QUEEN STREET PROPERTIES LIMITED v CARDIFF CITY AND COUNTY COUNCIL

Rateable occupation is a question of fact. The statutory liability framework does not create a presumption of law that an owner is the rateable occupier, although ownership, entitlement to possession and the absence of evidence of another occupier may support an inference of occupation. The four elements of rateable occupation are actual occupation, exclusivity, value or benefit, and sufficient permanence.

In deciding whether an agreement is a sham, the court may examine the document, the parties’ conduct and the surrounding circumstances. Relevant circumstances are not confined to events leading to execution. A pattern of related dealings may be relevant where it bears on whether the document was intended to have legal effect.

The appellants appealed by way of case stated against liability orders for unpaid non-domestic rates. Each appellant was the lessee of commercial premises and contended that a connected company had occupied the premises under a management agreement and licence.

The district judge found that each appellant was in rateable occupation and that each purported licence was a sham. The central issues were whether the district judge had applied the law concerning rateable occupation correctly, whether ownership had been treated as creating an impermissible presumption, and whether the surrounding circumstances were properly considered in determining whether the licences were shams.

1. Appeal dismissed. The High Court affirmed the district judge’s decisions and answered all four questions in the case stated in the affirmative.
2. Rateable occupation requires four elements: actual occupation; exclusive occupation for the particular purposes of the possessor; possession of some value or benefit to the possessor; and possession for a period that is not too transient. The burden initially lies on the rating authority to establish that the rate was duly demanded and unpaid. The burden then falls on the respondent to show sufficient cause, but it may swing back if the respondent’s evidence raises inferences requiring an answer.
3. Actual occupation is distinct from ownership and the legal right to possession. Ownership therefore creates no presumption of law that the owner is the rateable occupier. It may, however, be considered with the fact that the premises are occupied and the absence of evidence of another occupier. In an appropriate case those matters may support a natural or prima facie inference that the owner is in actual occupation.
4. The district judge was entitled to reject the evidence that the connected companies occupied the properties and then infer, from the remaining circumstances and the evidence as a whole, that the appellants were in actual occupation. The judgment had to be read as a whole, and its concise findings on the remaining elements of the test were adequate in context.
5. For sham, the court was not confined to the terms of the licences or to events leading to their execution. Relevance depends on the circumstances of the particular case. Other dealings may be relevant where they form part of a pattern or continuing series bearing on whether the challenged document was intended to be implemented. The district judge was entitled to consider the terms of the licences, unidentified signatories, the absence of supporting business records, actual occupation, and the director’s dealings with other companies.

• District Judge: By a reserved judgment dated 9 June 2021, found each appellant liable for non-domestic rates and found that each purported licence was a sham.
• High Court (Administrative Court): On appeal by way of case stated, affirmed the determinations and dismissed the appeal.