Factual and Procedural Background
This is an appeal by way of case stated from the decision of District Judge Elsey, of the City Magistrates Court, dismissing the Appellant's complaint seeking a liability order against the Respondent for non-payment of non-domestic rates. The premises in question, Unit G7 at Phoenix Towers Business Park, are a 1500 square metre industrial warehouse unit. The Respondent is the freehold owner. The premises were vacant after January 2006 until a portion, including Unit G7, was used by a third party, Complete Mobile Marketing Limited (CMML), from 20th May 2011 to 1st July 2011 pursuant to a short lease. CMML used the premises to install and operate a small "blue tooth box" for marketing purposes. CMML paid non-domestic rates for the period of their occupation. After CMML vacated, the Respondent became liable for rates unless exempted under the relevant regulations. The Appellant sought a liability order for unpaid rates from 2nd July 2011, which the Magistrates Court dismissed on the basis that CMML's occupation amounted to rateable occupation, entitling the Respondent to a six-month exemption from unoccupied property rates.
Legal Issues Presented
- Whether the District Judge erred in law in finding that the presence of the blue tooth apparatus constituted occupation of the hereditament.
- Whether the District Judge erred in law in finding that the presence of the apparatus amounted to rateable occupation of the hereditament notwithstanding that it had been placed there for advertising and not for warehousing.
Arguments of the Parties
Appellant's Arguments
- A hereditament is a unit of occupation of land or buildings, with rateable value reflecting rent for its existing mode or category of occupation.
- While slight acts of user may amount to rateable occupation, the degree of use by CMML was so minimal it should be disregarded under the de minimis maxim.
- The blue tooth apparatus occupied a negligible physical space (a window sill) and was not used as a warehouse, the nature of the hereditament.
- The lease excluded use of the premises as a warehouse and CMML’s use created a separate hereditament rather than occupation of the existing one.
- The District Judge erred by considering the miniaturisation of technology as relevant to occupation and by failing to assess whether the hereditament was occupied as described in the rating list.
Respondent's Arguments
- Rateable occupation should be assessed by reference to the Laing factors: actual occupation, exclusivity, benefit, and non-transience.
- Actual occupation does not require substantial use, only actual presence and use, regardless of the extent of space occupied.
- The occupation was beneficial to CMML’s business, even if not consistent with the warehouse use described in the rating list.
- The nature of the use differing from the rating list description does not negate occupation; any such discrepancy is a matter for the Valuation Officer and Valuation Tribunal.
- CMML’s exclusive use for the permitted purpose, coupled with intention and beneficial use, surmounted the de minimis threshold and amounted to rateable occupation.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Laing v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 |
Four factors for occupation: actual occupation, exclusivity, benefit, and non-transience. |
Applied to assess whether CMML’s presence constituted occupation of the hereditament. |
| Secerno Ltd v Oxford Magistrates Court and Vale of White Horse District Council [2011] RA 247 |
Limits Magistrates Court role to whether liability arises following demand notice; no challenge to rating list validity. |
Confirmed court’s limited scope in liability order proceedings. |
| Hackney BC v Mott and Fairman [1994] RA 381 |
Similar principle to Secerno regarding court’s limited role. |
Supported limiting court’s inquiry to liability under the rating list. |
| R v Vtesse Network Ltd v North West Wiltshire Magistrates Court [2010] RA 1 |
Clarifies limits on challenging rating list in liability proceedings. |
Referenced to support court’s confined role. |
| Vtesse Networks Ltd v Bradford (VO) [2006] RA 427 |
Hereditaments may include rights to use land for specific purposes, not just possession. |
Supported argument about nature of hereditament and occupation. |
| LCC v Wilkins (VO) [1957] AC 362 |
Chattels may become rateable hereditaments when enjoyed with land with permanence. |
Used to argue about the blue tooth apparatus’s status. |
| Hayes (VO) v Loyd [1985] 1 WLR 714 |
Application of de minimis maxim in determining sufficient use for rateable occupation. |
Appellant relied on it to argue minimal use should be disregarded. |
| Wirral Borough Council v Lane [1979] RA 261 |
Confirmed de minimis principle applies in occupation cases. |
Appellant cited it to support minimal use argument; court noted it upheld application of de minimis. |
| Makro Properties Ltd v Nuneaton and Bedworth Borough Council [2012] RA 285 |
Occupation requires user and intention; slight user with intention may suffice. |
Respondent relied on it to support the finding of occupation based on user and intention. |
| The King v Melladew [1907] KB 192 |
Occupation varies with nature of hereditament; intention is key in determining rateable occupation. |
Supported Respondent’s argument on occupation and intention. |
| Associated Cinema Properties Ltd v Hampstead Borough Council [1944] 1 KB 416 |
Occupation requires overt acts evidencing user; intention relevant only to show present occupation. |
Supported analysis of occupation requiring user and intention. |
| Arbuckle Smith & Co Ltd v Greenock Corporation [1960] AC 813 |
Occupation must be beneficial use; mere maintenance or preparation is not occupation. |
Central to rejecting argument that any beneficial use regardless of nature counts; court found occupation here despite different use than originally intended. |
Court's Reasoning and Analysis
The Court analysed whether the presence and use of the blue tooth apparatus by CMML constituted rateable occupation of the hereditament at Unit G7. It applied the established four-factor test for occupation from Laing, accepting that exclusivity and non-transience were conceded. The key issues were whether there was actual occupation and whether the occupation was beneficial.
The Court rejected the Appellant’s argument that the minimal physical space used and the nature of the use (advertising rather than warehousing) negated occupation. It held that actual occupation can be established even with a small physical presence if the occupier has the right, means, and intention to occupy, and has placed equipment for use in their business. The Court found that CMML’s occupation was actual and exclusive, and beneficial to its business, thereby satisfying the occupation test.
The Court also addressed the de minimis maxim, concluding that the District Judge was entitled to find that the occupation was not so insignificant as to be disregarded. The miniaturisation of equipment and the limited space used were relevant factual considerations, not irrelevant as contended by the Appellant.
Regarding the nature of use differing from the description in the rating list, the Court held this was not relevant to the question of occupation for rating purposes. The rating list description does not limit the authority to levy rates based on occupation for a different use. Any discrepancy is a matter for the Valuation Officer and Tribunal, not the Court in liability proceedings.
The Court found no error in the District Judge's legal conclusions or factual findings and upheld the dismissal of the liability order application.
Holding and Implications
The appeal is dismissed.
The Court held that the presence and use of the blue tooth apparatus by CMML constituted actual, exclusive, and beneficial occupation of the hereditament sufficient to amount to rateable occupation. Consequently, the Respondent was entitled to the six-month exemption from unoccupied property rates under Regulation 4(b) of the Non-Domestic Rating (Unoccupied Property) Regulations 2008 for the period following CMML’s lease.
This decision affirms that minimal physical occupation, combined with intention and beneficial use, can amount to rateable occupation even if the use differs from the description in the rating list. The ruling clarifies that the rating list’s description does not restrict the scope of occupation for rating liability purposes. No new precedent was set beyond applying established principles to the facts.