England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		2nd July 2010

The Hon Mr. Justice Burnett:

Introduction:

1. North Somerset District Council ["the Council"] bring these proceedings for unpaid National Non-Domestic National Rates ["business rates"] against three defendants. The first, Honda Motor Europe Limited ["Honda"] and the second Chevrolet United Kingdom Limited ["Chevrolet"] are motor companies who at the material times were using Royal Portbury Docks ["the docks"] near Bristol for the import and export of vehicles. It is the Council's contention that Honda is liable to pay business rates on premises known as Main Site at the docks for the period between 13^th October 2002 to 13^th September 2007 (with a minor adjustment) pursuant to statutory notices eventually served on 6^th November 2007. The Council's case against Chevrolet is that it is liable to pay business rates on a plot of land at the docks, known as Daewoo 1, for the period between 1^st November 2002 to 31^st March 2005 pursuant to notices similarly served on 6^th November 2007. The third defendant is a property owner who developed office premises known as Rivermead Court, Kenn Business Park, Bristol. The claim is for business rates in respect of the period between 19^th November 2002 and 22^nd February 2005 pursuant to notices issued on 6^th November 2007.
2. Each of the defendants contends that the demand notices upon which the Council is suing were not served in accordance with the provisions of Regulation 5 of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (SI 1989/1058) ["the 1989 Regulations"] which requires that a notice 'shall be served on or as soon as practicable … after 1^st April in the relevant year'. The relevant year is the chargeable financial year to which the notice relates.
3. The defendants submit that a failure to serve the notice as soon as practicable after 1^st April in the relevant year renders the notice invalid with the consequence without more that no business rates for that year are payable. In support of that submission they rely upon the decision of David Pannick QC, sitting as a Deputy High Court Judge, in Encon Insulation Limited v Nottingham City Council [1999] RA 392. They further submit that even if the notices are not invalid without more on account of their alleged late service, if there is substantial or real prejudice to the ratepayer as a result of the delay, the Council cannot recover. In support of that submission they rely in particular upon the decision of David Holgate QC, sitting as a Deputy High Court Judge, in R (Waltham Forest LBC) v Waltham Forest Magistrates Court and Yem Yom Ventures Limited [2008] EWHC (Admin) 3579; [2009] RA 181. Mr. Drabble QC, for the Council, submits that the correct approach to the late service of a notice is not reflected in either of those authorities. He suggests that a failure to serve a notice as soon as practicable has no legal impact on the ability of a council to enforce recovery of outstanding business rates unless the ratepayer can demonstrate that it would be unconscionable to allow the council to do so, or demonstrate some other public law basis for defeating recovery.
4. The defendants contend that they have suffered substantial prejudice as a result of the delay and additionally would say, if necessary, that the Council should not be able to enforce liability for the disputed business rates because it would be unconscionable to allow them to do so, or would be conspicuously unfair. Various formulations were used in the course of argument which amounted to abuse of power. The Council denies that the defendants have suffered any prejudice and disputes that the notices were not served as soon as practicable. The essence of the problem which occurred in these cases is that the system of inspections operated by the Council broke down. As a result the Council was unaware that these sites were in rateable occupation, or they had failed to identify who the occupier was. Properties were being noted as 'void' when they were not.
5. Honda developed an additional factual argument. Mr. Mercer QC submits that Honda was not, at the material times, the paramount occupier of Main Site at all. It is Honda's contention that Bristol Port Company, which is the trading name of the company (First Corporate Shipping Limited) which operates the docks ["the Port Company"], was the paramount occupier and therefore responsible for any business rates that might be due.
6. Honda further submits that there is an element of double taxation if the Council succeeds in this action because the Port Company pay business rates pursuant to a special scheme, known as a 'Cumulo', based upon its revenues. The Port Company's rates liability under the Cumulo is paid to Bristol City Council and not the North Somerset District Council. The arrangement for the calculation of business rates payable by port operators arises under the Docks and Harbours (Rateable Values) (England) Order 2000 (SI 2000/951). Rather than calculating rates in the ordinary way by reference to the rateable value of land, a calculation is made on the qualifying revenues of the port concerned. Those revenues exclude rent paid in respect of sites within docks let out to tenants. Honda had a lease on Main Site from 1^st October 2002 but paid a peppercorn in rent. The financial consideration was the payment of a fee per car to the Port Company. The revenues which were used to calculate the Cumulo included all money paid by Honda to the Port Company in respect of its use of Main Site. That adds weight, he submits, to the argument that Honda should not be treated as being in paramount occupation. Mr. Mercer also contends that recovery of business rates from Honda in these circumstances would amount to a breach of Article 35 of the Treaty on the Functioning of the European Union ["TFEU"], on the basis that it creates an impediment to exports.
7. Mr. Drabble contests both these further arguments.
8. The trial of this action occupied seven days. Witnesses were called by each of the parties although much of the material explaining what has happened in each of these cases is found in the 10 volumes of documents placed before the Court. None of the witnesses was substantially challenged on the content of his witness statement, rather cross-examination was used as a vehicle to elicit information contained in the documentation. There were no conflicts of evidence of the sort usually encountered in witness actions. The essential facts and chronology are not significantly in dispute. It is the interpretation of the evidence in the context of the correct legal approach which is controversial.

The statutory scheme for the collection of business rates

9. The system of business rates is governed by the Local Government Finance Act 1988 ["1988 Act"] and Regulations made under it. Those include the 1989 Regulations. The system has two broad parts. The first is concerned with the preparation, maintenance and alteration of rating lists. Such lists identify hereditaments (that is property on which rates must be paid) and rateable values. This aspect of the system is administered by the Valuation Officer, an official of HM Revenue and Customs, in the Valuation Office Agency ("VOA"). The second part is concerned with the recovery of rates in accordance with the rating list. That aspect of the system is administered by the billing authority for the statutory area concerned, in this case the Council, North Somerset District Council.
10. The 1988 Act introduced an important change in the nature of business rates. Whilst they continued to be charged on the basis of local valuations and were collected locally, money raised by way of business rates was transmitted to a central pool controlled by Central Government for distribution according to a statutory formula. The 1988 Act also introduced the highly controversial community charge in substitution for domestic rates.
11. The statutory obligation on the VOA to maintain "local non-domestic rating lists" is found in Section 41(1) of the 1988 Act. The first list was required to be compiled on 1^st April 1990 with subsequent lists being compiled on 1^st April at the end of each five year period thereafter. This case is primarily concerned with the 2000 rating list. The content of local lists is specified by Section 42 of the 1988 Act. Section 43(1) governs liability to pay business rates. It provides:

"43 Occupied hereditaments liability

(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."

Section 43 makes further provision for the calculation of the business rates to which the ratepayer will be subject.

12. Section 43 does not itself give rise to a duty to pay the rates to which the ratepayer is subject. That duty arises only following service of a notice under the 1989 Regulations.
13. Section 45 deals with liability for business rates on unoccupied premises (material in Mr. Graham's case). Subject to refinements to which it will be necessary to return when considering the facts of that case, the broad scheme at the material time was that the owners of unoccupied business premises were liable for 50% of the liability calculated pursuant to Section 43. The position has since changed.
14. Section 49 provides express statutory provision for a billing authority to reduce any amount a person is liable to pay under Section 43 or Section 45, or to remit the payment of the whole amount, if the authority is satisfied that the ratepayer would sustain hardship if such steps were not taken and it is reasonable to do so "having regard to the interests of persons liable to pay council tax set by it".
15. Schedule 8 concerns the pooling of business rates, that is collection by Central Government of business rates through billing authorities. The approach to contributions required from billing authorities to Central Government is found in paragraph 4 of Schedule 8 of the 1988 Act which provides, as material, as follows:

"4(1) The Secretary of State may make regulations containing rules for the calculation of an amount for a chargeable financial year in relation to each billing authority (to be called its non domestic rating contribution for the year).

(2) The Rules shall be so framed that the amount calculated under them in relation to an authority is broadly the same as the total which, if the authority acted diligently, would be payable to it in respect of the year under Sections 43 and 45 above."

The basic structure of the contribution system, which is subject to much further refinement in Schedule 8 itself and Regulations made thereunder, ensures that a billing authority pays to the central pool a sum equivalent to what ought to have been collected, assuming the billing authority had acted diligently, rather than any lesser sum actually collected.

16. Schedule 9 is concerned with "non-domestic rating administration". It is given effect by Section 62 which provides:

"Schedule 9 below (which contains provisions about administration, including collection and recovery) shall have effect."

Paragraph 1 of Schedule 9 enables the Secretary of State to make regulations containing "such provision that he sees fit in relation to the collection and recovery of amounts persons are liable to pay" in business rates. Paragraph 2(2) empowers the Secretary of State to make regulations which, amongst other things, concern the form and content of notices which specify the amount to be paid. The provisions in sub paragraph (2) originally included:

"(e) that the payee must serve a notice or notices on the ratepayer stating the amount payable or its estimated amount and what payment or payments he is required to make (by way of instalment or otherwise),

(f) that no payment on account of the amount payable need be made unless a notice requires it,

(g) that a notice and any requirement in it is to be treated as invalid if it contains prescribed matters or fails to contain other prescribed matters or is not in a prescribed form."

This was the original form of paragraph 2(e) to (g). It is of note that sub-paragraph 2(g) empowered the Secretary of State to make regulations which specified that a notice that failed to contain prescribed matters was invalid. It was thus anticipated that absent such specification, the defective notice would not be automatically invalid. There was no express power to make a regulation specifying that a failure to comply with a time limit for serving a notice should result in invalidity. The power to make express provision for invalidity of defective notices itself begs the question whether that invalidity could be cured by serving a fresh notice which was compliant. Schedule 9 paragraph 2 was amended by the Local Government and Housing Act 1989 by substituting a new paragraph 2(g), together with paragraphs (ga) to (ge). They provide part of the answer:

"(g) that a notice must be in a prescribed form,

(ga) that a notice must contain prescribed matters,

(gb) that a notice must not contain other prescribed matters,

(gc) that where a notice is invalid because it does not comply with regulations under paragraph (g) or (ga) above, and the circumstances are such as may be prescribed, a requirement contained in the notice by virtue of regulations under paragraph (e) or (f) above shall nevertheless have effect as if the notice were valid,

(gd) that where a notice is invalid because it does not comply with regulations under paragraph (g) above, and a requirement has effect by virtue of regulations under paragraph (gc) above, the payee must take prescribed steps to issue to the ratepayer a document in the form which the notice would have taken had it complied with regulations under paragraph (g) above,

(ge) that where a notice is invalid because it does not comply with regulations under paragraph (ga) above, and a requirement has effect by virtue of regulations under paragraph (gc) above, the payee must take prescribed steps to inform the ratepayer of such of the matters prescribed under paragraph (ga) above as were not contained in the notice."

17. This alteration to Schedule 9 paragraph 2 demonstrates that Parliament considered that a notice which was not in the prescribed form, or failed to contain prescribed matters, would be invalid in some circumstances. Nonetheless, the purpose of paragraphs (gc) to (ge) is to enable arrangements to be put in place to ensure that the rates are paid. The underlying intention was that technical failings should not necessarily result in total invalidity. The Schedule remains silent on the question of invalidity for failure to comply with a time limit.
18. Paragraphs 3 and 4 of Schedule 9 enable the Secretary of State to lay Regulations making provision for the recovery of unpaid business rates by way of a liability order in the Magistrates Court (with distress, committal to prison, bankruptcy and winding-up proceedings to follow) or in a court of competent jurisdiction. Paragraph 7 of Schedule 9 is also of note. It confers a power of entry on a Valuation Officer for the purposes of discharging his functions under the legislation, but not on the billing authority. This is a feature of the scheme which Mr. Drabble relied upon in support of a submission that the task of a billing authority in identifying the occupier of premises, and thus the person to whom a notice should be sent, was far from easy.
19. The 1989 Regulations were made under Schedule 9 and Section 62. Part 2 of the 1989 Regulations are concerned with "billing". Regulations 4 and 5 are as follows:

4.— The requirement for demand notices

(1) For each chargeable financial year a billing authority shall, in accordance with regulations 5 to 7, serve a notice in writing on every person who is a ratepayer of the authority in relation to the year.

(2) Different demand notices shall be served for different chargeable financial years.

(3) A demand notice shall be served with respect to the amount payable for every hereditament as regards which a person is a ratepayer of the authority, though a single notice may relate to the amount payable with respect to more than one such hereditament.

(4) If a single demand notice relates to the amount payable with respect to more than one hereditament, subject to paragraphs 5 and 8 of Schedule 1 the amounts due under it, and the times at which they fall due, shall be determined as if separate notices were issued in respect of each hereditament.

5.— Service of demand notices

(1) Subject to paragraph (2), a demand notice shall be served on or as soon as practicable after–

(a) except in a case falling within sub-paragraph (b), 1st April in the relevant year, or

(b) if the conditions mentioned in section 43(1) or 45(1) of the Act are not fulfilled in respect of that day as regards the ratepayer and the hereditament concerned, the first day after that day in respect of which such conditions are fulfilled as regards them.

(2) Subject to paragraph (3), a demand notice may, if the non-domestic multiplier for the relevant year has been determined or set under Schedule 7 to the Act, be served before the beginning of the relevant year on a person with respect to whom on the day it is issued it appears to the billing authority that the conditions mentioned in section 43(1) or 45(1) of the Act are fulfilled (or would be fulfilled if a list sent under section 41(5) of the Act were in force) as regards the hereditament to which it relates; and if it is so served, references in this Part to a ratepayer shall, in relation to that notice and so far as the context permits, be construed as references to that person.

(3) A demand notice shall not be served before the authority has set amounts for the relevant year under section 30 of the Local Government Finance Act 1992."

It is common ground before me that no duty on the ratepayer to discharge his rates liability arises until a notice has been served under Regulation 5. There is thus, within the statutory scheme, a clear distinction between the liability for business rates created by Section 43, on the one hand, and the obligation to discharge that liability after service of a notice under the 1989 Regulations.

20. Regulation 12 and following are concerned with recovery of outstanding rates through the Magistrates Court or a court of competent jurisdiction, together with the ancillary enforcement procedures if a liability order made in the Magistrates Court is not satisfied. Finally, I should mention Regulation 23(1) which provides

"any matter which could be the subject of an appeal under Regulations under Section 55 of the Act may not be raised in proceedings under this part".

Section 55 of the 1988 Act (together with Regulations made thereafter) is concerned with alteration of lists. There are mechanisms which allow the owners and occupiers of a hereditament to dispute the content of the list. Notably, the rateable value set out in the list, upon which any notice served under the 1989 Regulations would be based, may be disputed. On various bases it might be suggested that the hereditament should be deleted from the list altogether or that other changes should be made. The statutory route of challenge in those circumstances involves first a proposal to the VOA with statutory rights of appeal to a Tribunal thereafter. The effect of Regulation 23(1) of the 1989 Regulations is to deny a ratepayer the opportunity to take a point to defeat enforcement proceedings which could have been raised by way of a statutory appeal.

21. The mechanisms for altering a list which are of relevance for the arguments advanced in this case are the mechanisms in respect of the 1995 and 2000 lists that were engaged on and after 1^st April 2005. The VOA has power to alter the valuation list pursuant to its duty to maintain an accurate list. It also has power to alter the rating list pursuant to a proposal, and may be required to do so by a decision of a tribunal or court.
22. The VOA's direct powers arise under section 41 of the 1988 Act. Section 41(7) provides that:

'A list must be maintained for as long as is necessary for the purposes of this Part, so that the expiry of the five year period for which it is in force does not detract from the duty to maintain it.'

However, by virtue of subordinate regulations the last effective date on which the VOA could make an alteration to the 2000 list was 31^st March 2006: see the Non-Domestic Rating (Alteration of List and Appeals) Regulations 1993 (SI 1993/2911) ["the 1993 Regulations"]. Until that date, anyone (including a ratepayer) could have drawn an error to the attention of the VOA. If it was accepted as such by that date, the VOA could alter the list. Various protections operate in favour of those who might be adversely affected by such a unilateral change.

23. That power stands in contrast with the procedure which enables ratepayers to make proposals for the alteration of the list. Regulation 4C of the 1993 Regulations establishes a general rule that a proposal to alter the 2000 list could be made at any time before 1^st April 2005. Whilst there are exceptions to that time limit, they do not apply in respect of any of the three defendants in these proceedings. That is a position accepted by the Council. In all three cases before the Court, the 2000 rating list was closed to proposals from 1^st April 2005.
24. The 1995 rating list has a bearing on the cases of Honda and Chevrolet (but not Mr. Graham). Regulation 4B(4A) of the 1993 Regulations allowed a proposal to alter the 1995 rating list for its last day of life (31^st March 2000) on the grounds that a property shown in the list as a single hereditament ought to be shown as more than one. Such a proposal had to be made before 1^st April 2005. Both Chevrolet and Honda made such proposals. The purpose was legitimately to obtain transitional relief, and thus secure a financial benefit. The background was straightforward. Neither Main Site nor Daewoo 1 was assessed as a separate hereditament until December 2001 with entry into the list being back dated to 1^st April 2001. A curiosity of the rating system is that the ratepayer could make a saving in the sums due by accepting rateable occupation from the last day of the 1995 list to include the first year of the 2000 list, due to transitional relief arrangements.

Failure to serve the notices 'as soon as practicable'

25. In paragraph [3 - 8] above the bare bones of the contentions advanced by the parties on the consequences of the Council's suggested failure to serve notices as soon as practicable after the 1^st April in the relevant years are identified. Those submissions were informed by a number of decisions of this Court in the rating sphere. The first was Encon which concerned business rates and Regulation 5(1) of the 1989 Regulations. The billing authority had served notices in November 1997 in respect of rates said to be payable from 1990 to 1998. The ratepayer settled the last of those years' liability. However, it contended before the Justices that the notices in respect of the earlier years had not been served as soon as practicable and were thus a nullity. The Justices concluded that the notices had been served as soon as practicable because it was only shortly before the service of the notices that the billing authority became aware of the location of the premises. The case came before the High Court on a Case Stated from the Justices. David Pannick QC allowed the appeal concluding that the Justices had asked themselves the wrong question. It was not whether the billing authority had served the notices as soon as practicable after becoming aware of the location of the premises but whether it was practicable for the billing authority to have identified the location at an earlier date and thus been able to serve the notices earlier. Had they asked that question the inevitable conclusion would have been that the notices had not been served as soon as practicable.
26. No argument was developed before Mr. Pannick concerning the consequences of a failure to serve a notice as soon as practicable or to limit those consequences. In paragraph 19 of his judgment he said:

"I should mention that the Magistrates noted that they did not need to decide whether the requirement imposed by Regulation 5(1) was mandatory. Counsel for the billing authority has not advanced any argument seeking to limit the consequences of there being a breach of Regulation 5(1). That does not surprise me. Regulation 5(1) contains a balance between the interests of the ratepayers and the practicalities of administration. Parliament must have intended that if the billing authority has not complied with the requirement it would be wrong in principle for the ratepayer to have an obligation thereafter to pay."

It was consequent upon this dictum that the Department of the Environment, Transport and the Regions included within a Business Rates Information Letter to billing authorities dated 11^th August 2000 a warning that a failure to serve a notice as soon as practicable could have the effect of depriving it of the ability to recover the business rates in question.

27. An allied issue was considered by Lightman J in the High Court on a Case Stated concerning council tax in Regentford Limited v Thanet District Council [2004] EWHC 246 (Admin); [2004] RA 113. The regulation in question provided that the notice 'is to be served' as soon as practicable after a particular date rather than 'shall be served' which the Judge considered to be stronger language. On that basis he was able to distinguish Encon and held that a failure to serve the notice as soon as practicable did not operate as a bar to recovery of the tax, unless the breach had occasioned some procedural or substantive prejudice: see paragraph [21]. He rejected a submission that the taxpayer had been prejudiced by the late service of the notice. No authority was referred to on this issue except Encon. In the course of his discussion of the regulation requiring prompt service of the notice, Lightman J observed:

"The statutory duty is imposed at least in substantial part for the protection of those from whom the billing authority may seek payment of council tax. The notice is required to enable the recipient to know that a claim may be made for payment and accordingly to take immediate steps to prepare and assemble any necessary evidence to establish that there is not a duty to pay … and to arrange his finances to make payment."

28. In JJB Sports v Telford and Wrekin Borough Council [2008] EWHC 2870 (Admin); [2009] RA 33, Timothy Brennan QC sitting as a Deputy High Court Judge, considered the consequences of the late service notices contrary to Regulation 5 of the 1989 Regulations. The billing authority issued a notice covering two years' liability. The ratepayer protested that such a notice was unlawful because Regulation 4 requires a separate notice for each year. In due course separate notices were served but the District Judge concluded that those notices were too late by 56 days. He approached the issue of validity by reference to the question whether the ratepayer had suffered any prejudice in consequence of the late service, concluding that it had not. The ratepayer's appeal by way of Case Stated was dismissed. Mr. Brennan considered the issue of the consequence of a failure to serve a notice in time in the light of the speeches in the House of Lords in R v Soneji [2006] 1 AC 340. They contain the most recent authoritative exposition of the principles to be applied. He concluded:

"23. In my judgment, and subject to observations which I shall make shortly on the other authorities, that approach of focussing intently on the consequence of non-compliance, and posing the question, taking into account those consequences, whether Parliament intended the outcome to be total invalidity, should inform and govern the analysis in this case."

The learned Deputy Judge's conclusions are found in the following paragraphs of his judgment:

"31. I turn to consider the time limit in the present case under the Regulations. It is not a fixed time. … It is governed by considerations of practicability. The ratepayer himself will not know, and will in the ordinary case have no means of finding out, what those considerations of practicability are. He will not know the internal workings of the rating authority, its manpower, its funding or its organisation.

32. It would, in my judgment, be highly unsatisfactory for the citizen's liability to pay a tax, or not to pay it, to depend on the administrative details of the organisation of the rating authority in circumstances where the citizen himself cannot find out what the position is.

33. Mr. Hamlin for the appellant in this case has sought to persuade me that seriousness of the breach in this case, as it was characterised by the District Judge, could allow the court to take a serious view. A demand served equally late, but for a less egregious reason, might not, he submits, have disentitled the authority from collecting the rates. I reject this approach. The authority here is seeking to rely on a late notice; it is not seeking to rely on the earlier notices, which were wholly defective.

34. The District Judge described reliance on those notices as having been disgraceful, but that description cannot fairly be attached to the notices on which the authority seeks now to rely.

35. Very importantly, particularly, in my judgment, in the light of Soneji, there is no prejudice alleged or found. The appellant knew, on receipt of the original but defective notices, the amount of money which was being demanded. It is true that the appellant could not check the amount in respect of the period with which we are now concerned, because certain calculation information was missing from the document and that was a breach of the Regulations, but insofar as it is appropriate to look at the later 2003 Regulations at all, they indicate that it was not Parliament's intention that absence of information by itself should allow a ratepayer to escape liability, at any rate in circumstances where the absence of information was due to a mistake.

36. I emphasise that this is a case where the ratepayer claimed and suffered no prejudice from late service of the notice. In a case where there is prejudice, the position may be different. Like Walker J in Hardy and Sefton Metropolitan Borough Council [2006] EWHC (Admin) 1928, I am prepared to assume, without in any way deciding, that a Magistrates' Court which is invited to make a liability order may be entitled to refuse to make such an order in a case where there has been a serious breach of the mandatory provisions of the Collection Regulations which has caused prejudice to the ratepayer.

37. It may also be possible to envisage a case where the decision of a rating authority to proceed with enforcement may, in the light of its own breaches of the Regulations, and consequent prejudice to the ratepayer, be so unfair as to call for the intervention of the court on judicial review."

29. The essence of the Deputy Judge's reasoning was that it could not have been Parliament's intention to fix a liability to pay tax by reference to the administrative arrangements of the billing authority, of which the taxpayer will be largely unaware. There was no prejudice argued in the case before him. JJB was heard on 5 November 2008. The previous day, David Holgate QC, sitting as a Deputy High Court Judge had given an ex tempore judgment in Yem Yom at the conclusion of a two day hearing. It too concerned the consequences of a failure to serve a notice as required by Regulation 5 of the 1989 Regulations 'as soon as practicable'. The dispute concerned business rates over three billing years during which the ratepayers were in occupation of the property in question. The billing authority had failed to inspect. When the billing authority discovered that the ratepayer was in occupation it sent notices covering four years, all but the most recent of which the ratepayer disputed by reference to Encon. The District Judge accepted the submission that late service of the earlier notices was fatal to recovery, and concluded that liability was extinguished. The billing authority took the matter to the High Court principally to obtain a ruling on the proper approach to Regulation 5. There was a secondary argument that the District Judge was wrong to conclude that the notices had not been served as soon as practicable.
30. The principal argument was advanced by reference to a traditional dichotomy, namely whether the Regulation was to be regarded as 'mandatory' or 'directory', with invalidity being the consequence of the first but not the second. The judgment records that during argument Mr. Holgate drew counsel's attention to the discussion of this general topic in de Smith et al Judicial Review (6^th edn) to indicate that the law had moved on: see paragraph [36]. It would appear that little authority was otherwise cited to the Deputy Judge. In the course of the judgment he referred to Lord Woolf's judgment in R v Home Secretary ex parte Jeyeanthan [2000] 1 WLR 345 which, on any view, was an important stepping stone on the route away from the formalism inherent in the mandatory/directory dichotomy to the approach approved by the House of Lords in Soneji. Mr. Holgate identified a number of factors which would influence a court in deciding the consequences of a breach of a statutory requirement:

"First of all, there is the importance of the requirement. Some requirements are so important that absence of prejudice resulting from non-compliance is irrelevant. Secondly, the courts do consider whether the statutory requirement or purpose could be fulfilled by substantial compliance. If not, then the requirement may well be taken to be mandatory. Thirdly, regard should be had to the consequences of non-compliance. Fourthly, the issue is often determined in practice in the context of the facts of a specific case. Particularly helpful guidance was given in relation to this area by Lord Woolf MR in R v Home Secretary ex parte Jeyeanthan [2000] 1 WLR 354, 358-362. The starting point is that where the word "shall" is used "the requirement is never intended to be optional" (see page 358G)."

He went on to distil factors that pointed towards the requirement in Regulation 5 being absolute and those pointing the other way. In favour of a strict approach he identified:

No liability to pay the tax arises until the demand notice is served. Businesses need a notice to be able to organise their financial affairs and to take and act upon spending decisions. That was so even where a ratepayer knew that it had potential liability.

Serious consequences flow from the service of a demand notice. The primary enforcement mechanism provided by the 1989 Regulations is via a liability order issued following application to a Magistrates' Court (Regulation 12). Failure to satisfy a liability order may lead to the issue of enforcement by distress (Regulation 14). If enforcement by distress fails to produce sufficient to discharge the liability, the debtor may be committed to prison (Regulation 16). The debtor (whether an individual or corporate entity) may be made subject to insolvency proceedings (Regulation 18). Thus delay in serving the notice may have the effect of exposing the ratepayer to serious coercive action because of an inability to meet the demands when they are eventually served.

Regulation 5(1) is of general application whatever the circumstances of the ratepayer or the hereditament.

There is no obligation found in the statutory scheme requiring a new occupier to notify the billing authority of his occupation. Conversely, the legislation allows the billing authority to serve requisitions for information.

The service of a notice is important because the limitation period of six years for enforcement in a court of competent jurisdiction starts to run from that date.

By contrast, the factors pointing the other way were:

If non-compliance with Regulation 5(1) absolves a ratepayer from the obligation to discharge the liability imposed by section 43 of the 1988 Act, the burden on other ratepayers would increase.

The strict application of Regulation 5(1) could produce a pure windfall for a ratepayer who has suffered no prejudice at all as a result of a delay.

The time limit is not expressed in finite terms for example in a number of days. It is, by its nature, imprecise.

Whether a notice has been served as soon as practicable is a matter of judgment which might involve an investigation of the resources of the billing authority and the implementation of its recovery regime.

A court's assessment of what was practicable might deliver very different results on individual facts with long periods, on the one hand, being endorsed as satisfying Regulation 5(1) but short periods, on the other, falling foul.

31. Mr. Holgate concluded that the word 'practicable' in this context:

" … indicates that Parliament expected that substantial compliance should be achieved, and therefore that the presence or absence of any prejudice to the ratepayer caused by a period of "delay" should be capable of being a relevant consideration."

He went on:

"45. As a result of considering these arguments for and against the proposition that the effect of regulation 5(1) is mandatory or absolute, I conclude that it is not. Instead, it is necessary to consider whether there has been substantial compliance with the regulation and its objectives. That includes consideration of the question whether the ratepayer has suffered prejudice by any particular delay which could qualify as a failure to serve a demand notice as soon as practicable. That was the approach taken by Lightman J in the Regentford Limited case in relation to very similar wording dealing with the recovery of Council Tax. There has been no indication -- certainly none that has been referred to in this court -- that his decision has given rise to any practical difficulties in the implementation of the Council Tax legislation. In my view, on a proper reading of the legislation the same basic approach to this question should be taken when construing or applying regulation 5(1).

46. In summary, the Magistrates' Court needs to consider whether there has been substantial compliance with regulation 5(1) and its objectives which include the matters I have set out above (in paragraphs 43 and 44) and the issue of whether the time which has elapsed has resulted in procedural or substantive prejudice for the ratepayer. If the billing authority substantially complies with regulation 5(1) so that, for example, no significant prejudice is caused to the ratepayer, the ratepayer becomes liable to pay the sum demanded upon the service of the notice and in due course a liability order may be sought.

47. I would not want it to be thought, however, that that conclusion provides some sort of charter or licence for local authorities not to take seriously their duty to serve demand notices in accordance with regulation 5(1) as soon as is practicable. The context for this regulation remains one of the imposition of taxes and considerable importance is to be attached to that duty. However, it does seem to me that in circumstances where a particular delay has caused no prejudice whatsoever to the ratepayer concerned, if that be the case, then it would be wrong to hold that that was a matter which was incapable of being taken into account.

48. I do not think I should attempt to go into the matter in any further detail because, as the judgment of Lord Woolf in the Jeyeanthan case emphasises, the conclusion which is to be reached by a particular court will be fact specific. It may just, however, be helpful to say this. The longer the delay that is involved in the serving of a demand notice then the greater the risk that a ratepayer will be able to show prejudice. It seems to me that Parliament has legislated in such a way that that is a matter the court should be able to take into account and it is then a matter for the judgment of the court at first instance."

32. It followed from these conclusions, namely that the District Judge should have concentrated on the questions of substantial compliance and prejudice, that he had applied the wrong legal test. Mr. Holgate went on to reject the billing authority's submission that the District Judge had been wrong to conclude that the notices had not been served as soon as practicable. The billing authority did not, however, seek any relief in respect of the identified error of law beyond the judgment itself. There was no need to consider the underlying issues of prejudice and the like.
33. Before turning to the general authorities which establish the principles to be applied in circumstances where a statutory requirement has not been observed, I summarise the approach exemplified by each of the decisions thus far identified:

i) Encon suggests that a failure to comply with Regulation 5(1) by serving a notice as soon as practicable extinguishes any liability for the rates in respect of which it was served.

ii) Regentford, in the context of the similar but not identical Council Tax recovery legislation, suggests that such a failure is not fatal to recovery but that procedural or substantive prejudice to the taxpayer would relieve him of liability to pay.

iii) JJB Sports endorsed the approach, albeit by reference to a greater citation of authority, that Lightman J had considered appropriate under the council tax regime in so far as it related to the question whether a failure to serve a notice as soon as practicable was fatal to recovery. It was not. Prejudice did not arise in JJB Sports. The Deputy Judge noted that the point in Encon had not been the subject of argument, indeed it was in effect the restatement of a concession. In coming to his conclusion, the learned Deputy Judge had regard to Soneji.

iv) Yem Yom endorsed the proposition that the Encon approach should not be followed. The Deputy Judge concluded that a failure to serve a notice as soon as practicable was not fatal to the recovery of rates and concluded that each case should be looked at by reference to a combination of whether there had been substantial compliance with the provision and its objectives, including whether there had been prejudice to the ratepayer. By putting it in that way, I understand the learned Deputy Judge to have recognised that one of the objectives of the Regulation was to avoid a ratepayer being prejudiced by late service of a notice. The citation of authority in Yem Yom was far from complete. In particular, there was no consideration of Soneji. As will be seen, Soneji qualified the approach by reference to 'substantial compliance' as providing the correct analytical route to determining the outcome in cases such as these.

34. The defendants in these proceedings are relying by way of defence in civil proceedings on the failure of the Council to serve timely notices. It is not contested that they are entitled to raise an issue of invalidity by way of defence: Wandsworth London Borough Council v Winder [1985] AC 461; Boddington v British Transport Police [1999] 2 AC 143. Had the Council sought to enforce the notices by way of complaint in the Magistrates Court the same defence could have been raised. Similarly, as a matter of theory the same issue could have been raised in judicial review proceedings. Rather than wait for the Council to try to enforce the liability arising on service of the notices, the defendants could have issued judicial review proceedings seeking to quash them. The principles in play must be the same whether being relied upon as a defence in enforcement proceedings or as founding a claim for judicial review to quash the notices.
35. It is over 130 years since Lord Penzance observed in Howard v Boddington (1877) 2 PD 203 that the distinction drawn between statutory requirements which were 'imperative' on the one hand and 'directory' on the other involved unfortunate use of language, beloved though it was by common lawyers. Nonetheless, he proposed to adhere to it because it was 'the recognised language'. He added:

"The real question in all these cases is this: A thing has been ordered by the legislature to be done. What is the consequence if it is not done? … There may be many provisions in Acts of Parliament which, although there are not strictly observed, yet do not appear to the court to be of that material importance to the subject matter to which they refer, as that the legislature could have intended that the non-observance of them should be followed by a total failure … On the other hand, there are some provisions in respect of which the court would take the opposite view… I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subject matter; consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory." (210-211)

A similar approach was adopted by Lord Hailsham in London & Clydesdale Estates Ltd v Aberdeen District Council [1980] 1 WLR 182 when he said at 189-190:

"When Parliament lays down a statutory requirement for the exercise of legal authority it expects its authority to be obeyed down to the minutest detail. But what the courts have to decide in a particular case is the legal consequence of non-compliance on the rights of the subject viewed in the light of the concrete state of facts and continuing chain of events. It may be that what the courts are faced with is not so much a stark choice of alternatives but a spectrum of possibilities in which one compartment or description fades gradually into another. At one end of this spectrum there may be cases in which a fundamental obligation may have been so outrageously and flagrantly ignored or defied that the subject may safely ignore what has been done and treat it as having no legal consequences upon himself. In such a case if the defaulting authority seeks to rely on its action it may be that the subject is entitled to use the defect in procedure simply as a shield or defence without having taken any positive action of his own. At the other end of the spectrum the defect in procedure may be so nugatory or trivial that the authority can safely proceed without remedial action, confident that, if the subject is so misguided as to rely on the fault, the courts will decline to listen to his complaint. But in a very great number of cases, it may be in a majority of them, it may be necessary for a subject, in order to safeguard himself, to go to the court for declaration of his rights, the grant of which may well be discretionary, and by the like token it may be wise for an authority (as it certainly would have been here) to do everything in its power to remedy the fault in its procedure so as not to deprive the subject of his due or themselves of their power to act. In such cases, though language like "mandatory", directory", "void", "voidable", "nullity" and so forth may be helpful in argument, it may be misleading in effect if relied on to show that the courts, in deciding the consequences of a defect in the exercise of power, are necessarily bound to fit the facts of a particular case and a developing chain of events into rigid legal categories or to stretch or cramp them on a bed of Procrustes invented by lawyers for the purposes of convenient exposition. As I have said, the case does not really arise here, since we are in the presence of total non compliance with a requirement which I have held to be mandatory. Nevertheless I do not wish to be understood in the field of administrative law and in the domain where the courts apply a supervisory jurisdiction over the acts of subordinate authority purporting to exercise statutory powers, to encourage the use of rigid legal classifications. The jurisdiction is inherently discretionary and the court is frequently in the presence of differences of degree which merge almost imperceptibly into differences of kind."

36. Wang v Commissioner of Inland Revenue [1994] 1 WLR 1286 was a case which involved time limits in Hong Kong legislation concerning the determination of assessments for tax by the Commissioner, which were required to be made 'within a reasonable time' of objections being made by the taxpayer. The taxpayer sought quashing orders in judicial review of the determinations on the grounds that the Commissioner had failed to comply with the statutory requirement. They contended that the consequence was that the determinations were invalid. Accepting both arguments, the High Court quashed the determinations. The Court of Appeal reversed the Judge on both grounds. Its decision was upheld by the Privy Council. The reasoning of the Court of Appeal, in concluding that a failure to comply with the time limit would not be fatal to recovery, noted that identifying what was a reasonable time would depend upon all sorts of variables that ultimately could only be resolved by a court after examining questions of resources and the like. The conclusion of the Privy Council, delivered in the opinion of Lord Slynn of Hadley, was as follows:

"Having reviewed the authorities cited by the taxpayer in this appeal, not all of which are referred to in this opinion, their Lordships consider that when a question like the present one arises - an alleged failure to comply with a time provision - it is simpler and better to avoid these two words "mandatory" and "directory" and to ask two questions. The first is whether the legislature intended the person making the determination to comply with the time provision, whether a fixed time or a reasonable time. Secondly, if so, did the legislature intend that a failure to comply with such a time provision would deprive the decision maker of jurisdiction and render any decision which he purported to make null and void?

In the present case the legislature did intend that the commissioner should make his determination within a reasonable time. At the same time it is no less plain that the legislation imposed on the Inland Revenue authorities, including the commissioner, the duty of assessing and collecting profits tax from "every person carrying on a trade, profession or business in Hong Kong:" section 14. If the commissioner failed to act within a reasonable time he could be compelled to act by an order of mandamus. It does not follow that his jurisdiction to make a determination disappears the moment a reasonable time has elapsed. If the court establishes the time by which a reasonable time is to be taken as having expired, which will depend on all the circumstances, including factors affecting not only the taxpayer but also the Inland Revenue, it would be surprising if the result was that the commissioner had jurisdiction to make the determination just before but not just after that time. Their Lordships do not consider that that is the effect of a failure to comply with the obligation to act within a reasonable time in the present legislation. Such a result would not only deprive the government of revenue, it would also be unfair to other taxpayers who need to shoulder the burden of government expenditure; the alternative result (that the commissioner continues to have jurisdiction) does not necessarily involve any real prejudice for the taxpayer in question by reason of the delay."

37. Lord Slynn did not go on to deal with how a court should approach a case in which there was real prejudice to a taxpayer. The facts of Wang were such that prejudice did not arise. The determinations in question formed part of a series of steps involving the taxpayer and the Commissioner to resolve a dispute about a very substantial tax liability. The result contended for by the taxpayer would have delivered a windfall. The potential liability, although disputed, was well understood by the taxpayer throughout the process.
38. Soneji was a case that concerned time limits in confiscation proceedings following conviction for a criminal offence. The time limit in question required a step to be taken within six months save where there were exceptional circumstances. The Court of Appeal quashed the confiscation orders for failure to comply with that requirement. The House of Lords unanimously reversed that decision. Their Lordships' conclusion was that the statutory scheme did not suggest that a failure to comply with the time limit had the effect of dissolving the court's duty to consider making a confiscation order. Lord Steyn, with whom Lord Carswell and Lord Brown of Eaton-Under-Heywood agreed, set out the principles by which such questions are to be determined. Lord Cullen agreed that the question should be worked out by reference to the authorities collected together by Lord Steyn. Lord Rodger of Earlsferry's approach (in common with all those on the committee) was to identify the statutory intention to be imputed to Parliament in connection with the consequences of a breach of the time limit.
39. Lord Steyn described Lord Hailsham's dictum in London & Clydesdale Estates as 'important and influential' and noted that in formulating the question by reference to statutory intention:

"… it is necessary to have regard to the fact that Parliament ex hypothesi did not consider the point of the ultimate outcome. Inevitably one must be considering objectively what intention should be imputed to Parliament." [15]

In addition to Wang, he noted a number of other recent decisions of high authority including: Charles v Judicial and Legal Service Commission [2003] 2 LRC 422; [2002] UKPC 22; Attorney General's Reference (No 3 of 1999) [2001] 2 AC 91; and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. All rejected the mandatory/directory approach and focussed on Parliamentary intention.

40. Charles concerned failures to observe time limits laid down in regulations governing the procedure for disciplining misconduct in the public service in Trinidad and Tobago. Having endorsed Lord Hailsham's approach Tipping J, giving the opinion of the Privy Council, noted:

"At the outset their Lordships observe that it seems highly unlikely that the Commission could have intended that breaches of time limits at the investigation stage would inevitably prevent it from discharging its public function and duty of inquiring into and, if appropriate, prosecuting relevant indiscipline or misconduct."[12]

A little later Tipping J referred to London & Clydesdale Estates and added:

"With this in mind their Lordships note that in the present case delays were in good faith, they were not lengthy and they were understandable. The appellant suffered no material prejudice; no fair trial considerations were or could have been raised, and no fundamental human rights are in issue."[17]

41. Lord Steyn expressly approved the analysis of the High Court of Australia in Project Blue Sky Inc which included the following:

"In our opinion, the Court of Appeal of New South Wales was correct in Tasker v Fullwood in criticising the continued use of the 'elusive distinction between directory and mandatory requirements' and the division of directory acts into those which have substantially complied with a statutory command and those which have not. They are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning. That being so, a court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to 'the language of the relevant provision and the scope and object of the whole statute." [93]

42. Lord Steyn's conclusion on the applicable principle, having reviewed the authorities, is found in paragraph [23] of his speech:

"Having reviewed the issue in some detail I am in respectful agreement with the Australian High Court that the rigid mandatory and directory distinction, and its many artificial refinements, have outlived their usefulness. Instead, as held in Attorney General's Reference (No 3 of 1999), the emphasis ought to be on the consequences of non-compliance, and posing the question whether Parliament can fairly be taken to have intended total invalidity. That is how I would approach what is ultimately a question of statutory construction. In my view it follows that the approach of the Court of Appeal was incorrect."

By reference to that test Lord Steyn considered arguments advanced by the respondents in support of a strict approach:

"On behalf of the two accused counsel submitted that, given the criminal law context, a strict approach to construction of section 72A of the 1988 statute should be adopted. Bearing in mind that one is not dealing with the definition of crimes, but with the process of making confiscation orders, I would reject this approach. The context requires a purposive interpretation: Sir Rupert Cross, Statutory Interpretation, 3rd ed (1995), 172-175. Secondly, counsel argued that such an interpretation would render wholly ineffective the Parliamentary intent of providing for a specific time limit. I would not accept that this is correct. At the very least the courts can, where necessary, vindicate the scheme adopted by Parliament by the abuse of process jurisdiction and perhaps in other ways. Thirdly, counsel for the accused relied on an alleged injustice caused to the accused by the delay of the confiscation procedures. In my view this argument was overstated. The prejudice to the two accused was not significant. It is also decisively outweighed by the countervailing public interest in not allowing a convicted offender to escape confiscation for what were no more than bona fide errors in the judicial process." [24]

43. It is clear from the analysis in Soneji that in any case concerning the consequences of a failure to comply with a statutory time limit, there are potentially two stages in the inquiry. The first is to ask the question identified by Lord Steyn: did Parliament intend total invalidity to result from failure to comply with the statutory requirement? If the answer to that question is 'yes', then no further question arises. Yet if the answer is 'no' a further question arises: despite invalidity not being the inevitable consequence of a failure to comply with a statutory requirement, does it nonetheless have that consequence in the circumstances of the given case and, if so, on what basis? It is at this second stage that the concept of substantial compliance may yet have a bearing on the outcome. If a court has concluded at the first stage that total invalidity is not the outcome of a failure to comply with a statutory requirement, then it is unlikely at the second stage to conclude on the facts in the light of the statutory scheme that invalidity should be the consequence if there has been substantial, but not strict, compliance. That, as it respectfully seems to me, is the point that Lord Carswell was making in paragraph [67] in Soneji.

"The other avenue is by means of holding that if the time limit is not strictly observed the confiscation is nevertheless not invalidated. It is here that the doctrine of substantial performance may offer some assistance. I would not regard it as justified to extend time indefinitely, for I do not think that Parliament would have so intended. Nor would it be sufficient to ask merely if it would be fair and reasonable to accept the validity of an act done out of time. I would suggest that one should ask whether there has been substantial observance of the time limit. What will constitute substantial performance will depend upon the facts of each case, and it will always be necessary to consider whether any prejudice has been caused or injustice done by regarding the act done out of time as valid."

44. So, the more remote from substantial compliance the circumstances are, the more likely the conclusion that invalidity follows. That is because the purpose for which Parliament has imposed the time limit could very well be defeated if the position were otherwise.
45. The authorities show that prejudice may be advanced to defeat reliance upon an action taken outside a time limit laid down by statute in circumstances where the failure does not result in automatic invalidity. In Wang it was a factor that did not arise on the facts but Lord Slynn's reference to prejudice demonstrates its potential relevance. He had in mind that despite depriving the Government of revenue, if the taxpayer could demonstrate 'real prejudice' caused by the delay, the liability might be extinguished. Similarly, prejudice did not arise in Charles but its potential as a factor to deny the opportunity to the Commission to proceed in the face of a failure to comply with a time limit was recognised by Tillet J. So, too, in Soneji, Lord Steyn considered that prejudice was a relevant factor. However, he concluded that it was not significant in that case and was decisively outweighed by countervailing public interests. His discussion of this aspect (the third point advanced by the accused) was significant because it engaged the individual facts of the case, by contrast with the first two arguments which related solely to the statutory scheme. The implication of Lord Steyn's approach was that if a party could establish significant prejudice which outweighed any competing public interest, then Parliament's imputed intention would be that the party who had failed to comply with the time limit should be unable to proceed. Of course, the public interest in depriving convicted criminals of the proceeds of their crimes is a very strong one indeed.
46. Lord Steyn also categorised the errors in that case as 'bona fide'. Tipping J noted that the delay in Charles was in 'good faith' and in any event not long. Lord Hailsham in London & Clydesdale Estates had spoken of cases in which a fundamental obligation may have been so outrageously and flagrantly ignored that an individual could safely take no notice of the purported act. He added that in such a case, if the defaulting authority sought to rely on its action, the defect in procedure could be used as a defence without any positive action having earlier been taken by the person concerned. Lord Hailsham's language is firmly rooted in public law concepts of abuse of power or unconscionability. So too is the language of good faith. The concept of 'prejudice', standing alone, does not necessarily import public law concepts, although it is often a feature that requires evaluation in public law challenges. It is a factor that arises for consideration in countless legal environments and very often in the context of delay or failure to comply with time limits. The context in which prejudice is discussed in the authorities, dealing as they do with very different statutory schemes, imports a notion of balance.
47. There is, as it seems to me, no doubt that prejudice has been identified as a relevant factor when considering the question whether invalidity should flow on the facts of a given case, even when automatic invalidity does not follow from a failure to comply. It forms one of the potential considerations (arising under the statutory schemes under consideration in those cases) which feed the conclusion on what intention should be imputed to Parliament.
48. That conclusion reflects the central theme of all the authorities to which I have referred. The consequence of a failure to comply with a statutory requirement should be worked through by reference to imputed statutory intention. It will be important to place the time limit in the context of the statutory scheme and in particular consider why the time limit was imposed. That is the position whether the contention is for total invalidity for failure to comply, or invalidity in the circumstances and facts of the given case.
49. With all this in mind, what is the position as regards Regulation 5(1) of the 1989 Regulations? The defendants seek to contend that the conclusions reached in both JJB Sports and Yem Yom are wrong and that the conclusion stated in Encon is correct. I am satisfied that the conclusions reached independently by the two Deputy Judges in JJB Sports and Yem Yom, namely that a failure to comply with Regulation 5 of the 1989 Regulations did not result in automatic invalidity, were correct and fully accord with principle. Parliament cannot be taken to have legislated for automatic invalidity as the consequence of late service of a notice under Regulation 5. The parallel with Wang is very strong. The factors which are, to my mind, decisive are essentially those already identified by Mr. Holgate in Yem Yom (see paragraph [30] above). I would summarise the position in this way. If non-compliance with Regulation 5 gave rise to automatic invalidity, it would increase the burden on other ratepayers and tax payers in circumstances where there might be no conceivable prejudice to the individual ratepayer. More generally it would deprive the local authority concerned of revenue because of the way in which the centralised pooling of business rates operates. It may result in a pure windfall for a ratepayer. Many ratepayers, far from being prejudiced by a late notice, may benefit. Most businesses, whether large or small, are likely to make some provision for business rates. As will become apparent, the facts in these cases are unusual in that each of the defendants was unaware of a potential liability. A late demand may well improve cash flow and either enable interest to be earned on money put aside for the purpose of paying business rates or at least delay the payment of interest on borrowed money. There is no provision for a billing authority to apply interest to rates demanded late. Importantly, invalidity consequent upon a breach of a requirement to serve a notice 'as soon as practicable' would introduce uncertainty because of the imprecision of that term. There may be clear cases in which service of a notice is so long delayed that it takes little to conclude that it was not served as soon as practicable. However, often the answer to the question whether a notice was served as soon as practicable could only be answered after a detailed investigation of the procedures and resources within the billing authority. Strict invalidity would encourage disputes given the potential benefit to ratepayers of showing that a notice was served even a few days beyond a date which was practicable. Furthermore, if strict invalidity were the imputed intention of Parliament, it is difficult to discern why the obligation imposed was to serve a notice 'as soon as practicable', rather than 'as soon as reasonably practicable', which on any view would impose a less exacting obligation. I cannot accept that Parliament intended that ratepayers might be relieved of an obligation to pay tax on what might be no more than a minor administrative failing in the part of a billing authority. More generally, whilst the requirement to serve a notice as soon as practicable has been imposed in part to provide certainty and protection for the ratepayer, it also operates in the public interest to ensure that rates which become due are collected and paid promptly.
50. These reasons are essentially the same as led the Privy Council in Wang to conclude that invalidity did not flow from the failures in that case.
51. Furthermore, to accept the submissions of the defendants in these proceedings would deliver a very odd result. A failure to perform a public duty can be enforced in public law proceedings by way of mandatory order. A billing authority has a public duty to serve notices and collect the rates. Yet if a liability to pay rates were extinguished because the time for serving a notice had elapsed, no effective action could be taken against a billing authority which had failed to issue notices as soon as was practicable. A mandatory order to perform its duty would be pointless because the duty to pay the rates in issue would have been extinguished.
52. In coming to the conclusion that total invalidity is not the outcome of a failure to serve a notice under Regulation 5 as soon as practicable, I do not overlook Mr. Fookes' argument that the language of Schedule 9 Paragraph 2 of the 1988 Act (quoted in paragraphs [16] and [17] above) decisively suggests the contrary. That is not an argument I am able to accept. Parliament has taken the trouble to deal with questions of invalidity in the primary legislation: Schedule 9 Paragraph 2(g) to (ge). Paragraph (g) provides that 'a notice must be in a prescribed form' and paragraph (ga) that 'a notice must contain prescribed matters'. It is undoubtedly correct that the Schedule assumes that a failure to comply with regulations prescribing the form of a notice and setting out what must be in the notice, would without more be invalid. However, what follows suggests that Parliament was making provision to ensure that technical failings could be cured so that rates were recovered. In particular, regulations are contemplated that require the billing authority to serve a further compliant notice. Schedule 9 Paragraph 2 is silent on the question of time limits. Paragraph 2(e) merely empowers the Secretary of State to require that a notice must be served. Yet if a failure to comply with a time limit were necessarily fatal to recovery, how could Parliament contemplate that a fresh compliant notice might be served which necessarily would not have been served as soon as practicable? It seems to me that if Parliament had contemplated that invalidity flowed from a failure to comply with a procedural requirement imposed by regulations as to timing of a notice, it is a matter which would have been dealt with in the Schedule. A notice in the wrong form and containing the wrong material constitutes a more serious failing than a notice that has been served perhaps only a short time after what was practicable.
53. Mr. Drabble submits that a failure to serve a notice as soon as is practicable under Regulation 5, when looked at in context, should result in invalidity only if reliance upon it would be unconscionable or otherwise fall to be denied upon a recognised public law ground. He submits that having rejected the defendants' arguments that total invalidity should follow that failure, I should accept that the correct intention to be imputed to Parliament is to deliver invalidity only in those relatively extreme circumstances.
54. It is a simple matter to encompass within the imputed Parliamentary intention that a failure to comply with a statutory requirement in circumstances which amounted to an abuse of power, or allied public law concepts, would result in invalidity. That is because very clear statutory language would be required to exclude such an outcome anyway. Yet is that the limit of Parliament's intention in the context of business rates?
55. In seeking to support the Council's submission that unconscionability should be the touchstone, Mr. Drabble submits that the historical context of the passing of the 1988 Act suggests that the strict time limits envisaged in the delegated legislation were designed to ensure prompt collection of rates rather than to provide protection for ratepayers. That flows, he submits, from the fact that the 1988 Act introduced the Community Charge (or Poll Tax) which was intensely controversial. The vice with which Parliament was concerned was that local authorities would neglect to collect the tax for partisan reasons, he suggests. The terms 'as soon as practicable' and 'as soon as reasonably practicable' appear in over 40 places in the 1988 Act and 20 places in the 1989 Regulations. Mr. Drabble submits that the use of such words was not intended to create any duty upon a billing authority to an individual ratepayer. He submits:

"Those words were introduced to make it clear that central and local Government owed a duty to each other and to the general body of local taxpayers to be prompt in some of the stages of the rating process. They were not intended to create a situation in which delay either would or might extinguish the liability of an individual ratepayer."

56. The general background to the introduction of the community charge was certainly controversial. However, it is impossible to discern from the statutory language the conclusion for which Mr. Drabble contends. No materials which provide legitimate aids to construction of Regulation 5 have been placed before the Court. As Mr. Fookes drily observed:

'there is no support for imputing a motive to the introduction of Regulation 5 from threatened insurrection.'

I accept that the timely collection of business rates was one factor in the introduction of an obligation imposed on a billing authority to act as soon as practicable. Yet Lightman J, if I may respectfully say so, put the matter accurately when he observed in Regentford in the passage set out in paragraph [27] above that a time limit of this sort was also designed to protect those subject to local taxes.

57. In further support of his submission that public law concepts govern the question of validity, without any further gloss, Mr. Drabble drew my attention to the decision of the Court of Appeal in R v Lambeth London Borough Council ex parte Sterling [1986] RVR 27. It demonstrates that public law principles could be deployed by a ratepayer to defeat an attempt to recover rates under the General Rate Act 1967. It was not a case involving statutory interpretation or the application of a time limit. There were no relevant time limits. The facts were extreme and the delays with which the Court was concerned lengthy. In granting leave to apply for judicial review Lawton LJ described the conduct of the council as 'outrageous' and Parker LJ as 'Wednesbury unreasonable'. It does not illuminate the question with which I am concerned, nor provide any support for Mr. Drabble's argument.
58. That is not to suggest that public law concepts will be irrelevant when considering, on the facts of any given case, whether a failure to comply with the requirement to serve a Regulation 5 notice as soon as practicable defeats recovery. Reliance upon an action taken in breach of a statutory requirement can be impugned on traditional public law grounds. The colour of any argument, whether couched in traditional public law terms or not, will be taken from the provision itself. The starting point is that Parliament has required something to be done which has not been done. Egregious failures to comply with statutory obligations may be sufficient in themselves to deny the body or person in default the lawful opportunity to rely upon the action in question.
59. However, prejudice is a factor relevant to the question whether a billing authority can rely upon a late notice under Regulation 5(1), just as it was in the cases already discussed. A person who has suffered substantial prejudice as a result of a failure to comply with this statutory provision in circumstances where that prejudice is not decisively outweighed by a competing public interest, will be able to defeat recovery. Parliament cannot have intended that a billing authority could rely upon a notice in those circumstances.
60. In summary, therefore, a failure to serve a Regulation 5 notice as soon as practicable does not result in automatic invalidity. Rather, the court determining any issue resulting from such a failure will have regard to the length of delay and the impact of that delay upon the ratepayer, in the context of the public interest in collecting outstanding rates. The greater the prejudice to the ratepayer flowing from the delay, the more likely will be the conclusion that Parliament intended invalidity to follow.
61. Prejudice may flow to business ratepayers in any number of ways as a result of a late notice to pay rates. Prejudice is different from inconvenience. In using the language of 'real prejudice' in Wang, 'material prejudice' in Charles and 'significant' in Soneji the various judges were conveying the same notion: that the prejudice relied upon must be substantial and certainly not technical or contrived. It is in that way that I shall consider the question of prejudice argued for by the defendants in these proceedings. The countervailing public interest is in the collection of taxes, the interests of other tax payers and the revenues of the local authority concerned.

As Soon as Practicable

62. All parties submitted that had I accepted the submission of the defendants that a failure to serve a Regulation 5 notice as soon as practicable resulted in automatic invalidity, a less exacting approach to what was 'practicable' would be appropriate to avoid defeating the underlying statutory intention, which is to recover business rates. It is not easy to discern from the references in the 1988 Act and the 1989 Regulations why some obligations have to be undertaken 'as soon as practicable' and others 'as soon as reasonably practicable'. In some environments the difference between those two formulations can be of very profound importance. The most obvious is in the field of health and safety legislation when the absence of the qualification 'reasonably' is usually understood to circumscribe an appeal to financial considerations as a reason for failing to take action.
63. In Encon David Pannick QC referred to the judgment of Ralph Gibson LJ in R v Chief Constable of South Wales ex parte Merrick [1994] 1 WLR 663 at 667. That was a case concerned with a statutory requirement upon the police to comply with a request from a detained person to consult a solicitor 'as soon as practicable'. Ralph Gibson LJ referred to definitions of 'practicable' found respectively in the Shorter Oxford English Dictionary and Webster's Dictionary: 'capable of being carried out – feasible' and 'possible to be accomplished with known means and known resources' respectively. He also referred to the judgment of Scarman LJ in Dedman v British Building and Engineering Appliances Ltd [1974] 1 WLR 171 in which the word appeared by reference to the time for presenting a complaint in the Industrial Tribunal. Scarman LJ said:

"On the point of construction of "the escape clause" I agree with Lord Denning MR. The word "practicable" is an ordinary English word of great flexibility: it takes its meaning from its context. But, whenever used, it is a call for the exercise of common sense, a warning that sound judgment will be impossible without compromise. Sometimes the context contemplates a situation rarely to be achieved, though much to be desired: the word then indicates one must be satisfied with less than perfection: see, for example, its use in s 5 of the Matrimonial Proceedings and Property Act 1970. Sometimes, as is submitted in the present case, what the context requires may have been possible, but may not for some reason have been "practicable". Whatever its context, the quality of the word is that there are circumstances in which we must be content with less than 100 per cent: and it calls for judgment to determine how much less."

64. In the context of an obligation to serve notices under Regulation 5 of the 1989 Regulations, Parliament can be taken to have been well aware of the constraints under which billing authorities operate in terms of manpower and resources. That is so whether a billing authority administers the system in-house, or has contracted others to perform the services. To that extent, the Webster definition: 'possible to be accomplished within known means and resources' can properly be applied to the obligation under Regulation 5. That, in my judgment, is for practical purposes synonymous with 'feasible'. A billing authority will not be able to rely upon the suggestion that home-grown problems and inefficiencies rendered impracticable what would otherwise have been practicable.
65. Mr. Drabble submits that however the word 'practicable' is interpreted in this statutory environment, it can never be practicable to serve a notice in respect of a hereditament until the billing authority knows the identity of the person in rateable occupation. He submits that in each of these cases the Council was ignorant of the identity of the ratepayer and thus the question of practicability should be judged from the date when the identity became known or clear. It is wrong, he submits, to consider the question of practicability from the date on which the billing authority could have discovered the identity of the ratepayer.
66. I am unable to accept that submission. It is inconsistent with the decision of David Pannick QC in Encon on a point which was argued before him and which, if I may respectfully say so, was obviously rightly decided. The problem encountered by the billing authority in Encon was that although the hereditament appeared in the list, they were unable to locate it. One of the errors identified in the reasoning of the Magistrates was that they focussed on whether the billing authority knew the location of the premises before a certain date rather than whether they took practicable steps to find it at the beginning of the relevant period. The learned Deputy Judge concluded:

"The issue is not whether the billing authority was unaware of the location of the premises before 7^th November 1997 and therefore whether it was not feasible physically to serve the notices prior to that date … Rather the issue is whether it was practicable for the billing authority to have identified the location of the premises at an earlier date and therefore physically to have served the notices at an earlier date."

The reasoning applies with equal force to the question whether it was practicable for the billing authority to have identified the ratepayer at an earlier date.

The Impact of Alterations to Rating Lists

67. In the cases of Honda and Chevrolet the rating list was altered in April 2006. Mr. Drabble developed a submission that the effect of the alteration was to start the clock running again for the purposes of serving a notice under Regulation 5 of the 1989 Regulations. The Council's argument hinges on the fact that both hereditaments entered the 2000 rating list in December 2001 with effect from 1^st April 2001. Mr. Drabble does not dispute that a duty arose under Regulation 5 to serve a notice as soon as practicable after December 2001. However, in due course the proposals of Honda and Chevrolet to alter the list had the effect of entering both hereditaments into the 1995 list from 31^st March 2000 and from 1^st April for the 2000 list. That happened in the spring of 2006. There was a short period of time (13^th March to 4^th April 2006) when the hereditaments were shown in neither list. Those were the dates respectively when they were deleted from the 2000 list in their original form and then entered into the 1995 and re-entered into the 2000 list.
68. It is correct for the Council to say that they were unable to serve a notice under Regulation 5 in respect of liability arising under the 1995 list or for the year from 1^st April 2000 until after they were notified of the alterations to the lists. But in neither of these cases does the dispute extend that far back in time. I remind myself that the business rates claimed from Honda relate to occupation after 13^th October 2002 and those from Chevrolet to occupation after 1^st November 2002. There was a duty to serve Regulation 5 notices as soon as was practicable after those dates and then on or as soon as was practicable after 1^st April in subsequent years.
69. Had the Council served notices in respect of those years before the alterations were made to the list, and leaving aside that such service might well have precipitated earlier activity by the defendants to protect their positions, the eventual alteration of the lists would have required a reconciliation of the correct amounts due by reference to the entries in the lists eventually determined by the VOA or Tribunal. Fresh notices would be served for that purpose under Regulation 9 of the 1989 Regulations. The fresh notices have the effect of adjusting the payment up or down. Whilst those notices would supersede anything that had gone before they would not have the effect of excusing an earlier failure to comply with Regulation 5, if there were one. Thus the question whether business rates can be recovered for the earlier years falls to be determined by reference to the imputed statutory intention which I have discussed.

The Billing Authority

70. The Council is the billing authority for the purposes of the collection of business rates. During the period with which these claims are concerned there were about 5,600 hereditaments liable to business rates within the North Somerset District. At current rateable values they produce about £52,000,000 per year in business rates. At any one time roughly 10% of those properties are empty. It was the Council's responsibility to discharge the functions and duties imposed upon it by the 1988 Act and subordinate regulations. The functions of the billing authority have been outsourced by the Council to Liberata UK Limited. Martin James is a non-domestic rating specialist employed by Liberata. He gave evidence on behalf of the Council in connection with all three claims. He had joined the Council in 1991 but transferred to Liberata in 1995 when the Council contracted with Liberata to administer its revenues and benefits services. Mr. James had general experience of community charge and council tax collection but for over 10 years has been concerned with non-domestic rates.
71. Mr. James produced very detailed statements dealing with each of the claims. He was cross-examined at length and showed himself to be a careful and measured witness. He was the only witness called on behalf of the Council. There were times when he was asked questions about what were clear administrative failings within Liberata, some of which were within his bailiwick and some not, which discomforted him. Nonetheless, he was frank in accepting those failings. The factual content of his evidence was not, in the end, disputed.
72. The contractual arrangements between the Council and Liberata were examined at some length, as were a number of internal and external audits of Liberata's performance. The contract was a comprehensive document designed to ensure that Liberata undertook the relevant statutory functions on behalf of the Council. Indeed its purpose was identified as such in a certificate issued under Section 3 of the Local Government (Contracts) Act 1997. It obliged Liberata to comply with all relevant statutory requirements. A separate section dealt with detailed obligations in respect of each of the areas covered by the contract. Section 4 was concerned with business rates. By paragraph 3 of that section Liberata was required to:

"(a) make regular inspection and research of relevant properties as agreed by the [Council's contract monitoring manager]

(b) ensure that all new non-domestic properties where work is in progress are regularly inspected and issue completion notices for such properties as appropriate.

(c) …

(d) liaise with the Valuation office regarding the nature and effective date of alterations which affect the rating assessment.

(e) visit non-domestic properties as required to trace taxpayers, obtain forwarding addresses and investigate queries relating to liability, discounts and other relevant matters.

(f) liaise with the Council's Planning Directorate where appropriate to obtain information concerning changes to properties."

73. There was no suggestion that these obligations, or indeed those which are set out below, were unusual or onerous. The clear inference is that they represented a broad equivalence of what the Council itself would do if the operation were being run in-house. They were practicable.
74. Paragraph 5 of the same section required Liberata to use its best endeavours to determine the identity of all persons liable to pay business rates and maintain an accurate and up-to-date record of such liability.
75. Paragraph 7 concerned billing and collection:

"The contractor shall:

a) issue a legally valid non-domestic rating bill/demand/notice to the ratepayer(s) for each property shown in the rating list for the Council area in accordance with the statutory requirements, as soon as practicable taking account of reliefs etc.

b) …

c) …

d) amend and update rating records where a change in liability occurs and issue amended demand notice

e) …

f) …

g) …

h) …

i) take prompt action to trace the ratepayer where demand notices are returned "gone away" or similar

j) …

k) …"

76. The performance standard set by the contract for the collection of business rates was the upper quartile of all English Local Authorities or 98.6%, whichever was the higher. Void properties were to be inspected within a month of notification of a void and every three months thereafter. The various audits, details of which are before the Court, picked up a variety of problems. In particular, there were problems with the frequency of inspections during the period material to the three claims, namely 2001 to 2007. Manpower shortages were identified as a factor from time to time. Mr. James also explained that a change in the computer system added to the difficulties of his department. Although the performance standards were never formally changed, Mr. James indicated that in practice the Council knew they were not being undertaken with the frequency expected. As will become apparent when the details of the individual cases are examined, the system of inspections of property was patchy during this period and the alternative mechanism in place of sending postal enquiries was also ineffective. As Mr. James accepted in answer to Mr. Mercer:

"Q. We differ over when you worked it out and when you should have worked it out, but the reality was that the inspection system had broken down in the period between 2002 and 2006?

A. My Lord, unfortunately that is the case."

77. The result was that a liability for business rates might be overlooked and a hereditament recorded as 'void' for billing purposes when in reality it was in the list, had a rateable value attributed to it and the person liable was known to the billing authority, or with very little effort could have been discovered. This particular problem was also picked up in the audits. For example, the audit for 2004/5 noted:

"There are void properties on the NNDR System where the owner is not known to the NNDR Section. A void exemption is applied to the account and is not removed until the owner or new occupier is identified. A void exemption should only be applied for a period of three months, after this period empty property relief of 50% should be awarded."

78. One consequence of recording premises as 'void' was that for statistical purposes they were treated as productive of no revenue. Performance, both for contractual purposes and for the purposes of the statutory scheme for paying into the central pool of business rates, is critical. Between 2002 and 2008 the recorded performance of Liberata, and thus the Council, ranged between 99.7% and 99.98%. Yet the three claims before the Court, which do not represent the totality of premises wrongly noted as 'void', show that the reality was different. Even allowing for potential disputes about whether the sums now claimed could properly have been recovered if timely notices had been served, there were substantial rates liabilities which existed but were excluded from the calculation of those performance figures.
79. Liberata failed to comply with the obligations relating to inspections and record keeping imposed on it by the Council in respect of each of the properties in these three claims. Those obligations were considered by the Council as necessary to ensure compliance with the statutory scheme and to guarantee the proper recovery of business rates. Compliance with the contract was plainly practicable. The contrary was not suggested.

The Honda Case

80. Honda's involvement at the Royal Portbury Docks arises in connection with two different sites. One is known as Plot 33 and the other as Main Site. The Docks are situated on the south bank of the River Avon. Individual hereditaments within the Docks fall within the Council's area. The Docks themselves were at all material times subject to a 'Cumulo' assessment, together with Avonmouth Docks on the other side of the river, made by Bristol City Council. That assessment was made under the Docks and Harbours (Rateable Values) (England) Order 2000 (SI 2000/951). The basis upon which the Port Company First Corporate Shipping Limited is rated under the Cumulo is by reference to its revenues. Charges made per vehicle in connection with the import or export of cars, fall into the Cumulo calculation. Rents receivable on leased property within the Docks are excluded from the calculation.
81. The dispute over business rates between Honda and the Council related to its use of Main Site. Main Site forms part of a larger area that is used for the import and export of motor vehicles. Until 2001 Main Site was not separately rated. However, in the course of 2001 the VOA reviewed the basis upon which many sites with the Docks were assessed for business rates. Its conclusion was that a number of sites used by car companies should be entered into the rating list as separate hereditaments. Main Site was one of these. Another was the site in issue in the Chevrolet proceedings. Honda manufactures vehicles in the United Kingdom, some of which are exported. Additionally, it imports large numbers of vehicles from Japan. Many different manufacturers and importers in addition to Honda use the Docks. There is a practical distinction between land used for the import of vehicles and that used for their export. The sites used for imported vehicles, known as import terminals, are generally leased from the Port Company for substantial rents. That is a position replicated at other ports in the United Kingdom. That is because the vehicles which are imported remain on those sites for protracted periods. They are removed for delivery to dealers around the country in response to orders. It is thus important for car companies to maintain high grade security at these sites and generally ensure that the cars remain in pristine condition pending their sale. The site is a distribution centre. In short the site is much more than a temporary car park. It is therefore important to car companies, as it was for Honda, that they have exclusive control over such sites. By contrast, the position with export sites is in general different. Vehicles arrive at a port shortly in advance of a particular ship setting sail. Cars are parked for a few days and then loaded onto the ship, with the port company organising the moving and loading of the vehicles. The average period during which a Honda car would be at the port awaiting export is 4 to 5 days. For this, a 'per car fee' is charged.
82. Plot 33 was Honda's import site and distribution centre for which Honda has always accepted rates liability. Honda has occupied that site pursuant to a lease since 1994. All rates demanded on that site have been paid. Main Site was also used as part of Honda's import terminal until 30^th June 2002. That was pursuant to lease granted in July 1993 which expired on 1^st October 2002. In fact, Honda vacated the site at the end of June. All rates liabilities for that site in respect of occupation until 30^th June 2002 have also been discharged. There was then a gap of three months before Honda took a new lease on the site as an export terminal, during which time it is agreed that it was not in rateable occupation.
83. The circumstances in which Main Site came into the rating list were as follows. On 4^th December 2001 Neil Stanley of the VOA sent a fax to Mr. James giving the details of 11 new hereditaments subject to assessment within the Docks, which it considered should be rated separately from the Docks. As has already been noted, one of those was Main Site which was being used by Honda as port of its import terminal. The VOA notified the Council that Main Site should be subject to business rates from 1^st April 2001. That was the limit of backdating available to the VOA although, as Mr. James explained, it was clear that the site had been in rateable occupation before then. That enabled Honda in due course to make proposals to alter the list with the result that Main Site was subject to business rates for the whole of the period covered by the 2000 list (i.e. from 1^st April 2000) and also for the last day of the 1995 list (i.e. 31^st March 2000). That secured transitional relief which had the effect of reducing overall rates liability.
84. On 23^rd December 2001 the Council sent a demand notice to Honda at its Slough address (where such things were dealt with). Robert Tizzard of Messrs Edwin Hill, who acted as rates advisers to Honda, immediately confirmed that payment would be made. He and the Council agreed an instalment plan. On 1^st March 2002 the Council sent a demand for the year 2002/2003, seeking payment in 10 instalments.
85. The procedure followed after the Council was notified of the alteration of the list to include Main Site demonstrates how the system should work. The identity of the occupier was known to the Council. A notice was sent immediately for the year during which the new entry related. The collection of the next year's rates proceeded smoothly.
86. The period of dispute in this case is from 1^st October 2002 until 13^th September 2007. During that period Honda had a new lease of the Main Site from the Port Company. No rates have been claimed for the period between 5^th January 2005 and 31^st March 2005. That is because Honda surrendered part of the site, known as area C, to Mitsubishi on the earlier of those dates. The result was that two different companies occupied different parts of the site. The 2000 list contained a single hereditament described as Main Site. The site was reassessed by the VOA as from April 1^st 2005 to reflect the fact that the site had been divided in January 2005. The Council had been unaware that Honda had surrendered part of Main Site. The Council took the view that there was no single rateable occupier for the assessment during this short period and it was too late to alter the list. That was because by the time they became aware of it, the 2000 list was closed. Therefore no rates were charged to either of those occupiers for this period. Thus the business rates claimed from Honda are for the whole of Main Site until 5^th January 2005, then nothing until 1^st April when thereafter the rates claimed reflect the reduced occupation until 13^th September 2007. That is when the lease came to an end.
87. The papers reflect a confusion which extended over many years concerning the correct Honda corporate entity which was responsible for rates on Plot 33 and Main Site. That confusion extended to Honda itself and its professional advisers. Until 2007 the ratepayer for both Plot 33 and Main Site was understood by all concerned to be Honda UK Limited. In fact that company had ceased to trade and had been dormant since 1^st April 1991. The correct corporate entity was Honda Motor Europe Limited. It traded through two internal divisions (which had no separate legal identity) known as Honda UK and Honda Motor Europe. The Honda UK division conducted the import business; Honda Motor Europe the export business. It is now clear that for many years, rates bills were raised in the name of Honda UK Limited and paid without demur. The correct payer should always have been Honda Motor Europe Limited.
88. The confusion in the mind of Honda's advisers stemmed from their knowing that the import business and export business were run as separate divisions, but failed to appreciate that the designation 'Honda UK' and 'Honda Motor Europe' were not separate legal entities. Bills sent to Honda addressed to Honda (UK) Ltd were simply paid, the fine distinctions of corporate nomenclature being of no concern.
89. Both Plot 33 and Main Site were entered into the 2000 list as hereditaments for which Honda accepted liability for rates because it occupied both sites under leases from the Port for the purposes of their import business. There was never any suggestion that liability for rates did not accrue on Plot 33 or on Main Site up to and including 30^th June 2002 when Honda vacated the site. Having agreed an instalment plan, Honda's rating adviser took steps legitimately to minimise Honda's liability for rates on the import sites first by applying to have the sites assessed from the last day of the 1995 list and secondly to reduce the rateable values of both hereditaments. That exercise was protracted but ultimately successful. In April 2006 the Valuation Officer altered the assessments in respect of both the 1995 and 2000 lists. Those alterations resulted in a recalculation of the rates payable on Plot 33 and Main Site, the latter until 30^th June 2002. In the result, there had been an overpayment which was reimbursed in April 2008.
90. The implications of the fact that Honda accepted liability for Main Site until June 2002 and also had rates advisers on board at all times were much debated in the course of these proceedings. Yet, without more, they do not answer the question whether Honda was in rateable occupation after 1^st October 2002 when it began to use Main Site for export purposes, nor whether it or its advisers understood that there was a rates liability for the site after that date. The potential liability for rates on the Main Site after October 2002 was first raised by Mr. James of Liberata in May or June 2006 in discussions with Mr. Tizzard. Demands were not served until 6^th November 2007 although through most of the intervening period that was by agreement whilst attempts were made to sort out the differences between the parties.
91. The events between June 2002 and the sending of demand notices in November 2007 are spoken to by Mr. James, in the documents produced by the parties and in evidence from Simon Stacy, Manager of Logistics Operations at Honda, Richard Harvey, Finance Director of the Port Company, Robert Tizzard and Colin Barfoot the terminal supervisor at Main Site.
92. Having given up Main Site for their import business at the end of June 2002, Honda entered into discussions with the Port Company to use the site for exporting cars. Hitherto, Honda had exported its cars through Southampton. The Port Company was understandably keen to secure Honda's export business. Sean Willis, then the responsible executive, negotiated with the Port Company on behalf of Honda. He has since left Honda's employment. The circumstances of his departure were unhappy and so it has been impossible for Honda to explore with him the thinking behind entering into the arrangements with the Port Company that he did. On 12^th July 2002 the outline arrangements for Honda's use of Main Site for export were recorded in a letter from Simon Bird, Chief Executive of the Port Company, to Mr. Willis. The Port Company offered to upgrade Main Site at an estimated cost of £1.2 million. Honda would take a lease of Main Site for five years at a peppercorn rent. Honda would pay the Port Company £4 per car for use of the site for export, as a contribution to the capital cost, subject to a maximum of £400,000 per annum. It was anticipated that Honda would not use the whole site all the time. In that event the Port Company would be able to utilise the unused areas at no cost. The letter also recorded an understanding that if rates became payable on the site, they would be for Honda's account.
93. A detailed specification was produced by the Port Company for the works required. It was sent to Mr. Willis on 24^th July 2002. It provided for resurfacing, the provision of a visitor car park, fencing, lighting, a terminal office, an enhanced entrance with security and a dedicated road on the site.
94. Honda had been paying business rates on Main Site by monthly instalments of £17,829.60. On 1^st August 2002, Mr. Willis wrote to the Council. He asked for the rates liability to be cancelled. He sought a credit note for the July payment, which had already been made, and also for the August payment due in the middle of the month in the event that liability had not been cancelled before then. These requests were premised on the fact that Honda had given up occupation at the end of June.
95. On 4^th December 2002 the Port Company entered into an underlease of the Main Site with Honda. It was for five years from 1^st October 2002. It reflected the understanding set out in Mr. Bird's letter of 12^th July. The authorised use of the premises was defined as:

"Use as a compound for the transit storage of 'Honda' branded motor vehicles manufactured by the Tenant which are awaiting export by water transport from the Port of Bristol together with such other use that the Landlord may make of the Premises under clause 3 8 2 and paragraph 7 of schedule 2."

The rights reserved to the landlord were:

"In the Landlord's exclusive discretion and without costs or charge to use such parts of the Premises as shall not from time to time be occupied by motor vehicles stored by the Tenant in accordance with the Authorised Use. Before exercising the rights granted in this paragraph 7, the Landlord shall obtain the Tenant's consent, which the Tenant covenants not unreasonably to withhold or delay and which consent shall be deemed given if given orally or in writing by any employee, agent or other representative of the Tenant at the Premises or elsewhere. If the Tenant reasonably requires the Landlord to vacate parts of the Premises used by the Landlord in order to allow those parts to be used by the Tenant for the Authorised Use, then the Tenant may give notice to the Landlord (such notice being given orally or in writing by the Tenant or any employee, agent or other representative of the Tenant) specifying the parts affected and the time and date on which the Tenant's use of the relevant parts of the Premises for the Authorised Use is to start (the "appointed time"). Provided that the Tenant's notice is given sufficiently in advance of (and in any event not less than 48 hours before) the appointed time to enable the Landlord reasonable time to relocate the motor vehicles stored by it on the relevant parts of the Premises, the landlord shall vacate the relevant parts of the Premises specified in the notice by the appointed time. In exercising the rights of access and use granted by this paragraph 7, the Landlord shall not erect any permanent buildings or other structures on the Premises, but this shall not prevent the Landlord bringing onto the Premises any plant, machinery or equipment required by the Landlord in connection with its use of the Premises provided the same is removed at the end of such use.

Provided always that in exercising the foregoing rights and all other rights of entry and access in connection with such rights generally the Landlord shall cause as little interference as possible to the Premises and the business of the Tenant and shall forthwith make good any physical damage caused to the Premises by the exercise of the said right and indemnify and keep indemnified the Tenant against all actions, claims proceedings, expenses and demands in any way relating to the exercise of those rights."

96. As envisaged, the rent was a peppercorn. Responsibility for outgoings was provided for in clause 3 2. The Tenant covenanted as follows:

"3 2 1 To pay and discharge to the relevant authorities or (if no direct assessment is made on the premises) to pay to the Landlord on demand a due proportion (to be determined by the Surveyor, whose decision shall bind the Tenant) of all rates, taxes, outgoings and impositions whatsoever of whatever kind payable in respect of the Premises by the owner or occupier other than any payable by the Landlord in respect of the grant of this lease, the receipt of rents under this lease or any dealing with its reversionary interest.

3 2 2 To pay for all drainage, water, gas, electricity, telephone communications and any other services or amenities of a like nature used by or available to the Premises (including all standing charges) and to observe and perform all present and future regulations and requirements of the statutory supply authorities and to keep the Landlord indemnified against non-payment, breach, non-observance or non-performance."

97. Honda covenanted to use the premises only for the authorised purpose. So when Honda wanted to use Main Site for the storage of import vehicles it was required to ask for the Port Company's permission. When it did so permission was granted. For example, on 13^th January 2003 Mr. Bird wrote to Mr. Stacy indicating that the Port Company had no difficulty in the export terminal being use for the short term storage of imported vehicles. Mr. Bird added that it was hoped that export volumes would develop and grow. A parking charge of 45 pence per car per day was agreed in respect of those import vehicles. In March 2004 there was further discussion between Mr. Bird and Mr. Stacy about increasing Honda's use of the export facility, with Mr. Bird indicating that until that happened the Port Company would need to use the site for surplus non-Honda parking. The capacity of Main Site was 2,357 cars. This reduced to 1,977 cars on 5^th January 2005 when part of the site was surrendered to Mitsubishi.
98. Honda operated the export site through International Car Operators ("ICO"), for whom Colin Barfoot worked. Honda paid ICO a fee from which the £4 per car charge levied by the Port Company was then paid by ICO.
99. A clear indication of how use of Main Site by the Port Company was expected to be arranged is found in a letter from Honda dated 4^th January 2005 which gave consent to the storage of Toyota vehicles on Main Site. Honda required the Port Company to enter into a formal agreement with Toyota effectively to bind Toyota directly to the Port Authority's obligations to Honda under paragraph 7 of schedule 1 of the lease. The Port Company was also required to ensure than anyone exercising the rights under paragraph 7 would vacate if Honda served a notice. A duplicate of the letter was signed on behalf of the Port Company agreeing to the conditions in return for Honda's consent.
100. Detailed figures relating to the use of the site by Honda and, through the Port Company, other manufacturers were collated for the purposes of the trial. They were distilled into a number of tables and graphs. The periods represented in these documents did not precisely coincide with the dates in issue in these proceedings but there was no suggestion that they were inaccurate, or otherwise did not provide a clear overall picture of how Main Site was used. Over the whole period of the lease an average of about 7.5% of the parking slots available to Honda was occupied by cars waiting for export. That average conceals very wide variations in the numbers of export cars at Main Site at any one time, ranging from none to well over one thousand. On about 8% of the available days there were no Honda cars waiting for export at the site, although on some of those days import vehicles may have been parked there. In October and December 2002 no cars were parked at the site and in November 2002 Honda's use of the site was so negligible that it barely registers on the chart. During that period it would not have been at all obvious to someone looking at Main Site that it was in rateable occupation at all. The highest volume of exports was found in 2007. At various times Honda import vehicles were parked at Main Site with the permission of the Port Company. That was between January and May 2003, in March 2005 and between July and September 2005; so too in April, August and September 2006 and January to March and July to September 2007. Once again, the use for this purpose was highest in 2007. In January 2005 Toyota cars took up about 20% of the available slots pursuant to the arrangement already outlined, but on the evidence produced by Honda that was the only occasion that parking slots were occupied by another car company pursuant to the terms of the lease. The reality is that the site was grossly underused during the whole period of the lease. The Port Company's hopes that Honda would route a large part of its export business through Bristol rather than Southampton did not materialise.
101. Mr. Stacy was unaware of the existence of the lease on the site until the dispute about rates erupted in 2006, although whoever gave consent for Toyota cars to be parked there in January 2005 knew of it. Mr. Tizzard, who was assiduously pursuing a refund in respect of Plot 33 after 2002, was also unaware of any potential rates liability on Main Site after 30^th June 2002 until that same time. That was because there was no contact at all from the Council concerning it.
102. We have seen that the Council had imposed contractual obligations on Liberata requiring them regularly to visit and otherwise check all sites for business rates purposes. In 2002 responsibility for review of empty properties rested with Liberata's housekeeping team. Void properties should have been inspected within a month of receipt of notification that they were empty, and thereafter on a three monthly basis. The obvious purpose of that requirement was to ensure that the fact of rateable occupation was picked up swiftly, so that business rates could be collected. Mr. James explained that pressure of work made that difficult and so the Council agreed that the three monthly enquiries could alternate between physical inspections and postal canvasses. Mr. James also explained that the IT system used by Liberata was changed in March 2003. This apparently resulted in delay in reviews of void properties. In July 2003 the internal audit noted a general problem with post being returned marked 'gone away' or similar, but no follow up inspection happening. Various recommendations were made to improve systems for keeping pace with the occupation of properties that had earlier been void. Further problems were noted, and commensurate recommendations made for improvement, in 2004.
103. There were no recorded canvasses or inspections of Main Site between November 2002 and December 2004. Mr. James explained that an automatic postal canvass was generated by the computer on 1^st November 2002 although no copy was kept. The next was a postal canvass on 9^th December 2004 sent to 'The Occupier, Honda UK Ltd, Main Site' but it was returned by the Post Office marked 'Address inaccessible'. Main Site was inspected on 2^nd February 2005, which inspection confirmed that the site was in use. The inspection note gave the address as 'Honda UK Ltd Main Site'. It also recorded Mr. Harvey's name and telephone number as the contact at the Port Company who dealt with rating matters. Despite this inspection, no action was taken to raise any notice or notices nor to contact either Honda or Mr. Harvey. On 1^st April 2005 the time for making proposals to alter the 2000 rating list expired.
104. Throughout this period, Mr. Tizzard had been active in his negotiations with the VOA with a view to reducing Honda's rates liability for Plot 33, which it continued to occupy as its import terminal, and also for Main Site until 30^th June 2002. He reported his progress in a letter to Mr. Stacy dated 16^th December 2005. It noted the savings that had been made by taking advantage of transitional arrangements consequent upon securing an assessment for the last day of the 1995 list, namely 31^st March 2000. The properties had been first assessed from 1^st April 2001. He explained to Mr. Stacy that 'the perverse world of Rating' resulted in a longer period of exposure to rates liability reducing the bill as compared with the shorter period. Mr. Tizzard had also negotiated reduced rateable values. His letter made reference to Plot 33 for the whole period until 31^st March 2005 but to Main Site only until it had been vacated on 30^th June 2002. Finally, Mr. Tizzard explained that he had made representations regarding Plot 33 for the 2005 list from 1^st April 2005.
105. This correspondence demonstrates a point that has never been seriously in issue, namely that both Honda and its rating adviser were genuinely unaware of the existence of any potential liability for rates on Main Site during this period. There is no suggestion that Honda was keeping its head down with a view to avoiding its liabilities.
106. All of this careful footwork by Honda's rating adviser was mirrored by advisers working for other car companies who had import sites at the docks. It was in the financial interests of all such companies to seek to benefit from the transitional arrangements available by arranging that their sites entered the list on 31^st March 2000, rather than 1^st April 2001.
107. The changes agreed by Honda (and indeed by other car companies) resulted in the VOA sending notification to the Council on 14^th March 2006 that the assessment dated 1^st April 2001 was deleted. Mr. James and Mr. Bath of the VOA discussed the implications of this the following day in the light of a long email from Mr. Bath. It was explained to Mr. James that both the 2000 and 1995 lists had been altered. At that time, Mr. Bath's understanding was that all the car importers had agreed the alterations, with the exception at that point of Chevrolet. As will be seen when dealing with the facts in Chevrolet's case, its position was complicated by its having taken on liabilities of Daewoo following that company's insolvency.
108. The changes made by the VOA generated an interest from Mr. James in Main Site. On 17^th May 2006, the Council set up a new account to collect business rates on Main Site which reflected the changes to the lists. Mr. James had made contact with Mr. Tizzard in May and June 2006, who provided him with contact details of Mr. Stacy at Honda. The precise dates of that contact are not apparent from the evidence, but the parties agree that it occurred at about that time. In early July Mr. James and Mr. Tizzard spoke on a number of occasions. Mr. James indicated that he intended to raise bills for business rates in respect of Honda's occupation of Main Site since the end of 2002. It was during this period that Honda was given the first intimation from the Council that there was a liability for such rates. The rebate in respect of Plot 33 (and Main Site for July and August 2002) had not by then been paid. Mr. James indicated his intention to set off the rebate against the new liability. Mr. Tizzard cavilled at that suggestion because his understanding was that the rebate was due to Honda UK Ltd whilst any new liability was for Honda Motor Europe Ltd. So it was that the confusion about the correct corporate identities of Honda quite innocently crept into the discussions. The earlier rates had been paid on notices sent to Honda (UK) Ltd from the funds of the trading division of Honda Motor Europe Ltd known as Honda UK.
109. Mr. Tizzard wrote to Mr. James on 20^th July 2006 asking for the rebate for Plot 33 to be paid to Honda UK Ltd. In respect of Main Site he said this:

"I have again checked with my clients. There is a lease in the name of Honda Motor Europe Limited which is a separate body to that of Honda UK Limited albeit, of course, within the same overall Honda group of companies.

Despite the existence of the lease, Honda Motor Europe Limited have not been in exclusive occupation or possession of the property. They have an agreement with the Port whereby the Port handle Honda cars and receive an all-inclusive payment from Honda on a per car per day basis or on a gate fee.

Since 2002, other companies have occupied Main Site. Part has been disposed of to a third party.

For significant periods the entire site was vacant.

We are advised that the Dock has a contractual agreement for the storage and export of cars for Honda Motor Europe Limited in which the Dock are responsible for rates. It is accepted that this has not yet been agreed with the Dock but the parties are in active discussions to try to resolve the issue in order to inform you of the agreed situation.

We hereby confirm that if it is proven that the ratepayers are Honda Motor Europe Limited they will meet their liability provided it reflects the accurate facts of occupation."

It is apparent from this letter that Mr. Tizzard was focussing on whether Honda were in occupation for the purposes of attracting a liability for business rates. It was the herald of the argument that Honda was never the paramount occupier. The indication that Honda would meet their rates obligations was subject to that issue being resolved. At this stage no 'Encon' point was taken. The reference to a 'per car per day' rate was to the arrangement in respect of import vehicles parked on Main Site. The gate fee arrangement was a reference to the £4 fee charged for export vehicles.

110. On 18^th July 2006 a demand notice for £733,593.33 had been sent to Main Site addressed to 'the Occupier Honda (UK) Ltd, Main Site' but was returned marked 'Addressee has gone away'. That notice covered the period from July 2002 until 31^st March 2007. On 1^st August 2006 the Council sent a Business Rates Payment Card to Main Site which suffered the same fate. On 4^th August Mr. James spoke to Mr. Tizzard and explained that he was having difficulty in establishing which Honda entity was responsible for rates on Main Site. On 16^th August Mr. Tizzard sent Mr. James a copy of the front sheet of the lease. The lease itself was not provided until after these proceedings were issued, despite later being requested. He told Mr. James that any Honda liability would accrue to Honda Motor Europe Ltd. It was apparent from the parties identified on the title page of the lease sent by Mr. Tizzard that Honda Motor Europe Ltd was the leaseholder. Mr. James was sensitive to the possibility that the proper ratepayer could be a different Honda entity. He explained in his witness statement that it 'was not at all clear' to him the company identified by Mr. Tizzard was the correct ratepayer. But the reality was that were it not for the underlying disagreement about whether Honda (in its widest sense) was liable for rates on Main Site, there was nothing to stop the Council from serving Regulation 5 notices for each year from 1^st October 2002 as soon as Mr. James was provided with this information by Mr. Tizzard.
111. Mr. Tizzard indicated that any liability for rates was disputed between Honda and the Port Company. That may have been the view of Honda although the Port Company was clear that any liability there might be was for Honda. Mr. Tizzard recorded his take on the various issues that had arisen in a file note dated of 21^st July. He described the lease at a peppercorn as 'a strange situation'. On usage he said this:

"The lease seems to suggest that Honda are liable for rates. However, there is an option to which Honda need to give consent to allow the Landlords to use empty parts of the site for other purposes. This is common usage provision. It doesn't to me seem to give the Landlord paramount control of the overall site however.

The Landlord have exercised that option, with Honda's consent and Toyota have used part (presumably) of the site at some stage."

He noted that the site had been vacant for some time during the disputed period and that Mitsubishi had taken part of the site. He also recorded Honda's conviction that the gate fee arrangement covered any rates liability.

112. By contrast an e mail from Simon Bird, the Port Company Chief Executive, to Simon Stacy on 12^th July 2006 had made it clear that the lease was drafted to ensure that rates liability would be for Honda.
113. On 18^th August Mr. James arranged for a postal canvass to be sent to the site but it too was returned by the Post Office. Mr. James remained unsure about which Honda legal entity was responsible for the rates. On 29^th August he spoke to a colleague of Mr. Tizzard's and asked for a copy of the lease (which was not forthcoming) and a letter from the Port Company confirming who was in rateable occupation.
114. Following further telephone conversations Mr. Tizzard wrote to Mr. James on 10^th October 2006. He attached a statement of facts to the letter. That summarised the terms of the lease and the separate financial arrangements for the gate fee (export vehicles) and parking fee (import cars stored on Main Site). He noted that the Port Company had used the site to store Toyota cars, that there had been part occupation of the site because it is divided for the purposes of use into different areas and slots and many had been unoccupied for much of the time. He explained the surrender of part of the site to Mitsubishi and emphasised that all the Port Company's revenues from the site's use had gone into the Cumulo assessment. He continued:

"It is our contention that, at any time from 2002 onwards, there have been a number of possible ratepayers involved in this hereditament. Whilst the lease confirms that Honda Motor Europe Ltd are responsible for rates it does not confirm that they were themselves in paramount 'rateable occupation'. Occupation has been shared and/or held in common with companies other than HME.

Rate demands have not been issued by North Somerset District Council since 2002. It was the firm understanding of the management of HME that any rate liability was being met by way of their contractual arrangements of car management with The Port who pay rates within their Cumulo assessment based on revenues generated from this and other sites.

There has been an entry for the Main Site throughout the 2000 Rating List.

The case of [Encon] found in favour of an appellant where a Local Authority issued demands some time after occupation commenced. The Charging Authority could not recover for a period prior to the year in which the demands were issued.

Any occupation of Main Site is clearly visible from public and private roads. It can be argued that the Authority could reasonably have expected to have charged HME had the Authority considered HME to have been the ratepayer.

The fact that it has not charged HME has caused HME to reasonably consider that it did not have a rate liability on Main Site.

HME believed that any rate liability was being met. The Charging Authority have been in the position to ascertain the relevant facts relating to the rateable occupier and rate liability since 2002."

115. Mr. Tizzard also enclosed a letter he had signed on behalf of Honda Motor Europe Ltd and Honda (UK) Ltd and which Mr. Harvey had signed on behalf of the Port Company. It suggested that Honda (UK) Ltd occupied Plot 33 for their own purposes but that Honda (UK) Ltd were not in paramount occupation of Main Site. Honda Motor Europe Ltd carried out operations on Main Site, subject to the factors set out in the statement of facts. Thus the confusion about the corporate identities persisted.
116. Mr. James was not willing to waive the suggested liability on the basis of the information provided. Mr. Tizzard noted the content of a conversation with Mr. James on 26^th October 2006 in an e mail to Mr. Stacy:

"They haven't agreed to 'waive' rates before 1/4/05 which I think might be a practical solution I could recommend to you, but they haven't issued demands and are still considering the arguments. They have maintained that you are the ratepayer and have been since 1/10/02.

Have you partitioned the area yet to define the occupied and vacant areas? We spoke about using fencing to delineate?"

Mr. James agreed not to raise a rate demand notice until matters had been clarified.

117. Thereafter, in December 2006 Mr. Tizzard approached the VOA in an attempt to vary the 2005 list to reflect the actual usage since 1^st April 2005. In January 2007 he pressed Mr. James for the refund due to Honda (UK) Ltd (as he believed). Two further demands were generated automatically and sent to Main Site in March and June 2007. The second was returned by the Post Office and the first was not received by Honda.
118. On 25^th June 2007 Mr. James also caused a rate reminder to be sent directly to Mr. Stacy at Honda's offices in Slough in respect of Main Site for the period before 30^th June 2002. This was acknowledged by Honda immediately and, as Mr. James put it 'gave rise to a flurry of activity'. That was because Honda had in fact paid all its rates liability for Main Site before 30^th June 2002. This reminder had been sent in response to a reduction in rateable value for Main Site for that period. The result was that a modest refund was due, which was eventually paid on 24^th April 2008.
119. On 27^th June 2007 the Council was notified by the VOA that the 2005 list had been altered by a reduction in the rateable value. In August, the Council wrote to Mr. Tizzard setting out their calculation of the rates due on Main Site for the period 30^th June 2002 to 31^st March 2008, reflecting the changes in rateable value. In the meantime, Mr. Tizzard decided to appeal the inclusion of Main Site in the rating list, on the basis that it was land in common usage. The Council agreed to suspend the issue of a bill to enable the VOA time to consider that appeal. The VOA was not receptive to Mr. Tizzard's representations. This was in contrast to the steps he had taken the previous December when he asked that Main Site be split into two hereditaments (an occupied and an unoccupied part) with effect from 1^st April 2005, and also that the part surrendered and then re-let to Mitsubishi should be separately rated. Very substantial savings were made in the potential liability for rates on Main Site by dividing it into an occupied and unoccupied part.
120. Mr. Tizzard was prevented from making a proposal to split the site for rating purposes before April 2005, because by the time he was aware that there was a suggested liability, the 2000 list was closed. He has calculated that the saving on the sums claimed for the period between October 2002 and March 2005, had he done that, would have been £141,247.49.
121. Despite the agreement to suspend the issuing of a demand, the computer churned one out on 11^th September 2007 but it was returned as before. Mr. James and a number of his colleagues had a meeting on 18^th September to discuss the position of Main Site. It was at this meeting that they decided to grant an exemption for the period 5^th January 2005 to 31^st March 2005 on the basis of Mitsubishi's occupation of part of the site pursuant to a lease from the Port Company. Otherwise they determined to seek recovery.
122. On 25^th September 2007 two demand notices were issued and sent to Honda Motor Europe Ltd at their Slough address. One on its face covered the period from 1^st October 2002 to 31^st March 2007, but the charges after 1^st April 2005 were fully rebated on this document. The effect was that the bill set out the sum claimed from 1^st October 2002 to 31^st March 2005. The second bill covered the period from 1^st April 2005 to 31^st March 2008. These bills did not comply with the 1989 Regulations in that they included demands for more than one year's rates in a single document, but the potential liabilities were set out. Six individual demand notices were sent on 6^th November 2007. These are the notices on which the Council are suing. They were the first that complied with Regulation 5 of the 1989 regulations.
123. On 13^th September 2007 Honda's lease of Main Site expired. It was not renewed. Honda's use of the site has continued as before but there is no suggestion that Honda has any continuing rates liability after that date. The distinction is that there is no lease. The nature of the payments to the Port Company has not changed. Mr. Stacy explained that Honda exports between 20,000 and 23,000 cars a year through the Port, in batches of between 200 and 600. The two hereditaments that made up the premises comprised in the lease at the date that it expired were in due course removed from the 2005 list from that date. The site is back as part of the Docks for rating purposes under the Cumulo.
124. Mr. Tizzard had one last go at trying to persuade the Council to reduce the demand on the basis that Honda had not occupied the whole of the hereditament during its tenure, but without success. The notice for 2007/2008 was later amended to reflect the expiry of the lease.
125. Colin Barfoot of ICO was the terminal supervisor who worked at Main Site from January 2003. He explained that Honda export cars were stored on the site as close as possible to the point at which they were offloaded from car transporters. This meant that the same areas were regularly utilised with the result that large areas were never, or were only infrequently, used. It would have been possible to fence off areas of the Main Site and thereby avoid using them at all. Honda itself did not have staff at Main Site. There were various buildings on or near the site from which ICO staff operated. It is possible that this explains why post addressed to Honda was returned by the Post Office. There has been no evidence or suggestion that Honda was deliberately returning post received at Main Site. The picture is not entirely consistent because a Notice of Alteration dated 14^th March 2006 sent by the VOA to Main Site did find its way onto Honda files and so is likely to have been received by someone at Main Site and sent on, unless the file copy is one that came through Mr. Tizzard.
126. Mr. Tizzard's actions give some indication of what might have been done earlier if Honda's potential liability for business rates on Main Site had become apparent earlier through the service of notices. There is no reason to doubt both his evidence and that of Mr. Stacy that they were unaware of any potential liability until Mr. James and Mr. Tizzard were in touch with each other in May and June 2006. The potential rates liability for Main Site did not feature in Honda's financial calculations or projections. That state of ignorance resulted in Mr. Tizzard taking no steps to reduce that liability whilst it was still possible to make proposals to alter the 2000 list. There is also no reason to suppose that, at the least, he would not have achieved the division of the hereditament in just the same way as he did in respect of the 2005 list. He was able to do that by showing that parts of the site were never used for the export business because when cars were parked for export they were always located as close to the lorry drop off point as possible. Mr. Tizzard also explained that he would have advised Honda on how it might have operated differently within the Main Site by isolating individual zones which would have enabled empty rate relief to be obtained. That has been done at other Honda sites within Avonmouth. He would also have suggested that parts of Main Site which were not in fact needed by Honda be handed back to the Port Company. There would have been the opportunity to surrender or renegotiate the lease. As it is, the potential liability came to light only towards the end of the lease and during that period Mr. Tizzard's energies were devoted to persuading the Council, albeit unsuccessfully, to waive the rates and ameliorate the position with respect to the 2005 list.
127. Mr. Stacy knew nothing of the lease until the issues came into focus in 2006. Underlying his evidence on the steps that would have been taken to avoid a liability for rates was the proposition that the export operation could just as easily have been arranged in a way which resulted in no rates liability on Honda for Main Site. That, after all, is what has happened since the expiry of the lease. So Mr. Stacy identified five options that would have been open to Honda had they appreciated that there was a rates liability.

(i) The lease might have been surrendered early. He would have expected the Port Company to be receptive to such a proposal given the close business relationship between the two and the Port Company's desire to foster good relations with a view to increasing both export and import business.

(ii) Since the export business in any event remained largely operated through Southampton, the relatively small part which went through Portbury could have been relocated to Southampton. At worst, that would have enabled empty business rates relief to be claimed. There was no obligation under the lease to put a single car through the Docks.

(iii) The alternative would have been to put more cars through the Docks to spread the cost of the rates. The arrangement at Southampton did not expose Honda to a liability for rates.

(iv) A fencing arrangement could have reduced liability for rates.

(v) Since Honda had not budgeted for this rates liability it was not a factor which informed its financial planning. Consideration would have been given, if all else failed, to working this increased overhead into the pricing of its cars.

128. There is, in my judgment, little doubt that if Honda had been aware in October 2002 or thereafter that it was liable for rates on Main Site, (or thereafter) on receipt of notices served under Regulation 5 of the 1989 Regulations, steps would have been taken that either would have extinguished that liability (at least for the future) or substantially reduced it. Nothing in the evidence of Mr. Harvey of the Port Company leads to a contrary conclusion.
129. He confirmed that until March 2005 the Port Company paid rates to Bristol City Council on the basis of its Cumulo assessment. That was based upon revenues before 2000. From April 2005 a new assessment was made based upon revenues in accounting years 2001, 2002 and 2003. The new assessment for 2010 took into account those revenues for accounting years 2005, 2006 and 2007. The revenues included the £4 per car fee charged after October 2002 in respect of Honda's exported cars. That fee was invoiced to ICO on behalf of Honda. It follows that so long as the Port Company were not additionally assessed as liable for business rates on Main Site, the arrangement did not affect its own liability under the Cumulo. Any rent received by the Port Company from leased property was not included in the income used to assess the Cumulo.
130. Mr. Harvey explained that the arrangement with Honda was one which the Port Company hoped would lead to substantial export volumes passing through the Docks. Their aim was to try to secure business hitherto enjoyed by Southampton. Mr. Harvey negotiated the lease with Honda. It was his practise when entering leases to make explicit reference to rates and fix the tenant with such liability as there may be. Mr. Harvey's expectation was that any leased premises would be considered a separate hereditament by the VOA, whether or not that resulted in liability for rates. He did not consider that the right of the Port Company to use the site with permission could make it the paramount occupier. He wanted a lease because the Port Company was entering into very substantial expenditure to make Main Site fit to be used by Honda as an export terminal. Even though the rent was a peppercorn and there was no obligation upon Honda to put any traffic through the Docks, it provided the Port Company with some comfort.
131. Mr. Stacy was unable to see the value to Honda of having the lease and Mr. Willis is no longer around to ask for his reasoning in entering the lease.
132. However, it does not seem to me too difficult to discern advantages to Honda in entering into the lease. It was part of an arrangement which secured a large investment by the Port Company in Main Site which then gave Honda control over whether it was used for export or not. If Honda chose to do so, it could have moved its export operation from Southampton, or as much of it as suited them, in the knowledge that arrangements were in place at the docks to facilitate that. Mr. Stacy explained that in 2002 Honda started to export large volumes of cars from the United Kingdom to the United States. The intention was to export 60,000 or 70,000 vehicles a year. Only Southampton and Portbury had the necessary deep water facilities. To cope with this volume of potential trade, a large operating area would be needed at whichever port was used. It was to capture this trade that the Port Company upgraded Main Site to a standard comparable with the facility offered at Southampton. From Honda's point of view one can see how having an ability to have first call on the use of this facility would be advantageous. It would also be naïve not to suppose that the existence of a new and available facility at Portbury would not have had a beneficial impact on Honda's ability to negotiate with Southampton. The facilities created at the Docks produced a competitive dynamic.
133. None of this, however, detracts from the conclusion that arrangements could have been made at Main Site to reduce any rates liability.
134. The first question to be considered in the light of these facts is whether Honda was in rateable occupation of Main Site at all between 1^st October 2002 and 13^th September 2007. Honda's argument that it was not in rateable occupation of Main Site at the docks is based upon the premise that the Bristol Port Company was the paramount occupier of the site. If that is so, they and not Honda would have had such liability as there was for business rates. As the evidence developed during the case, and in particular as charts and graphs of the detail of vehicle movements on a month by month basis were produced, it appeared that Honda might be laying the ground for an argument that the question of who was the paramount occupier could deliver different answers for different periods. Mr. Mercer disavowed that possibility and accepted, as Mr. Drabble contended, that there were only two answers to the question: either Honda or the Port Company was the paramount occupier for the whole of the material period.
135. The principles to be applied to this question were not in dispute. The starting point is the judgment of Slade LJ in Ratford & Another v Northavon District Council [1986] RA 137. He considered the burden of proof in rate recovery proceedings where the issue was rateable occupation. A demand can only be served on someone whom the rating authority has reasonable grounds for believing is in rateable occupation. At enforcement proceedings the rating authority has to show that the rate in question has been duly made and published; that it has been duly demanded and has not been paid. If these three things are shown, the burden then shifts to the defendant to show cause why the demand has not been paid. The burden of proof is on the balance of probabilities – see page 149.
136. The question of rateable occupation is generally explored by reference to four ingredients. First, there must be actual occupation or possession. Secondly, occupation should be exclusive to the purposes of the possessor. Thirdly, possession must be of some value or benefit to the possessor. Fourthly, the possession must be more than transient. Those are the ingredients discussed in Laing (John) & Son Ltd v Kingswood Area Assessment Committee [1949] 1 KB 344, which were approved in the House of Lords in London County Council v Wilkins (V0) [1957] AC 362. Legal entitlement to possession does not determine the question, although it is a relevant factor: R v St Pancras Assessment Committee (1877) 2 QBD 581.
137. However, there may be cases in which there is more than one candidate for the position of rateable occupier. Rather than a multiplicity of candidates delivering the outcome that no one is liable to pay rates, the question for the court is one of paramountcy. In Westminster City Council v Southern Railway Co [1936] AC 511 Lord Russell said:

"There may be rival occupancy in some persons 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 the occupation is paramount, and whose position in relation to the 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."

Furthermore, the fact that storage facilities might stand empty from time to time does not result in their ceasing to be in rateable occupation during those periods: Hewson, Chapman & Co ltd v Grimsby County Borough Council (1953) 46 R & IT 703. Finally, occupation of part of a hereditament by someone who retains legal possession of the whole and whose occupation of the part fulfils the description in the rating list, amounts to rateable occupation of the whole: see section 43 of the 1988 Act and Camden London Borough Council v Herwald [1978] QB 626.

138. I do not overlook Allan v Liverpool Overseers (1874) LR 9QB 180, which Mr. Mercer drew to my attention, but that turned upon the grant of preferential use of parts of docks pursuant to statutory powers found in section 64 of the Mersey Docks Act 1858 and whether, for the purposes of the poor rate the arrangement entered into conferred exclusive possession on the ship owners concerned.
139. Mr. Mercer submits that the lease itself is of 'minimal' significance in this case for seven reasons.

(i) The lease was unnecessary to enable Honda to use the site for export purposes.

(ii) The existence of the lease made no difference to the way in which the export operation was run.

(iii) The lease was suggested by the Port Company and not Honda whose interest was in the quality of the site (after improvement) and the rate per car, and who gave no commitment in that respect.

(iv) The true rental value in 2001 was about £31,000 per acre per annum. (There was evidence to support this proposition.)

(v) The lease contemplated two co-existent uses. One by Honda and the other by the Port Company.

(vi) Although the lease provided for exclusive occupation by Honda, it was always envisaged that Honda would not need the whole of the site for its export purposes and that it would give consent to the Port Company to use parts of it for other purposes.

(vii) When Honda wished to use Main Site for imported vehicles it sought the Port Company's permission to do so and paid a parking fee for the privilege.

140. In summary, Mr. Mercer submits that although the essential elements of a lease, namely exclusive possession and rent, were provided for as a matter of formality, the reality was different. Honda's use of Main Site was minimal. Large areas of the site were not used by anyone and others used the site through the Port Company.
141. Mr. Mercer's appeal to the presumption against double taxation and double recovery of tax was advanced to support the contention that Honda was not in rateable occupation of Main Site. He referred to the judgment of Cairns LJ in Milford Haven Conservancy Board v IRC & Others [1976] 1 WLR 817 at 824 for the general proposition that landlord and tenant should not both be subject to rates. The attack was on the enforceability of subordinate legislation, which failed because the language of the Order in question was clear and intra vires. The same was true in R (Edison First Power Limited) v Central Valuation Officer and another [2003] UKHL 20; [2003] 4 All ER 209. The parallel between that case and this is that it concerned the electricity generation business in respect of which the ordinary formula was not applied, and a scheme based upon net generating capacity was used instead to determine rates liability. There were thus similarities with the Cumulo arrangement applied to docks. Powergen sold power stations which became subject to rating assessments in the hands of their new owners. The new owners satisfied business rates demands. They had also agreed to reimburse Powergen a proportion of the rates it had to pay. The generating capacity continued to feature in the rates Powergen paid under the special arrangement and so the new owners were paying twice over. The House of Lords concluded that the statutory scheme was lawful despite the admitted double recovery. Mr. Mercer emphasises that the argument he advances was not in play in that case because there was no doubt that the new owner was in rateable occupation of the power stations.
142. The question of paramount occupancy is one of fact. I am unable to accept Mr. Mercer's submission that the resolution of that question is aided by an examination of the extent to which the financial arrangements between the Port Company and Honda resulted in monies paid by the latter falling into account for the purposes of the calculation of the Cumulo. Those arrangements could have been structured in any number of ways to provide that the same sums were paid from one to the other. The parties contemplated no monetary rent but a per car charge resulting in revenues for the Port Company which would be capped at £400,000 per annum. There could have been a monetary rent and no additional charge per car, or a mix of the two. The rent could have been expressed and calculated by reference to the number of cars put through the facility by Honda. Whatever the formula adopted, the occupation and use of Main Site would have been identical. In any event, the 'loser', if there is one, in the arrangement that was adopted is the Port Company and not Honda. If Honda was in rateable occupation of Main Site, the financial arrangements in place resulted in the Port Company being liable under the Cumulo on a basis which included the per car fees paid by Honda. A similar sum expressed as rent would have fallen outside the revenues used to calculate the Cumulo liability. But on either basis, assuming the rateable occupation, Honda's liability for rates would be the same.
143. The facts surrounding the occupation of Main Site from October 2002, in my judgment, point inexorably to the conclusion that Honda was in rateable occupation. The lease granted Honda control of the site. They had control over the whole site. It was available for their exclusive use as an export terminal for the whole period, if they wished to use it. The rights reserved to the landlord were subordinate. The Port Company could use the site only if it was not in use by Honda and with their permission, albeit not to be unreasonably withheld. That use could be terminated at 48 hours' notice. Honda's use of the site was safeguarded whilst others were there with its permission by covenants which protected Honda from interference, required any damage to be made good and by indemnities. The Port Company only used Main Site for the storage of non-Honda vehicles in January 2005. Honda demonstrated the strict control it continued to exercise over Main Site by the terms of the letter the Port Company signed in January 2005 (see paragraph [99] above). It is true that the use to which Main Site could be put was limited by the terms of the lease. In consequence Honda agreed with the Port Company to pay a parking fee when it used the site for import vehicles for which there was no room on Plot 33. That fact taken with others that evidence the position and rights of the parties does not lead to the conclusion that the Port Company was in paramount occupation.
144. Mr. Mercer's European point was floated in two short paragraphs in his skeleton argument and was developed very briefly in oral argument. The proposition was that the relationship between the Cumulo assessment on the Port Company and any assessment of rates on Honda as occupier of Main Site results in double recovery of rates. Article 35 TFEU prohibits quantitative restrictions on exports and all measures having equivalent effect. Mr. Mercer suggests that this would in some way affect goods for export but not for domestic consumption, because ports are not concerned with the latter. If I understood the argument it amounted to a contention that the operation of the Cumulo, on the one hand, and ordinary rating principles, on the other, acts as a restriction on exports (and perhaps imports too under Article 34) contrary to Article 35. The claimant's skeleton argument and closing submissions were silent on this point. At the end of Mr. Drabble's closing legal submission there was this exchange:

"MR. DRABBLE: My Lord, those, I think, are the legal

submissions. Could I just highlight some aspects of the note on the facts that we have put in.

MR. JUSTICE BURNETT: Have you anything to help me on the European point?

MR. DRABBLE: The short answer to that is no. I am not sure, with respect, I understand it."

Mr. Drabble's answer was not in any sense frivolous, because it is relatively a difficult argument to follow. Honda's authorities contained an extract from the 5^th edition of Wyatt and Dashwood's European Union law which summarises the relevant law in this area at page 609 and following. The equivalent provision in the earlier Treaty was designed to prohibit restrictions on exports. Export licensing and quality controls on exports were an early target of the Luxembourg Court. The principle emerged that a prohibited restriction on exports involved a national measure having discriminatory effect. In Groenveld [1979] ECR 3409 the Court held:

"That provision [i.e. Article 29 EC; now Article 35 TFEU] concerns the national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade in such a way as to provide a particular advantage for national production or for the domestic market of the State in question at the expense of the production or of the trade of other Member States. This is not so in the case of a prohibition like that in question which is applied objectively to the production of goods of a certain kind without drawing a distinction depending on whether such goods are intended for the national market or for export."

145. As Wyatt and Dashwood explain, the Court is more ready to find that a measure restricts imports from other EU States, than exports. That said, it is extremely difficult to see how the special rating systems at dock premises could even arguably come within the prohibition of Article 35 as interpreted by the Luxembourg Court. Furthermore, the facts of this case show that the operation of the twin rating systems need have no impact at all. Honda has continued to operate from Main Site since September 2007 with no liability for rates. In so far as there was a difficulty it was generated by the way in which Honda and Port Authority chose to engineer their financial relationship.
146. Having concluded that Honda was in rateable occupation of Main Site from 30^th October 2002, I turn to the question whether for each of the rating years, the notice under Regulation 5 of the 1989 Regulations was served as soon as practicable.
147. I have accepted that during the first three months of Honda's occupation of Main Site as an export terminal, there would have been very little for anyone to see had an inspection been made, because only rarely in that period were any cars parked there. But from January 2003 Honda cars were regularly on the site. The inspection system should have picked up Honda's occupation of the site in early 2003. Once Honda's use of the site had been noted, as events in 2006 showed, very little time would have been needed to pin down the correct Honda entity on whom to serve a rates notice. In those circumstances it was practicable to serve a notice for 2002/2003 by about 1^st April 2003. Thereafter, the pattern of service of notices on or after 1^st April each year would have followed without interruption or hindrance.
148. It follows that, subject to one qualification, none of the notices eventually served on 6^th November 2007 was served as soon as was practicable. That qualification relates to the notice for rating year 2007/2008. At the time that was due to be served (on or as soon as practicable after 1^st April 2007) there was an agreement that the Council would not serve notices pending attempts to resolve the differences between the parties and pending the Council's determination of its final position. As we have seen (paragraph [121] above) Mr. James and his colleagues finally decided to seek business rates for whole period, and caused notices to be sent on 25^th September 2007. If there is an agreement to hold back from serving a notice then in my view, for the purposes of Regulation 5, it is not practicable to service it until the agreement provides that it should be served. It was practicable for the Council to serve a notice for 2007/2008 at that time, but an effective notice did not follow until 6^th November. To that extent only, the notice is respect of this last period was out of time.
149. In considering the consequences of the late service of those notices there are some important features of the activities during the last 18 months before that service which must be borne in mind. After Mr. James made contact with Mr. Tizzard in May or June 2006, the potential liability for rates was known to him, and through him to Honda. Honda were in a position to take steps to ameliorate their potential liabilities, and indeed through Mr. Tizzard did just that. They secured changes to the 2005 list which reduced substantially the sums being claimed. Conversely, from the early summer of 2006, subject to being persuaded otherwise, the Council made its intention to recover rates clear. The position of recoverability calls for separate consideration of the periods before and after 1^st April 2005.
150. There is, in my judgment, no doubt that the Council should be denied the opportunity to recover business rates on Main Site for the years up to 31^st March 2005. Despite the consequence of late service not being automatic invalidity there was here very late service of the notices, with no indication whatsoever that rates would be sought until May or June 2006. I have accepted that Honda and its adviser, Mr. Tizzard, were unaware of this rates liability. That was entirely understandable in the context in which they were operating at the docks. I am confident that if notices had been served in time for Mr. Tizzard to make proposals to alter the 2000 list consequent upon dividing the site (in the way he did after the summer of 2006 in respect of the 2005 list) he would have done so. That could have been done retrospectively in the sense that the VOA could have been persuaded to treat the division as having been in place from October 2002, just as it was from 1^st April 2005 even though the proposal to alter the 2005 list was made in late 2006.
151. Additionally, I accept the evidence of Mr. Stacy that steps would have been taken not only to reduce substantially Honda's liability for business rates on Main Site, but to extinguish them. That could have been achieved by surrendering the lease or abandoning the site. In either case there would then have been no rateable occupation.
152. In all these circumstances, Honda has suffered substantial prejudice in consequence of the late service of the notices. It is possible that whatever steps were taken by Honda would not have extinguished their liability from 1^st October 2002. Prompt service of the first notice might well have resulted in a liability for some business rates on Main Site. However, it is clear that to allow the Council to recover on the late notices would result in recovery of a sum very much greater that would have been payable had they performed their statutory obligations.
153. The position for the years that follow, that is to say from 1^st April 2005 to 13^th September 2007, is less clear cut. The notices for the first two years were served late, but by the summer of 2006 Honda knew of its potential liability. It was in detailed discussions with the Council before the liability for 2007 itself arose and had asked for the service of notices to be deferred whilst negotiations were conducted. Mr. Tizzard, whilst seeking to persuade the Council to waive historical rates liabilities, made the proposals to the VOA to which reference has already been made. There was only a year left to run on the lease by the time the position had come into clear focus. No steps were taken to surrender the lease early nor did Honda shift its entire export operation to Southampton, as it might have done earlier in the life of the lease had the rates liability become apparent and a surrender of the lease had not been feasible. As it happens the use of Main Site for export increased during the period of discussions with the Council and then the wait for its position to crystallise.
154. The thrust of the Council's submission in answer to any suggestion of prejudice to Honda (and indeed to some extent the other defendants) is that all the information was there to enable them to determine whether there was a rates liability. It was their own fault that they did not take steps to crystallise their positions throughout the periods in question (despite the inactivity of the Council). Had they done so any suggested prejudice would have been avoided by prompt action on their part. I consider this argument in general terms weak because there is no statutory obligation imposed on potential ratepayers to act in the way suggested. There is a variation of the argument that would have more potency, namely if the facts were that a ratepayer knew very well of its liability and sat on its hands to take advantage of an oversight by the Council in serving a timely notice. That is not this case.
155. Does the argument avail the Council in respect of the years from 1^st April 2005 onwards? Mr. Drabble does not seek to distinguish between the years before and after 1^st April 2005. It seems to me that is for good reason. It would be artificial to approach the question of Honda's liability for rates as if their occupation of Main Site had commenced on 1^st April 2005. Their failure to take steps in the years preceding 2005 to ensure they paid no rates on the site is an important context for what followed. Furthermore, had notices been served in a prompt fashion in April 2005 and 2006 there would have been time to make arrangements for the use of Main Site to ensure that no rates were payable, at least prospectively. Additionally, as Mr. Stacy explained, steps could have been taken to reflect any unavoidable rates liability in the pricing of the vehicles for export. So for those years there was significant prejudice, quite apart from that which had already accumulated, which defeats recovery.
156. By the time the issue arose in mid 2006 the energies of Mr. Tizzard were being expended in the ways described. On analysis, the late service of the notice for 2007 caused no additional prejudice to Honda. However, Mr. Mercer's overarching argument was that it would be unconscionable to allow recovery for any of these years (or indeed those before) quite apart from any discernible prejudice. I accept that argument. The reality in this case is that had the Council served a notice in 2003 demanding business rates for Main Site steps would have been taken to ensure that the arrangements at Main Site, were such that any liability was soon extinguished. As a result of the Council's repeated failure to comply with its statutory obligations Honda was denied that opportunity. In these circumstances I conclude that it would be conspicuously unfair, that is to say unconscionable, to allow the Council to recover business rates for these periods.
157. For all these reasons the claim against Honda fails.

The Chevrolet Case

158. The background facts surrounding the Chevrolet case can be stated shortly. The period in dispute is relatively short and, as regards Chevrolet's occupation, the reality is that very little happened. The hereditament in respect of which the dispute between the Council and Chevrolet arises, as with the Honda sites, was first assessed by the VOA separately from the docks in December 2001. It was known as Daewoo 1, Royal Portbury Dock. The limit of backdating that was permissible under the statutory scheme allowed rates to be charged from 1^st April 2001. Daewoo Cars Limited operated their import terminal at the site and had apparently done so for some years. As has already been noted, the exercise undertaken by the VOA had the effect of spinning out a number of sites from the Docks, which were leased from the Port Company, and adding significantly to the overall business rates take without reducing the Cumulo based rates paid by the Port Company to Bristol City Council.
159. On receiving notification of the new assessment from the VOA on 12^th December 2001 the Council set up a new account for this site. They issued a rate demand for the period 1^st April 2001 to 31^st March 2002 to Daewoo Cars Ltd. Daewoo's property agents, Gerald Eve Chartered Surveyors, acknowledged that demand on 3^rd January 2002. They asked for, and were given, some time to check the basis of the assessment with the VOA. It is not entirely clear from the material produced by the parties whether Daewoo Cars Ltd paid those rates. It can reasonably be inferred that a demand notice was sent for the year 1^st April 2002 to 31^st March 2003. That, it seems, was not paid. On 14^th November 2002 the Council received a letter from Ernst & Young stating that two of their partners had been appointed Joint Administrators of Daewoo Cars Ltd on 8^th October 2002 and that the company was now in administration. The Council had been contacted as a creditor. In response, the Council decided to end the Daewoo account and from 8^th October designated the hereditament as empty or void.
160. In fact, the site was never empty. Daewoo vehicles remained parked on the site. This defendant, Chevrolet (UK) Limited, took over the site from 1^st November 2002, and was in rateable occupation until it gave it up in 2006. Thus in the case of Chevrolet there is no suggestion that anyone else was in occupation of the site.
161. The circumstances in which this defendant came into occupation of the site were these. Daewoo's worldwide operation had been in financial difficulty in 2001 and the corporation was looking for a buyer. Julian Lyon, who is the European Real Estate Manager for General Motors, explained that in April and May 2001 Daewoo was in crisis. General Motors began due diligence with a view to acquiring parts of Daewoo. By September 2001 due diligence had been completed on the major Daewoo automotive subsidiaries and in November it was completed on their European assets. General Motors did not acquire all of Daewoo. Daewoo Korea went into administration in May 2002. General Motors bought some of their assets. When Daewoo Cars Ltd went into administration in the United Kingdom, General Motors bought the inventory (that is their vehicles and parts) and acquired the property interests. The aim was to continue selling Daewoo cars and also to honour existing warranties. All of this was played out in the national press.
162. Part of the due diligence exercise related to Daewoo's properties. When due diligence was performed on the site at the docks in the latter part of 2001, it was not separately assessed for rates. The position changed in December 2001. This fact explains why Chevrolet had no idea that there was a rates liability separate from the Cumulo when they took possession of Daewoo 1.
163. For the purposes of acquiring Daewoo assets in the United Kingdom, a company was incorporated on 1^st October 2001. It was called GM Daewoo UK Limited. In December 2004 the company changed its name to Chevrolet UK Limited, as part of a rebranding exercise. For the purposes of this case, it has been referred to throughout as Chevrolet.
164. From 1^st November 2002, Chevrolet occupied the site under an informal arrangement with the Port Company but agreed that it would enter a lease to formalise the position. That lease is dated 6^th June 2003 for a term commencing 1^st November 2002. At the time that the lease was entered into Chevrolet did not know whether Daewoo had been paying rates, nor whether the site was separately assessed for rates.
165. The lease was for a term until 4^th December 2010. The rent was £402,000 per annum rising in December 2005 to £562,800. The lease provided for the tenant to pay rates if a direct assessment were made or to contribute a proportion of rates if the landlord were liable in precisely the same terms as those included in the Honda lease (set out in paragraph [96] above). The lease was in due course terminated on 4^th June 2006 and a new lease granted by the Port Company to Vauxhall Motors Limited.
166. The business rates claimed in these proceedings are those said to be due for the period 1^st November 2002 to 31^st March 2005. There has been no dispute over the rates due thereafter. Chevrolet paid the rates due for the period until the lease expired and Vauxhall became tenant of the site. Vauxhall Motors have been responsible for rates since then.
167. After the Council had received the administrator's communication in October, there were various subsequent communications relating to the insolvency of Daewoo. They trickled in through 2003, 2004 and into 2005. As would be expected, those communications did not make any reference to what had happened to the site after Daewoo went into administration. They were concerned with no more than keeping the Council, as a creditor, informed of developments.
168. Because the site had been noted as a void property, a postal canvass was automatically generated by the Council's computer on 1^st November 2002 and sent to the site. Its fate is unknown. An occupation record was sent on 10^th January 2003. The result of that too is unknown. There is no evidence to suggest that they came to the attention of Chevrolet. There do not appear to have been other postal canvasses in the two years that followed; nor was there any inspection. It is now clear that an error crept into the new computer system which operated from March 2003. The accounts in respect of this and a number of other properties entered as void were put into the name of a Mr. C Colston. How that happened is a complete mystery. Nobody within Liberata noticed the problem until late 2005. Mr. James eventually identified 79 properties affected by this error but believes there would have been about 100. So it is at least possible that communications were addressed to the mysterious Mr. C Colston (all over the District) in the years that followed. Be that as it may, there was no physical inspection of the site until 2^nd February 2005. By then it had been noted as void for almost 28 months. The Council's property inspector, Peter Slade, saw that the site was in use. Despite his observation, no activity was generated in the Council because the report was misfiled. It was late in 2005 that the problem surrounding Mr. C Colston was discovered. Mr. James checked the Council's document management system for the properties affected. That system holds all relevant documents and correspondence relating to all accounts. On checking the records for Daewoo 1, Royal Portbury Dock he came across the inspection record. That was on Friday 9^th December 2005. Mr. James requested an urgent inspection. That took place three days later. It was carried out by Keith Dudley who spoke to a police officer. He was told that Walon UK Limited leased the premises and, so the policeman thought, was operating the site. That was not correct but it had the germ of the real situation within it. Walon UK Limited did indeed have leases on sites within the docks. It held leases on sites used by General Motors and was the logistics provider to General Motors. It was because the Port Company already had considerable exposure to Walon UK Limited that they had asked in 2002 that a General Motors subsidiary take a lease of the site itself.
169. On 14^th December 2005 Mr. James spoke to Robert Bath at the VOA to check that he was not confused about the hereditament itself. He was not. The next step was to get in touch with the Port Company. Mr. James made contact with Richard Harvey who immediately confirmed that Chevrolet had been in occupation of the site since 1^st November 2002. He also gave Mr. James the contact details of Rob Assinder who worked in the relevant business unit within General Motors. On 14^th December 2005 Mr. James set up a new account for Chevrolet. The Council issued a rate demand notice to Chevrolet on 20^th December 2005 which sought rates due from 1^st November 2002 until 31^st March 2006. Albeit that this notice incorporated demands for more than one year within a single notice (contrary to Regulation 4 of the 1989 Regulations), it is striking how quickly the Council had moved. In less than a fortnight since picking up the error, Mr. James had taken steps which included an inspection and then elementary investigations to identify the correct ratepayer which resulted in the service of a notice.
170. Shortly after receiving the notice, Mr. Assinder telephoned Mr. James. That was towards the end of January 2006. He indicated that he had referred the demand to Chevrolet's rating advisers. General Motors uses GL Hearn as rating consultants. Their Head of Business Rates is John Penfold. He formally responded to the demand for business rates by letter dated 3^rd April 2006. He indicated that Chevrolet would meet its liability for the current year (i.e. 1^st April 2005 to 31^st March 2006) but would dispute the earlier years.
171. In the meantime both Mr. James and Mr. Penfold had been busy. On 20^th February 2006 Mr. James issued four separate demand notices, to overcome any technical point arising from the first notice having covered a number of years. These demanded:

(i) £82,257.77 for the period 1^st November 2002 to 31^st March 2003.

(ii) £202,020 for the year 2003/2004.

(iii) £207,480 for the year 2004/2005.

(iv) £192,010 for the year 2005/2006.

Although these demand notices set out figures which were, in due course, to change, they reflected the figures that had been contained in the composite notice sent in December.

172. On 5^th April 2006 the VOA informed the Council that the 2000 list had been altered to include this site from 1^st April 2000 (rather than the original entry into the list from April 2006). Then on 25^th April 2006 the VOA informed the Council that the 1995 list had been altered to show an effective date of 31^st March 2000. That brought with it all the benefits of transitional relief and had the effect of reducing the rates claimed. These changes resulted from urgent steps taken by Mr. Penfold to protect his client's interests (without conceding any liability for the earlier years). He was able to tag onto a process that had been started in November 2004 by a proposal made by Messrs GVA Grimley on behalf of Toyota in respect of another site that had been spun out of the Cumulo in 2001. The evidence before the court suggests that all the car companies and their associates affected by that step sought to take advantage of transitional relief by backdating the entry to 31^st March 2000. It was for this reason that Mr. James mistakenly believed that Chevrolet had been involved in this process before he had sent his first demand notice.
173. Mr. James was made aware of the process in which car manufacturers and importers were involved in January 2005 during a conversation with an official at the VOA. He believed that the entry in respect of Daewoo 1 was under appeal and was subject to proposed changes. However, GVA Grimley did not act for Chevrolet or before them for Daewoo. However, GVA Grimley were acting as the lead agent for all concerned. For technical reasons, which do not need explanation, the VOA considered that the changes had to be made to all of the new hereditaments that had been assessed for the first time as from 1^st April 2001. On 15^th March Robert Bath of the VOA included this in an e mail to Mr. James:

"Having received authority to split the docks RV, all the appropriate 1995 and 2000 separate valuations have now been agreed with the exception of the Chevrolet site. They took over the Daewoo car operation in November 2002. They will need to sign any agreement which I make with the other agents as they are a party. At the moment [GVA Grimley] is trying to obtain instructions to act for them in this matter, but, of course the decision lies with Chevrolet. If they say 'no' then the 2 cases we are using for the 1995 and 2000 list reconsiderations will need to be listed by the VT and a decision given before I can make 2 lists."

Mr. Penfold became involved at this stage for the first time. He did not say 'no'. On 30^th March 2006 Mr. Bath faxed him forms for agreement which he signed and returned immediately. That was followed by his letter to the Council to which reference has already been made.

174. The Council responded to Mr. Penfold in a letter dated 22^nd May. They set out the revised figures for the rates demanded which reflected the changes made to the 1995 and 2000 lists, together with transitional relief. They became:

(i) £52, 401.27 for the period 1^st November 2002 to 31^st March 2003.

(ii) £151,361.90 for the year 2003/2004.

(iii) £182,652.19 for the year 2004/2005.

175. The sum due for 2005/2006 had been paid by then. The Council argued that notices had been served as soon as practicable after it had been notified of the alterations to the rating list. For reasons explained in paragraphs [67] to [69] above, I do not consider that an alteration to the list has the effect of wiping the slate clean (as the Council in effect suggests) for the purpose of Regulation 5 of the 1989 Regulations. Mr. Penfold responded to the Council by letter dated 31^st May 2006 indicating his view that the Council had inexcusably failed to identify Chevrolet's occupation in a timely manner and for that reason Chevrolet was not liable for the historic rates. A hold was thereafter placed on the account for enforcement purposes whilst the Council considered its position. The computer generated a number of reminders, despite that position, yet contact between Mr. Penfold or his office and the Council confirmed that until the Council had reviewed its position, that state of affairs would persist.
176. On 6^th November 2007 the Council wrote to GL Hearn indicating that the review was complete, that it considered that it had met its statutory obligations and so would proceed to seek recovery of the outstanding sum. Notices were enclosed which claimed the sums that had been identified in the letter of 22^nd May 2006. A further hold on enforcement action was put in place to enable Chevrolet to take advice. Discussions failed to resolve the difference and these proceedings were eventually issued on 10^th October 2008.
177. The first question for determination concerns by when the notices should have been served. The first unsuccessful postal canvass was sent to the site at the time that Chevrolet entered into occupation, in November 2002. Allowing for a realistic time for the Council to react to the failure of that postal return, there is no reason why the fact that the site was in continued use (storing Daewoo branded cars) should not have been discovered within the following three months. From that observation, it would have taken but days to identify Chevrolet as the rateable occupier. In those circumstances, my conclusion is that a Regulation 5 notice should have been served before the end of March 2003. Had that happened the notices for rating years 2003/2004 and 2004/2005 would have followed punctually. The notices in respect of those years were not served finally until November 2007 and were not served as soon as was practicable. In considering the consequence of the late service the more important date is May 2006, by which time Chevrolet and its advisers were fully aware of the Council's claims.
178. In considering the consequences for recovery of the failure to serve the notices as soon as was practicable the starting point is my acceptance of the evidence called on behalf of Chevrolet that they were unaware of the rates liability. Chevrolet believed that any rates liability was encompassed within the Cumulo. My Lyon explained that elsewhere in the country similar storage areas were within the Cumulo. Whilst aware of the terms of the lease, which made clear that any rates liability would fall on Chevrolet, it begged the question whether there was in fact a separate rates liability. Mr. Lyon provided figures for the additional cost per car which went through the site if this rates liability has to be met. In 2002 it would be £8; in 2003 £13; and in 2004 £10. In their financial planning for those rating years, Chevrolet made no provision for these additional costs. His evidence was that these additional costs would have been added to the wholesale cost of the cars to the dealer, and thus recovered by Chevrolet. He put it this way:

"It is a cost which, if [Chevrolet] had known about it, would have formed one of the many factors used by [Chevrolet] and General Motors in setting its wholesale vehicle prices to dealers and their onward pricing to customers, negotiating or renegotiating terms with its suppliers (in particular the terms of its agreements with the Landlord for the provision of port related services and with Walon UK for logistics services). These matters cannot be retrospectively altered or renegotiated. Thus [Chevrolet] has lost the ability to mitigate or offset such liability forever."

179. Mr. Lyon was not an expert within Chevrolet on the pricing of cars to dealers, still less in the unusual circumstances in which Chevrolet took on Daewoo's UK assets and liabilities. I do not doubt a very large number of factors go into the pricing of any car in the markets of different countries. The evidence was insufficient for me to be able to conclude that Chevrolet would necessarily have been able to recover these additional costs in the pricing of the vehicles. But I do accept that they would have tried to do so and may well have been successful. This is an example of the importance for any business of knowing its costs from year to year. That opportunity has been denied to them as a result of the late service of the notices. Chevrolet has suffered substantial prejudice as a result of the later service of the notices.
180. The result of this conclusion is that the Council cannot recover business rates under the notices, as they would have been able to do had they acted promptly. The circumstances are such that the imputed Parliamentary intention delivers that result. The claim against Chevrolet is dismissed. The Council can take some comfort from the fact that as a result of recording the site as void when it was not, the distribution from the Central Government pool was greater than it should have been.

Mr. Graham

181. Mr. Graham is a property developer with long experience of developing residential housing. He was a relative novice in developing office accommodation when he acquired land on the east side of Kenn Road, Kenn, Cleveden. He acquired that land on 26^th October 2001 and has been the registered proprietor since 14^th November 2001. At the time that Mr. Graham acquired the property it was an undeveloped site for which outline planning permission had been obtained for industrial development. Mr. Graham had previously undertaken one commercial development in Gloucestershire which had run smoothly and been successful. It was in those circumstances that he contemplated a second office development.
182. Mr. Graham constructed the two buildings known as Rivermead Court as a speculative development through Longborough Developments Ltd (a company he controls). Construction was undertaken quickly and the development reached practical completion in around August 2002. At that stage no tenants had been identified. Mr. Graham engaged the services of letting agents, Alder King Property Consultants, who had earlier advised him on the purchase of the site. In due course a tenant was found for part of the premises. On 23^rd February 2005 that tenant, Comet PLC, took possession of both floors in building 1 of Rivermead Court and the top floor of building 2. Comet began operating from the premises on 15^th May 2005. The intervening period of almost 3 months was the time spent by the incoming tenants in fitting out the property to its own specification. The ground floor of building 2 has yet to attract any tenant. It has remained unoccupied for what is fast approaching 8 years since practical completion of the buildings. Comet has been responsible for business rates on those parts of the properties they occupy since the 22^nd February 2005.
183. Mr. Graham received a demand for payment of business rates on Rivermead Court dated 28^th November 2006. The sum demanded was £153,620.41. It covered the period up until 31^st March 2005. Mr. Graham sent the demand to his letting agents who responded to the Council by a letter dated 15^th December 2006. They indicated that in their view the demand was invalid. It covered the period from April 2003 until 22^nd February 2005. The first point they made was that under the 1989 Regulations a separate notice was necessary to cover each year's liability. Secondly, it was suggested that the notice in respect of any period had not been served 'as soon as practicable' and so was invalid on the basis of the principles identified in Encon. The letter also noted that the 2000 rating list had been altered on 6^th December 2004 and that no bills had been sent since then.
184. The circumstances in which that alteration to that list had occurred were as follows. Rivermead Court had been entered into the rating list on 23^rd December 2002. The entry was made by the VOA pursuant to information supplied by the Council as billing authority. The Council had completed a form on 6^th October 2002 noting that there was an office block at Rivermead Court and asking the VOA to assess it. The occupier was noted as "unknown" and the suggested effective date of change for the list was 1^st April 2002. The new entry on the list was given its correct address at Rivermead Court with the post code BS21 6TH, which was also correct. The document from the Council billing authority, to which I have referred, had noted the post code as BS21 6EY, which was incorrect. That mis-recording of the post code for Rivermead Court in the Council's computer system was to lead to the fruitless transmission of documentation to a non-existent address. The entry in the list adopted the date which had been suggested, namely 1^st April 2002 and ascribed a rateable value of £269,000.
185. On 23^rd January 2003 Alder King made a proposal to alter the 2000 rating list. They purported to be acting on behalf of Longbrough Developments Ltd, who were noted as the owner in the proposal. That was in fact an error. As already indicated, Longbrough Development Ltd had undertaken the development of the offices but at all times the site was owned by Mr. Graham. Mr. Graham explained that he had instructed Alder King to act as letting agents and then, in effect, left them to get on with it. He had no experience of business rates and was unaware that his agents were dealing with rating issues until he had a telephone conversation with his representative at Alder King in the autumn of 2004. He was not at all unhappy about not being troubled with detail. It was clear that Mr. Graham is a businessman who understands the importance of delegation. He is prepared to leave professionals he has engaged to get on and do what is required in connection with his affairs. Mr. Graham was not challenged on any of his evidence and I accept it.
186. The proposal made in January 2003 suggested that the effective date of 1^st April 2002 was wrong. That was because practical completion of the development did not take place until 1^st September 2002. Therefore, suggested Alder King, the hereditament should be entered into the list only from that date. The date of 'practical completion' is a term that is important in building contracts. It is not the same as the date from which rates become payable on empty business premises. Consideration of that proposal proceeded at a leisurely pace because of the large amount of outstanding work that the VOA had on its plate. An agreement was eventually reached between Alder King and the VOA on 26^th October 2004. That appears to be the effect of a very short hand written note made by Simon Price at Alder King:

"WR [Wendy Rowley of the VOA] called back. Discussed issues re value and fragmentation. Also touched on rateability. WR not willing to concede on this point and therefore accepted."

Whatever the precise meaning of that very short note, Alder King and the Valuation Office entered into an agreement on 18^th November 2004 which had the effect of reducing the rateable value to £259,500. It also changed the effective date of alteration of the list to 19^th August 2002. The question of whether the premises were rateable or should be fragmented was not pressed by Alder King. The August date was the date of practical completion for the purposes of the contract with the builders of the offices. A certificate to that effect had been issued by the surveyors concerned.

187. It was at about the time that Mr. Price of Alder King concluded the agreement with the VOA that he telephoned Mr. Graham. Mr. Graham had not been concerned with rates on Rivermead Court prior to that telephone call. He had no idea that there might be a liability for business rates on unoccupied premises. For that reason, he was unsure of what the practicable implications were of the information being conveyed to him by Mr. Price. Mr. Graham's evidence was that Mr. Price indicated to him that as a result of (a) the reduction in rateable value, and (b) the shifting of the effective date to 19^th August 2002 he, Mr. Graham, could expect a refund in respect of overpaid rates. Mr. Graham expressed his surprise because he had paid no rates and received no notices in respect of such rates liability. There matters rested until the first notice of demand dated 28^th November 2006 was sent just over two years later.
188. Alder King responded to that notice on Mr. Graham's behalf in a way which reflected the advice they gave him when he received it (see paragraph [183] above. In particular the Encon point was taken. Because Mr. Graham had been told that the notice was invalid he took no immediate action in respect of that demand. There was continued correspondence between Alder King and Liberata, on behalf of the Council. Although Liberata indicated in early 2007 that they were putting a stop on the account pending resolution of outstanding issues, a series of reminders was sent. Additionally on two occasions summonses were issued in the local Magistrates Court seeking a liability order. The summonses were, in due course, withdrawn but it was especially unfortunate that coercive action was initiated when there had been a clear indication that it would not be. This reflects further the disorganisation in the administrative arrangements in place for collecting business rates. It also provides a clear example of what can occur once a computer programme is operating to generate documents without any immediate control of those responsible for decision making.
189. The Council, having taken the view that Encon did not prohibit recovery, issued a series of demand notices dated 6^th November 2007 on a year by year basis. The purpose of that was to cure the other impediment to recovery identified by Alder King. As I have already noted, Comet had been responsible for any rates due on those parts of Rivermead Court which it had occupied since February 2005. So much was accepted by the Council. The demands were therefore in respect of the whole of Rivermead Court from 18^th November 2002 to 22^nd February 2005. That allowed a period of 3 months at nil rate from the entry into the list in August. Such a concession forms part of the statutory scheme. Furthermore, in accordance with the appropriate statutory provisions, rates were billed at 50% of full liability. That is because the premises were empty during the whole of that period. With effect from the date of Comet's occupation of the majority of the development, the single floor left unoccupied was separated into a distinct hereditament. Thus from that date, Mr. Graham's liability was assessed on that part of Rivermead Court alone.
190. The liability for rates until 22^nd February 2005 arose under the 2000 list. The last date upon which Mr. Graham could make a proposal to alter that 2000 list was 31^st March 2005. Therefore, subject to arguments that arise in connection with the late service of notices to pay those business rates, Mr. Graham will be liable to pay them. The service of the notices came long after he could make a proposal contending that the hereditament should not be in the list at all. However, he was in a position to challenge the 2005 list for that part of Rivermead Court not occupied by Comet. He did just that. As has been noted, 'practical completion' is a critically important date as between a developer and his contractors. However, practical completion is not without more a relevant or meaningful date for the purpose of business rates. Liability for business rates arises when the premises are capable of beneficial occupation, which may be a different thing. On 11^th July 2007 Mr. Graham made an application to delete the ground floor of the second block of Rivermead Court from the 2005 list on the basis that it was not in a physical condition which was capable of beneficial occupation when it was entered on the list, or thereafter. In response to the proposal to delete that hereditament from the list, the Council served a Notice of Completion dated 29^th April 2008 on Mr. Graham. That Notice was served pursuant to Section 46A and Schedule 4 of the 1988 Act. Its effect (subject to appeal) was to deem completion for rates purposes from 29^th April 2008. So irrespective of the actual state of the premises the notice deems them capable of beneficial occupation. The ability to serve such a notice, and thereby trigger a liability for business rates, avoids the possibility of developments being left in an uncompleted state until tenants are found, simply to avoid paying rates. Mr. Graham lodged an appeal against that Notice of Completion, but in due course he withdrew it. Thus Mr. Graham has accepted a liability to pay the appropriate rates from 29^th April 2008 on that part of Rivermead Court which is not let. In the result what remains in issue consequent upon his proposal to alter the 2005 list is the liability for business rates on that part of Rivermead Court between 1^st April 2005 and 29^th April 2008.
191. A significant element of the prejudice prayed in aid by Mr. Graham as a result of the delay in serving notices in this case is that they were served long after his ability to make the same proposal in respect of the whole of the premises for the duration of the 2000 list had passed. The proceedings relating to his proposal to alter the 2005 list by deleting that part of the Rivermead Court remain unresolved.
192. Following the entry into the list of the development premises at Rivermead Court in December 2002, the Council sent an "occupation record" to the owner/occupier at Rivermead Court designed to elicit details which would enable it to send a rate demand. Regrettably, that Notice was sent to the wrong address, in that the incorrect post code was used. In due course, it was returned by the Post Office marked "Gone Away". In the meantime an inspection was carried out on the 4th February 2003 that resulted in the name of the developer 'Longborough', being noted in the Council's records. The Council's records note that a nil rate demand notice was issued on about 1^st April 2003. It is not clear whether it was sent to Rivermead Court but it was not received by Mr. Graham. A further nil rate demand was sent on or about 1^st July 2003. Once again, this was sent to an address with the wrong post code. It was returned by the Post Office on the 23^rd July 2003 noted as "address inaccessible".
193. These nil rate demands were addressed to "The Occupier". The demand dated 1^st July 2003 covered the rating years 1^st April 2002 to 31^st March 2003 and 1^st April 2003 to 31^st March 2004. The way the demand was structured was to identify the rateable value and the appropriate multiplier to be applied. A charge for the relevant period was then identified but followed by entries suggesting that an exemption operated for each year. The whole amount apparently due was then deducted. In the result the total demanded for the two year period was zero. A note at the bottom of the demand said: "this notice is for your information. No payment is necessary."
194. Had Mr. Graham received this notice it would have suggested that no business rates were due.
195. Both these rates demands were sent after Alder King had made the proposal to the Valuation Officer in January 2003 to alter the effective date for entry into the list and to reduce the rateable value.
196. A postal survey dated 10^th December 2003 was sent by the Council to the occupier. One again the address was incorrect and the Post Office returned it noting 'addressee unknown'. Another was sent on 24^th May 2004 and again returned by the Post Office with the helpful indication that the post code was wrong. A further survey dated 17^th September was sent to the wrong address and similarly was returned by the Post Office. So throughout this period documents were being returned by the Post Office but the Council took no steps to fill their information gap in a different way.
197. In December 2004 the Council was notified of the alteration in the list consequent upon the agreement that had been reached with Alder King shortly before. The Council's computer generated another survey on 9^th December 2004 but it too was returned. Very shortly afterwards another bill was produced by the Council. It was dated 14^th December 2004. Alas, it was sent with the wrong postcode. It too was returned by the Post Office, this time with the note 'address incomplete'. It reflected the reduction in rateable value and the new date of entry into the list. It purported to cover rates liability for the years 2002/2003, 2003/2004 and 2004/2005. It was structured in the same way as had been the bill sent in July 2003. The rates liability for each year was cancelled out by an exemption, leaving the total due as Zero. As before the bill confirmed that 'no payment is necessary'.
198. On 20^th January 2005 the Council organised a site visit. The note produced on that occasion indicated that the property remained vacant. The details of Alder King were recorded from a board outside the premises. Those details were correct although no steps were taken by the Council to contact Alder King. In March 2005 a Business Rates Payment Card was sent incorrectly addressed and returned by the Post office. An inspection on 15^th November 2005 was made of the wrong site. The resultant note suggested that nothing had yet been built. That error was corrected on 22 November 2005 when it was discovered on re-inspection that Comet was occupying the whole of one building and the first floor of the other, with the ground floor of building two left empty. That was the first occasion on which the Council had accurately identified the position on the ground.
199. On 11 January 2006 Comet completed a form which had been given to them by the Council. In that they named Mr. Graham as the owner and gave his correct address. Still no notice was sent.
200. In the months that followed, Mr. James and his colleagues spent time trying to explore the details of properties that were entered in their systems as 'void'. There was a critical external auditor's report into the treatment of properties recorded as void. Mr. James was involved in a review of a number of such properties, including Rivermead Court, but the underlying errors made in the preceding years were not picked up and Mr. Graham as owner was not identified.
201. On 20 November 2006 an employee of Liberata discovered Mr. Graham's details within the council's systems. The notice demanding £153,620 followed 8 days later, posted to Mr. Graham's home address in Gloucestershire. What that shows with some clarity is that the only obstacle to serving timely notices was the Council's ignorance of the identity of the owner of Rivermead Court. Once that knowledge was available, the service of a notice followed immediately.
202. The VOA had, in the meantime and coincidentally, used its powers to amend the register to reflect that Comet were in occupation of part of Rivermead Court. The remaining part was listed as a separate hereditament. Notice of that change was sent to Mr. Graham on 25^th November 2006.
203. As has already been noted, the demand sent on 28^th November 2006 covered four rating years, something not permitted by the 1989 Regulations. Although that error was pointed out to the Council by Alder King very shortly after the notice had been served, no early steps were taken to correct it. The demand notices relied upon in these proceedings were eventually produced on 6^th November 2007.
204. The obligation upon the Council was to serve a notice as soon as practicable after 1^st April for any given year. The demand for the year 2002/2003 could not have been served until after Rivermead Court appeared in the rating list. The Council was notified of that event by letter dated 31^st December 2002. So for that year, the obligation was to serve the notice as soon as practicable thereafter. For each of the subsequent years the obligation was to serve it as soon as practicable after 1^st April. Mr. Graham's simple argument is that he should have been served within days of notification to the Council of Rivermead Court's entry into the list. That is because it was a simple exercise to establish who owned Rivermead Court. Full details were always available from the Land Registry. That is not disputed. Furthermore, the VOA knew of Alder King's involvement from January 2003, yet there appears to have been no information sharing. An enquiry of Alder King would have taken the Council immediately at least to Longborough, and very quickly to Mr. Graham himself. There was no attempt to obtain information from the planning department of the council. Indeed no attempts were made to identify the owner or occupier of the premises save through the extensive postal canvassing (and occasional visits) which were unsuccessful for the reasons identified. What is more, the long series of returned post prompted no inquiry.
205. I have rejected the Council's contention that the correct approach is to ask whether the notice was served as soon as was practicable after they in fact became aware of the correct identity of the owner or occupier of the hereditament in question, irrespective of whether it was practicable for them to have done so earlier. The reality is that the Council took no steps to identify the owner of Rivermead Court when the postal canvasses produced no information. Any of the inquiries identified by Mr. Graham would very quickly have led to his identification. They are precisely the sort of actions Liberata was obliged to take under the terms of the contract. Indeed, the ability to liaise with the planning department in the same Council for the identity of the owner of the site just developed, or at least for the identity of who of was who made the planning application, or check with the Land Registry would have led to Mr. Graham in an instant. It is impossible to conclude other than that the Council should have served a section 5 notice during the spring of 2003, even allowing for some time to make the inquiries. Had the first notice been served timeously, those which followed would have been served on time at the beginning of each rating year.
206. The notices for each of the years in dispute were not served as soon as was practicable. They were all served in November 2007. In considering the consequence of that late service on Mr. Graham it should not be overlooked that he and his advisers considered the composite notice dated 28^th November 2006 and took steps to ameliorate its impact for the rating years since 1^st April 2005.
207. It is true that throughout the disputed period Mr. Graham had Alder King acting with regard to business rates, albeit that he was unaware of this until late 2004. The Council say that he has suffered no prejudice because Alder King were always in a position to do what was required to reduce his liability for business rates. If they failed to take a step available whilst the 2000 list remained open, that has nothing to do with their failure.
208. Mr. Kolinsky submits that the steps taken with regard to the 2005 list could and would have been taken with regard to the 2000 list, if a notice had triggered Mr. Graham's specific interest in the question of rates liability. He has been denied the opportunity, in consequence of the late service of notices for those billing years, of contending that the property should not have been in the list at all. That submission, in my judgment, is well made. I do not accept that because during that period Alder King appeared to be eliding the issue of practical completion with liability for rates, neutralised that point. After all, acting on their advice he made precisely that proposal with respect to the 2005 list. It has not been submitted that the proposal is obviously fanciful and the evidence which, in due course, will be considered by the VOA and possibly the Tribunal to resolve that issue is not before the Court. I am satisfied that Mr. Graham has suffered substantial prejudice which flows from the late service of the notices by his inability to propose that the hereditament should have been deleted from the 2000.
209. It is true that having done that, he may well have been unsuccessful or the Council might have served a completion notice just as they later did in 2008 to fix the period during which the advantage he was seeking could run. A real possibility in any case such as this is that a compromise would have been reached with which all could live comfortably. So, on the one hand the Council may be deprived of revenue that would have flowed to them had they acted in accordance with the statutory scheme. On the other, there is a substantial risk that if the Council were to recover on these notices, that Mr. Graham would be paying more than should be the case. In those circumstances, taking account of the lateness of the notices, the interference in Mr. Graham's ability to deal with the suggested liabilities as and when they arose and the denial of his opportunity to make proposals in relation to the 2000 list, the conclusion is that the Council cannot recover the disputed business rates. Additionally, it should not be overlooked that the result of the Council mis-categorising this property as 'void' resulted in a larger distribution of funds to the council from the Central Government pool than was strictly justified.
210. In the result, the claim against Mr. Graham is dismissed.

Conclusion

211. I am satisfied that by reason of the late service of notices pursuant to Regulation 5 of the 1989 Regulations, viewed in the light of the intention to be imputed to Parliament in requiring that such notices should be served as soon as is practicable on or after 1^st April each year, the claims against each of these three defendants fails. There will be judgment for each defendant.