Rent Act 1977 — Rent assessment committee’s duty to give reasons for decision — Extent of duty — Reasons must be intelligible and deal with the substantial points raised — Effect of non-compliance with statutory duty to give sufficient reasons — Complaint by landlords (applicants for judicial review) that committee did not explain why they rejected, as a basis for the determination of the fair rents of certain flats, a comparison with rents for similar flats in the same block determined by another committee only a few months earlier — Committee had stated in their decision that while they accepted the general approach put forward by the landlords they did not agree with conclusions drawn from particular comparisons put before them — Held that committee had failed to give adequate reasons — Question as to effect of this failure — Principles in Crake v
This was an
application for judicial review by St George’s Court Ltd, landlords of a block
of flats at St George’s Court, Gloucester Road, London SW7. The respondents
were a committee appointed by the president of the London Rent Assessment
Panel.
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 an application for judicial review of the
determination by a London rent assessment committee on November 25 1981 of the
fair rents of six flats in St George’s Court, Gloucester Road, SW7. The
application is made by the landlords, St George’s Court Ltd.
In July 1981
the rent officer had determined the fair rents for the six flats. The landlords
were dissatisfied and appealed to the committee. The principal evidence put
before the committee by the landlords was a statement from Mr N C M Renny, a
surveyor who is an associate partner in Messrs Chestertons. He knew the flats
well; he had been involved in a number of similar rent assessments before. He
was mindful of the views expressed in this court to the effect that the best
yardstick, by and large, tends to be the earlier determinations by committees
of the fair rents of comparable premises. So, in preparing his evidence for the
hearing in November 1981, he paid detailed attention to the findings of another
rent assessment committee in August 1981 in relation to a number of the other
flats in the same block.
The flats are
of different shapes and sizes but, broadly speaking, each is the same shape and
size as the ones above and below it. The flats which are the subject of the
present application are of Types D, F and I. So Mr Renny got out particulars of
the fair rents of the flats of Types D, F and I which had been determined in
August 1981. He produced a very helpful table. In its lower part, he set out
the fair rents determined in August 1981 of five flats comparable with five of
the six which are the subject of the present proceedings. The sixth flat did
not have a comparable one which had been the subject of an appeal in 1981, and
the nearest comparison that Mr Renny was able to make was with a flat the fair
rent of which had been determined by a committee in May 1979.
He then
decided that some allowance ought to be made for the passage of time between
August 1981 and November 1981; he decided that 16% per annum was the correct
uplift (as he called it), and so he applied to the figures of August 1981 a
small uplift, calculated on this basis, and arrived at figures which, he
submitted, broadly represented the rents which the committee should determine
in this instance. These were all higher than those determined by the rent
officer. By way of example, in June 1981 the rent officer had decided on
figures of £2,700 or £2,800 for five of the six flats; Mr Renny’s exercise led
to the conclusion that these figures should be £3,020 or £3,200 in November
1981. He was not unfairly selective in his extraction of these comparables from
August: he made a perfectly fair comparison and presented it to the committee.
For the
tenants, the committee heard evidence from Mrs Baker, who was a tenant herself,
and from one or two others, including a Professor W A West, who submitted that
a fundamentally different approach to the determination of the fair rents for
these flats should be adopted. Mrs Baker, and I think possibly one of the other
witnesses, made a number of criticisms of the quality of the services provided
by the landlords at that time.
The committee,
having heard the submissions and having inspected the property, expressed their
conclusions in four paragraphs. Para 20 said this:
The committee
concluded that a general pattern of rents had been established over a number of
years and that the previous . . . committee decisions, as a whole, provided the
best guide to the level of rents to be determined for the subject flats.
They then went
on to explain that they had not thought it right to adopt Professor West’s
alternative approach, nor had they thought it right to make a direct comparison
with another block of flats in a different part of London, which Mrs Baker had
drawn to their attention, although they said that that formed part of the
general background.
In the
critical paragraph, which is para 21, they said this (and this is all they
said):
While
accepting the general approach put forward on behalf of the landlord, the
committee did not agree with the conclusions drawn from particular comparisons
put to them nor did they accept the allowance adopted for the passage of time.
I will come
back to that paragraph.
Para 22 said:
Having regard
to the present condition of the subject block and the consideration of the
general level of rents derived from a number of . . . committee decisions, the
committee concluded that the rent officer’s registrations were fair although,
in the light of the latest evidence of service costs which were accepted by the
committee, they differed from him with regard to the amounts attributed to the
services.
Para 23 said:
Having regard
to all the evidence put before them, to their inspection, to their . . .
knowledge and experience, and to the provisions of section 70 of the Rent Act
1977, the committee determine as set out in the attached schedule.
Effectively,
their determination was the same as that made by the rent officer four months
earlier.
The vital
paragraph is 21, in which they said that they did not agree with the
conclusions from particular comparisons put to them by Mr Renny. Why they did
not agree is not stated. They said they did not accept the allowance adopted
for the passage of time. Why they did not accept it is not stated. No doubt,
they thought it was somewhat too high: that can be read by implication. But
nothing implicit can be read into the statement that they did not agree with
the conclusions drawn from particular comparisons put to them. One is simply
left in the dark as to why they disagreed.
A rent
assessment committee are obliged, both by regulations and by section 12 of the
Tribunals and Inquiries Act 1971, to give reasons for their decisions. A number
of decisions of this court (and perhaps also the Court of Appeal) have
established the following propositions, which I take from the judgment of Sir
Douglas Frank QC, sitting as a deputy judge in the Queen’s Bench Division in
March 1981, in the case of Guppys Properties Ltd v Knott and Another
(No 3) (1981) 258 ESTATES GAZETTE 1083. At p 1086, he said that it seemed
to him that the following rules were to be derived:
(1) The reasons must be intelligible; (2)
although they do not have to deal with every point raised, they must deal with
the substantial points, showing what matters were taken into consideration and
what view was reached on them. (3) Where the committee (having conformed with
rule (2)) decide to rely on their own knowledge and experience they are not
required to further explain how their figure is determined.
Mr Patten, on
behalf of the landlords, submits that the committee have offended by failing to
give reasons which are intelligible and which deal with the substantial points.
Mr Brown, for the Secretary of State, submits that the reasons were adequate
and that there has been no failure to spell out anything which the law requires
to be spelt out.
In my
judgment, Mr Patten is plainly right. No adequate or intelligible reasons are
given. The committee’s reasons are not expressed. They have not dealt with the
substantial points. There are no reasons at all in para 21: there are only
conclusions. Neither the landlord nor anybody else reading this decision can
discover why Mr Renny’s table of comparison was thought to fall short.
Now comes the
problem of what this court is to do about it. Does the failure to give reasons
constitute an error of law on the face of the record which would enable an
order of certiorari to be made? If not,
then the best that the court can do is to adjourn the case, meanwhile inviting
the committee to say why they did not agree with the comparisons made by Mr
Renny and why they did not accept his allowance for the comparatively short
period between August and November 1981.
Mr Patten
invites me to hold that the failure to give reasons, in breach of section 12 of
the Tribunals and Inquiries Act 1971, amounts to an error of law which would
enable this court to quash the committee’s decision. He refers me to a passage
in the 4th edition
says:
Unfortunately
it is still far from clear what are the other legal effects of non-compliance
with a statutory duty to give reasons for decisions. There is authority for the
proposition that failure to give reasons, or to give adequate reasons, is not
in itself an error of law entitling the court to set the decision aside . . .
There is also authority (which it is submitted, is to be preferred) for
treating material omissions as errors of law or as a failure to comply with the
requirements of the legislation in question . . .
The footnotes
to the relevant parts of this passage draw attention to a number of cases which
support each point of view.
In Crake v
Supplementary Benefits Commission and Butterworth v Supplementary
Benefits Commission, reported in [1982] 1 All ER 498, but decided in July
1980, Woolf J had occasion to consider this conflict. He examined the majority
of the cases referred to in the footnotes at p 151 of de Smith. (I have
not checked to see whether he examined all of them.) He came to the following conclusion, at p
507:
I would
therefore still regard the Mountview case as being the main authority to
be applied. However, it has to be applied in the light of the 10 years which
have elapsed since that case was decided. Over that period of 10 years the
approach of the courts with regard to the giving of reasons has been much more
definite than they were at that time and courts are now much more ready to
infer that because of inadequate reasons there has been an error of law, than
perhaps they were prepared to at the time that the Mountview case was
decided.
He went on, at
p 508:
In other
spheres there are numerous cases which have been before the courts where
tribunals of all sorts have had to reconsider their decisions because the
reasoning was inadequate. Therefore in practice I think that there will be few
cases where it will not be possible, where the reasons are inadequate, to say
one way or another whether the tribunal has gone wrong in law. In some cases
the absence of any reasons would indicate that the tribunal had never properly
considered the matter (and it must be part of the obligation in law to consider
the matter properly) and that the proper thought processes have not been gone
through.
In other
cases it will be seen from the reasons given that there has been a failure to
take into account something which should have been taken into account or that
something which should not have been taken into account has in fact been taken
into account. Again, in that situation, there will be an error of law which
will justify this court interfering on an appeal on a point of law.
In the rare
case where it is not possible to decide either way whether or not there is an
error of law, then, in my view, this court has got a jurisdiction, as was
indicated in the Mountview case, to remit the matter to the tribunal for
reconsideration.
In Mountview
Court Properties Ltd v Devlin (1970) 21 P & CR 689 that course
was adopted. It is apparent from p 696 of the report that when the matter was
before this court, Bridge J was of the view that the committee must have made
an error of law. It had failed to answer a particular point which appeared to
be of substance. Nevertheless, the matter was sent back to the committee for
amplification of reasons; and, when the reasons emerged, they proved to be
fully sufficient to support the determination which had been arrived at.
Mr Patten
submits that there is every reason to believe that if this matter were to go
back to the committee, they would say no more than has been said in the
affidavit already sworn by the chairman, Mrs Lloyd. Although her affidavit
purports to explain in greater detail the basis of the decision, it is still,
submits Mr Patten, impossible to discover why they were led to reject Mr
Renny’s comparison. When I first read Mrs Lloyd’s affidavit, I thought there
was substance in this contention.
Mr Brown, on
behalf of the committee, has suggested a possible reason for their rejecting
this comparison with the August determination. On that occasion, the tenants
were not represented; and the evidence given, not by Mr Renny but by someone
else, on behalf of the landlords was not therefore tested in quite the way it
might otherwise have been. So it is possible that the November committee felt
that the rents fixed in August 1981 did not of themselves provide a fair
yardstick and that, while Mr Renny was right in saying that one should look at
rents fixed for other flats of the same types in St George’s block, one must
look at a number of determinations, and he was therefore wrong to focus only
upon August.
Mrs Lloyd has
not expressly said in her affidavit that this was the thinking of the
committee. But, bearing in mind Mr Brown’s submission that this is, at any
rate, a possible reason which led the committee to their decision and, in the
light of that, reading Mrs Lloyd’s affidavit again, I think it is possible that
the committee might be able to demonstrate that they had reasons which this
court might, on the resumed hearing, find to be good.
In those
circumstances, I do not propose to quash these decisions. I propose to adjourn
the matter with a specific invitation to the committee to give the reasons
which, in my judgment, are missing at the moment. If these prove to be good,
then the application for certiorari will eventually fail. On the other hand, if
they demonstrate that the committee made an error of law, equally clearly the
application will succeed. But the matter must go back.
The case was
adjourned and the matter remitted to the committee in accordance with the
judgment. The applicants were awarded costs.
