British Waterways Board, R. (On the application of) v The First Secretary of State

Transitional rating arrangements must be rational and fair in their application to substantial changes in rateable value. Excluding a hereditament merely because its previous rateable value was nil may be irrational where the hereditament has long been listed and is revalued to a substantial positive value. A scheme intended to phase in increases cannot use a method which defeats that purpose. Where a public authority undertakes consultation, fairness may require it to disclose a proposal that will have a particularly severe effect on an affected person, even though there is no statutory duty to consult.

The British Waterways Board challenged a demand for non-domestic rates for canals and inland waterways for 2005/06. Its hereditament had been entered in the central rating list since 1995. Following a valuation tribunal decision, its rateable value was nil until the 2005 revaluation, when it was assessed at £1,750,000.

The claimant argued that the Non-Domestic Rating (Chargeable Amounts)(England) Regulations 2004 unlawfully excluded it from transitional arrangements because its previous rateable value was zero. It also challenged the consultation process. The claim was lodged out of time, requiring the court first to decide whether permission should nevertheless be granted.

1. Permission and delay. Permission was granted despite delay under CPR 54.5. The claimant could raise the unlawfulness of the demand defensively in later proceedings, following Wandsworth LBC v Winder [1985] A.C. 461. It would therefore be wasteful not to determine the issue.
2. Meaning and application of the transitional scheme. The canal hereditament was not a new hereditament. It had remained in the rating lists and had been revalued from nil to £1,750,000. That was a revaluation producing a sudden and dramatic increase in liability. Its nil value was nevertheless a rateable value for this purpose.
3. Irrationality and unfairness. Regulation 3 of the 2004 Regulations excluded hereditaments with a rateable value greater than zero on the specified dates. Applied to the claimant, that produced an irrational and unfair result inconsistent with the purpose of transitional arrangements, namely gradual movement towards the full liability. A nominal valuation of £5 would not cure the defect, since the full increase would become payable virtually in the final year.
4. Consultation. Although there was no statutory duty to consult, the defendant had chosen to consult. Fairness required the claimant, or its advisers, to be informed of the proposal to exclude nil-rated hereditaments because it was known or should have been known that the proposal would have a dramatic effect on the claimant.
5. The claim succeeded. The court was to hear further submissions on the appropriate relief.