Council tax – Liability – Vacant premises – Respondent landlord letting out flats on assured shorthold tenancies – Tenants leaving flats and appellant council holding respondent liable for council tax – Valuation tribunal allowing respondent’s appeal – Appellants appealing – Whether respondent or tenants being owners of flats for purposes of council tax after premises vacated – Appeal dismissed
The respondent owned five flats in Leeds and granted an assured shorthold tenancy of each. The tenants left after a period of time, and the appellant council ceased to regard the tenant as liable for council tax when notified of his/her departure. Although the tenant was no longer resident, the respondent, as landlord, asserted that the tenancy continued with the result that there was, until the tenancy was terminated under the terms of each agreement, a material interest inferior to his and he was therefore not “the owner” during that period. In each case, the appellants took the view that the respondent was liable to pay the council tax in respect of the properties during the “period in dispute”, i.e. the time between the date when the departing tenant gave up possession and the date when the tenancy was terminated by notice or, if later, the date when the property was re-let. The respondent appealed.
The Vice President of the Valuation Tribunal for England decided that the respondent was right and that the tenancy agreement created a single term which was a fixed period of six months, followed by a further period of time which was identical to a periodical monthly tenancy.
The appellants appealed to the High Court under regulation 43 of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009. The common issue was whether the respondent or his tenants was or were the owner of the appeal dwelling, within the meaning of section 6 of the Local Government Finance Act 1992 when the appeal dwellings had no resident. The issue was important because it determined whether the landlord was liable to pay council tax or whether the tenant (or former tenant) was liable to pay council tax after vacating the premises. It depended upon the construction of a standard form tenancy agreement used by the respondent.
The respondent relied on the natural meaning of the words used and the actual intention of the parties. The appellants argued that a single tenancy could not be both a fixed term and a periodic tenancy as that would offend the principle of uncertainty.
Held: The appeal was dismissed.
On their face, the words used in the agreement purported to create a single tenancy whose term comprised a fixed period of six months followed by a period which operated precisely as if it were a new monthly tenancy, but which was described in the document as a continuation of the term originally granted. The words used had to be construed in a way which gave effect to the intention of the parties as deduced from the document itself against the relevant background, which did not include their actual intentions. The document actually stated its intention which was plainly to create one tenancy only. The agreement had to be interpreted in the same way as any other written contract. If the words on their plain meaning offended against the rule against uncertainty then it might be possible to save something of the agreement by interpreting it in another way; but that would mean that it was not a “material interest” for council tax purposes.
(2) Following the decision of the House of Lords in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386, an agreement for a term, whose maximum duration could be identified from the inception could give rise to a valid tenancy. An agreement which gave rise to a periodic arrangement determinable by either party could also give rise to a valid tenancy. An agreement could not give rise to a tenancy as a matter of law if it was for a term whose maximum duration was uncertain at the inception. A fetter on a right to serve notice to determine a periodic tenancy was ineffective if the fetter was to endure for an uncertain period, but a fetter for a specified period could be valid. In the case of Mexfield Housing Co-Operative Ltd v Berrisford [2011] UKSC 52; [2011] 3 EGLR 115, the Supreme Court declined to jettison the rule albeit without much enthusiasm but there was no encouragement for any extension to the scope of the rule. Accordingly, it was appropriate to apply the rule in the form which the Supreme Court stated, which was that a tenancy was invalid for uncertainty if it prevented a party from determining it except if an event occurred which might never happen. Accordingly, the tenancy as granted by the plain words of the agreement did not offend against the rule against uncertainty. The tenancy agreement created a term which was neither simply a fixed term nor a periodic tenancy, nor one followed by the other. It was a term which had the characteristics of a fixed term followed by a periodic tenancy, both of which were capable of being created under the Law of Property Act 1925 and were not void for uncertainty at common law.
(3) It was not legally impossible to have a single tenancy comprised of both a fixed and periodic term. The only reason for wishing to define a term in that way appeared to be to secure a benefit for the landlord in relation to his council tax liability. It was a modern contrivance. The uncertainty rule, which was developed long before anyone considered granting a tenancy in those terms, should not be extended to invalidate it.
Kerry Bretherton QC and Justin Crossley (instructed by Leeds City Council Legal Services) appeared for the appellants; The respondent appeared in person.
Eileen O’Grady, barrister
Click here to read transcript: Leeds City Council v Broadleyj
