R v Tower Hamlets London Borough Council, ex parte Chetnik Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Bridge of Harwich,Lord Fraser of Tullybelton,Lord Brandon of Oakbrook,Lord Ackner,Lord Goff of Chieveley |
| Judgment Date | 17 March 1988 |
| Judgment citation (vLex) | [1988] UKHL J0317-1 |
| Date | 17 March 1988 |
| Court | House of Lords |
[1988] UKHL J0317-1
Lord Bridge of Harwich
Lord Fraser of Tullybelton
Lord Brandon of Oakbrook
Lord Ackner
Lord Goff of Chieveley
House of Lords
My Lords,
The respondents are a property development company. The appellants are the rating authority for the London Borough of Tower Hamlets. In 1975 and 1976 the respondents developed a site at 7 Ditchburn Street, London E14 in the area of the rating authority by the erection of two warehouses each with ancillary office and other accommodation. For this they required and obtained the approval of the Greater London Council ("the G.L.C.") under the London Building Acts 1930-1939. The approval was subject to numerous conditions governing the detailed construction and fitting out of the buildings and additionally to condition 43 which provided:
"No part of the building shall be occupied until the consent of the Council has been obtained to the proposed user. The Council reserves the right to vary the foregoing conditions and to impose further conditions should such be considered necessary upon the submission of details of the proposed occupation of the whole or any part of the building."
It is not disputed that a contravention of this condition would have been a criminal offence under section 148 of the London Building Acts (Amendment) Act 1939.
The area of the rating authority is one to which the provisions of Schedule 1 to the General Rate Act 1967, relating to the rating of unoccupied properties, have been applied by resolution of the authority under section 17 of the Act. In July 1976 the two warehouses were nearing completion and the rating authority served on the respondents completion notices under paragraph 8 of Schedule 1 specifying 16 August 1976 as the date when the building in each case could reasonably be expected to be completed. The respondents did not appeal against the notices. Consequently on 16 August 1976 the warehouses were deemed to become unoccupied and from 16 November 1976 and for so long thereafter as they remained unoccupied the respondents, as owners, were liable, subject to the provisions of Schedule 1, to be rated in respect of the warehouses as if they were the occupiers: see paragraphs 1, 7 and 8 of Schedule 1.
The respondents, however, did not immediately proceed with the fitting out and completion of the warehouses for the good reason that they were unable to find tenants. Until they knew who was to occupy each warehouse and for what purpose they were in no position to submit details of the proposed occupation or to indicate the nature of the proposed user to the G.L.C. under condition 42 so as to obtain finalisation of the detailed conditions which would govern the manner in which the buildings would require to be fitted out. One of the two warehouses was eventually let and occupied before 31 March 1979, but the other remained unoccupied until November 1980. For the period from 16 November 1976 to 31 March 1979 the respondents paid without demur the rates demanded in respect of the unoccupied warehouses pursuant to paragraph 1 of the Schedule 1 in the aggregate sum of £51,396.92. But before paying any rates in respect of the warehouse which remained unoccupied after 31 March 1979 the respondents woke up to the fact that they had a valid ground on which to dispute their liability. Paragraph 2 of Schedule 1 to the Act of 1967 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; …"
The respondents contended that the effect of condition 42 of the G.L.C. approval and the relevant provisions of the London Building Acts 1930-1939 was to bring them within this provision. The rating authority did not accept this and the issue eventually fell to be determined when the rating authority applied for a distress warrant for the rates claimed in respect of the warehouse which had remained unoccupied for the period from 1 April 1979 to 1 November 1980. On 3 April 1981 a metropolitan stipendiary magistrate sitting at Thames Magistrates Court held that the respondents were "prohibited by law from occupying" the warehouse and were therefore not liable for the rates claimed. This decision was not challenged on appeal, its correctness is not in dispute and it follows that the payments in respect of rates made by the respondents for the period up to 31 March 1979 were payments which they were not liable to make.
Section 9 of the Act of 1967 provides as follows:
"(1) Without prejudice to sections 7(4)( b) and 18(4) of this Act, but subject to subsection (2) of this section, where it is shown to the satisfaction of a rating authority that any amount paid in respect of rates, and not recoverable apart from this section, could properly be refunded on the ground that - ( a) the amount of any entry in the valuation list was excessive; or ( b) a rate was levied otherwise than in accordance with the valuation list; or ( c) any exemption or relief to which a person was entitled was not allowed; or ( d) the hereditament was unoccupied during any period; or ( e) the person who made a payment in respect of rates was not liable to make that payment, the rating authority may refund that amount or a part thereof.
(2) No amount shall be refunded under subsection (1) of this section - ( a) unless application therefor was made before the end of the sixth year after that in which the amount was paid; or ( b) if the amount paid was charged on the basis, or in accordance with the practice, generally prevailing at the time when the payment was demanded.
(3) Before determining whether a refund should be made under subsection (1) of this section - ( a) in a case falling within paragraph ( a) of that subsection; or ( b) in a case falling within paragraph ( c) of that subsection where the exemption or relief was one which ought to have appeared in the valuation list, the rating authority shall obtain a certification from the valuation officer as to the manner in which in his opinion the hereditament in question should have been treated for the purposes of the valuation list, and the certificate shall be binding on the authority."
On 5 August 1982 the respondents applied to the rating authority for a refund under section 9(1)( e) of the £51,396.92 they had paid in error. The application was considered by the rating authority's finance committee at two meetings on 28 September and 26 October 1983. At the second meeting, exercising powers delegated to them by the rating authority, the committee decided to refuse the application for the refund. It appears from the relevant minutes of these meetings that the committee had considered counsel's opinion (which had been sensibly obtained by the council's officers and with complete propriety disclosed to the respondents) and the representations made on the respondents' behalf; in the light of counsel's opinion, the council's officers advised that "as this was a discretionary power the committee would have to make a decision independent of any officer's recommendations." Not surprisingly the minutes do not record the reasons for the decision, but when asked by the respondents' solicitors to indicate what the reasons were the solicitor to the rating authority replied in a letter dated 8 November 1983 in the following terms:
"When this matter came before the finance committee on 26 October last, members had before them all the representations made by you on behalf of your client company, together with the judgment of the stipendiary magistrate and the advice from counsel. The committee were strenuously advised that the decision required pursuant to section 9 of the General Rate Act 1967 was one entirely for their discretion acting fairly in accordance with the principles set out in counsel's advice. After discussion the committee decided against a repayment for the following reasons:-(a) the advice that the payment made by the company was paid under a mistake of law; (b) on the parallel that an application for relief from empty rates under paragraph 3A of Schedule 1 to the General Rate Act 1967 would require an applicant to demonstrate 'hardship' - which was not argued by your client company although they were invited to do so; (c) the scheme and intent of the Act of 1967 with regard to completion notices; (d) that your clients could have taken professional advice before making such payments and, of course, they could have avoided the problem if they had complied with the requirements of the London Building Acts."
The respondents applied for judicial review of the rating authority's decision. On 3 April 1985 Mann J. dismissed their application, but on 13 February 1987 the Court of Appeal (Slade, Parker and Mustill L.JJ.) allowed the respondents' appeal and made orders of certiorari to quash the rating authority's decision dated 26 August 1983 and mandamus directing the rating authority to hear and determine according to law the respondents' application for a refund of rates: [1987] 1 W.L.R. 593. The rating authority now appeal by leave of your Lordships' House.
It is common ground that section 9(1) of the Act of 1967 does not impose a duty, but confers a discretion on a rating authority to refund rates paid in any of the circumstances mentioned in paragraphs ( a) to ( e) subject to the restrictions imposed by subsection (2). The judgments below, however, reveal a wide divergence of opinion as to the scope of that discretion. Mann J. (1985) R.V.R. 87, adopting a phrase used by Forbes J. in Reg. v. Rochdale Metropolitan Borough Council, Ex parte Cromer Ring Mill Ltd. [1982] 3 All E.R. 761,...
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