Neutral Citation Number: [2008] EWHC 3579 (Admin)

CO/2347/2007 
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION 
THE ADMINISTRATIVE COURT 
Royal Courts of Justice 
Strand
London WC2A 2LL 

Tuesday, 4th November 2008
 
B e f o r e: 

DAVID HOLGATE QC
Sitting as a Deputy High Court Judge 
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Between: 
THE QUEEN ON THE APPLICATION OF LONDON BOROUGH OF WALTHAM FOREST 
Claimant

v 

WALTHAM FOREST MAGISTRATES' COURT 
Defendant 

YEM YOM VENTURES LIMITED  
Interested Party 
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Mr J Swirsky and Mr J Norman (instructed by LB Waltham Forest) appeared on behalf of the Claimant
Mr J Milner (instructed by Foskett Marr Gadsby & Head) appeared on behalf of the Interested Party
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The Defendant did not attend and was not represented
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J U D G M E N T
1.	THE DEPUTY JUDGE:  On 21st March 2007 an application was lodged by the London Borough of Waltham Forest seeking permission to challenge the decision of District Judge Gott given at Stratford Magistrates' Court on 21st December 2006 ‑‑ not, I mention in passing, 22nd December as stated in the claim form.  Permission to apply for judicial review was granted by Mr Rabinder Singh QC, sitting as a Deputy High Court Judge, on 27th June 2007.   
Background 
2.	I go straight to the decision of the District Judge for the background.  In paragraph 1 he explains that he was dealing with a claim by the billing authority, the London Borough of Waltham Forest, for a liability order in respect of business rates in respect of premises at Unit 1, Lea Bridge Industrial Estate, London E10 for the period 1st March 2003 to 30th March 2005.  The demand was first made on 4th August 2005 and the issue was whether the requirements of regulation 5(1) of the Non‑Domestic Rating Regulations 1989 had been met, and in particular whether a demand notice was served on, or as soon as practicable after, 1st April of the relevant year.
3.	In the second paragraph he helpfully summarised the facts stating that they were not greatly in dispute.  He said: 
"The previous occupiers of the premises in question notified the local authority in April 2002 that they had vacated the property with effect from 1st April 2002 and that they would notify the authority when the lease was sold.  The authority carried out inspections on 16th August 2002 and 5th November 2002, when the property was confirmed as empty, and they continued to issue zero balance demands of the previous occupiers as the property was exempt from empty property charges.  There were no further inspections until 23rd February 2005 when the defendants were found in occupation.  It is accepted that they have been in occupation since 1st March 2003.  A demand for business rates for the years 2002‑3, 2003‑4, 2004‑5 and 2005‑6 was sent on 4th August 2005, albeit in an incorrect name, and a further demand in the name of the limited company was sent on 9th September 2005.  The defendants accept liability for 2005‑6 and have paid the rates for that period but dispute the remainder."
In this court the defendants appear as the interested party. 
4.	An application was made on 11th January 2007 to the District Judge to state a case.  On 27th February that year he refused to do so.  Nothing now turns on that procedural history.  Instead, on 21st March 2007, as I have said, the application for judicial review was lodged.  No point is now taken by the authority on the fact that Part 54 has been used.
5.	In paragraph 14 of the interested party's summary grounds it was said that the application for judicial review had not been made promptly and there had also been undue delay within section 31(6) of the Supreme Court Act 1981.  Nevertheless, permission was granted on paper, as I have indicated.  The delay point was reiterated in paragraph 22 of the interested party's skeleton, but, fairly, Mr Milner on behalf of his client stated at this hearing that delay was no longer being pursued.   
The Grounds of Challenge 
6.	There are two grounds of challenge which I summarise at the outset.  First, it is said that the requirement under regulation 5(1) of the Non‑Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, SI 1058/1989 ("the 1989 Regulations") that a demand for rates "shall be served as soon as practicable" is a directory rather than a mandatory requirement.  It is said that the District Judge was therefore wrong to hold that a failure to comply with regulation 5(1) absolved the interested party from any obligation to pay the rates demanded and therefore prevented the claimant from obtaining a liability order under regulation 12.
7.	Under ground two, it is said that the District Judge erred in law in determining that the Council had failed to serve a regulation 4(1) demand as soon as practicable.  
8.	The main focus of the Council's case in this court has been on ground one.  I should note that before the District Judge a skeleton argument was produced on behalf of the Council, and in paragraph 15 it was said that in the Magistrates' Court, Waltham Forest was bound to accept that it was indeed mandatory to serve demand notices as soon as was reasonably practicable after 1st April of the relevant year.  Waltham Forest reserved its position on the point should this or any other case reach a higher court.   
The Encon and Regentford Decisions 
9.	That qualified concession was based upon a decision of Mr David Pannick QC (as he then was) in a case called Encon Insulation Limited v Nottingham City Council [1999] RA 382.  In that case the local authority had been unable to identify, so it was said, the actual location of the premises by reference to the description given in the valuation list.  Seven years after the property was first entered in the list its location was, however, discovered and then seven days later a demand was served.  From the case stated, it can be seen that, first of all, the Magistrates decided that the notices had been served as soon as practicable, and secondly, on that basis, the question whether the requirement in regulation 5(1) is mandatory or directory did not fall to be decided by them.  
10.	The Deputy Judge in that case held, first of all, that the Magistrates had applied the wrong legal test in deciding that the notice had been served as soon as practicable.  In particular, they had only considered the time which elapsed from the date when the premises had been identified and had failed to consider whether the local authority had omitted to take practicable steps to locate the premises before they actually discovered them.  Secondly, he held that if the Magistrates had applied the right test, the only answer they could reasonably have come to was that there had been a breach of regulation 5(1)(a) and so a liability order could not be made.
11.	The Deputy Judge therefore decided not to send the matter back for reconsideration.  I am satisfied that, in part, that depended upon his view as to the effect of his decision that regulation 5(1) had been breached.  The Council did not argue that the requirement was not mandatory, nor did they seek to limit the consequences of any breach and, having regard to that concession, the learned judge took the view that regulation 5(1) was mandatory in nature.
12.	Because of a request for guidance from billing authorities, the Department of Environment, Transport and the Regions, otherwise known as DETR, gave informal views on the effect of the Encon decision in a letter addressed to chief finance officers of the English billing authorities dated 19th February 2001, emphasising that local authorities must seek their own legal advice as to the implications of the case and the legislation:  
"3.  In our Business Rates Information Letter 7/2000 (issued on 11th August) we reminded billing authorities of their duty to issue rate demands and adjustment notices 'as soon as practicable' after they become aware of changes affecting liability.  We advised authorities that not to do so may jeopardise their ability to enforce non‑payment.  Since then, we have re‑examined the court judgment in more detail and have been advised that its consequences on a billing authority not acting 'as soon as practicable' go beyond mere enforcement. 
4. We have been advised that the judgment in effect means that if an authority does not rectify a billing error quickly, probably within the same year as the billing error occurred, then any revised rate demand would be unlawful.  The judgment held that 'as soon as practicable' was a mandatory requirement.  It also held that in regulation 5 of the NDR (Collection and Enforcement) Regulations 1989 this means 'as soon as practicable after the authority is in a position to ascertain the relevant facts' not 'as soon as practicable after the authority has actually discovered the relevant facts' (9).  In other words when it should have been aware of the error not from when it actually was.  This would also apply to revised demands issued under regulation 9.  Obviously this has serious implications for billing authorities.  We would advise billing authorities to ensure that their billing systems are robust enough to identify and rectify billing errors within the same year as the original demand notice.  To do otherwise will probably lead to an inability to collect the correct amount for the ratepayer.  Again billing authorities must seek their own legal advice." 
13.	The letter then went on to deal with a separate but perhaps related matter.  The letter reminded the local authorities of their potential liability for the amount of business rates payable to central Government on the assumption that the local authority concerned had acted diligently, irrespective of whether or not all the sums in question had been collected: 
"6.  If an authority is unable to collect the correct amount from the ratepayer because of a billing error, they cannot offset this amount against their contribution to the rate pool.  Under paragraph 4 of Schedule 8 to the Local Government Finance Act 1988 the Secretary of State has the power to make regulations containing rules for the calculation of a billing authority's annual contribution to the pool.  Sub‑paragraph (2) of paragraph 4 requires the rules to be 'so framed that the amount calculated under them in relation to an authority is broadly the same as the total which, if the authority acted diligently, would be payable to it in respect of the year under sections 43 or 45 above' (the 1988 Act). 
7.  Paragraph 2 of Schedule 1 to the Non‑Domestic Contributions (England) Regulations 1992 contains the formula for calculating the gross amount of rates payable to the authority from which it can deduct the items set out in paragraphs 3 to 7 of Schedule 1 to arrive at its annual contribution.  We interpret the formula in paragraph 2 as requiring the authority to include in the gross amount all sums payable by way of rates to the authority, whether or not those sums are actually collected.  The authority is allowed to make a deduction from the gross amount for bad debts (see paragraph 6 of the Schedule) but this does not, in our view, allow the authority to make a deduction for sums which it cannot recover because it has not issued a lawful demand in respect of them.  
8.  The basic reasoning behind this conclusion is that the enabling powers in paragraph 4 of Schedule 8 of the 1988 Act requires the contribution to be calculated in a way that assumes that the authority acts diligently . . . "
14.	The other authority in this area to which the court's attention has been drawn relates to the parallel legislation dealing with the liability to pay Council Tax.  On 18th February 2004 Lightman J gave a judgment dealing with the provisions under the Local Government Finance Act of 1992 governing the obligation to pay Council Tax in a case called Regentford Ltd v Thanet District Council [2004] EWHC 246.  In summary, he held that, firstly, no obligation to pay Council Tax arose until a statutory demand for payment is served pursuant to regulation 18 of the Council Tax (Liability for Owners) Regulations 1992, SI 1992 No.63; secondly, the obligation on a local authority under regulation 19 to serve a demand notice on, or as soon as practicable after, the setting of the Council Tax for the relevant year was not an absolute obligation, so that a duty to pay would only be "precluded" when the breach has occasioned some "procedural or substantive prejudice". 
15.	I should say that it is not entirely clear to me whether the analysis in that judgment between paragraphs 19 and 22 were strictly speaking necessary in order to answer the question posed in the case stated, as amended by the court, the answer to which was given at paragraph 18 and then repeated at paragraph 24 (see also paragraph 23).  Nevertheless, the views that the learned judge expressed in that case were given after hearing argument on the matter, unlike the basis upon which the decision in Encon was reached.
16.	In the present proceedings, the claimant argues that the same approach should be taken under the 1989 Regulations as under the 1992 Regulations in respect of the requirement to serve a demand notice as soon as practicable.  The interested party maintains that Encon was correctly decided and that the obligation in regulation 5(1) is mandatory.   
The Statutory Framework 
17.	I now turn to the statutory framework, starting first of all with the Local Government Finance Act 1988 which imposes an obligation to pay non‑domestic rates, usually referred to as business rates.  Section 41(1) imposes an obligation on the valuation officer, an employee of HMRC, to compile and then maintain lists for the area of each billing authority, referred to as "local non‑domestic rating lists".  By subsection (2) a list had to be compiled on 1st April 1990 and on 1st April in every fifth year thereafter.  By subsection (5) not later than 30th September preceding the date on which a list is to be compiled, the valuation officer is required to send to the authority a copy of the list that he proposes to formally compile.  By subsection (6) the authority is then required to deposit that list at its principal office and take suitable steps for giving notice of it.  By subsection (6)(a) and (b), as soon as reasonably practicable after compiling a list, the valuation officer is required to send the property list to the authority and then the authority is required to deposit the compiled list at its office.
18.	Section 42 deals with the contents of local lists.  By subsection (1), in summary, such a list must show for each day in the chargeable financial year each hereditament which fulfils a number of conditions.  In particular, the hereditament must be a relevant non‑domestic hereditament, at least some of which is neither domestic property nor exempt from local non‑domestic rating.  The concept of a hereditament is defined by section 64(1), which in turn refers back to section 115(1) of General Rate Act 1967.  Domestic property is defined by section 66.
19.	Section 43 is an important provision dealing with the liability to pay rates in respect of occupied hereditaments.  By subsection (1): 
"A person (the ratepayer) shall as regards a hereditament be subject to a non‑domestic rate in respect of a chargeable financial year if the following conditions are fulfilled in respect of any day in the year ‑‑ 
 (a) on the day the ratepayer is in occupation of all or part of the hereditament, and 
(b) the hereditament is shown for the day in a local non‑domestic rating list in force for the year." 
Subsection (2) introduces the basic formula for the calculation of the rates.  In summary, the amount of rates payable depends on two matters: first of all, an assessment by the valuation officer of the rateable value of a particular hereditament, applying the assumptions set out in Schedule 6 to the Act which are based upon the traditional annual letting value formula.  The amount of the rates is then calculated by applying the national non‑domestic rating multiplier to that rateable value.  Subsection (7) of section 43 provides that the amount which the ratepayer is "liable to pay" under this section is to be paid to the billing authority in whose local non‑domestic rating list the hereditament is shown.  The billing authority for the purposes of this case is the London Borough of Waltham Forest.  In subsection (8): 
"The liability to pay any such amount shall be discharged by making a payment or payments in accordance with regulations under Schedule 9 below." 
20.	Section 45 then deals with the liability to pay a reduced level of rates for unoccupied hereditaments (under the law then in force).  Section 55 empowers the making of regulations by the Secretary of State to deal with the alteration of rating lists, also the date from which such an alteration is to have effect including retrospective effect.  In addition, it is provided that alterations to the rating list may be made, first of all, directly by the valuation officer, or secondly, pursuant to a proposal by an interested person, and thirdly, pursuant to an order of the Valuation Tribunal or the Lands Tribunal in the event of an appeal being made.
21.	The delegated legislation provides for a wide range of alterations to the rating list which may be made from time to time.  There can, for example, be alterations in the rateable value shown in the list or a change in the size of a hereditament, or physical alterations, or the merging or splitting of units of occupation, or the moving of properties between the business rate and the Council Tax regimes, or the moving of properties in and out of the categories exempted from non‑domestic rating.
22.	Section 62 then gives effect to the additional requirements of Schedule 9, to which I now turn.  Paragraph 1 enables the Secretary of State to make regulations containing provisions for the collection and recovery of amounts from persons who are "liable to pay" business rates under, inter alia, section 43.  Paragraph 2(1)(a) provides that in this paragraph references to the ratepayer are to a person "liable to pay" an amount under section 43.  Paragraph 2(2) reads: 
"Regulations under this schedule may include provision ‑‑ 
 (e) that the payee must serve a notice or notices on the ratepayer stating the amount payable or its estimated amount and what payment or payments he is required to make (by way of instalment or otherwise), 
 (f) that no payment on account of the amount payable need be made unless a notice requires it . . . " 
Paragraph 3(1) of Schedule 9 provides: 
"This paragraph applies to any sum which has become payable to a charging authority under any provision included under paragraph 2 above and has not been paid.
 (2) Regulations under this Schedule may include, as regards the recovery of such a sum, provision ‑‑
 (a) allowing a liability order to be made . . . "
23.	It is accepted on behalf of the Borough Council that paragraph 3(1) of Schedule 9 refers back, amongst other things, to paragraph 2(2)(e) in the same schedule.  Thus, as in the Council Tax regime, the structure of the 1988 Local Government Finance Act draws the distinction between the potential liability to pay rates created by section 43 "in the sense of exposure to a possible duty to pay", as opposed to "an actual duty to pay", borrowing the language used by Lightman J in paragraphs 17 and 18 of the Regentford case.
24.	The only other provision in Schedule 9 to which I should draw attention is paragraph 3(4) which provides that: 
"(4) The regulations may include provision that ‑‑ 
 (a) a sum to which this paragraph applies shall be recoverable in a court of competent jurisdiction, and 
 (b) such method of recovery shall be available as an alternative to any method included under sub‑paragraph (2) above." 
That provision enabled regulations to be made which, as I understand it, for the first time provided for recovery of rates by civil proceedings as an alternative to proceedings through the Magistrates' Court for a liability order under the regulations made pursuant to paragraph 3(2).
25.	I then turn to the 1989 Regulations.  Part II is headed "Billing".  Regulation 4(1) is important and it provides: 
"For each chargeable financial year a charging authority shall, in accordance with regulations 5 to 7, serve a notice in writing on every person who is a ratepayer of the authority in relation to the year."
That notice is referred to as a demand notice, and that is made clear by the interpretation provision in regulation 3(1).
26.	The claimant accepts that regulation 4(1) is a mandatory or absolute requirement and that the duty of a ratepayer to pay the rates which he is potentially liable to pay under section 43 does not arise until a demand notice is served.  I agree.  The position is therefore the same in this respect for business premises as for the obligation to pay Council Tax under the 1992 Act.  Regulation 5(1) reads: 
"Subject to paragraph (2), a demand notice shall be served on or as soon as practicable after ‑‑ 
 (a) except in a case falling within sub‑paragraph (b), 1st April in the relevant year, or 
 (b) if the conditions mentioned in section 43(1) . . . of the Act are not fulfilled in respect of that day as regards the ratepayer and the hereditament concerned, the first day after that day in respect of which such conditions are fulfilled as regards them." 
Subparagraph (b) would apply, for example, where rateable occupation of a property recommences after a period of non‑occupation.
27.	Regulation 6(1) to (3) apply where a demand notice is served before or during the year to which it relates, and is therefore not relevant here.  The only relevant part of regulation 6 is subparagraph (4) which provides: 
"If a demand notice is issued after the end of the relevant year, it shall require payment of the amount payable for the year." 
Under regulation 7(5) it is provided that: 
"A notice to which regulation 6(2) or (4) applies shall require payment of the amount payable on the expiry of such period (being not less than 14 days) after the day of issue of the notice as is specified in it." 
Regulation 7(6) provides: 
"No payment in respect of the amount payable by a ratepayer in relation to a hereditament for any chargeable financial year (whether interim, final or sole) need be made unless a notice served under this Part requires it." 
In relation to regulation 7(6) the Council agrees, and so do I, that that confirms the principle that the obligation to pay is contingent upon the service of a demand notice under regulation 4.
28.	Part III of the 1989 Regulations is headed "Enforcement". Regulation 10(2) provides a gateway between Part II and Part III of those regulations.  It reads: 
"A sum which has become payable to a charging authority under Part II and which has not been paid shall be recoverable under a liability order, or in a court of competent jurisdiction, in accordance with regulations 11 to 21." 
The language which refers to a sum which has become payable to a billing authority under Part II again respects the distinction between the potential liability to pay rates created by section 43 of the principal Act, as opposed to the individual obligation to pay rates which is contingent upon the service of a demand notice under regulation 4(1).  Thus, recoverability under Part III, including the making of a liability order under regulation 12, is dependant upon the service of such a notice.  
29.	As regards enforcement, two routes are availabile to the local authority, the second of which is civil recovery dealt with by regulation 20.  That, in summary, provides that a sum payable under Part II is recoverable in a civil court but only as an alternative to seeking a liability order.  In relation to such a claim, a limitation period of six years applies.
30.	Liability orders are dealt with under regulation 12.  Where such an order is made, the local authority may, under regulation 14, distrain for the amount due.  By regulation 16, if distress yields too little to pay the sum due, an application can be made to commit an individual to prison.  By regulation 18, there is the possibility of insolvency or winding up proceedings following on from a failure to comply with a liability order.  
31.	Regulation 11 provides that a precursor to the making of a liability order is the sending of a reminder notice, as defined in regulation 11(1).  In relation to that provision, the local authority accept, and I see no reason to disagree, that that requirement is also mandatory.  It gives a clear warning to somebody who faces potentially serious consequences under subsequent provisions of Part III that action under that part is about to be taken.
32.	So far as is relevant to this case, regulation 12(1) provides: 
"Subject to paragraph (3), if . . . (in a case where a reminder notice is required under regulation 11) the amount stated in the reminder notice is wholly or partly unpaid at the expiry of the period of 7 days beginning with the day on which the notice was served, the charging authority may, in accordance with paragraph (2), apply to a Magistrates' Court for an order against the person by whom it is payable." 
Regulation 12(3), so far as is relevant, provides for the same limitation period as applies under regulation 20, namely six years from the day on which a sum became due under Part II.  That, in turn, depends upon the service of a demand notice.  Regulation 12(5) provides: 
"The court shall make the order if it is satisfied that the sum has become payable by the defendant and has not been paid." 
In relation to that provision the local authority in this case has agreed, and in my view they were correct to do so, that "payable" must mean payable under Part II.   
The Rival Contentions 
33.	Mr Swirsky on behalf of the local authority submits that although the word "shall" in regulation 4(1) is mandatory in relation to the service of the demand notice, the use of that same word in regulation 5(1) is not mandatory in relation to the timing of the service of the notice.  He also says that under the 1992 Regulations, the analysis of the Council Tax legislation in Regentford shows a great many similarities with the statutory code for the recovery of business rates.  That analysis of the Council Tax scheme has not been disputed by Mr Milner on behalf of the interested party.  
34.	The counterpart to rule 4 of the 1989 regulations is rule 18 of the 1992 Regulations, to which I have referred.  Both regulations use the word "shall" in relation to the requirement to serve a demand notice so as to cause an obligation to pay to arise.  Regulation 19(1) of the 1992 Regulations is the counterpart to regulation 5(1) of the 1989 Regulations.  Lightman J stated in the Regentford case that the use of the words "is to be" in regulation 19(1) rather than "shall", indicated that regulation 19 was using looser language.  For my part, I would simply add that the expressions used in both regulations are capable of having either a mandatory or a directory effect and I would not find it possible to decide this question simply on that linguistic difference.
35.	That leads to the question of whether it is helpful in any event to attempt to resolve this question of statutory construction simply by using the labels "mandatory" and "directory".  Both counsel have relied upon a decision of the Court of Appeal, Petch v Gurney [1994] 3 AER 731.  The issue in that case was whether the requirement in section 56(4) of the Taxes Management Act 1970 imposing a 30 day time limit for transmitting a case stated by Tax Commissioners to the High Court, was mandatory and absolute.  The Court of Appeal held that it was.  At page 736 Millett LJ held as follows: 
"The question whether strict compliance with a statutory requirement is necessary has arisen again and again in the cases. The question is not whether the requirement has to be complied with; of course it should: the question is what consequences should attend a failure to comply. The difficulty arises from the common practice of the legislature of stating that something 'shall' be done (which means that it 'must' be done) without stating what are to be the consequences if it is not done." 
He subsequently referred to the case of Howard v Bodington (1877) 2 PD 203, where Lord Penzance had said (page 211): 
"I believe, as far as any rule is concerned, you cannot go further than that in each case you must look to the subject matter; consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory." 
36.	During argument, I pointed out that the law had now gone beyond simply attempting to pigeonhole obligations or requirements into a mandatory or directory category: see, for example, the seminal speech of Lord Hailsham in London & Clydeside Estates Ltd v Aberdeen District Council [1980] 1 WLR 182, at 189 to 190.  Indeed, the subject has been discussed extensively, for example, at pages 251 and following of de Smith's Judicial Review (Sixth Edition).  The argument in this case has not involved any citation of that more recent case law, but I think it fair to say that both sides have approached the issue under ground one by considering, in any event, the consequences of non‑compliance and the intent of Parliament.  Certainly it would be wrong for me, in deciding ground one, to ignore that aspect of the case law.
37.	In summary, the local authority argues as follows.  First of all, the intention of Parliament to impose an obligation on occupiers to pay rates should not be relieved by administrative failings.  Secondly, if the requirement is treated as absolute, in a case where no prejudice is suffered through a particular delay in the service of a demand notice, the ratepayer, made liable by the primary legislation to pay his rates, benefits from a windfall.  Thirdly, under the Council Tax regime a person is not absolved from his liability to pay Council Tax because of such a failure if he suffers no prejudice.  They argue that it would be illogical to take, and there is no justification for taking, a different approach under the business rate regime.  
38.	On the other hand, the interested party responded firstly by placing heavy reliance upon Petch v Gurney.  Their reply to this ground of challenge was based substantially on that case.  I therefore turn once again to Petch v Gurney.
39.	Mr Milner relied upon the following passage from the judgment of Millett LJ at page 731 of the report: 
"Where statute requires an act to be done in a particular manner, it may be possible to regard the requirement that the act be done as mandatory but the requirement that it be done in a particular manner as merely directory. In such a case the statutory requirement can be treated as substantially complied with if the act is done in a manner which is not less satisfactory having regard to the purpose of the legislature in imposing the requirement. But that is not the case with a stipulation as to time. If the only time limit which is prescribed is not obligatory, there is no time limit at all. Doing an act late is not the equivalent of doing it in time.  That is why Grove J said in Barker v Palmer (1881) 8 QBD 9 at 10 ‑‑ 'provisions with respect to time are always obligatory, unless a power of extending the time is given to the court'.  This probably cannot be laid down as a universal rule, but in my judgment it must be the normal one. Unless the court is given a power to extend the time, or some other and final mandatory time limit can be spelled out of the statute, a time limit cannot be relaxed without being dispensed with altogether; and it cannot be dispensed with altogether unless the substantive requirement itself can be dispensed with.  
As I have already pointed out, it is obviously impossible to dispense with the requirement that the case stated be transmitted to the High Court.  Once this conclusion is reached, however, then in my judgment in the absence of any power to extend the time limit laid down by the statute or of any other final time limit which can be spelled out of the section and substituted, compliance with the requirement that the case stated be transmitted to the High Court within 30 days of its receipt cannot dispensed with either."  
40.	Mr Milner says that here there was no power to extend time, as to which there can be no dispute.  He goes on to submit that there would have to be a sufficient justification to displace what was described in the passage that I have just read as the "normal rule".  However, I do not consider that Petch v Gurney helps me to decide the question of statutory construction in the present case, principally for two reasons.  First of all, the context of that case can be seen from page 731 of the report.  There the issue as to the effect of non‑compliance with the time limit went directly to the jurisdiction of the court to entertain proceedings, and not, as here, to the inception of a limitation period.  One can see that from the following passage in which Millett LJ referred to an earlier decision of Scott J (as he then was) in Valleybright Ltd v Richardson [1985] STC 70, where Scott J had held that the requirement in subsection (4) was mandatory and that the failure to transmit a decision to the High Court deprives the court of jurisdiction to entertain the appeal: 
"Unlike subsection (1), he pointed out, subsection (4) was of real significance; transmission of the case stated to the High Court was the event which gave the High Court jurisdiction.  This suggested that it was mandatory.  The consequences of not so treating it suggested the same: it would be open to an appellant to keep his appeal in abeyance indefinitely by delaying the transmission of the case stated to the High Court.  Scott J pointed out that there would be nothing that the other party could do about it, for the court's powers to bring a case on for hearing or dismiss it for hearing or dismiss it for delay does not arise until there is a case to bring on or dismiss." 
It is to be noted that in that passage once again the analysis proceeded by reference to the consequences of non‑compliance with the requirement.  Secondly, the requirement as to time of service in that case was finite, whereas in the present case it is not.  In the present case service is required to be effected as soon as practicable, and in my view that involves an element of judgment on the part of the court, which has to decide whether or not the duty was complied with.
41.	Mr Milner also referred to a recent decision of the Court of Appeal, Greenweb Limited v London Borough of Wandsworth [2008] EWCA Civ 910.  That case was concerned with the interpretation and application of certain provisions in the Land Compensation Act of 1961.  I have considered that case carefully.  I do not find it to be of any help, with respect, in resolving the issues I have to decide in this case.  Particular emphasis was placed by Mr Milner upon paragraph 28 of the judgment of Stanley Burnton LJ.  Read in context, it is clear that he was dealing with the circumstances in which a court may depart from a clear and unambiguous meaning of a statute and the extent to which it may be possible to read words into the legislation.  That does not arise in the present case.  With respect to the submissions for the interested party, I do not consider that they enabled me to resolve this issue one way or the other.  Neither do I feel that the submissions advanced by the Council went so far as to demonstrate how this issue should be determined.   
Analysis 
42.	From the cases it is possible to see that in deciding the so‑called "mandatory/directory" question the courts have been influenced by, amongst other things, the following factors.  First of all, there is the importance of the requirement.  Some requirements are so important that absence of prejudice resulting from non‑compliance is irrelevant.  Secondly, the courts do consider whether the statutory requirement or purpose could be fulfilled by substantial compliance.  If not, then the requirement may well be taken to be mandatory.  Thirdly, regard should be had to the consequences of non‑compliance.  Fourthly, the issue is often determined in practice in the context of the facts of a specific case.  Particularly helpful guidance was given in relation to this area by Lord Woolf MR in R v Home Secretary ex parte Jeyeanthan [2000] 1 WLR 354, 358‑362.  The starting point is that where the word "shall" is used "the requirement is never intended to be optional" (see page 358G). 
43.	In my view, there are certain factors which could point to regulation 5(1) being absolute.  These are as follows.  First of all, the statute is imposing a tax liability which does not arise until a demand is made.  It is important to businesses to receive a demand as soon as practicable so that they may organise their financial affairs and take, and act upon, spending decisions.  It seems to me that that importance is not weakened because a particular ratepayer, or indeed ratepayers in general, are aware of a potential liability to pay rates.  Secondly, serious consequences may ensue from non‑service of the demand notice, as can be seen from regulations 12 to 18.  Thirdly, regulation 5(1) is of general application, in the sense that it is not limited to cases where property has become occupied after lying vacant, or indeed to cases where a new occupier "hunkers down" ‑‑ to borrow the expression used on behalf of the Council yesterday ‑‑ in the hope of remaining undetected (see paragraph 21 above).  Fourthly, there is no obligation in the legislation upon a new occupier to notify the billing authority as to when their occupation commenced.  The legislation, however, does allow for certain requisitions of information to be served by the Council.  Fifthly, the requirement to serve a notice is important because the limitation period starts to accrue once a demand notice is served.  That is relevant not only to enforcement via the liability order, but also to recovery of rates as a statutory debt.
44.	There are, however, other factors which suggest that session 5(1) is not an absolute requirement.  First of all, rates are required to be paid by businesses which beneficially occupy premises.  If non‑compliance with regulation 5(1) absolves a party potentially liable to pay rates under section 43 from liability, then the burden on other ratepayers is increased.  Secondly, a strict application of regulation 5(1) would result in a pure windfall, where the particular ratepayer has suffered no prejudice at all from a particular delay which is judged to be in breach of the language of that regulation.  Thirdly, it is relevant to consider, I think, the nature of the time limit.  I accept that there is no power to extend the time limit, but on the other hand the time limit is not expressed as a finite period, unlike the 30‑day limit which was the subject of Petch v Gurney.  Moreover, the time limit in this case gives rise to a limitation period which, by definition, is capable of being waived.  Fourthly, whether a notice has been served as soon as practicable is a matter of judgment and, it is common ground, may involve the consideration of matters such as the resources for the implementation of the recovery regime.  Fifthly, taking the words of regulation 5(1) literally, a court might find in one case that a notice had not been served as soon as practicable where a period of say two years has elapsed from the relevant event giving rise to the notice.  However, in another case that conclusion might be reached where the gap was considerably shorter, say only a few months.  That suggests to me that the legislative intent is satisfied if there has been substantial compliance with regulation 5(1).  For example, if the local authority took six months to serve a demand notice but the court concludes that it could have been served after three months ‑‑ for example, by the service of a statutory requisition or simply in some cases by making use of online services to inspect the Land Registry, then on a strict application of regulation 5(1) it might be said that the notice had not been served as soon as practicable.  However, in my judgment, the word "practicable" in this context indicates that Parliament expected that substantial compliance should be achieved, and therefore that the presence or absence of any prejudice to the ratepayer caused by a period of "delay" should be capable of being a relevant consideration.
45.	As a result of considering these arguments for and against the proposition that the effect of regulation 5(1) is mandatory or absolute, I conclude that it is not.  Instead, it is necessary to consider whether there has been substantial compliance with the regulation and its objectives.  That includes consideration of the question whether the ratepayer has suffered prejudice by any particular delay which could qualify as a failure to serve a demand notice as soon as practicable.  That was the approach taken by Lightman J in the Regentford Limited case in relation to very similar wording dealing with the recovery of Council tax.  There has been no indication ‑‑ certainly none that has been referred to in this court ‑‑ that his decision has given rise to any practical difficulties in the implementation of the Council Tax legislation.  In my view, on a proper reading of the legislation the same basic approach to this question should be taken when construing or applying regulation 5(1).  
46.	In summary, the Magistrates' Court needs to consider whether there has been substantial compliance with regulation 5(1) and its objectives which include the matters I have set out above (in paragraphs 43 and 44) and the issue of whether the time which has elapsed has resulted in procedural or substantive prejudice for the ratepayer.  If the billing authority substantially complies with regulation 5(1) so that, for example, no significant prejudice is caused to the ratepayer, the ratepayer becomes liable to pay the sum demanded upon the service of the notice and in due course a liability order may be sought.
47.	I would not want it to be thought, however, that that conclusion provides some sort of charter or licence for local authorities not to take seriously their duty to serve demand notices in accordance with regulation 5(1) as soon as is practicable.  The context for this regulation remains one of the imposition of taxes and considerable importance is to be attached to that duty.  However, it does seem to me that in circumstances where a particular delay has caused no prejudice whatsoever to the ratepayer concerned, if that be the case, then it would be wrong to hold that that was a matter which was incapable of being taken into account.  
48.	I do not think I should attempt to go into the matter in any further detail because, as the judgment of Lord Woolf in the Jeyeanthan case emphasises, the conclusion which is to be reached by a particular court will be fact specific.  It may just, however, be helpful to say this.  The longer the delay that is involved in the serving of a demand notice then the greater the risk that a ratepayer will be able to show prejudice.  It seems to me that Parliament has legislated in such a way that that is a matter the court should be able to take into account and it is then a matter for the judgment of the court at first instance.   
Ground Two 
49.	I turn to ground two.  The District Judge said as follows in his reasoned decision (and I will number the paragraphs): 
"1.  On behalf of the authority Mr Swirsky submitted that having regard to the resources actually available to the Business Rates Department the authority had done all that it could to identify the occupier of the property.  He further submitted that in a time of financial restraint it was entirely a matter for the democratically elected Council as to how resources should be allocated between various departments. 
2.  I do not accept that this is the correct approach to deciding the central issue in this case.  The local authority must, in my judgment, fulfil its statutory obligations and there must be some objective standard to which the court may have regard in deciding whether or not this has been achieved in any given case, bearing in mind Lord Scarman's dictum.  If insufficient resources are provided then the authority may be in breach of its statutory obligations. 
3.  In cross‑examination Mr Blunden accepted that during the relevant period inspections were not maintained at a satisfactory level [I interpose to say Mr Blunden was the gentleman giving evidence on behalf of the claimant].  He also said that guidelines published by the Institute of Revenue, Rating and Valuation suggested that inspections once every three months were desirable and he agreed that that was a reasonable guide to good practice.  Clearly in this case the inspection regime fell well below that standard. 
4.  It is axiomatic that the court must take great care in the use it makes of such a guide.  Significant departures from it are not fatal to the authority's case in my judgment and I remind myself that the rating regulations do not state that empty properties should be visited within a set time frame.  Nonetheless by any objective standard the performance of the billing authority in this area was very poor and they were not able to demonstrate an ability to compensate for a poor inspection regime by the effective use of other methods of information gathering many of which were referred to during the hearing. 
5.  In conclusion in my judgment it was practicable for the billing authority to have identified the defendant as the occupier of the premises in question and to have served a demand for business rates well before 4th August 2005." 
I should add that the effective use of other methods which the District Judge was there referring to included, as Mr Milner has shown the court, such matters as the service of statutory requisitions under section 16 of the Local Government (Miscellaneous Provisions) Act 1976 and also the relatively straightforward process of making a search of the registered title held by the Land Registry.
50.	The passage which I have just referred to mentioned a dictum by Lord Scarman in a case which both parties agreed should be treated as the guidance to be applied by the court in determining what is meant by "practicable".  That case was Dedman v British Building and Engineering Appliances Limited [1974] 1 WLR 171 and the passage reads as follows at page 179: 
"Upon the point of construction of 'the escape clause' I agree with Lord Denning MR.  The word 'practicable' is an ordinary English word of great flexibility: it takes its meaning from its context.  But, whenever used, it is a call for the exercise of common sense, a warning that sound judgment will be impossible without compromise.  Sometimes the context contemplates a situation rarely to be achieved, though much to be desired: the word then indicates one must be satisfied with less than perfection: see, for example, its use in section 5 of the Matrimonial Property Act 1970.  Sometimes, as is submitted in the present case, what the context requires may have been possible, but may not for some reason have been 'practicable'.  Whatever its context, the quality of the word is that there are circumstances in which we must be content with less than 100 per cent: and it calls for judgment to determine how much less." 
The context for that case was a claim for unfair dismissal under the then legislation.  There was a time limit for the presentation of a complaint to an Industrial Tribunal of four weeks unless the employee could show that it was not practicable for the complaint to be presented within that time.
51.	The argument under ground two was very short.  No complaint was made by Mr Swirsky (and he confirmed this to the court) about the findings of fact reached by the District Judge in paragraphs 3 and 4 in the passage I have cited.  The complaint simply related to the way in which the learned District Judge responded to the submission advanced on behalf of the Council in paragraph 2.  The submission was simply to this effect: that in a time of financial restraint it was entirely a matter for the democratically elected Council as to how resources should be allocated between various different departments.  
52.	That submission has been repeated in this court, but with no authority to support it.  I say straight away that it strikes me as being a very sweeping submission for a local authority to make and to expect the court to accept.  In my judgment, it does not sit with the dictum from Scarman LJ's judgment which I have just read and which, it was common ground, was to be applied by the court below.  Indeed, the submission runs the severe risk of reducing the role of the Magistrates' Court to that of a cipher in cases of this kind.  
53.	In any event, it seems to me that this argument is unsustainable because the District Judge was careful to deal with the matter on the facts presented to him without, as it is suggested by Mr Swirsky, in fact questioning the merits of the allocation of resources by the Council.  In paragraph 4 of his reasons he took the view that by any standards (in other words, however defined) the performance of the billing authority was very poor and they had not been able to demonstrate, even allowing for the poor inspection regime which the Council felt obliged to operate, that the occupation of the premises could not have been detected sooner by the effective use of other relatively straightforward methods.  For that reason, it seems to me that his decision is completely unimpeachable in this court.  Ground two fails.   
Relief 
54.	That leaves then the question of relief.  Mr Milner submitted that if I was against him in relation to ground one, then as a matter of the court's discretion the decision of the District Judge should not be quashed.  Mr Swirsky replied on behalf of the local authority and was good enough to take instructions from his clients.  He made it clear to the court that the main reason for bringing these proceedings was to seek to establish the nature of the requirement under regulation 5(1) and that that could be achieved by the obtaining of declaratory relief.  He therefore went on to say that if he were successful on ground one, he would not ask for the matter to be remitted to the Magistrates' Court for redetermination but would simply ask for an order quashing the decision of the District Judge.  
55.	In my view, the merits of the case are well met by simply indicating through this judgment what I believe to be the correct approach to the interpretation of regulation 5(1).  Going beyond that, I do not think that any purpose would be served by quashing the order of the District Judge if there is to be no remittal for redetermination.  No purpose indeed was suggested to me by Mr Swirsky.  For those reasons, I decline to quash the decision of the District Judge or to order remittal.
56.	I invite submissions from counsel as to whether in fact a declaration is necessary.  The problem is that if one tries in a sentence or two to encapsulate what the judge has attempted to explain by way of extended reasoning, a declaration can sometimes do less than full justice to what the judge had been trying to say.
57.	MR MILNER:  My Lord, for my part, the declaration is contained in the judgment.
58.	THE DEPUTY JUDGE:  What do you say, Mr Norman?  Do you need time to think about that?
59.	MR NORMAN:  Possibly, my Lord.  One issue that does arise, which is a consequential issue, is the issue of costs.  In the absence of the quashing of the District Judge's decision, the costs of the Magistrates' Court proceedings were paid by my client to the interested party and/or their agents, I understand.  One of my applications would be that the costs of these proceedings and those below be payable by the interested party to my client.  I have not thought through the absence of an order quashing ‑‑ 
60.	THE DEPUTY JUDGE:  I think whether you are entitled to the costs here and/or below does not depend upon whether a declaration is made to summarise the judgment.
61.	MR NORMAN:  My Lord, I think that must be right.  May I just have a moment.  My Lord, I do not think I would push the matter any further.  Your Lordship has set out a detailed judgment and I have nothing further to add.
62.	THE DEPUTY JUDGE:  Thank you.  Are there any other applications?
63.	MR NORMAN:  My Lord, yes.  You have found against the claimant on ground two and it appears to me, at least in very general principle, you found in favour of the claimant in ground one.  In those circumstances, my Lord, I would ask that the interested party pay the costs of these proceedings and indeed of those below.  As I understand the position, the proceedings in the Magistrates' Court have already been paid to the interested party or at least their agent.
64.	THE DEPUTY JUDGE:  Do I have any jurisdiction to deal with the order of the District Judge on costs, having decided that I was not going to quash the order?  It is no criticism of you, but this point was not raised.
65.	MR NORMAN:  My Lord, no.
66.	THE DEPUTY JUDGE:  I did allow a short adjournment for the question to be considered.  What sum of money are we talking about?
67.	MR NORMAN:  I think it is in the region of £11,500 pounds.  It would appear to me that it would flow from your Lordship's judgment today.  It seems quite clear that the Magistrates' Court proceedings should have been found in favour of my client.
68.	THE DEPUTY JUDGE:  I do not follow that.  This is what was troubling me yesterday.  The local authority before the District Judge chose to argue the case on the basis that Encon was correctly decided.  Although there was a submission from counsel yesterday that the view of Mr Pannick that regulation 5(1) is mandatory was not in fact necessary for his decision ‑‑ that submission was in fact advanced at one stage ‑‑ they chose to argue the case on the basis that the law was that regulation 5(1) is mandatory.  As I observed yesterday, the effect of that was that there was no point in the respondent calling any evidence to show substantial prejudice.
69.	MR NORMAN:  My Lord, it could be ‑‑ 
70.	THE DEPUTY JUDGE:  If the argument had been dealt with in the alternative, the District Judge could have made findings on substantial prejudice.
71.	MR NORMAN:  My Lord, I think that may well be right.  Whose fault that is is not entirely clear to me.  It appears to me that the concession made by counsel for the claimant in the Magistrates' Court was that the Magistrates' Court was bound by the provision.  I respectfully suggest that even though they were bound by it, in your Lordship's judgment the actual position is that the Council were entitled to do what they did.  Therefore it should not be the case that the Council be burdened with the costs for the proceedings in the Magistrates' Court and these proceedings.
72.	THE DEPUTY JUDGE:  I am going to deal with it in two stages.  First of all, the costs of these proceedings.  I would like to hear what Mr Milner has to say.
73.	MR MILNER:  My Lord, yes.  Certainly this matter raises an unusual set of circumstances.  At a minimum, my submission would be that there should be no order for costs on the judicial review in this court.  But it seems to me, in my submission, there is an exceptional case here for the interested party to claim its costs nonetheless from Waltham Forest.  The interested party is of course an interested party and not a defendant in these proceedings, and it cannot be said that the interested party has added any extra costs to the proceedings or cause a hearing that would not otherwise have occurred.  Of course the involvement of the interested party would have been completely unnecessary had the concession that was made yesterday been made at the outset of these proceedings, namely that the Borough was interested in the wider picture and therefore wished to challenge the judgment of the District Judge rather than seek to enforce against this particular interested party.  
74.	The interested party is here primarily to protect his personal interests in the subject matter of the notices and potential liability.  The position the Council have now adopted is what my learned friend yesterday called the "bigger picture" rather than the particular circumstances of this case, which was, in effect, picked almost at random because it was a case they chose among several pending in order to test the law.  In my submission, it would be disproportionate for the interested party to bear the costs of the London Borough of Waltham Forest pursuing that, in particular to change law that was previously well understood based on Encon.  Not only was it well understood, it was the subject of the guidance from the DETR in fairly clear terms and was so well understood in Waltham Forest that the position was accepted as being the law.  
75.	So it is unfortunate, in the sense of disproportionate and unfair, for the mere interested party to bear all of the Council's costs.  They indeed ought not to have to pay the Council's costs in a matter where they are seeking no longer to demand notices of the interested party but to seek this change in law which affects them more generally.  That is in relation to Waltham Forest's costs.  In relation to the interested party's own costs, different considerations apply, namely that had the concession been made at an earlier stage then those costs would not have been incurred at all and the law could have been tested just as well without their involvement.
76.	THE DEPUTY JUDGE:  I think I should invite the parties to make written submissions on costs, if either of you want to pursue these applications.  Do you want to?
77.	MR NORMAN:  My Lord, I would welcome that opportunity.  If nothing else, my Lord, because I did not appear yesterday. 
78.	THE DEPUTY JUDGE:  Does the same go for you, Mr Milner? 
79.	MR MILNER:  As I indicated at the outset, at a minimum we would press no order as to costs ‑‑ 
80.	THE DEPUTY JUDGE:  Yes, but my question is ‑‑ 
81.	MR MILNER:  If the Council were to accept that ‑‑ 
82.	THE DEPUTY JUDGE:  The Council is not accepting that.  Do you wish to advance your application by way of written representations?
83.	MR MILNER:  My Lord, if the Council will not accept that as a basis then I think that is the only route.
84.	THE DEPUTY JUDGE:  I am going to direct that the Council's written submissions be made by close of play Friday this week, which is the 7th, and any claim which is to be made to costs by the interested party should also be made by Friday 7th.  Each side is going to reply to the other by close of play Wednesday which is the 12th.  It is a short matter and that has to be done quickly.  Is there any need for any further reply?  I should hope two shots should be enough.  If it would help, Mr Milner, I will make that the 13th, but I want these submissions closed by the end of next week.
85.	MR MILNER:  That is fine.
86.	THE DEPUTY JUDGE:  The time limit is mandatory, as it were.