Shell-Mex and B P Ltd Ltd v Clayton (Valuation Officer) and Anor

[1956] 3 All ER 185

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(Judgment by: Lord Keith of Avonholm)

Between: Shell-Mex and B P Ltd Ltd
And: Clayton (Valuation Officer) and Anor

Court:

Judges: Viscount Simonds
Lord Oaksey
Lord Morton of Henryton
Lord Tucker

Lord Keith of Avonholm

Subject References:
LOCAL GOVERNMENT
RATES
De-rating
Freight-transport hereditament
Installations for unshipping and storing oil
Ratepayer selling agent for oil companies
Use of hereditament for dock purposes
Occupation and use of hereditament as part of a dock undertaking
Oil 'intended for the use of' the ratepayer

Legislative References:
Rating and Valuation (Apportionment) Act 1928 - (18 & 19 Geo 5 c 44), s 5(1) (c), (3), s 6(3)(b)

Case References:
Clyde Navigation Trustees v Inland Revenue, Inland Revenue v Kirkwall Assessor - [1930] SC 454; Digest Supp
Clyde Navigation Trustees v Glasgow Assessor - [1931] SC 400; Digest Supp

Hearing date: 26-28 June 1956
Judgment date: 25 July 1956

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Judgment by:
Lord Keith of Avonholm

My Lords, it is conceded that the hereditament here (which I shall call the "oil depot") is occupied and used partly for "dock purposes" in respect that it contains pumping apparatus which is used in unshipping oil from ocean-going tankers which berth at two jetties belonging to the British Transport Commission as dock authority at the Port of Hull. To that extent it satisfies the first of the requirements of s 5(1)(c) of the Rating and Valuation (Apportionment) Act 1928. Delivery of the oil is taken at ship's rail and is pumped direct from the ship by means of pipes to the oil depot.

The first question which arises is whether the oil depot is occupied and used as part of what I shall call the Hull dock undertaking so as to satisfy the second requirement of s 5(1)(c). "Dock undertaking" here means "an undertaking carried on by a dock authority", being so defined in s 5(3). Now such an undertaking includes much more than the mere physical structure of the dock. The dock is only part of the undertaking, just as a railway is part of a railway undertaking and a canal a part of a canal undertaking as stated in terms by the Act when referring to these types of freight-transport hereditament under s 5(1)(a) and (b). A dock undertaking includes the whole business and activities of a dock authority. I should require clear evidence, which is entirely lacking here, that the Hull dock authority had statutory power to carry on the business of an oil depot as carried on by the appellants, ie, as oil merchants and distributors, before I could regard a hereditament occupied and used for such a business as part of their undertaking. If the authority cannot so use their land, the appellants cannot be occupying and using the oil depot as part of a dock undertaking. A further difficulty is this. The land leased to the appellants or their predecessors in title belonged to the Hull dock undertaking and, I will assume, was part of the dock undertaking, though it may not have been used at all for dock purposes. But when it was let out it would, according to ordinary conceptions, cease to be part of the dock undertaking. It would be put, for the time being, beyond the operations and control of the dock undertakers. But counsel for the appellants points to proviso (a) of s 6(3), as showing that, though a part of the hereditament of a dock authority was let out, it might still, in the conception of the legislature, remain a part of the dock undertaking. The proviso is as follows:

"no part of a freight-transport hereditament which is so let out as to be capable of separate assessment shall be deemed to be occupied and used for transport purposes unless it is actually so occupied and used;"

The proviso refers to occupation and use for transport purposes. In the case of a dock, this means dock purposes under the definition of "transport purposes" in s 5(2). But this does not necessarily mean that every part of a dock undertaking which is let out and is used to some extent for dock purposes continues to be part of the dock undertaking. If it were open to a dock authority to let out the whole of its docks for dock purposes to serve the public as before, the undertaking would doubtless continue to be a freight-transport hereditament, and, if the authority had power to let out part of its docks or quays to be used for the berthing of ships and the loading and unloading of merchandise, it might, I think, be said that the part let out remained part of the dock undertaking. The dock authority would be securing for the public through a lessee the same services as it would have performed itself. But where all that the authority does is to let out some waste or vacant land in order that the lessee may erect works and plant, such as we have here, it is impossible, in my opinion, to say that the land with the works on it is occupied and used as part of the dock undertaking, even if, as incidental to the operations carried on, it is used also for the shipping or unshipping of goods for the purposes of the occupier's business.

On this part of the case, counsel for the appellants referred to and relied on the Scottish decisions in Clyde Navigation Trustees v Inland Revenue (1930 SC 454), and Clyde Navigation Trustees v Glasgow Assessor (1931 SC 400). The last of these cases alone need be noticed as illustrative of the point made by appellants' counsel. In that case, the Lands Valuation Appeal Court held, inter alia, that offices built by a dock authority on ground within the precincts of their dock, and let to a firm of shipowners and a firm of stevedores respectively, were occupied and used for "dock purposes as part of a dock undertaking" within the meaning of s 5(1) and were, accordingly, freight-transport lands and heritages. It may be observed that one of the facts found in the case was that the buildings had been constructed by the trustees (the dock authority) expressly for the purpose of leasing them to the shipowners and stevedores engaged at the dock in loading and unloading merchandise. Referring to s 6(3)(a) of the Act, Lord Hunter said (ibid, at p 405):

"That means, I think, that, where one finds subjects, capable of separate assessment and leased to tenants, which are so used and occupied as to fall within the definition of freight-transport, one must treat the subjects, although let, as part of the dock undertaking for purposes of de-rating."

That decision cannot, in my opinion, be pressed beyond the particular circumstances with which it dealt. The buildings in that case were being used for precisely the same purpose of loading and unloading merchandise as the dock authority would have used them if they had kept the buildings in their own hands. They were being used for no other purposes. For their own convenience, or for the convenience of the shipowners and stevedores using the docks, they chose instead to let them. Where similar buildings were erected by the lessees on land leased to them by the dock authority a different rule was applied, as the cases cited show. In such a case, the court held that the buildings were not part of the dock undertaking and so not entitled to de-rating. But as this distinction may depend on specialties of Scottish valuation law and procedure I do not seek to apply it to this case, though it shows how narrow the decisions in these cases were. The cases are, in my opinion, distinguishable from this case, where the operations carried on by the lessees extend far beyond the business and activities of a dock authority.

It is said, however, that, if the oil depot is not part of the Hull dock undertaking, it is a dock undertaking in its own right by virtue of the second limb of the definition of "dock undertaking", viz:

"any other undertaking comprising as part thereof a dock in so far only as its business is carried on at and in connection with that dock."

The appellants here rely on their barge berth at Hedon Haven, from which some of the oil in their oil depot is shipped. The barge berth is not part of the oil depot, though it is connected with the oil depot by pipes through which the oil is pumped for shipment. It is three hundred yards from the nearest part of the oil depot and is a separate hereditament, separately assessed, and, as such, does not come into this case. But it is used by the appellants to attract to their oil depot the character of a dock undertaking. Part, at least, of the business of the oil depot, it is said, is carried on at or in connection with the barge berth. I cannot apply the definition to the facts of this case in the way contended for by the appellants. No doubt the business done at the barge berth is associated with the business done at the oil depot. But the intention of the definition, in my opinion, is to effect a separation between the dock and the rest of the undertaking. The undertaking is carrying on business at the dock. It is also carrying on business at the rest of its premises. The two must be treated separately. No difficulty really arises, in my opinion, when the dock and the other premises are separated, as here. The dock is clearly identified from the rest. But the dock and the other premises may be within one curtilage where separation is not clearly defined. There it would be necessary, I think, to look at what would normally be regarded as dock activities, these being, ex hypothesi, part of the business of the undertaking, and the area within which these are carried on, or necessary for them to be carried on, would be marked by the definition as the dock undertaking. The rest would be excluded from being a dock undertaking. In my opinion, the definition is of no avail to the appellants in the circumstances of this case.

On the views which I have expressed it is unnecessary to consider the application of the third requirement of s 5(1)(c) to the facts of this case. If the oil depot were part of the Hull dock undertaking, that undertaking clearly satisfies the requirement. But if the oil depot were to be treated as a dock undertaking in its own right, I should have had great difficulty in holding that the oil did not belong to, or was not intended for the use of, the appellants. But I need not elaborate this point.

I would dismiss the appeal.

Appeal dismissed with one set of costs only to be apportioned as to two-thirds to the respondent, the valuation officer, and as to one-third to the respondents, the rating authority.

Solicitors: Sydney Morse & Co (for the appellant ratepayer); Solicitor of Inland Revenue for the first respondent, the valuation officer); Smith & Hudson agents for Mainprize, Rignall & Whitworth, Hull (for the second respondents, the rating authority).