Soor & Anor v London Borough of Redbridge

For council-tax purposes, a written tenancy agreement is the starting point in deciding whether a dwelling falls within Class C, but it is not conclusive where evidence casts doubt on its genuineness. The tribunal may examine the reality of the occupation and resolve conflicting documentary evidence.

Where a Class C dwelling is owned jointly, liability ordinarily falls on the persons holding the freehold legal estate, unless the regulations identify a person with a relevant superior interest. Beneficial ownership, management involvement and administrative control are not the statutory tests. Joint freehold owners are jointly and severally liable.

The appellants appealed against a Valuation Tribunal decision holding them liable for council tax on premises in Ilford for the period 1 January 2005 to 31 December 2010. They argued that the premises were let as a whole under annual assured shorthold tenancy agreements, so that the tenants were liable under section 6 of the Local Government Finance Act 1992. They also disputed liability on ownership grounds.

The Tribunal found that the premises were in multiple occupation within Class C of regulation 2 of the Council Tax (Liability of Owners) Regulations 1992 and that the appellants were liable under section 8. The central issues were whether the Tribunal had erred in examining the genuineness of the tenancy agreements and whether the appellants were statutory owners.

1. Appeal dismissed. The Tribunal was entitled to consider whether the tenancy agreements were genuine. Although a genuine agreement letting the whole dwelling would ordinarily determine the parties’ rental liabilities, evidence of conflicting documents, inconsistent signatures, tenants not named in the agreements and statements that rooms had been rented separately justified examination of the reality of the occupation. The Tribunal was entitled to find that the agreements were not shown to be genuine and that Class C(b) was satisfied.
2. The approach in Watts v Preston City Council [2009] EWHC 2179 (Admin) was applicable. A written agreement which is not a sham will normally regulate liability, but exceptional circumstances may justify looking beyond it. UHU Property Trust v Lincoln City Council (3 March 2000) was an example of such exceptional circumstances. The approach was also consistent with Muhammad Naz v Redbridge London Borough Council (19 April 2013).
3. The Tribunal did not act unfairly by receiving and considering the respondent’s documents. They had been sent to the appellants and the Tribunal within the relevant procedural period, and the appellants had not sought an adjournment or additional time to answer them.
4. Under sections 8(3), 8(4) and 8(6) of the Local Government Finance Act 1992, read with regulation 2A of the Council Tax (Liability of Owners) Regulations 1992, liability for a Class C dwelling falls on the person with the relevant material interest, or, if there is no such person, the person with the freehold interest in the whole or part of the dwelling.
5. The appellants were the registered joint freehold proprietors. Mr Bhogal’s limited involvement in management did not remove liability. Mr Soor’s absence of beneficial interest did not do so either. The statutory reference to a freehold interest concerns the legal estate, and joint holders were jointly and severally liable.

The judgment states that the appellants appealed against the Valuation Tribunal’s decision dated 9 February 2012. The High Court granted an extension of time and dismissed the appeal on its merits.