Leeds City Council v Broadley [2016] EWCA Civ 1213, 6 December 2016
Leeds City Council v Broadley [2016] EWCA Civ 1213, 6 December 2016
The respondent, Mr Broadley, was a residential landlord. He let out a number of properties in the Leeds area under assured shorthold tenancies granted on standard terms which provided for a six or 12 month fixed term, following which the tenancy would continue on a monthly basis. The tenancy could be terminated by either party by giving one month’s calendar notice. The tenant was liable to pay council tax in respect of the property during the tenancy.
The dispute in the case related to five of the properties. In each instance, the tenant left after a period of time, following which Leeds City Council took the view that Mr Broadley would be liable to pay the council tax.
Mr Broadley disputed this, asserting that the tenancies continued until either notice was given in accordance with the tenancy agreement, or the property was relet. He appealed to the Valuation Tribunal, who allowed his appeal. The Tribunal held that Mr Broadley was not the ‘owner’ of the properties, for the purposes of s6 Local Government Finance Act 1992 (the 1992 Act), during the period where the properties had no residents and was therefore not liable.
That decision was upheld in the High Court on appeal by the council. The Court of Appeal dismissed a second appeal.
Whether or not Mr Broadley was the owner for the purposes of s6 of the 1992 Act turned on whether or not the tenancies he had granted were to be regarded as a ‘leasehold interest which was granted for a term of six months or more’. See ss6(5) and (6) of the 1992 Act.
The council contended that the various tenancies did not meet this description. There were, it was argued, three ways in which the tenancy agreements could be construed: (i) as a fixed term, followed by a periodic tenancy under Housing Act 1988; (ii) as a monthly periodic tenancy with a fetter on termination for 6-12 months; or (iii) as a single tenancy comprising a fixed and periodic term simultaneously. This third option, it was said, was legally impossible and so if that was the true intention of the properties, then the agreements actually gave rise to a contractual licence. But in respect of each of these possible constructions it was said that, at the very least, the landlord would be liable for the council tax if the tenant departed following the end of the initial 6-12 months.
Further, relying on s5 Housing Act 1988, it was argued that following the end of the fixed term, the periodic tenancy which followed was a new tenancy arising by virtue of s5(2) and (3) Housing Act 1988. This new tenancy could not be regarded as a leasehold interest granted for a term of six months or more.
The court held that the various agreements constituted the single grant of a fixed term followed by a periodic tenancy. Agreements in this form had been held to be valid in a series of cases since at least the 19th century and therefore fell within the definition of a ‘term of years absolute’ in s205(xxvii) Law of Property Act 1925, meaning that there were capable of subsisting as a legal estate by virtue of s1(1) of that Act, on the footing that the Law of Property Act 1925 had not intended to alter the established common law position.
Accordingly the tenancies were to be properly regarded as leasehold interests granted for a term of six months or more, whether during the fixed term or periodic term. Section 5 Housing Act 1988 did not affect this analysis since the periodic period of the tenancy arose from the original grant and not from s5. As such, by s6(1) of the 1992 Act, the tenant remained liable for council tax so long as the tenancy subsisted, even if they were no longer resident at the property.
