Macattram v London Borough of Camden

THE DEPUTY JUDGE: This is a statutory appeal on a question of law from a decision of the Valuation Tribunal ("the Tribunal") brought under Regulation 51 of the Valuation and Charge Tribunals Regulations 1989. The decision in issue was made on 30 March 2010 and related to a property at Flat 3, 32 Croftdown Road London NW5 1EN (“the Property”), of which the appellant is the leasehold owner.

The appellant appealed to the tribunal against assessment for council tax for the period 5 June 2007 to 9 November 2008 on the basis that another was liable for the tax during that period and not her, namely the London Borough of Camden (“Camden”). The appellant has appeared in person on this appeal and put this case very well, with the benefit of a helpful skeleton argument. The respondent put in written submissions but did not appear.

It was the appellant's case that during the period in question Camden was the tenant of the property and liable to pay council tax. The appellant leased the Property to Camden for 3 years from 23 June 2003. On expiry of the lease, Camden failed to give up possession. It had been using the Property to house homeless persons and the occupier had not moved out. Several months later, the precise date does not matter, the occupier moved out and henceforth the Property remained vacant. However, Camden refused to give up vacant possession after the occupier moved out and it continued to pay the rent payable under the lease.

On 31 October 2006, Camden produced a schedule of dilapidations and a meeting was arranged at the Property on 23 November 2006 for the appellant to inspect it with her surveyor. It appeared to the appellant that the Property was in a much worse state than Camden's schedule indicated, and in July 2007 she served her own schedule of dilapidations. There were fruitless negotiations and, as I understand it, the issue of damages for dilapidations has not yet been resolved.

In the meantime, Camden ceased paying rent in January 2007, and on 5 June 2011 they said that they wrote to the appellant by recorded delivery post, returning the keys and indicating that the tenancy was at an end. On that date they regarded their liability to pay council tax in respect of the Property to be at an end. The appellant accepted liability for council tax from 10 November 2008 but said between 5 June 2007 and 9 November 2008 Camden remained tenants of the Property and liable to pay council tax.

Liability to pay council tax is to be determined having regard to the provisions of section 6 of the Local Government Finance Act 1992 ("the 1992 Act"). So far as material, these provide as follows:

The Tribunal dealt with a number of matters in its decision but so far as section 6 of the 1992 Act is concerned, the Tribunal held:

The appellant's grounds of appeal raise eight points, which I summarise as follows:

I deal with those grounds in turn. In my judgment, the first ground deals with the critical issues on which this appeal turns. The appellant submits that the Tribunal fell into error when deciding that Camden did not have a material interest in the property during the relevant period for a number of reasons. Before addressing those submissions, I should set out the Tribunal's conclusions on that issue:

The appellant submitted first that the words "leasehold interest" should be construed widely as being referable to the whole course of dealing in a case of holding over so that the previous lease and subsequent periodic tenancy together were a single leasehold interest. Otherwise, following the logic of the Tribunal decision, it could mean in every case where, for example, a statutory periodic tenancy arose following the term of an assured shorthold tenancy, council tax liability would transfer to the landlord even though the property is occupied by the same tenants on the same terms. I pause to remark that this would not be the case in any event because a tenant in residence would fall within section 6(2)(c) of the 1992 Act by virtue of residence.

The lease in the present case is dated 23 June 2003. Clause 2 provides that it commences on 23 June 2003. By Clause 4:

There is no challenge to the Tribunal's finding that after expiry of the lease the parties entered into a monthly periodic tenancy, applying the principle set out in Ladies Hosiery and Underwear v Parker [1930] 1 Ch 304. The appellant's argument involves an assertion that the leasehold interest or contract between the parties started when the lease was first granted in 2003 and continued during the period of the periodic tenancy. The question is whether that is correct, or whether the lease and subsequent monthly tenancy amount to separate successive leasehold interests.

In Clarke v Grant [1950] 1 KB 104 the Court of Appeal had to consider whether the acceptance of rent after expiry of a notice to quit had the same effect as when a landlord accepted rent from a tenant after the latter had incurred liability to forfeiture of the lease through breach of covenant. Lord Goddard, Chief Justice, after stating the facts, said this:

In that case, the court indicated that a periodic tenancy arising upon expiry of a fixed term involves the creation of a new tenancy.

The appellant submitted that the periodic tenancy only arose because of the previous lease and that Camden would not have been in the Property at all if it was not for the lease, for those are the terms which the parties agreed, and, for the purposes of the 1992 Act, the monthly periodic tenancy should be treated as being annexed to the previous fixed term.

Section 6 of the 1992 Act draws a distinction between different types of legal interest. Subsection (2)(b) refers to a resident with a leasehold interest, and subsection (2)(c) to a resident who is a statutory secure or introductory tenant, and subsection (2)(d) to a resident who has a contractual licence. Only the definition of owner for the purposes of subsection (2)(f) is constrained by the definition of material interest in subsection (6) as being a leasehold interest granted for a term of 6 months or more. In my judgment, given the careful distinction between different types of interest ranking below that of a freeholder, any argument which seeks to elide two different types of tenancy should be treated with considerable caution.

The whole premise of the inference of a periodic tenancy which arises after expiry of a fixed term by virtue of the payment and acceptance of rent is that by their conduct the parties are taken to have agreed to enter into a tenancy. Although the relationship of landlord and tenant continues, the agreement between them is not one of continuation of a previous fixed term that has expired, rather it is the commencement of a new and different term of years, a monthly periodic tenancy. Although that tenancy is on the same terms and conditions as the previous lease, that again is based on an inference from the party's conduct. Those previous terms only apply insofar as they are not inconsistent with the terms of the new and different tenancy, namely the monthly periodic tenancy.

For all these reasons, I consider that the periodic tenancy which arose upon the payment and acceptance of rent after expiry of the 3-year fixed term was a new tenancy or leasehold interest rather than a continuation of the fixed term.

However, that is not the end of the matter. The appellant submitted that each successive period of the periodic tenancy is part and parcel of the term granted, and that, accordingly, by the summer of 2008, when the local authority first issued a demand for council tax, the tenancy had been in existence for 25 months. Thus the tenancy had been granted for a term of 6 months or more for the purpose of section 6(6) of the 1992 Act. Assuming the tenancy continued until summer 2008 begs the answer to the question as to whether or not there was a surrender by operation of law in June 2007. For the purposes of considering this argument, it does not matter, however, because even if the Tribunal was correct that the tenancy was surrendered by operation of law in June 2007, the monthly periodic tenancy had been in existence for just under 1 year and therefore in excess of the period of 6 months referred to in section 6(6) of the 1992 Act.

In support of that submission, the appellant relied a line of authority to that effect, although she did not cite any particular case. The principles are helpfully referred to by the House of Lords in Hammersmith and Fulham London Borough Council v Monk [1992] 1 AC 478, a decision about whether or not one of two joint tenants could serve a notice to quit to terminate a joint periodic tenancy of a dwelling. At pages 488-489 Lord Bridge referred to the case of Gandy v Jubber (1865) 9 B & S 15, and the following passage from the judgment of Erle CJ, which he said has always been regarded an authoritative:

Although that decision refers to a tenancy from year to year, it is hard to see why the same principle should not apply to a periodic tenancy of shorter duration. Such a tenancy may be granted expressly or arise by implication from the parties' conduct in the same way as an annual tenancy, the period of the tenancy being determined by reference to the period in respect of which rent is expressed to be due. Gandy v Jubber refers to an express tenancy rather than one arising by implication from the parties’ conduct but the nature of a periodic tenancy implied by conduct is the same as one granted expressly, in the sense that it continues until either party determines it by appropriate notice or it is surrendered.

However, in my judgment, this principle does not assist the appellant. Section 6(6) of the 1992 Act refers to "a leasehold interest which was granted for a term of 6 months or more". A periodic tenancy is not granted for a term of 6 months or more unless it is an annual tenancy or an express half-yearly periodic tenancy. The phrase “was granted” implies the intial grant of a term of 6 months or more and is not apt to describe a periodic tenancy which has continued for over 6 months.

Further, to apply the Gandy v Jubber principle would mean that at the moment the tenancy was granted the tenant would not have a material interest and would not be the person liable for council tax, the landlord would be. Then after the periodic tenancy had continued for a period of 6 months, it would be converted into a material interest and the tenant would become liable for council tax in place of the landlord. That would give rise to a very unsatisfactory position with uncertainty as to who is liable for council tax and then potentially a retrospective change in liability. This could give rise to significant practical problems regarding payment and collection of council tax. In my judgment, that would be contrary to the whole scheme of section 6, which carefully sets out a list of persons upon whom the liability to pay council tax on any particular day falls, the object being that it must be possible to determine at any given moment with certainty on whom that liability falls.

In my judgment, the appellant's argument fails and a leasehold interest which was granted for a term of 6 months or more does not include a periodic tenancy unless the period of the tenancy is 6 months or more. For those reasons, I consider that the Tribunal's decision that the appellant's monthly periodic tenancy was not a material interest for the purposes of section 6(6) of the 1992 Act was correct as a matter of law.

Notwithstanding that decision, the tribunal went on to consider whether or not, if they were wrong about that, nevertheless the periodic tenancy had been surrendered in June 2007. The Tribunal said this:

The appellant submitted that merely posting the keys to the landlord is insufficient to amount to surrender and that there must be not only an act on the tenant's part which is inconsistent with the continuance of the tenancy but also an unequivocal acceptance of that surrender by the landlord. She relied on the judgment of the Court of Appeal in Laine v Cadwallader [2000] EWCA Civ 5562, in which Kennedy LJ said this:

The implication that the landlord had treated the surrender as occurring upon expiry of a notional notice to quit was because the landlord was seeking to recover rent up to a period of 4 weeks from the date when the keys were put through her letterbox.

Here the Tribunal did not simply find that there had been a surrender by virtue of the keys having been sent to the appellant, they go on to consider whether the appellant could be shown to have accepted that surrender, and had regard to what appears to have been the only evidence on that point: a letter from the appellant's solicitor dated 19 December 2007. That letter stated:

At the Tribunal hearing, the appellant disputed that that letter indicated she accepted the tenancy came to an end in June 2007. She said the letter was sent without instructions, that she had amended a draft letter shown to her by the solicitors and that they had mistakenly sent the letter without incorporating her amendments, which involved deleting the words "until the Council eventually brought it to an end in June 2007". The Tribunal considered that argument and rejected it in paragraph 62(b) and 63. On the facts, they found that the only explanation for the reference to June 2007 in the letter was that it was based on instructions which came from the appellant and that therefore she took the view that that letter from Camden dated 5 June 2007, enclosing the keys, brought the tenancy to an end. Whether Camden's wish to bring the tenancy to an end was accepted by the appellant or not was a question of fact for the Tribunal. They had regard to the evidence before them and reached a judgment on it which they were entitled to reach.

In my judgment, there is no error of law in their approach to this issue and, accordingly, on this additional and alternative ground, they were entitled to find that the appellant was liable for council tax from 5 June 2007.

That should be sufficient to dispose of this appeal, however, I deal briefly with the other grounds relied upon. Turning to the argument that the hearing was unfair; first, the appellant complained that she put her case before the Tribunal on the ground that Camden was a resident of the property with a leasehold interest and therefore liable for council tax by virtue of section 6(2)(b) of the 1992 Act. At the hearing, the Chairman appears to have stated that she should be putting her case under section 6(2)(f), and she felt constrained as a result of pressure put on her by the chairman to accept that.

It is quite right that in her written submissions to the tribunal, the appellant expressly refers to section 6(2)(b) by reference to a case called Kinsley v London Borough of Barnet [2009] EWHC 464 (Admin), where the court considered the definition of resident in various subparagraphs of section 6(2). However, in my judgment, Camden could never have been resident itself, being a local authority, and so could never have been liable under section 6(2)(b), and the Tribunal was quite correct to address the issue which arose before them as to whether it was the appellant or Camden who were liable to pay council tax under subsection (2)(f) as an owner. Therefore, far from the appellant's case suffering any prejudice in this regard, the Tribunal were assisting her in putting her case forward.

The appellant also complained that it was unfair of the Tribunal to have introduced new material that was not part of either party's case. This is a reference to the fact that after the Tribunal hearing, by a letter dated 18 February 2010, the Tribunal wrote to both parties drawing their attention to some provisions of the Law of Property Act 1925 and two authorities, and invited comment on them. The fact that the Tribunal did that is referred to in the tribunal decision starting at paragraph 29, and the tribunal went on to summarise the responses which it received from both parties. The appellant submits that the Tribunal had no power to do that and, moreover, it was unfair of them to have done so. She placed reliance upon a number of provisions of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009. She complained that no reasons were given by the tribunal for their direction seeking further comment on those legal issues, contrary to regulation 8(3), that the Tribunal had no power to admit that material of its own motion under regulation 17, and that in doing so it wrongly interpreted regulation 6(2).

In my judgment, the Tribunal was perfectly entitled to invite the parties to provide comment on the legal materials to which it referred. Regulation 8(1) envisages that the Tribunal may give directions on its own initiative, and the requirement to give reasons in regulation 8(3) only applies where an application for a direction is made by one of the parties. Regulation 17(1)(a) specifically entitles a Tribunal to give directions as to issues on which it requires evidence or submissions, and, in my judgment, it was very proper of the tribunal to do so. The legal materials to which it referred were relevant to the issues which arose and are relied upon in the Tribunal's decision. It would have been an error of law for the Tribunal to decide the case on the wrong legal basis, and it was entirely right of the Tribunal to refer back to the parties and give them an opportunity to comment. This is not a case where the Tribunal was, as it were, stepping into the Billing Authority's shoes and acting as judge and jury in its own cause.

The appellant also complains that the Tribunal prevented her from making submissions on what I have referred to as the jurisdiction issue. What appears to have happened is that the appellant produced a short bundle headed "Submission to the Tribunal", in which she raised some jurisdictional issues separately from another more substantial bundle headed "Statement of Case and Supporting Documentation", which set out her argument on the merits of the case. It would appear that the Chairman of the Tribunal refused to permit the appellant to elaborate on the written submissions as to jurisdiction orally. However, they are referred to at some length in the tribunal decision at paragraph 36 to 42. The appellant does not challenge the Valuation Tribunal's conclusions on that issue, which are set out in paragraphs 40 and 41.

In my judgment, the Tribunal’s approach involves no error of law. The conclusions which it reached on the jurisdiction issue are, as a matter of law, the only conclusions to which the Tribunal could have come. Accordingly, there was no unfairness to the appellant by her not being able to present her case on those topics orally.

The appellant submitted that the Tribunal had misunderstood her jurisdiction arguments, and that this was apparent from paragraph 13 of the decision. She said that her concern was that the Tribunal decision about her liability to pay council tax might prejudice any subsequent legal action she might take to recover the damages which she says Camden owe her in respect of dilapidations, whereas paragraph 13 of their decision was dealing with a completely different matter, namely whether or not the tribunal's jurisdiction was narrow or wide.

Even if the Tribunal did misunderstand the appellant's submission, as recorded in paragraph 13, the appellant was unable to refer me, in answer to my questions, to any respect in which their decision had been affected by that error. Indeed, paragraphs 40(36.5) and 41 deal expressly with the position of the appellant so far as any claim for dilapidations she might have is concerned, so that the Tribunal plainly did understand her submissions in that regard and dealt with them in the only way that was open to them, namely that the Tribunal's jurisdiction was confined to determining the appellant's liability to pay council tax, it could not consider any claim she might have for dilapidations which equally would not be prejudiced in any way by the Tribunal's decision.

Another aspect of unfairness relied upon was the fact that in paragraphs 46 to 50, the Tribunal consider whether any exemption might be available. The appellant submitted that was unfair because, as paragraph 46 of the decision records, "no exemption was expressly sought on this appeal".

In my judgment, the Tribunal appear to have addressed the issue of whether any exemption might apply out of an abundance of caution and in fairness to the appellant, who was acting in person. The fact that they found that no exemption applied, the appellant having sought none, does not affect their conclusions on the issue as to who was liable to pay council tax under section 6(2)(f) of the 1992 Act, and there has been no unfairness in this regard.

Finally, I turn to the argument that the tribunal's reasons were flawed. The appellant submitted that the decision did not adequately reflect the evidence and that the summary of Camden's case simply did not reflect in any way the case which had been put on behalf of that authority at the Tribunal. The appellant characterised Camden's written submissions as incoherent. She said the Tribunal appeared confused and asked the representative a lot of questions, none of which is reflected in the decision. That may well all be correct. However, it is not necessary for the Tribunal to set out the parties' submissions and any Tribunal questions verbatim. An element of summary is essential to a decision of this sort.

The appellant complains that Camden did not once refer to section 6 of the 1992 Act, and that it was unfair of the tribunal to have, in effect, treated that as part of Camden's case. However, as I have already identified, section 6 was the applicable provision and the key on which the appeal turned. There was nothing wrong with the tribunal seeking to be clear on Camden's position so far as the application of section 6 was concerned. Indeed, it may not have been referred to expressly by the London Borough of Camden because they felt that their submissions were obviously directed towards that provision.

Dealing with the appellant's other complaints, the fact that housing benefit is referred to in paragraph 3 was, as she herself acknowledged, a red herring and a statement which does not affect the Tribunal's decision. Paragraph 5 simply sets out the Camden's case, which the appellant disputed. Paragraphs 8 to 11 summarise Camden's case on the issue of exemptions. For the reasons I have already given, nothing turns on whether or not any exemptions might have applied. Paragraph 18 refers to a schedule of dilapidations, which was not relevant to the decision. Paragraph 19 does not contain any error, so far as I understand it. The appellant agrees that at the meeting on 23 November 2006 she was provided with a set of keys. It was no part of anybody's case at the Tribunal that the tenancy ended at that moment because of the handing over of a set of keys. Camden made it clear at that meeting that they were not handing over the property and that the tenancy was not at an end, and, indeed, they continued to pay rent.

Finally, as to paragraph 28, the appellant complained that she had not been allowed to question Camden's representative as to why they were not calling further evidence. It was a matter for Camden to call such evidence as they wished and for the Tribunal to take a decision on it.

The other aspect of the appellant's complaint that the tribunal's reasons were flawed relates to paragraph 61. She submitted first of all that that came out of the blue and that there was no explanation as to the reasons for the conclusion. In my judgment, that paragraph sets out the tribunal's conclusion flowing from paragraphs 51 to 60 which precede it. Moreover, I reject her submission that if that is correct, those paragraphs are so flawed in their exposition that they do not hold any weight. In my judgment, the Tribunal sets out full and adequate reasons explaining why it made the findings that it did, and, for the reasons that I have already given, I consider that there is no error of law in its decision.

For all those reasons, this appeal is dismissed.