Wirral Borough Council v Farthing

JUDGE HODGE QC: This is an appeal by Wirral Borough Council from a decision of the Merseyside Valuation Tribunal set out in a decision notice dated 6^th November 2007 following a hearing on 3^rd October 2007. The appeal had been by the respondent to this appeal, Mr Michael Farthing, against the billing authority's decision not to award a student discount disregard to Mr Farthing, who lives at an address in Higher Bebington on the Wirral, for the period 5^th January to 28^th June 2007. The appeal had been disposed of by way of written representations.

The decision of the Merseyside Valuation Tribunal was that Mr Farthing was indeed entitled to a student discount for the purposes of section 11 of the Local Government Finance Act 1992 relating to council tax in respect of dwellings on the basis that he satisfied the conditions relating to full time education contained in paragraph 4 of Schedule 1 to the Council Tax (Discount Disregards) Order 1992, to which I shall refer as “the Disregards Order”.

Save in respect of one finding, which in the event is not material to the outcome of this appeal, the appellant authority does not dispute the Tribunal's findings of fact. They may be summarised as follows. First that Mr Farthing was enrolled on a mathematics enhancement course at Liverpool Hope University which began on 5^th January 2007 and finished on 28^th June 2007; secondly that Mr Farthing's academic course lasted for a period in excess of twenty-four weeks; and thirdly that Liverpool Hope University's academic year ran from October to June.

It is the appellant's contention that the academic course which Mr Farthing undertook at Liverpool Hope University did not satisfy the requirements of paragraph 4 (1) (a) of Part II of Schedule 1 to the Disregards Order.

The statutory framework can be summarised as follows: Section 10 of the Local Government Finance Act 1992 (“the 1992 Act”) provides a formula for the basic amount of council tax payable in respect of persons who are liable to pay council tax.

Section 11 of the 1992 Act provides for certain discounts to be applied to the amount payable. In particular, section 11 (1) provides that a discount equal to the appropriate percentage of the amount otherwise payable shall be applied to the amount of council tax payable in respect of any chargeable dwelling if on the relevant day (a) there is only one resident of the dwelling and he does not fall to be disregarded for the purposes of discount, or (b) there are two or more residents of the dwelling and each of them except one falls to be disregarded for those purposes. It is accepted by the Council that the second of those two conditions, namely (b), was satisfied in the respondent's case if Mr Farthing qualifies for discount as a student.

By section 11 (3) the appropriate percentage in the present case is 25 per cent.

By section 11 (5), Schedule 1 to the 1992 Act has effect for determining who is to be disregarded for the purposes of discount.

Paragraph 4 of Schedule 1 to the 1992 Act provides that a student who satisfies certain prescribed conditions is to be disregarded for the purposes of discount. The prescribed conditions are set out in the Disregards Order.

So far as relevant to this appeal, article 4 of the Disregards Order provides that a “student” means a person who, so far as material, is to be regarded as: "a person undertaking a full time course of education, by paragraphs 3 and 4” of Schedule 1 to the Disregards Order." Paragraph 3 of Schedule 1 provides that a person is to be regarded as undertaking a full time course of education on a particular day if (a) on the day he is enrolled for the purpose of attending such a course with a prescribed educational establishment within Part I of Schedule 2 to the Order; and (b) the day falls within the relevant period for that course.

Paragraph 1 of Part I of Schedule 2 to the Disregards Order includes a university as a prescribed educational establishment.

Paragraph 4 of Part II of Schedule 1 to the Disregards Order, which is central to the present appeal, provides as follows: "(1) A full-time course of education is, subject to paragraphs (2) and (3), one - (a) which subsists for at least one academic year of the educational establishment concerned or, in the case of an educational establishment which does not have academic years, for at least one calendar year; (b) which persons undertaking it are normally required by the educational establishment concerned to attend (whether at premises of the establishment or otherwise) for periods of at least 24 weeks in each academic or calendar year (as the case may be) during which it subsists; and (c) the nature of which is such that a person undertaking it would normally require to undertake periods of study, tuition or work experience which together amount in each such academic or calendar year to an average of at least 21 hours a week during the periods of attendance mentioned in paragraph (b) above in the year.

Paragraph 4 (2) goes on to provide that in determining whether a course falls within the definition in subparagraph (1) - (a) and (b) I can omit and go straight to (c) - in applying the paragraphs of the definition in paragraph 4 (1) to a course which begins part-way through an academic year of the educational establishment concerned, the academic year shall be treated as beginning at the beginning of the term in which the course begins, and subsequent academic years (if any) as beginning at the beginning of the equivalent terms in those years.

Paragraph 9 of Part V of Schedule 1 to the Disregards Order provides that in that Schedule the relevant period for a course or programme means the period beginning with the day on which a person begins that course or programme and ending with the day (“the last day”) on which he completes it, abandons it or is dismissed from it (which period includes any periods of vacation between terms and before the last day).

In their written decision the Merseyside Valuation Tribunal first of all set out the respondent's case. The Tribunal then set out the case for the billing authority. There was then set out the decision and the Tribunal's reasons for it. The Tribunal essentially allowed Mr Farthing's appeal and determined that a student discount disregard was applicable in the instant case. The Tribunal recorded that the issue before it was the interpretation of paragraph 4 of Schedule 1 to the Disregards Order. The Tribunal recorded that the billing authority had provided evidence that a full time course of education was defined by considering all of the elements associated with paragraph 4 (1) of Schedule 1 to the Disregards Order and was supported by case law as provided by the billing authority. It then recorded Mr Farthing's contention that subparagraph (a) of paragraph 4 (1) could be considered in isolation from subparagraphs (b) and (c) thereof. The Tribunal recorded the billing authority's acceptance that Mr Farthing fulfilled paragraphs (b) and (c) of paragraph 4 (1), but it disputed whether Mr Farthing's course subsisted for at least one academic year.

The Tribunal stated that it accepted, when determining whether a course could be defined as a full time course of education, that it must consider all of the elements together, as determined by the higher courts. The Tribunal expressed its awareness that Mr Farthing was basing his case on only two of those elements, but it said that the regulations did not dictate that any of the elements of paragraph 4 (1) was to be taken in isolation; the Tribunal stated that all of the elements of paragraph 4 (1) were to be considered together. The Tribunal considered whether or not Mr Farthing's course subsisted for one academic year of the educational establishment. The Tribunal recorded that, in order for a course to be a full time course of education, it should subsist for at least one academic year of the educational establishment or one calendar year. The Tribunal stated that it was conscious that Mr Farthing's course had been condensed into a period of 26 weeks, with the number of study hours being double that required by paragraph 4 (1). The Tribunal believed that the structure of the academic year had, over recent years, been changed by educational establishments by condensing courses within their academic years. The Tribunal was mindful that full-time courses of education were being condensed into shorter periods of time to enable educational establishments to offer more courses within the same academic year. The Tribunal took what it said to be a logical viewpoint on the course as described by Mr Farthing, in that such a course in previous years would have been spread over an academic year from October to June.

It was therefore the Tribunal's opinion that Mr Farthing's course had been condensed to suit the needs of the educational establishment but it continued to be a full-time course of education. Liverpool Hope University also described the course as a full-time programme of study. It was for that reason that the Tribunal believed that Mr Farthing attended a full time course of education, as defined under paragraph 4, and it therefore allowed the appeal.

As I have indicated, there is one aspect of the Tribunal's findings of fact which the Council disputes, namely that there was insufficient evidence for the Tribunal to conclude that Mr Farthing's academic course had in fact been a course lasting for a whole academic year, but which had been condensed into a period of 26 weeks. The Council submits that in that respect, and that respect only, the finding was one which no reasonable Tribunal, on a proper appreciation of the evidence and the law, would have reached. As I say, it is unnecessary for me to reach any decision on that point, and I do not do so.

What is at the forefront of the Council's appeal is the submission that the Tribunal was wrong, as a matter of law, to conclude that Mr Farthing's academic course, which ran only from 5^th January to 28^th June 2007, satisfied the requirements of paragraph 4 (1) (a). It is said that the words of that paragraph are plain: the academic course must subsist - that is to say it must remain or continue in existence - for at least one academic year. The Liverpool Hope University's academic year ran from October to June; but, by virtue of paragraph 4 (2) (c), because Mr Farthing's course started part-way through Liverpool Hope University's academic year, the academic year was to be treated as beginning at the beginning of the term in which the course began, i.e. 5^th January 2007, so that the next academic year following would have begun in January 2008. On that basis, Mr Farthing's academic course did not subsist for one academic year, whether by reference to the academic year of the educational establishment, or by virtue of the adjustment made by paragraph 4 (2) (c). Rather, Mr Farthing's course ran from beginning to end for a period of 24 weeks and 4 days.

The Council submits, in my view correctly, that, whereas a course that subsists for an academic year might not require periods of attendance much greater than 24 weeks for required periods of study which must exceed 21 hours per week, it is clear that, in addition, the course itself must continue for one academic year. I accept the Council's submission in that regard.

Paragraph 4 (1) is perfectly clear. Each of the subparagraphs of that paragraph has to be satisfied for the relevant discount to be applicable. The full time course must not only satisfy the requirements of subparagraphs (b) and (c) of paragraph 4 (1); it must also satisfy the independent requirement of subparagraph (a).

I accept the contention that it is not possible to extend the scope of paragraph 4, whether by implication or by any other acceptable process of statutory construction, to persons who undertake intensive courses, but which subsist for less than one academic year. If it had been the intention of Parliament that a course which subsisted for a period of less than one academic year, but which was nonetheless intensive, so that for instance the period specified in subparagraphs (b) and (c) of paragraph 4 (1) were satisfied, then Parliament would have expressly provided for that situation. That construction is, in my judgment, supported by the decision of Forbes J in the case of The Queen (on the application of Carmarthenshire County Council) v The West Wales Valuation Tribunal and Mrs T J Evans [2004] EWHC 223 (Admin). At paragraph 12 of his judgment in that case, the learned judge referred to the submission of counsel for the local authority in that case that, in order to come within the definition of full-time education, the course upon which the council tax payer had embarked must be one which complied with each of the subparagraphs of paragraph 4 (1) of Schedule 1 to the Disregards Order, namely subparagraphs (a), (b) and (c). The judge clearly indicated his acceptance of that submission.

The Valuation Tribunal recognised that all of the elements of paragraph 4 (1) had to be considered together. It expressly accepted that, when determining whether a course could be defined as a full-time course of education, it must consider all the elements together, as determined by the higher courts. The Tribunal expressed its awareness that Mr Farthing was basing his case on only two of those elements. It sought to meet that point by saying that the structure of the academic year had, over recent years, been changed by educational establishments by condensing courses within their academic years. It took what it expressed to be a logical viewpoint on the course described by Mr Farthing, on the footing that such a course, in previous years, would have been spread over an academic year from October to June. It therefore considered that the course had been condensed to suit the needs of the educational establishment, but continued to be a full time course of education. It seems to me that, in this analysis, the Tribunal fell into error as a matter of law. It is impossible to reconcile the need to satisfy each of the subparagraphs of paragraph 4 (1) with the Tribunal's actual decision on Mr Farthing's application in the present case. The issue is not whether courses of education being offered by academic establishments are being condensed into shorter periods of time, so as to enable them to offer more courses within the same academic year; rather, the question is simply whether each of the discrete requirements of the individual subparagraphs of paragraph 4 (1) have been satisfied.

In the present case, only paragraphs (b) and (c) were fulfilled by Mr Farthing. However desirable it might be for the Tribunal to adopt a pragmatic view, it has to remain within the boundaries of the legislation enacted by Parliament. If, notwithstanding that a course is sufficiently intensive to satisfy the requirements of paragraphs (b) and (c), it nevertheless does not subsist for at least one academic year or, in the case of an educational establishment which does not have academic years, for at least one calendar year, then the full time course of education is not one which entitles a person undertaking that course to qualify for the applicable discount for council tax purposes.

In my judgment, the Council are right to contend that, on the true construction of paragraph 4 (1) of Schedule 1 to the Disregards Order, the Tribunal ought to have held that, as the respondent, Mr Farthing, began the course on 5^th January, and was due to end it on 28^th June 2007, his course did not subsist for at least one academic year; and that it was, therefore, not a course of full time education for the purposes of the applicable disregard. In finding otherwise, I am satisfied that the Tribunal fell into error as a matter of law and that this appeal should be allowed.