Case No: C1/2016/3265
Neutral Citation Number: [2016] EWCA Civ 1213
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
QUEEN’S BENCH DIVISION, 
ADMINISTRATIVE COURT
MR JUSTICE EDIS [2016] EWHC 1839 (Admin)
CO/933/2016
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 06/12/2016
Before:

LORD JUSTICE McCOMBE
LORD JUSTICE UNDERHILL 
and
SIR STANLEY BURNTON 

- - - - - - - - - - - - - - - - - - - - -

Between:

	LEEDS CITY COUNCIL	Appellant	
	- and -		
	STEPHEN BROADLEY	Respondent	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Kerry Bretherton QC and Justin Crossley (instructed by instructed by Leeds City Council, Legal Department) for the Appellant
The Respondent in Person
Justin Bate (instructed by Anthony Gold Solicitors) for the Intervener, The Residential Landlords’ Association, by written submissions

Hearing date: 15 November 2016

- - - - - - - - - - - - - - - - - - - - -

Judgment
Lord Justice McCombe: 
1.	This is an appeal from the order of Edis J of 26 July 2016, dismissing the appeal of Leeds City Council (“the Council”) from a decision of the Valuation Tribunal for England (Young V-P) of 27 January 2016, allowing in part two appeals and a third appeal as a whole, brought by Mr Stephen Broadley (“Mr Broadley”) from decisions of the Council as to his liability to pay council tax in respect of certain dwellings let by him on assured shorthold tenancies. The detailed facts of the individual lettings and the liabilities claimed by the Council are to be found in the Tribunal’s written decision and are summarised in the judgment below at paragraphs 7 and 8. The neutral citation for the judgment of Edis J is [2016] EWHC 1839 (Admin). It is not necessary to set out those details here since each case turns upon the same short point of law.
2.	The issue in the Tribunal, before the judge, and before us is whether Mr Broadley or his tenant was “the owner” of the appeal dwelling within the meaning of section 6 of the Local Government Finance Act 1992 (“the 1992 Act”) when that dwelling had no resident for the period in dispute. 
3.	Liability turns upon the true construction and effect of the common form of tenancy agreement made between Mr Broadley and his individual tenants and upon how the 1992 Act applies to the agreement as so construed. The form of agreement is of a type that has been in common currency for as long as today’s practitioners in the law of landlord and tenant will be able to remember and, as the authorities cited by counsel for the intervener show, for even longer than that.
4.	The relevant forms of agreement provided in each case, in their material parts as follows: 
“Whereas the landlord agrees to let the premises known as…..for a term of [6 or 12] months and thereafter continuing on a monthly basis unless terminated by either party under the provisions of Clause 3
Paying therefore [sic] the rent of ….per calendar month….
1. The landlord lets and the tenant takes the property for the term at the rent payable as above.
2. This agreement is intended to create an assured shorthold tenancy under the provisions of the Housing Act 1988.
3. This agreement may be terminated by either party giving to the other one full calendar month’s written notice provided that no such notice may be served during the first [6 or 12 as above] months of the term.
TENANT’S OBLIGATIONS
….
(b) To pay….Council Tax…charged in respect of the property during the tenancy……”
5.	The statutory imposition of liability to pay council tax is provided for by section 6 of the 1992 Act which is in these terms: 
“(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 or introductory 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.
 …
(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.”
The crucial question is whether the tenant in these cases at the relevant times had “a material interest”, i.e. “a leasehold interest which was granted for a term of six months or more” (s.6(5) and (6)).
6.	The Council contends that, in the circumstances which happened, the question of the identity of the owner “depends on whether it is legally possible to have what has been described as a ‘continuation tenancy’ namely a single property interest comprising of [sic] both a fixed and periodic term”: replacement skeleton argument for the appeal, paragraph 3. The Council argues that that is not possible; the tribunal and judge have held to the contrary. The Council said in its written argument for the appeal (through Ms Bretherton QC and Mr Crossley) that the type of tenancy purportedly created by the agreement offends against the rule that requires tenancies to be of sufficiently certain duration and which, if contravened, means that the purported tenancy is beyond the power of a landlord to create. The emphasis of the argument shifted somewhat, in Ms Bretherton’s helpful submissions during the hearing, away from the certainty issue, to the question of whether the type of hybrid tenancy appearing on the face of the agreement could exist as a single grant in the light of the provisions of the Law of Property Act 1925.
7.	Refining the Council’s argument further, it is said that this form of tenancy agreement can only be construed in one of three ways: 1) as  fixed term, followed by a periodic tenancy under the Housing Act 1988; 2) as a monthly periodic tenancy with a fetter on termination for the period of 6 or 12 months; 3) if intended as a truly single tenancy comprising two terms, it cannot be a tenancy at all, as this is legally impossible; it must, therefore, be a contractual licence. 
8.	On this basis, says the Council, in case 1) the tenant would be liable to tax for the period of occupation pursuant to the periodic tenancy (s.6(2)(b) or (e)) and if he vacated before the end of the fixed term (s.6(2)(f)). In case 2) the tenant would be liable during the period of occupation as before, but not after, leaving the property as he had no material interest as the periodic tenancy is not a leasehold term of 6 months or more. In case 3) the tenant is liable during his occupation under s.6(2)(d), but not thereafter. At all other times the landlord would be liable for the tax.
9.	The nature of tenancies granted in this form is considered in Woodfall on Landlord & Tenant in its current edition (at para. 5.076); and the law is there stated (as broadly in all previous editions in my experience) as follows: 
“5.076
A demise for “one year from the date hereof, and so on from year to year, until determined by three months’ notice,” creates a tenancy for two years at the least, determinable at the end of the second or any subsequent year by notice expiring at the end of such year. A fortiori such a tenancy will be created where the words are “for the term of one year certain and so on from year to year.” A demise “for years” will also create a lease for two years. Similarly a demise “for six months, and so on from six months to six months until determined by either party,” will create a tenancy for one year at the least. A tenancy “for two years certain and thereafter from year to year” can only be determined at the end of the third or any subsequent year. But a tenancy for 12 months certain, and six months’ notice to quit afterwards, has been held to be determinable at the end of the first year, and a term of two years from a stated date, and the quarterly, subject to three months’ notice on either side expiring on any quarter day, was held to be a term for two years and then on a quarterly basis, subject to the three calendar months’ notice.
A demise may be made from two years to two years, or from three years to three years, or like. So a lease may be made for seven years, and afterwards from year to year. However, an agreement to let from year to year, for so long as the tenant pays rent, and the landlord has power to let, is void as lease and confers no particular estate beyond a tenancy from year to year.”
The authorities construing grants of this character in this fashion, referred to in the footnotes to this paragraph of the textbook date back to 1605.
10.	In Doe d. Chadbourn v Green (1839) 9 A & E 658 a tenancy for a “term of one year, from the date hereof, and so on from year to year”  was said by Lord Denman CJ (for himself, Littledale, Williams and Coleridge JJ) to “give…a term for a year and so on from year to year…for the language of the contract clearly contemplates a term longer than one year”, i.e. a single term.
11.	In R v The Inhabitants of Chawton (1841) 1 QB 247, the question arose whether a letting was for at least one year. The grant was “for the term of six months from the 1st day of January next…and so on for six months to six months, until one of the said parties shall give to the other of them six calendar months’ notice in writing to determine the tenancy”. It was held to be a letting for at least one year.
12.	Brown v Trumper (1858) 2 Beav. 11 concerned a lease for seven years and afterwards from year to year if notice were not given to terminate at the end of seven years. It was held by Romilly MR that the lease was a “… a demise for seven years certain, and for so much longer as they should think fit, with liberty to either party to put an end to it”.
13.	It seems to me that all these authorities point to the result that grants in the form such as those made by the present agreements are single grants for a fixed term followed by a periodic tenancy thereafter. They were valid grants at common law and no doubt was ever cast upon that.
14.	By section 1(1) of the Law of Property Act 1925, it is provided as follows: 
“The only estates in land which are capable of subsisting or of being conveyed or created at law are- (a) An estate in fee simple absolute in possession; (b) A term of years absolute.”
Section 205(1)(xxvii) defines “term of years absolute” in this way:
“Term of years absolute’ means a term of years . . . either certain or liable to determination by notice, re-entry, operation of law, or by a provision for cesser on redemption, or in any other event (other than the dropping of a life, or the determination of a determinable life interest); . . . and in this definition the expression ‘term of years’ includes a term for less than a year, or for a year or years and a fraction of a year or from year to year; . . .”
15.	There is no doubt that a lease for a fixed term is valid, as is a periodic tenancy, e.g. from month to month or from year to year. However, Ms Bretherton for the Council argues that an amalgam of the two is invalid as being void for uncertainty and/or as not being within the contemplation of the 1925 Act.
16.	I do not think that such a lease is invalid. As I have sought to say, such leases were well known to the common law and no doubt as to their validity was ever raised. In the authorities that I have cited above it seems to me that the grant of the fixed term and the ensuing periodic term were seen as a single grant. In Prudential Assurance Co. ltd. v London Residuary Body & ors. [1992] 2 AC 386 at 390, Lord Templeman (with whom the rest of their Lordships agreed), having set out the basic requirement of certainty as to the length of term granted, said that the Law of Property Act 1925 took up “the same theme as the common law”. Lord Neuberger (then Master of the Rolls) in the Supreme Court case of Mexfield Housing Co-operative Ltd. v Berrisford [2011] UKSC 52 (at [36]) said that Lord Templeman was saying in the Prudential case that the Act seemed “to underwrite the established common law position”.
17.	I would have concerns therefore that, at this late stage, the 1925 Act should be thought to render invalid leases such as those construed and considered in the earlier cases, of which I have cited three examples. Quite to the contrary, it seems to me that a term such as that granted (for a fixed period of months and then from month to month) falls clearly within the genus of the statutory descriptions in s.205(1)(xxvii), either as expressly covered by the words of the paragraph itself or because the paragraph envisages the possibility of creating terms of years, including a term for less than a year and a term from year to year (i.e. a periodic tenancy). I see no good reason why the statute should be taken to have rendered impossible the creation of an amalgam of the two, as had been familiar to the common law for centuries. 
18.	Again, in the Mexfield case, Lord Neuberger said that in Breams Property & Investment Co. Ltd. v Stroulger [1948] 2 KB 1 the grant of a periodic tenancy with a fetter on the landlord’s right to determine for three years had been found by this court to have been valid and was the equivalent of a fixed term of three years followed by a periodic tenancy: see para. [55]; and see also Megarry & Wade’s Law of Real Property 8th Edn. (2012) p.775.
19.	Thus, it seems to me that, on their natural construction, the agreements in these cases were of the character described in the passage from Woodfall already quoted. The terms granted by the agreements here were in terms a single grant for 6 or 12 months certain (as the case may be) and then continuing from month to month. Clearly, they grant “a term of six months or more”, constituting a “material interest” within the meaning of s.6(6) of the 1992 Act. It is pursuant to that grant that the tenant holds throughout the tenancy, whether during the fixed term or thereafter, Accordingly, in my judgment, the Tribunal and the judge were correct in finding that the tenant’s liability continued while those tenancies subsisted as periodic tenancies and even if the tenant had gone out of occupation.
20.	Ms Bretherton’s argument based upon the Housing Act 1988 is that the grant of a hybrid tenancy of this character, which might otherwise be invalid, is saved by the co-existence of the fixed term grant under the agreement followed by a statutory tenancy under the Housing Act 1988, which was a new tenancy arising at the end of the fixed term. Such a new tenancy, of course, would not be a tenancy granted for 6 months or more within s.6(6) of the 1992 Act.
21.	The result is achieved, it is said, by ss.1 and 5 of the Housing Act. Section 5 provides as follows: 
“5.—(1) An assured tenancy cannot be brought to an end by the landlord except by obtaining an order of the court in accordance with the following provisions of this Chapter or Chapter II below or, in the case of a fixed term tenancy which contains power for the landlord to determine the tenancy in certain circumstances, by the exercise of that power and accordingly, the service by the landlord of a notice to quit shall be of no effect in relation to a periodic assured tenancy.
(2) If an assured tenancy which is a fixed term tenancy comes to an end otherwise than by virtue of—
(a) an order of the court, or 
(b) a surrender or other action on the part of the tenant,
then, subject to section 7 and Chapter II below, the tenant shall be entitled to remain in possession of the dwelling-house let under that tenancy and, subject to subsection (4) below, his right to possession shall depend upon a periodic tenancy arising by virtue of this section.
(3) The periodic tenancy referred to in subsection (2) above is one—
(a) taking effect in possession immediately on the coming to an end of the fixed term tenancy;
(b) 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;
(c) under which the premises which are let are the same dwelling-house as was let under the fixed term tenancy;
(d) under which the periods of the tenancy are the same as those for which rent was last payable under the fixed term tenancy; and
(e) under which, subject to the following provisions of this Part of this Act, the other terms are the same as those of the fixed term tenancy immediately before it came to an end, except that any term which makes provision for determination by the landlord or the tenant shall not have effect while the tenancy remains an assured tenancy.
(4) The periodic tenancy referred to in subsection (2) above shall not arise if, on the coming to an end of the fixed term tenancy, the tenant is entitled, by virtue of the grant of another tenancy, to possession of the same or substantially the same dwelling-house as was let to him under the fixed term tenancy. ”
Reliance is placed in particular on s.5(2). Ms Bretherton argues that s.5(2) operates to bring into existence a statutory tenancy under the 1988 Act during the subsistence of the periodic tenancy.
22.	In my judgment, that is not correct. The tenancy granted is not for a “fixed term” alone to which s.5(2) applies at the end of the fixed element of the term granted. The term granted by this type of agreement does not come to an end then; it continues until terminated in the usual way. There is no need for the application of s.5(2); the contract does the necessary work.
23.	This is the pattern of statutory tenant protection that has been known from the Rent Acts and which seems to me to continue under the modern regime of assured shorthold tenancies. Just as section 1 of the Rent Act 1977 provided that,
“Subject to this part of this Act, a tenancy under which a dwelling-house (which may be part of a house) is let as a separate dwelling is a protected tenancy for the purposes of this Act”,
so (as noted above) section 1 of the 1988 Act provides that,
“A tenancy under which a dwelling-house is let as a separate dwelling is for the purposes of this Act an assured tenancy if and so long as…”
(to paraphrase) the tenant is an individual and occupies it as his only or principal home. 
24.	In the case of the protected tenancy, statute intervened to protect the tenant’s rights of occupation once his contractual rights had come to an end. In the same way, as it seems to me, the 1988 Act provides a different type of protection in similar circumstances where the tenant can no longer rely upon his contract. While the contractual rights subsist, the statutory protection is not required and the tenancy is not, in either case a “statutory tenancy”. 
25.	It is only necessary to say a little more about some of the other cases to which we have been referred in argument. 
26.	First, there is Macattram v LB Camden [2012] EWHC 1033 (Admin), a decision of HH Judge Alice Robinson (sitting as a Judge of the High Court) in which it was held that where a lease was granted for 3 years and the tenant did not give up possession, but continued in place paying rent on a basis giving rise to a monthly tenancy. The periodic tenancy arising by the payment and acceptance of rent after the expiry of the fixed term was a new monthly tenancy and was not one “granted for a period of six months or more” within the meaning of s.6(6). With respect, this was clearly right. The first grant was for three years, but the tenancy under which the tenant held thereafter had been created not by agreement at the outset but by implication of law from month to month and, although it had subsisted for more than six months in fact, it had not been granted for 6 months or more.
27.	Next, there is Superstrike Ltd. v Rodriguez [2013] 1 WLR 3848. In that case, there was a fixed term tenancy of one year, less a day. The fixed term came to an end and the statutory tenancy under s.5 of the Housing Act 1988 kicked in. The statutory tenancy was a new tenancy arising under statute and was not a tenancy granted by the original agreement. That is not our case.
28.	It follows that I consider that the case of Trustees of the Berwick Settlement v Shropshire CC (2014) VTE 3245M131738/176C, another decision of the Valuation Tribunal (Young V-P, Mrs S Gurney and Mrs D Foster), was correctly decided. The tenancy there granted was for an initial term of 12 months. Clause 1.7 of the tenancy agreement then provided that: 
“Unless the Tenant gives notice in accordance with clause 1.81 below then at the end of the fixed term the tenancy hereby created shall continue as a contractual periodic tenancy form month to month until terminated in accordance with the provisions of this agreement. For the avoidance of doubt, the continuing tenancy shall not be a statutory periodic tenancy”.
As the Vice-President said in paragraph 22 of his judgment in that case,
“The tenants had been granted a leasehold interest for a term of six months or more and the contractual term of that lease had not ended, being extended from month to month as part of the term. The fact that they no longer held under the initial term is not, in the judgment of the Panel, a relevant consideration: the leasehold interest “was granted” (applying the words of section 6(6) of the 1992 Act) on 23 July 2010 for a term of six months or more and they continued to hold the appeal dwelling under the extended contractual term until it was agreed their notice expired. They continued to have that material interest in the whole of the dwelling. In Macattram there was no contractual provision for the original term to continue: a new tenancy had arisen by the demand and acceptance of rent.”
29.	Ms Bretherton also relies upon the decision in Addis v Burrows [1948] 1 KB 444. There the landlord let premises to the tenant, 
“from the 1st day of January 1944 to the 30th day of June 1945, for the term of one year and so on from year to year until the tenancy be determined at the end of the first or any subsequent year by one of the parties giving to the other six calendar months previous notice in writing”. 
The agreement was on a printed form with the words “from the 1st day of January 1944 to the 30th day of June 1945” inserted in typescript. On 28 June 1945 the landlord gave to the tenant notice to quit, 
“…at the expiration of the year of your tenancy which will expire next after the end of one half year from the service of this notice”.
It was claimed by the landlord that the tenancy had ended on 30 June 1946. 
30.	On those facts, this court held that the tenancy was for 18 months certain and thereafter on a yearly tenancy; the notice to quit was valid and the tenancy duly ended on 30 June 1946, as the landlord contended. The judgments were devoted first to the question of the apparent inconsistency between the grant from 1 January 1944 to 30 June 1945 (i.e. 18 months) and “for the term of one year…”. No question arose as to the validity of the lease so granted, however it might properly be construed. Ms Bretherton, however, concentrates upon two passages in particular. First, in the judgment of Evershed LJ one finds this (at p.449): 
“I feel, no doubt, as a matter of construction, that what they intended by this formula was that there should be a fixed term of eighteen months from January 1, 1944 to June 30, 1945, and that thereafter there should come into existence a yearly tenancy beginning to run on July 1, 1945, which would go on until that tenancy was determined at the end of any year of the term by six calendar months’ previous notice in writing”.
Secondly, at p.457, Lord Greene MR added,
“It seems to me that the one thing that they clearly wanted was a term certain of eighteen months, and it was only from the expiration of that term that the tenancy from year to year begins”.
The case does not seem to me to show that the grant was other than a single grant of which the periodic element began after the end of the fixed term.
31.	Ms Bretherton relies upon this decision for the proposition that authority is consistent that a periodic tenancy arising after a fixed term is a newly granted tenancy. I do not accept either the proposition or that Addis’s case is authority for it. It seems to me that the important things in that case were: 1) the resolution of the inconsistency of the express words used in creating the fixed term; and 2) whether the notice to quit was of sufficient certainty to be a good notice. On the second point, it was necessary to decide when the year of the tenancy began and ended: the answer was that the year began when the fixed term ended, i.e. on 1 July 1945 (see p.452); half a year after that ended on 29 December 1945 (p.453) and the year of the tenancy expiring after that was 30 June 1946, the date for which notice was given. 
32.	In a sense, the periodic tenancy began when the fixed term ended, but that was by operation of the grant itself and the true construction of it. It was not a new tenure created on the date of the expiry of the fixed term. 
33.	In essence, therefore, I agree with the solution to the present problem arrived at by the Tribunal and by the judge. However, I disagree with the judge’s comment (at paragraph 31) that the definition of the tenant’s term is a “modern contrivance”; it is not, as the textbooks and authorities demonstrate. Further, quite apart from any advantage with regard to council tax that the judge perceived, there is obvious benefit to both parties to the lease in giving a degree of initial certainty of the term’s duration, with a degree of flexibility thereafter. This is a commercial advantage to which Mr Broadley speaks from his own experience as a landlord on the sixth page of his skeleton argument (p.35K of the appeal bundle). It is, however, an obvious commercial reality, quite apart from any fiscal issues, to which I think we are entitled to have regard in construing the agreements.
34.	I would add that the conclusion to which I have come is essentially that for which Mr Bate contends in his written submissions for the intervener. I found those submissions most cogent.
35.	For these reasons, I consider that the appeal should be dismissed. 
Lord Justice Underhill:
36.	I agree.  Ms Bretherton's case depended on treating the agreements as having created two distinct tenancies - a fixed term tenancy of six months and a separate periodic tenancy arising thereafter: on that basis the second, periodic, tenancy, would not be an "interest granted for a term of six months or more" and would not be caught by section 6 (5) (b).  I do not believe that that is the natural reading of the agreements: on their face they create a single interest which is initially for a fixed term but periodic thereafter and thus plainly satisfies the statutory language.  Ms Bretherton submitted that such a tenancy was not recognised by the law, by reason of the terms of section 205 (1) (xxvii) of the 1925 Act.  But I cannot see any warrant for that submission in the language used; and, as McCombe LJ clearly demonstrates, it would be inconsistent with long-established authority and with the position as clearly stated in Woodfall.  The recent cases on which she relies are concerned with the situation where a fresh tenancy arises at the end of a fixed term either because the tenant held over and continued to pay rent (Macattram) or because of the operation of statute (Superstrike): that is quite different from the case here, where the agreement itself provides for the continuation of the original tenancy following the expiry of the initial fixed term.
Sir Stanley Burnton:
37.	I agree with both judgments.