UKI (Kingsway) Ltd v Westminster City Council [2018] UKSC 67

Westminster Council hand-delivered a completion notice for business rates to a receptionist at 1 Kingsway, who emailed a scanned copy to the owner UKI. The Supreme Court held this constituted valid service, as the council caused the notice to reach the intended recipient.

Facts

UKI redeveloped 1 Kingsway, London, into 130,000 sq ft of office space. In February 2012, Westminster City Council intended to serve a completion notice under section 46A of and Schedule 4A to the Local Government Finance Act 1988, specifying 1 June 2012 as the completion date. UKI’s agents declined to confirm the owner’s identity. On 5 March 2012, the council hand-delivered the notice, addressed to the ‘Owner’, to the building. It was received by a receptionist employed by Eco FM (the building’s manager, with no authority to accept service), who scanned and emailed it to UKI, which received it by 12 March 2012. UKI appealed against the notice and the subsequent rating list entry, contending service was invalid.

It was common ground that, but for the deeming effect of a valid completion notice, the premises could not have been entered in the rating list, and that UKI’s name and address could have been ascertained by reasonable inquiry, so the council could not rely on the ‘affixing’ method under paragraph 8(c) of Schedule 4A or section 233(7) of the Local Government Act 1972.

Issues

The Supreme Court had to determine whether the completion notice was validly served on UKI, where:

1. It was not delivered directly to UKI by the council, but passed through the hands of an unauthorised third party (the Eco receptionist); and
2. It was received by UKI in electronic (scanned email) rather than paper form.

Arguments

Council (Appellant)

The council submitted that ‘serve’ bears its ordinary meaning of delivery to the intended recipient. The notice was in fact received by UKI and acted upon. As in Townsends Carriers Ltd v Pfizer Ltd, the involvement of an intermediary did not invalidate service. The reasoning in Hastie & Jenkerson v McMahon and PNC Telecom plc v Thomas, accepting fax service, applied equally to email. Nothing in the Electronic Communications Act 2000 displaced general common law principles.

UKI (Respondent)

UKI argued that paragraph 1 of Schedule 4A required service ‘on the owner’ ‘by the authority’. Delivery to an unauthorised third party broke the chain of causation. The receptionist had no implied authority to act for the council, particularly given statutory restrictions on delegation of local authority functions. The need for certainty in a taxing statute, particularly regarding the date triggering liability and the appeal window, militated against accepting indirect service. On electronic communication, the existence of specific ministerial regulations under the 2000 Act for some non-domestic rating notices (but not completion notices) showed Parliament intended electronic service to require express authorisation and the ratepayer’s consent.

Judgment

Lord Carnwath (with whom Lady Hale, Lord Kerr, Lord Lloyd-Jones and Lord Kitchin agreed) allowed the appeal and restored the Upper Tribunal’s decision.

Indirect service

The opening words of paragraph 8 preserve other modes of service available at general law. Drawing on Sun Alliance and London Assurance Co Ltd v Hayman and Tadema Holdings Ltd v Ferguson, ‘serve’ ordinarily means causing the notice to be received. The real question was whether the council ’caused’ the notice to reach UKI – there must be a sufficient causal connection between the authority’s actions and the recipient’s receipt of the notice.

It was unnecessary to invoke concepts of agency or statutory delegation. The receptionist did no more than would reasonably be expected of a responsible employee on receiving a hand-delivered notice addressed to the ‘Owner’, namely passing it on. That was the natural consequence of the council’s actions. Causation does not depend on control: a notice mistakenly delivered to a neighbour who passes it on could equally constitute valid service. Sir Robert Megarry V-C’s dictum in Townsends Carriers supported this approach, although it does not extend to every situation where the recipient comes to know of the contents; actual receipt and a sufficient causal link with the council’s actions are required. Cases concerning service on unauthorised solicitors (such as Glen International Ltd v Triplerose Ltd) were distinguishable from the mechanical role played by the receptionist here.

While certainty as to the date of service is desirable, some uncertainty is inherent in the legislation. Authorities can avoid the risk by using a statutory method; if they choose a non-statutory route, they bear the risk.

Electronic communication

No good reason was suggested for distinguishing email transmission from fax transmission, which had been accepted as valid service in Hastie & Jenkerson and PNC Telecom. Parliament legislated against that background when enacting the Electronic Communications Act 2000. The Act’s purpose, as its long title states, was to ‘facilitate the use of electronic communications’, not to cut down the existing common law. UKI could point to nothing in the 2000 Act expressly or impliedly restricting the previous position. The detailed scheme under the 2000 Act provides a clear and certain basis for routine use of electronic methods, but does not preclude valid service occurring on general principles in particular cases.

Implications

The decision confirms that, where a statute permits methods of service in addition to those it specifies, valid service at common law requires (i) actual receipt by the intended recipient and (ii) a sufficient causal connection between the server’s actions and that receipt. The route may be ‘unorthodox’ or pass through unauthorised third parties without invalidating service, provided causation is preserved. Concepts of agency or formal delegation need not be imported.

The decision also confirms that fax authorities such as Hastie & Jenkerson and PNC Telecom extend in principle to service by email of scanned notices, and that the Electronic Communications Act 2000, despite providing for specific modifications, does not displace the underlying common law position.

The judgment is significant for billing authorities, ratepayers and practitioners dealing with statutory notices generally. However, Lord Carnwath emphasised that the council’s approach was ‘far from ideal’ and endorsed the President’s observation that authorities are well advised to use the protections in paragraph 8 of Schedule 4A unless confident that good service will otherwise be effected. The decision does not undermine the importance of the prescribed statutory methods, which protect the server from the risk of non-delivery; it merely confirms that informal routes may also achieve valid service where the notice in fact reaches the addressee through the server’s causative action. Mandatory statutory codes (such as that considered in Fagan v Knowsley Metropolitan Borough Council) remain a distinct category not affected by this reasoning.

Verdict: Appeal allowed. The Supreme Court restored the order of the Upper Tribunal, holding that the completion notice had been validly served on UKI, notwithstanding that it reached UKI via an unauthorised third party (the Eco receptionist) and in electronic form by email.

Source: UKI (Kingsway) Ltd v Westminster City Council [2018] UKSC 67