Pall Mall Investments (London) Ltd v Gloucester City Council

Exemption from unoccupied non-domestic rates applies only where the owner is prohibited by law from occupying the hereditament or permitting occupation. A risk that occupation would breach health and safety duties, or expose the owner to prosecution, is insufficient. The law must prohibit occupation itself, either expressly or by the necessary effect of a prohibition or enforcement notice. The exemption is an entitlement when its conditions are met, not a rating authority’s discretion. The possibility of phased occupation with temporary facilities may also prevent health and safety breaches. The burden of establishing the exemption rests on the owner.

Pall Mall Investments owned two vacant office buildings in Gloucester. It claimed exemption from unoccupied rates under regulation 4(c) of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008, contending that dilapidation and vandalism made occupation unlawful under health and safety legislation.

The magistrates’ court rejected the claim and stated a case for the Administrative Court. The questions were whether a statutory prohibition notice was necessary, whether potential criminal liability for breach of health and safety duties amounted to a prohibition by law, and whether possible storage use affected the exemption.

1. The appeal was dismissed. The magistrates’ court had reached the correct conclusion in law, although the reasoning differed.

2. Under section 45 of the Local Government Finance Act 1988 and regulation 4(c) of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008, the owner had to establish that the law prohibited occupation or permitting occupation. The expression required strict interpretation.

3. A prohibition notice was not essential. Tower Hamlets London Borough Council v St Katherine by the Tower Ltd [1982] RA 261 showed that a statutory prohibition could suffice without a notice. Regent Lion Properties Ltd v Westminster City Council [1990] RA 121 showed that the necessary effect of a notice could prohibit occupation even where the notice addressed remedial work rather than occupation in express terms.

4. Those authorities did not extend the exemption to a case where occupation merely risked breaches of the Health and Safety at Work etc Act 1974 or the Workplace (Health, Safety and Welfare) Regulations 1992. The legislation imposed duties to make premises safe, but did not itself prohibit occupation. Occupation would not, of itself, constitute the section 33 offence.

5. The owner could enter to repair and could potentially arrange staged occupation with temporary facilities. The court therefore rejected the premise that any occupation would necessarily breach the legislation. It declined to give a concluded opinion on storage use because the magistrates’ court had made no relevant factual findings.

6. The magistrates’ court had incorrectly referred to a rating authority’s discretion, but exemption was an entitlement if regulation 4(c) applied. Its answer to the first question was affirmed.

• High Court (Administrative Court): appeal by way of case stated from the decision of District Judge Brown sitting at Cheltenham Magistrates Court on 9 September 2013. The appeal was dismissed.