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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 rting 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. 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 has ultimately reached the party on whom it was being served. The building owner appealed to the Court of Appeal against that decision. the Court of Appeal has allowed the building owner’s appeal and its judgment in UKI (Kingsway) Limited v Westminster City Council (2017) EWCA Civ 430, is an important one for billing authorities, building owners, and for those advising them.
The building owner contended that the Upper Tribunal’s decision was wrong for three reasons. Firstly, that none of the methods of service set out in the Local Government Finance Act 1988 had been used to serve the Notice. Secondly, that the Upper Tribunal was wrong to consider that such a Notice could properly be served indirectly as it had been in this case, and thirdly, that in any event transmission of a scanned copy by an unauthorised agent could not represent proper service.
The Billing Authority submitted that the Notice had been received by its intended recipient and had therefore been correctly served. The Local Government Finance Act permitted service in a number of different ways and did not set out any mandatory means of service. The fact that the building owner had been able to appeal against the Completion Notice suggested that it had been effectively served and this was not negated by the fact that it had been passed on by an intermediary not authorised to receive service of documents.
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 Court did not set out any prescriptive formula of what will, or will not, constitute proper service, and agreed with the Billing Authority that the statute contemplated more than one way of serving such documents. But the fact that the Notice could have been served in a number of ways did not mean that indirect service was sufficient to satisfy the requirements of the Act. The Court appeared minded also to accept the building owner’s contention that electronic service of such notice was not effective, but declined to express a firm conclusion on that point. The building owner’s appeal was allowed and the assessment should be deleted from the rating list.
It will be interesting to see if the billing authority seeks leave to pursue this matter further to the Supreme Court. Assuming that the case stays as it does, the Court of Appeal judgment has important lessons for billing authorities, building owners, and those advising them. Billing Authorities will need to be certain that, if they are using a method of service not specifically authorised under the Act, they are certain that they are serving notice on somebody authorised to accept service. Building owners will need to consider whether Notices reaching them in such ways have, in fact been properly served and advisers will need to consider what constitutes correct service. If they are to challenge service of Completion Notice, they will also want to have in place a proposal challenging the resulting rating list entry on the same basis.
Whilst there may be some initial uncertainty whilst all affected parties get to grips with the impact of this judgment it does seem to us that, in the long run, its effect will be beneficial. This is because it will encourage all concerned to think carefully about proper service of such Notices which can, as in this case, have consequential liabilities running into millions of pounds. where this is the case it seems only right that correct service of the necessary documents is important – potential recipients are entitled to certainty in this respect.
