There are two points to get right in this situation. First, the retiring chair does not have a vote in the initial voting. So, if the retiring chair did vote, that was invalid, and there should not have been a tied vote.
But if the retiring chair correctly refrained from voting, and there was a tied vote within the new council, then it is quite correct that the retiring chair, who is presiding over the election, must give a casting vote to decide the issue. In this case, I guess whatever way the vote was cast, there would be seven unhappy people!