We’ve seen the issue of who is liable for Council Tax when a tenant has left a property before the end of a periodic tenancy arise before. Here, the Upper Tribunal decided that a statutory periodic monthly tenancy following a 6 month fixed term did not amount to a ‘material interest’ of over six months such that the tenant would remain liable for Council Tax, while here in the Shropshire decision (and amusingly featuring NL) the Valuation Tribunal decided that a contractual periodic tenancy following on from a fixed term of 6 months did amount to a material interest such that the tenant remained liable.
Now this latter question – a contractual periodic tenancy following a 6 month (or 12 month) fixed term has been decided by the High Court. And could have brought the basic structure of landlord and tenant law crashing to the ground…
Leeds City Council v Broadley [2016] EWHC 1839 (Admin)
Mr B was the landlord of a number of properties, all let on tenancies which were for 6, or 12 month fixed terms followed (as a contractual provision) by monthly periodic terms. Leeds City Council had sought Council Tax for the properties from Mr B for periods when the tenants had left but the tenancies had not been formally ended (by either party)
A Valuation Tribunal, the Vice President had followed the Shropshire decision above (which he had also made) and found the tenancies were a continuous material interest of over 6 months. Leeds appealed. The parties’ contentions were broadly:
i) Mr. Broadley submits that the contract created a single tenancy whose term was 6 months and thereafter continuing as a monthly tenancy. This would have the same effect as a fixed term assured shorthold tenancy, but would be the result of the contract rather than the effect of statute at the conclusion of the fixed term.
ii) Ms. Bretherton QC (for Leeds) submits that a single tenancy cannot be both a fixed term and a periodic tenancy as this would offend the principle of uncertainty. Therefore she contends either
a) the words used must be construed against the legal context in which they were chosen and that the contractual term is a fixed term of 6 months at the conclusion of which a new statutory tenancy was created by statute and the conduct of the parties in continuing to pay and accept rent; or
b) the lease created a periodic monthly tenancy with a fetter on the giving of notice to terminate before the expiry of 6 months; or
c) Finally, and only in reply and somewhat faintly, she suggests that the parties created a contractual licence.
Leeds basically argued that such a tenancy would fall foul of the requirement for term certain. The roll call of Prudential Assurance Co Ltd v. LRB [1992] 2 AC 386, Mexfield Housing Co-Operative Ltd. v. Berrisford [2011] UKSC 52 and Hammersmith & Fulham LBC v. Monk [1992] 1 AC 478 was made. In addition, Superstrike Ltd. v. Rodrigues [2013] EWCA Civ 669 was relied on for the proposition that periodic tenancy arising at the end of a fixed term was a new tenancy (a statutory periodic in that instance). The contention was that the tenancy agreements created two tenancies. First the fixed term, then a second periodic tenancy. Alternatively, it was a periodic tenancy from the start, with a fetter on giving notice for the first 6 (or 12) months, but the interest was therefore less than a six month term.
The High Court noted Baroness Hale’s exposition on periodic tenancies and certainty of term in Mexfield, and then went on to find:
30. The answer to Ms. Bretherton’s submission is that this tenancy as granted by the plain words of the agreement does not offend against the rule against uncertainty as I have just expressed it. This tenancy agreement created a term which is neither simply a fixed term nor a periodic tenancy, nor one followed by the other. It is a term which has the characteristics of a fixed term followed by a periodic tenancy. Fixed terms and periodic tenancies are both capable of being created under the Law of Property Act 1925 and are not void for uncertainty at common law. Why should a term become uncertain because it is comprised of two successive periods of time each of which is sufficiently certain for the purposes of the relevant rule? There is no prospect of the term being perpetual because its termination depends on an event which may never happen. Alternative constructions would be that (1) the agreement creates a monthly tenancy with a fetter on the giving of notice in the first 6 months, or (2) the agreement creates two tenancies a fixed term followed by a periodic tenancy. If those are not bad for uncertainty I do not see why the formulation used in the agreement should be. All three formulations have the same practical effect and legal consequences so far as the termination of the tenant’s holding is concerned. There is no basis for finding that one is repugnant and the other two not. They are all equally uncertain or, to put it another way, equally certain. For this reason I reject the appellant’s argument that it is 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 this way appears to be to secure a benefit for the landlord in relation to his Council Tax liability. It is a modern contrivance. Such a term has not therefore received the attention of the courts over the centuries. The uncertainty rule, which was developed long before anyone considered granting a tenancy in these terms, should not be extended to invalidate it.
So, there was no uncertainty of term. And the terms were of over 6 months, and as such a valid material interest. The Council Tax liability remained with the tenant.
And landlord and tenant lawyers in general heave a sigh of relief that some of the basic principles of tenure were not abandoned for a few hundred quid in Council Tax, despite Leeds best efforts. If this had gone the other way, imagine would it would have done to any concept of a fixed term with monthly rent. Or all the statute around deposit protection. Or indeed Housing Act 1988 itself.