Broxfield Ltd v Sheffield City Council

The High Court affirmed the decision of District Judge Redhouse that no legal or equitable lease existed between Broxfield Ltd and Busy Bodies Business Services Ltd and that the documents produced to the local authority were a sham. The court applied the classic definition of a sham from Snook v London and West Riding Investments Ltd and considered relevant authorities on standard of proof and appeals on findings of fact, concluding that the evidence established on the balance of probabilities that there was no genuine transfer of rateable occupation. The judge also held that equity would not perfect a fundamentally defective or dishonest document and that, where relevant knowledge rested with the appellant, the evidential burden could properly shift to them.

Background and parties: The appellant, Broxfield Ltd, appealed by way of case stated against District Judge Redhouse's decision that liability orders sought by Sheffield City Council were properly made because no valid lease had passed rateable occupation to Busy Bodies Business Services Ltd.

Procedural posture: The case proceeded by a stated case under section 28A of the Senior Courts Act 1981. The High Court heard argument, remitted the case for amendment and reconvened the appeal. The District Judge's decision dated 14 September 2017 was the subject of the case stated.

Facts: The council issued business rates demands for Courtwood House for December 2015–March 2016 which were unpaid and summonses were issued. Broxfield claimed Busy Bodies became rateable occupier from 18 December 2015. Evidence showed Busy Bodies was a nominal shelf company with assets of £1, subject to a Companies House strike-off notice under section 1000 of the Companies Act 2006, and later wound up. Broxfield produced a document it said was a lease dated 18 December 2015; that document was internally inconsistent (no clear operative term), bore inconsistent footer numbers (8249803-4 and later 8249803-5 after an amended page was supplied), included duplicated page numbers and separately executed signature pages, and was inconsistent with contemporaneous actions by Broxfield (licences granted to other occupiers and no rent paid by Busy Bodies). A second supposed lease for a car parking space also appeared late and was found not to have been signed on the asserted date.

Relief sought and issues: The appellant sought, by the case stated, to challenge the District Judge's findings. The court considered whether a legal or equitable lease existed, whether Busy Bodies had paid rent or gone into occupation or had immediate right to possession, whether any personal licence arose, whether the court should exercise inherent power to correct construction errors, and whether the documents and arrangement were a sham.

Court’s reasoning and conclusions: The High Court endorsed the District Judge's findings. Applying the definition of a sham from Snook and authoritative statements in subsequent cases, the court held that the totality of circumstantial and documentary evidence showed an intention to create the appearance of a tenancy without the reality: Busy Bodies lacked resources, no rent or occupation was proved, the documents were inconsistent and likely assembled after the fact, and Broxfield’s conduct (granting licences to others) was incompatible with a genuine lease to Busy Bodies. The judge emphasised that serious allegations are to be decided on the balance of probabilities and cited Re B (Children) and related authority. On appeal standards, Perry v Raleys Solicitors was cited to underscore the narrow grounds for overturning factual findings. The court therefore concluded the arrangement was a sham, equity would not perfect it, and answered the specific questions in the re-amended case in the negative for the appellant. The appeal was dismissed.

Wider comment: The judgment notes the importance of the ordinary balance of probabilities in serious factual findings, warns against elevating presumptions beyond their evidential role, and confirms that courts may find a sham where the evidence so indicates.

Appeal dismissed. The High Court affirmed the District Judge’s findings that no legal or equitable lease existed and that the documents and arrangement were a sham. The judgment reasoned that the documentary inconsistencies, absence of rent or occupation by Busy Bodies, contemporaneous conduct of Broxfield (granting licences to others) and the totality of evidence demonstrated on the balance of probabilities there was no genuine transfer of rateable occupation; equity would not repair a fundamentally dishonest or defective document.

District Judge Redhouse gave the initial decision on 14 September 2017. A stated case was produced in March 2018 and the appeal first came before Mostyn J on 11 July 2018. Pursuant to section 28A(2) Senior Courts Act 1981 the case was remitted for amendment; an amended case appeared in November 2018 and a further amendment was ordered on 5 December 2018. The re-amended case emerged in January 2019. The appeal was reconvened and heard on 2 July 2019 and judgment was handed down on 24 July 2019, affirming the District Judge's findings and dismissing the appeal.