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Business rates, Booth and the fairness of costs

Cutbacks iStock 000013353612XSmall 146x219A recent Administrative Court ruling should provide reassurance on costs to local authorities when bringing cases for unpaid National Non-Domestic Rating, writes Anthony Jones.

The world of National Non-Domestic Rating (NNDR) can be a daunting place for local government lawyers, not only having to deal with the complex and hybrid nature of enforcement in this area (making civil applications for liability orders in the criminal courts), but also on occasion finding themselves with particular difficulties in recovering rates where the identity of the occupier is unknown.

When these matters do inevitably end up in court, councils often have very little by way of evidence, and find themselves up against well-resourced and highly motivated defendants keen to avoid being found liable.

The courts have recognised such burdens in the past, particularly in the case of Ratford [1] that set out a number of key principles relating to the burden of proof amongst other things.

But what about the issue of costs? Where a local authority is acting on limited evidence, and it fails to establish that the defendant is in occupation, given the civil nature of the application the well-resourced defendant can, and often does, put in an application for costs for tens of thousands of pounds. Where the NNDR funds are “pooled” to central government, there can be very little motivation for councils to take risks to recover NNDR where council tax payers’ money is potentially at stake in an adverse costs order.

Thankfully, a recent ruling of the Administrative Court has found that a public authority acting honestly and reasonably should not automatically be liable for costs, extending the principles derived from the cases of Booth [2] and Perinpanathan [3] to local authorities making applications for liability orders.

In the case of Patel v London Borough of Camden, the appellant, appealed by way of case stated against a refusal by a District Judge sitting at Highbury Corner Magistrates' Court to make an order for costs against the London Borough of Camden when dismissing applications by the council for liability orders against the appellant for NNDR.

The District Judge had refused Camden’s application to make a liability order against the appellant, and the appellant then applied for costs against Camden contending that costs should follow the event, and that Camden had acted irresponsibly and irrationally in pursuing their claim that the appellant was personally responsible for the rates on the property.

Camden resisted the application and contended that no order should be made in respect of the appellant's costs relying on section 64 of the Magistrates' Court Act 1980, and the decision of the Administrative Court, in the case of City of Bradford Metropolitan District Council v Booth [2000]. In the Booth case, the issue of costs were addressed by Lord Bingham, stating that:

"I would accordingly hold that the proper approach to questions of this kind can for convenience be summarised is three propositions:

  1. Section 64(1) confers a discretion upon a magistrates' court to make such order as to costs as it thinks just and reasonable. That provision applies both to the quantum of the costs (if any) to be paid, but also as to the party (if any) which should pay them.
  2. What the court will think just and reasonable will depend on all the relevant facts and circumstances of the case before the court. The court may think it just and reasonable that costs should follow the event, but need not think so in all cases covered by the subsection.
  3. Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of its public duty, the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant in the particular circumstances if an order for costs is not made in his favour; and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged."

Camden contended, first, that its decision to pursue the application against the appellant was honestly and reasonably made; and, second, that its work would be impeded if an order for costs was made against it in applications such as this.

The District Judge applied the decision in Booth and refused the costs application made by the appellant. The appellant challenged this decision seeking an appeal by way of case stated, arguing amongst other points that Camden was not acting in the capacity of a police or regulatory authority primarily concerned with the issues of protecting the public; instead it was performing a revenue collecting function.

Mr Justice Silber heard the case at the Administrative Court on 19 June 2013 and gave judgment in favour of the London Borough of Camden, represented by Mr Christopher Lewsley.

On Mr Justice Silber’s analysis, the main issue before him was whether the Booth principle should have been applied in this case, and to put it more specifically, whether the substantive legislative framework surrounding NNDR allowed this.

He came to the conclusion that billing authorities are public authorities charged with the statutory duty of recovering rates on behalf of community. Further that it was clear that Camden as a public authority was charged with recovering the rates in this particular case, and its role would fall within the category of bodies which were entitled to the protection within the Booth regime, on the basis they were performing the exercise of public duty. Mr Justice Silber stated that this would appear to have fallen within the words of Lord Bingham in the Booth case of:

"The need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged."

Mr Justice Silber went on to find that the District Judge had therefore been entitled to apply the principles in the Booth case, and had correctly exercised her discretion.

The decision by the Administrative Court therefore brings NNDR applications into line with the existing rules around costs in the Magistrates’ Courts, and should offer some additional reassurance to local authorities in bringing cases for unpaid NNDR in the Magistrates’ Court, in particular not to feel overly inhibited by those well-resourced defendants threatening their substantial costs.

Anthony Jones is a Senior Solicitor at the London Borough of Camden. He can be contacted on 020 7974 2051 or by This email address is being protected from spambots. You need JavaScript enabled to view it..

[1] Ratford and another v Northhaven District Council [1986] RA

[2] City of Bradford Metropolitan District Council v Booth [2000] EWHC (Admin) 444

[3] R (on the application of Perinpanathan) v the City of the Westminster Magistrates' Court [2010] 1 WLR 1508



Ratford and another v Northhaven District Council [1986] RA

City of Bradford Metropolitan District Council v Booth [2000] EWHC (Admin) 444

R (on the application of Perinpanathan) v the City of the Westminster Magistrates' Court [2010] 1 WLR 1508

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