Rating–Unoccupied premises–General Rate Act 1967, section 17 and Schedule 1 as amended by Local Government Act 1974–Judgment by a ‘mere pragmatic common lawyer’ on an ‘esoteric branch of the law’–Date of completion of whole building agreed between owners and rating authority–Certain floors in building subsequently let to defendant company–Dispute as to date from which liability to pay rates began–Plaintiff rating authority claimed rates from date when defendant company’s tenancy began–Company contended that liability did not begin until expiry of three months’ moratorium or date of actual occupation–Numerous technical points put forward by defendant company rejected–Camden
In this action
Brent London Borough Council, as the rating authority, claimed from the
defendants, Ladbroke Rentals Ltd, originally sued as Ladbroke Group Ltd, £7,013
in respect of rates alleged to be due during a period when the fourth and fifth
floors of Chancel House, Neasden Lane, were unoccupied by the defendants,
although let to them.
Viscount
Colville of Culross QC (instructed by K B Betts, Town Clerk of Brent London
Borough Council) appeared on behalf of the plaintiffs; C S Lewsley (instructed
by P W Moore, solicitor to Ladbroke Group Ltd) represented the defendants.
Giving
judgment, KILNER-BROWN J said: In this action the plaintiffs claim as rating
authority the sum of £7,013 due as rates payable for the period June 23 1975 to
September 1 1975 in respect of premises which were unoccupied during that
period. It is said to be the first case which concerns the particular aspects
of this esoteric branch of the law which have been argued before me although I
have been guided and helped by the authority of several decisions which, though
not directly in point, indicate solution by analogy. A first impression that
the defendants were resorting to every conceivable technicality in order to
evade a legitimate and incontestable demand was later tempered by the knowledge
that the defence was formulated by the late F A Amies and most attractively and
persuasively urged by Mr Lewsley. Moreover, the defendants have always
contended that in commonsense and in common fairness this was a demand which
they ought not to be compelled to meet. Nevertheless the case remains one of
detailed technicality and cannot be decided upon broad principles. The
essential facts can be shortly stated.
By the month
of June 1974 a new six-storey block known as Chancel House, Neasden Lane, bore
all the appearance of a completed building. The local authority wished to bring
it on to their books of rateable property even though it might not yet be ready
for occupation. They believed that they had properly resolved in accordance
with the Local Government Act 1966 to empower themselves to collect rates upon
unoccupied properties and in accordance with the General Rate Act 1967, as
amended, to charge one hundred per cent of the full rate charge from the commencement
of liability. As they knew, it was a prerequisite of such liability that a
completion date should be established either by service of notice or by
agreement. On June 12 1974 the authority wrote to the then owners, Clarebrooke
Holdings Ltd, and that letter and subsequent correspondence was dealt with by
their professional agents. The whole building was under consideration and it
was not accepted on behalf of the owners that any part or any floor was
sufficiently completed to attract a certificate of completion. After inspection
and discussion it was agreed between the agents for the owners and the director
of finance for the local authority that the whole building should be certified
as complete on November 15 1974. Unfortunately the local authority on November
7 despatched notices (one for each floor) specifying the earlier date and upon
receipt thereof the agents promptly rejected them as being contrary to the
agreement. So on November 26 fresh notices were sent specifying completion on
November 15. By letter dated December 3 the agents wrote that the notices were
acceptable. No problems arose until June 1975.
On May 23 1975
AI and P Estates Ltd, as reversioners and lessors, demised the fourth and fifth
floors of the building in question to Ladbroke (Rentals) Ltd for the term of 25
years commencing June 24 1975. On June 23 1975 the agents for the owners wrote
to inform the director of finance of the local authority that the fourth and
fifth floors had been let to Ladbroke Group Ltd. In order to correct misapprehension
and inaccuracy it has been by consent thought fit to amend the name of the
defendants to Ladbroke Rentals Ltd as the creation of the hereditament
comprising the fourth and fifth floors was in their name. The agents contended
that liability for rates with reference to that part of the building passed
from the owners to the new occupiers. Unfortunately, according to the evidence
of Geoffrey Gilbey, which I accept, the defendants were not aware of this
letter or, more importantly, of the existence of the agreed date for liability,
November 15 1974. As far as they were concerned those two floors were far from
complete, were quite unfit for occupation and involved the defendants in an
expenditure of no less a sum than £197,000. Plainly much of that amount can be
discounted as being referable to matters of their own preference, but details
were given of basic additions necessary before the premises could be regarded
as complete.
On July 8 1976
the director of finance made a demand for rates going back to May 23 1975. The
defendants resisted the inclusion of any period before September 1 1975. The
plaintiffs recognised that the effective date was not May 23 but June 24. They
still maintain this to be correct. The defendants after protracted correspondence
and much argument and dispute still maintain that no liability arises before
September 1 1975. This is what this case is all about.
The plaintiffs
recognise that they have to establish liability and that every step in the
tortuous process has to be taken and taken properly and to good effect. The
statement of claim concisely sets out various matters necessary to establish
liability and avers the correctness and effectiveness of each step in the
process. Each one is challenged. It is convenient, therefore, to take each such
step and to evaluate the force of the contentious arguments.
Evidence was
tendered in documentary form of the resolution of the local authority made at a
council meeting on December 28 1967 empowering the authority to rate unoccupied
property pursuant to the Local Government Act 1966 and section 17 of and
Schedule 1 to the General Rate Act 1967. The effective date was resolved to be
April 1 1968 and notices of the resolution were published in the London
Gazette of February 23 1968 and in the local newspapers as required by
section 17(3) of the Act. It is important to note that the Borough of Brent
properly resolved on December 28 1967 and properly published notices and
properly specified the effective date. In this regard they differed from many
local authorities such as Sheffield City Council (see Sheffield City Council
v Graingers Wines Ltd [1978] 2 All ER 70; [1977] RA 127; 242 EG 687,
[1977] 1 EGLR 37) who were content until March 1974 to leave the question of
rating unoccupied property in abeyance.
Section 17 of
and Schedule 1 to the General Rate Act 1967 were amended by section 15 of the
Local Government Act 1974 which came into force on March 4 1974 and because of
the withdrawal of the government grant all local authorities throughout the
country reviewed their position. Some authorities like Sheffield City Council
in the Sheffield case initiated the rating of unoccupied property for
the first time and therefore had to comply with the requirements of section 17
of and Schedule 1 to the 1967 Act. However, the Court of Appeal in that case
took a robust and pragmatic view of the effect of technical failure to comply
with all the requirements specified by statute.
In the instant
case the only material change was to apply the power to provide for
differential rating between classes of hereditaments and to rate empty property
other than dwelling-houses at one hundred per cent of the full rate from the
commencement of liability. This was done by resolution of February 13 1974
which, although before March 4 1974, specified the effective date to be April 1
1974. The Act received Royal Assent on February 8. In my judgment a resolution
made after the Act is passed although before the date that the Act comes into
force, but which specifies an effective date after the Act is in force, is
valid and I reject the defendants’ argument to the contrary. There is, however,
no evidence that notice of this resolution was published in the London
Gazette
whether it was necessary to publish this amendment to a previously published
resolution applying the power. I am of the opinion that the plaintiffs are
correct in arguing that a change in rates does not have to be published. Moreover
I am certain that the London Gazette is not compulsory reading for the
burgesses of Brent, so what practical difference would it make? After all, the object of the exercise is to
ensure that all questions of liability for rates are dealt with openly and not
by some secret cabal meeting behind closed doors. In any event I would follow
the general approach of the Court of Appeal in the Sheffield case and if
the process as a whole has not taken the ratepayers by surprise and has not
misled that particular ratepayer in question the failure is merely technical. I
reject the argument that the rating authority were not empowered to increase
the rate as they did.
On June 12
1974 the local authority wrote to the owners of this six-storey office block
with reference to the rating of the premises, although they were known to be
unoccupied, and on June 27 1974 the professional agents for the owners took
over the discussion and negotiations. It was agreed between the rating
authority and the agents for the owners at the beginning of November 1974 that
the whole building should be deemed to be completed on November 15 1974. It is
argued on behalf of the defendants that the notices specifying the date of
November 7 as the date of completion were notices which, though valid on the
face of it, became invalid and were withdrawn when the authority accepted the
contention of the owner’s agents that the expressed date was contrary to the
agreement. By sending out the second notice dated November 26 which specified
November 15 as date of completion the first notice was expressly withdrawn. As
paragraph 8 of Schedule 1 to the General Rate Act 1967 lays down that notice of
completion must specify the date of completion as the date of service of the
notice, or some future date, it is further submitted that a notice cannot
specify a date earlier than the date of notice. This is conceded by the
plaintiffs. Therefore the notice dated November 26 was a bad notice as notice,
but could it not merely be evidence of an agreement or alternatively an
amendment of the first notice?
The defendants
contend that there is no power to amend a notice. It may be withdrawn. The
second notice withdrew the first. The agreement was reached before November 7;
it was translated into a notice which was withdrawn; there was no agreement
after November 7; therefore there was no agreement, no valid notice and no
completion date fixed. The plaintiffs contend that the first notice remained
valid and was merely amended because both parties agreed that the proper date
should have been November 15 and to adopt the defendants’ argument would have
the effect of flying in the face of reasonable and practical administrative
process. In any event if technicality is to prevail there was no written record
of agreement reached until the letter of the owners’ agents dated December 3
1974 and there was therefore on that date an agreement as to completion date as
contemplated by paragraph 8(2) of Schedule 1 to the 1967 Act. This latter
argument seems to me to have the merit of logic and commonsense and I prefer it
to that of the defendants. I hold, therefore, that there was a valid and
properly constituted completion date specified to be November 15 1974. The
notices were served with reference to each of the six floors separately.
The plaintiffs
contend therefore that all of the building, and particularly floors 4 and 5 of
the building, were deemed to be completed on November 15 1974. They were also
deemed to be unoccupied (see paragraph 7 of Schedule 1).
The plaintiffs
submit that by the lease dated May 23 1975 the defendants became the occupiers
of the fourth and fifth floors with effect from June 23 1975. There was a
liability to pay rates as from that date. The enjoyment of the moratorium
relating to delayed liability had been vested in the owners of the whole
building who had therefore become liable as occupiers of the whole building.
Once they let a portion of the building the tenants and occupiers became liable
to pay rates from the date the tenancy began. This was recognised by the
owners’ agents in their letter dated June 23 1975. In my judgment any question
of complaint centres on the nondisclosure of the liability by the owners to the
tenants or the failure to make proper inquiries of the owners by the tenants or
both, and my instant reaction was that there could be no answer to the
plaintiffs’ claim. But I am assured that there is not a simple straightforward
answer to this case. The defendants contend that there was a creation of a
separate hereditament in so far as the fourth and fifth floors were concerned,
not when the valuation officer made a proposal with reference to the whole
building but when there was a notional occupation on June 23 1975 under the
terms of the lease. The separate hereditament came into existence on that date
and the occupiers (the defendants) being entitled to a three months’ moratorium
were not liable to pay rates until September 23 or until occupation on
September 1. This much they have always acknowledged. Reliance is placed upon
section 79 of the Act and upon paragraphs 7 and 10 of Schedule 1 to the Act.
The valuation officer was making proposals about the whole of the building in
the first place and on February 12 1976 made a proposal for alteration of the
valuation list but so as to recognise the creation of the separate
hereditament. There was in June 1975 no valid and effective separate
hereditament for rating purposes as contemplated by section 79. Paragraph 10 of
Schedule 1 indicates that the old hereditament ceased to be rateable and the creation
of the new and separate hereditament under the lease did not become rateable
until September 23.
The
plaintiffs’ answer to this argument is short and simple. The same point was
taken before the Court of Appeal in Camden London Borough Council v Post
Office [1977] 1 WLR 892; [1978] RA 57; (1977) 243 EG 131, [1977] 2 EGLR 104
and it was rejected. The judgment of the court is correctly paraphrased in the
headnote at [1978] RA 58. This reads:
The
ratepayers were liable for the unoccupied rate on their part of the building
for the period claimed for the following reasons:
(1) Although the provision in para 8(1) of Sch 1
to the 1967 Act that the rating authority must be of opinion that the ‘building
when completed will be comprised in a relevant hereditament’ could only be
satisfied literally when there was a coincidence between the building and the
hereditament.
(2) At the time of the completion notice the
building was not yet completed but was expected to be completed in the near
future and no one would know what hereditament would be carved out of the whole
building–there might be one, two, three or more hereditaments ultimately in the
valuation list for one completion notice.
(3) The literal construction of para 8(1)
therefore produced such an absurd result that there must be some mistake in
drafting which the courts should do what they could to put right, and the
clause should be taken to read that the ‘building when completed will be comprised
in one or more relevant hereditaments’ particularly having regard to the
definition of ‘hereditament’ in s 115(1).
(4) On that basis where a completion notice was
served in respect of a whole building, it could apply to any part which
afterwards turned out to be a separate relevant hereditament, which need not
coincide with the terms of the actual completion notice; for the relevant
hereditament fell to be ascertained at the time when the valuation list was
amended.
In any event
this instant case is even stronger, for the completion notices or agreement as
to completion date dealt with each floor separately, and clearly there was
contemplated the creation of separate hereditaments referable to each floor or
a combination of two or more floors. The argument on behalf of the defendants
really amounts to a submission that the Court of Appeal did not take into
account the effect of sections 17, 17A, 17B and 79 of the Act or paragraphs 7
and 10 of Schedule 1, and that if they had done so they would have reached a
different conclusion. That may be
record straight. As it is, I am bound to follow the Court of Appeal and to
apply the decision in the Camden Borough Council case, which means that
I reject the defendants’ contention.
The submission
on that part of the case spills over into and overlaps the argument on behalf
of the defendants with reference to the point arising under section 6 of the
1967 Act. On this aspect the plaintiffs set out their contention in paragraph 4
of the statement of claim which reads as follows:
By a proposal
dated February 12 1976 the duly authorised valuation officer for the said area
made a proposal to assess the said premises as a hereditament separate from the
other parts of Chancel House, and to enter that hereditament in the valuation
list at a rateable value of £48,805. Objection was made or deemed to have been
made to the said proposal but the proposal will have effect by virtue of
section 79(2) of the Act, as from June 23 1975. Accordingly the plaintiffs
amended the rate for the year 1975-1976 to correspond with the said proposal,
by virtue of their powers under section 6 of the Act as applied by paragraph 1
of the Schedule.
There is
analogous authority on the interpretation of section 6 in relation to section 2
of the Act in the reported decision of the Divisional Court in Newcastle-under-Lyme
Borough Council v B Kettle Ltd [1977] RA 181; 245 EG 1027, [1978] 1
EGLR 105. This decision was upheld by the Court of Appeal (reference no 198/76)
on March 21 1979 [(1979) 251 EG 59]. The point at issue, shortly, was that
although by section 2(4) of the Act the rate was required to be made and levied
in accordance with the valuation list, section 6 enabled the rating authority
to amend the rate by making additions necessary by reason of the coming into
occupation of any hereditament which has been newly erected. In other words
they would on a proper construction and application of section 6 anticipate the
valuation list and empower themselves to apply rateability to the new
hereditament. The plaintiffs argue that that is what has happened here.
The defendants
in essence take three points. They query and challenge the process and point to
the absence of essential details in the rates record book, and therefore submit
that the plaintiffs, who are by virtue of section 6 required to have a
foundation of correct documentary form on which to base an amendment, fail to
get the argument off the ground. I am against them on this point. The director
of finance appointed the proper officer, delegated the necessary authority to
that officer and his records were adequate.
The next point
was that paragraph 5 of Schedule 1, which concerns the determination of
rateable value, seems to indicate that the rating authority have to wait for
the valuation officer to fix the rate and include the hereditament and the rate
in his list. Paragraph 5 of Schedule 1 is inconsistent with other sections of
the Act and other paragraphs of the Schedule. I agree that on the face of it
this seems to be so, and it may be that if this inconsistency had been brought
to the notice of the Divisional Court and the Court of Appeal in the Newcastle
case the Court of Appeal would have had to add this criticism of the
draftsmanship to the criticism of paragraph 8. But this merely adds point to
the belief of a mere pragmatic common lawyer that if Parliament chooses to
legislate in minute detail in an endeavour to cover every conceivable question
and to anticipate every conceivable issue it is bound, in common parlance, to
make a mess of it somewhere along the line and to leave some loophole for an
expert and knowledgeable practitioner to utilise as a means of escape. Although
the Court of Appeal were not asked to and did not pronounce upon the effect of
paragraph 5 I am confident that they would have disregarded its effect as I do.
The third
point is that the Newcastle case concerned occupied property and
therefore ought not to be applied to unoccupied property. I was invited by
counsel for the plaintiffs to do just that and, although breaking new ground,
pose the rhetorical question: why not?
Why not indeed? It makes sense to
me in its particular context. It makes equal sense in its application to the
instant case. I therefore apply the same decisive reasoning here and accept the
plaintiffs’ submission.
All this means
that at every twist and at every turn I reject the valiant efforts on behalf of
the defendants to escape liability. Notwithstanding the immense erudition and
persuasive skill of Mr Lewsley, their counsel, which compels respectful
admiration, I find the defendants to be liable and accordingly there must be
judgment for the plaintiffs.
Judgment was given for the plaintiffs with costs.
