“The “traditional” explanation of the theory underlying the adoption of the contractor’s basis is that the hypothetical tenant, instead of taking the subject property at a rent, has the option of building a precisely similar property for his own occupation, and that his rental bid for the subject property will be related to the annual equivalent of the capital cost of providing the site for and of building such a property”
“The rateable value of a non-domestic hereditament … shall be taken to be the amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on these three assumptions: a) the first assumption is that the tenancy begins on the day by reference to which the determination is to be made; (b) the second assumption is that immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic; (c) the third assumption is that the tenant undertakes to pay all usual tenant's rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command the rent mentioned above”
“To fulfil its present purpose, the subject hereditament has been adapted from an oil refinery. Consequently adjustments are justified at both stage 2 and stage 5 of the valuation to reflect the fact that the total site area in occupation, and the size and layout of the tankage and the supporting facilities are not optimised for the ratepayer’s petrochemical storage business. My approach takes as its starting point the hereditament ‘as it is’, seeks to identify 25 its specific deficiencies and adjusts for these. This recognises and quantifies these deficiencies by reference to those different features of a modern equivalent hereditament which would be the hypothetical tenant’s “ideal”, but leaving the valuation anchored in reality. By not placing at the centre of the exercise this latter non-existent hereditament it avoids venturing too far into speculation, and distinguishes between genuine disadvantage and the actual hereditament simply not being the ideal one.”
“‘functional obsolescence’ covers the problems which may be present in the design of the property which could be deficient by comparison with current requirements, e.g. excessive ceiling heights, inappropriate layout, inadequate load bearing of floors, inferior heating and ventilation etc…”
“Suppose that a prospective operator of a tank farm which has the capacity of 100 units expects that he will have almost constant use for 50 units, that he may have occasional use for a further 30 units and that he will have no use for the remaining 20 units. In those circumstances, the last 20 units will have no value to him; and the first 50 will have greater value than the 30 units for which he expects to have only occasional use”
“We now deal with the reduction factor for the underutilisation of the stadium in regard to which parties appeared to be agreed that no legal issues were involved. This factor is to reflect the modification which would be sought by the tenant, or indeed a purchaser, because he would rarely, if ever, require all the accommodation in the stadium. The expectation would also be that the hypothetical landlord would be prepared to accept a lower rent in consequence.”
“Even after every allowance has been made for limitations on usefulness in the physical subjects, any true hypothesis for valuation may require to reflect variations in their maximum potential use, flowing perhaps from their location, or the need or demand for them, or perhaps from some inherent characteristic of the use to which they are being put. Even after all physical limitations have been allowed for, it is necessary to get away from some notional view of the subjects’ capacity for use, and move to a realistic view of their maximum potential, or expected, or likely use. It will be a matter of impression and degree, to distinguish the true potential capacity for use of given subjects from some higher notional 44 capacity, or indeed from some lower and more limited capacity which is merely a reflection of a particular tenant’s failure to put subjects to full use.”
“Another recurring justification for claims of superfluity was where there was partial use of facilities, i.e. suggesting over-capacity. Where this was temporary, for example as a result of the Direction, we would not propose any allowance. There were, however, cases in which there was no reasonable prospect of facilities being used to their capacity, for example a fuel store which, as of January 2000, had spare capacity and would not have been expected to take in any further material. In principle, over-capacity on a long-term basis should be reflected in an appropriate allowance. We do not, however, think that it is simply a mathematical calculation of the extent of use. A facility with half the capacity is not necessarily worth only half.”
“That is the proposition which is put before the parish officers – that is the question which they have to answer; and they are to arrive at that value, so far as I know, unfettered by any statute as to the way in which they can do it. I am not aware of any rule of law or statute which has limited them as to the mode in which they shall arrive at it. It is not a question of law at all – it is a question of fact…. but still one must bear in mind that the thing to be done is to answer a plain question of fact, namely, what is the rent which a tenant might 45 reasonably be expected to give for the premises, subject to the deductions mentioned in the statute, as a tenant from year to year?”
“What you are to find out is what a tenant will reasonably give, looking, surely, at all the circumstances of the particular occupation, including therein the business that has been done on the premises……… All the circumstances of the particular occupation, the mode in which the trade is being carried on, and the circumstances affecting either the restriction or the amplitude of the trade, are all legitimate subjects of enquiry…”
“To adjust this cost to take account of the actual state of the buildings comprising the hereditament. The resulting figure is often known as “effective capital value”, but Mr Mallett in his decision prefers to call it “adjusted replacement cost”
“On the other hand, it has always been a well-recognised rule of this Court that a mere temporary setback in an industry is no reason for altering the yearly value of heritable subjects, which, when once properly fixed, must be considered as being a more or less permanent figure.”
“Here it is not always appropriate 55 to follow the rounding guidance and agreements may be reached at figures which both parties are content to agree.”
“… However in this case, both parties accepted that the VTE’s decision was wrong, to consider costs solely in the context of the appellant succeeding in achieving an increase of£95,000 above the VTE’s determination would, in my judgement, be an unjust starting point.”
“The Court of Appeal in its judgement went fully into the issue of costs. In their view the real issue was whether the value assessed, viz.,£9,500 was too high; the respondent was successful in showing that it was too high by a substantial amount. The case was an intricate one involving difficult questions. The Court could find no trace of misconduct by the respondent or any other sufficient reason for depriving the respondent of 50% of its costs. No reasons for so doing have been given by the board. The respondent should have its costs in full. Their Lordships agree with the decision of the Court of Appeal… In principle their lordships consider that a person who successfully secures a reduction in the valuation, unless that is of a minimal amount, should be entitled to its costs, and that, unless by doing so he has added to the length or expense of the proceedings, the fact that he has supported a figure which turns out to be less than that finally accepted should not be to his detriment.”