Introduction

The case of Jackson (VO) v. Canary Wharf Ltd ([2019] UKUT 136 (LC)) presents a significant examination of how hereditaments are valued for rating purposes, particularly concerning the assumptions about their state of repair. The dispute revolves around whether two floors of the iconic One Canada Square in Canary Wharf should be rated as offices in an assumed state of repair or as premises undergoing redevelopment and thus incapable of beneficial occupation. The appellant, David Jackson as Valuation Officer (VO), contested the respondent, Canary Wharf Ltd, over the applicable rateable value of the property during a period it was stripped to a shell in anticipation of future tenancy.

Summary of the Judgment

The Upper Tribunal (Lands Chamber) upheld the decision of the Valuation Tribunal for England (VTE), dismissing the appeal brought forth by David Jackson (VO) against Canary Wharf Ltd. The key issue was whether the vacant floors should be valued based on an assumed state of repair or their actual condition as properties undergoing reconstruction, thereby justifying a nominal rateable value. The Tribunal concluded that the appellant failed to establish that the hereditaments were not under reconstruction, upholding the lower Tribunal’s determination of a nominal rateable value of 1. This decision was grounded in the Supreme Court’s earlier ruling in SJ & J Monk v Newbigin.

Analysis

Precedents Cited

The judgment extensively referenced two pivotal cases: SJ & J Monk v Newbigin ([2017] 1 WLR 851) and Benjamin v Anston Properties [1998] 2 EGLR 147. Additionally, the Valuation (Valuation) Act 1999 played a crucial role.

• SJ & J Monk v Newbigin: This Supreme Court decision clarified the application of the statutory assumption that hereditaments are in a state of reasonable repair. Lord Hodge emphasized that this assumption does not override the reality principle if the building is undergoing reconstruction, which renders it incapable of beneficial occupation.
• Benjamin v Anston Properties: This case addressed the placement of repair responsibilities, concluding that placing such obligations on tenants under a hypothetical tenancy can negate assumptions of repair if the property is not actually in a reasonable state.
• Valuation (Valuation) Act 1999: This Act reinstated the legal framework regarding rateable values, particularly the hypothesis that hereditaments are in a state of reasonable repair, aligning with pre-1988 principles.

Legal Reasoning

The Tribunal's reasoning pivoted on distinguishing between a property merely in disrepair and one undergoing active reconstruction. Lord Hodge’s interpretation in Monk was central, asserting that the repair assumption does not apply when a building is technically incapable of beneficial occupation due to ongoing redevelopment.

The appellant argued that, unlike in Monk, the property in question did not have an objectively ascertainable program of reconstruction at the material day (16 January 2013). However, the Tribunal found this argument unpersuasive, noting that standard practices in property management, especially in prominent office locations like Canary Wharf, inherently involve periodic refurbishment and redevelopment. The appellant also suggested that without concrete evidence of reconstruction (e.g., detailed contracts or plans), the property should still be valued as in repair, but the Tribunal countered that the established patterns of behavior and observable practices effectively indicated reconstruction was underway.

Moreover, the Tribunal emphasized that determining whether a property is a hereditament capable of being rated hinges on its capacity for beneficial occupation. Since the appellant could not demonstrate that the property was not undergoing reconstruction, the nominal rateable value stood.

Impact

This judgment reinforces the precedent that the statutory assumption of reasonable repair is subordinate to objective assessments of a property's condition and intent for redevelopment. It underscores the necessity for Valuation Officers to consider industry norms and observable evidence when determining rateable values. Future cases will likely reference this decision to justify nominal valuations for properties under genuine redevelopment processes, provided there is clear, albeit possibly inferred, evidence of such activities.

Complex Concepts Simplified

Hereditament

A hereditament is a term used in UK law to describe any property right or interest in land or buildings that can be valued for rating purposes. It is essentially a unit of property that must be assessed individually to determine its rateable value.

State of Repair

The state of repair refers to the condition of a property, assuming it is reasonably maintained. For rating purposes, the valuation considers whether the building is in a condition that allows it to be used as intended, without requiring significant repairs.

Beneficial Occupation

Beneficial occupation implies that a property is fit for use and can be occupied beneficially by a tenant. Properties under reconstruction are deemed incapable of beneficial occupation until the reconstruction is complete.

Nominal Rateable Value

A nominal rateable value is a minimal rateable value (often set at one) assigned to a property that is temporarily incapable of beneficial occupation, such as during significant reconstruction. This allows the property to remain on the rating list for administrative purposes.

Conclusion

The Upper Tribunal’s decision in Jackson (VO) v. Canary Wharf Ltd serves as a critical clarification on the application of the repair assumption in property rating. By upholding the nominal rateable value, the Tribunal affirmed that properties undergoing genuine reconstruction should not be valued under the assumed state of repair. This ensures that rateable values more accurately reflect the practical usage and condition of properties, aligning assessments with the current realities of property management and redevelopment practices. The judgment underscores the importance of objective analysis over hypothetical or assumed conditions, thereby shaping future evaluations and legal interpretations within property rating frameworks.