UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 548 (LC)

UTLC Case Number: RA/24/2012

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

RATING – proposal to alter the 2010 non-domestic rating list – proposal containing error in its statement of annual rent – Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 – whether proposal validly made – whether (if not validly made) the valuation officer entitled to assert the invalidity

 

 

IN THE MATTER OF AN APPEAL

AGAINST A DECISION OF THE VALUATION TRIBUNAL FOR ENGLAND

 

 

BETWEEN:

 

 KAREN KENDRICK Appellant

(Valuation Officer)

 

and

 

MAYDAY OPTICAL CO LTD Respondent

 

Re: Shop and Premises,

508 London Road

Thornton Heath

Surrey CR7 7HQ

 

 

 

 

Before: His Honour Judge Huskinson

Sitting at: 43-45 Bedford Square, London WC1B 3AS

on 6 November 2013

 

David Forsdick, instructed by Her Majesty’s Revenue and Customs for the Appellant

The Respondent did not appear and was not represented

 

 

 

The following cases are referred to in this decision:

Tuplin (VO) v Focus (DIT) Ltd [2009] UKUT [LC] 118, [2009] RA 226, 237, para 27

R v Northamptonshire Local Valuation Court, ex p Anglian Water Authority [1991] RA 93 CA

Mainstream Ventures Ltd v Woolway (VO) [2000] RA 395

R. v Secretary of State for the Home Department, ex p Jeyeanthan [2001] 1 WLR 354

Imperial Tobacco Group Ltd v Alexander (VO) Nos. 306018810109/511NO5, 306018810330/511NO5 and 306018810247/511NO5

DECISION

Introduction

1. This is an appeal from the decision of the Valuation Tribunal for England (Professor Graham Zellick QC, President) dated 24 April 2012 whereby the VTE decided that a proposal made by the respondent to alter the 2010 rating list in respect of 508 London Road, Thornton Heath, Surrey CR7 7HQ must be treated as valid and that, in consequence, the substantive appeal must be considered by the VTE.

2. The proposal to alter the 2010 rating list was made by The Coupers Partnership Ltd as agents on behalf of the respondent, who was the occupier rather than the owner of the property. The proposal stated that the property was not owner occupied and that rent was paid. A question on the form asked that the current annual rent be stated and the answer given was: 9500 (presumably £9500 was intended). In fact, as subsequently decided by the VTE at the hearing, the rent payable was £10,000 p.a.

3. In his decision the learned President stated that there were three questions for consideration:

(1) Is the VO entitled to raise the invalidity of the proposal at the hearing, not having previously issued an invalidity notice?

(2) Does the mistake in the rent render the proposal invalid?

(3) Is the VO acting lawfully in asserting invalidity?

In summary the answers given by the President to these questions were (1) that the invalidity point could be taken at the hearing, (2) that the mistake in the rent made the proposal potentially invalid, but (3) that the attempt by the VO to claim invalidity was unreasonable and irrational and therefore unlawful. The VTE therefore concluded that the VO was precluded from claiming invalidity and that the proposal was valid notwithstanding the error.

4. The reasoning of the VTE on point 3 above is contained in paragraphs 29 to 35 of its decision which are in the following terms:

“29. The third and final question must be posed in all cases but will only rarely have an impact on the outcome.

30. As explained in Imperial Tobacco, the VO has a discretion under reg. 8.  It is not a discretion as to whether to issue a notice or instead raise invalidity at the hearing, but whether to issue a notice or treat the proposal as valid.  That discretion persists even where (as here) it was not possible to issue a notice. It is inconceivable that the VO would be given a discretion in the one context but not in the other.  It is, as I understand it, no part of the respondent’s case that a VO, not having issued a notice whether in the exercise of discretion or otherwise, is bound to raise invalidity at a later stage if of the view that there is a defect that makes the proposal invalid.

31. It is axiomatic that such a statutory discretion must be exercised lawfully, in particular reasonably.  Can it be said that the VO in this case has exercised her discretion lawfully?

32. The ratepayer is likely to be bemused.  The VO says the proposal is invalid because it contains a piece of information which she knows or suspects to be inaccurate because of information already in her possession provided by that same ratepayer which she believes to be accurate.  It must look to the ratepayer like the use of a technicality to immunise her assessment of the rateable value from scrutiny.

33. Can the VO so exercise her discretion on these facts as to shield her assessment from review by the Tribunal?  Can she take refuge in a numerical error which she knows to be an error because of information previously supplied by the ratepayer and where therefore she is in possession of the correct figure?  Is that not an unattractive display of pedantry and formalism?

34. The question in law is whether it is unreasonable in the Wednesbury sense.  Is it a decision to which no reasonable VO could come?  I am unable to conclude that the VO’s attempt to have the proposal ruled invalid falls within the range of rational decision-making.  In my judgment, the attempt to claim invalidity is unreasonable and irrational and therefore unlawful.  Public law principles will inhibit a VO from using invalidity on these facts in this way and they render the assertion of invalidity inadmissible.

35. The answer to this question means that the VO is precluded from claiming invalidity.  Accordingly, I hold the proposal valid notwithstanding the error.”

Thus as shown in this passage the VTE took the view that for the VO to contend that the proposal was invalid was "an unattractive display of pedantry and formalism".

5. The circumstances in which the present dispute arises can be summarised as follows:

(1) The 2010 rating list for non-domestic properties contained an entry for 508 London Road as a rateable hereditament. The rateable value shown was not in fact in evidence in these proceedings and it is not relevant to the analysis, but I was told that the rateable value shown was £5400.

(2) A proposal to alter the 2010 rating list was made by The Coupers Partnership Ltd on behalf of Mayday Optical Co Limited (i.e. the present respondent) by a proposal document dated 7 October 2010. This document stated that the current annual rent was £9500. The proposal was that the rateable value should be altered to £1 with effect from 1 April 2010. The grounds for the proposed alteration were stated as being that the assessment was incorrect excessive and bad in law.

(3) On the face of the proposal there was nothing to indicate invalidity. All the necessary information, as required by The Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009, was given and there was nothing on the face of the document to indicate that any of this information was incorrect. The VO did not serve an invalidity notice under Regulation 8 -- there was at the relevant time no basis for doing so.

(4) It subsequently came to the attention of the VO that there had previously been submitted by the respondent a formal form of return ("FOR") in respect of the property in which the respondent had stated that the rent passing was £10,000 p.a. On 3 May 2011 the VO communicated with the respondent's representatives raising this point and stating her view that the proposal was not valid by reason of misstating the annual rent.

(5) At no stage did the respondent, either by itself or through its representatives, produce any evidence to show that the true rent was £9500 -- this is despite an order from the VTE to produce authenticated documentary evidence of the rent.

(6) The respondent did not appear at the appeal hearing on 29 February 2012 and did not at any stage put in any evidence to show what truly was the yearly rent payable at the date of the proposal. The VTE placed weight upon the FOR, which was a document submitted by the respondent in circumstances where the respondent faced criminal sanctions for giving incorrect information, and concluded that the yearly rent passing was £10,000.

(7) Accordingly the VTE concluded that the proposal contained incorrect information regarding the yearly rent payable because the proposal stated that yearly rent to be £9500 whereas in fact it was £10,000.

6. The present appeal was heard by the VTE together with another appeal namely Imperial Tobacco Group Ltd v Alexander (VO) Nos. 306018810109/511NO5, 306018810330/511NO5 and 306018810247/511NO5 in respect of John Player & Sons, Horizon Factory, Thane Road, Nottingham. In this Imperial Tobacco appeal the President gave consideration as to the effect of the requirements of regulation 6 of the 2009 Regulations and the consequences of non-compliance. Paragraphs 30 to 34 of the decision of the VTE in that case are in the following terms:

“30. First are errors of or omissions of a clerical nature which are trivial, insignificant and de minimis. These have no impact on the proposal's validity and should be ignored.

31. Secondly, there are errors and omissions of substance but not the result of a deliberate attempt to mislead which do not impair the VO’s ability to consider the appellant’s case and which have no adverse impact on an assessment of the correct rateable value.  This encapsulates two questions: (a) Has there been substantial compliance? (b) Has it caused the VO any prejudice?  If the answer to (a) is yes and to (b) no, these failures do not render the proposal invalid.

32.Thirdly, there are errors or omissions of a kind that misrepresent the appellant’s case or mislead the VO in considering the matter on its merits.  Such error or omission will render the proposal invalid if the VO decides so to treat it.  But if in the exercise of his discretion he chooses to disregard it and proceeds on the basis that the proposal is valid, that is entirely proper and the VO may either adjust the rateable value or allow the case to proceed to appeal before the Tribunal, but he may not thereafter raise or rely on the invalidity.

33. I draw attention to the comment of the President of the Lands Tribunal in Tuplin (VO) v Focus (DIT) Ltd [2009] UKUT [LC] 118, [2009] RA 226, 237, para 27, where he expressed some pleasure in rejecting the VO’s argument as to invalidity –

“… Since she failed to serve an invalidity notice on the proposer … and thus deprived it of the  opportunity of serving a further notice to make good the claimed deficiency …  In such circumstances, it seems to me, a valuation tribunal may often be able to treat the fact that the valuation officer did not serve an invalidity notice as a good indication that the proposal was not invalid.”

34. Finally, there will be errors or omissions so fundamental that the proposal cannot in any circumstances be treated as valid (as in R v Northamptonshire Local Valuation Court, ex p Anglian Water Authority [1991] RA 93 CA, where a sewage works that no longer existed was named in the proposal instead of one half a mile away; and in Mainstream Ventures Ltd v Woolway (VO) [2000] RA 395, where the proposer was not qualified to make the proposal as he was not the occupier).  In this category, the VO has no alternative but to pronounce the proposal (in his opinion) invalid; and should such a proposal come before the Tribunal, whether on appeal against an invalidity notice or otherwise, the Tribunal, whatever stance taken by the VO, would have to declare the proposal invalid and either uphold the invalidity notice or strike out the appeal on the basis that the Tribunal had no jurisdiction to entertain it.  This is clear from the Mainstream case (supra) where the invalidity was raised for the first time by the VO on appeal to the Lands Tribunal although the defect should have been noticed at a much earlier stage.”

7. In the present case the respondent did not serve any respondent's notice and the respondent has played no part in the present appeal. The VO has not appealed against the decision of the VTE in the Imperial Tobacco case. On behalf of the VO Mr Forsdick invited me to proceed on the basis that the analysis of the VTE in the Imperial Tobacco case as to the effect of non-compliance with the requirements of regulation 6 is correct.

Relevant statutory provisions

8. The Local Government Finance Act 1988 schedule 6 makes provision for valuation for non-domestic rating. Paragraph 2 (1) provides that the rateable value of a non-domestic hereditament (none of which consists of domestic property and none of which is exempt from local non-domestic rating) shall be taken to an amount equal to "the rent at which it is estimated the hereditament might reasonably be expected to let from year to year" on certain assumptions.

9. Section 55 of the Act empowers the Secretary of State to make regulations regarding the alteration of lists. The regulations may include provision as to the manner and circumstances in which a proposal may be made and may include provision that, where there is a disagreement between a valuation officer and another person making a proposal about the validity of the proposal, an appeal may be made to a valuation tribunal.

10. The relevant regulations are the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009. Regulation 4 sets out the grounds for making a proposal, which includes in paragraph 4(1)(a) the ground that the rateable value shown in the list for a hereditament was inaccurate on the day the list was compiled (this is the ground which the present respondent relied upon in its proposal).

 

11. Regulation  6 so far as presently relevant provides:

“6 (1) A proposal shall be made by notice sent to the VO which shall --

(a) state the name and address of the proposer;

(b) [state the capacity of the proposer]

(c) identify the property to which the proposal relates;

(d) identify the respects in which it is proposed that the list be altered; and

(e) include --

(i) a statement of the grounds for making the proposal;

(ii) to (vi) ……….

(vii) in the case of a proposal made on one or more of the grounds set out in regulation 4(1)(a) …. in respect of a hereditament occupied under a lease……, the information specified in paragraph (3).

(2) …………

(3) The information required by paragraph (1)(e)(vii) is --

(a) where the proposer is the occupier, the amount payable each year by the proposer, as at the date of the proposal, in respect of the lease………., or

(b) ………..”

12. Regulation 8 contains provisions regarding disputes as to the validity of proposals in the following terms:

 

“8.— Disputes as to validity of proposals

(1) Subject to paragraphs (2) and (3), where the VO is of the opinion that a proposal has not been validly made, the VO may, at any time after receiving the proposal, serve notice (an “invalidity notice”) on the proposer that the VO is of that opinion and stating—

(a) the reasons for that opinion, and

(b) the effect of paragraphs (6) to (10).

(2) The VO may not serve an invalidity notice after an agreement has been reached under regulation 4 (arbitration) of the Procedure Regulations or the VTE has given notice under regulation 31 (notice of hearing) of those Regulations.

(3) The VO may not serve an invalidity notice more than four weeks after the proposal to which it relates was served other than with the consent of the proposer, given in writing.

(4) Where an invalidity notice is served—

(a) if it is served more than four weeks after the proposal to which it relates was served on the VO but before a disagreement as to the proposed alteration has been referred to the VTE under regulation 13—

(i) the invalidity notice shall state the effect of paragraph (12); and

(ii) the VO shall serve a copy of the invalidity notice on—

(aa) any person who has been served with a copy of the proposal to which the invalidity notice relates; and

(bb) any IP who has served notice under regulation 11(3)(a); or

(b) if a disagreement as to the proposed alteration has been referred to the VTE under regulation 13—

(i) the VO shall serve a copy of the invalidity notice on—

(aa) any person who has been served with a copy of the proposal to which the invalidity notice relates; and

(bb) any IP who has served notice under regulation 11(3)(a); and

(ii) the VO shall inform the VTE that the invalidity notice has been served and of any withdrawal of that notice under paragraph (5).

(5) The VO may at any time withdraw an invalidity notice by serving notice in writing on the proposer; and any appeal against the invalidity notice shall then be treated as having been withdrawn.

(6) Unless an invalidity notice has been withdrawn, the proposer may, within four weeks of receiving it—

(a) subject to paragraph (7), make a further proposal in relation to the same property; or

(b) appeal against the notice to the VTE.

(7) For the purposes of paragraph (6)(a)—

(a) the time limit applicable under regulation 5 may be ignored; but

(b) a further proposal may not be made where the proposal to which the invalidity notice relates was itself made—

(i) under paragraph (6)(a); or

(ii) after the expiry of the time limit applicable under regulation 5.

(8) Where a further proposal is made under paragraph (6)(a), the proposal in respect of which the invalidity notice was served shall be treated as withdrawn.

(9) An appeal against an invalidity notice shall be made by the proposer sending a notice of disagreement to the VO.

(10) Unless the VO withdraws the invalidity notice within four weeks of receiving the notice of disagreement, once that period has ended the VO shall inform the VTE of—

(a) the entry in the list (if any) which it is proposed to alter;

(b) the grounds on which the proposal was made; and

(c) the reasons for the VO's opinion that the proposal has not been validly made.

(11) Where information relating to an invalidity notice has been supplied in accordance with paragraph (10) and the notice is withdrawn, the VO shall, as soon as practicable, inform the VTE of the withdrawal.

(12) Subject to paragraph (14), until it is finally decided that the proposal to which an invalidity notice relates was validly made, regulations 9 to 13 shall not apply in relation to the proposal.

(13) Where it is finally decided that the proposal was validly made, those regulations shall have effect as if the proposal had been served on the VO on the date of that final decision.

(14) Where an invalidity notice is served more than four weeks after the service of the proposal to which it relates, any period of time referred to in regulation 9 or any of regulations 11 to 13 which has started to run—

(a) shall cease to run with effect from the date of service of the notice until it is finally decided that the proposal was validly made; and

(b) where it is finally decided that the proposal was validly made, shall start to run again with effect from the date of that final decision as if there had been no interruption.

(15) For the purposes of paragraphs (12) to (14), a final decision is made—

(a) where the invalidity notice is withdrawn, on the day of the withdrawal;

(b) in any other case, on the day on which—

(i) (the VTE having determined the appeal against the invalidity notice) the period within which an appeal may be made to the Upper Tribunal expires without such an appeal being made; or

(ii) the Upper Tribunal gives a decision on appeal.

(16) Nothing done under this regulation shall prevent any party to an appeal under regulation 13 from contending that the proposal to which that appeal relates was not validly made.”

13. Regulation 33 of The Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009 provides:

“33. Where at the hearing of an appeal under regulation 10 of the CT regulations or regulation 13 of the NDR regulations (disagreement as to proposed alteration) --

(a) the LO or, as the case may be, the VO contends that the proposal was not validly made; and

(b) the VTE panel does not uphold the contention,

 

the VTE panel must not immediately proceed to deal with the appeal unless every party present or represented at the hearing so agrees.”

Submissions on behalf of the VO

14. On behalf of the VO Mr Forsdick advanced the following arguments.

15. He pointed out that the proposal was made under regulation 4(1)(a) in circumstances where regulation 6(1)(vii) applied. Accordingly the information set out in regulation 6(3) must be included in the proposal, namely the amount payable each year by the proposer as at the date of the proposal in respect of the lease.

16. He drew attention to the mandatory language of regulation 6, namely that the proposal "shall" be made by notice sent to the VO which "shall" include certain material. A requirement to include the amount payable by way of yearly rent must be read as a requirement to include an accurate statement of this yearly rent rather than some arbitrary figure which may or may not be accurate.

17. He drew attention to the judgement of Lord Woolf MR in R. v Secretary of State for the Home Department, ex p Jeyeanthan [2000]1 WLR 354 at 358 where it is observed that: "the requirement is never intended to be optional if a word such as "shall" or "must" is used."

18. He accepted that, for the purposes of the present appeal, the Upper Tribunal should proceed on the basis of the decision of the President of the VTE in the Imperial Tobacco case for the purpose of analysing the effect of any failure to comply with regulation 6.

19. He pointed out that in the present case the VTE found (correctly he submitted) that the fact the VO had not made use of the invalidity notice procedure did not prevent the question of the validity of the proposal being taken at the hearing. He pointed out that it is recognised in Mainstream Ventures Ltd v Woolway (VO) [2000] RA 395 that circumstances may arise where a VO may have conducted themselves in such a manner that they may become estopped from asserting at the hearing that a proposal is invalid, but no such argument has been or can be raised in the present case.

20. The VTE has found as a fact that the yearly rent payable was £10,000. The respondent has had every opportunity to show that the true rent payable was only £9500 as stated in the proposal but has not availed itself of any such opportunity. The Upper Tribunal should reach the same conclusion for the same reasons on this point as the VTE, namely that the yearly rent payable was £10,000.

21. The VTE, applying the reasoning in paragraph 31 of the Imperial Tobacco case, asked itself the correct questions when deciding whether the error in the proposal resulted in the proposal being invalid, namely (A) whether there has been substantial compliance with the requirements of regulation 6 and (B) whether any failure to comply has caused the VO any prejudice.

22. Mr Forsdick pointed out that the VTE answered these questions (or should be construed as having answered these questions) favourably to the VO in paragraphs 23 to 28 of the present decision, namely an error of £500 on a figure of £10,000 is an error of 5% which is not an immaterial error and is an error that could mislead and prejudice the VO. He argued that in any event, quite apart from the VTE's analysis on that point, the Upper Tribunal should so conclude for the following reasons.

23. As regards whether it was substantial compliance with regulations 6 to state £9500 as the yearly rent when the accurate answer was £10,000, he pointed out that rateable values were based upon the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on certain assumptions. Thus the yearly rent payable was potentially a crucial piece of information. An error of 5% in the amount entered in the rating list would be a substantial error, not merely in relation to the subject property but also as a precedent which could affect the tone of the list.

24. As regards whether the valuation officer was prejudiced by the error, Mr Forsdick drew attention to what he submitted was the intention and scheme of the relevant statutory provisions and regulations. He argued that the intention and scheme can be discerned from the statutory provisions and regulations themselves, but such intention and scheme is conveniently summarised in the consultation paper on the proposed amendments to the then existing business rates appeal regulations which was issued in January 2005 by the Office of the Deputy Prime Minister (ODPM). Paragraphs 36 to 42 are in the following terms:

“36. A valid proposal may only be made where specified information has been included.  Some of this information concerns the identity of the list entry that it is proposed to alter and the nature of the alteration sought.  Those making proposals must also give reasons for requiring the list to be altered.  In practice, however, many ratepayers making proposals simply state that the rateable value is “incorrect, excessive and wrong in law and should be reduced” – irrespective of the RV on the compiled list entry – without giving any supporting evidence to back their assertion.  There is a risk that proposals are made without due consideration by the ratepayer – advised professionally where appropriate – as to the correctness or otherwise of the existing list entry – which again adds unnecessarily to the cost of public administration.

37. Although the rateable value represents the rental value of the property, there is no current requirement to supply details of the rent paid in respect of the occupation.  This means that a key piece of information may not be available to the VO when initially considering the appeal.  This is the single most important piece of information for the VO when determining appeals, and rental information at an early stage can assist significantly in assessing the accuracy of rateable values and whether there is a case for altering them.

Proposal

38. We propose that those making a proposal should be required to include a statement of the basic tenancy details where appropriate.  Providing this at the start of the process should allow cases to be resolved more quickly with fewer cases going to Valuation Tribunal.  Failure to provide this information will render the proposal invalid [Regulation 6(3)].

39. Setting out the basic tenure details for a property at the start of an appeal process on a rental value based tax is a reasonable requirement.  It has been commented that it is surprising this has not been a requirement in the past.

40. Whilst the VO already has the discretion to ask for rental information by way of forms of return, the new requirement will enable better targeting of these forms so that the burden and costs of unnecessary forms can be avoided.

41. Though rateable value represents the rent reasonably to be expected for a property which may be different from the actual rent paid, stating the rent on the form brings the connection between rent and rateable value strongly into focus.  A significant discrepancy between rateable value and rent needs to be brought to the valuation officer’s attention at an early stage and it is important that the VO is aware of this basic information.

42. The details sought are basic rental information which should be easily to hand for a ratepayer and known by any authorised agent.  The requirement will not impose any significant additional burden and has the added advantage of protecting ratepayers from unauthorised agents making proposals as such “agents” will not possess this information.  Non-inclusion of accurate information will mean the proposal is not validly made.”

25. He pointed out that if a proposal misstated the rent passing, the VO might rely upon the information given and might in consequence reduce the rateable value. Alternatively a VO, if faced with a proposal which contained information regarding the yearly rent which the VO viewed as potentially inaccurate, could be put to substantial work in researching the matter. He submitted there was a strong public policy reason to place a burden (only a slight burden) on the proposer to provide accurate information upon this crucial point of what was the current rent. He also pointed out that a proposal is a public document which can be viewed by members of the public on a register. If the proposal substantially understated the rent passing and was available for public inspection, without the VO having the ability to challenge the validity of the proposal (and to mark this challenge on the register) on the basis that the proposal wrongly stated the rent, then this might encourage other persons to make other proposals in respect of similar properties in the belief that the rent stated in the proposal was accurate when in fact it was inaccurate.

26. Mr Forsdick submitted that the VTE was correct in its decision in paragraphs 22 to 28, save only the final sentence in paragraph 28. He submitted the VTE was wrong in concluding that there was still left the question of whether the VO could raise the question of invalidity.

27. He relied on the wording of the regulations regarding the question of validity. Thus regulation 8 provides that the VO may serve an invalidity notice where the VO is of the opinion that "a proposal has not been validly made". Regulation 8 (10) provides that unless an invalidity notice is withdrawn within a certain period, then the VO is to inform the VTE of certain matters including the reasons for the VO's opinion that "the proposal has not been validly made". Regulation 8 (12) and (13) contemplate that what has to be finally decided, where validity has been raised, is whether "the proposal was validly made". It is not necessary for the question of validity to be challenged through an invalidity notice. It can also be challenged at the hearing. The crucial question is whether the proposal was validly made, see regulation 8(16) and see also regulation 33 of the Procedure regulations.

28. Accordingly the question for the VTE was whether the proposal has been validly made. The question was not one which involved examining whether, as a matter of administrative law, the VO was acting lawfully in arguing that the proposal was not validly made. Mr Forsdick contended that the VTE examined the wrong question in the closing part of its decision. The VTE should have concentrated upon the question raised in the regulations, namely whether the proposal has been validly made. If the answer was that the proposal has been validly made, then the consequence would be that the matter would have to become the subject of a hearing to decide the merits of the proposal. If the answer was that the proposal has not been validly made, then that was an end of the case (subject to an appeal to the Upper Tribunal). If a party wished to contend that, in respect of a proposal that has not been validly made, the VO was precluded for public law reasons from treating the proposal as not having been validly made, then that was a matter which the party would need to take to the Administrative Court -- it was not a matter for the VTE.

29. Mr Forsdick accepted that if on the facts of a particular case it could with justification be said that the invalidity argument taken by the VO was "an unattractive display of pedantry and formalism" then the considerations which justified such a comment would be likely to be considerations which were relevant to the question of whether the proposal had been validly made, because this question would turn upon whether the error in the notice was one which (as analysed in the Imperial Tobacco case) did not prevent substantial compliance with the regulations and did not cause the VO any prejudice. If the VO was truly giving an unattractive display of pedantry and formalism then the VTE might well be justified in concluding that the error in the notice had not prevented substantial compliance with the regulations and had caused no prejudice to the VO and that therefore the proposal had been validly made. That however is not the conclusion which the VTE reached in paragraphs 23 to 28 of its decision.

 

Discussion

 

29. The VTE concluded that the VO was entitled to raise the invalidity point notwithstanding that no invalidity notice had been served. I agree that the VTE was correct in so concluding.

 

30. I accept the submissions made by Mr Forsdick as to the intention and scheme of the relevant statutory provisions and regulations as summarised in paragraphs 24 and 25 above. I proceed on the basis that the consultation paper issued by the ODPM is of assistance in conveniently setting out aspects of the relevant intention and scheme -- however the question of whether an inaccurate statement of the yearly rent means that the proposal is not validly made is a matter for the VTE (or this Tribunal on appeal) to decide for itself without reliance upon the assertion in the ODPM document that "non-inclusion of accurate information will mean that the proposal is not validly made".

 

31. There has been no appeal by the VO against the Imperial Tobacco decision. The VO, through Mr Forsdick, has invited me to proceed on the basis that the VTE's analysis in the Imperial Tobacco decision is correct upon the question of whether an error in a proposal renders the proposal invalid. There has been no participation by or representation on behalf of the respondent in the present case. In these circumstances I conclude that for the purposes of the present appeal I should proceed on the basis that the VTE's analysis on this point in the Imperial Tobacco case is indeed correct.

 

32. I agree that compliance with regulation 6(3) requires the accurate statement of the yearly rent -- it is not compliance to state a rental figure (i.e. so as not to leave relevant box blank) which is an inaccurate figure.

 

33. Having regard to the analysis in paragraph 31 of the decision in Imperial Tobacco, the result of an error in the statement of the yearly rent in the proposal form will depend upon whether (A) there has been substantial compliance with the regulation and (B) the error has caused the VO any prejudice.

 

34. I accept Mr Forsdick’s argument that the error in the present case (namely an error of 5% in the statement of the annual rent) was a significant error and resulted in there not having been substantial compliance with the regulation. I also accept his argument, as summarised in paragraph 25 above, that such an error prejudiced the VO. I conclude therefore that the error in the proposal rendered the proposal invalid. It appears that the VTE would have taken the same view had it not been for the VTE's conclusion that the VO was precluded as a matter of public law from taking the invalidity point.

 

35. I now turn to the question crucial to the present appeal, namely whether in relation to an error such as this in a proposal form it is open to the VTE to conclude that, although the proposal is in fact invalid, the VO is acting unreasonably in the Wednesbury sense in asserting invalidity.

 

36. It is significant that the question to be decided by the VTE is whether the proposal has been validly made, see regulation 8 and see also regulation 33 of the Procedure regulations (see paragraphs 12 and 13 above). The question is not whether the VTE, in relation to a proposal that has not been validly made, is precluded from asserting invalidity.

 

37. I accept the argument advanced by Mr Forsdick as summarised in paragraph 29 above. Put another way, if a proposal contains an error which results in there not being substantial compliance with the regulations and in there being prejudice to the VO, it cannot be said to be an unattractive display of pedantry and formalism for the VO to take the point and to assert invalidity. A VO can in certain circumstances become estopped from taking an invalidity point, see paragraph 19 above, but there is no suggestion of any such estoppel in the present case.

 

38. It may be noted that in the present case the VO did not know what the true rent was. The position was merely that the VO suspected that the proposal may have contained an inaccurate statement of the yearly rent. The VO did not know what the true yearly rent was at any time prior to the VTE deciding as a fact that the yearly rental was £10,000 -- for all the VO knew the yearly rent could have been £9500 or £10,000 or some other figure. I therefore cannot accept that the question posed by the VTE, namely:

"Can she take refuge in a numerical error which she knows to be an error because of information previously supplied by the ratepayer and where therefore she is in possession of the correct figure?

is a relevant question to ask or a question posed upon a factually correct foundation. The VO did not know she was in possession of the correct figure.

 

39. I do not accept that it was "an unattractive display of pedantry and formalism" for the VO to take the invalidity point on the facts of the case.

 

40. I find it difficult to imagine circumstances in which:

(a) there is an error in a proposal which results in there not being substantial compliance with the regulations and in there being prejudice to the VO; and

(b) there is no estoppel precluding the VO from taking the invalidity point; but

(c) the VO is nevertheless acting unreasonably in the Wednesbury sense and therefore unlawfully in taking the point that the proposal is invalid.

If in any case a proposer who has made a proposal wishes to argue that such circumstances as described above exist and that the VO is acting unlawfully as a matter of public law in taking the invalidity point, then the question will arise as to whether such an argument can be considered by the VTE or whether the proposer will need to seek to raise the argument with the Administrative Court. It is not necessary for the purpose of deciding the present appeal for me to reach a final conclusion upon this point and therefore I do not do so (especially bearing in mind that there has been no representation from the respondent and that the point has not been fully argued by the VO). I do however respectfully disagree with the VTE’s observation in paragraph 29 of its decision that in all cases (i.e. cases where the question of whether a proposal has been validly made arises before the VTE) it is also necessary for the VTE to pose the question of whether as a matter of public law the VO is acting lawfully in asserting invalidity. The task given by the statute and the regulations to the VTE is to decide whether the proposal has been validly made (and to decide on any estoppel argument if raised). It is not for the VTE routinely (and in the absence of any such argument raised by the proposer -- which was the position in the present case) to consider this public law point. If such a public law point is raised by a proposer the question of jurisdiction (i.e. whether the matter can only be considered by the Administrative Court) will arise. However such a public law point cannot in any event properly be considered by the VTE where no such point has been raised by the proposer. (I also note that paragraph 11 of the VO's statement of case states that the point was not raised by the VTE during the hearing such that the VO was not given an opportunity to respond to the point).

 

41. It is sufficient for the purpose of deciding the present appeal for me to state that I conclude, with respect, that the VTE was wrong in finding that the VO was acting unreasonably, in the Wednesbury sense, in asserting the invalidity of the proposal. In short, the proposal was not validly made by reason of a substantial non-compliance with regulation 6 causing prejudice to the VO. The VO was entitled to assert this invalidity.

 

Conclusion

 

42. In the result the VO's appeal is allowed.

 

43. The VO did not seek any order for costs against the respondent.

 

 

 

His Honour Judge Huskinson

 

12 November 2013