Case No: C1/2002/1446
Neutral Citation Number:  [2003] EWCA Civ 529
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL
(GEORGE BARTLETT QC, PRESIDENT)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Friday 11 April 2003
Before :

LORD JUSTICE POTTER
LORD JUSTICE CHADWICK
and 
LORD JUSTICE TUCKEY

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Between :

	CINDERELLA ROCKERFELLAS LIMITED	Appellant	
	- and -		
	PETER JAMES RUDD 
(VALUATION OFFICER)	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
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Mr David Widdicombe QC and Mr Robert Walton (instructed by Messrs Richmonds) for the Appellant
Mr T Mould (instructed by the Solicitor of Inland Revenue) for the Respondent

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Potter: 
Introduction
1.	This is an appeal by Cinderella Rockerfellas Ltd (the appellants) the operators and occupiers of a nightclub situated upon a floating vessel, the Tuxedo Royale (“the vessel”) which at all material times was moored and berthed on the river Tyne at Hillgate Quay, Gateshead.  They appeal against the decision of the Lands Tribunal (George Bartlett QC, President) dated 13 June 2002 whereby the Lands Tribunal allowed two consolidated appeals by the Valuation Officer against decisions of the Tyne & Wear Valuation Tribunal.  The latter Tribunal had, on appeals by the appellants, directed that two entries:
“River and riverbed occupied by floating nightclub moorings car park and premises”
and 
“Tuxedo Royale, Hillgate Quay, Gateshead, Tyne & Wear”
should be deleted on the ground that the vessel was not rateable.
2.	The appeal thus raises the question of the rateability of floating vessels in the English law of rating and, incidentally, whether it diverges from Scottish law.  
The facts
3.	The material facts as agreed between the parties before the Lands Tribunal were as follows.  I have indicated in square brackets certain additional matters not mentioned in the agreed facts but which were not in dispute on the appeal.
4.	The vessel was built in 1964.  It is 350 feet long, 54 feet in the beam and has a gross registered tonnage of 5888.  Then known as Sol Express, it operated as a passenger and drive-on vehicle ferry until 1988 when it was modified for its present use and re-named.  It was moored at Hillgate Quay from 1989 to 1999 under licence granted to the appellants by the Crown Estate Commissioners.  The first licence, dated 26 January 1990, granted for a period of five 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 on the plan and annexed licence, the vessel or such replacement vessel as might be approved by the licensor.  [The plan attached showed the vessel in position in the river beside the quay within a rectangular marked area closely drawn around the vessel indicating the extent of the foreshore and riverbed licensed.]  By 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.”
5.	Thereafter there was no interference by the Licensor with the appellants’ use of the parts of the foreshore or bed of the river to which the licence related and the Commissioners granted no additional rights during the term of the 1990 licence.  By licence dated 23 November 1994 the Commissioners granted rights to the respondents in similar terms to those in the 1990 licence save that clause 3(4) was omitted.  The vessel was used in compliance with clause 2(11) throughout the period of both licences.  
6.	The 1.52 acres of land which contained the Hillgate Quay frontage on its northern boundary was the subject of a lease for 10 years from 26 November 1983 originally made between Gateshead Borough Council and a company called Riverzest Ltd, which became vested in the appellants.  The lease included the right to use the frontage for the purpose of berthing a vessel previously known as the SS Caledonian Princess or any other vessel in the appellant’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 used as a restaurant, licensed premises, hotel, disco and conference centre.  Clause 3(g) required the lessee to use the surface of the quay area for the parking of customers’ private vehicles in properly marked out parking areas.
7.	By a lease dated 21 November 1994 Gateshead Borough Council granted the appellants a further 12 year term from 26 November 1993 upon terms not materially different from those in the 1984 lease.  Again, at all material times, the quay structure, vessel and quay areas were used within the purposes provided by the leases.  
8.	The vessel was moved to the quay and held in position over the riverbed by means of ropes and chains secured to capstans on the quayside.  It was subject to tidal movement.  It remained secured at its berth from 1989 to 1999, only being moved from its position once 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 it was moved to the river Tees for similar use, before being replaced at Gateshead by a similar vessel.
9.	The main accommodation on the vessel consisted of bars, offices, a restaurant, a café/diner and adjoining discotheque, a main discotheque holding up to 700 people, a kitchen, toilets, 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 gangways were strongly constructed of steel, totally enclosed and capable of moving on the quay side as the vessel rose and fell with the tide.]  The car park was used as a private car park for the purposes of the appellant’s business use of the vessel.  The vessel generated its own electricity and there was no mains connection.  It 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.
10.	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 ship keeper on constant duty and other matters.
The Decision of the Lands Tribunal
11.	The Lands Tribunal resolved the issue whether the vessel was rateable by applying the principle stated by Lord Denning MR in Field Place Caravan Park Ltd v Harding [1966] 2 QB 484 in which, basing himself upon London County Council v Wilkins (Valuation Officer) [1957] AC 362, Lord Denning stated:
“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 so that the chattel with the land can together be regarded as one unit of occupation.”
12.	Applying that principle, the Lands Tribunal held that the vessel was rateable for the reasons set out at paragraph 21 of its decision:
“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 riverbed 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.”
13.	In coming to its decision, the Lands Tribunal referred to its own previous decision in Felgate (VO) v Lotus Leisure Enterprises Ltd [2000] RA 89 and observed that the vessel was rateable for the same reasons that a vessel called the Lotus was rateable in that case.  
The Relevant Law
14.	The unit of property which is the subject of rating is “the hereditament”.  By s.64(1) of the Local Government Finance Act 1988 [“the 1988 Act”]:
“A hereditament is anything which, by virtue of the definition of hereditament in section 115(1) of the [General Rate Act 1967], would have been a hereditament for the purposes of that Act had this Act not been passed.”
15.	S.115(1) of the General Rate Act 1967 provided that:
“ ‘Hereditament’ means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list.”
16.	S.64(4) of the 1988 Act provides that:
“A hereditament is a relevant hereditament if it consists of property of any of the following descriptions – 
(a)Lands …”
17.	“Land” is not defined in the 1988 Act.  However, by virtue of s.5 of and the First Schedule to the Interpretation Act 1978, “land” in an Act of Parliament passed after 1978 includes land covered by water.
18.	S.41(1) and (2) of the 1988 Act require the valuation officer for a billing authority, such as the respondent in this case, to compile and maintain local rating lists on 1 April 1990 and on 1 April every fifth year afterwards.  
19.	By s.42(1):
“A local non-domestic rating list must show, for each day in each chargeable financial year for which it is in force, each hereditament which fulfils the following conditions on the day concerned – 
(a)	it is situated in the authority’s area, 
(b)	it is a relevant non-domestic hereditament …”
20.	From the origins of rating in 1601 as provided for in the Poor Relief Act 1601, the liability to be rated rested upon the occupier of the property concerned: see Sir Anthony Earby’s case (1633) 2 Bulst 354.  The position is still the same, save for specific statutory provision first made in 1966 for rates to be chargeable on certain unoccupied properties.  A ratepayer’s liability in respect of occupied hereditaments now arises from the express provision contained in s.43(1) of the 1988 Act:
“A person (the ratepayer) shall as regards a hereditament be subject to a non-domestic rate in respect of a chargeable financial year if the following conditions are fulfilled in respect of any day in the year – 
(a)	on the day the ratepayer is in occupation of all or part of the hereditament, and 
(b)	the hereditament is shown for the day in a local non-domestic rating list in force for the year.”
21.	Sir Anthony Earby’s case also decided that assessments under the 1601 Act “ought to be made according to the visible estate of the inhabitants there, both real and personal”.  Although largely ignored in practice by rating authorities, the rateability of inhabitants for personal property (i.e. chattels) was only abolished by the Poor Rate Exemption Act 1840.  Since that date therefore, the liability of the occupier has been limited to hereditaments in the nature of land, and no chattel is rateable per se.  
22.	A ship is a floating chattel.  Prior to 1840 ships were rated in the parish which was regarded as their home.  Thereafter they ceased to be rated.  However, a line of decisions including such cases as Cory v Bristow (1872) 2 App Cas 262 (HL) and Smith’s Dock Co Ltd v Tynemouth Corporation [1908] 1 KB 315 held that the owners of vessels or floating structures used for commercial purposes while fixed in position on a long-term basis over moorings on the riverbed could for rating purposes be treated as the occupiers of those moorings and the part of the riverbed in which they were situated.  
23.	In parallel, a line of authority developed in relation to structures and other chattels on or connected with land held in occupation whereby, albeit not part of that land, such chattels were rated with it on the basis that they were enjoyed with the land and enhanced its value.  These authorities related to such chattels as telegraph posts and wires (Electric Telegraph Co v Salford Overseers (1855) 11 Exch 181), telephone wires (Lancashire Telephone Co v Manchester Overseers (1884) 13 QBD 700), showcases and kiosks at a railway station (Westminster City Council v Southern Railway Co [1936] AC 511) and a number of cases concerned temporary huts and structures erected by builders upon construction sites.  The principle underlying those decisions was examined and made clear in LCC v Wilkins (Valuation Officer) [1957] AC 362.  In that case it was claimed that four builders’ moveable huts, erected as temporary structures on a site for 18 months, only one of which was moved from one part of the site to the other during that period, were chattels and therefore not rateable.  The House of Lords held that the question whether or not the structures had lost their character as chattels was not decisive as the test of rateability, nor was the conscious intention of the contractors to attach or not to attach them to the soil.  These were no more than factors which fell to be considered and the test of rateability was whether there was evidence that the structures, occupied for a period which was not transient, were enjoyed with the land and enhanced its value.  Viscount Kilmuir LC stated at 373-374:
“ … the test of rateability is whether there is evidence that the structures were enjoyed with the land and enhanced its value.  In considering this, the intention of the erector and the other elements of annexation, period, size, quality, amenities and purpose are all material.  All these factors are important, but intention, and certainly what I may call the “conscious element” in intention, is no more than one factor and its importance is not overriding.  The question is eminently one of fact …”
24.	Lord Radcliffe said:
“No-one supposes, of course, that a man is rateable in respect of the enjoyment of chattels as he is in respect of the occupation of land.  But, on the other hand, I think that that is a long way from saying that the presence of chattels on land can never be a relevant factor either in determining the assessment of the rateable value of a hereditament or in determining whether there is a rateable occupation or not …I think it equally well established that a structure placed upon another person’s land can with it form a rateable hereditament, even though the structure remains in law a chattel and as such the property of the person who placed it there.  It has been habitual practice to treat gas and water pipes, drains and sewers, telegraph posts placed in and telegraph or telephone wires placed over land as being themselves rateable subjects, yet I do not think that there is any foundation for supposing that when the undertaker equipped either with the licence of the owner of the soil or with statutory powers, affixes his apparatus to a building or lays it in or on the soil the law regards him as thereby making it a part of the freehold.”
25.	Later he stated:
“When the owners of pipes, cables, posts etc are rated as occupiers they are rated in respect of those things themselves, by means of which they occupy land, not merely in respect of the land that is occupied: just as in Cory v Bristow it was the moorings themselves that were treated as the rateable hereditament …
In my opinion, the present case really centres round the question whether the sheds, erected on a building site by a building contractor for the purpose of his operations, involve such a degree of permanency in his occupation as to make it a rateable one.  I have no doubt that, in considering this, it is at any rate relevant to ascertain to what extent and in what way these constructions have been made a fixed part of the site on which they stand, for the more casually they are attached the less likely it is that the occupation of them will be found to be a permanent one.  In this sense it may be of some importance to enquire whether they are chattels or not.  But to make the whole issue of rateability depend on the bare issue, for instance, whether a particular structure has or has not foundations in the ground which give it a measure of lateral as well as subjacent support would be to use a legal distinction for a purpose for which it was never intended.”
26.	In Field Place Caravan Park Ltd v Harding [1966] 2 QB 484 the Court of Appeal considered the rateability of a residential caravan site.  The caravans were on wheels and retained their mobility although they were jacked up to keep them stable.  The Court of Appeal upheld the decision of the Lands Tribunal confirming the entries of the caravans in the valuation list.  In giving the leading judgment, Lord Denning MR having considered the observations of Lord Kilmuir and Lord Radcliffe in London County Council v Wilkins, stated the proposition applicable to the facts of the case before him as set out at paragraph 11 above.  
27.	In the light of certain submissions made for the appellant to which I refer below, it is pertinent to observe that in relation to the Scottish case of Assessor for Glasgow v Gilmartin (1920) SC 488 in which it was held that a small hut which could be moved on wheels was not rateable in Scottish law, Lord Denning observed that the provisions of the relevant Scottish Acts were different from the relevant English provisions.  Salmon LJ also observed at 503:
“To my mind that decision turned entirely upon the statute which governs the law of rating in Scotland and which has no application to any of the matters we have to consider.  In my judgment the fact that the structure in question happens to be a caravan on wheels rather than a hut or bungalow is material only to a consideration of the question whether or not the occupation of the caravan dweller is transient.  That question does not arise in this case because it is conceded that it would be impossible to say that the occupation of these caravan dwellers was so transient as to be incapable of constituting rateable occupation.  As was pointed out in the Southern Railway case, in rating, as distinct perhaps from tax law, the courts look to the substance and not the form.”
28.	The effect of those authorities was considered by the Lands Tribunal in Woodbury (Valuation Officer) v The Yard Arm Club Ltd [1989] RA 381 (LT) in relation to a vessel, The Hispaniola, moored in the river Thames to two steel piles called dolphins fore and aft, each embedded in the riverbed.  The vessel was connected to the dolphins by steel horns which permitted it to rise and fall with the tide but prevented forward, rearward or lateral movement.  The vessel was also anchored to the riverbed fore and aft, a subsidiary chain going to the embankment wall.  The vessel was used as a restaurant and was permanently connected to all main services for that purpose.  Access to the vessel from the embankment was via a metal canopied gangway.  The vessel and its moorings were owned by the Club authorised to operate it, whereas the riverbed was owned by the Port of London Authority which had granted the Club a licence to place and retain the vessel with its piles etc in the position which it occupied.  By s.178(1) of the Port of London Act 1968, land vested in the Port Authority (which included the bed of the river beneath the vessel) was exempt from rating or inclusion in any valuation list.  The decision of the Lands Tribunal turned upon that last point.  Giving judgment the President stated:
“I cannot accept that the dolphins and the vessel are land.  They and the anchors which rest on the riverbed are chattels.  Nevertheless, on the facts of the present appeal it is clear and I hold that the Club by means of the vessel, its dolphins and anchors is in occupation of that part of the riverbed over which it is moored and permanently so.  That part of the riverbed together with the vessel would thus be a rateable hereditament or part of a rateable hereditament if s.178 of the Port of London Act 1968 had no application: see Cory v Bristow.  In other words, the relevant parts of the riverbed, together with the chattels, that is to say the vessel, the dolphins and the anchors, constitute a unit of occupation: see per Lord Denning MR in Field Place Caravan Park v Harding [1966] RA 393.  However on the authority of Whenman v Clark, that unit of occupation is not rateable because of the operation of s.178 of the Port of London Act 1968.”
29.	The President also considered an alternative submission that, by reason of the connection by the horizontal chains and gangways to the river wall, the vessel was rateable together with the part of the river wall in question which was owned by the Greater London Council.  Counsel for the Club answered that submission by saying that chattels could only be rateable if they were in, on or over rateable land and that the relation between the land and the chattels must be vertical and not horizontal.  The President observed:
“I think that that observation is correct but whether it is so or not, it appears to me that it is not possible for the vessel to occupy part of the riverbed, as I have held it to do, and part of the river wall as well.  Moreover, I agree with counsel for the Club that, if paramountcy comes into question, it is the riverbed which is the more important because the vessel derives its stability therefrom and without that stability could not be used as a floating restaurant …”
30.	On appeal sub nom Westminster City Council v Woodbury (Valuation Officer) and the Yard Arm Club Ltd [1992] RA 1 (CA), Lloyd LJ in upholding the decision of the Lands Tribunal observed at 8-9:
“I confess that, like the Lands Tribunal, I find some difficulty in the concept of lateral occupation by a chattel, if indeed occupation by a chattel is the right test, but for reasons which will appear, I do not find it necessary to resolve that difficulty …
Such authority as there is seems to suggest that the Hispaniola does not occupy the Victoria Embankment in any relevant sense, though I accept of course that it was attached to the embankment fore and aft by chains and that it was permanently connected to all the main services …
Similarly, in Thomas v Witney Aquatic Co Ltd, the hereditament was described as “lake, clubhouse and premises” with a rateable value of £250.  The clubhouse was floating on the surface of the lake.  It was argued, first that “lake” was not an adequate description of the land beneath the water and secondly that the rate payers were not in rateable occupation of the clubhouse, as it was a chattel.  Both arguments were rejected.  It was held that the clubhouse was enjoyed with the lake and so with the land beneath the lake, and was therefore part of the rateable hereditament so described.
So the educated reader would, prima facie at any rate, take “the premises” as a reference to the land comprising the riverbed and not the embankment.  If that is so, then counsel for the rating authority is in difficulty, for by s.178(1) of the Port of London Act 1968 the riverbed is not rateable.”
31.	In concurring, Mann LJ said:
“ … if it be supposed that the bed of the river is occupied by means of the Hispaniola being held above it by the embedded dolphins, then that occupation would not be a rateable occupation of the bed because of s.178 of the Act.  The correctness of the supposition does not fall for decision.  However, on the facts as found I am of the view that it would be a correct identification of the only land which could be said to be enjoyed through the vessel.  In common with my Lord and with Mr Wellings, I doubt whether one can occupy a land by means of a chattel which is not on, under or above that land.”
32.	The decision in Thomas v Witney Aquatic Co Ltd [1972] RA 31 referred to by Lloyd LJ was a decision of the Lands Tribunal in respect of a clubhouse floating upon a lake over which the ratepayer had rights of use for sporting and boating activities and to maintain a floating clubhouse which was moored to three steel barges in turn moored to the land.  The clubhouse was also made fast to the land by two wire hawsers and kept at a fixed distance from the land by two gangways, being moved in winter months to an island in the lake.  The disputed hereditament was described as ‘lake, clubhouse and premises’.  
33.	In finding that the floating clubhouse was a chattel enjoyed with the land and therefore rateable as part of the hereditament, the Tribunal relied on the words of Lord Russell of Killowen in Westminster City Council v Southern Railway Co [1956] AC 511 at 529:
“Subject to special enactments, people are treated as occupiers of land, land being understood as including not only the surface of the earth but all strata above or below.  The occupier, not the land, is rateable; but the occupier is rateable in respect of the land which he occupies.”
34.	The Tribunal added:
“The expression ‘land’ is in my opinion wide enough to include water lying on the surface of the earth, so that the lake in the present case is capable of being part of the hereditament, if it satisfies the other tests of rateability, and in those circumstances I consider that the word ‘lake’ would be a proper description of that part of the hereditament.”
35.	In Felgate (VO) v Lotus Leisure Enterprises Ltd, to which I have already referred in paragraph 13 above, the valuation officer had entered in the rating list a floating restaurant called The Lotus moored at Millwall Dock as “dock bed, floating restaurant, moorings and premises”.  The Lands Tribunal was concerned to decide whether such rateable hereditament had been correctly identified.  The vessel was a steel hull without means of propulsion or steering with a superstructure erected to contain the restaurant.  It was permanently moored in position connected to the dock wall by three hawsers at the bow and two at the stern, each looped over bollards.  There were two further connections to the dock wall by means of steel hawsers and the vessel was connected to all main services.  Access was by means of four wooden and steel gangways resting on rollers to allow for the vertical movement of the water in the dock.  The vessel was permanently in position save that it was moved on two occasions each year from its mooring by a tug to the other side of the dock for the purpose of undertaking essential maintenance in an operation which lasted no more than a few hours.  
36.	It was submitted for the valuation officer that the owners were the occupiers of a hereditament comprising the part of the dock bed over which the vessel was moored and the water beneath the Lotus.  Field Place Caravan Park Ltd v Harding was relied on.  It was submitted for the owners that there could be no occupation of the bed of a river or a dock by a vessel floating above it without some kind of permanent fixture to the bed concerned.  The President of the Lands Tribunal conducted a wide-ranging review of the relevant authorities, including that of the Scottish Lands Valuation Appeal Court in Assessor for Glasgow v R.N.V.R. Club (Scotland) [1974] SLT 291 and that of the Hong Kong Court of Appeal in Commissioner of Rating and Valuation v Yiu Lian Machinery Repairing Works Ltd [1985] 2 HKC 517.  In the former case a ship used as a club and moored to a quay in the Clyde in physical circumstances remarkably similar to this case, was held not to be “heritable” in nature and therefore not rateable under Scottish law.  In the latter case, floating dry docks in Hong Kong harbour were held to be not sufficiently connected with a piece of land to be rateable under the wording of the relevant Ordinance in Hong Kong.  
37.	Applying the principle laid down in Field Place Caravan Park v Harding, the President said as follows:
“25.	Applying this principle, therefore, whether the vessel is rateable depends on whether 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.  “Enjoyed with” the land means no more than that the chattel, although not forming part of the realty, must have some real connection with the land on which it rests (see Ryan Industrial Fuels Ltd v Morgan (VO)).
26.	The fact that the vessel is floating does not in my judgment prevent it from forming part of a hereditament.  Solicitor for the respondent company accepts that this is so and does not suggest that the Tribunal was wrong in the Yard Arm Club case in treating the Hispaniola as part of a hereditament extending upwards from the bed of the river.  The crucial point, on his argument, is that the vessel here is not attached fore and aft to dolphins and to anchors in the bed of the river but is secured to moorings on the dock side. This distinction does not seem to me to be significant.  
27.	The relevant circumstances are in my judgment these.  Although it is a vessel, the essential function of the Lotus is to remain stationary and attached to the dock side to provide a static, landbased facility as a restaurant.  Apart from the fact that it floats, it is not designed for movement and has no means of propulsion.  It has in fact remained stationary for over six years with the exception of the occasions, twice a year for a few hours, when it is towed across the dock for maintenance purposes.  It enjoys all main services.  Its presence excludes the potential use for a similar purpose by anyone else of the dock bed beneath it or the dock side alongside it.  It is enjoyed with the dock bed and the dock side in that it is supported by the dock bed in conjunction with the water above it and it is secured to moorings on the dockside.
28.	In these circumstances, I am satisfied that the valuation officer is correct in identifying as a rateable hereditament the dock bed, floating restaurant and its moorings.  Physically the hereditament consists in my view of the dock bed immediately beneath the vessel, the space above it that is filled with water, the vessel itself and its moorings on the dockside.  The fact that there is water immediately beneath the vessel is only of relevance, it seems to me, to the extent that the vessel could become more mobile if it were not secured …  The occupation of the respondent company fulfils all the ingredients of rateable occupation.  Actual use is made of the dock bed for the support of the vessel through the medium of the water above it; the occupation is plainly of benefit to respondent company; in view of the fact that the vessel is continuously secured in position (apart from a few hours when it is moved for maintenance) and has remained in the same position for a number of years, the occupation is undoubtedly permanent; and in my judgment, it is also exclusive.  The harbour authority can no doubt be said to use all the dock bed and the space above it, including the area beneath the vessel, in that it controls the volume of water within the dock, but this does not interfere with the use that the respondent company makes of the dock bed, which is exclusive for their purposes, and, in my view is plainly paramount.”
The Submissions of the Parties
38.	For the appellants, Mr Widdicombe QC accepts that the principle which fell to be applied by the Lands Tribunal in this case, was that propounded by the House of Lords in London County Council v Wilkins and Lord Denning MR in Field Place Caravan Park v Harding to the effect that chattels may be rateable with land and together form a rateable hereditament if they are enjoyed with the land and enhance its value.  However, he points out that the context in which the principle was propounded was one in which the House of Lords and the Court of Appeal were concerned with chattels/structures which were physically placed upon land but insufficiently attached to become fixtures.  Mr Widdicombe also accepts that in principle (though only in rare cases), the test propounded may be apt to extend to a floating structure or vessel.  However, he submits that that can only be so in a case where such structure or vessel is immovable and physically connected to the land with which it is said to form a rateable hereditament.  
39.	Mr Widdicombe submits that a floating ship is a chattel so far conceptually removed from ‘lands’ that, if it is to be treated as part of a rateable hereditament a high degree of connection and/or adaptation should be sought before so regarding it.  He submits that in this case no such element is present.  He submits that the absence of vertical connection to the riverbed effectively prevents the presence of the floating vessel from being regarded as itself a method of occupation of the land beneath; and the absence of any adaptation of the vessel or its integration and enjoyment with the adjacent land, preserves its separate character as a chattel, enjoyed as such.  
40.	In this respect Mr Widdicombe places heavy reliance upon the Scottish and Hong Kong cases to which I have already referred and submits that the Lands Tribunal fell into error in distinguishing them.  
41.	Mr Mould for the respondents submits that the Lands Tribunal was right to apply the principle succinctly stated by Lord Denning MR in Field Place Caravan Park v Harding and, by applying that principle, to find that the vessel was rateable property for the reasons which it gave.
42.	Mr Mould submits that the principle that a chattel placed upon a piece of land, enjoyed with that land and enhancing its value, can with that land form a rateable hereditament, while remaining in law a chattel, is apt to apply in a case where the chattel is a floating vessel placed upon land covered with water: see the Interpretation Act (paragraph 17 above), the observation of Lord Russell in Westminster City Council v Southern Railway Co [1956] AC 511 - 529 and the decisions of the Lands Tribunal in Thomas v Witney Aquatic Co (paragraph 32-4 above) Felgate v Lotus Leisure Enterprises Ltd (paragraphs 35-7 above).
43.	Mr Mould accepts that, in relation to the question whether the chattel (a) occupies and/or (b) is enjoyed with land comprised within the hereditament identified, the question whether the land has a direct physical connection to that part of the land which lies vertically beneath it, is highly relevant and will generally be definitive.  However, he submits that, in the case of a permanently moored vessel, moored in position over a part of the river bed licensed to the owner for that purpose, even without such a physical connection it is in appropriate circumstances possible to provide an affirmative answer to the question whether the vessel is enjoyed with the riverbed beneath and enhances its value.  In this case, by means of horizontal connection to the adjacent quay which together with the riverbed formed part of the same hereditament, the vessel was permanently secured in a position above and within a part of the riverbed which was licensed to the appellants for the very purpose for which it was used and was in fact used for no other purpose.  In those circumstances the Lands Tribunal was entitled to find that the four conditions of rateable occupation were in fact satisfied.  
Discussion
44.	The four conditions of rateable occupation as set out in John Laing & Son Ltd v Kingswood Assessment Committee [1949] 1 KB 344 at 357 and approved in LCC v Wilkins [1957] AC 365 are (i) actual occupational possession (which involves actual as opposed to intended user of the land in question); (ii) occupation or possession which is exclusive (i.e. if the occupier can exclude all other persons from using the land in the same way as he does); (iii) occupation or possession which is of some value or benefit to the occupier/possessor; (iv) occupation or possession which has a sufficient quality of permanence: see generally Ryde on Rating and the Council Tax paragraphs [61] to [62].
45.	The cases culminating in LCC v Wilkins and Field Place Caravan Park v Harding which developed the principle that chattels may be rateable if enjoyed with the land and enhancing its value have also made clear that the placing of a valuable chattel in or on land may itself be all that is required by way of occupation of the lands to render the chattel and the land together a rateable hereditament.  
46.	Assuming for a moment that condition (i) can be satisfied, in the sense that the Lands Tribunal was entitled to hold that the vessel could properly be regarded as occupying the riverbed beneath (see further below), there seems to me no room for doubt that conditions (ii) – (iv) were satisfied in this case.  
47.	So far as condition (ii) is concerned, when a person occupies land in respect of which he has no title to the exclusive occupation or possession but his occupation is exclusive in fact, then he is rateable in respect of that occupation.  It seems to me that the question is identical to that enunciated by Lord Russell of Killowen in Westminster City Council v Southern Rail Co [1936] AC 511 at 532, namely whether the person sought to be rated has the enjoyment of the land “to the substantial exclusion of all other persons”.  As made clear in that case, the relevant question is: what in fact is the occupation in respect of which the person is said to be rateable and, in that respect, it is immaterial whether the title to occupy is attributable to a lease or a licence: see ibid at 533.  The substance of the document granting the right of occupation is highly material; however, what is material is not so much the precise terms of the grant but whether the occupation is in fact greater or lesser than the terms convey.  It is also the position that the reservation by the grantor of a right which is never exercised and could not be fully exercised without destroying the grant is to be disregarded: ibid per Lord Wright at 567.  
48.	The factual position in this case, as already indicated, was that the vessel between 1990 and 1999, under successive licences from the Crown Estate Commissioners, occupied a fixed position in the river, immediately above the area of the foreshore and riverbed the subject of the licence, which it physically occupied (by resting in the mud) at low tide.  While the licence stated that its terms were not to be construed as giving exclusive use of the disputed area to the appellants, the liberty of the Commissioners to grant elsewhere any rights or easements over the relevant land was limited by the proviso that it should not thereby prevent the placing and maintenance of the vessel in accordance with the licence.  Nor, as the agreed facts stated, were any other or ‘rival’ rights granted by the Commissioners during the entire period that the vessel was moored in position under the terms of the licence.  In these circumstances it is clear that if the vessel could be properly regarded in occupation of the riverbed beneath, it was de facto in exclusive occupation.  
49.	So far as condition (iii) is concerned, it is plain that the occupation was of great value and benefit to the appellants as occupiers.  Equally, so far as condition (iv) was concerned, there was a period of occupation of some nine years with a single brief interruption on some unspecified date when the vessel was temporarily removed from its mooring by tugs.  I therefore return to consider condition (i).  
50.	Throughout a period of nine years, the vessel was placed in position over the licensed area of riverbed beneath.  While the principle stated in London County Council v Wilkins and Field Place Caravan Park v Harding dealt with structures which were physically placed upon dry land, and there were not in this case any moorings within the riverbed by which the vessel could be said to occupy the riverbed (c.f. Cory v Bristow), it does not seem to me that the interposition of water between the vessel and the riverbed of itself acted in any significant manner to deprive the appellants of occupation of the area of the riverbed the subject of the licence.  The ‘permanent’ presence of the vessel was sufficient to constitute de facto exclusive occupation of that part of the riverbed.  That view seems to me entirely consistent with the observations of Lloyd LJ and Mann LJ in the case of The Hispaniola quoted at paragraphs 30 and 31 above.  
51.	Mr Widdicombe submits that such a conclusion is at odds with the Scottish and Hong Kong cases to which I have already referred.  I therefore turn briefly to those authorities.  
52.	In the Scottish R.N.V.R. Club case, in which the physical facts were remarkably similar, the Lands Valuation Appeal Court was concerned with the question whether a former naval vessel refitted for use as a club was ‘heritable’ or not in Scottish law.  It should at once be observed that the entry in the valuation roll under consideration simply referred to the subject of the valuation as “Description: Club.  Situation: Custom House Quay”.  Thus there was no reference to, or consideration of, the relationship of the vessel to the riverbed beneath or to any land save the adjoining quay to which it was secured.  Indeed it does not appear that there had been any licence granted to the vessels’ owners in respect of the riverbed of the kind with which we are concerned.  
53.	In giving the leading judgment, Lord Fraser adopted the approach taken by Lord Fleming in John Menzies & Co v The Assessor for Edinburgh [1937] SC 784 and followed by Lord Kilbrandon in Assessor for Renfrewshire v Mitchell [1965] SC 271, by asking the question first whether the subject structure belonged to a class or genus which was prima facie heritable.  He rejected the submission of counsel that there was a genus ‘club’ into which the vessel could be conveniently placed and stated at 293 rhc: 
“In my opinion the general character of this structure is plainly, and obviously, that of a ship.  It began its life as a ship and unquestionably continued as such until 1947 and it still retains much of its original appearance and character.  Above all it shares with other ships the essential characteristic that it habitually floats on water.  Nobody has suggested that a ship is prima facie heritable and I do not think such a suggestion could reasonably be made.  If one starts from that position, the question is whether there are special facts about this ship which distinguish it from other ships and make it heritable and not movable.  It undoubtedly has many unusual features.  Perhaps the most prominent of these is that it has been moored at its present position for 16 or 17 years and that its owners have no intention of moving it in the foreseeable future.  But that does not take the matter far, because it is settled that, if a thing is by its nature movable, the mere passage of time will not make it heritable even though it is never in fact moved – Anderson Grice & Co Ltd v Assessor for Angus [1962] RA 90.  The connections of the various services, and especially of gas, are consistent with and indeed indicative of the intention to keep the ship where it is.  Further its use as a club house in the middle of Glasgow is an unusual use for a ship.  But, in my opinion, these factors are not enough to outweigh its general character of moveability.”
54.	Later in his judgment he observed:
“I do not think that a floating ship, even if permanently moored in one place, could enter the roll as being lands or heritages, except perhaps if there was a high degree of mutual adaptation between the ship and the berth at which it was moored.”
55.	Lord Avonside was of similar opinion, as was Lord Keith.  He said:
“The subjects of appeal were designed and constructed as a ship and they rest not upon land but upon water.  This is the outstanding characteristic of the subjects.  
In my opinion this characteristic necessarily involves that the subjects are prima facie moveable.  The other circumstances of the case are not, in my view, sufficient to warrant the inference that the subjects have become heritable by attachment to, or mutual adaptation with, heritable property.”
56.	It is thus apparent that the approach of the Scottish courts places great emphasis upon the general character of the structure for the purpose of its classification as either heritable or moveable: see also Armour’s Valuation for Rating at paragraphs 9-01 to 9-08, where the observation appears that “reference to English authority in this field is inappropriate and could be misleading, since the separate considerations of the heritability of the subject and the rateability of the occupation are not clearly distinguished in the English cases”.  Since the RNVR Club case was decided on the basis of Scottish law and turned entirely on whether or not the vessel was ‘moveable’, I do not think it affords Mr Widdicombe any useful support in this appeal.  
57.	The same is true of the decision of the Hong Kong Lands Tribunal in Yiu Lian Machinery Repairing Works Ltd v Commissioner of Rating and Valuation (1982) HKC 55 in which the President of the Tribunal, following the decision in the RNVR Club case held that, before the floating dry docks concerned could be rateable as chattels enjoyed with the land, there would have to be a high degree of mutual adaptation between the vessels and the berth at which they were moored.  The President observed at paragraph [41]:
“I appreciate that even in the absence of sufficient physical or legal connection between the vessels’ chattels and the land to satisfy Hong Kong requirements, the position in England might be different.  For the English criterion of occupation and liability for rates flowing from the mere existence of a unit of occupation would be sufficient for floating docks together with the land – either sea bed or shore – to form one unit of occupation and so to constitute a rateable hereditament.
However, I am satisfied that the unit of occupation has no place in Hong Kong rating law.”
58.	On appeal (1985) 2 HKC 517 the Hong Kong Court of Appeal held, in the words of the headnote, that having regard to the history of the legislation in Hong Kong, it could not be said that the English rule that the value of chattels was to be included as part of the land itself was, on a proper construction of the wording of the Ordinance, applicable in Hong Kong, where a stricter course prevailed; only the land itself or any building or part thereof were rateable and the Lands Tribunal’s decision that none of the dry docks was sufficiently connected with a piece of land to be taken into account in estimating its rateable value would not be disturbed.  
59.	The particular observation upon which Mr Widdicombe has placed emphasis is the following:
“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.”
60.	I do not find those observations telling or indeed accurate in relation to the facts of this case.  As I have already indicated, it does not seem to me that the mere fact that a vessel floats on water above the land (i.e. the riverbed), per se prevents it from being a chattel enjoyed with the land and which enhances its value.  Nor, if it is secured permanently in position by horizontal attachment to adjacent land forming part of the same hereditament, is it vital that the vessel should be directly secured or connected to the land beneath.  In such circumstances, the purpose and function of the horizontal attachment is to confine the vessel to the area of the licensed land beneath, thereby enjoying that land (albeit supported by the water above it) as a permanent means of support by which means the riverbed, together with the adjacent quay as part of the same hereditament, is enhanced in value.  
61.	The analogy of an advertising balloon connected by a single wire and free to float to and fro, unrelated to or constrained by the area of the land beneath and plainly incapable of amounting to occupation of it, seems to me inapt.  This is an area in which analogies are on the whole unhelpful.  However, in the example given, a more appropriate analogy would be that of a barrage balloon permanently tethered in a stationary position by guy ropes with a platform suspended from it just above the land beneath and in permanent use as a night club dance floor, approached by a heavy metal ramp or ramps resting on the ground.  Be that as it may, as the court went on to observe, 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 in every case.  
Conclusion
62.	There is no suggestion in this case that the Lands Tribunal misstated or misunderstood any of the primary facts in relation to the position, purpose or function of the Tuxedo Royale or the nature or extent of the hereditament the subject of their decision.  Nor is it suggested that they misstated or misunderstood the principles of law applicable to those facts save as to the degree of connection and/or adaptation of the vessel necessary to amount to occupation of the land in question.  In that respect, I accept the submissions of Mr Mould set out at paragraphs 41-43 above and the conclusion of the Lands Tribunal as stated  in paragraph 12.
63.	I would therefore dismiss this appeal.
Lord Justice Chadwick:
64.	I agree.
Lord Justice Tuckey:
65.	I also agree.
ORDER: The appeal is dismissed.  The appellant shall pay the respondent's cost of the appeal, such costs to be the subject of detailed assessment if they are not agreed.  Permission to appeal to the House of Lords refused.
(Order not part of approved judgment)