Leasehold Reform Act 1967 — Housing Act 1974, Schedule 8, para 3(2) — Adjustment of rateable value in respect of improvements — Lessee’s entitlement to enfranchisement depended on establishing that the rateable value of his property on April 1 1973 did not exceed £1,500 — The value in the list was £1,597 and the applicant sought to show that if certain improvements were taken into account the value would be reduced to the qualifying figure — The valuation officer, however, certified a reduced rateable value of £1,509 — As there was no right of appeal, the applicant challenged the valuation officer’s certificate by proceedings for judicial review — Taylor J dismissed the application and the applicant appealed to the Court of Appeal — Appellant’s main complaint was that the valuation officer failed to make any reduction for the conversion of a bedroom into a bathroom, although there was a subsidiary point about the replacement of an old coke boiler by a new Potterton gas boiler — In giving judgment the Master of the Rolls emphasised the importance of the distinction between an ordinary appeal (which was not available in the present case) and judicial review — CCSU v Minister for the Civil Service and Associated Provincial Picture Houses Ltd v Wednesbury Corporation referred to — A failure to take account of a relevant consideration is a possible ground for judicial review, but a complaint about the assessment of relevant considerations, all of which had been taken into account, was not — One point had been raised which was possibly relevant, namely, the failure of the valuation officer to obtain and consult files in the Valuation Office which might have shown what precisely had been taken into account in the 1973 valuation — The Court of Appeal had itself made inquiries into the existence of such files and, after considerable difficulty, had discovered a pre-1973 file relating to the appellant’s house, but it proved to be of no significance — If the valuation officer had found it there would have been no cause to revise his view — Even if there was a failure on his part to look for such a file, this could not form a basis for judicial review — There was nothing in the point about the replacement of an old boiler — Appeal dismissed
This was an
appeal by Mr J L Rendall from a decision of Taylor J dismissing his application
for judicial review by which he sought to challenge the certificate of the
valuation officer under Schedule 8 to the Housing Act 1974. The valuation
officer had certified that the amount by which the rateable value of £1,597 in
respect of Mr Rendall’s leasehold house at 74 Eaton Terrace, London SW1, would
have been reduced if certain improvements had not been made was £88. The
freehold owners of the house were the Grosvenor Estate.
The appellant,
Mr J L Rendall, appeared in person; D Mole (instructed by the Solicitor of
Inland Revenue) represented the valuation officer for Westminster and District,
Mr Hardy; Nigel Hague QC (instructed by Boodle Hatfield & Co) represented
the Grosvenor Estate.
Giving
judgment, SIR JOHN DONALDSON MR said: Mr Rendall is the assignee of a long
lease of 74 Eaton Terrace, London, of which the freehold owner is the Duke of
Westminster. Understandably he would like to enfranchise his interest in the
property and it is conceded that, subject to one crucial point, he is entitled
to do so. That crucial point turns on the rateable value of the property on
April 1 1973. The relevant rateable value is not necessarily that which
appeared in the valuation list on that date, since, for this purpose, that
value is subject to downward adjustment in so far as it reflected improvements
made by the tenant or a previous tenant.
The target
rateable value, from Mr Rendall’s point of view, was £1,500 or less. The value
appearing in the valuation list was £1,597 and Mr Rendall has therefore applied
his mind to getting rid of £97 or more. The procedure is governed by the
Leasehold Reform Act 1967 as amended by the Housing Act 1974. The first stage
in this operation was an application to the county court for a determination of
whether, and to what extent, the improvements specified by Mr Rendall qualified
for consideration in reduction of the rateable value. He succeeded in respect
of four improvements, namely:
(1) The addition of a room on the ground floor;
(2) The creation of a patio area on the mezzanine
floor;
(3) The conversion of a bedroom on the third
floor into a bathroom; and
(4) The installation of a gas boiler in place of
a coke boiler to supply a hot-water system and one radiator.
The second
stage consisted of an application to the valuation officer for a certificate
under para 3(2) of Schedule 8 to the Housing Act 1974:
(a) whether or not the improvement has affected
the rateable value on 1st April 1973 . . . of the hereditament of which the
premises consist . . . and
(b) if it has, the amount by which the rateable
value would have been less if the improvement had not been made.
It was for Mr
Rendall to specify the improvements to which the certificate would relate,
provided that they were agreed by the ground landlord as a qualifying
improvement or were held to be such by a county court. Mr Rendall in fact
specified only improvements (1), (3) and (4) of those so determined by the
county court.
On April 21
1981 Mr Hardy, the local valuation officer, certified that the amount by which
the rateable value would have been less if those improvements had not been made
was £88. This was, of course, £9 short of Mr Rendall’s target and there is no
right of appeal.
In these
circumstances Mr Rendall decided to seek to challenge the valuation officer’s
certificate by judicial review. It was reasonably clear, and was subsequently
confirmed, that the £88 reduction related solely to the increase in floor area
consequent upon the addition of a room on the ground floor and that the
valuation officer had made no reduction on account of the conversion of the
third-floor bedroom into a bathroom or of the replacement of the boiler. In his
application Mr Rendall concentrated upon the failure by the valuation officer
to make any allowance in respect of the bathroom conversion, stating, in the
grounds upon which relief was sought, that ‘the valuation officer failed to
perform his statutory duty or proceeded on wrong or unlawful principles in
excluding (as he admits he did) from his certificate the said bathroom which
(if included) is likely to have caused a further reduction of at least £25 in
the gross value and thus substantially more than £9 in the rateable value’. No
mention was made of the replacement of the boiler, although in argument, both
here and below, it made fleeting and somewhat insubstantial appearances.
Taylor J
dismissed the application and Mr Rendall has appealed to this court.
Mr Rendall is
a solicitor of very considerable experience in rating matters and he has
conducted his own case with great skill. Indeed such was his skill that at
times he succeeded in blurring the lines between the jurisdiction of the High
Court, and of this court on appeal, to entertain an appeal from the decision of
the valuation officer, which is non-existent, and the jurisdiction of the High
Court, and of this court on appeal, to judicially review that decision. The
distinction is of fundamental importance. The valuation officer’s statutory
duty was to inquire whether the specified improvement or improvements had in
fact affected the rateable value of the property on April 1 1973 and, if it
had, the amount by which the rateable value would have been less if the
improvements had not been made. The issues were essentially issues of fact. If
there had been a right of appeal, it would have been relevant to consider, in
the light of the inquisitorial nature of his duties, whether the valuation
officer had sought for and found all relevant evidence and whether he had
correctly assessed that evidence. It is quite otherwise if the duty of the
court is to consider an application for judicial review. In CCSU v Minister
for the Civil Service [1985] 1 AC 374 at p 410, Lord Diplock classified the
grounds for judicial review under three main headings, namely, ‘illegality’,
‘irrationality’ and ‘procedural impropriety’. Only ‘irrationality’ is relevant
in the instant case.
‘Irrationality’
was defined by Lord Diplock as ‘what can now be succinctly referred to as
‘Wednesbury unreasonableness” (Associated Provincial Picture Houses Ltd
v Wednesbury Corporation [1948] 1 KB 223). It applies to a decision
which is so outrageous in its defiance of logic or of accepted moral standards
that no reasonable person who had applied his mind to the question to be
decided could have arrived at it. Mr Hardy, in an affidavit upon which he was
cross-examined, stated that ‘Provided that the house had at least one bathroom,
the practice was to assess bathrooms at the same price per square metre as
other space in such houses. There is no evidence to show that the conversion of
bedrooms to extra bathrooms increased rental value of such houses as at April 1
1973: some hypothetical tenants would prefer the extra bathroom, while others
would prefer to retain the bedroom.’ For
my part, I can see nothing irrational in such a conclusion, whether or not I
should have reached it.
However, all
concerned seem to have accepted that a wider inquiry by the court was
permissible, based upon the Wednesbury decision itself. There the court
was concerned with a discretionary decision and Lord Greene MR said that the
decision-maker ‘must call his own attention to the matters which he is bound to
consider. He must exclude from his consideration matters which are irrelevant
to what he has to consider’. I do not suggest that different considerations
apply where the decision is not discretionary, but a word of caution must be
uttered. It is one thing to fail to take account of a relevant consideration.
It is quite another to take account of all relevant considerations but to
assess them in a way which, though not irrational, is not a way which would
have appealed to everyone. The former is a ground for judicial review. The
latter is simply a ground for appeal.
It was, I think,
a failure to appreciate this distinction which expanded the scope of the
evidence and arguments in this case to the point at which it was
indistinguishable from an appeal against the valuation officer’s finding of
fact. Thus we had Mr Hardy explaining not only the basis of his decision, which
I have already quoted, but exhibiting the rating precis sheets for the 1973
valuation to which he had referred. Taylor J was treated to the
cross-examination of Mr Hardy on this evidence. In addition he and we were
enlightened by an affidavit from Mr Rendall exhibiting a letter from a
distinguished rating surveyor expressing the view as an expert that ‘the
addition of a third floor bathroom must have added to the value of any house in
this district’, and an affidavit from another distinguished rating surveyor
expressing his expert opinion that while the addition of a second bathroom
would increase the rateable value, bathrooms in excess of two would not do so.
We even had evidence relating to remarks about the effect of additional
bathrooms alleged to have been made by Mr Hardy’s successor, not in the context
of a 1973 valuation but in that of a dispute before the valuation court in
1984. Little of this evidence is appropriate to an application for judicial
review.
Standing back
and looking at the mass of material available to us, and indeed thrust upon us,
there are really only two points which are deserving of serious consideration.
The first is one taken against Mr Rendall by the Duke of Westminster and upheld
by Taylor J. This is that the rating precis relating to the 1973 valuation
stated that no 74 had two bathrooms, not three as was the fact. Accordingly it
is to be assumed that the 1973 valuation took no account of the third bathroom
which had been converted from a bedroom. If it was not taken into account, the
rateable value would manifestly have been no lower if the improvement had not
been made. I see the force of this argument, but it is relevant only if (a) Mr
Hardy’s decision is prima facie fit to be quashed on review and (b) the
court is then considering whether to refuse relief upon the basis that any
fresh certification must lead to the same result. In any event, if we had got
to that point, it would have been necessary to consider whether the evidence of
the precis sheets was conclusive or might be displaced by other evidence.
The second
point requires slightly more elaboration. Mr Hardy has sought to check the
correctness of his conclusion that the additional bathroom in no 74 would have
no effect upon its 1973 value by referring to entries in the precis sheets
relating to other houses which he considered to be comparable. Mr Rendall
contended that some of these houses were not comparable. So be it. They may not
have provided Mr Hardy with the confirmation which he sought, but equally, on
this hypothesis, they could not cast doubt upon his conclusion. For the rest,
Mr Rendall devoted much of his argument to seeking to persuade us that Mr Hardy
has misinterpreted the precis sheets and failed to make inquiries as to what
certain notations meant, all of which is really only appropriate to an appeal,
as contrasting with judicial review. But he did suggest that the rating
authority must have had files relating to no 74 and other comparable houses
which would have revealed what precisely was taken into account on the 1973
valuation. Alternatively he suggested that the 1973 valuation was merely a
revision (to take account of changed values) of a full valuation in 1963 and
that the files would show what was taken into account in 1963 and thus, on
revision, in 1973. This point about the files does not seem to have been
developed before Taylor J. It certainly should have been and Mr Rendall could
hardly have complained if he had been told that it was now too late. However,
it did seem to us that if it was a fact that such files existed, this was the
obvious source to which any reasonable surveyor would turn when asked to give a
certificate of this nature and that a failure to do so could come within the Wednesbury
principle. How he assessed
facie not susceptible of forming a ground for judicial review.
It was clear
that Mr Hardy did not consult any such files and we asked that inquiries be
made as to whether they existed. The first such did indeed reveal a file for no
74, but it had been opened long after 1973 and was irrelevant. Similar files
were produced for the other ‘comparable’ houses, but, with two exceptions, they
contained no 1973 or earlier material. A second and even more thorough search
revealed another file for no 74 which had been misfiled by being in the wrong
coloured folder, thereby indicating that it was a commercial and not a
residential property, and being filed under Eaton Square instead of Eaton
Terrace. It did indeed include a survey sheet relating to the 1963 valuation
and showed that at some unspecified point of time before 1984 the rating
authority had become aware that a new bathroom had been created on the third floor.
But that is all that it did show. It may well have been available to those who
undertook the 1973 valuation, but it casts no light upon whether at that time
it showed the conversion and, if so, whether this had any effect upon the
value.
I will go as far
with Mr Rendall as to say that a valuation surveyor who is required to give a
certificate relating to the effect of improvements on the value of a property
at April 1 1973 should make all reasonable efforts to refer to any working
papers still extant which relate to that valuation. Whether or not Mr Hardy did
make such efforts, I do not know. All I know is that, if he did so, he did not
succeed. The matter either was first raised or at least first achieved
significance at the hearing in this court and at that time Mr Hardy was ill and
could not be asked. However, it is clear that if he had attempted to find the
pre-1973 file relating to no 74 it is most unlikely that he would have
succeeded, for the extent of the search mounted in consequence of these proceedings
was wholly exceptional and more than could have been expected from Mr Hardy.
Furthermore, it is clear that had he found this file, there would have been
nothing to cause him to revise his view of what the 1973 valuers must have
done, and this failure to look for such a file, if such failure there was,
cannot form a basis for judicial review.
The suggestion
that any valuer would necessarily have increased the value of the property to
take account of the substitution of a new Potterton gas boiler for an old coke
boiler is quite insupportable.
I, like the
learned judge, cannot fault the valuation officer’s actions, other than in
respect of a possible failure to seek the 1973 file relating to no 74. This
failure, if such it was, could not have affected the form of his certificate
and I would dismiss the appeal.
Agreeing,
PARKER LJ said: In the CCSU case, although Lord Diplock classified under
the three heads ‘illegality’, ‘irrationality’ and ‘procedural impropriety’ the
grounds upon which administrative action is subject to control by judicial
review, he said also ([1985] 1 AC at p 410):
That is not
to say that further development on a case by case basis may not in course of
time add further grounds.
He also
regarded (see p 411A) ‘procedural impropriety’ as covering ‘failure to observe
basic rules of natural justice or failure to act with procedural fairness
towards the person who will be affected by the decision’.
On an
application for a certificate under para 3(2) of Schedule 8 to the Housing Act
1974 the valuation officer has two questions to determine:
(a) whether or not the improvement has affected
the rateable value on April 1 1971, and
(b) if it has, the amount by which the rateable
value would have been less if the improvement had not been made.
The first is a
question of historical fact. The second involves an assessment of the
consequences which would have taken place upon a hypothesis.
If the
valuation officer carried out the 1973 valuation himself and has a good enough
memory he can no doubt properly answer both questions without more ado. The
valuation officer in the present case did not, however, make the 1973
valuation; he therefore had to obtain information as to what happened in 1973.
Mr Rendall’s only possible sustainable complaint is, in my view, that Mr Hardy
failed either (i) to act with procedural fairness in that he failed to obtain
or at least make reasonable efforts to obtain documents which would be the
obvious primary source of information relating to the pure question of historical
fact, or (ii) to take into account a relevant consideration, namely information
in such documents.
I say ‘only
possible sustainable complaint’ because any suggestion that Mr Hardy’s decision
was ‘irrational’ is without foundation.
In my view a
valuation officer with no personal knowledge of what happened in 1973 would be,
at least prima facie, guilty of procedural impropriety if he purported
to determine the question of historical fact without making reasonable efforts
(i) to ascertain whether documents relating to the 1973 valuation still existed
and (ii) to obtain and inspect them in so far as they did exist. The matter may
be tested in this way. Suppose a VO, when asked to certify whether or not three
improvements had affected the rateable value in 1973, certified that none of
them had done so on the simple basis that, having inspected the property, he
was confident from his general experience that none of them would have done so
and it was therefore unnecessary to look further. Suppose further that, after
the certificate had been given, it emerged that within the valuation office
there was, readily available, a file relating to the property and that, in that
file, there was a detailed breakdown of the 1973 valuation showing clearly that
two of the improvements had affected the 1973 valuation. In such
circumstances it appears to me that there would have been a clear failure on
the part of the VO and that whether it were regarded as a failure to act with
procedural fairness or as a failure to take into account a relevant
consideration it would be right for the court to grant relief by way of
judicial review. If not a procedural impropriety such a failure is clearly
analogous thereto.
In the present
case, however, it will not avail Mr Rendall, even if it be the case that Mr
Hardy did fail to take all proper steps to find and obtain papers relating to
the 1973 valuation. Searches have now been made and I agree that nothing which
has emerged is of any significance. It would therefore be wrong as a matter of
discretion to grant relief.
I, too, would
dismiss the appeal.
SIR GEORGE
WALLER agreed that the appeal should be dismissed for the reasons given by the
Master of the Rolls and did not add anything further.
The appeal
was dismissed. The appellant was ordered to pay the costs of the valuation
officer, but not the costs of the Grosvenor Estate, in the Court of Appeal.
Leave to appeal to the House of Lords was refused.
