Leeds City Council v Broadley
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe,Lord Justice Underhill,Sir Stanley Burnton |
| Judgment Date | 06 December 2016 |
| Neutral Citation | [2016] EWCA Civ 1213 |
| Docket Number | Case No: C1/2016/3265 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 December 2016 |
[2016] EWCA Civ 1213
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
QUEEN'S BENCH DIVISION,
ADMINISTRATIVE COURT
MR JUSTICE EDIS [2016] EWHC 1839 (Admin)
CO/933/2016
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice McCombe
Lord Justice Underhill
and
Sir Stanley Burnton
Case No: C1/2016/3265
Kerry Bretherton QC and Justin Crossley (instructed by instructed by Leeds City Council, Legal Department) for the Appellant
The Respondent in Person
Justin Bate (instructed by Anthony Gold Solicitors) for the Intervener, The Residential Landlords' Association, by written submissions
Hearing date: 15 November 2016
Approved Judgment
This is an appeal from the order of Edis J of 26 July 2016, dismissing the appeal of Leeds City Council ("the Council") from a decision of the Valuation Tribunal for England (Young V-P) of 27 January 2016, allowing in part two appeals and a third appeal as a whole, brought by Mr Stephen Broadley ("Mr Broadley") from decisions of the Council as to his liability to pay council tax in respect of certain dwellings let by him on assured shorthold tenancies. The detailed facts of the individual lettings and the liabilities claimed by the Council are to be found in the Tribunal's written decision and are summarised in the judgment below at paragraphs 7 and 8. The neutral citation for the judgment of Edis J is [2016] EWHC 1839 (Admin). It is not necessary to set out those details here since each case turns upon the same short point of law.
The issue in the Tribunal, before the judge, and before us is whether Mr Broadley or his tenant was "the owner" of the appeal dwelling within the meaning of section 6 of the Local Government Finance Act 1992 ("the 1992 Act") when that dwelling had no resident for the period in dispute.
Liability turns upon the true construction and effect of the common form of tenancy agreement made between Mr Broadley and his individual tenants and upon how the 1992 Act applies to the agreement as so construed. The form of agreement is of a type that has been in common currency for as long as today's practitioners in the law of landlord and tenant will be able to remember and, as the authorities cited by counsel for the intervener show, for even longer than that.
The relevant forms of agreement provided in each case, in their material parts as follows:
"Whereas the landlord agrees to let the premises known as…..for a term of [ 6 or 12] months and thereafter continuing on a monthly basis unless terminated by either party under the provisions of Clause 3
Paying therefore [sic] the rent of ….per calendar month….
1. The landlord lets and the tenant takes the property for the term at the rent payable as above.
2. This agreement is intended to create an assured shorthold tenancy under the provisions of the Housing Act 1988.
3. This agreement may be terminated by either party giving to the other one full calendar month's written notice provided that no such notice may be served during the first [ 6 or 12 as above] months of the term.
TENANT'S OBLIGATIONS
….
(b) To pay….Council Tax…charged in respect of the property during the tenancy……"
The statutory imposition of liability to pay council tax is provided for by section 6 of the 1992 Act which is in these terms:
"(1) The person who is liable to pay Council Tax in respect of any chargeable dwelling and any day is the person who falls within the first paragraph of subsection (2) below to apply, taking paragraph (a) of that subsection first, paragraph (b) next, and so on.
(2) A person falls within this subsection in relation to any chargeable dwelling and any day if, on that day—
(a) he is a resident of the dwelling and has a freehold interest in the whole or any part of it;
(b) he is such a resident and has a leasehold interest in the whole or any part of the dwelling which is not inferior to another such interest held by another such resident;
(c) he is both such a resident and a statutory or secure or introductory tenant of the whole or any part of the dwelling;
(d) he is such a resident and has a contractual licence to occupy the whole or any part of the dwelling;
(e) he is such a resident; or.
(f) he is the owner of the dwelling.
…
(5) In this Part, unless the context otherwise requires—
"owner", in relation to any dwelling, means the person as regards whom the following conditions are fulfilled—
(a) he has a material interest in the whole or any part of the dwelling; and.
(b) at least part of the dwelling or, as the case may be, of the part concerned is not subject to a material interest inferior to his interest;
"resident", in relation to any dwelling, means an individual who has attained the age of 18 years and has his sole or main residence in the dwelling.
(6) In this section—
"material interest" means a freehold interest or a leasehold interest which was granted for a term of six months or more."
The crucial question is whether the tenant in these cases at the relevant times had "a material interest", i.e. "a leasehold interest which was granted for a term of six months or more" (s.6(5) and (6)).
The Council contends that, in the circumstances which happened, the question of the identity of the owner "depends on whether it is legally possible to have what has been described as a 'continuation tenancy' namely a single property interest comprising of [sic] both a fixed and periodic term": replacement skeleton argument for the appeal, paragraph 3. The Council argues that that is not possible; the tribunal and judge have held to the contrary. The Council said in its written argument for the appeal (through Ms Bretherton QC and Mr Crossley) that the type of tenancy purportedly created by the agreement offends against the rule that requires tenancies to be of sufficiently certain duration and which, if contravened, means that the purported tenancy is beyond the power of a landlord to create. The emphasis of the argument shifted somewhat, in Ms Bretherton's helpful submissions during the hearing, away from the certainty issue, to the question of whether the type of hybrid tenancy appearing on the face of the agreement could exist as a single grant in the light of the provisions of the Law of Property Act 1925.
Refining the Council's argument further, it is said that this form of tenancy agreement can only be construed in one of three ways: 1) as fixed term, followed by a periodic tenancy under the Housing Act 1988; 2) as a monthly periodic tenancy with a fetter on termination for the period of 6 or 12 months; 3) if intended as a truly single tenancy comprising two terms, it cannot be a tenancy at all, as this is legally impossible; it must, therefore, be a contractual licence.
On this basis, says the Council, in case 1) the tenant would be liable to tax for the period of occupation pursuant to the periodic tenancy (s.6(2)(b) or (e)) and if he vacated before the end of the fixed term (s.6(2)(f)). In case 2) the tenant would be liable during the period of occupation as before, but not after, leaving the property as he had no material interest as the periodic tenancy is not a leasehold term of 6 months or more. In case 3) the tenant is liable during his occupation under s.6(2)(d), but not thereafter. At all other times the landlord would be liable for the tax.
The nature of tenancies granted in this form is considered in Woodfall on Landlord & Tenant in its current edition (at para. 5.076); and the law is there stated (as broadly in all previous editions in my experience) as follows:
"5.076
A demise for "one year from the date hereof, and so on from year to year, until determined by three months' notice," creates a tenancy for two years at the least, determinable at the end of the second or any subsequent year by notice expiring at the end of such year. A fortiori such a tenancy will be created where the words are "for the term of one year certain and so on from year to year." A demise "for years" will also create a lease for two years. Similarly a demise "for six months, and so on from six months to six months until determined by either party," will create a tenancy for one year at the least. A tenancy "for two years certain and thereafter from year to year" can only be determined at the end of the third or any subsequent year. But a tenancy for 12 months certain, and six months' notice to quit afterwards, has been held to be determinable at the end of the first year, and a term of two years from a stated date, and the quarterly, subject to three months' notice on either side expiring on any quarter day, was held to be a term for two years and then on a quarterly basis, subject to the three calendar months' notice.
A demise may be made from two years to two years, or from three years to three years, or like. So a lease may be made for seven years, and afterwards from year to year. However, an agreement to let from year to year, for so long as the tenant pays rent, and the landlord has power to let, is void as lease and confers no particular estate beyond a tenancy from year to year."
The authorities construing grants of this character in this fashion, referred to in the footnotes to this paragraph of the textbook date back to 1605.
In Doe d. Chadbourn v Green (1839) 9 A & E 658 a tenancy for a "term of one year, from the date hereof, and so on from year to year" was said by Lord Denman CJ (for himself, Littledale, Williams and Coleridge JJ) to "give…a term for a year and so on from year to year…for the language of the contract clearly contemplates a...
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