Source: http://www.voa.gov.uk/corporate/Publications/Manuals/CouncilTaxManual/council_tax_man_pn/ct-man-pn5-app1.html
Timestamp: 2014-07-23 17:54:43
Document Index: 129619055

Matched Legal Cases: ['art 1', 'art 2', 'art 3', 'art 1', 'art 1', 'art 2', 'art 3']

ct-man-pn5-app1
Practice Note 5: Appendix 1: Case summaries relating to Disaggregation 1.0 Part 1: Articles 2 & 3 The Council Tax (Chargeable Dwellings) Order 1992 SI No 5491.0 Article 2 1.1 Article 32.0 Part 2: General principles of disaggregation2.6 Physical Identity 2.7 Unit of Sale3.0 Part 3: Summaries of High Court decisions in which above principles have been examined and clarified3.1 Batty (LO) v Burfoot3.2 Batty (LO) v Merriman3.3 Gilbert (LO) v Childs 3.4 Rodd v Ritchings3.5 McColl v Subacchi LO (2001) RA 3423.6 Joseph Rowntree Housing Trust v Speight (LO)(2002 RA 203)3.7 Clement (LO) v Bryant and Others (2003 RA 133)3.8 R (on the application of Coleman (LO) v Rotsztein (2003 RA 152) 3.9 R (on the application of Williams (LO)) v Royal National Institute for the Blind (2003 RA 158)4.0 Jorgensen (LO) v Gomperts (2006 RA 300) 4.1 Daniels v Aristides 2006
Practice Note 5: Appendix 1: Case summaries relating to Disaggregation 1.0 Part 1: Articles 2 & 3 The Council Tax (Chargeable Dwellings) Order 1992 SI No 5491.0 Article 2
“a building or part of a building which has been constructed or adapted for use as separate living accommodation” 1.1 Article 3
“Where a single property contains more than one self-contained unit, for the purposes of Part 1 of the Act (LGFA 1992), the property shall be treated as comprising as many dwellings as there are such units included in it and such unit shall be treated as a dwelling”
1.2 NB. Disaggregation only applies when there is more than one such unit within the hereditament. Separately occupied units are not the subject of Article 3, but are nonetheless dwellings because they are separate hereditaments. BEFORE considering whether a self-contained unit exists it is essential to first identify the extent of the hereditament. Only where a single hereditament [under the paramount control of one occupier] exists can the disaggregation principles apply. If parts of a building are separately let/occupied then Articles 2 & 3 of the Chargeable Dwellings Order do not apply and the parts should be banded separately as dwellings that are separate hereditaments and whether or not the parts are “self-contained” is irrelevant. 2.0 Part 2: General principles of disaggregation
Since 1993, the practical outworking of disaggregation legislation has been subject to clarification and refinement in practice and policy through adopting principles that have been confirmed in decided cases.
2.1 The Unit must have been constructed or adapted for use as separate living accommodation. This is purely an objective physical test, and it must disregard intention. It is irrelevant as to how or by whom or for what purpose the adaptations were carried out. (Jorgensen (LO) v Gomperts RA 2006 300, Coleman (LO) v Rotsztein RA 2003 152).
2.2 The degree of communal living is irrelevant (Batty (LO) v Burfoot, Batty (LO) v Merriman, Gilbert (LO) v Childs & Rodd (LO) v Ritchings 1995 RA 299) 2.3 Access & Egress: The meaning of separate was considered in McColl v Subacchi LO (2001 RA 342). Access and egress arrangements can be a material consideration. Here access to a flat was only possible via hall, stairs & landing shared with the house within which it was situated. This did not stop the flat being held to be separate. In Jorgensen (LO) v Gomperts (2006 RA 300) the attic flat was similarly accessed.
However, contrast this with Batty (LO) v Merriman where access to an annex was through the lounge of the main dwelling and in these circumstances the HC judge indicated that he was sympathetic to the tax payer’s case. These comments have been used to guide policy on identifying ‘separate living accommodation’.
2.4 The unit must be physically capable of use as separate living accommodation: In the Batty cases the reasoning used in answering this question was based on an examination of the physical character and layout of the premises. This was examined in Beasley (LO) v National Council for YMCA’s 2000 RA 429. The case involved a “foyer housing scheme” where homeless youngsters occupied flats comprising; bedsitting room, a kitchenette and shower room (shower WC & WHB). Apart from this, the residents had use of various communal facilities. The judgment focused on the physicality of the situation, the actual way it was used was unimportant, although this may be indicative of whether the building was constructed for use as separate living accommodation. The extent of the communal facilities were relevant, but only vis-à-vis the absence of such facilities within the separate units.
2.5 Provision of standard facilities: A self-contained unit should usually have facilities for living, sleeping, preparation and cooking of food, and bathing facilities such as a bath/shower, whb and lavatory. However, in exceptional circumstances the lack of a facility does not prevent a unit from being self contained. For example a unit having, say, shared bathing facilities - Clement (LO) v Bryant and Others (2003 RA 133).2.6 Physical Identity The accommodation of a self-contained unit should normally be contained within a single curtilage, and be capable of clear definition. If the unit’s boundaries cannot be clearly defined, despite there being, say an extra kitchen or an extra bathroom, this may provide a strong indication than there is no separate living accommodation.2.7 Unit of Sale
The fact that part of a property cannot be sold separately or occupied separately from the main dwelling, does not mean that it is not a self-contained unit within the meaning of Article 3. The test is an objective physical test. Planning considerations are subsidiary to, and will not override, the basic principles (see Ritchings case below).3.0 Part 3: Summaries of High Court decisions in which above principles have been examined and clarified
Batty (LO) v Burfoot and others, Batty (LO) v Merriman, Gilbert (LO) v Childs & Rodd (LO) v Ritchings (1995) RA 299 (These were four separate disaggregation cases, from different parts of the country but heard together.)3.1 Batty (LO) v Burfoot
It was argued successfully at VT that the disaggregated part should not be separately assessed because:
• of its layout and integration it could not be sold separately
• planning permission was granted for one dwelling only
• if sold separately, outsiders would be reliant on a common entrance which would provide them with access to all other rooms (same key used for all locks and common services).
On appeal to the High Court, the Judge did not deal with the community of living aspect although it was arguable that the case could be quashed on that reason alone, in terms of his judgement on the Childs case. Instead he focused on the impracticality of sale aspect which was not a relevant consideration when deciding what comprised separate living accommodation. In the context of discussing the concept “willing vendor” the Judge said …“It is therefore fallacious to contend that this valuation provision, even if relevant to the exercise of definition, leads to the conclusion that if sale is, in fact, impracticable the premises cannot be treated as a self contained unit.”
Counsel for the taxpayer argued that the valuation assumptions assume that the dwelling is capable of separate sale, but this was rejected. This, however, may be relevant to valuation. On this basis the VT had misled itself and the decision was quashed. 3.2 Batty (LO) v Merriman
Factors considered at VT:
• Practicality of separate sale
• The rooms had no separate access; this was gained through the shared front door and then through the lounge and dining area of the main house
• Community of living (rooms in main house often used by occupant of annex), shared services
• Door between annex and main house left unlocked
The decision of the VT was quashed by the HC on the basis that the decision was made partially on impracticality of separate sale. However, the judge was sympathetic to the case as a whole, due to the other aspects:
“I am bound to say that were I to be judging the merit of the appeal on the particular facts I would have had a deal of sympathy with Mr Merriman's contentions without, of course, giving any consideration to the practicability of sale. I think at the end of the day this appeal, along with that of Mr Burfoot, should go back to Kent Valuation Tribunal. If my observations are of any comfort to Mr Merriman then he may, of course, adopt them before the tribunal on the rehearing, so long as he understands that the decision must be exclusively the tribunals; it cannot be mine.”
NB: It is as a result of the judge’s comments in this case, that where access to the annexe is solely via a main room of the adjoining unit, it will not be considered separate living accommodation.3.3 Gilbert (LO) v Childs The annex comprised a garage conversion with connecting link. It had separate access, and access between the two units via a fire door, as required by regulation. The VT considered this as the main reason for aggregating the two, but also referred to aspects of communal living (shared services & the interconnection meant that the units could not be sold separately).
The Judge put the fire door issue to one side (and expressed no final conclusion) but quashed the VT decision on the basis that the aspects of communal living were considered irrelevant. The VT had confused the hereditament approach with the requirement of disaggregation. The starting point is a single hereditament, subject to a single (family) occupation. The VT was swayed by a commonality of living (a degree of community of access to services with the main house….participation in family life) and did not focus on the bricks and mortar.
“In this case, I believe the appellants' submissions are well founded. In particular, it seems to me, that to give account to the level of communal living is to introduce a consideration which is outwith the relevant criteria required in order to test properly the definition in question. It will be obvious that the purpose behind the great majority of these annexes is to furnish separate accommodation for an older generation in such a way as to allow of mutual privacy, while at the same time allowing for the degree of community which gives peace of mind to both parts of the family. It follows that in most cases the actual degree of communal living will be, or probably will be, significant. But that cannot assist, in my judgment, in answering the question as to whether the annexe in question was constructed or adapted for use as a separate dwelling. To that extent I agree that the tribunal misdirected itself.”3.4 Rodd v Ritchings
The VT did not disaggregate as planning permission for the annex excluded occupation other than that which was incidental to the main house and at no time could it be used as a separate unit of accommodation. The Judge (Ognall J) said: “In my judgment, that approach was plainly an erroneous one. It may be that the terms of planning consent are a legitimate factor to be taken into account in the decision-making process in some cases. For my part, I can see force in the argument that if the mode of actual use of the annexe in question is not legally relevant to the definition of a self-contained unit, then any planning restriction on the form of user is likewise irrelevant. To contrary effect, it is possible to envisage cases where the terms of a planning consent may afford legitimate assistance, for example, in throwing light upon other relevant considerations. It would be wrong for me, in this case, to express any conclusions on the question of the relevance, in principle, of the terms of planning consent to the liability of premises to be assessed separately for the tax. It is unnecessary for the purposes of this appeal and consideration of it must therefore await an appeal where it necessarily requires determination.
But I am quite satisfied that even were the question of planning consent and its terms to be a relevant factor, it would be wholly wrong to treat it as the sole one, as opposed to one of a number of factors sounding in the exercise. Whether in this case one construes article 2 of the regulations as meaning physically amenable to use as separate living accommodation (the appellants' argument) or, on the other hand, intended to be used as such (the respondent's argument), in neither event can the terms of a planning restriction of itself rule the day. The fact, were it to be the case, that an owner intended to make use of the annexe in question in breach of planning consent could not, in my judgment, of itself afford him any answer to liability of assessment for the tax on the basis that it was a separate dwelling, if otherwise the evidence established that it fell to be treated as such under the regulations. The tribunal in this instance gave no other reason for its decision. There may have been others, I do not know. But in default of any recital of them, it is clear that the tribunal failed to apply its mind to any of the evidence, save for the restrictive terms of the planning consent, or to consider whether any of the other unrecited evidence featured in its consideration of the application of the regulations. This was a clear error of law and the decision must be quashed”.3.5 McColl v Subacchi LO (2001) RA 342
This case concerned a flat and a house. Both dwellings had full facilities including bedrooms, living room, kitchen and bathroom. The only drawback was that access to flat was via the hall, stairs and landing of the house. The appellant argued that neither dwelling should be assessed.
The HC judge first reviewed the VT decisions. With regard to the flat, he noted that it had all the facilities necessary for separate living and that it was separated from the main house by a lockable door. On the precedents this was an objective test and did not depend on what it was used for, however, he noted that it had been separately tenanted in the past. It was therefore prima facie a separate dwelling in terms of the order. The question was whether the fact that access to the flat required passing through the main house defeated this separateness? (paragraph 25) The judge noted that there was nothing in the order itself to compel that conclusion (paragraph 26). He was not persuaded that the circumstances deprived the flat of its character as a separate self-contained unit. The situation at Chieveley Drive (Merriman case) was distinguished (paragraph 27) as access was not required through a main living room.
Regarding the house, it had all the usual features associated with a self-contained unit. It is separated from the flat by a lockable door. It did not cease to be separate because the appellant had granted the tenant a license to pass through her hall stairs and landing. Nothing in the Order compels that conclusion (paragraph 29), although it may cause inconvenience.
The Judge then looked at previous precedents; the situation at Chieveley Drive, as featured in Batty v Merriman was considered, Butterfield v Ulm (unreported) and the YMCA case, but he did not find them helpful. He seemed to be particularly influenced by the lockable door and the requirement for the unit to be separate; “the flat has a lockable door which makes it separate” (paragraph 35).
Note: The lockable door issue was central to the 2006 case of Jorgensen (LO) v Gomperts. In this case it was pointed out by Counsel for the LO that even if the flat has a lockable door, the main unit is not secure to the passage of the tenant via hall stairs and landing. Mutual trust has to be assumed in such cases.3.6 Joseph Rowntree Housing Trust v Speight (LO)(2002 RA 203)
The VT decided that the removal of cookers and refrigerators, and the capping of electricity supplies to the former kitchens of self-contained accommodation, now no longer used separately, did not mean that the rooms were no longer self-contained. This part of the decision was not reviewed by the High Court.3.7 Clement (LO) v Bryant and Others (2003 RA 133)
This case concerned eleven bedsits, each comprising; bedsitting room, fully equipped kitchen, bathroom with WHB & WC, but no bath or shower, provision being made communally.
The High Court reversed the decision of the VT and held that bedsits should be disaggregated.
The Court disagreed with the VT’s decision on 4 counts:
1. The fact that bathing facilities were communal did not mean that the bedsits couldn’t be self- contained (reference was made to LT decision on unit of assessment, in connection with domestic rating).
2. The VT, in connection with the absence of exclusive bathing facilities, had been particularly taken by the fact that the actual occupiers were elderly.
3. The VT had had regard to the high degree of communality and dependency, “one is concerned with bricks and mortar, not with the characteristics of the occupiers”.
4. The fourth and final error was to have regard to the availability to the single access point which would have posed a difficulty if the units were to be sold.3.8 R (on the application of Coleman (LO) v Rotsztein (2003 RA 152)
A granny annex comprised living room, kitchen, bedroom and combined shower and wc. There was an interconnecting interior door and an exterior door with its own gated side access. The VT decided that it was simply built as an extension to the family home.
The High Court held that the VT had erred in law as it had had regard to the intention of the occupier and not concentrated on what had been physically constructed. The accommodation had all the characteristics of a self-contained unit. The family alleged they used it as a simple extension to their home, this was supported by there being common services. The additional kitchen was designed to be used as a “Passover kitchen” as the family were orthodox Jews. 3.9 R (on the application of Williams (LO)) v Royal National Institute for the Blind (2003 RA 158)
A purpose built residential home for the blind or partially sighted, consisting of 36 residential units. The VO had accepted that the single person bed-sits were not self-contained units*(see below). This left 4 double units which were subject to contention.
The double units comprised of separate bedrooms, a kitchen/living area and a bathroom with shower, whb & wc. The VT held that they should not be disaggregated. This was based on 3 findings; the double units could be used for independent living but so could the other, single, units, the RNIB did not intend to create units for entirely independent living, and finally, as there was no difference between the single and double units and as the VO accepts that the single should not be disaggregated then the same should apply to the double. Because of this misguided reasoning, the High Court quashed the decision and remitted it back to the VT. It identified the factors that are relevant to a decision of this nature.
First, matters which should not be taken into account:
1) The actual use of the property (Batty v Burfoot & YMCA case)
2) The difficulty in selling part of the building (Batty)
3) The intention of the builder or developer (Rotsztein)
Secondly, the HC identified factors that should not be treated as decisive:
1) The terms of the planning permission
2) The absence of a bath or shower within the unit
Finally, as to matters that should be taken into account:
1) What has been constructed (Rotsztein)
2) The extent of facilities provided within the unit and the extent of the communal facilities provided externally
(NB. It was very shortly after this case that Article 3a of the Council Tax (Chargeable Dwellings) Order came into effect regarding the special rules for registered care homes.)
*This decision was taken on the facts of the particular case and is not a general principle to be adopted.
4.0 Jorgensen (LO) v Gomperts (2006 RA 300)
The LO contention was that there were two dwellings; a maisonette on the basement, ground and first floors, and a flat on the second. The ‘flat’ was 26m² in size and comprised two rooms; a bed-sitting room with facilities for cooking and a bathroom. The VT decided against the VO and found that there was no intention for the flat to be lived in separately. Lodgers who had occupied it were part of the household and the flat had no lockable door.
The judge reiterated both ‘Rotsztein’ and Clement v Bryant and set out reasons why these adopted the correct approach:
“ 15 In my judgment these passages from the foregoing authorities conclusively demonstrate that the test is an objective bricks and mortar test. Intention and use, actual or prospective, are not relevant……there are good policy reasons why an interpretation based on intention or purpose should not be adopted in this context. First, there may be real practical difficulties by reason of the passage of time or otherwise in ascertaining the intentions of an original constructor or later adaptor of the building. Secondly, a test based on intention might encourage taxpayers to devise strategies with varying degrees of ingenuity to persuade listing officers and/or the Tribunal that they had no deliberate aim to create separate living accommodation. Thirdly, administrative and judicial time would be employed in seeking to test the veracity of subjective claims of lack of the necessary subjective intention. This process would be costly and uncertain, with the probable result that success would depend more on the skill and resources of the advocate than upon the intrinsic merits of the claim. Inequality of treatment would be likely to occur. I do not believe that such consequences would be in the public interest or accord with the object of Article 2 of the Order.” On “construction and adaptation”:
The Judge rejected a “strong test” for the concept of adaptation, which Mr Fookes (for the taxpayer) had put forward, whereby the LO is required to adduce some actual evidence of the acts (how when and by whom) that “construction or adaptation” took place, upon which he relies in a disaggregation case (paragraph 19). The approach is to simply do no more than “look at the present physical characteristics of the relevant building.”
On facilities: In paragraph 22. “I therefore reject Mr Fookes strong test for the concept of adaptation. However, I do see considerable force in a rather weaker version of this argument, which Mr Fookes (for taxpayer) also deployed. He submits that whether a part of a building constituted separate living accommodation required close scrutiny of the precise physical characteristics of the building. He argued, for example, that nowadays in certain particular circumstances no reasonable person, would regard a part of a building as constituting separate living accommodation if nothing had been done of a physical nature to provide facilities for cooking. Drawing on some examples from his own experience, he contended that in certain situations it would be absurd to treat a particular area as constituting separate living accommodation by reason only that an a owner or occupier had made it possible to use a small microwave oven therein.”
In paragraph 23. Mr Fookes readily accepted that there could be no hard and fast rules in this area, but submitted that if it was contended in a specific case, for example, that the building had everything, including a kitchen, for separate accommodation, the Tribunal must consider, having regard to the particular circumstances of the case, what it was said there was that physically constituted such a facility. “In my judgment, Mr Fookes is right on this issue, for the reasons that he advanced. The Tribunal should consider whether, having regard to the particular circumstances of the case, the physical characteristics of the building do constitute separate accommodation.”
In paragraph 24. Mr Buley (for LO), in any event, did not really dissent on this question. He submitted that there was here something physically present sufficient to constitute kitchen facilities, namely the presence of a sink unit. “However, it seems to me that an evaluation of a matter of that kind is pre-eminently for the Tribunal to make, not for this court.” On the relevance of a lockable door:
Counsel for LO submitted that the VT erred in law by relying on the corollary of the McColl case where a lockable door was material to the finding that a separate unit existed. The judge felt that McColl did not establish a rule of law and each case had to be decided on its merits. In paragraph 27 he concluded that;
“…in relying on McColl, undue weight was given to the absence of a lockable door in this case. Mr Buley accepted that in modern conditions some degree of privacy might not untypically be regarded as a significant element in deciding whether something constituted separate living accommodation. In my judgment, that was a correct concession to make. However, he submitted that in most cases (and this was certainly one in his contention) an objectively acceptable degree of privacy could be achieved without the presence of a door locking off one part of the building from another. He drew attention in particular to the facts of McColl where, although the occupant of the flat could lock himself off from the rest of the house, the physical configuration was not such as to allow the occupants of the rest of the house to lock themselves off from him, yet the rest of the house was found to be a separate self-contained unit. In paragraph 28. “In my judgment, this is again a matter that must be resolved by the Tribunal on the particular facts of the given case. It is wrong in law to treat the presence of a lockable door as a necessary condition for the application of the Order. However, as I have said, there may well be particular circumstances where some degree of privacy could reasonably be regarded as a material element in determining whether something constituted separate living accommodation, and the Tribunal must then decide whether, having regard to the physical characteristics, the part of the building in question should be so treated. I stress again that the test is an objective one. It is emphatically not a question whether any particular occupant might believe that privacy required a locked door, and without it there was no separate living accommodation. It is for the Tribunal, looking at the physical characteristics of the building, to determine on an objective basis whether those characteristics are sufficient to make part of the building separate living accommodation.”
NB. The case was remitted to VT for reconsideration in light of guidance provided and on the basis that the correct tests are applied. There was insufficient detail in the evidence available on the kitchen facilities for the Judge to make a decision in the High Court. On rehearing at VT, it was shown that all that the kitchen facilities consisted of were a sink unit (with open shelving beneath) and a ‘plug in’ baby belling that had later been replaced with microwave oven sitting on a low table, and a small fridge. There were no fixtures other than the sink, such as worktops units or cupboards. The VT did not find these facilities sufficient to constitute that part of the building as having the physical characteristics of separate living accommodation. 4.1 Daniels v Aristides 2006
The VT had decided to re-aggregate a log cabin, which had all the features of a self-contained unit in the grounds of a new barn conversion, with the new dwelling itself. The log cabin of some 50m² had originally been conceived to be constructed as a games room and tool shed, and only later, was the decision taken by the taxpayer to adapt it as a studio for temporary living accommodation, whilst the main house was being constructed. The studio was mainly open plan, had a kitchen area, a wc and shower, and a gallery with a ladder/step access used as a bedroom area. It was occupied for three years whilst construction on the barn conversion took place and banded as A. On completion of the new dwelling, the cooker was taken out of the studio, the cooker point removed, and the building used as a games room, ancillary to the main house, as was the original intention. In amalgamating the band to ‘G’, the VT had regard to the original intention of the taxpayer; the ancillary use of the building; a previous (incorrect) decision of the LO to amalgamate; that its construction did not accord with building regulations; the temporary nature of its planning permission for residential use, and the factor of a missing cooker point (though they said this was of minor consideration). They did not, however, have regard to the one overriding essential, i.e. the physical features of the living accommodation.
The High Court judge felt there was no difference in approach regardless of whether the self-contained unit had been “constructed” or “adapted” for use as separate living accommodation, although the precedents dealt with property constructed as such (paragraph 19).
He referred to RNIB case which set out the relevant considerations (at paragraph 21): “Matters which should not be taken into account at all include, first, the use to which a part of the building is actually put; secondly, the impracticability of the sale of part of a building; and thirdly, the subjective intention of the builder or developer. Matters which should not be treated as decisive include, first, the terms of the grant of planning permission, and secondly, the absence of a bath or shower (see paragraph 15 and 16 of the judgment). Mitting J went on to say that the question, here, had to be assessed objectively: and it seems to me that that accords with the other authorities to which he refers and is consistent with the language of the Order itself.”
Other cases such as Rotsztein and Gomperts made clear that the subjective intention was irrelevant (paragraphs 22 & 23) as was actual use (paragraph 24). “The VT had therefore significantly misdirected itself in law” (paragraph 25).
On removal of a cooker:
In the alternative (paragraph 26) the taxpayer submitted that in 2003 the removal of the “cooker and cooker unit” was an adaptation, (paragraph 27). This had been discussed in Jorgensen v Gomperts and the judge thought it depended on the particular circumstances of each case. Also in Clement, the lack of a shower or bath did not mean that property could not be disaggregated. The tax payer’s submission was rejected (paragraph 30):
“But it seems to me that that cannot be right. When one has regard to the actual original state of the building, as built in 2000 and as recorded by the Tribunal, that building remained in similar form in 2003 save and save only for the removal of the cooker and cooker unit. Still there was the kitchen area, still there were the shower and cloakroom facilities, still there were the bedroom facilities of the upstairs gallery. But it is unnecessary for me to say anything more than that because that point has, in effect, been decided by this particular Tribunal itself: in that it decided that the removal of the cooker and point have not changed the characteristics of the dwelling: because, as the Tribunal itself found on the facts of this particular case, it was considered to be of "minor consideration".
“That being so, and taking the view that the decision of this Tribunal was wrong in law, I do not think it necessary or appropriate for me to remit this matter back to the Tribunal for further consideration. The only point outstanding would be the effect of the removal of the cooker and cooker point and this particular Tribunal has found on the facts of this case that that was a matter of minor consideration.” © Crown Copyright | Terms & Conditions | Privacy Policy