Western Heritable Investment Company Limited V. Olivia Hunter
| Jurisdiction | Scotland |
| Judge | Lord Hamilton,Lord Marnoch,Lord President |
| Docket Number | XA12/02 |
| Date | 23 March 2004 |
| Court | Court of Session |
| Published date | 26 March 2004 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lord Marnoch Lord Hamilton
| XA12/02 OPINION OF THE LORD PRESIDENT in APPEAL TO THE COURT OF SESSION under section 11 of the Tribunals and Inquiries Act 1992 by WESTERN HERITABLE INVESTMENT COMPANY LIMITED Pursuer and Appellant; against OLIVIA HUNTER Defender and Respondent: _______ |
Act: J.J. Mitchell, Q.C., D O'Carroll; Masons (Appellants)
Alt: O'Brien, Q.C., Collins; Castlemilk Law Centre, Anderson Strathern (Respondent)
23 March 2004
[1]I am grateful to Lord Hamilton for his account of the circumstances in which the present appeal arises, and the competing submissions of the parties.
[2]The main submission of counsel for the appellant was that, on a proper interpretation, Section 48 of the Rent (Scotland) Act 1984 required that a "fair rent" had to be determined by taking as the "starting point" the market rent of the dwelling-house in question, and then adjusting that rent by reference to the requirements of subsections (2) and (3), so far as appropriate. Counsel also submitted that, for the purpose of the starting point, where there were market rents of comparable dwelling-houses, it was incorrect, again as a matter of construction of section 48, to have regard to registered rents.
[3]Section 48 contains a number of directions which a rent officer, or, as the case may be, a rent assessment committee, is to follow in determining the amount of a "fair rent". It is important, in my view, to keep clearly in view what the section directs and what it does not.
[4]First, the section states that the rent is to be "fair", but without expressly defining what is meant by that expression. However, it is clear that it means fair as between the hypothetical tenant and the hypothetical landlord, so that it is to be assumed that neither is at an unfair disadvantage.
[5]Secondly, subsections (1) and (3) give specific directions as to certain matters relating to the dwelling-house which are to be taken into account, or, as the case may be, disregarded. Thus under subsection (1) it is necessary to have regard to the age, character and locality of the dwelling house and to its state of repair and, if any furniture is provided for use under the tenancy, to the quantity, quality and condition of the furniture. Subsection (3) contains a list of what is to be disregarded.
[6]Thirdly, subsection (2) requires it to 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".
[7]The terms of the section, and in particular subsection (2), indicate, in my view, that the "fair rent" would be a open market rent, freely negotiated between the parties at arm's length. The assumption under the subsection can only be sensibly applied to a state of supply and demand in a market for similar dwelling houses. However, it has to be borne in mind that, just as the tenant and the landlord are hypothetical, so also is the market. It may or may not correspond to the actual market for such dwelling-houses.
[8]Subsection (1) provides that the rent officer and the rent assessment committee are to have regard to their knowledge and experience of current rents of comparable property in the area. This provision is evidently intended to make it plain that such knowledge and experience are covered by the requirement "to have regard to all the circumstances". The important point, on the other hand, is that there is no restriction as to the type of material to which regard is to be had. In particular there is nothing which requires that attention must be confined to open market rents of comparable dwelling-houses.
[9]Further, the section does not prescribe the method by which the "fair rent" is to be arrived at. In particular it does not prescribe that the rent officer or rent assessment committee must start by ascertaining a market rent under subsection (1), and thereafter adjust it in accordance with the following subsections. While the section sets out a number of directions it does not say that they must be complied with in a certain sequence. In a particular case it may be clear that it is appropriate to adopt the sequence to which counsel for the appellant referred, but that would depend on the nature, extent, comparability and reliability of the available rental evidence.
[10]In the light of these propositions, while a "fair rent" would, in my view, be a market rent, I do not agree with the submission for the appellant that as a matter of correct construction of section 48, it must be determined by means of the method contended for. I should add that the correct construction of what is required by the section, or its equivalent in earlier legislation, cannot be affected by changes over time in the availability of different types of rental evidence, such as an increase in the number of open market rents of comparable property. Such changes may well affect the material which is used, and the way in which it is used, in arriving at the "fair rent". That is a matter of valuation and is not fixed by construction of the statutory provisions.
[11]It follows from what I have said that I disagree with the view expressed by Auld LJ in Curtis v London RAC [1999] QB 99 at pages 114-115 that "the exercise must in some way identify a market rent en route to assessing a fair rent". The statutory provisions do not make this sequence mandatory in arriving at a "fair rent". What is ultimately determined as the "fair rent" would be a market rent in the hypothetical circumstances required by the statute. I do, however, agree with Auld LJ when he said (at page 115) that, if the use of registered rent comparables is under consideration, it is necessary to reassess their current validity and applicability.
[12]I agree with Lord Hamilton's observations on the decision of the rent assessment committee in the present case, subject to one point. I do not consider that the committee proceeded on the basis that the use of registered rent comparables was "the primary method for determination of a fair rent", as if they thought that there was some rule or principle to this effect. I interpret what they said as indicating that they thought that they had the option of using such comparables as the primary method, which is a different thing. In this they may have been influenced by observations made by members of the court in Western Heritable Investment Co Ltd v Johnston 1997 SLT 74. However, it cannot be assumed that every possible method is equally appropriate. The method which should be used should depend on what is the best available evidence, although it may well be appropriate to use other available evidence as a check. Since otherwise I am in agreement with Lord Hamilton I concur with him as to the disposal of this appeal.
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lord Marnoch Lord Hamilton
| XA12/02 OPINION OF LORD MARNOCH in APPEAL TO THE COURT OF SESSION under section 11 of the Tribunals and Inquiries Act 1992 by WESTERN HERITABLE INVESTMENT COMPANY LIMITED Pursuer and Appellant; against OLIVIA HUNTER Defender and Respondent: _______ |
Act: J.J. Mitchell, Q.C., D O'Carroll; Masons (Appellants)
Alt: O'Brien, Q.C., Collins; Anderson Strathern (Respondent)
23 March 2004
[13]For the reasons given by Lord Hamilton I agree that the decision of the Rent Assessment Committee should be quashed and the case remitted for a hearing, of new, before a differently constituted Committee.
[14]In so far, however, as concerns the wider issues which were canvassed in the course of the hearing, I do not, with respect, share Lord Hamilton's difficulty in seeing "market rent" as the natural or logical "starting point" in the assessment of a "fair rent" for purposes of Part V of the Rent (Scotland) Act 1984. I also have sympathy with the observations of Auld L.J. in Curtis v. London Rent Assessment Committee 1999 Q.B. 92 at p. 116 that an unquestioning recourse to registered rentals:
"would freeze the fair rents by reference to precedent rather than achieve what is intended by the legislation, an exercise of 'valuation', an assessment of current fair rents by knowledgeable and experienced committees responsive to the particular characteristics of the subject property and to changing market levels ... ".
In short, to echo a phrase which appears a little later in the judgment, such recourse seems to me to constitute a "short-cut" to assessment rather than represent a method of valuation or assessment, as such.
[15]All that said, I agree with Lord Hamilton that, at least for Scotland, it is important not to be over-prescriptive as to the manner in which fair rents should be assessed and I readily agree that in certain circumstances such an assessment will involve what Lord Hamilton describes as the "composite task" of drawing on varying sources of material, including registered rentals, whereas, in other circumstances, such rentals may provide the principal or even sole basis of assessment.
[16]Where registered rentals of property are relied on I do not consider that they need always be re-worked in the manner set out by Keene J. in Northumberland and Durham Property Trust Limited v. London Rent Assessment Committee and Borkowski 1999 31 H.L.R. 109 at p. 116. Indeed, such an approach was expressly disavowed in Curtis (at pps. 100 and 116). All, I think, that can usefully be said is that in judging of their "current validity and applicability as comparables" the extent to which reliance can properly be placed on such rentals will necessarily depend, not only on their comparability and proximity in date, but on how, in general, they have been arrived at (e.g. by the Rent Assessment Officer or by the Rent Assessment Committee), on...
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