SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Bonomy Lord Emslie	[2011] CSIH 47 XA51/11 OPINION OF THE LORD JUSTICE CLERK in Appeal by THE ASSESSOR, LOTHIAN VALUATION JOINT BOARD Appellant: against (1) COLIN CAMPBELL and (2) MRS MARION CAMPBELL Respondents: ______

For the Appellant: Clarke, QC; Simpson & Marwick

Non participating parties: The Respondents

29 June 2011

Introduction

[1] This is an appeal by the assessor for Lothian under section 82(4) of the Local Government Finance Act 1992 (the 1992 Act) against a decision of the Lothian Valuation Appeal Committee dated 31 March 2011. It relates to the Council Tax valuation band of the respondents' dwellinghouse at 19 Craigmount Place, Edinburgh (the house). The assessor altered the Valuation List by transferring the house from valuation band E to band F with effect from 9 May 2008. The respondents appealed to the Committee on the ground that the effective date of the alteration should be 10 January 2011. The Committee allowed the appeal.

The statutory framework

[2] Section 87 of the 1992 Act provides for the making of regulations about the alteration by local assessors of valuation lists that have been compiled for the purposes of Council Tax (s 87(1)). It directs inter alia that the regulations may include provision that no alteration shall be made of a valuation band shown in the list as applicable to any dwelling unless since the valuation band was first shown in the list as applicable to the dwelling, there has been a material increase in the value of the dwelling and the dwelling has subsequently been sold (s 87(4)(a)(i)). A "material increase" in relation to the value of a dwelling means:

"any increase which is caused (in whole or in part) by any building, engineering or other operation carried out in relation to the dwelling, whether or not constituting development for which planning permission is required ..." (s 87(10).

[3] The relevant regulations are the Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993 (SI No 355) (the 1993 Regulations). Part II of these regulations provides for the alteration of valuation lists. The relevant provisions are as follows:

"4-(1) No alteration shall be made of a valuation band shown in the list as applicable to any dwelling unless-

(a) since the valuation band was first shown in the list as applicable to the

dwelling-

(i) there has been a material increase in the value of the dwelling and it, or any part of it, has subsequently been sold ...

19-(1) Any alteration of the list effected so as to reflect a material increase in the value of a dwelling shall have effect from the day on which the first sale of the dwelling, or any part of it, subsequent to the material increase was completed ... "

[4] Part IV of the Regulations deals with appeal procedure. Regulation 37 provides inter alia as follows:

37-(1) On deciding an appeal, other than an appeal under Part II of these Regulations, the committee may in consequence of the decision by order require ...

(e) the alteration of a list (prospectively or retrospectively).

(2) On deciding an appeal under Part II of these Regulations, the committee may in consequence of the decision by order require an assessor to alter a list in accordance with any provision made by or under the Act.

The reference in regulation 37(1) to an appeal other than an appeal under Part II relates to a "non-list appeal" under Part III of the Regulations. A non-list appeal is an appeal under section 81 of the 1992 Act (as amended) against a decision of the local authority that a dwelling is a chargeable dwelling or that the appellant is liable to pay council tax in respect of it; or against a calculation made by the local authority of the amount of council tax that the appellant is liable to pay (s 81(1). Section 81(1) provides that in such an appeal the committee "shall make such decision as they think just."

The facts

[5] The respondents bought the house on 9 May 2008. The house was then listed in valuation band E. Unknown to the assessor, the sellers had carried out alterations to the attic that had materially increased the value of the house. On 10 January 2011 the assessor, having learned of the alterations to the house and of its subsequent sale, served notice on the respondents of the re-banding of the house in valuation band F with effect from 9 May 2008.

The proceedings before the Committee

[6] The respondents accepted that the effect of the work to the attic was that the appropriate valuation should be in band F; but they submitted that the effective date of the alteration of the List should be the date on which the assessor brought the matter to their attention. The assessor's position was that the effective date required by regulation 19(1) of the 1993 Regulations (supra) was the date of the first sale of the house after the completion of the alterations to the attic. Her witness expressed sympathy for the respondents, but insisted that the assessor had no discretion to fix the effective date at any other date.

The Committee's reasons

[7] The Committee gave the following reasons for its decision.

"Regulation 4(1)(b) allows the Assessor to alter the entry where a different Valuation Band should have been determined. It was not disputed in this case that once the attic alteration was taken into account Band F is justified. Regulation 37 gives the Committee general power under 1(e) to deal with the retrospective nature of the alteration in the list and, having regard to the expression of sympathy from [the assessor's witness] and his acceptance that there was no criticism of the tax payer, the Committee considered that the justice in the matter demanded that the effective date should be changed to 10th January 2011 when the appellants were told about the matter."

Conclusions

[8] In my opinion, the Committee has erred. As the Committee recognised, it was not disputed that the result of the work done to the attic by the previous owners was that the house should be valued in band F. Therefore, in my opinion, regulation 4(1)(a)(i) (supra) applied. Since the alteration to the list reflected a material increase in the value of the dwelling, regulation 19(1) (supra) required that the effective date of the alteration should be the day on which the first sale of the dwelling subsequent to the material increase was completed, that is to say 9 May 2008.

[9] Regulation 4(1)(b) of the 1993 Regulations, to which the Committee referred, is irrelevant to this case. That provision applies where the assessor is satisfied that he should have determined a different valuation band for the dwelling in the first place (cf Ass for Lothian v Holland, 2010 SLT 1149). It does not apply where, as here, there has been a material increase in the value since the original entry was made.

[10] The Committee also referred to regulation 37(1)(e) (supra). It too is irrelevant. Regulation 37(1)(e) applies only to an appeal other than an appeal under Part II; that is to say, to a non-list appeal under section 81(1) of the 1992 Act and Part III of the 1993 Regulations. The respondents' appeal related to an alteration to the Valuation List. Therefore, in my opinion, it was an appeal under Part II of the Regulations and regulation 37(2) applied. That empowered the Committee to require the assessor to alter the list, but only in accordance with any provision made by or under the 1992 Act. On the facts of this case, in my view, the assessor altered the list in accordance with section 87(4)(a)(i) of the 1992 Act (supra) and regulation 19(1) of the 1993 Regulations (supra). Regulation 19(1) provides that there is one and only one effective date in a case of this kind, namely the date of the first subsequent sale. In my opinion, the Committee had no general power, as it thought, to deal with the retrospective nature of the alteration to the list; or to fix the effective date of such an alteration according to its own perception of what justice demanded.

[11] In Ass for Grampian VJB v Fraser (2007 SC 210; 2007 SLT 48) this court considered the present question. In that case, on similar facts, the committee held that the effective date of an alteration to the list made in consequence of a material increase in value was the date on which the assessor had revalued the dwelling. It took the view that regulation 19 could not apply retrospectively. We held that the committee had erred and directed it to determine that the effective date was that of the first subsequent sale. In my Opinion in that case, in which my colleagues concurred, I said -

"[8] In my opinion, the Committee has misdirected itself. Its decision shows a confusion between the event that causes the material increase in the value of a dwelling and the subsequent events by which the occurrence of that increase comes to the notice of the assessor. The assessor's duty to alter the Valuation List arises from two events, namely the occurrence of the material increase, as defined by section 87(10) of the 1992 Act, and the first subsequent sale (1992 Act, s 87(4); 1993 Regs, r 4(1)). The alteration has to take effect from the date of the first subsequent sale (1993 Regs, r 19(1)).

[9] On the agreed facts, the material increase occurred in this case in January 2000 when the building operation was completed. The lack of an exact date is neither here not there. The first subsequent sale of the dwelling was that by Mrs Pacitti to Mr Fraser. The assessor was bound to alter the Valuation List with effect from the date of that sale, and from no other date. The fact that the assessor did not discover until much later the true date on which the material increase occurred is irrelevant."

[12] It is unfortunate that that decision had not come to the notice of the assessor before the Committee heard this case. If the decision had been cited at the hearing, the clerk to the Committee would have been bound to advise it that it had no discretion in its decision on the appeal.

Disposal

[13] I propose to your Lordships that we should allow the appeal, recall the decision of the Committee and return the case to it with a direction to refuse the respondents' appeal and to determine that the assessor's alteration to the Valuation List was properly made with effect from 9 May 2008.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Bonomy Lord Emslie	[2011] CSIH 47 XA51/11 OPINION OF LORD BONOMY in Appeal by THE ASSESSOR, LOTHIAN VALUATION JOINT BOARD Appellant: against (1) COLIN CAMPBELL and (2) MRS MARION CAMPBELL Respondents: ______

For the Appellant: Clarke, QC; Simpson & Marwick

Non participating parties: The Respondents

29 June 2011

[14] For the reasons given by your Lordship in the chair, I agree that this appeal should be dealt with as you propose.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Bonomy Lord Emslie	[2011] CSIH 47 XA51/11 OPINION OF LORD EMSLIE in Appeal by THE ASSESSOR, LOTHIAN VALUATION JOINT BOARD Appellant: against (1) COLIN CAMPBELL and (2) MRS MARION CAMPBELL Respondents: ______

For the Appellant: Clarke, QC; Simpson & Marwick

Non participating parties: The Respondents

29 June 2011

[15] Although this appeal was ultimately presented unopposed, and without any contradictor, I agree with your Lordship that it is well-founded and should be allowed in the manner proposed. Like your Lordship, I can see no other plausible construction for regulation 19(1) of the Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993, and consider that the point in issue is directly covered by the earlier decision of this court in Ass. for Grampian VJB v Fraser.