R (Waltham Forest LBC) v Waltham Forest Magistrates' Court
| Jurisdiction | England & Wales |
| Judgment Date | 04 November 2008 |
| Neutral Citation | [2008] EWHC 3579 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 04 November 2008 |
| Docket Number | CO/2347/2007 |
[2008] EWHC 3579 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Before: David Holgate QC
Sitting as a Deputy High Court Judge
CO/2347/2007
Mr J Swirsky and Mr J Norman (instructed by LB Waltham Forest) appeared on behalf of the Claimant
Mr J Milner (instructed by Foskett Marr Gadsby & Head) appeared on behalf of the Interested Party
The Defendant did not attend and was not represented
THE DEPUTY JUDGE: On 21st March 2007 an application was lodged by the London Borough of Waltham Forest seeking permission to challenge the decision of District Judge Gott given at Stratford Magistrates' Court on 21st December 2006 —not, I mention in passing, 22nd December as stated in the claim form. Permission to apply for judicial review was granted by Mr Rabinder Singh QC, sitting as a Deputy High Court Judge, on 27th June 2007.
Background
I go straight to the decision of the District Judge for the background. In paragraph 1 he explains that he was dealing with a claim by the billing authority, the London Borough of Waltham Forest, for a liability order in respect of business rates in respect of premises at Unit 1, Lea Bridge Industrial Estate, London E10 for the period 1st March 2003 to 30th March 2005. The demand was first made on 4th August 2005 and the issue was whether the requirements of regulation 5(1) of the Non-Domestic Rating Regulations 1989 had been met, and in particular whether a demand notice was served on, or as soon as practicable after, 1st April of the relevant year.
In the second paragraph he helpfully summarised the facts stating that they were not greatly in dispute. He said:
“The previous occupiers of the premises in question notified the local authority in April 2002 that they had vacated the property with effect from 1st April 2002 and that they would notify the authority when the lease was sold. The authority carried out inspections on 16th August 2002 and 5th November 2002, when the property was confirmed as empty, and they continued to issue zero balance demands of the previous occupiers as the property was exempt from empty property charges. There were no further inspections until 23rd February 2005 when the defendants were found in occupation. It is accepted that they have been in occupation since 1st March 2003. A demand for business rates for the years 2002-3, 2003-4, 2004-5 and 2005-6 was sent on 4th August 2005, albeit in an incorrect name, and a further demand in the name of the limited company was sent on 9th September 2005. The defendants accept liability for 2005-6 and have paid the rates for that period but dispute the remainder.”
In this court the defendants appear as the interested party.
An application was made on 11th January 2007 to the District Judge to state a case. On 27th February that year he refused to do so. Nothing now turns on that procedural history. Instead, on 21st March 2007, as I have said, the application for judicial review was lodged. No point is now taken by the authority on the fact that Part 54 has been used.
In paragraph 14 of the interested party's summary grounds it was said that the application for judicial review had not been made promptly and there had also been undue delay within section 31(6) of the Supreme Court Act 1981. Nevertheless, permission was granted on paper, as I have indicated. The delay point was reiterated in paragraph 22 of the interested party's skeleton, but, fairly, Mr Milner on behalf of his client stated at this hearing that delay was no longer being pursued.
The Grounds of Challenge
There are two grounds of challenge which I summarise at the outset. First, it is said that the requirement under regulation 5(1) of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, SI 1058/1989 (“the 1989 Regulations”) that a demand for rates “shall be served as soon as practicable” is a directory rather than a mandatory requirement. It is said that the District Judge was therefore wrong to hold that a failure to comply with regulation 5(1) absolved the interested party from any obligation to pay the rates demanded and therefore prevented the claimant from obtaining a liability order under regulation 12.
Under ground two, it is said that the District Judge erred in law in determining that the Council had failed to serve a regulation 4(1) demand as soon as practicable.
The main focus of the Council's case in this court has been on ground one. I should note that before the District Judge a skeleton argument was produced on behalf of the Council, and in paragraph 15 it was said that in the Magistrates' Court, Waltham Forest was bound to accept that it was indeed mandatory to serve demand notices as soon as was reasonably practicable after 1st April of the relevant year. Waltham Forest reserved its position on the point should this or any other case reach a higher court.
The Encon and RegentfordDecisions
That qualified concession was based upon a decision of Mr David Pannick QC (as he then was) in a case called Encon Insulation Limited v Nottingham City Council [1999] RA 382. In that case the local authority had been unable to identify, so it was said, the actual location of the premises by reference to the description given in the valuation list. Seven years after the property was first entered in the list its location was, however, discovered and then seven days later a demand was served. From the case stated, it can be seen that, first of all, the Magistrates decided that the notices had been served as soon as practicable, and secondly, on that basis, the question whether the requirement in regulation 5(1) is mandatory or directory did not fall to be decided by them.
The Deputy Judge in that case held, first of all, that the Magistrates had applied the wrong legal test in deciding that the notice had been served as soon as practicable. In particular, they had only considered the time which elapsed from the date when the premises had been identified and had failed to consider whether the local authority had omitted to take practicable steps to locate the premises before they actually discovered them. Secondly, he held that if the Magistrates had applied the right test, the only answer they could reasonably have come to was that there had been a breach of regulation 5(1)(a) and so a liability order could not be made.
The Deputy Judge therefore decided not to send the matter back for reconsideration. I am satisfied that, in part, that depended upon his view as to the effect of his decision that regulation 5(1) had been breached. The Council did not argue that the requirement was not mandatory, nor did they seek to limit the consequences of any breach and, having regard to that concession, the learned judge took the view that regulation 5(1) was mandatory in nature.
Because of a request for guidance from billing authorities, the Department of Environment, Transport and the Regions, otherwise known as DETR, gave informal views on the effect of the Encon decision in a letter addressed to chief finance officers of the English billing authorities dated 19th February 2001, emphasising that local authorities must seek their own legal advice as to the implications of the case and the legislation:
“3. In our Business Rates Information Letter 7/2000 (issued on 11th August) we reminded billing authorities of their duty to issue rate demands and adjustment notices 'as soon as practicable' after they become aware of changes affecting liability. We advised authorities that not to do so may jeopardise their ability to enforce non-payment. Since then, we have re-examined the court judgment in more detail and have been advised that its consequences on a billing authority not acting 'as soon as practicable' go beyond mere enforcement.
4. We have been advised that the judgment in effect means that if an authority does not rectify a billing error quickly, probably within the same year as the billing error occurred, then any revised rate demand would be unlawful. The judgment held that 'as soon as practicable' was a mandatory requirement. It also held that in regulation 5 of the NDR (Collection and Enforcement) Regulations 1989 this means 'as soon as practicable after the authority is in a position to ascertain the relevant facts' not 'as soon as practicable after the authority has actually discovered the relevant facts' (9). In other words when it should have been aware of the error not from when it actually was. This would also apply to revised demands issued under regulation 9. Obviously this has serious implications for billing authorities. We would advise billing authorities to ensure that their billing systems are robust enough to identify and rectify billing errors within the same year as the original demand notice. To do otherwise will probably lead to an inability to collect the correct amount for the ratepayer. Again billing authorities must seek their own legal advice.”
The letter then went on to deal with a separate but perhaps related matter. The letter reminded the local authorities of their potential liability for the amount of business rates payable to central Government on the assumption that the local authority concerned had acted diligently, irrespective of whether or not all the sums in question had been collected:
“6. If an authority is unable to collect the correct amount from the ratepayer because of a...
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