Metropolitan Property Holdings Ltd v Laufer and others

Fair rents –‘Perverse’ of rent committee to ignore ‘abundant expert evidence’ tendered on behalf of landlords?  –No–‘Typical simple case’ in which landlords said £x, tenants £y, and committee were entitled to fix their own figure, saying merely that in the light of their experience they thought it the right one This was an appeal by Metropolitan Property Holdings Ltd, of Prince Consort Road, London SW7, against a decision of a committee of the London Rent Assessment Panel dated September 20 1973, fixing fair rents for premises occupied by the respondents, the respective tenants of 34 flats in Buckingham Mansions, London NW6, 68 flats in Marlborough Mansions, NW6, and 29 flats in Avenue Mansions, NW3. Mr R H Bernstein QC and Mr M Singh (instructed by D J Freeman & Co) appeared for the appellants; Mr S Walsh (instructed by Seifert, Sedley & Co) for the respondents; and Mr H K Woolf (instructed by the Treasury Solicitor) as amicus curiae. Giving judgment, LORD WIDGERY said that the appellants were represented by counsel before the committee and also had highly-qualified expert witnesses to support their case. One of these witnesses was Mr George W Burrow, a chartered surveyor [partner of Tyler & Co, London EC3]. His approach to the problem of what was a fair rent was first of all to try to assess a fair market rental, having regard to the conditions specified in section 46 (1) of the Rent Act 1968, and then to make a deduction for such element in the rent as was attributable, in his opinion, to scarcity. His conclusions on each limb of the problem were based, in the end, on his professional opinion. He looked at certain actual rentals to assist him or confirm his theories, but each step, in the last analysis, depended on personal professional opinion and experience. In his evidence, he chose as an example the six-roomed flats. In assessing a fair market rental he thought that for the flats improved by the landlords, the figure would be about £1,400 per annum, and for the unimproved flats about £1,200 per annum. A 10 per cent discount for scarcity would, he considered, be appropriate in each instance. He justified this by saying that expert valuers had for some years been allowing five to ten per cent for scarcity in lettings of this kind. He did not think there had been any recent increase in the scarcity element in the rent, so that 10 per cent was sufficient and right for the present case. He (his Lordship) was not going to criticise anything in all this, because Mr Burrow was approaching the problem before him by a well-recognised and thoroughly reputable route. The tenants, too, were supported by professional evidence, specifically the opinion of Mr Ronald Wilkie-Long, a chartered surveyor [partner of Watsons, of London W1]. He had had some regard to current market rentals, but he put the main emphasis on recently-registered rents. That was also a perfectly reputable and proper way of approaching the problem; which approach one adopted depended on the circumstances of each case. Because Mr Wilkie-Long looked at recently-registered rents in the area, there was no need for him to make an allowance for scarcity, because the registered rents themselves reflected any scarcity element. It was evident that Mr Wilkie-Long thought scarcity was more important and more widespread than Mr Burrow had considered it to be. He spoke of the element of scarcity having increased in recent years, whereas Mr Burrow had taken a different view. Based on these considerations Mr Wilkie-Long produced figures for fair rents substantially below Mr Burrow’s. The committee’s decision contained a detailed assessment of the physical qualities of the flats. Quite clearly they had inspected every single flat and they weighed the advantages and disadvantages of the various factors. In their conclusions, they said that they had decided to confine their considerations to the subject flats. When dealing with the scarcity element, they considered on balance that the evidence showed that the element of scarcity had slightly increased rather than diminished. They decided on fair rents after having regard to all the circumstances and applying their own knowledge and experience. The rents they fixed were well below those proposed on behalf of the landlords, who now raised a number of complaints. They said that the committee had failed to give reasons that dealt with the substantial case which they (the appellants) had made; that the only inference from such reasons as were given was that the committee did not properly direct themselves on the issues before them; and that the committee had overthrown highly-qualified expert and other evidence as to both market rents and scarcity without saying why they had done so. In addition to these points, which were raised by the notice of motion, the landlords made further complaints in an affidavit by a Mr Singh [of the landlords’ solicitors]. Firstly, that there was cogent evidence of market rents in actual lettings, amply supported by their witnesses, so that it was perverse of the committee to decide that the market value of an average six-roomed unimproved flat was other than £1,200 per annum. Secondly, that committees some 4-5 years previously were fixing fair rents about 5-10 per cent below market rents; there was no evidence that scarcity of this kind of accommodation had increased–on the contrary there was a great weight of positive evidence that it had not–so there was no justification to fix the rents at 35-40 per cent below market rents. Thirdly, that a rent which represented a steadily decreasing income in real terms could not be described as fair: the rent officer’s fair rents in 1972, net of the service element, represented an increase of about 17 per cent over the rent fixed by a committee in 1967 in respect of 43 Marlborough Mansions, while in the same period the retail price index rose by about 38 per cent. Leaving that last complaint aside for the moment, the general tenor of the landlords’ complaints was that there was abundant expert evidence supporting their view and that either it was perverse of the committee to reject that view, or in rejecting it they failed to give reasons for so doing. 78 Paragraph 9 of the sixth schedule to the Act of 1968 directed committees to make inquiry as they thought fit and to consider any information supplied or representation made to them. If it appeared to them that the rent registered or confirmed by the rent officer was a fair rent they were to confirm it; if not, they were to determine a fair rent of their own. In other words they were to pay attention to everything they were told, look at all the material put before them and then come up with what they thought was a fair rent. The obligation on them to give their reasons came under section 12 of the Tribunals and Inquiries Act 1971, which said that it was their duty to furnish a statement, either written or oral, of the reasons for their decision if requested. This provision applied to a wide range of tribunals, and the nature and extent of the reasons to be given had in some measure to be governed by the nature of the problem in hand. It was well established that rent assessment committees were entitled, indeed bound, to have regard to their own experience and knowledge. They acquired a really remarkable knowledge of prevailing rents in their own area simply from the experience of doing their job. It had been firmly established for many years that a tribunal could and should take into account their own experience and knowledge. That did not mean that they could throw over expert evidence; however, if the landlord’s expert said the rent should be £X, and the tenant’s expert said it should be £Y, and they themselves thought that neither figure was right, not only could they choose a figure in between, but they should do so. In a typical, simple case like that there were no reasons the committee could give except that they were not satisfied with either of the alternatives put forward in evidence and on their own expert knowledge preferred another figure. If the decision was based simply on the committee’s own views, having regard to the evidence before them, then there were no reasons which the committee could give except to say that they thought their figure was the right one. As far as the landlords’ specific points were concerned, therefore, it seemed quite clear to him (Lord Widgery) that the first three grounds of complaint could not be sustained. The landlords had also complained in their notice of motion that the committee overthrew highly-qualified expert and other evidence. Perhaps the committee did, but if they took the view that it was necessary to do so to produce the right answer themselves, then they acted fully within their discretion. As to the landlords’ allegation that the rent fixed by the committee was unfair because it did not take into account inflation and the rising cost of living as expressed in the retail price index, one could only say that there was no obligation on the committee to tie themselves to the retail price or any other index. Finally, no one could say the committee’s decision was perverse. It was supported by the evidence of Mr Wilkie-Long to a very large extent and, lest it be thought otherwise, there was no obligation on the committee to quantify any element of scarcity which they allowed. Indeed, if they approached the problem by reference to other registered rents in the area, the question of quantification of scarcity did not arise. He (the Lord Chief Justice) was quite satisfied that the decision could not be attacked in law and accordingly the appeal should be dismissed. MAIS and CROOM-JOHNSON JJ agreed, and the appeal was dismissed with costs. Leave to appeal was refused.