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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> The Rent Service v Heffernan [2007] EWCA Civ 544 (13 June 2007) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2007/544.html Cite as: [2008] HLR 2, [2007] NPC 72, [2007] EWCA Civ 544 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QBD, Administrative Court
His Honour Judge Gilbart QC
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE RIX
and
LORD JUSTICE LONGMORE
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The Rent Service |
Appellants |
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- and - |
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R (Daniel Heffernan) |
Respondent |
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Richard Drabble QC and Jamie Burton (instructed by Messrs. Irwin Mitchell) for the Respondent
Hearing date : 9 May 2007
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Crown Copyright ©
Lord Justice Pill :
a) under paragraph 1, to determine, for example, whether the rent of a flat in a block of flats was of the same order as other flats in the block ("the vicinity") and;
b) under paragraph 3, whether the rent was of the same order as rents in the "neighbourhood", which might affect rents, for example, in a prestigious block of flats where rents are out of keeping with others in the distinct area of residential accommodation.
"(1) The rent officer shall make a determination of a local reference rent in accordance with the formula-
R = (H + L) / 2
Where-
R is the local reference rent;
H is the highest rent, in the rent officer's opinion, —
(a) which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and
(b) which is not an exceptionally high rent; and
L is the lowest rent, in the rent officer's opinion, —
(a) which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and
(b) which is not an exceptionally low rent.
(2) The criteria are—
(a) that the dwelling under the assured tenancy—
(i) is in the same locality as the dwelling;
(ii) is in a reasonable state of repair; and
(iii) has the same number of bedrooms and rooms suitable for living in as the dwelling (or, in a case where the dwelling exceeds the size criteria for the occupiers, accords with the size criteria);
. . .
(6) For the purposes of this paragraph . . . "locality" means an area—
(a) comprising two or more neighbourhoods, including the neighbourhood where the dwelling is situated, each neighbourhood adjoining at least one other in the area;
(b) within which a tenant of the dwelling could reasonably be expected to live having regard to facilities and services for the purposes of health, education, recreation, personal banking and shopping which are in or accessible from the neighbourhood of the dwelling, taking account of the distance of travel, by public and private transport, to and from facilities and services of the same type and similar standard; and
(c) containing residential premises of a variety of types, and including such premises held on a variety of tenancies."
"10. It is evident that the local reference rent is a blunt instrument which can depress an individual's benefit below a level which is neither "significantly" nor "exceptionally" high, but cannot elevate it if for other reasons it falls below the local reference rent level. It is also evident, both from the text and from its history, that this effect is intentional. So an argument simply from hardship cannot succeed. Nor, however, should an argument simply from economic policy succeed – for example that it is consonant with the intent of the Order that as large an area as possible should be taken in order to depress the local reference rent level for better-off areas and so limit the housing benefit bill. Mr Fetherstonhaugh rightly disavows any such construction: he accepts that the comment of Lord Bingham MR in Ex parte Gibson . . . that the benefit assessment procedure is not designed to produce homelessness is as true of the [as then] amended Order as it was of the earlier version. Both counsel accordingly have concentrated their submissions on making sense of the words on the page.
11. Although both counsel start from the proposition that it is an ordinary English word, "locality" as used here, while certainly not a term of legal art, necessarily has a meaning, or a range of meanings, geared to its context and purpose. The context, Mr Luba submits, includes the use of the same word in the three preceding paragraphs to denote a plainly more restricted area than has been adopted for paragraph 4. While paragraphs 1 to 3 do not use the word "locality" to mean some defined geographical or administrative area, in all three places it clearly requires regard to be had to the near neighbourhood of the subject letting: why else would two of the three paragraphs need to contain fallback provisions introducing some elasticity into the concept of locality in the interests of practicability? But as Mr Fetherstonhaugh points out, wholly different meanings of this very word within a few lines are not unknown – for example as used in subsections (1) and (2) respectively of s.70 of the Rent Act 1977 (see Metropolitan Property Holdings Ltd v Finegold [1975] 1 WLR 349, DC). It does not follow, therefore, that the meaning in paragraph 4 is necessarily the same as in the preceding three.
12. To decide whether it is the same or not, and at all events whether it is on any view large enough to encompass the whole of Stockport, it is necessary to consider the policy and objects of this Order in its [then] amended form. We are not concerned here with policy in the sense of what ministers hoped or intended to achieve in financial terms, but with what the amended Order itself (which by s.122(6)(a) of the Housing Act 1996 was subject to negative resolution in Parliament) displays as its essential objective. This, in my judgment, is to limit the housing benefit which is otherwise payable on grounds of reasonable individual need to the median point between the upper and lower ends (excluding exceptional cases) of the local market in dwellings with similar living space (actual or assumed) and in a reasonable state of repair. To this extent, but no more, its purpose is to intervene in the market. It is not to drive people who have had to fall back on housing benefit out of more affluent areas where the benefit rules would otherwise have enabled them to remain and into poorer areas. If that were desired, it would require clear provision – for example by a recasting of paragraph 3, which is designed to avoid subsidising market-priced but excessively comfortable accommodation. It cannot fairly be deduced from the terms of paragraph 4.
13. It follows that it offends the purposes of the Order to take as the relevant locality an area so large that the poorer dwellings in it will inexorably bring the median, and with it the cap, down to a level which drives out or pauperises otherwise eligible housing benefit claimants. The fundamental purpose of the housing benefit scheme is the very opposite: it is to ensure that people who are not under-occupying property and not over-paying rent are not made homeless through genuine inability to pay. This is the context in which the purpose of the local reference rent has to be established. While, as a limiting procedure, it undoubtedly qualifies the basic purpose, it is not designed to negative it. Its objective, in its context, is that a rent should not be subsidised above the median or average level (the two are mathematically the same here) for the locality. That in turn implies a necessary geographical and demographic restraint on what can be legitimately regarded as the locality. Just as the court will intervene if too narrow an area is taken to accommodate the statutory purpose (Metropolitan Property Holdings Ltd v Finegold [1975] 1 WLR 349, DC), so it must intervene if too large an area is taken.
14. As the Secretary of State pointed out in the memorandum referring his proposals to the Social Security Advisory Committee (paragraph 20), "Localities are fluid representations of property markets and can be quite variable in size." In his witness statement Mr Cannon, the rent officer who made the redetermination in Ms Dinsdale's case, explains that
"If a general level for four-room accommodation were required, to restrict researches to just a few streets or a neighbourhood at the heart of the area would not provide the generalised view and would be based on limited evidence . . . Hazel Grove . . . is a semi-suburban area . . . Residential property is principally semi-detached or terraced houses, mainly in owner-occupation. There is limited evidence of private rented accommodation . . ."
This one accepts; but it leaves open the question whether an area as large as the metropolitan borough of Stockport, containing as it does twelve discrete named areas, is the only alternative. Mr Luba points out that the Order, which could perfectly well have specified the rent registration area or the local authority area, does not do so; and Mr Fetherstonhaugh accepts that to take, say, Greater Manchester (of which Stockport forms part) as the material locality would be irrational, though he did not find it easy to say why.
15. In my judgment the reason is that it is contrary to the meaning and purposes of the Order and of the statutory scheme of which it forms part to treat an area as large and diverse as Stockport, and even more so Greater Manchester, as the relevant locality for the purposes of setting a local reference rent under paragraph 4 of the first schedule to the Order when an immediate locality capable of furnishing a local reference rent can readily be identified. If locality does not stop here, there is no answer to the question "Where does it stop?"
16. As a matter of construction, accordingly I would hold that in none of the first four paragraphs of Schedule 1 to the Order as amended does "locality" necessarily refer to a particular geographical or administrative area, and that in all of them it signifies an area no greater than will enable the rent officer reliably to make the specified calculations and judgments. In each case this will depend on the character of the area in which the dwelling is located and on the data available there; but in none of the four paragraphs, for the reasons I have given, can it lawfully be an area as diffuse or as arbitrarily related to the subject dwelling as the administrative borough of Stockport.
17. For this reason the four material decisions must be quashed. Beyond this point, the court should heed what has been said more than once about the importance of letting expert decision-makers such as rent officers form their own view about the precise extent of a locality so long as they stay within the law: see Metropolitan Property Holdings v Finegold (above, 353-4). It will be for the rent officer service to redetermine the local reference rent in each of these four cases in accordance with the judgment of this court."
"I therefore conclude that Mr Spedding
a. used a meaning of "locality" in his determination which was inconsistent with that in the Order
b. relied on the inadequate work done before he made his redetermination
c. when making his redetermination, failed to make any assessment of the matters required under subparagraph 4(b) of the Order. [4(6)(b) must have been intended]
I express no view at all on whether a Rent Officer might properly conclude that Sheffield is a "locality" for the purposes of the Order. All that I do say is that such a conclusion must be reached properly, and not in the very unsatisfactory way in which this one was."
"The second criterion requires an analysis of health, education, recreation, personal banking and shopping provision from the point of view of a tenant in the dwelling under consideration, albeit not the particular tenant. That analysis requires that attention is given to both type and standard. It is agreed before me, and I so hold, that "standard" requires consideration of the quality of the facility or service in question. If one considers education for example, "type" will refer to the type of school (e.g., primary, secondary, independent, sixth form college etc) and "standard" will relate to its quality. Mr Strachan, despite his acceptance that "standard" required a qualitative assessment, also submitted that (for example) in terms of education, "standard" meant no more than type, and that it would be a wholly subjective exercise for a rental officer to assess the quality of one school against another. I reject that argument as illogical and unrealistic. It is illogical because it would make the words "and standard" otiose. It is unrealistic because it overlooks what actually occurs. As set out by Ms Fletcher in her evidence for the claimant, Local Education Authorities and the Department of Education now publish data relating to school examination results and performance. In my judgment, the inclusion of the words "and standard" must have been designed to require a qualitative judgement. The degree of analysis may of course be less substantial, probably much less so, than a prospective parent would carry out."
"An hour or so spent considering the published material and in discussion with an LEA officer once a year would enable information to be provided which could be used to inform the choice of locality for determinations over the next 12 months."
As to health and recreation facilities, the judge stated, at paragraph 31:
"All such information is readily available, whether in Health Authority or Local Planning Authority material, in written form or often on the internet. The NHS, for example, keeps information on which GP practices have spare capacity for new patients."
"These are matters often considered by valuers, or by house builders and other developers or their advisors, or by local authority planning officers. A broad brush approach may well suffice, provided that the criteria are addressed. But most importantly, the criterion in the Order is explicit that a judgement must be formed on such issues when considering how a locality is to be determined."
"Meaning a broad geographical area comprising a number of neighbourhoods with a mix of property types and tenure, where a tenant could, as an alternative to the dwelling in question, reasonably be expected to live and benefit from similar amenities."
The December circular also provided:
"This again confirms existing practice and continues to mean that
- A locality is made up of a number of rental markets.
- A locality has got to be at least as large as two adjoining neighbourhoods, and will usually be more.
- "Two or more" is not a limiting or arithmetic factor- it is purely a direction to use more than one neighbourhood. For example, a locality, which is made up of a city and its immediate area, could easily comprise 20 to 30 neighbourhoods".
"I also considered in my professional judgement that the whole of the city of Sheffield and some of its surroundings formed a cohesive area in which a prospective tenant living in Sheffield Central could in fact exercise reasonable choice when looking for a home and within which he might reasonably be expected to live having regard to the factors identified above. Access to services of the same type and similar standard throughout Sheffield is broadly the same, and travel times by both private and public transport allow cross-city travel for access to these services and facilities. Although there are a number of locally named areas throughout the city, I concluded that there were only 13 distinct areas of residential accommodation within the locality, having regard to the definition of neighbourhood in paragraph 3(5)(a) of Schedule 1 to the Order. I considered that the rural hinterland was an area within which the Claimant could reasonably be expected to live having regard to the factors contained in paragraph 4(6)(b) of the Order relating to the facilities and services and distance of travel by public and private transport to those facilities and services including those within Sheffield itself. Consequently I felt that the locality I used provided both the variety of property types and tenures and the other requirements indicated by the definition in the Order."
Later in the statement, Mr Spedding stated:
"I applied the requirements of paragraph 4(6) of Schedule 1 to the Order and I took account of the internal guidance in my consideration."
He considered Sheffield to have 13 neighbourhoods for the purposes of the Order:
"I determined the locality on the basis that it was objectively reasonable for a notional tenant of the subject dwelling to consider the whole of Sheffield having regard to those factors. The whole area has the twin attributes of good access to similar facilities and services over a broad area."
"However, in the case of the 'Sheffield locality' used for the Claimant's rent determinations, evidence shows that the area used is so large as to include many areas which, in comparison with the central area, are in fact qualitatively quite different, and in which the type and standard of amenities available are strikingly different from, and indeed inferior to, those available in the area of the Claimant's home."
Ms Fletcher went on to refer to "the exceptional level of variation between [Sheffield's] different areas, including extremes of affluence and socio-economic deprivation, and one of the reflections of this is in terms of the widely differing types and standards of local facilities and services available in different areas". By way of example, reference is made (and cited by the judge) to significant distinctions between different areas in terms of the performance of schools, as demonstrated by school performance tables published by the Department for Education and Skills. Schools in areas of relative deprivation have levels of attainment significantly below the national average. Ms Fletcher submits that the locality in this case has been drawn too widely.
"All of the heads in the Order are represented within the locality and all services and facilities are accessible from the locality and from all the neighbourhoods making up the locality with similar degrees of ease."
This is very far from the type of assessment sought by the respondent.
a) The use of the word "locality" does contemplate a broader geographical area, especially now that the hierarchy of "vicinity", "neighbourhood", "locality" appears in the Order.
b) The requirement for "two or more neighbourhoods", and for a variety of types of premises and a variety of tenancies, imposes a minimum requirement in terms of size and variety but does not suggest a maximum.
c) The reasonable expectation in sub-paragraph 4(6)(b) is related to accessibility to services and facilities, including by means of public and private transport, and does not favour a narrow geographical restriction.
d) While no maximum is expressed, having regard to an obvious parliamentary intention to create a workable and manageable scheme for assessing LRR, an area may be too large to constitute a locality within the meaning of the Order. Greater Manchester was accepted by the appellants as an example of an area which would be too large.
e) I am prepared to conclude that the definition in the circulars, cited at paragraph 23 above, does broadly reflect the statutory intention and that paragraph 4(6) should be construed accordingly.
f) The concept, advocated on behalf of the respondent, of constraining localities to areas in which services and facilities are of a similar quality would have the effect of segregating, for the purposes of assessing housing benefit, the more deprived from the more prosperous areas. That does not appear to me to be within the purposes of the statute. It would put a premium on tenants going to more prosperous areas where higher housing benefit would be paid, and that is unlikely to have been Parliament's intention. A variety of types is contemplated within a locality. (To meet that point, Mr Drabble did faintly submit that, for a person living in South East Sheffield, the relevant locality would be the whole of Sheffield while, for a person living in the centre of Sheffield, the locality would be defined more narrowly. That would not be in accord with the Order, in my view)
Lord Justice Rix:
Lord Justice Longmore: