Pengelly v The Listing Officer

This is an appeal brought by Mr Darren Pengelly against a decision of the Valuation Tribunal Pursuant to Regulation 43 of The Valuation Tribunal for England (Council Tax and Rating Appeals) Regulations 2009. As with many statutory appeals, it is an appeal on a point of law. It is not a rehearing on the merits. The test is essentially the public law test. There are two relevant principles in this case. Firstly whether the decision the tribunal made was so unreasonable as to be irrational, for example if there were simply no evidence to support its findings. Secondly has the decision maker applied the wrong principles of law, or (put in simple terms) asked itself the right question, or taken into account irrelevant matters Those are the two central issues of the public law test that arise in this case.

Mr Pengelly is the owner of a flat at 21 Gournay Road in Hailsham in East Sussex (“the property”). Unusually for a flat it is a freehold property. It is built over three garages. I have seen a diagram of it, and as Mr Pengelly's father has pointed out, he was keen to ensure that his son had a freehold property when it was purchased.

In June 2011 the property was entered on the list at band C. Mr Pengelly, assisted by his father, asked the Listing Officer to consider that. On 11 October 2012, the Listing Officer confirmed the decision in a letter in which he decided that the property was indeed within the range of band C. I have that letter at page 115 of the bundle.

Mr Pengelly appealed to the Valuation Tribunal. That is an expert tribunal, and it deals with appeals from decisions of Listing Officers. It has the power to look at the whole of the evidence and to make a finding of fact. In this case that was a finding as to which band this property should be placed.

That is an appeal on the merits. The parties put forward evidence and the Valuation Tribunal come to its conclusion on the basis of that evidence. That is in contrast to the appeal that is before me, which is, as I say, simply on a question of law. Mr Buley, who appears for the Listing Officer on the appeal, reminds me that the findings of fact are only challengeable if they are irrational; so far out of the band of what is reasonable that no tribunal properly directing itself could come to that conclusion.

The appeal was heard by two members, with a senior member in the chair. I have the written decision which was sent out dated 10 September 2013 and I have read that. That decision is the starting point for my consideration of this appeal, for those written reasons express what it is the tribunal decided, and why.

The tribunal dismissed the appeal and confirmed band C. What it was not about, and what is was not obliged to do nor did, was actually provide a valuation, a figure, for this property. For that is not the question it is asked. What it is asked is to decide the correct band for this property when assessed in accordance with the statutory basis of valuation. There is no need for the Valuation Tribunal to actually come up with a precise figure. What it has to do is assess what is the correct band.

The appellant sought a review of that decision straightaway, but the Vice President of the tribunal decided it was not an appropriate case to review. Hence the appeal to this court. There are no issues taken as to timing.

The grounds are set out in the appellant's notice. The first issue is whether the tribunal asked itself the right question. It now seems to be agreed that it did. When I read the papers it seemed to me that at the heart of the appeal was the argument that in reaching its decision the tribunal took account of material that it should not have taken into account. That appears to be the principal complaint. Ground 1 refers to the fact that:

That impression was confirmed in the course of submissions from Mr Pengelly (the appellant) assisted by his father. One of the central complaints is that the Listing Officer and (more relevantly for my purposes) the Valuation Tribunal, have used a valuation of the appeal property which is a freehold valuation, rather than the 99 year lease valuation as required by the terms of the Regulations.

Thirdly, Mr Pengelly was arguing that the conclusion of the tribunal that for valuation purposes there was no material difference between leasehold and freehold, was irrational. Those are the three areas for consideration.

Mr Pengelly is not a lawyer, nor is his father, and I have given them considerable latitude in the way they have made their submissions, allowing both of them to speak. It seemed to me that this was an appeal where the appellant had a real sense that something had gone wrong. I suspect it is not about the money. He seems sincerely convinced that errors have been made. What he is after is a fair decision. In cases such as that I think it is right to allow a degree of latitude.

Regulation 6 of the 1992 Regulations provides that the valuation exercise undertaken both by the Listing Officer, and by the Valuation Tribunal, proceed on a series of common assumptions. Those assumptions include a valuation on the basis of a sale was with vacant possession, that the interest sold was the freehold, or in the case of the flat, a lease for 99 years at a nominal rent.

It is a simple point but it is worth emphasising that these are Regulations which relate to the valuation exercise - the banding exercise. This not a Regulation which provides, in terms or by implication, that only flats with a lease of 99 years at a nominal rent can be considered in coming to that conclusion. To make such a provision would be absurd, for there are probably very few cases where you would be able to get a comparable, or a decent set of comparables, if all you could refer to were flats on 99 year leases at a nominal rent. The reason for having these valuation assumptions is that the valuation is always done on the same basis. That does not mean to say that all the evidence must also be on that basis. As I say, to make that sort of requirement would be absurd and unnecessary. Listing Officers and Valuation Tribunals have an expertise and are used to taking information of values in relation to properties which are similar but different, taking account of those differences and then reaching a conclusion. That is the process by which experts and tribunals usually operate. If there was something which was identical, the art of valuation would be a very simple one.

It is a misunderstanding of the requirement of the 1992 Regulations that a Listing Officer or a Valuation Tribunal is only allowed to look at 99 year lease properties. I raised that with Mr Pengelly in the course of his submissions. In response, his father formulated a secondary argument to the effect that if you are valuing flats, you should not look at freehold because of the significant difference between freehold and leasehold valuation.

There is then the question of whether the tribunal was entitled to conclude as it did that there was no material difference on the facts of this case between the leasehold and the freehold position when considered in 1991. The starting point for a consideration of that issue is that the tribunal is the judge of the facts, and that I am not entitled to interfere with its conclusion on the facts unless there has been an error of law. So I turn to the decision and the written reasons of the tribunal in making the decision to see how it went about its task.

It is not (now) in issue that it asked itself the correct question. That is put beyond doubt when you look at the decision. Paragraph 7 identifies the issue, and refers to the statutory basis of valuation. Paragraph 10 records the Listing Officer's submission that whilst the appeal dwelling was freehold he had to consider that the property was held on a 99 year lease at a nominal rate as per the assumptions set out in the Regulations. That was also the case put by the appellant. It is inconceivable that the tribunal asked itself any other question.

The written reasons first of all set out the evidence and submissions put to it on behalf of the Listing Officer. That includes a review of the matters put before it as evidence in support of the Listing Officer's case. Paragraphs 11 and 12 can be cross referenced to the document at pages 80 and 81 of the bundle. In reply, Mr Pengelly raised the question of the accuracy of some of the details of what are recorded in relation to the properties on those two pages. But the tribunal had that information before it and was entitled to accept it. It was that information that was analysed at paragraphs 11 and 12 of the written reasons. It took values in 2011 and 2012 and reduced them by a factor (which is explained in the workings) to reach the value in 1991.

Paragraph 14 records that the Listing Officer accepted there were 27 “broadly similar flats” (is the phrase) in Gournay Road that had been placed in band C, and two other proposals that had been lodged but had not proceeded to appeal. That is relevant to the “tone of the list”, which is a factor that the tribunal is entitled to take account of.

There is then a record of the matters that were put by the appellant. A bundle was provided by Mr Pengelly and his father. It included a significant amount of material: a statement of case; external and internal photographs of the appeal dwelling; a graph showing the property asking prices and selling prices and the number of dwellings that had sold in Hailsham; marketing details of Badger's Walk, Hailsham; Council Tax Practice Notes; details of the purchase of the appeal dwelling; an estate agent's valuation in December 2012; evidence of value of new houses against old properties; marketing details of dwellings in Anglesey Avenue; an extract of the Valuation List for properties in Old Bricklayer, Hailsham which were banded A; and details of a property on the development which was similar to the property but had been marketed as a one bedroom flat with a study. At paragraph 17 there is a discussion of the new build price premium and concern expressed about the effect that that might have had. There is then a reference to the flat being freehold.

It is the fact that the property is freehold which is the essential theme of the appellant’s submissions, and particularly those made for him by his father. Paragraph 18 of the Tribunal’s written reasons records this:

There is then a reference to a Lloyds Bank report showing the difference between old and new properties, and a record of the fact that Mr Pengelly did not agree with the comparables, that they were not relevant as they were "different from the appeal dwelling and therefore would achieve different values and did not assist in providing a value in 1991 of the appeal dwelling". Further details of two flats in Anglesey Avenue are provided and two properties currently being marketed which had been in band A.

So the tribunal took some care to record the matters that were put before it and then went on to make its decision, giving its reasons. I should emphasise for the benefit of the appellant that it is this decision that I have to consider. The evidence of the Listing Officer before the tribunal was simply that: evidence. The tribunal was not bound by what the Listing Officer had concluded but obviously would take into account what was put before it on behalf of the Listing Officer as evidence, as it would take account of the matters that Mr Pengelly and his father had put before it.

At paragraph 28 of its reasons the Tribunal state as follows:

At paragraph 29, there is a reference to the need to exercise caution over new build properties. The conclusion of the tribunal was that whilst caution should be taken when comparing the value of the new properties to the value of the second-hand properties, the value of the premium should be disregarded as it formed part of the value of the new dwelling.

Then at paragraph 30 what seems to me to be an important finding:

The Tribunal there recognised that there was a difference between a freehold and a leasehold property. It cannot be argued that that point was not in the mind of the tribunal. For it then went on to find as follows:

That is a conclusion that Mr Pengelly disagrees with and he produces evidence which he says would demonstrate that it was wrong. But it is a conclusion that the tribunal was entitled to come to. There was evidence to support it and it cannot be argued that as a matter of law it is in error. If this were a complete rehearing on the facts the position might be different but, as I have endeavoured to explain, that is not the nature of this appeal.

Mr Pengelly senior complains that the Listing Officer's use of the comparables was a disgrace, that his choice of property was appalling and that what they want is a fair valuation and, if there had been a valuation of the property, that would have clarified it. I accept, if it be relevant, that the views expressed by Mr Pengelly and his father are entirely sincere. They believe something has gone wrong, but I do not detect in the approach of the tribunal or in that finding an error of law in the sense that I have endeavoured to explain.

The tribunal then proceeds to consider other properties. What it is doing here is making its own decision, looking at the evidence that it considers relevant and seeing where that leads it. It is making that decision with some of the points that Mr Pengelly made in mind, for one can see at the foot of paragraph 32 these words:

I return to the three grounds of appeal. Firstly, did the tribunal have the correct statutory assumption in mind in asking itself the question on appeal? Plainly so. Secondly, is the tribunal entitled to take account of valuation evidence which refers to freehold or 125 year leasehold properties? Yes, there is no error of law in that. Thirdly, is the conclusion that it reached on the facts one which is irrational or Wednesbury unreasonable? No, it is not. If the Valuation Tribunal had proceeded on the wrong valuation assumption, that would have been an error of law. But it did not and, it is not an error to have regard to the purchase of the freehold in reaching its decision. The Tribunal needs to be alive to the fact that it is not precisely the same valuation basis, but it plainly is alive to that, for it recognises that there is a difference, albeit a minimal difference, between the values of freehold and leasehold in 1991 terms. So for those reasons, none of the grounds of appeal that are raised before this court can succeed and the appeal is dismissed.