Housing improvement grant — Housing Act 1974, section 75(6) (repealed by Housing (Consequential Provisions) Act 1985, but applicable in the circumstances of this case) — ‘Certified date’ after completion of works — Local authority’s appeal from decision of McCowan J in favour of applicant for judicial review — Proceedings by way of judicial review had been taken after a lengthy delay by the authority in paying the final instalment of £1,993 in respect of a grant of £19,928 for improvement works — The ‘protracted and tortuous history’ is summarised in the judgment of Nicholls LJ — The appeal, however, is concerned only with a short point of construction in regard to the meaning of ‘the certified date’ in section 75(6) — This is defined as ‘the date certified by the local authority by whom the application was approved as the date on which the dwelling first becomes fit for occupation after the completion of the relevant works to the satisfaction of the local authority’ — The works in question were physically completed by November 30 1982, but clearance by various departments of the authority, such as environmental health, planning and district surveyor, had not been given before May 12 1983 — It was submitted by the authority that ‘the certified date’ could not be before May 12 1983 as the earliest date on which the authority were satisfied in regard to the works — Held, affirming the decision of McCowan J, that the correct date was November 30 1982 — The material date is the completion of the relevant works to a particular standard, namely, the satisfaction of the local authority, not the date when the last of the departmental confirmations of this satisfaction is received — In the normal way, it would be hoped, the interval between these two dates will be short — Appeal dismissed
No cases are
referred to in this report.
This was an
appeal by Westminster City Council from the decision of McCowan J granting an
application by James Hazan for judicial review following difficulties in regard
to payment of an improvement grant by the council.
Eldred
Tabachnik QC and Miss Elisabeth Laing (instructed by G M Ives, City Solicitor,
Westminster City Council) appeared on behalf of the appellants; the respondent,
James Hazan, appeared in person.
Giving the judgment
of the court at the invitation of the Master of the Rolls, NICHOLLS LJ said:
This is the judgment of the court on an appeal by the City of Westminster
against a decision of McCowan J given on June 12 1987 on an application for
judicial review made by Mr James Hazan. The application relates to a housing
improvement grant, and this appeal raises a short point of construction on a
section of the Housing Act 1974.
Mr Hazan
bought 9 Thorngate Road, London W9, in July 1981. It consisted of one
residential unit, in a state of disrepair. He decided to convert the property
into two self-contained units, a basement flat and a separate flat above. He
applied for an improvement grant on August 28 1981, and his application was
approved by the City of Westminster, to which we shall refer as ‘the council’,
by letter dated March 23 1982. The council agreed to pay Mr Hazan by way of
grant the sum of £19,928, subject to certain conditions, on completion of the
relevant works to the council’s satisfaction.
The works were
put in hand, and between March and November 1982 the council paid Mr Hazan five
instalments on account of the total grant, which left outstanding as the final
instalment the sum of £1,993. On November 4 1982 Mr Lucas, senior grants
officer of the council, inspected the property. He recorded that the works were
90% complete.
On the
following day the council’s director of housing circulated a memorandum to the
director of environmental health. He stated that the alterations and
improvements to the property were virtually complete, and he inquired whether
the works had been completed to the satisfaction and requirements of the
director of environmental health under the Public Health Acts. The memorandum
sought similar confirmation from the city planning officer, regarding means of
fire escape, and from the district surveyor, regarding the requirements of the
London Building Acts and byelaws. The confirmation sought was forthcoming from
the director of environmental health on December 7 1982, from the district surveyor
on February 2 1983, and from the city planning officer on May 12 1983. It was
not until this latter date that the council was satisfied as to the completion
of the relevant works, although in fact the works were all completed by Mr
Hazan before the end of November 1982.
This was only
the beginning of Mr Hazan’s difficulties. For the next four years efforts by Mr
Hazan to obtain payment of the final instalment came to nought. In particular
the council contended that the grant by Mr Hazan of a long lease of the
basement at a premium in January 1983 was a breach of one of the grant
conditions, so that, far from Mr Hazan being entitled to payment of the final
instalment, he was under an obligation to repay all the money already paid to
him. Thus, when Mr Hazan brought proceedings against the council in April 1985
in the Westminster County Court for payment of the final instalment of £1,993,
he was met with a defence and also with a counterclaim by the council seeking
repayment from him of £17,935, with interest amounting to some £4,000.
We need not
pursue the rights and wrongs of that particular issue, because subsequently the
council abandoned its claim for repayment and accepted that Mr Hazan was
entitled to be paid the final instalment of £1,993, with interest. What
happened was this. In August 1985, at a meeting between the parties,
representatives of the council said they preferred to have the matter dealt
with by way of judicial review, and they proposed that the county court action
should remain stayed pending the outcome of judicial review proceedings. This
course was accepted by Mr Hazan. Accordingly, following leave granted by
Webster J on November 14 1985, Mr Hazan applied for, first, an order of
mandamus requiring the council to nominate a date on or about November 30 1982
as the certified date within section 75(6) of the Housing Act 1974 in respect
of the basement residential unit at 9 Thorngate Road; second, a declaration
that £1,993 of the improvement grant remained due and owing to him by the council
and, third, an order of certiorari quashing the decision of the council to
recover grant money already paid to him.
One week
before the application was due to be heard the council wrote to Mr Hazan’s
solicitors on June 5 1987:
We are writing
to you to make clear our position in relation to the hearing of this matter
listed for June 12 1987.
1 We are prepared to undertake to consider
properly the question of certifying a date for the purpose of section 75(6) of
the Housing Act 1974 and to certify such a date according to law, in relation
to the basement flat at 9 Thorngate Road, London, W9.
2 We are prepared to accept that the remainder
of the grant monies, £1,993, offered to the applicant will be paid to him.
3 We are prepared to revoke any decision we
have made to recover the grant monies already paid to the applicant together
with interest thereof.
Since we are
conceding all the relief sought in your form 86A to which you are entitled we
hope it will not be necessary to trouble the Court with [a] substantive
hearing. So far as costs are concerned we will pay the applicant’s costs to be
taxed if not agreed down to May 7 1987. We are content that the question of
costs thereafter be decided by the learned judge, if that question cannot be
agreed between us.
Having regard
to the protracted and tortuous history of this matter Mr Hazan was
understandably suspicious of the cryptic terms of para 1 of this letter. So he
did not accept this proposal, and the application came before McCowan J on June
12. Before the judge there was no dispute on paras 2 and 3 of this letter: the
council accepted that Mr Hazan was entitled to payment of the final instalment
and that he was not obliged to make any repayment. Issue was joined on para 1,
which goes to the relief sought in the application by way of mandamus. For Mr
Hazan it was submitted, and the judge accepted, that on the evidence the
relevant works in the basement flat had been completed by November 30 1982 at
the latest. The judge held that it would be wholly perverse for the council to
come to any different conclusion. The council submitted that, even so, the
‘certified date’ within section 75(6) could not have been before May 12 1983 as
the earliest date on which the council was satisfied regarding the works. This
raised a question of construction of that section. The judge rejected the
council’s submission and held that on the virtually undisputed facts and on his
interpretation of the section, November 30 1982 was the date which the council
was obliged to certify as the certified date, and accordingly he ordered the
council to nominate that date as the certified date in respect of the basement
flat.
From that
order the council has now appealed, regarding this decision as raising an
important question of principle. The council is concerned to establish that the
certified date, contrary to the judge’s construction of the legislation, is not
geared to the date of physical completion of the works but is geared to the
date on which the council is satisfied as to the completion of the works.
We turn to the
legislation. Part VII of the Housing Act 1974, as amended by section 107 of and
Schedule 12 to the Housing Act 1980, contained the material provisions at the
time of Mr Hazan’s application for a housing improvement grant and the
council’s consideration of that application. Part VII made extensive provision
empowering local authorities to make grants for the provision, improvement and
repair of buildings. Part VII of the 1974 Act has now been repealed by the
Housing (Consequential Provisions) Act 1985, but it has been re-enacted, with
amendments immaterial for present purposes, in Part XV of the Housing Act 1985.
By section 56
of the 1974 Act, local authorities are empowered to make four different kinds
of grant, including improvement grants. Section 61 concerns improvement grants
and provides, by subsection (1), that a local authority shall pay an
improvement grant if an application for such a grant has been approved and if
the conditions for the payment of the grant have been fulfilled. Section 61(2)
provides that an application for an improvement grant shall not be approved
unless the local authority is satisfied that, on completion of the relevant
works, the dwelling to which the application relates will attain the required
standard. The ‘relevant works’ are the works in respect of which the grant is
sought (section 57(2)). The ‘required standard’ is defined in section 61(3).
The authority may in certain circumstances reduce the ‘required standard’: see
section 61(4) and (5).
‘The certified
date’ has several important functions in the scheme of the legislation. We
mention some of them. Section 73, the first section in a fasciculus of sections
concerned with conditions attached to a grant, imposes conditions as to the
occupation of the dwelling to which a grant relates for a period of five years
beginning with the certified date. Section 75 provides for a grant condition to
be binding on owners of the dwelling during a period of five years or, in the
case of a dwelling in a housing action area, during a period of seven years
beginning, in each case, on the certified date. In the event of the breach of a
grant condition at a time when it is binding on the owner, the amount of the
grant is repayable with compound interest from the certified date: section 76.
Again, under section 60 a certificate of future occupation covers a period of
five years beginning with the certified date. Further, by virtue of section
81(2), if the applicant for a grant ceases before the certified date to have an
interest in the land as required by section 57(3), he ceases to be entitled to
a grant and he must repay to the local authority any instalments of grant
already paid to him.
Thus the
certified date is of importance, both to the applicant for a grant and to the
local authority. ‘The certified date’ is defined in section 75(6) as follows:
In this Part
of this Act ‘the certified date’, in relation to a dwelling in respect of which
an application for a grant has been approved, means the date certified by the
local authority by whom the application was approved as the date on which the
dwelling first becomes fit for occupation after the completion of the relevant
works to the satisfaction of the local authority.
A definition to
the same effect appears in section 499 in the Act currently in force, the
Housing Act 1985.
For the
council Mr Tabachnik submitted that, on the express wording of section 75(6), a
duty to certify the certified date cannot arise until the date when the
following three conditions are first all satisfied: (a) the dwelling is fit for
occupation, (b) the works are complete in fact and (c) the works are complete
to the satisfaction of the local authority. Condition (a) can be fulfilled only
after conditions (b) and (c) are fulfilled. On the facts in the present case that
state of affairs did not exist until May 12 1983 and, accordingly, until then
the council cannot have had a duty to certify the certified date.
This
submission raises two closely related points. The first is that, on this
construction of the definition, the words ‘after the completion of the relevant
works to the satisfaction of the local authority’ contain two separate
conditions. We cannot accept this. On our reading of them these words predicate
one event, not two events. The one event is the completion of the relevant
works to a particular standard, namely to the satisfaction of the local
authority. That event occurs when the relevant works are physically completed
to that standard. That the works as completed have attained that standard will
become known only when the local authority has inspected the finished works and
approved them. But when the authority has made that inspection and approved the
finished works, the date of completion of the works to the required standard
will be the date on which the applicant ceased from his labours, not the
(later) date on which the local authority approved of what the applicant had
done.
In the normal
course of things the interval between these two dates will, one would like to
think, be a short one. One would have hoped that a local authority would be
able to inspect the finished work within a very few days after being notified
by the applicant of the completion of the relevant works and express its
satisfaction or dissatisfaction with those works more or less at once. In which
event there will, in most cases, be no significant practical consequence
flowing from the use of one date rather than the other in applying the
definition of the certified date. But the present case shows, in stark form,
that this will not always be so. Here the works were completed by November 30,
but the last of the departmental approvals which the council considered it
necessary to obtain before it could be satisfied as to the completion of the
works was not forthcoming until the following May 12, which was nearly six
months later.
This leads us
to our second comment. It is implicit, if not explicit, in Mr Tabachnik’s
submission that the date to be certified by the local authority can never be
earlier than the day on which the local authority is first in a position to
give the certificate, namely, the day on which the authority reaches its
overall conclusion on whether the works have been completed to its satisfaction
and the dwelling has become fit for occupation. We are unable to accept that
construction of the language of the definition in section 75(6). If the works
are physically completed on day 1 and inspected by the local authority on day
2, but it is not until day 180 that the last of the relevant departmental
confirmations regarding completion and fitness for occupation is forthcoming,
the date which the local authority is then required to certify under section
75(6) is, in our view, day 1, not day 180.
We recognise
that with the construction of section 75(6) which we prefer there is the
possibility of dispute over when the works were physically completed prior to
their inspection on behalf of the authority. However, we do not think that this
possibility is sufficient to cast serious doubt on the correctness of this
construction of the subsection. An applicant for a grant can be expected, in
his own interests, to notify the authority of completion of the works at the
earliest opportunity. So that if an applicant were to claim that the works had
been completed at some considerably earlier date the local authority would
normally be justified, in the absence of a cogent explanation for the delay, in
declining to accept such a claim at its face value. The alternative
construction, contended for by the council, would have the effect that even
though, to the knowledge of all concerned, the works were
the necessary administrative steps have been taken will not be that date but
will be a date which, if one can judge from what occurred in the present case,
may be many months later. We have difficulty in supposing that Parliament can
have intended such a result.
Mr Tabachnik
placed some reliance on the condition for payment of a grant set out in section
82(5). Under that subsection payment of a grant is conditional upon the works
‘being executed to the satisfaction of the local authority’. It was submitted
that the phrase ‘to the satisfaction of the local authority’ has a temporal
connotation: it must be looking to a point of time later than completion of the
works, because the authority is not obliged to pay the grant until it is
satisfied. The language of the crucial words in the definition in section 75(6)
(‘completion of the works to the satisfaction of the local authority’) is
essentially the same, and that subsection ought to be construed similarly,
because otherwise the certified date might precede the date on which the
payment condition in section 82(5) is fulfilled, which would be an
extraordinary position.
In our view
the fallacy in this argument lies in the premise. The premise is the proper
interpretation of section 82(5). This raises the same point of construction as
section 75(6). In our view, as with section 75(6), so with section 82(5): the
phrase ‘to the satisfaction of the local authority’ does not have temporal
significance. In each case the phrase is stating a standard to which the
relevant works must be completed or executed. The payment condition in section
82(5) is fulfilled as soon as the works are physically executed to that
standard. The local authority’s obligation to pay arises accordingly. But,
plainly, a local authority must have a reasonable opportunity to check that the
works have been executed to the required standard. Provided the authority makes
the payment with reasonable promptness, there will be no question of the
authority being in default or of interest being payable. What is reasonable
will depend on all the circumstances (but, we add in parentheses, we find it
difficult to think of circumstances where a delay of the order of six months
could be reasonable). On this construction of section 82(5) there will be no
discord between the certified date and the date on which the payment condition
in section 82(5) is satisfied.
For these
reasons we are unable to accept the council’s submissions on the construction
of section 75(6). In our view the judge reached the correct conclusion. We
dismiss this appeal.
The appeal
was dismissed with costs; costs assessed at £150; application for leave to appeal
to the House of Lords was refused.