Pall Mall Investments (London) Ltd v Gloucester City Council

The court considered whether premises could be exempt from non-domestic unoccupied rates under regulation 4(c) of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 on the ground that the owner was "prohibited by law from occupying it or allowing it to be occupied". The appellant relied on reports that the internal condition of two office buildings made occupation unlawful because of likely breaches of the Health and Safety at Work etc. Act 1974 and associated regulations.

The court applied established authorities (notably Tower Hamlets and Regent Lion) and held that "prohibited by law" requires an actual prohibition on occupation (for example a statutory provision or a prohibition or enforcement notice whose necessary effect is to prohibit occupation). Mere dilapidation, the risk that occupation would expose the occupier to duties or potential prosecution under the Health and Safety at Work etc. Act 1974 or the Workplace (Health, Safety and Welfare) Regulations 1992, or the practical difficulty of occupation did not amount to a legal prohibition of occupation. The owner remained able to enter to carry out repairs and could, in principle, take steps (or require a tenant to take steps) to make parts safe for occupation, so the exemption under regulation 4(c) did not apply.

Background and parties: The appellant owned two office buildings at 67 and 69 London Road, Gloucester, which were unoccupied in 2011–2013. The respondent billing authority issued unoccupied non-domestic rate demands. The appellant sought exemption under regulation 4(c) of the 2008 Regulations on the basis that dilapidation and vandalism made occupation unlawful.

Procedural posture: This was an appeal by way of case stated from a decision of District Judge Brown at Cheltenham Magistrates' Court (9 September 2013). The High Court heard argument on 15 May 2014 and delivered judgment on 8 July 2014.

Nature of the claim/application: The appellant sought a declaration that the hereditaments were exempt from unoccupied rates under regulation 4(c) because the owner was prohibited by law from occupying or permitting occupation, relying on surveyor reports and duties under the Health and Safety at Work etc. Act 1974 and related regulations.

Issues framed:

• Whether, absent a current statutory provision expressly prohibiting occupation or a valid statutory notice prohibiting occupation, the state of disrepair and a surveyor's evidence that office occupation would breach health and safety duties sufficed to show the owner was "prohibited by law" from occupying under regulation 4(c).
• Alternatively, whether the possibility of limited alternative uses (such as storage of boxes in parts of the premises) would defeat the claim to exemption, and whether the court should first determine whether such areas constituted separate parts of the hereditament.

Court's reasoning: The court reviewed authority including Tower Hamlets (where statutory requirements meant occupation was legally unlawful) and Regent Lion (where the necessary effect of a notice prevented occupation). It concluded that "prohibited by law" carries a strict meaning and requires either an express statutory prohibition or a prohibition arising from the necessary effect of a notice or enforcement measure. Health and safety duties and the prospect of criminal liability for breaches did not themselves amount to a prohibition on occupation: the legislation did not forbid occupation, and the owner could lawfully enter to carry out remedial work or require a tenant to remedy defects. The court therefore rejected the appellant's contention that the risk of contravening health and safety duties equated to occupation being prohibited by law. The judge also noted that he would not resolve the alternative storage-use question because no findings of fact had been made below.

Relief sought and disposition: The appellant sought exemption from the unoccupied rate; the High Court dismissed the appeal, upholding the magistrates' court conclusion that regulation 4(c) did not apply.

This was an appeal by way of case stated. The appeal is dismissed. The court held that the phrase "prohibited by law from occupying" in regulation 4(c) requires an actual prohibition on occupation (for example statutory prohibition or a prohibition/enforcement notice whose necessary effect is to prohibit occupation). The risk of breaching health and safety duties or potential criminal liability if the premises were occupied does not itself amount to a legal prohibition of occupation, and mere dilapidation or vandalism does not establish the exemption.

Appeal by way of case stated from the decision of District Judge Brown sitting at Cheltenham Magistrates' Court on 9 September 2013. Heard in the High Court (Administrative Court) on 15 May 2014; judgment delivered 8 July 2014 (Neutral Citation: [2014] EWHC 2247 (Admin)).