Rees v Boston Borough Council

For non-domestic rates under section 43(1) of Local Government Finance Act 1988, a receiver's status depends on the substance of the occupation, not merely on legal title or the continuation or termination of agency. The court must examine the receiver's appointment and actual conduct. Managing and carrying on the company's business, without more, does not displace the company's rateable occupation. Termination of an administrative receiver's agency on liquidation under section 44(1)(a) of Insolvency Act 1986 does not itself create rateable occupation by the receiver. Where the conduct remains ordinary management within the appointment, the company remains the rateable occupier.

Beck Foods Limited owned premises where it carried on meat and burger processing. Administrative receivers were appointed on 3 February 1997. They closed the meat-processing business but continued the burger-processing business. The company entered creditors' voluntary liquidation on 18 April 1997, after which the receivers' agency for the company ended, although their activities at the premises remained unchanged. The assets were sold on 18 November 1997.

The Council sought non-domestic rates from the receivers for the intervening period. On an application for directions, Jacob J declared that the receivers were not personally liable. The Council appealed. The central issue was whether the receivers became rateable occupiers by continuing to manage the business after their agency ended, or whether the company remained in rateable occupation.

The appeal was dismissed. The receivers were not personally liable for the non-domestic rates, although the Court of Appeal reached that result on different reasoning from Jacob J. Lord Justice Pill agreed with Lord Justice Jonathan Parker and added clarification concerning Ratford.

1. Rateable occupation. Under section 43(1) of Local Government Finance Act 1988, rateable occupation is a question of fact. The court must examine the terms of the receiver's appointment and what the receiver actually did, considered separately and together. Managing and carrying on the company's business, without more, does not itself displace the company's occupation. This followed Marriage Neave [1896] 2 Ch 633, National Provincial [1916] All ER 106 and Gyton [1944] 1 KB 426, and was adopted from Ratford [1987] QB 357.
2. Agency. The agency issue concerns attribution after it has first been established that the receiver is in rateable occupation. Occupation by an agent within the agency is ordinarily treated as the principal's occupation. Conversely, the ending of agency does not itself create occupation by the former agent. Pill LJ emphasised that the agency proposition in Ratford assumed rateable occupation in the first place.
3. Effect of liquidation. Section 44(1)(a) of Insolvency Act 1986 ended the receivers' agency on liquidation, but it did not alter what they were actually doing. Their debenture powers to continue the business, realise assets and take proceedings continued, subject to the restriction against creating new debt or liability.
4. Application. The receivers continued only to manage the company's business within the terms of their appointment. There was no dispossession or change in occupation. The company therefore remained in rateable occupation, and the receivers were not rateable occupiers either as principals or on behalf of the company or liquidator. In re ELS Ltd [1995] Ch 11 concerned the different question whether goods remained goods of the company after crystallisation of a floating charge and provided no assistance.

The appeal was dismissed with costs assessed at £18,000. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): dismissed Boston Borough Council's appeal, upheld the result that the receivers were not personally liable for rates, but substituted different reasoning. Costs were awarded in the sum of £18,000 and permission to appeal to the House of Lords was refused.
• High Court, Chancery Division: Jacob J made an order dated 21 December 2000 declaring that the receivers were not personally liable to pay non-domestic rates for the relevant period.