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Dias v London Borough of Havering

[2011] EWHC 172 (Ch)

Neutral Citation Number: [2011] EWHC 172 (Ch)
Case No: CH/2010/0270
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 04/02/2011

Before :

MR JUSTICE HENDERSON

Between :

MR SAM DIAS

Appellant

- and -

THE LONDON BOROUGH OF HAVERING

Respondent

Mr Jonathan Titmuss (instructed by BTMK Solicitors) for the Appellant

Mr Thomas Evans (instructed by Sharpe Pritchard) for the Respondent

Hearing date: 10 December 2010

Judgment

Mr Justice Henderson:

Introduction

1.

This is an application for permission to appeal (with the hearing of the appeal to follow if permission is granted) in a bankruptcy case in the Romford County Court. The appellant debtor is Mr Samuel Dias, and the respondent petitioning creditor is the London Borough of Havering (“the Council”). The decision under appeal was made by District Judge Mullis on 20 April 2010, at a hearing where both parties were represented by the same counsel as have appeared before me, Mr Jonathan Titmuss for the debtor and Mr Thomas Evans for the Council.

2.

By his order District Judge Mullins dismissed an application by the debtor to set aside the bankruptcy petition, and adjourned the further hearing of the petition to the first open date after 7 days. The purpose of the adjournment was to give the debtor an opportunity to make proposals for payment of the outstanding balance of the petition debt, which consisted of unpaid business rates and costs in the total sum of £190,151.58. The District Judge had found that the whole of this sum was due from the debtor personally, and was not (as Mr Dias had contended) the sole liability of his company Decathlon Indoor Market (Romford) Limited (“DIM”), with the exception of a sum of approximately £19,000 which Mr Dias accepted was due from him personally and which he had either paid into court or lodged with his solicitors pursuant to an earlier order of the court.

3.

In his Appellant’s Notice dated 26 May 2010 the debtor said that he wished to appeal against the District Judge’s finding that he had been in rateable occupation of the relevant premises. This gives rise to a possible problem, because the general rule is that an appeal lies only against an order made by the lower court, and not against the reasons which the court gave for its order or against particular findings which it made: see section 16 of the Senior Courts Act 1981, Lake v Lake [1955] P 336 (CA) and (closest to the present case) the decision of Lawrence Collins J (as he then was) in Re Mathew [2001] BPIR 531. Thus an appeal cannot lie directly against the findings made by the District Judge. However, there is no reason why an appeal should not lie against his dismissal of the debtor’s application to set aside the petition, and the Appellant’s Notice should in my view be read as though that order were the true subject matter of the appeal. This was pointed out by Roth J when he considered the application for permission to appeal on paper, and in view of what Roth J then said counsel for the petitioner, rightly in my view, decided not to persist with this technical objection.

4.

Roth J also directed that there should be an oral hearing of the application for permission to appeal, with the hearing of the appeal to follow if permission were granted. In the reasons for his order, he said that the Council had raised a significant issue about the scope of the jurisdiction of the bankruptcy court to determine a question of liability to rates, in a case where liability orders had been made in the magistrates’ court. If that jurisdictional objection were overcome, Roth J considered that the central question would be whether DIM was in exclusive occupation of the property for rating purposes, or whether its occupation was shared with the debtor.

5.

In the event, when the case came on for hearing before me on 10 December 2010 I decided to hear argument on the permission application and the appeal together, and having done so I reserved my judgment.

Facts

6.

The basic facts are simple and may be shortly stated. The evidence before the District Judge consisted of a witness statement by Mr Dias signed by him on 23 July 2009, and a statement in response dated 19 August 2009 by Mr Robert Collins, a special enforcement officer employed in the business rates department of the London Borough of Barking and Dagenham, who were also responsible for the collection of the Council’s business rates. Neither witness was cross-examined, and as I understand it no oral evidence was called on either side.

7.

By a lease (“the Lease”) dated 27 April 2007, and made between Zog 2 Limited as landlord and Mr Dias as tenant, the landlord demised to Mr Dias some commercial premises at Romford (“the Property”), defined as “the land and building at Unit 1 and 2 Angel Way Retail Park, Romford, Essex RM1 1JH together with 125 car parking spaces shown edged red on the attached plan”, for a term of five years expiring on 26 April 2012. The rent was £150,000 per annum, payable quarterly in advance. Either party could terminate the Lease on three months’ notice, but only after 28 April 2009. The tenant was obliged to keep the Property in good repair and condition. The user covenant restricted use of the Property to use “for the purpose of an indoor market only”.

8.

Clause 16 of the Lease contained an absolute prohibition against assignment or underletting of the Lease or the Property. The prohibition included parting with or sharing possession or occupation of the premises. However, clause 17.2 permitted the tenant to grant a short term licence of any part (but not the whole) of the Property in the following terms:

“The Tenant may grant a licence as a short term licence in relation to any part of the Property for so long as the following conditions are satisfied:

(a) the other occupier uses the relevant part of the Property only for the Permitted Use;

(b) the arrangement is by way of licence, is personal to the parties and does not create any relationship of Landlord and Tenant; and

(c) the arrangement is consistent with the terms of this lease [and] is documented in writing.”

9.

DIM was incorporated by Mr Dias on 26 June 2007. He says in his witness statement that he was “a director and shareholder” of the company at all material times, but he was in fact (as his counsel confirmed to me during the hearing) the sole director and shareholder. The company was registered for VAT with effect from its date of incorporation. Pursuant to an amended certificate issued on 9 July 2008, VAT returns were to be made in respect of the period ending 31 August 2008 and three monthly thereafter.

10.

On 1 July 2007 Mr Dias, in his capacity as tenant of the Property, granted a written licence (“the Licence”) of Units 1 and 2 to DIM for a term ending one day before the expiry of the Lease. The Licence, which Mr Dias appears to have drafted himself, was headed “Licence to operate premises at Units 1 and 2 Angel Way, Romford, Essex, RM1 1JH”, and provided as follows:

“This Licence is granted to [DIM] by S. Dias, Leaseholder of the premises at Units 1 & 2 Angel Way Retail Park, Romford, Essex, RM1 1JH under the terms of his lease dated 27 April 2007 from Zog 2 Limited of 15 Broadgates Avenue, Barnet, Herts EN4 0NU

1. To operate the whole site as an indoor market.

2. To meet all the expenses of running the business including payment of the rent due under the above mentioned Lease, Rates, Maintenance and Security arrangements.

3. At the end of this licence (1 day before the end of the above mentioned lease) to return the premises to S. Dias in good and similar condition as they were in on the day this licence was granted.

4. [DIM] agree to pay the sum of £25,000 by way of Licence Fee on 1 July 2008.”

11.

In his statement Mr Dias confirms that the Licence was intended by him to comply with clause 17.2 of the Lease, and he says in terms “I do not accept that any of those conditions have been breached”. The same intention must in my view be imputed to DIM, if only because Mr Dias is on the available evidence the only person through whom the company could then have acted. Furthermore, the Licence expressly stated that it was granted under the terms of the Lease. In those circumstances it must follow, in my judgment, that the Licence cannot have been intended to extend to the whole of the Property, because that would have involved a plain breach of clause 17.2. It must therefore be construed as a licence to occupy Units 1 & 2 only, and not the 125 car parking spaces (which, as the plan annexed to the Lease makes clear, were adjacent to Units 1 and 2 but did not form part of them).

12.

The Council obtained details of the Lease from the landlord, and delivered a demand for business rates to the Property on the footing that Mr Dias had been in rateable occupation since the date of the Lease. No response was received to this demand, and the Council then set in train its usual procedure for obtaining a liability order. The summons for the liability order was issued on 25 September, and posted to the rateable occupier at the Property. Again there was no response, and on 18 October 2007 a liability order was duly obtained against Mr Dias in the Havering Magistrates’ Court in the sum of £154,817.13 plus costs of £25.

13.

Bailiffs were then instructed, and a visit by the bailiffs to the Property finally elicited a response from Mr Dias. A meeting took place at the Council’s offices on 6 November 2007, when Mr Dias evidently claimed that DIM had been in occupation of the Property, or at least most of the Property, since 1 July. After the meeting, he wrote to the Council on 13 November, saying that he “would like to set out the situation in these premises so that a correct assessment can be made”. To that end, he attached a “chronological order of occupation”, which stated:

(a) that his own occupation of the Property under the Lease had started on 17 May 2007;

(b) that Unit 1 had been occupied by him from 17 May, and by DIM from 1 July 2007;

(c) that Unit 2 had been occupied by DIM from 28 October 2007; and

(d) that a third unit, consisting of a mezzanine floor above Unit 1, had never been used, because a planning application to use it for functions had been refused.

The note concluded with the words:

“All unused premises were and are separated by shutters or access is closed by partitions.”

14.

On 7 December 2007 the Council replied to Mr Dias’ letter of 13 November. The writer agreed to grant empty rate relief for the period from 27 April (the commencement date of the Lease) to 17 May, and said that a revised bill would be issued shortly. Mr Dias was asked to provide documentary evidence of the occupation of the Property by DIM. It was pointed out to him that, since the Property was currently assessed as a single rateable unit, and since he had stated that different areas were used at different times, the Property would have to be re-assessed so that individual areas were rated separately. Mr Dias was asked to contact the Valuation Office direct in order to instigate a revaluation, and the relevant address and contact details were set out. The letter concluded:

“Once visited the Valuation Office will inform the Council of any decision regarding any changes to the assessment.

In the meantime I must advise you to pay as billed until such a time to avoid any further recovery action.

I hope this clarifies the situation. If you do have any further questions please contact the office on the number provided.”

15.

Unfortunately, the issue of an amended bill to give effect to the empty rate relief appears to have been overlooked. However, Mr Dias took no steps to initiate a revaluation, and on 28 January 2008 a different Council officer wrote to him saying that he was liable for the rates as tenant under the Lease and requiring immediate payment in full of the sums comprised in the liability order, failing which recovery proceedings would continue.

16.

Nothing then seems to have happened, and in due course the Council issued a demand for business rates for the next rating year (1 April 2008 to 31 March 2009). Meanwhile, the rent payable under the Lease had fallen substantially in arrears, and the landlord began forfeiture proceedings. On 6 June 2008 an order was made in the Romford County Court by His Honour Judge Platt, forfeiting the Lease and granting possession in 28 days unless the arrears together with interest and costs, in the total sum of £88,885.62, were paid by 20 June.

17.

On 12 June Mr Dias wrote to the Council to inform it that the Lease had been forfeited, with possession to be given on 4 July 2008. It is obvious from this letter that there was no prospect of the arrears of rent being paid by 20 June or at all, and the Lease duly came to an end on 4 July. In his letter Mr Dias repeated that the Property had been occupied by DIM since 30 June 2007, and pointed out that the company had received no rate demand. He claimed that the landlord had raised no objection to his granting licences, and had “implicitly agreed” to his arrangement with DIM.

18.

Unsurprisingly, this letter did not cause the Council to change its position, and in the absence of any payment the Council began the procedure to obtain a second liability order. Perhaps prompted by service of the relevant summons, Mr Dias telephoned the Council on 12 August and made an appointment to meet the Council’s enforcement officers on 27 August, the day before the hearing in the Magistrates’ Court. The meeting was attended by Mr Dias, Mr Collins and a colleague of his, Mr Richard Bates. According to Mr Bates’ note of the meeting, Mr Dias disputed liability and it was agreed with him that the Council would proceed to seek a liability order on the next day, but that the outstanding balance would be reduced upon receipt of confirmation from the landlord that it was now liable for empty property rates following forfeiture of the Lease. Mr Dias was also told that the Council intended to commence bankruptcy proceedings against him, since the first liability order was still unsatisfied. It was left that Mr Dias would discuss his options with his adviser, a Mr Paul Atkinson of Vantis Plc, and that the Council would contact him again after 1 October, by when the necessary confirmation from the landlord would have been obtained.

19.

It should be noted that, even at this late stage, Mr Dias had still not produced a copy of the Licence to the Council.

20.

On 28 August 2008 Mr Dias attended at Romford Magistrates’ Court, but did not oppose the making of a second liability order. Mr Bates’ attendance note of the hearing reads as follows:

“[Mr Dias] attended liability hearing at Romford Magistrates’ Court on the advice of his solicitor to dispute liability. I advised him that he is clearly liable as we would show the Magistrates a copy of his lease and also as liability order was granted for last year’s arrears, that can only be overturned in the High Court so we would pursue bankruptcy action using that liability order. He agreed that to dispute current year’s liability order would be pointless so we proceeded with liability order request, which was granted by Magistrates. However, we will have to reduce the outstanding balance when landlords confirm the repossession date.”

The reference to Mr Dias’ solicitor appears to have been a mistake, as there is no evidence that Mr Dias had instructed solicitors at this stage. Presumably he had been advised to attend by Mr Atkinson in a discussion after the meeting of the previous day.

21.

The amount of the second liability order was £173,430, comprising rates for the Property for the year beginning 1 April 2008 in the sum of £173,250 plus costs of £180.

22.

On 16 October 2008 the Council served on Mr Dias a statutory demand under section 268(1)(a) of the Insolvency Act 1986 requiring payment of the sum of £204,429.01. The sum claimed comprised almost the full amount of the first liability order (there is a small deduction of £145 which I am unable to explain) and £49,364.38 in respect of the second liability order, together with associated costs of £392.50. Although this was not explicitly stated anywhere in the demand, it is clear that the reduced sum claimed in respect of the second liability order represented the rates due on a time-apportioned basis from 1 April 2008 down to the date when the landlord regained possession of the Property.

23.

Mr Dias then made an application to set aside the statutory demand, on the basis that DIM had been in occupation of the Property since 1 July 2007. To his affidavit in support of the application he exhibited the Licence (the first occasion when it was brought to the attention of the Council) and a short statement of facts in which he claimed, among other matters, to have granted a licence to a car wash operator with the approval of the landlord, and said that for the past 10 months DIM had employed valuation specialists, Bridgestone Surveyors Limited, to seek reductions in the rateable value of the premises on various grounds.

24.

The application to set aside the statutory demand was dismissed by District Judge Chrispin on 5 March 2009, and Mr Dias was ordered to pay the costs of the application in the sum of £880. It is common ground that the reason why the application was dismissed is that the sums claimed were the subject of court orders, and the normal practice of the court is not to go behind such an order or to enquire into the validity of the debt at the statutory demand stage: see paragraph 12.3 of the Practice Direction: Insolvency Proceedings and Muir Hunter on Personal Insolvency paragraph 7-198.

25.

On 19 March 2009 the Council presented a bankruptcy petition based on Mr Dias’ failure to comply with the statutory demand. The petition debt was £205,309.01, consisting of the amount claimed in the statutory demand and the assessed costs of the unsuccessful application to set it aside. The petition was then served on Mr Dias, he gave notice of intention to oppose, and following various adjournments for evidence and for payment into court of the undisputed debt of £19,000 odd the matter came on for hearing before District Judge Mullis on 20 April 2010.

The decision of the District Judge

26.

Unfortunately no transcript is available of the hearing before District Judge Mullis or of his judgment. The reason for this, I was told, is that the tape recording of the proceedings was lost. I have been supplied with a note of the judgment agreed between counsel, but not (so far as I am aware) submitted to the District Judge for his approval. It appears from this note that the hearing followed a rather unusual course, with the District Judge delivering part of his judgment and then entertaining further submissions before completing it. It is clear, however, that he began by addressing himself to the debtor’s application to set aside the petition, and proceeded on the footing that the bankruptcy court has the power to go behind a judgment debt or order in order to satisfy itself that the statements in the petition are true and that the debt is properly payable. He relied for that proposition on the decision of Mr Registrar Simmonds in London Borough of Lambeth v Simon [2007] BPIR 1629 at paragraph [27]. He said that he had looked at the two liability orders, and had read the witness statements of Mr Dias and Mr Collins. He accepted Mr Dias’ evidence as correct, and agreed with his counsel’s submission that in the absence of cross-examination the court could not go behind the evidence in his witness statement. He identified the critical question as being whether Mr Dias was in rateable occupation of the Property or not. He said that he found no assistance in the fact that Mr Dias did not occupy Unit 2 until 28 October 2007, because the fact that Unit 2 was not occupied did not mean that Mr Dias occupied it. He accepted the separate existence of DIM as a company, and attached no weight to the fact that Mr Dias was its sole director.

27.

The District Judge then referred to section 50 of the Local Government Finance Act 1988, which empowers the Secretary of State to make regulations to deal with cases of joint ownership or occupation of rateable premises, and to the relevant regulations made in exercise of that power, namely The Non-Domestic Rating (Collection and Enforcement) (Miscellaneous Provisions) Regulations 1990, SI 1990 No. 145, Part II of which deals with joint owners and occupiers. By virtue of Regulation 3(2), at any time when there would otherwise be more than one occupier of a hereditament, or part thereof, the occupiers are to be jointly and severally liable to pay the amount that would have been payable by way of non-domestic rates if there were only one such occupier. By virtue of Regulation 3(3), notice of liability in such a case may be given severally to each or any of the relevant occupiers from whom payment is demanded.

28.

In the light of these provisions, the District Judge found that liability fell on Mr Dias on the basis that he shared occupation of the Property with DIM. He said that he did not come to this decision easily, and referred to an argument for the Council that the Licence only granted DIM permission to use the Property for the limited purposes of an indoor market. At this point the District Judge dismissed the application to set aside the petition, but then said he was willing to entertain further submissions before finishing his judgment. These further submissions included one that the Licence could only be interpreted as intending to part with exclusive possession of the Property, to which the Judge said “that the aspiration of [Mr Dias] was for exclusive possession to be conferred to DIM, but that the practical application of the Licence was to share possession”.

Discussion

29.

Against this background, the first question I have to consider is whether this is an appropriate case to go behind the liability of Mr Dias established by the two liability orders.

30.

The procedure for obtaining liability orders is laid down in The Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, SI 1989 No 1058. Part II of the Regulations provides for the service of written demand notices in each financial year, and for the payment of business rates pursuant to such demands. Part III then deals with enforcement. By virtue of Regulation 10(2), a sum which has become payable under Part II and which has not been paid shall be recoverable under a liability order, or in a court of competent jurisdiction, in accordance with Regulations 11 to 21. Regulation 11 provides for the service of a reminder notice, in addition to any notice required under Part II, before application can be made for a liability order. If the amount stated in the reminder notice is unpaid after seven days from its service, the charging authority may then apply to a magistrates’ court for an order against the person by whom it is payable: Regulation 12(1). The application begins with a complaint to a justice of the peace, requesting the issue of a summons requiring the person concerned to appear before the court to show why he has not paid the sum which is outstanding: Regulation 12(2). Regulation 12(5) then provides that:

“The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid.”

31.

When a liability order has been made, the authority may enforce it by distress (Regulations 14 to 15) or by commitment to prison (Regulations 16 to 17). In addition, by virtue of Regulation 18(1):

“Where a liability order has been made and the debtor against whom it was made is an individual, the amount due shall be deemed to be a debt for the purposes of section 267 of the Insolvency Act 1986 (grounds of creditor’s petition).”

By virtue of Regulation 18(3), the amount due for the purposes of this regulation is “an amount equal to any outstanding sum which is or forms part of the amount in respect of which the liability order was made”.

32.

There is no specific provision, so far as I am aware, for appealing from a liability order, but it was common ground before me that such an order can be challenged, in a suitable case, either by judicial review or by requiring the justices to state a case for the opinion of the High Court. An example of an appeal of the latter type is Regentford Ltd v Thanet District Council [2004] EWHC 246 (Admin).

33.

It is apparent from the provisions cited above that liability orders can be made only after a fairly elaborate procedure has been followed, and the defendant has been given an opportunity to explain why he has not paid. The court may make the order only if it is satisfied that the sum has become payable, and that it has not been paid. If the defendant thinks that the order has been wrongly made, he is in principle entitled to challenge it either by judicial review or by an appeal by case stated. In the present case, however, Mr Dias took no active steps to present his case to the court, nor did he challenge or appeal against either of the liability orders.

34.

It is well established that the circumstances in which it may be appropriate for the bankruptcy court to go behind a court order upon which the petition is founded are circumscribed, although they are not necessarily confined to grounds upon which the judgment debt could be set aside. I was taken through the main authorities by Mr Evans. They include: In re Onslow (1875) LR 10 Ch App 373 (CA), In re Flatau (1888) 22 QBD 83 (CA), In re Hawkins [1895] 1 QB 404 (CA), McCourt and Siequien v Baron Meats Ltd and the Official Receiver [1997] BPIR 114 and Dawodu v American Express Bank [2001] BPIR 983. I will not review the cases, because there was no disagreement between counsel about the basic principles, or that for present purposes the law is adequately stated by Etherton J in Dawodu where he said this, after citing the review of the authorities by Warner J in McCourt:

“My only qualification to the summary by Warner J is that the cases establish that what is required before the court is prepared to investigate a judgment debt, in the absence of an outstanding appeal or an application to set it aside, is some fraud, collusion, or miscarriage of justice. The latter phrase is of course capable of wide application according to the particular circumstances of the case. What in my judgment is required is that the court be shown something from which it can conclude that had there been a properly conducted judicial process it would have been found, or very likely would have been found, that nothing was in fact due to the claimant. It is clear that in those circumstances the court can enquire into the judgment and the judgment debt, even though the debtor himself has previously applied to have the judgment set aside, and even though that application has been refused and that refusal has been affirmed by the Court of Appeal …”

35.

There is no question of fraud or collusion in the present case, so the question is whether Mr Dias was the victim of a miscarriage of justice in the sense explained by Etherton J. At first blush, it is hard to see how a case of miscarriage of justice could get off the ground. There is no allegation of procedural impropriety or unfairness by Mr Dias in his witness statement, which was drafted after he had instructed solicitors to act for him. The appropriate procedure for obtaining the liability orders was employed, and Mr Dias had the opportunity to attend and present his case at both hearings. The nub of his complaint appears to be that the liability orders were wrong in substance, but in the absence of any effective opposition from him it is hardly surprising that the magistrates’ court did not investigate the matter.

36.

Nevertheless, counsel for Mr Dias submits that there was a miscarriage of justice. He says that it arises in three ways. First, on the Council’s own evidence, Mr Dias was effectively told not to make any representations to the magistrates’ court disputing liability, although he had attended in person for that very purpose: see Mr Bates’ attendance note of the second hearing, quoted in paragraph 20 above. Secondly, the liability order process in cases of the present type is not a full judicial process, but more akin to a rubber stamping exercise where the court relies upon the local authority to raise any relevant issues. No issues were drawn to the attention of the court, although the Council was aware of Mr Dias’ grounds of opposition. Thirdly, the methods by which a liability order may be challenged are in practical terms limited to errors of law or procedure, and have to be invoked swiftly (the time limit for a case stated is 21 days, and for judicial review three months). There are none of the safeguards afforded to a civil litigant in the High Court or County Court such as CPR 3.9 (relief from sanctions), CPR Part 13 (setting aside a default judgment), CPR 39.3 (failure to attend trial) or Part 52 (allowing fresh evidence to be adduced on an appeal in appropriate circumstances). Furthermore, counsel submits that it was effectively conceded by the Council at the hearing below that the court did have jurisdiction to go behind the liability orders.

37.

I think it would be wrong for me to decide this point in Mr Dias’ favour on the basis that it was conceded below. I was told that there was some argument on the point, and in the absence of a transcript I would be reluctant to hold that a concession was clearly made. In any event, the point is one of principle, and it is one that the appeal court would need to address, particularly in view of the comments made by Roth J. Both counsel came prepared to argue the point, and did so. In the circumstances, I am satisfied that I should consider it on its merits. Having done so, I remain unconvinced that any miscarriage of justice occurred. The complaint about the Council’s conduct at the second hearing was not raised by Mr Dias himself in his written evidence, and he provided no account of what happened at and before the hearing. He had the assistance of his own professional adviser, and was clearly an experienced business man. He was not obliged to accept the suggestions made to him by Mr Bates, and there is no indication that he felt in any way pressurised to do so. In any event, even if there were any substance in the point, it could not affect the first hearing and the first liability order, which accounted for approximately three quarters of the petition debt. As to the second and third grounds, it is true that the liability order procedure is of a relatively summary nature, but it still has the basic hallmarks of a judicial process, and it cannot in my judgment be stigmatised as inherently unfair.

38.

For these reasons I consider that the District Judge was wrong to go behind the liability orders, and that he should have declined the invitation to consider the question whether Mr Dias was in fact liable in his personal capacity for the rates demanded. On that basis alone, I would refuse permission to appeal, because in my view the appeal never had a real prospect of success.

39.

That is the end of the matter, but as I heard full argument on Mr Dias’ grounds of appeal I will briefly state my views on them. His basic contention is that the District Judge was wrong in law to find that the effect of the Licence was to share occupation of the Property with DIM. He submitted that the clear intention of the Licence was to confer upon DIM exclusive occupation of the Property for the purpose of operating an indoor market from it, and that the presence of a restrictive user clause in the Licence does not detract from that intention: it is commonplace for leases and licences to grant exclusive occupation in cases where the use of the premises is restricted. Mr Dias’ unchallenged evidence is that he gave up possession of the Property to DIM on the signing of the Licence. Further, he retained no right to occupy any part of the Property, and DIM would have been able to exclude him from the Property had he attempted to take up occupation. In those circumstances, the only conclusion that the District Judge could legitimately have drawn was that DIM was in sole occupation of the Property for rating purposes from 1 July 2007.

40.

In support of these submissions, counsel for Mr Dias referred to the principles stated by the House of Lords in the leading case of Westminster City Council v Southern Railway Co [1936] AC 511, and in particular to the speech of Lord Russell of Killowen at 529–533 ending with these words:

“In my opinion the crucial question must always be what in fact is the occupation in respect of which someone is alleged to be rateable, and it is immaterial whether the title to occupy is attributable to a lease, a licence, or an easement.”

41.

These submissions were attractively advanced, but I am unpersuaded by them. In the first place, as I have already explained, the Licence must in my view be construed as extending to Units 1 and 2 only, and not to the car parking spaces. Thus on any view Mr Dias remained in possession of a substantial part of the Property throughout. Secondly, the Licence did not in terms grant DIM the right to exclusive occupation of Units 1 and 2, and in a situation where DIM was Mr Dias’ one-man company it was in my view open to the District Judge to infer that Mr Dias retained a sufficient degree of control over the premises to amount to a sharing of occupation. The matter can perhaps be tested by asking whether Mr Dias could ever seriously have contemplated his own company (acting through himself) excluding him in his personal capacity from Units 1 and 2. Any such suggestion would in my judgment be farcical. Thirdly, and in any event, on the evidence of Mr Dias’ own letter to the Council of 13 November 2007 Unit B was not occupied by DIM until 28 October 2007. Since Mr Dias admits that he was in rateable occupation of the whole of the Property immediately before the grant of the Licence, the only reasonable conclusion to draw is that this occupation must have continued in relation to Unit B until at least 27 October. I was informed that the rates attributable to Unit B for this period would have amounted to approximately £54,700.

42.

Any appeal would be limited to a review of the decision of the District Judge, and in the normal way the High Court would not receive any evidence which was not before him: see paragraph 17.18(1) and (2) of the Practice Direction. For the reasons which I have briefly indicated, even if it were permissible to consider the underlying merits of Mr Dias’ case, I would conclude that there was no basis for interfering with the decision of the District Judge to allow the petition to proceed. Accordingly, had it been necessary to do so, I would have granted Mr Dias permission to appeal on the above grounds, but dismissed the appeal. In the event, however, permission to appeal is refused on the prior ground that this is clearly not a case where it would be appropriate to go behind the liability orders.

Dias v London Borough of Havering

[2011] EWHC 172 (Ch)

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