Where a local authority (the ‘Billing Authority’) has reasonable grounds for believing that a person (individual or company) is liable for national non-domestic rates (‘Business Rates’) in respect to a premises, either because they have been in rateable occupation of the premises, or because they were the ‘owner’ of the premises under section 65 of the Local Government Finance Act 1988, the Billing Authority is likely to serve a demand notice upon that person (the ‘alleged ratepayer[1]; or ‘demandee’).
Where such a demand notice[2] is served, it will be served pursuant to regulation 5 in Part III to the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations (SI 1989/1058) (the ‘Regulations’), a provision which sets down certain provisions in respect to timing. One part of the timing provisions, is that subject to certain provisions[3a]:
‘a demand notice shall be served on or as soon as practicable after…1st April in the relevant year’
The relevant year is the chargeable financial year to which the demand notice relates[3b].
This article will consider: (1) how this requirement is applied; and (2) the consequences of a Billing Authority failing to comply with this requirement, as analysized by Burnett J (as he then was) in the case of North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB) (‘Somerset v Honda’).
Obligation to Pay Business Rates triggered by valid Demand Notice service
Regulation 7(6) of the Regulations sets down the position until a valid demand notice is served:
'No payment in respect of the amount payable by a ratepayer in relation to a hereditament for any chargeable financial year (whether interim, final or sole) need be made unless a notice served under this Part requires it.'[4a]
Somerset v Honda, at paragraphs 12 and 19[4b], makes clear that the duty on the part of the ratepayer to pay business rates arises only following the service of a valid notice under the 1989 Regulations.
As HHJ Hodge QC (sitting as a Judge of the High Court) in Rossendale Borough Council v Hurstwood Properties (A) Limited [2017] EWHC 3461 (Ch)(appealed to Supreme Court) ('Rossendale')), said, at paragraphs 20 to 21:
'...the service of a demand notice is an integral part of the cause of action entitling the charging authority to recover business rates from the ratepayer.
I find that a ratepayer is liable for business rates prior to the service of a demand notice, but that he is not actually obliged to pay business rates until then. The ratepayer is already subject to a liability for business rates, but he only comes under a duty to pay them upon the service of a demand notice.'
Affirming this, at least in respect to unoccupied hereditaments, Lord Briggs and Lord Leggart said in the Supreme Court in Hurstwood Properties (A) Ltd v Rossendale BC [2021] UKSC 16:
'The judge found that liability for rates accrues day by day, even if it does not become payable until demanded. On the clear wording of section 45 of the 1988 Act (quoted at para 18 above), he was plainly right on this point. See also Jervis v Pillar Denton Ltd [2015] Ch 87, para 74.'[4c]
Somerset v Honda
In Somerset v Honda, the Billing Authority served demand notices on 6.11.07 on three defendants (1) Honda (for 13.10.02 to 13.9.07) for premises known as ‘Main Site’ at the Royal Portbury Docks (the ‘docks’); (2) Chevrolet (1.11.02 to 31.3.05) for a plot of land at the docks, called ‘Daewoo 1’; and (3) Mr Graham, a property owner who developed office premises (for 19.11.02 to 22.2.05), for office premises known as Rivermead Court.
The Business Rates were not paid, and the Billing Authority, unusually, commenced ordinary civil proceedings against the defendants, rather than apply by way of complaint to the Magistrates Court. This difference of litigation route, however, does not diminish the analysis set down in Somerset v Honda. Indeed, the fact that the defendants in Somerset v Honda faced ordinary civil proceedings, rather than a complaint in the Magistrates Court, made no difference to the position - as made clear by Burnett J, at paragraph 34, where he said:
’Had the [Billing Authority] sought to enforce the notices by way of complaint in the Magistrates Court the same defence could have been raised.’
That defence (amongst others) was that the ‘…demand notices upon which the [Billing Authority] were suing were not served in accordance with the provisions of regulation 5…’ (paragraph 2) and that ‘...a failure to serve the notice as soon as practicable after 1st April in the relevant year renders the notice invalid with the consequence without more that no business rates for that year are payable.’ (paragraph 3). Further:
‘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.’ (paragraph 4)
In response, the Billing Authority denied that ‘…the defendants have suffered any prejudice’ (paragraph 4) and disputed ‘…that the notices were not served as soon as practicable.’ (paragraph 4)
The essence of the problem which occurred in these cases was that the system of inspections operated by Billing Authority had broken down. As a result the Billing Authority was unaware that these sites were in rateable occupation, and/ or they had failed to identify who the occupier was. ‘Properties were being noted as ‘void’ when they were not.’ (paragraph 4)
What is ‘as soon as practicable’
As will be apparent from regulation 5, the timing requirement is that the demand notice be served ‘on or as soon as practicable…’
On this timing requirement, Burnett J in Somerset v Honda, said, at paragraphs 64 to 66:
‘In the context of an obligation to serve notices under Regulation 5 of the 1989 Regulations, Parliament can be taken to have been well aware of the constraints under which billing authorities operate in terms of manpower and resources. That is so whether a billing authority administers the system in-house, or has contracted others to perform the services. To that extent, the Webster definition: ‘possible to be accomplished within known means and resources’ can properly be applied to the obligation under Regulation 5. That, in my judgment, is for practical purposes synonymous with ‘feasible’. A billing authority will not be able to rely upon the suggestion that home-grown problems and inefficiencies rendered impracticable what would otherwise have been practicable.
[Counsel for the Billing Authority] submits that however the word ‘practicable’ is interpreted in this statutory environment, it can never be practicable to serve a notice in respect of a hereditament until the billing authority knows the identity of the person in rateable occupation. He submits that in each of these cases the Council was ignorant of the identity of the ratepayer and thus the question of practicability should be judged from the date when the identity became known or clear. It is wrong, he submits, to consider the question of practicability from the date on which the billing authority could have discovered the identity of the ratepayer.
I am unable to accept that submission. It is inconsistent with the decision of David Pannick QC in [Encon Insulation (Nottingham) Ltd v Nottingham City Council [1999] R.A. 382] on a point which was argued before him and which, if I may respectfully say so, was obviously rightly decided. The problem encountered by the billing authority in Encon was that although the hereditament appeared in the list, they were unable to locate it. One of the errors identified in the reasoning of the Magistrates was that they focussed on whether the billing authority knew the location of the premises before a certain date rather than whether they took practicable steps to find it at the beginning of the relevant period. The learned Deputy Judge concluded:
“The issue is not whether the billing authority was unaware of the location of the premises before 7th November 1997 and therefore whether it was not feasible physically to serve the notices prior to that date … Rather the issue is whether it was practicable for the billing authority to have identified the location of the premises at an earlier date and therefore physically to have served the notices at an earlier date.”
The reasoning applies with equal force to the question whether it was practicable for the billing authority to have identified the ratepayer at an earlier date.’
The upshot of the above, is that the date the Billing Authority ought to have served the demand notice by, is judged from when it was practicable (for practical purposes synonymous with ‘feasible’) for the Billing Authority to have located the premises (the hereditament) and have identified the alleged ratepayer/demandee[5].
A comparison between the date the Billing Authority ought to have served the demand notice[6], against the date the Billing Authority did in fact serve the demand notice, will show whether the Billing Authority did, or did not, comply with regulation 5 (i.e. served an in time demand notice, or a late demand notice).
Consequence of Billing Authority failing to comply with ‘as soon as practicable’ test
The defendants in Somerset v Honda contended that failure to serve the notice as soon as practicable after April 1 for each respective liability period, rendered the notice invalid, with the consequence that, without more, no business rates for that year were payable.
To address this contention, Burnett J undertook a survey of previous relevant authorities, summarising his survey as follows (the full case references have been added where necessary), at paragraph 33:
‘i) Encon suggests that a failure to comply with Regulation 5(1) by serving a notice as soon as practicable extinguishes any liability for the rates in respect of which it was served.
ii) [Regentford Ltd v Thanet DC [2004] EWHC 246 (Admin), [2004] R.A. 113; (‘Regentford’)], in the context of the similar but not identical Council Tax recovery legislation, suggests that such a failure is not fatal to recovery but that procedural or substantive prejudice to the taxpayer would relieve him of liability to pay.
iii) [JJB Sports v Telford and Wrekin Borough Council [2008] EWHC 2870 (Admin); [2009] RA 33 (‘JJB Sports’)] endorsed the approach, albeit by reference to a greater citation of authority, that Lightman J had considered appropriate under the council tax regime in so far as it related to the question whether a failure to serve a notice as soon as practicable was fatal to recovery. It was not. Prejudice did not arise in JJB Sports. The Deputy Judge noted that the point in Encon had not been the subject of argument, indeed it was in effect the restatement of a concession. In coming to his conclusion, the learned Deputy Judge had regard to [R. v Soneji (Kamlesh Kumar) [2006] 1 A.C. 340]
iv) [R (Waltham Forest LBC) v Waltham Forest Magistrates Court and Yem Yom Ventures Limited [2008] EWHC (Admin) 3579; [2009] RA 181 (‘Yem Yom’)] endorsed the proposition that the Encon approach should not be followed. The Deputy Judge concluded that a failure to serve a notice as soon as practicable was not fatal to the recovery of rates and concluded that each case should be looked at by reference to a combination of whether there had been substantial compliance with the provision and its objectives, including whether there had been prejudice to the ratepayer. By putting it in that way, I understand the learned Deputy Judge to have recognised that one of the objectives of the Regulation was to avoid a ratepayer being prejudiced by late service of a notice. The citation of authority in Yem Yom was far from complete. In particular, there was no consideration of Soneji. As will be seen, Soneji qualified the approach by reference to ‘substantial compliance’ as providing the correct analytical route to determining the outcome in cases such as these.’
After considering the case of Wang v Commissioner of Inland Revenue [1994] 1 WLR 1286 (‘Wang’), and some commonwealth cases, Burnett J concluded that it was not Parliament’s intention that late service/non-compliance with the timing requirement rendered the demand automatically invalid. Burnett J said, at paragraph 49:
‘With all this in mind, what is the position as regards Regulation 5(1) of the 1989 Regulations? The defendants seek to contend that the conclusions reached in both JJB Sports and Yem Yom are wrong and that the conclusion stated in Encon is correct. I am satisfied that the conclusions reached independently by the two Deputy Judges in JJB Sports and Yem Yom, namely that a failure to comply with Regulation 5 of the 1989 Regulations did not result in automatic invalidity, were correct and fully accord with principle. Parliament cannot be taken to have legislated for automatic invalidity as the consequence of late service of a notice under Regulation 5.'
Burnett J’s reasoning[7] was as follows:
'The factors which are, to my mind, decisive are essentially those already identified by Mr. Holgate in Yem Yom (see paragraph [30] above). I would summarise the position in this way. If non-compliance with Regulation 5 gave rise to automatic invalidity, it would increase the burden on other ratepayers and tax payers in circumstances where there might be no conceivable prejudice to the individual ratepayer. More generally it would deprive the local authority concerned of revenue because of the way in which the centralised pooling of business rates operates. It may result in a pure windfall for a ratepayer. Many ratepayers, far from being prejudiced by a late notice, may benefit. Most businesses, whether large or small, are likely to make some provision for business rates. As will become apparent, the facts in these cases are unusual in that each of the defendants was unaware of a potential liability. A late demand may well improve cash flow and either enable interest to be earned on money put aside for the purpose of paying business rates or at least delay the payment of interest on borrowed money. There is no provision for a billing authority to apply interest to rates demanded late. Importantly, invalidity consequent upon a breach of a requirement to serve a notice ‘as soon as practicable’ would introduce uncertainty because of the imprecision of that term. There may be clear cases in which service of a notice is so long delayed that it takes little to conclude that it was not served as soon as practicable. However, often the answer to the question whether a notice was served as soon as practicable could only be answered after a detailed investigation of the procedures and resources within the billing authority. Strict invalidity would encourage disputes given the potential benefit to ratepayers of showing that a notice was served even a few days beyond a date which was practicable. Furthermore, if strict invalidity were the imputed intention of Parliament, it is difficult to discern why the obligation imposed was to serve a notice ‘as soon as practicable’, rather than ‘as soon as reasonably practicable’, which on any view would impose a less exacting obligation.'
Burnett J then said:
'I cannot accept that Parliament intended that ratepayers might be relieved of an obligation to pay tax on what might be no more than a minor administrative failing in the part of a billing authority. More generally, whilst the requirement to serve a notice as soon as practicable has been imposed in part to provide certainty and protection for the ratepayer, it also operates in the public interest to ensure that rates which become due are collected and paid promptly.'[8]
Substantial Prejudice not decisively outweighed by Public Interest
The correct approach was then discerned. At paragraph 58 and 61, Burnett J said:
‘The starting point is that Parliament has required something to be done which has not been done. Egregious failures to comply with statutory obligations may be sufficient in themselves to deny the body or person in default the lawful opportunity to rely upon the action in question.
However, prejudice is a factor relevant to the question whether a billing authority can rely upon a late notice under Regulation 5(1), just as it was in the cases already discussed. A person who has suffered substantial prejudice as a result of a failure to comply with this statutory provision in circumstances where that prejudice is not decisively outweighed by a competing public interest, will be able to defeat recovery. Parliament cannot have intended that a billing authority could rely upon a notice in those circumstances.
In summary, therefore, a failure to serve a Regulation 5 notice as soon as practicable does not result in automatic invalidity. Rather, the court determining any issue resulting from such a failure will have regard to the length of delay and the impact of that delay upon the ratepayer, in the context of the public interest in collecting outstanding rates. The greater the prejudice to the ratepayer flowing from the delay, the more likely will be the conclusion that Parliament intended invalidity to follow.
Prejudice may flow to business ratepayers in any number of ways as a result of a late notice to pay rates. Prejudice is different from inconvenience. In using the language of ‘real prejudice’ in Wang, ‘material prejudice’ in Charles and ‘significant’ in Soneji the various judges were conveying the same notion: that the prejudice relied upon must be substantial and certainly not technical or contrived. It is in that way that I shall consider the question of prejudice argued for by the defendants in these proceedings. The countervailing public interest is in the collection of taxes, the interests of other tax payers and the revenues of the local authority concerned.’
On the facts in Somerset v Honda, the prejudice suffered by the respective defendants was substantial and was not outweighed by the countervailing public interest; the demand notices were invalid[9]. Consequently, the Business Rates were not recoverable and the Billing Authority's claims against the defendants were dismissed.
Conclusion
It is a statutory requirement that Billing Authorities comply with the timing requirement in regulation 5: ‘a demand notice shall be served on or as soon as practicable after…1st April in the relevant year’. The date the Billing Authority ought to have served the demand notice is judged from when it was practicable (synonymous with ‘feasible’ for practical purposes) for the Billing Authority to have located the Premises (the hereditament) and/or have identified the alleged ratepayer/demandee.
However, a Billing Authority’s late service (non-compliance) does not lead to the demand notice being automatically invalided, and so the Business Rates demanded irrecoverable. Parliament did not impose such a strict invalidity legal environment. Egregious failures to comply with statutory obligations may be sufficient in themselves to deny the body or person in default the lawful opportunity to rely upon the action in question. However, prejudice is a relevant factor here: ‘A person who has suffered substantial prejudice as a result of a failure to comply with this statutory provision in circumstances where that prejudice is not decisively outweighed by a competing public interest, will be able to defeat recovery.’ But such prejudice must be 'substantial and certainly not technical or contrived’ - having regard to the countervailing public interest in the collection of taxes, the interests of other tax payers and the revenues of the local authority concerned.
SIMON HILL © 2020-2021
BARRISTER
33 BEDFORD ROW
NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.
[1] In Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations (SI 1989/1058), reg.3 is entitled ‘Interpretation and application of Part II’ and includes:
‘“ratepayer” in relation to a chargeable financial year and a billing authority means a person liable to pay an amount under section 43 or 45 of the Act to the authority in respect of the year;’
[2] In Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations (SI 1989/1058), reg. 3 is entitled ‘Interpretation and application' and includes:
'“demand notice” means the notice required to be served by regulation 4(1)'
[3a] The whole of regulation 5 in Part III to Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations (SI 1989/1058) reads as follows:
‘(1) Subject to paragraph (2), a demand notice shall be served on or as soon as practicable after–
(a) except in a case falling within sub-paragraph (b), 1st April in the relevant year, or
(b) if the conditions mentioned in section 43(1) or 45(1) of the Act are not fulfilled in respect of that day as regards the ratepayer and the hereditament concerned, the first day after that day in respect of which such conditions are fulfilled as regards them.
(2) Subject to paragraph (3), a demand notice may, if the non-domestic multiplier for the relevant year has been determined or set under Schedule 7 to the Act, be served before the beginning of the relevant year on a person with respect to whom on the day it is issued it appears to the [billing authority] 2 that the conditions mentioned in section 43(1) or 45(1) of the Act are fulfilled (or would be fulfilled if a list sent under section 41(5) of the Act were in force) as regards the hereditament to which it relates; and if it is so served, references in this Part to a ratepayer shall, in relation to that notice and so far as the context permits, be construed as references to that person.
(3) A demand notice shall not be served before the authority has set amounts for the relevant year under section 30 of the Local Government Finance Act 1992.’
[3b] A demand notice can only be in respect to one financial year - see reg.4(2) of Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989/1058. For completeness, Reg.4 of Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989/1058 is entitled 'The requirement for demand notices' and sets out certain requirements/restrictions on business rates demand notices. Reg.4 reads:
'(1) For each chargeable financial year a billing authority shall, in accordance with regulations 5 to 7, serve a notice in writing on every person who is a ratepayer of the authority in relation to the year.
(2) Different demand notices shall be served for different chargeable financial years.
(3) A demand notice shall be served with respect to the amount payable for every hereditament as regards which a person is a ratepayer of the authority, though a single notice may relate to the amount payable with respect to more than one such hereditament.
(4) If a single demand notice relates to the amount payable with respect to more than one hereditament, subject to paragraphs 5 and 8 of Schedule 1 the amounts due under it, and the times at which they fall due, shall be determined as if separate notices were issued in respect of each hereditament.'
See JJB Sports v Telford and Wrekin Borough Council [2008] EWHC 2870 (Admin); [2009] RA 33 (a decision of Timothy Brennan QC sitting as a deputy High Court Judge), and the comments made by the district judge (at first instance) about demand notices covering 2 years' liability.
[4a] This regulation was made under powers conferred on the Secretary of State under Schedule 9 to the Local Government Finance Act 1988. Paragraph 1 of Schedule 9 reads (so far as material):
'The Secretary of State may make regulations containing such provision as he sees fit in relation to the collection and the recovery...of amounts persons are liable to pay under sections 43, 45 and 54 above.'
Paragraph 2(f) of Schedule 9 reads:
'(2) Regulations under this Schedule may include provision—
...
(f) that no payment on account of the amount payable need be made unless a notice requires it...'
[4b] Both North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB) and Rossendale Borough Council v Hurstwood Properties (A) Limited [2017] EWHC 3461 (Ch) involved consideration of a slightly earlier version of Regulation 7(6). That version, which is not materially different, read:
"No payment towards business rates needs to be made by a rate payer unless and until a requisite demand notice has been served".
In North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB), at paragraph 12, Burnett J said:
'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 under the 1989 Regulations.'
And at paragraph 19, Burnett J said:
'It is common ground before me that no duty on the ratepayer to discharge his rates liability arises until a notice has been served under Regulation 5. There is thus, within the statutory scheme, a clear distinction between the liability for business rates created by Section 43, on the one hand, and the obligation to discharge that liability after service of a notice under the 1989 Regulations.'
[4c] In Jervis v Pillar Denton Ltd [2015] Ch 87, Lewison LJ said, at paragraph 74:
'Thus he applied the reasoning of Bowen LJ, which had turned out to be the correct explanation for liability for rates. In my judgment, therefore, the rating cases do not bear on the problem in our case. As Lord Neuberger PSC also pointed out in In re Nortel GmbH [2014] AC 209, para 103, this is consistent with the fact that, at least in the modern law, liability for rates arises from day to day (although the position was di›erent in the 19th century).'
[5] Confirming the point, in North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB), Burnett J said, at paragraph 205:
'I have rejected the Council's contention that the correct approach is to ask whether the notice was served as soon as was practicable after they in fact became aware of the correct identity of the owner or occupier of the hereditament in question, irrespective of whether it was practicable for them to have done so earlier.'
[6] Burnett J in North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB) also relied upon a comparison with the facts in Wang v Commissioner of Inland Revenue [1994] 1 WLR 1286. Burnett J said, at 49:
‘The parallel with Wang is very strong.’
[7] In North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB), Burnett J phrased the question, at paragraph 177:
'The first question for determination concerns by when the notices should have been served.'
[8] The reference to Yem Yom (i.e. R (Waltham Forest LBC) v Waltham Forest Magistrates Court and Yem Yom Ventures Limited [2008] EWHC (Admin) 3579; [2009] RA 181) and paragraph 30 of the Judgment of Burnett J in North Somerset DC v Honda Motor Europe Ltd [2010] EWHC 1505 (QB), is a reference to the following parts quoted by Burnett J:
'Mr Holgate in Yem Yom said:
“First of all, there is the importance of the requirement. Some requirements are so important that absence of prejudice resulting from non-compliance is irrelevant. Secondly, the courts do consider whether the statutory requirement or purpose could be fulfilled by substantial compliance. If not, then the requirement may well be taken to be mandatory. Thirdly, regard should be had to the consequences of non-compliance. Fourthly, the issue is often determined in practice in the context of the facts of a specific case. Particularly helpful guidance was given in relation to this area by Lord Woolf MR in R v Home Secretary ex parte Jeyeanthan [2000] 1 WLR 354 , 358–362. The starting point is that where the word “shall” is used “the requirement is never intended to be optional” (see page 358G).”'
Burnett J then said:
‘He went on to distil factors that pointed towards the requirement in Regulation 5 being absolute and those pointing the other way. In favour of a strict approach he identified:
• No liability to pay the tax arises until the demand notice is served. Businesses need a notice to be able to organise their financial affairs and to take and act upon spending decisions. That was so even where a ratepayer knew that it had potential liability.
• Serious consequences flow from the service of a demand notice. The primary enforcement mechanism provided by the 1989 Regulations is via a liability order issued following application to a Magistrates' Court ( Regulation 12 ). Failure to satisfy a liability order may lead to the issue of enforcement by distress ( Regulation 14 ). If enforcement by distress fails to produce sufficient to discharge the liability, the debtor may be committed to prison ( Regulation 16 ). The debtor
(whether an individual or corporate entity) may be made subject to insolvency proceedings ( Regulation 18 ). Thus delay in serving the notice may have the effect of exposing the ratepayer to serious coercive action because of an inability to meet the demands when they are eventually served.
• Regulation 5(1) is of general application whatever the circumstances of the ratepayer or the hereditament.
• There is no obligation found in the statutory scheme requiring a new occupier to notify the billing authority of his occupation. Conversely, the legislation allows the billing authority to serve requisitions for information.
• The service of a notice is important because the limitation period of six years for enforcement in a court of competent jurisdiction starts to run from that date.
By contrast, the factors pointing the other way were:
• If non-compliance with Regulation 5(1) absolves a ratepayer from the obligation to discharge the liability imposed by section 43 of the 1988 Act, the burden on other ratepayers would increase.
• The strict application of Regulation 5(1) could produce a pure windfall for a ratepayer who has suffered no prejudice at all as a result of a delay.
• The time limit is not expressed in finite terms for example in a number of days. It is, by its nature, imprecise.
• Whether a notice has been served as soon as practicable is a matter of judgment which might involve an investigation of the resources of the billing authority and the implementation of its recovery regime.
• A court's assessment of what was practicable might deliver very different results on individual facts with long periods , on the one hand, being endorsed as satisfying Regulation 5(1) but short periods, on the other, falling foul.’
As to protection of the ratepayer, Burnett J, at paragraph 56:
(1) 'a time limit of this sort was also designed to protect those subject to local taxes.' and
(2) agreed with a passage from Lightman J in Regentford Ltd v Thanet DC [2004] EWHC 246 (Admin), where Lightman J had said, at paragraph 19:
'The statutory duty is imposed at least in substantial part for the protection of those from whom the billing authority may seek payment of council tax. The notice is required to enable the recipient to know that a claim may be made for payment and accordingly to take immediate steps to prepare and assemble any necessary evidence to establish that there is not a duty to pay … and to arrange his finances to make payment.'
[9] In respect to Honda, Burnett J considered the facts between paragraphs 80 to 157. At paragraph 152 and 155, Burnett J said:
'In all these circumstances, Honda has suffered substantial prejudice in consequence of the late service of the notices. It is possible that whatever steps were taken by Honda would not have extinguished their liability from 1st October 2002. Prompt service of the first notice might well have resulted in a liability for some business rates on Main Site. However, it is clear that to allow the [Billing Authority] to recover on the late notices would result in recovery of a sum very much greater that would have been payable had they performed their statutory obligations.
...
It would be artificial to approach the question of Honda's liability for rates as if their occupation of Main Site had commenced on 1st April 2005. Their failure to take steps in the years preceding 2005 to ensure they paid no rates on the site is an important context for what followed. Furthermore, had notices been served in a prompt fashion in April 2005 and 2006 there would have been time to make arrangements for the use of Main Site to ensure that no rates were payable, at least prospectively. Additionally...steps could have been taken to reflect any unavoidable rates liability in the pricing of the vehicles for export. So for those years there was significant prejudice, quite apart from that which had already accumulated, which defeats recovery.'
Burnett J concluded, at paragraph 156:
'The reality in this case is that had the Council served a notice in 2003 demanding business rates for Main Site steps would have been taken to ensure that the arrangements at Main Site, were such that any liability was soon extinguished. As a result of the Council's repeated failure to comply with its statutory obligations Honda was denied that opportunity. In these circumstances I conclude that it would be conspicuously unfair, that is to say unconscionable, to allow the Council to recover business rates for these periods.'
In respect to Chevrolet, Burnett J considered the facts between paragraphs 158 to 180. On the question of when ought the notices have been served, he said, at paragraph 177:
'The first question for determination concerns by when the notices should have been served. The first unsuccessful postal canvass was sent to the site at the time that Chevrolet entered into occupation, in November 2002. Allowing for a realistic time for the [Billling Authority] to react to the failure of that postal return, there is no reason why the fact that the site was in continued use (storing Daewoo branded cars) should not have been discovered within the following three months. From that observation, it would have taken but days to identify Chevrolet as the rateable occupier. In those circumstances, my conclusion is that a Regulation 5 notice should have been served before the end of March 2003. Had that happened the notices for rating years 2003/2004 and 2004/2005 would have followed punctually. The notices in respect of those years were not served finally until November 2007 and were not served as soon as was practicable.'
As to the consequences of non-compliance, Burnett J said, at paragraphs 177 to 179:
'In considering the consequence of the late service the more important date is May 2006, by which time Chevrolet and its advisers were fully aware of the [Billing Authority's] claims.
...Chevrolet believed that any rates liability was encompassed within the Cumulo. My (sic) Lyon explained that elsewhere in the country similar storage areas were within the Cumulo....Mr. Lyon provided figures for the additional cost per car which went through the site if this rates liability has to be met. In 2002 it would be £8; in 2003 £13; and in 2004 £10. In their financial planning for those rating years, Chevrolet made no provision for these additional costs. His evidence was that these additional costs would have been added to the wholesale cost of the cars to the dealer, and thus recovered by Chevrolet. He put it this way:
“It is a cost which, if [Chevrolet] had known about it, would have formed one of the many factors used by [Chevrolet] and General Motors in setting its wholesale vehicle prices to dealers and their onward pricing to customers, negotiating or renegotiating terms with its suppliers...These matters cannot be retrospectively altered or renegotiated. Thus [Chevrolet] has lost the ability to mitigate or offset such liability forever.”
...The evidence was insufficient for me to be able to conclude that Chevrolet would necessarily have been able to recover these additional costs in the pricing of the vehicles. But I do accept that they would have tried to do so and may well have been successful. This is an example of the importance for any business of knowing its costs from year to year. That opportunity has been denied to them as a result of the late service of the notices. Chevrolet has suffered substantial prejudice as a result of the later service of the notices.'
[Cumulo is a separate, special rating system used in substitute for the normal Business Rates system; the Port Company for the docks was subject to it; it is based upon revenue (paragrph 6)]
He then concluded, at paragraph 180:
'The result of this conclusion is that the [Billing Authority] cannot recover business rates under the notices, as they would have been able to do had they acted promptly. The circumstances are such that the imputed Parliamentary intention delivers that result. The claim against Chevrolet is dismissed. The [Billing Authority] can take some comfort from the fact that as a result of recording the site as void when it was not, the distribution from the Central Government pool was greater than it should have been.'
In respect to Mr Graham, Burnett J considered the facts between paragraphs 181 to 210. On whether there were late demand notices, he said, at paragraphs 205 to 206:
'The reality is that the [Billing Authority] took no steps to identify the owner of Rivermead Court when the postal canvasses produced no information. Any of the inquiries identified by Mr. Graham would very quickly have led to his identification. They are precisely the sort of actions [the Billing Authority's external agent] was obliged to take under the terms of the contract. Indeed, the ability to liaise with the planning department in the same [Billing Authority] for the identity of the owner of the site just developed, or at least for the identity of who of was who made the planning application, or check with the Land Registry would have led to Mr. Graham in an instant. It is impossible to conclude other than that the Council should have served a section 5 notice during the spring of 2003, even allowing for some time to make the inquiries. Had the first notice been served timeously, those which followed would have been served on time at the beginning of each rating year.
The notices for each of the years in dispute were not served as soon as was practicable. They were all served in November 2007.'
As to the consequences of non-compliance, Burnett J said, at paragraphs 208 to 210:
'[Counsel for Mr Graham] submits that the steps taken with regard to the 2005 list could and would have been taken with regard to the 2000 list, if a notice had triggered Mr. Graham's specific interest in the question of rates liability. He has been denied the opportunity, in consequence of the late service of notices for those billing years, of contending that the property should not have been in the list at all. That submission, in my judgment, is well made. I do not accept that because during that period [Mr Graham's letting agents] appeared to be eliding the issue of practical completion with liability for rates, neutralised that point. After all, acting on their advice he made precisely that proposal with respect to the 2005 list. It has not been submitted that the proposal is obviously fanciful and the evidence which, in due course, will be considered by the VOA and possibly the Tribunal to resolve that issue is not before the Court. I am satisfied that Mr. Graham has suffered substantial prejudice which flows from the late service of the notices by his inability to propose that the hereditament should have been deleted from the 2000.
It is true that having done that, he may well have been unsuccessful or the [Billing Authority] might have served a completion notice just as they later did in 2008 to fix the period during which the advantage he was seeking could run. A real possibility in any case such as this is that a compromise would have been reached with which all could live comfortably. So, on the one hand the [Billing Authority] may be deprived of revenue that would have flowed to them had they acted in accordance with the statutory scheme. On the other, there is a substantial risk that if the [Billing Authority] were to recover on these notices, that Mr. Graham would be paying more than should be the case. In those circumstances, taking account of the lateness of the notices, the interference in Mr. Graham's ability to deal with the suggested liabilities as and when they arose and the denial of his opportunity to make proposals in relation to the 2000 list, the conclusion is that the [Billing Authority] cannot recover the disputed business rates. Additionally, it should not be overlooked that the result of the [Billing Authority] mis-categorising this property as ‘void’ resulted in a larger distribution of funds to the council from the Central Government pool than was strictly justified.
In the result, the claim against Mr. Graham is dismissed.'