Introduction

The case of Johnson (VO v. H & B Foods Ltd) ([2013] UKUT 539 (LC)) presents a significant examination of the jurisdictional boundaries of the Upper Tribunal (Lands Chamber) in the context of non-domestic rating appeals. The appellant, Nicola Jane Johnson, acting in her capacity as a Valuation Officer, challenged the decision of the Valuation Tribunal for England (VTE) which had consolidated two separate hereditaments owned by H & B Foods Limited into a single hereditament with an aggregated rateable value of £290,000 effective from 1 April 2005.

The core issues addressed in this case revolve around the extent of the Upper Tribunal's jurisdiction—whether it can conduct a de novo hearing encompassing a fresh assessment of both the unit of assessment and the rateable value—and the implications of agreements reached between parties prior to the VTE hearing.

Summary of the Judgment

The Upper Tribunal (Lands Chamber) upheld the VTE's decision to merge the two hereditaments, determining that they were functionally connected and should thus be treated as a single hereditament. Crucially, the Tribunal affirmed its authority to conduct a de novo hearing, allowing for a fresh examination of the rateable value independent of prior agreements made at the VTE level.

The Tribunal found that the VTE did possess the jurisdiction to ascertain the rateable value of the merged hereditament, even though the original proposal did not explicitly state a specific rateable value in the alteration form. The respondents' agreement to a rateable value of £290,000 was deemed preparatory and not binding on the Upper Tribunal during the appeal.

Consequently, the appeal was allowed to proceed as a de novo hearing, enabling both parties to present new or additional evidence regarding the appropriate rateable value of the merged property.

Analysis

Precedents Cited

The Judgment extensively referenced several key cases to substantiate its reasoning:

• Leda Properties v Howells (V.O.) [2009] RA 165 – Highlighted limitations in the VTE’s ability to alter hereditament descriptions and rateable values concurrently.
• Cheale Meats Limited v Ray (V.O.) [2012] RA 145 – Reinforced that proposers cannot seek rateable values lower than those determined by the VTE without initiating a separate appeal.
• Re London & Winchester Properties Ltd.'s Appeal [1983] 2 E.G.L.R. 201 – Established that appeals to the Lands Tribunal are not confined to points of law but are treated as rehearings with fresh evidence.
• Additional cases like Verkan & Co. Ltd. v Byland Close (Winchmore Hill) Ltd. [1998] 2 E.G.L.R. 139, Galgate Cricket Club v Doyle (V.O.) [2001] RA21, and others were instrumental in shaping the Tribunal's approach to de novo hearings and the interpretation of proposal forms.

These precedents collectively underscored the Tribunal’s inclination towards a comprehensive reassessment in appeals, rather than mere reviews of previous decisions.

Legal Reasoning

Central to the Tribunal’s reasoning was the interpretation of the appeal’s procedural and substantive scope under the current regulatory framework. The Upper Tribunal emphasized that its jurisdiction is expansive, encompassing the authority to confirm, vary, set aside, revoke, or remit VTE decisions, including those pertaining to rateable values.

The Tribunal examined the respondent’s proposal form, noting that while the specific rateable value was not delineated in Part B, the combined grounds under Parts A and C implicitly encompassed the proposal for a merged hereditament's rateable value. This holistic interpretation aligned with the Tribunal’s guidance on rating appeals, which mandates a de novo hearing allowing for fresh evidence and reassessment.

Furthermore, the Tribunal addressed the nature of pre-hearing agreements, clarifying that such compromises do not irrevocably bind parties in subsequent appeals unless explicitly stated. The divergence in the parties' subsequent submissions—where both contested the previously agreed rateable value—reinforced the necessity for a fresh evaluation.

Impact

This Judgment sets a clear precedent affirming the Upper Tribunal’s authority to conduct de novo hearings in rating appeals, ensuring that settled agreements at the VTE level do not preclude a comprehensive reassessment during appeals. It underscores the Tribunal’s commitment to maintaining accurate and fair rating lists, independent of prior concessions or compromises between disputing parties.

Future cases will likely follow this precedent, especially in scenarios where parties attempt to adjust or constrain the scope of appeals based on prior agreements. The decision reinforces the principle that the Tribunal possesses ultimate discretion to re-evaluate rateable values, thereby enhancing the integrity and precision of the rating process.

Complex Concepts Simplified

De Novo Hearing

A de novo hearing refers to a trial where the appellate court conducts a fresh examination of all evidence and facts, as if the case were being heard for the first time. Unlike a simple review, a de novo hearing allows the Tribunal to make its own independent assessment without being bound by the previous tribunal’s findings.

Hereditament

In UK property law, a hereditament is any kind of property—land or buildings—that can be inherited. For rating purposes, hereditary units are assessed to determine their rateable values, which in turn influence business rates.

Rateable Value

The rateable value is an assessment of the annual rent a property could reasonably expect to achieve in the open market as of a specific valuation date. It serves as the basis for calculating non-domestic business rates.

Valuation Tribunal for England (VTE)

The VTE was responsible for handling disputes over property valuations under the non-domestic rating system. It has since been succeeded by the Valuation Tribunal (Council Tax and Rating Appeals), part of the Upper Tribunal.

Conclusion

The Upper Tribunal’s decision in Johnson (VO v. H & B Foods Ltd) marks a pivotal affirmation of its jurisdictional autonomy in rating appeals. By upholding the de novo hearing approach, the Tribunal ensures that previous agreements do not unduly constrain the reassessment of rateable values, thereby safeguarding the accuracy and fairness of the rating system.

This Judgment emphasizes the Tribunal’s role in independently verifying rateable values, irrespective of prior compromises between parties. It reinforces the legal framework that governs non-domestic ratings, offering clear guidance for both valuation officers and ratepayers in future disputes. Ultimately, the decision enhances the robustness of property rating mechanisms, ensuring they remain just and reflective of true property values.