Rates and rating — Development consisting of the erection of warehouses — Condition prohibited occupation pending approval of user — Owner paid rates on unoccupied hereditaments — Payments made under a mistake of law — Whether rating authority improperly exercised a discretion to refuse a refund
The respondents are a property development company. They developed a site by the erection of two warehouses and ancillary accommodation. The Greater London Council gave approval under the London Building Acts 1930-1939 subject to a condition that “no part of the building shall be occupied until the consent of the council has been obtained to the proposed user”. Schedule 1 to the Rating Act 1967, relating to the rating of unoccupied properties, applied to the area. The rating authority served on the respondents completion notices and from November 16 1976 the respondents became liable for rates on the unoccupied property.
The first warehouse was let before March 31 1979, and the second in November 1980. The respondents paid the rates on the unoccupied warehouses until March 1979, and then contended they should not have been liable for rates by virtue of paragraph 2 of Schedule 1 to the 1967 Act: “No rates shall be payable…for…any period during which — (a) the owner is prohibited by law from occupying the hereditament or allowing it to be occupied…”. They relied on the prohibition in the GLC condition. There was no dispute that the respondents were not liable for the rates, but the rating authority refused to refund the improperly paid rates amounting to £51,396. The rating authority relied on the following matters: the overpayment was a mistake of law, absence of hardship, the scheme of the 1967 Act relating to completion notices, and that the respondents could have taken professional advice to avoid the payment in the first place. The Court of Appeal decided that the reasons for the decision to refuse the refund were wrong and ordered the authority to reconsider the application for a refund according to law; the appellant rating authority appealed from that decision.
Held In refusing the rating authority’s appeal, Lord Bridge said that section 9 of the 1967 Act confers a discretion upon a rating authority where an application for a refund of rates has been made. Before deciding whether a discretion has been exercised for good or bad reasons, the enactment by which the discretion is conferred must be construed. The authority had disregarded its legislative purpose. Apart from one ground, all the grounds in section 9 cover errors or oversights by the ratepayer, and include a payment under a mistake of law. Against that background it would be wrong to refuse a refund by taking into account the financial circumstances of the ratepayer in comparison with those of the local authority; or whether the rating authority has in fact retained the rates or paid a proportion on to the precepting authorities. The prima facie justice of refunding overpayments is only displaced by factors arising from the circumstances of the case. This might include an agreement by a ratepayer to pay the disputed rates, to compromise a claim, rather than litigate; it may then be right to refuse a refund if the law was later clarified in the ratepayer’s favour.
Barry Payton and Simon Gaunt (instructed by the borough solicitor) appeared for the appellant rating authority; and John Taylor QC and John Howell (instructed by Lovell White & King) appeared for the respondent ratepayers.