The sites of cash machines in shops raised two distinct business-rates questions. Was a particular site a separate unit of property, and if so, who occupied it? Even where an ATM site could be separately identified, the shops in these appeals retained paramount occupation. The banks did not receive separate assessments.
The questions before the court
These were lead appeals about the business-rates treatment of ATMs in shops and supermarkets. Lord Carnwath, with whom Lord Reed, Lord Kerr, Lady Black and Lord Kitchin agreed, identified two questions. First, was an ATM site a separate hereditament, meaning a unit of property capable of appearing as its own item in the valuation list? Secondly, if so, who was in rateable occupation: the retailer or the bank operating the machine? Appeals concerning some 10,000 other sites, amounting to some 34,000 appeals, had been stayed pending the decision.
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The answers had differed below. The Valuation Tribunal for England held that every ATM site was in separate rateable occupation. The Upper Tribunal agreed for the external machines but not the internal ones, and held that one moveable machine was not a separate hereditament. The Court of Appeal held that none of the machines was separately rateable. The Valuation Officers appealed. Lord Carnwath emphasised that the Upper Tribunal hears such cases by a full rehearing, whereas an appeal beyond it lies only on points of law. Its findings of fact and evaluation therefore came first, and a higher court needed more than a difference of assessment before intervening.
The machines and the stores
External machines could be used even when the shop was closed. Internal machines generally depended on the store’s opening hours. The parties disputed whether outside access changed the relationship between the shop and the ATM operator.
The Worcester machine stood on a metal plinth, was chained to the cash-room floor and used the supermarket’s electricity. Sainsbury’s owned the lease of the store, including the site. Sainsbury’s Bank plc had a contractual licence to install and operate the machine and enter the site. The cash belonged to the bank but was kept under the control of Sainsbury’s staff, who also maintained the machine during opening hours. The other groups used associated banking companies for regulatory reasons. Lord Carnwath did not treat the contractual differences as significant: the rating of such standard machines should not turn on each group’s internal organisation.
Some Tesco machines could be used only from inside the store and only during opening hours. Their arrangements were otherwise the same, apart from one machine on the first floor of the Nottingham store. A Cardtronics machine in a Londis convenience store in Harefield, with about 60 square metres of floor space, was another external example. Cardtronics owned, operated, maintained and loaded it under a licence dated 26 March 2007. Loading blocked an aisle and sometimes required the store to close. The cabinet stood in the shop and its top displayed goods; the only building adaptation was a panel in the front wall.
A separate unit of property
The retailers argued that an ATM could not define a hereditament because, under the Valuation for Rating (Plant and Machinery) (England) Regulations 2000, its value is left out of account when rateable value is estimated. They relied on Lord Keith’s statement in Kennet District Council v British Telecommunications that such plant could not be treated as part of the hereditament for any rating purpose. The Upper Tribunal, the Court of Appeal and Lord Carnwath rejected that argument. The regulations govern valuation, not the prior question of whether a hereditament exists. The machine did not have to be ignored, and Kennet did not require the court to assume that it had been removed.
They also relied on Woolway v Mazars, which describes a hereditament as a self-contained piece of property whose parts can be reached without going onto other property. They said an ATM site failed that test because servicing and access used the rest of the store. The Upper Tribunal held that, once a machine occupied a space designed or adapted for it, its boundaries could be defined with sufficient precision. A fixed and apparently permanent location, visibly set apart and intended for that use, was enough. The Court of Appeal and Supreme Court accepted that reasoning and its findings of fact.
The Nottingham machine was different. It stood near a café and the toilets in a store which had not been adapted for it. It could be unbolted and moved, and was housed in a metal cupboard about two metres tall and 1.5 metres deep which rolled forward for servicing. The Upper Tribunal found that its essential qualities were impermanence and mobility, so the space it happened to occupy was not a separate unit of property. Lord Carnwath treated this as a permissible finding of fact. He rejected the argument that the only relevant question was whether occupation was too transient under John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area. A Cardtronics machine at Harefield and a Tesco machine at Walsall were closest to the boundary, but both were still sites designed or adapted for an ATM.
Who occupied the site
Rateable occupation requires actual occupation, exclusive for the occupier’s particular purposes, of some value, and not too short-lived. Where occupation is shared, the court asks whose occupation is paramount. In Holywell Union Assessment Committee v Halkyn District Mines Drainage Co, Lord Herschell used a landlord and lodger: both occupy in a sense, but the landlord’s occupation is paramount and the lodging house remains one hereditament. In Westminster Council v Southern Railway Co, by contrast, shops and kiosks at Victoria Station were separately occupied by the traders. Lord Russell said the issue is factual, judged by the parties’ rights in the particular premises and the purpose of that occupation.
The Valuation Officers said the court should ask only whether the retailer’s control interfered with the bank’s use of the ATM site. Lord Carnwath was not persuaded. A landlord’s control supports rather than interferes with a lodger’s use, yet the landlord remains rateable. He rejected the suggestion that this familiar example was an anomaly displaced by Southern Railway. The retailers began in exclusive occupation of the whole store. The issue was whether a limited right given to an associated bank changed that.
The Upper Tribunal found that the store had not given up possession. It had restricted its use of a small area because the ATM furthered its business and produced income. Both parties benefited from the same use and shared its economic return. Lord Carnwath held that this finding was open on the evidence and supported the conclusion that the internal sites remained in the retailers’ occupation. This was not a case of rival activities, such as a station trader selling newspapers or subcontractors excavating gravel on a fish farm.
The Upper Tribunal nevertheless treated external machines differently because they served a wider public, were available at all times and were physically separated from the store’s other facilities. It treated the bank’s purpose as primary and its occupation as exclusive. Agreeing with Lindblom LJ, Lord Carnwath held that this distinction was an error of law. Those features did not displace the retailer’s occupation or make the machine any less part of the retail business. The case differed from Assessor for Central Scotland Joint Valuation Board v Bank of Ireland, where an ATM in a sub-post office wall had no direct link with the post office business and was used independently of its opening hours. Here the purposes were the same or closely aligned. The difference was no greater in principle than that between internal and external ATMs in a bank, which would not be separately rated.
Verdict: The Court unanimously dismissed the Valuation Officers’ appeals. On these facts neither internal nor external ATM sites were separately rateable in the hands of the banks. The movable Nottingham machine also lacked a separately identifiable site.
Source: Cardtronics UK Ltd and others v Sykes and others [2020] UKSC 21
