Hillbank Properties Ltd v Hackney London Borough Council; Talisman Properties Ltd v Hackney London Borough Council
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE GEOFFREY LANE |
| Judgment Date | 26 May 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0526-4 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Plaint No. 7714544 |
| Date | 26 May 1978 |
[1978] EWCA Civ J0526-4
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the Shoreditch County Court
(His Honour Judge Willis)
The Master of the Rolls
(Lord Denning)
Lord Justice Geoffrey Lane and
Lord Justice Eveleigh
MR. J. COLYER, Q.C. and MR. R. FAWLS (instructed by Messrs. Stafford Clark & Co., Solicitors, London) appeared on behalf of the Appellants (Respondents).
MR. A. SCRIVENER, Q.C. and MR. R. BIRTLES (instructed by R.A. Benge, Esq., Borough Solicitor) appeared on behalf of the Respondents (Appellants).
In Hackney there are two roads of terraced houses. They were built nearly 100 years ago. The houses have two floors and are occupied by tenants. They have been inspected by the surveyor to the local council. He found that they were fit for human habitation, but that they were in need of repair. He reported it to the local council: and they served notices on the owners, requiring them to do the repairs necessary to bring them up to a reasonable standard. But the owners objected. They said that the repairs would cost much more than the houses are worth. In the face of this objection the county court judge has set aside the notices. The local council appeal to this court.
The cases are in the nature of test cases and for this reason: If the owners do not do the repairs, the houses will in due course become so dilapidated that they will be unfit for human habitation. Once they are unfit the owners will be in a position to evict the tenants by this means: They will give an undertaking to the local council that the houses will not be used for human habitation. On the owners giving such an undertaking, the tenants will no longer be protected by the Rent Acts, see section 16(5) of the Housing Act 1957. The owners will then get orders for possession of the houses. The local council will have to rehouse the tenants. The owners will get vacant possession: and then deal with the houses to their great advantage. They will do them up and sell them with vacant possession.
I should have thought that socially this was most undesirable. It means that the owners are at liberty to let houses get in a state of gross disrepair: and use it as a means of depriving tenants of their homes.
One other thing must be remarked. It is the emergence of the "one house" company. This is a new phenomenon in the housing world. It is comparable to the "one ship" company in the shipping world. It can be used with great advantage by people who form private companies, sometimes Irish companies or other overseas companies. Such a company buys one house on mortgage, and then - if liabilities accrue to outside creditors - the company can be wound up. The mortgagees can sweep up the only asset and the other creditors will go away empty-handed. Often enough, the promoters will themselves be the mortgagees: and will then operate so as to take all possible benefit to themselves and inflict all possible losses on others.
With this introduction, I turn to the two houses in this case. One is 68 Glyn Road, E.5. It is owned by a company called Hillbank Properties Limited The other is 48 Coopersale Road, E.9. It is owned by a company called Talisman Properties Limited Both companies have their address at 27 Victoria Square, London, S.W.I. We know nothing about these two companies. No information was given to the court below about them. All we do know is that both houses are managed by the same property managers. These managers gave evidence that neither company has any money with which to pay for any repairs. Any work on the houses will have to be financed by a loan at normal interest rates of 14 per cent. Both houses are occupied, in whole or in part, by sitting tenants.
In 1976 the surveyors to the Hackney Council inspected the houses and made a detailed list of work required to put them into a reasonable standard of repair, having regard to their age, character and location. The surveyors submittedtheir reports to the appropriate committee of the council. In consequence the council on the 30th March 1977 served notice on the owners' agents requiring them to do the works of repair set out in the schedule. The cost of the works was in each case more than the house was worth - if a sitting tenant was there who was protected by the Rent Acts - but the cost was well worth while if the house was vacant. These are the figures:-
| 68 Glvn Road | |
| Value of house in its unrepaired state with sitting tenant therein | £1,700 |
| Cost of repairs | £2,750 |
| £4,450 | |
| Value of work after, repairs carried out with sitting tenant therein | £2,300 |
| Value of house with vacant possession after works carried out | £7,500 |
The result is that, with a sitting tenant, the repairs done result in a loss of £2,150: but if, with vacant possession, they result in a profit of £3,050.
| 48 Coopersale Road | |
| Value of house in its unrepaired state with sitting tenant therein £1,700 | |
| Cost of repairs £2,900 | |
| £4,600 | |
| Value of house repaired but with sitting tenant therein | £2,500 |
| Value of house repaired but with vacant possession | £7,500 |
The result is that, with a sitting tenant, the repairs result in a loss of £2,100: but with vacant possession they result in a profit of £2,900.
I must observe, however, that we do not know the price forwhich, these companies bought the houses. If they bought them at a very low price because of the sitting tenants, their profit with vacant possession would be greatly increased.
It is obviously, therefore, of no financial advantage to the owners to repair the houses with a sitting tenant there: because that would involve them in a loss. It is far more to their advantage to allow the houses to go unrepaired and become unfit for human habitation: because In these circumstances they may be able to get the tenant evicted, obtain vacant possession and make a large profit. At any rate, they do not want to do any repairs. They object very strongly to the notices of repair which have been served on them. The judge has quashed the notices. Was he right?
THE LAW
In considering the problem, it is necessary to bear in mind throughout that these two houses were fit for human habitation. They were, no doubt, in need of repair, but they were fit in this sense: that they were worth repairing. If they had been unfit - because the cost of repairs was more than the houses were worth - the local authority would have had to condemn them and serve a notice preliminary to a demolition order under the procedures contained in sections 9 to 39 of the Housing Act 1957 as explained in Bacon v. Grimsby Corporation (1950) 1 King's Bench 273.
The 1957 Act did not, however, contain any provision for houses which were fit for human habitation: that needed repairs to keep them up to a reasonable standard. This was first provided for in 1969 (by section 72 of the Housing Act 1969). Parliament introduced a new section into the Housing Act 1957. It is section 9(1)(A). It says that the local authority mayserve a notice requiring the owner to do repairs when they are needed so as to bring a house up to a reasonable standard "having regard to its age, character and locality".
THE DISCRETION OF THE LOCAL AUTHORITY
In applying that section the judge said that "in order to exercise a discretion properly, it is my opinion that the local authority must put themselves in possession of all the relevant facts. They will, of course, pay attention to any official representation or a report from any of their officers or other information in their possession, but they must also find out about the owner of the property, the cost of the works, and the value of the property. These are examples and I do not pretend they are exhaustive".
If the statute had afforded no appeal - or no means of challenging or questioning this notice - I would have agreed wholeheartedly with the judge. I go further. If fairness had demanded that the owner should be given a hearing before the notice was served, I would agree also. But I regard this notice as a preliminary step - a preliminary notification - made by an administrative authority. It is designed to ensure that the stock of houses is kept in good repair and not allowed to fall into decay. So long as the local authority have regard to the matters stated in section 9(1)(A) they are not bound to look further. They need not give any prior warning to the owner. They need not hear him, They need not make any enquiries of him. They need not enquire into the cost of the works or the value of the property. So long as they are satisfied that substantial repairs are required to bring the house up to a reasonable standard, having regard to its age, character, and locality, that is sufficient tojustify them in serving the notice: and they can properly be so satisfied by receiving a report from their officers who have examined the house and set down its condition and the repairs that are required.
The protection afforded to the owner is his right of appeal to the county court judge. If any owner is aggrieved by the notice, he can appeal to the county court judge: and on such appeal the county court judge will hear any objections that the owner may wish to make against the notice: and may quash it or vary it as he thinks fit. See section 11(1)(a)(3) of the 1957 Act, and Victoria v. Southwark (1978) 1 Weekly Law Reports at page 473. But here is the point: to what matters is the judge to have regard?
THE DISCRETION OF THE COUNTY COURT JUDGE
The county...
To continue reading
Request your trial
- R v Maldon District Council, ex parte Fisher
-
F.F.F. Estates Ltd v Hackney London Borough Council
...with a sitting tenant and in not applying the test laid down by this court in Hillbank Properties v. Hackney London Borough Council 1978 QB 998. Mr. Bard's own figures for the value of the house with vacant possession were: in its present state before the work of improvement was carried out......
-
An Application by D.L. Richardson for Judicial Review, v A Closing Order Made by the London Borough Ealing Under Section 17 of the Housing Act, 1957
...or, better, on the authority of what Lord Justice Lane (as he then was) said in Hillbank Properties Ltd v Hackney London Borough Council (1978) QB 998 at 1014, on the basis of a figure somewhere in between. It is the open market value of the house, and not the rental investment in it, to wh......