England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/01/2012

Mr Justice Wyn Williams:

1. In these proceedings the Appellant appeals against a determination of a Rent Assessment Committee dated 6 August 2010 whereby the Committee decided that the rent in respect of the premises known as 16 Deiniol Road, Bangor (hereinafter referred to as "the premises") should be £495 per calendar month from 1 March 2010. The Appellant appeals as of right. However, her appeal can succeed only if she demonstrates that the decision is wrong by reason of an error or errors of law.

Relevant background

2. By an agreement in writing made 26 May 1992 between Watkin Jones (the landlord) and GO and AG Taylor (the tenants) the premises were let to the tenants for a period of 12 months from 1 June 1992. The agreement contained the following material clauses:-

"3. The tenant shall pay the monthly rent of £217, the first payment being made on the signing hereof and each subsequent instalment being made on the first day of each succeeding term by standing order.

7. During the tenancy the tenant shall keep in good tenantable repair all the fixtures and fittings, window, locks, latches and fasteners and glass in their present state of repair and condition (reasonable wear and tear excepted) and in particular (but without prejudice to the generality of the foregoing) the tenant shall keep the premises in good decorative order and condition.

11. At the determination to the tenancy the tenant shall deliver up the premises to the landlord and all fixtures and fittings therein in good and tenantable repair and condition in accordance with the covenants or stipulations by the tenant herein contained."

3. The tenancy did not come to an end on 31 May 1993. It is common ground that it subsisted after that date as an assured periodic tenancy under the Housing Act 1988 (the 1998 Act).
4. By notice dated 1 February 2010 David Horrocks and George Bevan (then the landlords) notified the Appellant that they proposed that the rent in respect of the premises should be increased to £550 per calendar month from 1 March 2010. The notice was given in proper form pursuant to section 13(2) of the 1998 Act. At the time the notice was served the rent in respect of the premises was £347 per calendar month. As was her right, the Appellant referred the notice to the Rent Assessment Committee. She did so on 4 February 2010.
5. A hearing took place before the Rent Assessment Committee on 27 July 2010. The Committee also inspected the premises on that date. By the date of the hearing the Respondent had become the landlord and Mr Horrocks was one of its directors.
6. As I have said the Rent Assessment Committee determined that the rent should be £495 per calendar month from 1 March 2010. It produced written reasons for that decision under cover of a letter dated 6 August 2010 (the determination).

The grounds of appeal

7. The Appellant supported her appeal by reference to a significant amount of documentation. At the hearing before me, however, the Appellant sought to identify the errors of law on the part of the Committee upon which she relied. I deal with each alleged error in the following paragraphs of this section of my judgment.
8. At page 3 of the determination the Committee sets out the basis for its assessment that the rent for the premises should be £495 per calendar month. I quote:-

"From our own knowledge and experience, we consider that a house of this type, size and condition in this location and let on the open market unfurnished without carpets or curtains (having discounted the work carried out by the tenant not under any obligation within the tenancy agreement) would be £495 per calendar month.

The Committee arrives at this figure, (using its knowledge and experience as mentioned above) as follows:

Rent for comparable house under an assured shorthold tenancy £620 per calendar month.

less deduction for lack of carpets and curtains and with

dated fittings taking account of the tenant's

repairing obligations £125

£495"

9. The Appellant submits that this section of the determination reveals a fundamental flaw in the Committee's approach. She submits that the Committee erred in law in taking as its starting point a rent for a comparable house but let under an assured shorthold tenancy. The Appellant correctly points out that an assured periodic tenancy is a different form of tenancy to an assured shorthold tenancy and, accordingly, she submits that the Committee must have erred in law in using as a starting point for its assessment of the appropriate rent the rent which might be obtained for the premises Road upon the assumption that it was let under an assured shorthold tenancy.
10. Mr Horrocks submits that the extract from the Committee's determination set out above should be read in the context of the determination as a whole and in particular the following paragraph which appears at page 2 of the determination:-

"In this application, the Committee is required to determine a Market Rent at which the Property might reasonably be expected to be let by a willing landlord under an assured periodic tenancy (not an assured shorthold tenancy)."

11. Mr Horrocks submits that it is clear that the Committee fully understood that it was assessing the rent which was to be payable in respect of an assured periodic tenancy and that the figure of £620 which appears at page 3 is, in truth, referable to such a tenancy and not an assured shorthold tenancy.
12. There can be no doubt that there are important distinctions between an assured periodic tenancy under Chapter 1 of the 1988 Act and an assured shorthold tenancy under Chapter 2. In particular a tenant under an assured periodic tenancy enjoys greater security of tenure than a tenant under an assured shorthold tenancy. Further the statutory provisions relating to the assessment of rent by a Rent Assessment Committee in respect of such tenancies are materially different.
13. Section 14 of the 1988 Act contains provisions relating to the determination of rent in respect of an assured periodic tenancy. The material parts of the section are as follows:-

"(1) Where, under sub-section (4)(a) of section 13 above, a tenant refers to a Rent Assessment Committee a notice under sub-section (2) of that section, the Committee shall determine the rent at which, subject to sub-section (2) and (4) below, the Committee considers that the dwelling-house concerned might reasonably be expected to be let in the open market by a willing landlord under an Assured Tenancy –

a) which is a Periodic Tenancy having the same periods as those of the tenancy to which the notice relates;

b) which begins at the beginning of a new period specified in the notice;

c) the terms of which (other than relating to the amount of the rent) are the same as those of the tenancy to which the notice relates;

d) in respect of which the same notices, if any, have been given under any of grounds 1 to 5 of Schedule 2 to this Act, as have been given (or have affect as if given) in relation to the tenancy to which the notice relates.

(2) In making a determination under this section, there shall be disregarded –

a) any effect on the rent attributable to the granting of a tenancy to a sitting tenant;

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 and in pursuance of an obligation to his immediate landlord, or

(ii) was carried out pursuant to an obligation to his immediate landlord being an obligation which did not relate to the specific improvement concerned but arose by reference to consent given to the carrying out of that improvement; and

c) any reduction in the value of the dwelling-house attributable to a failure by the tenant to comply with any terms of the tenancy.

(8) Where a notice under section 13(2) above has been referred to a Rent Assessment Committee, then, unless the landlord and the tenant otherwise agree, the rent determined by the Committee…..shall be the rent under the tenancy with effect from the beginning of the new period specified in the notice or, if it appears to the Rent Assessment Committee that that would cause undue hardship to the tenant, with effect from such later date (not being later than the date the rent is determined) as the Committee may direct.

(9) This section shall apply in relation to an assured shorthold tenancy as if in sub-section (1) the reference to an Assured Tenancy with a reference to an assured shorthold tenancy."

14. Chapter 2 of the 1988 Act contains specific provisions relating to rent assessment in respect of assured shorthold tenancies. Section 22(1) provides that a tenant under an assured shorthold tenancy may make an application 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 tenancy. However, this provision is made subject both to sub-section 22(2) and section 23 of the Act. Further, section 22(3) provides as follows:-

"(3) Where an application is made to a Rent Assessment Committee under sub-section (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 sub-section unless they consider –

a) that there is a sufficient number of similar dwelling-houses in the locality let on Assured Tenancies (whether Shorthold or not);

b) 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."

15. In the light of these statutory provisions relating to rent assessment the following seems to me to be clear. First, a Rent Assessment Committee which is assessing a rent in respect of an assured shorthold tenancy may make a determination of the rent only if the rent payable under that tenancy 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 in respect of comparable properties let either under an assured shorthold tenancy or an assured periodic tenancy. Second, there must be a sufficient number of comparable dwelling-houses in the locality to the dwelling-house let upon the assured shorthold tenancy although it matters not whether those dwelling-houses are let under assured periodic tenancies or assured shorthold tenancies. Third, when assessing a rent in respect of assured shorthold tenancy the Committee must apply section 14 of the 1988 Act. However, fourth, when assessing the rent in respect of an assured periodic tenancy the governing statutory provision is section 14 of the 1988 Act. Nothing contained within that section makes it obligatory for the Rent Assessment Committee to take account of the rent which might reasonably be expected to be obtained in the open market if the premises in question were let under an assured shorthold tenancy as opposed to being let under an assured periodic tenancy.
16. That said the issue for me is whether it is unlawful for a Rent Assessment Committee when assessing a rent in respect of premises let under an assured periodic tenancy to take account of the rent which might be achieved in respect of comparable premises let under an assured shorthold tenancy? In my judgment nothing in section 14 of the 1988 Act compels that conclusion. Section 14 contains provisions which must be applied when the Committee seeks to determine the rent at which premises might reasonably be expected to be let in the open market under an assured periodic tenancy. However, it does not preclude the Committee from taking account of any material which the Committee considers relevant to making its assessment in accordance with the section.
17. I have reached the conclusion that the Rent Assessment Committee did not act unlawfully when it took into account the rent which a comparable property let under an assured shorthold tenancy might be expected to command in the open market when assessing the rent to be paid in respect of the assured periodic tenancy in existence in relation to the premises.
18. If I am wrong in that conclusion, however, it seems to me to be clear that the error, if error there was, was advantageous to the Appellant. A tenant under an assured periodic tenancy enjoys greater security of tenure than does a tenant under an assured shorthold tenancy. In those circumstances and in the absence of any evidence or submission to the contrary it seems to me to be clear that the rent in respect of premises such as 16 Deiniol Road is likely to be greater if the premises are let as an assured periodic tenancy than if those premises were let under an assured shorthold tenancy. Certainly there is nothing about this case which leads me to think that the "starting point" rent taken by the Committee (£620 per calendar month) was too high.
19. The Appellant next complains that the Rent Assessment Committee failed to take account of the fact that the local authority had served notices upon the Respondent, pursuant to the Housing Act 2004, requiring certain improvements to be done. The notices concerned improvements within the kitchen and bathroom in particular.
20. In its determination the Committee refers to the notices under the Housing Act 2004 on two occasions. First, when summarising the Appellant's case. Second, when recording the Respondent's acknowledgement that improvement notices had been served and its assurance that the work specified in the notices would be carried out in accordance with the notices and by the time specified in the notices.
21. I find it very difficult to accept that the Committee recorded the fact that notices had been served by the local authority and that the Respondent intended to comply with the notices yet failed to have any regard to the fact of the notices and the Respondent's response to those notices when assessing the rent. In any event it seems to me to be clear that the Committee's obligation was to take into account the condition of the premises at the time it was undertaking its assessment. That is what the Committee did – see the extract from the determination set out at paragraph 8 above.
22. The Appellant's next complaint is that the Committee failed to act in accordance with section 14(2) of the 1988 Act and, in particular, failed to act in accordance with paragraph 14(2)(b). In my judgment there is nothing in this complaint. It is apparent from the extract from the determination set out at paragraph 8 above that the Committee disregarded the work undertaken at the premises by the Appellant which was outwith the scope of her repairing obligation under the terms of the tenancy agreement. Additionally, the Committee noted:-

"The Committee accepts that the Property has been well maintained by the Tenant and that she has carried out numerous improvements to the Property paragraph (p). It is noted, however, that her obligations under the Tenancy are set out in paragraph 7 of the Agreement dated 26 May 1992 and she appears to have complied with such obligations."

23. In my judgment it is clear that the Committee understood that in so far as the Appellant had undertaken improvements to the premises which she was not obliged to undertake such improvements were to be disregarded (in the Appellant's favour) in assessing the appropriate rent. There is no basis, in my judgment, for the suggestion made by the Appellant that the Committee failed to apply section 14(2)(b) when undertaking its assessment.
24. The fourth complaint made by the Appellant is that the Committee failed to have regard to the fact that the locality in which the premises are situated had "markedly degenerated". I cannot accept that submission. The Committee, specifically, to the location of the premises in the extract from its determination set out in paragraph 8 above. The Committee is a specialist tribunal. It refers, specifically, to its own knowledge and experience. It is impossible to accept that the Committee failed to make an objective and accurate assessment of the locality in which the premises in question are situate especially when it refers, specifically, to the location in which the premises are situate.
25. The final point taken by the Appellant relates to section 14(7) of the 1988 Act. She complains that the Committee failed to consider whether or not it would cause undue hardship to her if the rent determined by the Committee was payable from the date specified in the notice served by her landlord.
26. The Appellant frankly acknowledged that she had not raised this issue before the Committee.
27. At least in the context of this case I do not consider that the Committee erred in law in failing to investigate, for itself, whether or not it would cause undue hardship to the Appellant if the rent which it assessed was payable from the date specified in the landlord's notice. It is not suggested by the Appellant that anything was written in advance of the hearing before the Committee or said at the hearing which should have caused the Committee to investigate this issue.
28. I conclude that the Committee did not err in law in its determination. If, contrary to my view, it did err in law in taking account of the rent which might be obtained for comparable premises let as an assured shorthold tenancy the error did not produce an outcome which was in any way unfavourable to the Appellant. There is nothing in the papers in this case which begins to suggest that the rent which was assessed by the Committee was too high. Accordingly, I have reached the conclusion that this appeal must be dismissed.
29. I propose to hand down this judgment on 17 January 2012 at 10.30am at the Royal Courts of Justice. Neither the Appellant nor the Respondent need attend. If the Respondent wishes to make an application for costs it should send my clerk (by email if possible) all the documentation which is relevant to the application by 4.30pm 19 January 2012. It should also send copies of that documentation to the Appellant. The Appellant should then provide her response to the application by email to my clerk (copied to the Respondent) by 4.30pm 23 January 2012. I will then make a decision on costs. If the Appellant wishes to apply to me for permission to appeal against my decision she should send her proposed grounds of appeal to my clerk by email (copied to the Respondent) by 4.30 pm 19 January 2012. I will then make a decision about permission to appeal.