Completion Notice validly served

The Supreme Court’s decision in UKI (Kingsway) Limited (Respondent) v Westminster City Council (Appellant) (2018) UKSC 67 brings to an end litigation regarding the service of a Completion Notice in respect of a new office building at 1 Kingsway, London WC2 in 2012. The Supreme Court has reversed the decision of the Court of Appeal and determined that the notice was correctly served. The case has taxed the appeals system since its commencement, with the Valuation Tribunal for England determining that the notice had not been properly served; the Upper Tribunal (Lands Chamber) determining that it had been validly served; the Court of Appeal finding that it had not; and now the Supreme Court reversing that finding and reinstating the decision of the Upper Tribunal.

If a new building is complete, or very nearly complete, but remains unoccupied, it will not normally be possible for the property to be included in the rating list (and hence become liable for empty rates) unless the local authority serves a “Completion Notice” on the owner of the building under Section 46A of the Local Government Finance Act 1988. The effect of a Completion Notice is to deem the property to be complete for rating purposes from the date specified in the Notice, and to require the Valuation Officer to assess the building from that date. Completion Notices can therefore carry with them a significant liability for empty rates.

Westminster City Council sought to serve such a Notice on the owner of a new property, known as 1 Kingsway, London WC2. Despite discussions with the agents acting for the owner, the City Council was unable to confirm the correct identity of the owner of the building. As a result, the Notice was addressed to the “Owner, 1 Kingsway, London WC2B 6AN”, it did not identify the owner by name, and was delivered by hand to a receptionist at the building. The receptionist was employed by Eco FM, a company employed by the owner to manage the building, but neither Eco FM, nor its employees was authorised by the owner to accept service of documents on behalf of the owner. The receptionist scanned and emailed a copy of the Notice to the building owner, UKI (Kingsway) limited, but the original was lost.

The building owner appealed against the Completion Notice on a number of grounds, including that the Notice was invalid because it had not been correctly served in accordance with statutory requirements. The building owner also made a proposal that the rating list entry for the property, made as a result of the Completion Notice, should be deleted because the Completion Notice itself was invalid. The Valuation Tribunal heard that appeal in 2014 and determined that the Notice had not been validly served on the building owner because the owner’s name did not appear on either the Notice itself, or the envelope containing the Notice. As a result of this decision, the rating list entry, which was rateable value £2,750,000, was deleted.

The billing authority, Westminster City Council, appealed against the decision of the Valuation Tribunal for England and that appeal was heard by the Upper Tribunal (Lands Chamber). We reported in these news pages that the Upper Tribunal allowed the billing authority’s appeal and determined that the Completion Notice had been correctly served because it had ultimately reached the party on whom it was being served. The building owner then appealed to the Court of Appeal against that decision. The Court of Appeal allowed the building owners appeal and found that simply leaving a notice with a third party, not authorised to accept service of documents (in this case the building receptionist), could not constitute proper “service on the owner”. The billing authority appealed against that decision to the Supreme Court.

The issues for determination by the Supreme Court were whether service via a third party, not authorised to accept service of documents, could constitute proper service, and whether it mattered that the notice received by the building owner was in electronic form.

In the Supreme Court the Appellant (the Billing Authority) submitted that the reasoning of the Upper Tribunal regarding “service” was correct and that the notice was properly served because it reached its intended recipient. There was nothing in the legislation to exclude electronic service and the end result of the electronic mode of service was the same as conventional service by hard copy.

The Respondent (the building owner) submitted that the tests used by the Court of Appeal were the correct ones and that the notice had not been served by the billing authority, because the actual service was effected by a third party. Rating legislation set out provisions regarding electronic service in some circumstances, but this did not include provisions relating to completion notices.

The Supreme Court judgment, which was unanimous, was delivered by Lord Carnwath, who accepted that the means by which a document reached the intended recipient was not wholly immaterial to whether or not it had been properly served, but that the proper test was whether the Authority “caused” the notice to be received by the owner. What was to be determined was whether there was “a sufficient causal connection between the authority’s actions and the receipt of the notice by the recipient”. This interpretation cannot be extended to embrace all situations where ultimately the intended recipient has come to know of the contents of the notice. There needs to be actual receipt of the notice, and a sufficient causal link with the actions of the council, and that was the case here.

The Electronic Communications Act 2000 was enacted against a background in which the courts had accepted that electronic service by fax was good service. Given that the provisions of the 2000 Act were intended to extend the use of electronic communication, there was nothing in the more specific orders relating to business rates that would limit the effects of that Act and accordingly, “under general principles, and on the particular facts of this case, the notice was successfully served”.

The final determination is, therefore, that the Completion Notice in this case was validly served. As these notices are important documents, often carrying substantial financial implications, it must be hoped that this determination will not encourage casual service of documents of this type and that billing authorities and others will note the Supreme Court’s encouragement to them to use the methods of service specified in the regulations.