Broxfield Ltd v Sheffield City Council
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 24 July 2019 |
| Neutral Citation | [2019] EWHC 1946 (Admin) |
| Docket Number | Case No: CO/1135/2018 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 24 July 2019 |
[2019] EWHC 1946 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Mostyn
Case No: CO/1135/2018
Christopher Royle (instructed by Keebles LLP) for the Appellant
Rowena Meager (instructed by Sheffield City Council Legal) for the Respondent
Hearing date: 2 July 2019
Approved Judgment
This is my judgment on an appeal by way of case stated against the decision of District Judge Redhouse given on 14 September 2017. The signed stated case was produced in March 2018. The appeal came before me on 11 July 2018. I was of the opinion that aspects of the stated case required clarification and I remitted it for amendment pursuant to section 28A(2) of the Senior Courts Act 1981. The amended case emerged in November 2018. By an order made by me on 5 December 2018 I required the case to be further amended to deal with an argument advanced at trial by the respondent local authority but on which the court had not ruled. The re-amended case emerged in January 2019, and the appeal was reconvened before me on 2 July 2019. Obviously, the delay that has arisen in dealing with this appeal is regrettable.
Section 28A(3) of the Senior Courts Act 1981 provides:
“The High Court shall hear and determine the question arising on the case (or the case as amended) and shall—
(a) reverse, affirm or amend the determination in respect of which the case has been stated; or
(b) remit the matter to the magistrates' court, or the Crown Court, with the opinion of the High Court,
and may make such other order in relation to the matter (including as to costs) as it thinks fit.”
The controversy in this case revolves around demands for business rates sent by the local authority to the appellant on 25 January 2016 in respect of a property known as Courtwood House in Sheffield. There were three separate demands, reflecting three separate hereditaments, for the period 18 December 2015 to 31 March 2016, totalling £62,514.01.
Those demands were not paid and on 21 April 2016 the local authority caused summonses to be issued seeking liability orders. The appellant indicated its intention to contest the liability orders sought by the local authority, arguing that from 18 December 2015, and throughout the liability period in question, rateable occupation, and therefore liability to rates, had validly passed to, and reposed in, a company called Busy Bodies Business Services Ltd (“Busy Bodies”).
At this point it is worth reflecting on the evidence about Busy Bodies that was before the District Judge. The company was formed under the name of Liquid Air Energy Company Ltd on 24 May 2012. It was a shelf company with assets of £1 and a single £1 share vested in CFS Secretaries Ltd. It changed its name on 29 August 2014 to Busy Bodies Business Services Ltd but remained dormant, on the shelf. Richard Stock of 68 Fortune Green Road, Hampstead was appointed director on 17 July 2015. Its single share remained vested in CFS Secretaries Ltd. Its accounts to the year ended 31 May 2015 show that it remained dormant and had assets of £1. On 22 December 2015 the Registrar of Companies issued a notice for Busy Bodies to show cause why it should not be struck off under section 1000 Companies Act 2006. Such a notice is issued where the Registrar has reasonable cause to believe that a company is not carrying on business or in operation. On 5 January 2016 the Registrar determined to take no further action under section 1000 of the Companies Act 2006, cause having been shown why the company should not be struck off. It is not known what was shown or by whom.
On 12 May 2016 Nicholas Davis was appointed a director. He was a witness before the District Judge. The accounts for the year ended 31 May 2016 show that the company remained totally dormant with assets of £1 and no revenue or expenditure. On 10 January 2017 the company was wound up by the court on the petition of Leeds City Council, a creditor of it. The papers at Companies House do not show the scale of the debt or to what it relates, but the identity of the creditor certainly gives a clue.
In a witness statement made on 4 November 2016 Nicholas Davis stated:
“In my first statement I explained that although according to the publicly available documents from Companies House Busy Bodies appears to be effectively dormant, it is in fact operative. As mentioned above, I own a separate property company, Coda Properties Ltd which is a financially successful company (the last filed accounts for 2015 show a net worth of over £414,000). On successful property developments I have worked on, I have arranged a company loan from Coda Properties to meet the needs of Busy Bodies, and have repaid this by assigning rental income to Coda Properties and thereby repaying the loan. Therefore, even if Busy Bodies effectively has a nil balance sheet, it is able to access funds to meet its obligations through the arrangements with Coda Properties Ltd.”
The accounts of Coda Properties Ltd to 31 December 2015 do not explicitly show any such loans or readily reveal from what source such loans might be made – at that date it had cash of only £37,111. Moreover, had such loans been made “to meet the needs of Busy Bodies” then the receipt and expenditure would have been reflected in the accounts of Busy Bodies; but no such activity is detailed. Nor is there any mention in the accounts of Busy Bodies of it having entered into a single lease, let alone two leases, on 18 December 2015.
Yet that was the case advanced by the appellant. On 30 December 2015 the appellant wrote to the local authority stating that it had acquired Courtwood House on 18 December 2015 and that “the building has been leased to Busy Bodies from the 18 th December 2015”. In his witness statement dated 1 November 2016 Jacob Schreiber, a director of the appellant company, stated: “On 18 December 2015, Broxfield entered into a lease with Busy Bodies”. In his witness statement dated 4 November 2016 Nicholas Davis stated: “On 18 December 2015, Broxfield entered into a lease with Busy Bodies.” None of these statements was true. No lease or other contractual bargain was made on 18 December 2015.
On 25 January 2016 the local authority asked to see a copy of the lease. On 1 February 2016 the appellant wrote to the local authority stating: “as requested please find enclosed a copy of the lease for the above premises”. That document proclaimed itself to be a lease made on 18 December 2015. It had a footer which gave the document's numeric code and iteration. This was 8249803-4. It provided for the basic rent to be £1000 plus 50% of sub-rent. The permitted use was the use of the property as offices for subletting. Yet in clause 4.16.1 under-letting of the property was prohibited. Although the document proclaimed itself to be a lease it did not contain any contractual term. Rather, ‘term’ was defined as meaning “the contractual term granted by this lease together with any extension holding-over or continuation of it”. No contractual term was granted anywhere by the lease. It was an internally inconsistent and nonsensical document.
The document had two pages numbered 26. These had the signatures executing the document as a deed. The first page 26 had the signature of Mr Stock on behalf of Busy Bodies. This signature was witnessed by Mr Davis giving his address as 68 Fortune Green Road, which was of course Mr Stock's address. The second page 26 had the signature of Mr Schreiber on behalf of Broxfield.
The plain representation made on the production of this lease document to the local authority on 1 February 2016 was that it had been signed, and thus created, on 18 December 2015. This was not true.
During the course of the hearing before the District Judge a witness on behalf of the appellant, Mr Brown, was asked to go and examine his files. He produced an exchange of emails on 1 February 2016. At 12:14 Mr Brown sent an email to Mr Schreiber stating: “Can you sign the attached page for the lease and get the tenant to sign and return please then I can forward to council”. At 17:00 Mr Schreiber replied: “attached” and attached two PDF files which were the two pages 26 referred to above. There was no evidence that the persons signing the two pages 26 were doing anything more than signing separate copies of the single page enclosed with Mr Brown's email. The two pages 26 have the same footer at the rest of the document namely 8249803-4.
On 25 February 2016 the local authority wrote to the appellant stating that they had reviewed the lease that was supplied on 1 February 2016 and they considered that the lease was invalid because it did not contain a valid term for the duration of the tenancy nor could such a term be implied from the lease. On 1 March 2016 the appellant replied: “It would appear that you had been sent an incomplete lease; please find attached our file copy”. This version of the lease contained a new page 4 which provided that the term would be “the contractual term of three years granted by this lease together with any extension, holding over or continuation of it”. This new page 4 had a different footer number, namely 8249803-5. Obviously, what the appellant had done was to update the word version of the file to correct the deficiency concerning the lack of a term. From the updated file the revised page 4 was extracted and swapped into the original hard file. However, this process generated a new file number in the document's metadata which was reflected in the changed footer on the new page 4. In her judgment the District Judge said this about this crude inconsistency:
“[Mr Brown] could not provide any explanation as [to] the inconsistency in the numbers shown on the bottom of each page of...
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