Rating–House damaged by excessive traffic–Would a reasonable hypothetical landlord spend £120 on strapping the window-bay, or lay out £1,200 on longer-term repairs?–Application of Wexler v Playle principle–Ratepayer’s appeal dismissed
This was an
appeal by Mr Charles Basil Eldred, of 9 Tubbs Road, London NW10, from a
decision of the Lands Tribunal dated December 4 1974 confirming a decision of a
local valuation court by which the gross rateable value of his property was
fixed at £355 per annum. The respondent was the local valuation officer.
The appellant
appeared in person. Mr A Fletcher (instructed by the Solicitor of Inland
Revenue) represented the respondent.
Giving the
first judgment, ORMROD LJ said: This is an appeal from a decision made by the
Lands Tribunal on December 4 1974 dismissing an appeal by the present
appellant, Mr Eldred, from a local rating tribunal which sat at the Brent Town
Hall on June 24 1974, which had also dismissed his appeal from a reassessment
of his property, 9 Tubbs Road, Harlesden NW10, promulgated on May 23 1973. On
that date the gross rateable value of 9 Tubbs Road was raised from the previous
figure of £140 a year to the new figure of £355 a year. Mr Eldred, who has put
his case to the court with moderation and clarity, is the owner and occupier of
the property concerned. Apparently Tubbs Road, and a neighbouring road called
Nightingale Road, began some years ago to be used by very heavy lorry traffic
which was trying to avoid more-congested roads elsewhere. Both these roads are
residential roads with small two-storey houses, and the evidence is that as a
result of the extremely heavy traffic passing in front of them, some of the
houses–perhaps all of them–in these roads became damaged to varying degrees.
Obviously a great deal of anxiety was quite reasonably generated about this,
and strenuous efforts were made to prevent this lorry traffic continuing to
come through these residential streets. Those efforts were eventually
successful, and before that, in October 1973, a traffic restriction was imposed
on the two roads, limiting their use to vehicles not exceeding
this heavy traffic, and he has raised two points. He says first that the cost
of doing the necessary repairs is very high and that the repairs themselves are
of a kind which ought not for rating purposes to be treated simply as what he
calls the statutory landlord’s obligations. Secondly he takes the point that he
ought not to suffer from damage to his property for which he was not in any way
responsible.
So the actual
appeal from the Lands Tribunal to this court is based on a somewhat narrow
ground. The appellant puts his first point in this way: he says that the Lands
Tribunal was mistaken, or wrong in law, in having heard a Mr George Thompson
give evidence for the valuation officer and in deciding, after hearing his
evidence, that the repairs to the bay would only cost £120 or £130. The
appellant says that as Mr Thompson had never been inside 9 Tubbs Road to make
an inspection of the bay, he would not be expected to be able to make an
estimate of the cost of repairs to the bay which carries the same authority as
the evidence handed to the Lands Tribunal by the appellant. In saying that, Mr
Eldred refers to evidence in the form of a report which also, oddly enough, has
clearly been written by Mr Thompson for a wholly different purpose, to which I
shall come back. The appellant’s second point is that he is not responsible for
the repairs to the bay, however large or small the cost may be, because the
cause of the damage was the heavy traffic. Those are the two points in the
notice of appeal.
The position
before the Lands Tribunal was as follows. The member of the Lands Tribunal who
heard this appeal was Mr E C Strathon, who is a Fellow of the Royal Institution
of Chartered Surveyors. There was evidence before the Lands Tribunal which
suggested that the front ground-floor bay of the house had become unsafe and
dangerous to live in–that was Mr Eldred’s main case–and further that there was
a structural defect in the side wall of the back addition, which had caused a
bulge in the brickwork. The valuation officer, Mr Playle, gave evidence, which
was summarised in the case stated in this way. He measured the area of the
property and made it 138.1 sq metres. He then took the figure of £2.36 per sq
metre as the basis of the valuation of a property of this type, giving a total
figure of £325. An addition to that sum was made on the ground that this
particular house is adapted for occupation as more than one living unit,
because it has two kitchens; to allow for that amenity a further 10 per cent
was added to that £325, making £355 in all. That appears to be a more or less pro
forma figure, which was used customarily in this area. It is not suggested
that there was anything wrong with the basis of Mr Playle’s valuation of £2.36
per sq metre; what is said is that as the bay is in so bad a state, some
substantial reduction should be made, below the figure of £355.
I think the
difficulty in this case starts from the fact that as a result of all the
trouble owing to the heavy traffic, a very detailed survey was undertaken of
the houses, each individual house, in this road and in the adjoining roads.
That survey was based upon ascertaining the cost of carrying out the necessary
works to give the houses a property life of 30 years plus. What the precise
object in mind was at the time of that survey is not very clear and does not
matter, but Mr Eldred put in a copy of that survey and a copy of the letter
which was written covering it, dated June 6 1974. As I have already said, the
letter was actually written by Mr Thompson, although it is signed by Mr Tyson,
the chief planner. It is a letter which was written from the directorate of
development of the Borough of Brent to Mr Hawkes, the district valuer and
valuation officer for Brent. The letter reads thus:
Please find
enclosed a copy of a survey report in respect of the above property. As
explained to your surveyor at Brent House on June 5, the purpose of the survey
is not to report on repairs required to make the premises habitable, but those
necessary to give the property a life of 30 years plus. As itemised in the
report, the movement to the bay is as yet slight, and further movement could
probably be stopped by immediate strapping of the bay. The roof is at present
watertight; however, re-covering has been allowed for as nail rot is suspected.
The bulge in the flank wall is small but not dangerous, but as with the roof,
renewing has been allowed for to give a 30-year life. Therefore, when analysing
the report, it will be seen that the only items of immediate concern are the
provision of a damp-proof course and treatment against worm or rot attack.
The detailed
survey shows that the cost of taking down the defective bay and rebuilding it
would be £1,210, and a note is attached to say: ‘The movement to the bay is not
yet serious. If no further movement takes place, or if it moves back, the bay
could be saved by strapping.’ There are
other items listed: the cost of cutting out and rebuilding the bulge in the
flank wall would be £700, and the total estimated cost was £2,700 for repairs
and £2,650 for improvements, making the property into two self-contained flats.
So that is a survey and estimate for a totally different purpose from that with
which this court and the Lands Tribunal were and are concerned. That is a
report on the works necessary to rehabilitate this house and bring it up to the
full standard of 30 years’ further life for all sorts of purposes, other than
rating.
Mr Thompson
actually gave evidence before the Lands Tribunal. He said that in his view the
cost of strapping the bay, which was all that was needed at that time, would be
about £120 or £130. Mr Eldred takes exception to that evidence of Mr Thompson,
on the ground that Mr Thompson himself had not inspected the house on the
inside, which is not disputed; but it is common ground, and is quite clear,
that Mr Thompson had a very detailed knowledge of the state of these houses,
because he had been responsible for organising the survey to which I have
already referred. It is important to make it plain that there is no evidence
whatever, in spite of what Mr Eldred has said, that this house was in any
condition which could possibly be called dangerous in the ordinary sense of
that word. The member of the tribunal inspected the house himself, and, being a
surveyor, he is in a better position, one would think, than most people to
decide whether evidence like Mr Thompson’s is right or not. The member of the
tribunal came to the conclusion, having inspected the house, that it was right
to accept Mr Thompson’s evidence that the bay could be put right for £120 or
£130 and that there was no question of the owner of the house being obliged to
spend £1,210, or anything like that, on the bay. So I think Mr Eldred, quite
understandably, has become confused by the survey having put the cost so very
much higher.
Those being
the findings of fact–and there is no reason for this court to go behind them,
or to think of going behind them–the question then arises as to how to apply
the general principles of rating to these facts. The member of the tribunal, in
the case stated, on p 4, sets out section 19(6) of the General Rate Act 1967,
which defines ‘gross value’ in these terms:
‘Gross
value,’ in relation to a hereditament, means the rent at which the hereditament
might reasonably be expected to let from year to year if the tenant undertook
to pay all usual tenant’s rates and taxes and the landlord undertook to bear
the cost of the repairs and insurance and the other expenses, if any, necessary
to maintain the hereditament in a state to command that rent.
Obviously that
is not a very easy definition to apply, because the hypothetical rent is clearly
closely linked to the hypothetical obligation to carry out repairs, and it is
agreed that there are defects, or there may be defects, of such a kind that it
is not reasonable to expect a landlord to carry out repairs at great cost if
the property itself is of limited value. So a line has to be drawn somewhere in
this exercise. But the whole basis of valuation in these cases is hypothetical.
The valuation officer has to determine as best he can the
question. Obviously, if the place is in a very bad state of repair, the
hypothetical tenant would offer only a very small rent, and I suppose, at the
extreme end of the scale, if it was in an impossibly bad state of repair it
would be unlettable. But that is balanced in the definition by the landlord’s
obligation to put it in repair. The principles are really stated in simple and
practical terms, if one may say so, by Morris LJ in the case of Wexler v
Playle [1960] 1 QB 217 in a passage at the foot of p 235. There Morris
LJ said:
So it seems
to me, if one postulates that a hypothetical landlord and a hypothetical tenant
went into a flat which had the defects to which I have referred, such as bad
window-frames, cracks in the walls and ceilings and dampness and so on, and if
we are considering what might reasonably have been expected by way of rent, I
would say that it would be such rent as would be payable on the basis that the
landlord would then do the necessary repairs to make the flat reasonably
habitable and would do such later repairs as would be reasonable in all the
circumstances.
So the
question here is whether the hypothetical landlord owning this property would
be likely to do the necessary repairs to make the flat reasonably habitable. On
the evidence of Mr Thompson, which was accepted by the Lands Tribunal, so far
as the bay is concerned that would involve an expenditure of £120 to £130, and
in my judgment that is the sort of expenditure which a reasonable hypothetical
landlord in the circumstances of this case would have incurred. It is not a
grotesquely high figure for repairs of this kind to this property, which
presumably is worth a certain amount, and is certainly not an unreasonable
figure to expect. It might be different if the cost of repairs was very much
higher.
Well after the
decision of the Lands Tribunal had been given, there was another case heard
quite recently in this court, and not yet reported, the case of Saunders
v Maltby [see now 239 EG 205, [1976] 2 EGLR 84.–Ed]. There is a useful
passage in the judgment of the Master of the Rolls beginning at the bottom of p
3 of the transcript with which we have been provided. It reads thus:
It seems to
me that the tribunal has to consider whether it is such that it would be
reasonable in all the circumstances to expect a hypothetical reasonable
landlord to do the repairs. If the cost of doing the repairs would be out of
all proportion to the value of the house, so much so that even a reasonable
landlord would not do them all, then it must not be assumed that he would do
them. He would let the premises at the low rent. In those circumstances the low
rent would be the basis on which to arrive at the rateable value.
So the Lands
Tribunal, as I have said before, has to draw a line between assuming that
repairs had been done by a reasonable hypothetical landlord and assuming that
that reasonable hypothetical landlord would not undertake the repairs in
question because of their cost in relation to the value of the house. It is of
course quite natural that the tribunal did not formulate the judgment quite in
the terms of Saunders v Maltby, because that case had not been
decided; but in my judgment the member of the tribunal who dealt with the
matter clearly directed his mind to the important question, and the real
question, which was, as I have already said: is it reasonable to assume that a
reasonable hypothetical landlord would have done the repairs to this bay as
suggested by Mr Thompson? The answer by
the tribunal was, yes, it was. It is true that the member indicated that the
case was a borderline case, but in my judgment it is clearly on the side of the
borderline which is unfavourable as far as the appellant is concerned. The fact
that the damage may have been caused by traffic in the road is irrelevant;
everyone has agreed that that point has no basis in law at all. In those
circumstances, in my judgment, the member of the tribunal was fully entitled to
take Mr Thompson’s evidence of the cost of these repairs into account. Having
seen and actually inspected the bay itself, he was able to make up his own
mind, to some extent, about the cost; and more to the point, it is not a case
where there is in fact a conflict of evidence. As I have already pointed out,
Mr Thompson himself was the author of the letter of June 6 1974, and once it is
understood that that letter refers to a survey prepared for an entirely
different purpose from the present one, in my judgment the difficulties in this
case disappear. For those reasons I am afraid that Mr Eldred fails again in yet
another appeal, and I would therefore dismiss this appeal.
SIR JOHN
PENNYCUICK: I agree and do not wish to add anything.
STAMP LJ: I
also agree and have nothing to add.
The appeal
was dismissed with costs.
