Williams and another v Khan

Rent Act 1977 and Housing Act 1957 — Effect of closing order on assessment of fair rent — Appeal from a decision of Stocker J, who had rejected a submission that as a matter of law the rent assessment committee should have determined the fair rent as nil or a nominal amount — Court of Appeal agreed with judge, but it should be noted that actual ground of decision turned partly on a provision in section 72 of Rent Act 1977 which has been amended by Housing Act 1980 — The application to rent officer was received on December 14 1977 and under section 72 (before amendment) this was the normal effective date of registration of the rent, but the rent officer and committee had power to determine a later date — Closing order became operative on May 13 1978 and committee’s decision was dated July 12 1978 — Committee determined that effective date should be December 14 1977 — At that date the closing order was not operative — The property was lawfully let and occupied up to May 13 1978 — Observations at end of judgment of Ormrod LJ as to position under the amended section 72, which lays down the effective dates of registration with no discretion for rent officers or committees to alter them — It will be a question of deciding whether any rent is a fair rent for a property which is occupied by a tenant for the time being in contravention of section 27 of the 1957 Act in circumstances which expose him to a fine — Appeal dismissed This was an appeal by Isaac Williams and Lucille Williams, former tenants of a house at 6 Clover Road, Small Heath, Birmingham, from a decision of Stocker J dismissing their appeal from a decision of a rent assessment committee of the West Midland Rent Assessment Panel. The committee had determined that the fair rent payable to the landlord, Manir Khan, should be £5.75 per week. The facts and the relevant dates which are material are set out in the judgment of Ormrod LJ. A report of Stocker J’s decision appeared at (1980) 255 EG 1208, [1980] 2 EGLR 92. Andrew Arden (instructed by the Small Heath Community Law Centre, Birmingham) appeared on behalf of the appellants; the respondent landlord did not appear and was not represented. Giving judgment, ORMROD LJ said: This is an appeal from a judgment of Stocker J on March 28 1980 sitting as an appellate tribunal under the Tribunals and Inquiries Act 1971, hearing an appeal from a rent assessment committee — a rent assessment committee of the West Midland Rent Assessment Panel. The facts in outline are these. The property in this case was a house known as 6 Clover Road, Small Heath, Birmingham. It was one of a number of similar houses in that area and on December 12 1977 an application was made by the tenant, Mr Williams, to the rent officer to register a fair rent. On March 23 1978 the local authority resolved to make a closing order under the Housing Act 1957 in respect of this property. On March 29 1978 the rent officer held the usual consultation on the premises and on April 10 1978 he registered the fair rent as he assessed it in the sum of £5.75 a week with effect from the date of the application to register the fair rent — though the actual date appearing is December 14 as opposed to December 12 1977, but I do not think it makes any difference. To that registration of fair rent objection was made by the tenant on April 18 1978. On the following day the local authority served the closing order on the landlord, who is the respondent to this appeal. That order under the provisions of the Housing Act 1957 became operative on May 13. Meanwhile the reference from the rent officer to the rent assessment committee was going through the usual machinery and it came before the rent assessment committee on July 3. They heard argument about it. They gave their decision on July 12 and they confirmed the rent officer’s assessment of the fair rent and the date from which the rent was to be effective. By80 pure coincidence, on that same day — July 12 1978 — Mr Williams was rehoused by the local authority. The matter was then taken, as I say, on March 28 1980 to appeal before the learned judge. The first point to be made is that the only ground of appeal in these matters is upon a point of law, so it has to be shown that the rent assessment committee were wrong in law in confirming the rent officer’s registered fair rent. What is submitted is that they were wrong in law either because, the closing order having become operative before the rent assessment committee reached their decision, they were bound to hold that in fact the fair rent of these premises was nil or, alternatively, as Mr Arden has put it, as a matter of law they were bound to decide that the fair rent was either nil or what he called in his notice of appeal a ‘nominal rent’ or, alternatively, a very low rent. As between nil and a very low rent, he says it was for the rent assessment committee to decide. The second alternative way of putting the case is, I think, this. It amounts to saying that the rent assessment committee, assuming that they were not bound in law to assess the rent at nil, misdirected themselves and therefore failed to exercise their discretion in accordance with the provisions of the Act in that they came to the conclusion that the proper fair rent of this property was £5.75 a week. The matter is one which is not very easy to deal with, partly because the respondent landlord has taken no part in these proceedings either below or here — for the very good reason, I imagine, that he would regard the expense of doing so as far outweighing any sum of money he might have to pay. Indeed, it is not very easy to see why the appellants are here because the amount involved for them is exceedingly small as it turns out, but we are told that the law centre has decided to bring this appeal at its own expense in order to obtain a decision. Whether that is within the function of a law centre or not is not for us to decide. The appeal requires us to look a little closely at the Housing Act 1957. Mr Arden has most helpfully directed our attention to all the relevant provisions of this and the Rent Act 1977 in a very clear, lucid and succinct manner, for which we are grateful. It is important to bear in mind that we are talking here of ‘fair rent’ and ‘houses unfit for human habitation’. In both cases these are terms with legal definitions and it is very easy to forget that we are talking about terms of art. The test of unfitness for human habitation for the purposes of the Housing Act 1957 is to be found in section 4 of that Act. It reads: In determining for any of the purposes of this Act whether a house is unfit for human habitation, regard shall be had to its condition in respect of the following matters, that is to say: (a)  repairs; (b)  stability; (c)  freedom from damp; (cc)  internal arrangement; (d)  natural lighting; (e)  ventilation; (f)  water supply; (g)  drainage and sanitary conveniences; (h)  facilities for . . . preparation and cooking of food and for the disposal of waste water; and the house shall be deemed to be unfit for human habitation if and only if it is so far defective in one or more of the said matters that it is not reasonably suitable for occupation in that condition. So we are talking about a habitable house which is not reasonably suitable for occupation in its present condition as defined in the Housing Act. There are alternative powers in the local authority. Section 9 gives them power to require the owner of the property to repair it within a reasonable time if the local authority is of the opinion that the property is capable of being repaired at reasonable expense. Section 16 gives the local authority power to accept an undertaking as to reconstruction and power to serve a notice upon him which is called a time and place notice, which is only marginally relevant to this case. Section 17 is the operative one. It reads: If no such undertaking as is mentioned in the last foregoing section is accepted by the local authority, or if, in a case where they have accepted such an undertaking– (a)    any work to which the undertaking relates is not carried out within the specified period, or (b)    the premises are at any time used in contravention of the term of the undertaking then, subject to the provisions of this section, the local authority shall forthwith make a demolition order for the demolition of the premises to which the notice given under the last foregoing section relates. But there is power, instead of making a demolition order, to make a closing order. That comes in the proviso to subsection (1); it reads: Provided that if in the case of any house the local authority consider it inexpedient to make a demolition order having regard to the effect of the demolition of that house upon any other house or building, they may make a closing order as respect that house instead of a demolition order. The effect of a closing order is set out in section 27. That reads: A closing order shall be an order prohibiting the use of the premises as respects which the order is made for any purpose other than a purpose approved by the local authority, and any person who, knowing that a closing order has become operative and applies to any premises, uses those premises in contravention of the order or permits them to be so used, shall on summary conviction be liable to a fine not exceeding [£100] and to a further fine of [£20] for every day, or part of the day, on which he so uses them, or permits them to be so used, after conviction. In this case the form of the closing order permitted the premises to be used for shop purposes and other purposes other than residential. The actual closing order read: Now therefore the council in exercise of the power conferred on them for that purpose by the proviso to section 17 (1) of the Housing Act 1957, by this order prohibits the use of the above mentioned house for any purpose other than a purpose approved by the council and hereby approve the following purposes, namely as a shop, office, warehouse or other purpose not involving human habitation. Under a later Act, the Land Compensation Act 1973, the local authority are under an obligation to rehouse persons rendered homeless by the operation of a closing order. In this case there was a time lag between May 13 and July 12 1978 during which the tenants continued to occupy the house pending their rehousing. The other Act to which we must turn is the Rent Act 1977, to Part IV, section 67, which provides for the registration of a rent and for application to be made to the rent officer and it sets out the details of the matter. Subsection (3) provides: Subject to subsection (4) below, where a rent for a dwelling-house has been registered under this part of this Act, no application by the tenant alone or by the landlord alone for the registration of a different rent for that dwelling-house shall be entertained before the expiry of three years from the relevant date (as defined in subsection (5) below) except on the ground that, since that date, there has been such a change in– (a)    the condition of the dwelling-house (including the making of any improvement therein), (b)    the terms of the tenancy, (c)    the quantity, quality or condition of any furniture provided for use under the tenancy (deterioration by fair wear and tear excluded) or, (d)    Any other circumstances taken into consideration when the rent was registered or confirmed, as to make the registered rent no longer a fair rent. Section 70 deals with the determination of a fair rent. It defined what is meant by a fair rent. Section 70(1) reads: In determining, for the purposes of this Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to — (a)    the age, character, locality and state of repair of the dwelling-house, and (b)    If any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture. The other provisions of that section are not relevant to our present problem. From that determination by the rent officer it is possible under the procedure to refer the matter to the rent assessment committee. 81 The rent assessment committee’s duties are set out in Schedule 10, which provides for their constitution, and Schedule 11, which provides for their function. The function of the rent assessment committee is either to confirm — if they agree with the rent officer — the fair rent which he has fixed or — if they wish to vary it — it is for them to determine the fair rent and to determine it at the time when the matter comes before them. There is power under this legislation in the rent officer and in the rent assessment committee to decide the date from which their assessment shall operate. Mr Arden tells us that, under the 1980 Housing Act, that discretion as to fixing a date has been removed and now there is no discretion as to fixing the date from which the fair rent will operate. It operates from the date of the determination, but we are dealing with the earlier Act. What the rent assessment committee in this case decided is conveniently set out in the learned judge’s judgment: Mr Bean — that is the solicitor representing the appellants — argued that because of a closing order the committee was under an obligation to fix a nominal or even a nil rent. We were unable to accept this argument. Our statutory duty is to determine a fair rent and in doing so to have regard to all the circumstances as defined in section 70 of the Rent Act 1977. If a local authority decides that a house is unfit for human habitation on grounds listed in section 4 of the Housing Act 1957, that is certainly one of the circumstances before the committee whether or not the decision is followed by a closing order or some other proceedings available to the local authority under the Housing Acts. But it is not per se conclusive of the question of the fair rent. The learned judge on appeal came to the conclusion that the rent assessment committee were correct in that approach. He said: In my judgment it does not follow, though there may be cases in which it would arise, that simply because a closing order has been made that the fair rent is necessarily nil. It may well be somewhat less than it would otherwise be; no doubt that is so, but for the reasons that I have endeavoured to give, in my judgment it cannot be said that there was an error of law here or that the rent assessment committee applied any false principle of law in reaching their conclusions, or failed to take into account any matter that they should have done. So he dismissed the appeal. In spite of Mr Arden’s attractive argument, I have come to the same conclusion. It seems to me that here there are two quite distinct pieces of legislation which have not in fact been linked together by any legislative provision. That always creates some difficulty, but I do not think in this case the difficulties are insuperable. The first point to make plain is that Mr Arden has expressly conceded that, so far as the rent officer was concerned, he made his assessment of fair rent on April 10 1978 — that is, of course, before the closing order became operative — and he was not obliged to follow the tentative view of the local authority that this house was unfit for human habitation within the meaning of section 4. That is to say, he had to make his own assessment of the physical condition of these premises and to reflect that physical condition in his assessment of the fair rent following the principle set out in section 70 of the 1977 Act. So it could not in any event be contended, I think, that the rent officer was in any way wrong in law on April 10 1978 when he fixed this rent at £5.75. In other words, it was for him to judge what a fair rent for that property was at that time. So the crucial question in this appeal is, what effect in law (if any) has the coming into effect of the closing order upon the assessment of the fair rent and how should that be dealt with by the rent assessment committee?  It seems to me that the fact that a closing order has become operative is obviously a very, very important fact to be taken into consideration by the rent assessment committee, but they have a discretion to determine on what date the rent is to come into effect. They decided — and their decision seems to me plainly within their jurisdiction — that the fair rent as registered by the rent officer should operate from December 14 1977. So that they were bound, it seems to me, to take account of the fact that the property was perfectly lawfully let and lawfully occupied right up to May 13. If it is right that they have no discretion in the matter whatsoever and are bound to fix the fair rent at nil, this means either that the tenant would have no remedy against what might have been a very excessive rent for the period from December 14 — that is the effective date of the application for fixing the fair rent — down to May 13 — the date of the closing order, or the tenant would be living rent free in that period. It seems to me open, therefore, to the rent assessment committee, just as it was open to the rent officer, to fix a rent back-dated to the date of the application if they thought that was right. The Act provides that that shall be the operative date unless the rent officer or rent assessment committee otherwise decide. It seems to me plain that it is open to them to make the decision — which they did. I am unable to find any provision which says that, as a matter of law, the rent assessment committee must assess a nil rent because of the coming into force of a closing order. The reasons for this conclusion seem to me to be exactly the same as those which operated on the minds of this court in the case of Black v Oliver [1978] QB 870. It involved a number of quite different matters from those we have had to consider, but all three Lords Justices who decided the case, while they held that it was open in that case to the rating authority to come to the conclusion that the rateable value of the premises in question was nil, they were not prepared to hold that the rateable value of the premises in question must be nil. I find it impossible to distinguish the present case from that case and, accordingly, impossible to say in law that the rent assessment committee were obliged in law to fix a nil fair rent. That being so, I find it almost impossible to understand how, if they have a discretion to fix a nominal rent as a matter of law, it can be said that this rent assessment committee erred in fixing a rent of £5.75 unless it can be shown that they misdirected themselves in some way or failed to take into account some factor which they ought to have taken into account. It is not good enough to establish this as a point of law to argue that they did not give sufficient weight to some particular Act. As to that, it seems clear to me that they did take into account the crucial fact that, between the time the rent officer had fixed the rent and the time they came to deal with it, there had been this closing order. Of course it was obviously in the forefront of their minds. I think the only point Mr Arden could make on this is to say that, although they referred to the closing order, they did not treat it as having any specific effect in itself. The problem, of course, for the rent assessment committee was to decide what the fair rent should be from the date of application. This will not happen now when they have no power to decide the date from which their fair rent is going to be operative — but it will be a matter for them to decide whether any rent is a fair rent for a property which, under the provisions of the Housing Act 1957, is being occupied by the tenant for the time being in contravention of section 27 and, accordingly, in circumstances which exposes him to a fine. The question whether a landlord can enforce any rental payment after a closing order has been made is not before us. I can see nothing to make their decision of £5.75 a week wrong in law for the period between December and May 13 and Mr Arden concedes that. The only period, therefore, with which we are concerned — or any question of law can apply — is between May 13 and July 12. I think it was within their discretion to decide what effect to give the closing order and I think, for exactly the same reasons as this court gave in Black v Oliver, they were acting within their discretion. Consequently, I think the learned judge was right in his conclusion and I would dismiss this appeal. GRIFFITHS LJ agreed. The appeal was dismissed. There was no order as to costs.