England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2
		2nd July 2003

Wednesday, 2nd July 2003

1. MR JUSTICE DAVIS: This is an appeal by a limited liability company called Park Lane Properties Limited from a decision of the Northern Rent Assessment Committee, which was given on 11th February 2003, and the reasons for which (on request) were supplemented by detailed reasons provided on 21st March 2003.
2. The background, briefly put, is this. Park Lane Properties Limited, as landlord, let out the top flat at 6 Winstanley Terrace, Leeds LS6 1DS, which, as I understand, is an area in north Leeds, to five young men who were students at Leeds University, called David Gardiner, Andrew Pegram, Ben Marsh, Jake Berrisford and Martin Balham. There was a written form of agreement, which appears to be undated, but which provides that the commencement date is 1st July 2002, and the term date is 30th June 2003. The total rent payable, as written in in manuscript into the agreement, was put at £3,812.94. Payments were to be made quarterly and it was agreed that, for the rooms concerned, which were five in number, this worked out at £58.50 per week each per week. A deposit of £1,250 was also sought, and it was provided that the maximum number of occupants should be five persons, which corresponds, as I understand it, to the number of bedrooms.
3. The agreement was for an assured shorthold tenancy and there were various other typed terms and conditions of the letting, which it is not necessary for me to set out.
4. The tenants formed the view that this rent was too high and, as was their right, on 11th November 2002 they applied to the Rent Assessment Committee for a determination under section 22 of the Housing Act 1988. Section 22 of the Housing Act 1988, in its amended form, provides as follows:

"(1) subject to section 23 and subsection (2) below, the tenant under an assured shorthold tenancy ... may make an application in the prescribed form to a rent assessment committee for a determination of the rent which, in the committee's opinion, the landlord might reasonably be expected to obtain under the shorthold tenancy".

I can pass over subsection (2). Subsection (3) reads as follows, in the relevant respects:

"(3) Where an application is made to a rent assessment committee under subsection (1) above with respect to the rent under an assured shorthold tenancy, the committee shall not make such a determination as is referred to in that subsection unless they consider --

(a) that there is a sufficient number of similar dwellings in the locality let on assured tenancies (whether shorthold or not); and

(b) that the rent payable under the assured shorthold tenancy in question is significantly higher than the rent which the landlord might reasonably be expected to be able to obtain under the tenancy, having regard to the level of rents payable under the tenancies referred to in paragraph (a) above".

It may be noted that the terms of subsection (3)(b) import an element of objectivity by use of the word "reasonably".

5. There is in fact, by virtue of section 11 of the Tribunals and Inquiries Act 1992, conferred a right of appeal from parties aggrieved by a decision of such a Rent Assessment Committee. Section 11(1) of that Act provides that an appeal lies to the High Court, provided that the party concerned is dissatisfied "in point of law" with a decision of the Tribunal. (I should add that, by section 10 of the Tribunals and Inquiries Act 1992, it is provided that it is the duty of the Tribunal, on request, to furnish reasons for decision, if so requested.)
6. It is by virtue of section 11 that the landlord appeals from the decision of the Rent Assessment Committee in this particular case, the landlord being dissatisfied with that decision and, as it says, being dissatisfied "in point of law".
7. I should mention that the respondent to this appeal has been the Northern Rent Assessment Panel. It does not appear that the five student tenants have been named as respondents to this appeal, as perhaps strictly they should have been, but I was informed, and accept, that the tenants have been notified of this appeal and it appears that they have not wished to appear. As a matter of practicality, leaving aside such financial implications as might arise were this appeal to succeed, it is to be noted that this tenancy has now come to an end.
8. The actual hearing of the tenants' application took place on 6th February 2003. On the morning of 6th February 2003, the three members of the Committee, one of whom perhaps it might be worth observing seems to be a chartered surveyor practising in Leeds, inspected the property at 6 Winstanley Terrace. Although the landlords had been notified of this inspection, the landlords elected not to have a representative attend that inspection.
9. The result of that inspection -- and I add that an inspection of the property is in terms permitted by the Rent Assessment Committee (England and Wales) Regulations 1971 -- is set out in some detail in the detailed reasons which were provided on 21st March 2003.
10. There is a detailed description of the property. Amongst other things, it appears that the front door had been blocked up and access was to be obtained from the rear. It was pointed out that, on the lower floor of the flat, there was an inner hallway, with four rooms and stairs to the second floor, the four rooms being a lounge, double bedroom, a three quarter sized bedroom (originally a bathroom) and a kitchen, and the kitchen was described in this way:

"An internal room with no window. It was a galley style and rather narrow. There was no space for eating".

There was then a description as to the fact that there are modern fitted units and other such matters. The three attic bedrooms, as they were described, were noted as having limited headroom because of internal roof beams at a height of about 5 feet. There is a description of the bath facilities and the furniture facilities. It was also stated that 6 Winstanley Terrace was off the Victoria Road and that was an area popular with students because of its proximity to the University.

11. There is thus a detailed description of the property in question and there is also an assessment of the locality in which the property was located.
12. Having set out those background matters in detail in a number of paragraphs, at paragraph 19, the Committee, in their detailed reasons, set out a review of the evidence.
13. The tenants had submitted written representations. They did not themselves attend the hearing or make oral submissions. The tenants attached to their written submissions details of four other properties to let for the next academic year, three of which were in the Victoria Road area and one was on Hessle Mount. The rents of such properties so submitted varied in price between £47.50 and £49.80 per person per week; that is to say, a quite significant amount less than the rent which these tenants were paying for this particular flat. The tenants then made observations about certain aspects of the poor state of repair and cleanliness of the property in question, and they also provided some photographs.
14. The detailed reasons of the Committee then record that, at the hearing, the landlords had been represented by Mr Naveen Ahmed and Mr Sam Ahmed, who, as I understand it, are involved in the running of Park Lane Properties Limited. Mr Ahmed is recorded as making a number of points to the Committee, all of which were summarised carefully in the reasons, and all of which tended, if accepted, to show that this rent of £58.50 per week each per person was by no means unreasonable or out of line. It is also recorded that Mr Ahmed was asked a number of questions by the Committee, which he answered, and was also invited to comment on the tenants' written submissions.
15. The reasons at paragraph 20 recorded that Messrs Ahmed produced details of a large number of properties currently to let for the next academic year in the Leeds 6 area. Those, it was observed, had been obtained from landlords or agents other than Park Lane Properties, and these included details of properties in the Victoria Road area, as well as other areas. Those properties, put forward as comparables, seem to have varied in terms of rent between £58 and £70 per week.
16. At paragraph 25 of their reasons, this is stated:

"The Committee had only limited opportunity to go through these details in the presence of Mr N Ahmed and Mr S Ahmed. The majority of the details had been obtained from internet sites operated by landlords/agents specialising in the student market in Leeds, and it appeared that a degree of selectiveness in relation to price had been used. In relation to one letting agent or landlord, Aston Properties, it could be seen that a search had been done to find properties being let for a weekly charge per person of between £60 and £100. This may explain why the detailed supply did not, with the exception of a faxed letter from Oasis Properties, make any reference to properties being let at less than £60 per person per week".

17. In a subsequent witness statement put in for the purposes of this appeal, Mr S Ahmed has suggested that the Committee refused to hear representations of Messrs Ahmed about the comparables. That has been answered by statements from Committee members, and I am bound to say I can see no basis for the assertion that Messrs Ahmed were not allowed to be heard on matters they wished to put forward.
18. The Committee then, in their detailed reasons, set out their findings about the property and they found, in essence and as they said, that the property was in fair condition. They also found that the Victoria Road area was a popular area for student lettings, albeit slightly less popular than central Headingley.

They then directed themselves in terms by reference to section 22(3) of the Housing Act 1988. Then at paragraph 29, this was said:

"In coming to its decision the Committee had regard to the evidence supplied by the parties and the members' own general knowledge of market rent levels in the area of North Leeds. All three members of the Committee had a very high degree of familiarity with market rent levels in the area of North Leeds and in particular in the main student letting areas".

19. The first point that the Committee had to consider was whether there was a sufficient number of similar dwellings in the locality let on assured tenancies for the purposes of section 22(3)(a) of the Housing Act 1988. They concluded that this requirement was satisfied and it is accepted that they were entitled so to conclude.
20. They then went on to consider the position with regard to section 22(3)(b). In paragraph 32 of their reasons, the Committee said this (and I have regard also, of course, to paragraph 31 just preceding it):

"In having regard to the details of properties submitted by the tenants and the landlord, the Committee had in mind that the rental figures referred to were figures which landlords were seeking for the academic year 2003 to 2004. They were rents sought, not rents achieved. In this sector of the market, increases in rent normally take place with each new letting. The Committee determined that it had to decide what rent the landlord might reasonably be expected to obtain for the property subject to a letting for the academic year 2002 to 2003".

I regard that approach as unexceptionable. It seems to me that the Committee were indeed required to consider the rental position with respect to the academic year 2002 to 2003. Moreover, so far as I can see, it is indeed the case, as the Committee said, that the comparables being put forward -- not only, I might add, by the landlord, but also by the tenants -- related to the forthcoming academic year.

21. The decision was then expressed in this way:

"Having considered carefully the submissions put before it, and using the knowledge and experience of its members, the Committee found that the rent which the landlord might reasonably have been expected to obtain for the property was £52.50 per person per week.

The Committee then considered whether the rent at which the property was let (£58.50 per week) was substantially more than the landlord might reasonably have been expected to obtain. The rent charged was in excess of 10% more than the rent which the landlord might reasonably have been expected to obtain. The Committee took the view that an excess of more than 10% was significant".

Mr Manning, counsel appearing on behalf of the landlord before me today, does not dispute that an excess of more than 10 per cent could fairly be described as significant. Indeed, he went so far as to describe the consequent reduction as "a swingeing reduction".

22. The Committee, in the event, concluded that the rent at which the property might reasonably be expected to be let under the assured shorthold tenancy would be £52.50 per person per week.
23. On an initial reading of the reasons, and indeed on a second reading of the reasons, it is difficult to see how any point of law arises which would render it vulnerable to challenge by reference to section 11 of the Tribunals and Inquiries Act 1992, as is now advanced. Mr Manning, however, puts forward in essence four complaints.
24. First, he submitted that the Committee misunderstood the evidence and so erred in law. In particular, he submits that the Committee misunderstood the comparables and focussed on the position with regard to them all, as the Committee stated, being for the forthcoming year, and failed to have regard to the fact that some of those properties had in fact, by the time of the hearing before the Committee, been let. He says that, overall, they wrongly assessed the position.
25. Secondly, he submits that, while he accepts that the Committee were entitled to use their local knowledge, they used it in an impermissible way and, in particular, used it in such a way against the landlords that the landlords had no opportunity to deal with the approach that the Committee may have been adopting, using their local knowledge.
26. Thirdly, and really linked to this, he says that there was a breach of procedural fairness requirements, in that points were taken against the landlord which were not put to the landlord in a way with which the landlord could properly, or fairly, deal.
27. Finally, he submits that no sufficient reasons were given by the Committee and, in particular, they gave no reasons for justifying a reduction from £58.50 to £52.50, on the grounds that £52.50 was the rent which the landlord might reasonably have been expected to obtain for the property.
28. I turn, then, to the first way in which Mr Manning puts his case.
29. In his submissions, Mr Manning submits that the Committee seems to have discounted the many comparables put forward by the landlord on the basis that they related solely to properties advertised to let, rather than as evidence of actual rents achieved in the market. In my view, however, Mr Manning's submissions overall on this aspect do not fairly represent what the Committee were saying. The Committee were not entirely discounting or rejecting the comparables put forward by the landlord. What they were saying, as they emphasised in paragraph 25 of their reasons, was that a degree of selectiveness in relation to "price" had been used.
30. That comment was justified. One only has to look at the comparables put forward to see that that is so. For example, it can be seen that, in a number of cases, the search on the internet had been fixed at searching at a rental level at £60 per week, or, in one case, £58.50 a week, and upwards. That is not to say that, in noting that point, the Committee were entirely rejecting the comparables: and indeed they conspicuously do not say that. It is, moreover, a fair point for the Committee to make that the rental figures adduced before them, by way of comparables, were for the forthcoming academic year and not the current year. That is something they were entitled to take into account. Yet further, it is clear (and the Committee could not possibly have overlooked it) that some of the comparables, as put forward by the landlord, had in fact been let. That is clearly marked by a bold stamp on the face of some of these comparables. But what was not put before the Committee was evidence of what those properties had actually been let for, as opposed to what the original asking price was, as advertised.
31. Accordingly, reviewing all the evidence, the overall complaints of Mr Manning under this particular head seem to me to be misplaced. I do not think that the landlords were entitled to put forward these comparables as evidencing precisely what those particular properties had actually been let for without rather more specific evidence than the landlords chose to put in. That is not to say that the comparables were of no relevance at all, nor did the Committee say that they were irrelevant.
32. I should also add that, as would have been obvious to these very experienced Committee members, many of the comparables put forward were self-evidently, by virtue of the written descriptions provided for them, of considerable difference to the subject property, which was the subject of the rent assessment before the Committee.
33. Mr Manning did also submit that the Committee in some way seem to have misunderstood their role and jurisdiction. That is not a very promising submission, when one sees that the Committee directed themselves in terms, by reference to section 22, which they actually set out in their reasons.

What Mr Manning submitted in essence was that the existence of both higher and lower rents indicated no more than the contractual rent is in the middle of a range; and he submitted that the Committee in one sense had stated the point entirely the wrong way round: it is only, suggested Mr Manning, when the weight of the evidence indicated generally lower rents and when there was no evidence of similar or higher rents, that the contractual rent would, on the face of it, be significantly higher than the comparables. Putting it another way, says Mr Manning, the most relevant comparables are those which are as high as, or higher than, the contractual rent.

34. I can just about see what Mr Manning means by that; but it seems to me that this point leads absolutely nowhere because the Committee were obliged to consider the totality of the comparables put before them, and were obliged to consider the evidence as a whole. That, on the face of it, is exactly what they did.
35. Accordingly, I reject that particular ground relied upon by Mr Manning.
36. The second ground on which Mr Manning relies is to submit that the Committee used their local knowledge in an impermissible way.
37. In the case of Crofton Investment Trust Limited v Greater London Rent Assessment Committee and Another [1967] 2 All ER 1103, being a decision of Lord Parker CJ, sitting with Widgery and O'Connor JJ, this is said in the course of the judgment of Lord Parker CJ at page 1108:

"For my part I am quite satisfied that this committee, that is to say a committee of this sort under a procedure which is clearly intended to be informal and not to be carried through with the precision of a court of justice, is fully entitled to act, as it has been said, on their own impression and on their own knowledge. It is idle in my view to think of gentlemen manning this committee and sitting maybe day after day without requiring experience and knowledge of conditions in the locality, and to say that they should shut their eyes to what they know of their own knowledge, and act only on such evidence as may or may not be put before them, seems to me to reduce the matter to absurdity".

Lord Parker CJ went on to cite with approval comments made by Lord Goddard CJ in the case of R v Brighton and Area Rent Tribunal ex parte Marine Parade Estates (1936) Limited [1951] All ER 946, and said, with regard to his citation of those comments of Lord Goddard:

"It seems to me that every word of Lord Goddard in that case is equally applicable to proceedings before a rent assessment committee".

38. Mr Manning submitted that the Committee acted improperly, and went wrong in principle in imposing the reduction (which, as I have said, he describes as "a swingeing reduction") solely -- in his words -- on the basis of local knowledge. He submits that that simply does not fit with the comparables put forward. He also relies in this context on one of the decisions in the Spath Holme cases -- of which, as I understand, there have been a considerable number -- this one being Spath Holme Limited v The Chairman of the North Rent Assessment Committee [2003] HLR 13. In the course of his judgment, and by reference to the facts of that particular case, which was very different from the facts of the present case, Collins J said this:

"The Committee relied on the experience of its members to assume that the appellants had because a professional landlord could be expected to do so. The Committee members have an expertise which they are entitled to use, but they should be careful to ensure that there is some basis in fact to enable any assumption to be applied. More particularly, they should be satisfied that there is no evidence pointing in another direction".

Founding himself on these various observations, Mr Manning, as I say, submits that the Committee here erred and approached the matter in the wrong and an improper way.

39. It seems to me that this submission fails also because it really is predicated on the basis that this asserted "swingeing reduction" was entirely derived from the Committee's own knowledge. That, as asserted, was the sole basis for that reasoning. But it seems to me that that is a misreading of the reasons of this Committee. As Mr Litton, counsel appearing for the respondent, pointed out, it is necessary to take these reasons as a whole. The Committee specifically said that they had regard to the evidence supplied by the parties, as well as to their own general knowledge of market rental levels. The Committee specifically said that they had carefully considered the submissions put before them. I can see no basis for saying that the Committee applied its own purported local knowledge to the exclusion of all the other evidence. In my view, that is an entire misreading of these reasons. What the Committee were saying is that, in addition to the evidence that had been put before them, they were also applying their own general knowledge of market rent levels in that area with which they were all familiar. That is an approach they were entitled to adopt, as the Crofton decision makes clear, and that is what this Committee did. In my view, that was a proper approach and I do not think it can be attacked in the way that is now sought to be done.
40. I turn, then, to the third way on which this appeal is founded. It is said there was a breach of procedural fairness in that points were taken against the landlord which were not put to the landlord. In this regard, as I have said, I discount the allegation that the Committee refused to hear the landlord on certain points. What is said here in effect founds itself, in terms of approach, by reference to what is also said by Lord Parker CJ in the Crofton case, where he says this, amongst other things:

"For my part I am quite clear that whenever a new point emerges, something which might take a party by surprise or something which the committee have found out and of which the parties would have no knowledge, fairness would clearly dictate that they should inform the parties and enable them to deal with the points".

A striking example of this kind of approach, which vitiated a decision of a Rent Assessment Committee, can be found on the rather special facts in the unreported decision of Ouseley J in the case of Yeoman's Road Management Limited v The Chairman of the London Rent Assessment Committee, dated 19th April 2002.

41. My difficulty with this submission is that it is unclear to me what the new point is said to be which emerged, which should have been put to the landlord, which was not.

What was in issue here was quite clear. The comparables were being put forward by both sides. The Committee were considering those comparables. As the Committee made clear, and as they were entitled to do, they were treating the comparables put forward by the landlords, not to reject them entirely, but with a degree of reserve, by reason, amongst other things, of the selectiveness in their deployment, and of the fact, amongst other things, that those comparables essentially related to the forthcoming year. I had great difficulty in following from Mr Manning's submissions just what it was that should have been put. He said that it was in essence, as I understood him, the local knowledge of the Committee which, so it was said, operated to displace the comparables put forward by the landlord. But there were other comparables being put forward by the tenants of a much lower order and, as I say, what the Committee were doing was also taking into account their local knowledge; not, that is to say, simply ignoring the comparables in favour of their own local knowledge.

42. It seems to me there was nothing further that needed to be put to the landlords because the issue was clear. There was no new point emerging. It was the very point being debated before this particular Committee.
43. Accordingly, I reject that particular ground.
44. Finally, it is said that no sufficient reasons were put forward to justify the conclusion reached by this Committee. They gave, submits Mr Manning, no reasons for saying why a landlord might reasonably have been expected to obtain for this property £52.50 per week per person, and thereby giving rise to a very significant reduction in the rent being charged under this particular tenancy agreement. However, it is, to my mind, extremely difficult to mount an argument, by reference to this 36 paragraph statement of reasons, an assertion that reasons for the decision were not given. I would accept that the ultimate conclusion was succinctly put, but it is manifest in my view how that conclusion was reached. Further, the very fact that, at considerable length, the Committee had set out the observed condition of the property shows that they were taking that into account: as, of course, they had to do, not only with a view to taking it into account, by reference to the comparables put forward, but also by assessing, in part by reference to their own local knowledge, what the proper rental value, reasonably payable for this property, would be.
45. It is therefore clear, in my judgment, that the Committee were basing themselves not only on their own knowledge, but also on a consideration of the comparables put forward both by the landlords and by the tenants, with such reservations as they pointed out. In my view, this is not a question of this being a figure plucked out of the air, let alone one plucked out of the air in reliance solely on asserted local knowledge. On the contrary, it seems to me that, as the Committee themselves indicated, it was a conclusion arrived at by an assessment of the totality of the evidence and the submissions put before them.
46. It seems to me that the position here is totally different from the case of Northumberland and Durham Property Trust Limited v The Chairman of the London Rent Assessment Committee (1998) 30 HLR 1091. In that case, the facts were unusual. There the landlord was contending that the closest comparable to the subject two bedroom flat were two flats, each with two bedrooms, with rents for £1,126 and £1,166. In the event, the Committee registered a fair rent for the flat of £390 per calendar month, an enormous reduction from that which the landlords had been arguing for. In the context of doing so, the Committee seemed to have had regard to another comparable, being a smaller property in the same road as the flat, which had a registered rent of £182 per calendar month, which the Committee stated was of "some assistance". The Committee in that case, and without giving any indication of how it came to the conclusion, stated that the flat in a modernised state, with furnishings and white goods, would achieve an open market rent of £200 per week.

It is clear, just from that recital alone, how different that position was from the present case. But in the course of his judgment, Latham J said this at page 1097:

"But it seems to me that a Rent Assessment Committee should not simply decline to take account of (as this Committee appears to have done) open market rentals which were put before it on the basis that adjustments had to be made such as to mean that those comparables were not close comparables, when it is perfectly prepared to accept, as of some assistance, a registered fair rent in respect of which very substantial adjustments must be made".

Again, one can see from that how fundamentally different that case is from the present because there the Rent Assessment Committee, as the judge viewed it, simply declined to take account of relevant market rentals; whereas there is absolutely no basis whatsoever in the present case for saying that this Committee had declined to take into account such matters. In fact, Latham J went on a little later on to say this:

"In my view the Committee should assess the evidence overall and make a proper value judgment on the whole of that evidence".

Again, in my judgment in the present case, one can see that that is what this Rental Assessment Committee in the present case did. In the Northumberland and Durham Property Trust Limited case, moreover, Latham J went on to point out on the facts that the figure of £200 per week appeared out of thin air without reasoned justification. That also is quite different from the present case. Indeed, in the Northumberland and Durham Property case, the position was actually conceded on behalf of the Rent Assessment Committee there concerned.

While it seems to me that the Northumberland and Durham Property Trust Limited case is an illustration of a case where lack of reasons (or reasoning) can be fatal, it is different from the present case where, in my view, the reasons given were sufficient.

47. Accordingly, none of the grounds advanced in support of this appeal has, in my view, any substance. I would doubt, in fact, whether the grounds advanced do give rise to any point of law. In the event, however, for the reasons I have given, this appeal is dismissed.
48. MR LITTON: My Lord, I am grateful.
49. I ask that the appellant pay the respondent's costs in the principle and then, if that is not disputed, there is a schedule of costs, which gives a figure.
50. MR JUSTICE DAVIS: Yes, I have it. You want £4,437.50, including VAT.
51. MR LITTON: My Lord, yes.
52. MR JUSTICE DAVIS: I do not have a schedule of costs from you, Mr Manning.
53. MR MANNING: My Lord, no.
54. MR JUSTICE DAVIS: What were your costs?
55. MR MANNING: My Lord, I do not dispute the figure.
56. MR JUSTICE DAVIS: You do not dispute the figure. So you agree the figure of £4,437.50?
57. MR MANNING: My Lord, yes.
58. MR JUSTICE DAVIS: 21 days?
59. MR MANNING: May I just have a moment?
60. (Pause).
61. Would your Lordship say 28 days, in that there are more than one --
62. MR LITTON: We are not suggesting that is unreasonable, my Lord.
63. MR JUSTICE DAVIS: Very well. Given this appeal, I think the appellant should pay the costs of the respondent and, since the amount is agreed in the sum of £4,437.50, I will make an order for the payment of those costs, such costs to be paid in 28 days from today.