Network Rail Infrastructure Ltd v List (Valuation Officer)

Factual and Procedural Background

The appeal concerns whether two advertising rights at major railway stations are to be treated as separate advertising hereditaments (and thus rateable to the holder of the rights) or as forming part of a single railway hereditament entered on a central rating list and rateable to the railway undertaking.

Company A granted advertising rights under a concession agreement to Company B. The Valuation Officer recorded two new advertising hereditaments (one at each station) on local non-domestic rating lists with rateable values. Company A proposed deletions; the Valuation Officer treated the proposals as not well-founded and appealed to the Valuation Tribunal for England. The VTE allowed Company A's appeal and directed deletion of the two entries. The Valuation Officer appealed to the Upper Tribunal (Lands Chamber), which allowed that appeal and directed restoration of the two entries to the local lists. Company A obtained permission to appeal to this court. The court heard submissions and delivered the judgment summarized here.

Legal Issues Presented

1. Whether advertising rights falling within section 64(2) of the Local Government Finance Act 1988 are to be treated as separate hereditaments in the rateable occupation of the person entitled to the right, or instead form part of a central railway hereditament in the rateable occupation of the railway undertaking.
2. How the phrase "let out" in section 64(2) should be interpreted—whether it imports principles analogous to paramountcy of occupation/landlord-control or simply denotes the creation of the advertising right.
3. Whether the Central Rating List (England) Regulations 2005 (in particular regulation 6) bring such advertising rights within an en bloc railway hereditament.
4. Whether the factual terms of the 2010 concession agreement meant that Company A retained paramount control sufficient to prevent separate advertising hereditaments arising.

Arguments of the Parties

Valuation Officer's Arguments

• Sections 64(2) and 65(8) create a self-contained statutory regime: a qualifying advertising right is a hereditament and the person entitled is deemed to occupy it; the 2010 agreement let out advertising rights to Company B, creating separate hereditaments.
• Those advertising hereditaments could not be included in the central list because the conditions in regulation 6(1) were not satisfied.

Appellant's (Company A) Arguments

• "Let out" in section 64(2) must be read in light of general rating law and the Southern Railway line of authorities: an advertising right is separate only where it is sufficiently carved out from the host occupation—i.e., an evaluative inquiry akin to paramountcy of occupation is required.
• Regulation 6 of the 2005 Regulations, and the historical treatment of railway hereditaments, support including advertising rights within the central railway hereditament unless they are "so let out as to be capable of separate assessment".
• The terms of the 2010 agreement indicated Company A retained rights (withdrawal, temporary suspension, operational signage, powers of access and oversight) amounting to paramount control over the advertising sites.
• Practical and administrative difficulties and longstanding VOA practice weighed against the Valuation Officer's interpretation.

Table of Precedents Cited

Court's Reasoning and Analysis

The court proceeded by statutory interpretation, legislative history and application of established authorities to the statutory scheme for advertising hereditaments and the central railway list.

1. The court observed that s.64(2) is a general provision directed at advertising rights throughout the rating code, not a provision confined to railway hereditaments. The wording of s.64(2) plainly deems a qualifying advertising right to be a hereditament.
2. The court construed the phrase "let out or reserved" in s.64(2) to refer to the creation of the advertising right (the grant or reservation), not to a separate qualitative inquiry importing paramountcy or landlord‑control doctrines. That conclusion was supported by statutory history (LGA 1948 s.56; RVA 1961 s.9) and by regulation 15 which ties the coming into existence of an advertising hereditament to the creation of the right plus erection of a structure or exhibition of an advertisement.
3. The court held that s.65(8) then operates as a deeming provision identifying the person entitled to the advertising right as the person treated as occupying that separate advertising hereditament and therefore liable for rates on it; that deeming is inconsistent with importing a separate paramountcy test which could result in someone other than the entitled party being treated as occupier.
4. The court rejected the appellant's attempt to import the Southern Railway paramountcy framework into s.64(2). Southern Railway and related authorities govern situations where the general rules on rateable occupation and paramountcy apply; by contrast ss.64(2) and 65(8) constitute a self-contained regime resolving occupation and liability questions for advertising rights.
5. In relation to the 2005 Regulations (reg.6), the court noted those regulations amalgamate certain hereditaments occupied by Network Rail into a single central railway hereditament when the conditions in reg.6(3) are met. But an advertising right that qualifies under s.64(2) and s.65(8) is a separate hereditament and, by virtue of the deeming, the person entitled to it is treated as its occupier for rating purposes, so that it need not be included in the central list even if situated on land otherwise in the railway hereditament.
6. The court considered the terms of the 2010 agreement and the Upper Tribunal's factual findings on control. The court accepted the UT's approach and findings that the agreement conferred exclusive advertising rights on Company B, that Company B bore the commercial risk and had control of the advertising sites while those rights subsisted, and that Company A's contractual reservation or limited operational rights did not demonstrate paramount control while the rights subsisted.
7. Practical or administrative inconvenience, prior VOA practice or the potential for increased fragmentation did not outweigh the clear statutory language and legislative history supporting the Valuation Officer's interpretation.

Holding and Implications

DISMISSED

Direct effect: The appeal by Company A is dismissed. The Upper Tribunal's decision stands and the two advertising entries are to be restored to and remain on the relevant local rating lists as separate advertising hereditaments, with the person entitled to each advertising right treated as the occupier for rating liability purposes.

No novel legal principle was established beyond the court's interpretation and application of the existing statutory scheme; the decision applies the statutory deeming regime in ss.64(2) and 65(8) and the 2005 Regulations as described in the opinion.