QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
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Mr Christopher Heather (instructed by Forsters) for the Respondents
Hearing dates: 5 March 2009
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Mr Justice COLLINS :
"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."
"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). "
"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 ..,.
14(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; …."
"(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 carried out during the long tenancy. Thus relevant improvement must mean an improvement carried out by a tenant during the long tenancy since, because s.14(3) does not apply, it is not otherwise defined. That at least seems to be the natural meaning of the provisions so that the 21 year limit is not applicable. But that is not a matter which I have to determine. All I need say is that neither counsel has sought to argue that pursuant to a reference to the Committee under Paragraph 10(2) of Schedule 10 (which will be the case on the service of a landlord's notice following the termination of a long tenancy) tenants' improvements during the long tenancy should not be disregarded.
"I freely acknowledge that this interpretation of section 18(1)(g) involves reading words into the paragraph. It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. Some notable instances are given in Professor Sir Rupert Cross's admirable opuscule, Statutory Interpretation, 3rd ed. (1995), pp. 93-105. He comments, at p.103:
"In omitting or inserting words the judge is not really engaged in a hypothetical reconstruction of the intentions of the drafter or the legislature, but is simply making as much sense as he can of the text of the statutory provision read in its appropriate context and within the limits of the judicial role".
This power is confined to plain cases of drafting mistakes. The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation: see per Lord Diplock in Jones v Wrotham Park Settled Estates  A.C. 74, 105 -106. In the present case these three conditions are fulfilled."
"In my judgment, the principal submissions are based on a misreading of the statutory provisions. There is nothing in the provisions establishing or supporting a statutory principle of "once an assured tenancy, always an assured tenancy". The provisions of Schedule 10 relied upon do not set a ceiling of £25,000 on the amount of he annual rent which may be validly proposed or which the Committee ma validly determine. The case advanced by Mr Morris would, if accepted, produce the surprising conclusion that a tenant could remain in a high value property at less than the proper open market rent determined by the Committee. If the rent is determined by the Committee at a figure exceeding £25,000, the landlord is not prohibited by statute from recovering it: the result is that the tenancy will simply cease to qualify for protection as an assured tenancy. The alternative submission on the validity of the notice fails because the rent proposed in the notice was, as the judge held, a realistic rent based on valuation evidence."
While that involves at the very least, a strained construction of the statutory provisions to avoid the suggested need to keep the rent for an assured tenancy created by the 1989 Act below £25,000 per annum, it is otherwise unhelpful to the appellant's case. The Court of Appeal made it clear that the protection could not prevent a proper market rent being determined even if that removed the protection which would otherwise be provided by an assured tenancy.