Q: Is an outstanding appeal to the VO / VTE grounds for disputing a liability order?
Our client council was pursuing a property development company (the Company) for outstanding business rates. The Company disputed liability on the basis that due to the present scheme of reconstruction / redevelopment the property was not capable of beneficial occupation and accordingly the rateable value should either be deleted or assess at a nominal £1.
In accordance with Regulation 4 of The Non-Domestic Rating (Collection and Enforcement)(Local Lists) Regulations 1989 (1989 Regulations) the council served a demand notice on the Company. As the Company did not make payment, and in accordance with Regulation 11 of the 1989 Regulations a reminder notice was served on the Company. The Company did not make payment of the sum demanded in the reminder notice.
The council was entitled to and applied to the Magistrates Court for a liability order against the company pursuant to Regulation 12.
When filing their skeleton argument with the Magistrate Court the company referred to the case of Newbigin (Valuation Officer) v Monk  which stated that a valuation officer has to assume that the property in question is in a condition of reasonable repair, but exclude from that assumption those repairs which a reasonable landlord would consider uneconomic.
The Company considered that it was only viable to return the property to its previous use and that the cost of such restoration was between £4 and £5million and would take up to 4 years. The Company therefore argued that a reasonable landlord would consider the works to put the property into a state of reasonable repair to be uneconomic and therefore should not have been rateable.
The Company lodged an application with the Valuation Office Agency disputing the present rateable value of the property.
It was agreed between the parties that the Company had a liability to pay non-domestic rates in respect of the property pursuant to section 45 in that the property was wholly unoccupied (s45(1)(a)), owned in their entirety by the Company (s45(1)(b)) and shown in the local non-domestic rating list in force for the year (s45(1)(c)).
The Company’s objection to the liability order was that the ratings list should be altered given the redevelopment works. It was submitted to the Court that the Company was not permitted to raise an argument of this nature in proceedings for a liability order.
Regulation 23 of the 1989 Regulations provides that “any matter which could be the subject of an appeal under regulations under section 55 of the Act may not be raised in proceedings [for a liability order]”.
Section 55 of the Act provides that the Secretary of State may make regulations dealing with the circumstances in which alterations can be made to ratings lists. The relevant regulations are in fact The non-Domestic Rating (Alteration of Lists and Appeals )(England) Regulations 2009 which set out how and by whom a proposal for alteration to a ratings list can be made to the VO.
In particular Regulation 13 sets out the mechanism by which a decision of the VO regarding a proposal for alteration can be appealed to the VTE.
It was argued that the matter raised by the Company (that the ratings list should be altered so as to either delete the rateable value of reduce it to £1) was a matter which could be the subject of an appeal under Section 55 and therefore by virtue of Regulation 23 of the 1989 Regulations the Company was prohibited from raising such a matter within the liability order proceedings.
Further, it was argued that the Court did not have the power to defer the making of the liability order pending the outcome of any proposal to the VO or any appeal to the VTE by the Company, Regulations 12(5) of the 1989 Regulations provides that the Court “shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid”.
The Court determined that the Company was prohibited from raising any arguments regarding the redevelopments works and that this was an issue between the Company and the VO / VTE. Accordingly the Court granted the liability order together with an order for costs.
It is likely given the recent case of Newbigin (Valuation Officer) v Monk  and the proposals regarding business rates appeals reform that such arguments will be increasingly likely. However the regulations prohibit the raising of such issues as grounds for disputing the granting of a liability order.
If the defendant is however ultimately successful in their appeal to the VO or VTE then an element of the liability order will need to be credited.