Network Rail Infrastructure Limited v Karl List: Advertising rights and railway hereditaments

The Court of Appeal has dismissed Network Rail's challenge to the separate rating of advertising sites at Victoria and Liverpool Street stations, confirming that advertising rights granted to JC Decaux constitute independent hereditaments rather than forming part of Network Rail's central railway hereditament.

The dispute centred on whether advertising rights at two London stations should appear on local rating lists as separate hereditaments occupied by Decaux, or form part of Network Rail's national railway network on the central rating list. The Valuation Officer had entered two advertising sites—a static backlit installation at Victoria Station (rateable value £83,000) and a digital display at Liverpool Street Station (rateable value £77,500)—onto local lists in December 2020.

Network Rail contended these entries should be deleted, arguing the advertising rights remained part of its railway hereditament valued "en bloc" on the central list. The Valuation Tribunal initially agreed, but the Upper Tribunal reversed this decision, prompting Network Rail's appeal.

The legislative provisions

Section 64(2) of the Local Government Finance Act 1988 deems a right to use land for exhibiting advertisements a separate hereditament when "let out or reserved" to someone other than the land's occupier or owner. Section 65(8) treats the person entitled to such rights as the rateable occupier. Network Rail argued these provisions should be interpreted alongside established rating principles, particularly the paramountcy of occupation doctrine from cases like Westminster City Council v Southern Railway Company.

The 2010 Rail Advertising Concession Agreement granted Decaux exclusive rights to "maintain, manage, promote and exploit the sale of Advertising Space" at 18 stations. Network Rail retained powers to withdraw advertising space, temporarily suspend usage for operational reasons, and display information signage for railway operations.

The Court's analysis

Lord Justice Holgate, delivering the leading judgement with which Lords Justices Nugee and Popplewell agreed, rejected Network Rail's interpretation comprehensively. The Court held that sections 64(2) and 65(8) establish a self-contained regime for advertising hereditaments, distinct from general principles of rateable occupation. Parliament deliberately chose deeming provisions that make rateable occupation principles irrelevant to advertising rights.

The phrase "let out or reserved" simply refers to the creation of an advertising right, not to any qualitative assessment of separation from the host property. Network Rail's attempt to import a paramountcy test was inconsistent with the statutory language, which provides no scope for determining that someone other than the rights holder should be the rateable occupier.

The Court noted that section 64(2) applies to advertising rights generally, not merely those on railway property. Network Rail's approach would create conceptual uncertainty about when advertising rights qualified as separate hereditaments. The straightforward interpretation—that any advertising right granted to a third party constitutes a separate hereditament—promotes clarity and certainty.

Regarding railway-specific legislation, the Court held that the Central Rating List Regulations 2005 do not override section 64(2). Following Case v British Railways Board, provisions excluding premises "so let out as to be capable of separate assessment" from railway hereditaments were largely surplusage, as the general occupation requirements already achieved this result.

The Court also rejected Network Rail's arguments about practical difficulties and disruption to established practice. Previous VOA guidance had proceeded on incorrect assumptions about the legal arrangements, and commercial parties' reliance on flawed interpretations cannot alter statutory meaning.

On the facts, advertising represented merely an ancillary income stream for Network Rail rather than furthering its primary railway purposes. Decaux exercised exclusive control over advertising operations and bore all commercial risk, distinguishing this from cases like Cardtronics where activities served mutual business purposes.

Copyright & permissions