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
		31 January 2012

1. THE DEPUTY JUDGE: This is an appeal against a decision of the Rent Assessment Committee of the London Rent Assessment Panel dated 13 December 2010, whereby the Rent Assessment Committee decided that the fair rent which Mr Moule, the respondent to this appeal, who appears today in person, decided that the fair rent is £5654.50 per annum with affect from the date of the decision, 13 December 2010.
2. The appeal comes about in this way. Cavendish Square Investments Ltd, who are for these purposes Mr Moule's landlord (they are represented by Mr Mendoza), contend that the Committee misdirected itself in law when it held that by paragraph 5 of its decision the rent was not to be registered as variable.
3. The short point on this appeal is whether or not the Committee misdirected itself in law in reaching that conclusion. The point arises in the following way. There is a head lease of the building, the building in which 41 Westbourne Terrace and Mr Moule's flat is situated. The head lease is dated 4 March 1920 and under a relatively normal covenant in a head lease, the landlords have covenanted throughout the term:

i. "...to keep all erections and buildings for the time being on the said premises and all walls, party walls, fences, vaults, sewers, drains and pertinence thereto belonging [reading to the text] well and substantially repaired, maintained and well repaired and cleaned and the garden and ground thereto belonging in neat and orderly condition, and in particular once in the year 1923 and once in every succeeding fourth year of the term and also in the year preceding the termination of the term to paint in a good work like manner all outside walls usually which ought to be painted..."

4. (Tab 13 and it's on the fourth page.)
5. Under the underlease under which Mr Moule occupies his flat, it is provided by clause 5(B):

i. "THROUGHOUT the said term he will pay and discharge the yearly rent payable in respect of the Building and to observe and perform all the covenants and conditions on their part contained in the Head Lease except in so far as such covenant and conditions are to be observed and performed by him and to keep the Lessee indemnified from all actions proceedings, costs claims and demands in respect thereof."

6. Under clause 3(8) Mr Moule agrees:

i. "TO pay to the Lessors on demand ten twenty fourths of the cost from time to time during the term hereby demised incurred by the Lessors in complying with the Lessors covenants (except in so far as such covenants are to be observed and performed by the Lessee or by the Lessee of the Upper Maisonette pursuant to the tenant's covenants contained in the Underlease of the Upper Maisonette hereinbefore mentioned) contained in Clause 5(B) hereof (other than the covenant for payment of the rent reserved by the Headlease) and Clause 5(E) hereof."

7. It happens, although in my view, this is of no real assistance on the question of whether or not these clauses give rise to a variable rent, that as a matter of history on two occasions, on 1 April 1999 and 11 December 2001, the rent officer accepted registration of this lease and accepted that there was a variable rent but Mr Moule has fairly pointed out that no one discussed this particular point. In the circumstances it is matter of history but not one of particular assistance until we get to the events of 2010.
8. Section 71(4) of the Rent Act 1977 provides for the amount to be registered as rent and section 71(4) provides:

i. "(4)Where, under a regulated tenancy, the sums payable by the tenant to the landlord include any sums varying according to the cost from time to time of—

(b) any services provided by the landlord or a superior landlord, or

(c) any works of maintenance or repair carried out by the landlord or a superior landlord.

i. the amount to be registered under this Part of this Act as rent may, if the rent officer is satisfied or, as the case may be, the rent assessment committee are satisfied, that the terms as to the variation are reasonable, be entered as an amount variable in accordance with those terms."

9. Construing that provision, it seems to me to be clear that where the sums payable by the tenant to the landlord include any sums which vary according to the cost from time to time of works of maintenance or repair, then such sums may, if they are reasonable in accordance with the last part of Section 71(4) fall to be registered as part of the rent.
10. This point did arise during the course of the discussion before the Rent Assessment Committee and the Committee concluded in paragraph 23 that:

i. "The Committee was satisfied on the basis of the material before it and having to take into account the provisions of Section 71(4) and of the underlease that there was no proper provision for a variable rent governing this tenancy."

11. Having regard to the clear provisions of Section 71(4) it seems to me that on a proper construction of clause 3(8) of the underlease (which provides for a provision whereby Mr Moule will contribute ten twenty fourths of the costs of works of maintenance or repair carried out by the landlord) that this provision falls four square within Section 71(4)(b). It may be a usual provision to be found within underleases but the question is whether or not the sum is a variable sum for works of maintenance or repair or indeed services (see Section 71(4)(a)) provided by the landlord or a superior landlord. It seems to me clear that on a proper construction of Section 71(4) and in particular Section 71(4)(b) that the works of maintenance or repair carried out by the landlord do fall within that provision having regard to the proper construction of clause 3(8) of the underlease.
12. It therefore follows that the Committee misdirected itself in law when concluding that this part of the underlease did not give rise to a variable rent.
13. The next step which the Committee should have taken was to consider whether or not the variable amount (provided for by clause 3(8) of the underlease), and sought to be charged by the landlord were reasonable. They did not conduct that exercise because they had misconstrued section 71(4) and clause 3(8) of the underlease. In the circumstances, therefore, I find that the Rent Assessment Committee did misdirect itself in law as contended for by the appellant and I am going to direct that they reconsider their assessment, having regard to the proper construction of Section 71(4) of the Rent Act and clause 3(8) of the underlease.
14. Mr Moule has raised a number of concerns about the amounts which he is paying. In tab 8 of the documents helpfully provided to me by the parties, he points out that the amounts which he is paying by way of service charge, and which he is being called upon to pay, have risen dramatically and he tells me that for the year 2009, the amount of the demand is £10,600. It seems to me that that gives rise to the following points which the Assessment Committee will need to consider when Mr Moule appears before them.
15. The first question is whether or not the amounts expended by the landlord are sums which have been expended in accordance with their obligations under the headlease and in particular their obligations under the part of the headlease which I have recited above in this judgment.
16. The second question is whether or not the amounts themselves are reasonable. Those are matters for the Committee to consider when they reconsider this case.
17. They also need to consider, as I have indicated already, whether or not the terms as to the variation, that is the terms under the underlease and in particular clause 3(8) are reasonable before they reach their conclusion as to whether this variable element of the underlease falls to be registered in accordance with Section 71(4).
18. The points which Mr Moule makes do not therefore go, as he fairly accepts, to the point of construction of Section 71(4) or, indeed, the question of construction of clause 3(8) of the underlease. They go to whether or not under the second limb of Section 71(4) the amounts which the landlord is claiming in accordance with the variable lease have been incurred as required under the requirements of the headlease and are reasonable in amount.
19. In the circumstances, I will allow the appeal, I will direct that the Rent Assessment Committee reconsider this matter in accordance with Section 71(4) as I have construed it and in accordance with clause 3(8) of the provisions of the underlease and that they consider the question of reasonableness, having regard to the provisions of clause 3(8) of the underlease and the other provisions of the lease and that they hear Mr Moule's points as to whether or not the sums which are being sought from him have been incurred in accordance with the provisions with the headlease and are reasonable amounts.
20. I will therefore allow the appeal and make an order in those terms. If, Mr Mendoza, you can submit a draft to me of an order.
21. MR MENDOZA: Including details of the direction or the bare bones of it?
22. THE DEPUTY JUDGE: I need a declaration as to the meaning and effect of Section 71(4) and clause 3(8).
23. MR MENDOZA: Right.
24. THE DEPUTY JUDGE: You are going to apply for costs?
25. MR MENDOZA: I am going to apply for costs.
26. THE DEPUTY JUDGE: I am going to make, unless you persuade me otherwise, no order as to costs, in light of the slightly unfortunate way this argument developed below.
27. MR MENDOZA: If there was any unfortunate aspect of the argument it was below as a RAC, but that should not effect, in my submission, the costs of the appeal for this reason:  the key documents and material were there before the Rent Assessment Committee. They had all this material. Yes, the surveyor who appeared may have slanted the argument in a particular way which was not the same way as I put it forward here today. That may be an issue as regards to costs below, not that there are any but it does not effect the appeal. From the outset of this appeal, which was launched I think a year ago, the notice of appeal which was prepared, served, lodged together with the skeleton. The skeleton very clearly sets out, in very short form, the key points that have been advanced here today. It sets out Section 71(4). It sets out my point about there being no consideration of reasonableness. In fact there is nothing that I have advanced in my oral submissions which is not in the skeleton. It is all there. But this appeal has been contested. I appreciate Mr Moule has not been represented. That is his choice. But the appeal has been contested, we had to come here –
28. THE DEPUTY JUDGE: You would have had to come here in any event because the appeal would not be allowed by consent. You will have had to come here to make those points.
29. MR MENDOZA: It had to be prepared and the appeal would have run. One of the points I made, I think at the concluding part of the skeleton is that the matter out to be remitted back to the RAC contract to be dealt with properly.
30. THE DEPUTY JUDGE: On which you have won.
31. MR MENDOZA: I have won those points. We pursued the appeal. The Committee got it wrong even on the material they have had and we have incurred costs in trying to sort it out.
32. THE DEPUTY JUDGE: Mr Moule, I do not need to trouble you on the costs issue.

(a) Costs

33. Normally on an appeal of this kind which is being contested, the successful party might expect a costs award in its favour since the costs tend to follow, or the starting principle is that the costs follow the event and as Mr Mendoza strongly argues he has had to come here today to overturn the decision.
34. On the face of it, the construction of Section 71(4), as I have just ruled of the Rent Act 1977 is clear. That may be so but unfortunately -- and I take on board the fact that Miss Alpert, who argued the case below is not a lawyer -- nevertheless argued the point below on the question on whether this was a variable rent in a quite different way from the way Mr Mendoza has quite properly argued it on this appeal. She is recorded, at paragraph 14 of the hearing below as saying: she told the Committee that it might be possible so to contend (that is the rent was variable) because of the use of the words, "from time to time" in clause 3(8). However, she recognised that there was no such express provision and that there had not been any variation of the original contractual terms as between themselves after expiry of the underlease.
35. Whilst it may indeed be correct that the Committee had section 71 of the Rent Act before it, as indeed they did because they recited it accurately at paragraph 23, the full import of it was not brought home by the submission made on behalf of the landlord by Miss Alpert. Indeed, on the contrary, she appeared to be making an argument in the paragraph which I have just quoted which was unhelpful and which did not address section 71(4)(b) and the effect of Section 71(4)(b) having regard to clause 3(8) as has been advanced on this appeal. It is fair to say Mr Mendoza expressed some surprise when I drew his attention to the way the matter was put below because it is not a way which he would have himself argued it.
36. The impact of all of that is it that it was necessary for the landlord to mount this appeal and it would have been necessary for the court to have ruled on this appeal since appeals are not allowed by way of consent. In those circumstances, it seems to me that the fair conclusion, having considered Mr Mendoza's powerfully expressed submissions is that there should be no order on the costs of this appeal. In fairness to Mr Moule, he did not advance any points on construction against those being advanced by Mr Mendoza and he said that in this complicated area and construction, no matter how clear it appears to a court can seem complicated to the layman. He did not in fact wish to advance any arguments against those of Mr Mendoza. In the circumstances it seems to me that fair conclusion is no order as to the cost of this appeal. Plainly, one now hopes that the Committee will construe Section 71(4) correctly, having regard to the provisions of the lease and the matter need not trouble the court again.
37. Are there any other points I need to deal with?
38. MR MENDOZA: I do not think so, my Lord.
39. THE DEPUTY JUDGE: Thank you very much Mr Moule. There will be further consideration by the Committee and you can raise your points about the reasonableness of the clause and the reasonableness of the any costs provisions before the Committee.
40. MR MENDOZA: My Lord, how long is it likely to take for the judgment to be transcribed and available for distribution?
41. THE DEPUTY JUDGE: It sounds as we ought to get something back to you within three weeks or so, but no promises.