Southwark LBC v Ludgate House Limited [2020] EWCA Civ 1637

Many of our local authority clients have situations where a hereditament is occupied by several different people at once. In this situation, the following question arises: ‘Who is in rateable occupation of the hereditament?’. The case of Southwark LBC v Ludgate House Limited [2020] EWCA Civ 1637 offers guidance on this point.

The facts are as follows:

Until its demolition in 2018, Ludgate House (‘the Property’) was a 9-storey building in the London Borough of Southwark.

Between 2015 and 2018, Ludgate House Limited (‘LHL’) contracted with a company called VPS to secure the building against trespassers by arranging for occupation by Guardians under licences granted by VPS. Such Guardians were individuals who could live in the Property for a lower than market rent in exchange for keeping the property secure. The contract between LHL and VPS expressly provided that LHL would retain control, possession and management of the building and VPS would not allow a Guardian to take possession.

The Guardians were not allowed to be absent from the Property for more than 2 days in any 7 and were contractually obliged to challenge anyone on the Property who was unfamiliar. Crucially, the Guardians did not have exclusive possession of any individual room in the building and could be moved around at the will of VPS.

In the Court of Appeal, the question to be decided was whether the rooms in the building were in separate rateable occupation.

Legal Position

In his judgment, Lord Justice Lewison drew out several principles:

1. “Occupation” must include “actual possession”. It would appear to follow that if a putative occupier does not have possession, he will not be in rateable occupation.
2. If there is more than one candidate, who is in rateable occupation depends on “the position and rights of the parties in respect of the premises in question”. This means the tribunal must analyse the contractual relationship between the parties based on what they would be if they were exercised. It is irrelevant if the rights have not actually been exercised.
3. The mere fact that someone lives in a unit of property around which a continuous red line can be drawn does not necessarily mean that he is in rateable occupation of it. A person will not be in rateable occupation where (a) he is a caretaker, (b) it is essential to the performance of his duties that he should occupy the particular house, or (c) he is required by contract to occupy the house and by doing so he can better perform his duties to a material degree.

From these points, we can determine that in a case analogous to Ludgate House Limited, the licence holder is not likely to be in rateable occupation if there is another entitled to occupation of the same hereditament at the same time.

Lord Justice Lewison’s judgment is also helpful in determining who will be in rateable occupation where Guardians are present. He makes the following points:

(i) The tribunal must consider “the purpose of the occupation of those premises”. For example, from the perspective of a lodger, the only purpose in securing lodgings is to have somewhere to live. But that is not determinative of the question of rateable occupation as there is also the landlord’s purpose to be considered.

(ii) The same occupation could have more than one purpose, and that any such purpose could be capable of giving rise to rateable occupation.

(iii) Where persons occupy parts of a larger hereditament, rateable occupation is not resolved by weighing one party’s “purpose” against another’s. “General control” remains the decisive factor in establishing who is in rateable occupation of the site.

(iv) Therefore, if the owner of the hereditament (being also in occupation by himself or his employees) retains to himself general control over the occupied parts, the owner will be treated as being in rateable occupation; if he retains to himself no control, the occupiers of the various parts will be treated as in rateable occupation of those parts.

This suggests that generally the owner of the building will be the rateable occupier unless they have given over control of the building completely to someone else in which case, that person will be rateably occupying.

This finding regarding general control need not only apply to Guardians cases. It also applies to any situation where occupancy of a whole building is split between several individuals or businesses and could be extremely useful for local authorities attempting to collect rates from office blocks in joint occupation.

As contractual analysis is key to answering who is in rateable occupation, Greenhalgh Kerr are well suited to assist on such matters. If we can be helpful then please don’t hesitate to contact us.

Richard Kerr August 2021