CO/5341/2006 
Neutral Citation Number: [2007] EWHC 1077 (Admin)
IN THE HIGH COURT OF JUSTICE 
QUEEN'S BENCH DIVISION  
ADMINISTRATIVE COURT 
Royal Courts of Justice 
Strand
London WC2 

Monday, 23rd April 2007
 
B E F O R E:

MR JUSTICE IRWIN 

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GE BOWRA GROUP LIMITED
Appellant

-v- 

THANET DISTRICT COUNCIL
Respondent 
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MR G COWEN (instructed by Messrs Worthingtons, Folkestone CT20 2AS) appeared on behalf of the Appellant
MR T MOULD QC (instructed by Thanet District Council) appeared on behalf of the Respondent

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J U D G M E N T
1.	MR JUSTICE IRWIN:  In this case on 22nd February 2006 a complaint was preferred by the respondent, the Thanet District Council, against the appellant, GE Bowra Group Ltd, that the appellant was liable to pay non-domestic rates for the first and second floors of 42 Hawley Square, Margate in Kent, for the period 1st April 2005 to 31st July 2005 in the modest sum of £373.79.  The implications of the judgment may go somewhat beyond that sum of money.
2.	The complaint was heard by justices for the County of Kent sitting in Thanet on 13th March 2006.  The justices found the following facts, which they have stated with admirable clarity:
"a) GE Bowra Group is the owner of 42 Hawley Square.
b)  42 Hawley Square is a Listed Building under the provisions of the Town and [Country] Planning Act 1971.
c)  42 Hawley Square (as assessed by the District Valuer) consists of two hereditaments, these are i) the basement and ground floors, and ii) the first and second floors.
d)  The hereditament consisting of the basement and ground floors are occupied (by a tenant of the appellant).
e)  Non domestic rates are being paid for the hereditament mentioned in d above [i.e. the occupied floors]. 
f)  The hereditament consisting of the 1st and 2nd floors are unoccupied."
3.	After reciting the arguments that had been placed before them, the justices recorded their opinion as follows:
"a) The appellant had misinterpreted the regulations and/or had applied the regulations out of context.
b) Reg 2(5)(a) [of the Non-Domestic Rating (Unoccupied Property) Regulations 1989] which was relied upon by the appellant simply provides a definition of a non-domestic hereditament and within that definition states that such a hereditament may comprise part of a building, which may also include any land associated with it.  It does not mean, as was contended by the appellant that a hereditament is listed because it is part of a listed building."
The magistrates went on to say:
"c) Having considered the submissions put forward by both the appellant and the respondent and having studied the regulations in detail we do not accept that the hereditaments are in fact listed in accordance with the Town and Country Planning Act 1971."
4.	A little later in their conclusions, the justices record as follows:
"f) Accordingly we found in favour of the respondent in that GE Bowra Group are liable to pay non domestic rates for the 1st and 2nd floors of 42 Hawley Square [for the period in question]."
They ordered payment of that sum, and ordered costs to be paid in the sum of £70.
5.	The definition of hereditament that is relevant to this case begins with section 115(1) of the General Rate Act 1967, where the following is stated: 
"'hereditament' means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list;"
6.	That definition was adopted by the Local Government Finance Act 1988, section 64(1) of which reads:
"A hereditament is anything which, by virtue of the definition of hereditament in section 115(1) of the 1967 Act, would have been a hereditament for the purposes of that Act had this Act not been passed."
7.	However this definition carries over into the Non-Domestic Rating (Unoccupied Property) Regulations 1989, which are made subject to the 1988 Act.  For the purposes of the Local Government Finance Act 1988, section 45(1)(a) specifies "property liable for unoccupied property rates."  The Regulations provide for property liable for unoccupied property rates as follows:
"2(1)  The class of non-domestic hereditaments prescribed [for exemption] for the purposes of section 45(1) of the Act consists of all relevant non-domestic hereditaments to which none of the conditions in paragraph (2) applies."
8.	Paragraph 2(2) reads as follows:
"The conditions are that -
 (a) the whole hereditament has, subject to paragraph (3), been unoccupied for a continuous period not exceeding three months;
...
 (d) it [the whole hereditament] is the subject of a building preservation notice ... or is included in a list compiled under section 54 of that Act ..."
9.	It is helpful to interpolate the phrase "the whole hereditament" as constituting what is referred to by the word "it" in paragraph 2(d), and both sides are agreed that is what the pronoun means in the sub-paragraph. 
10.	Bringing the 1967 definition into this allows the formulation to read in something rather more like English:
"The whole hereditament (being a unit of property) which is or may become liable to a rate and is or would fall to be shown as a separate item in the valuation list is ... included in a list compiled under section 54."
11.	Read that way, the interpretative question which this case gives rise to is the meaning of "included".  Does the term "included" in paragraph 2(2)(d) of the 1989 Regulations mean "named" or does it mean "included within a building which is listed".
12.	The respondent identifies the issue in this case in an admirably clear written skeleton argument as follows:
"The issue in this appeal is whether the condition stated in paragraph (2)(d) of regulation 2 of the 1989 Regulations applies to the unoccupied hereditament owned by the Appellant and comprising 1st and 2nd floors 42 Hawley Square, Margate.  If it does (as the Appellant contends in this appeal), the order of the Magistrates Court was wrong in law since no liability to rates arises in respect of that hereditament under section 45 of the 1988 Act.  If the condition (set out ...) does not apply, the order of the Magistrates Court was correct."
13.	The argument before me has turned essentially on both construction of the statute and on policy.  Mr Mould QC for the respondents has conceded that since a hereditament cannot of itself be included in a list of buildings and since authority, including House of Lords' authority, is clear that it is buildings which are listed not hereditaments, it is not possible finally to resolve the interpretative difficulty by looking at the language alone, and thus much of the remaining argument has turned on policy.
14.	The outcome of the analysis which persuaded the magistrates and which is advanced by the respondents today would be that if a building is listed which has a number of units wholly comprised within it, then none of the units would be rate-free, even if none were occupied.  The landlord of such a building would be forced to pay business rates without the relief that would be afforded if the building was treated as one hereditament.  Mr Mould's answer to that policy point is to say that in circumstances where a building which is listed (even where it is capable of multi-occupation) had none of its unit occupied, then it would be appropriate to treat it as one hereditament rather than one building.  However, that analogy breaks down if one considers the range of potentially relevant commercial buildings and their orientation or physical structure.  It is perfectly possible to have a single building which is of such architectural merit that it warrants being listed, which is really not capable of single occupation and cries out for the analysis of a single building, with a variety of hereditaments comprised within it.  If that is correct, or to the extent that that is correct, the policy argument in my judgment clearly favours the analysis offered by the appellant.
15.	Turning the matter on its head, since each hereditament comprised within a building has to be treated separately for valuation purposes, and indeed collection purposes when occupied, there is no policy reason why each should not be treated as a separate unit for valuation and payment or collection purposes, when unoccupied or to the extent unoccupied.
16.	A number of cases have been provided to the court helpfully in advance of the hearing, but I think it will be helpful for me to refer only to one.  The case of Debenhams v Westminster City Council [1987] AC 396, a decision of the House of Lords, contains perhaps all that we need to consider.  Firstly, in the speech of Lord Keith of Kinkel at page 403D he makes a point which has appeared in other authority contained in the bundle:
"In resolving a statutory ambiguity, that meaning which produces an unreasonable result is to be rejected in favour of that which does not, it being presumed that Parliament did not intend to produce such a result."
17.	At page 404G, in considering these Regulations he says this:
"The construction of paragraph 2(c) presents difficulty owing to the draftsman, as it would appear, not having kept in view the distinction between a hereditament and a building.  It is buildings, not hereditaments which may be the subject of building preservation notices ... and which are included in lists compiled under section 54.  Although a hereditament may consist in a building and no more, there are a great many hereditaments which comprise a building and also something more, even if only a small garden or yard."
I cease to quote from Lord Keith there, but add the comment that there are many buildings which consist of more than one hereditament, as I have already observed.  The difficulty arises from the drafting.
18.	It seems to me that the correct analysis here is that since a hereditament cannot in the strictest sense be listed, for the Regulations to require a hereditament as such to be listed would be impossible, I must therefore interpret the term "included" in paragraph 2(2)(d) of the Regulations to mean something a little more liberal than "named".
19.	In my judgment, common sense, policy and a perfectly respectable use of language come to the same point.  The Regulation means that where a hereditament is wholly included within a building which is listed, exemption should follow.  Given that that is my view, it follows that I should quash the decision of the magistrates and the penalty which follows.
20.	Gentlemen, what other order should follow from that?
21.	MR COWEN:  My Lord, just looking back at my notice of appeal at page, I think it is page 5, my Lord, of the bundle.
22.	MR JUSTICE IRWIN:  Of the bundle? 
23.	MR COWEN:  Of the bundle, my Lord.  The order which we were seeking is an order that the decision of the magistrates should be set aside.
24.	MR JUSTICE IRWIN:  Yes.
25.	MR COWEN:  My Lord, alternatively that it be remitted.  If my Lord is happy to set aside, I do not think it needs to be remitted.
26.	MR JUSTICE IRWIN:  It is a question of law.  The magistrates could -- they come to the same point, do they not?  Is there any purpose for anyone in requiring a fresh hearing in front of the magistrates?
27.	MR COWEN:  No.  As your Lordship can see, it is simply put in the alternative, that they should hear the summons and dismiss it.  Rather than to put them to that trouble, if your Lordship is happy to simply set it aside we would be content with that.
28.	My Lord, the only other order we would seek would be an order for costs of this appeal.  My Lord, I do not know whether your Lordship has had a copy of the --
29.	MR JUSTICE IRWIN:  Yes, I have.  I confess I have not looked at it, because I was waiting to see the outcome. 
30.	MR COWEN:  My learned friend has not seen a copy of mine.  I only have one copy with me, but I am happy to show it to him.  (Handed) 
31.	MR JUSTICE IRWIN:  Mr Mould, do you want me to rise while you take instructions on that?
32.	MR MOULD:  It might be helpful.  I should say straightaway that I clearly cannot resist an order for costs. 
33.	MR JUSTICE IRWIN:  No, but you may wish to take instructions on whether it should be assessed and, if so, in what sum.
34.	MR MOULD:  I am grateful.  A very short period of time.
35.	MR JUSTICE IRWIN:  We will say five minutes. 
(Short adjournment)
36.	MR MOULD:  My Lord, I am grateful for that.  I have taken instructions.  We do not raise anything on the schedule.  So we are content, as it were, for your Lordship to assess on the basis of that schedule. 
37.	MR JUSTICE IRWIN:  Thank you very much.
38.	MR COWEN:  My Lord, in those circumstances I would ask for summary assessment in the sum of £8,933.08.
39.	MR JUSTICE IRWIN:  Yes.
40.	MR MOULD:  Can I just raise one other thing -- are you finished?
41.	MR JUSTICE IRWIN:  Yes.  Costs in that amount.
42.	MR COWEN:  I am grateful.
43.	MR MOULD:  My Lord, there is just the question of appeal.  The position is rather strange in a way.  This being an appeal to this court on a case stated in a civil matter, there is no right of appeal to the Court of Appeal.  That is the effect of I think it is section 18 of the Supreme Court Act, read together with section 111 of the Magistrates' Courts Act 1980. 
44.	MR JUSTICE IRWIN:  Just give me one moment.  I am a bit historical here with the 2005 White Book. 
45.	THE USHER:  Would you like me to get you an up-to-date one?
46.	MR JUSTICE IRWIN:  Let us see whether it has changed.  It may be exactly the same. 
47.	MR MOULD:  The Supreme Court Act, section 18.
48.	MR JUSTICE IRWIN:  Can you give me a....  Is it in the CPR? 
49.	MR MOULD:  This is volume 2. 
50.	MR JUSTICE IRWIN:  It is volume 2.  Then I have got a 2006 one.
51.	MR MOULD:  I have 2007 which has just been issued.  But I do not think -- you will find, it is certainly in volume 2 in section 9A (I do not think that has changed) in the inside margins.
52.	MR JUSTICE IRWIN:  Yes.
53.	MR MOULD:  If you could find section 19, it is then section 9(6).
54.	MR JUSTICE IRWIN:  Section 19.
55.	MR MOULD:  I am so sorry, section 18.  Yes, 18, which is the section which sets out restrictions on appeals to the Court of Appeal.  The relevant paragraph is (c), which says:
"(1) No appeal shall lie to the Court of Appeal -
...
 (c) from any order, judgment or decision of the High Court or any other court or tribunal which, by virtue of any provision (however expressed) of this or any other Act, is final; ..."
56.	You will see in the notes there is a reference, what in this edition is the penultimate paragraph of the notes to that section a reference to the Magistrates' Courts Act 1981, section 111.  I do not have that with me, but the effect of that is to make this appeal final.  Your Lordship will see there is a reference to a case called Westminster City Council v O'Reilly in the Court of Appeal, which was a case concerning appeal by way of case stated on a civil matter, namely a licensing matter.  Now on that basis I am not able to ask your Lordship to consider whether there should be an appeal to the Court of Appeal.  The only route that is available would be, as I understand it, would be a leapfrog to the Lords.  Now I am not going to enter into a debate as to whether or not the subject matter of this case merits that kind of exposure.  Although it is fair to say, as your Lordship has seen, that there is no earlier case on this particular provision, which is one that has certainly been a feature of the rating scheme since the General Rate Act 1967.  So it has at least that novelty to it, in the sense I think arisen for the first time for judicial consideration.
57.	MR JUSTICE IRWIN:  Which is an extraordinary proposition. 
58.	MR MOULD:  It is.  It may be that system is working well or it may be that -- well, whatever reason it may be.  But, my Lord, all I am going to ask your Lordship to do, if I may, is to indulge me to extent.  My clients have told me they would wish to consider whether to invite this court to grant the necessary certificate for a leapfrog appeal.  If your Lordship would grant us a short period of time in which to do that, and then, if so advised, to make a written application to the court, which obviously would be served on my learned friend --
59.	MR JUSTICE IRWIN:  Yes.
60.	MR MOULD:  -- and to deal with the matter in writing.  But we would undertake if we were to make that application to do so within 14 days of today -- 
61.	MR JUSTICE IRWIN:  Yes.
62.	MR MOULD:  -- to your Lordship, in writing, and if we did not do so, or indeed if we chose not to, to alert the court and the appellants then.
63.	MR JUSTICE IRWIN:  That is perfectly helpful.  Yes, I will certainly give you that time to think about it.  It is not something that you will rush to do, and there may be a relevant committee or official or both.
64.	MR MOULD:  As your Lordship will appreciate, the way in which the legislation works is that we -- perhaps I am putting it a little crudely, but billing authorities to a large degree act as collection agencies for the Secretary of State.  We collect the rates, then he puts it into a pool and then he hands it out again.
65.	MR JUSTICE IRWIN:  Or not.
66.	MR MOULD:  Or not!  Or to some extent.  And so of course the greater the exposure of a point like this, which goes to the operation of the system, the more it may be a matter for central government rather than an individual local authority to pursue, and that is a point we would wish to consider as well.
67.	MR JUSTICE IRWIN:  I will hear Mr Cowen.  But from my point of view, if you are going to have time to consider the point and you might want to consult central government as paymasters for that, is 14 days enough?
68.	MR MOULD:  I would hope it would be enough for an initial view, but perhaps 21 would be sufficient, yes.
69.	MR COWEN:  My Lord, I do not think I have any objection in principle.  Obviously from the point of view of my clients they want to see an end to this as quickly as possible within reason.
70.	MR JUSTICE IRWIN:  But the difference between two weeks and three is not.... 
71.	MR COWEN:  Quite, and I am not going to press that point to any great degree.
72.	MR MOULD:  That is very kind?
73.	MR JUSTICE IRWIN:  21 days and you can do it in writing.  I in fact will be in this building until the end of May, until the break, so if it did prove necessary to make any oral application, I am not encouraging it, but that could be arranged.
74.	MR MOULD:  I am very grateful.  We will certainly press on with that and reach a view as soon as we can. 
75.	MR JUSTICE IRWIN:  What I should do then is to keep the file pending that application because it might come. 
76.	MR MOULD:  I would be grateful.
77.	MR JUSTICE IRWIN:  Thank you both.