Midanbury Properties (Southampton) Ltd v Houghton and T Clark & Son Ltd v Heathfield (No 2)

Rent assessment committee to whom a decision had been remitted by the court for further consideration again challenged — Committee on previous occasion had been held to have been in error in treating the appreciation of the capital value of the landlord’s investment as a circumstance to which they should have regard in determining a fair rent — Committee, although acknowledging this error, came to the conclusion on further consideration that the error had no effect on the fair rent which they determined — They also considered that any ‘comparables’ to which they had had regard were not likely to have been affected to any significant extent by erroneous views on capital appreciation — Complaints against committee’s present decision rejected by judge — Committee held to have applied their minds to91 the right questions on further consideration; no fault could be found with their present decision or the reasons stated for it — Appeals dismissed These were further statutory appeals under section 13 of the Tribunals and Inquiries Act 1971 in two cases which the judge had remitted to a rent assessment committee of the Southern Rent Assessment Panel on April 9 1981 for further consideration. The appellants were owners of a large number of properties in the Southampton area. G Nurse (instructed by Lovell, Son & Pitfield, agents for Paris, Smith & Randall, of Southampton) appeared on behalf of the appellants; A Arden (instructed by Abels, of Southampton) represented the respondents. Giving judgment, SIR DOUGLAS FRANK QC said: When this matter last came before me* I said that this committee were to be congratulated on the careful way in which they had dealt with it. They had set out fairly and properly the matters which they must take into account and shown that they had done so. They had erred in just one respect by taking something into account which they ought not to have done. In all other respects I said that I would commend the way in which the decisions had been formulated and the full reasons which had been given. *Reported at (1981) 259 EG 565, [1981] 2 EGLR 86. The matter which they should not have taken into account was this. In their decision they had said: ‘The return’ — that is the return on capital — ‘is not only the income return but also the return on ultimate realisation either now or later. We have had regard to it’. Then further down they said, commenting on one of the tenant’s representations: ‘It’ — that is vacant possession — ‘is realisable when vacant possession obtained but regard must be had to it’. They said: ‘We agree it is a circumstance to which we must have regard but it is difficult to quantify.’ And so I must assume that it may be difficult to quantify, but they had regard to it. There was a matter that they had regard to which they should not have done and the matter was sent back to the committee. It came for rehearing and it was heard by the same committee by the consent of the parties. Again, the committee set out the reasons for their decision. They referred to the transcript of my judgment, so they must have had that before them. They said: ‘It is our duty to determine the fair rent accordingly, without taking into account ultimate capital appreciation. Further, that in so far as we rely upon any comparable registrations, we must first consider whether or not they are invalidated by those who determined them having erroneously had regard to ultimate capital appreciation.’  They then came to the conclusion that they should not change the view which they had previously formed and they determined the fair rent as before. The matter comes before this court on what are stated to be points of law. One of them is expressed to be that no reasonable committee, having accepted that they had had regard to the increase in capital value of the said premises in their decision, could have concluded that, despite their error, the fair rents for the said premises were the same as that determined by that decision. Mr Nurse puts it another way. He said the fair rents as assessed were invalid because the committee had originally taken into account something they should not have done. With respect, I think there is nothing in that argument. The rents were not invalid. The reasons were invalid in so far as they had taken into account a matter which they should not have done, but that does not necessarily invalidate the rent. Mr Nurse said that the committee failed to have any regard, or alternatively and sufficient regard, to my judgment or the submissions based thereon. Nothing has been addressed to me on that. He said the committee failed to have any regard, or alternatively any sufficient regard, to evidence that registered fair rents for ‘comparables’ were invalidated to any degree by the fact that account had been taken in the assessment of such rents of any increase in capital value of the comparable properties. It is quite clear from the passage I have already quoted that it was in the forefront of the committee’s mind that they had to consider whether the comparable registrations were invalidated by having built into them something in respect of ultimate capital appreciation. The committee were well aware that that was something they must investigate. In referring to the previous decision they say: In both cases, ultimate realisation was too uncertain, both as to date and as to amount, to have any measurable effect on our decision. We were in error in having regard to it but it did not affect the result. We also had regard to what is conveniently called ‘the tone of the list’. Mr Clark submits that all ‘comparables’ are suspect. We think that ultimate capital realisation had rarely had any significant effect on the determination of a fair rent. We have no evidence to show that the ‘tone of the list’ has been invalidated by this error. Mr Nurse attacks that and I am bound to say that I do not think there is any substance in the attack. I have emphasised that the committee were fully aware that they should regard the comparables with suspicion — suspicion that they may be tainted with ultimate capital appreciation. They though that ultimate capital realisation has rarely had any significant effect on fair rents. That was their own view and they go on to say that there was no evidence to displace that view. That is as I read paragraph 7 and I can find nothing wrong with it. The committee applied their mind to the right question and in so doing used their experience and knowledge. I remind myself that the tribunal consisted of a lawyer, a professional valuer as well as a layman and that they are experienced in this type of work. They applied their mind to the right question and came to the conclusion that the comparables were a valid yardstick. Finally, it was said that the committee’s reasons were inadequate. I do not find them so. As I have said, this committee set out their reasons at length; more so than is customary with these committees and certainly more so than is customary with local valuation courts, who have a comparable function. I find these reasons intelligible. I find that they deal with the substantial points which were in issue; the substantial point then being whether their decision was affected by their wrongful regard to ultimate capital appreciation and they have said not. In my view their decision is unassailable and accordingly this appeal is dismissed. No order was made as to costs. Leave to appeal was refused.