Tenant John Floyd appealed on the ground that the First-tier Tribunal had erred in finding that the charges had arisen from his own use and occupation of the property. The Upper Tribunal originally refused permission to appeal in November 2021, however a request was made for review of that decision.

The appeal was heard by Upper Tribunal judge Sheriff Pino Di Emidio. No hearing was fixed, with the decision being made based on written submissions.

Receipt of payment

The parties entered into a short assured tenancy agreement in November 2017 that terminated in April 2019. It was provided for by the tenancy agreement that the tenant would be responsible for the payment of council tax in respect of the property. The agreement further stated that in the event of the landlord being required to make a council tax payment, the tenant was required to reimburse the landlord the same amount.

It was found by the First-tier Tribunal that, as the sum was not paid as a condition of the grant, renewal, or continuance of the tenancy, it did not fall within the definition of “premium” under section 90(1) of the 1984 Act. In the view of the Tribunal, the payments were a lawful charge arising from the tenant’s use and occupation of the property, as it was accepted by him that he was required to pay council tax, regardless of whether it was paid directly to the council or to the landlord.

In his written submissions, the appellant argued that the FtT had failed to deal with the provisions of section 82(2) of the 1984 Act, which covered the receipt of premiums, and instead only engaged with section 82(1), which prohibited the demand of payment. As the property was a house in multiple occupation, the appellant had no obligation to pay council tax, however the respondent was obliged to under the Council Tax (Liability of Owners) (Scotland) Regulations 1992.

In support of his argument the appellant also relied on the English case of Farrell v Alexander (1977), which concerned the broadly similar language of the Rent Act 1968. In particular, he referred to passages in which it was stated that the provisions prohibiting both the imposition and receipt of a premium were not interlocked and it was possible for a landlord to be in breach of either one or both.

Fallen foul

In his decision, Sheriff Di Emidio said of the Farrell case: “It is important to appreciate that all five law lords in Farrell gave speeches in the case as it gave rise to wider issues about statutory interpretation and the state of the English authorities at the time. Furthermore the passage just quoted [by the appellant] is strictly obiter dictum in that his Lordship based his conclusion on the first subsection of the section under consideration there.”

He continued: “Notwithstanding that, I consider that the appellant is correct in his submission as to the significance of the passages relied on to the facts as found by the FtT in this case. It was regrettable that I failed to take full account of them in my decision of 30 November 2021.”

Addressing the FtT’s finding that the sum paid was not a condition for the grant of the tenancy, Sheriff Di Emidio said: “On closer examination I have some difficulties with this finding. It addresses the subject matter of section 82(1) but not of section 82(2) in that it is directed to what had been made a condition of the grant of the lease. As the appellant has submitted, that provision which I have quoted above is broader in its terms. I am persuaded that the passages quoted above from Farrell v Alexander explain properly the wider application of section 82(2) of the 1984 Act.”

He went on to say: “The respondent’s submission was that section 82 is not intended to strike at a contractual condition of the kind in this case. On reconsideration, I have concluded that this is not a sound argument. In the circumstances the appellant is well founded in his submission that the payment he made was in connection with the grant of the tenancy and caught by section 82(2). On the facts as found by the FtT the respondent has fallen foul of the prohibition in section 82(2), albeit perhaps inadvertently.”

The sheriff concluded: “The appeal has succeeded on a point of statutory interpretation. No further factual inquiry of the kind that might merit a remit to the FtT is required. Therefore the appropriate course of action is to grant the appeal, quash the decision of the FtT dated 23 September 2020 and make an order for payment of the sum of £1,399.13 by the respondent to the appellant.”