Applications to set aside liability orders for Non-Domestic Rates are becoming increasingly common place following the lifting of pandemic restrictions and in the current cost of living crisis.

Associate Solicitor Nicky Kinnear reviews one such application where the ratepayer’s actions unnecessarily complicated what otherwise should have been a routine application and considers the circumstances in which a liability order for NDR can be set aside.

The legal test

A  person who applies to set aside a liability order must satisfy the Magistrates Court that three criteria laid down in the leading authority R. (on the Application of Brighton and Hove City Council) v Brighton and Hove Justices v Michael Hamdan [2004] EWHC 1800 (Admin)have been met, being:

• There must be a genuine and arguable dispute
• The application must have been made promptly
• There has been a serious procedural mishap

Every limb of the test must be satisfied to succeed.

The case

A ratepayer that leased a central London night club denied that it was liable to pay NDR for the property. The council believed that someone had been operating a night club from the property prior to the  pandemic restrictions being introduced.

The ratepayer had been evasive in providing evidence of who the occupant was, resulting in the billing authority treating the hereditament as being unoccupied and serving the ratepayer as owner with demands for payment of rates.

The ratepayer continued to dispute that it was liable resulting in a summons being issued seeking a liability order for the unpaid business rates. The ratepayer defended the proceedings and whilst the case was ongoing the billing authority issued a second summons for unpaid NDR for the following financial year.

Whilst the billing authority had intended to suspend all recovery action whilst the first summons was being litigated, a liability order was nonetheless made on the second summons.

The application to set aside

The liability order was entered in default when the ratepayer failed to appear at the hearing of the second summons. A last-minute request to adjourn the hearing had been emailed to the court on the ratepayer’s behalf late in the evening on the day before the hearing.

The court later replied to the ratepayer’s request for details of the outcome of the hearing, confirming that it had listed a directions hearing for the second summons at a subsequent date. This is assumed to have been an error arising from the court having a record of two different complaints between the same billing authority and the same ratepayer consecutively.

The ratepayer seized upon this error and denied that the liability order on the second summons had ever been made. The listing of a case management conference after all was inconsistent with a liability order having been made. When it later became apparent that a liability order did exist, an application to set this aside was made.

Complications

Peculiarly, the ratepayer continued to deny that the liability order had been made but claimed that it had made an application to set it aside as a precautionary measure. The ratepayer sought to rely on the court having listed a case management hearing for the second summons in satisfaction of the third limb of the prevailing test and there was a bare assertion of there being a genuine and arguable dispute.

Whilst the ratepayer knew of a summons hearing several months before the application had been made the ratepayer reasonably believed that no liability order had been entered until later because of the court’s listing of a case management hearing.

In its continued denial of a liability order having been made, despite having applied to set it aside, the ratepayer argue that the first and second summonses should be heard together resulting in the court’s listing of the two cases for a single case management hearing.

The ratepayer sought to utilise the case management hearing for the consolidated case management and listing of the two cases, which would have had the de facto effect of reopening the second summons, and thereby setting aside the liability order.

What happened next?

Greenhalgh Kerr assisted the local authority by arranging a representative to attend the case management hearings and successfully opposed the ratepayers application for consolidated directions.

The court accepted the billing authority’s argument that a liability order did exist, and that consolidated case management of the second summons was not therefore required. Instead, the court was persuaded that as a liability order did exist, separate directions were appropriate on the set aside application ensuring that the disputed complaint and application to set aside the liability order were handled separately.

The ratepayer went on to ignore directions that had been ordered by the court in respect of the set aside application.

The billing authority’s argument at trial, as advanced by Alex Worthington, counsel employed by Greenhalgh Kerr, was that an unevidenced and bare assertion of the three criteria that the ratepayer had to satisfy to succeed in its application was not in itself enough to enable the court to set aside the liability order. The court agreed and dismissed the ratepayer’s application and ordered that the ratepayer pay the billing authorities legal costs in dealing with the application.

Greenhalgh Kerr’s extensive specialist experience in this area assisted the billing authority in steering the court through the unnecessarily complex case management arguments raised by the ratepayer in what appeared to be an attempt to secure the de facto setting aside of the liability order without regard to the prevailing test.

Ultimately, the ratepayer was unable to satisfy the court that the three criteria had been met resulting in the dismissal of the application an order for all of the costs  that the local authority incurred in dealing with the same.

If you require assistance with an application to set aside a liability order please do not hesitate to contact Nicky Kinnear (Nicky.Kinnear@greenhalghkerr.com) or Alex Worthington (Alex.Worthington@greenhalghkerr.com) for assistance.