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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Secerno Ltd & Ors v Oxford Magistrates Court & Anor [2011] EWHC 1009 (Admin) (19 April 2011) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2011/1009.html Cite as: [2011] EWHC 1009 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		19 April 2011

The Honourable Mr Justice Burnett:

1. Each of the claimants in this application for judicial review is a non-domestic ratepayer within the Vale of White Horse District. They seek to quash the decision of Deputy District Judge Dean given on 25 November 2009 in Oxford Magistrates' Court whereby he concluded that he had no jurisdiction to decline to make a liability order in respect of unpaid business rates on the basis of arguments advanced by the claimants. There was no dispute that the hereditament occupied by each of the claimants was entered in the valuation list for the periods for which rates had been demanded. There was no suggestion that the Vale of White Horse District Council ["the Council"] had failed to serve demand notices in accordance with the applicable statutory regime. The argument which the claimants advanced before the Deputy District Judge was that before the hereditaments were added to the list the Council had been in breach of its statutory duty under Regulation 42 of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2005 ["the 2005 Regulations"]. That provides:

"Information to be supplied by relevant authorities

42. – (1) information of the description set out in paragraph (2) is hereby prescribed for the purposes of paragraph 6(1A) of Schedule 9 to the Act.

(2) In relation to any property such as is mentioned in paragraph (3), the information is –

(a) the address of the property;

(b) the nature of the event by reason of which, in the opinion of the relevant authority, the local non-domestic rating list is required to be altered;

(c) the date from which, in the opinion of the relevant authority, such alterations should have effect; and

(d) if the property is shown in the local non--domestic rating list, any reference number prescribed to it in that list.

(3) the property referred to in paragraph (2), in relation to a relevant authority, is any non-domestic property in the authority's area-

(a) which is, in the authority's opinion, property which is or may become liable to a rate; and

(b) in relation to which-

(i) there is no entry in the local non-domestic rating list; or

(ii) in the authority's opinion any entry in such a list requires to be altered.

(4) the information required by this regulation shall be supplied as soon as is reasonably practicable after it comes to the attention of the relevant authority."

2. The Act referred to in regulation 42 of the 2005 Regulations is the Local Government Finance Act 1988 ["the 1988 Act"]. Paragraph 6(1A) of Schedule 9 provides:

"The Secretary of State may make regulations containing provision that, at such times and in such manner as may be prescribed, a billing authority shall supply to the Valuation Officer for the authority information of such description as may be prescribed."

3. The submission made before the Deputy District Judge, and repeated in this Court, was that the Council had failed to supply to the Valuation Office as soon as reasonably practicable after it came to its attention information relating to the properties which it considered should be liable to non-domestic rates. The result was that the valuation list was not altered to reflect the occupation of the properties by the three claimants as early as it could have been. There were consequent delays in demands for business rates which, it was contended, caused difficulties for the ratepayers.
4. It was submitted that the alleged antecedent breach of the statutory duty to provide information to the Valuation Officer could, as a matter of law, have resulted in the Magistrates' Court being obliged to refuse to make the liability orders sought against the ratepayers. For that reason the Deputy District Judge was obliged to investigate the circumstances surrounding the provision (or lack of provision) of the information and its consequences upon the ratepayers.
5. The way in which the submission was advanced recognises that the statutory duty is different from a simple obligation to pass on information as soon as reasonably practicable after it comes to the attention of the authority. The language of regulation 42 dictates that before the statutory duty arises the relevant authority must have formed an opinion on various matters. The authority must be of the opinion that the property is or may become liable to a rate (42(3)(a)) when there is no entry in the list or that in its opinion the entry requires alteration (42(3)(b)). The information to be provided includes the nature of the event which in the opinion of the authority gives rise to the need to alter the list (42(2)(b)) and the authority's opinion concerning the date from which the alteration should have effect (42(2)(c)). Taken together, these matters show that the duty to pass on information to the Valuation Officer arises after the relevant authority has applied its mind to the question and concluded that the list needs alteration.
6. The Deputy District Judge declined to hear any evidence because he concluded that such questions were immaterial to the applications for liability orders before him.
7. There was agreed information prepared for the Magistrates' Court detailing the properties concerned and the broad chronological outline relating to occupation by the claimants and involvement of the Council in planning and building issues. It is convenient to summarise that information. Secerno Ltd took occupation of the second floor at Seacourt Tower, West Way, Botley in January 2007 following substantial works of demolition, extension and refurbishment of the whole building. On 10 November 2008 the Valuation Officer gave notice that the hereditament would be entered in the list from 3 January 2007. Demands for rates from that date were served by the Council on 4 December 2008 and immediately disputed on behalf of Secerno Ltd. In due course the rates due for the period from April 2008 were paid. Those that remain in dispute relate to the period 3 January 2007 to 31 March 2008. As a planning authority and also as the body responsible for building regulation, the Council were aware of the development and completion of the works at Seacourt Tower. It was prompting from the occupiers in 2008 that led to action and the eventual inclusion of their hereditament in the local list.
8. Sportsworld Group Ltd occupies Suite G/H at Windrush Court, Blacklands Way, Abingdon. Windrush Court was the subject of redevelopment and refurbishment which were completed in October 2005. The Council had granted planning permission for the work in January that year. The Valuation Officer was not then informed by the Council that the various hereditaments within the premises should be added to the local list. Sportsworld Group Ltd occupied their suite from 1 September 2007. In December 2008 the managing agents of the building contracted the Council which prompted the Council to ask the Valuation Officer to enter the suite in the list. That occurred on 2 February 2009. A demand for rates was issued 10 days later in respect of the period 1 September 2007 to 31 March 2009. The rates for the whole period are disputed.
9. Xou Solutions Ltd occupies a different suite of rooms at Windrush Court under a five year lease from October 2005. Thereafter Xou Solutions Ltd had direct dealings with the Council over internal alterations to the suite they occupied. Nonetheless, it was only when the Council were contacted by the owners of Windrush Court in December 2008 that they in turn contacted the Valuation Officer. The hereditament was entered into the local list on 2 February 2009 and a rates demand sent on 12 February. The period in issue is 1 September 2007 to 31 March 2009.
10. The duty to compile and maintain a valuation list, known as the local non-domestic rating list, rests upon the Valuation Officer: see section 41 of the 1988 Act. The reference in the statute and subordinate legislation to a Valuation Officer is in practice a reference to the Valuation Office Agency which is independent of local authorities. Section 55 of the 1988 Act makes provision for alteration of lists by the Valuation Officer of his own motion or on the proposal of others. The 2005 Regulations are concerned primarily with the practice and procedure to be followed in the event of proposals from someone other than the Valuation Officer, and include an appeals mechanism. It was common ground before me that an alteration may be made by a Valuation Officer because a hereditament not shown in the local list ought to be shown. Regulation 42 of the 2005 Regulations appears in a part headed 'Miscellaneous and General'.
11. Liability to pay a business rate arises pursuant to section 43 of the 1988 Act. That provides:

"(1) A person (the ratepayer) shall as regards a hereditament be subject to a non-domestic rate in respect of a chargeable financial year if the following conditions are fulfilled in respect of any day in the year-

(a) on the day the ratepayer is in occupation of all or part of the hereditament, and

(b) the hereditament is shown for the day in the local non-domestic rating list in force for the year.

(2) In such a case the ratepayer shall be liable to pay an amount calculated by –

(a) finding the chargeable amount for each chargeable day, and

(b) aggregating the amounts found under paragraph (a) above.

(3) A chargeable day is one which falls within the financial year and in respect of which the conditions mentioned in subsection (1) above are fulfilled.

…

(7) The amount the ratepayer is liable to pay under this section shall be paid to the billing authority in whose local non-domestic rating list the hereditament is shown.

(8) The liability to pay any such amount shall be discharged by making a payment or payments in accordance with regulations under Schedule 9 below."

The omitted parts of the section are concerned with the detail of calculation of the amount for which the ratepayer is liable. The regulations mentioned in subsection 8 are the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 ["the 1989 Regulations"].

12. The 1989 Regulations require that demand notices are served on ratepayers who have a liability to pay business rates pursuant to section 43 of the 1988 Act. The liability to pay need not be satisfied by a ratepayer until a notice is served. Only then does the duty to satisfy the liability arise. The various enforcement mechanisms found in the 1989 Regulations only kick in following a failure to satisfy the demand notice. Regulation 5 of the 1989 Regulations requires a demand notice to be served 'on or as soon as practicable after' a certain date. In North Somerset District Council v. Honda Motor Europe Limited and others [2010] EWHC 1505 (QB) the questions considered by the Court concerned the consequences of a billing authority's failure to serve the demand notice as soon as was practicable in accordance with the requirement of regulation 5. The various ratepayers in that case contended that a failure to serve the demand notice as soon as was practicable after the relevant date led to the automatic invalidity of the notice, with the consequence that the authority could not enforce the rates. The billing authority argued that a failure to comply with the statutory duty to serve a demand notice as soon as was practicable would not result in an inability to collect the rates in question, unless it would be unconscionable to do so. Between paragraphs [33] to [48] in my judgment in that case there is an analysis of a number of authorities concerning the consequences of a failure to comply with a statutory time limit which had arisen in the rating arena, but in the context of the decision of the House of Lords in R v. Soneji and another [2006] 1 AC 340. The House of Lords there considered the consequences of a failure by the prosecuting authorities to comply with time limits in confiscation proceedings laid down in primary legislation. It was argued on behalf of the convicted defendants that the failure to comply with the relevant time limits resulted in total invalidity of the confiscation proceedings. The reasoning of the House of Lords informs any question of the consequences of failing to comply with statutory time limits. At its heart is the proposition that the question must be resolved by reference to imputed parliamentary intention.
13. Mr Pike did not submit that the failure of a relevant authority to provide information as soon as reasonably practicable following its forming the opinions referred to in regulation 42 of the 2005 Regulations should lead to total invalidity. It is not the claimants' case that the Council would necessarily be disabled from recovering the rates for the period between the notional date on which they should have passed on the information and the date on which they did, or otherwise the date on which the Valuation Officer entered the hereditament in the list without the aid of information from the authority. Rather, he submitted that the approach to invalidity in this context should be the same as applies to a failure by the billing authority to comply with the time limit specified for service of the demand notice in regulation 5 of the 1989 Regulations. The following paragraphs from the judgment in North Somerset District Council encapsulate the position:

"43. It is clear from the analysis in Soneji that in any case concerning the consequences of a failure to comply with a statutory time limit, there are potentially two stages in the inquiry. The first is to ask the question identified by Lord Steyn: did Parliament intend total invalidity to result from failure to comply with the statutory requirement? If the answer to that question is 'yes', then no further question arises. Yet if the answer is 'no' a further question arises: despite invalidity not being the inevitable consequence of a failure to comply with a statutory requirement, does it nonetheless have that consequence in the circumstances of the given case and, if so, on what basis?...

48. … The consequence of a failure to comply with a statutory requirement should be worked through by reference to imputed statutory intention. It will be important to place the time limit in the context of the statutory scheme and in particular consider why the time limit was imposed. That is the position whether the contention is for total invalidity for failure to comply, or invalidity in the circumstances and facts of the given case.

49. With that in mind, what is the position as regards Regulation 5(1) of the 1989 Regulations? …

60. In summary …. a failure to serve a Regulation 5 notice as soon as practicable does not result in automatic invalidity. Rather, the court determining any issue resulting from such a failure will have regard to the length of delay and the impact of that delay upon the ratepayer, in the context of the public interest in collecting outstanding rates. The greater the prejudice to the ratepayer flowing from the delay, the more likely will be the conclusion that Parliament intended invalidity to follow.

61. Prejudice may flow to business ratepayers in any number of ways as a result of a late notice to pay rates. Prejudice is different from inconvenience. In using the language of 'real prejudice' in Wang, 'material prejudice' in Charles and 'significant' in Soneji the various judges were conveying the same notion: that the prejudice relied upon must be substantial and certainly not technical or contrived. It is in that way that I shall consider the question of prejudice argued for by the defendants in these proceedings. The countervailing public interest is in the collection of taxes, the interests of other tax payers and the revenues of the local authority concerned."

14. If that approach applies to regulation 42 of the 2005 Regulations then, submitted Mr Pike, the facts both as to the delay and any prejudice should have been considered by the Deputy District Judge just as they were by the High Court in North Somerset District Council. That is because the Magistrates' Court could, following the enquiry, decline to make a liability order. Mr Crorie submits that there is no reason, in the context of the statutory scheme in which the duty imposed on relevant authorities by regulation 42 arises, to impute to Parliament an intention that a failure to provide information as soon as reasonably practicable in breach of that regulation should have any impact of recoverability of rates. Furthermore, he submits that such an outcome would be inconsistent with a long line of authority that a Magistrates' Court cannot question the validity of an entry in the local list when dealing with an application for a liability order.

Discussion

15. Regulation 12 of the 1989 Regulations deals with liability orders. Such orders are made by Magistrates' Courts. If a liability order is not satisfied a series of further steps to enforce payment (distress, imprisonment etc) is available. Regulation 12(5) is in these terms:

"The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid."

It is clear that the Magistrates' Court has no discretion in the making of a liability order. If it is satisfied that (a) the sum has become payable and (b) has not been paid then the order must be made. There is no dispute that the sums in question had not been paid by these claimants and so the question was whether the sums had become payable.

16. In my judgment the Deputy District Judge was bound to conclude that the sums had become payable. The statutory scheme delivers that result. The two conditions specified in section 43(1) (a) and (b) of the 1988 Act were satisfied: the ratepayers were in occupation of the hereditaments on the days in question and the hereditaments were shown for the days in question in the local non-domestic rating list in force for the relevant years. The ratepayers, that is to say the claimants, were liable to pay an amount calculated in accordance with the provisions of section 43 of the 1988 Act. The liability for rates and the duty to pay the rates are separate. The liability arises by operation of the primary legislation. The duty to pay arises under the 1989 Regulations. No payment in respect of the liability need be made until a demand notice is served: see regulation 7(6) of the 1989 Regulations. No enforcement action can be taken unless a demand notice has been served.
17. The proposition that the Magistrates' Court could decline to make a liability order in the circumstances of this case involves an underlying contention that the sums demanded are not payable. Mr Pike emphasises that it was no part of his argument to invite the Deputy District Judge to go behind the list. That is because the line of authority starting with County and Nimbus Estates Limited v Ealing London Borough Council [1979] RA 63, passing through London Borough of Hackney v Mott and Fairman 1994 WL 1062535 and culminating in R (Vitesse Networks Ltd) v North West Wiltshire Magistrates Court [2009] EWHC 3283 (Admin) renders that argument untenable.
18. Nonetheless, in my judgment, the claimants' case involves a very similar argument. The claimants do not suggest that the Valuation Officer acted unlawfully in entering their respective premises in the list from the dates identified. It was his duty to do so under the statutory scheme. Thus the claimants' argument involves one of two implicit contentions. Either, first, they have no liability for the business rates in question or, secondly, the Council were unable lawfully to serve and enforce a demand notice in respect of the disputed periods.
19. So far as the first contention is concerned, the liability arises under primary legislation: section 43 of the 1988 Act. Regulation 42 of the 2005 Regulations could not qualify the statutory liability created by section 43 of the 1988 Act. Yet the effect of the claimants' argument is that they have no liability for the rates relating to the period during which they say the Council dithered over providing information to the Valuation Officer. Although Mr Pike focused his argument on the second aspect the reality, in my judgment, is that the claimants are seeking to attack the list in resisting these liability orders. The Magistrates' Court cannot go behind the list.
20. Nonetheless, the argument which seeks to attack recoverability of the rates from the other end of the process by suggesting that the Council were unable to demand and enforce the disputed rates also founders when the statutory scheme is examined. Section 43(8) of the 1988 Act specifies that the liability which arises under that section shall be discharged in accordance with regulations made under Schedule 9. Paragraph 1 of Schedule 9 enables the Secretary of State to make regulations containing 'such provision as he sees fit in relation to the collection and recovery of amounts persons are liable to pay' in business rates. Those are the 1989 Regulations. They contain the statutory code for recovery and enforcement of business rates.
21. Part II of those regulations concerns billing. The link between liability under section 43 of the 1988 Act is patent from regulations 3, 4 and 5 which provide:

"Interpretation and application of Part II
     3.—(1)  In this Part-

"the amount payable" for a chargeable financial year or part of a chargeable financial year in relation to a ratepayer, a charging authority and a hereditament means the amount the ratepayer is liable to pay to the authority as regards the hereditament in respect of the year or part under section 43 or 45 of the Act (whether calculated by reference to section 43(4) to (6) or 45(4) to (6) or by reference to an amount or rules determined or prescribed under section 47(1)(a) or 57(3)(a) of the Act);

"demand notice" means the notice required to be served by regulation 4(1);

"ratepayer" in relation to a chargeable financial year and a charging authority means a person liable to pay an amount under section 43 or 45 of the Act to the authority in respect of the year; and

"relevant year" in relation to a notice means the chargeable financial year to which the notice relates.


…


The requirement for demand notices
4.—(1)  For each chargeable financial year a charging authority shall, in accordance with regulations 5 to 7, serve a notice in writing on every person who is a ratepayer of the authority in relation to the year.

    (2)  Different demand notices shall be served for different chargeable financial years.

    (3)  A demand notice shall be served with respect to the amount payable for every hereditament as regards which a person is a ratepayer of the authority, though a single notice may relate to the amount payable with respect to more than one such hereditament.

    (4)  …

Service of demand notices
5.—(1)  Subject to paragraph (2), a demand notice shall be served on or as soon as practicable after-

 (a) except in a case falling within sub-paragraph (b), 1st April in the relevant year, or

 (b) if the conditions mentioned in section 43(1) or 45(1) of the Act are not fulfilled in respect of that day as regards the ratepayer and the hereditament concerned, the first day after that day in respect of which such conditions are fulfilled as regards them.


    (2)  …"

22. The references to section 45 of the 1988 Act within those regulations concern unoccupied business premises. Regulation 4 requires a charging authority to serve demand notices in accordance with Regulation 5 in circumstances where there is a liability under section 43. By regulation 4 those demand notices relate to 'the amount payable' in respect of any hereditament. The 'amount payable' is the amount calculated by reference to section 43 of the 1988 Act. The claimants accept that the section 43 criteria were satisfied in their cases. It follows that the Council were under a statutory duty to issue the demand notices. They also accept that the council issued the demand notices in accordance with the 1989 Regulations. The duty to pay thereby arose under regulation 6 and the enforcement mechanisms under the 1989 Regulations thereafter became available when payment was not made. Any liability order made pursuant to regulation 12 concerns so much of the amount payable that has remained unpaid (together with costs of enforcement). A failure to serve a demand notice altogether would result in there being nothing to pay. A failure to serve such a notice timeously may, in the circumstances identified in North Somerset District Council, lead to the conclusion that there has been no lawfully enforceable demand.
23. By contrast, the 2005 Regulations have nothing to do with the collection and enforcement of business rates. They are concerned with the content of the local lists which provide the foundation for liability for business rates. In my judgment Regulation 42 of the 2005 Regulations cannot be interpreted as providing any qualification of the clear statutory scheme for collection and enforcement found in the 1989 Regulations. That is despite the fact that, at least arguably, a ratepayer may be prejudiced by the delay in the hereditament being entered into the list. The reality is that the claimants argue for a qualification of the 1989 Regulations. It is a necessary contention that regulation 4 of the 1989 Regulations should be qualified so that the 'amount payable' is not calculated by reference to section 43 of the 1988 Act but may be adjusted to reflect a breach of regulation 42 of the 2005 Regulations before the hereditament entered the list. The provision empowering the Secretary of State to make the regulation (Paragraph 6(a) of Schedule 9 of the 1988 Act) does not give power by this mechanism to qualify the calculation of the amount due. There is, in any event, no sign of such a qualification in the 2005 Regulations. I reject the argument that Parliament intended to qualify the liability for business rates, or the duty to collect them, in the event of a breach of regulation 42. Regulation 42 imposes a duty upon billing authorities to provide information to the Valuation Officer to assist him in the discharge of his statutory duty to maintain an up to date list. It is concerned with the efficient operation of the business rating system. Entry in that list is the foundation of any liability for business rates. Regulation 42 is not concerned with, and cannot affect, a liability for rates which arises under section 43 of the 1988 Act and which become payable by virtue of the 1989 Regulations. It follows that any question relating to compliance with regulation 42 of the 2005 Regulations is an irrelevance when a Magistrates' Court is adjudicating upon an application for a liability order.