General Rate Act 1967, section 17 and Schedule 1–Rating of unoccupied property–Post Office held to be liable to pay empty property rates–No need for building named in completion notice to coincide with actual hereditament eventually appearing in the valuation list–Liability applies to the "relevant hereditament"–Thompson J’s decision reversed
This was an
appeal by Camden Borough Council as rating authority from a decision of
Thompson J in the Queen’s Bench Division on February 4 1977 whereby he held
that the Post Office, subtenants of offices and premises at Euston Centre,
London, were not liable to pay £64,550 rates in respect of nine months during
which the Post Office had possession of the top portion of Euston Tower but the
premises had remained empty. Thompson J’s decision was reported at (1977) 242
EG 289, [1977] 1 EGLR 73.
Gerald
Moriarty QC and Guy Roots (instructed by B H Wilson, solicitor, Borough of
Camden) appeared for the appellant council, and Guy Seward (instructed by Saul
Rothstein) represented the respondent, the Post Office.
Giving
judgment, LORD DENNING MR said that Euston Tower was 400 ft high with 34 floors
of offices, shops on the ground floor, and a car park at the bottom. Part of it
had been unoccupied from December 11 1970 to September 11 1971. The question
was whether, if rates were payable for the empty portion, they were payable by
the Post Office.
Under the
General Rate Act 1967 the rating authority could, in regard to newly-erected
buildings, serve a "completion notice" on the building owner, stating
the date on which in their opinion the building could be expected to be
completed; and when that date was ascertained the owner was liable for the
empty property rate. On November 21 1969, while the tower block was being
built, the council served a completion notice on Balgray Investments Ltd, who
then owned it, stating that in their opinion the building, described as
"286 Euston Road (Euston Centre–36-storey tower block)," could
reasonably be expected to be completed within three months–by February 20
1970–and that it would then be a hereditament liable for unoccupied property
rate.
In January
1970 the council and the owners agreed in writing that the whole of Euston
Tower, except the ground-floor shops, "shall be deemed to be complete on
September 11 1970" and the empty property rate was to be payable from
December 11 1970 on the buildings so described. The owners then separated it
into two parts and leased one part to what was now the Department of the
Environment, which sublet the top portion, 20th to 33rd floors and part of the
34th floor, to the Post Office. They took possession on December 7 1970, but
did not occupy it until September 12 1971. The council claimed the empty
property rate from the Post Office, £64,550, from three months after the deemed
date of completion, December 11 1970, to September 11 1971. The Post Office
said that they were not liable because under the Act the hereditament described
in the completion notice had to coincide with the hereditament actually created;
that the completion notice was the vital document; that it was for the whole
building; that the selfsame hereditament should have appeared in the valuation
list; that the whole tower block which had been empty all the time was liable
for the empty property rate; but that the hereditament in the list was only the
top portion of the building and therefore the Post Office was not liable at
all.
Paragraph 1 of
Schedule 1 to the General Rate Act 1967 provided:
1(1) Where . . . any relevant hereditament . . .
is unoccupied for a continuous period exceeding three months, the owner shall .
. . be rated in respect of that hereditament for any relevant period of
vacancy. . . .
Paragraph 8
provided:
(1) Where a rating authority are of opinion–(a)
that the erection of a building . . . has been completed; or (b) that the work
remaining to be done . . . 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 . . . a "completion notice."
He (his
Lordship) thought that the short, if technical, point turned on the
interpretation of paragraphs 7 and 8 of Schedule 1. From those paragraphs it
was plain that the completion notice dealt with the position before the whole
building was actually completed but when it was expected that it would be
completed in the near future. At the completion notice date it would not be
known whether the eventual hereditament for rating purposes would be the whole
or part of the building. A date for completion of the whole building had been
agreed; but paragraph 1 of Schedule 1 dealt with the actual hereditament. The
important words there were "any relevant hereditament." That did not mean the whole building which
was the subject of the completion notice, but any relevant hereditament which
might thereafter be formed out of the newly-completed building. In the present
case the one "relevant hereditament" listed in the valuation list was
the Post Office-occupied portion, not the whole building in the completion
notice. In his Lordship’s view the liability to empty property rates applied to
what the valuation officer found to be the separate hereditament. It did not
have to coincide with the completion notice. The relevant hereditament had to
be ascertained at the time when the valuation was made on the state of the
premises at that time. He would allow the appeal and hold that the Post Office
was liable for the empty property rate for the period in question.
LAWTON LJ
agreed.
Also agreeing,
BRIDGE LJ said that the effect of the procedure under paragraphs 7 and 8 of
Schedule 1 was that when the building owners agreed with the local authority a
date for completion of their building that date, by virtue
deemed to be unoccupied. By reference to that date, and applying the definition
of "relevant period of vacancy" in paragraph 15, the owner of any
relevant hereditament in that building became liable to pay the unoccupied rate
under paragraph 1 three months from the deemed date of completion of the
building. It had been said that the procedure was ineffective because the whole
building never became a hereditament in respect of which any valuation was
entered in the list and that it could be effective only if there were a
coincidence between the building described in the completion notice and the
hereditament subsequently sought to be charged with the unoccupied rate under
paragraph 1. He (his Lordship) could not see why that should be so. Ultimately
the point turned on the construction of paragraph 8. "Hereditament"
was defined in section 115 of the Act as including any unit of property which
was or would fall to be shown as a separate item in the valuation list. A local
authority could foresee that an empty office building would, when completed, be
comprised in a relevant hereditament, because it was a unit of property capable
of single occupation and which, if it ever came into single occupation, would
fall to be a separate item in the valuation list. The fact that it never did
come into single occupation and would therefore never fall to be shown as a
separate item in any valuation was quite irrelevant to the procedure under
paragraphs 7 and 8, which fixed the date when the whole became unoccupied. So
the "owner," as defined in the schedule, of any hereditament which
could be carved out of it was liable to pay unoccupied rate from the
appropriate date.
The appeal was
allowed.
