SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Mackay of Drumadoon	[2010] CSIH 54 XA67/09 XA68/09 OPINION OF THE LORD JUSTICE CLERK in the Appeals by THE ASSESSOR FOR LOTHIAN Appellant; against (1) MR & MRS K G MARTIN; (2) MR A S FORREST; Respondents: _______

For the Appellant: Cleland; Simpson & Marwick

(Non-Participating Party - The Respondents)

29 June 2010

Introduction

[1] The Assessor for Lothian has appealed under section 82(4) of the Local Government Finance Act 1992 (the 1992 Act) against a decision of the Lothian Valuation Appeal Committee dated 27 March 2009 by which it upheld appeals by Mr and Mrs K G Martin, and Mr A S Forrest against the entries of their respective houses at 29 Delta Drive and 26 Galt Road, Musselburgh at band C in the Council Tax List (the List).

[2] These houses are situated in Pinkie Brae, an extensive estate of public sector houses most of which are owned by East Lothian Council and the Scottish Special Housing Association (SSHA). There are about 900 houses on the estate. Some have been sold to sitting tenants. Of those some have since been sold on.

[3] The appeals resulted from an extensive re-assessment of council tax bandings in Musselburgh and Prestonpans with effect from October 2008 in which the assessor corrected 520 entries in the List. In the course of this exercise the assessor reclassified the houses with which we are concerned from band B to band C.

[4] I have set out the statutory framework in my Opinion in Ass for Lothian v Holland and Anor which we heard with this appeal.

The evidence

[5] The assessor's witness said that houses identical to these had originally been entered in band C. In 1994, by way of settling appeals against the valuations of these two houses, the assessor had reduced their banding to band B. That had remained the position until the re-assessment exercise to which I have referred. The assessor's witness produced evidence on similar lines to that tendered in Ass for Lothian v Holland and Anor (supra) to prove that the appropriate banding was band C. This evidence included a schedule and an analysis of 16 comparable open market sales in the immediate vicinity in the period 1990-1992.

[6] The evidence for the occupiers was based in part on evidence of sales to sitting tenants, on one specific sale in 1995 and on evidence of the generally poor state of maintenance of houses on the estate.

The decision of the Committee
[7] The Committee's decision and its reasons are set out as follows in both cases.

"The Committee considered that the assumption of a state of reasonable repair in Regulation 2(2)(d) [sc of the 1992 Regs] was to do with the individual house but that the evidence of Mr Martin and Mr Forrest about the market at the estate being depressed because of the poor state of the property in general and a lack of attention by the Council and SSHA was relevant.

The Committee accepted that the re-sales probably were improved houses. They accepted Mr Forrest's evidence on the matter. They thought him objective. He is still a tenant. They thought he had a good grasp of the value of the tenanted or unimproved properties in 1991. Mr Martin's house does not seem to have been improved. The Committee also doubted that these sixteen re-sales, or all of them, had not been available and taken into consideration at the time of the original assessment. It was equally likely that the Assessor's valuer discounted the value to be taken from those re-sales when setting the Band broadly for the whole range of property in the estate.

The Committee was not persuaded that Band C 'should have been determined'. There appeared to be reasons why assessing Band B might be thought reasonable at the time. There was no evidence of incompetence by the valuer. It appeared to be a matter of judgement. It appeared that a different interpretation had been put on the information at the time, possibly by someone more familiar with the 1991 market and the condition of the houses on the estate as a whole than anyone now looking at re-sale price figures. There had been a lot of appeals originally. The matter must have been given serious attention. The Committee today was not satisfied that Band C should have been determined and they allowed the appeals restoring Band B."

Conclusions

[8] In my opinion, the Committee has taken a misguided approach to the assessment of the evidence and to the making of findings in fact, and has misinterpreted the law.

[9] The starting point in these cases is that the assessor's evidence was based on an analysis of extensive evidence of open market sales of comparable properties, all of which was unchallenged save for the suggestion in cross-examination that in certain of the houses shown in the assessor's photographs there appeared to be evidence of disrepair. The Committee appears to have disregarded the assessor's comparison evidence, which represented primary and best evidence of value. On the other hand, it has based its decision on vague, unvouched and secondary evidence tendered by the householders. The conclusion that the re-sales of comparable houses referred to by the assessor were "probably" improved houses is of little significance. Even if that speculation was correct, the question remained as to what the value of an unimproved house would have been at the relevant date. Moreover, at the end of the penultimate paragraph of its decision (supra) the Committee has speculated as to the assessor's valuation method with no sound basis for doing so.

[10] On the whole matter I am in no doubt that the Committee has failed to provide any proper reasoning for its decision that it "was not persuaded that Band C should have been determined." As in the case of Ass for Lothian v Holland and Anor (supra), it has failed to give adequate reasons for dissenting from the judgment made by the assessor in altering the entry in the List, has failed to specify the evidence on which it relied and has failed to set out the reasoning which led it from that evidence to its conclusion.

[11] The Committee thought that it was a relevant valuation consideration that the market at the estate was "depressed because of the poor state of the property in general and a lack of attention by the Council and SSHA." In my opinion the Committee was misguided in relying on that consideration. If property on the estate was generally of poor quality, that factor would be reflected in the prices obtained in the open market sales of the comparable properties on which the assessor relied.

Disposal

[12] I propose to your Lordships that we should allow the appeal and return both cases to the Committee for reconsideration.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Mackay of Drumadoon	[2010] CSIH 54 XA67/09 XA68/09 OPINION OF LORD HARDIE in the Appeals by THE ASSESSOR FOR LOTHIAN Appellant; against (1) MR & MRS K G MARTIN; (2) MR A S FORREST Respondents: _______

For the Appellant: Cleland; Simpson & Marwick

(Non-Participating Party - The Respondents)

29 June 2010

[13] For the reasons given by your Lordship in the chair I agree that we should allow the appeal and return both cases to the Committee for reconsideration.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Hardie Lord Mackay of Drumadoon	[2010] CSIH 54 XA67/09 XA68/09 OPINION OF LORD MACKAY OF DRUMADOON in the Appeals by THE ASSESSOR FOR LOTHIAN Appellant; against (1) MR & MRS K G MARTIN; (2) MR A S FORREST Respondents: _______

For the Appellant: Cleland; Simpson & Marwick

(Non-Participating Party - The Respondents)

29 June 2010

[14] For the reasons given by your Lordship in the chair I also agree that we should allow the appeal and return both cases to the Committee for reconsideration.