THE ASSESSOR FOR GRAMPIAN, APPEAL BY AGAINST ANDERSON, ANDERSON AND BROWN LLP AND OTHERS [2018] ScotCS CSIH

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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> THE ASSESSOR FOR GRAMPIAN, APPEAL BY AGAINST ANDERSON, ANDERSON AND BROWN LLP AND OTHERS [2018] ScotCS CSIH_15 (15 March 2018) URL: http://www.bailii.org/scot/cases/ScotCS/2018/[2018]_CSIH_15.html Cite as: 2018 SC 370, 2018 GWD 11-155, 2018 SCLR 641, [2018] ScotCS CSIH_15, [2018] CSIH 15, [2018] RA 420, 2018 SLT 293

[1] These appeals in relation to numerous office premises in the city of Aberdeen

proceeded before the Valuation Appeal Committee (“VAC”) on the argument that there had

been a material change of circumstances (“MCC”) brought about by an exceptional

downturn in the economy of the North East of Scotland. The ratepayers sought a reduction

of 20% for the year from 1 April 2015 and a reduction from 1 April 2016 of 40%. The VAC

rejected the claims in respect of the first period, but concluded that there had been an MCC

for the later period, and applied a reduction of 16.5%. The assessor has appealed against the

latter decision, the ratepayers against the finding that the reduction was limited to 16.5%.

[2] Section 37 of the Local Government (Scotland) Act 1975 (“the Act”) defines an MCC

as meaning “in relation to any lands and heritages a change of circumstances affecting their

value”. It is not enough for there simply to have been a change of circumstances – to be

material the change of circumstances must be shown to have affected the value of the

subjects. Both parties recognised that a distinction requires to be made between changes

resulting from the normal fluctuations or variations which may occur from time to time in

any business venture, or general fluctuations in the economy, which do not constitute an

MCC; and those which result from some abnormal economic crisis which do. The key

distinction is between the normal processes of change and those resulting from some

abnormal or unusual situation (Assessor for Glasgow v Schuh 2012 SLT 903 (“Schuh 1”), the

Lord Justice Clerk (Gill), paras 30-34). The onus of establishing that there has been a change

of circumstances affecting value rests on the party so asserting.

[3] In giving its reasons, the VAC explained that it had regard to the questions identified

in Schuh 1 (para 36) as relevant to an appeal such as this, namely whether there had been a

material fall in rental values since the entries were made; if so, what caused it; whether the

cause(s) constituted a material change of circumstances; and if multiple causes, to what

extent the fall in value was caused by the material change of circumstances.

[4] On the question whether there had been a fall in rental values, the VAC considered

that there was weak evidence to show a “dip in rental values” during 2015, but that the

evidence was “sufficiently robust” to conclude that there had then been a significant

reduction in rental value from 2016, “in some few cases to figures below those at the tone

date of 1 April 2008.” It rejected the assessor’s argument that rents would in general have to

have fallen below tone value before an MCC based on a general fall in rental values could be

made out, “especially as the fall was claimed to have taken place in these cases seven and

[5] On the basis of an analysis comparing the average proportion of new built as to

established office premises available between the years 2008 – 2016 with that in 2016, the

VAC concluded that an increase in the availability of newly built offices (which would not

have constituted an MCC) was not a factor contributing to the drop in values. Rather, the

cause of the fall in rental values was an economic downturn in the oil and gas industry

which had affected all sectors of industry in the Aberdeen area and was such an extra-

ordinary and exceptional economic crisis for the North East as to amount to an MCC.

[6] The VAC considered that the 2016 rental figures had to be adjusted to the value

which would have applied at tone date. Rejecting the ratepayers’ suggestion that the RPI

might be used to do so, it proceeded to use figures said to have been extrapolated from the

evidence given for the assessor. By means which are difficult to discern, from this they

[7] Before noting the basis upon which the VAC’s decision was challenged by the

assessor, it is perhaps worth noting that there were several respects in which senior counsel

for the ratepayers indicated that he could not support the VAC’s reasoning. In the first

place, it was accepted that the methodology used to calculate the fall in values, under

reference to the spread sheets, was obscure and could not be defended. The VAC also

appeared, in the selection of the figure of 16.5%, to have adjusted for inflation, which was

inappropriate. If the court accepted that the VAC had been entitled to conclude that there

had been a fall in value, then, unless the cross-appeal succeeded, the case should be remitted

to the VAC to reassess the quantum of that fall. The methodology of determining whether

the fall in rental values was in any way attributable to an oversupply of new office space, by

comparing average availability of new and existing premises, was also flawed and could not

be supported. The fact that a period of time had passed since the tone levels were set had

[8] These concessions were well made. I agree with the written submissions for the

assessor that the reasons given for reaching the conclusion that there had been a 16.5% drop

in value, and the documents provided by the VAC in support thereof, lack the necessary

clarity and transparency to explain either the methodology or the basis for it. The assessor

lodged notes trying to make sense of the documents, and the VAC’s approach, but of course

much of this was speculation. Even with this assistance, from an informed source, we were

unable to understand the approach taken, see where the figures had come from, or find a

reasonable basis for saying that such an approach was a tenable or reasonable one.

[9] The central argument upon which the appeal proceeded was that an MCC based on a

generalised fall in rental values could only succeed where a fall below tone level was

established. The remaining grounds of appeal, including the argument that any fall was

simply part of the ebb and flow of business, and the ratepayers’ cross-appeal, arise for

determination only if the appellant’s primary argument is not well-founded.

[10] Counsel advanced three preliminary points in support of his written submissions.

First, that an MCC appeal based on a general fall in rental values, such as this, is of an

inherently different nature from one based on changes specific to subjects or a group of

subjects, and must be analysed differently. Second, that the starting point for consideration

of this type of MCC must be rental evidence. It was not a case of “common sense”, nor was

it appropriate to apply an index adjustment to determine whether there had been a fall in

rental values. In this case, the rental evidence showed a relatively straightforward picture,

showing that rental values generally remained above tone level. Third, that having accepted

that primary rental evidence, the committee discarded that straightforward picture and

proceeded on a selective and unfounded use of the evidence to reach the conclusion that an

[11] At each stage of the analysis they carried out under reference to Schuh 1, para 36, the

VAC erred in law. In particular, at “stage 1” of that analysis, they had erred in rejecting the

assessor’s argument as to the need for a fall below tone level.

[12] An MCC is defined in section 37(1) of the 1975 Act, as “in relation to any lands and

heritages a change of circumstances affecting their value”. The “value” referred to is, by

necessary implication, the value on the valuation roll. Before an MCC could be established,

it was necessary to show that the current rental value of the subjects was lower than that

[13] In Assessor for Dunbartonshire and Argyll & Bute v Akram and Ali [2012] SC 235, the

Lord Justice Clerk (Gill), in his preliminary discussion of general principles, explained

“An essential feature of the system is that a value entered in the roll remains fixed for

the duration of the roll unless during its currency there should be a material change

In an appeal based on an MCC, the value which must be affected is the value entered in the

roll which, otherwise, remains fixed for the duration of the roll. It was an error to read that

case as requiring an adjustment to current values to demonstrate an MCC. An adjustment

was permissible only after an MCC had been established in order to ensure that a common

[14] The assessor’s argument was also supported by other provisions of the 1975Act. In

section 3(4), the right of appeal is tied explicitly to the making of the particular entry. It is a

right to “appeal against the relevant entry” on the basis that “there has been a [MCC] since

the entry was made”. Any appeal is against the value entered in the roll, which will reflect

[15] Section 2(1)(d) requires the assessor to alter the roll “to give effect to any alteration in

the value of any lands and heritages which is due to a material change of circumstances”.

There would be no need to do so if the alteration did not result in a lower value than that

[16] Any other reading of section 37(1) would undermine the whole basis of quinquennial

revaluations, as explained by the Lord President at para 22 of Schuh Limited v Assessor for

“If every downward fluctuation, whatever the cause, constituted a material change

of circumstances, the whole basis of quinquennial revaluation would be undermined.

The quinquennium would consist of an endless series of material change appeals

Each revaluation resets values to a common base which remains constant until the next

revaluation. The result of the VAC’s decision would be a series of mini, downwards only,

revaluations on the occasion of each downward fluctuation in the rental market, wholly

[17] Furthermore, the decision creates obvious injustice. The current rental values are

greater than the values appearing on the valuation roll, yet the Committee has awarded a

[18] The VAC’s adjustment of rental values to find equivalent tone date values was

misconceived. An MCC appeal is concerned with falls in value from the tone date in

absolute terms. Backdating to tone value was appropriate only in new entry appeals, the

correct approach being illustrated by Lord Hodge in Scottish Natural Heritage v Highland &

“Where an assessor relies on rents which are fixed sometime after the tone date, it is

necessary for him to be able to justify the adjustment back to tone date, such as by

evidence of the movement of the market in the relevant period.”

[19] In an MCC appeal, founded on the occurrence of a general decrease in rental values

the only question is whether the market had moved: no backdating adjustment can

coherently be made. The VAC were correct to reject the suggestion that the RPI should be

applied to the rental values to backdate to tone date, but there was no basis for the approach

they adopted. There is no evidential basis for assuming that the average fall from peak had

occurred at tone date, an assumption which simply proves its own premise.

[20] The finding that the downturn in the oil industry was an exceptional and

extraordinary “single event ….albeit that its effects took time to percolate down” is

contradictory. A “percolating” event is part of the ebb and flow of business. The assessor

accepted that there were significant structural changes ongoing in the oil industry, which

were at least in part a reflection of the recent changes in the oil price and which had had

some consequential effects on the economy of the Aberdeen area. However, the assessor

had provided further evidence, as greater context for both the oil industry data and the

overall economy of the area. The committee appeared to accept the assessor’s evidence

about the wider economy but gave no reason for preferring the evidence for the ratepayers,

save that it was “favourably impressed” by the witness’s evidence.

[21] The case of Lothian Assessor v H & M Hennes & Mauritz UK Limited 2010 SC 753, relied

upon by the committee for its adoption of “common sense” is not relevant, having been

made in the context of manifest physical changes. Where abstract change is relied upon,

evidence of change in value must still be supplied. In any event, the matters referred to

were not matters of proved facts to which common sense could properly be applied.

[22] Counsel also advanced several procedural points, which, with his main submissions,

a) Comparing net effective rents in 2014 with those in 2015 and 2016 showed

that there had been a drop in rental value during these periods, which averaged out

b) This was “a change affecting…value” of the subjects, and thus a “material

change of circumstances” for the purposes of section 37(1) of the Act of 1975.

c) The change was caused by the downturn in the oil industry in 2014, the

effects of which were felt with increasing force in 2015 and 2016. The punctum

temporis from which to calculate the fall was that downturn. The change was one

which had occurred “since the entry was made”. Thus this was a material change of

d) In their calculations the ratepayers took no account of the admitted fact that

by 2014 rents had risen to a peak range of £250-£350 from a tone range of £185-£275.

e) Equally, the fact that the general levels of rents in 2015 and 2016 did not drop

below tone levels was not relevant. The drop during 2015/2016 from the peak levels

of 2014 was nevertheless a change in value since the entries were made.

Before the VAC, the argument was that to identify the sums which should be

entered in the roll as the NAV/RV for the subjects the general rental levels for 2015

and 2016 should be reduced by the RPI. In submissions before the court, the

argument was simply that one should (i) identify the percentage level of the fall in

rental since 2014; and (ii) apply that percentage drop to the tone figures, on the

hypothesis that the MCC had occurred at that date. Since the VAC had erred in its

method of calculating that fall, the matter should be remitted for their consideration,

g) Even if the effect on value could not be precisely assessed, the appeal should

still succeed on the basis of the proviso to section 3(4) since the MCC has materially

reduced the extent to which beneficial occupation of the subjects can be enjoyed.

[24] Advancing these arguments, senior counsel submitted that the result of a successful

appeal under section 3(4) would be that the rateable value would be reduced. Some

clarification as to what must be established to bring about such a reduction could be found

in the proviso to section 3(4), with its reference to a material reduction in “the extent to

which beneficial occupation of the lands and heritages can be enjoyed”. Occupation is

“beneficial” if it is capable of yielding a net annual value, i.e. capable of yielding a rent on

the statutory hypothesis (Lothian Assessor v The Ministry of Defence [2009] CSIH 89, paras.

[25] Accordingly, in an appeal under section 3(4) one is concerned with an effect on the

rental value of the lands in question. The relevant period depended upon the start and end

points at which the MCC was claimed to have taken effect; the relevant fall is that from the

actual market level at the nominated start date. It is necessary to look at the actual market

rents at the time of the MCC, and establish whether from that point the rents have fallen. If

that is proven, the annual value will require to be altered. That is achieved by applying the

proportion of fall in rent between 2014 and 2016 to the annual value with effect from the

date when the effect was experienced. If there had been a reduction of 40% from 2014, one

applies reduction of 40% to the tone value, proceeding on the assumption that the MCC

occurred at tone date. One is effectively valuing the subjects on the hypothesis that the

MCC had occurred at the tone date. That was how a common base was maintained (Assessor

for Dunbartonshire and Argyll & Bute v Akram and Ali (supra), LJC (Gill) at para 8; see, also,

[26] It was irrelevant whether the MCC related to physical disturbance to the subjects or

some economic event. In either case, the reduction in the annual value would be based on

the effect on rental values, without reference to whether the latter had fallen below tone as a

result. In Assessor for Lothian v H & M Hennes & Mauritz UK Ltd 2010 SC 753, it appears to

have been accepted that the disruptive effect of tram works in Edinburgh city centre had

had an effect on the rental value of retail premises affected by the works without any

discussion as to whether rental values had fallen below tone as a result and no hard

[27] The only valuation evidence in respect of the appeals was from the ratepayers,

suggesting a 40% fall from 1 April 2016. The only criticism of the ratepayers’ valuation

evidence was that it was “too small to be a reliable basis for comparison purposes”. That

criticism was unjustified where there was only a slight difference between these valuations

and those of the assessor. The VAC should have accepted the suggested fall of 40% and

reduced the RV accordingly (Argos Distributors Ltd v Assessor for Fife 2011 SC 272). The

submissions were elaborated on in the written submissions, which also dealt with the

[28] In a case in which it is argued that an MCC has resulted in a fall in rental values, the

correct approach for the VAC to take was identified in Schuh 1, para 36, by the Lord Justice

“(1) whether there had been a material fall in rental values in the relevant

[subjects] since the entries appealed against were made in the roll; (2) if so, what

caused it; (3) whether the cause, or any of the causes, constituted a material change of

circumstances within the meaning of s.3(4); and (4) if one or more of the causes

constituted a material change of circumstances and another or others did not, to

what extent the fall in value was caused by the material change of circumstances. "

[29] The first question which requires to be addressed is thus whether there had been a

fall in rental values since the entries were made. It was common ground, and it is clear from

the evidence, that while there was a fall in the general levels of office rents between 2014 and

[30] A critical question arising is thus whether counsel for the assessor was correct to

submit that in a case based on an alleged general fall in rental levels an MCC could not be

established unless the evidence showed that the resultant levels were below tone levels. If

so, the appeal would have to succeed, since, as the ratepayers accepted, there was no such

[31] In my view this issue turns on what is to be understood by the word “value” in the

phrase “a change of circumstances affecting their value” in section 37(1). For the

respondents it was argued that this simply meant affecting market rental value at any given

time during the quinquennium. Where there had been a fall in value in consequence of an

extraordinary event capable of constituting a change of circumstances, one assessed the

proportion of the fall from the occurrence of that event, or at least from the date when the

consequences of the event were demonstrated. That the rental value in absolute terms

remained above tone level, and had fallen only from a much higher peak did not alter the

fact that a change of circumstances had affected the value of the subjects.

[32] I am unable to accept that argument, accepting rather the submission for the assessor

that in this context “value” means the annual value at which the subjects have been entered

in the roll. In my view such an interpretation is the only one consistent with the principles

[33] In relation to subjects included on the valuation roll, section 3(4) provides a means of

appeal only “against the relevant entry”. An MCC provides grounds for such an appeal

only if the MCC has occurred “since the entry was made”. The only value contained in the

entry is the annual value of each property. The correct interpretation of section 3(4) is that in

an appeal of this kind it must be demonstrated that the annual value in the roll is no longer

accurate because there has been a change of circumstances making it incorrect or invalid.

[34] In a case where the MCC is based on a change to the physical nature of the premises,

or of the locality, the figure may be inaccurate because the premises or locality were

fundamentally different from those upon which the NAV/RV had been assessed. However,

where the claimed effect on value is predicated entirely on the assertion of a general fall in

rental levels, this will only render the entry in the roll open to challenge if the fall has

generally taken rental values below the values set at tone. Even then, an appeal will only

succeed if what has caused the fall is something beyond the normal ebb and flow of

business. Where general levels of rents have risen significantly above tone, then fallen back

to levels which are not below tone, it is hard to see why the change is a material change of

circumstances affecting value; or that the entry in the roll, reflecting the tone valuation, is

incorrect. The VAC’s function is to see that the correct value is entered in the roll (Schuh 1,

para 55), and in my view it can only entertain an appeal based on a generalised fall in rental

values where the circumstances are such as may suggest that the entry is incorrect.

“The system of quinquennial revaluation is based on the principle that subjects

entered in the roll at a revaluation will remain at the same value until the next

revaluation, unless a material change of circumstances occurs in the interim. In

reality, the rental values of commercial subjects of all kinds may fluctuate constantly

[35] This is well understood, having been referred to also in Schuh 1. The NAV/RV is

fixed in the knowledge that there will be such fluctuations in the market which may take the

rental value above, or below, the rate set at tone. Such variations will be taken into account

and reflected in the next revaluation. That is why only changes resulting from exceptional

circumstances can constitute an MCC enabling the roll to be altered before then.

[36] It appears to me that this interpretation is entirely in keeping with the cases to which

we were referred. For example, in Akram, the Lord Justice Clerk (Gill) said (emphasis

added) that: “An essential feature of the system is that a value entered in the roll remains

fixed for the duration of the roll unless during its currency there should be a material

change of circumstances affecting that value.” It is made clear in para 20 that what is being

considered in an MCC case of this kind is whether there has been a change “affecting the

NAV”. In the Schuh cases the argument was that the rental values had fallen below tone (see

Schuh 1, para 7 at p. 905D). The committee’s finding in that case was that new lettings were

at levels “well below” tone (see para 17 at p.906F and para 23). The datum which was used

was the tone level, not some subsequent higher level. In Argos the datum point from which

the claimed fall was calculated was not from a “peak” rental but from tone level (paras 5-7).

The nature of the appeal was described by the Lord Justice Clerk (Gill) (para 1) as “an appeal

against the rateable values entered in the roll”. In Assessor for Fife v Ruggi 1960 RICS 51

(No 32) at 57, quoted in Armour at para 3.18, Lord Patrick noted that in that case what

required to be proved was “that the subjects …would possess an altered value to that which

they possessed at Whitsunday 1956” (i.e. the date the entry appealed against was made).

[37] The primary argument for the ratepayers relied heavily on the proviso to section 3(4)

as an aid to construing what is meant by “value” in section 37(1). However, the proper

construction of the definition in section 37(1) cannot be determined in this way. The

definition must be capable of application equally to any part of the Act where an MCC is

referred to. It must also be capable of application whatever the basis of valuation which is at

issue. It is, for example, difficult to see how the ratepayers’ interpretation could be applied

[38] The argument for the ratepayers appears to be self-contradictory: on the one hand

arguing that a fall below tone level did not require to be established, yet at the same time

accepting that the result of a successful appeal would have to be a reduction in the rateable

value, which could only be achieved by applying the proportion of the fall from peak to the

tone figure, on the assumption that such a percentage fall would have been equally

applicable at tone date. That latter exercise is only necessary because the basic argument is

flawed. It is an unwarranted and erroneous exercise to achieve a reduction in the roll by

extrapolating a recent fall in actual rental values back in time to the tone date and by this

means alone establishing an MCC. For the reasons more fully given by Lord Malcolm at

paras 51 and 52 of his concurring opinion this is an illegitimate approach.

[39] Senior counsel for the ratepayers also relied on the proviso in section 3(4) to argue

that even if the extent of the diminution in value could not precisely be ascertained, the

appeal could succeed on the basis that there had been an MCC which had materially

reduced the extent to which beneficial occupation of the subjects could be enjoyed. The

“notwithstanding the definition of ‘material change of circumstances’ as set out in

section 37(1) of this Act, if in an appeal under this subsection on the ground of a

material change of circumstances it is proved that there has been a change of

circumstances which has materially reduced the extent to which beneficial

occupation of the lands and heritages can be enjoyed, the appeal shall not be refused

by reason only that the change of circumstances has not been proved to have affected

[40] However, in my view the proviso has no application in a case in which the basis of

the appeal is a general fall in rental values. The case of H&M does not assist the ratepayers

in this regard. First, that case was not based on an argument that there had been a general

fall in rental values, rather it was based on changes in the physical nature of the locality in

which the premises were situated. It was a clear case of an argument that the beneficial

enjoyment of the premises had been affected. Second, there was ample evidence of the

severe degradation of the local shopping environment, together with evidence as to the

extent to which footfall had diminished (para 12). Third, it was a case in which it was

recognised that there would be difficulty in obtaining rental evidence; and where neither

turnover nor sales would provide a satisfactory assessment of the extent to which beneficial

occupation had been affected (para 18). Fourth, in Lothian Assessor v Ministry of Defence,

where a reduction was sought in respect of office premises on the basis that an allowance of

a reduction had been given by the assessor to shops and licensed premises in consequence of

the tram works, the court said that the logic which suggested that such a reduction might be

appropriate for shops and pubs did not apply to offices (para 18):

“An allowance of that nature was a logical response to the disruptive effect on

businesses that supplied goods and services to the public and whose turnover was

dependent to a great extent on footfall. It was reasonable to assume that businesses

of that nature would sustain a direct impact on their turnover which would affect net

annual value on the statutory hypothesis… But the logic of that allowance does not

[41] In fact, it is clear that in a case based entirely on a generalised fall in rental values,

evidence relating to rental values is essential. In Akram the Lord Justice Clerk stated

“Where an appeal is based on an alleged material change of circumstances affecting

the net annual value of the subjects… the best evidence is evidence of actual rents.”

[42] The appeal in Tesco Stores Limited v Fife Assessor 2011 SC 316 foundered because such

evidence was not presented. The argument that this was a situation where the VAC were

entitled, even as a cross-check, to rely on “common sense” is untenable. H&M was a case

where clear evidence had been led of severe degradation of the subjects’ environment and

reduction in footfall. Those were established matters of fact from which one could draw the

common sense conclusion that the beneficial enjoyment of the property had been adversely

“If a ratepayer can lead evidence of facts from which a reasonable committee could

deduce that an amenity loss has caused a material change of circumstances, which, as

a matter of common sense, would affect value then he has done enough …”

(Lord Kingarth, para 19, quoting from Assessor for Lothian Region v Wilson 1979 SC 341).

[43] Lord Clarke said that a committee was not “expected to abandon common sense and

rationality when faced with proved facts and invited to reach deductions from them”.

Relying on unproven, unquantified, anecdotal evidence, as the VAC did in its “cross check”

is quite a different exercise from using common sense to draw reasonable or obvious

[44] For the reasons given above, I am satisfied that a change “affecting the value” of the

subjects must be a change affecting the value as it appears in the roll. There being no

evidence that the value has dropped below that level, the other questions arising need not be

addressed. The assessor’s appeals must succeed and the ratepayers’ cross-appeals must fail.

[45] However, there is a further matter upon which I think it right to comment. The way

in which the stated case was presented was highly unsatisfactory. Acknowledging that the

precise detail of a stated case depends on the circumstances of the case, the procedure to be

adopted is clearly set out in Armour para 5.47, where much other helpful guidance is

available to those required to state the case. At para 5.47 it is noted that the case stated

if the evidence has been recorded, a certified transcript should be appended to the case.

[46] The findings in fact were sparse, and difficult to follow. Beyond stating that certain

documents bearing to provide rental evidence – sometimes contradictory, the findings made

no reference to what the VAC found established from the rental evidence, save the

conclusion, based on their own methodology that there had been a fall of 16.5%. I have

already referred (para 8) to the lack of clarity and transparency in relation to the

methodology. Again, clear guidance is given in Armour to assist those requiring to prepare a

stated case. At para 5.48 it is noted that it is inappropriate to require reference to extraneous

material to ascertain what finding has been made. In Scammell v Assessor for Highland and

Western Isles Valuation Joint Board 1997 GWD 29-1495, Lord Gill stated:

“….it is unhelpful for the committee to make findings in fact referentially ... the

correct approach … is for the committee to use its best judgement to extract from this

material such facts as it accepts and considers to be relevant to the issues raised …”

[47] If facts are founded upon in the grounds of decision those facts must be included in

the findings of fact and not appear only in the grounds of decision (Armour 5-49; Assessor for

Edinburgh v Hertz Rent-a-Car [1968] RA 735). Although it is customary to include some detail

of the submissions made, it is not appropriate to include those submissions verbatim or at

length, even when they have been presented to the VAC in written form. In the present

case, the whole of the written submissions, some 30 or so pages, was simply incorporated

[48] I propose to your Lordships that the assessor’s appeals should be allowed and the

[49] I have had the considerable advantage of reading a draft of the opinion of your

Ladyship in the chair. I agree with it and with the proposed disposal of these appeals. I

[50] None of the ratepayers rely upon anything specific to the subjects or to their

respective localities. It is accepted that current rental values have not fallen below the

entries in the valuation roll. This is because, before the recent downturn, there was a

prolonged post tone date period of rental growth. Thus, to illustrate the ratepayers’

argument, if the tone date valuation was £100,000, then a sustained increase in values over a

period of years to £200,000, followed by a sharp decrease to £150,000, it is said that the fall

was a material change of circumstances in that it affected the value of the subjects. It is then

contended that the recent fall has to be extrapolated back in time to the tone date, on the

thinking that, there having been a material change of circumstances caused by the recent

difficulties experienced in an important sector of the regional economy, there requires to be

a fresh valuation at the tone date carried out on the assumption that such difficulties were

experienced by 2008. Only in this way do the ratepayers and the valuation appeal

committee reach the position that the current entries in the roll should be reduced.

[51] In support of the submission, reference was made to the opinion of the then

Lord Justice Clerk, Lord Gill, in paragraph 8 of Assessor for Dunbartonshire and Argyll & Bute

“It is of critical importance that the values in the roll should be consistent with one

another. Therefore, when a material change of circumstances has been proved, the

revised value must be adjusted to the tone of the roll; that is to say, revised to the

value that would have applied at the tone date. In this way a common valuation

These observations presupposed that a material change of circumstances had been

established. Typically that will have been a change in the circumstances of the subjects

themselves, or in the locality, which reduce their value. As with new entries, it would be

inappropriate to register such subjects in the roll at the current valuation. Given the new

state of affairs, they would require to be treated in the same way as any similar subjects

already on the roll, hence the need to adjust the value back to the tone date. In this way the

integrity of the roll is maintained from revaluation to revaluation.

[52] Reverting to the circumstances of the present appeals, there is no justification for

carrying out a tone date valuation on an assumption that the causes of the recent fall in

rental values occurred in 2008. For obvious reasons, no subjects were entered in the roll on

such a basis, thus the rationale for the exercise described in paragraph 8 of Akram does not

arise. The matter might be explained by identifying what I suggest is a fallacy in the

committee’s thinking. The exercise of adjusting values back to the tone date presupposes an

established material change of circumstances. However, here the material change of

circumstances was achieved only by virtue of the adjustment itself. Without it, the current

rental values are not lower than the annual values in the roll. As a necessary minimum

(though not sufficient in itself) for a successful material change of circumstances appeal

based upon a general fall in rental values, in my view it must be shown that the current

value has fallen below that entered in the roll for the appeal subjects. Failing that, there can

be no proper basis for a reduction. In the present context “material” means a change of

circumstances such as would justify an alteration in the roll. In respect of each of the office

premises involved, their current values are not lower than the annual values in the roll. It

follows that there has been no material change of circumstances in terms of section 3(4) of

the Act. Nothing has happened since the current roll was created which would justify an

[53] The ratepayers’ argument is predicated upon the recent downturn being a material

change of circumstances in terms of section 37(1). It provides that the phrase means “in

relation to any lands and heritages a change of circumstances affecting their value …”.

Section 3(4) allows an appeal against an entry in the valuation roll on the ground of a

material change of circumstances since the entry was made. The focus is on the continuing

validity or otherwise of the entry in the roll. The definition in section 37(1) is to be seen in

that context. Here the fact remains that, notwithstanding fluctuations in rental values, the

annual values in the roll cannot be categorised as excessive for the subjects as at the date of

[54] It is of significance that the appeal is not based upon any alteration in the subjects,

nor in their use, nor in the occupiers’ beneficial enjoyment of them. Where there has been an

important change in such respects, then, whatever the current rental value might be in

comparison with the roll, it can be accepted that the original valuation must be revisited,

and this because of the alteration in the subjects being valued. If material, the new situation

demonstrates that the entry in the roll is no longer appropriate. In the present case, the only

proven impact of the fall in the oil price is on rental values, so the question is; has there been

a material change in that regard since the entry was made as would support an appeal

under section 3(4)? The answer to that question, when applied to the premises in issue, is

[55] I do not suggest that a fall in values below the entries would, of itself, justify a

reduction; the ordinary ebb and flow of economic activity is insufficient. Something

abnormal, significant, or fundamental is required. However, where the movements up and

down of general rental levels have not caused rents to fall below the net annual values in the

roll, how can it be demonstrated that the movement has been a change in circumstances

such as would support a reduction in the ratepayers’ liabilities?

[56] Recently this court cautioned against the view that any fall in rental value constitutes

“If every downward fluctuation, whatever the cause, constituted a material change

of circumstances, the whole basis of quinquennial revaluation would be undermined.

The quinquennium would consist of an endless series of material change appeals

relating to all kinds of lands and heritages.” Schuh Ltd v The Assessor for Glasgow 2014

While the court has from time to time allowed that factors such as an abnormal economic

crisis might be relevant, in general one would be looking for changes of circumstances in the

subjects or their immediate locality. By way of an example, in Argos Distributors Ltd v The

Assessor for Fife 2011 SC 272 occupiers of shops in the Mercat Centre, Kirkcaldy successfully

appealed on the ground that the economic recession was reflected in, amongst other things,

the number of vacant units in the Centre, and thus created a material change of

circumstances. Finally, it can be noted that counsel for the ratepayers was unable to point to

any precedent for a successful material change of circumstances appeal based on an

economic downturn when current rental values were not lower than the net annual values

entered in the roll. I do not find this surprising. It reinforces my impression that the

committee were led into the error described earlier in this opinion.

[57] I have had the advantage of reading in draft the opinions of your Ladyship in the

chair and your Lordship. I agree with them and with the proposed disposal.

[58] In order to succeed the ratepayers had to demonstrate that a material change of

circumstances affecting value had occurred since the relevant entries were made in the roll.

The values which had to be affected were the annual values entered in the roll for the

subjects. I was perplexed by Mr Stuart’s initial resistance to that elementary proposition.

[59] On an ordinary reading of the definition of “material change of circumstances” in

s 37(1) of the 1975 Act, the “value” which must be affected by the change is the annual value

entered in the roll. The word “value” has been used in other provisions of the Act (eg

s 1(6)(c), s 2(1)(d) and s 3(4)) where it is clear, in my opinion, that it has the same meaning as

in s 37(1). The statutory context is a frozen roll between revaluations, and a material change

of circumstances affecting value is one of a limited number of situations where the entry in

the roll for a subject may be altered. The annual value in the roll is the datum against which

one assesses whether there has been a material change of circumstances affecting value since

the entry was made. The point is so rudimentary that it is perhaps unsurprising that there

has been little discussion of it in previous cases. However, it has been touched upon both in

cases dealing with the 1975 Act and in cases governed by the 1975 Act’s statutory

[60] In Assessor for Fife v Ruggi 1960 RICS 51 a shop was entered in the roll at the 1954/55

revaluation. Subsequently, the ratepayer took over the tenancy and he was entered as

tenant in the roll. Later, he appealed on the ground of a material change of circumstances

said to have occurred in June 1957. At p 57 Lord Patrick observed:

“… (U)nder the Valuation Acts it falls upon someone to demonstrate that there has

been a fall in value. The problem then is to show that the subjects would have a

different value and a lesser value in the hands of anyone who might come to be the

tenant … to that aspect – and it is the true aspect of valuation under the Valuation

Acts – the tenant has not addressed himself at all, and has adduced no evidence

upon which the committee could affirm that the subjects in question in the hands of a

hypothetical tenant in general would possess an altered value to that which they

[61] In Myles and Another v Dundee Assessor 1967 RCIS 53 an entry had been made in the

roll for an office at the revaluation in 1961. The ratepayer claimed that a material change of

circumstances affecting value had occurred in 1964. The suggested material change was that

the future demolition of the appeal subjects had become imminent and certain.

“Allowing that to be a material change of circumstances, however, it is necessary to

go further and to show that this material change affects the value of the subjects, that

is to say, that it is a change which would make a hypothetical tenant offer and a

hypothetical landlord accept a rent lower than the rent at which the office was

Lord Avonside concluded (at p 57) “The appellants have thus failed to show a fall in value

[62] In Fife Assessor v Guthrie 1969 RICS 167 a shop was entered in the roll at the 1966-67

revaluation. In 1967-68 the ratepayer appealed, maintaining that a material change of

circumstances affecting value had occurred since the entry was made. He relied upon

suggested reduced turnover following demolition of nearby houses. Lord Hunter stated (at

“In my opinion, having regard to the findings, that evidence formed no basis upon

which the Committee could properly affirm that the subjects of appeal in the hands

of a hypothetical tenant in general would possess an altered value to that which they

[63] In Assessor for Fife v Baxter 1970 RICS 137 a petrol filling station was entered in the

roll at the 1966/67 revaluation. In 1969/70 the ratepayer appealed, maintaining that a

material change of circumstances affecting value had occurred since the entry was made.

He relied upon suggested reduced turnover after the road upon which the subjects were

located was upgraded to a dual carriageway. Lord Hunter opined (at p 142 and at p 143):

“…(I)t would appear that the Committee did not address their minds at all to the

question whether the value of the subjects, in the sense in which the word ‘value’ is

used in the valuation statutes, had been affected by a change of circumstances … (I)n

the absence of evidence showing that the value, in the sense of the Lands Valuation

Acts, of the subjects of appeal had been affected by the conversion of the road into a

dual carriageway with central reservation, I am unable to see how the Committee

could have reached a finding along the lines of the gloss put by counsel for the

[64] In Assessor for Lanarkshire v Macdonald & Others 1973 SLT (Notes) 83 the ratepayers

were the occupiers of two houses. Both appealed against the entries in the roll, maintaining

that a material change of circumstances affecting value had occurred since they were made

at the 1971 revaluation because an obnoxious smell from a nearby farm was said to have

“The appeal for the assessor before us was based …upon the general ground of

principle that there was no evidence before the committee as to the effect, if any, of

the obnoxious smell on the annual value of the subjects. There is an express

statement to that effect in finding (8) in the case. Counsel for the assessor said that,

standing that finding, the committee were not entitled to make the finding that they

did. In my opinion we have no alternative but to accept that submission for the

The passages in Akram and Schuh 1 to which your Ladyship refers are to similar effect.

[65] Where a ratepayer maintains that there has been a material change of circumstances

affecting value because of a fall in the general level of rents, it is necessary to show that the

new level is lower than the level which is reflected in the annual value in the roll. The latter

level is the yardstick against which one determines whether such a material change of

circumstances affecting value has occurred. Thus, where rental levels have merely fallen

from higher rental peaks reached during the course of the quinquennium but have not fallen

below the tone level, there will not have been a fall in the general levels of rents since the

[66] In the present appeals, so far as affect on value was concerned, the critical issue on

which battle was joined before the committee was whether a relevant drop in the general

levels of rents for offices had been demonstrated. There was no suggestion that any of the

appeal subjects were not in the same state as they had been when the relevant entry was

made in the roll. Nor was it maintained that the state of the locality of the subjects (in any of

the respects described in s 15(1)(b) of the Local Government (Scotland) Act 1966) had

materially changed since the tone date or since the entry was made in the roll. Mr Rogan’s

primary position was that a fall in the general level of rents from the peak rental levels

reached in 2014 was a material change of circumstances affecting value. In his view it was

unnecessary to show that the level to which rents fell was less than the tone level used to

arrive at the annual value in the roll. Alternatively, if it was necessary to show a fall in rents

to below tone value levels, that was achieved by discounting the 2015 and 2016 rents to the

[67] Mr Rogan’s primary case was obviously flawed. A significant drop in general rental

levels from their 2014 peak was not in itself a material change of circumstances affecting

value. In fact, it is plain that even by 2016 general rental levels for offices had not fallen

below tone levels. On the face of things therefore, there was no material change of

[68] Mr Rogan’s backdating exercise using RPI was also unsound. It was rejected by the

committee, and before this court Mr Stuart did not support it. In my opinion he was right

not to. Where a suggested material change of circumstances is a fall in general rental levels,

it is the actual rental level at the time of the suggested material change which is relevant and

which should be compared with the rental level upon which the value in the roll has been

[69] Since it was for the ratepayers to establish the occurrence of a material change of

circumstances affecting value, and both of Mr Rogan’s suggested approaches were unsound,

one might have expected the committee simply to refuse the appeals. Somewhat

surprisingly, they did not. On the basis of an exercise of their own they decided that there

had been a material change of circumstances affecting value, and that the affect on value had

been a reduction of general rental levels to 16.5% below tone levels, with effect from 1 April

2016. It was common ground that, notwithstanding the committee’s statement of reasons

and the further supplementary reasons which they added when they prepared the stated

case, this aspect of their decision is obscure and unintelligible.

[70] Mr Stuart did not seek to justify what the committee had done. He attempted,

however, to support the decision on grounds different from those articulated by the

committee. Thus, for example, he submitted (relying on the proviso to s 3(4) of the 1975 Act)

that it was not necessary for the ratepayers to prove that the values of the appeal subjects

had been affected to any specific extent. The committee were entitled to conclude that the

extent to which the ratepayers’ beneficial occupation of the appeal subjects could be enjoyed

had been materially reduced. There are at least two problems with that submission. First, it

was not what the committee did. On the contrary, the exercise which they carried out was

the basis for concluding that there had been a material change of circumstances affecting

value, and was also the source of their assessment of the measure of the affect on value.

Second, on the evidence and the findings there is no basis for concluding that there was any

reduction in the extent to which beneficial occupation of the subjects could be enjoyed. In

relation to the other grounds upon which Mr Stuart relied, it suffices to say that in my

opinion none of them assist the ratepayers, and none of them were in fact the basis of the

[71] The short point in these appeals is that it was not open to the committee to do what

they did. The exercise which they conducted formed the crux of their decision. It was the

foundation for finding that there had been a fall in general rental levels below the tone

levels. In those circumstances there is no proper basis for a remit of the appeals to the

committee to reconsider whether there had been such a fall, and if so, its extent. The

decision simply cannot stand. It was for the ratepayers to prove that a material change of

circumstances affecting value had occurred. They failed to establish that.

[72] It follows that it is unnecessary to consider the other grounds of appeal which the

assessor advanced. Moreover, in light of the way that the issues were focussed before the

committee and before this court, it is also unnecessary to opine upon the proper construction

and application of s.15 of the 1966 Act. In my view it is preferable that any such guidance

awaits a case where it is essential to the decision and where the relevant issues have been

[73] In Assessor for Grampian v CDS (Superstores International) Limited [2018] CSIH 13, at

paras 27-29, I commented on the unsatisfactory form and content of the stated case. In the

present appeals the form and content of the stated case were also unsatisfactory. The

submissions of the parties were set out at inordinate length. They extended to 31 pages.

The intelligibility of the stated case suffered because the gist of each party’s submissions was

[74] By contrast, the findings in fact were brief, extending to just under four pages.

Contrary to the clear guidance given by the court in Scammell v Assessor for Highland and

Western Isles Valuation Joint Board 1997 GWD 29-1495 (which guidance is reproduced in

Armour, para 5-48), several of the findings required reference to extraneous material in

order to understand them. In a further unwelcome departure from normal practice, at the

[75] Once again, it may be helpful to remind committees of the customary form and

content of a stated case in an appeal to the Lands Valuation Appeal Court from a decision of

a committee. The case normally begins by narrating the date and place of the meeting of the

committee and by setting out the entry (or entries) in the valuation roll which the ratepayer

appealed against. That is usually followed by a sentence setting out what it was in the entry

that the ratepayer sought should be changed (eg “The appellant craved that the assessor

should have valued the subjects at £x NAV/RV.”). The next paragraph should set out the

representation for each party, and the witnesses which each led. The productions lodged by

each party are then listed. Next come the findings in fact. After the findings in fact, the

contentions for each party should be summarised. Each summary ought to be brief. It

should outline the essence of the party’s submissions and it should note any authorities

which were referred to. It ought to be rare for the summary of a party’s contentions to take

up more than a page or two, and often less than a page is likely to suffice. After the

contentions, the committee’s decision, and then their reasons, are stated. Finally, the

grounds of appeal to the court and the answers thereto are set out.

Scottish Court of Session Decisions