Morcom and Ors v Campbell-Johnson and Ors
[1955] 3 All ER 264[1956] 1 QB 106
(Judgment by: Denning LJ)
Between: Morcom and Ors
And: Campbell-Johnson and Ors
Judges:
Denning LJ
Hodson LJ
Morris LJ
Subject References:
LANDLORD AND TENANT
RENT
Rent Restriction
Permitted increase
'Improvement' of house
Repairs
Flats
Substitution of modern one-pipe for worn out two-pipe drainage system
Substitution of single large water tank for separate tanks in each flat
Raising of area
Legislative References:
Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 - (10 & 11 Geo 5 c 17), s 2(1)(a)
Case References:
Strood Estates Co Ltd v Gregory - [1937] 3 All ER 656; [1938] AC 118; 106 LJKB 752; 157 LT 338; 31 Digest (Repl) 667, 7660
Wates v Rowland - [1952] 1 All ER 470; [1952] 2 QB 12; 3rd Digest Supp
Rabbitt v Grant - [1940] IR 323; 31 Digest (Repl) 679, 2555
Lurcott v Wakely & Wheeler - [1911] 1 KB 905; 80 LJKB 713; 104 LT 290; 31 Digest (Repl) 363, 4953
Judgment date: 6 October 1955
Judgment by:
Denning LJ
In this case the question is whether the landlords of a block of flats can charge an increased rent to the tenants on the ground that they have made improvements to the premises. The governors of Grey Coat Hospital own a block of flats at Grey Coat Gardens. They have in recent years expended on work on those premises sums amounting to £25,000, and that has qualified them to increase the rent under the Housing Repairs and Rents Act, 1954, on account of the repairs. In these proceedings they claim that, in addition to that increase, they are entitled to the increase given by the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, s 2(1)(a), which authorises an increase:
"Where the landlord has since Sept. 2, 1939, incurred ... expenditure on the improvement or structural alteration of the dwelling-house (not including expenditure on decoration or repairs)."
The question for our determination is whether three items of work come within the description "improvement ... of the dwelling-house [the flat] (not including expenditure on decoration or repairs)."
The first item of work concerned the drainage system. When these flats were put up nearly sixty years ago, they had water closets the refuse from which was taken down one set of pipes into drains below the ground, and alongside they had wash-hand basins and baths from which a separate set of pipes went down the house but when they got underground the water went into the same drains as the refuse from the water closets. That was what is called a two-pipe system. In the course of time it has been found that that two-pipe system is not the best that can be devised. It is better to have a system whereby everything-refuse and water-from water closets, wash-hand basins and baths is all taken down by one set of pipes. This is called the one-pipe system. It so happened that in these flats after sixty years the two-pipe system had come to the end of its life, and the landlords were faced with the question whether to repair all that system piece by piece or whether they should put in a modern one-pipe system. On taking advice, the landlords were told that the better and cheaper way of making good this drainage system at the present day was to install a one-pipe system. It was a system which the by-laws of the London County Council require for any new dwellings. They did the work at a cost of £5,200.
The second item of work concerned the cold-water supply to the flats. When the flats were built, each flat had its own storage cistern of eighty gallons in the flat. In the course of time troubles arose. For instance, some of the tenants had put taps on the rising mains, and the pipes were worn out. The system had come to the end of its life. The landlords took advice and decided that the best way to make the system good was to put a 480-gallon tank in the top of the building which would supply the six flats instead of having an eighty-gallon tank in each flat. That is what they did. The work cost £4,600.
The third item of work was the lowering of the area in the middle of or adjacent to the flats. The trouble was of long standing. When the area was first made, it was an inch or so higher than the damp course, with the result that if water collected in the area it might percolate into the walls above the damp course and so might rise up the walls and cause dry rot. That was a defect in the work done when the flats were originally built. It was decided that, when all the work of repairs was being done, the area should be lowered an inch or two so as to bring it below the damp course. That cost £690.
The county court judge, in a careful judgment, has said that the primary facts are undisputed. He held that all these three works were improvements and qualified the landlords for an increase of rent. I think his decision involved necessarily the true construction of this statute; and that is a point of law which this court is in a position to review.
I find great difficulty in framing a definition of what is an "improvement" as distinct from a "repair". Perhaps the most helpful way is to give a few illustrations. In Strood Estates Co Ltd v Gregory ([1937] 3 All ER 656) there was an old-fashioned privy at the bottom of the garden, which was simply a pit which was emptied every month or so by the local authority. The landlords removed that old-fashioned privy, and substituted a modern water closet in which the refuse was taken away by a water-borne system. That was, no doubt, an improvement. In Wates v Rowland ([1952] 1 All ER 470) the floor of a house had become rotten by damp. When the floor was made good, instead of a wooden floor, a tiled floor was put in. That was held not to be an "improvement", but a "repair". But in the self-same case a new concrete bed, some nine inches in depth, was put into the house because the water level in the area had risen. That was held to be an "improvement". Jenkins LJ said (ibid, at p 475):
"The replacement of a floor of some kind would, I think, therefore, fairly come within the description of 'repairs'",
and he held that the tiled floor replacing the old wooden floor was repairs. Sir Raymond Evershed MR said (ibid, at p 476):
"In the course of the argument examples were given showing that what was undoubtedly repair might yet involve some degree of improvement, in the sense of the modern substitute being better than that which had gone before."
It seems to me that the test, so far as one can give any test in these matters, is this: If the work which is done is the provision of something new for the benefit of the occupier, that is, properly speaking, an improvement; but if it is only the replacement of something already there, which has become dilapidated or worn out, then, albeit that it is a replacement by its modern equivalent, it comes within the category of repairs and not improvements.
Applying this test, it seems to me that the drainage system in these flats is the same now as the system which existed before. All that has happened is that, instead of there being two pipes to carry the water and refuse away, there is one pipe. That is simply the replacement of the older two pipes by its modern equivalent of one pipe. I think it comes properly within the category of repairs and not that of improvement. So also with the cold-water system. There were six individual tanks before, one in each flat. They have been replaced by one bulk storage tank in the roof of the block. That again is simply the replacement of something which existed before by a more suitable modern substitute. In both cases, as the surveyor said, it was a cheaper way of doing it than it would have been simply to restore the old system as it was. It seems to me that in both those instances the work done properly comes within the category of repairs and not that of improvements.
So far as the tenants are concerned, the position in the flats for them from the practical point of view is no different from what it was before. The water closets, the baths, and the cold-water system all operate just as they did before. Some of the tenants said that if anything it was a little more inconvenient, because, for instance, the baths were higher. In a sense, of course, the work benefits them in the same way as any repairs must benefit the people who live in a house when it gets old and dilapidated, because they are better off when it is repaired and made good. But that is the extent of the benefit to them. There is no provision of anything new for their benefit, but only the replacement of the old parts by a modern equivalent, and, in my judgment, that does not amount to improvement so as to qualify the landlords for an increase in rent.
There remains the third item, which, I confess, has given me much difficulty. That is the lowering of this area. Counsel for the tenants submitted to us that, on the strict and true construction of this statute, an improvement has got to be executed on the site of the flat itself-on the dwelling-house itself. I am not prepared to go as far as that. I can well see that there is much force in what counsel for the landlords contended, that for instance, if a landlord brings a water supply or an electricity supply into a row of houses, the whole of that expenditure would qualify for an increase. The expenditure on the common pipe which led up to the house would have to be apportioned amongst the individual houses, even though the expenditure was common to all. The same would apply if a new lift were put into a block of flats instead of an old staircase. I do not myself wish to exclude the possibility in such a case of the landlord qualifying for an appropriate increase. I would not be deterred from so holding by the fact that the statute makes no express provision for apportionment. I think the courts have enough resources open to them to solve questions of that kind. Nevertheless, when I come to consider this particular expenditure-lowering an area to make good a defect which had been there from the commencement; just making good a defect-and when I consider the evidence in the case, it seems to me difficult to say that this is expenditure on the improvement of the flats or on any individual flat. I do not myself think that even that item qualifies the landlords for an increase. In those circumstances, in my judgment, the appeal should be allowed and judgment should be entered for the tenants.