Solihull Corporation v Gas Council
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HOLROYD PEARCE,LORD JUSTICE HARMAN,LORD JUSTICE DAVIES |
| Judgment Date | 25 January 1961 |
| Judgment citation (vLex) | [1961] EWCA Civ J0125-1 |
| Court | Court of Appeal |
| Date | 25 January 1961 |
| Docket Number | LVC/240/1959. |
[1961] EWCA Civ J0125-1
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Holroyd Pearce
Lord Justice Harman and
Lord Justice Davies.
In the Matter of the Local Goverment Act, 1948
In the Matter of the Rating and Valuation Acts, 1925 to 1957
In the Matter of Appeals from the Warwickshlre Local Valuation Court
Mr. PATRICK R.E. BROWNE, Q.C. and Mr. NIGEL C. BRIDGE (instructed by Messrs Sherwood & Co.) appeared on behalf of the Gas Council and the West Midlands Gas Board.
Mr. MAURICE L. LYELL. Q.C., and Mr. DAVID G. WIDDICOMBE (instructed by Messrs Sharpe Pritchard & Co., Agents for Mr. W. Maurice Mell, Town Clerk) appeared on behalf of Solihull Borough Council.
Mr. J. RAYMOND PHILLIPS (instructed by the sobatct of inland appeared on behalf of the Valuation officer.
The hereditament with which these appeals are concerned is the Gas Research Station at Solihull. The issue is whether it is in the ratable occupation of the West Midlands Gas Board or the Gas Council. For the year to which the first appeal relates the result of it will merely decide which of these two financially interconnected corporations is liable to pay the rates. For the following years to which the other appeals relate, the matter is of more practical importance, For the premises of Gas Boards are, by section 6 of the Rating and Valuation (Miscellaneous Provisions) Act 1955, exempted from rating by annual payments in lieu of rates, but a hereditament occupied by the Gas Council is not so exempted.
The West Midlands Gas Board (whom I will call "the Board") are owners of the horeditament in foe simple, and all these who work there are the Board's servants. But the Board are largely controlled by and are reimbursed by the Gas Council. The Lands Tribunal held that by virtue of arrangements between the Board and the Council, the Board was occupying merely as agent for the Council, and that it is the Council which is in ratcable occupation. The nature and effect of these arrangements has been the subject of much argument before the Lands Tribunal and here. All figures and the relevant documents are agreed.
Before 1948 many gas companies and local authorities supplied gas. The Gas Act of 1948 nationalised gas companies and local authorities' gas undertakings. By section 1 Area Boards were appointed to develop and maintain a co-ordinate gas supply to their areas, and they were given certain powers of manufacture and distribution and the like. By subsections (2) and (4) the Boards had wide powers to carry on activities that should appear convenient in discharge of their duties; they had power to do anything, including borrowing and buying, that would facilitate performance of their functions. Section 2 established the Gas Council to advise and assist the efficient exercise and performance by Area Boards of their functions, and the Gas Council is given wide powers. Section 3 puts a duty on the Gas Council to settle a research program-no. Subsections (2) and (3) of that section read as follows; "(2) It shall be the duty of the Gas Council to secure the carrying out of any general programme settled as aforesaid, and for that purpose they may themselves conduct research into any of the matters aforesaid and make arrangements with any other person, including an Area Board, for the conduct of such research by their (3) Any Area Board may conduct research in accordance with arrangements made with the Gas Council as aforesaid, and may also, after consultation with the Gas Council, conduct research into such matters affecting the functions of the Board as are not included in the general programme settled as aforesaid". ###quary###Both the Boards and the Gas Council are, by section 5, bodies corporate. By section 48 the Council may require Area Boards to contribute to the Council's expenses. Thus all the Boards contribute indirectly to the expenses of a research station paid for by the Council, and all the Boards benefit by any discoveries.
There is no written agreement defining the respective positions of the Board and the Council in connection with this research station. Both were working with the same object, namely, the betterment of the gas industry, and as between the Council and this particular Board it was clearly intended that the Board should be neither in pocket nor out of pocket in respect of this research station. The cost of the research was to be borne by the Council, who would ultimately recover it by contributions from all the Boards. For that reason, instead of drawing up any comprehensive formal document defining the legal effect of their respective parts, the Board and the Council simply made resolutions and carried them into effect. It was, in a sense, a family arrangement.
The general effect of the working arrangements was this, The Board financed the station in so far as it provided the cash to buy the land and buildings and various assets and the salaries of its employees who work at research. All those expenses were reimbursed by the Council to the Board. In the case of some expanses this was done quarterly. In the case of assets costing over £1,000, or with more than two years life, it was done over a period. In the case of the land itself it was done by payment of interest (without any capital payment) described by the parties, erroneously from a legal point of view, as "rent".
The main facts which the Tribunal sets out in reaching its conclusion were these. The Council appointed a permanent research committee, and on its advice decided to establish two research stations, one in London, and the other in the Midlands, such stations to be under, the immediate control of the Board of the areas in which they are situated. The director of the station was selected by the Council, and the appointment was to be offered to him subject to the Board being agreeable to making the appointment. His duties were to be confined to conducting research into complete gasification processes and such other research as the Gas Council might specify. The Board assigned to the Council the right to apply for patents arising from work in the research programme at the station. The Board purchased the land and approved the construction of the buildings, A document headed; "Reimbursement of Expenditure incurred by the Boards in administering Research Stations on behalf of the Council" sots out the method of accounting and reimbursement between the parties, Letters and remittance advice notes wore produced, on paper headed; "Gas Council Midlands Research Station". Application by the director for certain licenses wore stated to be made "on behalf of the Gas Council", and the name of the Council was writ large on the research station with no reference thereon to the Board.
The Lands Tribunal reached its conclusion in the following terms; "The decision in this case depends, I think, entirely upon theatre construction of the arrangements made between the Council and the Board, The use of the words 'Gas Council on the building, on the notepaper and in applications for licensees are. I think material only in that they give some evidence as to the construction which the parties themselves placed upon the arrangements, Any such evidence would be immaterial if the arrangements had been contained in a formal legal document, but it is, I think, clear that the documents in the present case are embodying in informal languages terms which had been agreed by financial advisers.
"I am not satisfied that the use of the word 'rent' justifies the assumption that a lease of the property to the Council was intended, but the whole tenor of the arrangements is, I think, designed to make the Board an agent of the Council in operating the research station. The director was selected by the Council; he works under the control of there search committee of the Council, and all the expenses are borne by the Council. That the Board and the Council them selves took this view is, I think, shown by the evidence to which I have referred; and in the brochure to which I have referred the position is, I think, correctly summed up in the words The Midlands Research Station which is administered by the West Midlands Gas Board on behalf of the Gas Council. The beneficial occupation is, I am satisfied, in the Gas Council for whom, and under whose direction, the research is carried out, and the Board occupy merely as their agents".
Mr Patrick Browne, for the appellants, argues that the. decision was wrong on the following grounds. There are four essential ingredients of ratable occupation. (a) There must be actual possession by the alleged occupier. (b) Possession must be exclusive for the particular purposes of the occupier. (c) possession must be of some use or value or benefit to the possessor, (d) Possession must not be for too transient a period, The necessity for 'those ingredients is clearly established by the case of John Laing v. Kingsaweed, reported in 1949 volume 1 King's Bench Division at page 344, where it was accepted by both sides and the court at page 350.
He relies on certain further facts which were set out in the Case stated at the request of the appellants. They are to this effect: At all material times the ownership of the freehold of the hereditament was in the Board. All the buildings comprised therein were erected by architects and contractors instructed, employed and paid by the Board, All persons employed at the hereditament have at all material times been employed and paid by the Board, and all equipment and supplies used at...
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