RA/35-38/1998

	LANDS TRIBUNAL ACT 1949
	
	RATING – hereditament – occupation – whether former ferry permanently moored and used as nightclub rateable – held that it was rateable

IN THE MATTER of an APPEAL from a DECISION of the
	TYNE & WEAR VALUATION TRIBUNAL

BETWEEN	PETER JAMES RUDD	Appellant
	(Valuation Officer)
		
	and
		
	CINDERELLA ROCKERFELLAS LIMITED	Respondent

	Re: 	Tuxedo Royal Car Park
		Hillgate Quay
		Gateshead

	Before: The President

	Sitting at Gateshead County Court
	on 28 May 2002

The following cases are referred to in this decision:

Field Place Caravan Park Ltd v Harding [1966] 2 QB 484
Felgate (VO) v Lotus Leisure Enterprises Ltd [2000] RA 89
Commissioner of Rating and Valuation v Yiu Lan Machinery Repairing Works Ltd [1982] HKC 55; [1985] 2 HKC 517

Timothy Mould instructed by the Solicitor of Inland Revenue for the Appellant
J P Scrafton solicitor, for Richmonds of Newcastle upon Tyne, for the Respondent

DECISION
1.	These appeals concern the rateability of a vessel, the Tuxedo Royale, which was moored at Hillgate Quay on the River Tyne at Gateshead under the Tyne Bridge.  It was used as a night club, restaurant and discotheque.  The land adjacent to the vessel contained the moorings, access gangways, and a car park.  The land area measured approximately 1.52 acres. 
2.	The appeals are consolidated appeals by the valuation officer against the decisions of the Tyne and Wear Valuation Tribunal.  Two of the appeals (RA/37/1998 and RA/38/1998) relate to entries made in the 1990 and 1995 local rating lists by the valuation officer in respect of a hereditament described as “River and riverbed occupied by floating nightclub, moorings, car park and premises.”  The address of the premises was given as “‘Tuxedo Royale,’ Hillgate Quay, Gateshead, Tyne and Wear NE8 2BH.”  On appeals by the ratepayer the valuation tribunal directed that the entries should be deleted.  It did so on the ground that the vessel was not rateable.  
3.	The other two appeals, RA/35/1998 and RA/36/1998, arise from entries made by the valuation officer as a consequence of the proposals made by the ratepayer in respect of the entries that are the subject of the first two appeals I have referred to.  The entries are alternative entries, in the 1990 and 1995 lists respectively, to those in the first two appeals.  In each case the hereditament is described simply as “Car Park”.  The valuation tribunal, having concluded that the vessel was not rateable, directed that the entries relating to the car park should appear in the lists.  If the valuation officer’s first two appeals are successful, the entries relating to the car park will accordingly fall to be deleted. 
4.	Values are agreed.  In the event that the vessel is held to be rateable, the assessments are to be £63,750 RV in the 1990 list, with an effective date of 1 April 1992, and £91,500 RV in the 1995 list, with an effective date of 1 April 1995.  If the vessel is not rateable, so that the entries are the ones relating solely to the car park, the assessments are to be those in the entries directed by the valuation tribunal, £4,250 RV in the 1990 list, with effect from 1 April 1992, and £6,400 RV in the 1995 list, with effect from 1 April 1995.
5.	The valuation officer contends that the appeal hereditament comprises that part of the river and river bed above which at all material times the Tuxedo Royale floated, the moorings to which it was attached and by which it was held in position, the vessel itself and the 1.52 acres that contained the car park.  The ratepayer contends that the vessel is not rateable and the appropriate entries are those relating to the car park alone.
6.	The facts are to be found in the statement of facts that the parties have agreed and the documents that are appended to the statement.  The vessel was built by Swan Hunter at Wallsend upon Tyne in 1964.  It is 350 feet long, 54 feet in the beam, and has a gross registered tonnage of 5888.  Known as the Sol Express, it operated as a passenger and drive-on vehicle ferry based in Cyprus until 1988, when it was bought by the respondents and brought back to the Tyne to be modified for its present use and re-named.  It was moored at Hillgate Quay from 1989 to 1999, under licence granted to the respondent by the Crown Estate Commissioners.  The first licence, dated 26 January 1990, granted for a period of 5 years from 26 November 1988 the right to place and maintain on and over the foreshore and bed of the River Tyne adjoining Hillgate Quay, in the position indicated approximately on the plan annexed to the licence, the vessel or such replacement vessel as might be approved by the licensor.  Under clause 2(11) the vessel was not to be used for any purpose “…save as an entertainment complex comprising restaurants bars and disco function rooms exhibitions and like users.”  Clause 3(4) stipulated:
“Nothing herein is to be construed as conferring on the Licensee the right to the exclusive use of any part of the said foreshore or bed of the River Tyne and the Commissioners shall be at liberty to grant such interest rights and easements in or over the same as the Commissioners shall think fit provided only that the placing and maintenance of the Vessel in accordance with this Licence is not thereby prevented.”
7.	It is agreed that, at all material times, there was no actual interference by the licensor with the respondent’s use of those parts of the foreshore or bed of the River Tyne to which the licence relates and that the licensor granted no additional rights in respect of the foreshore or river bed during the term of the 1990 licence.  By licence dated 23 November 1994 the Crown Estate Commissioners granted rights to the respondent on similar terms to those in the 1990 licence save that a term corresponding to clause 3(4) of the 1990 licence was not included in the 1994 licence.  It is agreed that the vessel was used in compliance with clause 2(11) in the 1990 licence and the equivalent clause in the 1994 licence.
8.	The 1.52 acres of land was the subject of a lease for 10 years from 26 November 1983 between Gateshead Borough Council and a company called Riverzest Limited.  It became vested in the respondents.  The lease included the right to use the Quay frontage on the northern boundary of the demised premises for the purpose of berthing the vessel previously known as the SS Caledonian Princess or any other vessel in the lessee’s ownership which the council might authorise in writing as an alternative to the named vessel.  There was a prohibition against using the quay structure for any other purposes, and a requirement that the vessel should be sued as a restaurant, licensed premises, hotel, disco and conference centre.  Under clause 3(g) the lessee covenanted to use the surface of the quay area for the parking of customers’ private vehicles in properly marked out parking areas.  
9.	By a lease dated 21 November 1994 Gateshead Borough Council granted the respondent a lease of the premises demised under the 1994 lease for a term of 12 years from 26 November 1993.  The lease contained terms that were not materially different from those in the 1984 lease, including those relating to user.  It is agreed that at all material times the quay structure, vessel and quay areas were not used for purposes outside those provided for in the leases.
10.	The vessel was moved to the quay, and was then held in position over the river bed by means of ropes and chains secured to capstans.  It was subject to tidal movement.  It remained secured at its berth from 1989 to 1999, and was only once moved and then only for the purpose of demonstrating that it could be moved away from its mooring.  On that occasion it was moved by being towed by tugs.  In 1999 the vessel was moved to the River Tees, where it is now used as it was on the Tyne, being moored in a tidal dock adjacent to the Riverside Stadium of Middlesbrough Football Club.  I viewed the vessel there on the day before the hearing.  Its place at Gateshead has been taken by a vessel called the Tuxedo Princess.
11.	At all material times the main accommodation on the vessel consisted of a piano bar, including a cocktail bar, offices, a mess room, a switch room and toilets etc on the upper deck; a restaurant with café/diner and adjoining discotheque, a kitchen and toilets on the middle deck; and a main discotheque holding up to 700 people, two private function suites, storage areas and a cellar on the lower deck.  Access to the vessel was by means of four metal gangways on the quay.  The car park was used as a private car park for the purposes of the respondent’s business use of the vessel.  The vessel generated its own electricity, and there was no mains connection.  The vessel was not connected to a public sewer, but instead had tanks that were emptied and serviced by a private contractor.  There was a water supply to the quay and from there to the vessel by means of a hose.  There was a telephone connection.  
12.	The vessel had a full justices on-licence and an entertainment licence granted by the local authority.  It was registered in the Registry of British Ships.  Permission to moor it at Hillgate Quay was granted by the Port of Tyne Authority, subject to requirements relating to lighting, the need for a competent shipkeeper to be on constant duty on the vessel, and other matters.
13.	For the valuation officer, Mr Timothy Mould submitted that during the currency of the 1990 and 1995 lists the vessel was placed upon land, namely the river bed, through the medium of the water upon which it rested, and was enjoyed with that land in such circumstances and with such a degree of permanence that the vessel and the land were together properly to be regarded as a single unit of occupation.  The vessel was rateable on the application of the principle laid down in Field Place Caravan Park Ltd v Harding [1966] 2 QB 484.  The rateable hereditament was properly described as including the vessel, the river and the river bed that it occupied, its moorings and the car park and premises comprising the adjoining dockside, that being the physical extent of the single unit of occupation actually enjoyed for the purpose of operating the floating nightclub of the vessel itself.  
14.	Mr Mould relied on my decision in Felgate (VO) v Lotus Leisure Enterprises Ltd [2000] RA 89, in which I held that a floating restaurant moored in Millwall Dock, but with no physical connection to the bed of the dock, was rateable.  He said that there was no significant difference between the facts of that case and the facts of this case.  The relevant facts were the following.  Although a vessel, the essential function of the Tuxedo Royale throughout the period 1989 to 1999 was to remain stationary (subject only to tidal movement) and attached to the dockside at Hillgate Quay, to provide a static land based facility as a nightclub, restaurant and discotheque.  The vessel floated and was capable of movement, but throughout the 10 year period it remained stationary apart from on one occasion when it was moved by tugs in order to demonstrate its mobility.  It enjoyed telephone connection and water supply from the dock.  It generated its own electricity supply and disposed of its own sewage.  Its presence excluded the potential use for a similar purpose by anyone else of the river bed beneath it or the quay alongside it.  It was enjoyed with the river bed and the quay in that it was supported by the river bed in conjunction with the water above it and was secured to moorings on the quay.  Mr Mould submitted that the factual differences between the two cases – tidal movement, the fact that the Tuxedo Royale was a ship designed for movement, and the fact that it generated its own electricity – did not lead to a different conclusion, applying the Field Place Caravan Park principle.
15.	For the ratepayer, Mr Scrafton accepted that the principle to be applied was that laid down in Field Place Caravan Park, but submitted that on the facts the Tuxedo Royale was not rateable.  It was moored at a berth in the Port of Tyne.  It was a registered vessel and moved on its mooring upstream and downstream, vertically up and down, and towards and away from the quayside, on a continuing basis.  It was required to carry a watch-keeping crew and to carry riding lights.  It thus maintained the characteristics of a vessel and was not rateable.
16.	Mr Scrafton placed particular reliance on a Hong Kong case, Commissioner of Rating and Valuation v Yiu Lan Machinery Repairing Works Ltd [1982] HKC 55; [1985] 2 HKC 517.  He had cited it in the Lotus case but I had not dealt with it in my decision.  The case concerned the rateability of five dry docks floating in Hong Kong harbour.  The docks were moored within the limits of the harbour for the purposes of repairing ships.  Four of them were stationed above portions of the sea bed leased or agreed to be leased to their respective owners.  The vessels were maintained in their stations by means of chains attached to mooring blocks set in the sea bed.  The fifth dry dock was held in station by its anchors and sea chains, and no lease or other agreement was involved.  Three of the vessels were connected to areas of dry land, which had also been leased to their owners, by means of permanent piers or floating pontoons, and all were supplied with electricity and telephone connections.  The owners of the dry docks contended that they were not rateable.  They argued firstly that, as chattels, they were not rateable as “tenements” under the Rating Ordinance of 1973, the law in Hong Kong being in this respect different from that in England.  Alternatively they argued that, on the facts, there was insufficient connection between the dry docks and the land to make them rateable.  In the Lands Tribunal the President held that the English doctrine of chattels enjoyed with land did apply in Hong Kong.  He went on to hold, however, that there was insufficient connection between the dry docks and the land to make them rateable.
17.	The Hong Kong Court of Appeal disagreed with the President on the first point.  It held that, on a proper construction of the Ordinance, the value of chattels enjoyed with land was not to be taken into account, so that the dry docks were not rateable.  On the second point, which only arose if their conclusion on the first point was wrong, the court agreed with the President that none of the docks was sufficiently connected to the land.  Mr Scrafton placed particular reliance on the following passage in the judgment of Cons JA, giving the judgment of the court:
“We find ourselves unable to accept the proposition that a vessel which floats in the sea many feet above a piece of land is properly said to be enjoyed with it or to enhance its value.  If that is so, then the same must be said in respect, for example, of an advertising balloon attached by wire to dry land, or even perhaps to a block in the sea bed off a popular holiday resort.  Both the balloon and the vessel are of course connected to the land, but the connection is not for the purpose of enjoying or enhancing the land.  It is simply to prevent either getting lost or into difficulties.  Objects left free in air or on water are inclined to stray unless properly tethered.  Builders huts and caravans set upon jacks do not.”
18.	I do not find the Hong Kong case to be of assistance.  Immediately after the passage relied on by Mr Scrafton, Cons JA went on to say:
“Whether a chattel is sufficiently connected with a piece of land to be taken into account in estimating its rateable value is essentially a question of fact.  The learned President came to the conclusion that none of the docks was so sufficiently connected.  For the reasons which we have just indicated we would ourselves have come to the same conclusion.  We see no reason for this court to interfere.”
19.	One therefore looks to see how it was that the President had approached this question of fact.  In coming to his conclusion, the President had said:
“Are these particular vessels sufficiently connected with the land to be enjoyed with the land?  Their possible physical connection with the land appears to be threefold.  First, where there are sea bed leases, they rest on the portion of the sea which is above the area of sea bed within the sea bed leases.  Secondly, by the connection through chains between the floating docks and the concrete mooring blocks in the case of four of the floating docks and the anchors in the case of a fifth floating dock.  Thirdly, by the connection to the shore leases of the telephone and electricity cables and in the case of three of the five floating docks, by the connecting pontoons, piers or drawbridges.
As to the portion of the sea over the sea bed leases, I am satisfied that the definition of tenement in s 2 excludes the possibility of that sea water forming part of the tenement, as it otherwise would on the English common law principle that a hereditament includes not only the surface of the land but all strata above and below the land including water.  Our ordinance, for rating purposes, excludes that common law principle.  As to the moorings, none of them has such a degree of permanence that while it may be possible, it is improbable that they would be moved.  In the case of the ‘Yiu Lian No.2’, the moorings are not even secured to the sea bed under any licence.  Where three of the floating docks are connected to the foreshore by pontoons or piers, the link between the end of the piers and the pontoons is of a more movable nature than the piers or pontoons themselves.  The telephone and electricity line connections, I find, have been made for reasons of convenience and are not essential.”
20.	It is clear from this passage, therefore, that the conclusion of the President, which the Court of Appeal upheld, was derived by considering the physical connection between the sea bed and the dry land provided by the moorings and the pontoons respectively and rejecting as irrelevant the space occupied by the dry docks themselves and the function of the sea water in supporting them.  The President recognised that a different approach would apply in English law, under which the air space or space filled with water above a hereditament may form part of the hereditament if it contains chattels that are enjoyed with the hereditament on a permanent basis.  
21.	In my judgment, the Tuxedo Royale is rateable for the same reasons that I held the Lotus to be rateable.  The principle to be applied, as both parties agree, is that stated by Lord Denning MR, basing himself on LCC v Wilkins (VO) [1957] AC 362, in Field Place Caravan Park ([1966] 2 QB 484 at 497-8):
“The correct proposition today is that, although a chattel is not a rateable hereditament by itself, nevertheless it may become rateable together with land, if it is placed on a piece of land and enjoyed with it in such circumstances and with such a degree of permanence that the chattel with the land can together be regarded as one unit of occupation.”
The fact that the Tuxedo Royale is a vessel is no bar to rateability.  In the normal way a vessel, as a mobile chattel, is not rateable.  As the Sol Express the whole function of the vessel lay in its mobility, its ability to move and to transport passengers and vehicles.  Moored under the Tyne Bridge, on the other hand, it was the immobility of the Tuxedo Royale that enabled it to perform its new role as a nightclub.  The fact that it had been designed to propel itself across the sea and to transport passengers and goods ceased to have any significance other than to add to its attractiveness in its new and wholly different role.  Its moorings were intended to ensure that the vessel stayed in position, eliminating all movement except for the small amount that would inevitably arise from the tidal nature of the river.  The occupation by the ratepayers of the vessel, the river bed and quay had the same characteristics in terms of permanence and exclusiveness as in the case of a nightclub contained in a building on dry land.  The vessel is, in my judgment, undoubtedly rateable.
21.	The valuation officer’s appeals must accordingly be allowed.  In the 1990 list the description of the hereditament must be “River and river bed occupied by floating nightclub, moorings, car park and premises” and the value £63,750 RV, with an effective date of 1 April 1992.  In the 1995 list the description must be the same and the value must be £91,500 RV, with an effective date of 1 April 1995.  The entries in which the hereditament is described as “Car park” must be deleted.
22.	The parties agreed that costs should follow the event.  The respondent must pay the appellant’s costs of the appeals, such costs if not agreed to be the subject of a detailed assessment by the Registrar.
						Dated 13 June 2002

						George Bartlett QC, President