Lawbite: Who is in “general control” of ATMs and liable for their £300m business rates liability?

• United Kingdom

• Litigation and dispute management
• Real estate litigation

12-11-2018

Cardtronics Europe Ltd and Others -v- Chris Sykes and Others (Valuation Officers) [2018] EWCA Civ 2472

The Court of Appeal has ruled that ATMs located in supermarkets are not to be treated as their own separate hereditaments for rating purposes.

Overturning the distinction made by the Upper Tribunal (Lands Chamber) between internal and external ATMs, the Court held that the retailers had in both cases retained "general control" over the ATM sites.

The Court upheld the Upper Tribunal's finding that an ATM located on the first floor of a Tesco store in Nottingham was not to be regarded as a separate hereditament as the underlying contractual arrangement between Tesco and the ATM owner afforded only a "right of access to a machine wherever it [happens] to be located", rather than a "right of occupation of a specific unit of property". In the Court's words, there was no "sufficiently coherent and settled "unit of property" capable of forming a separate hereditament, only an undifferentiated area of floor space within the hereditament comprising the retail premises as a whole".

During the course of its decision, the Court further held that:

• whilst ATMs are themselves not rateable (as they are plant and machinery which are exempt from taxation for these purposes) and are accordingly to be disregarded when assessing a hereditament's rateable value, their presence is not to be ignored when considering whether a separate hereditament exists;
• the Upper Tribunal had substituted a test of "primary purpose" for the test of "control", in drawing a distinction between the purpose of an internal ATM (which formed part of the "retail offer of a store") from that of an external ATM (which was "to reach as wide a market for ATM services as possible") and holding that "external ATMs available to the public at large should not be regarded as an in-store facility";
• the ATM operators and the retailers are not to be regarded as rivals, the "provision of an ATM in a store [being] "complimentary" to the retailer's purpose";
• the question to be considered where a person has given another possession of part, but not exclusive possession, is whether they are properly to be regarded as retaining "general control" of the relevant part.

Summarising the position, Lord Justice Lindblom stated that "the retailers remained in occupation and possession of the ATM sites in their stores, the banks had not been given exclusive possession for their own purposes, the relevant purposes of the banks and the retailers was the same, and the retailers had retained "general control" over those sites".

Key points

• this is a decision which could well have affected the provision of free ATMs across the country and should therefore be welcomed by the public as well as the relevant ATM operators and supermarket retailers involved (who expect to receive c.£300m in refunds)
• the Court’s decision provides helpful guidance and refocuses attention on the test of “general control”
• the Court considered the relationship between the ATM operator and the relevant retailers to be “more than merely symbiotic” and was particularly guided by the finding that the ATM site was not only “physically incorporated into the store premises, [but] was also functionally integrated with the operation of it”, with “the bank [relying] on the active assistance of the retailer in operating its ATM from [the relevant] site” and without which it “would not be able to operate an ATM on the site”