The Mayor and Commonalty and Citizens of the City of London v Robinson Webster (Holdings) Limited

For liability for non-domestic rates on an unoccupied hereditament, the owner is ordinarily the person with the immediate legal right to exclusive possession, identified down the tenurial chain. That right is not displaced merely because another person may later obtain possession or control when it does so. The purposive qualification recognised in Rossendale Borough Council v Hurstwood Properties (A) Limited applies where the right was granted under arrangements having no purpose other than avoiding rates. It does not apply merely because a company later enters a company voluntary arrangement. A CVA cannot unilaterally surrender or terminate a lease, or transfer the tenant’s proprietary right to possession. Unless the lease is surrendered or otherwise terminated, the tenant remains the owner liable for rates.

The City of London appealed by case stated under section 111 of the Magistrates’ Court Act 1980 against a decision of the City of London Magistrates’ Court. The district judge held that Robinson Webster (Holdings) Limited was not liable for non-domestic rates on an unoccupied shop because its company voluntary arrangement had removed its real and practical entitlement to possession.

The company held the shop under a commercial lease. The lease was placed in category D under a CVA, under which the company would exit the premises, relinquish any right of occupation and offer to surrender the lease. The landlord did not accept the surrender. The central issue was whether the CVA meant that the company ceased to be the owner under sections 45 and 65 of the Local Government Finance Act 1988.

1. Appeal allowed. The formal answer to the case-stated question was “No”. A liability order should have been made against the respondent.
2. Under section 65(1) of the Local Government Finance Act 1988, the owner is ordinarily the person with the immediate legal right to actual physical possession. The court adopted the analysis in R (Emeraldshaw Limited) v Sheffield Magistrates’ Court, which identified the ratio of Rossendale Borough Council v Hurstwood Properties (A) Limited: the ordinary property-law meaning is read down only where the right was granted under arrangements having no purpose other than avoiding rates and the grantee lacks any real or practical ability to exercise it.
3. That qualification was not engaged. The lease was an arm’s-length commercial transaction and neither its grant nor the later CVA formed part of a plan to avoid rates. Rossendale was concerned with tax-avoidance arrangements, not with choosing which of two parties should bear rates liability.
4. The CVA did not surrender or terminate the category D lease. Its loose reference to “exit” had to be read with clause 14.4(d), which merely deemed the tenant to offer to relinquish any right of occupation and promised execution of documents needed for surrender or termination. The lease therefore continued, and the tenant retained exclusive possession and the ability to exclude others.
5. The landlord’s possession of keys, marketing of the premises and ability to accept a future surrender did not make it the owner. A future right to obtain possession does not displace the immediate right to possession. This was consistent with the legislative policy of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008, which provided exemptions for bankruptcy, liquidation and administration but not for a company subject to a CVA.

• High Court (King’s Bench Division, Divisional Court): allowed the appeal by case stated and held that the respondent remained liable for non-domestic rates.
• City of London Magistrates’ Court: District Judge Law held that the respondent was not the owner of the unoccupied premises during the relevant period.