Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL                                                       Case No.  CH/4148/2012

ADMINISTRATIVE APPEALS CHAMBER

1.         I refer to my decision in this case dated 2 October 2013, which in respect of council tax benefit was only an interim decision in that I set aside the First-tier Tribunal’s decision of 8 May 2012 as wrong in law, but postponed deciding how to re-make the First-tier Tribunal’s decision pending further written submissions from the parties. The Council has made a further written submission. The Claimant has also made a further submission, but it is largely directed to the housing benefit issues, which I have already decided. For the reasons explained below I re-make the First-tier Tribunal’s decision in respect of council tax benefit as follows:

            The Claimant’s appeal against the Council’s decision of 18 August 2010 in respect of council tax benefit is allowed. The Claimant was not liable for council tax in respect of the alleged excess benefit period (4 August 2008 to 1 February 2010) and was not therefore in receipt of excess benefit in respect of that period.

2.         The Council submits that, contrary to the provisional view which I expressed in para. 22 of my decision of 2 October 2013, the Claimant remained liable for council tax after she ceased actually to live in no. 14, because, under the hierarchy for liability for council tax set out in s.6(2) of the Local Government Finance Act 1992, she was the “owner of the dwelling” within s.6(2)(f). Under para. 6(5)  a person is the “owner” if (a) “he has a material interest in the whole or any part of the dwelling; and (b) at least part of the dwelling …… is not subject to a material interest inferior to his interest.” By s.6(6) “material interest” is defined as “a freehold interest or a leasehold interest which was granted for a term of six months or more.”

3.         The Claimant had been a tenant of the property since 1997, and it appears from p. 28 of the papers that by at any rate February 2008 her tenancy had become an assured periodic tenancy. That is what one would have expected: the tenancy originally granted in 1997 is likely to have been either a periodic one or a tenancy for a fairly short fixed term. I will assume in favour of the Council that (as I think is more likely) the initial term was a fixed term of at least six months. On the termination of that fixed term the landlord was deemed to grant a periodic tenancy to the Claimant: see section 5 of the Housing Act 1988. That periodic tenancy will have remained an assured tenancy until the Claimant ceased to occupy no. 14 as her only or principal home (see s.1(1) of the 1988 Act).

4.         The Council contends, in reliance on the decision of a Valuation Tribunal in the case of Oyston v Leeds City Council (27 July 2011), that the interest which the Claimant had under her periodic tenancy was a “material interest”, as it had originally been granted for a term of six months or more. In that case there appears to have been an initial grant of an assured tenancy for a term of six months, followed by a periodic assured tenancy arising under the 1988 Act, followed when the tenant ceased to reside in the property by a periodic tenancy which was not an assured tenancy. The Tribunal held, contrary to the council’s contention in that case, that the periodic tenancies were “a continuation of the original agreement and not three separate and different agreements and it therefore followed that the tenant had a material interest …”

5.         However, I prefer what appears to have been the reasoning of a Deputy High Court Judge, sitting in the Administrative Court in MacAttram v. London Borough of Camden [2012] EWHC 1033, where the facts were somewhat similar, the initial fixed term having been for 3 years. I have not been able to locate a transcript of the judgment in that case, but it is summarised in various publications available online. The Judge held that the periodic tenancy which arose after the fixed term was a new tenancy or leasehold interest rather than a continuation of the fixed term. That seems to me to be correct. By s.5(3) of the 1988 Act the periodic tenancy is “deemed to have been granted by the person who was the landlord under the fixed term tenancy immediately before it came to an end to the person who was then the tenant under that tenancy.” The statutory periodic tenancy is not in my judgment some sort of continuation of the fixed term, and therefore it cannot be said that the periodic tenancy was one which was “granted for a term of six months or more.”

6.         In MacAttram the Court also rejected a contention that, even ignoring the initial fixed term, that requirement was fulfilled once the periodic tenancy had been in existence for six months. That contention was based on the principle, laid down in 1865 in Gandy v Jubber 122 ER 914, and formerly described in Megarry & Wade, the Law of Real Property (5^th ed) (1984) at 648-9 (in relation to a yearly tenancy) as being that

            “the law treats each successive yearly term, when it takes effect, as part and parcel of the original term, which therefore grows as the years pass; after 50 years, for example, the tenant’s interest is regarded in retrospect as a 50-year term, but as to the future as a yearly tenancy.”

Even if that ancient principle is still correct (see, now, Megarry & Wade, 7^th ed (2008), at para. 17-064), I agree with what appears to have been the reasoning in MacAttram, namely that the definition of “material interest” requires one to ask whether the leasehold interest which the tenant has at the relevant time (i.e. the time when liability for council tax is being considered) was an interest which was granted for a term of six months or more. That in my judgment requires one to look at the time when that leasehold interest was granted. A yearly periodic tenancy would appear to suffice, in that the initial grant will have been for a term of least a year. However, the periodic tenancy in the present case will have been either a monthly or weekly one (see s.5(3)(d) of the 1988 Act), and therefore it in my judgment was not a tenancy granted for a term of at least 6 months.

8.         In my judgment, therefore, the Claimant was not during the alleged overpayment period (4 August 2008 to 1 February 2010) liable for council tax. As I understand it the Council accepts that if that was the case the Claimant did not need council tax benefit and therefore cannot have received excess council tax benefit. I explained in para. 23 of my decision of 2 October 2013 why that might not at the end of the day help her. 

Charles Turnbull

Judge of the Upper Tribunal

4 December 2013