QUEEN STREET PROPERTIES LIMITED v CARDIFF CITY AND COUNTY COUNCIL

The High Court considered whether the appellants were the rateable occupiers of two commercial hereditaments and whether purported licences to related companies were shams. The court applied the John Laing test for rateable occupation (actual occupation; exclusivity; some value or benefit; not too transient) and the burden approach from Ratford. It also applied the Snook formulation of the test for a sham and accepted that surrounding circumstances may be considered (National Westminster Bank plc v Jones; Hitch v Stone).

On the facts the district judge’s detailed factual findings that the appellants were in actual occupation were within his evaluative role: the related companies produced little or selective documentary evidence, key records were absent, and corporate dissolutions and transactional features indicated a pattern consistent with creating a false appearance to avoid liabilities. The district judge therefore correctly inferred that the appellants were in rateable occupation and that the licences were shams. The High Court affirmed those conclusions and dismissed the appeal.

Background and nature of the claim:

• The respondent council sought liability orders in respect of unpaid non-domestic rates for two properties. District Judge Khan found the two appellant companies to be the rateable occupiers for specified periods and held that licences to related trading companies were shams.
• The appellants appealed by way of case stated, arguing that the district judge misapplied the law on rateable occupation and on sham documents.

Issues before the High Court:

1. Whether each appellant was in actual (and thus rateable) occupation of the respective property applying the John Laing test.
2. Whether the purported licences to related trading companies were shams under the Snook test and whether the district judge could properly have regard to surrounding circumstances (including prior corporate conduct) in that assessment.

Procedural posture: The appellants appealed by way of case stated from District Judge Khan’s reserved judgment (9 June 2021). The case stated posed four questions about actual occupation and sham licences and the High Court heard argument on 19 November 2021.

Court’s reasoning and disposition:

• The court reiterated the four-part John Laing test and the swinging burden principle from Ratford. The question of actual occupation is one of fact to be determined from the evidence.
• The district judge had considered the evidence in detail. In respect of each property the related trading company produced little or selective documentary material (no accounting records required by Companies Act 2006 s.386, no payroll, bank statements or staff evidence), and in both cases the trading companies were later struck off under s.1000. The district judge reasonably inferred that the missing documents did not exist and that selective disclosure undermined the respondents’ case.
• On the sham point the court accepted that the district judge could look beyond the bare document to surrounding circumstances (following National Westminster Bank plc v Jones and Hitch v Stone) and that, where there was a pattern of incorporation, purported licence and dissolution involving the same individual, earlier or contemporaneous dealings could be relevant to whether the challenged document was intended to be operative. The licence terms (manifestly unrealistic weekly rental figures) and unsigned/ unidentified signatories were additional indicia of sham.
• Having reviewed the judgment as a whole, the High Court held the district judge had not applied an impermissible presumption of occupation but had reached conclusions open to him on the evidence. The appeal was dismissed and the questions in the case stated were answered in the affirmative.

Wider context: The court noted the high appellate hurdle to overturning a judge’s factual evaluation and emphasised that the relevance of prior dealings to a sham finding depends on the facts and whether they form part of a pattern relevant to intention.

Appeal dismissed. The High Court affirmed the district judge’s findings that each appellant was in actual (rateable) occupation of the respective premises and that the purported licences to related trading companies were shams. The court held the district judge stated the law correctly (John Laing test; Ratford burden approach; Snook sham test), was entitled to consider surrounding circumstances (subject to relevance), and his factual inferences and evaluations were open to him on the evidence.

Appeal by way of case stated from decisions of District Judge Khan (reserved judgment handed down 9 June 2021 in the district/magistrates' court). The case stated was dated 31 August 2021 and provided to the parties on 6 September 2021. The High Court (Eyre J) heard the case stated and dismissed the appeal in [2022] EWHC 39 (Admin).