Mayor and Commonalty and Citizens of the City of London v Robinson Webster (Holdings) Ltd

Factual and Procedural Background

This is an appeal by way of case stated under s.111 of the Magistrates' Court Act 1980 brought by the Appellant against the decision of Judge Law in the Magistrates' Court on 28 November 2024. The judge decided that the Respondent was not liable to pay non-domestic rates ("NDR") under s.45 of the Local Government Finance Act 1988 ("LGFA 1988") on an unoccupied shop at premises located in The City for the period 1 April 2021 to 31 March 2024.

The freehold was held by Company A. On 7 February 2017 Company A granted a 10-year lease to the Respondent commencing 5 September 2016. The Respondent formerly traded from the shop under a retail brand but the shop became loss-making and was closed during the Covid-19 pandemic.

On 13 August 2020 the Respondent's directors proposed a company voluntary arrangement ("CVA") under Part 1 of the Insolvency Act 1986; the CVA came into effect on 3 September 2020. The CVA divided leases into categories A–D; the shop was in category D from which the company would "exit" and certain arrears were compromised.

Company A refused to accept a surrender of the lease. The Appellant initially issued proceedings against Company A but withdrew those and served demand notices on the Respondent. On 27 July 2023 the Appellant issued a summons against the Respondent seeking a liability order for unpaid NDR for 1 April 2021 to 31 March 2024. The Respondent disputed liability; the matter was heard by Judge Law and the Appellant appealed by case stated.

Legal Issues Presented

1. Whether Judge Law erred in law in holding that, by reason of the CVA, the Respondent ceased to be the "owner" of the shop for the purposes of s.45(1)(b) of the LGFA 1988 for the period 1 April 2021 to 31 March 2024.
2. Whether a CVA can unilaterally displace a tenant's right of possession or control for the purpose of determining who is the "owner" liable under s.45 of the LGFA 1988.

Arguments of the Parties

Appellant's Arguments

• The lease remained subsisting and the Respondent retained the immediate legal right to possession such that it remained the "owner" under s.65(1) and liable under s.45.
• The purposive qualification in Rossendale did not apply because the CVA was not implemented for the purpose of avoiding NDR and the lease was not part of a scheme to avoid rates.
• Clause 14 of the CVA did not effect a surrender or transfer of the legal right to possession; obligations under the lease remained extinguishable only by surrender or termination.

Respondent's Arguments

• The CVA resulted in the Respondent having no real and practical entitlement to possession during the disputed period (citing the purposive test in Rossendale), including that the Respondent had "exited" the premises and handed over keys.
• Because the landlord (Company A) refused to accept surrender only to avoid liability for rates, the purposive test in Rossendale should lead to treating the Respondent as not the "owner" for s.65(1).

Company A's Position

• Company A's solicitors contended a CVA cannot determine proprietary rights and the lease continued to subsist; Company A did not accept surrender.

Table of Precedents Cited

Court's Reasoning and Analysis

The appeal court examined the statutory framework: s.42–45 and s.65(1) LGFA 1988, and the 2008 Regulations which exclude certain owners (trustees, liquidators, administrators) from liability for NDR on unoccupied hereditaments. The court accepted Rossendale's purposive test but analysed whether that test was engaged.

The court found the lease was an arm's-length commercial grant which conferred the immediate legal right to possession on the Respondent. The CVA was introduced to address financial difficulty and was not established for the purpose of avoiding NDR; the lease had not been surrendered. Clause 14 of the CVA did not effect a surrender: it deemed the Respondent to offer to relinquish any right of occupation and to execute documents required for surrender, but left the legal lease subsisting until a surrender or termination occurred. The supervisors did not assume possession or vesting of the lease.

The court rejected the judge's approach of choosing which party would best incentivise reoccupation or which party was practically best placed to bring the premises back into use. That was not the statutory test. The purposive qualification in Rossendale applies where a right to possession is conferred solely to avoid NDR; it did not apply here. Legislative policy in the 2008 Regulations shows Parliament chose to exempt certain office-holders (trustee, liquidator, administrator) but not companies subject to CVAs. By parity of reasoning the CVA did not displace the Respondent's ownership for s.65(1).

Accordingly, the court held that the Respondent retained the immediate legal right to exclusive possession and therefore remained the "owner" for the purposes of s.65(1) and liable under s.45 for NDR on the unoccupied shop during the disputed period.

Holding and Implications

APPEAL ALLOWED.

Holding: The appellate court answered the case-stated question "No": the judge was not entitled to decide that the Respondent lacked a "real and practical entitlement" to possession by reason of the CVA and therefore the Respondent remained the "owner" within s.65(1) and liable under s.45 for the disputed period.

Implications: The direct effect is that the Respondent remains legally liable for NDR on the unoccupied shop for the period in issue and the magistrates' court's decision in the Respondent's favour was set aside. The court's decision applies the existing purposive gloss from Rossendale narrowly and does not extend Rossendale to treat CVAs as displacing leasehold ownership; no general new exemption for companies subject to CVAs was created.