Appeal by Dundee City Council against a decision of Dundee Valuation Committee. The question in dispute was whether Mr Hanson, the landlord of a number of (apparently unoccupied) flats in Dundee was liable for council tax on those flats.

The council had determined that Mr Hanson was liable for council tax. However, the Valuation Committee allowed an appeal by Mr Hanson on the basis that, as a valid lease existed over each of the flats, the tenants and not Mr Hansen were liable for the council tax.

The committee found that the leases had been continued by tacit relocation and, although the flats were unoccupied, there was no rule of law requiring the landlord to serve a notice to quit or seek to recover the property where the tenant is not paying rent or appears to have abandoned the property. On the basis there were tenants with leases, the tenants were responsible for the council tax in terms of s75 of the Local Government Finance Act 1992.

The Second Division of the Inner House allowed the council’s appeal finding that the committee had erred in the procedure it had adopted meaning it had reached a decision which was “illogical, erroneous in law and based on inadequate findings in fact”.

Procedure

At the root of the procedural failings was the Committee’s failure to make findings in fact before making its decision. In particular it had failed to consider whether the properties were unoccupied because they had been abandoned by the tenants or whether the tenants were merely absent temporarily from the property.

Legal error

The committee’s understanding was that when the term of a lease expired, the lease was automatically renewed by tacit relocation and continued so to be renewed until either party served notice of termination or the landlord obtained a court order for eviction. Therefore, in the view of the committee, since none of these events had occurred, the tenancies continued by operation of law.

However the Inner House found that interpretation to be unsound:

 “In leases of heritable property, the broad general principle is straightforward. If at the expiry of the contractual endurance of the lease neither party indicates to the other that he does not consent to the renewal of the lease, the lease is held to be renewed on the basis that the mutual consent of the parties is to be presumed from their silence. At common law, any overt indication by either party that he does not consent to the prolongation of the lease is sufficient to exclude tacit relocation.”

 In considering whether the leases have been terminated by notice of termination or by a decree of removal, the Committee has overlooked the rule that the operation of tacit relocation is excluded where the tenant does not retain possession after the contractual ish”

It was noted that, where a flat let under a short assured tenancy appears to be vacant at the end of the lease, the question of whether the tenant has abandoned it will be particularly fact-sensitive.

A special problem in this case was that the landlord’s typical tenant would not be minded to give notice to the landlord and would simply vacate the flat and cease to pay rent. At first sight, that would be evidence of abandonment.  It may be supposed that those facts will come to the notice of the landlord. However, in view of the many diverse circumstances which can prevent the operation of tacit relocation, it was essential that the Committee should hear evidence in respect of each flat and make a decision based on the special facts applying.

Decision

The Inner House allowed the appeal, recalled the committee’s decision and returned the cases to the committee with a direction that it should hear evidence in respect of each flat and to make findings in fact and law in order to decide whether the tenancies remained in force.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.