Niche Point Of Law Raised In NDR Dispute

Image: Brad Mills/bradmills/Unsplash
Image: Brad Mills/bradmills/Unsplash

Does a ratepayer have an obligation to pay Non-Domestic Rates following service of an adjustment notice in circumstances where they assert to have acted upon an earlier nil-balance demand notice to their detriment?

This question was dealt with in a recent case before the Magistrates’ Court handled by our Associate Solicitor, Nicky Kinnear, with the hearing attended by our in-house Barrister, Alex Worthington.

What are Adjustment Notices?

Regulation 5 of the Non-Domestic Rates (Collection and Enforcement Regulations) (Local Lists) Regulations 1989 (‘the 1989 Regulations’) requires a Billing Authority to serve a demand notice for each chargeable year for any hereditament where the conditions in sections 43(1) or 45(1) of the Local Government Finance Act 1988 are met, or on the first day after such conditions are fulfilled.

Where a demand notice has been served on a ratepayer but the amount that they are required to pay in Non-Domestic Rates for the period demanded is subsequently modified following a change in liability, an adjustment notice must be served as per Regulation 9 of the 1989 Regulations.

What is Estoppel?

In the words of Lord Denning M.R. in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84;

“… when the parties to a transaction proceed on the basis of an underlying assumption—either of fact or of law—whether due to misrepresentation or mistake makes no difference—on which they have conducted the dealings between them—neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands.”

What were the Facts?

The hereditament was empty and the Billing Authority had served the owner of the property with an annual demand notice requiring payment of Non-Domestic Rates under Regulation 5 of the 1989 Regulations as part of their routine annual billing. The demand notice contained a nil balance because a 3-month exemption under Regulation 4(a) of the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 applied to the ratepayer’s account at the time that the annual demand notice was created.

The empty property exemption expired shortly into the new billing year, and the Billing Authority therefore served the ratepayer with an adjustment notice requiring the balance of the Non-Domestic Rates for the year to be paid.

What was the Dispute?

The ratepayer argued that they should not be required to pay the sum stated on the adjustment notice because they had relied on the original demand notice to their detriment. Specifically, the ratepayer said that they had refused a request from a charity to lease the premises from them. They asserted that they had refused the request because they believed that there were no Non-Domestic rates to be paid for the hereditament following service of the demand notice. They said that they would have allowed the charity to occupy the hereditament if they had known they were liable to pay Non-Domestic Rates for the remainder of the year. Had they allowed the charity to occupy the hereditament, their personal liability to pay the rates would have been avoided.

What was the Outcome?

The billing authority issued a summons against the ratepayer seeking a liability order for the unpaid Non-Domestic Rates in reliance on the adjustment notice. The ratepayer defended the summons on grounds of estoppel with the effect that the Billing Authority could not rely on the adjustment notice and also argued that they had not received the adjustment notice (although their allegation of fraud relating to the date on which the adjustment notice was created by the Billing Authority was not pursued at trial).

As to estoppel, the District Judge accepted the Billing Authority’s proposition that the ratepayer could not rely on estoppel as a defence to the summons. This was firstly because the Billing Authority had a statutory obligation to serve the ratepayer with an adjustment notice under Regulation 9 of the 1989 Regulations and doing so was for the public benefit, rather than the benefit of the Billing Authority. Therefore, estoppel could not be relied upon as a defence to the complaint as a matter of law (per Southend-on-Sea Corporation v Hodgson (Wickford) Ltd [1962] Q.B. 416 applying Maritime Electric Co Ltd v General Dairies Ltd [1937] A. C. 610).

Secondly, the District Judge went on to find that the ratepayer’s reliance upon the demand notice was unreasonable, particularly in circumstances where he had not read the guidance notes, was an experienced landlord owning multiple properties and was aware of the sort of reliefs available together with the duration for which they applied.

Consequently, a liability order was entered against the ratepayer for the unpaid Non-Domestic Rates and the legal costs that the Billing Authority had incurred.

Further Information?

For further information please do not hesitate to contact Nicky Kinnear on 0333 200 5223 or by email to

Greenhalgh Kerr
Olympic House, Beecham Court,
Smithy Brook Rd,
Wigan WN3 6PR

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+44 (0)333 200 5200

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