Guppys Properties Ltd v Knott ; Guppys Properties Ltd v Strutt

Fair rents–Evidence of fair rents–Capital values, other registered rents and market values all legitimate evidence–Rent assessment committee not obliged to follow any particular method of valuation–Extent of duty to give reasons–No need to show ‘arithmetical working’ or give reasons in ‘scientific sense’–Documents which may properly be looked at after hearing considered–No error of law by committee These were two statutory appeals under the Tribunals and Inquiries Act 1971 by Guppys Properties Ltd from decisions of a rent assessment committee of the Devon and Cornwall Rent Assessment Panel, the respondents being Mr and Mrs A Knott and Mrs N K Strutt respectively. R Pryor (instructed by Turner, Peacock, agents for Hollowell & Bollam, of Weymouth) appeared on behalf of the appellants; the respondents did not appear and were not represented. Giving judgment, LORD WIDGERY CJ said: The court is now required to deal, first of all, with the case of Guppys Properties Ltd against Knott, confining itself to that aspect of the dispute as relates to the appellants’ statutory appeal under the Tribunals and Inquiries Act 1971. In addition to the Knott appeal we have a quite separate appeal to deal with in which the appellants are again Guppys Properties Ltd and where the respondent is a Mrs Strutt. This is a case in which the rent of Honeysuckle Cottage, St Agnes, Cornwall, has been under review by the rent assessment committee, and where the appellants (the landlords) are appealing, as they are entitled to do, assuming that they have a point of law to support their appeal against the decision of the committee. The issue between Guppys and Mr and Mrs Knott relates to a cottage in Cornwall called Chez Nous. The matter had been referred to the rent officer, that is to say the assessment of a fair rent had been referred to the rent officer and he had produced as his figure of fair rent the sum of £338. Before the rent assessment committee that figure was reduced from £338 to £286. Having failed yesterday to have that reduction set aside by certiorari, Mr Pryor on behalf of the appellants now seeks the same consequence by the slightly different route of an appeal under the Tribunals and Inquiries Act. I can, therefore, go straight to the decision of the tribunal, producing as it did the figure of £286 as being the fair rent, and see how far it is criticised by Mr Pryor on behalf of the68 appellants. Before I deal with that in any detail there is one other element of history which has to be brought into this case, and that is that there had been other disputes between the present appellants (that is Guppys) and other tenants of other properties which have often come before the rent assessment committees and been the subject of a judgment. Indeed there was such a case, which was before this court on May 15 1975, which is referred to as Guppys v Sandoe [Guppys (Bridport) Ltd v Sandoe, reported in full at (1975) 235 EG 689, [1975] 2 EGLR 66]. I am not going to refer to it in detail at this stage, but it is of importance in the present instance because it will be seen that virtually every point argued by Mr Pryor in favour of the appellants today was argued again by Mr Pryor in the case of Sandoe in 1975. In so far as the case of Sandoe decided any of these disputed issues, for my part I think we should follow Sandoe and apply the same principle to the case before us. I go back then to the judgment. It is a lengthy judgment. I say that in no sense as a matter of criticism. It deals in considerable detail with the nature of the property Chez Nous and the accommodation it provides; it considers improvements which have been done to the premises by the tenants from time to time, and it goes through the general broad arguments as to the method by which a fair rent should be assessed. It is at this point, in my judgment, that the matters of real consequence in this appeal arise because throughout this litigation (and by that I include litigation affecting other houses beyond those which are the subject of this case today) the landlords have contended as a broad principle, first of all, that as the difference between market rents and registered rents under the Rent Act widens, it becomes more and more necessary, if fairness is to be done to the landlord, to fix fair rents by reference to capital values and not merely by reference to existing registered rents. Fixing rent by capital values of course (sometimes called the ‘contractors’ approach’) is a method whereby a modern value is put upon the house as the sale of the freehold. Having ascertained its capital value, an appropriate rate of interest is applied to that capital value, and that gives you a basic figure upon which the fair rent can be ascertained. It would not be disputed, I think, that this is a method which tends to favour landlords, and it is not therefore altogether surprising if the landlords in the present case supported it. The second matter of principle which has been stressed greatly by the landlords in these cases is that when the rent assessment committee gives its decision it is required by statute to give reasons, and it is contended in one way or another that an assessment committee fails to perform that duty if it does not show what one might call its arithmetical working. What is argued is that it is not enough for the assessment committee to say, ‘We have considered all the evidence and, doing our best, we have come to the conclusion that £x is the fair rent.’  It is argued that that will not do, and in some way the figure of £x has to be justified by reasons. In the absence of such reasons, the committee has not performed its function. This was a matter which came very much into evidence in the Sandoe case, and in the Sandoe case we directed first that there was no obligation on the rent assessment committee to follow any particular method of valuation from those which are accepted as being proper in these cases. In other words, there was no obligation on the committee to use capital values, or registered rents, or current market values, or any particular approach, provided it did its best after consideration of all the relevant matters which had been put before it. Accordingly, the fact that there seems little attention paid to capital values in the instant case is not an error of law on the part of the assessment committee. The assessment committee is entitled to take any of these courses, and in some instances to take more than one, and mould them together. Assuming that it stays within its jurisdiction and has not acted unreasonably, its conclusions are conclusions which do not raise questions of law and therefore which are not capable of being litigated in this court. There is only one shadowy dictum in opposition to that principle, but I should refer to it, and I mean no offence by describing it as shadowy. It is found in the case called Metropolitan Properties Co (FGC) Ltd v Lannon [1969] 1 QB 577. The actual extract to which I should refer is in the judgment of the Master of the Rolls at p 597 where Lord Denning says this: ‘The committee are, of course, entitled to use their own knowledge and experience: see R v Brighton and Area Rent Tribunal, ex parte Marine Parade Estates (1936) Ltd [1950] 2 KB 410. But that does not mean that they should throw over the evidence altogether. At any rate, they should not throw over the evidence without saying why. That is what troubles me most about their written decision.’  Lord Denning there is undoubtedly saying that they should give reasons, if they can, for throwing over any evidence, as he describes it. But the learned Master of the Rolls cannot have meant that where the assessment committee is fixing a fair rental on its own experience and instincts, it must give reasons for the figure which it has provided, because in the very nature of things the reasons, in the scientific sense, are not possible in such an instance. It is worth remembering that valuation is not a science: it is an art. There will be many, many cases where all the assessment panel can do is to say, ‘Doing our best with the information provided, we think the rent should be £x.’  If they do that, they disclose in my judgment no error of law. Those being the matters primarily contended before the assessment committee, I ought next to deal with three matters which are more specifically relied upon by Mr Pryor. The first concerns the treatment by the committee of a so-called comparable house called 2 Chelean Cottages at Frogpool. As is common in these cases, a substantial number of existing registered rents were put before the committee for such assistance as those rents might be, and 2 Chelean Cottages is one such rent. The situation in regard to that property was that the actual rent was £494, and in breaking it down to ascertain how much of that figure was attributable to the building and how much to the furniture a complicated calculation had been made, presumably by or on behalf of the assessment panel, which purported to show that £281 was attributable to the building and £213 was attributable to the furniture. Mr Pryor says, and for all I know he may be absolutely right, that that figure of £213 for the furniture was ludicrously large, and by reason of its being large it artificially depressed the figure which was attributable to the house. He says, therefore, it was a very poor comparable if it was relied upon in that way, and indeed I think he says it was misleading. So be it, but there is nothing in the judgment to discover to what precise extent the committee relied on 2 Chelean Cottages, if at all. Indeed, I suspect they did not because the last reference which is made to that house is in these terms: ‘We assume he was seeking to prove that 2 Chelean Cottages was in fact worth all or nearly all of the £494 per annum as an unfurnished letting. We cannot accept that proposition, nor the argument on which it was founded.’  It looks to me as though Chelean Cottages was being disposed of in limbo. Certainly I cannot find anything in that aspect of the case which could conceivably be interpreted as an error of law justifying the allowing of the present appeal. Then the next specific point made by Mr Pryor was in relation to certain improvements done by the tenants. Section 46 of the Rent Act 1968 contains a special provision to prevent a tenant from being charged twice in respect of improvements. In terms, in section 46(3), it says: ‘There shall be disregarded– . . . (b) any improvements carried out, otherwise than in pursuance of the terms of the tenancy, by the69 tenant under the regulated tenancy or any predecessor in title of his.’  In assessing the rent, the committee are required to proceed as though the improvement had never been carried out unless it is an improvement which is made by the tenant in pursuance of the terms of the tenancy. Mr Pryor has battled manfully to try to get us to say that the improvements undertaken by the tenants here were in pursuance of the terms of the tenancy. But there is no tenancy agreement. We have seen nothing in writing to support any such argument, and I just am unable, I fear, despite Mr Pryor’s efforts, to understand why he says we should regard these improvements as being in pursuance of the terms of the tenancy when we do not even know what the terms of the tenancy were. The next point to be taken specifically I need not take time over because Mr Pryor accepts that it was not taken below, and that it ought to have been so taken if it was to be used in this court. It is concerned with the question of whether the improvements to which I have recently referred should be disregarded because at the time when the work was done the tenancy premises were not subject to a regulated tenancy. I propose to say no more about the matter because it is clearly not available to Mr Pryor in this court. Then there is a reference to another specific matter relied upon as rendering the decision below subject to reversal on appeal, and that is a complaint that the committee were supplied with documents after the hearing, which documents were not placed before the appellants or known to them until the decision of the committee was published. What seems to have happened is this. The secretary, one L W Weston, of the committee sent on to the chairman of the committee two days after the hearing a number of papers. First of all, there was sent a transcript of the secretary’s notes of the hearing. No objection is taken to that. Obviously the chairman in considering the decision would want to have the assistance of the notes taken during the hearing. Secondly, there is sent under the same cover some authorities which might be of assistance in regard to the treatment of improvements, which I have already said played a major part in this argument. Thirdly, a copy of the relevant pages of Hill and Redman was sent. In other words, the secretary is doing what is clearly a very useful job in giving the chairman of the committee the sort of documents which will help him in his conclusions. It is only when you come to the fourth and fifth that any real opportunity for criticism arises, because the fourth document or group of documents included under this cover was a specific previous decision of a rent assessment panel sent with a view to being used as a comparable if the chairman thought it was of value to him as such. The same goes for the fifth document, which was a copy of the chairman’s own decision in a Torquay house, which the secretary thought he might find of assistance. So far as the practice of sending such documents as these to the chairman is concerned, one must, I think, be a little careful to see that that which is appropriate is sent and that which is not appropriate is withheld. There cannot possibly be anything wrong with sending the chairman a copy of the notes of the hearing or of text-books or of authorities. One only touches the point of difficulty, as it seems to me, when one gets down to the specific instances which might be used as comparables because one is there getting into the realms of fact and not of pure law and opinion. It is said that the failure of the committee to see that the appellants were supplied with those documents, or in particular the alleged comparables, is in breach of the statutory instruments which affect this kind of hearing. The statutory instrument in question is the Rent Assessment Committees (England and Wales) Regulations 1971 (SI 1971 No 1065), and regulation 5 deals with the documents which should be supplied before the hearing. It says: ‘The committee shall, where the reference is to be subject to a hearing, take all reasonable steps to ensure that there is supplied to each of the parties before the date of the hearing,’ and then certain documents are specified, including a document ‘which contains relevant information in relation to fair rents previously determined for other dwelling-houses and which has been prepared for the committee for the purposes of that reference.’ In so far as documents dealing with comparables are concerned, if they are available before the hearing there is a duty to give copies to the parties. But there is no obligation placed on anybody to send copies of documents which come to light thereafter, and there is nothing which I can see in the actions of Mr Weston to infringe the terms of the statutory instrument to which I have referred. In any case I do not think that the terms of regulation 5 are necessarily mandatory, and I am not prepared to accept that the failure to hand over after the hearing copies of material relating to comparable properties would in itself require and entitle the appellants as of right to have the hearing reopened. Whether or not it would be appropriate to have the hearing reopened would depend on the circumstances, and this would be a point properly open to the appellants on an application for certiorari. At all events, I can see nothing there which would entitle us to say that there has been an error of law of the kind which would lead to the appeal being allowed. I propose to conclude my judgment at this point because I am content, if I may say so, with what I said in Sandoe as laying down the principles upon which these matters are to be treated, and I do not wish to repeat myself, lest I produce a slightly different conclusion and given counsel material for argument hereafter on the difference. It seems to me that, in summary, as far as the Knott litigation is concerned, there is nothing in the case which is not shown by the Sandoe decision to be within the powers and propriety of the committee’s activities, and therefore it provides no ground for allowing the appeal to this court. I can deal with the Strutt case even more briefly because this really, as Mr Pryor admits, is a case which reflects the same problem all over again; the same arguments are put forward to the same effect. I can see nothing in the Strutt case which is worthy of being described as a distinguishing feature from either the Sandoe case or the Knott case. Accordingly I think that the appeal in regard to Mrs Strutt should also be dismissed. CANTLEY and PETER PAIN JJ agreed. The appeals were dismissed.