Guppys Properties Ltd v Knott and another

Rent Act 1977, sections 69 and 70 and Schedule 12–Certificate of fair rent–Appeal from decision of a Devon and Cornwall rent assessment committee on a reference to them of an application to a rent officer for a certificate of fair rent–Submission that in assessing the fair rent which would be chargeable under a regulated tenancy after the completion of improvements the committee were wrong in not taking into account the effect of works of repair which the applicants were also proposing to carry out–Further submissions that the committee applied the wrong test in finding that certain items of work were in the nature of repairs and not improvements and that the committee did not give sufficient reasons for their decision–Held by judge that the committee were correct in not taking account of proposed repairs in assessing the fair rent and that they had applied the correct test in distinguishing repairs from improvements–Held, however, that the committee had failed in their statutory obligation to give proper reasons and that the case must be remitted to them for further consideration on this ground–Judge cites with approval the strict Scottish doctrine as to the kind of reasons which should be given by committees, as formulated by the Court of Session in Albyn Properties Ltd v Knox–Leave given to appeal to Court of Appeal In this case Guppys Properties Ltd, of Bridport, Dorset, appealed against a decision of a rent assessment committee of the Devon and Cornwall Panel determining the fair rent on the reference to the committee of an application for a certificate of fair rent. The premises concerned consisted of a cottage known as Chez Nous, Trehaddle, Cusgarne, Truro, Cornwall. The tenants, who were in occupation of the cottage under a regulated tenancy, were Mr and Mrs Knott. The application for a certificate of fair rent was made by Guppys Properties Ltd under section 69(1)(a) of the Rent Act 1977. The rent officer for the Cornwall registration area decided that the information supplied to him by the applicants was insufficient to enable him to issue a certificate of fair rent and that, accordingly, he could not entertain the application. The application was then referred, at the request of the applicants, to a rent assessment committee in accordance with Schedule 12 to the 1977 Act. The committee were satisfied that they could proceed and decided that in determining the fair rent for the purpose of the certificate only those works which constituted ‘improvements’ within the meaning of section 75 of the Act should be taken into account and that works of repair should be excluded. They also decided that of the list of works proposed by the applicants the only items which constituted improvements as defined were the provision of an inside we, an insulating quilt to the first-floor ceilings, and a hot water system and linen cupboard. Robert C Pryor (instructed by Turner, Peacock) appeared on behalf of the appellant landlords; there was no appearance by or on behalf of the tenants. Giving judgment, SIR DOUGLAS FRANK QC said: This is an application by the landlords to set aside and remit a decision by a rent assessment committee relating to a house near Truro in Cornwall. The landlords, intending to carry out works to the property, applied for a certificate of fair rent, but the rent officer declined to entertain it, for it appeared to him that the information supplied was insufficient. Subsequently the application was referred to the committee. The committee considered the list of proposed works, which were estimated to cost £4,500, and which of the items constituted improvements and which repairs. They came to the conclusion that only certain items constituted improvements and only those would they take into account in assessing the fair rent. They then went on to determine the fair rent to be £9.75 per week after completion of the works of improvement. It is apparent that, apart from the question of what works should be taken into account, the methods of arriving at the fair rent were canvassed and, in particular, assessments of capital value and the application of rents for comparable properties. The landlords’ case was conducted by a director of the landlord company, who put in a long statement of evidence to be given. When the matter came before me Mr Pryor appeared for the landlords, but there was no appearance for either the tenants or the rent assessment committee. Mr Pryor first argued that the committee should have taken into account the repairs to be carried out, but that submission was supported on grounds of logic rather than the provisions of the Act. Indeed, I can find nothing in the Act which empowered the committee to take into account repairs to be carried out in the future, and in my judgment the committee cannot be faulted in having regard only to proposed improvements. I further think that the committee applied the correct test in deciding what constituted improvements and to that extent their decision is unassailable. I turn now to the main ground upon which the decision is attacked, and that is that it is said that it failed to give reasons. The decision deals thoroughly with the state of the property as the committee assumed it to be, but when they come to the valuation of the property in that state they said: Having considered all the evidence put before them, and having regard to the provisions of the Rent Act 1977 and to their inspection, the committee are of the opinion that the only alterations to qualify as admissible improvements are the provision of an inside we, of an insulating quilt to the first-floor ceilings, and of a hot water system and linen cupboard, and accordingly determine that after the completion of those improvements a fair rent will be £9.75 per week exclusive of rates. Thus all they say about the evidence is that they have considered it and, without giving any reason beyond that, they determine the fair rent to be £9.75. There have been numerous decisions concerning requirements under the Tribunals and Inquiries Act 1958 to give reasons for decisions under town planning and compulsory purchase legislation and the Rent Acts. However, I think for the purpose of this case it is sufficient to refer to Mountview Properties Ltd v Devlin (1970) 21 P&CR 689. There Lord Parker CJ said (at p 692): What reasons are sufficient in any particular case must, of course, depend upon the facts of the case. I approach the matter in this way: that reasons are not deficient merely because every process of reasoning is not set out. I further think that reasons are not insufficient merely because they fail to deal with every point raised before the committee at the hearing. Indeed, I would adopt the words used by Megaw J in Re Poyser and Mills’ Arbitration [1964] 2 QB 467. That was dealing with an arbitrator’s award, but Megaw J said: ‘The whole purpose of section 12 of the Tribunals and Inquiries Act 1958 was to enable persons whose property or whose interests were being affected by some administrative decision or some statutory arbitration to know, if the decision was against them, what the reasons for it were. Up to then, people’s property and other interests might be gravely affected by a decision of some official. The decision might be perfectly right, but the person against whom it was made was left with the real grievance that he was not told why the decision had been made. The purpose of section 12 was to remedy that, and to remedy it in relation to arbitrations under this Act. Parliament provided that reasons shall be given, and in my view that must be read as meaning that proper, adequate reasons must be given. The reasons that are set out must be reasons which will not only be intelligible, but which deal with the substantial points that have been raised.’  A little farther down, he said: ‘I do not say that any minor or trivial error, or failure to give reasons in relation to every particular point that has been raised at the hearing’–and he was dealing with an error of law on the fact of an award–‘would be sufficient ground for invoking the jurisdiction of this court.’ Here, as it seems to me, while the tribunal had before them evidence of comparable flats in the vicinity, they had in addition a schedule of all the contractual rents and past histories including fair rents fixed by the rent officer and by the committee itself with regard to other flats in Mountview Court, yet the striking bit of evidence which they had before them was no 64, and, beyond saying, in the first reasons which they gave, that they had, to use their own words, ‘considered the evidence adduced,’ the decision in objection no LON/31/551 and their inspection, there is no explanation at all to show why they rejected what one would think would have to be a greater market value, a greater fair rent in respect, at any rate, of the two larger flats, no 43 and 73. In my judgment, that failure does result in the fact that they have here given insufficient reasons; they have not complied fully with their duty under section 12 of the Tribunals and Inquiries Act 1958. Accordingly, the next question is what flows from that. There is, in my judgment, undoubtedly power to compel any tribunal to which section 12 of the Act applies to give sufficient reasons; they could be ordered by mandamus to do so; in an appeal they could be required to do so by remission of the case to them. Indeed, as Lord Denning MR said in Earl of Iveagh v Minister of Housing and Local Government [1964] 1 QB 395: ‘The whole purpose of the enactment is to enable the parties and the courts to see what matters he’–and that was the Minister of Housing and Local Government in that case–‘has taken into consideration and what view he has reached on the points of fact and law which arise. If he does not deal with the points that arise, he fails in his duty: and the court can order him to make good the omission.’ I have quoted at length from that judgment because what is said there seems very pertinent to the instant case. However, I appreciate that valuation is not an exact science and at the end of the day, having considered the evidence, the committee are entitled to use their own knowledge and experience: see the cases cited by Lord Denning MR in Metropolitan Properties Co (FGC) Ltd v Lannon [1969] 1 QB 577. Lord Denning however pointed out that that does not mean they should throw over the evidence altogether. At any rate, they should not throw over the evidence without saying why. It is perhaps not inappropriate to point out that the Lands Tribunal, in dealing with rating assessments of dwelling-houses, have to carry out an exercise comparable to that carried out by rent assessment committees. Although the Lands Tribunal has for the 30 years of its existence been required to give reasons for its decisions, the Court of Appeal has never found it wanting in that respect and, although I would not expect rent assessment committees to set out the facts, evidence and arguments as extensively as is done by the Lands Tribunal, I suggest that their decisions are a useful guide. Further assistance can be gained from the judgment of the court in Albyn Properties Limited v Knox 1977 SLT 41 at p 43 where it was said: The statutory obligation to give reasons is designed not merely to inform the parties of the result of the committee’s deliberations but to make clear to them and to this court the basis on which their decision was reached, and that they have reached their result in conformity with the requirements of the statutory provisions and the principles of natural justice. In order to make clear the basis of their decision a committee must state: (i) what facts they found to be admitted or proved; (ii) whether and to what extent the submissions of the parties were accepted as convincing or not; and (iii) by what method or methods of valuation applied to the facts found their determination was arrived at. In short they must explain how their figures of fair rent were fixed. In the instant case it is quite impossible to discern from the decision what reasons lay behind the assessment of £9.75 per week, other than that the committee disregarded works which were not improvements. In particular, they have failed to state whether and to what extent the submissions concerning capital value and comparables were accepted as convincing or not. Consequently, the applicant knows not whether any consideration was given to his submissions and thus is left in a state of mind of dissatisfaction, which the requirement to give reasons was enacted to avoid. Accordingly, in my judgment, the committee have failed to fulfil their statutory obligation to give reasons and, accordingly, the decision must be sent back to them for further consideration. The case was remitted to the rent assessment committee to consider further in the light of the judgment. Leave was given to appeal to the Court of Appeal. No order was made as to costs.