North Western Estates Development v Merseyside and Cheshire Rent Assessment Committee

Fair rent of £33.50 per week largely based on registered rent for like property at same level – Whether committee entitled to assume accuracy of such registration – Committee’s reasons apparently ignoring landlord’s evidence as to market rents at much higher level with no lack of scarcity – Whether reasons so inadequate as to raise inference of error of law The appellant landlords had at all material times let a house in Liverpool on a regulated tenancy. In May 1993 a registered rent was determined at £27 per week. In February 1995 the landlords applied for the registration of a rent of £50, pointing to: (1) market rents of between £70 and £100 obtainable for comparable dwellings let on assured tenancies; and (2) the fact that there was no shortage of such dwellings (hence no case for a “discount for scarcity” to comply with section 70(2) of the 1977 Act). By its decision dated December 28 1995 the respondent committee determined a fair rent of £33.50 based upon a recent registration at that figure in respect of a similar house in the same street. The reasons given by the committee (as required by the Rent Assessment Committees Regulations 1971) consisted of a recital of its legal powers and duties and an assertion of compliance. In proceedings brought under section 11 of the Tribunals and Inquiries Act the landlords contended that the committee had erred in law by failing, above all, to apply the principles laid down by the Court of Appeal in Spath Holme Ltd v Chairman of the Greater Manchester Rent Assessment Committee [1995] EGLR 80. Held The decision of the rent assessment committee quashed. 1. As regards tribunals in general, insufficiency of reasons was not in itself a ground for quashing a decision. It was otherwise however if that very insufficiency gave rise to an inference that the tribunal had erred in law in arriving at that decision: see per Lord Parker CJ in Mountview Court Properties v Devlin (1970) P&CR 689 at p695. Since the Mountview case the courts had become increasingly alert to draw such an inference where the reasons were found to be unintelligible or inadequate: see per Woolf J in Crake v Supplementary Benefits Commission [1982] 1 All ER 498 at p507. That, coupled with improved training of tribunal members, strongly indicated that “reasons should not merely pay lip service to the statutory umbrella under which the particular tribunal is operating . . .”. 2. In determining a fair rent, a committee could have regard to both registered rents and rents obtained for assured tenancies, but, as affirmed in Spath Holme (supra), the objective in either case had to be the determination of a market rent less the appropriate allowance, if any, to be made for scarcity. Where registered comparables were used in preference to open market rents the committee was bound to “work through” them so as to show how the fair rent reflected both the market and any deduction made for scarcity. The correctness of the registered rent could not simply be assumed. 3. Violation of the above principles in the present case could be inferred from: (1) the committee’s reliance on the earlier registered rent simply because it “had no reason to believe it to be suspect”; (2) the failure to accept or reject the landlord’s evidence in regard to market rents; (3) the failure to refer to the landlord’s evidence on the scarcity issue; (4) the failure to recognise that if it did accept the landlord’s evidence as to market levels then the resulting fair rent was discounted from those levels by a factor of between 100 and 200%; (5) the failure to note that, following Spath Holme, if there was no scarcity and no disregards the rent was to be the same whether the tenancy was regulated or assured . James Bonney QC and Jonathan Gavaghan (instructed by Drewitt Willan, of Manchester) appeared for the appellant; Michael Furness (instructed by the Treasury Solicitor) appeared for the respondent.