R v London Rent Assessment Panel, ex parte Chelmsford Building Co Ltd

Rent Act 1977 — Decision of rent assessment committee of London Rent Assessment Panel challenged by application for judicial review — Landlords seek to have committee’s decision quashed on the ground that the reasons given for it were inadequate — Committee in this case had upheld the determination of the rent officer that the rent of a flat should be £100 per month exclusive of rates — A main complaint made by the landlords was that the committee’s reasons did not deal satisfactorily with the landlords’ case in regard to the effects of inflation — The committee had not in fact commented in any detail on landlords’ submissions as to percentage increases of costs and increases in average earnings, but had indicated that they did not accept their application — The court referred to the limitation on the committee’s power and duty to give reasons in detail in determining an appeal on a fair rent, which was a matter of valuation, as explained by Lord Widgery CJ in Metropolitan Holdings Ltd v Laufer and Guppys (Bridport) Ltd v Sandoe — The committee had taken inflation into account and their reasons were sufficient to show how their decision was reached — The suggestion that the reference in their decision to their own knowledge and experience was merely a ‘common form of wording’ which might cover weaknesses was rejected; the Court of Appeal in Wareing v White had recognised the phrase in which these words occurred as a permissible way for the committee to express themselves unless they were being untruthful — The judge agreed with comments made by Mann J in Ellis & Sons Fourth Amalgamated Properties Ltd v Southern Rent Assessment Panel as to the advantages of using the procedure of judicial review rather than statutory appeal to challenge the decision of a rent assessment committee — Application dismissed This was an application by landlords, Chelmsford Building Co Ltd, for judicial review seeking an order of certiorari to quash the decision of a committee of the London Rent Assessment Panel. The decision related to a flat at 1 Longwood Court, Longwood Close, Corbets Tey Road, Upminster, of which the tenant at the time was a Mr Wakefield. The committee had confirmed the rent officer’s registration of £100 per calendar month. Derek Wood QC and Wayne Clark (instructed by Macdonald Stacey, agents for Elgar & Griffith, of Salisbury, Wilts) appeared on behalf of the applicants; John Laws (instructed by the Treasury Solicitor) represented the respondents. Giving judgment, McNEILL J said: Chelmsford Building Co Ltd moves with leave for judicial review by way of certiorari to quash a decision of the London Rent Assessment Panel, reasons for which decision were given on October 23 1984. The decision of the panel was upon an appeal by the applicant company from a registration by the rent officer of a fair rent of premises of which the applicant company was landlord, namely, flat no 1, Longwood Court, Longwood Close, Corbets Tey Road, Upminster. The tenant at that time was a Mr Wakefield. He has since left. By its decision the panel upheld the rent officer’s determination that the fair rent for the premises (upon terms of the lease which are not material to this application) was £100 per calendar month. No question arises as to the jurisdiction or as to the statutory functions of the rent officer and the panel under the Rent Act 1977. Moreover, although there is a statutory right of appeal from the panel under the Tribunals and Inquiries Act 1971 (section 13), Mr John Laws for the panel does not contend that these proceedings are improperly instituted. This is consistent with the opinion expressed by Mann J, which I accept and follow, in Ellis & Sons Fourth Amalgamated Properties Ltd v Southern Rent Assessment Panel, unreported, the judgment being given on February 8, 1984.*  In the course of that judgment the learned judge said: The appeal is under section 33 of the Tribunals and Inquiries Act and therefore attracts Order 55. The appellant is perfectly entitled to take that course, but as Mr Brown, who very helpfully appeared as amicus in this case, pointed out, a challenge to a decision of a Rent Assessment Committee by way of judicial review has three possible advantages. First, it enables the committee to be represented. The probability is that they would make use of that ability and thus avoid the delay such as occurred in the present case, which has occurred through the appointment of an amicus. Secondly, costs can follow the event in either direction. Thirdly, it permits the possibility of an appeal if a landlord’s appeal against the committee’s decision is successful. I of course postulate in looking at those advantages that the tenant does not appear. In the present case there is no tenant, but I understand that it is rare for tenants to appear on these occasions. So I would commend for consideration by those who are thinking of challenging a decision of a rent assessment committee that they should proceed by way of an application for judicial review. *Editor’s note: The decision was in fact reported at (1984) 270 EG 39, [1984] 1 EGLR 91. It is that course which has been followed in the present case. Those words of the learned judge appear to me to apply precisely to this application. Judicial review is particularly apt where what is under consideration is, as here, the procedure adopted by the panel and the reasons given by it for its decision. The present case is a good example of the task of this jurisdiction, to look not at the decision itself but at the decision-making process (see, for example, per Lord Brightman in Chief Constable of the North Wales Police v Evans [1982] 1 WLR 1155 at p 1174). Here the main thrust of the attack by Mr Derek Wood for the landlord applicant upon the decision of the tribunal is directed to the reasons given or the absence of any or any sufficient reasons given for the decision. It is beyond question, as a matter of law, that a rent assessment panel must give reasons for its decision. This obligation arises under section 12(1) of the Tribunals and Inquiries Act 1971 and has been well recognised as applicable in this jurisdiction. The contrary is not argued. The matter is clearly expressed in the judgment of Lord Widgery CJ in Metropolitan Property Holdings Ltd v Laufer (1975) 30 P & CR 172 at p 176. Having stated that the obligation is derived from section 12(1) and having set out the relevant words of the subsection, the judgment continued: So there is an obligation to state reasons, and it is necessary to say that this is a provision applicable to a wide range of tribunals, not merely the rent assessment committee, and it is, I think, obvious that the character of the reasons given, the nature of the reasons, the extent of the reasons, must in some measure be governed by the nature of the problem which the particular tribunal has been set to resolve. It is well established, so much so that I shall not refer to any authority, that rent assessment committees when fixing fair rents are entitled, indeed bound, to have regard to their own experience and knowledge. Initially they are not perhaps to be described as an expert tribunal, but they acquire a really remarkable knowledge of prevailing rents in their area from the simple experience which they gain from doing their job, and it has been, as I say, firmly established for many years that in considering what is a fair rent the committee can and should take into account its own experience and knowledge. That does not mean, as Lord Denning MR said, that they can throw away the expert evidence; they cannot throw away the expert evidence in the sense of declining to look at it. They have got to look at the evidence put before them, but if, as so often happens in the typical simple case, the landlords’ experts say that the rent should be X and the tenant’s experts say that the rent should be X minus Y, if the committee thinks that neither figure is the right one not only can it choose a figure in between the two extremes but it should do so. Now, what reasons should the committee give in that situation?  The answer is that in the simple typical case to which I have referred there are no reasons which the committee can give, save that it was not satisfied with either of the alternatives put forward in evidence and on its own expert knowledge preferred another figure. If that is all that the decision was, a simple matter of valuation opinion and nothing else, that is all that the decision involves, and if the decision is based simply on the committee’s own views, having regard to the evidence put before them, then there are no reasons which the committee can give save to say that they think that their figure is right. Great complication and trouble would ensue if it were sought to make committees give reasons in such a situation beyond the simple and single reason to which I have referred. Here, says Mr Wood, the landlord advanced a substantial argument based upon what is by concession a relevant matter, namely, the effect of inflation itself and the effect of inflation upon the rentals of comparable properties, but he says the panel either176 failed to give any reasons for rejecting the argument and the material supporting it or rejected it in such cryptic language as to make it impossible to ascertain whether it was rejecting it as inadmissible or irrelevant or upon some factual basis resulting from an assessment of conflicting evidence. The factual background to the dispute can be set out shortly. Mr C B J Miller, a chartered surveyor and a Fellow of the Royal Institution of Chartered Surveyors, acts professionally for the landlord applicant, which was established by his late father. Since 1975 or thereabouts he has managed Longwood Court, which comprises six flats in one of the best parts of Havering. Four of the flats, including the subject flat, are conversions of the original building and the remaining two are in a more modern 1959 extension. A fair rent for the subject flat, no 1, was first registered in 1968. On April 16 1973 the panel determined the fair rent for the flat at £396 per annum, that is to say, £33 per month, effective from January 24 1972. This and all relevant rents hereafter referred to were exclusive of general and water rates. There had been no subsequent determination prior to the matters which I have to consider, but the tenant, Mr Wakefield, was in fact, prior to the dispute with which I am concerned, paying by agreement a monthly rental of £80 for the subject flat. No issue of any significance arises as to the size, accommodation, facilities, state of repair and the like of flat no 1. The landlord’s challenge to the rent officer’s determination of a fair rent of £100 per month is, as appears from the proof of Mr Miller, which was before the panel, supplemented by his oral evidence or explanation. The landlord company was also represented by counsel. The tenant submitted written representations from Mr D J Parish, also a Fellow of the Royal Institution of Chartered Surveyors. Both Mr Miller’s proof and Mr Parish’s written representations are before me as exhibits to the landlord’s solicitor’s first and second affidavits. According to Mr Miller, of the four flats in Longwood Court and the two then tenanted, only no 1 had a registered rent. However, at some stage, five of the six had been registered. No 3 was then tenanted at an unregistered rental of £108 per month, agreed in early 1983 on a three-year tenancy. In 1968 a fair rent for no 2 was registered at £23 per month. This flat was then occupied by Mr Miller’s sister. Four other flats were subsequently registered and, on later references, he said that the fair rents registered were the same or, in most cases, more than the rental terms which had been offered to tenants. Mr Miller also commented on four lettings referred to by the rent officer; one in particular, 7 Tadlows Close, Upminster, where the fair rent was registered at £123.50 per month. That was, said Mr Miller, the only one of the four referred to by the rent officer in close proximity to the subject flat. Mr Miller advanced a number of contentions based on (i) the increased cost of complying with the landlord’s obligations under the lease, put by him at an increase of 500/600% since the last registration in 1972; (ii) the average increase in income since that date of 480%, according to government statistics; (iii) The updating or phasing up of the rentals of the various flats referred to, to bring them to 1984 levels; (iv) A comparison of the accommodation and situation at 7 Tadlows Close and the fair rent registered for those premises in comparison with that registered for the subject flat. He concluded that on those bases the fair rent for flat no 1 should be registered at £160 per month. Mr Parish, largely though not wholly, relied upon the condition and amenities of flat no 1 and upon seven rentals which he regarded as representing prevailing rentals in the district and concluded that the fair rent would be, as the rent officer had concluded, £100 per month. He regarded 7 Tadlows Close as ‘probably one of the best flats in the entire area with a number of advantages not shared by flat no 1’. That was the material before the tribunal, supplementary to the reports of and the particulars provided by the rent officer himself, and in addition to the inspection which the panel carried out prior to reaching their decision. The method by which a fair rent is to be determined is laid down by section 70 of the Rent Act 1977. Subsection (1) reads as follows: In determining, for the purposes of this Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had to all circumstances (other than personal circumstances) and in particular to — (a) the age, character, locality and state of repair of the dwelling-house, and (b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture. Subsection (2), in effect, provides that scarcity value is to be disregarded and subsection (3) sets out a number of other matters which are specifically to be disregarded. These, then, are the provisions with which the panel had to comply when reaching its decision. The panel set out its reasons for the decision as follows. The paragraphs in the decision are not in fact numbered, but can be so identified. The first three paragraphs are descriptive of the subject property. Nothing turns upon them or upon para 5, which records that the panel carried out its statutory duty under subsection (3). I set out the remaining paragraphs upon which the argument has turned: (4) We paid careful consideration to the written representations of Mr Parish on behalf of the tenant. We found his reference to recent registrations in the area to be of interest in showing the general level of rent officer registrations. We also noted his comments as to the state of repair of the property. (6) We also carefully considered the submissions made to us at the hearing by Mr Brock on behalf of the landlord, and by Mr Miller who presented his evidence in a convenient written proof. The concluding sentence of that paragraph does not raise any controversial question. (7)  We could not agree with Mr Miller’s calculation of a rent of £160.00 per calendar month based on the updating of the unregistered rent of no 3 Longwood Court nor were we assisted to any extent by his argument based on phasing, having regard to the rental history in recent years of the subject property. We noted, but were not convinced by his submissions based on Government statistics of the index of average earnings from 1972-1984. There again, I need not read the last sentence because no point is taken on that. (8) We inspected the exterior of 7 Tadlows Close, Upminster and they give the reference of the decision which was drawn to our attention by both parties. We found this flat, which was situated close to the subject property, to be modern, of superior construction, and quite different from the subject flat. (9) In all those circumstances, we saw no reason to disturb the rent officer’s determination. (10) Having regard to all the evidence put before us, to our inspection, to our own knowledge and experience, and to the provisions of section 70 of the Rent Act 1977, we confirmed the fair rent, to be registered exclusive of rates, at ‘100.00 per calendar month.’ Mr Wood contended that although the theme running through the landlord’s case before the panel was the effect of inflation and its impact upon other rents however established, whether by registration or agreement, the panel does not appear to deal with that in a manner which he said was legally satisfactory. Indeed, he said the way in which, in para (7), the panel dealt with Mr Miller’s evidence, commencing with the words ‘We could not agree’, appears to amount to dismissal of the validity of that evidence in respect of both inflation and updating (phasing), but gives no or no sufficient reason for dismissing it. It is, in my view, clear that so far as no 7 Tadlows Close was concerned, the panel were not prepared to regard it as a proper comparable (see the last sentence of para (8)). Equally, the panel was (I consider) rejecting in clear terms Mr Miller’s calculated rental of £160 per month, based on the updating of the unregistered rent at no 3 and his ‘phasing’ arguments, having regard, as it was put, to the rental history of no 1. Finally, the panel expressed itself as not convinced by Mr Miller’s argument based on the average earnings index. It could have been said, though it was not expressly spelt out, that the rental of £100 per month was broadly in line with registered rents of comparable properties as disclosed by the evidence. I am also satisfied, in particular from paras (4) and (6), that the panel did give consideration to all relevant material. Although para (4) of the grounds upon which relief is sought disputed this, Mr Wood did not rely on that ground at the hearing and it was not suggested on the landlord’s behalf that the decision of the panel could be attacked on what can for convenience be called Wednesbury grounds. Mr Laws submitted that the reasons given by the panel enabled an informed reader such as the landlord’s professional adviser, Mr Miller, to know perfectly well what was and what was not being taken into account and how the decision was reached. I accept this. Moreover, he said the panel did take inflation into account. Although it expressly or by implication rejected or declined to apply Mr Miller’s suggested percentage increases of rent to allow for inflation, and in particular for increased landlord’s expenses and a proper return on capital, put variously at 480, 500 and 600%, the registered rent did in fact represent an increase of 200% over the last 1972 registered rent. Mr Wood had argued that a landlord such as the177 present applicant was entitled to guidance as to how this panel, adjudicating in a district where the landlord had a number of properties, would take into consideration inflation. I think it is sufficient for present purposes to say that in this case they did, though, of course, not to the extent claimed by the landlord. I am also mindful of the view of Lord Reid in Mason v Skilling [1974] 1 WLR 1437 at p 1439, commenting in relation to the valuation method of comparing with the subject premises the registered rent of comparable houses in the area, that ‘. . . as the number of comparable registered rents increases the more likely it will be that it will lead to a correct result’. I only mention, for example, that an unregistered rental for a superficially comparable house may reflect a scarcity value, which is of course an inadmissible factor in determining a fair rent. That inflation generally is a permissible consideration has been well recognised (see, for example, in the Court of Appeal Wareing v White (1985) 274 EG 488,* per Lawton LJ, with whom Fox LJ and Kerr LJ agreed, who, while accepting the relevance of inflation, affirmed the view expressed by Forbes J in Kovats v Corporation of Trinity House (1981) 262 EG 485 that it was a ‘fallacy to conclude that rents must rigorously be in line with inflation generally’. See also Lord Widgery in Metropolitan Holdings Ltd v Laufer, to which I have already referred, and the decision of Woolf J (as he then was) in Wareing v White (1984) 270 EG 851, [1984] 1 EGLR 97, the decision which was upheld by the Court of Appeal in the case to which I have already referred. *Editor’s note: See also [1985] 1 EGLR 125. Mr Laws reminded me that the nature of the panel’s task in determining on appeal the fair rent of premises was one of valuation where there was more scope for the exercise of opinion and judgment than in other fields of adjudication. Panels are constituted with expert and professional members, who operate within a particular locality of which they would have or would gain experience. This panel, according to the papers, included a legal member and a Fellow of the Royal Institution of Chartered Surveyors. In Guppys (Bridport) Ltd v Sandoe (1975) 30 P & CR 69, Lord Widgery CJ said at p 74: There are plenty of judicial offices, not the least that of 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, and 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 is given. In the present case, said Mr Laws, there is no real issue as to the primary facts, the location, condition, accommodation and so on of the subject premises. On the contested material, he said, the panel’s reasons are unambiguous. This is, in my view, a correct analysis of the situation. Mr Wood criticised what he called the ‘common form wording’ of para (10) of the reasons and suggested that it might be there to cover the weaknesses of the earlier paragraphs of the reasons. However, the Court of Appeal in Wareing v White, to which I have already referred, recognised that phrase as a permissible way for the panel to express itself unless it could be said that the panel was being untruthful. That was not suggested there and is not here. Having given careful consideration to all the arguments advanced by Mr Wood, I have come to the conclusion that upon the material before me the panel cannot be said not to have given sufficient reasons for the decision. In my view, adequate reasons were given. This application therefore fails and is dismissed. The application was dismissed with costs