the question is whether distinct spaces under common occupation form a single hereditament. First, the primary test is, as I have said, geographical. It is based on visual or cartographic unity. Contiguous spaces will normally possess this characteristic, but unity is not simply a question of contiguity, as the second Bank of Scotland case 18 R 936 illustrates. If adjoining houses in a terrace or vertically contiguous units in an office block do not intercommunicate and can be accessed only via other property (such as a public street or the common parts of the building) of which the common occupier is not in exclusive possession, this will be a strong indication that they are separate hereditaments. If direct communication were to be established, by piercing a door or a staircase, the occupier would usually be said to create a new and larger hereditament in place of the two which previously existed. Secondly, where in accordance with this principle two spaces are geographically distinct, a functional test may nevertheless enable them to be treated as a single hereditament, but only where the use of the one is necessary to the effectual enjoyment of the other. This last point may commonly be tested by asking whether the two sections could reasonably be let separately. Thirdly, the question whether the use of one section is necessary to the effectual enjoyment of the other depends not on the business needs of the ratepayer but on the objectively ascertainable character of the subjects. The application of these principles cannot be a mere mechanical exercise. They will commonly call for a factual judgment on the part of the valuer and the exercise of a large measure of professional common sense. But in my opinion they correctly summarise the relevant law. They are also rationally founded on the nature of a tax on individual properties. If the functional test were to be applied in any other than the limited category of cases envisaged in the second and third principles, a subject (or in English terms a hereditament) would fall to be identified not by reference to the physical characteristics of the property, but by reference to the business needs of a particular occupier and the use which, for his own purposes, he chose to make of it.”
“44. The leading authority on the identification of a hereditament is the decision of the Supreme Court in [Mazars] which concerned the proper treatment of geographically distinct units with a common occupier (which is not an issue in this appeal). Lord Sumption JSC (at para 12), identified the primary test as “based on visual or cartographic unity” and as “geographical”, (ie “whether the premises said to be a hereditament constitute a single unit on a plan”, at para 6). Lord Neuberger of Abbotsbury PSC also explained, at para 47, that: “Normally at any rate … a hereditament is a self-contained piece of property (ie property all parts of which are physically accessible from all other parts, without having to go onto other property), and a self-contained piece of property is a single hereditament.” 45. It is unnecessary to refer in any greater detail to the principles by which a hereditament is identified, as it is agreed that the Rooms occupied by individual Members are capable of being separate hereditaments. Someone entering one of the Rooms and closing the door would find themselves in a self-contained space which could be depicted on a plan. The appeal turns on a different issue, namely the identity of the person who, in law, is the occupier of those Rooms. Viewed as a whole, the Appeal Premises are also self-contained (all parts being accessible without leaving the premises). If, for rating purposes, they are occupied by the same person, it is not disputed that the Appeal Premises would also be capable of being a separate hereditament.”
“there are four necessary ingredients in rateable occupation … First, there must be actual occupation; secondly, that it must be exclusive for the particular purposes of the possessor; thirdly, that the possession must be of some value or benefit to the possessor; and, fourthly, the possession must not be for too transient a period.”
“Where the case is concerned with an appeal from a specialist Tribunal, particular deference is to be given to such tribunals, for Parliament has entrusted them, with all their specialist experience, to be the primary decision maker. Those tribunals are alone the judges of the facts. Their decisions should be respected unless it is quite clear they have misdirected themselves in law. Appellate courts should not rush to find such misdirections simply because they might have reached a different conclusion on the facts or expressed themselves differently.”
“26. It appeared to me that Mr Carter was trying to use the functional test in reverse to persuade me that the rooms were incapable of being separate hereditaments as only the house as a whole was capable of passing the test. However, my understanding of the relevant tests was that the primary test was geographic and if the putative hereditament passed that test, the secondary test was unnecessary. It was only necessary to consider the functional test, if a merger of assessment was sought and it was not possible to unify them under the geographic test. This being the case, regard could be made to the secondary functional test. 27. In the case under consideration, the common parts were disregarded for valuation purposes and had no separate band entry. Each of the six rooms, that were let to tenants, met the geographic test. Therefore, Mr Carter’s argument that I should apply the functional test was a distraction… In Mazars, Lord Sumption stated that whether the functional test was met could be tested by asking if the two sections could reasonably be let separately. In the case under consideration, the rooms had been separately let. The common parts had not been let but the occupiers of the rooms had access and the right to use the common parts. 28. I accepted Mr Carter’s point that the occupiers of the rooms had to have access and to be able to use the facilities in the common parts as the rooms, although described by the Listing Officer as Flats, were considerably smaller than one bedroom studio flats. However, there were numerous examples, as enunciated by Mr Wilcox in his submissions, where occupiers of other property types needed access of common parts, in order to make use of essential facilities which were not contained within their hereditament. For instances, shops within a shopping mall or office suites within an office building. 29. Having determined that the individual rooms that had been let to tenants were putative hereditaments, I then focussed on who was in rateable occupation. There were two potential candidates, the individual tenant(s) or the Appellant landlord. All of the rooms had been let out on an Assured Shorthold Tenancy basis with a fixed term of twelve months. I was satisfied that, whilst their respective tenancies endured, each tenant was in rateable occupation of their room. They were in actual occupation, that occupation was beneficial to them as they needed somewhere to reside, they had the exclusive use of the room and given the term of the agreement, which was twelve months, it could not be said that their occupation was for too transient a period...”