Hughes v Borodex Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice COLLINS |
| Judgment Date | 25 March 2009 |
| Neutral Citation | [2009] EWHC 565 (Admin) |
| Date | 25 March 2009 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/5529/2008 |
[2009] EWHC 565 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MR Justice Collins
Case No: CO/5529/2008
Dr Victoria Williams (instructed by David Tagg & Co) for the Appellant
Mr Christopher Heather (instructed by Forsters) for the Respondents
Hearing dates: 5 March 2009
Mr Justice COLLINS :
The appellant is the tenant of a flat on the ground and lower floors of premises in Tite Street, Chelsea. She appeals against the decision of a Rent Assessment Committee dated 7 May 2008 which determined the rent payable for the flat to be £2,340 per month with effect from 30 April 2008. For reasons which will become clear, because this amounts to more than £25,000 per year, the appellant suffers a serious disadvantage since she has lost security of tenure and the respondents have served a notice to quit on her. This appeal turns on whether improvements made by her to the flat some 17 years ago should be taken into account in her favour in assessing the rent payable. If they are, although the Committee has not indicated what discount it would have applied, she anticipates that the rent will not exceed the sum of £25,000 per year and so she will retain her assured status.
The salient facts can be set out shortly. The respondents hold the property on a head lease from the Cadogan Estate. On 25 March 1964 an under lease for a period of 39.25 years less 3 days of the flat was granted at a rent of £195 per year. This under lease was assigned to the appellant's mother (now deceased) on 9 October 1977. It came to an end on 21 June 2003 whereupon the appellant became an assured tenant in accordance with the relevant provisions, to which I shall have to refer in some detail, of the Local Government and Housing Act 1989 (the 1989 Act). So long as she remained an assured tenant, it is common ground that she was entitled to the protection provided by the Housing Act 1988 (the 1988 Act) which includes security of tenure and the right to apply to a Rent Assessment Committee to fix the rent. By virtue of Paragraph 2 of Schedule 1 to the 1988 Act as amended a tenancy entered into after 1 April 1990 will not qualify as an assured tenancy if the annual rent exceeds £25,000 on applying the formula set out in Schedule 10 to the 1989 Act. It is to be noted that that figure has remained constant since 1990 and perhaps somewhat surprisingly there has been no increase to reflect the impact of inflation.
On the coming to the end of the long residential tenancy in 2003, the appellant became an assured periodic tenant by virtue of Section 186 of and Schedule 10 to the 1989 Act. The 1989 Act repealed Part 1 of the Landlord and Tenant Act 1954, which had given protection to tenants such as the appellant, and substituted for its provisions those contained in Schedule 10. S.186(1) provides:—
“Schedule 10 to this Act shall have effect (in place of Part 1 of the Landlord and Tenant Act 1954) to confer security of tenure on certain long tenancies and in particular to establish assured periodic tenancies when such long tenancies come to an end.”
Schedule 10 is headed 'Security of Tenure on Ending of Long Residential Tenancies'. Paragraph 1 provides:—
“1(1). This schedule applies to a long tenancy of a dwelling house at a low rent as respects which for the time being the following condition (in the Schedule referred to as 'the qualifying condition') is fulfilled, that is to say, that the circumstances (as respects the property let under the tenancy, the use if that property and all other relevant matters) are such that, of the tenancy were not at a low rent, it would at that time be an assured tenancy within the meaning of Part 1 of the Housing Act 1988.
(2) For the purposes only of determining whether the qualifying condition is fulfilled with respect to a tenancy, Schedule 1 to the Housing Act 1988 (tenancies which cannot be assured tenancies) shall have effect with the omission of Paragraph 1 (which excludes tenancies entered into before, or pursuant to contracts made before, the coming into force of Part 1 of that Act). “
Paragraph 3 provides that the long residential tenancy continues in being until terminated and the landlord can achieve such termination by service of the requisite notice under Paragraph 4. The respondent served a notice bringing the long tenancy to an end and proposing a new assured tenancy to commence on 28 February 2004. Agreement on the rent payable was not achieved and so there was a reference to a Rent Assessment Committee which determined a rent of £1,668 per month. That figure was reached by disregarding in the appellant's favour the improvements she had carried out.
Paragraph 9 of Schedule 10 so far as material provides that on the termination by a landlord's notice of the long residential tenancy, the tenant remains in possession under an assured periodic tenancy arising by virtue of Paragraph 9. Paragraph 9(2)(d) specifies that the periods of the tenancy and the intervals at which rent is to be paid are monthly. The rent itself and the other terms are to be determined in accordance with Paragraphs 10 to 12 of the Schedule.
Assured tenancies were created by the Housing Act 1988. Inter alia, the right to possession was limited to specific grounds and, subject to some immaterial exceptions, disputes about the rent payable can be referred to a Rent Assessment Committee. Section 13 allows a landlord to serve an initial notice of increase after a minimum period of one month and thereafter after a year has elapsed (s.13(2), (3) and (3A)). Section 13(4) confers upon the tenant the right to refer a landlord's notice of increase to a Rent Assessment Committee. Section 14 sets out the principles which a Committee must apply. Those relevant to this appeal are as follows:—
“14(2). In making a determination under this section, there shall be disregarded—…
(b) any increase in the value of the dwelling house attributable to a relevant improvement carried out by a person who at the time it was carried out was the tenant, if the improvement –
(i) was carried out otherwise than in pursuance of an obligation to his immediate landlord..,.
(3). For the purposes of subsection 2(b) above, in relation to a notice which is referred by a tenant as mentioned in subsection (1) above, an improvement is a relevant improvement if either it was carried out during the tenancy to which the notice relates or the following conditions are satisfied, namely –
(a) that it was carried out not more than twenty-one years before the date of service of the notice; and
(b) that, at all times during the period beginning when the improvement was carried out and ending on the date of service of the notice, the dwelling house has been let under an assured tenancy; ….”
Since assured tenancies did not exist until the 1988 Act created them, it is obvious that s.14(3)(b) would on its face mean that tenants such as the appellant could not meet the condition leading to a disregard. Thus it is only if the 1989 Act, which conferred assured tenancies on those whose long tenancies at a low rent had come to an end, contained provisions which enabled those tenants to benefit from the disregard that the appellant could succeed. It is to be noted that Paragraph 1(1) and (2) of Schedule 1 to the 1989 Act is careful to limit the omission of Paragraph 1 of Schedule 7 to the 1988 Act to a determination whether the qualifying condition is met (Paragraph 1(2)) and that Paragraph 1(1) does not deem the long tenancy to be an assured tenancy. Again, it applies only to enable a tenant to take advantage of the security provided by the creation at the termination of the long tenancy of an assured tenancy.
The relevant paragraph of Schedule 10 is Paragraph 11. Sub-paragraphs (6) and (7) provide:—
“(6) Subsections (2), [(3A),] (4) and (5) of section 14 of the 1988 Act shall apply in relation to a determination of rent under sub-paragraph (5) above as they apply in relation to a determination under that section subject to the modifications in sub-paragraph (7) below; and in this paragraph 'rent' shall be construed in accordance with subsection (4) of that section.
(7) The modifications of section 14 of the 1988 Act referred to in sub-paragraph (6) above are that in subsection (2), the reference in paragraph (b) to a relevant improvement being carried out shall be construed as a reference to an improvement being carried out during the long residential tenancy …..”
Section 14(3) of the 1988 Act is not applied by Paragraph 11(6). However, it is clear that it was intended that a 'relevant improvement' was to include one...
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