5. Legal framework
By virtue of the Local Government Finance Act 1988 Schedule 5, para 13 (1), no sewer, as defined by section 343, Public Health Act 1936, or accessory (manhole, ventilating shaft, pumping station, pump or other accessory) belonging to such a sewer, shall be liable to be rated. The overwhelming majority of sewage treatment works (STW), both in terms of number and size, are owned and operated by ten water companies operating under their statutory capacity of sewerage undertaker. The remainder compriselocal authorityowned and occupied works, and a small proportion of privately owned systems.
The volume and quality of discharges from a STW is licensed by the Environment Agency. The Environment Agency operates within the legislative framework established by the Department of Environment Food and Rural Affairs (Defra) and the National Assembly for Wales.
Water Companies, when investing in new plant on a STW, will have considered the requirements of the Works in the context of current and anticipated legislative requirements.
The Office of the Water Regulator OFWAT regulates the Water Industry determining the capital expenditure and charging structures. These are determined in five yearly cycles termed Asset Management Programmes (AMPs) and are agreed in advance of each 5-year period.
5.1 Identification of the Hereditament
As with all non-domestic hereditaments the first step is always to identify the hereditament regardless of any schedule 5 exemption issues. The guidance found in Rating Manual: section 3 part 1 - Hereditament should be followed.
5.1.1 Split site works
The increasing environmental standards have led to the requirement of additional treatment facilities being added to existing sites. Some small coastal sites have been faced with the need to expand their treatment facilities but without the presence of more land. In some cases additional treatment facilities have been built at a second site inland from the first. Sewers bring the effluent to the coastal site (formerly for discharge), the effluent is then screened and grit removed before the partially treated effluent is pumped inland to the second site. At the second site further treatment processes take place. The final effluent is then returned by pipe to the original coastal site before being pumped out to sea.
In these types of cases, care is needed to correctly identify thehereditament. After the start of treatment has been established at the coastal site, consideration of whether the sites could only be occupied together is required.
An indication of sites only being capable of being occupied together would include the screening of effluent at one site without duplication of the process at the second.
Where two sites are connected by transfer pipes, consideration should be given to whether the STW comprises one, two or potentially three hereditaments -See Webster (VO) v Yorkshire Water Services Ltd (2009) RA 317
All issues concerning these circ*mstances should be referred to the NVU technical lead.
5.2 Start of rateability
After identifying thehereditamentthe point of non- exemption must be determined. By virtue of the Local Government Finance Act 1988 Schedule 5, para 13 (1), no sewer, as defined by section 343, Public Health Act 1936, or accessory (manhole, ventilating shaft, pumping station, pump or other accessory) belonging to such a sewer, shall be liable to be rated.
Where treatment of effluent starts, the sewer is deemed to have finished and rateability starts. Several cases have explored this area.
A set of storm water tanks, located off a sewer, one mile from the STW had effluent diverted into it when the flow down the sewer exceeded 3 times dry weather flow. When the flow rate down the sewer returned to below 3 times dry weather flow, the effluent temporarily stored in the tanks flowed back into the sewer. If the tanks became full, the excess effluent after undergoing some settlement in the storm tanks passed over a weir into the river. The Lands Tribunal considered these facts inJones (VO) v Eastern Valleys (Monmouthshire) Joint Sewerage Board (No.2) 1960and concluded the storm tanks were an accessory to the sewer and hence not rateable.
The case ofGudgion (VO) v Erith Borough Council and London County Council LT 1960, CA 1961, concerned three sewers that flowed towards a STW. All three of the sewers reached a point where their flow was diverted in direction. On two of the three the sewage was pumped to a higher level in order to discharge into sedimentation tanks. The third continued to a sedimentation tank. The Lands Tribunal (LT) were asked to determine whether the change in direction of the pipe should be interpreted as a change in function of the pipe. The LT concluded that the function of the pipe and subsequent raising of the sewage to a greater height could in no way be interpreted as treatment, merely incidental to the function of conveyance. Hence exemption continued up to the point of discharge of the effluent into the sedimentation tank, the first point of treatment. The Court of Appeal agreed with this decision.
InHoggett (VO) v Cheltenham Borough Council 1964, treatment was found to start at the screens. Effluent passed through the screens and a detritor, and then subsequently into sedimentation tanks. In this case if the flow exceeded a certain level, the excess would flow into a storm water tank. When the flow subsided the effluent was pumped back into the main sewer before the screens. The LT having determined that treatment had started at the screens found as fact that the storm water tanks were below this point in terms of the treatment process. As such the LT concluded that these storm water tanks should also be considered rateable.
What constitutes treatment can be a relatively simple action. In Hoggett it was the presence of screens. In the case ofFife County Council v Fife Assessor (1965)it was the physical maceration of sewage before discharge to sea.
5.3 End of rateability
When the liquid has passed through all the stages of treatment it will be ready for discharge to the water course or sea. If the pipe or conduit taking the treated liquid from the STW to the water course solely carries treated liquid it will be regarded as a drain and will remain potentially rateable up to the water course. The LGFA 1988 Schedule 5 Paragraph 13, as noted above, exempts sewers but not a drain.
Pipelines are named items and rateable under Class 3(g) of The Valuation for Rating (Plant and Machinery) Regulations 2000, except where they are a drain or sewer. An outfall pipe as a drain would therefore not be rateable.
Conduits are a named item and rateable under Class 4 Table 3 of the Regulations and therefore should be included.
If the pipe or conduit receives other liquid before reaching the water course, it is at this point that rateability ceases and the pipe or conduit will constitute a sewer.
Issues concerning the end of rateability should be forwarded to the NVU technical lead if they arise.
5.4 Appurtenance to domestic property
Where small STW are in the same ownership as the domestic properties which they serve, proposals to delete from therating liston the basis that these STW as domestic may be received.
To determine whether a STW is an appurtenance to a domestic property requires consideration of the facts.
The relevant provision within the Local Government Finance Act 1988 (the 1988 Act) is contained within section 66 (1);
“(1)… property is domestic if- a. it is used wholly for the purposes of living accommodation b. it is a yard, garden, outhouse or other appurtenance belonging to or enjoyed with property within paragraph (a) above…”
There is no statutory definition of ‘other appurtenance’.
In the Lands Tribunal case ofMartin v Hewitt (VO) [2003] RA 275, a case concerning boathouses on the shores of Lake Windermere, the President reviewed the authorities dealing with what is and what is not an appurtenance, and ruled;
“In all the statutory contexts that fell to be considered in these cases, therefore, ‘appurtenance’ was held to be confined to the curtilage of the building in question. I can see no reason for treating it as not so confined in section 66(1)(b) of the 1988 Act ”, and that “ “appurtenance” in section 66(1)(b) was not intended to encompass land or buildings lying outside the curtilage of the property referred to in section 66(1)(a) ”.
In the later case ofHead (VO) v London Borough of Tower Hamlets [2005] RA 177which concerned District Heating Systems (DHS), the President found it unnecessary to review again the cases that deal with the meaning of “appurtenance” and accepted that in the statutory context of the 1988 Act; “it embraces property that will pass with the principal subject matter of a conveyance without the need for express mention and is confined to the curtilage of the building in question.”
This principle was followed in the case ofWinchester City Council v Handco*ck (VO) [2006] RA 265concerning sewage treatment works. Here Winchester City Council had retained a number of small STW originally provided for Local Authority housing. It was submitted that the “right to use the sewage treatment works” fell within the curtilage of each freehold and was appurtenant to it and was therefore property which would pass on a conveyance of the freehold, that it was not necessary for the freehold of the residential units and the STW to be capable of being enclosed within one single red line on a map, and that the curtilage was extended by pipes connecting dwellings in the ownership of the appellant to the STW.
The Lands Tribunal held that;
” It is the physicalhereditamentcomprising the sewage treatment works that must be within the curtilage of the dwelling (or dwellings), if it is to be appurtenant to it (or them) “.
In the case ofAllen (VO) v Mansfield District Council & Bassetlaw District Council [2008] RA 60-69 2005again concerning DHSs, these definitions were reaffirmed. In this case, the VO submitted, and the member accepted, that the proper analysis of the decision in Head 2005 is that a DHS constitutes an appurtenance within section 66(1) (b) if:
- It is possible to identify a principal building; and
- This principal building is used wholly for the purposes of living accommodation; and
- The DHS in question is within the curtilage of this principal building and belongs to or is enjoyed with that property.
It should be noted that the curtilage of a building does not necessarily equate with the boundary of the property, although in most cases the boundary and the curtilage will coincide exactly. The curtilage of a building may on occasions be smaller than the extent of the property owned. Whilst for example a house and grounds may comprise gardens and outbuildings, it is a question of fact and degree whether the curtilage of the house would extend to include all or part of the gardens and all or part of the outbuildings. The extent of the curtilage is determined by several factors including the nature and size of the house, being the “principal subject matter of the conveyance.”
In the case of Head the VO contended that a DHS could not be an appurtenance to domestic property that comprised more than one occupation. In his decision the President rejected this contention. The President ruled that the definition contained in section 66(1) (b) was not worded in terms of occupation nor was there any reference to the term “hereditament”.
The example cited by the President in that decision was that of a boiler house situated on the top floor of a multi storey building. The building contained several property interests; statutory tenants, long leaseholders and the freehold. The accommodation in the building was wholly residential. The building and the boiler house were in the same ownership. The President concluded;
““the boiler house and the associated pipework within the building would pass on any conveyance of the building. The DHS can properly be said, therefore, to be appurtenant to the residential accommodation and to belong to it”.
In Winchester the VO advanced that a sewage treatment works serving an estate of houses all in single ownership might satisfy section 66, as it did in Head, but once the freehold of any of the dwellings was disposed of and the sewage treatment works continued to serve it, it could not be ‘appurtenant’ to them. As the VO succeeded in the principal argument that the sewage treatment works did not fall within the curtilage of any dwellings that they served, it was not necessary to consider this further submission. The Lands Tribunal however gave an obiter view that the submission was too broad and concluded;
“It seems to us to be possible to envisage situations where a part of a curtilage is disposed of by freehold sale and continues to be served by the sewage treatment works, yet the circ*mstances are such that the sewage treatment works is still capable of satisfying the words of section 66 (1)”.
The member in Allen agreed with these obiter remarks.
Taking into account the effect of these decisions, the following tests should be carried out, in the order that they are shown below, when deciding whether or not a STW is an appurtenance to property that is domestic. The STW must satisfy all the tests to qualify as domestic property.
i. Identify the building(s) that are served by the STW. A block of flats, a terrace of houses or an individual house may constitute the “principal subject matter of the conveyance” in question. An estate comprising a multitude of different buildings would not.
ii. Establish that the above is wholly domestic.
iii. Identify the “curtilage” of the domestic property.
iv. Establish that the STW in the same ownership as the “principal subject matter of conveyance”.
v. Establish that the STW is wholly located within the curtilage of the “principal subject matter”. This will be a matter of fact and degree in every case.
vi. Establish that, by its nature the STW would pass without mention in a conveyance of the principal subject matter.
If the STW satisfies all of the above criteria then it is an appurtenance to domestic property, and therefore is itself domestic property. Such systems should not be shown in anon-domestic ratinglist.
Examples
A small terrace of four houses set in a small, shared garden. Within the garden is a septic tank that serves all four properties. The four properties are owned by thelocal authorityas is the garden and the septic tank. In this case the curtilage of the domestic building (the principal subject matter) would extend to include the septic tank. The septic tank would “pass without mention in a conveyance “of the “principal subject matter” and so the septic tank would be considered an appurtenance to domestic property.
A crescent of sixteen semi-detached houses. A green area within the crescent housing a small STW. Some of the houses are in different ownership having been purchased underRight to Buyprovisions; the remaining houses and the STW are in the same ownership. The STW could not be said to be in the curtilage of any one of the buildings and it could not be envisaged to be able to pass without mention. As such the STW cannot be an appurtenance to any of the eight pairs of semis. The STW is non-domestic.
5.5 Rateability - plant and machinery
The instructions contained in Rating Manual: section 6 part 5: plant and machinery should be followed. The nature and extent of Plant and Machinery encountered on a STW may vary widely, however the main items encountered can be found in the sewage works section of the Cost Guide. Several tribunal cases have tested the extent of rateability on certain items found on a sewage treatment works.
InJones (VO) v Eastern Valleys (Monmouthshire) Joint Sewerage Board (No.1) 1958the LT were asked to decide whether certain items ofplant and machineryfound on a STW were rateable, as falling within Class 4 of the Schedule to the Plant and Machinery (Valuation for Rating) Order 1927.
The mechanical iron screens of the screening chamber were found not to be part of the tank or chamber that held them and consequently not rateable.
The scrapers attached to a revolving bridge over a sedimentation tank were found not rateable as they could only be brought within the Order as part of the tank in which they were situated, and the member decided on the evidence that they play no part in the treatment of the sewage for which the tank was designed. The member also considered that that they did not appear to be in the nature of a building or structure.
Media contained within sludge beds and bacteriological beds, held not part of the chamber nor being in the nature of a building or structure, hence not rateable.
Rotating sprinkler apparatus of bacteriological treatment beds, held not part of the chamber nor being in the nature of a building or structure, hence not rateable.
InWessex Water v Barnes (VO) 2004the Valuation Tribunal considered the rateability of sludge holding tanks under 400m3, constructed from a concrete base and metal sides. The tanks were formed by the setting of a concrete pad upon which the metal sides were constructed within a lip in the concrete. The metal sides could be unbolted and moved to another site and re-erected on another concrete pad. The concrete base could only be removed by breaking it up.
The Valuation for Rating (Plant and Machinery) Regulations 2000 provides that where a named item in Class 4 Table 4; a tank; is less than 400 cubic metres then to be rateable the item needs to satisfy the provisions in Class 4.
(a) any such item which is not, and is not in the nature of, a building or structure;
(b) any part of any such item which does not form an integral part of such item as a building or structure or as being in the nature of a building or structure.
(c)….(not relevant)
(d) any item in Table 4 the total cubic capacity of which (measured externally and excluding foundations, settings, supports and anything which is not an integral part of the item) does not exceed four hundred cubic meters and which is readily capable of being moved from one site and re-erected in its original state on another without substantial demolition of any surrounding structure.
The Valuation Tribunal found that as a matter of fact the tank, the concrete pad, and metal walls were integral to the tank. Whilst it was possible to unbolt the metal sides and re-erect them at another site on another concrete pad, this did not constitute its “original state”. The tank was therefore rateable.
The question of rateability ofplant and machineryused for odour control under Class 2 was also in contention in Wessex Water. The STW had contained all the effluent treatment processes within two buildings. Odorous air was extracted by fans and ducts from two parts within the buildings. First immediately above treatment plant, and the second from within the building in general. Fresh air was introduced to the buildings by a separate set of ducts. The odorous air was then taken to scrubbing plant that chemically cleansed the air before it was released.
The Valuation Tribunal found that at the STW, the received effluent comprised three parts requiring treatment, the liquid, the sludge and odorous gas emitted during the separation and subsequent treatment of the first two.Plant and machineryused to treat the odorous gases, the Valuation Tribunal held, constitutedplant and machineryunder Class 2 “which is in or on thehereditamentand is used or intended to be used in connection with services mainly or exclusively as part of manufacturing operations or trade processes”. These items ofplant and machinerywere therefore found to be not rateable under Class 2.
It should be noted that several of the items ofplant and machineryhowever comprise named items under Class 4. These items include ducts, foundations, settings, supports and tanks. Notwithstanding the position under Class 2, these items should be tested against the provisions of Class 4 to ascertain their rateability.
