RICHARD MEACOCK RA/17/2002

UPPER TRIBUNAL

LANDS CHAMBER

RA/17/2002

Case No RA/17/2002

Between

RICHARD MEACOCKApplicant

Before

N J Rose FRICS

Venue 48/49 Chancery Lane, London, WC2A 1JR

Date 24 September 2002

Hearing 29 July 2002

Property: 24 Richmond Hill, Richmond, Surrey TW10 6QX

Catchwords: RATING - lock-up shop - value - relevance of various empty shops in vicinity of appeal property - rental and premium evidence - assessments of other units - assessment reduced to RV £7,400.

[1]This is an appeal by the owner of a shop and premises known as 24 Richmond Hill, Richmond, Surrey, TW10 6QX (“the appeal property”) against the decision of the London (South West) Valuation Tribunal (“the VT”), determining the assessment in the 2000 rating list at rateable value £8,900.

[2]Mr Richard Meacock, the appellant, appeared in person and gave evidence. The respondent valuation officer, Mr Mark Jorgensen, MRICS, appeared in person with leave of the Tribunal and gave evidence. By order of the Registrar the simplified procedure provided for in rule 28 of the Lands Tribunal Rules 1996 applied to this appeal.

[3]The parties prepared an agreed statement of facts. In the light of that document and of the evidence I find the following facts. Richmond Hill is an extension of Hill Rise, which rises in a south-easterly direction from the south side of Richmond town centre near Richmond bridge towards the Richmond gate of the Royal Park. The town centre is approximately 500 metres to the north-west. Hill Rise (which is even-numbered only from the lower level junction with Petersham Road upwards) comprises ground floor shop units, interspersed with a number of restaurants, a public house and one office. Richmond Hill is predominantly even-numbered. No.2 is occupied as an office and No.4 as a dwelling. The remainder of the even-numbered side contains ground floor shop units with retail frontages. The odd-numbered (south-western) side of Richmond Hill has ground floor shop units at Nos.13, 15 and 17 (No.15 is occupied as a café). Nos.1 to 11 inclusive are occupied as dwellings on all floors. They have no retail frontage apart from No.3, which is occupied as an office on the ground floor and which has retained what appears to be a display window. When Mr Meacock first occupied the appeal property some 22 years ago, all the odd- numbered properties were occupied as shops.

[4]The appeal property is the penultimate retail unit on the even-numbered side of Richmond Hill (moving in a south-easterly direction). Adjoining it is No.26, then a small street (Lancaster Mews) and beyond that are dwellings. The appeal property comprises the ground and basement floors of a building which is understood to date originally from 1650 and constructed in brick. It is occupied as an art gallery and both ground and basement floors are used for display purposes. There is a full height display window which affords a view of each floor. There are four steps up from road level into the ground floor gallery area and a spiral staircase situated towards the rear of the ground floor gives access to the basement. Heating is from electric storage heaters. WC facilities are available off the rear of the ground floor shop area. The ground floor has a net internal area of 10.9 m2 in zone A and of 24.7 m2 in zone B. The basement has a net internal area of 42.4 m2.

[5]The upper three floors of the building are occupied separately for domestic purposes. Access to them is gained via their own external door.

[6]The appeal property was entered in the 2000 rating list as at 1 April 2000, described as shop and premises with a rateable value of £8,900. On 2 May 2000 Mr Meacock served a 2 proposal that the rateable value be reduced to nil with effect from 1 April 1999. The grounds of the proposal were that:

“The rateable value in the rating list as at 1 April 2000 was inaccurate.”

Despite the effective date being shown as 1 April 1999, this document was accepted as a valid proposal against the entry in the compiled 2000 rating list.

[7]The valuation officer did not consider that the proposal was well-founded and the matter was referred to the VT, which heard the resultant appeal. By a decision dated 28 January 2002 the VT confirmed a rateable value of £8,900 with effect from 1 April 2000.

[8]Mr Meacock appealed against this decision on 1 March 2002. The grounds of appeal included the following:- “The rental evidence produced by the valuation officer is virtually non-existent.”

[9]For the purposes of this appeal the material day and the effective day are both 1 April 2000 and the antecedent valuation date is 1 April 1998.

[10]Mr Meacock said that, when he first started to trade at the appeal property in 1980, Richmond Hill was a busy road with shops on both sides. Since then, most of the shops on the odd-numbered side had closed and half of those with even numbers had ceased to trade. He explained that Hill Rise becomes Richmond Hill at the junction with The Vineyard, a road leading off to the north-east. He claimed that very few of the pedestrians walking up Hill Rise from the direction of the town centre now continue up Richmond Hill. He pointed out that planning permission had been granted for two out-of-town superstores in the Richmond area, both with large car parks, while parking had been reduced within Richmond itself. On Richmond Hill parking was restricted and a one-way traffic system had been introduced, turning it into a through route for traffic rather than a road for residents and shoppers. As a result it was no longer a viable retail location.

[11]In support of his appeal, Mr Meacock produced letters from a number of neighbouring traders in Richmond Hill. One was from a Dr Burnett, who said that he opened a photographic gallery at No.17 in June 2000. After two years in business he could not afford to employ even a part-time assistant, nor to draw a salary to support himself. He had recently written to all the residents and shopkeepers in Richmond Hill and Hill Rise, seeking their views on his proposal to establish weekend pedestrianisation of Hill Rise in an effort to encourage pedestrians and tourists back to the area and to stimulate new and interesting businesses to occupy the existing shops.

[12]Mr Nasrallah, the occupier of No.15, confirmed the poor shopping conditions in the street and expressed support for Mr Meacock’s appeal. 3

[13]Ms Penturo of the Richmond Hill Gallery, who had recently moved to No.26, said that she received no passing trade. She relied wholly on a regular clientele which she had built up over 12 years and to whom she wrote every three weeks, and on advertising.

[14]Mrs Gooday stated that, because of the dramatic decline in Richmond Hill as a retail business area over the last eighteen months, she would not be renewing the lease of her art gallery at No.14 after trading in the street for thirty years, unless Mr Meacock’s appeal was successful.

[15]Ms Guiton of No.22 made similar comments about the lack of passing trade and the deterioration in the trading position over the last eighteen months.

[16]Mr Jorgensen joined the valuation office in 1972. He is currently the group valuation officer for the London south group of the valuation office agency. As such, he is responsible for compiling and maintaining rating lists for Richmond borough council and eleven other councils in South London.

[17]He first inspected the appeal property on 17 May 2002 and has subsequently visited it and the surrounding area on several occasions. His valuation was as follows: Ground floor sales – zone A 10.9m2 @ £320 = £3,488 Ground floor sales – zone B 24.7 m2 @ £160 = £3,952 Basement sales 42.4 m2 @ £35.55 = £1,507 Total £8,947 Rateable Value say £8,900

[18]Mr Jorgensen referred to six items of rental evidence. Four related to shops in Hill Rise – Nos. 60, 64 and 84 (two rents) and two to transactions in respect of 14 Richmond Hill. He also produced details of the assessments in the 2000 rating list of the four properties whose rental evidence he had cited and of Nos.13, 15, 17, 22 and 26 Richmond Hill. He considered that the rents passing on 14 Richmond Hill provided the best evidence. He said that the rental evidence in Hill Rise supported the overall levels of value attributed to the various sections of that street for rating purposes. It also indicated how values fell as one progressed away from the town centre in the direction of the higher numbered properties in Hill Rise and thence into Richmond Hill. He produced the following summary of values attributed to properties in Hill Rise and Richmond Hill in the 2000 rating list: £ per m2 zone A 2-74 Hill Rise 500 80-86 Hill Rise 350 6-8 Richmond Hill 285 10-26 Richmond Hill 320 13-17 Richmond Hill 320 4

[19]I made an unaccompanied inspection of the area surrounding the appeal property on 26 July 2002, prior to the hearing. I inspected the appeal property and certain other shops in Richmond Hill, accompanied by the parties, on 1 August 2002.

[20]I deal firstly with Mr Meacock’s suggestion that the assessment of the appeal property should reflect the large number of neighbouring shops that have been vacated. Mr Jorgensen did not agree. He considered that the valuation should be based on the situation on 1 April 2000, the material day, when only one even-numbered shop out of eleven in Richmond Hill was vacant. In support of that view he produced a copy of a letter from the London borough of Richmond upon Thames. This said that, in the period commencing 1 April 2000, only one shop in Richmond Hill was being charged unoccupied rates. That property was No.16, which had been unoccupied since 1 April 1990. That information is broadly consistent with the letter from Mrs Gooday which stated that, when she moved to No.14 at the end of 1999, all the shops in Richmond Hill were occupied. Against that background I accept Mr Jorgensen’s approach to the valuation and, for the purposes of this appeal, disregard the fact that Nos.10, 16, 18, 20 and 20A were all empty at the time of his first visit in May 2002. (I should add that, in answer to a question from me, Mr Jorgensen indicated that he would be giving serious consideration to whether the recent reduction in the number of neighbouring properties that were actively trading was a material change of circumstances warranting a reduction in the assessments of shops in the parade).

[21]Mr Meacock also seeks a reduction in the assessment of the appeal property because of the double yellow line parking regime in the locality, the lack of parking facilities in this part of Richmond, the opening of a Tesco supermarket in Twickenham, the prospective opening of a Sainsbury supermarket in Manor Road, Richmond and the planning restriction on the use of the appeal property to retail. Again, Mr Jorgensen does not agree. He says, and I accept, that all these factors were either in existence or clearly anticipated on the material day and were thus reflected in the levels of value attributed to the locality in the compiled rating list.

[22]I now turn to those levels of value. Mr Jorgensen’s report stated that two zone A rates had been applied to the shops in Richmond Hill. 6-8 was valued at £285 and the remaining units at £320 per square metre. At the conclusion of his cross-examination by Mr Meacock I asked Mr Jorgensen a number of questions. It then emerged that 6-8 had, in fact, been valued at £257 per m2, based on £285 less ten per cent for size and quality. I asked Mr Jorgensen why the appeal property – which is situated further from Hill Rise than 6-8 – was valued at significantly more than 6-8, when he had accepted that values fell as one moved from Hill Rise into Richmond Hill. He replied that he thought the starting figure of £285 per m2 reflected the fact that 6-8 was set back from and situated at a higher level than the adjoining frontages. He frankly conceded, however, that the file on 6-8 contained nothing to support that theory.

[23]In the conclusion to his report Mr Jorgensen said: “In my opinion, the rent(s) passing on 14 Richmond Hill provide(s) the best evidence.” 5 A new lease of that shop property was granted on 25 March 1994 for 10 years at a rent of £4,500 per annum, subject to review in February 1999. The lease was assigned on 28 February 1995 for a premium of £6,000. Mr Jorgensen devalued that premium over the four years remaining to the next review, using a rate of return of 8 per cent. This produced an effective rent equivalent to £377 per m2 in terms of zone A. The landlord agreed that the rent should not be increased with effect from the rent review date in February 1999. The lease was assigned again on 22 December 1999 for a premium of £8,000. Mr Jorgensen devalued that premium over the unexpired term using a rate of 7 per cent and arrived at an effective rent of £402 per m2.

[24]I am required to assess the rental value of the appeal property based on values current at the antecedent valuation date - 1 April 1998. Some ten months after that date the landlord of No.14, who presumably had an interest in maximising the rent, agreed that there should be no increase in the initially reserved rent of £4,500. That rent was itself equivalent to approximately £269 per m2 in terms of zone A and there is no suggestion that values fell between April 1998 and February 1999.

[25]Mr Jorgensen’s suggestion that No.14 was worth substantially more than the agreed rent of £269 per m2 is based on the premium of £8,000 that was paid by Mrs Gooday in December 1999. The background to the payment of that premium is this. The Gooday name has been associated with a shop in Richmond Hill since the early 1970s. When Mrs Gooday’s lease of No.20A expired in late 1999 she was not given the opportunity to renew it. She therefore agreed to purchase the lease of No.14, at a time when all the shops in the parade – apart from No.16, which was not available to rent – were still occupied.

[26]The premium achieved for the lease of No.14 in December 1999 was therefore paid by a special purchaser. There is no evidence that the assignee of that lease, or any other special purchaser, would have been interested in leasing the appeal property on the antecedent valuation date. The premium that was paid for No.14 is thus of no assistance in assessing the rent that I am required to determine.

[27]Mr Jorgensen also relies – although to a lesser extent – on the assessments of the other shops in Hill Street. In general those assessments are based on a zone A value of £320 per m2. It is not entirely clear whether the assessment of 6-8 was based on £285 per m2 or a higher starting figure. No.15 is the subject of an outstanding appeal. No.14 was the subject of an appeal by Herbert Churchman Plc. The appeal was withdrawn in January 2002 by Courthollow & Co as successors to Churchman, after it was discovered that the area of the property was larger than the area on which the assessment had been based. In fact, that assessment is equivalent to £295 per m2 in terms of zone A. The valuation officer has not served a proposal to increase the assessment, notwithstanding the error in the original measurement.

[28]In my judgment, there is no clearly consistent pattern to the various zone A values which have been applied to the units in Richmond Hill. That being the case, I find that the best evidence is provided by the rent of £269 per m2 which was agreed for 14 Richmond Hill with effect from February 1999. I round that rent down to £265 to reflect the fact that the 6 appeal property is only one door away from the end of the shopping area and find that the value of the appeal property is £7,400, as follows: Ground floor sales – 10.9m2 zone A @ £265 = £2,889 Ground floor sales – 24.7 m2 zone B @ £132.50 = £3,273 Basement sales 42.4 m2 @ £29.45 = £1,249 Total £7,411 Say £7,400 As a matter of impression, a zone A value of £265 seems to me to be in line with the general tone that has been applied to shops in Hill Rise. In particular it is consistent with the rate of £350 per m2 applied to 80-86 Hill Rise; it reflects the break in the retail frontage caused by the presence of The Vineyard and the non-retail units at 2 and 4 Richmond Hill and the fact that the appeal property is virtually the last shop in the street.

[29]I would make two additional observations. Firstly, in the absence of any further evidence I consider it unlikely that the three shops on the odd-numbered side of Richmond Hill should be assessed at as high a level as the even-numbered units, since they are effectively the only shops on that side of Richmond Hill and Hill Rise.

[30]Secondly, the appeal to the VT was presented on behalf of the valuation officer by a Mr N Burdett. In its decision, the VT said:

“The current rateable values in the subject parade devalue at a rate per square metre of £320.00, and Mr Burdett feels therefore that the assessments are not excessive. This rate has been applied to the three units on the other side of the road – numbers 13, 15 and 17 Richmond Hill. The only exception is the double unit (numbers 6-8) which has been given a discount for size and therefore devalues at £285 per square metre.”

[31]In the light of the information provided by Mr Jorgensen, it would appear that the final sentence was erroneous in two respects. Firstly, the VT hearing took place on 10 January 2002. Six days earlier the appeal against the assessment of No.14 had been withdrawn, apparently after it had been discovered that the assessment in the rating list devalued to £295 per m2, not £320. Secondly, the statement that the assessment of 6-8 had been discounted for size to arrive at a value of £285 per m2 was wrong.

[32]For the vast majority of rating assessments, the valuation tribunal represents in practice the final court of appeal. The ratepayer looks no further than the valuation tribunal in order to achieve a fair assessment. It is essential, if public confidence in such tribunals is to be maintained, that valuation officers take pains to ensure that the factual information provided to the tribunals is accurate and complete. It would be extremely regrettable if the errors in the VT decision were based on information given by the valuation officer. 7

[33]The appeal is allowed. I direct that the assessment of the appeal property in the 2000 rating list shall be altered to rateable value £7,400.

[34]Rule 28 of the Lands Tribunal Rules 1996 provides that no award shall be made in relation to the costs of the proceedings:

“… save that the Tribunal may make an award of costs … in cases in which the Tribunal regards the circumstances as exceptional.”

If either party wishes to make an application for costs, such application should be submitted to the Tribunal within 14 days of the date of this decision, with a copy sent simultaneously to the other side. Comments on any costs application which may be made should be delivered to this Tribunal within 28 days of the date of this decision, again with a copy to the other side. In the absence of any such application, I intend to make no order as to costs. Dated 2 August 2002 (Signed) N J Rose ADDENDUM

[35]I have received written submissions on costs from the parties.

[36]Mr Meacock seeks to recoup his costs, which he puts at £273.30. This figure excludes the hearing fee, for which he has been billed but which he has not yet paid. Mr Jorgensen does not make an application for costs.

[37]At my request Mr Jorgensen was advised that I had formed the provisional view that the circumstances of this appeal were exceptional for the reasons given in paragraph 31 of my decision; I felt that, if the correct information on other assessments in Richmond Hill had been given to the VT, its decision might well have been different.

[38]Mr Jorgensen responded that, in his opinion, the issues to which I had drawn attention in paragraph 31 did not appear to have had a material bearing on the outcome of the VT hearing.

[39]It is true that the VT decision did not state in terms that it had relied on the fact that, with one exception, the rateable values in Richmond Hill had all been based on £320 per m2 and that the remaining assessment had been discounted for size to devalue at £285 per m2. Nevertheless, the VT considered this information to be sufficiently important that it quoted it in its relatively brief decision. Mr Jorgensen did not suggest that the VT wrongly recorded 8 that this erroneous information had been provided by the valuation officer. There is, in my view, a real possibility that the VT would have arrived at a different conclusion if the information on comparables had been presented accurately.

[40]It must, in my opinion, be wholly exceptional for a valuation officer to present a valuation tribunal with materially inaccurate information on comparable assessments. The circumstances of this appeal, therefore, are in my judgment sufficiently exceptional to justify an award of costs in Mr Meacock’s favour.

[41]I now turn to the amount of those costs. Mr Jorgensen does not query Mr Meacock’s claimed expenditure of £92.50 on the Lands Tribunal lodging fee and on fares. He does, however, question the sum of £130.80 which is claimed for letters, including postage and the £50 claimed for telephone calls. Mr Meacock replies that the former figure is based on £3 per letter, which he suggests is reasonable bearing in mind that “a solicitor would charge at least £20 per letter”. He has not responded to Mr Jorgensen’s request for details of the period over which his claim for letters and telephone calls has been calculated.

[42]In the absence of any further information supporting the amounts claimed, I order that Mr Meacock shall recover costs of £150 from the valuation officer. In addition, the valuation officer shall be responsible for payment of the hearing fee. Dated 24 September 2002 (Signed) N J Rose 9