Posted by: RM | July 31, 2025

Business Rates Liability: A ‘Hotbed of Controversy’

Non-domestic rates (“NDR”) (more commonly known as ‘business rates’) might appear to be an unlikely topic for a property law forum although an earlier post, Sham Agreements or Documents: The Test Revisited, did address an issue that arose in the context of NDR liability proceedings. However, it is not at all uncommon for issues that are the ‘bread and butter’ of property lawyers to present themselves in the NDR context and that is how I first became involved in this area of litigation. By way of brief examples, the question whether a lease is valid, or if a party is in ‘occupation’ of premises, are commonplace. In some cases, whether or not a party’s use is, or will be, wholly or mainly charitable, giving rise to questions about charitable status, might be central to the question of potential relief from liability to pay NDR. 

As a starting point it is necessary to briefly note the legislative scheme that underpins NDR liability. Sections 43 and 45 of the Local Government Finance Act 1988 (“the LGFA”) create liability in respect of both occupied (section 43) and unoccupied (section 45) commercial premises. Section 65 of the LGFA says that an owner (who is liable under section 45) is the person ‘entitled to possession’ of the premises. 

Most of the disputes that I become involved with arise out of schemes by which owners of empty commercial premises seek to avoid liability for NDR, which can be substantial. Until 2008 there was significant relief available for owners of empty commercial property but that all changed upon the enactment of the Rating (Empty Properties) Act 2007 (since repealed and replaced) and relief was severely curtailed thereafter. The underlying aim of the revised statutory scheme relating to relief from NDR liability became one of active encouragement of owners to bring empty commercial premises back into use.

From that was borne what might be described by some as a ‘rates mitigation industry’. The new legislation created an incentive among those with empty commercial property to find ways of minimising, or indeed avoiding, their NDR exposure. It should be said straight away that there is nothing unlawful per se about utilising a scheme to legitimately avoid liability for NDR. As much has been repeatedly recognised by the High Court, most recently in The Mayor & Commonality & Citizens of the City of London v (1) 48th Street Holding Limited (2) Principled Offsite Logistics Limited [2025] EWHC 1130 (KB) where the Judge said “For as long as there have been taxes there have been creative attempts to avoid them. Taxes on property have an even longer pedigree than those on income. There is an equally long history of litigation to set the boundaries of such taxes and define the key terminology interpreting them”, ¶[1]. NDR is, of course, a form of taxation.

However, and notwithstanding the general acceptance that rates mitigation schemes do not automatically fall ‘on the wrong side of the law’, where schemes are utilised for the benefit of property owners (whether or not through organisations that provide ‘business rates mitigation services’), rating authorities carefully scrutinise the effectiveness of the operative scheme for obvious reason given that a rating authority has a statutory duty to recover NDR and the loss of revenue can be substantial.

This tension has spawned a wealth of litigation at every level. The question of liability for NDR is ‘played out’ in the Magistrates’ Courts in the first instance which has jurisdiction to make liability orders. Those cases are not reported and do not constitute binding authority on any other court and the decisions are rarely disseminated and available for general consumption / scrutiny. Many decisions are not even the subject of written judgments although cases dealing with more complex issues of fact and law do tend to be and, if challenged, decisions will need to be be reduced to writing in any event.

From there, the High Court is the ‘next stop’ and, in the case of an appeal by way of case stated (the statutory method of appeal from a decision of the Magistrates’ Court pursuant to section 111 of the Magistrates’ Courts Act 1980), it is the final court of appeal, section 28A of the Senior Courts Act 1981. However, a challenge to a decision of the Magistrates’ Court by way of Judicial Review paves the way for continuing challenges up to Supreme Court level (subject, of course, to permission).

This post has set the general scene for a series of posts that will address specific types of scheme that are commonplace, the legal tests / principles that apply in each of the relevant scenarios, and the way in which the courts have approached the question of the effectiveness of those schemes, some of which will be rooted in questions of property law. Despite the abundance of decisions in this forum, the appetite for testing the boundaries of what is and is not permissible as far as mitigation schemes are concerned shows no signs of waning. Given the very substantial NDR liability that can attach to unoccupied commercial premises that is perhaps unsurprising, both from the perspective of the rating authority and that of the rate payer.

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Posted by: RM | July 26, 2025

TVG Landowner Statements: CRA’s Non-compliance with Regulations

Section 15A of the Commons Act 2006 (“the 2006 Act”) makes provision for a landowner to deposit a statement with a commons registration authority (“CRA”) the effect of which is to bring an end to any period of qualifying use for the purposes of an application to register land as a town or village green (“TVG”) pursuant to section 15 of the 2006 Act.

The Commons (Registration of Town or Village Greens) and Dedicated Highways (Landowner Statements and Declarations) (England) Regulations 2013 (“the 2013 Regulations”) make provision for the form and content of the landowner statement (Reg 2), the effect of a compliant statement being given to the CRA (Reg 3), and the steps that must be taken by the CRA upon receipt of a compliant statement (Reg 4). The steps the CRA must take pursuant to Reg 4 include sending an acknowledgement of receipt and publicising notice of receipt.

Reg 3(2) provides that in a case where a landowner provides a landowner statement under section 15A(1) of the 2006 Act combined with a deposit under section 31(6) of the Highways Act 1980 (“the 1980 Act”), it shall be treated as having been given to an appropriate authority in accordance with section 322(2) and (3) of the 1980 Act. Section 322(2) prescribes the methods by which a person may ‘give’ notice but further provides that “if it is proved that [the notice] was not received by the person to whom it was addressed” it would be deemed not to have been given or served.

In a recent decision of the Royal Borough of Windsor & Maidenhead (“RBWM”), as CRA, in respect of an application to register land known as ‘Land off Coombe Lane’ as a TVG (“the Coombe Lane case”), in circumstances where the CRA had failed to publicise receipt of a landowner statement which an Inspector found had been ‘given’ to the CRA, the question arose whether that failure to publicise receipt, which would have alerted local users to the application (and given them notice of the need to make any application for registration within a year if they wished to do so), caused the landowner statement to be ineffective (ie invalid).

This is an issue that was predicted by commentary in Gadsden & Cousins on Commons and Greens (3rd Ed, 2020) wherein it says “It seems likely that there will be disputes in the future about whether a landowner statement is effective to bring to an end a period of qualifying use where there is some doubt about whether all the procedural requirements have been met”, ¶15-13, and “it may be possible to argue that a statement is ineffective for the purposes of section 15A where notice has not been given in accordance with reg. 4”, ¶15-14.

In the Coombe Lane case the Inspector found as a matter of fact that a landowner statement had been given to the CRA but that the CRA had failed to undertake the steps required by Reg 4. The Applicant in the Coombe Lane case advocated for a purposive interpretation of the relevant legislation on the ground that Parliament had clearly intended that local inhabitants should have notice of any statement having been lodged which, under section 15(3) of the 2006 Act, would then give them a year to submit an application for registration. In making that submission the Applicant relied upon the language of section 15A(6) of the 2006 Act which mandates the CRA to take the prescribed steps upon receipt, namely those set out in the 2013 Regulations.

The Applicant’s stance relied upon the dicta of Lord Steyn in R v Soneji & Another [2006] 1 AC 340, ¶ [14], which draws a distinction between statutory requirements that are mandatory and directory, the former justifying an approach to statutory construction it was argued that would interpret the legislation so as to find a landowner statement to be ineffective where the section 15A(6) requirement had not been complied with by the CRA.

In opposition, the Objector impressed upon the Inspector the appropriateness of a straightforward approach to statutory interpretation that would result in the statutory provisions being construed in accordance with the actual and perfectly straightforward language used therein. The effect of the legislation, it was argued, was that once a Reg 2 compliant landowner statement has been given to the CRA, according to Reg 3 it shall be treated as having been deposited with the CRA under section 15A(1) of the 2006 Act. The effect of that deposit is that the statement is to be regarded as bringing to an end any period of qualifying user.  

In conclusion on this issue the Inspector found that there was insufficient support for reading the 2013 Regulations in a purposive way such that the Applicant’s argument for invalidity would follow, and he found, crucially, that reading the actual statutory words “… the period of user as of right is ended upon the statement being deposited and not when that deposit is advertised. In a system where the date on which user as of right ends is the most important consideration, Parliament ought to be taken to have been very particular when it used this language … “. Accordingly, he recommended the Application be refused on the ground that a compliant landowner statement had been deposited with the CRA and that started the ‘section 15(3) clock’ ticking. In this case more than one year had elapsed between the date of the landowner statement having been given and the application to register the relevant land as a TVG, thus the Application was out of time.

That was not the only ground upon which the Inspector recommended refusal. Prohibitory signage had also been erected on the Application Land more than a year before the Application, thus rendering subsequent user vi. The full report of the Inspector can be found here, the discussion relating to landowner statements (and the factual background thereto) being between ¶ [21] and ¶ [86].

I represented the successful Objector at an 8 day public inquiry into the Application in February / March 2024 (the decision was made in April 2025).

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Posted in Commons Act 2006, Landowner Statements, Town & Village Greens | Tags: , , ,

Posted by: RM | July 22, 2025

The scope of ‘clam’ in prescriptive claims

In a recent decision of the First Tier Tribunal, Property Chamber (Land Registration) (REF/2021/0571), Jones & Paddick v Hughes & Others [2025] UKFTT 00839 (PC), the scope of the concept of ‘clam‘ user was considered and applied with particular reference to user that was perpetuated through the user’s dishonest claim to have the benefit of a legal right which he knew he did not, in fact, enjoy. His repeated reliance upon an alleged legal right, said to have been created by an historic conveyance, was sufficient to deter a succession of putative servant owners from going so far as litigating their objections to his use of a way over their land.

In this case the user that formed the basis of a claimed right of way was purported to have been carried on from around the early 1960s to around the date of an application by the First Respondent (2020) to have an entry on the registered title of the dominant land removed. That entry related to an expressly granted right of way under a conveyance dating back to 1947. By the time of the trial in this case the owners of the dominant land (the personal representatives of their father upon whose use the prescriptive claim was largely based) had accepted that the 1947 conveyance did not create the legal right of way that the entry claimed.

A review of the full decision (link above) will inform the reader that the Judge found that various periods of use were, on the facts, permissive (‘precario‘) and any period of use that was not so, was punctuated by periods of use that were contentious, or ‘vi‘. There was never any period of qualifying use sufficient to meet the 20 year user requirement.

The most interesting aspect of this decision, however, was the Judge’s finding that throughout the period from 1990 to 2013 the dominant owner’s reliance upon the 1947 conveyance as having expressly granted the right he claimed, in circumstances where it was beyond any doubt that he knew it did not, was dishonest, thus rendering his use ‘clam‘.

“The question [he said] … is whether, applying existing legal principles in respect of prescriptive easements, [the dominant owner’s] dishonest use of the 1947 conveyance to justify and facilitate his user of the way has the effect of rendering his use of the way under the ‘cloak’ or ‘cover’ of the 1947 conveyance, user, which is not properly to be regarded as prescriptive, because it falls within the category of ‘clam’, or secret, user which does not give rise to prescriptive rights”.

Recognising that the argument before him was a novel one, the Judge went on “there is no doubt at all that such an approach to ‘clam’ user is a long way from the norm. The usual and well understood element of secrecy attaching to ‘clam’ user is user which is out of sight of, or obscured from, the relevant servient owner. The issue has most often arisen in cases relating to rights of support in respect of buildings and to the question as to whether particular circumstances have put the servient owner on notice, or on enquiry, as to whether the putative dominant owner’s land afforded support to the building owned by the servient owner”.

The Judge was, however, satisfied that the Court of Appeal’s decision in London Tara Hotel Ltd v Kensington Close Hotel Ltd [2012] 1 P & CR 13 expressly recognised the principle that ‘clam’ is not confined solely to secrecy as to use but can, in appropriate circumstances, extend to secrecy as to the user (ie the person using) the servient land. He referred to ¶81 of Roth J’s first instance decision and ¶37 of the Judgment of Lord Neuberger in the Court of Appeal, noting that in both courts it was accepted that if the change in the identity of the user of the way or of the ownership of the dominant land had been surreptitious or if steps had been taken to deliberately hide or conceal the change of identity or, a fortiori, to deliberately mislead or deceive the servient owner as to the change in user of the way then, as it was put, very different considerations would have arisen (in that case they did not).

The views of Roth J and Lord Neuberger were, as the Judge explained, founded on the dicta of Lord Selbourne LC in the seminal decision of the House of Lords in Dalton v Angus (1881) 6 App Cas 740, 802. He went on “… Lord Selbourne’s opinion was that all that was required was that the enjoyment of the support be enjoyed without deception or concealment and be so sufficiently open as to make it known that some support was being provided by the servient property. If, however, anything bearing upon the putative easement had been carried out secretly or surreptitiously, in order to hide material facts, or, if, in answer to any questions bearing upon the putative easement, information had been improperly withheld, or if the servient owner had received false or misleading information, as to the putative easement, then the ‘case would be different’ and, correspondingly, as I understand Lord Selbourne’s speech, the easement of support, which would otherwise have arisen, from long user, had matters been openly carried on without deception or concealment, would, on the grounds of ‘clam’, not come into being”.

The Judge concluded that Lord Selbourne’s dicta in Dalton v Angus, as discussed and adopted in London Tara Hotel, provided a principled basis, falling within the proper ambit of ‘clam’, upon which the issues arising out of the Relevant Owner’s dishonest deployment of the 1947 conveyance could be resolved. He said that “the principle to be applied is that a deliberate concealment of the basis upon which a potentially prescriptive use is carried on, or a deliberate deception as to the basis upon which that use is carried on, will disentitle the person who has perpetrated the deception, or concealment, from relying upon that user as establishing prescriptive rights. The rationale underlying the principle, as it seems to me, is that concealment of, or deception as to, the true basis, upon which the user is said to give rise to the prescriptive right in question has been carried on, will have had the effect of precluding the servient owner from challenging that user and bringing it to an end in the way that he would have done if the true basis of the relevant user had not been obscured and that, for that reason, it would be wrong for that user to give rise to prescriptive rights”.

Accordingly, the Judge concluded that between 1990, when the 1947conveyance was first deployed to fend off objection to the dominant owner’s use, and 2013, when he died, his dishonest reliance upon the 1947 conveyance as having created a legal right, which he knew it had not, rendered user ‘clam’ and was, therefore, incapable of supporting a claim to a prescriptive right.

This case explored the boundaries of what might render user ‘clam‘ and the decision certainly strays beyond that concept as traditionally characterised. It is, however, firmly rooted in principles that can be extrapolated from existing authority and provides a welcome analysis of the broader scope of what might constitute ‘clam‘ user.

I represented the successful First Respondent in this case which was concluded after a 10 day trial.

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Posted in Easements, Prescription, Property Law, Right of Way, Uncategorized, User As of Right

Posted by: RM | May 23, 2023

Rectifying Errors: CPR 3.10

CPR 3.10, “general power of the court to rectify matters where there has been an error of procedure“, provides:

3.10 Where there has been an error of procedure such as a failure to comply with a rule or practice direction –

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to remedy the error.

The question what powers of rectification are conferred upon the court by CPR 3.10 was recently considered in Jennison v Jennison [2022] EWCA Civ 1682, [2023] Ch 225 (“Jennison“) and the answer has resolved an inconsistency between two High Court authorities, Meerza v Al Baho [2015] EWHC 3154 (Ch) (“Meerza“) and Kimathi v Foreign and Commonwealth Office (No 2) [2017] EWHC 3005 (QB) (“Kimathi“).

This question was a ‘side issue’ in Jennison which was largely concerned with the standing of a foreign executor to issue proceedings in England and Wales prior to obtaining a grant of probate, or a re-sealed grant, in this jurisdiction. In light of the Court of Appeal’s decision on the main issue it was not necessary to decide the case on this basis. However, Newey LJ, with whom King and Coulson LLJ agreed, concurred with the view expressed by Stewart J in Kimathi that CPR 3.10 is incapable of curing a ‘nullity’. Had the court concluded that the Respondent in Jennison, the foreign executor, lacked standing to bring her claim prior to her obtaining a grant of probate (or re-sealed grant), CPR 3.10 could not have been used to rectify that lack of standing at the outset notwithstanding her having obtained a re-sealed grant before trial because the proceedings would have been a nullity.

In Meerza Peter Smith J concluded, in circumstances where a claimant had failed to take out letters of administration prior to issuing proceedings on behalf of an intestate, that CPR 3.10 was capable of rectifying her lack of standing saying at paragraph [46]:

It seems to me … I have a discretion under CPR 3 to apply the overriding objective to enable cases to be dealt with justly. In particular based on Chadwick LJ’s observations [in Maridive] it seems to me clear that that power can be used to ensure that any technical objections whether procedurally or as a matter of law can be overcome provided it is just to do so. In the present case it is clearly just to accede to an application to amend to perfect the claim by reason of the grant of letters of administration if that were necessary”.

In Kimathi Stewart J was faced with an application to strike out the claim of one of a number of test claimants on the ground that the claim was a nullity, the claim having been brought in the name of a deceased claimant personally rather than in the name of his personal representative. Stewart J acceded to the application and struck the claim out on the ground that it was a nullity (it being impossible to bring a claim in the name of a deceased person). Given that the facts were not on all fours with Meerza Stewart J distinguished Kimathi. However, he expressed the view that CPR 3.10 was not competent to cure every defect and that any discretion to remedy errors did not extend to reviving a claim that was a nullity.

The Court of Appeal in Jennison agreed with Stewart J and said at paragraph [60] that “… bringing a claim on behalf of an estate by a person who, at the time, lacks standing to represent is is not a mere “error of procedure”, but renders the proceedings a nullity … They are, in the circumstances, “a dead thing into which no life could be infused” (to quote Hodson LJ in Burns v Campbell) … Had, therefore, I considered the claimant to have had no standing when she issued the claim in February 2019, I would have held that CPR 3.10 had no application and that the proceedings had to be struck out“. This conclusion is consistent with the view expressed by Lord Burrows in Jogie v Sealy [2022] UKPC 32.

Any uncertainty that might have existed as a result of the decision in Meerza has now been firmly put out to grass. There can be no lingering doubt that proceedings which are a nullity are incapable of revival by the exercise of judicial discretion.

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Posted in Administration of Estates, Civil Procedure, Executors, Foreign Executors, Jurisdiction, Standing

Posted by: RM | December 29, 2022

Foreign Executor’s Standing …

Jennison v Jennison [2022] EWCA Civ 1682; [2023] 2 WLR 1017 is an important decision of the Court of Appeal which distinguishes between the standing of a foreign executor to bring proceedings in England without first obtaining a grant or resealed grant of probate from that of a foreign administrator without letters of administration in the English jurisdiction. A link to a short article can be found here.

UPDATE: April 2023. Permission to appeal to the Supreme Court has been refused.

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Posted in Administration of Estates, Executors, Foreign Executors, Jurisdiction, Standing, Testamentary Disposition

Posted by: RM | March 11, 2021

The latest on TVGs

This podcast considers the recent decision of the Supreme Court in TW Logistics Ltd v Essex County Council [2021] UKSC 4 in which the Court considers the important question of the scope of a landowner’s rights to continue using land following registration and the likelihood of pre-registration use being criminalised as a result of registration.

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Posted by: RM | July 30, 2019

Proper execution of documents

In my last post I referred to the High Court’s decision in the case of Broxfield Limited v Sheffield City Council [2019] EWHC 1946 concerning liability for the payment of non-domestic rates. A very interesting point arose in that case which can be understood by reference to paragraphs [12], [13] and [33] of Mostyn J’s judgment. In short, what emerged in evidence was a concern about exactly what document (if any) had been signed by the parties. Central to the case, and therefore the proper identification of the liable party, was a document purporting to be a lease of the relevant premises. What is evident from the judgment is that the Judge was not satisfied that the whole lease had been signed rather than just a signature page that was then attached to a full document and presented to the Council as such.

Why does that matter? According to Underhill J in R (on the application of Mercury Tax Group Limited) v HMRC [2008] EWHC 2721 (Admin) (“Mercury“) it matters a great deal. Mercury concerned a tax avoidance scheme (“the Scheme”), the detail of which is unnecessary to recite for current purposes save to note that in respect of the tax year 2002-2003 Mercury operated the scheme for some 23 clients. However, the effectiveness of the Scheme depended upon the execution of certain documents. “… three of the key documents required to be signed by a client participating in the Scheme were (a) the Trust Deed …, (b) the Option Agreement …, and (c) the Sale and Purchase Agreement … It is common ground before me that in the case of not only Mr Grisay but of Mercury’s other clients participating in the Scheme the client was asked at some time in early or mid November to sign incomplete drafts of each of these three documents; and that, when fresh documents in final form came to be executed, he was not asked to sign those versions but instead the signature pages from the drafts were detached and stapled to the final version with the intention that that should constitute his signature to that version …”, para [9].The Judge considered the differences between the drafts and the final versions of the documents and concluded that there were substantial changes (blanks had been filled in and other material information had been altered).

Counsel for Mercury submitted that there was nothing wrong in the procedure adopted whereby signature pages were transferred from draft documents to substantially different documents. Reliance was placed on the case of Koenigsblatt v Sweet [1923] 2 Ch 314 to the effect that it was submitted that the alteration (by the substitution of completed documents for incomplete documents) was ratified by implicit authorisation. Underhill J rejected the applicability of that authority to the substantive changes to the relevant documents in the Mercury case. At para [38] Underhill J stated “… I am not sure that the evidence establishes that Mr Grisay or the other clients implicitly authorised (or ratified) the change in identity of the strip as between the draft and final versions of the Option Agreement and Sale and Purchase Agreement. Although the letters of 25 November 2003 do indeed refer in terms to the 2004 stock, there is nothing in KPBP’s letter which specifically draws clients’ attention to the fact that this is a change or that it will require alterations to the documentation which they had already signed: some may have noticed that, and recognised the implications, but others may not“. And at para [39] “… I have been referred to no authority which deals with the situation in the present case – that is, the taking of a signature page from one document and its recycling for use in another … the parties in the present case must be taken to have regarded signature as an essential element in the effectiveness of the documents: that is to be inferred from their form. In such a case I believe that the common understanding is that the documents to be signed exists as a discrete physical entity (whether in a single version or in a series of counterparts) at the moment of signing. The significance of this is not entirely talismanic (though it would not affect my view even if it were): the requirement that a party sign an actual existing authoritative version of the contractual document gives some, albeit not total, protection against fraud or mistake“. He went on at para [40] “… even if I were wrong about the legitimacy of transferring signature pages in general, there is the additional factor that each of the three key documents in the present case was intended to be a deed … Mr Bird submitted, and I agree, that [the language of section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989] necessarily involves that the signature and attestation must form part of the same physical document  … Mr Mitchell observed that, although these documents were expressed to be deeds, it was not necessary that they should be. I am not sure that that is correct, at least in the case of the Option Agreement, for which no consideration is given; but, even if it were, the fact remains that the parties intended them to be deeds and their validity must be judged on that basis“.

In Broxfield the trial judge had been unable to conclude exactly what (complete) document had been signed, if any. However, the evidence clearly pointed to the distinct possibility that only a signature page had been signed (see para [33] of Mostyn J’s judgment) and then inserted into a ‘lease’ to provide to the Council to evidence the transfer of the right to possession of the relevant property. In those circumstances it was impossible for the court to positively conclude that the document upon which Broxfield relied had been executed as a whole document and the burden of proving that was upon the party relying upon it. Broxfield failed to meet that burden and, accordingly, the document it relied upon was not accepted as a lease or indeed any other form of contractual arrangement because, as Mostyn J surmised, it was impossible to know exactly what document had been signed.

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Posted in Execution Of Documents, Lease, Non-Domestic Rates

Posted by: RM | July 25, 2019

Sham Agreements or Documents: The Test Revisited

The High Court has handed down its judgment in Broxfield Limited v Sheffield City Council [2019] EWHC 1946 (Admin) and has made some important observations regarding the standard of proof for establishing a ‘sham’. By way of background, this case concerned the question of liability for non-domestic rates (business rates). The commercial property in question was owned by Broxfield Limited (“Broxfield”) but immediately upon acquisition was subject to a purported demise (of the empty parts) to a company called Busy Bodies Business Services Limited (“Busy Bodies”). Sheffield City Council (“the Council”), the rating authority, was not satisfied that the lease produced by Broxfield was valid or genuine and considered that even if the document did have the apparent effect of transferring the right to possession from Broxfield to Busy Bodies, that agreement was a sham.

The matter was tried in the Sheffield Magistrates’ Court over 5 days and the District Judge concluded that the lease was not valid, that there was no other form of agreement that conferred the right to possession upon Busy Bodies and in any event the agreement relied upon was a sham. The liability orders sought by the Council were granted.

Broxfield applied to the Magistrates’ Court to state a case and then appealed to the High Court by way of case stated. The matter came before Mr Justice Mostyn and was heard over two days (almost a year apart due to amendments to the stated case at the direction of the Mostyn J). In a reserved judgment he dismissed the appeal and answered every question posed in the case stated in agreement with the approach that had been adopted by the District Judge.

Importantly, Mostyn J considered the standard of proof that is required to establish that a document or agreement is a sham. His starting point, inevitably, was the test set out in Snook v London & West Riding Investments[1967] 2 QB 786 wherein, at page 802, Lord Diplock stated that a sham “… means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create”. Mostyn J then refers to Diplock LJ’s reference to “legal principle, morality and the authorities” and observed that Diplock LJ clearly “… intended the legal definition to correspond to the natural definition; he did not intend that the meaning in law should be a term of art”, para [20].

Referring to the statement by Munby J in A v A[2007] 2 FLR 467 that Diplock LJ’s statement of the law has always been treated as canonical Mostyn J went on to say “…the courts should be careful of being beguiled by the irresistible temptation of senior judges to apply spin, gloss and tweaks to a very simple literal concept …”, para [21]. He said that he struggled with the concept of a ‘strong presumption’ against holding a provision or a document to be a sham, referred to by Neuberger J (as he then was) in National Westminster Bank plc v Jones[2000] BPIR 1092 at [59], a phrase advanced by the Appellant as reason to be slow to make a finding of sham. Of course, in that case Neuberger J did recite that “… a sham provision is simply a provision or agreement which the parties do not really intend to be effective, but have merely entered into for the purpose of leading the court or a third party to believe that it is to be effective …”, para [59], a statement in complete accord with the test set out in Snook.

In the case before Mostyn J the Appellant sought to persuade the court that the test for a sham should be approached more stringently requiring “very cogent evidence“, but that submission was rejected. In his judgment Mostyn J recited part of the judgment of Baroness Hale in Re B (Children) [2009] 1 AC 11 wherein she said at para [64] “Lord Nicholls’ nuanced explanation [in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563, 586D-H] left room for the nostrum, ‘the more serious the allegation, the more cogent the evidence needed to prove it’, to take hold … it is time for us to loosen its grip and give it its quietus”. Mostyn J said “… the fact that an allegation is serious, or that its consequences, if proved, will be serious, is not a reason for subversively elevating the standard of proof from the simple balance of probability, nor for suggesting that the quality of evidence, should such an allegation be made, needs to be better than if the seriousness of the allegation were less grave. The court has to consider on the admissible evidence whether the charge is more likely than not made out, no more no less”, para [25].

Having conducted a focused but thorough review of the relevant authorities together with the evidence before the trial judge and her findings of fact, Mostyn J concluded that this was a case in which “… no reasonable judge could have reached a decision other than this one …” and “… it was an overwhelming case of sham…”, para [30]. This decision confirms the proper approach to the question whether a document or agreement is a sham generally, but is helpful in the context of non-domestic rating cases where it is not clear that the approach of the court has not been infected with the spin that some greater standard of proof is required when considering whether a document or agreement is a sham.

In SOS for Business Innovation and Skills v PAG Management Services Limited [2015] EWHC 2404 (Ch), whilst Norris J was not prepared to make any finding regarding a sham in that case he did recite the extract from Neuberger J’s judgment wherein Neuberger J said “… because the finding of a sham carries with it a finding of dishonesty, because innocent third parties may often rely upon the genuineness of a provision or an agreement, and because the court places great weight on the existence and provisions of a formally signed document, there is a strong and natural presumption against holding a provision or a document a sham”. Norris J went on to say that in the absence of the landlord as party to the proceedings “… to find each scheme user dishonest on the evidence of PAG Management’s witnesses alone would be a strong thing…”, para [41].

Of course, the court is not required to make a specific finding of dishonesty; only a finding on the balance of probabilities regarding the status of the relevant document or agreement. Sham or no sham. An explicit finding of dishonesty is not required although it follows that if a court finds a sham it carries with it an implicit finding of dishonesty.

It is hoped that the decision in this case will bring some renewed clarity to the applicable test and sweep away the tendency among those resisting a sham argument to impress upon the court the need for something more than is ordinarily required to meet the standard of proof; the balance of probabilities.

 

 

 

 

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Posted in Non-Domestic Rates, Rates Avoidance, Sham transactions

Posted by: RM | July 22, 2019

A blow to the ‘TVG Industry’?

The Court of Appeal has delivered its judgment in Wiltshire Council v Cooper Estates Strategic Land Limited [2019] EWCA Civ 840, the essence of which is to interpret the provisions of Schedule 1A to the Commons Act 2006 broadly. For a fuller discussion of the decision see my article here.

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Posted in Commons Act 2006, Commons Registration Act 1965, New Green Registration, Town & Village Greens, Uncategorized

Posted by: RM | October 19, 2012

A New Threat to TVG Registration

Yesterday the Government published its Growth & Infrastructure Bill which includes, amongst other things, provisions that curtail the circumstances in which applications can be made to register new town and village greens under section 15 of the Commons Act 2006 by reference to “trigger” or “terminating events” that will be set out in a schedule to the 2006 Act. Further, landowners would be able to register a statement in the prescribed form with the commons registration authority that would bring to an end any period of qualifying use upon which an application for registration might be based. Sections 12 and 13 of the Bill (together with Schedule 4) are the key provisions.

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Posted in Commons Act 2006, New Green Registration, Town & Village Greens

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