Business rates liability, CVAs intersect and proprietary rights (City of London v Robinson Webster)
Restructuring & Insolvency analysis: In The Mayor and Commonalty and Citizens of the City of London v Robinson Webster (Holdings) Ltd, the High Court, sitting as a Divisional Court (Lord Justice Holgate and Mr Justice Mould), considered the effect of company voluntary arrangements (CVAs) on liability for non-domestic rates on unoccupied property. Allowing the City of London Corporation’s appeal, the court held that a tenant subject to a CVA remained the ‘owner’ of premises for the purposes of section 45 of the Local Government Finance Act 1988 (LGFA 1988), even where its lease had not been surrendered, notwithstanding CVA provisions requiring the tenant to ‘exit’ the premises and offering to relinquish possession. The court’s analysis clarified that the purposive interpretation of ‘owner’ adopted in Rossendale BC v Hurstwood Properties (A) Ltd applies where a right to possession is created solely to avoid liability for rates. Rossendale does not justify reallocating liability between landlord and tenant where the underlying lease is a genuine commercial transaction. The judgment provides important guidance on the limits of CVAs in affecting proprietary rights and confirms that Parliament has not exempted companies subject to CVAs from liability for non-domestic rates on unoccupied property. Written by Katherine (Kate) Traynor, barrister at Landmark Chambers.