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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> 1998/208 - Parish Rate Appeal Board v Fields [1998] UR 208 (20 October 1998)
URL: http://www.bailii.org/je/cases/UR/1998/208.html
Cite as: [1998] UR 208

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ROYAL COURT

(Samedi Division)

 

20 October 1998

 

Before: F C Hamon, Esq., Deputy Bailiff, and

Jurats Gruchy and Potter.

 

In the matter of the representation of Fiona Catherina Fields, née Harvie-Smith

(the Representor)

and

The Parish Rate (Administration) (Jersey) Law 1946 as amended ("the Law")

The Parish Rate Appeal Board, (Respondent)

Application by the Representor for Judicial Review of final decision of the Respondent

regarding assessment of rateable value of dwelling house in Jersey

 

Advocate M St J O’Connell for the Representor

Advocate N F Journeaux for the Respondent

 

JUDGMENT

THE DEPUTY BAILIFF:

1.By the Parish Rate (Administration) (Amendment No.6) (Jersey) Law 1995, a Parish Rate Appeal Board for the Island was set up. It comprises five members appointed by the States on the recommendation of the Finance and Economics Committee. The Law came into force on the 1st January 1996.

2.The Board is given wide powers on appeal and, in particular, by Article 14(4):

"The members of the Board hearing an appeal shall, after consultation with the Supervisory Committee, have power to obtain expert advice in cases in which they consider it to be necessary and the Parish in which the land to which the appeal relates is situated, shall defray any expenses so incurred, unless the Supervisory Committee shall otherwise determine."

3.By Article 15 of the Law

"The Board shall have power to confirm or alter any matter in the draft list which relates to the land in respect of which the appeal shall have been made and its decision shall be final."

4.These proceedings are brought by way of judicial review against the decisions of the Board in respect of the property known as "Lowlands", Rue du Couvent in the Parish of St. Ouen. The Board made two decisions, one in 1996 and one in 1997.

5.Because the decision of the Board is final, the Representor has to proceed by way of judicial review.

6.In Jersey New Waterworks Company Limited -v- Grouville Rate Assessment Committee and Ors (1994) JLR 197 at page 211. The Royal Court said this on the principles which govern judicial review:

"The principles which govern judicial review are well-known. They were set out in B.H. Rowland -v- Finance & Econ. Cttee. (7) (1981 J J at 173). Following these principles, we have asked ourselves three questions: (a) were the decisions of the Assessment Committees and the Supervisory Committee ones which they could lawfully make under the Law?; (b) were the proceedings of the Assessment Committees and the Supervisory Committee in general sufficient and satisfactory?; and (c) were the decisions of the Assessment Committees and the Supervisory Committee ones to which they could reasonably have come, having regard to all the circumstances? If the answers to all three questions are in the affirmative then we have a clear duty to maintain the decisions."

A later English case put it in somewhat different terms but the principle remains unaffected. In Council of Civil Service Unions -v- Minister for Civil Service (3), Lord Diplock said this ([1984] 3 All E.R. at 950):

"Judicial review has I think developed to a stage today when, without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground I would call ‘illegality’, the second ‘irrationality’ and the third ‘procedural impropriety’."

He continues to explain in more detail, as follows (ibid, at 950-951):

"By ‘illegality’ as a ground for judicial review I mean that the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. Whether he has or not is par excellence a justiciable question to be decided, in the event of dispute, by those persons, the judges, by whom the judicial power of the state is exercisable.

By ‘irrationality’ I mean what can now be succinctly referred to as ‘Wednesbury unreasonableness’ (see Associated Provincial Picture Houses Ltd. -v- Wednesbury Corp. [1947] 2 All ER 680, [1948] 1 KB 223). It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Whether a decision falls within this category is a question that judges by their training and experience should be well equipped to answer, or else there would be something badly wrong with our judicial system. To justify the court’s exercise of this role, resort I think is today no longer needed to Viscount Radcliffes ingenious explanation in Edwards (Inspector of Taxes) -v- Bairstow [1953] 3 All E.R. 48, [1956] AC 14 of irrationality as a ground for a court’s reversal of a decision by ascribing it to an inferred though unidentifiable mistake of law by the decision-maker. ‘Irrationality’ by now can stand on its own feet as an accepted ground on which a decision may be attacked by judicial review.

I have described the third head as ‘procedural impropriety rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. But the instant case is not concerned with the proceedings of an administrative tribunal at all."

7.The background to the Appeal lies in the fact that the Representor is the owner of Lowlands. The Representor and her late husband purchased the property in 1994 and carried out extensive alterations to the property. In 1994 (before the works had started) the property was assessed at 2,939 quarters by the Parish Rate Assessment Committee which at the rate of 3.85 pence per quarter equated to a rates demand of £113.15p. In 1995 the property was assessed at 7,259 quarters (4,379 Foncier and 2,880 Occupier) which at 4.1p per quarter equated to a rates demand of £297.62p.

8.In 1996 the rate demand changed . The property was assessed at 54,100 quarters (18,100 Foncier and 36,000 Occupiers) which at 3.8p per quarter equated to a rates demand of £2,055.80p. The Representor appealed to the Board. (We shall deal with matters arising from that and the 1997 decision later in this judgement). The Board decided to maintain the assessment but subject to certain caveats.

9.In 1997 the property was assessed at 54,100 quarters (18,100 Foncier and 36,000 Occupiers) which at 3.7p per quarter equated to a rates demand of £2,001.70p.

10.The Representor appealed to the Board. The Board raised the assessment to 65,830 (22,010 Foncier and 43,820 Occupiers) which at 3.7p per quarter equated to a rates demand of £2,435.71p.

11.By Article 12(1) of the Parish Rate (Administration) (Jersey) Law 1946:

"The Constable shall, as soon as may be after the delivery of the returns made in pursuance of Article 10 of this Law transmit them to the appropriate Assessment Committee."

The next subsection sets out the manner in which the rateable value of dwelling houses in Jersey is to be determined:

"12(2). Upon receipt of the said returns, the Assessment Committee shall assess the rental value and compute the rateable value of all land (excepting that exempt from rate) within its parish or district, as the case may be, in accordance with the rules set out in the Second Schedule to this Law."

12.The Second Schedule (as amended) is as follows:

"Rules for the assessment of rental value and computation of rateable value.

1. (1)The rental value of land which is not let shall be the amount which it might reasonably be expected to command as rent if it were let from year to year with the tenant undertaking to pay the usual tenant’s rates and the landlord undertaking to bear the costs of repairs and insurance and any other expenses necessary to maintain the land in a state to command that rent.

(2)Subject to sub-paragraphs (3) and (4) of this paragraph, in the case of land let at a rent, the rental value of the land shall be whichever is the greater of

a) the rent, or

b) the rental value of the land assessed in accordance with sub-paragraph (1) of this paragraph.

(3)Where separate parcels of land are let to the same person at separate rents, the assessment of those parcels shall be made on the basis of the total of those rents instead of on the basis of the individual rents at which they are let.

(4)In the case of any land let at a rent, if it appears to the Assessment Committee that the rent represents more than the rental value assessed in accordance with sub-paragraph (1) of this paragraph, the committee may, for the purposes of occupiers rate, assess the rental value of that land in accordance with that sub-paragraph.

2.Where, in the return made in respect of any land in pursuance of a notice served under paragraph (1) of Article 10 of this Law, a declaration has been made of the amount of the annual interest of the rentes charged on that land from which a deduction is not authorised under paragraph (6) of Article 3 of this Law, there shall be deducted from the rental value of that land, for the purposes of foncier rate, an amount equal to five per centum of such annual interest.

3. (1)Subject to the provisions of this paragraph, a rental value of one pound shall be computed as a rateable value of one quarter.

(2)In the case of agricultural land, a rental value of two pounds shall be computed as a rateable value of one quarter -

(a)for the purposes of occupiers rate; and

(b)for the purposes of foncier rate if the land is occupied together with a house and buildings.

(3)For the purposes of occupiers rate, the rateable value of houses and building of which the rental value has been assessed at under two hundred pounds shall be computed in accordance with the scale set out in the Third Schedule to this Law.

(4)In computing rateable value, a fraction of one quarter shall be reckoned as one quarter.

4.Reductions from the rateable value of houses and buildings shall be made as follows-

(a)a reduction of twenty per centum in respect of the costs of interior decoration; and

(b)a reduction of thirty per centum in respect of the costs of other repairs; the reduction being made from rateable value for the purposes of foncier rate or of occupiers rate according to whether those costs are payable by the owner or the occupier."

13.In the Jersey New Waterworks case (supra) the Court said this (page 212):

"All parties agreed that if it were possible, Assessment Committees should have regard to similar properties in the Parish for the purpose of assessing the rental, which need not be the actual or declared rental. In other words, there has to be a hypothetical exercise in each case. The difficulty lies in the fact that there are 12 autonomous Assessment Committees in the Island. Is the uniformity prescribed by Art.8 of the Law meant to ensure that Assessment Committees carry out their functions, so to speak, in watertight compartments, or should they look at the level of assessments in other Parishes for similar properties? From the evidence we heard, it is clear that not every three-bedroomed house, for example, is assessed identically in every Parish. It is obvious that a house of this size in a busy and noisy part of St. Helier would not command the same rent as one in a quiet rural area. The same qualification, however, cannot apply to a reservoir. Its rental value does not vary with its location. A gas or electricity plant, by contrast, may, for example, if it is close to the docks. It is unlikely that there would be any variation in the siting of a power station. It seems to us, therefore, that where, as in this case, a public utility company has undertakings all over the Island, the Assessment Committees of the Parishes must have regard to the practice in the other Parishes.

But the problem here is that no one seems to know upon what basis the other Parishes, apart from Grouville and St. Ouen, have worked. Even in the case of St. Ouen, although the Constable was able to tell Mrs. Dawkins the amount of the rates and, by inference, the assessed rental, the Constable of St. John believed that the original method had been lost in the sands of time and all that had been done had been to increase the amount in with inflation. Thus any comparison with Val de la Mare without knowing the basis of assessment was worthless. In passing, we note that on the whole (Grouville is one exception), the Assessment Committees do not appear to keep comprehensive records which, had they been available, might have been of great help not only to us but also to the Supervisory Committee."

14.The only rule laid down for the assessment of rateable value of dwelling houses in Jersey is that found in Article 12(2):

The rent at which it might reasonably be expected to let from year to year if the tenant undertook to bear the usual tenant’s rates and if the landlord undertook to pay the costs of repairs and insurance and any other expenses necessary to maintain the land in the state to command that rent."

15.Before considering the effect of the Boards decision, we must turn to the happenings before the Board for the two years under review.

16.The grounds of Appeal filed on the 31 May 1996 were as follows:

"The rental value/rateable values assessed for 1996 represent a 600% increase over previous values. The values assessed bear no relationship to comparable property in the district. The house value should be in the order of £7,000 not £32,760. No objection is made to cottage or land values."

By way of explanation of that last sentence, the quarters were calculated on the house, the land and the cottage.

17.The Board set aside the afternoon of the 11 June 1996 to hear the Appeal. With its ground of Appeal the Board sent a questionnaire to which, when the respondents had completed the eleven boxes appropriately yielded this information.

1The property was detached

2It had 2 WCs and 6 combined WC/bath/showers

3It had 3 garages

4.There were no swimming pools

5.The property was not double glazed but it was centrally heated

6.The general condition (exterior and interior) was good

7.The overall floor area was approximately 6,000 square feet

8.There were country views from the main rooms

9.The property was built pre-1939 (this is probably correct, although the Representor had substantially rebuilt it)

10.It was built of stone

11.It had electricity but no mains water, main drains nor gas

18.On the 11 June the Board met (all five members were present although one did not stay for this Appeal - a quorum in any event is three). They visited the property with the Chairman of St Ouen Parish Rate Assessment Committee, Mr E J Syvret and a member of that Committee Mr S Morel. At that time Mr Fields was still alive but in order to avoid distress to his widow the word Representor will include Mr and Mrs Field and Mrs Field at a later time.

19.The Representor in making the claim that the assessment of property should be based on the rental value and not the capital conceded that in the grounds of appeal £7,000 rental value was too low for this property and a more realistic value would be £15-£16,000. The Representor had converted the property to extend its life but the size of the property was substantially the same as the previous property. He compared the house with Les Ormes which had three units separately assessed. It was the Representor who put forward the proposition that

"there was no market in Jersey for properties suitable for occupation by persons qualifying under Regulation 1(1) (k) of the Housing (Jersey) Law 1949."

The Representor put forward other arguments concerning comparative properties in comparable locations.

20.In order to explain his feelings about the 400% increase on "Lowlands" before conversion, the Representor is recorded as saying this:

"The capital valuation of the property (even though this was not a consideration) (our underlining] was £420,000 purchase price (taking into account the substantial repairs required) and approximately (our underlining] £800,000 had been spent on rehabilitation/rebuilding/restoration work."

There was then a telling passage recorded in the Minute. It reads:

"In terms of the capital value Mr Fields accepted that the Assessment Committee was faced with a dilemma as the property had been rebuilt as a luxury property to a high specification and the Committee had been seeking to establish a rental value where there was no market. However, having regard to other properties in the Island, Lowlands had been assessed at more than 50% of the value for St. Ouen’s Manor and 70% of Vinchelez de Haut Manor and this was not reflective of either the comparative worth of desirability of the properties. To conclude, whilst Mr Fields wanted to be fair to the Parish, he believed an assessed rental value of £15-£16,000 to be fair for Lowlands."

21.The Chairman of the Assessment Committee explained how Lowlands had been purchased in 1993 and virtually gutted with only the facade remaining. It had been assessed as a new property and it had been compared with six named properties within the Parish.

22.At this point the Chairman of the Board said that:

"He was aware that any decision in respect of Lowlands would serve as a benchmark for other Parishes."

The Board decided to seek legal advice and the Clerk was requested to advise the Supervisory Committee under Article 14(4).

23.That is a flaw in procedure in our view because it is not for the Board (under Article 14(4) to "advise" the Supervisory Committee. The Board must "consult" with members of the Supervisory Committee.

24.On the 1 July the Board pressed on with its decision in this way:

"The Board having recalled that in paragraph 2/96/4 of 16 February 1996, the Solicitor General had advised that the Law Officers of the Crown would not be able to advise the Board, and that it would not be appropriate to seek legal advice from a Parish lawyer as that lawyer might be called upon to represent the Parish, agreed that Advocate Jeune should consider possible firms from whom advice might be sought and agreed that, in particular, the advice received concerning the rateability of plant and equipment (Paragraph 3/96/5 of 26 March 1996 refers) should be confirmed and that it required advice as to how the rental market value should be established for a property that had no rental market (in this connection the Board noted that a stately house in the United Kingdom might be comparable). It was possible that the advice might best be obtained from a United Kingdom firm of lawyers if reference to United Kingdom law was required."

We think that the reason that the Board is to consult with the Supervisory Committee lies within Article 8 of the Parish Rate (Administration) (Jersey) Law 1946. That Article is not without importance but seems to have been ignored by the Board, eager to press on to resolve a problem which it conceived as being difficult to resolve without legal advice:

"(1)There shall be a Supervisory Committee for the Island, consisting of the twelve Constables.

(2)The Supervisory Committee shall take such steps as it thinks fit for promoting uniformity in the principles and practice of rating and for assisting Assessment Committees in the performance of their functions under this Law, and, for this purpose, the Supervisory Committee shall have power to hold conferences with persons representing Assessment Committees and to bring to the notice of any Constable or Assessment Committee any conclusions arrived at or recommendation made by the Supervisory Committee or at any such conference.

(3)The Supervisory Committee may, in the performance of its function under this Law, obtain the advice and assistance of competent persons and may make payments for the services of those persons.

(4)Any expenses incurred under this Law by the Supervisory Committee shall be charged on all the Parishes in proportions to be determined by that committee.

(5)The provisions of the First Schedule to this Law, in so far as they are applicable, shall have effect with respect to the Supervisory Committee."

25.By the 23 July the Board had decided to take advice from Advocate Kelleher. There were other imponderables concerning other properties upon which legal advice was sought but essentially "Lowlands" was the only problem of its kind. The problem was divined as being:

"The principle of assessing a rental value for a property for which there was no rental market as persons qualifying under Regulation 1(1) (k) of the Housing Law were not permitted to rent property, only to purchase property. The decision reached would provide a benchmark for determining properties in other Parishes in future and it was suggested such properties might be compared with stately homes in the United Kingdom."

The flaw in that argument is that a 1(1)(k) approved dwelling is not exclusively restricted to occupation by 1(1)(k) residents. Mr Bridle, the expert to be called at a later stage by the Representor (see paragraph 36) put it this way:

"These properties therefore have a rental value based upon their potential occupation by other approved occupiers being persons qualifying under Regulation 1 (1) (a-j) inclusive."

26.The legal opinion was duly presented and the Board met to consider it on the 23 September.

27.The legal opinion reached the conclusion that:

"the peculiar nature of 1(1) (k) properties results in the "Contractor’s Method" providing the only viable means for their rate assessment."

28.The opinion uses the definition in W H Rees, Valuation Principles into Practice (London 1992) of the "Contractors Method" in these words:

"The "Contractors Method" says Rees, op. cit. is often described as the "method of last resort" and is "based upon the premise that cost approximately equates to value". He continues. "If a hereditament were not available to rent, then a prospective tenant would have to construct one. The land would need to be acquired and the building constructed. The occupier would have to borrow the capital in order to construct the building and pay interest on this loan. The amount of the annual interest payable would be equivalent to the rent" (page 374). Lord Parker put the matter more concisely in Metropolitan Water Board v Chertsey Union Assessment Committee [1916] 1 A.C. 337."

"If the company is owner as well as occupier, then, inasmuch as it is by reason of its occupation out of pocket to the extent, at least, of interest on its capital expenditure in acquiring and building on the land it occupies, the amount of such interest is good evidence of what the company would be willing to pay by the year for the privilege of continuing its occupation."

29.Having considered the legal opinion the Board met on the 23 September to review its decision on Lowlands. In accordance with that meeting a letter was sent headed - "Form of Notice of Decision of the Parish Rate Appeal Board on an Appeal."

The letter was a formal notification to the Representor that the assessment had been maintained. A copy was sent to the Connêtable of St. Ouen. The notice does not appear to have been sent to the Supervisory Committee as required by Article 15 of the 1995 Law:

"The Parish Rate Appeal Board advises you that the reasons for the above decision, as recorded in the minutes of the meeting held on 23 September 1996, are as follows -

1.the legal advice received was that the assessment of properties such as Lowlands, having been purchased under Regulation 1(1)(k) of the Housing Law and therefore having no rental market, should be based on the Contractor’s Method, which was capital value;

2.that to increase the assessment of Lowlands, based on the legal advice received, would lead to inconsistencies within the Parish (the Board referred to advice given by the Solicitor General in minute 2/96/2);

3.that having regard to the assessments of other properties in the Parish indicated by the Assessors the Board concluded that the assessment was a fair one;

4.that in future the assessment for this property should be based on the Contractors Method."

The final paragraph read with paragraph 2 is a difficult intellectual concept to follow.

30.When the 1997 assessment was raised on Lowlands there was no change from 1996. The Assessment Committee for St. Ouen had not followed the "Contractors Method" because the 1996 decision of the Board was still before this Court. However, the Board was adamant that the Contractor’s Method should be followed. It had made that decision in 1996. It had not applied the Contractors Method in 1996 as that would have "led to inconsistencies within the Parish". In any event the Board has decided in 1996 that:

"having regard to the assessment of other properties in the Parish indicated by the Assessors the Board (had) concluded that the assessment was a fair one."

31.Because the Board had indicated quite clearly that it would impose the Contractors Method in 1997 it decided to do so. In effect the Board would not raise an inconsistency in 1996 but would do so in 1997.

32.Then, as was inevitable, the problem which had been staring the Board in the face for over a year crystallised. The Board decided that it did not have sufficient information to assess "Lowlands" on that basis and therefore decided to ask the Representor and the assessors to provide evidence of the ‘effective capital value’ of "Lowlands" by 18 August 1997, at which time the Board would reconvene with both parties to consider the evidence supplied and matters arising therefrom.

33.The Board wrote to ask both the Representor and the Assessors to provide evidence "of the effective capital value of Lowlands" by the 18 August 1987.

  1. Correspondence ensued. The Board was able to define "effective capital value" as

"the capital value leaving out of account expenditure on unnecessary ornamentation or accumulation surplus to requirements, and after allowing, if necessary, for age and obsolescence".

35.The Connêtable declined to prepare the estimate required. His Rates Assembly, whilst adamant that they had acted correctly, decided to await a decision of the Royal Court. That is surprising in the light of Article 9 of the Law:

"Every Assessment Committee and every Constable shall furnish to the Supervisory Committee or the Board respectively all information which it may require for the due discharge of its functions under this Law and which it is in the power of the Assessment Committee or Constable to furnish."

36.The Representor called as her expert Mr Peter Bridle, ARICS, ASVA a former Housing Law Officer with the Housing Department but now in private practice. His written opinion is a careful analysis of the facts. He named a further 16 properties with which Lowlands might have been compared. He contended that a 1(1)(k) approved dwelling had a rental value and was adamant that it followed that the Contractors Method was not applicable to the assessment of Parish Rates. His conclusion was that "Lowlands" appeared to have been singled out and to have been significantly in excess of other comparable and superior properties in the Parish.

37.The Board before it met to consider the 1997 Rate Appeal remarked on Mr Bridles report that it gave no evidence of "effective capital value". That was replied to by the Representors lawyers saying that they did not accept that the Contractor’s Method was tenable.

38.The Board took further written advice from their lawyers. The three page letter of advice contains this paragraph:

"7. In my view, Mr Bridle is entirely wrong, as a matter of law, (our underlining] to reject the use of the Contractors Method as a primary method of determining rental value, given that the hypothetical tenant may be deemed to include the actual occupier, the question of being how much would they be prepared to pay in rental to live in the house they have actually bought? The capital cost method is a very good starting point."

39.The Board met on the 6 November. The Representor was there with her legal advisers, Mr Bridle was there, as was Mr Syvret the Chairman of the St. Ouen Rate Assessors.

40.It is clear from the reading of the admirably detailed Minute of the meeting that the Board made certain assumptions:

1."1(1)(k) properties" were now to be referred to as "substantial properties". That is, in our view, a remarkable alteration.

2.The Parish Rate (Administration) (Jersey) Law 1946 as amended had not been properly applied over the years but if the appellant produced evidence of market rental, as opposed to assessed rental, this would be considered.

3.That, in the absence of any evidence from either the Respondent or the Assessors (both had declined to reply to the Boards request) the Board would base its decision on a remark made by the Representor at the meeting of the Board on the 11 June 1996.

41.It is worth setting out two parts of the Minute

1.The view of Mr Syvret

2.The reasoning of the Board

"1.26/97/45. Mr Syvret confirmed that the Contractors Method had not been used to assess properties in St. Ouen and the Assessors were not aware of the category under which properties in the Parish were purchased. Assessments of properties had been developed over a period of time and were based on comparison with other properties. The Assessors were in the same position as the Board as these properties did not command a rent being generally owner occupied. When the Assessors visited Lowland the facade of the original building, the gates and cottage remained intact. Following its rebuilding it was compared with other properties and in particular with ‘La Rocque Envoy’ which M and Mrs Fields had considered purchasing before deciding that Lowlands would make a superior residence. An assessed rental value had therefore been used rather than an actual rent or the Contractors Method. There was no given formula for assessing rentals but it could be described as an art rather than a science although it was not guess work. Lowlands had not been singled out by the Assessors in their assessment of properties. The 1996 assessment had been maintained in 1997 as it was considered that it would have been presumptuous to apply another method when the Board’s decision on the 1996 appeal was the subject of an appeal to the Royal Court. Lowlands was a newly built, architect designed house with an increased area of some 10% over the previous building on the site compared to Vinchelez de Bas Manor which had had very little alteration. The assessed rental value for the main house was £32,760 which, together with the cottage and a small field, gave a total assessed rental value of £36,100 for Lowlands.

2.26/97/47. The Board having considered the information available, and in the absence of evidence from either the appellant or Assessors of effective capital value as requested, recalled that it had been stated that the purchase price of Lowlands was £420,000 and approximately £800,000 had been spent on rehabilitation/rebuilding/restoration work (paragraph 5/96/25 of the minutes of 11th June, 1996 refers). The Board accordingly decided that the only available evidence of capital value was this sum of £1,220,000 and agreed that this should be discounted by 10% to allow for unnecessary ornamentation and accommodation (in line with the definition of effective capital value received by the Supervisory Committee from Advocate S A Pearmain). Applying the Contractors Method to this sum and considering that a reasonable net return on capital was 4% (in line with its decision when applying the Contractor’s Method to other assessments in 1997) the Board accordingly decided that the assessed rental value for Lowlands, Ville au Bas, St. Ouen (comprising house, cottage and small field) should be raised to £43,920 (the foncier to 22,010 quarters and the occupiers rate of 43,820 quarters which reflected the small field let at an annual rent of £100) having considered -

1.that the legal advice received was that the assessment of a substantial property, such as Lowlands, having no rental market, should be based on the Contractors Method, which was capital value;

2.its decision in respect of the appeal against the draft rate assessment for 1996 was that in future the assessment for this property should be based on the Contractors Method and as this had not been applied in 1996 it would be inconsistent that the 1996 decision was subject to review by the Royal Court;

3.that in the absence of effective capital value requested from both the appellant and Assessors the Board based its decision on the evidence given at the hearing on 11th June1996, that the total cost of purchase and rehabilitation/rebuilding/restoration work of Lowlands was £1,220,000;

  1. a reasonable net return on capital was 4% applied, in the absence of effective capital value, to the estimated capital value of Lowlands having made an allowance of 10% for unnecessary ornamentation." with that decision to proceed in any other way in 1997 notwithstanding

42.We did not hear witnesses at this hearing but we were prepared, with Counsels approval, to accept the written explanation of the Board for these percentages, as follows:

"The 4% was arrived at as a consensus among the five Board members determining the appeal as the lowest capital return a landlord would be prepared to accept as a return on his money, given the compensation of capital appreciation on the property." (According to the Minute of the 6 November only four members of the Board were present for the decision].

43.In conclusion the Board gave its written reasons for its decision on the 14 November. The Board repeated the 4 points set out in paragraph 41 (2.) above.

44.On the 25 September 1996 the Board wrote a very detailed letter to the Chairman of the Supervisory Committee reminding the Committee at the outset of its duties set out in Article 8(2) of the Parish Rate (Administration) (Jersey) Law 1946. That letter talks of the "method of assessing 1(1)(k) properties" (later referred to as "substantial properties" by the Board in 1997). It enclosed the legal opinion and advises that "guidance should be given to all Assessment Committees on the assessment of 1(1)(k) properties in line with the legal opinion attached (our underlining].

45.The Boards reply is minuted on the 15 January 1997 in regard to this letter. The Chairman of the Board was received at this meeting.

"The Supervisory Committee and Chairmen of Assessment Committees had also decided that 1(1)(k) properties would continue to be assessed as any other house and no change would be made in the current practice of assessment. In particular, concern had been expressed at the possible assessment for manor houses if the legal opinion was followed and the assessment based on the capital value of the property. Mr Crapp reminded the Committee that to continue with the existing method of assessment would be contrary to the legal opinion received and, in the event of an appeal against the assessment for such a property and having advised the Committee as to how such an assessment should be made, the Board would have to consider applying the Contractor’s Method. The Board recognised the difficult job with which the Assessors were faced but the Connêtables also had the right to appeal against an assessment and it could be said that owners of substantial properties were being subsidised if the property was under assessed in comparison with smaller properties."

46.We need for a moment to have regard to the pleadings and in particular to the Further and Better Particulars of the Boards Answer and to paragraph 16 of the Answer, which reads:

"The assessment was fair given that the property was now one of the most desirable within the Parish compared with other properties in this category, namely:

Vinchelez de Bas Manor(ARV £35,868 including coach houses)

La Landelle(total ARV £24,014)

La Rocque Onvoy(ARV £25,554)

Cherry Trees(ARV £25,556)

La Cache(ARV £29,383)

Le Breton Farm and Lodge(total ARV £37,850)."

After considerable argument, the Particulars were amended at trial. The words in capitals are those added by Counsel. We believe them to be contradictory but they are the best that Counsel could produce:

"Considerable weight was given to this submission, OTHER THAN IN RELATION TO THE EVIDENCE OF COMPARABLE ASSESSMENT. Although the Assessment Committee did not appear to have used the Contractors Method to determine the ARV they could have done so and the result would almost certainly have been a higher ARV than the comparative method that was adopted by the Assessment Committee. In the absence of any prior decision by the Board on the point, the Board decided that the application of the Contractors Method to Lowlands in isolation would give rise to inconsistency with other similar properties that had not been rated by this method and for that reason alone therefore chose not to increase the assessment for 1996 although they consider that they were free to do so."

The "years grace", in Mr Journeauxs own words:

"was to be fair to the Respondent because it maintained uniformity not to increase the assessment (as the Board believed they were entitled to do) but to allow the Respondent one years grace whilst it sought to encourage the Assessment Committee to apply the Contractors Method in future years so as to combine uniformity with correctness of method."

47.The Board has decided that in future "all substantial properties" in Jersey shall be assessed using the Contractor’s Method. The fact that Article 15 (4)(c) directs the Board to give written notices of its decisions to the Supervisory Committee means, in our view, that when it has received that notice, the Supervisory Committee is bound by its decision. If the Supervisory Committee should object then it would have the right to ask for a review but if that event did not occur the Supervisory Committee must follow the guidelines set out by the Board.

48.We repeat, the three questions that we have to ask ourselves are:

1.Was the decision of the Rate Appeal Board one which it could lawfully make under the Law?

2.Were the proceedings of the Rate Appeal Board generally sufficient?

3.Was the decision of the Rate Appeal Board one to which it could reasonably come, having regard to all the circumstances?

Or, as was said in Council of Civil Service Unions -v- Minister for Civil Service (supra) the three classifications:

"1illegality

2irrationality

3procedural impropriety."

49.In Halsburys Laws of England (4 Ed’n) we find this in Vol. 30: "Rating":

"98. Values based on hypothetical letting. Both gross value and net annual value directly ascertained are estimated by reference to the rent at which the hereditament might reasonably be expected to let from year to year but with differences as to the terms of the hypothetical letting, particularly as to the burden of repairs. Various methods of valuation are applied in order to arrive at the hypothetical rent, for instance, by reference to the actual rent paid for the hereditament, or for others comparable to it, or, where there are no rents, by reference to the assessments of comparable hereditaments, or to the profits earned at the hereditament, or to the cost of construction."

There we have the three methods for assessing a value based on a hypothetical letting. The "cost of construction" equates with "the Contractors Method".

It is these three methods that Advocate Journeaux says are there for the choice of the Board. There is no order of priority.

Again at paragraphs 114 and 115 we find this:

"114 No uniform method of valuation. Except in the case of hereditaments assessed by a statutory formula and any other public utility undertakings, there is no rule of law as to the method of valuation to be adopted for rating.

115 Actual rent as evidence of value. The actual rent paid for the hereditament is not conclusive evidence of value. However, where the hereditament is let at what is plainly a rack rent, that rent is the best evidence of value always provided that it was recently fixed by the "higgling of the market". If the actual rent is paid on terms which differ from those of the hypothetical tenancy, it must be adjusted, if possible, to the terms of the hypothetical tenancy before it affords evidence of value. Such adjustments may be necessary to allow, for example, for the burden of rates and taxes, the burden of repairs, the length of the lease or the provision of landlord’s services. Rents paid for comparable hereditaments are relevant evidence, subject to similar consideration. The clauses of hereditaments which in practice are most commonly valued by reference to rents are shops, offices, warehouses and other commercial premises and dwelling houses."

And at paragraph 119, this:

"119 Evidence of assessments of comparable hereditaments. Evidence my be given of the assessments of comparable hereditaments. To be of use the comparable hereditaments should normally be drawn from the same areas as the hereditament under review, although this limitation does not apply if the purpose of referring to the comparable hereditaments is to establish valuation practice and method. However, statements as to the basis of assessment by the valuation officer who is not party to the proceedings are not admissible. An assessment under appeal is normally excluded from consideration. A valuation officer will not be allowed to impugn his own list."

50.We turned to W H Rees: Principles into Practice (1992) (4 Ed’n) At page 372, there is this passage:

 

"Market rental evidence when it is available is to be preferred as being the most direct evidence and hence rental comparison is the usual valuation method for the majority of hereditaments."

Of the "Contractors Method" he says this at page 374: (the legal opinion contains some of this passage but we repeat all of it here in extenso]

"This is often described as the "method of last resort". It is certainly true to say that it is used only where the previous methods are not applicable, It is based upon the premise that cost approximately equates to value. If a hereditament were not available to rent, then a prospective tenant would have to construct one. The land would need to be acquired and the building constructed. The occupier would have to borrow the capital, in order to construct the building, and pay interest on this loan. The amount of the annual interest payable would be equivalent to the rent. Briefly, the process is as follows. The building costs as at the valuation date are determined. They are then adjusted to take account of any age and/or obsolescence disabilities the building may suffer by comparison with a new building, or its equivalent, from which the costs will have been derived. The resulting adjusted replacement cost of the building(s) plus the value of the site works and fees is then "rentalised" or decapitalised. The rate per cent at which the total cost is decapitalised represents the actual cost of making the money available, adjusted to reflect the essential differences between the benefits to be derived from owning the property rather than renting it, on the terms of the hypothetical tenancy.

The fifth stage of the approach, and possibly the most vital, requires the valuer to stand back and check the results of the calculation against known values of properties as similar in type as possible. Adjustments at this fifth stage may be either downwards or upwards."

51.In the commentary in Halsbury the following words appear:

"This method of valuation (the cost of construction) has been applied, for insurance, to the indirectly productive parts of public utility undertakings (such as waterworks), to municipal property (such as schools, former sewage systems, a town hall, a fire station, a swimming pool and public conveniences) to colleges and university buildings, public schools, a geological museum, a lighthouse, an old people’s home, coke ovens, a football stadium, a cricket ground, a factory and broiler house, a car park, a nursing home, a community centre and an indoor bowling stadium and to plant and machinery."

52.We have been taken with great industry, by both Counsel, through a large number of English Cases. There is nothing wrong with that. The cases however turn on their own facts and on the interpretation of English rating statutes and the practice of various rating authorities as interpreted by the Lands Tribunal. Many of their conclusions could have been foreseen by this Court, for example, Advocate O’Connell used Barnard -v- Barnard & Walker (Valuation Officer) (1975) RA 383 to show that the Board should not have dismissed the examples of comparative properties supplied by the Parish Rate Assessment Committee as wrong. The Board did not precisely do that. What it did, in our view, was to say that the comparative method was no longer tenable for "substantial properties" and that the "Contractors Method" would be adopted in future. Cases such as Munday -v- Mason (VO) (12.10 1960) Court of Appeal dismiss the concept of interest on the owner occupiers purchase price (which was very favourable) because rents of comparable hereditament where available must be looked at as the best evidence.

53.We have paid very careful attention to all the cases referred to us by Counsel but the solution that we seek lies more in the happenings of the Board than in the judgements on various rating laws in England and Wales; particularly as we are dealing with a habitable dwelling house and not a waterworks or a football stadium.

54.The Board relied heavily on the legal opinion that it received. It was entitled to do so. However, that opinion is based on the false assumption that so called "1(1)(k) properties" are a special type of property in Jersey. That is not so. The Board soon recognised that and referred in its later decision to "substantial" properties. Had the Board’s lawyers been asked to give the opinion on "substantial" properties, they might well have asked a question of definition before putting pen to paper.

55.That problem is highlighted by the opinion quoting from the brochure of the Housing Committee where the policy guidelines say:

"The availability of substantial properties outside the financial reach of the vast majority of local residents is an important issue in the administration of this Regulation."

The classification of section ‘k’ properties lies in the discretion of the Housing Committee and its officers and there are many substantial properties which the Housing Committee would refuse to allow to be sold to wealthy newcomers to the Island.

56.The legal opinion ended with these words:

"Appropriate advice should be sought from a professional familiar with this method."

57.The Board took no such advice. From the pleadings, the Board seemed uncertain as to what weight, if any it had applied to the time honoured methods of the Parish Assessment Committee.

58.That led to the amendment of the Further and Better Particulars and a somewhat unusual non-sequitur.

59.In our view, the Board did not have the responsibility to be consistent. The Supervisory Committee had that responsibility under the Law.

60.The Board, not perhaps having understood what the Solicitor General told it, as recorded in Minute 2/96/2, gave as part of its reasons a conclusion which was illogical on any score.

"2. That to increase the assessment of Lowlands, based on the legal advice received, would lead to inconsistencies within the Parish (the Board referred to advice given by the Solicitor General in Minute 2/96/2).

3. That having regard to the assessments of other properties in the Parish indicated by the Assessors, the Board concluded that the assessment was a fair one."

61.Minute 2/96/2 reads as follows:

"Mr Crapp asked how the Board was to judge an appeal, whether on the evidence given or on the basis of its own judgement, and the Solicitor General replied that whilst the provisions of the Law relating to the Board were new, and therefore had not yet been interpreted by the Court, paragraph (9) of Article 14A stated that the Board could "call and examine witnesses". Having asked whether the Board could increase the rate of a property the Board was told that Article 15(1) gave the Board "power to confirm or alter any matters in the draft list.....". Whilst the Solicitor General could not give the Board a Court ruling on this, as it was a new Law, generally if the Law wished to limit a person it would be specific on the matter but in this case the Law said "confirm or alter". However, the Law did not say the Board had to alter, only that it might alter, a rate and therefore if, by increasing to the true rate for the property, glaring inconsistencies resulted with respect to other properties the Board did not have to make an alteration."

62.The Board reached its decision in 1996 on the basis that because Lowlands was a 1(1)(k) property, it therefore (our underlining] had no rental value.

63.The Board felt itself bound by the legal opinion that it had received. (The Chairman of the Board said as much when he met the Supervisory Committee on the 15 January 1997).

64.The Board by 1997 had changed its concept of 1(1)(k) properties (which is at least ascertainable) to a "substantial property" (which is not).

65.The Board established the capital value on a remark made to it by the Representor on 11 June 1996 and referred to that as "evidence". It was no such thing.

66.The Board assessed a reasonable net return at 4% with an allowance of 10% for unnecessary ornamentation with nothing to support those figures.

67.We can see that the Contractors Method which, if the Board is right, will have to be employed for every "substantial" property in Jersey if the Assessment Committee is to comply with the Law. This may lead to problems. Not the least of these will be the cost of assessing the capital value of the properties. This Court has no idea of how many properties in Jersey will be regarded as "substantial". The 1(1)(k) test is already accepted by the Board as not being viable.

68.There is no provision in the Law to enforce entry by whoever is the chosen expert to assess the capital value of each "substantial" property, if entry should be required. The Board, having failed to take further advice from a professional valuer (although advised to do so by its legal adviser) had no experience of how the capital value of each substantial property was to be ascertained.

69.The Board, in our view, has adopted a method at variance with the directions contained in the Second Schedule on an entirely misconceived basis that it was having to regard all "1(1)(k)" properties in Jersey as having no assessable rental value.

70.In its pleading the Board admitted that both for the 1996 and 1997 appeals it:

"was entitled to and did consider some evidence that was put to the Board and the Board was bound to and did make an assessment according with the Law."

71.The Parish Rate Assessment Committee has resolved to await a judgement of this Court before changing its method of assessment. In a letter sent with the draft rate assessment for 1998 the Connêtable wrote this (inter alia):

"The Parish Rate law requires the rental value of land/property to be assessed and this is the figure shown in the column headed Rental Value £.

In recent years many assessed rental values have fallen behind current market rents. Properties which have been under-assessed in the past will notice an increase, which may be substantial, in the rental value assessed. This may be the case with your assessment but it may only result in a small change in your actual rates bill."

72.Article 1 of the Second Schedule in our view, makes the method of computation clear. Where the computation is not possible (as in the case of a waterworks) then another method such as "the profits" method can be employed.

73.In 1996 the decision of the Board was that it would "preserve the status quo". We cannot conceive that the Board paid anything more than lip service to a method which it had already decided was wrong and which had been wrong, in its view, since the law came into force in 1946. That cannot be a reasonable decision. There is no logic in the Board being unwilling to create an inconsistency in 1996 but being prepared to create an inconsistency in 1997.

74.In our view the Board in 1997 erred in law and reached a decision that no reasonable Board, properly directed, could have reached.

1)The Board based its decision on a legal conclusion that 1(1)(k) properties (of which Lowlands was one) could only be assessed on the Contractor’s Method because it had no rental value.

2)It failed to consult with the Supervisory Committee

3)It changed its decision from the basis of "1(1)(k)" properties to "substantial" properties

4)It ignored the Second Schedule of the Law

5)It failed to take "appropriate advice" from a professional familiar with the Contractor’s Method as counselled by its lawyers

6)It based its conclusions as to the capital cost of Lowlands on a passing remark made by the owner and assessed returns without evidence in support

75.It is because of these matters that we have to declare that, despite the obvious goodwill and industry of the Board, its decisions were not those a reasonable Board could have made.

76.Accordingly, we quash the decisions of the Board in 1996 and 1997.

In our view the Board should reconsider the assessments of Lowlands in the light of this judgement. It should, in our view, take further legal advice and certainly consult a professional familiar with the Contractors Method. Because we have heard no expert evidence on the assessment of rental values of substantial properties which are not let in our view the Board should also take advice from a professional valuer in order to ascertain that it is impossible to assess a rental value for "substantial property" in Jersey.

 

Authorities

Parish Rate (Administration) (Jersey) Law, 1946

Parish Rate (Administration) (Amendment No. 6) (Jersey) Law, 1995

Jersey New Waterworks Co Ltd -v- Grouville Rate Assessment Committee & Ors. (1994) JLR 197

Council of Civil Service Unions -v- Minister for Civil Service (1984) 3 All ER 950

WH Rees: Valuation Principles into Practice (1992): The Contractor’s Method: pp.368-375, 4 Halsbury30: paras 98, 114, 115, 119, 39: paras 9/14, 97/119

Barnard -v- Barnard & Walker (VO) (1975) RA 383

Munday -v- Mason (VO) (12 October 1990) Judgment of Court of Appeal of England

Eastaway -v- Rees (VO) (1957) Lands Tribunal 147

Pointer -v- Norwich Assessment Committee (1922) 2 KB 471

Ladies Hosiery & Underwear Ltd -v- West Middlesex Assessment Committee (1932) 2 KB 679

Greffier of the States, WEB -v- Les Pas Holdings Ltd (24 June 1998) Jersey Unreported CofA,

IDC -v- Fairview Farm [1966] JLR 306

Garton -v- Hunter (VO) (1969) 1 All ER 457

Mitchell -v- Slingsby (VO) [1978] 21 RRC 261

Stockbridge Mill Company Ltd -v- Central Land Board (1950) 2 All ER 360


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