Hyett v Wakefield Council

For council tax purposes, the appointment of Law of Property Act receivers does not, without more, place the mortgagee in possession of the property. Valid appointment documents must generally be accepted at face value unless there is sufficient evidence that the receivership is a sham or otherwise invalid. The use of a related company as the receivers’ agent, a profit-making structure, and the continuation of a receivership for many years do not alone establish mortgagee possession.

A tenancy is not surrendered merely because a tenant leaves and returns the keys. In the absence of clear evidence of an earlier surrender or formal notice, the court may determine the termination date on the balance of probabilities. A court hearing an appeal on a point of law may vary or remit the Valuation Tribunal’s decision, but cannot order the council to undertake wider investigations.

Mr Timothy Hyett appealed against findings of the Valuation Tribunal for England concerning council tax liability for a property at 9 Brighton Street, Wakefield. The Tribunal held that Mr Hyett, as freeholder, was liable because Paragon Mortgages Limited was not in possession and the property was subject to a valid receivership.

The appeal concerned whether the receivership was a sham, whether Paragon was instead in possession, whether the council or Tribunal should have investigated that issue further, and when the tenant’s liability ended. The court also considered the practical effect of the tenancy-ending date on the council tax sum.

1. Receivership and possession. The appointment of a company as receiver would have been void, but the subsequent appointment of Mr Hitches and Mr Shelton as individual Law of Property Act receivers was, on the documents, valid. Documents bearing the Redbrick logo, the appointment of a wholly owned subsidiary as agent, and the receivership’s continuation for more than nine years were insufficient to establish a sham or to show that Paragon had taken possession.
2. Companies are separate corporate entities unless a court is persuaded to pierce the corporate veil. The use of associated companies and a structure intended to generate profit is not, without more, unlawful or evidence that the mortgagee has assumed possession. The council and Tribunal had made sufficient enquiries and were entitled to accept the appointment documents at face value.
3. The council was not required to conduct litigation, potentially involving substantial cost and uncertain outcome, to investigate whether Paragon was in possession. The court’s appellate jurisdiction was limited to correcting errors of law and varying or remitting the Tribunal’s decision. It had no power to order the council to undertake the wider investigation sought by Mr Hyett.
4. Tenancy termination. A tenant’s departure and return of keys does not by itself establish surrender, which requires a meeting of minds. There was insufficient evidence that the tenancy ended on 6 January 2016 or that 29 January 2016, the date recorded in a letting agent’s system, was supported by notice. On the balance of probabilities, the tenant’s handing in of the keys implied 28 days’ notice, so the tenancy ended on 3 February 2016 and Mr Hyett’s liability began on 4 February 2016.
5. The receivers remained primarily Mr Hyett’s agents in relation to the property. His lack of access did not remove his right to require access for works, including fire-safety works. Council enforcement powers directed at protecting tenants did not make Paragon liable while the receivership remained in place.
6. The appeal was dismissed, subject to variation of the Tribunal’s order so that liability ran from 4 February 2016.

1. High Court (Administrative Court): the appeal from the Valuation Tribunal for England was dismissed, subject to varying the liability period so that it began on 4 February 2016.
2. Valuation Tribunal for England: held Mr Hyett liable for the council tax because the receivers, rather than Paragon, were in possession and no prior interest displaced his freeholder liability.