Rating appeals reinstated

In April 2017 there were more that 250,000 outstanding appeals against business rates assessments in England. The Valuation Tribunal for England (VTE) is responsible for disposing of these appeals and has, in recent years, adopted increasingly stringent rules for the conduct of appeals, with a view to trying to reduce the backlog of outstanding cases. These rule changes have seen detailed directions applied by the Tribunal to the conduct of appeals, and a large number of appeals being “struck out” as a result of failure to comply with those directions. The effect of a strike out is to prevent the appeal from being heard. Many whose appeals have been struck out in this way have applied to have the proceedings reinstated. Where applications to reinstate have been refused by the VTE, some ratepayers have appealed to the Upper Tribunal (Lands Chamber) against the refusal to reinstate.

The Upper Tribunal has heard together appeals by five different Appellants, in respect of eight different appeals, against refusals by the VTE to reinstate appeals that had been struck out. These cases were a selection from amongst a number of other similar appeals and, despite being dealt with under the Upper Tribunal’s simplified procedure, they were heard by the President and Deputy President of the Upper Tribunal sitting together; an unusual occurrence, and one that will give added significance to the decision in Simpsons Malt Limited and Others v Craig Jones (VO) and Others (2017) UKUT 0460 (LC).

The Upper Tribunal’s decision sets out the statutory framework within which rating appeals are conducted and details of the VTE’s Practice Statements concerning rating appeals. The decision then considers the appropriate response to circumstances where the VTE’s directions are not complied with, in the light of the decision of the Court of Appeal in Denton v TH White Ltd [2014] 1 WLR 3926 and the decision of the UK Supreme Court in BPP Holdings v Commissioners for Her Majesty’s Revenue and Customs [2017] 1 WLR 2945, [2017] UKSC 55. The Upper Tribunal’s decision identifies three elements of consideration, from Denton, in cases where there has been non-compliance with a direction of a Court or Tribunal and relief is sought from sanctions for that non-compliance. The first is the seriousness or significance of the breach. The second is why the failure or default occurred, and the third is a consideration of all the circumstances of the case so as to enable a Court to deal justly with the application for relief.

The decision also considers the basis on which an appeal to the Upper Tribunal against discretionary case management decisions of the VTE can proceed. The Upper Tribunal took the view, as it had in an earlier decision reported in these news pages, Wonder Investments Ltd v Jackson (VO) [2015] UKUT 0649 (LC),that such appeals do not proceed as re-hearings, but as reviews of the discretionary decision made by the VTE. Such cases are not an appeal against the striking out, but are a request for relief against a sanction, the fair determination of which requires consideration of all material circumstances.

In the case of the first Appellant, Simpson Malt Limited, the Upper Tribunal was satisfied that there had been no breach of the VTE’s directions. As that was the case, there were no grounds on which the VTE could properly strike out the appeals, and that the strike-out decision and the reinstatement refusal were both wrong.

The second Appellant, Norton Motorcycles, had also not been in breach of the VTE directions, despite mistakenly thinking that it may have been. The mistaken understanding of the Appellant should not be held against it and the appeals should not have been struck out. In such circumstances the refusal to reinstate was also wrong.

The third Appellant, First Colour Limited, was in breach of the VTE’s directions but the VTE had struck out the appeal without giving reasons as to why it had done so. This failure to give reasons undermined the decision by the VTE not to reinstate the appeal, because it made it impossible to know whether there was a jurisdiction for the VTE to reinstate the appeal, and made it impossible for the VTE properly to consider (using Denton guidelines) whether the appeal ought nevertheless to be reinstated.

The fourth Appellant, Portland Lighting Limited, had also been in breach of the VTE’s directions but, again, no reasons had been given by the VTE for striking out the appeal. The failure to give reasons was a breach of the VTE’s rules and meant that the Appellant’s application to reinstate the appeal could not properly be considered in the light of the Denton tests. Accordingly, both the striking out and the refusal to reinstate the appeal were wrong.

In the final case, where the Appellant was DP Realty Limited, the reasons given for striking out the appeal were not accurate ones, stating that no statement of case had been served when such a statement had in fact been served. The Appellant’s application for reinstatement was refused on the same grounds, that no statement of case had been served. As this was not correct, both the striking out and the refusal to reinstate must be set aside.

This is an important decision and is one that all parties concerned with rating appeals will do well to study carefully. Although all these appeals were reinstated, and were remitted to the VTE for reconsideration, ratepayers should not assume that all struck out appeals can be reinstated. In its concluding remarks, the Upper Tribunal is at pains to make clear that “our decision should not be taken as condoning breaches of orders or Practice Statements made by the VTE or as signalling that the need for a robust case management regime is diminished.  No party or practitioner should be conducting appeals on the basis that they do not need to comply. Quite the contrary”. But the VTE needs to ensure that it follows its own rules, which was clearly not the case in all the circumstances covered by this decision.

Where there are breaches of orders and these give rise to sanctions by the VTE, any application for relief from those sanctions needs to be considered in the light of the three stages set out in Denton. First, consider the seriousness of the breach or failure; second, consider why the default occurred; and third, evaluate all the circumstances of the case, so as to enable the court to deal justly with the application. The Upper Tribunal makes the important point that “compliance with rules is not to be regarded as an end in itself and should never be allowed to assume a greater importance than doing justice in each case”.

There will also be plenty for the Valuation Office to consider in this decision. The Tribunal was clearly concerned that the Valuation Office should not take advantage of alleged procedural irregularities to support the striking out of appeals in cases where it is clear that the rating list is inaccurate.

We hope that all parties will review carefully, and learn from, this important decision that has at its heart the need for any system of justice to strive towards just outcomes.