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 WC2A 2LL
		26th November 2009

1. MR JUSTICE IRWIN: In this case the appellant landlord appeals to the High Court under section 11(1) of the Tribunal's Inquiries Act 1992 and pursuant to CPR 52.1(9), against a decision of a Rent Assessment Committee dated 22nd June 2009 which determined a rent of £22,500 per annum, beginning from 29th May 2009 for Flat 5, Bourne House, 189 Sloane Street, London SW1X 9QT under section 14 of the Housing Act 1988.
2. The background to the hearing is helpfully summarised by a skeleton argument on behalf of the landlord appellant lodged by Mr Radevsky, who has been of great assistance in the hearing today.
3. The respondent to the appeal became a tenant of Flat 5 on 6th August 1998, having on that date taken an assignment of a periodic tenancy, which tenancy had arisen in 1993 following expiry of the lease. The rent had not been increased since 2001. By a decision dated 15th May 2001 a differently constituted Rent Assessment Committee had determined a rent for these premises of £23,600 per annum. However, the parties had in fact previously agreed that the rent should be £17,000 per annum and the appellants honoured that agreement.
4. By a notice under section 13(2) of the 1988 Act, dated 14th April 2008, the appellant sought to increase the rent to the sum of £29,120 per annum with effect from 29th May 2009. By an application dated 6th February 2009 the respondent referred the notice to the Committee, pursuant to his rights under section 13(4) of the 1988 Act.
5. Each of the parties put in evidence from a surveyor, a Mr Baynes on behalf of the appellants and a Mr Doncom for the respondents. Each of those experts acted as the representatives of the parties, and gave evidence, at the hearing on 12th May 2009.
6. In the course of the hearing, as I understand the facts — and for these purposes they are not in dispute — both parties indicated that they might wish to submit further written representations, primarily about the tenant's repairing obligations, and both surveyors did so. No complaint arises about those further written representations because, through the conduit and good offices of the Committee, those further representations were passed to the other party.
7. It appears to be the case that the surveyors, both Mr Baynes and Mr Doncom, did not directly send the further representations to the other side but relied upon the Committee to pass them on. However, Mr Doncom, surveyor for the tenant, submitted a second supplemental report dated 19th June 2009. He sent that to the Committee but he did not serve that upon the appellants and, crucially, the Committee did not send it to them either. Accordingly, it is common ground that the appellants had no opportunity to read or comment on the second supplemental submissions from Mr Doncom. The landlords were unaware that such further representations had gone to the Committee until receipt of the decision of the Committee, which came under cover of a letter dated 26th June. Appended to that decision was a copy of Mr Doncom's second supplemental submission.
8. It is clear from the nature of their decision that the Committee relied upon that further evidence from Mr Doncom.
9. The crucial parts of the further supplemental submission are contained in paragraph 3 of Mr Doncom's document, which deal with the effects upon the value of a tenancy, of an assured tenancy, in paragraph 1.8, and in paragraph 1.9 they read as follows:

"My client's solicitor has considered Mr Baynes' reliance on Megarry [that was a reference to Megarry on Assured Tenancies, 2nd Edition]. In doing so Mr Baynes is now conceding that my client's rent must remain below the £25,000 threshold. Mr Baynes' legal submission is only designed to take account of a benefit which applies to an assured tenancy rather than a tenancy at a rent over £25,000 which has no assured status."

10. As I have indicated, it is clear that the Committee relied on that. In paragraph 6 the Committee noted that Mr Doncom had submitted written representations, sent after the hearing, and proceeded to set out their computation figures. It is perfectly clear from the content of that paragraph that it is the second supplemental submissions coming from Mr Doncom with which they are dealing.
11. In paragraph 8 they set out their conclusions as to rental in part as follows:

"We are required by section 14 of the Act to determine the rent at which the flat might reasonably be expected to be let in the open market by a willing landlord under an assured tenancy on the basis set out in section 14. We have come to the conclusion that the open market rent on that basis would be £22,500 per annum, inclusive of services. We have arrived at that rent by starting from £39,000 as proposed by each of the parties' valuers."

12. The Committee go on then to set out incremental alterations to that starting point, which lead them to conclude as follows:

"We thus arrive at £22,561.50, which we round to £22,500 per annum. We make no adjustment for security of tenure, which has advantages and disadvantages for both parties."

13. In appealing this decision, Mr Radevsky on behalf of the landlord takes four points. Firstly he says that the evidence lodged with the Committee, but not served on his clients, was controversial, was germane to the decision and clearly affected the Committee's decision, and that it is a breach of natural justice for the Committee to proceed in that way when his client had no opportunity to address the evidence.
14. Secondly, he says that it was wrong to treat the argument in the supplemental evidence as setting a £25,000 cap or limit to the rent and that the Committee fettered their discretion by reference to such a supposed limit.
15. Thirdly, he says that the treatment of the security of tenure as a factor which "has advantages and disadvantages for both parties", and which led the Committee to make no adjustment for security of tenure, is wrong.
16. Fourthly, although this point was not, in the event, pursued, following an indication from me as to the way my mind was working, he says there is fresh evidence which he should be able to and, if the matter is remitted, can be introduced before the Committee on a re-hearing.
17. I have listened with great care to the submissions from Mr Radevsky and I also have in mind the concession by Mr Dymond, who appears on behalf of the tenant today, and it seems to me that his first ground is made out. It should never be the case that evidence which is germane to the decision and, indeed, which was relied on by the Rent Assessment Committee, should be submitted after the event without going to all parties who may have an interest in the outcome of the proceedings. It seems to me that this is likely to have happened by error, on this occasion, certainly not by any deliberate decision on the part of the Committee. It may have resulted from the practice which grew up, in at least this case, that supplemental submissions were not exchanged directly between the parties, but rather the surveyors relied on the Committee to pass material on.
18. On any view, if a Rent Assessment Committee permits such a practice then they are taking to themselves the responsibility of ensuring that relevant material goes to all the parties. What I would add is that it seems to me very highly desirable that if further material is to be submitted to a Committee after the conclusion of the oral proceedings, then the lawyers, or surveyors or other agents engaged in the particular hearing must ensure that the material goes directly to the other side, because reliance on the official support of such committees is not wise. The solution may be different before a hearing when any deficiency can be put right. However that may be, after the close of a hearing it seems to me there is almost certainly a duty to send such material inter partes, rather than merely to the Committee. Perhaps in this instance Mr Doncom may be forgiven for relying upon the Committee, because that is what had been permitted to take place rather earlier.
19. It would be perfectly possible to reach the conclusion, on this ground of appeal, from first principles. However, as Mr Radevsky has shown me, a parallel situation has arisen previously. The court has seen a transcript of a decision by McCullough J in the case of Robert G Curtis v London Rent Assessment Committee, a decision given by the judge on 27th November 1996 with the reference CO/1193/96. The first instance decision is unreported, although the case, for different reasons, came before the Court of Appeal and is reported at [1999] QB 92.
20. In similar circumstances, material came to the Rent Assessment Committee which made a difference to the decision of the Committee, but was not served on the landlord. It was on that basis that McCullough J quashed the decision of that Committee and made an order remitting the case for a re-hearing.
21. The reference to the Court of Appeal by the landlord in that case was on different grounds, and the appeal from McCullough J was allowed on different grounds, but the report of the Court of Appeal decision makes it clear by implication that the court regarded the decision of McCullough J when quashing the rent assessment in that case as being correct.
22. It must be obvious that all parties should see all relevant evidence and submissions in their case, and the Rent Assessment Committees must take care to ensure that that happens.
23. On Mr Radevsky's second point, it does seem to be a fair implication from the way the Committee expressed their decision that they made no adjustment for security of tenure, which, as they put it, had advantages and disadvantages for both parties.
24. In my judgment it is perfectly obvious that security of tenure is an advantage for a tenant. In this instance, the proper course for them to follow would be to assess the value of the rent, including the security of tenure, and then to see whether that caused difficulties of one kind or another. They did not do so. I do not stipulate whether they should adjust for security of tenure after addressing the other factors affecting the value of the rent, or as part and parcel of the same exercise. It seems to me that both approaches might be perfectly proper. Which approach is followed could also be fact dependent in the individual case. Certainly to proceed on the basis that security of tenure is of no value to a tenant seems to me not to be either appropriate or indeed rational.
25. The third basis of appeal throws up a problem which was addressed in argument early in this hearing. Given that a Rent Assessment Committee must assess security of tenure as being an advantage to a tenant while it persists, what if the value of that security of tenure takes the appropriate rent above £25,000 per annum, which by operation of statue law sets aside or abrogates the security of tenure which has just been valued? Mr Radevsky sought to persuade me that I should rule on that point today, but I decline to do so. It seems to me that that is a difficult point and not entirely met by existing authority.
26. Mr Radevsky has cited to me the decision of R v London Rent Assessment Panel ex parte Cadogan Estates [1998] QB 398, a decision of Kay J sitting in the Administrative Court. At page 403E-F in the judge's decision, he made it clear that, as Mr Radevsky, who appeared in that case, submitted, he was of the view that valuation of an assured tenancy must be approached on the basis of valuing every element within it and every factor which affects the rent level, without imposing any cap or observing any limit pursuant to the statute.
27. As the judge said at page 405F:

"... I have come to the conclusion that the applicant's submissions are correct and it is unnecessary to look in detail at the anomalies outlined on behalf of the applicant that would arise if the Panel's interpretation was correct."

28. I agree. It must be the case that all relevant factors should be taken into account by a Rent Assessment Panel and no artificial limit set on the rent on which they fix. The problem that is thrown up, potentially, by a case such as this, is this: if it is the element of security of tenure which brings the rent through the £25,000-limit, then that breach of the limit will itself, by necessary operation of law, remove the security of tenure. It is open to argument as to whether, in those circumstances, the Committee should again re-assess the rent, reflecting the fact that security of tenure no longer exists. The situation is straightforward if, even allowing for security of tenure, the rent does not reach £25,000. It is also straightforward if, without regard to the value of security of tenure, the rent exceeds £25,000. The difficulty only arises if it is the value of the security of tenure itself which carries the appropriate rent across the threshold.
29. I make no ruling on that. It seems to me that that point is problematic and requires fuller argument on both sides on the proposition before a satisfactory judgment could be reached.
30. As I have already indicated, Mr Radevsky does not pursue the fresh evidence point for the purposes of today's hearing.
31. For those reasons, therefore, the decision of the Rent Assessment Committee in this case will be quashed and the matter remitted for re-hearing and for re-argument.
32. MR RADEVSKY: My Lord, in the appellant's notice, the appellant asked for it to be remitted, preferably to a different panel.
33. MR JUSTICE IRWIN: Yes.
34. MR RADEVSKY: I think it is a matter for your Lordship.
35. MR JUSTICE IRWIN: That will mean a complete re-hearing.
36. MR RADEVSKY: Yes. In the circumstances, it is probably best that there should be a complete re-hearing, I would submit, not least because there is an additional comparable, and we are going to have to address the matters put in the supplement.
37. MR JUSTICE IRWIN: It will all have to be drawn together, in any event.
38. MR RADEVSKY: Yes.
39. MR JUSTICE IRWIN: Mr Dymond, do you want to make any submissions on that?
40. MR DYMOND: My Lord, I would agree with that. I think it should be a differently constituted panel.
41. MR JUSTICE IRWIN: To a fresh constitution of the Rent Assessment Committee.
42. MR RADEVSKY: My Lord, as anticipated by the other side, I do make an application for costs. The position is that the appeal has succeeded, and that the appeal only sought the quashing of the decision and a re-hearing. Up until yesterday afternoon, when I telephoned Mr Dymond to see what his position was, there was no indication from the other side that they conceded the appeal. All we had had was a copy of a letter which was sent to the court by my learned friend's instructing solicitors, where they denied that there was anything misleading about Mr Doncom's evidence and they said that they were not going to make any representations or attend. Had they said, at an early stage, when the appeal was first lodged, "We will concede the appeal", we would have saved any further costs. We may, at that stage, have asked for the costs of preparing the appeal.
43. MR JUSTICE IRWIN: Can you show me a copy of the correspondence?
44. MR RADEVSKY: That letter, my Lord?
45. MR DYMOND: (Handed).
46. MR JUSTICE IRWIN: So it is a positive denial. Well, it is denied there is anything misleading about the evidence. The letter does not address whether, misleading or otherwise, it should have been relied on when you did not know about it.
47. MR RADEVSKY: Absolutely. The court should have, my Lord, a statement of costs.
48. MR JUSTICE IRWIN: I have it. Is it the other side's fault that this happened?
49. MR RADEVSKY: Well, it is, my Lord, yes. There may also be some fault on the Rent Assessment Committee. I accept that. The Rent Assessment Committee also wrote to the court.
50. MR JUSTICE IRWIN: Yes. Do I have that in the bundle?
51. MR RADEVSKY: It is not in the bundle, my Lord, no. I have it on file. They referred to a case, which I have looked at, which does bear out what they suggest, which is that no costs should be awarded against the Committee unless there is some flagrant breach.
52. MR JUSTICE IRWIN: Yes.
53. MR RADEVSKY: The case they referred to is R v Birmingham Deputy Coroner ex parte Davies, which I looked up.
54. MR JUSTICE IRWIN: Well, I am familiar with that.
55. MR RADEVSKY: You are familiar with that. They have to have behaved improperly in a flagrant way, or to have appeared at a hearing in order to contest --
56. MR JUSTICE IRWIN: Well, I have that in mind.
57. MR RADEVSKY: -- and although they may be said to have been at fault by not either sending a copy (inaudible) or confirming with him that he had sent it to our side, I could not properly say that they had behaved improperly in a flagrant way and they have deliberately chosen not to appear or contest the hearing. Therefore, my clients' costs application must be made against the respondent or against nobody. In my submission, your Lordship made it plain in your judgment that although there may be an element of excuse here because the earlier supplemental proofs were exchanged via the medium of the Committee, nevertheless it was the duty of a party communicating with the court to serve the other side with their material and what should have happened here is that Mr Doncom should have sent a copy of his -- or if he was not sure, he should have sent it to Mr Baynes, as a matter of good practice, apart from courtesy, or to have ensured --
58. MR JUSTICE IRWIN: I say, so that it is on the record, I cannot think that Mr Chehab himself would have known about this or known how to handle it. It is not his fault. He is the party.
59. MR RADEVSKY: Yes, but in a sense, my Lord, that is by the by. No one is blaming Mr Chehab personally, because he had professionals acting for him.
60. MR JUSTICE IRWIN: But I am making it perfectly clear, not from your point of view.
61. MR RADEVSKY: I see what you mean.
62. MR JUSTICE IRWIN: I am sure you understand.
63. MR RADEVSKY: I do, my Lord.
64. MR JUSTICE IRWIN: This is a professional matter.
65. MR RADEVSKY: Yes, and he should either have sent a copy to Mr Baynes or confirmed with the Committee that they would send a copy to Mr Baynes — one or the other. That was his professional obligation. I am not suggesting any kind of dishonesty or (inaudible) no doubt an oversight, but nevertheless it has caused the problem that caused us to be here today, my client having incurred costs. So, in my submission, particularly given that the principle of the appeal was not conceded until I telephoned Mr Dymond yesterday afternoon to see what his position was, that costs should follow the event.
66. As far as the level of costs --
67. MR JUSTICE IRWIN: Well, we will come to that.
68. MR DYMOND: My Lord, I have handed up a copy of the letter. I submit that although it does not expressly go so far as to concede the appeal and specify a ground for doing so, the letter that was sent to the court, and a copied to my learned friend's instructing solicitors, makes it pretty clear that no representations are going to be made on the appeal, in the light of the arguments being made, which can only really, in my submission, suggest that the appeal was being conceded on the part of the respondent.
69. MR JUSTICE IRWIN: But what were they to do, in the absence of you saying, "We agree explicitly that they have to come to court, they have to prepare to argue it".
70. MR DYMOND: My Lord, they could have replied to the letter and clarified the situation if they were genuinely concerned as to the extent to which the appeal was being conceded.
71. MR JUSTICE IRWIN: Yes.
72. MR DYMOND: My Lord, just one point in relation to -- my learned friend — and I am grateful to him — provides in his bundle of authorities, at tab 9, a Rent Assessment Committee's England and Wales Regulations 1971, which my learned friend refers to in his skeleton argument. My Lord, it is four pages on that, Regulation 5, which deals with documents. The obligation there is the Committee shall, where the reference is to be subject to a hearing, take all reasonable steps to ensure that there is supplied to each of parties before the date of the hearing a copy of, or sufficient extracts from, or particulars of, any document relevant to the reference which has been received from the rent officer or from a party.
73. Then it carries on. I shall not read it at length, but it makes it clear that the responsibility for forwarding the documents is with the Committee. I accept it does not expressly deal with the position with regard to supplementary submissions, but in my submission it is clearly implicit, and indeed was borne out by the practice in this case, that effectively the Committee is the conduit for documentation — that has traditionally always been the position with Rent Assessment Committees and, of course, with good reason. My learned friend said, with a Committee or a court -- of course, it is very much not a court. This is the sort of tribunal which is used by litigants in person to a much greater degree than a court. So, in my submission, it is entirely appropriate for Mr Doncom to assume, given the regulations and the way these matters are meant to work, that his submissions would be passed on by the Committee to Mr Baynes.
74. My Lord, the position is that, of course, the Rent Assessment Committee cannot award litigation costs. It is a costs-neutral environment. We have the unfortunate position here, in my submission, where you have a party who has exercised his statutory right to go to the Committee, who, through no fault of his own, and, indeed, through an error on the part of the Committee — I am not expressing (inaudible), but because of an error on the part of the Committee with regard to service of documents, the appeal must be allowed, and he, having embarked on a hearing where, prima facie, he should never be in a position to pay costs, now, through no fault of his own, he potentially finds himself with a very substantial costs bill. My Lord, it is my submission that in the light of that, given that I do put the blame, such as it is, on the Committee for failing to pass on the documents, an appropriate order would be no order as to costs or, if your Lordship felt that that was going too far, then that the amount as to costs should be reduced to a proportion of the costs.
75. MR JUSTICE IRWIN: Do not forget there are two grounds on which the appeal has succeeded, not just the failure to serve the documents.
76. MR DYMOND: My Lord, yes, but that other ground probably could have been addressed had the document been passed on and further submissions made.
77. MR JUSTICE IRWIN: Thank you very much.
78. MR DYMOND: My Lord, I do not know whether you wish me to go to the schedule of costs at this stage.
79. MR JUSTICE IRWIN: Well, what I propose to do is to allow the costs. I do not know whether you want to talk about the schedule and then let Mr Radevsky justify the figures, because Mr Radevsky will tell me the schedule is absolutely fine, you will tell me it is not, so it makes sense, maybe, to see any criticism of it first and then deal with it that way.
80. MR DYMOND: My Lord, I have one or two brief comments. Obviously there have been two fee earners involved, one at £320 per hour, one at £125 per hour. My Lord, the penultimate heading on page 1, "Work done on documents", that must be the bundle, and that is 4½ hours at £320 per hour. My Lord, with respect, the bundle is a pretty straightforward appeal bundle. There is the grounds of appeal, the reasons and copies of the relevant expert's report. That, first, I find difficulty seeing how 4½ hours could be spent on that. Secondly, I find difficulty in seeing why the more senior fee earner was spending so much time on that when that could have been done by someone at a much lower rate. Indeed, I think the real effort in the appeal bundle is undoubtedly my learned friend's skeleton argument. For his advice and his work on documents, the fee is £1,400, which is actually below the costs of the preparation of the bundle, which, my Lord, I suggest illustrates that that figure is too high.
81. With regard to attendance at the hearing, I also question whether it was necessary to have the senior fee earner here at £320 per hour, given the nature of this hearing and that the appeal, I say, clearly was not going to be opposed. At the very least, it was clear that detailed representations were not going to be made on the merits of the appeal.
82. MR JUSTICE IRWIN: Well, attendance at the hearing is only 1 hour. You are in a bit of difficulty complaining about that point.
83. MR DYMOND: Well, it remains at £320 per hour. My Lord, I think those are the only figures I can realistically challenge, given the comments your Lordship has made.
84. MR JUSTICE IRWIN: Thank you very much. The only thing that troubles me slightly is 4½ hours from a senior on doing the bundle. That is the only thing you need to address.
85. MR RADEVSKY: Well, it is not just doing the bundle; that is work on the documents generally, for the entire appeal, which would include correspondence. There has been some correspondence with the Committee, I know, and documents generally. I mean, my solicitor says that she has spent that time on it. The total bill is not excessive, I would submit, for an appeal to the High Court and I would invite you to allow it. As has been pointed out, the attendance at the hearing, the time is less than was actually spent, which balances out any concern about the time on documents.
86. MR JUSTICE IRWIN: Yes. I always get confused as to whether I should be expressing it net or gross of VAT.
87. MR RADEVSKY: I do not think it matters what you do, my Lord, unless it is suggested that the other side can reclaim VAT, which is not suggested here. So as long as you express the view you are going to allow X plus VAT, or a global figure, I do not think it matters, my Lord.
88. MR JUSTICE IRWIN: You shall have your costs in £9,000, including VAT. (Pause).
89. We are missing an associate, so I am going to ask counsel please to draw up the order. There will be an e-mail address for it to go to. If you could both agree that it is in the correct form, as far as you are concerned. Use that e-mail and then I will sign it. If we can deal with that before lunchtime tomorrow, if that is not going to present a difficulty.
90. MR RADEVSKY: We will do it today.
91. MR DYMOND: Yes.
92. MR JUSTICE IRWIN: Thank you both very much. I hope you will both have great fun arguing that point.