Business Rates – Actual Occupation and Preparing / Maintaining Hereditament for Contemplated Use

Author: Simon Hill
In: Bulletin Published: Wednesday 30 March 2022

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In determining whether someone with a physical presence on a hereditament is in rateable occupation for the purposes of national non-domestic rating (‘Business Rates’) under section 43(1) of the Local Government Finance Act 1988 (‘LGFA 1988’), it is necessary to determine whether that person satisfies the fourfold test set out in Laing & Sons v Kingswood AC [1949] 1 KB 344 ('Laing'), at 350[1]. That fourfold test is:

‘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.’[2]

These four ingredients in this fourfold test are cumulative. For a (legal or natural) person (or persons, if jointly[3]) to be in rateable occupation, all 4 ingredients will need to be satisfied. 

This article will look at a particular aspect to the first ingredient: actual occupation. The particular aspect is: whether a person with physical presence in a property/hereditament because they are preparing the property/hereditament for a particular intended/future use (i.e. from some old use to another; say, converting a shop into a takeaway or vice versa), is thereby in 'actual occupation' of it during that preparatory period. In other words, is there ‘actual occupation’ on a given day(s) through physical presence, whatever use the property/hereditament is being put to, or is there only ‘actual occupation’ by a person when that person is using the property/hereditament for its intended/future use?

Consideration will be given to the cases of: (1) Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813, HL(Scotland) (‘Arbuckle’); and briefly, (2) R. (on the application of Reeves (Valuation Officer)) v Valuation Tribunal for England [2015] R.A. 241('Reeves'); and (3) R. (on the application of Secretary of State for Health and Social Care (on behalf of Public Health England)) v Harlow DC [2021] 4 WLR 65 ('Harlow').

Importance of the Issue

Typically, this issue is of only modest importance. This is because, in many cases, the relevant person is likely to be liable for Business Rates anyway, just by a different route, if in law during the preparatory period there is no rateable occupation. This is because, though the person will not be liable for rateably occupied hereditament business rates, he will likely be liable as the 'owner' of a rateably unoccupied property/hereditament (under section 45 and 65(1) of the LGFA 1988) - since the person preparing/renovating a property/hereditament for its intended/future use will likely be doing so while holding a lease or freehold interest in the property/hereditament providing him with an immediate right to possession (and so rendering him likely to be the person ‘entitled to possession’ and so liable as 'owner').

But there are 2 areas where it makes a significant difference. Where the property/hereditament:

(1) still has some unoccupied/empty property relief time 'left' to be 'used' (out of the 3 or 6 months, as applicable). This can be 'used' during the preparatory period, reducing the business rates per day due, down to zero;

(2) would otherwise be entitled to ‘Expanded Retail Discount’ relief (available for the year 2020/2021)[4]), which if applicable, would reduce the business rates per day due, down to zero;

Arbuckle
Turning now to the case of Arbuckle, which, it can be said, is not the most straightforward authority to use.

Arbuckle - The Facts

In Arbuckle, the rating authority Greenock Corporation (‘Billing Authority’) sued Arbuckle Smith & Co. Ltd (‘Arbuckle’; or ‘alleged ratepayer’) for unpaid but allegedly due business rates, for the liability period Whit Sunday 1957 (9.6.57) to Whit Sunday 1958 (25.5.58). The claim for Business Rates against Arbuckle related to a certain warehouse (the ‘Warehouse’) the alleged ratepayer had purchased and entered on 1.3.57. Arbuckle had purchased the Warehouse with a view to using it as a bonded store for spirits. Warehouses storing bonded spirits required H.M. Customs and Excise approval. In order to gain such approval, H.M. Customs and Excise set down certain requirements in terms of security and alike. When purchased, the Warehouse did not meet those requirements and so, consequently, the Warehouse could not immediately be used by Arbuckle for storing bonded spirits:

(1) As Lord Reid said, at 823 ‘Before premises can be used for that purpose the requirements of H.M. Customs and Excise as to security must be satisfied.’ 

(2) H.M. Customs and Excise operated an approval process, involving both (i) a ‘Preliminary Approval’; and (ii) a ‘Provisional Approval’ stage. Only upon ‘Provisional Approval’ being issued, could a warehouse be used as a bonded spirits store. Viscount Kilmuir said, at 814:

‘It was an essential preliminary to the grant of provisional approval that certain alterations to the premises should be carried out in order to make them secure in accordance with Customs regulations.’ (the 'Alterations')

A timeline of events can be found in a footnote[5], but the main points are that:

(1) the Alterations:

(i) were commenced part way through the liabilty period

(ii) consisted of '...bricking up some windows and doors and fitting iron bars to some other windows' (Lord Reid, at 823);

(iii) were completed after the liabilty period ended; and

(2) the intended/future use to be made of the warehouse was clear throughout, from:

(i) the purpose of purchasing the Warehouse;

(ii) the applications for Preliminary Approval and Provisional Approval; and

(iii) the nature and purpose of the Alterations works, which were completed;

Arbuckle - Scottish Case but Law of England is the Same

Before considering the judgments, it should be noted that, although Arbuckle is a case on Scottish law, Lord Keith said, at 831:

‘I can detect no difference between the law of Scotland and the law of England in the principles that affect rateable occupation...'[6]

Consequently, Arbuckle is therefore also an authority on English law - notwithstanding the judgments contain references to provisions in Acts of Parliament that apply to Scotland only (for those interested, the statutory provision underlying the judgment are explained in the footnote[7]).

Arbuckle - The Judgments
Arbuckle reached the House of Lords, and 4 of the 5 law lords gave reasoned judgments.

Arbuckle - Viscount Kilmuir LC

Viscount Kilmuir LC gave the first judgment. At 821, he said referred to general observations made about 'actual' occupation, by Lord Patrick in the Court of Session (Inner House, Second Division)(the court below). Viscount Kilmuir LC said, at 821:

Lord Patrick thought that the word "actual" in section 379 (1) of the Act of 1947 had been used to make plain that the occupation which is necessary to make the occupier liable to pay rates is de facto occupation as opposed to de jure occupation, the kind of constructive occupation which might be held to flow from mere ownership of land. I am disposed to agree with him on this, and also when he says that for the purposes of the Act of 1947 an owner of land must have made some actual use of the premises in the relevant year before he can be called on to pay rates.'[8a]

Viscount Kilmuir LC then said, at 821:

'The crucial question, however, is what kind of use is contemplated or, in other words, whether it is sufficient to make alterations with the intention of carrying on a business when the alterations are completed.'

At 821, Viscount Kilmuir LC said 'I do not think it is….' , explaining, at 821-822:

'The sole purpose of [the alleged ratepayer] in acquiring the premises was to use them as a bonded store in connection with their business as warehousemen. The alterations were necessary in order that this purpose might, if the alterations were approved by the Customs and Excise, receive effect. Yet activity carried on in relation to premises, the sole object of which is to make the premises fit for the only use which is contemplated, does not amount to the kind of actual user as is essential to rateable occupation. So long as the activities were confined to making the premises fit for a contemplated purpose, the premises were not serving [alleged ratepayer’s] purposes as warehousemen. The premises were not being applied to the purpose for which they existed but were in an antecedent stage. It must be remembered that under rating law it is open to the owner to sterilise a property - whether by leaving a house without furniture or otherwise - which is perfectly capable of being let for a valuable rent. If, therefore, there is no use of premises according to their nature I find it difficult to see how there is occupation attracting liability for rates.'[8b]

Arbuckle - Lord Reid

Lord Reid gave the next judgment. Lord Reid considered the issue, but: (1) at times, referring only to 'occupation' rather than 'actual' occupation; and (2) at times, discusses it as whether just physical presense will be beneficial - seemingly, towards satisfaction of the third Laing ingredient). While a fuller passage is provided in a footnote[9], Lord Reid identifies an important distinction in the law, where he said, at 824:

'...I can see a clear distinction between maintaining, repairing or improving a fabric, on the one hand, and enjoying the accommodation which it provides, on the other. and I think hat (sic) it would accord with the ordinary use of language to say that the owner who in some way enjoys the accommodation is occupying the premises, but that the owner who merely maintains, repairs or improves his premises is not thereby occupying them: he is preparing for future occupation by himself, his tenant or his disponee.'

Arbuckle - Lord Radcliffe

Lord Radcliffe gave the third judgment. He formulated the question (rather inelegantly, one might say) as follows, at 828:

‘Has the person to be rated such use of the tenement as the nature of the tenement and of the business connected with it renders it reasonable to infer was fairly within his contemplation in taking or retaining it?’

Lord Radcliffe later put the question rather more simply, at 828, as:

'...whether the acts that were done in carrying out these works amounted to such a use of the hereditament as set up an occupation within the year.'

At 828, Lord Radcliffe answered: 'In my opinion, they did not', explaining, at 828-829[10]:

'Since language is not a precise instrument, it is possible to say that there was use of the premises in the circumstance that they were entered and subjected to the work of adaptation. I do not think, however, that it is this sort of user that is relevant when the court is considering whether a warehouse was in rateable occupation. There was no enjoyment of the value of the building as a warehouse. Indeed, I do not see how adaptation work differs in its significance from current repair or maintenance work carried out for the purpose of keeping the building safe against wind and weather. If all that was done to or in an empty building was that workmen went in to effect such current repairs, I should have thought it rather extravagant to suggest that it thereby became occupied in the rating sense.

Again, it is not, in my opinion, a correct, or, at any rate, a conclusive, test to determine whether an occupation was beneficial to inquire whether it suited the owner to have the work in question done or whether such work was to his advantage. Except in very special circumstances, it is to be assumed that it would be. But you could say as much about maintenance work. It prevents a loss of value to the owner just as adaptation or improvement should lead to an increment of value. These considerations, however, do not suffice to show that the occupation, assuming the acts to have amounted to such, was itself "a thing of value" during the year. Where there was no act of user of the warehouse for the business purpose for which it existed this requirement was not fulfilled.’

Arbuckle - Lord Keith

Lord Keith could not understand why the Court below had '...thought it necessary to consider whether the alterations that were made were beneficial, or of value, to the [alleged ratepayer].' (830) The question should always be: 'Was there such occupancy as would amount to enjoyment of the beneficial value of the subjects?' (831)[11]

Reeves

A recent authority that touched on this area, is R. (on the application of Reeves (Valuation Officer)) v Valuation Tribunal for England [2015] R.A. 241, though the case was directed to the rating of new buildings. In Reeves, Holgate J recognised the principle that where a building is being modified so that it may be used for a new purpose, it was not rateable. At paragraph 5, Holgate J said:

‘The general legal principle is that a building in the course of construction is treated as not constituting a hereditament for rating purposes because it cannot be occupied for its intended purpose ( Arbuckle Smith & Co Limited v Greenock Corporation [1960] AC 813). The same principle may also apply where a building cannot be occupied while it is being modified so that it may be used for a new purpose.'

Harlow

In R. (on the application of Secretary of State for Health and Social Care (on behalf of Public Health England)) v Harlow DC [2021] 4 WLR 65, Kerr J stated, in Annex A to his judgment:

'(9) It is not sufficient for occupation if the only use of the property is its upkeep and preservation or alterations in preparation for future occupied use.'[12]

Later in the same case, at paragraph 65, Kerr J said '...the purpose must go beyond upkeep and development of the property itself, as shown by the caretaker cases and the decision in Arbuckle.'

Kerr J considered whether certain items on the property, and contractor visits to the property, linked to maintenance and upkeep of a building, amounted to rateable occupation. Kerr J said, at paragraph 78:

‘The floor polishers and cleaning equipment are clearly for maintenance and upkeep of the property. It was common ground that contractors would come onto the site to maintain it. The upkeep and maintenance of a building does not amount to rateable occupation, as shown in cases such as Arbuckle. [Counsel for Harlow] rightly did not contend that PHE's contractors coming onto the site to maintain the building of itself amounted to PHE occupying the building.'

Kerr J then reaffirmed the proposition from Arbuckle that preparation for future exploitation of the property does not qualify as rateable occupation, Kerr J said, at paragraphs 79 and 80:

'As for the use of the boardroom for meetings, also featuring tea and coffee making facilities, the evidence … is that these were “held to discuss the future development and promotion of the site”; were “of frequency … no greater than would be reasonably be expected for a project of this size and complexity”; and that the building “was only used on an occasional basis by senior PHE staff for the purposes of promoting the development of the site”.

That is a use not amounting to rateable occupation; it is preparation for future exploitation of the property, as in the Arbuckle case. Operational use of the site as PHE's headquarters must require the building to be prepared and adapted first. Discussions and planning must precede whatever physical works need to be done. Holding those discussions in the building and serving tea or coffee during them does not make the use present rather than contemplated.’

In other words, there was no actual occupation because preparatory use of a property to get it ready for its main operational use, does not amount to qualifying actual occupation for the first JS Laing test/requirement. 

Conclusion

There is no rateable occupation where the ingredient of 'actual occupation' is missing. Not all physical presence is 'actual' occupation. Some kinds of physical presense are not of the right kind to amount to 'actual' occupation. One such kind of physical presense, which does not amount to the right kind of actual use (as is essential to rateable occupation), is where the sole object of the '...activity carried on in relation to premises...' is to '...make the premises fit for the only use which is contemplated, ' (Viscount Kilmuir LC in Arbuckle). During this 'antecedent stage', as Viscount Kilmuir LC described it, the property/hereditament is '...not being applied to the purpose for which they existed ' (Viscount Kilmuir LC), with the result that, there is no rateable occupation. Viscount Kilmuir LC said that where '...there is no use of premises according to their nature', it is '...difficult to see how there is occupation attracting liability for rates'.

Seemingly, this fits into a wider distinction drawn in Business Rates law, As Lord Reid put it in Arbuckle, there is a '...distinction between maintaining, repairing or improving a fabric, on the one hand, and enjoying the accommodation which it provides, on the other.' Consequently, '...the owner who in some way enjoys the accommodation is occupying the premises, but ... the owner who merely maintains, repairs or improves his premises is not thereby occupying them: he is preparing for future occupation by himself, his tenant or his disponee.' Lord Radcliffe in Arbuckle, drew essentially the same distinction, namely between:

(i) enjoyment (or beneficial use) of the value of the property/hereditament for its intended purpose/future use (an 'act of user of the [property/hereditament] for the business purpose for which it existed'). Here there will be rateable occupation (assuming the other Laing ingredients exist); as against:

(ii) activity/work on the property/hereditament which it suited the owner to have done/gained him an advantage, but during and from which 'There was no enjoyment of the value of the [property/hereditament] as a [intended purpose/future use].'[13]. Here there will be no rateable occupation.

Actual Occupation can exist where there is 'use present rather than contemplated' (Harlow - paragraph 80).

Note

Note, while not the focus of this article, there is a preceding stage to the analysis here - that of determining the nature and extent of the physical presense. This is a matter of fact. As stated by Eyre J in Queen Street Properties Ltd v Cardiff City and Council Council [2022] EWHC 39 (Admin), Eyre J, at paragraph 29: 'The question of actual occupation is a matter of fact which is to be determined in the light of the relevant factual circumstances.'

SIMON HILL © 2022

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] The case of John Laing & Sons Ltd v. Kingswood Area Assessment Committee [1948] 1 KB 344, precedes the Local Government Finance Act 1988 but the preceding law on occupation applies by virtue of section 65(2) of the Local Government Finance Act 1988. Because section 65(2) is subject to the rest of the provisions in section 65, section 65 is written out in full:

65.— Owners and occupiers.

(1) The owner of a hereditament or land is the person entitled to possession of it.

(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 sections 24 and 46A of that Act).

(3) Subsections (1) and (2) above shall have effect subject to [the following provisions of this section] 1 .

(4) Regulations under section 64(3) above may include rules for ascertaining—

(a) whether the different hereditaments or the one hereditament (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 when 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 subsection) it would be treated as occupied by reason only of—

(a) the use of it for the holding of public meetings in furtherance of a person's candidature at a parliamentary or local government election, or

(b) if it is a house, the use of a room in it by a returning officer for the purpose of taking the poll in a parliamentary or local government election.

(7) In subsection (6) above “returning officer” shall be construed in accordance with section 24 or 35 of the Representation of the People Act 1983 (as the case may be).

(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.

(8A) In a case where—

(a) land consisting of a hereditament is used (permanently or temporarily) for the exhibition of advertisements or for the erection of a structure used for the exhibition of advertisements,

(b) section 64(2) above does not apply, and

(c) apart from this subsection, the hereditament is not occupied, the hereditament shall be treated as occupied by the person permitting it to be so used or, if that person cannot be ascertained, its owner.'

[2] This was recently reaffirmed by the Supreme Court in Cardtronics UK Ltd v Sykes (Valuation Officers) [2020] UKSC 21; [2020] 1 WLR 2184, paragraph 13 (noted in Hurstwood Properties (A) Ltd v Rossendale BC [2021] UKSC 16, paragraph 21, who also said that 'The question whether property is occupied and, if so, who is the occupier for rating purposes is still largely governed by the common law rules: see section 65(2) of the 1988 Act'

[3] There can be 2 or more persons in rateable occupation at the same time and in relation to the same hereditament, they can only do this jointly. This will be where their legal right of occupation is a joint right.

Note, where there are:

(1)  rival claimants / rival contenders for rateable occupation of the whole of the hereditament - only 1 claimant/contender (i.e.1 person, or one set of persons holding jointly) can be in rateable occupation. Who that is will depend on who, of the rival claimants / rival contenders, is in paramount occupation and who is in subordinate occupation. The claimant/contender in paramount occupation (and not the claimant/contender in subordinate occupation), will satisfy the second Laing & Sons v Kingswood AC [1949] 1 KB 344 ingredient, namely the exclusive occupation ingredient (see below for more details)

(2) are parties having their own exclusive areas of the wider hereditament, it is likely the hereditament needs to be subdivided into smaller hereditaments. Prior to subdivision, there will not be any one person who is in rateable occupation of the whole hereditament (see Atos IT Services Ltd v Fylde BC [2020] EWHC 647 (QB))

To provide more detail on rateable occupation - joint vs rival claimants / rival contenders: A rateable ‘occupier’ can be more than one person (natural or legal) – if there is more than one, and their legal right of occupation is a joint right - they are joint rateable occupiers (or joint rateable occupants, if you will). However, 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) who is 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.’

See also, paragraph 71 of Rossendale. In Re Briant Colour Printing [1977] 1 WLR 942, Buckley LJ said, at 952-953:

‘There cannot, I think, be two occupiers for rating purposes at one time of one hereditament.’

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 v. The Southern Ry. Co. and W. H. Smith Son, Ld. and Others [1936] AC 511, 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.'

[4] Expanded Retail Discount relief was only available for property/hereditaments which were rateably occupied (including by reason of the special Expanded Retail Discount relief ‘treating’ provision - see below) between 1.4.20 to 31.3.21 (analysed on a day by day basis). If the property/hereditament was only in the preparatory period, the person undertaking the preparation/renovation works was not in 'actual occupation' and so not in rateable occupation. That person was therefore ineligible for the 100% discount off their Business Rates bill. For property/hereditaments which were in this preparatory period, when the first Covid 19 lockdown occurred (on 23.3.20 - 7 days before 1.4.20 12 month Expanded Retail Discount relief commenced), the lockdown may will have meant that they stayed in this preparatory period for months - which of course means that the property/hereditament was not ratealy occupied for months, and so was ineligble for the Expanded Retail Discount relief for months.

The special 'treating' provision would not have come to their assistance either. As dealt with in more detail below, in the scenario set out above, Covid-19 government lockdown/advice will have prevented the property/hereditament business from opening; as distinct from causing it to close. This was crucial. The treating provision only applies where the business was caused to close; it did not apply when the business was prevented from opening. 

To go into Expanded Retail Discount relief in more detail:

As readers may appreciate, some reliefs available for business rates are written into the statute - the LGFA 1988. For instance charitable relief for rateably occupied properties/hereditaments appears in section 43(6) of the LGFA 1988.

Neither: (1) Expanded Retail Discount (for the year 2020-2021); nor (2) its predecessor Business Rates Retail Discount (for the year 2019-2020; originally it was going to also be for 2020-2021 but Covid-19’s appearance changed things), are written into the statute. They both were implemented through the discretionary power granted to billing authorities by section 47 of the LGFA 1988, to reduce the quantum of business rates due from the ratepayer, if the billing authority so decide to. Central government issued, amongst other things, Guidance to Billing Authorities (the 'Guidance') on when to apply, under section 47 of the LGFA 1988, ‘Expanded Retail Discount’ relief. As stated in the Guidance, at paragraph 7:

'As this is a measure for 2020/21 only, the government is not changing the legislation relating to the reliefs available to properties. Instead the government will, in line with the eligibility criteria set out in this guidance, reimburse local authorities that use their discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended), to grant relief. It will be for individual local billing authorities to adopt a local scheme and determine in each individual case when, having regard to this guidance, to grant relief under section 47.'

Within this Guidance, there was paragraph 10 (under the heading ‘Which properties will benefit from relief?’):

'Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used…’ [bold added]

The obvious result was that Expanded Retail Discount relief was not available for unoccupied hereditaments.

For completeness, note is made of an additional element of the Guidance - the 'treating' provision.

In paragraph 14 of the Guidance, it provided that:

'For the avoidance of doubt, hereditaments which have closed temporarily due to the government’s advice on COVID19 should be treated as occupied for the purposes of this relief.'

This 'treating' provision requires the billing authority to treat an unoccupied property/hereditament as occupied (and so eligible for Expanded Retail Discount relief) if the hereditament was '...closed temporarily due to the government’s advice on COVID19...'

As mentioned above: 'closed temporarily due to...' was interpreted as meaning exactly that. The scope of the 'treating' provision (and so its effect) did not include a property/hereditament business which had been prevented from opening in the first place, due to government’s advice on COVID19.

The combination of:

(1) there being no 'actual occupation' due the preparatory period (as per Arbuckle); and

(2) The Guidance limiting the scope of the 'treating' provision,

was that: where a hereditament was: (1) in the midst of the preparatory period when government’s advice on COVID19 hit; and so (2) remained in the preparatory period and unopened to the public for months afterwards, the hereditament was not in rateable occupation and so was ineligible for Expanded Retail Discount relief during those months. The person preparing/renovating the property/hereditament: (1) was not in 'actual occupation'; and (2) did not benefit from the effect of the Guidance 'treating' provision.

[5] The timeline for Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813 ('Arbuckle'), is as follows:

1.3.57 - Arbuckle entered the Warehouse

9.6.57 - liability period commenced (i.e. first Whit Sunday)

26.9.57 - HMRC granted Arbuckle Preliminary Approval

28.1.58 - Arbuckle applied for Provisional Approval

3.3.58 - Arbuckle commenced alternations required for grant of Provisional Approval (i.e. to make then secure in accordance with Customs regulations)

25.5.58 - liability period ended (i.e. second Whit Sunday)

13.6.58 - HMRC grant Arbuckle Provisional Approval.

16.6.58 - Arbuckle completed alternations works; thereafter, Arbuckle was free to use the Warehouse for their intended purpose, and did commence use of the Warehouse as a bonded store.

So, to summarise the facts, Arbuckle:

(1) entered the Warehouse prior to the liability period commencing, but didn't start the alternations until part way through the liability period;

(2) completed the alterations to the Warehouse after the liabilty period ended;

(3) didn't use the warehouse for its intended/future use, as a bonded store warehouse, until after the liabilty period ended;

In Lord Reid in Arbuckle said, at 823:

‘The premises remained empty and the only operations carried out in them by the [alleged ratepayer] during the year were some slight repairs to the roof in January and the alterations begun on March 3 and not completed by Whitsunday. These alterations comprised bricking up some windows and doors and fitting iron bars to some other windows.’

[6] In Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813 ('Arbuckle'), the full quote of what Lord Keith said, at 831, is:

‘I can detect no difference between the law of Scotland and the law of England in the principles that affect rateable occupation, though the system by which rateable values are fixed may be somewhat different.'

Further, Viscount Kilmuir in Arbuckle, at 822, said that ‘…everyone has treated the law of Scotland and the law of England as being the same on this point…’

[7] In Scotland, Business Rates were imposed by section 16(1) of the Valuation and Rating (Scotland) Act 1956 on the ‘occupier’. Whether or not the Warehouse had an 'occupied' or had been ‘unoccupied’ within section 243 (1) of the Local Government (Scotland) Act 1947 ('1947 Act'), involved the definition, in section 379(1) of the 1947 Act, of "occupier" - that was: 'the tenant or sub-tenant or any person in the actual occupation of land.’ (Bold added). It is the latter permutation - the 'any person in the actual occupation of land' part, that contains the same phrase - 'actual occupation' as in Laing.

[8a] If the physical presense is not of the wrong kind, then whether or not that person is in 'actual occupation' is a question of fact. In Queen Street Properties Ltd v Cardiff City and Council Council [2022] EWHC 39 (Admin), Eyre J said, at paragraph 29:

'The question of actual occupation is a matter of fact which is to be determined in the light of the relevant factual circumstances. Actual occupation is different from ownership and from the legal right to possession of particular premises.'

In Bexley Church Treasurer v. Bexlcy L.B.C. [1972] QB 222, CA ('Bexley'), Lord Denning considered the case of Associated Cinema Properties Ltd. v. Hampstead Borough Council [1944] K.B. 412, and he said, at 228:

'In that case a company during the war took accommodation and kept the premises empty. Their intention was to use them in case they were bombed out of their other premises. It was held that they were not in occupation. This court stated in terms, at p. 416, that " a mere intention to occupy premises on the happening of a future uncertain event, cannot, without more, be regarded as evidence of occupation." That case shows that when premises are left vacant, a mere intention to occupy them in the future does not constitute occupation. There must be something more, such as furniture left on the premises or some use being made of them.'

The Bexley were that a church owned a house. It used it to house its minister. The house was occupied as a residence by the minister from 1966 until 30.7.69. That minister was then posted elsewhere. The house was empty until 2.7.70, when a newly appointed minister took up residence. So it was empty for 11 months. During this period the church held the house available as a residence. The question was whether or not the church was liable to pay business rates in respect of the time when the house remained empty.

After Lord Denning stated the passage from 228 (quoted above), Lord Denning then said, at 228:

'Applying this principle, on the facts stated in the case, I think that under the previous law there was no occupation by the church: and it would not have been liable before 1967 to pay any rates at all.'

After agreeing with Lord Denning, Megaw LJ in Bexley said, at 228:

'...it is clear that Parliament contemplated that premises can be unoccupied for rating purposes despite the fact that they are being held for the purpose of being available for occupation by a minister of religion as a residence from which to perform the duties of his office.'

[8b] Viscount Kilmuir LC in Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813 continued, at 821-822:

'The learned judges who considered this case in the Court of Session were obviously much impressed by the advantage which, in their view, [the alleged ratepayer] would receive from altering the premises. I cannot, however, take their next step of saying that because it was an advantage to [the alleged ratepayer] to alter the premises, therefore [the alleged ratepayer] were making beneficial use of the premises. It is an undoubted advantage to the owner of an empty house to put on some slates and keep it weathertight, but the fact that he does so could not create rateable occupation where none existed. I cannot myself accept the view that when a person is repairing or altering something designed for a particular purpose, he is by that action making use of it.’

[9] Lord Reid in Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813: (1) discussed the notion of rateably 'occupation' without dealing separately with 'actual' occupation; (2) drifted into consideration of the use is beneficial.  at 824-825:

‘I therefore think it proper to begin by taking the word "unoccupied" as an ordinary word of the English language and considering its possible meanings. It could, I suppose, mean that no one ever set foot in the premises during the relevant period, but I reject that meaning at once, both because it has never even been suggested so far as I know in any authority or textbook, and because, very properly, it was not argued in this case. So if the owner can himself enter or send in others without thereby "occupying" the premises, the criterion of occupation must be either how frequently he or his representatives go in or what they do when they are here. No one has contended that entry for inspection or cleaning or ordinary maintenance such as heating in cold weather or carrying out ordinary repairs to make the premises wind- and watertight constitutes occupation, and it appears to me that occupation must involve something more than that. But if that be so, I have difficulty in seeing on what reasonable principle the making of the alterations in this case can be held to constitute occupation. It might easily be necessary to do work not dissimilar in character and extent from that done here to make good doors and windows broken by natural or human agency. And, moreover, where fairly extensive repairs are necessary the old position is not always exactly restored: the opportunity is taken to carry them out in such a way as to make improvements. It would seem to me very odd if in such a case the criterion were whether or not the work done has improved the premises or made them more valuable to the owner.

But I can see a clear distinction between maintaining, repairing or improving a fabric, on the one hand, and enjoying the accommodation which it provides, on the other. and I think hat (sic) it would accord with the ordinary use of language to say that the owner who in some way enjoys the accommodation is occupying the premises, but that the owner who merely maintains, repairs or improves his premises is not thereby occupying them: he is preparing for future occupation by himself, his tenant or his disponee.

It appears to me that the difficulty in this case arises from a misapplication of the requirement that, to be rateable, occupation must be beneficial. The argument is that if you find the owner making use of his property, and if that use is beneficial, then there must be occupation: the kind of use does not matter. But if the word "use" is used in that wide sense that argument must, I think, be wrong or at least too widely stated. If bricking up doors and windows is beneficial use, I do not see how it can be said that replacing or repairing broken doors and windows is not also beneficial use: the premises might be unusable until the repairs had been done. The real question in this case, to my mind, is not whether that kind of use was beneficial. It is whether that kind of use, beneficial or not, can amount to occupation.’ [Bold added]

Hackney Borough Council v. Metropolitan Asylums Board 131 L.T. 136 seem to hold that ‘…although individual acts of maintenance and improvement do not constitute occupation, an accumulation of such acts may do so.’

Lord Reid said, at 825, as to that:

'I would doubt that. But I think it unnecessary to decide that such an accumulation could never amount to occupation: it is sufficient to say that that could only be so in exceptional circumstances…’

[10] Lord Radcliffe in Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813 gave a fuller explanation, from 828-829:

‘Now, the [the alleged ratepayer] never used the warehouse in question here as a warehouse during 1957-58. That, I think, is the determining point. They did not buy it for any purpose of use except as a bonded store, and that only when their adaptations were complete and their licence permitted. This is not a case of a warehouse being kept empty in one year by its owner after it had been used as such by him in the previous year: nor is it one of those cases of "stand-by" premises…Nor, again, is it a case of premises bought for one business purpose being, in fact, put to some other use. Here, if nothing more had been done than was done up to the date when the work of adaptation began, there would have been no question of rateable occupation. The whole issue is whether the acts that were done in carrying out these works amounted to such a use of the hereditament as set up an occupation within the year.

In my opinion, they did not. Since language is not a precise instrument, it is possible to say that there was use of the premises in the circumstance that they were entered and subjected to the work of adaptation. I do not think, however, that it is this sort of user that is relevant when the court is considering whether a warehouse was in rateable occupation. There was no enjoyment of the value of the building as a warehouse. Indeed, I do not see how adaptation work differs in its significance from current repair or maintenance work carried out for the purpose of keeping the building safe against wind and weather. If all that was done to or in an empty building was that workmen went in to effect such current repairs, I should have thought it rather extravagant to suggest that it thereby became occupied in the rating sense.

Again, it is not, in my opinion, a correct, or, at any rate, a conclusive, test to determine whether an occupation was beneficial to inquire whether it suited the owner to have the work in question done or whether such work was to his advantage. Except in very special circumstances, it is to be assumed that it would be. But you could say as much about maintenance work. It prevents a loss of value to the owner just as adaptation or improvement should lead to an increment of value. These considerations, however, do not suffice to show that the occupation, assuming the acts to have amounted to such, was itself "a thing of value" during the year. Where there was no act of user of the warehouse for the business purpose for which it existed this requirement was not fulfilled.’ [Bold added]

[11] Lord Keith in Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813 continued, at 831 to 832:

'The question in this case is whether the appellants were in rateable occupation during any part of the rating year 1957-58. If their Lordships of the Second Division entertained the view that the appellants were in actual occupation, then there was no need to go on and consider whether that occupation was beneficial. That had already been fixed by the value in the valuation roll. But I think they may have meant that mere entry on the premises to make the alterations in question - which they called

use or possession of the premises - was not enough unless that use was of value. Beneficial use, in other words, was necessary for actual occupation. I do not know that I would cavil at that proposition in this case, but I do not think that what was done here was beneficial use of the premises. The alterations were the same kind of alterations that might have been done in other circumstances by a tenant of premises, or by an owner-occupier in undoubted occupation of premises, but these would not add to his beneficial use or enjoyment, unless they were of such a character as added to the value of the premises, in which case they would, no doubt, be reflected in an increased valuation in the valuation roll. In that case, his beneficial use would be in the enjoyment of the increased value, not in the mere making of the alterations. In the premises here in question there could be no possible benefit, or enjoyment, from the alterations until the next rating year.

I can detect no difference between the law of Scotland and the law of England in the principles that affect rateable occupation, though the system by which rateable values are fixed may be somewhat different. The statute defines occupier as including any person "in the actual occupation" of land. It is difficult to know what significance was intended by the word "actual." The definition in the Act of 1947 is not new. It will be found in the Burgh Police (Scotland) Act, 1892 . It may be intended to exclude the nominal occupation which may attach to an owner-occupier being entered, as I think is usual, in both the owner's and occupier's column of the valuation roll, irrespective of whether he is in actual occupation or not. But the point here is immaterial. The word "actual" cannot certainly weaken the criteria to be looked to in deciding whether there is rateable occupation. I cannot add to the views expressed in the speeches already delivered that nothing points here to actual occupation of the premises in question.

I agree that the appeal should be allowed.'

[12] In R. (on the application of Secretary of State for Health and Social Care (on behalf of Public Health England)) v Harlow DC [2021] 4 WLR 65 ('Harlow, Kerr J said, about Annex A, at paragraphs 4:

...(A) states what I believe are correct propositions of law that will enable district judges to determine most if not all disputes of this kind. They comprise Tucker LJ's first, second and fourth propositions and incorporate an expanded version of the third one. The propositions are only a checklist and should not be taken as anything like a complete statement of law that has evolved over centuries.'

[13] For completeness, the actual quote from Lord Radcliffe in Arbuckle Smith & Co Ltd v Greenock Corp [1960] AC 813, at 829 (which was already set out in the main body of the article) was:

'There was no enjoyment of the value of the building as a warehouse.'

The parts in brackets represent the author's understanding of the wider principle being expressed in the quote.