Kovats v Corporation of Trinity House

Rent Act 1977 — Statutory appeal under Tribunals and Inquiries Act 1971 from decision of rent assessment committee on a point of law — Appeal by tenant who complained that committee went wrong in law because, as a fair rent had previously been registered, all that the committee should have done was to revise the existing registered rent by reference to the effect of inflation — Fallacious argument derived from section 67 (3) of the 1977 Act — In any case rents do not move precisely in step with the movement of inflation — Committee in this case acted sensibly by looking at comparative properties and rejecting the argument that the only proper factor to consider was the cumulative rate of inflation since the previous registration — No error of law on part of committee — Appeal dismissed. This was an appeal by Laszlo Joseph Kovats against the decision of a rent assessment committee of the London Rent Assessment Panel. Mr Kovats was the tenant of three floors of a four-storey terrace house at 64 Trinity Church Square, London SEI, of which the landlords were the Corporation of Trinity House. W Bowring (instructed by Kingsley, Napley & Co) appeared on behalf of the appellant; P Goldsmith (instructed by Freshfields) represented the respondent corporation. Giving judgment, FORBES J said: In this case Mr Kovats appeals, as he is entitled to do, against a decision of the rent assessment committee sitting at Newlands House, Berners Street, London W1, and the decision, which they gave on August 19 1980, was in relation to the fair rent for a dwelling-house of which the appellant is the tenant. The situation is this, quite briefly, that in 1976 the rent officer registered a fair rent of, I think, £820 a year for this property. In January 1980 there was a further application to the rent officer to register a new fair rent and the rent officer did so in May 1980. The appellant appealed to the rent assessment committee as he was entitled to do. From their decision, of course, an appeal lies to this court on a point of law and one has to look to see what is the point of law on which this appeal arises. Well, broadly, as I understand it, it is this, that the rent assessment committee went wrong in law because, as there was already registered in 1976 a fair rent for this very property, all they were entitled to do in arriving at a new fair rent was to apply to that rent the cumulative rate of inflation since the date of the application to register that rent; because that would have been the relevant date under subsection (5) of section 67 of the Rent Act 1977, which is the relevant statute for these purposes. That is really what is being argued and Mr Bowring, who stuck to his point with great tenacity, suggests that, under section 70, the procedure there for determining a fair rent in effect only applies to the first determination, because if all the matters which are properly taken into account under section 70 have been taken into account on the first registration of a fair rent, nothing remains to be taken into account unless it can be shown that circumstances have changed, such as those set out in section 67(3), and, he says, no such circumstances were shown to have changed in this case. Section 67(3) is wholly irrelevant to any argument that arises in this case. That is a section which provides, as it were, a hurdle or a gate, or whatever analogy you like to draw, in the path of the landlord applicant if he wants to apply for a fresh determination of a fair rent less than three years since the last determination. If he wants to do that, he has to satisfy the rent officer that one or other of the matters set out in subsection (3) (and they end up with ‘any other circumstances taken into consideration when the rent was registered or confirmed’) have been so changed as to make the registered rent no longer a fair rent. All those matters provide, as I say, a hurdle to be surmounted or a gate to be gone through by the applicant landlord or the tenant before either of them can ask within the three-year period for a fresh registration of a new rent. If they do not bring themselves within those provisions then they fail. Their application will not be entertained. If they do pass through the gate it is quite clear, from the case to which Mr Bowring has drawn my attention, London Housing & Commercial Properties v Cowan [1977] 1 QB 148, that once you have gone through the gate then all the matters which are now set out in section 70 fall to be considered by the rent officer and he would be wrong, as the case showed, if he considered only the matters set out in section 67(3). In other words, what is set out in that subsection are merely104 qualifying matters which the applicant has to satisfy before his application can be entertained. Once he qualifies under that subsection then all matters have to be looked at again as required by section 70. But in any event these considerations apply only to ‘midterm’ applications, ie applications within the three-year period. Now, as I say, I cannot see that there is anything in section 67(3) which bears the slightest relevance to the argument, particularly having regard to the case which Mr Bowring has just brought to my attention and which is binding on me. I cannot see that section 67(3) has any relevance to any matter which has to be taken into account under section 70 and, of course, if it really is suggested that a rent officer or rent assessment committee can only take into account the incidence of inflation once they have determined a fair rent, and that has been registered in the past, then, it seems to me, that would be a really very curious arrangement for Parliament to have intended. The rate of inflation — and Mr Bowring acceded in the end to this definition — is a statement of the percentage rise in the weighted average of a number of items in a chosen price index over the period since the last time on which a statement was made. If the rate of inflation is a monthly rate, then what happens is you tot up all the items in the price index, then you apply a weighted average to the total of all the rises and falls which may occur over the whole spectrum of the items in the price index and, in the end, as I say, you get an inflation figure in percentage terms. But one has only got to define the rate of inflation in those terms for it to be seen that you simply cannot, with any form of commonsense, justice or logic, apply a weighted average of that kind to one item like rent. It does not at all follow that rents will go up precisely in step with the rate of inflation. In fact they frequently do not. It has been apparent for a long time that, for instance, building costs do not keep in line with inflation rate, and building costs, to some extent, are one of the many matters which may together determine what is a rent chargeable for a particular property. There is no evidence at all, it seems to me, which any sensible rent assessment committee could take into account that the rate of inflation is a proper multiplier to apply when considering what should be a fair rent for property which already has a registered fair rent. The way in which rents vary, differ, rise or fall, differs all over the country and they can differ very markedly within a very short geographical distance. All those matters have to be taken into account and are properly taken into account by looking at comparable rents, which is precisely what the rent officer did in this case. I cannot see that there is the slightest ground for suggesting here that the rent assessment committee were wrong in law. They seem to me to have operated in accordance with the sensible way in which you would expect them to operate by looking at comparable cases and rejecting any argument that the only proper thing to look at was the cumulative rate of inflation since the last registration. In my view they acted perfectly correctly and it cannot be said that they went wrong in law and this appeal therefore fails. The appeal was dismissed with costs.