CO/9062/2005 
Neutral Citation Number: [2006] EWHC 3200 (Admin)
IN THE HIGH COURT OF JUSTICE 
QUEEN'S BENCH DIVISION  
THE ADMINISTRATIVE COURT 
Royal Courts of Justice 
Strand
London WC2 

Wednesday, 25 October 2006
 
B E F O R E:

MR JUSTICE OWEN 

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THE QUEEN ON THE APPLICATION OF REGENTFORD LTD
(CLAIMANT) 
-v- 

SHEPWAY DISTRICT COUNCIL
(SECOND DEFENDANT) 
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MR D WILLINK (instructed by Joseph Ackerman) appeared on behalf of the CLAIMANT
The First Defendant was not represented and did not attend
MR GORDON MENZIES (instructed by Legal Department, Shepway District Council) appeared on behalf of the SECOND DEFENDANT

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J U D G M E N T
1.	MR JUSTICE OWEN:  This is a statutory appeal on a question of law from a decision of the Kent Valuation Tribunal ("the tribunal") brought under Regulation 51 of the Valuation and Charge Tribunal Regulations 1989.  The decision in issue was made on 26 August 2005 and related to a property at 12 Ford Road, South Folkestone, of which the appellant company is the freehold owner.  The property consists of a shop and five flats.  The appellant appealed to the tribunal against   assessments for council tax in relation to each of the five flats on the basis that others were liable for the tax.  
2.	Section 6 (1) and (2) of the Local Government Finance Act 1992 provide that the person liable to council tax in respect of any chargeable period is the first named on the list that sets out the hierarchy of liability: (a) a resident of a  dwelling with a freehold interest in the whole or any part of it; (b) such a person with a leasehold interest in the whole or any part of a dwelling which is not inferior to another interest held by another such resident; (c) such a resident who is also a statutory or secure tenant of the whole or any  part of a dwelling; (d) such a resident with a contractual licence to occupy the whole or any part of the dwelling; (e) such a resident; and, (f) the owner of the dwelling. 
3.	It was the appellant's case that Flats 1 and 3 had been sold on long leases to a company - Ace Mark Ltd - on 20 December 2002, so that Ace Mark would fall into category (b) in the hierarchy.  In relation to Flats 2, 4 and 5, it was the appellant's case that they had, at various times during the periods in issue, been let on assured shorthold tenancies, the tenants therefore falling within category (c) in the hierarchy.  
4.	In its decision the tribunal recited the schedule of liability on each flat as provided by the second respondent, the Shepway District Council, and then summarised the cases advanced on either side.  At page 5 of the decision the tribunal concluded that after having carefully considered all the evidence it was its view that the appeals must be dismissed.  It then went on to give its reasons for arriving at that conclusion in the following terms:
"As remarked by the council in a letter to Regentford of 15 March 2005, ' ..... In respect of Flats 1 & 3 the council has been trying to establish the position regarding the existence of leases between Regentford Limited and Acemark Limited.'   The leases provided to the council only show the signature of Regentford Limited, a situation that solicitors acting for Acemark were, we understand, seeking to remedy.  However without having fully signed copies of the lease, the council, quite understandably in our view, was unwilling to amend its records.  A check by the local authority of the Land Registry records did not reveal any change of ownership.  In respect of Flats 2, 4 and 5, there stands on record a signed statement by Regentford dated 1 April 2003 (made in connection with an unrelated matter), that these three flats stood empty on the date the tenancy agreements were said to come into force.  Additionally at no stage has  Regentford been able to furnish irrefutable evidence in relation to the identities and circumstances of those persons who it was said were in occupation of the properties at the material times.  This is exemplified by the fact that when asked by the tribunal to provide an informal record of monies received in respect of rental payments on the appeal properties during the relevant periods Regentford were unable to provide this evidence.  
In our view, the responsibility for proving the legitimacy of the claims made by Mr Ratnasingham that for the periods in question Regentford should not be liable to council tax must rest with Regentford.  We consider this responsibility has not been discharged."
5.	It is submitted on behalf of the appellant that in arriving at its decision the tribunal erred in law in two respects.  The first arises in relation to Flats 1 and 3.  It is submitted that the tribunal's error took the form of misunderstanding its role.  It is submitted that it appears from the decision that the tribunal regarded its task as merely to review the reasonableness of the council's decision rather than to reach its own view on Regentford's liability.  Mr Willink relies, in  support of that submission, on the first part of the paragraph in which the reasons for the decision were set out.  
6.	Mr Menzies, who appeared for the second defendant, argued that the reason why the tribunal was not persuaded by the documentary evidence produced by the appellant - namely a counterpart agreement for a lease dated 10 September 2002 and a letter from the solicitors acting for the respondent dated 23 December 2002 and referring to the consideration that had been paid - was that the address given by Ace Mark Ltd was in fact a sheltered housing scheme run by the Riverside Housing Association, evidence that was summarised by the tribunal under the heading Summary of Local Authority Case.  That, submitted Mr Menzies, was evidence that raised a very real question as to the bona fides of the transaction, and was a matter that the tribunal was entitled to take into account.  
7.	The problem about that argument is the tribunal made no finding in relation to that evidence, and made no reference to it in the paragraph in which it set out its reasons for its decision in relation to Flats 1 and 3.  On close examination of the reasons given by the tribunal in relation to Flats 1 and 3, I am driven to the conclusion that the tribunal failed to apply the appropriate test.  
8.	The first sentence does no more to state that the council had been trying to establish the position regarding existence of leases.  
9.	The second sentence says that the leases provided to the council only show the signature of Regentford Ltd, a situation which solicitors acting for Ace Mark were seeking to remedy.  That is neutral and does not afford a reason for the decision.  
10.	It appears from the third sentence that the tribunal was basing its decision, at least in part, on the fact that the council had not been prepared to amend its records.  As is submitted on behalf of the appellant, the question was not whether the council was justified in that decision, but whether, on all the evidence before it, the appellant had satisfied the tribunal on the balance of probability that others were liable for the council tax.  
11.	As to the fourth sentence - namely, "a check by the local authority of the Land Registry records did not reveal any change of ownership" - while a relevant observation, that could not have been conclusive as to the issue before the tribunal.  There was no indication given by the tribunal in its reasons as to why the tribunal was not satisfied by the documents which had been produced on behalf of the appellant.  
12.	In my judgment, the only conclusion that can fairly be drawn from the third and critical sentence is that the tribunal considered that that course by the council was itself reason enough for it to dismiss the appeal.  That, in my judgment, is where it erred in law.  
13.	The second point taken by the appellant is in relation to Flats 2, 4 and 5.  It is submitted that the tribunal erred in imposing a higher burden of proof than that required by law, namely the burden of proving on the balance of probabilities  that for the periods in question the appellant should not be liable for council tax on the flats in question.  The appellant relies on the following sentence:
"Additionally at no stage has Regentford been able to furnish irrefutable evidence in relation to the identities and circumstances of those persons who it is said were in occupation of the properties at the material times."
It was on the phrase "irrefutable evidence" that Mr Willink focused his submissions.  But the phrase has to be considered in context.  First, this sentence was only one factor in the decision.  What was plainly the critical factor appears in the preceding sentence, namely -
"In respect of Flats 2, 4 and 5, there stands on record a signed statement by Regentford dated 1 April 2003 (made in connection with an unrelated matter), that these three flats stood empty on the date the tenancy agreements were said to come into force."
That was evidence that the tribunal was plainly entitled to take into consideration as undermining the case advanced on behalf of the appellants.  
14.	Secondly I do not read the sentence in issue as demonstrating that in this regard the tribunal erred in not applying the correct standard of proof.  What the tribunal was saying was that if they were valid transactions then the appellant should have been able to produce evidence that would have been irrefutable.  The logic of that proposition is sound; and it does not demonstrate that the tribunal was applying a higher standard of proof than proof on the balance of probabilities.  It was not required for the appellant to produce irrefutable proof of the tenancies.  It follows that in my judgment this limb of the appeal fails.   
15.	I should add that although the reasoning in relation to Flats 2, 4 and 5 is discernible, it is far from clear.  This case demonstrates the importance of a tribunal giving a properly reasoned decision so as to enable the parties affected by it readily to understand why they have won or lost, and whether the decision is valid and therefore not challengeable, or invalid and challengeable.  Where, as in this case, there are contested issues of facts, the decision ought to set out the principal findings upon which the decision is based in clear and readily comprehensible terms.  
16.	The consequence of my decision is that the decision of the tribunal with regard to Flats 1 and 3 will be set aside and the matter remitted to the tribunal for a re-hearing.
17.	MR WILLINK:  There remains the matter of costs.  You have split your decision both ways.  I would ask that the appellant be allowed his costs on this appeal.  You have indicated that the case is fully made out on one limb.  On the second limb your Lordship has indicated that we were entirely justified in believing we may have a case given the weaknesses in the tribunal's decision.
18.	MR JUSTICE OWEN:  I did not put it quite as high as that, Mr Willink.
19.	MR WILLINK:  No, your Lordship plainly did not.
20.	MR MENZIES:  I would ask you to consider that of the five flats, two flats are to be reconsidered, and costs should reflect that apportionment; I would ask you to consider that so far as the appeal is successful.  If it had been unsuccessful, perhaps an order for costs may be the most expeditious way of dealing with this.
21.	MR JUSTICE OWEN:  Mr Willink, what do you want to say?
22.	MR WILLINK:  No order for costs would be grossly unjust to those I represent, I would submit in this case.
R U L I N G 
23.	MR JUSTICE OWEN:  The appellant has succeeded in part.  The issue is whether it should recover its costs in full.  Mr Willink submits that would meet the justice of the case.  Mr Menzies  submits that given that the appellant failed in relation to three of the flats, the appropriate order would be no order as to costs.  
24.	In the light of the observations I have made as to the lack of clarity in the decision, I have come to the conclusion that the appropriate order is that the appellant should be entitled to its costs of this appeal.  In arriving at that decision, I also bear in mind that the difference between costs incurred by the appellant in advancing the case in relation to Flats 1 and 3 cannot sensibly be differentiated in its costs in the appeal in relation to Flats 2, 4 and 5.  It follows that there will be an order for costs in favour of the appellant.
25.	MR WILLINK:  There is a schedule, I believe. 
26.	MR JUSTICE OWEN:  It has not got as far as me.
27.	MR WILLINK:  I have made handwritten rather scribbled amendments, corrections.  The schedule of costs was prepared on the assumption that my instructing solicitor would be here today.  He could not be here so, in fairness to my friend, I shall delete that item.  It leaves a total of £3,547 (?).
28.	MR JUSTICE OWEN:  Mr Menzies, you have had the opportunity to see both the original and the amendment.
29.	MR MENZIES:  I have.  I have no observations on the level of costs sought.
30.	MR JUSTICE OWEN:  I will summarily assess costs in the sum of £3,547.  That is a "5", is it, and not a "3"?
31.	MR WILLINK:  Forgive me, it is £3,547.
32.	MR JUSTICE OWEN:  £3,547.  I am grateful to you both for assistance.
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