High Court rejects appeals over business rates and sham transactions findings

The High Court has dismissed appeals against a case brought by Cardiff City Council over shams designed to avoid business rates.

Mr Justice Eyre ruled against Queen Street Properties and 20 18 Churchill Way, both of which have Philip Ryan as sole director and shareholder.

Cardiff issued summonses against each company seeking liability orders for unpaid business rates, which were granted by DJ Khan last June.

Queen Street Properties was the lessee of a property from which traded Parc Lane Traditional Fish & Chips, of which Mr Ryan was also the sole director and shareholder.

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Cardiff said Queen Street Properties had been in rateable occupation throughout, and the references to Parc Lane Restaurant “were simply ruses to avoid liability and that the purported licence was a sham created to support this subterfuge”.

18 Churchill Way was at all relevant times the lessee of the Churchill Way Property but the firm said the rateable occupier was CW18 Trading, again a company of which Mr Ryan was the sole director and shareholder. The council argued this too was a sham.

Giving judgment in Queen Street Properties Ltd v Cardiff City And County Council [2022] EWHC 39 (Admin), Eyre J said: “In my reading of the judgment [it] does not show the district judge applying an impermissible presumption of law.

“Rather it shows him drawing a legitimate (indeed the only realistic) inference from those circumstances which remained after his rejection of the case which the second appellant had advanced as to the occupation of the property by CW18 Trading.”

He rejected the argument that “the district judge's finding of exclusive occupation by the second appellant is not based on a reasoned finding of fact”.

There was no error of law in the district judge's finding that 18 Churchill Way was in actual occupation of the Churchill Way Property and it had been one he was entitled to, as was a similar conclusion on Queen Street.

Turning to whether these were shams, Eyre J said that at Churchill Way ”the judge was clearly entitled to take account of his finding as to actual occupation” and was also entitled to have regard to Mr Ryan's actions in relation to other companies and to the creation of other documents for the purpose of escaping liability to non-domestic rates.

“In circumstances where Mr. Ryan was the sole shareholder in and director of both the parties to the purported licence the district judge was entitled to take account of what he saw as being a pattern of behaviour,” Eyre J said. He added similar conclusions on Queen Street also showed no error.

Mark Smulian

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