On 9 April 2014 the Court of Session issued its decision in an appeal by the City of Edinburgh Council against a decision of the Lothian Valuation Appeal Committee. The Courts judgment can be read in full here. The case concerns liability for council tax while a property is uninhabitable as the result of renovation and construction works.
Mr Miller purchased a residential property in March 2007. The property was unfurnished and unoccupied. Following his purchase he requested that the Council assess the property to determine whether the property was habitable or uninhabitable. In May 2007 the Council duly carried out that assessment and found that the property was uninhabitable due to the major construction works being undertaken.
In December 2007 Mr Miller applied to the City of Edinburgh Council for a Building Warrant in order that he could construct an extension to the property. After delays, the Building Warrant was granted in November 2008. In July 2011 the City of Edinburgh Council determined that the property was still “unfit for human habitation…due to the extensive renovation work underway”. However, no statutory prohibition notice was served on Mr Miller.
In December 2012 the Lothian Valuation Appeal Committee held a hearing concerning the liability for Council Tax in respect of this property. Mr Miller’s solicitors argued that as it would have been an offence under section 21(5) of the Building (Scotland) Act 2003 for Mr Miller to inhabit the property, occupation of the property was prohibited by law and paragraph 7(a) of Schedule 1 to the Council Tax (Exempt Dwellings) (Scotland) Order 1997 was engaged. Mr Miller’s Solicitors argued that the property was exempt from council tax.
The Council argued before the Lothian Valuation Appeal Committee, and the Court of Session, that Section 21(5) of the Building (Scotland) Act 2003 was not engaged. It relied upon the fact that the works that the Building Warrant authorised had not been registered as having by the issuing of a Start of Works notice to the Building Standards department. The Council also argued that there had been no evidence that the works which the Building Warrant authorised (that is the construction of the extension) had commenced.
The Lothian Valuation Appeal Committee accepted Mr Miller’s argument and found that the property was exempt from Council Tax. The Council appealed.
Decision and reasoning of the Court
The Court of Session quashed the decision of the Lothian Valuation Appeal Committee.
The Court of Session accepted that the exemptions from the payment of council tax are located in Schedule 1 to the Council Tax (Exempt Dwellings) (Scotland) Order 1997 and that liability does not require there to be a person living in the property. The Court did not accept that section 21(5) of the Building (Scotland) Act 2003 was engaged in this case. However, the Court went on to say that even if section 21(5) of the Building (Scotland) Act 2003 was engaged it considered that occupation could include occupation for the purposes of carrying out renovations to a property. The Court did not accept that occupation could only mean habitation, indeed section 21(5) of the 2003 Act clearly draws the distinction by excluding occupation for the purposes of construction or conversion. The Court went on to say that paragraph 7(a) of the Council Tax (Exempt Dwellings) (Scotland) Order 1997 was not engaged as occupation was not prohibited by law; the property would have been occupied for the purposes of the renovation.
The Court also considered that the Council Tax (Exempt Dwellings) (Scotland) Order 1997 provided a specific exemption for the purposes of major repair work or structural alteration. These can be found in paragraphs 2 and 4 of Schedule 1. Paragraph 2 relates to dwellings which are under repair, and since 2000 has been limited to a period of 12 months since the day that the property was last occupied while paragraph 4 relates to dwellings which are both unfurnished and unoccupied. The Order places a restriction of 6 months since the last period of 3 months in which it was occupied. The Court considered that as there were specific statutory provisions, which were time limited, in respect of properties like that in this case, it would not be appropriate to read paragraph 7(a) in the way that the Lothian Valuation Appeal Committee had. The Court agreed with the City of Edinburgh Council that Parliament’s intention would be defeated with such an interpretation of the provisions.
This case deals with the statutory interpretation of the Council Tax (Exempt Dwellings) (Scotland) Order 1997. It is clear that properties that are undergoing substantial repair work, which prevents them from being inhabited, are entitled to an exemption from council tax only for a period of 12 months following the date at which they are vacated for the purposes of that work. It is not possible to escape the payment of council tax by simply obtaining a Building Warrant and then never obtaining the required Completion Certificate. While Section 21(5) of the Building (Scotland) Act 2003 prevents an individual living in a property which is undergoing conversion or construction and where no completion certificate has been accepted, it does not prevent its occupation in a way that would engage paragraph 7(a) of the Council Tax (Exempt Dwellings) (Scotland) Order 1997.