Case notes

It's in the post... no, honest!

Have you ever said "it's in the post" to buy yourself a few days' grace? Well in this dispute - because of the strict timescales attached to adjudications - the performance of the Royal Mail did have an impact.

On September 18 2003, Ritchie Brothers Ltd posted a referral notice and covering letter to the adjudicator regarding the firm's case against David Philip. The adjudicator wasn't at home when the Royal Mail tried to deliver the notice on Friday. The following Monday 22 was a Bank Holiday so it was Tuesday 23 before the adjudicator picked it up from the delivery office.

The adjudicator is required to make his decision inside 28 days, unless the referring party agrees to an extension. (The other party does not have to agree for the extension to be valid.) On October 21 the adjudicator requested an extension to at least October 23. On October 23 the adjudicator confirmed he had made his decision. Ritchie agreed to pay his fees on 27 October and the adjudicator delivered his decision.

When Ritchie tried to collect payment, David Philip argued that the 28 days ran from September 18, thus the period had expired on October 16, so from then the Adjudicator was Functus Officio and could not get an extension. Ritchie countered that the 28 days could not start until the adjudicator had received the referral (ie on September 23) and he was in time in asking for the extension. And Ritchie (as referring party) had agreed to a longer period that hadn't expired when the decision was made.

The court held that although the date of the referral was the date it was posted, NOT when it was delivered, as the adjudicator had made his decision by October 23 as agreed, it was valid.

Moral: Watch the calendar

Case: Ritchie Brothers (PWC) Ltd versus David Philip (Commercials) Ltd. Outer House, Court of Sessions. April 2004

Late expectations

JDC Services had a poor record with tax. Between February 2002 and February 2003 it was late with PAYE and CIS payment 31 times. Of these, 25 were at least 14 days late. Its corporation tax due in March 2001 was 17 months late and the March 2002 payment over 7 months late. JDC was also consistently late in filing tax returns and had amassed £100,000 in tax arrears which had been paid off in instalments over 30 months.

The tax office refused to give JDC a CIS tax certificate. Since 1971, contractors have had to deduct tax from payments to subcontractors who do not hold a CIS Tax Certificate. The Inland Revenue will only issue the certificate if the firm has complied with all obligations imposed on it by the various Tax Acts and with all requests to supply a tax inspector with its accounts and other information.

There are exceptions if the failure is minor and technical and there is no reason to doubt that the subcontractor will comply in future.

JDC appealed to the General Commissioners who found that although JDC's breaches were not of a minor or technical nature, it had made considerable and sustained efforts to bring its tax affairs up to date. JDC was on the brink of success, it was winning large contracts and would be able to comply in future.

The Inland Revenue appealed. The court held that the Commissioners' decision was flawed in law, as JDC's tax failures were not minor. In addition, the Commissioner has not addressed the "reason to doubt" question properly. JDC lost and its CIS was revoked.

Moral: Pay your tax on time

Case: Tom Hudson (HH Inspector of Taxes) versus JDC Services Ltd. EWHC 602 (Ch), March 2004

A vote too close for comfort

Cygnet Healthcare wanted to buy Truro House, a run-down Grade-II Listed Building, and turn it into a psychiatric nursing home.

Enfield's Conservation Advisory Group (CAG), which advised the council, approved Cygnet's proposals as a good opportunity to restore Truro House. CAG consisted of members of the public and councillors, some of whom were also on the planning committee.

However, the council staff recommended rejecting the proposal. Cygnet revised its plans and met again with the CAG which pledged its 'continued support' of the application.

At the next Planning Committee meeting, the council staff recommended the scheme. After hearing various representations, the Planning Committee agreed to grant Cygnet Conditional Permission by an 8:7 majority. All three councillors with overlapping CAG and Planning membership voted in favour.

Costas Georgiou, representing local business interests complained of bias. The court agreed, saying that because CAG had supported the scheme, it was possible the three councillors were biased. The vote had been very close and the decision was void.

Moral: Dual roles can compromise

Case: Costas Georgiou versus London Borough of Enfield and Cygnet Healthcare Ltd, Rainbow Developments, Mr. J. C. and Mr. J. Patel. EWHC 799 (Admin) April 2004

EMAL's victory on aggregate

Food manufacturer Lockwood wanted to build a second warehouse on its site at Sawmills Belper, Derbyshire. The planning conditions required removal from site of all excavated materials. Excavation was needed because the steeply sloping site had to be cut away to accommodate the warehouse and to form a safe bank for the lorry park.

The 425,000 tonnes of spoil was a poor quality rock mixed with soil. It came from three areas: under the new building, for the lorry park formation and to reduce the slope.

The aggregates levy introduced by the Finance Acts of 2001/2 allows Customs and Excise to charge £1.60 per tonne on commercially exploited aggregates.

There are exemptions for aggregate removal from the ground on the site of a building.

When East Midlands Aggregates (EMAL) started work, Customs tried to collect the aggregate levy. This would have made the new warehouse uneconomic and work stopped. After EMAL's successful appeal to a VAT Tribunal, Customs appealed to court, arguing that although the spoil from under the building's footprint was exempt, it could collect the levy on the lorry park and slope excavations.

The court dismissed the appeal, holding that no-one would regard the building's footprint as being the whole of the site. The construction of the lorry park was also part of the site of the proposed building and the levy did not apply to that area or the slope reduction.

Moral: Not all rock is aggregate

Case: Customs & Excise Commissioners versus East Midland Aggregates. EWHC 856 (CH) – April 2004