Rating — Rating of unoccupied property under General Rate Act 1967, section 17 and Schedule 1 — Appeal by rating authority from decision of Forbes J dismissing authority’s claim for rates in respect of unoccupied premises consisting of three floors in a large building — Question of construction of relevant provisions in 1967 Act — It was agreed that the ‘relevant period of vacancy’ within the meaning of Schedule 1 to the 1967 Act was from February 1 1976 to March 31 1979 — The dispute between the rating authority and the owners was as to whether the latter were liable to be rated for the whole of that period — No value for the floors in question had been entered in the valuation list during that period, the building being in process of construction — Proposals for the inclusion of entries for these floors were made in December 1979 and the entries were made in November 1980 — It was submitted on behalf of the rating authority that para 1(1) of Schedule 1 to the 1967 Act was a mandatory provision establishing the owners’ liability to be rated for the whole of the vacancy period — The authority also argued that Schedule 1 provided a code which imposed liability on owners on a different basis from that applicable to occupiers — The owners argued that the intention of the Act was to bring the owners of unoccupied premises into the purview of the Act so as to place them on the same footing as occupiers and subject them to the same procedural steps — They submitted that, applying the provisions governing an occupier’s liability to payment in section 79 of the Act, as the proposals were served on them in December 1979 their liability to be rated as the owners of unoccupied property dated only from April 1 1979 — Held, accepting the rating authority’s submissions, that the owners were liable to be rated for the whole period of vacancy, February 1 1976 to March 31 1979 — The liability of owners of unoccupied property was a new concept in rating law — The code in Schedule 1 superseded provisions in the Act dealing with the liability of occupiers — Authority’s appeal allowed, but leave to appeal to House of Lords granted
This was an
appeal by the rating authority, Hastings Borough Council, from a decision of
Forbes J dismissing the appellants’ claim against the respondents, Tarmac
Properties Ltd, for £25,502.69, plus interest, in respect of unoccupied
property rates alleged to be due from the respondents as owners of three floors
of a large building known as Cavendish House.
A R Porten
(instructed by Sharpe Pritchard & Co, agents for Raymond M Adams, Hastings
Borough Council) appeared on behalf of the appellants; G R G Roots and Miss
Susan Hamilton (instructed by Hextall Erskine & Co) represented the
respondents.
Giving
judgment, LAWTON LJ said: This is an appeal by the plaintiffs, Hastings Borough
Council, as a rating authority, against a judgment of Forbes J delivered on
December 21 1983, whereby he dismissed their claim against the defendants,
Tarmac Properties Ltd, for the payment of £25,502.69, plus interest, being, so it
was alleged, rates payable by the defendants as the owners of two hereditaments
consisting of three floors of a large building which had been unoccupied
between February 1 1976 and March 31 1979. The plaintiffs’ claim was made
pursuant to section 17 of the General Rate Act 1967 and para 13 of Schedule 1
to that Act.
On March 11
1973 the plaintiffs, exercising powers given them by section 17 of the General
Rate Act 1967, passed a resolution that the provisions of Schedule 1 to that
Act should apply to their area as from April 1 1974. The plaintiffs were
required by the Act to cause a copy of the resolution to be published in the London
Gazette and one or more newspapers circulating in their area. The effect of
the resolution, broadly stated, was that after April 1 1974 the owners of
buildings which were unoccupied would be rated in respect thereof for ‘any
relevant period of vacancy’, which was defined as being:
any period
beginning with the day following the end of a period of three months during
which the hereditament has been continuously unoccupied and ending with the day
preceding that on which the hereditament becomes or next becomes occupied or
ceases to exist.
For the
purposes of this appeal this period is deemed to be from February 1 1976 to
March 31 1979.
About the time
this resolution was passed, the construction began of a building consisting of
a basement, a ground floor and seven floors above. It was known as Cavendish
House. It was intended that the ground floor should be used as shops and the upper
floors for commercial purposes. On September 29 1975 the defendants acquired a
leasehold interest in the second, third and fourth floors of Cavendish House.
For the purposes of the 1967 Act they were the owners thereof. Pursuant to para
8 of Schedule 1 to the Act, the plaintiffs had served a notice on the previous
owners of the building that they were of the opinion that it would be completed
on November 1 1975. It followed, so the plaintiffs submitted, that the
defendants were liable to be rated in respect of these hereditaments as from
February 1 1976. At that date there was no rateable value for their
hereditaments and none was proposed until December 1979. Without a rateable
value the rates due could not be quantified. On December 14 1979 the valuation
officer made a proposal for the alteration of the valuation list for the
plaintiffs’ rating area by the inclusion in the list of an entry relating to
‘offices and premises fourth floor’. Another similar proposal was made on
December 21 1979:
for offices
and premises second and third floors.
The plaintiffs
made a demand for rates on April 22 1980 for the whole period from February 1
1976 until March 31 1979. No value had been entered on the valuation list at
this date. The entries were made on November 11 1980. The reason for the long
delay in making proposals was that the valuation officer was of the opinion
that further work would be required before the premises were capable of
occupation. He was unwilling to make proposals until he knew the precise units
of assessment.
In support of
their submission that the defendants should be rated for the whole of the said
period the plaintiffs put forward five reasons: first, that the policy of the
Act, as enacted in section 17 and Schedule 1, was to rate the owners of
unoccupied premises; second, that the provisions of the Act were mandatory;
third, that para 5(1) of the Schedule, when read with para 1, made provision
for the calculation of the amount of the rates payable by the owners; fourth,
that the schedule provided a different way of imposing liability on owners from
that on occupiers; and, fifth, that the other provisions of the Act were
applicable only in so far as they made provision for matters, such as appeals,
which were not dealt with in the Schedule.
The defendants
submitted that these submissions were misconceived because the intention of the
Act was to bring the owners of unoccupied premises into the purview of the Act
so as to give them the same rights as occupiers and to subject them to the same
procedural steps. This, it was submitted, was clear from the last clause of
para 1(1) of the Schedule.
The resolution
of the rival contentions depends upon the construction of the relevant
provisions of the Act. The mischief with which section 17 and Schedule 1
intended to deal can be clearly identified. Parliament wanted to stop the
owners of premises, particularly dwelling-houses, leaving them unoccupied to
suit their own convenience and to their own financial advantage. As long as
rates were payable only by the occupiers of premises, which had been the law
since the 17th century, the owners of unoccupied premises avoided liability for
rates. The Local Government Act 1966 made such owners in specified
circumstances liable to pay rates: see sections 21 and 22. These provisions
were incorporated into the General Rate Act 1967. Part I of that Act relates to
the general rate, how a rate is made, published and demanded, how it can be
amended and how aggrieved persons can appeal. Part II relates to precepts and
has no relevance to this appeal. Part III relates to liability and valuation.
Section 16 provides that every occupier of property of specified
description (and they cover all kinds of real property):
shall be
liable to be assessed to rates in respect of the hereditament or hereditaments
comprising that property according to the rateable value or respective rateable
values of that hereditament or those hereditaments determined in accordance
with the provisions of this Act.
Section 17
departs from the historical concept of liability to be rated. Subsection (1)
provides as follows:
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, or
(b) if they
for the time being apply, shall cease to apply, to their area, and in that case
those provisions shall come into operation, or, as the case may be, cease to be
in operation, in that area on such day as may be specified in the resolution.
Schedule 1
contains detailed provisions for the rating of unoccupied property. In so far
as it deals with an owner’s liability to be rated, it is a code; but it does
not deal with many matters which are incidental to liability without being
determinate of liability, such as appeals. Para 1(1), as amended by the Local
Government Act 1974, provides 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 provision of this Act
shall apply accordingly as if the hereditament were occupied during that
relevant period of vacancy by the owner.
There has been
no dispute that on the facts of this case the period between February 1 1976
and March 31 1979 was a relevant period of vacancy.
The plaintiffs
submitted that the mandatory form of the subparagraph establishes a liability
to be rated for the whole of this period.
The quantum of
liability in respect of an unoccupied hereditament remains unknown until a
rateable value for it is ascertained. Liability to pay arises when it is
ascertained. If it had only recently become unoccupied, its rateable value will
probably be on the valuation list, but if it is a newly built property the
valuation officer may not make a proposal for some time, as happened in this
case. There is no provision in the Schedule or in the body of the Act enabling
an owner himself to make a proposal. The making of a proposal, submitted the
plaintiffs, marks the end of a period of uncertainty, which is part of the
relevant period of vacancy. The quantum of rate payable from the beginning of
the relevant period of vacancy can then be ascertained. On this construction
the mischief against which section 17 is directed is contained: the policy of
the Act comes into effect.
The defendants
submitted that this construction disregards the concluding words of para 1(1).
The effect of these words is to ensure that the owner of an unoccupied
hereditament shall be subject to the same provisions of the Act as an occupier.
Section 79(1)(2) regulates the extent of an occupier’s liability to pay rates
when a valuation officer makes a proposal in respect of a hereditament. The
relevant parts of section 79(1)(2) are as follows:
(1) Subject to
subsection (2) of this section . . . where an alteration is made in a valuation
list by virtue of sections 71 to 78 of this Act, then, in relation to any rate
current at the date when the proposal in pursuance of which the amendment so
made was served on the valuation officer, or, where the proposal was made by
the valuation officer, current at the date when notice of the proposal was
served on the occupier of the hereditament in question, that alteration shall
be deemed to have had effect as from the commencement of the period in respect
of which the rate was made, and shall, subject to the provisions of this
section, have effect for the purposes of any subsequent rate.
(2)
Notwithstanding anything in subsection (1) of this section, where an alteration
in the valuation list —
(a) consists
of the inclusion in the valuation list of a newly erected or newly constructed
hereditament or an altered hereditament which has been out of occupation on
account of structural alterations; or
(b) . . .
the
alteration shall have effect only as from the date when the new or altered
hereditament comes into occupation or as from the happening of the event by
reason of which the alteration is made as the case may be.
Since in this
case the proposals relating to the defendants’
submitted, that their liability to be rated as the owners of unoccupied
property dated from April 1 1979, the beginning of the rating year and no
further. The plaintiffs have not by any appropriate resolution (and they did
not claim they had) exercised their powers under section 6 to make amendments
in the rate so as to impose liability on the defendants for the preceding year,
that is, the year ended March 31 1979.
In my judgment
the plaintiffs’ 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 when a newly
occupied or altered building has been completed. Schedule 1 deals 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. The construction put forward by the defendants would,
in my judgment, tend to thwart the policy of the Act.
I would allow
the appeal.
FOX LJ agreed
that the appeal should be allowed for the reasons given in the judgments of
Lawton and Kerr LJJ, which he had had the advantage of reading in draft.
Also agreeing,
KERR LJ said: My mind wavered during the hearing of this appeal, but I have
ultimately reached the same conclusion as Lawton LJ. The arguments of Mr Roots
on behalf of the respondents against the overriding effect of Schedule 1 to the
General Rate Act 1967 (as amended) were mainly based on sections 6(1), 16 and
79(1) of the Act. In relation to section 6(1) his argument was that, on the
true construction of the resolution of the authority’s finance committee dated
February 8 1979 prescribing the rate for the year ending March 31 1980, this
was insufficient to give effect to the inclusion of these premises and their
rateable value in the valuation list on November 11 1980, and that the
respondents’ liability thereunder could in any event not take effect earlier
than April 1 1979. This resolution was in the following terms:
A general
rate of 100.15p in the pound be made in respect of the year ending March 31
1980, such rate to become due and payable in full on April 1 1979, and that it
is hereby specified that the said general rate is to be levied at the rate of
100.15p in the pound of rateable values as at April 1 1979 of all hereditaments
other than dwelling-houses and mixed hereditaments as defined in the General
Rate Act 1967.
As it seems to
me, however, these arguments cannot prevail against the clear words at the end
of paragraph 5(1) of Schedule 1, which is in the following terms:
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.
Since an
unchallenged rateable value was in fact subsequently ascribed to these premises
as from November 11 1980 in the valuation list then in force, it seems to me
that para 5(1) takes effect so as to determine their rateable value during ‘the
relevant period of vacancy’, as defined in para 15 of the Schedule, with the
result that para 1(1) of the Schedule was then brought into operation and that
section 6 is irrelevant.
Next, the
respondents submitted that the words in paragraph 1(1) — ‘. . . the owner shall
. . . be rated in respect of that hereditament for any relevant period of
vacancy . . . ‘ — were only in the nature of a general statement in relation to
unoccupied property analogous to the general provision for the rating of
occupied hereditaments as referred to in section 16. But, as was pointed out by
Mr Porten on behalf of the appellants, there is an important difference between
para 1(1) and section 16: as mentioned above, the former prescribes the period
during which the owner of unoccupied property is to be rated, whereas the
latter contains no similar provision in relation to occupied property. In this
connection I cannot see any material difference between the words ‘shall . . .
be rated’ in para 1(1) and ‘shall be liable to be assessed to rates’ in section
16, and I did not understand Mr Roots to suggest the contrary.
His main
argument relied on the concluding part of section 79(1), which has already been
set out in the judgment of Lawton LJ. He submitted, with some force, that since
sections 69 to 78 inclusive clearly remained applicable despite Schedule 1
(and, so far as I can see, equally the subsequent sections in this Part of the
Act), there was no sufficient reason to except the application of section
79(1). On this basis he submitted that the respondents’ liability to rates
could not predate the beginning of the rating period during which the relevant
proposals were made, ie April 1 1979, since it was common ground that the words
in brackets in section 6(1) — ‘being either the current or the last
preceding rate‘ — have no application in the present case. At first sight
this is an attractive argument, but on balance I cannot accept it. Section
79(1) falls to be read together with section 16 to the extent that it
prescribes the retrospective effect of the rateable value contained in a
proposal. However, sections 16 and 79(1) clearly apply only to occupiers and
occupied hereditaments, whereas Schedule 1 contains the corresponding
provisions governing the liability to rates of owners of unoccupied
hereditaments. To this extent, despite the concluding words of para 1(1) of
Schedule 1, it seems to me that these provisions must give way to Schedule 1,
and for present purposes in particular to the opening words of para 1(1) read
in conjunction with para 5(1). I was at one time concerned about the fact that,
among the provisions to which section 79(1) is expressly made subject, there is
a reference to para 6(4) of Schedule 1, but not to Schedule 1 generally or to
any other provision in it. However, para 6(4) deals with occupied property: its
opening words are ‘Where a newly created dwelling-house is first occupied after
its completion . . .’ The express reference to this provision of Schedule 1,
which appears otherwise to deal only with unoccupied premises, accordingly
lends further support to the conclusion that in cases of unoccupied property,
such as the present, section 79(1) must give way to the mandatory terms of para
1(1) of Schedule 1 so as to rate the owner for the whole of the relevant period
of vacancy, ie February 1 1976 to March 31 1979 on the facts of this case.
For these
reasons, as well as those stated by Lawton LJ, I would allow this appeal.
The appeal was
allowed with costs in the Court of Appeal and below; interest in the sum as
agreed between the parties. Application for leave to appeal to the House of
Lords was granted.
