Rating — General Rate Act 1967, section 17 and Schedule 1 — Rating of unoccupied property — Action by plaintiff ratepayers in Chancery Division seeking declarations to the effect that they were not liable to pay unoccupied property rates in respect of hereditaments forming part of the Angel Centre, Pentonville Road — Defendant rating authority had served a completion notice under Schedule 1 on the plaintiffs — Plaintiffs’ appeal against the notice had been dismissed by the county court, but an appeal to the Court of Appeal was pending — Meanwhile defendant authority were demanding unoccupied property rates on the basis of a proposal by the local valuation officer to enter the relevant hereditaments in the valuation list — Plaintiffs had objected and, in the absence of agreement or a determination by the local valuation court, no rateable values had been entered in respect of the centre — Plaintiffs submitted that in the circumstances no rate liability could arise and so no sum could be due in respect of rates — Defendant authority argued that as, according to para 1(1) of Schedule 1, the Act applied as if the hereditaments were occupied, section 6 was applicable during the relevant period of vacancy — It followed that as there had been a proposal, and as the hereditaments had come notionally into occupation when the relevant period began, the authority were entitled to add to or correct the rate — Held, rejecting this argument, that there was no notional coming into occupation within section 6(1), and that, in any case, there was authority that the provisions of Schedule 1 constituted a code which, within its terms, superseded the special rules relating to the liability of occupiers — The decision of the Court of Appeal in Hastings Borough Council v Tarmac Properties Ltd was binding on this point and must be preferred to views expressed by a divisional court in Barr Hill Developments Ltd v South Cambridgeshire District Council — It was strictly unnecessary to deal with an argument by the plaintiffs that their appeal against the completion notice had not been finally disposed of, but that argument was based on a misinterpretation of ‘appeal’ in para 8(5) of Schedule 1 — Declaration accordingly that the plaintiffs were not liable to pay any unoccupied property rates until the relevant hereditaments and their rateable values were entered in the valuation list
This was an
action commenced by writ in which the plaintiff, Trendworthy Two Ltd, sought
against the defendant rating authority, the London Borough of Islington,
declarations in respect of its liability to unoccupied property rates on
hereditaments in Pentonville Road and St John’s Street, Islington, London N1,
forming part of the Angel Centre, a recently built office block. There was a
counterclaim by the defendant authority for a declaration that the plaintiffs
were liable to pay £976,407.06.
W J Glover QC
and G R G Roots (instructed by Michael Conn & Co) appeared on behalf of the
plaintiff; M B Horton (instructed by Christopher Tapp, Borough Solicitor of
Islington) represented the defendants.
Giving
judgment, MERVYN DAVIES J said: This is a writ action in which the plaintiff,
Trendworthy Two Ltd, seeks certain declarations respecting rates liability
against the defendant rating authority, the London Borough of Islington. This
is, to my mind, an unusual way in which to ascertain a rating liability under
the General Rate Act 1967. However, counsel for the parties regarded a visit to
the Chancery Division as appropriate and convenient. The hearing proceeded
without oral or affidavit evidence on the basis of admissions in the pleadings
or of admissions made by counsel.
The facts are
as follows. The plaintiff company own a recently built office block known as
the Angel Centre in the Pentonville Road. There is a lease for part of the
property but that fact is not of present concern. On June 1 1983 the defendant
rating authority served a completion notice on the plaintiff pursuant to para 8
of Schedule 1 to the General Rate Act 1967. For present purposes the material
parts of para 8 are as follows:
(1) Where a rating authority are of opinion —
(a) that the erection of a building within their
area has been completed; or
(b) that the work remaining to be done on a
building within their area is such that the erection of the building can
reasonably be expected to be completed within three months,
and that the
building is, or when completed will be, comprised in a relevant hereditament,
the authority may serve on the owner of the building a notice (hereafter in
this paragraph referred to as ‘a completion notice’) stating that the erection
of the building is to be treated for the purposes of this Schedule as completed
on the date of service of the notice or on such later date as may be specified
by the notice.
. . .
(4) A person on whom a completion notice is
served may, during the period of twenty-one days beginning with the date of
service of the notice, appeal to the county court against the notice on the
ground that the erection of the building to which the notice relates has not been
or, as the case may be, cannot reasonably be expected to be completed by the
date specified by the notice.
(5) If a completion notice served in respect of a
building is not withdrawn and no appeal in pursuance of sub-paragraph (4) of
this paragraph is brought against the notice or such an appeal is abandoned or
dismissed, the erection of the building shall be treated for the purposes of
this Schedule as completed on the date specified by the notice; and if the
notice is not withdrawn and such an appeal is brought and is not abandoned or
dismissed, the erection of the building shall be treated for those purposes as
completed on such date as the court shall determine . . .
I have not
seen the completion notice but it is accepted that it was to the effect that
the Angel Centre be treated, for Schedule 1 purposes, as completed on September
1 1983. There was an appeal to the county court (see para 8(4)) against the
completion notice. On December 21 1984 His Honour Judge Marder QC, sitting in
the Clerkenwell County Court, dismissed the appeal.
The plaintiff,
desiring to question that dismissal, has given a notice of appeal dated January
11 1985 to the Court of Appeal. That appeal may be heard, so it is said, in
February next*. Meanwhile the defendant authority has been seeking payment of
rates in respect of the property. They do so despite the fact that the property
is, or was at all material times, unoccupied.
*Editor’s
note: On March 24 1986 the appeal was allowed and the case remitted to the
county court judge for reconsideration.
In Islington
rates may be claimed in respect of unoccupied property by virtue of section 17
of the 1967 Act and Schedule 1 to the Act. Demands totalling £976,407.06p for
unoccupied property rates under Schedule 1 were served on December 21 1984.
Those demands
of the Angel Centre as specified in (1) and (2) below. The demands were made by
reason of a local valuation officer having, on March 28 1984, made proposals to
enter in the valuation list hereditaments comprising parts of the Angel Centre:
(1) Offices and premises at 1
Pentonville Road and 403 St John’s Street: gross value £695,000, rateable value
£579,138; and
(2) Offices and premises at
401 St John’s Street: gross value £52,500, rateable value £43,722.
That is to say,
the rates demands were grounded on those proposals and not on any rateable
values established as respects the Angel Centre.
Subsections
(1) and (2) of section 6 of the 1967 Act are said to justify a rates demand
being made on the mere proposals of a valuation officer. Subsections (1) and
(2) are, so far as now material, as follows:
(1) Subject to the provisions of this section,
the rating authority may at any time make such amendments in a rate (being
either the current or the last preceding rate) as appear to them necessary in
order to make the rate conform with the enactments relating thereto, and in
particular may —
(a) correct any clerical or arithmetical error in
the rate; or
(b) correct any erroneous insertions or omissions
or any misdescriptions; or
(c) make such additions to or corrections in the
rate as appear to the authority to be necessary by reason of —
(i) the coming into occupation of any
hereditament which has been newly erected or which was unoccupied at the time
of the making of the rate; or
(ii) any change in the occupation of any
hereditament
I need not
read the rest of subsection (1). Subsection (2):
Where the
effect of the amendment would be either —
(a) to alter, otherwise than by way of correction
of a clerical or arithmetical error, the value on which a hereditament is
rated; or
(b) to charge to the rate a hereditament not
shown, or not separately shown, in the valuation list,
the rating
authority shall not make any amendment of the rate unless either the amendment
is necessary to bring the rate into conformity with the valuation list or a
proposal for a corresponding alteration to the valuation list has been made by
the valuation officer . . .
(3) In the foregoing provisions of this section,
other than subsection (1)(c)(i) references to a rate should be construed as
references to that rate as it has been applied in relation to particular hereditaments.
It is said
that subsections (1) and (2) may be operated for the purpose of fixing a rate
liability on the owner of unoccupied property. As appears from the Act, section
6 was enacted directly as respects occupied property. But the local authority
says that it can also be taken into account in the operation of the Schedule 1
code that applies as respects unoccupied property.
I should say
that on April 3 1984 the plaintiff company served notice of objection to the
proposals of the valuation officer. Up till now the subject-matter of the
proposals has not been settled by agreement or by any determination of the
local valuation court. Accordingly, no rateable values are entered in the
valuation list as respects Angel Centre.
I have
referred to steps taken by the local authority to obtain payment. Steps by way
of petition to wind up were, as I understand, restrained. Then in June 1985 the
authority took distress proceedings in the magistrates’ court. Those
proceedings, too, have been restrained, that restraint being imposed, so I was
told, because by the time of the hearing before the magistrates the writ in
this action dated February 15 1985 had been issued. Thus it was inappropriate
to litigate the same liability in two courts.
Against this
background of these disputes and proceedings there arise two submissions by the
plaintiff company. First, it is said that the completion notice dated June 1
1983 is not yet of established validity, with the consequence that no rates
liability as yet falls on the plaintiff. Second, that when operating Schedule 1
to the 1967 Act to determine what is an owner’s liability for rates on
unoccupied property, there can be no recourse to section 6 of the Act, in that
Schedule 1 operates as respects liability independently of the rest of the Act.
These
submissions seek respectively the following declarations set out in the
statement of claim:
2 A declaration that the Plaintiff is not
liable to pay any unoccupied property rates in respect of premises known as the
Angel Centre, Islington, until the Plaintiff’s appeal against the ‘completion
notice’ (within the meaning of paragraph 8 of Schedule 1 of the General Rate
Act 1967) on appeal from a decision dated the 21st December 1984 of Clerkenwell
County Court has been finally disposed of.
3 A declaration that the Plaintiff is not
liable to pay any unoccupied property rates in respect of premises known as the
Angel Centre, Islington, until relevant hereditaments and their respective
rateable values have been entered in The Valuation List.
It is
convenient first to consider 3 above. As I have mentioned, the Angel Centre is
unoccupied, and in Islington rates may be claimed in respect of unoccupied
property by virtue of section 17 of the 1967 Act and Schedule 1 to that Act. Mr
Glover appeared for the plaintiff. He read para 1(1) and para 5(1) of Schedule
1, which are as follows:
1(1) 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.
5(1) Subject to the provisions of this Schedule,
the rateable value of a hereditament for the purposes of paragraph 1 thereof
shall be the rateable value ascribed to it in the valuation list in force for
the area in which the hereditament is situated or, if the hereditament is not
included in that list, the first rateable value subsequently ascribed to the
hereditament in a valuation list in force for that area.
Mr Glover’s
simple submission then was that the plaintiff is not at present liable because
there is no rateable value ascribed to the Angel Centre in the valuation list
now in force (see para 5(1)). He accepted, as I understand, that if a rateable
value was hereafter ascribed to the centre by an amendment or alteration in the
current list, then a liability may arise and may relate back in time. But he
says there is now no rateable value in the list and so no rate liability can be
calculated and so no sum is due.
Mr Horton, for
the authority, was not content to read Schedule 1 in isolation. He drew
attention to the words at the end of para 1(1) of the schedule:
and the
provisions of this Act shall apply accordingly as if the hereditament were
occupied during the relevant period of vacancy by the owner.
There, he
said, was a thread leading the schedule back to the Act, and in particular to
section 6 of the Act. I have already set out section 6. Fastening on to section
6(1)(c)(i), Mr Horton said that the authority was empowered to add to or
correct the rate on ‘the coming into occupation’ of a newly erected
hereditament if and when there has been made by the valuation officer a
proposal within section 6(2). That such a proposal has been made is admitted by
the plaintiff. There was, said Mr Horton, a deemed coming into occupation of
Angel Centre on the date when the relevant period of vacancy, as defined in
para 15(1) of the schedule, began. In other words:
1 The Act applies as if
the Angel Centre were occupied during the relevant period of vacancy;
2 So, during that period,
section 6 applies;
3 There is in being a
proposal pursuant to section 6(2);
4 So, the authority can
add to or correct the rate (see section 6(1)(c)) when the Angel Centre comes
into occupation; and
5 It notionally comes into
occupation (presumably at the start of the relevant period of vacancy) because
you apply the Act as if it were occupied (see para 1(1) of the schedule).
I find this
circular argument difficult. First, the Act applies to the Angel Centre as if
it were occupied (see para 1(1)). If the Act applies as if the property were
occupied, I cannot see that there can be any coming into occupation notionally
within section 6(1)(c)(i), since occupation, whether notional or actual, is not
a relevant circumstance for rating liability as respects unoccupied land. The
liability appears from the schedule, and in particular paras 1(1), 5, 7 and 8.
Second, the centre is deemed to have been unoccupied on December 1 1983 (see
para 7 of Schedule 1). According to Mr Horton, as I understand him, it is also
deemed to have come into occupation on that date.
While those
are my views it is not necessary that I should rely upon them as reasons for my
decision on declaration 3. That is because there is authority that points the
way. In Hastings Borough Council v Tarmac Properties Ltd [1985]
RA 124 *Lawton LJ says at p 129:
In my
judgment the rating authority’s construction is correct. The liability of the
owners of unoccupied hereditaments to be rated has a statutory origin. It was a
new concept in rating law and could not easily be clothed with the existing law
based as it was on the concept of occupancy. Situations had to be dealt with
which did not arise when there was an occupier of a hereditament. Examples are
provided by para 2 of the schedule. Further, there has to be a means for
determining the rateable value for the relevant period of vacancy
with all these matters. It is a code enacting when liability to be rated arises
and how the quantum of liability is to be determined. On matters within its
terms it supersedes any provisions of the Act which determine the liability of
occupiers. The concluding words of para 1(1), which were expressed as a
subordinate clause, are, in my judgment, intended to make applicable to the
owners of unoccupied hereditaments the provisions of the Act which are not
concerned with liability.
*Editor’s
note: Also reported at [1985] 1 EGLR 161; (1985) 274 EG 925.
Kerr LJ and
Fox LJ agreed with those sentiments. So it appears that the schedule supersedes
any liability-imposing provisions of the Act. Section 6 appears to be such a
provision. On the other hand, the Hastings case is, as I understand, at
odds with a decision of a strong divisional court in Barr Hill Developments
Ltd v South Cambridgeshire District Council [1979] RA 379† . In that
case Eveleigh LJ said at p 389:
Counsel for
the owners has conceded in this case that section 6 of the Act allows a rate to
be recovered, although the premises are not in the valuation list, but he
claims that it is only possible in respect of occupied property. I will not in
this extempore judgment go into a detailed examination of the case which has
caused counsel to make that concession, if indeed he is not constrained to make
it on the very wording of section 6. It is the case of Kettle & Co v
Newcastle-under-Lyme Borough Council decided in the Court of Appeal on
March 21 1979. Suffice it to say that the wording of the section itself shows
that not always is it envisaged that there must be actual entry in a valuation
list before rates can be demanded. A proposal by the valuation officer is a
sufficient foundation for the valuation. At a subsequent date it may be that
valuation is challenged by one party or another and is then varied. The Act
then provides that adjustments may be made, but it is clear that the rates
based on that initial proposal must be paid in the first instance. Then, as I
have said, the matter can be adjusted later in the event of a dispute as to the
proposed rateable value. So that the actual recovery is provided for in the Act
itself in the very detailed provisions of the Act particularly relating to what
is to happen when a proposal is made. I do not think it is necessary in this
case to go into that; I mention it simply to indicate that the Act itself
contains the power to demand rates although the property is not in the list. I
see nothing in the Act to indicate that that situation is confined to occupied
property as opposed to unoccupied property. After all, section 17 is itself
part of the Act and that of course relates to unoccupied property. The schedule
should not be allowed to limit the effect of the sections of the Act itself.
Nor do I think that the schedule in any way attempts to do so. What one finds
in the schedule and in para 5 in particular is a number of different tests to
be applied where appropriate to determine the rateable value.
† Editor’s
note: Also reported at (1979) 252 EG 915, [1979] 2 EGLR 109.
So while
Lawton LJ says that Schedule 1 in matters within its terms supersedes any
provisions of the Act which determine the liability of occupiers, Eveleigh LJ
says that the schedule should not be allowed to limit the effect of the
sections of the Act itself. The situation is the more puzzling because I was informed
that the Barr Hill case was read at the Hastings hearing.
However that
may be, in this situation it is my duty to follow the Court of Appeal, and that
I do. Accordingly I hold that the Islington Rating Authority cannot rely on
section 6, with the consequence that the plaintiff is entitled to the
declaration numbered 3 above.
I turn to
declaration 2 sought by the plaintiff. Since I have found, as I have, as to
declaration 3, it is not necessary for me to decide whether or not to make
declaration 2. Accordingly I do not make declaration 2. But, since the matter
was argued before me, I will say that if it were necessary to consider
declaration 2, I should decline to make it. In brief, my reasons would be:
1 That the phrase ‘such an
appeal’ where it first appears in para 8(5) of Schedule 1 is a reference to an
appeal to the county court (see para 8(4)). Since the plaintiff’s appeal to the
county court has been dismissed, the Angel Centre is now to be regarded as
having been completed on the date specified by the completion notice.
2 Order 59, rule 19(5)
provides, so far as now material, that an appeal from the county court is not
to operate a stay of execution or of proceedings in the county court unless the
judge of the county court or the Court of Appeal so orders. Judge Marder, on
February 12 1985, dismissed an application by the plaintiff for a stay of
proceedings on his dismissal on December 21 1984 of the appeal.
In these
circumstances it seems to me that the rating authority can act on the
completion notice unless and until it is set aside or amended by the Court of
Appeal.
The plaintiff
also sought declaration 1 in these terms:
A declaration
that the Plaintiff is not liable to pay certain sums totalling £976,407.06
alleged by the Defendants to be due as unoccupied property rate in respect of
two relevant hereditaments at premises known as Angel Centre, Islington, as
particularised in two demand notes dated December 21 1984 served by the
Defendants upon the Plaintiff.
In the light
of declaration 3 the plaintiff is not at present liable to pay the sum
mentioned in declaration 1. However, I do not make declaration 1. It is
sufficient for present purposes to make declaration 3. Furthermore, it may be
that in future the plaintiff will become liable for the sum stated in
declaration 1, as and when the machinery of Schedule 1 for fixing liability is
eventually operated.
I add that
there is a counterclaim by the rating authority for a declaration that the
plaintiff is liable to pay the sum of £976,407.06 mentioned. It follows from my
decision on the plaintiff’s claim that the counterclaim must be dismissed.
Order made in
terms of Declaration 3. Counterclaim dismissed. Defendants to pay plaintiff’s
costs.
