North Somerset District Council v Honda Motor Europe Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon Mr. Justice Burnett,MR. JUSTICE BURNETT |
| Judgment Date | 02 July 2010 |
| Neutral Citation | [2010] EWHC 1505 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ08X03969, HQ08X03970 AND HQ08X03971 |
| Date | 02 July 2010 |
[2010] EWHC 1505 (QB)
Before: The Hon Mr. Justice Burnett
Case No: HQ08X03969, HQ08X03970 AND HQ08X03971
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr. R Drabble QC,. Mr. C. Lewsley and Ms S. Blackmore (instructed by Pinsent Masons LLP) for the Council.
Mr. H. Mercer QC and Ms J. Wells (instructed by DLA Piper United Kingdom LLP) for Honda.
Mr. R. Fookes (instructed by Duane Morris) for Chevrolet
Mr. D. Kolinsky (instructed by Carla Hull Solicitors) for Martin Graham.
Hearing dates: 8 th March 2010 to 16 th March 2010
The Hon Mr. Justice Burnett:
Introduction:
North Somerset District Council [“the Council”] bring these proceedings for unpaid National Non-Domestic National Rates [“business rates”] against three defendants. The first, Honda Motor Europe Limited [“Honda”] and the second Chevrolet United Kingdom Limited [“Chevrolet”] are motor companies who at the material times were using Royal Portbury Docks [“the docks”] near Bristol for the import and export of vehicles. It is the Council's contention that Honda is liable to pay business rates on premises known as Main Site at the docks for the period between 13 th October 2002 to 13 th September 2007 (with a minor adjustment) pursuant to statutory notices eventually served on 6 th November 2007. The Council's case against Chevrolet is that it is liable to pay business rates on a plot of land at the docks, known as Daewoo 1, for the period between 1 st November 2002 to 31 st March 2005 pursuant to notices similarly served on 6 th November 2007. The third defendant is a property owner who developed office premises known as Rivermead Court, Kenn Business Park, Bristol. The claim is for business rates in respect of the period between 19 th November 2002 and 22 nd February 2005 pursuant to notices issued on 6 th November 2007.
Each of the defendants contends that the demand notices upon which the Council is suing were not served in accordance with the provisions of Regulation 5 of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (SI 1989/1058) [“the 1989 Regulations”] which requires that a notice 'shall be served on or as soon as practicable … after 1 st April in the relevant year'. The relevant year is the chargeable financial year to which the notice relates.
The defendants submit that a failure to serve the notice as soon as practicable after 1 st April in the relevant year renders the notice invalid with the consequence without more that no business rates for that year are payable. In support of that submission they rely upon the decision of David Pannick QC, sitting as a Deputy High Court Judge, in Encon Insulation Limited v Nottingham City Council [1999] RA 392. They further submit that even if the notices are not invalid without more on account of their alleged late service, if there is substantial or real prejudice to the ratepayer as a result of the delay, the Council cannot recover. In support of that submission they rely in particular upon the decision of David Holgate QC, sitting as a Deputy High Court Judge, in R (Waltham Forest LBC) v Waltham Forest Magistrates Court and Yem Yom Ventures Limited [2008] EWHC (Admin) 3579; [2009] RA 181. Mr. Drabble QC, for the Council, submits that the correct approach to the late service of a notice is not reflected in either of those authorities. He suggests that a failure to serve a notice as soon as practicable has no legal impact on the ability of a council to enforce recovery of outstanding business rates unless the ratepayer can demonstrate that it would be unconscionable to allow the council to do so, or demonstrate some other public law basis for defeating recovery.
The defendants contend that they have suffered substantial prejudice as a result of the delay and additionally would say, if necessary, that the Council should not be able to enforce liability for the disputed business rates because it would be unconscionable to allow them to do so, or would be conspicuously unfair. Various formulations were used in the course of argument which amounted to abuse of power. The Council denies that the defendants have suffered any prejudice and disputes that the notices were not served as soon as practicable. The essence of the problem which occurred in these cases is that the system of inspections operated by the Council broke down. As a result the Council was unaware that these sites were in rateable occupation, or they had failed to identify who the occupier was. Properties were being noted as 'void' when they were not.
Honda developed an additional factual argument. Mr. Mercer QC submits that Honda was not, at the material times, the paramount occupier of Main Site at all. It is Honda's contention that Bristol Port Company, which is the trading name of the company (First Corporate Shipping Limited) which operates the docks [“the Port Company”], was the paramount occupier and therefore responsible for any business rates that might be due.
Honda further submits that there is an element of double taxation if the Council succeeds in this action because the Port Company pay business rates pursuant to a special scheme, known as a 'Cumulo', based upon its revenues. The Port Company's rates liability under the Cumulo is paid to Bristol City Council and not the North Somerset District Council. The arrangement for the calculation of business rates payable by port operators arises under the Docks and Harbours (Rateable Values) (England) Order 2000 (SI 2000/951). Rather than calculating rates in the ordinary way by reference to the rateable value of land, a calculation is made on the qualifying revenues of the port concerned. Those revenues exclude rent paid in respect of sites within docks let out to tenants. Honda had a lease on Main Site from 1 st October 2002 but paid a peppercorn in rent. The financial consideration was the payment of a fee per car to the Port Company. The revenues which were used to calculate the Cumulo included all money paid by Honda to the Port Company in respect of its use of Main Site. That adds weight, he submits, to the argument that Honda should not be treated as being in paramount occupation. Mr. Mercer also contends that recovery of business rates from Honda in these circumstances would amount to a breach of Article 35 of the Treaty on the Functioning of the European Union [“TFEU”], on the basis that it creates an impediment to exports.
Mr. Drabble contests both these further arguments.
The trial of this action occupied seven days. Witnesses were called by each of the parties although much of the material explaining what has happened in each of these cases is found in the 10 volumes of documents placed before the Court. None of the witnesses was substantially challenged on the content of his witness statement, rather cross-examination was used as a vehicle to elicit information contained in the documentation. There were no conflicts of evidence of the sort usually encountered in witness actions. The essential facts and chronology are not significantly in dispute. It is the interpretation of the evidence in the context of the correct legal approach which is controversial.
The statutory scheme for the collection of business rates
The system of business rates is governed by the Local Government Finance Act 1988 [“1988 Act”] and Regulations made under it. Those include the 1989 Regulations. The system has two broad parts. The first is concerned with the preparation, maintenance and alteration of rating lists. Such lists identify hereditaments (that is property on which rates must be paid) and rateable values. This aspect of the system is administered by the Valuation Officer, an official of HM Revenue and Customs, in the Valuation Office Agency (“VOA”). The second part is concerned with the recovery of rates in accordance with the rating list. That aspect of the system is administered by the billing authority for the statutory area concerned, in this case the Council, North Somerset District Council.
The 1988 Act introduced an important change in the nature of business rates. Whilst they continued to be charged on the basis of local valuations and were collected locally, money raised by way of business rates was transmitted to a central pool controlled by Central Government for distribution according to a statutory formula. The 1988 Act also introduced the highly controversial community charge in substitution for domestic rates.
The statutory obligation on the VOA to maintain “local non-domestic rating lists” is found in Section 41(1) of the 1988 Act. The first list was required to be compiled on 1 st April 1990 with subsequent lists being compiled on 1 st April at the end of each five year period thereafter. This case is primarily concerned with the 2000 rating list. The content of local lists is specified by Section 42 of the 1988 Act. Section 43(1) governs liability to pay business rates. It provides:
“43 Occupied hereditaments liability
(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 a local non-domestic rating list in force for the year.”
Section 43 makes further provision for the calculation of the business rates to which the ratepayer will be subject.
Section 43 does not itself give rise to a duty to pay the rates to which the ratepayer is subject. That duty arises only following service of a notice...
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