Guppys (Bridport) Ltd v Sandoe and another; Same v Moyle and another; Same v Radcliffe; Same v Spencer and another

Rent committees may rely on comparable fair rents already registered and need not say why they prefer this approach to the yardstick proposed by the landlord to secure him a fair return on his capital These were four appeals by Guppys (Bridport) Ltd, of Nordons House, Crock Lane, Bridport, Dorset, against decisions of the Devon and Cornwall Rent Assessment Committee fixing fair rents for houses occupied by the respective respondents. The appeals raised the same points of law, and were argued together. Mr R Pryor (instructed by Turner Peacock, agents for Hollowell & Bollam, of Weymouth) appeared for the appellants. None of the respondents took any part in the proceedings. Giving judgment, LORD WIDGERY said: These proceedings comprise a number of appeals brought under the authority of the Tribunals and Inquiries Act. In each case the appellant is a company called Guppys (Bridport) Ltd. In each case the order appealed against is made by the Devon and Cornwall Rent Assessment Committee. In each case the issue was the fixing of a fair rent of a house within the jurisdiction of the committee under section 46 of the Rent Act 1968, and in each case the landlords, the appellants, were dissatisfied with the decision as to a fair rent arrived at by the committee and appeal, as is their undoubted right, under the Act to which I have referred. The cases raise identical questions, and it will probably suffice if I deal with the property referred to in bundle no 1, which is 9 Foxes Row, Carharrack, which I understand to be in Cornwall near Redruth. It does not matter how this particular issue was brought before the rent assessment committee, because the procedures are now well known. The matter of course first of all went to the rent officer, and in the case of 9 Foxes Row the rent officer assessed a figure of the order of £312 in respect of a fair rent of the premises. The committee produced as a conclusion at the end of the hearing a rent of £338 as a fair rent, only marginally perhaps in excess of that sought by the tenant and considerably below that contended for by the landlord, which was £520. The issues which arose in the course of the appeal are very familiar issues, because in the years in which an appeal under this legislation has been possible a very similar pattern is constantly seen in the evidence put before the appeal committee. The tenant tends to rely on comparable rentals found in the rents already registered under the machinery of the Act of 1968, and rents which are therefore prima facie fair rents, making due allowance for scarcity, as one is enjoined to make under section 46 (2) of the Act. True to form, the tenant in this case, as had the rent officer, was basing his claim principally upon the proposition that other registered rents which were of comparable properties showed a rent equivalent or equal to that for which the tenant contended. The landlord, on the other hand, as is the modern trend in these cases, sought to justify a higher figure by a variety of different approaches, some of which involved capital value, and some, as I understand it, which did not. The landlord’s case, as summarised, and no doubt very briefly summarised, by the committee, is a criticism of the reliance by the tenant on comparable rents. Strangely enough, nos 10, 11, 12 and 13 Foxes Row had all been the subject of a recent reference by the rent officer and had all had fair rents registered, and I feel bound to say that if ever there was a case where one would look first at the registered rents, I would have thought it was this case with the next four adjoining houses all appearing in the register for registered fair rents. However, the landlord considered that that did not give a fair figure, and he put forward alternative methods or routes to reach the figure which might constitute a fair rent in his estimation. For example, he referred to advertised lettings of comparable houses which were to be let furnished. He found that a furnished letting might be had for something of the order of £15 a week. He made an adjustment of £2 a week in respect of the furniture, took the view that the net rental without furniture would be about £13 a week, and then going to capital value on a 10 per cent basis, he achieved the conclusion that something of the order of £520 would be appropriate. Another guide relied upon by the landlord was the fact that three-bedroom council houses required a minimum rent of £24 per week, most of which he says was produced through subsidies, and on that basis a rental of £18 a week for 9 Foxes Row was said to be appropriate and fair. I emphasise at once that all those are perfectly proper approaches either to be put forward by the litigant or, if thought fit, to be adopted by the committee. They are just other ways of seeking the same conclusion, which is the assessment of a fair rent. The committee, having listened to all the evidence which was put before them, eventually reached a conclusion, and it is evident that they paid great attention to the registered rents of nos 10, 11, 12 and 13 Foxes Row. They referred to a dictum of Lord Reid, to which I must return and refer in a moment, to the effect that until it was shown that the committee had determined the rent upon a wrong basis, it must be assumed that rents already determined had been rightly ascertained, that is to say that the existing registered rents could fairly be followed. Then there is a substantial passage which I think I must read in full, because it sets out the committee’s treatment of the landlord’s argument, and this is really at the very heart of the case. The committee say this: The landlord’s argument continued that Higher Pennance Cottage, Lanner, 19 Loscombe Road, Four Lanes and 31 Carn Brae Lane, Pool, were used, together with no 12 Foxes Row (an earlier 1970 decision) in reaching the decision on 13 Foxes Row, and these decisions had been accepted as correct in respect of the committee’s decisions on 10 and 11 Foxes Row. He argues that we must therefore go back to these original decisions, apparently discarding the later decisions in regard to 10, 11, 12 and 13 Foxes Row. If one takes this argument as acceptable, it must follow that all committees’ decisions which rely on comparables should be considered on the basis of the earliest comparables and not on the most recent decisions. The committee cannot accept this argument, and consider that the most recent comparables are more reliable than the older ones, because they have been brought up to date, or are certainly more up to date than the earlier ones going back to 1968 and 1969. I pause there to say that that is a view of the landlord’s argument which the committee were perfectly entitled to take. If they thought that the later comparables were more valuable than the earlier ones, that is a perfectly fair comment which they are entitled to make if they wish. Then they go on to quote Lord Reid in Mason and others v Skilling [1974] 1 WLR 1437, and this is the quotation which they use, ‘as the number of comparable registered rents increased, the more likely it would be that it would lead to a correct result,’ in other words, supporting the view that as time goes by and the number of registered rents increases, so a new rent derived from those already registered rents is more likely to be correct. The committee then say: We do not consider that the landlord has shown that the rents of 10, 11, 12 and 13 Foxes Row have been determined on a wrong basis, and the committee accordingly consider that it is the correct way to reach the determination of the fair rent on 9 Foxes Row. I pause there to observe that the appellant, through Mr Pryor, is perfectly right in saying that in the end this committee fix the fair rent on the basis of the registered comparables, and it is in the last sentence which I have read that their decision so to act is to be found. They go on: Further, in reliance on Lord Parker’s judgment in Tormes Property Co Ltd v Landau, the committee consider that without criticising the yardstick put forward by the landlord, the committee are perfectly entitled to reject it and to apply another yardstick. That is a very important sentence, because what the committee are there saying is that on their understanding of a dictum of Lord Parker they are entitled to reject the landlord’s approach to this problem, be it the one based on furnished rentals or the council rentals or anything else, without specifically criticising it. I read the phrase again: ‘without criticising the yardstick put forward by the landlord, the committee are perfectly entitled to reject it and to apply another yardstick.’  That, as we shall see in a moment when I turn to the authorities, is supported by the authority of Lord Parker. I do not think anything else can usefully be extracted from the reasons given by the committee, and I go to the two authorities to which reference has been made and upon which the committee obviously based their conclusion. First of all, I refer to the dictum of Lord Reid, in Mason v Skilling. It is not necessary to read the headnote, because the principal point in the case was on quite a different matter, although it was a matter arising under the same Act. The case is referred to now, and constantly referred to, for Lord Reid’s views as to the propriety of a committee choosing one particular route to the solution of this problem in preference to another. He said this at the bottom of p 1439: In my view, this section leaves it open to the rent officer or committee to adopt any method or methods of ascertaining a fair rent provided that they do not use any method which is unlawful or unreasonable. The most obvious and direct method is to have regard to registered rents of comparable houses in the area. In the initial stages this method may not be available but as the number of comparable registered rents increases the more likely it will be that it will lead to a correct result. Of course it must be open to either party to show that those comparable rents have been determined on a wrong basis, but until that is shown it must be assumed that rents already determined have been rightly ascertained. In the present case the committee did consider comparable rents, and it is not said that they acted wrongly in this respect. Criticism is limited to the manner in which they dealt with the capital value of the house. The committee were quite entitled and may have been well advised to use other methods in addition to considering comparable rents. In particular they were entitled to have regard to the capital value. A fair rent should be fair to the landlord as well as fair to the tenant, and it can be regarded as fair to the landlord that he should receive a fair return on his capital. We are not concerned in this case with the percentage which in present circumstances can be regarded as a fair return. Then Lord Reid goes on to consider the treatment of the capital value in the case in question. It is clear from that that if more than one approach to the problem is put before the committee, the committee must look at every such approach which is tendered, but they are entitled to accept one and reject the others. In particular, if they choose to rely on other registered comparable rents, then, according to Lord Reid, it must be assumed that those comparable rents are truly representative of a fair rent unless and until it can be shown that they were assessed on some wrong basis. The other decision is that of this court in Tormes Property Co Ltd v Landau and others [1971] 1 QB 261. That was a case very much like the present. The rent officer had been required to fix a fair rent for a newly-converted flat. He fixed the rent by reference to the comparables–the other registered rents–to which he had access. The landlords objected to the determination and referred the matter to the assessment committee, the landlords submitting that the fair rent should be assessed on the basis, as one alternative, of a reasonable return on replacement costs. In other words, the familiar contest: the tenant is saying, with the rent officer, that the rent should be fixed by reference to existing registered comparables; the landlord is saying, no, the rent should in some way reflect my capital investment and give me a fair return on my capital investment. Lord Parker at p 266 included this oft-quoted passage in his judgment. He said: In my judgment, the committee were perfectly entitled to do what they did. Without criticising the yardstick put forward by the landlords, it seems to me that the committee were perfectly entitled to reject it and to apply another and, for my part, I cannot believe that, when one is approaching residential premises for which there are any number of comparables, as is the case here, much weight can properly be given to any version of the contractor’s theory. As I have said, the true contractor’s theory can only produce a ceiling. The adaptation based on historic costs may produce false results, and the present suggested adaptation based on replacement cost is an attempt to achieve indirectly something which can be achieved directly from market-rent comparables or in the fair rents of comparables which have been fixed. That is a passage which the committee in the instant case obviously had in mind, because they have used the exact language which I have quoted from Lord Parker. It is therefore indisputable, in my view, on those authorities that if the committee are faced with a landlord’s case based on capital value and a fair return thereon, and a tenant’s case based on other registered comparable rents, it is open to the committee, if they think it right in accordance with their judicial function, to choose the method of registered comparable rents. If they do choose that, then, according to Lord Parker, they can do it without criticising the landlord’s approach on the basis of a capital value and a fair return upon capital value. That observation of Lord Parker gives rise to what is really the heart of Mr Pryor’s submission today, namely, that if the committee do not give a more detailed explanation of why they find the landlord’s argument unacceptable, then the committee are failing in their statutory duty to give reasons67 for their decision. Under the Tribunals and Inquiries Act reasons are required to be given, and Mr Pryor says that if the committee do not explain in some detail and by means of analysis why they are not prepared to accept the landlord’s figures, then they fail to give the proper reasons. In so doing he recognises, I think, that he is putting up a submission contradictory to the dictum of Lord Parker to which I have referred, and a submission which to my mind is not to be found in the authorities at all. There are plenty of judicial offices, not the least a High Court judge, where reasons undoubtedly have to be given for every decision, but that does not mean that if the judge has two conflicting opinions put before him in evidence, he has to explain why he chooses one in preference to the other. Such explanations are not possible. They are matters of judgment, impression and sometimes even instinct, and it is quite impossible to give detailed reasons to explain how the system of decision has worked. So with a rent assessment committee. If they have decided, having carefully weighed the evidence, that they must reject one approach and adopt another, then all they need to do is to say that in the exercise of their discretion and relying on their skill and judgment they prefer the method which in fact they do prefer. If they say that, it cannot be said against them that their decision is invalidated by the fact that no further or more detailed explanation of why they prefer method A and reject method B has been given. Mr Pryor, if he will allow me to say so, has battled gallantly on this very difficult territory today, but unfortunately the ground has been unduly churned up by others who have battled over it before, and there is little indeed left at the end of the day for me to say except that in my judgment this matter is thoroughly covered by authority, there is no ground for saying that the rent assessment committee erred in law, and I would dismiss the appeal. That goes for each of the appeals before us because, as I have said, they seem to me to raise the same issue. PARK J: I agree. STOCKER J: I also agree.