In UKI (Kingsway) Limited v Westminster City Council (2017) EWCA Civ 430 the appeal concerned the formal validity and service of a completion notice under Schedule 4A to the Local Government Finance Act 1988 (“the 1998 Act”) delivered by the respondent, Westminster City Council (“the respondent” or “the billing authority”), on 5 March 2012 in respect of premises on the 3rd-6th floors of a building at 1 Kingsway, London WC2 (“the premises”). The completion notice purported to bring the premises into the 2010 rating list with effect from 1 June 2012.
The appeal raised a point of practical importance regarding the serving of completion notices and as to the general approach to the construction of statutory schemes which require notification to be given but do not provide a prescriptive and exhaustive code as to how to do so.
The appellant, UKI (Kingsway) Limited (“the appellant”), owns the freehold of the building at 1 Kingsway (“the building”). In January 2009, it began a redevelopment of the building behind the original facade. On completion the redeveloped building included 130,000 sq. ft. of office space. In anticipation of the completion of the building, discussions took place between Jones Lang Lasalle (“JLL”), the rating agents acting on behalf of the appellant, and the respondent, acting in its capacity as the billing authority, relating to the service of a completion notice to fix the date on which the building, including the premises, would be brought into the 2010 rating list. The parties did not agree on the appropriate date and, on 23 February 2012, the respondent informed JLL that it intended to serve a completion notice in respect of the premises specifying a completion date of 1 June 2012. The respondent asked JLL to confirm the identity of the owner of the building but JLL declined to do so without first obtaining instructions from its client, which were not forthcoming.
The building was managed by Eco FM (“Eco”) under a contract with the appellant. Neither Eco, nor its employees, had any authority to accept service of legal documents on behalf of the appellant. The appellant did not carry on business at the building and had no presence there. On 5 March 2012, the respondent delivered a completion notice by hand to the building, specifying 1 June 2012 as the completion date. The notice was given to a receptionist employed by Eco. The completion notice was addressed to the “Owner, 1 Kingsway, London WC2B 6AN”. It did not identify the owner by name.
By 12 March 2012 at the latest, the receptionist had scanned and emailed a copy of the completion notice to the appellant (whether directly or via other persons is unknown). The original hard copy completion notice has been lost. On 29 March 2012 JLL, purportedly “on behalf of Eco”, lodged an appeal against the completion notice contending that: to be completed within 3 months.
(i) the premises were not capable of being completed by the date shown in the notice;
(ii) the notice was invalid as it did not comply with the statutory requirements for such a notice; and/or
(iii) because Eco was not the owner of the premises, but merely the facilities management company, the service of the completion notice was invalid.
When, on 7 May 2013, the premises were brought into the list with a rateable value of £2,750,000 with effect from 5 March 2012 (subsequently corrected to 1 June 2012), JLL submitted a proposal dated 14 June 2013 on behalf of the appellant that the entry be deleted from the list on the grounds, inter alia, that:
(i) the premises at the date of entry in the list were unoccupied and incapable of beneficial occupation; and
(ii) that the completion notice was invalid.
The proposal was not accepted by the respondent.
The appeals against the completion notice and against the inclusion of the premises in the list were subsequently consolidated and heard, in the first instance, by the President of the VTE, Professor Graham Zellick QC, on 10 March 2014. By that stage the relevant issues for his determination were:
(i) whether a completion notice was invalid because it failed to state the name of the intended recipient (where it was not suggested that that name could not be ascertained by reasonable enquiry); and
(ii) whether the completion notice dated 5 March 2012 had been validly served on the appellant.
For non-domestic rates to be payable (in respect of occupied hereditaments under Section 43 of the 1988 Act or unoccupied hereditaments under Section 45 of the 1988 Act) the property in question must be entered into the rating list (under Section 42 of the 1988 Act). Section 46A and Schedule 4A of the 1988 Act, inserted into the 1988 Act by the Local Government and Housing Act 1989, contain a mechanism for bringing a new building, which has not yet been occupied, into the 2010 rating list. They provide for the service of a completion notice which conclusively deems the building to be complete (whatever its actual state) for the purpose (a) of entry into the rating list and (b) the determination of the rateable value. There are two kinds of completion notices under Schedule 4A: (a) notices served in respect of buildings considered to be complete and (b) notices where the building is not yet complete but is expected to be completed within 3 months.
The statutory mechanism for fixing a completion date conclusively establishes a deemed basis for imposing tax (which, as in the present case, involves making counterfactual assumptions against the interests of the ratepayer and in favour of the taxing authority) for the purpose of entering the property into the rating list (a pre-requisite for charging rates) and valuing the property (valued as a completed building ready for occupation, whether or not it in fact is so ready).
The relevant provisions relating to service are contained in Schedule 4A to the 1988 Act.
Because of the short periods of time under Schedule 4A (i.e. the date for deemed completion must be less than 3 months away, in accordance with Schedule 4A paragraph 2(2)), appeal rights have to be exercised by a building owner “within 28 days after the date on which the appellant received the completion notice”; see Regulation 19 of the Non-Domestic Rating (Alteration of the List and Appeals) (England) Regulations (2009) (No 2268).
Section 233 of the Local Government Act 1972 (“the 1972 Act”) applies “in relation to any notice … required or authorised by or under any enactment to be given effect to or served on any person by or on behalf of a local authority”. It sets out various methods of service.
The President of the VTE held that there was no requirement that a completion notice served under Schedule 4A should be addressed to the owner of the building by name, but that the absence of the owner’s name on the completion notice or the envelope in which it was delivered was fatal to effective service. The President further held that what he regarded as defective service was not cured by the fact that the notice had, in fact, found its way into the hands of the intended recipient in electronic form. As a result of his decision, the premises were removed from the 2010 rating list.
The respondent appealed to the Upper Tribunal (Lands Chamber) (“the UT”). The Deputy President of the UT (Martin Rodger QC) reversed the VTE’s decision that the completion notice had not been validly served. In relation to the validity of the completion notice, the Deputy President rejected the appellant’s challenge to the VTE’s decision that the completion notice was not invalid by reason of the fact that it was not addressed to the appellant by name. There was no appeal against this aspect of the Deputy President’s decision.
It was common ground on the appeal to the Court of Appeal that the actual state of the premises at the relevant time was such that, but for the deeming effect of a completion notice, the premises could not have been entered in the rating list; that none of the specific modes of service set out in paragraph 8 of Schedule 4A to the 1988 Act or Section 233 of the 1972 Act (nor in any other statutory provision) could be relied upon by the respondent billing authority, as it had not adopted any of those methods of service; and that the name and address of the appellant as owner of the building could have been ascertained by the respondent as a result of reasonable inquiry, notwithstanding the fact that the appellant had instructed JLL not to divulge its name; and that neither the method of service referred to under paragraph 8(c) of the 1988 Act or that referred to under subsection 233(7) of the 1972 Act would have been available to the respondent.
The Court of Appeal allowed the appeal. The basic reason for that conclusion is simple. The relevant statutory requirements of Section 46 A and paragraph 1 of Schedule 4A to the 1988 Act for present purposes are: (a) that “the billing authority” (b) “shall serve” the required completion notice (c) “on the owner of the building“. For the billing authority merely to leave the notice with a third party, not authorised to accept service of the notice on the owner’s behalf, or, indeed, to effect service on the authority’s behalf, in the hope, or with the intention, that the notice will somehow be brought to the attention of the owner, and where a copy of the notice or its contents are in fact subsequently communicated to the owner by the third party, does not, on any natural or normal usage of the words “serve” and “on”, constitute “service” on “the owner” “by the authority”. In other words, the concept of “service on the owner by the authority” in paragraph 1 of Schedule 4A to the 1988 Act cannot be construed as including effectively all methods of communication or transmission, which ultimately result in the information in the notice (or the notice itself) being brought to the attention of, or delivered to, the owner, in circumstances where the information in the document, or the document itself, has been communicated to the owner by a third party who is not authorised either to accept, or effect, service. The issue is one which for its determination depends on the construction of the relevant statutory provisions in the context of the scheme of the 1988 Act relating to the rating of new buildings. There is nothing in those provisions, construed in that context, which would justify construing “service” so broadly as to characterise the events of the present case as constituting service by the authority on the building owner. The fact that paragraph 8 of Schedule 4A envisages non-statutory methods of service does not lead to the result that any type of indirect transmission of information which results in a copy of the completion notice or its contents being brought to the attention of the building owner is sufficient to constitute service for the purposes of the 1988 Act.
The context of the 1988 Act is that it is a taxing statute, which imposes rating liability on a property owner on an assumed basis. The timetable for a taxpayer to raise an appeal against the completion notice is strict and is based upon the date upon which it received the completion notice. In those circumstances there are obvious policy considerations which point to a need for certainty and precision as to the date of service. Those factors strongly militate against the notion that a billing authority can simply purport to “serve” notices by leaving them at subject buildings with a person not authorised to accept service on behalf of the building owner, without compliance with either the provisions of paragraph 8 of Schedule 4A or those contained in Section 233(7) – even in circumstances where the building owner ultimately happens to receive notice of the completion notice by an indirect route.
The Court of Appeal concluded that the Judgment of the President of the VTE was correct to hold that the completion notice had not been properly served and that, accordingly, it was not effective to determine a completion date of 1 June 2012 under the 1988 Act.