Rent Act 1977 — Consideration of further reasons given by rent assessment committee in response to court’s invitation at previous hearing — At that hearing the judge had found the committee’s reasons insufficient, in particular their failure to make clear why they had rejected a comparison with the findings of a previous committee sitting three months earlier on similar flats in the same block — In inviting the committee to amplify their reasons the judge mentioned a possible explanation, namely, that as the tenants had not been represented on the previous occasion the present committee might have felt that the evidence then given on behalf of the landlords had not been fully tested on that occasion — The committee submitted amplified reasons as directed by the judge and stated, inter alia, that in rejecting the comparison with the previous committee’s findings they were influenced by the consideration that ‘the evidence before that committee was not tested to the extent it might have been had the tenants been properly represented’ — Held that the reasons now given for rejecting the comparison, although adequate and intelligible, revealed an error of law — In going beyond the previous committee’s determinations and questioning the evidence on which they were based, the present committee were in effect saying that the rents previously determined were not fair rents — This was contrary to the principle stated by Lord Parker CJ in Tormes Property Co Ltd v Landau that unless and until it is shown that a committee in determining a fair rent were wrong in law it must be assumed that they were right in law — Accordingly the committee’s decision must be quashed and the matter reconsidered by a fresh committee
This was the adjourned
hearing of an application for judicial review which came before the same judge
on November 2 and 3 1982. His decision at the earlier hearing was reported at
(1982) 265 EG 984, [1983] 1 EGLR 98. The application was made by St George’s
Court Ltd, landlords of a block of flats at St George’s Court, Gloucester Road,
London SW7. In accordance with the order made by the judge on November 3 1982
the rent assessment committee reconvened and produced an additional statement
of reasons which were the subject of the present hearing.
Nicholas
Patten (instructed by Pickering, Kenyon) appeared on behalf of the applicants;
Simon Brown (instructed by the Treasury Solicitor) represented the respondent
committee.
Giving
judgment, McCULLOUGH J said: This is the adjourned hearing of a case which was
before me on November 2 and 3 1982. I then gave a judgment. It is not
necessary, in the circumstances, to introduce the case. The introduction is to
be found in that judgment. It is sufficient to say that I expressed the view
that the rent assessment committee had failed to give adequate reasons for
rejecting the primary evidence upon which the landlord had relied, namely, the
calculations which Mr Renny [the landlord’s surveyor] had made on the basis of
the decisions reached by an earlier committee in August 1981, in relation to
comparable flats. I then adjourned the matter and invited the committee to
supply the reasons which, in my judgment, were missing. This they have now
done.
A committee
must give reasons which are adequate and intelligible. They need not deal with
every point raised. They must deal with the substantial points. They must show
what was taken into consideration and show what view they reached. They do not
have to go into great detail but they should deal with what has been called the
hard evidence.
Two main
facets of the landlord’s case were rejected. The first was the use of the
August 1981 figures for purposes of comparison; the second was the 16% per
annum ‘up-lift’ which Mr Renny applied to those August figures in order to
reach what he submitted were fair figures for November, three months later.
Mr Renny did
not, so far as the record shows, explain why he had selected a figure of 16%
per annum. The committee have now said: ‘We rejected it because, in effect, it
was arbitrary, and in any event we were only looking at a period of three
months. There was no evidence that in that three months there had been
discernible, movement in rental values, and had we adopted Mr Renny’s method we
would have been engaged in indexing.’ In
my judgment those reasons are adequate, intelligible and sufficient in law.
In relation to
the comparison based on the determinations in August 1981, the committee said
this: ‘We rejected it for a variety of reasons. Mr Renny had relied on it alone
and we thought it right to rely on a number of rent assessment committee
decisions rather than just one.’ It was,
in any event, unreliable because the evidence before that committee had not
been tested to the extent that it might have been had the tenants been properly
represented.
What they did,
they have explained, was to go back to June 1978, which was the most recent
effective date of registration of the rents of all the flats which they were
considering in November 1981. Only one of these 1978 determinations had been
made the subject of appeal. They looked at all the rents then fixed for each of
the flats. One reason for doing this was that no two flats are identical. They
then made what they regarded as an acceptable allowance for the passage of
time, derived from their knowledge and experience. They have gone into no
further detail than that. They have not said what figure they took. They also
took into account the rent assessment committee’s decision of February 1980 in
relation to a number of flats and the decision of the committee which sat in
February 1979 in relation to the one flat.
As subsidiary
matters they took into account representations that had been made to them about
the condition and rents in a comparable block, Sussex Mansions, and they took
into account the condition of this particular block.
Reading the
reasons as a whole, as they have now been given for rejecting the comparison
based solely on the findings of August 1981, they are, in my judgment, adequate
and intelligible and I see no basis in law on which the decision should be
quashed for failure to give reasons.
But the matter
does not end there because, submits Mr Patten for the landlord, the giving of
reasons has now revealed an error of law. The hardest evidence in the case for
the landlord was undoubtedly the comparison based on the determinations of
August of 1981, and Mr Patten criticises the approach which the committee
adopted to that decision.
When comparing
earlier determinations, a rent assessment committee may well, I suppose, find
itself faced with assessments of fair rents which they find difficult to
reconcile. In such a situation they must obviously do the best they can, all
the time recognising that the rents determined are, in law, the fair rents. What
they must not do is go behind this fundamental principle. If one needs any
authority for this it is to be found at p 266G in the judgment of Lord Parker
CJ in Tormes Property Co Ltd v Landau [1971] 1 QB 261.
The points
which Mr Renny had made on the basis of the August 1981 decisions were fair and
forceful. If they were to be rejected they called for an answer. The central
paragraph of the answer is this:
The committee
also had reservations about accepting Mr Renny’s conclusions drawn from
particular comparisons because with one exception they were derived from the
August decision. The evidence before that committee was not tested to the
extent it might have been had the tenants been properly represented. Moreover,
the members of that committee did not have the benefit of the submissions put
to the present committee on behalf of the tenants, which, although not accepted
in full, as can be evidenced by the committee’s determinations, did to some
extent influence their consideration of the general level of fair rents for the
subject flats.
Effectively
they were saying this: ‘These were not, in our judgment, fair rents.’ I regard the committee’s reason for rejecting
the August decision as revealing an error of law. The mystery, as it were, is
now solved. At the original hearing no one knew why Mr Renny’s comparison was
rejected. Now we do. It was because the committee were of the view that the
August 1981 determination had not been fair.
This committee
was placed in a difficult position. They were sitting only three months after
the August determination. They knew, certainly by the time they put their own
decision into writing, that the tenants had applied at the outset of the
hearing in August for an adjournment for the reason that Queen’s Counsel who
had been going to represent them was unable to attend. The adjournment was
refused. The hearing proceeded. By the time of the hearing in this case, it was
known that an application for judicial review of the August determination had
been made or, at least, that leave to make such an application was being
sought, and that that application was then still undetermined.
I think that
this was why they fell, no doubt unconsciously, into the error of going behind
the August 1981 determinations and treating them, although they did not use
these words, as unfair.
Mr Patten was
given leave to make the necessary amendment to his grounds without objection
from Mr Brown. These determinations must be quashed and, accordingly, the
matter must be reconsidered by a fresh committee.
The court
granted an order of certiorari to quash the decision of the committee, the
matter to be remitted for a rehearing, and an order commanding the rent officer
for the borough of Kensington and Chelsea to delete the rents registered by him
pursuant to the committee’s decision and to reregister the rents as determined
by him previously to that decision. No order was made as to costs.
