Kenya Aid Programme v Sheffield City Council [DC]
| Jurisdiction | England & Wales |
| Judge | Lord Justice Treacy,Mr Justice King |
| Judgment Date | 22 January 2013 |
| Neutral Citation | [2013] EWHC 54 (Admin) |
| Docket Number | Case No: CO/1631/2012 & CO/1630/2012 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 22 January 2013 |
[2013] EWHC 54 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Treacy
and
Mr Justice King
Case No: CO/1631/2012 & CO/1630/2012
Mr Daniel Kolinsky (instructed by Wellers Law Group LLP) for the Appellant
Ms Jenny Wigley (instructed by Solicitor for Sheffield City Council) for the Respondent
Hearing dates: 8th – 9th November 2012
Introduction
This is an appeal by way of case stated arising from a decision of District Judge Browne in Sheffield Magistrates' Court on 31 st October 2011 to make liability orders for non-domestic rates in respect of Units 1 and 2 Europa Way, Sheffield for the period 9 th September 2010 to 31 st March 2012 in the sums of £863,756.19 and £750,810.52 respectively.
The main appeal is by way of case stated pursuant to Section 111 of the Magistrates' Court Act 1980. There is however a linked judicial review claim on identical grounds which has been listed for a permission hearing with a rolled-up hearing to follow pursuant to the order of Ouseley J dated 19 th June 2012.
There are also timing issues as both claims were lodged out of time.
The core issue in the case stated appeal is concerned with the question of whether the premises concerned were "wholly or mainly used for charitable purposes". The case stated is in succinct form and is as follows:
"(1) On 17 June 2011 a complaint was preferred by Sheffield City Council (the Respondent) against Kenya Aid Programme ("KAP") (the Appellant) seeking liability orders for non-domestic rates in respect of (a) Unit 1 Europa Way Sheffield S9 1TQ ("Unit 1") for the periods 09 September 2010 to 31 March 2011 and 1 April 2011 to 31 March 2012 in the total sum of £863,756.19 and (b) Unit 2 Europa Way Sheffield S9 1TQ ("Unit 2") for the same periods in the total sum of £750,810.52. Pursuant to Regulation 12 of the Non-Domestic Rating (Collection and Enforcement)(Local Lists) Regulations 1989.
(2) I heard the said complaint on 7 October 2011, 12 October 2011 and finally on 31 October 2011, when a written decision was handed down (appended).
(3) The following matters were not in dispute:
a. that the Appellant was, at all material times since 9 September 2010, a registered charity; and
b. that the Appellant was, at all material times since 9 September 2010, in rateable occupation of both Unit 1 and Unit 2.
(4) It was contended by the Appellant that:
a. KAP was entitled to mandatory charitable relief pursuant to s.43 (6) of the Local Government Finance Act 1988, because Unit 1 and Unit 2 were wholly or mainly used for charitable purposes, and that accordingly the sums claimed were not due.
b. The mandatory charitable relief due operated to reduce the amount of the rates claimed by 80%.
c. Once it was accepted that KAP was (i) a charity and (ii) in rateable occupation, then – provided that the use to which the premises are being put is for charitable purposes only – that was really all that was required to fall within the relief provisions.
d. The extent or efficiency of KAP's use of the premises was not a relevant consideration.
e. The correct approach to determine whether premises are being used wholly or mainly for charitable purposes is that set out in Glasgow v Johnstone [1965], below.
(5) It was contended by the Respondent that:
a. The Court should consider the content and context of the use of the premises, in order to determine whether the property was being used wholly or mainly for charitable purposes.
b. Whether premises were being used wholly or mainly for charitable purposes was a question of fact for the tribunal to determine in all of the circumstances of the evidence before it.
c. The correct approach to determine whether premises are being used wholly or mainly for charitable purposes is that set out by Lord Bonomy in English Speaking Union v City of Edinburgh Council [2010], below.
(6) I was referred to the following case law:
a. Glasgow v Johnstone [1965] AC 609, in particular, at 621–2.
b. English Speaking Union v City of Edinburgh Council [2010] R.A. 227
c. Oxfam v City of Birmingham District Council [1976] 1 AC 126
d. Wynn v Skegness UDC [1967] 1 WLR 52.
(7) I was of the opinion that:
a. Liability orders should be made in the sum of £863,756.19 in respect of Unit 1 and in the sum of £750,810.52 in respect of Unit 2.
b. The correct approach to determine whether premises are being used wholly or mainly for charitable purposes is that set out in English Speaking Union v City of Edinburgh Council[2010]. The Court should look at the whole evidence before it and decide on a broad basis whether the properties are wholly or mainly used for charitable purposes. I was obliged to give content to the full expression "wholly or mainly used" in relation to the use of the building as a whole.
c. Following that approach, taking into account the witness evidence as to the level of "use" (see written decision, paragraph 15), I was unable to conclude that the premises were being used by KAP wholly or mainly for charitable purposes. There was a marked absence of substantial use of the premises.
d. As to the extent of the use made of the premises, in particular:
(i) the way in which furniture was stored and spaced out, suggested that a more efficient approach to furniture storage would compress the space taken substantially. In the case of Unit 1, to between a third and one half of the space taken; for Unit 2, the furniture would compact down to a third or less;
(ii) the occupation by the Appellant of a number of other similar properties in the North, North West and North East, contradicted the Appellant's claim that Sheffield was the sole hub of their Northern operations;
(iii) the volume or quantity of furniture actually shipped to Kenya was small, and the frequency of these shipments low.
e. Despite the Lease between the Landlord and the Appellant specifying that the Appellant was to be liable for the payment of all non-domestic rates, the Appellant was according to its own evidence wholly dependent upon donations from the Landlord to meet this liability.
f. One of the uses of Units 1 and 2 was to produce revenue for KAP by arrangement with the landlord.
8. The questions for the opinion of the High Court are:
Substantially, whether in law, I applied the wrong approach to determine whether Unit 1 and Unit 2 were used wholly or mainly for charitable purposes; particularly:
a. Whether I was correct to apply the test in English Speaking Union v City of Edinburgh Council [2010] R.A. 227, namely that the Court should look at the whole of the evidence before it and decide, on a broad basis, whether the premises were being used wholly or mainly for charitable purposes, so as to give content to the full expression "wholly or mainly used", in the process taking account of and placing weight upon:
(i) the extent to which the premises were used;
(ii) the inefficiency of the furniture storage use which was taking place at the premises;
(iii) whether there was a "necessity" for KAP to occupy both premises, when one building would have satisfied their present and future needs; and
(iv) the mutual advantages to KAP and the Landlord of the letting to KAP as a consideration against KAP's entitlement to mandatory charitable relief.
b. Whether instead, I ought to have followed the approach set out by Lord Reid in the House of Lords' decision in Glasgow v Johnstone [1965], namely by confining my analysis to whether such use as KAP made of the premises was for charitable purposes, given that:
(i) it had been accepted on all sides that KAP was in rateable occupation;
(ii) the statutory scheme contains no provision (by way of regulations made under s.66A of the Local Government Finance Act 1988 or otherwise) which requires or permits the facts on the ground to be disregarded; and
(iii) there is no legal impediment to parties consciously structuring their arrangements so as to benefit from an established form of relief from non-domestic rates."
The case stated refers to the District Judge's written decision. This largely follows the case stated, but it is convenient to refer to some brief extracts in order to clarify the case stated itself.
At paragraph 15 the following appears:
"I have considered the following matters. Firstly, the use of the properties. I have seen photographs showing the way in which office furniture is stored…. It is a very unusual way to store furniture and makes poor use of the space available. The total internal floor space available in both properties is 58,120 square metres. The level of use is described by witnesses. Mr Hoyle estimates that 30–35% of Unit 1, and 25–30% of Unit 2 could be considered to be in use. It is hard to understand why Kenya Aid Programme has taken both of the units, when one would more than satisfy their present and predictable future needs."
Paragraph 17 provides as follows:
"Kenya Aid Programme relies upon donations. The letting agreement with CBRE makes the charity fully responsible for all rates and utility charges. Mr Smith said that Kenya Aid Programme receives the 20%, being the amount of rates due after relief, from the landlord and also the landlord makes a donation to the charity. He did not specify how much, but in the previous letting agreement between the landlord and Kenya Aid Foundation this amounted to £17,000.00. The charity pays a peppercorn rent and the agreement is capable of termination on seven days notice. It is a match made in heaven."
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