Rating — General Rate Act 1967 — Liability to pay rates in respect of unoccupied building — Appeal from decision of metropolitan stipendiary magistrate upholding ratepayers’ contention that they were not liable for rates because they were prohibited by law from occupying the premises during the material period — Para 2(a) of Schedule 1 to 1967 Act — No means of escape in case of fire provided during this period as required by section 34(1) of London Building Acts (Amendment) Act 1939 — Ratepayers’ contention that, in the absence of the required means of escape, they were prohibited by section 34(4) of the 1939 Act from occupying the premises and were therefore exempt from rates by reason of para 2(a) of Schedule 1 to the 1967 Act above mentioned — Held, upholding magistrate’s decision, that the ratepayers were not liable for rates during the material period, despite the oddity of the result that an owner can avoid the payment of rates by delaying the equipment of his building with the means of escape from fire
This was an
appeal by case stated by the London Borough of Tower Hamlets from the decision
of Mr Patrick Halnan, a metropolitan magistrate, in favour of the ratepayers,
St Katharine-by-the-Tower Ltd, on the application of the borough for distress
warrants in respect of unpaid rates on the fifth floor of a building known as
Europe House.
Peter Sells
(instructed by H D Cook, solicitor to the borough council) appeared on behalf
of the appellants; Guy Roots (instructed by Bucher Williams & Harrup)
represented the respondents.
Giving
judgment, McCULLOUGH J said: The London Borough of Tower Hamlets appeals by way
of case stated from the decision of Mr Patrick Halnan, a metropolitan
stipendiary magistrate, given at Thames Magistrates’ Court on January 14 1982,
in favour of the respondents, St Katharine-by-the-Tower Ltd, upon an
application by the London borough for the issue of distress warrants under
section 97 of the General Rate Act 1967 in respect of unpaid rates totalling
£130,451.27. This related to the fifth floor of a building known as Europe
House and covered parts of the years 1979-80 and 1980-81. The magistrate upheld
the contention of the respondents that they were not liable to pay the rates
demanded by virtue of para 2(a) of Schedule 1 to the 1967 Act, which reads as
follows:
No rates
shall be payable under paragraph 1 of this Schedule in respect of a
hereditament for, or for any part of the three months beginning with the day
following the end of, any period during which (a) the owner is prohibited by
law from occupying the hereditament or allowing it to be occupied.
Europe House
was, until January 31 1972, owned by the Port of London Authority. On that date
the freehold was sold to the respondents’ predecessors in title. The fifth and
sixth floors were leased back to the Port of London Authority, who remained in
occupation until March 31 1979. Meanwhile, in 1975, the respondents acquired
the freehold.
Provision is
made in Part V of the London Building Acts (Amendment) Act 1939 for ensuring
that buildings in London are not occupied or let for occupation unless they
have been provided with means of escape in case of fire, which have the
approval of what is now the Greater London Council — the GLC. Certain buildings
are exempt from these requirements. Section 150 of the Act reads:
The
provisions of Part V (Means of escape in case of fire) of this Act and of any
byelaws made in pursuance of the London Building Acts with respect to means of
escape in case of fire shall not apply to . . . (b) any building or part of a
building belonging to the Port of London Authority . . . .
The exemption
applied so long as Europe House was owned by the Port of London Authority. The
officers of the GLC responsible for the enforcement of Part V of the 1939 Act
thought that it still applied to the fifth floor after January 31 1972 while
the Port of London Authority remained in possession, even though they had
relinquished ownership. Whether or not they were correct, it cannot have
applied to the fifth floor after they vacated it on March 31 1979.
The exemption
having come to an end either then or earlier, it was the duty of the owner of
the building to give immediate notice of the fact to the GLC (see section 153
of the 1939 Act). No such notice was given, either by the respondents or by
their predecessors in title. However, it is not suggested that the GLC were
misled by this or that there was any bad faith on the part of the owners, and
nothing turns on that point.
After the Port
of London Authority left the fifth floor, the respondents (St
Katharine-by-the-Tower Ltd) realised that they were obliged to provide approved
means of escape if they were going to occupy it themselves or let it to anyone
else for occupation. So plans were drawn up and submitted to the GLC on
February 22 1980 and these were approved, subject to conditions, on April 28
1980. The case stated does not say so, but the necessary work was then done and
the parties are agreed that it was completed at the end of August 1980 and that
a tenant was let into occupation of the fifth floor on September 29 1980.
The rates
demanded cover part of the year commencing April 1 1979 and that part of the
following year up to September 29 1980, during the whole of which time the
fifth floor was unoccupied.
Section 17(1)
of the General Rate Act 1967 provides:
A rating
authority may resolve that the provisions of Schedule 1 to this Act with
respect to the rating of unoccupied property — (a) shall apply . . . to their
area, and in that case those provisions shall come into operation . . . in that
area on such day as may be specified in the resolution.
This authority
had so resolved.
Schedule 1 to
the Act (which deals comprehensively with the rating of unoccupied property),
as amended by later Acts, starts with paragraph 1(1) which at the material time
read as follows:
Where, in the
case of any rating area in which, by virtue of a resolution under section 17 of
this Act, this schedule is in operation, any relevant hereditament in that area
. . . is unoccupied for a continuous period exceeding three months, the owner
shall, subject to the provisions of this Schedule, be rated in respect of that
hereditament for any relevant period of vacancy; and the provisions of this Act
shall apply accordingly as if the hereditament were occupied during that
relevant period of vacancy by the owner.
Paragraph 1(2)
at the material time read as follows:
Subject to
the provisions of this Schedule, the amount of any rates payable by an owner in
respect of a hereditament by virtue of this paragraph shall be the specified
proportion of the amount which would be payable if he were in occupation of the
hereditament . . . .
Paragraph
1(2a) read as follows:
In
subparagraph (2) above ‘the specified proportion,’ in relation to a
hereditament, means such proportion (which may be the whole or any less
amount) as may be specified for the purposes of this subparagraph by a
resolution of the rating authority for the rating area in which the
hereditament is situated . . . .
At the material
time in this area the specified proportion was 100 per cent.
Then comes
paragraph 2(a) which I have already read and upon which the respondents rely.
It is now
necessary to look at the provisions of Part V of the 1939 Act, as amended by
later Acts. Section 33(1) contains inter alia the definition of a ‘new
building’. The parties agree that this building falls within that definition
and more particularly that the fifth floor, with which alone this case is
concerned, is within that definition.
Section 34(1)
provides that certain new buildings (and it is agreed that this is one of them)
‘shall be provided in accordance with plans approved by the Council with all
such means of escape therefrom in case of fire as in the circumstances of the
case can be reasonably required . . . .’
Section 34(2)
says:
The owner of
any building to which subsection (1) of this section applies shall before or at
the same time as a building notice under section 83 (Service of building
notices) of this Act in respect of the building is served on the district
surveyor deposit at the County Hall a notice stating the matters and
particulars which are required by that section to be stated in a building
notice thereunder together with two copies . . . of the plans prepared for the
new building showing so far as may be necessary for the purposes of this
section the means of escape proposed to be provided in connection with the
building.
Section 34(3)
reads:
The Council
at any time within a period of two months after the deposit of the plans or
such longer period as may be agreed in writing between the Council and the
applicant (i) may refuse to approve the means of escape shown thereon in
pursuance of this section; or (ii) may approve such means of escape subject to
such conditions (if any) as they think fit; in either of which case they shall
within the said period give notice to the applicant stating their reasons for
the refusal or for the imposition of the conditions as the case may be and if
within that period the Council fail to give such a notice they shall be deemed
to have approved the said means of escape unconditionally.
In this appeal
approval was sought and given.
Section 34(4),
which in one word is not correctly reproduced in volume 20 of the third edition
of Halsbury’s Statutes, reads as follows:
No building
or part of any building in respect of which building or part subsection (1) of
this section requires means of escape to be provided shall be occupied or let
for occupation until the Council have issued a certificate . . . that such
building has been provided with means of escape in accordance with plans
approved as aforesaid by the Council . . . and that the conditions (if any)
subject to which such plans were so approved have been complied with: Provided
that (a) unless the Council within 14 days after notice of completion of the
building has been given to them by the owner notify to the owner that such a
certificate as is mentioned in this subsection has been refused and the grounds
of the refusal the certificate shall be deemed to have been duly issued. . . .
In this case
the work was done in accordance with the approved plans and the district
surveyor was satisfied with it. No certificate under section 34(4) was issued.
Whether or not notice of completion was given, and if so on what date, are
facts not stated in the case. It is therefore not possible to determine the
date upon which a certificate would be deemed to have been issued by virtue of
the operation of the proviso (a) to section 34(4). However, this does not
matter because, if during the period up to the completion of the work at the
end of August 1980, the owners are to be held exempt from liability to pay
rates by virtue of paragraph 2(a) of Schedule 1 to the 1967 Act, the same
provision will exempt them from such liability for three months thereafter.
The principal
submissions for the rating authority can be summarised as follows:
(1) An owner is not ‘prohibited by law’ from
occupying a hereditament or allowing it to be occupied merely because he would
offend against section 34(4) of the 1939 Act if he let it or allowed it to be
let.
(2) Such a prohibition would arise only if a
court were to make a prohibition order under section 34(5) of that Act. This
reads as follows:
Where any
person has been convicted of an offence against this Act by reason of a
contravention of the provisions of this section a court of summary jurisdiction
may notwithstanding the imposition of any fine and without prejudice to any
other powers conferred on the court by this or any other Act make an order
prohibiting the occupation of the building or any part thereof in respect of
which building or part subsection (1) of this section requires means of escape
to be provided and any such order may be any time amended or discharged by a
further order of a court of summary jurisdiction.
These
submissions were repeated in this court and amplified as follows:
(3) An owner of premises which do not comply with
section 34(1) can, if he chooses, put them into a condition which will result
in compliance and he can then lawfully occupy them or allow them to be
occupied. So long as he chooses not to alter his premises in this way it is his
own failure and not the law which prohibits their occupation.
(4) If an owner chooses not to alter his premises
so as to secure compliance with section 34(1) he ought not to escape a
liability to pay rates which would have arisen had he made the necessary alterations.
The argument
for the respondents, both below and in this court, was succinct. It was: There
being at no time in the relevant period any means of escape as required by
section 34(1) the respondents were throughout the period prohibited by section
34(4) from occupying the premises or from allowing such occupation, therefore,
by the clear words of paragraph 2(a) of Schedule 1 to the 1967 Act, they were
not liable.
The learned
magistrate accepted the argument of the respondents and he stated two questions
for the opinion of this court. It is not easy to grasp the meaning or
significance of the second question and the parties are agreed that the court
need not try to answer it. The first question is this: Does the fact that no
certificate under section 34(4) can be issued in respect of premises because of
their condition mean that occupation of those premises is prohibited by law for
the purposes of paragraph 2(a) of Schedule 1 to the General Rate Act? I would rephrase the question as follows, to
bring out its true import:
Is the owner
of a hereditament ‘prohibited by law’ from occupying it or allowing it to be
occupied within the meaning of paragraph 2(a) of Schedule 1 to the General Rate
Act 1967, if it is a building or part of a building to which section 34(1) of
the 1939 Act applies and in respect of which no certificate under section 34(4)
has been issued or is deemed to have been issued?
In his
submission to this court counsel for the appellant has drawn attention to a
variety of other fields of legislation where a court, or a local authority, or
an official or other body, is empowered to issue a notice prohibiting the doing
of something or to make an order to this effect. These were: Road Traffic Act
1972, section 57 (power of goods vehicle examiner to prohibit the driving of a
vehicle which is or is likely to become unfit for service); Public Health Act
1936, section 94 (power of court to make a nuisance order prohibiting the
recurrence of a nuisance); Town and Country Planning Act 1971, section 87
(power of local planning authority to serve an enforcement notice); section 90
(power of local planning authority to serve a stop notice); and Housing Act
1957, section 17 (power of local authority to make a closing order, ie one
prohibiting the use of premises for certain purposes). However, I did not find
in any of these provisions anything to assist the answering of the question
which arises in this case.
Counsel for
the appellant pointed to the fact that the notion of prohibition is found both
in paragraph 2(a) of Schedule 1 to the 1967 Act and in section 34(5) of the
1939 Act and he urged me to hold that the prohibition referred to in Schedule 1
must therefore be the prohibition imposed by an order under section 34(5). In
his turn, counsel for the respondents drew attention to the similarity between
‘occupying . . . or allowing it to be occupied’ in paragraph 2(a) and ‘occupied
or let for occupation’ in section 34(4).
I do not
regard the similarities as indicative of one construction rather than another.
Paragraph 2(a) is dealing with prohibition in general and not merely the
prohibition which results from the operation of section 34 of the 1939 Act,
whether by virtue of subsection (4) or by virtue of subsection (5), an Act
which applies only in London. What other prohibitions are covered I do not
know, but one which must be is a closing order made under section 17 of the
Housing Act 1957.
Counsel for
the respondents submits that, on any ordinary understanding of the word
‘prohibited’, section 34(4) prohibits the occupation or letting for occupation
of a building in respect of which a certificate neither has been nor is deemed
to have been issued. I accept this, at any rate as a starting point. In my
judgment, the creation of a power to make an order of the type referred to in
section 34(5) does nothing to dilute the force of the conclusion that prima
facie this submission is correct. Are there then any indications in the
1967 Act, and in particular in Schedule 1 thereto, which deals comprehensively
with the rating of unoccupied property, to suggest that this meaning should not
prevail?
I was referred
to Ravenseft Properties Ltd v Newham London Borough Council
[1976] 1 QB 464, CA in which reference is made to Easiwork Homes Ltd v Redbridge
London Borough Council [1970] 2 QB 406, DC. The latter case concerned a
block of 16 flats which were empty for more than three months while they were
being modernised, during which time they were incapable of being occupied. The
owners had contended unsuccessfully before the justices that paragraph 1 of
Schedule 1 applied only to property which could be occupied. This argument was
also rejected in the Divisional Court, which heard submissions from each side
directed to the mischief at which the Act was aimed. Bridge J (as he then was)
gave the first judgment with which the other members of the court agreed. He
said this (p 414H):
The most
attractive way in which, as it seems to me, Mr Blom-Cooper’s argument is put is
to invite the court to look at the mischief at which this statute was plainly
aimed. Mr Blom-Cooper submits that the object of the new provisions in effect
was to penalise property owners who, to the detriment of the community, for the
purposes of capital gain or otherwise, keep their properties unoccupied for
long periods when they might be providing useful accommodation which is so much
needed. But it seems to me that that consideration is to a large extent
counterbalanced by the counter-argument advanced by Mr Fay that if the statute
is to be construed so as to exclude liability under these provisions in respect
of property which for the time being is incapable of occupation, it would open
the door to widespread abuse in that it would be open to any property owner
anxious to keep his property unoccupied for a substantial period of time simply
to remove, say, the sanitary fittings and part of the plumbing in order to be
able to say that the property was for the time being incapable of occupation.
I come back
therefore to the language of the Act, and I pose the question are there any
other provisions in the Schedule or in the Act itself which would support such
an implied term in para 1 of the Schedule as is necessary to sustain Mr
Blom-Cooper’s argument?
I have tried
to adopt this same approach and in particular to see whether there are features
in paragraph 2(b)-(f) which assist the construction of paragraph 2(a). It is
not easy to discern the common thread which runs through the hereditaments
referred to in those other subparagraphs, although one can well understand what
I might call the basic fairness of exempting their owners from Schedule 1 rates
in the event of their not being occupied.
It is
convenient here to mention the submission of counsel for the appellant, that if
the construction for which the respondents contend were correct, it would mean
that an owner whose hereditament did not comply with section 34(1) could avoid
payment of unoccupied property rates by the simple expedient of not putting the
premises into a condition which complied with that subsection. During argument
the example was posed of such an owner whose property was unoccupied for five
years, despite the fact that it would have taken only six months for him to
have completed the whole process of alteration beginning with the consideration
of what work was required to be done and ending with the issue of a certificate
that it had been completed. If the argument for the respondents is correct, the
owner would pay no rates at all during those five years. This, it is contended
by the appellant, can hardly have been the intention behind para 2(c).
Certainly the
owner who behaved in this way would have little or nothing in common with any
of those whose hereditaments are referred to in paragraph 2(b)-(f). However, if
one supposes an owner who buys a building, say, from the Port of London
Authority, which has hitherto been exempt from Part V of the 1939 Act, and at
once sets in train the process of bringing it into compliance with Part V and
achieves this as quickly as is reasonable, such an owner has much in common
with those who would be able to take advantage of paragraph 2(b)-(f).
I have
considered, but reject as unworkable, the possibility that Parliament intended,
by using the words which it chose for paragraph 2(a), to qualify the word
‘owner’ therein by restricting it to one who behaved in what the court would
regard as a reasonable way, having regard to the object of the Schedule as a
whole, which was, I believe, to ensure that there was less inducement to an
owner than before to leave his property unoccupied when it might be used;
accordingly, the exemption from the payment of rates which had hitherto been
enjoyed was removed and the liability was cast on the owner.
If I may
revert once more to the owner who puts his property into compliance with Part V
of the 1939 Act as quickly as possible and ask whether he, during the period
when he was doing this, was ‘prohibited by law from occupying the hereditament
or allowing it to be occupied’ I think that only one answer can be given,
namely, that he was so prohibited by the operation of section 34(4). To cast a
liability for the payment of Schedule 1 rates on him would, in my judgment, do
greater violation to the language of para 2(a) than it would to exempt from
liability for the whole period of five years the owner posed in the earlier
example.
I realise that
the construction which I judge to be correct, benefiting, as it would, the
owner who chose to delay equipping his building with means of escape in case of
fire, is at odds with a sentiment expressed in both of the cases to which I
have referred, namely, that it would be very odd if a person could avoid the
payment of rates by removing, say, the sanitary fittings and part of the plumbing
(see [1970] 2 QB 406 at p 415, letter B and [1976] 1 QB 464 at p 474, letter D)
but whichever construction is adopted, its application may work some degree of
hardship in certain cases.
For these
reasons I do not think that there is anything which should lead me to modify
the prima facie view that the occupation or letting for occupation of a
building in respect of which a certificate under section 34(4) neither has been
issued nor is deemed to have been issued is ‘prohibited by law’ within the
meaning of para 2(a). Accordingly, the answer to the stated question is ‘yes’,
the learned magistrate, in my judgment, was right and the appeal is dismissed.
The appeal
was dismissed with costs.
