General Rate Act 1967, section 17 and Schedule 1–Unoccupied hereditaments–Newly erected building deemed to become unoccupied on date when erection is completed–Service of completion notice by rating authority–Erection treated as completed on date of service of notice or such later date as is specified–Effect of paragraph 9 of Schedule 1–In this case erection of building was completed, including the work customarily done after substantial completion, such as partitioning and electric wiring, long before date of service of completion notice–County court judge in error in his construction of paragraph 9 and in purporting to add to the date specified in the completion notice a further six months which had in fact already expired–Rating authority’s appeal allowed
In this case
the rating authority, Ipswich Borough Council, appealed against a decision of
Judge Stinson at Ipswich County Court on a completion notice given by the
authority to the present respondents, Graylaw Investments Ltd. The effect of
the judge’s decision was to extend the time before which the respondents’ newly
erected building was deemed to become unoccupied and therefore to attract
rating liability under the provisions of the General Rate Act 1967, section 17
and Schedule 1.
R A W Sears
QC, I L Croxford and T Davey (instructed by the solicitor, Ipswich Borough
Council) appeared on behalf of the appellant authority; G R G Roots (instructed
by Radcliffes & Co) represented the respondents.
Giving the first
judgment at the invitation of Stephenson LJ, WALLER LJ said: This appeal
relates to a new office building of high quality in Ipswich. Planning
permission was granted for that building on January 30 1973. Work was started
in September 1973. The building was structurally completed in late 1975 and
finished, as found at the hearing before the county court judge, on March 25
1976. That was the date on which the letting agents wrote to the Ipswich
Borough Council saying that the building was finished to a high standard and,
in effect, offering it to the borough council as possible tenants. We have
before us pictures of the building–a large modern building with very
considerable floor area. One part of the building has been let, but at the date
of the hearing before the county court judge by far the greater part of the
building still remained unlet.
On March 7
1977 the local authority served upon the owners of the building, the
respondents before this court, a completion notice, but gave roughly seven and
a half weeks for the notice to take effect. The notice read:
(1) You are the person entitled to the possession
of the building newly/now being erected at: CROWN STREET, IPSWICH (comprising
the ground floor, first floor, second floor, third floor and the eastern wing
of the fourth floor) in the Borough of Ipswich. (2) The Council . . . being the
Rating Authority for the said Borough is of the opinion that: (a) the work
remaining to be done on the said building is such that the erection thereof can
reasonably be expected to be completed within three months; and (b) the
building when completed will be comprised in ‘a relevant hereditament’ for the
purposes of the General Rate Act 1967.
The notice is
dated March 7 1977 and it finished:
NOW THE
COUNCIL HEREBY GIVES YOU NOTICE that the erection of the said building is to be
treated for the purposes of Schedule 1 to the said Act of 1967 as completed on
April 30 1977.
The
respondents, Graylaw Investments Ltd, appealed, as they were entitled to do, to
the county court judge and the case was heard on July 12 1977, when Judge
Stinson allowed the appeal and gave the owners of the building six months from
March 7 1977, the date of the notice, making it September 7 1977.
By the General
Rate Act 1967 local authorities were given an optional power to rate the owners
of unoccupied hereditaments after being unoccupied for a continuous period of
three months. By a resolution passed in January 1975 the Ipswich Borough
Council resolved that the provisions of Schedule 1 to the 1967 Act, giving such
power, should apply to its area, so that from the time of the passage of that
resolution it became possible for the local authority to rate the owner of an
unoccupied building, provided they complied with the provisions of Schedule 1
to that Act.
I must read
certain of the provisions of Schedule 1. Paragraph 1(1) says:
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.
Under the
heading, ‘Completion of newly erected or altered buildings,’ paragraph 7 reads:
For the
purposes of paragraph 1 of this Schedule, a newly erected building which is not
occupied on the date determined under the subsequent provisions of this
Schedule as the date on which the erection of the building is completed shall
be deemed to become unoccupied on that date.
I hope it is a
fair paraphrase to say that, if the provisions of the schedule are complied
with, the building shall be deemed to become unoccupied on that date–that is
the date on which the erection of the building is completed.
Paragraph
8(1)(b) reads:
Where a
rating authority are of opinion . . . (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
contempleted on the date of service of the notice or on such later date as may
be specified by the notice.
By
subparagraph (5) of that same paragraph 8:
If a
completion notice served in respect of a building is not withdrawn and no
appeal in pursuance of subparagraph (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.
Finally, I
read paragraph 9 of the schedule, which is the important paragraph which we
have to consider in this case:
In the case
of a building to which work remains to be done of a kind which is customarily
done to a building of the type in question after the erection of the building
has been substantially completed, it shall be assumed for the purposes of
paragraph 8 of this Schedule that the erection of the building has been or can
reasonably be expected to be completed at the expiration of such period
beginning with the date of its completion apart from the work as is reasonably
required for carrying out the work.
It is accepted
for the purposes of this case that work remained to be done of a kind which is
customarily done to a building of this type. It is unnecessary to go into the
full details of that work, but it included such work as the installation of
partitioning, possibly the alteration of electrical wiring and so on. There is
a picture in the brochure relating to the building which shows one floor–a very
large floor–without any division at all, but carpeted, I think a witness said,
for sales purposes. Work of a kind which is customarily done to a building, it
is accepted, would include the installation of partitioning. In this case, the
learned judge also allowed time for obtaining fire regulation and building
regulation approval. There was a question of the length of time reasonably
required for this work, particularly in regard to the application of these
regulations, but the main question–indeed the only question which is left
before us now–is when the time begins to run.
The learned
judge proceeded on the basis that time began to run on the date of the service
of the notice, and in some of the reported cases to which we have been referred
the date of the service of the notice coincided with the date on which the
building was substantially completed. In this particular case, however, the
local authority–perhaps because it had encouraged the erection of this
building–did not serve the notice until approximately 12 months after the date
when the agents were saying that the building was finished to a high standard.
The question
we have to consider is whether the judge was right in saying that the time
began to run from the date of the notice, or whether time runs from the date of
substantial completion. Mr Sears submits, on behalf of the local authority,
that on a true reading of paragraph 9 the date from which time commences is the
date of substantial completion. He submits that when reading the words of
paragraph 9 ‘. . . shall be assumed for the purposes of paragraph 8 of this
Schedule that the erection of the building has been or can reasonably be
expected to be completed at the expiration of such period beginning with the
date of its completion apart from the work as is reasonably required for
carrying out the work,’ if you take the date of the service of the notice as
the date from which time begins to run, that gives no effect to the words
‘beginning with the date of its completion apart from the work’ in the passage
to which I have just referred. If those words were omitted, the paragraph would
read: ‘. . . at the expiration of such period as is reasonably required for
carrying out the work,’ and it might well be arguable that that period would
start with service of the notice. But when the words ‘beginning with the date
of its completion apart from the work’ are put in–and Mr Sears submits that in
fact the paragraph should be read as if there were a comma at the beginning of
that phrase and a comma after the word ‘work,’ which would make it
clearer–those words are meaningless unless they make the date of substantial
completion the starting date. In other words, ‘beginning with the date of its
completion apart from the work’ must mean, submits Mr Sears, apart from the work
which remains to be done which is of a kind which is customarily done to a
building of this type. That is to say, applying that to the facts of this case,
beginning with the date of its completion apart from the work required to put
in the partitioning and alter the electrical work. In other words, in this
case, that would be either March 25 1976 or perhaps even earlier. But it is
unnecessary to consider that because it is quite clear that the judge found
that this was substantially completed on March 25 1976.
I find that
construction irresistible. Furthermore, it seems to me that it is logical. The
date when the erection of a building has been or can reasonably be expected to
be completed is a date which should not depend on notices. The date on which
the erection of the building is to be treated for the purposes of this schedule
as completed is the date of service of the notice, or on such later date as may
be specified in the notice. Service of the notice is a condition precedent to
liability to rates, and the date on which liability commences depends on the
notice. The local authority, therefore, can do that which the Ipswich Borough
Council did in this case, namely give a little more time to an owner of a
building, without also having to have added to that more time an additional
amount of time which in truth has already passed.
For these
reasons I would allow this appeal and substitute the dates which were set out
in the original notice.
Agreeing,
CUMMING-BRUCE LJ said: Section 17(1) of the General Rate Act 1967 granted a new
discretionary power to a local authority with respect to the rating of
unoccupied property. Pursuant to that section the provisions of Schedule 1 to
the Act govern the liability to rating. But it was against that background that
the draftsman of the Schedule had to devise words apt, firstly, to enable the
local authority to exercise its discretionary power and, secondly, to set out
statutory assumptions which would effectually enable the local authority, where
it so wished, to expose the owner to liability to rates where the building was
actually completed or, in an appropriate case, where it had been substantially
completed but some work remained to be done.
The way in
which the draftsman solved the drafting problem is as follows. In paragraph 7,
a building not occupied on the date determined as ‘the date on which the
erection of the building is completed shall be deemed to become unoccupied on
that date’–that is to say, there is a deeming provision which makes it
necessary to discover the date on which the erection of the building is
completed. In order to decide whether it is completed, one then goes to
paragraph 8(1)(a) and (b), which provide both for actual completion and the
situation where the work remaining to be done is such that the building can
reasonably be expected to be completed within three months. In those situations
the local authority is empowered to serve a notice upon the owner, and that
notice is to state that the erection of the building is to be treated for the purposes
of the schedule as completed on the date of the service of the notice or such
later date as may therein be specified.
When one turns
to paragraph 9, one finds that the draftsman there has used words which give
rise to a statutory fiction, so that in the situation covered by paragraph 9
one does not any longer look at the reality, but looks at the statutory fiction
which the paragraph brings into existence. That statutory fiction, on the plain
words of the paragraph, compels one to assume for the purposes of paragraph 8
that ‘the erection of the building has been or can reasonably be expected to be
completed at the expiration of such period beginning with the date of its
completion apart from the work as is reasonably required for carrying out the
work.’
It appears to
me clear that when paragraph 9 was married
the period which will be necessary in order to do the work that remains to be
done as being work which is customarily done to a building, all the necessary
ingredients of the statutory fiction have been found; then it is irrelevant
that the date for notional completion so arrived at is earlier than the notice
served upon the owner.
For those
reasons, I am satisfied that the learned judge was in error and the appeal
should be allowed.
Also agreeing,
STEPHENSON LJ said: I agree with the construction of paragraph 9 which has been
formulated by my Lords. Indeed, Mr Roots conceded that, if it means what it
says, the relevant period must begin with the date of the building’s completion
apart from the work remaining to be done of a kind which is customarily done to
the building. The eleven words which Mr Sears puts between commas, ‘beginning
with the date of its completion apart from the work,’ have never been
considered in any reported case and were not apparently adequately considered
by the learned county court judge, from whose opinion we are differing.
In deference
to him I add a few words of my own to the judgments which have already been
given. An authority can state that the erection of a building is to be treated
as completed at the date of the service of the completion notice or at some
later date. That is plain from paragraph 8 of the First Schedule. It follows
that the date when the authority form their opinion that its erection has been
completed, or can reasonably be expected to be completed within three months,
may be earlier than the date of the service of the notice and completion or the
expiration of the three months may be earlier than the date of the service of
the notice. It also follows that substantial completion may have taken place,
and the period beginning with the date of completion apart from customary work
remaining to be done to the building and reasonably required for carrying out
the work may have started and expired, before the date of the service of the
completion notice.
In this case
the judge has found that substantial completion and what he happily called,
‘translation of the property from ‘substantially completed’ to ‘completed’ by
doing work ‘customarily done’,’ were much earlier than March 7 1977, the date
when the completion notice was served, and that the period reasonably required
was six months. The expiration of that period was, therefore, also in the past
on the date of the service of the completion notice. It expired in September
1976. The authority was therefore entitled to serve the completion notice
earlier than it in fact did, and was certainly entitled to determine the date
on which the erection of this building was completed at any later date than
September 1976, for instance, April 30 1977, the date which is specified in the
completion notice. That accordingly is the date when this building is deemed to
become unoccupied under paragraph 7, and consequently rateable under paragraph
1. The court, therefore, was not entitled to determine September 7 1977 under
paragraph 8(5) of Schedule 1 by treating the six months as running from the
completion notice, as was clearly confirmed to be its order in the explanatory
letter which the court wrote on July 17 1977 to the solicitor to the Ipswich
Borough Council.
For those
reasons I agree that this appeal should be allowed and the authority’s
completion notice allowed to stand.
The appeal
was allowed with costs.
