R (on the application of Secretary of State for Health and Social Care (on behalf of Public Health England)) v Harlow District Council – Non-domestic rates – Rates avoidance scheme – Occupation of premises – Claimant purchasing commercial premises for redevelopment as headquarters – Claimant moving crates into property for six weeks to mitigate rates liability – Defendant billing authority refusing claim for exemption from unoccupied non-domestic rates – Claimant applying for judicial review – Whether claimant occupying property for continuous six-week period – Application granted
The claimant owned the GlaxoSmithKline Building in Harlow, Essex, which it purchased in 2017 and was awaiting redevelopment as its new headquarters. The defendant was the local billing authority for non-domestic rates. The defendant issued a demand for £2.5m for the 2018-19 financial year which the claimant paid.
It then sought advice on how to mitigate rates liability and was advised that genuine occupation of the site for a continuous period of six weeks would give rise to rates relief granted for three months following vacation of the hereditament. Therefore, the claimant moved crates of documents into the property with the intention of occupying it during the six-week period from 1 May to 27 June 2018 and a subsequent six-week period starting in September 2018. The claimant claimed a three-month exemption from payment of unoccupied non-domestic rates for each period. The defendant decided that the claimant had not been occupying the property and refused the claims.
The claimant applied for judicial review on the basis that the defendant had applied the wrong legal test and that, on the undisputed facts, the only conclusion legally open to it was that the claimant had been in occupation during the relevant periods.
The defendant argued that the six-week period did not constitute rateable occupation because the storage of the boxes was minimal; the boxes contained redundant items and the storage was of no benefit to the claimant; alternatively, if the claimant was in occupation during the six-week period, it was also in occupation during the subsequent three-month period so that occupied rates would be payable throughout; after the removal of the crates there remained in the building a model of the property, display boards, a boardroom table and chairs, tea and coffee making facilities and cleaning items and the building was used for occasional meetings.
Held: The application was granted.
(1) The conventional starting point for determining whether premises were occupied for rating purposes was to apply four tests: first, there had to be actual occupation; second, it had to be exclusive for the particular purposes of the possessor; third, the possession had to be of some value or benefit to the possessor; and, fourth, the possession was not to be for too transient a period: JS Laing v Kingswood Area Assessment Committee [1949] 1 KB 344 applied.
This was not a case where there was an intention to create a semblance of occupation. The claimant was quite open about what it was doing and why. The contents of the crates were clearly documents and items belonging to the claimant created or acquired in the exercise of its functions. The claimant was entitled to store them somewhere. It was not legally bound to store them at the property or anywhere else; but it had not yet determined that they could safely be disposed of and would not be bound to dispose of them even after so determining. Rateable occupation was determined under the legislation on a day-by-day basis; but that same legislation aggregated days of occupation into periods of occupation. That an occupier had to wait until its exemption crystallised did not stop current occupation conferring the present benefit of notching up another day of the period that would produce the exemption. The artificial slicing up of occupation into 24-hour periods was inconsistent with the rules on exemptions and with the case law (preserved by section 65(2) of the Local Government Finance Act 1988), including the requirement that occupation must not be too transient: R (Makro Properties Ltd) v Nuneaton & Bedworth Borough Council [2012] EWHC 2250 (Admin); [2012] PLSCS 150 and R (Principled Offsite Logistics Ltd) v Trafford Council [2018] EWHC 1687 (Admin); [2018] PLSCS 125 considered.
(2) Actual use of the property, even minimal use, combined with an intention to occupy was sufficient for occupation, whether the motive was rates mitigation or any other motive. The use need not be substantial or legally required. It might be whimsical or eccentric. It had to serve a purpose of the occupier but that purpose could be obtaining a future rates exemption. That was subject to two caveats: the purpose had to go beyond upkeep and development of the property itself; and occupation was not established by leaving abandoned goods there which were not worth the trouble of removing. Further, if the possessor’s motive was to mitigate rates liability, its intention had to be to occupy the property in question, at least if its understanding of the law of rates exemptions was correct. It was unreal to suppose that a person intending to gain a rates exemption and knowing that occupation for six weeks was required to gain it did not intend to occupy the property during those six weeks.
(3) An intention to occupy meant what it said. It did not matter whether the occupation was outsourced or kept in house; or that the claimant’s public functions did not extend to serendipitous occupation of buildings; it was as much entitled to pursue a rates exemption as anyone else and was acting properly in doing so. In the present case, there was only one possible conclusion to be drawn from the presence of the goods on the site: The claimant was in occupation during the two six-week periods. It did not matter that the goods in the crates did not precisely match the claimant’s description of them; nor whether they were of value to the claimant beyond being papers and other items yet to be disposed of and which needed to be somewhere until disposed of.
(4) The intention to occupy was conspicuously absent except during the six-week periods. The presence of the items in the property either related to the upkeep and maintenance of the property (which did not amount to rateable occupation) or indicated a mere intention to occupy the building in future (after development) and not a present intention to occupy. Meetings to discuss the future development of the site similarly indicated a future, not present, intention to occupy. It followed that the claim would be allowed.
Jenny Wigley (instructed by Davitt Jones Bould Ltd) appeared for the claimant; Kelly Pennifer (instructed by Greenhalgh Kerr Solicitors LLP) appeared for the defendant.
Eileen O’Grady, barrister
