Curtis v London Rent Assessment Committee

JurisdictionEngland & Wales
JudgeLORD JUSTICE AULD,LORD JUSTICE HIRST,LADY JUSTICE BUTLER-SLOSS
Judgment Date09 October 1997
Judgment citation (vLex)[1997] EWCA Civ J1009-10
Docket NumberLTA 97/5112/J
CourtCourt of Appeal (Civil Division)
Date09 October 1997

[1997] EWCA Civ J1009-10

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

CROWN OFFICE LIST

IN THE MATTER OF Part IV of the Rent Act 1977

Royal Courts of Justice

Strand, London WC2

Before:

Lord Justice Butler-Sloss

Lord Justice Hirst

Lord Justice Auld

LTA 97/5112/J

Robert G. Curtis
Appellant
and
(1) THE CHAIRMAN OF THE LONDON RENT ASSESSMENT COMMITTEE
(2) MR HUNTINGFORD
(3) MR PACKFORD
Respondents

MR JAMES BONNEY QC & JONATHON GAVAGHAN (Instructed by Drewitt Willan, Manchester, M2 5WQ) appeared on behalf of the Appellant

KIM LEWISON QC & JOHN HOBSON (Instructed by The Treasury Solicitor, Queen Anne's Chambers, 28 Broadway, London, SW1H 9JS) appeared on behalf of the First Respondent

The Second Respondent was not present and was not represented

The Third Respondent was not present and was not represented

LORD JUSTICE AULD
1

INTRODUCTION

2

This is an appeal, following the grant of leave by this Court, by Robert G. Curtis ("the landlord"), from an order in his favour of McCullough J. of 27th November 1996 quashing determinations of the London Rent Assessment Committee of "fair" rents of two unfurnished regulated tenancies for registration under Part IV of the Rent Act 1977 and remitting the references to a differently constituted Committee for determination in accordance with his judgment. The appeal raises three main questions. The first is whether and in what circumstances a successful party can challenge in the Court of Appeal the reasoning of the judge below. If such a challenge can be made, the second and third questions concern the lawfulness and rationality of the Committee's mode of assessment and the adequacy of its written reasons.

3

The Rent Act 1965 introduced a scheme for regulating unfurnished tenancies and for rent control of them by the registration of fair rents. The Rent Act 1974 extended the scheme to furnished tenancies. Parts III and 1V of the Rent Act 1977 now contain the statutory scheme. It enables limitation of the recoverable rents of regulated tenancies by entry of them in registers maintained by rent officers for local authority registration areas. Either party may apply to a rent officer to register a rent, which means, albeit indirectly introduced in Section 67(2) of the Act, "a fair rent". The rent officer's determination of such a rent is subject to appeal by reference to a rent assessment committee, consisting usually of a legally qualified chairman, a surveyor and a lay member.

4

The 1977 Act does not define "a fair rent", but Section 70 of it describes how it is to be determined. Its effect is to take as its starting point the market rent for the premises in their current state, assuming a hypothetical absence of scarcity of similar properties available for letting in the locality and disregarding the personal circumstances of the landlord and tenant and certain other matters, including disrepair or defects for which the tenant is responsible or improvements made by him.

5

The Housing Act 1988 created new forms of tenancy from 15th January 1989, assured periodic tenancies and assured shorthold tenancies at open market rents. Such rents were to be determined by the parties in the first instance and, on the proposal by a landlord of a new rent, by a rent assessment committee if required by the tenant. Section 14 provides that a market rent is that which, subject to certain considerations, the property "might reasonably be expected to be let in the open market by a willing landlord under an assured tenancy". The Act also provided for a phasing out of the regime of regulated tenancies and registered "fair" rents provided by the 1977 Act. The phasing out will take a long time since it is to be achieved by freeing only post 1988 Act tenancies, subject to certain exceptions, from the control of the earlier legislation. There are thus two systems of statutory control of tenancies and rents, a substantial but dwindling body of pre-1989 regulated tenancies for which fair rents may be registered and a growing number of assured tenancies at market rents. In most cases registered fair rents are significantly lower than market rents for comparable properties. McCullough J neatly summarised the effect of the two systems on page 4 of the transcript of his judgment:

"…unless the tenant requires the intervention of the rent assessment committee, the rent is fixed in a real market. Thus, given two dwellings in a comparable location, with comparable accommodation, in a comparable state of repair and decoration…and let on the same terms, if one was let before 15th January 1989 and the other on or after that date, the tenant of the former will pay a lower rent than that paid by the latter unless there is no scarcity component in the rent of the latter."

6

Before 1989 rent officers and rent assessment committees, when determining fair rents for registration under the 1977 Act, most commonly looked to other registered rents as comparables. There were then relatively few market rent comparables. Since that time market rents of assured tenancies of similar dwellings have become increasingly available as comparables and starting points for determination of 1977 Act fair rents.

7

The main substantive issues raised by this appeal are whether rent officers and rent assessment committees—

1. should normally determine fair rents by reference to market rent comparables rather than fair rent comparables when both are available;

2. should, if they prefer fair rent comparables or some other method to available market rent comparables, have good reasons for doing so; and

3. should explain their reasons adequately, setting out their workings arithmetically if necessary.

8

The Court of Appeal considered these issues, obiter, in Spath Holme Ltd. v. Chairman of the Greater Manchester and Lancashire Rent Assessment Committee & Ors. [1995] 2 EGLR 80, CA. Morritt LJ., with whom Glidewell LJ. and Sir John May agreed, held, as part of the ratio, that a "fair rent" under the 1977 Act is the same as a "market rent" under the 1988 Act save for the assumption of no scarcity and allowing for the statutory"disregards", and that, in assessing a fair rent, regard should be had to market rent comparables if any. He said, at 122–3:

"…the fair rent to be determined is a market rent less the disregards and discounted for scarcity.

Thus,…if there is no scarcity and no disregards then the rents should be the same whether the tenancy is a regulated tenancy or an assured tenancy."

9

As to the issues here, the sense of Morritt LJ's obiter observations was—

1. that where there are good market comparables, such as assured tenancies of flats in the same block virtually identical to that for which a fair rent is to be determined, those comparables should normally be adopted as the means of assessing the fair rent; and

2. that in such circumstance if a committee departs from such approach they should explain why; and

3. the extent to which they should explain their reasoning must vary with the nature of the decision and of the case generally and that their "workings" or figures may well be required.

10

Uncertainty about the interpretation of those observations and about their effect in law have caused difficulties for at least some rent assessment committees. Those difficulties are reflected in some inconsistency in approach by judges at first instance on appeal from assessments. It is said that landlords rely on the observations as authority for the propositions that rent officers and rent assessment committees should no longer rely on previous determinations and registered fair rent comparables, but should instead refer to market rent comparables and should explain their determinations, setting out their arithmetical workings. Some rent assessment committees have taken a contrary view—dismissing Morritt LJ's observations as obiter—stating that it is sufficient to rely without more on general or particular registered fair rent comparables to meet a challenge based on market rent comparables, and that, in any event, there is no need to give detailed reasons, still less arithmetical workings, whichever method of assessment they use.

11

Before considering the Spath Holme case and its effect in greater detail, I should set out Section 70 of the 1977 Act. It provides for the determination of "a fair rent" for registration under the Act. In sub-sections (1) and (2), it sets out respectively the criteria for and the assumption of no scarcity to be made in determining such a rent and, in sub-section (3), the matters to be disregarded when making the determination.

"(1) 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,

(b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture, and

(c) any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy.

(2) 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.

(3) There shall be disregarded-

(a) any disrepair or other defect attributable...

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