High Court clarifies distinction between hereditament and rateable occupation in council tax assessment case

Introduction

In the case of Michael Stanuszek v Dawn Bunyan (Listing Officer), the High Court of Justice handled an appeal concerning the assessment of a property for council tax purposes. The central issue revolved around whether the property in question constituted a single hereditament or six separate hereditaments. The key legal principles of hereditament and rateable occupation were meticulously analyzed alongside principles established in previous case law such as Woolway (VO) v Mazars and John Laing & Son Limited. This article navigates through the case summary to elucidate on the legal principles applies and the subsequent implications of the High Court’s findings.

Key Facts

At the heart of the case is a property comprised of six rooms, each containing a bathroom but no cooking facilities. The rooms were accessible through communal areas, and each was let under an assured shorthold tenancy agreement. The Appellant argued that the entire property should be assessed as a single dwelling, while the Respondent (Listing Officer) contended that each room represented a separate dwelling. The Valuation Tribunal for England (VTE) initially agreed with the Listing Officer, prompting the appeal.

Legal Principles

Hereditament

A hereditament refers to a unit of property that may become liable to a rate and is typically shown as a separate item in the valuation list. The principles to determine whether distinct spaces under common occupation form a single hereditament or multiple hereditaments involve both geographical and functional tests. Geographically, contiguity and cartographic unity are crucial indicators; spaces that do not intercommunicate or require one to pass through common property to access other spaces are suggestive of separate hereditaments. Functionally, the use of one space being necessary for the effectual enjoyment of another can lead to the treatment of such spaces as a single hereditament.

Rateable Occupation

The case reaffirms the classic ingredients of rateable occupation per John Laing & Son Limited: actual occupation, exclusivity for the possessor’s purposes, value or benefit to the possessor, and duration that is not transient.

Application of Mazars

Mazars provided guidance on the identification of separate hereditaments, especially within properties under common occupation. The ruling in this case clarified that Mazars does not only apply to common occupation situations but also to cases where discrete areas are separately occupied.

Council Tax (Chargeable Dwellings) Order 1992

The Order plays a pivotal role when properties contain more than one self-contained unit, influencing how many dwellings are recognized for council tax purposes. Article 4 in particular, discusses the listing officer’s discretion to treat properties occupied as more than one unit of separate living accommodation as a single dwelling.

Outcomes

The High Court held that the VTE conflated the concepts of hereditament and rateable occupation, applying an erroneous test to conclude the number of hereditaments. The case was remitted to a differently constituted VTE, directing it to redetermine whether the property comprised a single hereditament, applying the principles outlined in Mazars and other established case law.

Conclusion

The High Court’s decision reemphasizes the distinction between hereditament and rateable occupation, outlining that a nuanced application of the geographical and functional tests is essential in determining the number of hereditaments within a property. The ruling demands a remitted assessment grounded in the established legal framework, ensuring that properties are classified correctly for council tax implications. This case reaffirms the precedent that the functional characteristics of occupation and the physical structure of the property are critical determinants for property tax categorization.