Hailbury Investments Ltd v The Lord Mayor etc. of the City of Westminster
| Jurisdiction | England & Wales |
| Judge | Lord Bridge of Harwich,Lord Brandon of Oakbrook,Lord Griffiths,Lord MacKay of Clashfern,Lord Ackner |
| Judgment Date | 16 October 1986 |
| Judgment citation (vLex) | [1986] UKHL J1016-1 |
| Date | 16 October 1986 |
| Court | House of Lords |
[1986] UKHL J1016-1
House of Lords
Lord Bridge of Harwich
Lord Brandon of Oakbrook
Lord Griffiths
Lord Mackay of Clashfern
Lord Ackner
My Lords,
The issue in this appeal is whether the appellants were liable to pay rates in respect of certain units of unoccupied property for the year 1973-79 and part of the year 1979-80. The respondents ("the rating authority"), as rating authority for the City of Westminster, applied in the Horseferry Road Magistrates Court for the issue of distress warrants in respect of the disputed rates and were successful. On appeal by case stated to the Divisional Court, Woolf J. reversed the decision of the stipendiary magistrate. The decision of the Divisional Court was in turn reversed by the Court of Appeal (Eveleigh and Stephen Brown L.JJ and Sir David Cairns). The appellants now appeal by leave of your Lordships' House.
Liability to pay rates in respect of unoccupied property arises under the provisions of Schedule 1 to the General Rate Act 1967. Paragraph 1(1) provides:
"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."
The Schedule is in operation in the City of Westminster. It is accepted that this provision makes the appellants liable to pay the disputed rates unless they are exempted by paragraph 2, which provides, so far as relevant: "No rates shall be payable under paragraph 1 of this Schedule in respect of a hereditament for … any period during which - ( a) the owner is prohibited by law from occupying the hereditament or allowing it to be occupied; ( b) the hereditament is kept vacant by reason of action taken by or on behalf of the Crown or any local or public authority with a view to prohibiting the occupation of the hereditament or to acquiring it;…"
Each of the hereditaments in respect of which the disputed rates are claimed is described in the valuation list in force for the years in question in terms which include the word "offices" to categorise the premises and, save for a reference in one case to a "caretaker's flat," none of the descriptions is apt to refer to residential property. At the material time, as the case stated finds, each of the hereditaments in question was kept vacant by reason of a planning condition purporting to prohibit its use for office purposes. The condition had been imposed on the grant of permission for development which had not yet been implemented. One of the hereditaments was also affected by a planning condition imposed on an earlier grant of temporary permission for office use which had been implemented and which had expired in 1972. That condition required discontinuance of the office use in 1972. Use of the hereditament for office purposes after 1972 would have been a breach of that condition. There are no findings of fact in the case stated relating to the physical condition of the relevant premises at the material time. The case has been argued throughout on the footing that there was no impediment to their occupation for residential purposes. The proposition which the appellants must establish to succeed is that the effect of the planning conditions referred to in relation to hereditaments described in the valuation list in force at the material time as "offices" is to entitle the owner of the hereditaments to exemption from liability to pay rates under paragraph 2( a) or ( b) of Schedule 1 to the Act of 1967.
Before one reaches the main issue, the appellants confront formidable difficulties in showing, by reference to the provisions of the Town and Country Planning Act 1971, that the occupation of the hereditaments as offices was the subject of a relevant "prohibition" within the meaning of paragraph 2( a) and ( b). To succeed under ( a) they would have to show that the owner of a hereditament who could only occupy it as offices in breach of a planning condition was "prohibited by law" from so occupying it. To succeed under ( b) they would have to show that the imposition of a planning condition on the grant of permission for development of which, if and when the development was carried out, it would be a breach to use a hereditament for office purposes amounted to action taken by a local authority "with a view to prohibiting the occupation of the hereditament" as offices. These aspects of the case give rise to difficult issues of construction and of planning law. For my part, like the Court of Appeal, I am content to leave them unresolved and to assume in the appellants' favour that the existence of the planning conditions which have been imposed enabled the appellants to claim either that they had been prohibited by law from occupying, or that action had been taken by the local planning authority with a view to prohibiting the occupation of, any of the hereditaments in question as offices.
Starting from the basis of such an assumption, the contention advanced for the appellants may be shortly summarised. It is said that the description of a hereditament shown in the valuation list is an essential element in the identity of that hereditament; from this it follows that occupation of the physical entity described as offices in the valuation list for any purpose other than as offices is the occupation of a different hereditament from that to which the entry in the valuation list relates. Before any liability to pay rates in respect of that new and different hereditament can arise, it is for the rating authority to take steps to secure an alteration of the entry in the valuation list or, more accurately, the deletion of the existing entry and the substitution of a new entry applying words of description to the new hereditament which are apt to apply to the use for which the new hereditament is or may lawfully be occupied. To this the rating authority reply that the hereditament to which any entry in the valuation list relates is, in the case of a corporeal hereditament, simply the physical entity comprised in any unit of property identified by the description and other particulars appearing in that entry. It matters not that the description in the valuation list is no longer appropriate accurately to describe the use for which that unit of property is or may lawfully be occupied. If it is the same physical entity, it remains the same hereditament. If it may lawfully be occupied for any purpose, there is no prohibition of occupation of the hereditament to which paragraph 2( a) or ( b) is capable of applying so as to exempt the owner from liability for rates to which he is otherwise subject in respect of any period during which the hereditament is unoccupied.
The resolution of the issue to which these rival contentions give rise depends on the true construction of the Act of 1967. By section 115(1) "hereditament" is defined as meaning
"property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list."
I shall refer to this as "the general definition." Liability to pay rates in respect of unoccupied property arises only in the case of a "relevant hereditament" which is defined by paragraph 15 of Schedule 1 as meaning
"any hereditament consisting of, or of part of, a house, shop, office, factory, mill or other building whatsoever, together with any garden, yard, court or other land ordinarily used or intended for use for the purposes of the building or part."
I shall refer to this as "the Schedule 1 definition."
The general definition must be understood in the light of sections 16 and 67 of the Act, which provide, so far as presently material:
"16. Subject to the provisions of this Act, every occupier of property of any of the following descriptions, namely-(a) lands; (b) houses; …, 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.
67(1) For the purposes of rates, there shall be maintained for each rating area a valuation list prepared, and from time to time caused to be altered, in accordance with the provisions of this Part of this Act by the valuation officer. (2) Subject to the provisions of this Act, there shall be inserted in the valuation list such particulars as may be prescribed - ( a) with respect to every hereditament in the rating area and the value thereof; …"
Particulars required to be inserted in the valuation list are prescribed by the Valuations List Rules 1972 ( S.I. 1972 No. 1612). As one would expect, entries in the list are required to be made in accordance with forms scheduled to the rules and in relation to each hereditament entries are required to be made under the following headings: "Description," "Address," "Gross value" and "Rateable value." Save in certain special cases, not presently relevant, the rules make no provision as to what the entry under the heading "Description" is to contain. Thus, although the use of the phrase "unit of property" in the general definition seems to give strong support to the contention for the rating authority, the qualifying words "which is, or would fall to be, shown as a separate item in the valuation list" prevent that phrase from having conclusive effect and in...
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