Understanding and Challenging a National Non-Domestic Rates Liability Order

Author: Simon Hill
In: Article Published: Saturday 04 November 2017

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Introduction

1. Liability orders are made against ratepayers who are found to have failed to pay due national non-domestic rates (‘NNDR’ or ‘Business Rates’ or simply ‘non-domestic council tax’). The liability order is an enforceable judgment and the sums involved are usually quite substantial.

2. Where liability orders are made in the ratepayer’s absence, or without him even being aware that a Court process was underway against him, the ratepayer can apply to bring the matter back before the Magistrates’ Court justices, with a view to the justices making an order setting the liability orders aside. Whether the justices will accede to that application depends on whether the circumstances justify it.

3. This article will explore those circumstances, and the conditions that need to be fulfilled before a Magistrates Court will set aside a Business Rates liability order. In the interests of brevity, I shall use the label ‘ratepayer’ for the applicant, though in most cases he will be disputing that he is the ratepayer (mandatory relief ratepayers being the exception).

Warning

4. Those reading this article because they have become aware that a liability order may have been made against them, should note that in such circumstances, the law expects them to act swiftly; to be within time, they must normally make their application to set aside the liability order ‘within days or at most a very few weeks, not months, and certainly not as much as a year'.

Proceedings for a Liability Order.

5. To put the application to set aside the liability order in context, it is helpful to consider the process by which a liability order is obtained.

6. Typically [1], the ratepayer will receive a demand notice, then a final reminder, before formal proceedings begin[2]. Formal proceedings are initiated by the Billing Authority (i.e. the local authority) applying to the local Magistrates Court, by way of a ‘Complaint’[3]. The Magistrates Court will respond to the Complaint, by issuing a summons against the person named in the Complaint, requiring that person to attend the Magistrates Court to explain why the sum has not been paid.

7. Where this process runs as it should, the ratepayer will receive the Summons at least 14 days before the first hearing is due to take place, the ratepayer can then attend and begin actively participating in the Court procedure, firstly, by setting out his resistance to the liability order being made against him, secondly, complying with any directions given at the hearing, and then thirdly, attending the final trial on the contested issues.

Form of Application to set aside the liability order

8. The process of commencing an application (sometimes called a ‘request’) for an order setting aside the liability orders is relatively informal. There is no prescribed form to fill in to make the application. Indeed a letter addressed to the Clerk to the Magistrates’ Court will be sufficient. However, the letter must be clear that it is an application under the Court’s exceptional jurisdiction to set aside the liability order (see R (Sangha) v Stratford Magistrates' Court [2008] EWHC 2979 (Admin), paragraphs 37 and 12) and should set out how the 3 conditions (identified below) are satisfied. The letter should at least do this in outline form, since this is akin to an ‘issue of process’ document, and so should contain the main thrust of the grounds upon which the application is made.

The Governing Law

9. The governing law is common law based, rather than statutory. Neither s142 of the Magistrates’ Court Act 1980 nor the CPR (in particular, CPR r.13 and r.39.3[4]) apply. That law requires that liability orders should not be set aside unless 3 ‘conditions’ are established. These 3 Conditions were set down in the leading authority is R (Brighton and Hove City Council) v Brighton and Hove Justices [2004] EWHC 1800 (Admin) (‘Hamdan’), at paragraph 31 of the judgment[5]:

‘31. It is important to take into account that the jurisdiction …held to exist cannot be exercised simply because the defendant disputes his liability to pay the NNDR in question. That there is a genuine and arguable dispute as to that liability is a necessary condition for a decision by justices to set aside a liability order, but it is not a sufficient condition. The power of a magistrates' court to set aside a liability order it has made is an exceptional one, to be exercised cautiously. In my judgment, in general a magistrates' court should not set aside a liability order unless it is satisfied, in addition to there being a genuine and arguable dispute as to the defendant's liability for the rates in question, that:

(a) the order was made as a result of a substantial procedural error, defect or mishap; and

(b) the application to the justices for the order to be set aside is made promptly after the defendant learns that it has been made or has notice that an order may have been made.’

10. These 3 Conditions can be summarised as:

a. Condition 1: A ‘genuine and arguable dispute as to the defendant's liability for the rates in question’ (‘Genuine and Arguable dispute’)

b. Condition 2: ‘Substantial procedural error, defect or mishap’ results in the order (‘Procedural mishap’);

c. Condition 3: Prompt application ‘after the defendant learns that it has been made or has notice that an order may have been made.’(‘Prompt application’)

11. Each of these 3 Conditions must be established. They are cumulative. To put it another way, the application to set aside will fail if one (or more) of these stages can not be established[6]. Furthermore, the burden of establishing each of these conditions lies upon the Applicant ratepayer[7].

12. As will be apparent, the test is more prescriptive than simply asking whether it would be reasonable and in the interests of justice to set aside the liability orders (see paragraph 37 of Hamdan).

Condition 1: Genuine and arguable dispute.

13. For Condition 1, the Court asks itself whether, on the balance of probabilities, there is at least a ‘genuine and arguable dispute’ as to the ratepayer’s liability to pay the Business Rates which founded the liability orders. This is a merits based test; it requires the Court to consider the substantive arguments put forward by the ratepayer as to why he is not liable to pay the relevant Business Rates.

14. The threshold set is fairly low. The ratepayer is not required to establish, at this preliminary stage, that at a trial he will establish on the balance of probabilities, that he is not liable (at all or for some of it); the ratepayer merely has to establish at this stage, that he has at least a genuine and arguable case that he is not liable.

15. Where the ratepayer alleges he has been wrongly identified as the party liable, he is not required to demonstrate who is in fact liable, merely that there is a genuine and arguable dispute that he is not liable. However, it naturally bolsters the ratepayer’s position to be able to produce evidence as to who is the true ratepayer. The credibility, plausibility and strength of the ratepayer’s arguments will be assessed.

16. The genuine and arguable dispute may centre around a variety of potential issues. One issue might be as to who is in rateable occupation, another might be entitlement to exemptions/Business Rates relief (for instance, mandatory relief for a charity).

Who is liable for Business Rates?

17. Liability for Business Rates is principally governed by two distinct sections in the Local Government Finance Act 1988, Part III Non-Domestic Rating, namely, s43 entitled ‘Occupied hereditaments: liability’ and s45 entitled ‘Unoccupied hereditaments: liability’, though each is the principal provision in a set of sections (set 1 being sections 43, 44 and 44A, and set 2 being sections 45, 45A, 46 and 46A) and readers should note that sections are due to be amended shortly.

18. The main part of s45, applying to unoccupied hereditaments, reads:

‘(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 none of the hereditament is occupied,
(b) on the day the ratepayer is the owner of the whole of the hereditament,
(c) the hereditament is shown for the day in a local non-domestic rating list in force for the year, and
(d) on the day the hereditament falls within a class prescribed by the Secretary of State by regulations.’

19. A discussion about these 4 conditions would fill an article on their own. Only two points will be noted here:

(a) Condition (b) to 45 (1) refers to the ‘owner’ and s65 of Local Government Finance Act 1988 states: '(1) The owner of a hereditament or land is the person entitled to possession of it.’ Typically this will be the legal title holder of the absolute interest (i.e. the freehold or leasehold interest) which does not have any derivative absolute interests carved out of it. S65 continues: ‘(3) Subsections (1) and (2) above shall have effect subject to [the following provisions of this section]’. Readers will need to consider whether s65 (5) to (8A) applies to their case [8].

Condition (d) is governed by Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 (SI 2008/386) (England only), see in particular reg.4.

20. The main part of section 43, applying to occupied hereditaments, reads:

‘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.’

Explaining this provision, Aikens LJ in Chowdbury v Westminster City Council [2013] EWHC 1921 (‘Chowdbury') said at paragraph 6:

’Under section 43 of the Local Government Finance Act 1988, a person called “the ratepayer” is liable to pay non-domestic rates as regards a “hereditament” in respect of any day of the year if (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.’

Complex issues can arise around who (or what legal entity) was in ‘occupation’ of the property within the hereditament, on a particular day (or over a certain period). Ultimately however, it is a question of fact for the justices’ to decide, who was in rateable occupation on any relevant day. S65 of Local Government Finance Act 1988 reads:

‘(2) Whether a hereditament or land is occupied, and who is the occupier, shall be determined by reference to the rules which would have applied for the purposes of the 1967 Act had this Act not been passed (ignoring any express statutory rules such as those in section 24 and 46A of that Act).’

This is again subject to s65(3).

21. Before considering the meaning of ‘occupation, it should be noted that if the hereditament is part occupied, part unoccupied, then section 44A will apply.

22. As to ‘occupation’, in R v Assessment Committee of St Pancras [1877] 2 QB 581, Lush J said:

‘It is not easy to give an accurate and exhaustive definition of the word ‘occupier’. Occupation includes possession as its primary element, but it also includes something more. Legal possession does not of itself constitute an occupation. The owner of a vacant house is in possession, and may maintain trespass against any one who invades it, but as long as he leaves it vacant, he is not rateable for it as an occupier. If, however, he furnishes it, and keeps it ready for habitation whenever he pleases to go to it, he is an occupier, though he may not reside in it one day in a year… On the other hand, a person who, without having any title, takes actual possession of a house or piece of land, whether by leave of the owner or against his will, is the occupier of it. Another element, however, besides actual possession of the land, is necessary to constitute the kind of occupation which the Act contemplates, and that is permanence.’

23. The Court of Appeal in J Laing & Sons v Kingswood AC [1949] 1 KB 344 laid down four essential ingredients for determining whether an occupier was in rateable occupation; at 350:

‘First, there must be actual occupation; secondly, that it must be exclusive for the particular purposes of the possessor; thirdly, that the possession must be of some value or benefit to the possessor; and, fourthly, the possession must not be for too transient a period. The primary question here is whether the plaintiffs are in actual occupation and exclusive occupation of these particular hereditaments.’

24. If any one of the four essential ingredients is missing, then the occupier cannot be in rateable occupation. In Laing, the Court referred to Westminster Council v. The Southern Ry. Co. and W. H. Smith Son, Ld. and Others [1936] AC 511, quoting Lord Russell at 529 (the case relating to Victoria Station):

‘Occupation, however, is not synonymous with legal possession: the owner of an empty house has the legal possession, but he is not in rateable occupation. Rateable occupation, however, must include actual possession, and it must have some degree of permanence: a mere temporary holding of land will not constitute rateable occupation.’

25. Where there is only one contender for rateable occupier, the position is more straightforward. Whether a person is in actual occupation is a question of fact rather than law (as per Holywell Union v. Halkyn District Mines Drainage Co. [1895] A. C. 117). 

26. A rateable ‘occupier’ can be more than one person (natural or legal) – if there is more than one, they are joint rateable occupiers (or joint rateable occupants, if you will). But the situation is more complicated where there are separate, independent contenders for the position of rateable occupier (that is, rival contenders, or sometimes called ‘rival claimants’). Firstly, there can be only one rateable occupier. Excluding joint rateable occupiers, this means there can be only one person (natural or legal) as the rateable occupier; Lord Diplock in Commissioner of Valuation for Northern Ireland v. Fermanagh Protestant Board of Education [1969] 1 W.L.R. 1708, said at 1728:

‘Under the Northern Irish legislation, as under the English, the liability to pay rates is imposed on the occupier. Parliament cannot have intended to impose separate and independent liabilities to pay the rates for the same hereditament on more than one person except where their legal right of occupation is a joint right, as in the case of joint tenants. In English law, therefore, although there may be a joint occupation of a single hereditament there cannot be rateable occupation by more than one occupier whose use of the premises is made under separate and several legal (or equitable) rights.’

27. Secondly, where there are rival claimants to the rateable occupancy, only the paramount occupier, and not the subordinate occupier, is in rateable occupation. Lord Russell at 529 in Westminster Council said:

‘Where there is no rival claimant to the occupancy, no difficulty can arise; but in certain cases there may be a rival occupancy in some person who, to some extent, may have occupancy rights over the premises. The question in every such case must be one of fact - namely, whose position in relation to occupation is paramount, and whose position in relation to occupation is subordinate; but, in my opinion, the question must be considered and answered in regard to the position and rights of the parties in respect of the premises in question, and in regard to the purpose of the occupation of those premises.'

28a. Thirdly, the subordinate occupier is not in rateable occupation because the existence of the paramount occupier negates an essential ingredient in any claim that the subordinate occupier is in rateable occupation, namely that of: exclusive possession. As Eveleigh LJ said in Routhan v Arun [1982] Q.B. 502, at 513:

‘In such cases, where it is shown that one person's occupancy is paramount, he is the occupier for the purposes of the Act. The existence of a paramount obligation (sic) shows that the condition of exclusiveness does not exist in the other’

28b. Lord Russell in Westminster Council Lord Russell said, at 10:

‘In truth the effect of the alleged control upon the question of rateable occupation must depend upon the facts in every case; and in my opinion in each case the degree of the control must be examined, and the examination must be directed to the extent to which its exercise would interfere with the enjoyment by the occupant of the premises in his possession for the purposes for which he occupies them, or would be inconsistent with his enjoyment of them to the substantial exclusion of all other persons.’

28c. In determining who is in rateable occupation, a factor which may be looked at is - who has title to that land. Lord Denning MR in Routhan v Arun [1982] Q.B. 502, said at 508, that:

'The title to the land is irrelevant save where the fact of occupation is ambiguous. Then the title may be looked at so as to determine who is the occupier.’

29. In Re Briant Colour Printing [1977] 1 W.L.R. 942, the Court of Appeal said, page 9:

‘…where all that is known about a hereditament is that it is in use — that is to say, that it is in some kind of occupation — then, in the absence of countervailing evidence, the natural inference on the balance of probabilities is that it is the owner who is using it.’

30. Returning to joint rateable occupation, and how each of the joint rateable occupiers are liable, Mr Stephen Morris QC sitting as a Deputy High Court Judge in The Queen on the Application of Tallington Lake Limited v Grantham Magistrates Court [2010] EWHC 3403 (Admin) said at paragraph 19:

'...the issue of whose occupation is paramount and whose is subordinate arises where there are rival claimants to occupancy. This does not arise where occupancy is strictly joint. It is clearly established that there may be two or more occupants of one particular hereditament and that each is jointly and severally liable for the rates. An example would be occupancy by a partnership. This is explained by Ryde on Rating in the following terms at paragraph 243 under the heading "Joint Occupiers":

"The occupation of land can be joint, and it is important to distinguish the case of a building in the hands of joint occupiers from that of a building of which the parts are let separately to several persons, each of whom is the occupier of the part let to him, and of that part only. In the case of a firm occupying the whole of the building, the partners are joint occupiers of the whole building, the partners are joint occupiers of the whole and every part of it, and each partner is liable for the rates on the whole. But in such a case as Allchurch v Hendon Union Assessment Committee, where the different parts of a building are let to different tenants, each tenant (if an occupier at all) is an occupier of his own part only and is liable for the rates on that part only. If the whole building is entered in the rating list as one rateable hereditament, no one tenant is liable for the rate on the whole, because he is not the occupier of the whole, nor can he be compelled to pay the rate on the part which he occupies, because there is nothing in the rate, or in the rating list on which it is based, to show what is the value of that part."

Tallington Lake applied this to a group of companies, individually and separately occupying parts of one hereditament. See Dias v London Borough of Havering [2011] EWHC 172 (Ch), paragraph 27.

Condition 2: Substantial procedural error, defect or mishap

31. There are two distinct parts to this Condition:

a. There was substantial procedural error, defect or mishap;

b. That procedural error, defect or mishap resulted in the liability order made.

32. Some general guidance on this was set down in Hamdan, paragraph 32:

‘In most cases, it must be shown that the liability order was unlawful or made in excess of jurisdiction or in ignorance of a significant fact concerning their procedure (such as an application for an adjournment) of which the justices should have been aware.

33. A procedural mishap, satisfying this Condition does not need to involve some fault being attributed to the Court or the local authority. Maurice Kay J inLiverpool City Council v Pleroma Distribution Ltd [2002] EWHC 2467 (Admin) (‘Pleroma’), gave the example of a traffic accident that, unknown to the magistrates' court, prevents the defendant from attending at the hearing.

34. A failure by the ratepayer to attend Court, when he knows that there will be a hearing, will not amount to a procedural mishap. As stated in Hamdan, paragraph 32:

‘…a failure of the defendant to attend the hearing because he assumes, without good reason, that the local authority will not seek an order, or because he is absent abroad, will not of itself satisfy this requirement. A defendant who will be unable to attend a hearing because of his absence abroad may request an adjournment in writing, or instruct a solicitor to appear on his behalf; but if he does nothing, he is not entitled to an order of the magistrates to set aside a liability order made against him.'

Procedural Mishap in Service of the Summons 

35. The service of the Summons can be fertile ground for procedural mishaps.

36. The rules on service are set out in regulation 13(2) of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989. This provides 5 separate and alternative methods by which service of a summons issued under Regulation 12(2) can be effected on a natural person or legal entity. Regulation 13(2) reads:

(2) A summons issued under regulation 12(2) may be served on a person-

(a) by delivering it to him,

(b) by leaving it at his usual or last known place of abode, or in the case of a company, at its registered office,

(c) by sending it to him at his usual or last known place of abode, or in the case of a company, to its registered office,

(d) where all or part of the sum to which it relates is payable with respect to a hereditament which is a place of business of the person, by leaving it at, or by sending it by post to him at, the place of business, or

(e) by leaving it at, or by sending it by post to him at, an address given by the person as an address at which service of the summons will be accepted

Exhaustive list of methods of service

37. The list in Regulation 13(2) is exhaustive. These 5, and no others, can be used for service. An argument in Chuckwu v Redbridge [2015] EWHC 2683 (Ch) (‘Chuckwu’), that ‘…any other method could be used if the local authority had good reason to use another address…’ failed. At paragraph 24, Nugee J said:

‘It seems to me that Regulation 13(2) is intended to set out the possible methods of service, meaning the only possible methods of service, and that service that is not in accordance with Regulation 13(2) is not due service.’

38. When considering whether service was within a permitted method, salient issues include identifying:

a. the method of service (hand delivery, physically leaving it at the destination, sending by the postal system) selected; and

b. the selected destination for the Summons (usual or last known place of abode, registered company address, place of business, specifically provided address).

39. Each limb will be considered in turn. Limb (b) and (c) can be read together. They differ only in respect to the method of service, ‘leaving it at’ for limb (b), while in contradistinction, Limb (c) prescribes ‘sending it to’. These phrases are common for methods of service[9].

Limb (a) delivering it to him

40. In Chuckwu, Nugee J said at paragraph 16 that in respect to limb (a), in the light of the other paragraphs, it must mean ‘by delivering it to him personally.’ Delivering it to a person personally, encompasses handing the Summons personally into the physical possession of the intended recipient. Typically this will be by a process server. Beyond this, it appears that delivery may be effected by handing the Summons to a person other than the intended recipient (a spouse for instance; the postal service cannot count), who promises to pass it on to the intended recipient and the evidence shows that they did in fact pass it on as promised. this finding can be made even where the intended recipient claims he has not received it: see Morecambe and Heysham Corp v. Warwick (1958) 56 L.G.R.

Limb (b) leaving it at his usual or last known place of abode, or registered office

41. ‘leaving it at’ means putting the document physically into the destination address while at the destination address.

42. Parallels can be drawn with a similar set of methods of service in s233 of the Local Government Act 1972. Within s233, service is permitted by ‘delivering it to him, or by leaving it at his proper address’. The Court in Rushmoor v Reynolds [1991] COD 315, found service had occurred within this provision, where the billing authority had used one of its own employees to visit the property itself, and whilst there, the employee pushed the notice through the letter box at the property. Service was found to come within this provision in Lambeth LBC v Mullings [1990] COD 281, a case which involved a notice being inserted ‘through the respondent's letter-box.’

43. The phrase ‘usual or last known place of abode’ should be given its normal and natural meaning. Analogies can be made with similar phraseology in the CPR. CPR r.6.9 uses the language of ‘usual or last known residence’ and ‘usual and last known address’:

a. For ‘usual’, the Court of Appeal in Relfo Ltd (In Liquidation) v Varsani [2010] EWCA Civ 560 said the critical determinant is of the addressee’s pattern of life, rejecting that the test merely required a comparision between periods of occupation - account should be taken of the nature or quality of occupation (for instance, as a family home). The first instance decision had talked of a notion of regularity about it but not necessarily comparative intensity of use.

b. For ‘last known’, the first instance decision in Relfo Ltd (In Liquidation) v Varsani [2009] EWHC 2297 (Ch) said that a person who had more than one residence could have more than one ‘last known’ residence (presumably any single person can only have one last known address for that person).

44. A ‘place of abode’ seems largely synonymous to ‘residence’.

45. A company has a registered address, and this is available and published on Companies House website.

Limb (c) by sending it to him at his usual or last known place of abode, or registered office

46. This method of service is identical to limb (b) save for the substitution of ‘Sending it to’ in place of ‘leaving it at’. ‘Sending it to’ means sending it by the postal system[10].

Limb (d) by leaving it at, or by sending it by post to him at, the place of business

47. The Divisional Court in Chowdhury considered the correct construction of Limb (d); Aikens LJ said:

'29….In my judgment, the correct construction of that provision is as follows: for there to be proper service of the summons in such a case, first of all, all or a part of the sum to which the summons relates must be payable in respect of “a heraditament” which is also “a place of business” of the person sought to be served with the summons.

30 Secondly, the summons must be left at that place of business ie at that heraditament, or the summons must be sent by post to the person sought to be served at that place of business ie that heraditament. In the present case there is, it would appear, no doubt that the letter containing the summons was posted to the appellant at the address of the premises, viz the heraditament. The only question is whether that heraditament was at the relevant time “a place of business” of this appellant.’

48. In Chuckwu, Nugee J at paragraph 15 summarized it as:

‘(d) which does enable a summons to be served at a person's place of business, only permits service at the place of business which is where all or part of the summons to which the summons relates is payable with respect to a hereditament which is that place of business.'

49. In Chowdhury, the relevant business of the ratepayer was that of a landlord – the subject premises were sublet on a succession of short-term leases. The Divisional Court found that the premises was not, by that fact alone, ‘a place of business’ of the landlord. However the Divisional Court left open the question of whether, if rent is collected at that premises, that premises then qualifies as ‘a place’ of business of the landlord (paragraph 31).

Limb (e) An address given by the person as an address at which service of the summons will be accepted

50. Service by this limb is only available: (a) where an address has been given by the ratepayer; and (b) that address was given expressly as an address at which a particular type of communication can be sent, namely a Summons.

51. An address which is given for any other purpose, is not an address which is given as an address at which a Summons will be accepted. An address given for general and/or formal communications or correspondence will not qualify. The CPR adopts a similarly strict approach in respect to the provision of addresses. CPR r.6.8 (a) says that service is good service at an address ‘…which the defendant has given for the purpose of being served with the proceedings’.

The effect of the Summons not being served properly

52. In Chowdhury, the Divisional Court said at paragraph 28:

‘In my judgment, it is unnecessary, and probably also unwise, for this court to try and define the extent of the justices' jurisdiction to set aside liability orders. In this case there is a much narrower point to decide, that is, effectively, whether the liability order challenged was ever properly made at all. It seems to me that if the summons was not properly served then the justices would have had no jurisdiction to make the liability order under Regulation 12(2).

53. It continued later, at paragraph 32:

‘…It seems to me that if the summons was not properly served in accordance with Regulation 12(2)(d) then the justices had no jurisdiction to make the liability order at all. 

54. This is because the Regulations make the service of the summons within one of the 5 prescribed methods, a prerequisite to obtaining a liability order. This is derived from Regulation 13(2A), which stipulates that no liability order ‘shall be made’ pursuant to a summons issued under Regulation 12(2) ‘unless fourteen days have elapsed since the day on which the summons was served’. If no summons has been properly served, then 14 days cannot have elapsed and so the bar on making a liability order cannot have been lifted (see Chowdbury paragraph 10 and 18).

55. Contrary to what may first appear, the mere fact that the justices lacked jurisdiction to make the liability order, does not mean that the liability order is null and void, or fatally irregular. The liability order remains valid. The lack of jurisdiction only establishes Condition 2. The Hamdan 3 Condition test remains applicable and Condition 1 and 3 must still be established before the liability order will be set aside. This is made clear in the following passage of Chowdhury, paragraph 32:

‘Subject to a possible argument on whether the appellant has lost his right to have the liability order set aside because he had not applied sufficiently promptly, which is not the subject of the Case Stated…then if the summons was not properly served, it seems to me that the justices not only have the power to set the liability order aside but they must do so. That it because it is accepted for present purposes that there is a genuine and arguable dispute as to the appellant's liability and the order would have been made as a result of a substantial procedural error.’

56. The liability orders were not set aside in Chuckwu, as although the summons were found not to have been properly served, and so Condition 2 established, there was no genuine and arguable dispute and the ratepayer had not acted promptly. The Court saw force in the argument at paragraph 25 that:

‘…to set aside the liability order for a failure to serve the summons properly in circumstances where there is neither a genuine and arguable dispute as to liability on the facts before the justices, nor a prompt application to set aside would simply lead to a duplication of costs and the proceedings having to start again to the benefit of nobody.’

Justices lacking knowledge when making Liability Order – Ratepayer unaware

57. The non-receipt of the summons by the ratepayer appears to amount to a procedural mishap.

58. In R (on the application of Jones) v Justice of the Peace [2008] EWHC 2740 (Admin) (‘Jones’), Foskett J said, after listing the 3 stage test set out above, in paragraph 4:

‘…In relation to the second of those matters, Stanley Burnton J emphasised that the procedural mishap may not be the fault of the court or of the local authority. In my judgment, it is broad enough to embrace the situation where the court, in ignorance of the fact that the party against whom the liability notice is sought is himself unaware of the application for such a notice, grants the application for the notice.’

59. The language may be easier understood with ‘liability notice’ perhaps meaning ‘liability order’ and so ‘application for the notice’ perhaps meaning the ‘summons for the liability order’.

60. Whether the ratepayer was unaware of the proceedings, or not, will be a question of fact for the Court to make a finding on. The Court will not know of the ratepayer’s lack of awareness when it made the liability order, just that the ratepayer was not at Court, so any liability order will be made by the Court in ignorance of that fact.

61. An observation can be made that this construction is rather at odds with the typical purpose of service. Usually, once a method of service is proved to have been used, an irrebuttably[11]presumption arises that the served document was received by the intended recipient. This difficulty was raised and considered in The Queen on the Application of London Borough of Newham v Stratford Magistrates Court v Selwyn Dublin [2008] EWHC 125 (Admin) (‘Newham’). There the Court took the view that the rules of service of the summons created a least a presumption that the summons will thereby have been received by the intended recipient. However, because non-receipt of the summons, if found as a fact, could not logically be distinguished from non-attendance at a hearing because of a traffic accident (which could qualify as a procedural mishap), the Court could not see why non-receipt of the notice of the hearing might not also qualify as a procedural mishap. Accordingly, where valid service is established, it is still open to the ratepayer to rebut the presumption that he thereby received the document – he can rebut the presumption by presenting evidence that he in fact did not received it.

Justices lacking knowledge when making Liability Order – Application

62. In Pleroma the justices had made a liability order in ignorance of the fact that the ratepayer’s solicitors had made a prior written request to the Court for an adjournment (only the Court clerk was aware). Upon the justices being informed of their mistake, the justices relisted the matter and set aside the liability orders. In Hamdan, this lack of awareness of the request for an adjournment was defined as a ‘substantial procedural defect’.

Procedural error, defect or mishap resulted in the liability order made

63. This is a question of cause and effect. The identified procedural mishap must have come before, rather than after, the liability order was made.

64. A Notice of Liability Order is produced after a liability order is made. Should that Notice of Liability Order contain an error, arguments can be put both ways on whether that is, or is not, a qualifying procedural error. An error arising in the recording of the liability order, can be said to arise after the liability order was made. The liability order did not arise as a result of the procedural mishap. Conversely, the error may be evidence, that prior to the liability order, an error had been made.

Condition 3: Prompt Application

65. An otherwise meritorious application to set aside a liability order can lost if it is not made sufficiently promptly. In essence, the law requires that those made subject to a liability order, do not ‘sit on their hands’, but requires them to be proactive and make the application swiftly after they learn or gain notice that an order exists against them, or that there may be an order that exists against them.

66. Two points in time must be established in order to assess whether the application to set aside has been made promptly.

a. The date when the application to set aside is made (the ‘end date’).

b. The date when time began to run against the ratepayer (the ‘start date’).

The End date 

67. This should rarely attract much controversy. The ‘end date’ is the date of the application to the Clerk of Magistrates’ Court to set aside - the date of the letter. This is the formal commencement of proceedings; nothing less than the actual formal commencement of such proceedings will be sufficient. For instance, writing to the Billing Authority complaining about and/or raising objection to the liability orders will not do. It is not enough simply to dispute or put the matter in issue with the Billing Authority.

68. The Billing Authority bears no obligation to commence set aside proceedings. Dove J in Sleekmade Property Company Ltd v Sheffield City Council [2015] EWHC 4193 (‘Sleekmade’) stated at paragraph 30 that responsibility for commencing those proceedings ‘rests fully, fairly and squarely with the rate payer…’.

The Start date

69. The start date is the date when ‘the defendant learns that it [the order] has been made or has notice that any order may have been made’. When this actually is, is complicated and tends to lead to disputes because the moment when sufficient knowledge was gained by the ratepayer for this Condition, can be difficult to pinpoint.

70. Where there is more than one liability order, and particularly when the liability orders were made on different dates, the process of ascertain the start date, requires that the Court adopt a differentiating approach to each liability order. In other words, each liability order (or set of liability orders) must be treated separately. They should not be bundled together as if one liability order. The need for this differentiating approach was emphasised in Sleekmade, at paragraph 29:

‘…there does not appear to be any differentiated consideration of the circumstances pertaining to each of the different orders. The tests which are set out in Hamden need to be applied carefully in relation to each order that has been made. It is apparent that the District Judge dealt with all of the orders based on her contention that there had been a failure to act with urgency and diligence and a failure to communicate the change of address. She concluded that those criticisms could apply to the question of promptness, in respect of all of the orders irrespective of the dates upon which they had made, the property to which they pertained and the circumstances in which each of the orders had been granted. By contrast the test which is required by Hamden is that the application must be “made promptly after the defendant learns that it [the order] has been made or has notice that any order may have been made.”

71. The start date triggers center around knowledge of the order itself – the 2 triggers are either where the ratepayer:

a. learns that the order has been made (‘direct knowledge’); or

b. has notice that an order may have been made (‘indirect knowledge’).

72. I have labeled these two limbs, direct knowledge and indirect knowledge.

73. The law deems that upon the ratepayer gaining either start date knowledge (whether direct knowledge or indirect knowledge), the ratepayer has enough knowledge about his predicament, such that he ought to realize: (a) the seriousness of his position – that a final judgment on the Billing Authority’s claim has been made against him, or at least that there is a sufficient risk that one has been made; and (b) that only by him taking proactive steps to: (1) discover whether in fact an order has been made against him (should he not know that an order exists); and bring the matter back before a subsequent Court, with reasonable expedition, can he expect a Court to consider displacing the order or orders in force against him. The rationale for time not running before this date was stated in Sleekmade - the Court said at paragraph 34:

‘To put the matter crudely they could not apply to set aside orders which they knew nothing about and which in reality they had no sensible justification to know may have been made…’

Direct Knowledge - Learns that the order has been made

74. A ratepayer can learn of the existence of the order by actually receiving a copy of the Notice of Liability Order, or being informed of its existence from a credible source (for instance).

75. Knowledge of the order can be conveyed to the ratepayer through post-liability order correspondence from the Billing Authority. The letters and/or emails from the Billing Authority need to be subject to close scrutiny to see whether the existence of liability orders was expressly conveyed.

Indirect Knowledge - Has notice that an order may have been made

76. By definition, this limb applies where the ratepayer does not know of the liability order itself. Satisfaction of this limb will arise however when the ratepayer has knowledge of certain facts, and those facts are sufficiently indicative of a liability order having been made against him, or at least, may have been made against him.

77. The Court in Hamdan gave a typical example at paragraph 33:

A defendant who knows of the issue of a summons, and therefore should appreciate that there may have been an order made on the return day, but makes no enquiry as to whether an order has been made against him, will not in general be entitled to set aside the order simply because some time later the local authority takes further steps to enforce the order.'

78. Given that in the normal course of events, a liability order will be made on the return date (i.e. the first hearing), knowing of proceedings and that the return date has passed, will be sufficiently indicative facts to found the conclusion that an order may have been made against him on that date.

79. As with direct knowledge, indicative facts can have been conveyed to the ratepayer during correspondence with the Billing Authority. This time, correspondence exchanged both before and after the liability order can be relevant.

80. A fertile ground for argument arises with such exchanges of correspondence; where:

a. The language used throughout was ambiguous or vague, alluding merely to the existence of a debt or outstanding sums (for instance) but without indicating clearly that proceedings were on foot or that debt had been formal recognized by a Court and made into a liability order. The Court will need to assess whether certain phrases used in correspondence indicated that formal Court proceedings existed and/or what stage things had reached, or whether nothing disclosed indicated anything beyond pre-action assertions.

b. Later correspondence was unequivocal, however the Billing Authority wish to argue that promptness is to be judged from an earlier start date (with promptness consequently harder to establish). Earlier correspondence will be assessed to see whether, and when, sufficient clarity was reached to fulfill limb 2 (whether it was post-order, mid proceedings, or pre-action).

81. Ratepayer knowledge about impending enforcement, may lead to this limb 2 being satisfied. In Chuckwu, the question arose whether correspondence between the Billing Authority and the ratepayer in January 2013 contained sufficient information to trigger the start date for purposes of the Condition 3. The relevant correspondence did not say expressly “We have obtained a liability order” so the question turned on limb 2, and somewhat equivocal phrases used in the correspondence.

82. On the basis that the correspondence from the Billing Authority:

1. stated that the arrears would be passed on to ‘our contract bailiffs’; and

2. had to be read in light of previous correspondence with the ratepayer in 2011 whereby the Billing Authority had agreed to withdraw a previously issued summons;

the Court held at paragraph 20 that:

‘that is sufficient to put him on notice that they have obtained some right to enforce the claim for rates by way of sending in bailiffs.’

83. Consequently, he was ‘…on notice that an order may have been made…’; time began to run in Chuckwu from January 2013. It did not matter that ‘…he had not received a copy of the order or been informed that an order had in express terms been made.’ (paragraph 21).

84. In Sleekmade, the argument was run that later liability orders start date began immediately because of an existing dispute on earlier liability. The foundation for this argument was that:

‘…since they are the same property as in the earlier orders, owned by the same owner, namely the appellant who has been subject to the same failure to pay rates, the appellant can be taken to have failed to have applied promptly to have those orders set aside in effect by implication….that the appellant knew that the subject of rates at those properties was a topic which was in live dispute between them and the respondents, and further, had they disputed those orders at the time when they should have been done, namely in a matter of days or at most weeks…, then they would have known about those orders or should have done, because the appellant and the respondent would have been engaged in active litigation.’

85. Dismissing such a wide construction of ‘notice that an order may have been made’ the Court said at paragraph 34:

‘The observations which were made at paragraph 33 of Hamden are not, in my judgment, necessarily designed to capture in effect prospectively future orders when the rate payer and rating authority are in dispute about earlier orders in respect of the same property. These subsequent orders relate to different periods of liability, in respect of which different factual considerations may very well arise as to whether or not liability exists.’

86. The Court went on to dismiss a similar argument, that start date notice should be taken to have been received for one property, merely from the fact that there was a live dispute about Business Rates about other properties ‘…on the same industrial estate…’ (paragraph 35).

Very old liability orders

87. The older the liability orders, the greater the requirement for a prompt application to set them aside. In Newham, the liability orders were between 5 and 2.5 years old. The Court said at paragraph 20 that there was ‘an important principle that runs independently of the defendant’s knowledge of orders, namely the finality of litigation’ and that:

'Obviously, with orders that were so old the obligation on the defendant, if he wanted to persuade the court successfully to set them aside, was to move particularly swiftly.’

Assessing whether the application was made sufficiently promptly

88. The predominate guidance[12] on assessing promptness is an observation made in Hamdan, at paragraph 33:

‘In this context, where the defendant is not required to do more than to write a letter stating why he seeks to re-open the decision to make a liability order, promptness normally requires action within days or at most a very few weeks, not months, and certainly not as much as a year.’

89. The crucial phrase ‘within days or at most a very few weeks, not months, and certainly not as much as a year ‘ has been adopted and applied in all the main cases. While undoubtedly applicable to assessing promptness, the following observations can be made:

a.The test is and remains promptness; this statement is a gloss on that test;

b. The word ‘normally’ is apt; the converse to ‘normally’ is presumably exceptional circumstances - which would justify departure from this guidance;

c. Words in a judgment should not be elevated to the status of a test set down in an Act of Parliament (see Merabello [1973] Ch 75, where Megarry J said, at 91, 'Words in a judgment must be construed in relation to the subject-matter of the case in question, and not as if they were Acts of Parliament.'). The common law discourages an unduly dogmatic and inflexible approach to phrases used in judgments. The perceived mischief which the Condition is designed to meet, must always be kept in mind.

90. By way of illustrative example:

a. in Sangha, a finding that an ratepayer was not sufficiently prompt following a delay of 16.5 months (3.9.04 to 23.1.06), was overturned in the High Court;

b. in Chuckwu, the High Court held that a finding that the ratepayer had not acted sufficiently promptly following a delay of 15-16 months (23 January 2013 to May 2014), was not susceptible to challenge (paragraph 21);

c. in Sleekmade, delay of 15 months (6.11.12. to 18.2.14) was held by the High Court to be ‘not … remotely prompt.’ 

d. in the unreported case of Hussain v Tower Hamlets LBC, dated 2.11.16, DDJ (MC) M Studdert, held 5 months delay was not prompt.

e. In Thaker v Tameside MBC [2011] EWHC 2354 (Admin); [2012] R.V.R. 36, Langstaff J said at paragraph 13 about a delay of 7 months: 

‘On the same basis it follows that he had had …ample time to find out what the magistrates had decided and did not apply promptly to set the matter aside. Promptness is critical in all cases involving public administration. This is no less the case where rating is concerned and it seems to me there was ample justification for the judge to come to that conclusion. It would have been difficult to come to any other conclusion in respect of a delay of over seven months.’

91. As will be apparent, the 3 High Court examples are rather clustered around the 15-16 month mark, and so merely show that this level of delay has been repeatedly considered insufficiently prompt. Regrettably, they don’t provide a well spaced out array of time periods from which to draw guidance. In time more examples will be reported, but for now, the authorities are not as helpful as they could be.

92. The Billing Authority’s own tardiness is not relevant. Promptness is not about comparing one party’s diligence and swiftness against another, or a question of comparing culpabilities. Arguments by the ratepayer in Sangha that the Billing Authority were (also) ‘guilty of delay’ in perusing unpaid Business Rates, did not get much traction (paragraph 25).

The rationale behind promptness

93. All challenges to administrative and judicial decisions have imposed upon them, some time limit element. The rational behind inserting a test of promptness, was considered in Sangha paragraph 38:

'There is the potential for a lot of prejudice here on behalf of the local authority. The reason why claimants have to move swiftly is that local authorities are put in a difficult position in producing evidence to show who was in occupation at particular times and when, and contradicting claimants' cases or ratepayers' cases that they were not in occupation at the material time. The law requires that people move swiftly so that these issues can be resolved rapidly and without prejudice to the local authority’

94. In Newham, the Court said at paragraph 22:

‘It is common knowledge that any organisation can only keep its records for a limited period. It is common knowledge that witnesses' recollections of events are going to fade with time.'

Need to investigate extent of prejudice to Billing Authority

95. In Newham, the 1st instance DJ was criticized at paragraph 22 for having assumed, without investigation,‘the local authority would still have all the evidence relevant to the questions that were going to be investigated at that hearing, notwithstanding the passage of such long periods of time’, and for concluding that the local authority would not be prejudiced by the setting aside of the liability orders and would not be prejudiced at the future hearing on the original summonses. The DJ should have investigated ‘[t]he possible difficulties which the local authority might have had in assembling or recovering, or being unable to recover, its records of evidence for that hearing…’ The extent of the prejudice to the local authority was an important matter and should have been investigated and not assumed (for instance, it was not known exactly over what period did the local authority ‘…clear the decks, as it were, of old materials and old evidence in their possession’, nor whether live evidence would be extensive or limited).

Entitlement to set aside even where Billing Authority promise not to enforcement

96. Where a Billing Authority, facing an application to set aside a liability order, concedes that the ratepayer is not liable, then the most appropriate way forward is for the application to set aside to continue, with the Billing Authority offering no resistance to the Court setting aside the liability orders. A Billing Authority taking that position, does not render the application to set aside the liability order unnecessary and academic. The subject of a liability order is entitled to demand that the liability order is set aside, whatever the Billing Authority says about whether it will enforce the liability order.

97. In R (on the application of Tull) v Camberwell Green Magistrates Court [2004] EWHC 2780, Mitting J dismissed an argument that liability orders could be left despite an application to set them aside, on the basis that they were rendered academic by a Billing Authority’s statement that it would not enforce them. He said at paragraph 33 and 34:

'33…Liability orders are, in effect, civil orders for payment by a court. They can ultimately be enforced by a sanction of imprisonment if unpaid, and by various other methods of enforcement before that ultimate step is reached. No citizen should be made the subject of orders to which, if they had been properly informed at the time, they would have objected and would have objected successfully…

34. In my view, a citizen is entitled, subject to the usual Administrative Court requirements as to promptitude and openness, to have set aside civil orders, such as liability orders, which adversely effect them, even though the person who has obtained the benefit of the order, the council, is willing to waive enforcement of them. I therefore make the order sought and quash the three liability orders.’

The Hearing

98. An application to set aside an order is an interim application. In the CPR arena, it is unusual to have oral evidence being given at an interim application hearing. Indeed it is discouraged[13]. Within the CPR arena, interim applications are typically dealt with by submissions on the written evidence provided in support, and in resistance, to the application. However, in the Magistrates’ Court, with liability order set aside applications, this reluctance to receive oral evidence is relaxed. Where all essential facts have been definitely established as not in dispute, oral evidence may be unnecessary. In Jones, the Court said at paragraph 7:

‘There may be cases where the essential facts are not in dispute where evidence of this nature is not required, but the court would need to be sure that there is true agreement on all the material facts before proceeding without hearing evidence.'

99. Conversely, at paragraph 10:

‘…a contested crucial issue of fact that may depend upon the credibility and reliability of witnesses cannot be dealt with simply on the basis of argument’

100. Contested issues of fact are adjudicated upon only after there has been an opportunity for cross-examination of any oral evidence adduced. The Billing Authority must put its factual contentions to the ratepayer should he call himself to give oral evidence. As stated in Jones, it would be unfair to the ratepayer to have findings made ‘without that matter being put fairly and squarely to him so that he has an opportunity to deal with it.'

Should the application to set aside the liability orders be successful

101. Where the application is granted, the Court will set aside the relevant liability orders. The Court should then give directions in the normal way, with a view to holding a contested hearing/trial on the application for the liability orders.

102. Facts found when adjudicating on the application to set aside, an interim hearing application, will have been tentative or provisional conclusions on all the admissible evidence[14]. Statements of the law within the application to set aside judgment are not likely to be treated as determining a preliminary point of law. The determination will just be in terms of arguability. The outcome of the application will not be designed to be conclusive on the issue[15].

Costs orders after a decision is made on the application to set aside the liability order

103. The statutory basis empowering the Magistrates' Court to make costs orders is section 64 of the Magistrates’ Court Act 1980[16]. That section is entitled ‘Power to award costs and enforcement of costs’ and provides:

‘(1) On the hearing of a complaint, a magistrates' court shall have power in its discretion to make such order as to costs—

(a) on making the order for which the complaint is made, to be paid by the defendant to the complainant;

(b) on dismissing the complaint, to be paid by the complainant to the defendant, 

as it thinks just and reasonable; but if the complaint is for an order for the variation of an order for the periodic payment of money, or for the enforcement of such an order, the court may, whatever adjudication it makes, order either party to pay the whole or any part of the other's costs.

(2) The amount of any sum ordered to be paid under subsection (1) shall be specified in the order, or order of dismissal, as the case may be.

(3) Costs ordered to be paid under this section shall be enforceable as a civil debt.

(5) The preceding provisions of this section shall have effect subject to any other Act enabling a magistrates' court to order a successful party to pay the other party's costs.’

104. The application to set aside a liability order should be considered within the ‘hearing of a complaint’, and so the provision is engaged. Unlike in the ordinary civil courts governed by the CPR, where there is a wide discretion granted to the Magistrates' Court on costs orders, Parliament has elected to restrict the occasions when costs orders can be made by the Magistrates’ Court, and further, has limited the direction the costs orders can be made in on those occasions (i.e. in favour of the complainant and against the defendant, or vice versa).

105. The question of whether the Magistrates' Court has jurisdiction to make a costs order has recently been considered by Cockerill J in R.(Khan) v Feltham Magistrates Court [2017] EWHC 3042. Readers are recommended to read this important decision in full. In essence, Cockerill J holds that an application to set aside a liability order is part of the wider, original 'complaint' brought by the billing authority, or the application itself is a 'complaint'. Either way, the Court has the statutory power to make costs order upon determination of the application to set aside the liability order.  

106. As to whether costs normally follow the event (i.e. whoever succeeds on the application (pursuing it or resisting it) is granted an order that the other party should pay their costs), this rule applies differently depending on which party is successful. 

Where the billing authority succeeds in resisting the application to set aside the liability order

In R (Broxbourne Borough Council) v North and East Hertfordshire Magistrates' Court v Geoffrey Oliver [2009] EWHC 695 (Admin), Munby J said at paragraphs 98 to 100, that 'the Justices were given an erroneous direction in law when they were advised, in terms, that “costs usually followed the event in these cases.”' Arguably however, this comment was obiter (see paragraph 84). The Court may take costs follow the event into account as an ordinary rule. In Thaker v Tameside Metropolitan Borough Council [2011] EWHC 2354 (Admin); [2012] R.V.R. 36, Langstaff J said at paragraph 24 about the DJ's approach:

'He took into account the principle that the loser pays. In civil proceedings that is the general rule. Here there is no obvious reason, as it appears to me, why the ordinary rule should not have applied.'

On quantum of recoverable costs, after quoting s.64, Langstaff J said in Thaker, at paragraph 21 that 'that gives a wide discretion to the court.

Where the application to set aside the liability order is successful 

Here the liability order is set aside, and the main complaint/summons is revived against the defendant/ratepayer. When considering whether to award any costs to the successful defendant/ratepayer and, if so how much as 'just and reasonable', the Magistrates Court will take into account that the billing authority is a public body and so the principles17 set down Bradford Metropolitan District Council v Booth (2000) 164 JP 485 at 490, R (Cambridge City Council) v Alex Nesting Ltd [2006] EWHC 1374 (Admin), (2006) 170 JP 539, at paragraph 11 and Silber J in Patel v Camden LBC [2013] EWHC 2459 will apply. 

Cost Schedules 

106. The High Court in Thaker held that while there is no statutory requirement that a party seeking costs must produce a costs schedule for the justices (the author interjects, for instance, on CPR Form N260), it is, Langstaff J said, as a matter of practice, to be commended, and that it would normally be expected. 

Challenging a dismissal of the application

107. A decision by the justices to refuse the application is itself challengeable.

108. In Hamdan, the issue arose whether the most appropriate method of challenging a refusal, was by way of judicial review, or appeal by way of Case Stated (under s111 of the Magistrates Court 1980) to the High Court. The Court in Hamdan said at paragraph 23:

‘I …have no doubt that appropriate procedure to challenge the decision of the justices….was to appeal by way of case stated.’

109. The Court went on to explain why Case Stated is the more appropriate method (and why judicial review was not; Hamdan is a case where the challenge was made by judicial review):

‘This is the normal procedure for challenging errors of law by justices. It has a number of advantages, not the least of which is that the discipline of a case stated normally ensures that the High Court has before it a statement by the justices of the issues they had to decide, the evidence before them, their findings of fact and the reasons for their decision. If the case stated is defective (because, for example, the justices' statement of their findings of fact is ambiguous), it may be remitted to them for amendment: see the Practice Direction to Part 52 at 52PD.76. The reasons of the justices in the present case are relatively informal, and do not include what I would expect to see in a case stated. Furthermore, in an appeal by way of case stated, this Court is able to make any order that the lower court might have made: see CPR Part 52.10 (1). The powers of this court on judicial review are more limited: it can quash the lower court's order and order it to make another order only if that other order is the only one properly open to it.’

110. Where judicial review proceedings are brought instead:

‘The High Court may refuse relief in judicial review proceedings on the ground that proceedings by way of case stated were appropriate, but the bar is discretionary, not mandatory.'

111. Where judicial review proceedings are brought, ‘unless prejudice is caused to a party, or there is some other good reason to refuse to permit a party to proceed by way of judicial review…in my judgment the Court should be reluctant to cause a good claim to be defeated by an error as to the form of the proceedings.'

112. It is noteworthy though that ’Judicial review proceedings are most appropriate where it is alleged that there has been a procedural impropriety on the part of the justices’. In the case of Pall Mall Investments Ltd v Leeds City Council [2013] EWHC 3307 (Admin) [2013] RVR 330, Judge Roger Kaye QC maintained this enclave for judicial review where the justices dealt with the case 'unfairly or improperly' (paragraph 43), as distinct from 'challenging errors of law'. The Court in Pall Mallapproved Collins J in R (on the application of) P v Liverpool City Magistrates [2006] EWHC 887 (Admin), where he said:

'6...I recognise that there are some conflicting authorities, which do not make it necessarily easy to decide whether judicial review or case stated is appropriate in the circumstances of a given case. Judicial review is obviously more appropriate where, for example, there is an issue of fact which may have to be raised and decided and which the Justices cannot have decided for themselves.

7. Those rather cryptic observations are intended to relate to a situation where it is alleged that there has been unfairness in the way that the Justices conducted the case, obviously where for example it is suggested that there was bias in the manner in which they conducted themselves, or the defendant in question was prevented from properly putting his or her case, or the Clerk to the Justices interfered in a way in which he should not have interfered.

8. There are cases in the books of judicial review which cover that sort of situation. Generally speaking, where it is alleged that Justices have misdirected themselves or got the law wrong in their approach to a decision, case stated is the appropriate way of dealing with it. Generally speaking a failure to go by way of case stated in such a situation is likely to result in a refusal of permission for judicial review on the basis that it is the wrong way of dealing with it.'

113. A challenge by way of Case Stated must be made within 21 days of the decision. Any right of appeal ceases upon a Case Stated application being made. The challenge is that the justices were wrong in law or acted in excess of jurisdiction. The Judge in The Queen on the Application of Tallington Lake Limited v Grantham Magistrates Court [2010] EWHC 3403 (Admin) explained Case Stated, as follows, at paragraphs 21-24:

21. This is an appeal by way of case stated under section 111 of the Magistrates' Courts Act 1980. Under that provision, the power of this court is to consider whether the Magistrates' Court was wrong in law or exceeded its jurisdiction. However, it is well-established that it is an error of law for the magistrates to reach a perverse conclusion on the evidence.

22. As it is put in Blackstone's Criminal Practice 2011 at paragraph D28.14:

"The remedy [of case stated] operates only in relation to an error of law or a decision taken in excess of jurisdiction. A decision as to a question of fact will ordinarily not give rise to an appeal by way of case stated but may do so if the finding of fact is alleged to be such that no reasonable bench could have properly reached that factual conclusion on this evidence."

And it cites the case of Bracegirdle v Oxley [1947] KB 349.

23. So I remind myself that my task is to decide whether the deputy district judge made an error of law, or reached a conclusion of fact which no reasonable district judge could have reached on the evidence or reached a conclusion which is perverse.

24. It is no part of my task to enter upon analysis of the findings of fact in any other way, for example by balancing the weight of different evidence received.

The application to Case State, is to the justices who composed the Court that refused the application to set aside, and it is for them to state a case for the opinion of the High Court on the question of law or jurisdiction involved. The justices can refuse the application if they are of the opinion that the application is frivolous. However, this refusal can itself be challenged in the High Court, with the prospect of the justices being ordered to produce the Case Stated, if the High Court deems that one should be produced. The High Court receives the Case Stated, which comprises the set of facts the justices found. The High Court then expresses its opinion on any questions of law arising from those facts. On a Case Stated, it is not the role of the High Court to rehear the evidence or form its own view as to what the facts are. The role of the High Court is to decide whether on the facts found by the justices and the evidence before the justices their conclusions were sound in law.

114. Where the question posed in the Case Stated cannot be answered by the High Court, one way or another on the stated facts, the High Court may remit the case back down to the justices, with directions that they should, for instance, hear evidence on an issue, in light any guidance in the judgment, and then decide the relevant issue (see Chowdbury paragraph 33).

BEYOND THE SCOPE OF THIS PAPER

It is never possible to cover all aspects of a particular topic in one paper. In particular, this article cannot feasibly cover all the possible types of occupation that can arise. For instance, complicated issues arise around unincorporated associations, office-holders, receivers, mortgagors in possession, holiday homes etc. Readers are advised to refer to the books in the ‘Further Reading’ section for further guidance.

FURTHER READING

1 - Encyclopedia of Rating and Local Taxation

Looseleaf Annual Subscription

Sweet and Maxwell

ISBN 9780421408005

Sweet & Maxwell Ltd

 

2- Ryde on Rating and the Council Tax

Looseleaf

Edited by: Guy Roots, Richard Glover

ISBN 9780406998279

LexisNexis Butterworths

 

SIMON HILL © 2016

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] See Chowdbury v Westminster City Council [2013] EWHC 1921, where Aikens LJ gives an overview on the process of obtaining a liability order:

6…The Regulations for the collection and enforcement of business rates are to be found in the Non-Domestic Rating (Collection and Enforcement)(Local Lists) Regulations 1989 (“the Regulations”). These have been amended from time to time, both before and after 2010…

7 Under Part II of the Regulations, the local rating authority, known as “the billing authority”, will serve on a “ratepayer” a “demand notice” for the business rates payable in respect of a particular “heraditament”. Part III of the Regulations deals with enforcement if non-domestic rates are not paid by the ratepayer. Broadly, under Regulation 11 a billing authority has to serve on the person who is liable to pay the non-domestic rates a “reminder notice”. Then, under Regulation 12 , if the non-domestic rates are not paid in the 7 days following service of a reminder notice, the billing authority may apply to a Magistrates' Court for an order against “the person by whom” the amount due is payable. This order is known as a “liability order”.

8 Regulation 12(2) and 12(5) provide:

“(2) The application is to be instituted by making complaint to a justice of the peace, and requesting the issue of a summons directed to that person to appear before the court to show why he has not paid the sum which is outstanding.

(5) The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid.”

Regulations prescribe how the ratepayer can be served with the summons. Regulation 13(2A) stipulates that no liability order shall be made pursuant to a summons issued under Regulation 12(2) unless 14 days has elapsed since the day on which the summons was served. It is therefore clear that service of the summons is a prerequisite to obtaining a liability order.

The Court of Appeal in R (on the application of Mathialagan) v Southwark LBC [2004] EWCA Civ 1689, set out the 'normal procedure' (at least in 2004), at paragraph 20:

The normal procedure is as follows:-

i. The local authority is represented by the same person on each occasion. That person is not legally qualified but has been trained and has shadowed an experienced advocate. A typical hearing at the beginning of the financial year is concerned with up to 1,000 summonses. As the year progresses, and liability orders are made or debts discharged, the number of cases to be heard on each occasion diminishes significantly.

ii. The documents described below are prepared in advance of each hearing and accompany the local authority representative to court.

iii. There is the complaint which is computer-generated by the local authority, a copy of which is faxed to the court and returned by fax.

iv. There is a declaration that the relevant summons has been posted and the proof of posting itself.

v. There is then a very extensive court list which is prepared by the local authority and which is handed to the district judge or lay bench (each member of a lay bench receives a copy). A copy is also provided to the court clerk. The procedure is that the magistrate will make a manuscript endorsement on the right-hand of the list in respect of any case which does not result in a liability order being made that day or which carries any additional orders. For example, where a case is adjourned, the adjournment is endorsed or where a costs order which is less or more than the standard costs order of £100 is made, a specific endorsement is made.

vi. In a simple case, where a debtor does not attend, there has been no communication by the debtor and standard costs are awarded on the summons, the magistrate will make no endorsement. The right-hand of the list will remain blank.

vii. At the conclusion of the hearing, the bench members or district judge will return the list or lists to the local authority representative who will then telephone Liberata plc in order to confirm the outcome of each case which did not result in a standard liability order. For all cases where a standard liability order was made, a notification of liability will be automatically computer-generated and despatched by post that night (see pp. 35 and 36 of the appeal bundle). In all other cases, a letter will be drafted and sent to the debtor (see pp. 139 and 140 of the appeal bundle).

viii. The court list is then returned to the offices of Liberata plc and archived.

ix. The court list which is in the possession of the court clerk is endorsed in manuscript during the hearing by the clerk and is retained by the court and archived.

x. There is also an evidence list. This document summarises the dealings between the local authority and each debtor.

xi. There is further an extract from the valuation list which is a large compendium of all business rate valuations for properties in the borough. The extract will show the subject premises.

xii. There is a declaration of authority. In addition, the local authority representative is sworn at the commencement of each hearing, and there is a further form of authority which is recited in addition to the oath being given.

xiii. There is then signed by the district judge or magistrate at the conclusion of the hearing, a form of order in favour of LBS, but for the purpose of authorising a bailiff a liability order is drawn. This document is generated by the local authority's computer but is not sent to the debtor. It is only printed if a decision has been taken to instruct the bailiff and is used solely for the purpose of confirming to the bailiff that he has authority to act. It is printed off the local authority's computer system without any further reference.

The Court of Appeal then went on to criticise the blurred boundaries between Court and Billing Authority activities, at paragraph 21(ii):

ii) I find it very surprising that the only document with a court stamp (under xiii) is not produced by the court, but is created automatically by the local authority's software, even though the local authority is a party to the proceedings. (The example before us adds, under the court stamp, the words "Justice of the Peace for the area aforesaid (or by order of the Court Clerk of the Court)". The intended significance of these words is not clear to me.) This document apparently is used only for the purpose of confirming to the bailiff that he has power to act. However, for that purpose the rules require no more than "the written authorisation of the authority" (Non-domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 r.14(5)). It seems both unnecessary, and wrong in principle, for it to be presented as though it had been stamped by the court. Nothing turns on this point in the present case, and we have not heard any submissions about it, but it seems to me an aspect of the procedure which merits reconsideration.

Blackburne J in Dias v London Borough of Havering [2011] EWHC 172 (Ch) said at paragraph 37 'it is true that the liability order procedure is of a relatively summary nature, but it still has the basic hallmarks of a judicial process, and it cannot in my judgment be stigmatised as inherently unfair.'

[2] See Non-Domestic Rating (Collection and Enforcement) (Local List) Regulations 1989, Part II Billing, paragraphs 3 to 11

[3] See Non-Domestic Rating (Collection and Enforcement) (Local List) Regulations 1989, Part II Billing, paragraph 12

[4] In R (on the application of Tull) v Camberwell Green Magistrates Court [2004] EWHC 2780, Mitting J said at paragraph 24-25: ‘These were civil proceedings, but they were civil proceedings to which no comprehensive code, such as the Civil Procedure Rules 1998, applied. Had the Civil Procedure Rules applied, then it would have been a simple matter to set aside the liability orders under CPR Part 13. Indeed, because the orders were not properly served upon the person against whom they were made, they would have been set aside as of right. Further, once the council had good reason to believe that they had not been served, it would have been obliged, under Part 13.5(2) itself to apply to have the orders set aside. Of course, the CPR did not apply to these proceedings.'

[5] A recent reaffirming of the 3 condition test can be found in Chuckwu v Redbridge LBC [2015] EWHC 2683 For an earlier explanatory/refashioning of the test, see London Borough of Tower Hamlets v Rahman [2012] EWHC 3428 (Admin), [2013] RA 147, where at paragraph 10, Kenneth Parker J said: 'As to the first element, it is not sufficient that a defendant disputes the existence of a liability to pay. There must be material before the magistrates that shows that there is a realistic prospect that the defendant could possibly succeed in setting aside the liability order and that it would therefore be potentially unjust not to reopen the issue of liability. As to the second element, it must be shown in most cases that the original liability order was either unlawful, made in excess of jurisdiction, made in ignorance of a significant fact concerning the procedure to be followed by the magistrates' court in making such an order, or where there is a substantial procedural error or defect. As to the third element, promptness normally requires action within days or at most a very few weeks: not months, and certainly not as much as a year (paragraph 33 of Hamdan ).'

[6] See Sleekmade Property Company Ltd v Sheffield City Council [2015] EWHC 4193, paragraph 14

[7] The concept of a shifting burden of proof under Ratford v Northavon District Council [1987] QB 357 does not apply to applications to set aside liability orders. Ratford applies only to obtaining the liability order in the first place – see Sleekmade Property Company Ltd v Sheffield City Council [2015] EWHC 4193, paragraph 26

[8] ‘(4) Regulations under s64(3) above may involve rules for ascertaining – (a) whether the different hereditaments or the one hereditaments (as the case may be) shall be treated as occupied or unoccupied; (b) who shall be treated as the owner or occupier of the different hereditaments or the one hereditament (as the case may be).

(5) A hereditament which is not in use shall be treated as unoccupied if (apart from this subsection) it would be treated as occupied by reason only of there being kept in or on the hereditament plant, machinery or equipment – (a) which was used in or on the hereditament which it was last in use, or (b) which is intended for use in or on the hereditament. 

(6) A hereditament shall be treated as unoccupied if (apart from this section) it would be treated as occupied by reason only of – (a) [parliamentary or local government election candidature] (b) [returning officer]

(7) [Returning officer]

(8) A right which is a hereditament by virtue of section 64(2) above shall be treated as occupied by the person for the time being entitled to the right. 

S64(2) is a ‘right to use any land for the purpose of exhibiting advertisements’

[9] See Civil Procedure Rules 6.9, 6.17, 6.20, 6.26, 6.29, 7.5 and 83.24(5)(c); s1139 of the Companies Act 2006; CCR Order 28, 2(2); RSC Order 115.17(1)

[10] Interestingly, limb (c) does not actually say ‘by post’ and so does not thereby benefit from s7 of the Interpretation Act 1978, which states that service “by post” is “deemed to be effected by properly addressing, prepaying, and posting a letter containing the document”. A phrase wide enough to include both ordinary and registered post. There is also not the s7 presumption of delivery, rebuttable by contrary evidence.

[11] CPR r.6.14 provides that, where service is by first class post or equivalent, the document is irrefutably deemed to have been served on the second business day after completion of the relevant step under r.7.5(1); Contrast with Interpretation Act s7, deeming provision, deeming the letter would be delivered “in the ordinary course of post” unless the contrary is proved. See further Marshall v Maggs [2006] EWCA Civ 20; [2006] 1 W.L.R. 1945, O’Hara v McDougal [2005] EWCA Civ 1623 and Lexi Holdings Plc v Luqman, October 22, 2007, unrep.

[12] Hamdan paragraph 33 also contains the following statement: 'If promptness were unnecessary, a defendant could circumvent the requirements of CPR Part 54.5 by applying to the justices for relief instead of to the Administrative Court.' which could be argued indicates that a maximum of 3 months should be applied. CPR r.54.6 sets down that for a judicial review claim form: (1) The claim form must be led— (a) promptly; and (b) in any event not later than 3 months after the grounds to make the claim first arose. However the problem with this argument is that it fails to keep separate the different functions of the separate devices for challenging a liability order: (1) Hamdan jurisdiction is there for when the ratepayer does not attend the hearing at which the liability order is made; he lost his chance to defending myself, and contends he ought to be given another chance; (2) appeal by way of case stated, is for when the substantive adjudication, or hearing procedure, went wrong; a hearing the ratepayer did attend (whether personally or through a legal representative); (3) Judicial review, is for when there is procedural impropriety on the part of the justices, but again, when the ratepayer attended.

[13] Canada Trust Co. v Stolzenberg (No.2)[2002] 1 AC 1, 13; [1998] 1 WLR 547, Waller LJ

[14] See Attock Cement Co. Ltd v Romanian Bank for Foreign Trade[1989] 1 All ER 1189 and Blackstone Civil Practice Commentaries 2016, para.32.29

[15] See Autofocus v Accident Exchange Ltd [2010] EWCA Civ 788, paragraph 20

[16] Section 64 of the Magistrates Court Act 1980 is the main section on costs generally. However, there is an additional provision contained in The Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 Reg 12, entitled ‘Application for liability order’, where Reg 12(5) and (6) read:

‘(5) The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid. 

(6) An order made pursuant to paragraph (5) shall be made in respect of an amount equal to the aggregate of– 
(a) the sum payable, and
(b) a sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order.’ 

(6)(b) seems to overlap with section 64. Reg.12(6)(b) will apply when the billing authority is seeking a liability order, and the Court must assess what is a reasonable sum incurred for costs by the billing authority, before adding that sum assessed, to the rates sum, in order to get the final liability order sum.

[17] Lord Bingham of Cornhill CJ in Bradford Metropolitan District Council v Booth (2000) 164 JP 485  at 490, sub voc City of Bradford Metropolitan District Council v Booth [2001] LLR 151 at 156, said

“I would accordingly hold that the proper approach to questions of this kind can for convenience be summarised is three propositions: 

(1) Section 64(1) confers a discretion upon a magistrates' court to make such order as to costs as it thinks just and reasonable. That provision applies both to the quantum of the costs (if any) to be paid, but also as to the party (if any) which should pay them.

(2) What the court will think just and reasonable will depend on all the relevant facts and circumstances of the case before the court. The court may think it just and reasonable that costs should follow the event, but need not think so in all cases covered by the subsection.

(3) Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of its public duty, the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant in the particular circumstances if an order for costs is not made in his favour; and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged.”

Toulson J said in R (Cambridge City Council) v Alex Nesting Ltd [2006] EWHC 1374 (Admin), (2006) 170 JP 539 , at paragraph 11:

'Although as a matter of strict law the power of the court in such circumstances to award costs is not confined to cases where the Local Authority acted unreasonably and in bad faith, the fact that the Local Authority has acted reasonably and in good faith in the discharge of its public function is plainly a most important factor.'