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Practice Note 6 Appendix 1: Case Law relating to Aggregation

1.0 Introduction

The following paragraphs set out key cases to support LOs in establishing the correct approach for houses in multiple occupation, where possible aggregation is an issue, under Article 4 of the Council Tax (Chargeable Dwellings) Order 1992

2.0 James v Williams (1973) RA 305

This was a domestic rating case, many years prior to the introduction of Council tax, but where exactly the same principles applied to the unit of assessment for taxation under S24 of the general rate Act 1967. It related to a house in Cardiff, converted to four flatlets. Three of the flats had a kitchen and living room, and one a kitchen within the living room. All four shared a bathroom/wc. The issue before the Lands Tribunal was whether the Valuation Officer was correct in not assessing the 4 flatlets as a single assessment. The VO had not considered aggregation under the similar provisions of S24 of the General rate Act 1967 appropriate after four considerations:-

(a) the degree of sharing common facilities –each having its own kitchen and each tenant having an external door key and use of the front door and door to the garden.

(b) the degree of adaptation and self containment – apart from one flat, three of them had their own single entrance door internally.

(c) capability of accurate identification – all the flats being accurately identified.

(d) the degree of transience of occupation – a generally stable pattern of occupation was demonstrated.

It was confirmed as four separate assessments as there were four tenants and four identifiable hereditaments, it being stated “I find that the valuation officer has properly taken into account the four factors precedent to the exercise of his discretion under s24… I find that the valuation officer has correctly declined to exercise his discretion, and the appeal house therefore falls to be assessed in four parts…”

3.0 R v London South East Valuation Tribunal & Neale (LO) (2001) RVR 92

The Court of Appeal considered an appeal following the refusal for a judicial review of a Valuation Tribunal decision. The case considered whether it was correct for the LO to separately band a second floor attic bedsit with kitchen facilities and shared use of bathroom/wc on the first floor. The C of A confirmed the approach taken by the VT and Brown LJ and stated in para 9 of the decision:-

“James v Williams (VO) (1973) RA 305 …lays down an approach has stood the test of time, and has been followed by the rating authorities and tribunals up and down this country ever since. This is the case on which the listing officer relied and which satisfied the tribunal that this applicants flat should be separately rated, rather than aggregated with the rest of the property. I should also note that the occupiers of the various units in the house which James v Williams was concerned also had to share a bathroom and wc.”

And in para 11

The tribunal in their decision set out the various factors established in James v Williams to be of critical importance in deciding the question of separate dwellings, and applied these factors to the undisputed facts of the present case…The applicant has sought to submit either that James v Williams was wrongly decided, or that this case is to be distinguished from it. Neither argument, I fear, can succeed. James v Williams has, as I repeat, stood the test of time and the distinction upon which principally the applicant relies, that he shares bathroom facilities with far more people than was the case in James v Williams, cannot serve to require a different result to be reached in the two cases”.

4.0 Smith v Turner (LO) VT Appeal No. 6815516345/192C05 March 2009

This South Wales Valuation Tribunal case relates to a 2005 list appeal on 23 Denton Road Cardiff, a mid terraced house occupied as 6 “bedsits”, each room having its own sink, fridge and baby belling cooker. Five rooms shared a bathroom/wc and the sixth room had en suite facilities. The Valuation Tribunal decided that each of the properties had been correctly, separately banded. Mr Hickman, a technical adviser, acting as advocate for the Listing officer contended that each of the rooms were a separate hereditament as the tenants had exclusive, beneficial and actual occupation of their room and as the tenancy agreements were in excess of 6 months, they were not too transient. He also referred to the cases of James v Williams and R v London South East Valuation Tribunal & Neale (LO) (see above). The adaptations to the property in providing individual kitchen facilities to each room at the expense of a shared kitchen for the whole property meant it could not be aggregated as it was no longer a single self-contained unit occupied as more than one unit of accommodation.

In reaching its decision the Valuation Tribunal considered the following points:

● Each of the rooms was separately occupied by different tenants with each rooms’ boundary capable of clear identification. The six flatlets were, in fact, six individual hereditaments and, therefore, each was a chargeable dwelling requiring a Council Tax Band
● Each room was adapted to provide self-contained kitchen facilities, including cold running water. The Tribunal considered these structural alterations and adaptations changed the rooms from that of traditional bedsits, to self contained flatlets, capable of being individually occupied. These adaptations had resulted in there being no communal kitchen for the tenants to share as each tenant had the use of kitchen facilities provided within their individual room.
● The licence indicated the minimum term for a tenancy was 6 months. Further, details of the length of tenancies that had taken place indicated that each of the occupations of the hereditaments had been non-transient in nature.

The Tribunal decided the Listing Officer was correct in deciding that each hereditaments should have its own band.

Rawsthorne LO v Parr 2009 High Court

In the High Court, the judgement set aside a decision of the Valuation Tribunal, where a former semi detached house had been converted for multiple occupation. The building included self contained garden flat on the ground floor and five bed sitting rooms let on shorthold agreements from the ground to second floor.

The VT had heard evidence from the LO that five bed-sits in a house were separately let on shorthold tenancies.  They shared bathroom facilities, but were adapted to the extent that each had a kitchenette.  They were separate dwellings under Local Government Act 1992 section 3(2) defined by separate occupations, without a high turnover of tenants, adapted for separate occupation and should correctly be entered into the list as separate bands.  The case of James v Williams (VO) LT 1973 RA 305 had been cited as relevant case law on the subject.  The owner, in contrast, had argued that, as the units were not self-contained, they should be treated as one dwelling.

The VT in its decision dated 26th January 2009 did not accept the evidence of the LO relating to separate hereditaments and did not accept that separate dwellings, defined by occupation, must be the primary basis of identifying the dwellings. They had gone straight to disaggregation legislation, and were surprised that the LO had not referred to Articles 2 and 3 of the Council Tax (Chargeable Dwellings) Order 1992 and looked for 'self-contained units' to define the dwelling. The case of James v Williams, as it pre-dated Council Tax legislation, was discounted as being out of date. On finding that no self contained units existed, they concluded that one dwelling existed (despite their being separate hereditaments), and ordered that one band should apply.

In the High Court, Mrs Justice Dobbs, referred to Articles 2,3 and 4 of the Chargeable Dwellings Order and the legislation defining a dwelling (LGFA 1992Section 3(2)), making a clear judgement setting aside the VT decision and finding that the VT had not addressed the legislation in the correct order. The hereditament question should be established first, and then and only then, should the question of disaggregation or aggregation be addressed. Her Ladyship said:-

“ What is clear from the Valuation Tribunal’s decision, which I have already quoted- but I quote one particular part- is that the tribunal say they were surprised to note that the current legislation was not quoted. The Tribunal went to section 3(5)(a) and (b) of the Local Government Act 1992, as opposed to starting at section 3(2), and having done that they went straight to Article 3 of the Council Tax (Chargeable Dwellings) Order 1992.

“What they hadn’t determined, and should have determined, was whether indeed there were multiple hereditaments or whether there was – as Mr Parr submitted- a single one.  It is clear that they failed to go through that process and in my judgement as a result, without making any observation on the merits of either case or the Valuation Tribunals decisions, the Valuation Tribunal fell into error in failing to determine preliminary and necessary issues. They jumped the gun and went straight to the Order without dealing first with the relevant provisions of the Act….”

Only if the property constituted a single hereditament would the relevance of looking for self contained units been a paramount consideration The judgement emphasises the need to consider the primary question of hereditaments, before applying the Chargeable Dwellings Order. Great care must be taken not to confuse article 3 of the Chargeable dwellings order with circumstances outlined in article 4.

The VT decision was quashed and remitted back for a new VT hearing in which the separate bands were confirmed.

Parr case second VT hearing: reference VT Appeal No. 0345516119/165CAD Dec 2009

Johnson LO v Callear 2012

The case arose by appeal to the High Court from a VTE decision where a large room in a house in multiple occupation has been given separate banding together with others in the building, where it was felt by the LO that exercise of discretion was outside the terms of Article 4. The flat had a kitchenette and shower, but did not have a WC. The VTE decision took the dwelling out of the list because it was not in their view a fully self contained unit. In the High Court it was argued as appoint of law that the panel had fallen into the same error as in Rawsthorne v Parr by not considering the hereditament question under, section 3 of the 1992 Local Government Finance Act, first to identify dwellings. Secondly the panel had considered the degree to which the room was adapted with its own facilities as determinative of whether a dwelling existed. Judge Spencer confirmed an error in law by finding that panel had not addressed the question of whether a section 3 dwelling existed, but refrained from making that decision without further evidence. He went on further to state that they were in error in finding that a self contained unit did not exist within the meaning given in article 2 of the Order, in this case merely because it did not have exclusive use of a WC.

At the remitted second hearing the vice president of the VTE accepted a statement of agreed facts confirming :

1. The appeal property is a bedsit. It contains kitchen facilities, including a cooker and a fridge, a sink and a shower. It is located within a large Victorian terraced house which contains ten bedsits. The appeal property is on the first floor. Six of the ten bedsits have showers in addition to kitchen facilities and a sink. There are shared toilet facilities at various points within the house and a shared laundry on the ground floor.

2. The appeal property was let and occupied on an Assured Shorthold Tenancy from February 2003 to May 2012.

3. No-one other than (the tenant) had access to the appeal property for the period of his tenancy.

4. All of the flats are let on a similar basis.

The decision accepted the guidance given by Judge Spencer that the 4 tenets of rateable occupation are central to the question of whether a dwelling existed under Section 3 of LGFA 1992, and concluded that the bed sit was such a dwelling, and must be shown in the list.

Coll LO v Dhillon (Consent Order from the High Court 2013)

This case arose from a LO appeal against a VTE decision of an HMO in Hounslow, where the VTE effectively stood in the shoes of the LO to aggregate rooms that had various degrees of conversion, and where the whole building did not form a single self contained unit. The VTE decision had aggregated the rooms on the grounds that they were not self contained units. This raised three matters of law :-

● The VTE had not asked, first of all, whether section 3 dwellings existed, as required by Rawsthorne v Parr.

● That the tribunal did not have jurisdiction under Article 4 of the Chargeable Dwellings Order to exercise the discretion given to the VOA listing officer to aggregate section 3 dwellings.

● An incorrect application of the criteria to be taken into account when deciding on the concept of the self contained unit, or matters of aggregating multiple dwellings.

The case was listed for High Court hearing in February 2013, but was settled by Consent Order of the High Court with solicitors acting for the respondent, in favour of the LO’s legal arguments.

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