Pilot Foods Ltd., R (on the application of) v Horsferry Road Magistrates Court

MR JUSTICE NEWMAN: This is a claim for judicial review, pursuant to permission granted by Sullivan J. The claimant seeks judicial review of two decisions of the Horseferry Road Magistrates' Court making the claimant liable for Non-Domestic Rates totalling £100,852.92 in respect of the ground floor and basement of 23 Villiers Street, London WC2, for periods during which the claimant was not in rateable occupation of the premises.

The decisions were: one, a decision of 13th December 2000 making a liability order against the claimant in respect of the periods 25th December 1998 to 31st March 2001 in the total sum of £64,453.54; secondly, a decision made on 25th July 2001 making a liability order against the claimant in respect of the period of 1st April 2001 to 31st March 2002 in the sum of £36,369.38.

The ground on which the application for judicial review is based is that there was a breach of natural justice. The claimant contends, and has put in evidence in support of this contention, that it was not aware of the dates of the hearings on which the two liability orders were made and, as a result, was deprived of an opportunity of appearing and opposing the making of the orders.

Further, it is said that had there been the opportunity to appear and make representations, there were facts which could have been drawn to the attention of the court which would have demonstrated that the company was not in occupation for the purposes of being liable in respect of the Non-Domestic Rates for the relevant period.

The premises are a ground floor and basement at 23 Villiers Street, WC2. They are premises which are subject to Non-Domestic Rates under the Local Government Finance Act 1988 and Westminster City Council (the interested party) is the billing authority for the premises under the provisions of that Act.

The essential facts are that the claimant carries on business as restauranteur and a cafe owner and operator. It also grants operating licences in the course of its business of restaurant premises to other individuals or companies. On 24th March 1999, the claimant took a lease of the premises for a term of 15 years from 24th March 1999. It is to be emphasised that at that date the claimant's registered office was 29 Villiers Street. It was not the premises at 23 Villiers Street which it acquired by way of the sole interest for the term of years.

The claimant company never took up occupation of the premises at 23 Villiers Street. In accordance with its business interests, on 24th March 1999, it entered into a written agreement with another company called Delta Project Management Services Limited and Delta occupied the premises, or were entitled or permitted to occupy the premises, for a period of five years to run a restaurant called "Little Italy". It was an operating licence and the company Delta was therefore in rateable occupation of the premises. That company remained in occupation between 24th March 1999 and 20th July 2001.

On 24th July 2001, the premises were unoccupied, but the claimant entered into a new operating agreement with another company, Rosecrown Restaurants. This was for a term of five years and, as it happens, Rosecrown Restaurants has been in occupation of the premises ever since.

The claimant's case is that it was unaware of any problem in respect of unpaid rates until 7th February 2002, by which time two liability orders had been made in the proceedings of which, as I stated, it was unaware.

This application for permission in respect of judicial review was not made until 7th November 2002. That was because Mr Kenawy, the Director of the claimant company, thought that Westminster Council had accepted the explanation that the company had not been in occupation. Thereafter, the claimant company proceeded by a number of unsuccessful legal routes to achieve a result. It brought an application in the Queens Bench Division for an interim injunction and a claim for a declaration that it was not in occupation.

Then, at the suggestion of Westminster Council itself, the claimant sought to appeal the liability order by way of complaint to the Horsferry Magistrates' Court. The Horsferry Magistrates' Court dismissed that on the ground of lack of jurisdiction.

Then the company attempted to request the court to state a case, but that was refused. Then, after a change of counsel for the claimant, the claim for judicial review was issued on 7th November 2002.

The position, so far as the service of the summons in connection with a liability order is concerned, is set out in the regulations: namely, the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1999, Statutory Instrument 1989/1058. Regulation 13(2) provides:

The uncontested facts are that the summonses in connection with these liability orders were served on the premises at 23 Villiers Street and therefore were not served at the registered office of the company, number 29.

The submissions which are advanced on behalf of the company can be very shortly stated, because neither the court nor the interested party has been represented, and indeed they have, on more than one occasion, indicated, certainly so far as Westminster City Council is concerned, no intention of attending and advancing any matters in opposition to this claim for judicial review, leaving the matter to, as it is said, the discretion of the court. The District Judge of the Magistrates' Court, in accordance with convention, has not, of course, attended, or been represented, and no such representation would have been expected of the court. No acknowledgement of service has come from the Council and there is no evidence. The only evidence in the matter comes from the claimant.

It is submitted therefore that unlawfulness, namely the absence of service in accordance with the regulations, has not been contested and it follows, so it is submitted, that judicial review should be granted.

So far as the appropriateness of judicial review in circumstances such as this is concerned, the claimant by Mr Daiches, who has prepared this application with commendable thoroughness and clarity, for which the court is grateful, draws attention to a decision of Sir Richard Tucker in the case of R (on the application of Maureen Clark-Derby) v Highbury Magistrates' Court (2002) RVR 35, and he draws attention to the fact that Sir Richard Tucker considered that there was unlawfulness where an appellant had no knowledge of the hearing.

He also draws attention to the support that can be gained for Sir Richard Tucker's approach in a decision of the House of Lords, R v Criminal Injuries Compensation Board, ex parte A [1999] 2 AC 330, where Lord Slynn of Hadley agreed that the court does not have to find that anyone was at fault in order to find that a breach of natural justice has occurred if it is submitted that objectively there has been unfairness.

I accept the submission that in this case there has been a procedural unfairness. Indeed, the regulations were not complied with and therefore the summonses were not validly served.

So far as the merits of the matter are concerned, having regard to the essential facts which I have already recited in this judgment, it seems to the court that it is obvious that if the facts, as set out by Mr Kenawy, relied upon by the claimant company, are correct, as indeed this court must take it that they are in the light of what has occurred, it is plain that the company was not in occupation of the premises during the relevant period and had that evidence been before the court, no liability orders would have been made.

The court is further satisfied that although this is a case in which it could be said that there has been a delay, that is not a point which has been relied upon by the interested party and on the facts as I have briefly summarised them, it would not avail so as to deprive the claimant company of relief in this court, having regard to the course which was taken -- admittedly misconceived but in some parts under the direction of the Council itself in connection with the appropriate way forward.

In all the circumstances, therefore, I am entirely satisfied that the claimant is entitled to the relief it seeks, namely the quashing of the liability orders.

Mr Daiches has also made an application for costs to be paid by the interested party and has drawn the court's attention to correspondence which has passed between solicitors for the claimant and counsel. He draws the court's attention to CPR Practice Direction 54.17 and to the well known provision which lies there for parties to agree an order which the court can then make, so avoiding the necessity of costs being incurred and preparation of documents as though a matter which in fact is not contested is nevertheless to be contested.

With this point in mind, it is worthy of note that on 17th February of this year, permission having been granted by Sullivan J on 16th January, solicitors wrote to the Director of Legal and of Administrative Services at Westminster City Council, drawing its attention to the rules under CPR 54 and in effect asking for them to comply with the rule and to indicate what the position is, whether they were going to contest or not.

By letter of 24th February 2003, the Council replied that they had stated to the court that they did not intend to contest the claim, but to leave it to the court's discretion; that counsel had made no formal submissions testing the claim; that the Council's recollection was that in the Magistrates' Court -- that was a reference to the abortive appeal:

The response of the Council in this regard, as indeed it had been in the letter to this court of 20th January, was to this effect:

I am bound to say that it seems to me the Council were either being disingenuous or really had failed to appreciate the nature of the case which this judgment has already made plain, namely that at the heart of the matter was a contention that there had been no service in connection with the Regulations because number 23 Villiers Street was not the registered office of the claimant company.

On 18th March, a further letter was written in which solicitors pointed out that it was imperative that matters are to be contested, that they should know, and if you are to agree, let us settle an agreed order.

The response of the Council to that was merely to repeat their position that they did not intend to contest the claim, with you but to leave it to the court's discretion, and thus there was an agreed order. Thus, this matter had to be prepared in the way that it has been. This matter could have been disposed of by the form of an agreed order, and in my judgment it is right that the claimant should have their costs against the Westminster City Council in respect of this application for judicial review.

Thank you very much. Anything else?

MR DAICHES: I am much obliged. In relation to the assessment of those costs, my Lord --

MR JUSTICE NEWMAN: Do you have --

MR DAICHES: I do, but I have to tell your Lordship that, as I understand, a summary was not served on Westminster. In those circumstances, I do not know whether your Lordship feels --

MR JUSTICE NEWMAN: Why do I not assess them and then they can always come back?

MR DAICHES: My Lord, I am much obliged.

MR JUSTICE NEWMAN: Otherwise, we are just incurring more costs.

MR DAICHES: My Lord, yes.

MR JUSTICE NEWMAN: When does this bill start running from, Mr Daiches?

MR DAICHES: The actual date in connection with the date of the application for permission --

MR JUSTICE NEWMAN: Is it confined to that?

MR DAICHES: It is confined to the application for permission and to the substantive hearing.

MR JUSTICE NEWMAN: And the costs hereafter?

MR DAICHES: Yes.

MR JUSTICE NEWMAN: You are agreeable to me assessing the costs by paying regard to all the factors. Do you want to address me as to proportion of this bill? It seems to me that, having regard to the anticipated result, which could be expected from the other side, there is scope for refusing it.

MR DAICHES: We would not object to that approach, my Lord.

MR JUSTICE NEWMAN: You would be better to have an order of some sort. The total bill, for the record, with VAT, is £10,399.34. The total bill without is £8,850.50 and it seems to me that the appropriate way of dealing with this, doing broad justice, is to reach a round figure to assess your costs at £5,000.

MR DAICHES: My Lord, may I just be clear, is that inclusive?

MR JUSTICE NEWMAN: That does not include VAT.

MR DAICHES: I am obliged, my Lord.

MR JUSTICE NEWMAN: All right. Thank you.

I ought to add that, since that has not been served on Westminster, they have liberty to apply in connection with the assessment of costs within seven days of service of the order on notice.

MR DAICHES: Thank you, my Lord.

MR JUSTICE NEWMAN: Thank you, Mr Daiches.