Housing Act 1957 — Judicial review sought by monthly tenant to quash closing order — Tenant, owing to nature of his interest, not eligible to appeal to county court under section 20(1) of 1957 Act — Tenant appealed from refusal of order of certiorari by McNeill J — In order to succeed in application tenant had to bring himself within the Wednesbury principles — Question whether house could be rendered fit for human habitation at a reasonable expense — Application of section 39 of 1957 Act under which regard had to be had ‘to the estimated cost of the works necessary to render it so fit and the value which it is estimated that the house will have when the works are completed’ — Very large difference between local authority’s valuation of premises tenanted and untenanted, repaired and unrepaired, compared with corresponding valuations made by appellant’s surveyors — In their assessment of the value of the house with the works completed, the local authority’s officers took the rental value of the house and multiplied it by nine to arrive at its value as unrepaired and by 10 to arrive at its value as repaired — Held that the local authority had valued the house on the wrong basis — What it did ‘was to value the rental income of the house and not the house’ — Rental values said to be of little importance, but the possibility of capital appreciation all important — Conclusion that the local authority’s decision that the premises were not capable of being rendered fit at a reasonable cost was a decision that no reasonable authority could reach — Appeal accordingly allowed and closing order quashed
This was an
appeal by Mr D L Richardson, a monthly tenant of premises at 11 Carlton Road,
Chiswick, from a decision of McNeill J, refusing him an order of certiorari to
quash a closing order made in respect of the premises by the London Borough of
Ealing.
Anthony F B
Scrivener QC and G Stephenson (instructed by Alastair Thomson & Partners),
appeared on behalf of the appellant: Douglas Hogg (instructed by R Polson,
chief solicitor’s office, Ealing Borough Council) represented the respondent
authority.
Giving
judgment, LORD LANE CJ said: This is an appeal from a decision of McNeill J on
April 7 1981 by which he refused the appellant’s application for an order of
certiorari to quash a closing order which had been made by the London Borough
of Ealing in respect of premises in Chiswick, 11 Carlton Road. The order had
been made on Wednesday, September 27 1978. The facts which lay behind the
application were these. The appellant was at all material times the monthly
tenant of the premises at a rent of £35 per month, that is to say, £420 per
annum. He had been dissatisfied about the state of the premises. On a date in
or about April 1978 he made a complaint to the local authority about the state
of the premises, as he was entitled to, no doubt in the hope that the local
authority, under their powers under section 9(1)(a) of the Housing Act of 1957,
would cause repairs to be made. However, it so happened that that was not the
way that things turned out. Officers of the local authority, in the shape
particularly of a Miss Bleach and a Mr Dean, inspected the premises on more
than one occasion and, instead of making the order which the appellant wanted,
they came to the conclusion that the premises were unfit for human habitation,
that they were not capable of being rendered fit for human habitation at a
reasonable cost and they reported accordingly to the housing committee of the
local authority.
The local
authority under the statutory provisions, to which reference will have to be
made in a moment, which regulated their activities, were empowered either to
make a demolition order or a closing order. There was no question of a
demolition order because this is either a semi-detached or end-of-terrace house
and were the premises to be demolished that would expose the adjoining house to
risk. A closing order was made on September 27 1978.
The provisions
under which action was taken are all found in the Housing Act of 1957 and it is
necessary to cite those at some length. Section 16(1) reads:
Where a local
authority, on consideration of an official representation, or a report from any
of their officers, or other information in their possession, are satisfied that
any house (a) is unfit for human habitation, and (b) is not capable at
reasonable expense of being rendered so fit, they shall serve upon the person
having control of the house, upon any other person who is an owner thereof,
and, so far as is reasonably practicable to ascertain such persons, upon every
mortgagee thereof, notice of the time (being some time not less than 21 days
after the service of the notice) and place at which the condition of the house
and any offer with respect to the carrying out of works, or the future user of
the house, which he may wish to submit will be considered by them.
(2) Every person upon whom such a notice is
served under subsection (1) of this section shall be entitled to be heard when
the matter is so taken into consideration.
(3) A person upon whom such a notice is served
under subsection (1) of this section shall, if he intends to submit an offer
with respect to the carrying out of works, (a) within 21 days from the date of
the service of the notice upon him, serve upon the authority notice in writing
of his intention to make such an offer, and (b) within such a reasonable period
as the authority may allow, submit to them a list of the works which he offers
to carry out.
(4) The local authority may, if after
consultation with any owner or mortgagee, they think fit so to do, accept an
undertaking from him, either that he will within a specified period carry out
such works as will in the opinion of the authority render the house fit for
human habitation, or that it shall not be used for human habitation until the
authority, on being satisfied that it has been rendered fit for that purpose,
cancel the undertaking.
The only other
relevant subsection is subsection (5) which reads:
Nothing in
the Rent Acts shall prevent possession being obtained of any premises by any
owner thereof in a case where an undertaking has been given under this section
that those premises shall not be used for human habitation.
I turn now to
section 17. Subsection (1) reads:
If no such
undertaking as is mentioned in the last foregoing section is accepted by the
local authority, or if, in a case where they have accepted such an undertaking,
(a) any work to which the undertaking relates is not carried out within the
specified period, or (b) the premises are at any time used in contravention of
the terms of the undertaking, then subject to the provisions of this section,
the local authority shall forthwith make a demolition order for the demolition
of the premises to which the notice given under the last foregoing section relates.
Provided that if in the case of any house the local authority consider it
inexpedient to make a demolition order having regard to the effect of the
demolition of that house upon any other house or building,
order.
It is to be
noted that by subsection (1) of section 17 once the matters in section 16 have
been shown to their satisfaction they are under an obligation to make a
demolition order or a closing order if the demolition order is inappropriate.
I have read
the further subsections of section 16 in order to demonstrate that the
appellant in this case was in a disadvantageous position. Owing to the nature
of his tenancy he was not a person to whom notice had to be given under the
terms of section 16. It was not obligatory upon the local authority to give him
notice of their intention and consequently he was not in a position to make any
representation at the time when this matter was being considered by the local
authority and before they reached their conclusions. A further disadvantage
under which he laboured lay in section 20 of the Act, subsection (1) of which
reads:
Any person
aggrieved by (a) a demolition or closing order made under this Part of the Act,
. . . may, within 21 days after the date of the service of the order or notice,
appeal to the county court within the jurisdiction of which the premises to
which the order or notice relates are situate, and no proceedings shall be
taken by the local authority to enforce any order or notice in relation to
which an appeal is brought before the appeal has been finally determined.
Subsection (2)
is the one which catches out the appellant in this case. It reads:
No appeal
shall lie under this section at the instance of a person who is in occupation
of the premises to which the order or notice relates under a lease or agreement
of which the unexpired term does not exceed three years.
Consequently
the appellant in this case had no right of appeal to the local county court at
which the merits of his case and the demerits of the local authority’s case, if
any, could be re-examined before the learned judge. The result of that is that
his only available course of action was to proceed by way of judicial review
and that is the reason why this case came before McNeill J and later before
this court.
This, of
course, severely restricts the area in which he has to manoeuvre. It is common
ground on all hands that the appellant in order to succeed must bring himself
within the words of Lord Greene MR in Associated Provincial Picture Houses
Ltd v Wednesbury Corporation [1948] 1 KB 223. The passage in
consideration is at p 233 in these terms:
I do not wish
to repeat myself but I will summarise once again the principle applicable. The
court is entitled to investigate the action of the local authority with a view
to seeing whether they have taken into account matters which they ought not to
take into account, or, conversely, have refused to take into account or
neglected to take into account matters which they ought to take into account.
Once that question is answered in favour of the local authority it may be still
possible to say that although the local authority have kept within the four
corners of the matters which they ought to consider, they have nevertheless
come to a conclusion so unreasonable that no reasonable authority could ever
have come to it. In such a case, again, I think the court can interfere. The
power of the court to interfere in each case is not as an appellate authority
to override the decision of the local authority, but as a judicial authority
which is concerned, and concerned only, to see whether the local authority have
contravened the law by acting in excess of the powers which Parliament has
confided in them.
The first
matter to consider then is what statutory guidance is afforded to the local
authority upon this aspect of their duties. I turn first of all to section 39
of the 1957 Act, section 1 of which reads:
In
determining for the purposes of this Part of this Act whether a house can be
rendered fit for human habitation at a reasonable expense, regard shall be had
to the estimated cost of the works necessary to render it so fit and the value
which it is estimated that the house
and I
emphasise the word ‘house’
will have
when the works are completed.
I turn next to
section 4 of the Act which is headed: ‘Definition of Standard of Fitness’, the
side-note being ‘Matters to be taken into account in determining whether a
house is unfit.’ There it sets out a
number of matters which it is unnecessary for me to read. It is not necessary
for me to advert to section 9 except to say that the local authority have power
to require the repair of an unfit house. If they consider that it is not
possible or not desirable to repair the unfit house then they are entitled to
invoke section 16, the provisions of which I have already set out.
In the event
there were two questions which Mr Scrivener on behalf of the appellant wished
us to consider. Was there evidence, first of all, upon which the local
authority could properly come to the conclusion that the house was unfit for
human habitation under section 16?
Secondly, was there evidence, again on the Wednesbury principle,
that if it was so unfit it was not capable of being repaired at a reasonable
cost. Mr Scrivener was understandably not enthusiastic about arguing the former
of those two propositions. As to the latter he submitted that there was no
proper basis on which the local authority could come to the conclusion that
they did and that their conclusion, namely that the house was not capable of
being repaired at a reasonable cost, was one which no reasonable local
authority could have reached.
What then was
the evidence which was before the local authority? Here it is right to say that the stage at
which the decision had to be made was the section 16 stage because, as the
terms of section 17 indicate and as I have already mentioned, after the section
16 decision had been made a local authority’s hands are to some extent bound.
There was before the authority at the section 16 stage, according to the
affidavits, first of all a document RD 2. RD 2 is the report of one of the
local authority inspectors, Mr Dean, where he sets out, among other things, the
estimated cost of repairs at £3,000. He then sets out the basis for his
conclusion, namely that the house was unfit for human habitation. Each room has
its own little report and in respect of each room he sets out the complaints
that he has to make and the same with regard to the exterior of the house. So
far as the valuation of the premises is concerned, that document is of no
assistance. The only other document which was available for the authority’s
consideration was RD 3. That is a document signed by a Mr D Lane dated August
15 1978, the effect of which is to set out the values which had been put
forward by a Miss D P Bleach [BSc ARICS], another surveyor employed by the
local authority; her idea of the value of these premises tenanted and
untenanted, repaired and unrepaired. Her figures were these: 11 Carlton Road,
£3,300 with a sitting tenant unrepaired; £4,000 for the premises with a sitting
tenant repaired; £9,500 vacant possession unrepaired; £13,250 vacant possession
repaired. It is submitted by Mr Scrivener that those figures were reached upon
a false basis and that in so far as they represented the foundation for the
local authority’s conclusion they cannot be supported and consequently the
conclusion itself must fail.
I move on a
little in time. When the appellant discovered that these matters had been going
on he took steps to instruct surveyors of his own, men who carried on business
in the locality and who were in a position to give their views of the proper
value of these premises in the various states as Miss Bleach had done. It is
perhaps interesting at this stage to set out the differences between their
views and those of Miss Bleach. Tenanted and unrepaired, Miss Bleach’s figure
was £3,300. Mr B C Sworn [FRICS], the appellant’s first expert was £6,000 and
Mr G S Bradley [FRICS], the second expert, was £7,200. Tenanted and repaired,
Miss Bleach £4,000, Mr Sworn £7,250, Mr Bradley £9,170; vacant possession
unrepaired, Miss Bleach £9,500, Mr Sworn £22,000, Mr Bradley £24,000; vacant
possession repaired Miss Bleach £13,250, Mr Sworn £25,000 and Mr Bradley
£27,500. Those figures, of course, are widely different. On the one hand Miss
Bleach and on the other hand Mr Sworn and Mr Bradley have a great gulf between
their estimates. That on its own would not be enough to invalidate the section
16 decision which the local authority reached.
On discovery,
though not initially part of her report, appeared a document which Miss Bleach
had used to calculate the figures which she reached and which I have just set
out. It shows that for the purposes of discovering, or endeavouring to
discover, the value of the premises with a sitting tenant, the method adopted
by Miss Bleach was to take what we were first of all told was a comparable
house rental but which turns out to be the precise rental of this house,
namely, £420 per annum, and simply to multiply that by nine, which then
resulted in a figure of £3,780; there is then a little note alongside that which
says: ‘Because of condition say £3,750’ then a line saying: ‘Say £3,250’ and
finally, for reasons which do not appear on the document, ‘£3,300’. The way she
determined it proper to calculate the value of the house if repaired, subject
to a tenancy, was to take the then rental figure of £420 per annum and to
multiply that by 10, one more year than she used for the non-repaired premises,
and by that method to achieve the sum of £4,200 which for reasons which are not
altogether clear on the document was reduced to £4,000. It is submitted by Mr
Scrivener that on any view that is a wrong basis upon which to come to the
conclusion of the value of premises subject to a tenancy. That was the reason
why I invited the terms of section 39(1) to be emphasised when it says, ‘the
value
What she was doing was to value the rental income of the house and not the
house. So far as that is concerned it seems to me that that invalidated her
views as to the value of the house with a sitting tenant. As it seems in this
case that the sitting tenant is likely, at least for the time being, to remain
a sitting tenant, that in my judgment would be enough to invalidate the closing
order in any event.
The matter,
however, does not stop there. She went on to value the house unrepaired and
repaired if vacant possession was available. It does not appear from the
document, either the letter I have indicated or the calculations, how it is she
came to the conclusions that she did, namely, the sum of £9,500 unrepaired
vacant possession and £13,250 repaired vacant possession which, as I have
already said, are widely different from those of Mr Sworn and Mr Bradley. It is
necessary therefore to look at the affidavits of those two gentlemen to see the
basis upon which they came to those conclusions. First of all Mr Sworn. He
says:
I should
explain the basis today is not necessarily the market value of the house less
the cost of any repairs needed. There has been a seller’s market for a long
time past and purchasers are eager to buy at prices which do not truly reflect
the repairs needed. I should also add that the figures I have given are my best
estimate and cannot be precise for what I hope are obvious reasons. I say also
that prices are rising all the time.
I estimate
the cost of repairs which would be considered to come within section 4 of the
1957 Act as at September 1978 would have been £2,700. . . .
I am frankly
bewildered by the making of the closing order. This property undoubtedly needs
work done on it but basically this is a perfectly good family house which is a
very saleable asset. I cannot think that the council were aware of the true
position as to the value of the property and/or the extent and cost of repairs.
The cost of repairs is, in my view, modest in relation to the value of the
house (whichever value one takes) and any reasonable owner would consider the
house worth preserving. Further, it is my opinion that although certain repairs
are within the ambit of section 4 of the Act the house is not so defective as
to make it unfit for habitation.
In a
subsequent affidavit he says:
Turning now to
my assessment of this house generally, it is true that the difference between
my sitting tenant values is only £1,250 and the cost of repairs is £2,700.
However, this is not the way that any reasonable landlord looks at the position
when considering whether or not to repair. Property-owning is a long term
investment and very few landlords would even do the calculation to see how much
the property value would be enhanced. It is a necessity to repair in order to
preserve a capital asset which very often is bought at a price far in excess of
the values pertaining when repairs are under consideration. Such factors as whether
grants are available, the possibility of tenants vacating and capital
appreciation in the long term and short term are important, even though this
may be by inflation only. . . .
On the
question of the council’s valuation I consider that the multiplier/multiplicand
approach is quite wrong in the circumstances. Rental values are of very little
importance. The possibility of capital appreciation is all-important. This
depends on the locality, the market conditions at the time, the type of tenants
and the existence of grants. Very few prospective landlords or surveyors acting
for them do any more than assess the freehold vacant value and then apply a
percentage reduction to it to get at the tenanted value.
He then goes
on to say of the comparables used by Miss Bleach two matters:
(a) None of these properties are in Chiswick.
This makes a dramatic difference to the price, possibly more than £3,000 in
1978.
(b) Several valuations are prior to 1978 and
property prices were rising rapidly.
None of those
matters was the subject of any affidavit in answer. It is true, we are told,
that this later affidavit of Mr Sworn was late on the scene, but Mr Hogg tells
us that no application was made for an adjournment for Miss Bleach, or anyone
else, to file an affidavit in reply. Finally, Mr Bradley, in an affidavit which
I do not think it is necessary for me to read, makes similar comments to those
made by Mr Sworn.
Mr Hogg, on
behalf of the respondents, submits that even if Miss Bleach’s report and the
basis upon which it was founded were absurd and manifestly nonsensical and even
if the committee acted on that nonsensical report this court is not entitled to
intervene in the decision. I disagree, respectfully. On the last leg of the
judgment of Lord Greene in Wednesbury, if for no other ground found in Wednesbury,
such a conclusion to my mind would be one which no reasonable council could
reach. That is indeed the case because the calculations, as I say, were based
upon the rent of property per annum and multiplied by a figure of nine, and on
the repaired basis by a figure of 10, but that approach is to my mind plainly
wrong on the wording of section 39, quite apart from the unanswered criticisms
made by Mr Sworn and Mr Bradley. If the vacant possession values of Mr Sworn and
Mr Bradley are anything like correct then so far as the vacant possession value
is concerned Miss Bleach is again wildly wrong. Again no excuse or explanation
and no justification was proffered. It seems to me that the whole foundation of
that conclusion, that the premises were not capable of being rendered fit at a
reasonable cost, is shown to be wrong. Whether it was a decision for Miss
Bleach or Mr Dean or any one of the permanent staff on the council to make as a
matter of delegation or whether it was a matter for the committee to decide
upon the basis of advice proffered by Mr Dean or Miss Bleach, as the case may
be, it seems to me that the conclusion which was reached was falsified and that
this appeal should succeed and the order should be quashed.
Mr Hogg
concedes that his argument is an unattractive one but submits nevertheless that
the statute is clear, the conclusions which I have reached are wrong and that
any matter of complaint should be directed to Parliament who should amend the
1957 Act to enable a person in the position of the appellant in this case to
make an appeal to the county court where the facts could be re-examined in
full. For the reasons which I have indicated I would allow the appeal and
rescind the closing order.
Agreeing,
O’CONNOR LJ said: I only add a few words of my own as we are differing from the
learned judge. The basis upon which the calculation required by section 39 of
the Housing Act is to be done is now well established from the judgment of my
Lord in Hillbank Properties Ltd v Hackney London Borough Council [1978]
QB 998 as reiterated by this court in FFF Estates Ltd v Hackney
London Borough Council [1980] 3 WLR 909 at pp 925 to 927. The local
authority is required to perform that exercise before it can serve a notice
under section 16 of the Act. In the present case the evidence which was before
the learned judge reveals how that was done. The local authority here purported,
and for the purposes of this hearing it is accepted that they were entitled to
do so (although Mr Scrivener on behalf of the appellant wishes to keep the
point open) to delegate to the chief officer of health the power to prepare and
serve a section 16 notice with the approval of the chairman of the housing
committee. That is how it was done in the present case. The affidavit of Mr
Higgins, assistant chief officer of health, reveals that Mr Bamping, the chief
officer of health, took the decision and it was in due course approved by the
chairman of the housing committee, Councillor Kettle, before it was sent out.
The information which Mr Bamping had before him consisted of two documents: (1)
a report by one of his officials, Mr Dean, on the nature of the defects to the
house and the prospective cost of putting them right; (2) a report signed by Mr
D Lane, the chief valuation officer, but prepared by Miss Bleach, a valuer in
the employ of the local authority, which tersely set out the four different values
for this house. One has to ask oneself who was it who took the necessary
decision required by section 39? To my
mind the answer comes back that that work was done by Miss Bleach. As my lord
has pointed out, when her methods of achieving her valuations are examined they
are shown to be on a completely false basis. It is for that reason that the
decision cannot be supported.
The learned
judge, it seems to me, fell into error because he never went behind the stage
where Mr Bamping was considering two documents. He must have concluded that Mr
Bamping had material in the two documents, to which I have referred, upon which
he could make a decision and that even if the decision were wrong this court
could not interfere. Had he asked himself the question, which I believe to be
the right one, namely, where was it in the local authority that the exercise
required by section 39 was done? — he
would then have gone to Miss Bleach and would have found her approach to that
exercise as wanting as we have done.
I agree that
the appeal should be allowed and the closing order quashed.
Also agreeing,
KERR LJ said: It seems to me that sections 16 and 39(1) must be read together,
because the matters about which the local authority must be satisfied under
section 16, ie the matters referred to in (a) and (b), depend on the criteria
laid down in section 39. So far as section 16(1) is concerned, Mr Hogg has
submitted that because of the words ‘on consideration of’ and those which
follow, the court is entitled to look only at the material which was considered
by the particular official or officials of the local authority who
decided to order a section 16 notice to be served. As it seems to me, this is
not correct, because either the local authority must, through the appropriate committee,
satisfy itself about the criteria in section 39(1), or if, as would be
understandable, it decides to delegate this process, then the reasonableness or
otherwise in the Wednesbury sense of the decision of the authority may
have to be tested by reference to the processes which that delegate has gone
through. I agree that in the present case this was Miss Bleach; but the
decision must in any event be tested by reference to the criteria in section
39.
One then comes
to section 39 and to the processes which Miss Bleach went through when seeking
to apply that section. There it appears to me it is perfectly clear that she
has gone wrong for a number of reasons. First, as already pointed out by the
Lord Chief Justice, so far as concerns this property in its tenanted stage, she
failed to do what on the authorities it is clear should be done under section
39: to take the open market value of the house, be it with a sitting tenant or
with vacant possession; or, better, on the authority of what Lane LJ (as he then
was) said in Hillbank Properties Ltd v Hackney London Borough Council
[1978] QB 998 at p 1014 on the basis of a figure somewhere in between. It
is the open market value of the house, and not the rental investment in it, to
which regard must be given. It is plain that she did not do that.
Then, if one
looks at the lower part of the valuation, where the capital or market values of
the house are stated, albeit only with vacant possession, two things appear.
First, an expenditure by way of repairs of £3,000, which is the agreed
estimated cost, was clearly a reasonable expense for the purposes of section
39(1), since these values are substantially larger. Secondly, if one takes, as
on the Hillbank Properties basis one probably should, a value somewhere
in between the vacant possession value and the tenanted value, again the
repairs would be worthwhile doing. Thus on no view can her approach be
supported, and it follows that section 39 was not properly applied in this
case.
Accordingly I
agree that this appeal should be allowed.
The appeal
was allowed with costs in the Court of Appeal and below. Legal aid taxation was
ordered.
