Morcom and Ors v Campbell-Johnson and Ors

[1955] 3 All ER 264
[1956] 1 QB 106

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(Judgment by: Morris LJ)

Between: Morcom and Ors
And: Campbell-Johnson and Ors

Court:

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

Hearing date: 5 October 1955
Judgment date: 6 October 1955

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Judgment by:
Morris LJ

I am of the same opinion. We are concerned with the words

"expenditure on the improvement or structural alteration of the dwelling-house (not including expenditure on decoration or repairs)",

and not with any question under the proviso to s 2(1)(a). It is clear that repair may, and often does, involve some measure of improvement. Certain passages from Lurcott v Wakely & Wheeler bear that out. Fletcher Moulton LJ said ([1911] 1 KB at p 919): "Many, and in fact most, repairs imply that some portion of the total fabric is renewed, that new is put in place of old". Buckley LJ said (ibid, at p 924): "Repair is restoration by renewal or replacement of subsidiary parts of a whole". Some measure of improvement may be involved in work of repair. In Wates v Rowland, Jenkins LJ said ([1952] 1 All ER at p 475):

"Turning again to the facts of the present case in their relation to the relevant statutory provisions, there is no doubt that the landlord has incurred expenditure, and I think he has certainly incurred expenditure on a structural alteration, that is to say, the addition of the further nine inches of concrete. He has also incurred expenditure on what is prima facie, according to the ordinary meaning of the word, an 'improvement', for on the evidence he has made the house, as regards its substratum and the system of construction of the floor and its foundations, very much better than they ever were before. Is there, then, any sufficient reason for holding that this expenditure is to be excluded from consideration on the ground that it was expenditure on repairs?"

That approach, I think, follows the wording of the section, namely, the words: "Expenditure on the improvement of the dwelling-house (not including expenditure on decoration or repairs)". I think Wates v Rowland affords a helpful and useful illustration of what may be regarded as repair and what may be regarded as improvement. As Jenkins LJ said in that case ([1952] 1 All ER at p 475): "The replacement of a floor of some kind would, I think, therefore, fairly come within the description of 'repairs'". Later on he said (ibid, at p 476):

"The landlord, however, did substantially more than merely provide a new floor. He made a structural alteration and an improvement, consisting of the laying of the additional concrete bed over the existing concrete, and that provided the house with a better substratum than it had ever had before in the shape of a solid concrete bed on which the new floor could be laid direct, thus getting rid of the disadvantage under which the house had laboured from the time it was built, consisting of the cavity beneath the floor into which, under the changed conditions brought about by the rise in water level, water could find its way."

An argument was submitted whether the provision should be approached from the point of view of the landlord or the tenant. Should improvement be considered from the point of view of the tenant? The matter clearly cannot be determined by considering what any particular tenant thinks. If the view of a tenant is being considered, it must be the view of a reasonable tenant. But it seems to me that the real inquiry must always be one to ascertain the true facts whether or not there has been an "improvement". Though Jenkins LJ used the words "very much better" in the passage that I have quoted, he also used the words "according to the ordinary meaning of the word". Expenditure must be expenditure on improvement or structural alteration not including expenditure on decoration or repairs. Of course, the very purpose of a dwelling-house is that it should be lived in, and if a tenant may be called on to pay more under this section, presumably he will have to do so because he is getting something which is an improvement of the dwelling-house in which he is to live, which, I think, contemplates an improvement from his point of view. But it is the word "improvement", to which attention must always be directed on the facts of a particular case.

On first approach, in a matter of this kind it would seem that any decision would be a decision of fact which could not be the subject of appeal. But it is clear from his judgment that the learned judge regarded the essential facts as not in dispute, and he considered-I think rightly-that we would be in as good a position as he was to arrive at a conclusion. The surveyors' report of 2 November 1954, was taken by the learned judge as conveniently summarising the position. In reference to the sanitary system it states:

"The sanitary inspector would not have allowed us to repair the system in the form in which it was in 1952 and it was considered to be more satisfactory and economical to install a 'one-pipe' system in lieu of the conventional old and insanitary 'two-pipe' system. In the new system the whole of the soil and waste branches in each half block of six flats discharge into a single pipe directly connected to the drain, with anti-syphonage pipes connected to the individual fittings",

and so on. Further on, in reference to the water system, is this passage:

"The services as they stood in 1952 consisted, in each half block of six flats, of a rising main from ground level to the roof space feeding, in most flats, a large cold-water supply tank and, in some cases, the flushing tanks, lavatory basins, sinks and baths. In many cases, however, alterations had been made over the years and the fittings were served direct from the rising main, in itself a contravention of the by-laws. Most of the cold-water storage tanks in the individual flats were either rotted or unused, and the rising mains themselves were found to be defective. We were of the opinion, therefore, that the repair of the rising mains would be costly and that the additional load which would be placed on them by the modernisation of the system as a whole, would impose such a strain that there might be danger of failure within a short time."

It seems to me that this report, which is really in conformity with the evidence of the surveyors, to which we were referred, rather demonstrates that repairs were necessary, that some work had to be done, and that opportunity was taken to do the work in the most modern way. There may also have been some anticipation of repairs which would have to be done in a short time, and it may have been thought to be more economical and in accordance with good estate management to do everything at the one time.

It seems to me that what ultimately has to be decided is whether the work comes within the category referred to by the Master of the Rolls in Wates v Rowland when he said ([1952] 1 All ER 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."

A consideration of the evidence leads me to the view that here in substance work of repair was being done, although that repair involved some degree of improvement and although the modern substitute might be better than that which had gone before. I think, therefore, that we are obliged to differ from the judgment of the learned judge.

Appeal allowed. Leave to appeal to the House of Lords refused.

Solicitors:  Baylis, Pearce & Co (for the tenants); Trollope & Winckworth (for the landlords).