Williams and another v Khan

Rent Act 1977–Assessment of fair rent for a dwelling-house which, by the time the case was heard by a rent assessment committee, had become subject to a closing order–Rent determined by a committee at £5.75 per week–Submission that the committee should have determined a nil or nominal rent and that their decision was therefore incorrect in law–Submission rejected by judge–Committee had correctly carried out their task, which was to determine a fair rent bearing in mind such matters as the age, character, locality and state of repair of the premises and the fact that a closing order had been made, in so far as the latter fact would affect the willingness of any person to enter into occupation and pay rent–Leave, however, given to appeal to Court of Appeal This was an appeal by Isaac Williams and his wife, Lucille Williams, tenants of 6 Glovers Road, Small Heath, Birmingham, from a determination of a rent assessment committee of the West Midlands Rent Assessment Panel dated July 3 1978. The respondent was the landlord, Manir Khan. Andrew Arden (instructed by the Small Heath Community Law Centre) appeared on behalf of the appellants. The respondent did not appear and was not represented. Giving judgment, STOCKER J said: In this case counsel moves, on behalf of the appellants, by way of an appeal from the determination of a rent assessment committee of the West Midlands Rent Assessment Panel, dated July 3 1978, which was notified to the appellants on July 12, in proceedings under the Rent Act 1977, whereby it was decided that a fair rent of £5.75 per week be registered for the premises, the subject of the determination, namely, 6 Glovers Road, Small Heath, Birmingham, and for an order that the determination should be set aside and the matter remitted to the rent assessment committee with the direction that the committee register either a nil rent or a nominal rent for the premises, after having considered and given proper weight to all relevant facts, including the fact that the premises are unfit for human habitation within the meaning of the Housing Act 1957, as amended by the Act of 1969, and are the subject of a closing order. The grounds put forward in the notice of appeal are that the rent assessment committee misdirected itself in law in holding that the making of a closing order under section 17 of the Housing Act was not conclusive evidence on the basis of which either a nil rent or a nominal rent should be registered for the premises, or erred in law in giving insufficient weight to the closing order. I think the facts emerge sufficiently by consideration of the chronology of events as they took place. The appellants, Mr and Mrs Williams, were the tenants of 6 Glovers Road, Small Heath, in Birmingham, and on December 12 1977 they made an application for the determination of the rent to be registered. 93 On March 23 1978 the housing committee of the Birmingham City Council resolved that a closing order would be made on this property. It seems from the record that it may be the appellants themselves who first initiated the proposition that such a closing order should be made, but it does not seem to me to be relevant to the issues whether that is so or not. On March 29 1978 the consultation took place at the property between the rent officer and the landlord and the tenant. The officer had at that time a letter indicating that the resolution of March 23 by the housing committee had been passed. On April 10 the rent officer registered as a fair rent the sum of £6.13, which included a figure of 63p for furniture, those of course being weekly sums. On April 18 the appellants, having disagreed with that assessment, launched an objection to the registered rent, and lodged it with the rent officer, asking that the matter be referred to the rent assessment committee. On April 19 1978 the closing order, foreshadowed by the council’s resolution of March 23 1978, was in fact made and served. On May 13 that closing order became operative, no notices of appeal having been given by the landlord, and on July 3 the hearing which the appellants had requested took place before the rent assessment committee. They made their determination and sent out their decision on July 12. Their decision in fact was that the furniture element should be reduced to 25p from 63p, but otherwise they approved of the rent officer’s assessment of £5.50 a week. In effect, therefore, the weekly rent was assessed at £5.75 instead of £6.13 that the rent officer had reached. On July 12, that is to say the same date as the decision was sent, the tenants (that is the appellants) were in fact rehoused by the local authority. It follows therefore that this claim relates to the period from December 12 1977, when application that the rent should be determined and registered was made, to July 12, when the appellants were in fact rehoused. The appellants complain that the rent assessment committee did not apply the correct principles of law in arriving at their determination of the fair rent as being £5.75 per week. The rent assessment committee’s reasons were, as I have said, communicated to the appellants on July 12, although that determination is dated July 3. It is unnecessary to read the whole of it, but specific complaint is made of a number of passages, and I think I should read them. In the third paragraph the rent assessment committee’s reasons are given in these terms: Mr Bean– that is the solicitor representing the appellants –argued that because of the closing order the committee was under an obligation to fix a nominal or even a nil rent. We were unable to accept this argument. Our statutory duty is to determine a fair rent and in doing so have regard to all the circumstances as defined in section 70 Rent Act 1977. If a local authority decides that a house is unfit for human habitation on grounds listed in section 4 Housing Act 1957, that is certainly one of the circumstances before the committee whether or not the decision is followed by a closing order or some other proceedings available to the local authority under the Housing Acts. But it is not per se conclusive of the question of the fair rent. Mr Arden, in his arguments before me, challenges that passage that I have just read as representing correctly the law which the assessment committee ought to have applied, and he does so really by saying that it is the wrong emphasis in respects which I will mention in a moment, but stated generally he is saying that because, by the time that the rent assessment committee met, a closing order had already been made in respect of these premises, it does not make sense that one statutory authority having made a closing order on the basis that the house is not fit for human habitation, and another statutory authority, namely, the rent assessment committee, should in effect come to different conclusions and apply different criteria. If the house is unfit for human habitation. Mr Arden submits that it must follow that after the closing order it is illegal for anybody to live in such premises and accordingly the proper value at least from that date should be nil, and that the assessment from the date of the application should reflect the known fact that the future was going to bring about a closing order. He says therefore that the way in which the committee have expressed the paragraph which I have just read insufficiently reflects the importance of the factor of the existence of the closing order. The reasons of the committee continued in this way: Having weighed all the relevant factors and in particular the fact that the house is large for its type . . . and is in full occupation by the tenants and their family we conclude that the rent officer was correct with . . . the fair rent of the house. Mr Arden specifically criticises that passage because he says that the fact that the house was in full occupation by the tenants is a matter which is personal to the tenant and not related to an assessment of rent, which is an assessment in rem and relates to the premises and not to the circumstances of any given tenant, and I shall have to return to that line of argument. The position therefore is really this, as I have in part indicated. Here was an old and quite obviously substantially dilapidated house in which the tenants applied, as they were of course entitled to do, under the Rent Act for the determination of a fair rent. At about the same time, at any rate during the period in which that matter was being considered by the rent officer and by the rent assessment committee, the local authority, acting under the Housing Act 1957, made a closing order which can only be justified, and could only legally be made, on the basis that the premises were unfit for human habitation. The issue which I have to decide is, where you have different criteria to be applied by two different statutory authorities, whether it can be said that the rent assessment committee failed properly to reflect the fact that this house had been found unfit for human habitation, and that as it is submitted that they did fail sufficiently to take that factor into account, they erred in law. Now the Rent Act 1977, section 70, lays down the criteria which are to be applied by a rent officer or by a rent assessment committee in reaching the figure which is a fair rent, and section 70 (1) reads: 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 the 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. Then there is a provision which I think I had better read. Subsection (2) of section 70 reads: For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms. In other words, they are saying that scarcity value is to be ignored. Then there follows by subsection (3) a number of matters which the Act says are to be disregarded. It seems to me that there is no point in my reading them, since they have no relevance to the problem which is before the court at the moment. I therefore draw attention to the fact that the criteria under section 70 which are to be applied where there is a registered tenancy in assessing a fair rent are the age, character, locality and state of repair of the dwelling-house and the value of any furniture provided under the tenancy. It seems perhaps convenient at this moment to compare the criteria that I have just read under section 70 of the Rent Act with the criteria under section 4 of the Housing Act 1957, under which the local authority made their closing order. 94 Section 4 reads: ‘Matters to be taken into account in determining whether a house is unfit.’  Subsection (1): In determining for any of the purposes of this Act whether a house is unfit for human habitation, regard shall be had to its condition in respect of the following matters, that is to say–(a) repairs; (b) stability; (c) freedom from damp; (cc) internal arrangement; (d) natural lighting; (e) ventilation; (f) water supply; (g) drainage and sanitary conveniences; (h) facilities for storage, preparation and cooking of food and for the disposal of waste water; and the house shall be deemed to be unfit for human habitation if and only if it is so far defective in one or more of the said matters that it is not reasonably suitable for occupation in that condition. Now there are provisions whereby the person who is the owner or, I suppose, occupier, but certainly the owner, of that house can undertake to carry out certain remedial works and thus avoid the service of a closing order. That did not happen in this case. As I have indicated, the local authority did serve a closing order and therefore it must be assumed that the local authority’s view was that this house was unfit for human habitation in one or some or all of the matters stated in section 4(1) which I have just read. The argument put forward by Mr Arden is that that being so, if the house were unfit for human habitation it must follow that a rent fixed at £5.75, which appears to be, roughly speaking, comparable with other similar buildings in the neighbourhood, must be too high a rent because it would be fixing a rent for a house which another statutory authority has found unfit for human habitation, which renders it a criminal offence to continue to reside in such a building after the date the closing order comes into effect. Mr Arden therefore says that whatever else may be the proper conclusion that the rent assessment committee ought to have reached, at any rate from May 13, when the closing order became operative, the rent should have been assessed at nil. Since the assessment was being made in the knowledge that the closing order had become operative, then, in determining the rent at the date of application regard should have been had to the known and ascertained history of what had in fact happened between the date of application and the date when the committee made their assessment. The closing order had not only been threatened but in fact had been served and had come into operation, and that was a factor which, if the rent were to be assessed at the date of application, should be reflected in the proper rent, the fair rent, not only from May 13 onwards but between the date of application, December 12 1977, and May 13, when the closing order became operative. And he says that those principles were not applied by the rent assessment committee, and accordingly the matter should be referred back so that they can apply those principles and reassess the fair rent. Mr Arden says that a fair rent must be either nil or a purely nominal rent, which I think he would put at £2 per week. In support of his proposition that there was an error when the rent assessment committee took into account the fact that the premises were in full occupation by the tenants, Mr Arden cites the case of Black v Oliver [1978] 3 All ER 408. That was a case on appeal from the Lands Tribunal and related to the rates that had been assessed in respect of a house, and the passage upon which Mr Arden particularly relies can be found at p 414, at letter e, where Browne LJ says: If the tribunal of fact (the local valuation court or the Lands Tribunal) comes to the conclusion that if factors personal to the actual occupier are disregarded no one would give any rent for the hereditament, there is in my judgment no reason in law why it should not find a nil value. I find it very difficult to imagine that anyone who had not the ratepayer’s personal reasons for wanting to stay there would give any rent for this hereditament. Lower down, on the same page, at letter j, he said: In my judgment, that case that is to say, the Grimsby Docks case, British Transport Commission v Hingley [1961] 2 QB 16– is an authority which supports what I think is the right answer in principle, namely that there is no reason in law why in proper circumstances there should not be a nil value even though the actual occupier is in beneficial occupation. Lower down, at letter h, he says: It is clear that any prohibition or restriction on the use of a hereditament imposed by statute which would bind any and every occupier must be taken into account in valuation. The closing order in the instant case would of course be binding upon any future potential occupier. A similar conclusion can be drawn from the case of Kimsey v Barnet London Borough Council (1976) (unreported), which is before me in the form of a transcript, and on p 10 of that transcript, the leading judgment of the court being given by Bridge LJ, the following passage appears: It is said by Mr Trench, on behalf of the appellant, that one should attribute some value to the property as it stands because there is in fact still a statutory tenant in occupation, and although by serving their notice under section 9 the council have declared their opinion that the property is unfit for human habitation, they have not yet taken any steps to cause the statutory tenant to be removed; they have not, for instance, made a closing order. I think in the context of the considerations relevant under section 9 and section 39 it would be wrong to attribute any present value to this property. There could be no expectation of a continuing right to receive the rent paid by the statutory tenant having regard to the fact that it is common ground that the property is not fit for human habitation. Therefore, Mr Arden says, it is clear that that factor was wrongly taken into account by the rent assessment committee because they appear specifically to say that the fact that the house was in occupation by the tenants and their family was a relevant factor. I am not convinced that that is what the passage means, and I will read it again: Having weighed all the relevant factors and in particular the fact that the house is large for its type (1,054 sq ft) and is in full occupation by the tenants and their family we conclude that the rent officer was correct. . . . It does not, to my mind, really follow from that sentence that the rent assessment committee were giving any specific value to the fact that the tenants were still in occupation. It is equally consistent, it seems to me, to that fact being a criterion in the assessment generally as to what people in that position would pay if in occupation of the whole house. But if I am wrong in my conclusion as to what that passage means it would not, in my judgment, seem really to affect the issue. The position seems to me to be this. Here is a house which is clearly in a very poor condition, because otherwise the local authority would not have made a closing order. It is also clearly in very poor condition because that is what the rent assessment committee say in their reasons for assessment. They say in terms that it is 120 years old. Its physical condition is extremely dilapidated, and it is located in Small Heath, one of the rundown inner city areas of Birmingham currently under largescale redevelopment. Many of the adjacent properties are empty and obviously scheduled for demolition. Then they go on to make specific reference to the fact that the Birmingham City Council had passed a resolution followed by the service of the actual closing order. The duty of the rent assessment committee, or for that matter the rent officer, is to take into account, in reaching their conclusions as to what was a fair rent, the age, character, locality and state of repair of the dwelling-house, and it seems to me that Mr Arden is correct in saying that they should clearly take into account, if they are going to put as the effective date the date of application, their knowledge of what had transpired since the date of application, and in this case that knowledge would have included the fact that the local authority had found this house unfit for human habitation and had issued a closing order by reason of that finding. In my judgment it does not follow that because there has been a closing order the fair rent for the building is necessarily either nil or nominal. The fact that a closing order has been made does not affect the physical condition of the premises. In my judgment what the rent assessment committee were bound to do under section 70 was to say what is the fair rent, bearing in mind the age, character, locality and state of repair of this dwelling-house, and the fact that a closing order has been made upon it, in so far as that fact would affect the willingness of any person to enter into occupation upon it and pay rent. In my judgment the relevance of the closing order relates to the physical condition of the premises which justified the order, and it does not follow that because there has been a closing order the rent assessment committee were acting upon any manifestly incorrect principle of law. Mr Arden says that they really must have been because the rent of £5.75 is, generally speaking, the sort of figure that similar houses in the area would attract as rent. That may be so, but of course I do not know whether similar houses in the area, if inspected by the local authority, might also attract closing orders. It is the physical condition, rather than the legal connotation of the order, which in my view is the factor which the rent assessment committee have to take into account. Though, as I have said, the fact that the closing order has been made, and the implication of that fact, is certainly a factor to which they should have regard. It seems to me that they did, as the award, which are the reasons given by the committee, states so in terms. If a local authority decides that a house is unfit for human habitation on the grounds listed in section 4 of the Housing Act, 1957, which I have read, that is certainly one of the circumstances before the committee, whether or not the decision is followed by a closing order. So they did take it into account, and therefore, in my view, their task and their statutory task was to reach a fair rent, bearing in mind the criteria set out in section 70, and any historical fact such as the issue of a closing order which had been made. In my judgment it does not follow, though there may be cases in which it would arise, that simply because a closing order has been made the fair rent is necessarily nil. It may well be somewhat less than it would otherwise be; no doubt that is so, but for the reasons that I have endeavoured to give, in my judgment it cannot be said that there was an error of law here or that the rent assessment committee applied any false principle of law in reaching their conclusions or failed to take into account any matter that they should have done. A written statement of their reasons does not have to set out every single factor which occurred to their minds or the detail of the factors which are stated. They had stated that the fact of the closing order is a factor taken into account, and it seems to me that they do not need to go further by precise legal analysis as to the conclusion to be drawn from that factor. One simply does not know, other than by reference to the papers which would indicate a comparable rent for other houses, to what extent they did in fact reflect the factor of the closing order. Therefore, for the reasons which I have endeavoured to give, I think that this motion should be rejected and the relief sought not granted. I would not refer the matter back to the rent assessment committee. Leave was given to appeal to the Court of Appeal.