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
		29 May 2012

1. JUDGE MACKIE: This is an appeal under Section 11 of the Tribunals and Inquiries Act against the decision of the Rent Assessment Committee as regards its determination of a fair rent of a regulated tenancy at 78 Barrington Road, Haringey, London. The court has jurisdiction to hear an appeal where a party to the decision is dissatisfied "in point of law".
2. The appellant landlord Triplerose Ltd has three grounds of appeal. First it says that the committee erred in fixing the rent because it misapplied the only comparable relied upon, failed to give the landlord an opportunity to consider that comparable and made unjustifiable deductions from the rent. Secondly, it is said the committee erred in failing to include any figure for council tax, alternatively in failing to explain the basis upon which any such figure that was included was calculated. Thirdly, it is said that the committee erred in failing to include any figure for gas, alternatively in failing to explain the basis on which any such figure, if it was included, was calculated. It is said that the committee also erred in failing to record that the rent was varied by reason of variable payments in respect of gas.
3. The Rent Act contains in Section 70 a list of factors for the determination of a fair rent. Section 71 provides for registration, and provides at Section 71 (1):

"(1) The amount to be registered as the rent of any dwelling-house shall include any sums payable by the tenant to the landlord for the use of furniture or for services [including in respect of council tax], whether or not those sums are separate from the sums payable for the occupation of the dwelling-house or are payable under separate agreements."

So matters like council tax and fuel costs are within the registered rent.

4. There is case law about the approach to be taken by Rent Assessment Committees on applications to register. It seems to me that the case law which I have been shown is accurately summarised in the skeleton argument of Mr Joshua Shields for the appellant.
5. Unfortunately, and quite understandably, Mr and Mrs Bonner cannot afford the cost of legal representations even should it have been worthwhile to do so. Mr Bonner has however written to the court a very courteous letter. He did not attend the proceedings of the Assessment Committee but he has kindly attended today and assisted the court. I am grateful for that.
6. The principles that Mr Shields refers to are that a committee must give proper, adequate and intelligible reasons which deal with the substantial points raised. The reasons need only be brief and deal with the principal controversial issues. Whether the absence of reasons leads to the inference that the committee has erred depends on the particular circumstance of the case. The committee is entitled to act on its own impression and knowledge of conditions in the locality. It is not obliged to act only on the evidence before it, but natural justice requires that parties should be informed of any new point arising which might take them by surprise or any matter of which the committee alone had knowledge.
7. It is also clear from Metropolitan Properties that where the rent includes an element for services the rent figure should include that service element. The committee also ought to state the principle on which the figure is calculated. The guidance in Metropolitan is that the figure should account for the whole period for which the rent is being fixed and take into account future trends.
8. I have also been taken to the decision of Mr Justice Richards (as he then was) in Queensway which, in turn, draws upon the observations in the judgment of Lord Justice Auld in Curtis. In one passage, Lord Justice Auld said:

"60 The members of a rent assessment committee, at least one of whom is normally a chartered surveyor, are expected to be experienced in such valuation and to know and to have a 'feel' for the rental property market in their area. But, however much experienced 'feel' or judgment the exercise requires and is given, the end product is a figure for rent of particular premises. Where the comparables are not exact and/or where there is a need to make disputed adjustments for hypothetical lack of scarcity or for disregards ..... some arithmetical markers whether in percentage form or otherwise on the way to the final figure [are necessarily involved]."

9. Mr Shields submits, with justification it seems to me, that the court has become, as one sees from Queensway, slightly more demanding in terms of reasons required from the committee than it was in the earlier cases, notably Crofton.
10. Against that legal background, the facts are these. The landlord is a limited company. What is described in the papers as the premises is the home of Mr and Mrs Bonner. Mr and Mrs Bonner have lived in the property now for forty-five years. It is their home. As the committee points out, there are various drawbacks about the accommodation. It has certain advantages, notably a beautifully kept garden. It seems that most of the advantages of the accommodation are the result of the care and hard work of the Bonners over the years.
11. On 23 March 2011 the appellant applied for registration of a fair rent. At that time the Bonners were paying £81 a week. They were also paying, it seems, 50 per cent of the council tax, water rates and either 45 or 50 per cent of the gas charges. The appellant sought registration of the rent at £220 a week. On 23 May 2011 the rent officer registered a fair rent of £155 per week. The appellant/landlord objected to that determination and the matter went to the Rent Assessment Committee.
12. There was a hearing on 12 August 2011. The tenants did not attend, but the landlord did through a representative Mr Israel Muscowitz. The deliberations of the committee are summarised in its decision which starts by reciting the background, before reporting on an inspection of the property on 12 August 2011. The committee notes the advantages but also the drawbacks of the property. After the inspection the committee was concerned that it did not have adequate information about the arrangements for the payment of heating and hot water costs, council tax and water charges, so it deferred its decision to give the parties an opportunity to provide evidence. This evidence when lodged showed that the tenants were separately billed for water and that the council tax was apportioned as to 45 per cent to the tenants and gas as to 50 per cent. The committee goes on to record the requirements of Section 70 and the guidance it has from the case law. It then lists a series of factors which it takes into consideration.
13. The decision has to be read as a whole, but on this appeal the concentration has been on paragraph 11 which states:

"11 Because of the very particular identity of the rooms let by the tenants the Committee drawing on its experience and knowledge determined that the market rent for the rooms is £270. It was particularly influenced by the advertised rent for a studio flat in the same road as the premises which had shared use of the kitchen. The rent for that property was advertised at£135. The committee therefore doubled that to give a market rent for these rooms.

12 From that market rent we made adjustments to reflect the market disadvantages of the tenants' rooms. For instance the rooms are over three floors, the kitchen and bathroom are in poor, unmodernised condition, the tenants supply their own white goods and carpets and curtains and are responsible for their own interior decoration, there was also some disrepair in the rooms, the wiring is not embedded but visible, and [there is] the lack of control over heating bills. Therefore we deducted 55 per cent from that market rent which leaves a rent of £121.50.

13 We went on to consider whether a deduction falls to be made to reflect scarcity within the meaning of Section 70 (2) ..... "

and they applied a deduction of 20 per cent, being what - it is not disputed -

"fairly represents the effect of scarcity of similar accommodation in the broad general location of the property, which we have taken for this purpose to be Greater London."

14. That then led the committee to fix a fair rent of £97.20 per week. At paragraph 16 the committee stated:

"For the avoidance of doubt the fair rent includes council tax."

15. The reason are then recorded in the notice of the Rent Assessment Committee Decision. This records at paragraph 1 that the fair rent is £97.20 per week, including council tax and any amounts in paragraphs 3 and 4. Paragraph 3 is marked "NA" because it is not applicable as it deals with services. Paragraph 4 is also not applicable but that deals with the amount of the fuel charges, not counting for rent allowance. Paragraph 5 states that the rent is not be registered as variable.
16. The grounds of appeal put forward by Mr Shields, which I have mentioned in outline, are three. First, there is complaint about the basic figure used for the rent being a single comparable, a studio flat which was advertised to rent for £135. Mr Shields complains that the advertised rent of a studio flat was doubled to provide the rent for the premises. However the premises consisted of up to three rooms. He says that deductions were made by reference to the condition of the premises without any account being taken of the condition of the flat used as a comparable. The comparable was not mentioned to the appellant's representative either before or at the hearing and the appellant had no opportunity to consider the comparable. The appellant has been unable to make any inquiries about the comparable since the address does not appear in the decision. He submits that notwithstanding the broad margin of appreciation allowed to the committee, those errors were errors of law. He says that the comparable referred to was not applied logically. No other comparable has been referred to to enable a reliable picture to be ascertained.
17. That seems to me the central point in the case.
18. Mr Bonner, for entirely understandable reasons, does not have a view on that legal point.
19. As I see it, there was an error of law in this case. The committee was fully entitled to take account of its local knowledge and experience and to apply that to the assessment of rent. The committee has unrivaled local knowledge gained from the professional qualifications and experience of each of its members and from the very fact that they are engaged in large numbers of cases in their locality. But when one looks, as one must, at the reasons it is clear that the comparable relied upon to provide the £135 has not just been used as a check upon an appraisal done by the committee. The comparable - and the comparable alone - has been taken as the starting point and has then been doubled.
20. There would be no error of law if the committee used its judgment and experience even broadly to arrive at the figure it did. But it took a "comparable" about which it knew very little and simply doubled it. There is no sign that it did anything else.
21. The additional problems are as follows. First, on instructions, counsel says that the £135 comparable was not put to the landlord's representative at the hearing or at any later point and he had no opportunity to deal with it. Secondly, the £135 which becomes £270 is not just a check on reasoning; it is the starting point. The committee has then taken from the £270, 55 per cent. We have no means of knowing - and it seems that the committee did not know because there is no sign that they evaluated the comparable in any detail or inspected the flat - how far the factors that lead to the adjustment of 55 per cent in this case would not have applied equally to the comparable or that it would only be as a result of those deductions that the comparable ended up at £135.
22. So on the face of the reasons, what we have is the product not of skill, judgment and experience of local conditions but extrapolation from what may or may not have been a relevant and pertinent comparable. Even allowing for the usual allowances that need to be made, having regard to the informality of the committee process and the reasons identified in the cases, it seems to me to be an error of law which cannot stand.
23. There is as yet no evidence from the landlord as to what did or did not happen at the hearing. I have therefore made an assumption, which I require to be verified, that counsel's instructions are correct. I emphasise that there is no error in principle in taking into account the factors leading to the deduction of 55 per cent or anything wrong with the process the committee carried out in that regard. There is nothing unlawful about the taking of a single one-bedroom comparable provided that its features are properly identified, and doubling it for this purpose if the committee is satisfied, using its experience and knowledge, that it is approximate.
24. This decision is not to be taken as suggesting that the figure which the committee ultimately arrived at was too high or too low. That is a matter for this committee or another one and not for me. For all I know, if the exercise is repeated the committee may come up with a lower but more reasoned figure.
25. The next matter is the council tax. Counsel has alternative submissions on council tax. It seems to me that his second alternative is the more realistic one. He says:

" ..... if a figure was included in the rent in respect of council tax, the decision fails to state what this figure was and how it was calculated and as such the reasoning is inadequate and insufficient."

It is clear on the face of the officer's decision and from the notice of the Rent Assessment Committee decision that council tax was included. It would not be a self-standing error of law for the details not to be provided but it does seem to me if this exercise is repeated it will be helpful if the committee will state what the figure is and how it is to be calculated.

26. The next thing is the costs of gas. Mr Shields contends that the cost of gas was to be borne by the tenants as to 50 per cent and that was one of the grounds on which the rent was reduced from its notional figure by 55 per cent. That is correct. It seems not only lawful but entirely appropriate for the committee to have taken that factor into account. However the committee did not, Mr Shields complains, include any amount for the cost of the gas. He submits that the committee erred in law in failing to include any figure in respect of services. He compares the decision with the entry made by the officer on the Rent Register which helpfully sets out the rent registered by the rent officer and also the amount for fuel charges at that point. That too seems to me not to be a self-standing error of law. But since both parties are unclear quite what the tribunal committee's decision was in that respect, if the exercise is repeated that too should be made clear.
27. It follows that to the limited extent which I have identified this appeal will succeed.
28. The question then arises as to what should happen next, whether the matter should go back to a new tribunal to start all over again or whether the current committee should be invited to provide clarification of what it has done. I will ask Mr Shields to address me about that.
29. MR SHIELDS: In my submission it would be more appropriate for a fresh tribunal to consider the matter. With the passage of time, it may that be further comparables will become available and it will be illogical to have the tribunal look at the matter again in an historic sense. They will have to produce this comparable and the landlord would want the opportunity to put comparables and compare them and look into this particular comparable.
30. Also - humanly - given they have made a decision and there is some criticism of it, it is in my submission difficult to expect them to completely draw a line under that and essentially see the matter afresh. If the matter has to go back in any case and be argued, my understanding is there are not any costs in front of the tribunal. It is easy to go back to a separate tribunal and likely to be fair and seen to be fair.
31. JUDGE MACKIE: Do you have any views about that, Mr Bonner?
32. THE FIRST RESPONDENT: No, my Lord. I am just thinking it might be a good thing to put it back to the tribunal unless of course my Lord you wanted to make a decision here.
33. JUDGE MACKIE: I cannot do that unfortunately. I say "unfortunately". There are several points. First, it seems to me inevitable that the matter should go back to a different tribunal. It does not seem to me that there is any criticism I have made of the committee that disqualifies its members from continuing to deal with the matter. These committees meet informally under the conditions set out in the cases. Inevitably at the speed with which they work things go wrong from time to time. Clearly the matter will have to be done all over again, so it seems sensible to remit it. I will make an order that the exercise be repeated by the committee under ideally but not necessarily a new constitution. For example, there is not much point, if there are only two members in Haringey, bringing someone from outside the area to deal with it.
34. Next I require counsel to ascertain specifically from his clients whether the comparable was mentioned at the hearing and to report to me if the position is not as he has submitted, and to do that before the order is finally drawn up.
35. Does anything else arise?
36. MR SHIELDS: In terms of reporting back to your Lordship.
37. JUDGE MACKIE: I will direct that the order not be drawn up for seven days. If you would obtain instructions and then send an e.mail. Do you have solicitors?
38. MR SHIELDS: Yes.
39. JUDGE MACKIE: I do not want to run up costs by getting a witness statement but I want some specific confirmation of instructions that it was not mentioned. I am not suggesting your instructions are wrong but I would be hopping mad if I was a member of the committee and fount that it had been mentioned. Mr Bonner does not know because, for understandable reasons, he was not there.
40. MR SHIELDS: Yes. I entirely understand. I will get the e.mail address of your clerk. I am instructed to ask for costs. A costs schedule has been served. I do not know on what basis the court exercises its discretion in these cases. I have not found any authority for it.
41. JUDGE MACKIE: I can tell you that under no circumstances will the court make an order as or against Mr and Mrs Bonner in the circumstances of this case. The court has a discretion as to costs. Generally, the successful party gets it costs paid by the losing party but the court may make a different order. In this case Mr and Mrs Bonner have conducted themselves courteously and sensibly throughout. They played no part in causing what I have identified as an error in the decision of the tribunal. They have not added in any sense to the expense of the landlord. Moreover Mr and Mrs Bonner have lived in these premises as their home for forty-five years. The appellant company is something of a newcomer, I think, which bought the premises in 2005. If ever there was a case for there being no order of costs as against the tenants this is one. So no order for costs as against the tenants. I need not do anything other than that. I make no order for costs against the tenants so, in effect, the costs order will be no order as to costs.
42. MR SHIELDS: Will it assist if I draw up the order?
43. JUDGE MACKIE: We are in the Administrative Court. I think it will help if you draw up the order. Please e.mail it to my clerk or the court. We do not have an associate here.
44. Mr Bonner, this means the committee process will start all over again. The court regrets the inconvenience to you. I suggest you turn up on the next occasion and you can make the points that you have made to me. You can make the points you have made to me and tell them anything else you want to tell them. It is important that you should understand and they should understand that the fact that I have, for technical reasons I have explained, set aside their decision does not necessarily mean the rent, when assessed again will be any higher than the figure which they have come up with.
45. THE FIRST RESPONDENT: Thank you.