Rent Acts (Maximum Fair Rent) Order 1999 – Order restricting increases of rent already registered – Whether order made intra vires section 31 of Landlord and Tenant Act 1985 – Whether power impliedly confined to making orders of a counter-inflationary nature – Court of Appeal holding order invalid – Government appeal to House of Lords allowed
In May 1998 the first respondent issued a consultation paper, expressing concern about disproportionate increases in regulated rents following the approach taken by the Court of Appeal in Spath Holme Ltd v Chairman of the Greater Manchester and Lancashire Rent Assessment Committee [1995] 2 EGLR 80, as affirmed and clarified in Curtis v Chairman of the London Rent Assessment Committee [1998] 1 EGLR 79. In January 1999 the first respondent and the second respondent, the Secretary of State for Wales (the ministers), having considered the responses to the paper, made the Rent Acts (Maximum Fair Rent) Order 1999 (SI 1999 No 6). The order was purportedly made under a “reserve power” contained in section 31 of the Landlord and Tenant Act 1985, which empowered the respondents to make orders restricting or preventing increases in rent, it being permissible to include provisions excluding, adapting or modifying any statutory provision relating to rent.
The order came into force in February 1999, having been laid before parliament subject to automatic approval in the absence of a resolution to annul (the negative procedure). Dealing solely with dwelling-houses already subject to a registered rent, the order limited subsequent increases to a specified percentage of the existing registration.
The applicant (SH) challenged the validity of the order, primarily upon the ground that the ministers, in making the order, had exceeded their power to legislate under the reserve power. In January 2000 the Court of Appeal accepted SH’s submission that, despite the absence of any express limitation on the reserve power, section 31 could not be read as authorising subordinate legislation that would amend primary legislation affecting the competing concerns of landlords and tenants (see [2000] EGCS 10).
In so deciding, the court held, inter alia, that: (i) the reserve power should bear the same meaning as the similarly-worded provision contained in section 11 of the Housing Rents and Subsidies Act 1975 (the 1975 power); (ii) the case was one where it was permissible, under the rules laid down in Pepper (Inspector of Taxes) v Hart [1993] AC 593, to gather the purpose of the 1975 power from relevant parliamentary reports; (iii) the purpose so ascertained was the same as that of the similarly-worded section 11 of the Counter-Inflation Act 1973; and (iv) it was most unlikely that parliament had intended such use of the negative procedure, given that positive parliamentary approval was required of orders made under section 74 of the Rent Act 1977 for the regulation of purely procedural matters affecting fair rents. The ministers appealed to the House of Lords.
Held: The appeal was allowed.
1. Per Lords Bingham, Nicholls, and Cooke: In its approach to a consolidating statute, the Court of Appeal had correctly concluded that the present case was one where it was appropriate to consider the statutory predecessor of the provision in question. Although the language of section 31 was in no way ambiguous, or such as to lead to absurdity if given its full apparent effect, the power thereby given was very broad, and no single, unifying purpose could be discerned in the wide variety of measures brought together in the 1985 Act. While the courts should not routinely investigate the statutory predecessors of consolidating provisions, such investigation was legitimate where the court could not otherwise interpret the provision in the social and factual context that originally led to its enactment: Director of Public Prosecutions v Schildkamp [1971] AC 1, Maunsell v Olins [1975] AC 373, Farrell v Alexander [1976] 2 EGLR 69 and Johnson v Moreton [1978] 2 EGLR 1 considered.*
2. There was no reason for concluding that the 1975 power was limited to the objectives of the Counter-Inflation Act 1973. It was significant that the 1975 Act was neither expressly nor exclusively directed to countering inflation and that the rent-restricting power contained therein did not, unlike the replaced 1973 provision, cease to be exercisable after a specified period of time. The use of the negative procedure (when compared with the power given by section 74 of the Rent Act 1977) was consistent with a reserve power, intended to be used in times when residential tenants faced conditions of hardship.
3. Per Lords Bingham, Hope and Hutton: Applying the majority decision in Pepper v Hart, reference to parliamentary materials could only be made where: (a) legislation was ambiguous or obscure, or led to an absurdity (the threshold condition); (b) the material relied upon consisted primarily of one or more statements by a minister or other promoter of the bill; and (c) the effect of such statements was clear. While the threshold condition might apply if section 11 were to be read in isolation, that was not so when it was read in its social and factual context. The third condition was also unsatisfied, as no minister gave a categorical assurance that section 11 would not be invoked save to counter excessive inflation.**
* Editor’s Note: A contrary view was taken by Lords Hope and Hutton, who considered that the apparent width of the power given by section 31 did not, without more, afford a reason for looking back to the 1975 Act in order to determine its purpose, which was plainly to restrict or prevent unfair rent increases.
** Editor’s Note: A contrary view on the threshold condition was taken by Lords Nicholls and Cooke, who considered that the very width of the power, together with its derivation from the Counter-Inflation Act 1973, was sufficient to justify resort to parliamentary materials.
James Bonney QC and Jonathan Gavaghan (instructed by Willan Bootland White, of Manchester) appeared for the applicant; Kenneth Parker QC, John Male QC and Philip Sales (instructed by the Treasury Solicitor) appeared for the respondents.
Alan Cooklin, barrister
