England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		05/05/2006

Mr Justice Stanley Burnton :

Introduction

1. This is an appeal by Mr Gethin Parry against the decision of the Derbyshire Valuation Tribunal ("the Tribunal") dated 4 October 2005, by which the Tribunal dismissed his appeal against the decision of the Respondent that Ivanhoe Cottage ("the Cottage"), Dragon Hill, Brassington in Derbyshire was his sole or main residence between 1 December 2003 and 20 June 2004, and that accordingly, although he did not live in it during that period, he was liable for 75 per cent of the council tax for the Cottage. If he were liable only as owner, his liability would have been entitled to a discount of 50 per cent.

The facts

2. In its decision, the Tribunal stated that the facts relating to Mr Parry's place of residence for the period concerned were not disputed. They are not set out in any one place in the decision, and are summarised in the following paragraph of my judgment.
3. Mr Parry was the owner of the Cottage, which he had purchased in 1999, and where he lived until September 2002. In September 2002 he went to live and work in Spain for Rolls Royce, with whom he had an employment contract with a duration of 2 years. He rented accommodation in Spain, he had the legal status of Spanish residency, and he paid Spanish taxes while working there. He let the Cottage under a written tenancy agreement for a period of 2 years commencing 1 September 2002. He moved furniture and other possessions out of the Cottage. At the end of November 2003, his tenant decided to leave the Cottage and Mr Parry accepted the premature termination of the tenancy. Mr Parry did not then return to live in the Cottage, but continued to work in Spain under his contract with Rolls Royce. At the end of that contract, he sought to secure alternative employment in Spain. He was unsuccessful, and therefore returned to live at the Cottage in June 2004. No one lived in the Cottage between the termination of the tenancy and June 2004.
4. Some of the factual contentions of both the Appellant and the Respondent referred to in the Tribunal's decision were not referred to in its summary of the facts on which it based its decision. According to the Billing Officer, Mr Parry had stated in 2002 that he intended to return to live at the Cottage, and in a letter dated 17 August 2002 he stated that he was moving out temporarily. Mr Parry had stated in a letter dated 21 September 2004 that the Cottage was his sole or main residence from 1 December 2003 to 21 June 2004 (although he did so in a letter disputing the Council's contention that it was his second home). Mr Parry stated that he had intended to extend his contract in Spain, or find an alternative occupation there, and had applied for a post in France. At the end of his 2-year contract, he intended to continue to work abroad. In a letter to the Clerk to the Tribunal dated 6 March 2005, Mr Parry asserted that following the termination of the tenancy referred to above he had instructed his solicitor to draw up another tenancy agreement for another tenant who wanted to move into the Cottage. I have to state, however, that given the excessive prolixity of Mr Parry's correspondence on the question of his council tax, it would not be surprising if this single mention of this point was overlooked by the Tribunal, and I would not criticise them if they did so.
5. However, the Tribunal made no express finding of fact as to Mr Parry's intentions as regards living in the Cottage on the termination of his tenant's tenancy at the end of November 2003.

The statutory framework

6. Liability to pay council tax in respect of any chargeable dwelling in England is determined by the Local Government Finance Act 1992 and regulations made under it. Section 6 is as follows:

(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 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.

(3) Where, in relation to any chargeable dwelling and any day, two or more persons fall within the first paragraph of subsection (2) above to apply, they shall each be jointly and severally liable to pay the council tax in respect of the dwelling and that day.

(4) …

(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;

…

7. As in the case of Williams v Horsham District Council [2004] EWCA Civ 39, [2004] 1 WLR 1137, to which I refer below, the issue before the tribunal was whether Mr Parry was liable to pay council tax in respect of the Cottage as a resident with a freehold interest in it under section 6(2)(a), or as the owner under section 6(2)(f).

The decision of the Tribunal

8. The Tribunal referred to the decisions of the High Court in City of Bradford Metropolitan Council v Anderton [1991] RA 45, Ward v Kingston-upon-Hull City Council [1993] RA 71, and Doncaster MBC v Stark [1998] RVR 80. It stated:

Of the case law cited by the Billing Officer, the tribunal is mindful that none of the cases is on all fours with the case being considered, but the general principles in the Anderton, Ward and Stark cases is the fact that all three of these taxpayers were away from their "homes" because of the requirements of their employment. In common with these cases, Mr Parry was away from Ivanhoe Cottage because of his employment, the main differences between his situation and the Anderton, Ward and Stark cases being that of regular return visits to that matrimonial home. In Mr Parry's case there were no matrimonial ties or even family ties in Derbyshire and he states in his evidence that he did not stay at Ivanhoe Cottage while employed in Spain. However, as in the Stark case, he did enjoy security of tenure, and this was at the property he owned in Brassington, although this was not available to him during the term of his tenancy.

In the case of Navabi v Chester-letter-Street Disciplinary Committee, it is interesting to note the view that a property does not have to be furnished for it to be identified as someone's sole or main residence.

When considering the above higher court cases, the tribunal is mindful of the directions given in the case of Williams v Horsham DC. In this case, the Judge stressed the need for the tribunal to consider all factors rather than attach too much weight to the issues of "security of tenure" and the "intention to return" and to view the situation in the way any reasonable onlooker would.

The tribunal accepts that Mr Parry's situation differs in many key areas to the situations of the taxpayers cited in the precedent case law referred to by the Billing Officer. However, Ivanhoe Cottage was his home before he took up his employment in Spain and is the address to which he returned once that employment had ceased. It is also the property where he enjoyed greater security of tenure as owner, than the property in Spain, which was rented. The tribunal accepts that Mr Parry moved all his main possessions out of Ivanhoe Cottage, but believes this would, in part, have been done to make way for his tenant.

The tribunal gave full and careful consideration both to the relevant facts and the case law pertinent to this appeal and, when doing this, is persuaded that Ivanhoe Cottage should be correctly described as Mr Parry's main residence for the period concerned.

The Tribunal therefore finds that, after the termination of the tenancy agreement on the 30 November 2003, Ivanhoe Cottage reverted to being Mr Parry's sole or main residence. He should therefore be liable for 75% of the charge, from that date onwards, even though he was not actually living at the property again until the 21st of June 2004.

The contentions of the parties

9. In many respects, Mr Parry has been his own worst enemy. As I stated above, his correspondence is prolix, to the extent that his good points are masked by the bad or irrelevant. In addition, his unfair perjorative and indeed insulting references to the Respondent Council and its officers do not engender sympathy. However, the essential submission he made was that during the period in question his sole or main residence was in Spain, and not England, and therefore not the Cottage.
10. For the Respondent, Mr Bhose submitted that the Tribunal had taken into account the relevant facts and correctly identified the question before it. While the tenancy of the Cottage was in existence, Mr Parry was unable to reside in it. Once the tenancy came to an end, there was no legal impediment to his residence, and it resumed.

Discussion

11. The leading case on the application of section 6 is the decision of the Court of Appeal in Williams v Horsham District Council [2004] EWCA Civ 39, [2004] 1 WLR 1137. I can conveniently take the facts from the headnote:

The council taxpayer owned a cottage in which he and his wife lived until January 1993. In that month he took up employment as a housemaster at a nearby college in a different local authority area. The college provided him with a house into which they moved with most of their belongings and furniture. They remained registered with the same doctor and dentist and their names were entered on the electoral registers for both addresses. The college declared the house to be his "main home" for council tax purposes and paid full council tax on it on his behalf. The council taxpayer did not stay overnight in the cottage, even in the holidays, but continued to pay council tax on it, without rebate. He retired in 1996 but continued to occupy the college house, with permission and at his own expense, until July 1997 when he and his wife returned to live in the cottage. The council taxpayer applied to the council for a 50% rebate on council tax for the period from January 1993 to July 1997, pursuant to section 11(2)(a) of the Local Government Finance Act 1992, on the ground that the cottage had been unoccupied during that period. The council refused, asserting that the cottage had remained his sole or main residence throughout for the purposes of section 6(5) of the 1992 Act. He appealed on the ground that his main residence at the relevant time had been the college house. In holding that the cottage was the council taxpayer's sole or main residence, on which full council tax was payable, the valuation tribunal, in the light of three earlier decisions, treated as the most important and persuasive criteria the security of tenure in the cottage as opposed to the college house and the intention eventually to return to the cottage. The judge allowed the council taxpayer's appeal on the ground, inter alia, that the tribunal had given too much weight to those factors, elevating them into principles of law.

12. The judgment of the Court was given by Lord Phillips of Worth Matravers MR. He referred to the cases of Anderton, Ward, Stark and Bennett v Bedfordshire Valuation Tribunal [2003] EWHC 990 (Admin), and continued:

23 There was and could be no suggestion that Pump Cottage (the cottage owned by the Williamses) constituted the Williamses' sole residence during the relevant period. The issue before the tribunal was whether during that period Pump Cottage or The Oaks (the cottage provided by Mr Williams' employer) was their main residence. The tribunal's starting point should have been to consider the meaning of this phrase. Frost v Feltham [1981] 1 WLR 452 might have assisted them in that task. Nourse J, at p 455, appears to have accepted that "main" in this context means "principal" or "most important". Perhaps more significantly, he made the observation that a residence is a place where someone lives. The precise meaning of the word "residence" can vary according to its context. The Shorter Oxford English Dictionary, 3rd ed (1944), includes the following material definitions of residence: "(a) 'the place where a person resides; his dwelling place; the abode of a person; (b) a dwelling, esp one of a superior kind'."

24 Mr Easton submitted that we should give "residence" the latter meaning in the present context. We do not agree.

25 Where an estate agent's brochure speaks of a "desirable residence" it gives the word the latter meaning. In the present case, residence is used as part of the definition of the word "resident". The primary meaning of "resident" given by the dictionary is: "One who resides permanently in a place." The relevant definition of "reside" is: "To dwell permanently or for a considerable time; to have one's settled ... abode; to live in or at a particular place."

26 All this reinforces the conclusion (which is one that we would have reached without reference to the dictionary) that in section 6(5) of the Act "sole or main residence" refers to premises in which the taxpayer actually resides. The qualification "sole or main" addresses the fact that a person may reside in more than one place. We think that it is probably impossible to produce a definition of "main residence" that will provide the appropriate test in all circumstances. Usually, however, a person's main residence will be the dwelling that a reasonable onlooker, with knowledge of the material facts, would regard as that person's home at the material time. That test may not always be an easy one to apply, but we have no doubt as to the conclusion to which it leads in the present case.

27 Mr Williams, upon whom we did not need to call, in a lengthy and lucid written argument, contended that the facts of his case are very different from the three considered by the tribunal. We agree. In each of those cases there was: a matrimonial home in which the wife resided; the taxpayer had to live elsewhere as a condition of his employment, but when on leave or holiday returned to the matrimonial home; and in each of those cases the reasonable onlooker would have concluded that the residence subject to community charge or council tax remained at all material times the taxpayer's home. Where a person ceases to reside in the house which has been his sole or main residence for a period of time, an issue may arise as to whether during that period the house in question ceases to be his sole or main residence. The answer will depend on the particular circumstances; it will be a matter of fact and degree.

28 In the present case the tribunal had regard to the fact that, during the material period, Mr and Mrs Williams never stayed at Pump Cottage, but failed to have regard to a number of circumstances that made that fact of particular significance. The first is the length of time that they lived elsewhere. Then there is the fact that Pump Cottage in West Sussex is very close to The Oaks in Mid-Sussex. That explains why Mr and Mrs Williams kept their doctor and dentist. According to Mr Williams, a visit to either only entailed driving for an extra 15 minutes or so. Another factor is that schoolmasters have much longer holidays than most people. Had Mr and Mrs Williams wished to live in Pump Cottage, there must have been lengthy periods when they would have been free to do so. Certainly the proximity of the two houses would have facilitated this. The next circumstance is that they opted to stay on in The Oaks at their own expense for nearly a year after Mr Williams's employment as housemaster ceased.

29 These circumstances would, in our view, lead any reasonable onlooker to conclude that Mr and Mr Williams moved their home from Pump Cottage to The Oaks, and that between January 1993 and July 1997, a period of 4 years, The Oaks was their home. Furthermore, we do not consider that any reasonable tribunal that applied a proper test to the material facts could have come to any conclusion other than that The Oaks, rather than Pump Cottage, was Mr and Mrs Williams's main residence during the relevant period. Indeed it could be argued that it was their sole residence.

13. In my judgment, the Tribunal in the present case failed to appreciate the essence of the judgment in Williams. Section 6(2) of the 1992 Act distinguishes between ownership of a dwelling (paragraph (f)) and residence. Ownership of a dwelling is not residence, and a person who is the owner of a dwelling is not without more resident in it. The Court of Appeal held that in order for a property to be a person's sole or main residence, he must reside in it. If it is his only home, it is his sole residence; it may follow from the Court of Appeal's judgment that a dwelling is a person's "main" residence if it is the property at which he mainly resides. See too the judgment of the Court of Appeal in Bennett v Copeland Borough Council [2004] EWCA Civ 672, in which Rix LJ said, at [33]:

"… actual residence is critical to an understanding of the relevant statutory provisions."

14. That there must be a resident of a dwelling if it is to be a person's residence is confirmed by the wording of section 11:

11. —(1)The amount of council tax payable in respect of any chargeable dwelling and any day shall be subject to a discount equal to the appropriate percentage of that amount if on that day—

(a) there is only one resident of the dwelling and he does not fall to be disregarded for the purposes of discount; or

(b) there are two or more residents of the dwelling and each of them except one falls to be disregarded for those purposes.

(2) Subject to section 12 below, the amount of council tax payable in respect of any chargeable dwelling and any day shall be subject to a discount equal to twice the appropriate percentage of that amount if on that day—

(a) there is no resident of the dwelling; or

(b) there are one or more residents of the dwelling and each of them falls to be disregarded for the purposes of discount.

(3) In this section and section 12 below "the appropriate percentage" means 25 per cent. or, if the Secretary of State by order so provides in relation to the financial year in which the day falls, such other percentage as is specified in the order.

Thus, if there is no resident of a dwelling, the person liable for council tax is entitled to a discount of twice the appropriate percentage.

15. In its reference to the judgment of the Court of Appeal in Williams, the Tribunal did not mention the basis of the decision, but only the admonition that it must "consider all factors rather than attach too much weight to the issues of 'security of tenure' and the 'intention to return' and to view the situation in the way any reasonable onlooker would". It seems to me that the Tribunal failed to consider whether it could sensibly be said that Mr Parry was resident in the Cottage during the period in question, when he lived in and was resident in Spain.
16. Security of tenure, and the nature of a person's interest in a property, may be relevant to (but not determinative of) the question whether the property in which he resides is his main residence, but not to the question whether he resides there. The expression "sole or main residence" is, I think, principally intended for determining the council tax liabilities of a person who lives in more than one place, for example, a person who lives in his or her city home during the week and goes to a country home at weekends. It is impossible to say of Mr Parry, who went to Spain to work for a minimum period of 2 years and had residence and paid tax there, and did not return to live in the Cottage during that period, that he resided solely in the Cottage while he lived in Spain. In my judgment, it is equally impossible to say that he resided there mainly or that in any meaningful sense he had his main residence there, in the sense in which "residence" was used by the Court of Appeal. His status for income tax purposes may not be determinative of his liability for council tax, but it does seem to me to be anomalous that he should during the period in question have been resident in Spain, paying Spanish taxes, and therefore non-resident in the UK for income tax purposes, but mainly resident in the Cottage for the purpose of liability for council tax.
17. Of course, a person who goes away for a holiday does not cease to reside in it. Similarly, a person who goes abroad temporarily, leaving his wife and family in his home (as in Anderton, Ward and Stark), may continue to reside in his home. A person who goes abroad for work, who returns to his home during periods of leave, may not cease to reside in it.
18. In this case, however, Mr Parry ceased to reside in the Cottage when he went to Spain for a protracted period and let it for a period of 2 years. He resided in Spain during that period. The fact that his tenant left did not without more mean that Mr Parry ceased to reside in Spain, and could not without more lead to the conclusion that he had resumed residence in England. The fact that he intended to return to live in the Cottage, assuming he did, could not of itself lead to the conclusion that immediately on the termination of the tenancy the Cottage again became his sole or main residence: it is necessary to know when a person intends to return in order to determine from what date a property may again be his sole or main residence. Mr Parry did not intend to return to the Cottage on the termination of the tenancy. He did not in fact do so; and the Tribunal's finding that after the completion of his initial contract, Mr Parry sought to secure alternative employment to extend his stay in Spain is inconsistent with his having such an intention.
19. Mr Bhose's submission, that the termination of the tenancy of the Cottage removed a legal impediment to Mr Parry residing in it, is well-founded as far as it goes. But residence is a question of fact, not simply of law. The fact that a legal impediment to residence by the freehold owner is removed does not of itself result in his residing in the dwelling.

Conclusion

20. In my judgment, on the facts found by the Tribunal, the Cottage was not Mr Parry's sole or main residence within the meaning of section 6 during the period in question. His appeal will be allowed, and the Respondent Council will be directed to assess Mr Parry's liability for council tax in respect of the Cottage during the period in question on the basis that he was the owner within the meaning of paragraph (f) and not a resident.
21. Since Mr Parry is again abroad, any application for costs and any other consequential orders will be determined by me on written submissions to be filed and served on the other side within 14 days or such further time as may be requested and I may allow.