Wates v Rowland and Anor

[1952] 1 All ER 470

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(Decision by: Jenkins LJ)

Between: Wates
And: Rowland and Anor

Court:

Judges: Sir Raymond Evershed MR

Jenkins LJHodson LJ

Subject References:
HOUSING
LANDLORD AND TENANT
RENT
Rent Restriction
Permitted increase
'Improvement' of house
Structural alteration
Repairs
Replacement of defective floor
Laying of additional concrete bed

Legislative References:
Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (c 17) - s 2(1)(a), s 2(5)

Case References:
Rabbitt v Grant - [1940] IR 323; 2nd Digest Supp
Strood Estates Co Ltd v Gregory - [1936] 2 All ER 355; [1936] 2 KB 605; 105 LJKB 726; 155 LT 82; affd HL [1937] 3 All ER 656; [1938] AC 118; 106 LJKB 752; 157 LT 338; 31 Digest, Replacement, 667, 7660

Hearing date: 5-6 February 1952
Judgment date: 7 February 1952

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Decision by:
Jenkins LJ

(Sir Raymond Evershed MR - I will ask Jenkins LJ to deliver the first judgment.)

(Jenkins LJ.) This is an appeal from the judgment of Judge Sir Gerald Hurst KC at Croydon County Court, dismissing a claim by a landlord to be entitled to add to the standard rent of premises the statutory eight per cent increase based on the amount of his (the landlord's) expenditure on improvements to the premises. The sole issue is whether, on the true construction of the relevant provisions of the Rent Restrictions Acts, this expenditure, having regard to the nature of the work done, was an expenditure qualifying for the statutory increase.

The relevant provisions are to be found in the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, s 2(1), as amended by the Rent and Mortgage Interest Restrictions Act, 1939, s 3(1) and sched. I, which provides:

"The amount by which the increased rent of a dwelling-house to which this Act applies may exceed the standard rent shall ... be as follows, that is to say:-(a) Where the landlord has since [Sept. 2, 1939] incurred, or hereafter incurs, expenditure on the improvement or structural alteration of the dwelling-house (not including expenditure on decoration or repairs), an amount calculated at a rate per annum not exceeding eight per cent. of the amount so expended: Provided that the tenant may apply to the county court for an order suspending or reducing such increase on the ground that such expenditure is or was unnecessary in whole or in part, and the court may make an order accordingly."

Reference should also be made to the definition of "repairs" contained in s 2(5) of the Act of 1920, which is in these terms:

"For the purposes of this section, the expression 'repairs' means any repairs required for the purpose of keeping premises in good and tenantable repair ..."

Reading s 2(1)(a) in its amended form in the light of that definition, it provides that where the landlord has, since the date mentioned, incurred, or hereafter incurs, expenditure on the improvement or structural alteration of the dwelling-house, not including expenditure on decorations or on any repairs enquired for the purpose of keeping the premises in good and tenantable repair, then the statutory percentage may be added to the rent, which the proviso already referred to under which the tenant may object to the increase on the ground that the expenditure in question on improvements or structural alterations is or was unnecessary.

The tenancy in the present case comprises the ground floor of No 210 Rowan Road, Mitcham. The system of construction of the floor of that part of the house appears to have been this. There was a layer of concrete on which wooden joists were laid, and the floor was laid over and secured to those joists in the usual way. The result of that method of construction was that there was a cavity between the surface of the concrete and the under-side of the floor. That method was, apparently, considered adequate in view of the condition of the ground obtaining at the time when the house was built, but, for reasons not satisfactorily explained, it appears that the land in this vicinity has of comparatively recent years tended to become waterlogged through, it is suggested, a rise, for some reason or other, in the water level, or water table (as I believe it is usually called), in the land. The effect of that has been that water has seeped through the lower part of the walls of the house, found its way into the cavity between the concrete substratum and the under-side of the wooden floor, and resulted in rotting of the floor. This condition of the floor and the cavity beneath it was considered by the sanitary authority as amounting to a nuisance within the meaning of the relevant public health legislation, and the landlord was anxious to do what was necessary to put the matter right. A formal notice to abate the nuisance was served, but it seems that there was a certain amount of co-operation between the local authority and the landlord inasmuch as the service of such a notice would facilitate the obtaining of the necessary licence.

The work required by the notice, which was dated 3 November 1950, was described in concert with the landlord in the sense that the work it required was the work that he himself regarded, or his technical advisers regarded, as the proper way of getting rid of the trouble. The relevant part of the work, as shortly described in the notice, was this: "Lay concrete over existing site to raise site by approximately nine inches. Re-build sleeper walls, re-fix joists and plates, re-lay flooring and re-fix skirtings, door frames, etc" The necessary licence having been duly obtained, the work was done. It involved the laying of a further layer of concrete over the existing concrete, raising the surface of the concrete bed by a matter of nine inches. The surface so raised having been appropriately treated, a tiled floor was laid directly on it in the place of the original wooden floor. The question now is whether any part of the expenditure incurred on this work, and, if so, how much, ranks for the statutory percentage. The matter has been dealt with before us as a question of principle, and I understand it is, in effect, agreed between the parties that, in the event of the appeal succeeding, the appropriate calculation should be made so as to allow the statutory percentage on the cost of laying the addition to the concrete bed under the house, with a proper allowance for the cost of providing the tiled flooring, which for this purpose can be regarded as a replacement of, or as a substitute for, the old wooden flooring.

The judge in his judgment, after stating the facts, said:

"Speaking in the popular sense, I should have no hesitation in saying that the expenditure had been incurred in relation to 'improvements' ... but that is not the issue I have got to decide. I have to decide whether such improvements are distinct from 'repairs', and in order to arrive at a true view whether such distinction can be made I am governed by authority ... In the present case, I think it was implicit in the service of the sanitary inspector's notice that the existing dampness of the floor prevented these premises from being described as being in good and tenantable repair ... In my view, I am governed by the decision in Rabbitt v. Grant. In that case a sanitary notice had been served and as a result the inadequate earth privy was superseded by a modern water-closet. In the present case I think a defective flooring has been superseded by an efficient floor, and although it is obviously a very great 'improvement' in the premises, the fact that it is also aptly describable as a repair of a bad system of flooring in order to make a defective flooring usable and the premises habitable prevents the plaintiff, in my view, from claiming the benefit of the eight per cent. increased rent. Against this I have been referred to the case of Strood Estates Co., Ltd. v. Gregory in the Court of Appeal, a decision in which the works related, according to SIR BOYD MERRIMAN, P., to the substitution of modern drainage to the satisfaction of the local authority, and that seems very similar to what has happened in the present case."

Then the judge referred to the circumstance that there had been no sanitary notice served in Strood Estates Co Ltd v Gregory and to the absence from the report of any details about the work done in that case, and he continued:

"I feel however that the case before the Irish courts is one which is so closely analogous to the present that it would be dangerous for this court to go behind it to the earlier decision in the Court of Appeal."

It was suggested on behalf of the tenants that the judge should be understood to have found as a fact that, although the expenditure had been incurred in relation to "improvement" in the popular sense of that expression, nevertheless the work in question also answered the description of "repairs", and that that being so, on the facts the expenditure was not within the section. I cannot read the judgment as involving a finding of fact to that effect. Looked at as a whole I think it comes to this, that, if the matter had been free from authority, the judge would have been disposed himself to find on the facts that the work here done did amount to an "improvement" in the ordinary, popular, sense of that expression, but he felt himself constrained by the authority of Rabbitt v Grant to hold that the expenditure in question was also an expenditure on repairs, and that, therefore, the landlord was excluded from the benefit of the statute. Accordingly, I think the question raised before us can properly be described as a question of law-that is to say, whether, on the facts of this case and the true construction of the relevant statutory provisions, this expenditure or some part of it was expenditure on the improvement or structural alteration of the dwelling-house as distinct from expenditure on repairs, within the meaning of the exception contained in s 2(1)(a) of the Act of 1920 as amended by the Act of 1939.

Counsel for the landlord put his case on the construction of the section in this way. He said that he had got to show an expenditure on an improvement or structural alteration, and that he claimed to have shown for there is no doubt that the floor, as it stands at present, with its solid foundation, is a much better floor than the house ever had before. He then pointed out that, if the phrase "not including expenditure on decoration or repairs" is read in conjunction with the definition of "repairs", it is found that what is excepted is expenditure on any repairs-not, be it observed, on any work of any kind-required for the purpose of keeping the premises in good and tenantable repair. He thus meets the judge's decision so far as it is based on the view that with the floor as it was before the work was done the premises could not be described as being in good and tenantable repair. He says that the mere fact that work is necessary to put premises into good and tenantable repair does not conclude the matter against him, for "repairs", by definition, means repairs required for the purpose of keeping the premises in good and tenantable repair, and there may well be work required for that purpose which, however, does not fairly answer the description of "repairs", as, for instance, where, for the purpose of making a structure, originally defectively designed, a structure in good and tenantable repair, it is necessary to make structural alterations and improvements, in the sense of making an addition or alteration to the premises which does not merely restore the premises to a condition approximating to the condition that they were in when new, but does make the premises in some way better in kind than they ever were before. The other point of construction taken on the landlord's side is to be found in the proviso to s 2(1)(a) of the Act of 1920:

"Provided that the tenant may apply to the county court for an order ... on the ground that such expenditure is or was unnecessary ..."

That implies that there must be some improvements or structural alterations which can be made to a dwelling-house which are necessary, and thus supports the view that an improvement or structural alteration is not necessarily ruled out from ranking for the statutory percentage merely because it can be described as a necessary improvement or structural alteration, eg, as being required for keeping the premises in good and tenantable repair or making them fit for human habitation. To hold otherwise, it is pointed out, might lead to the result that no improvement or alteration could ever rank for the percentage, because, if it was required for the purpose of keeping the premises in good and tenantable repair, it would be a repair, and, therefore, would be exclude from the benefit of the section, whereas, if it did something more than that, the tenant might raise an objection on the ground that the work was "unnecessary". In Strood Estates Co Ltd v Gregory the landlord had incurred expenditure in substituting a modern system of drainage for an old and antiquated system, and the question was whether that expenditure ranked for the statutory percentage by way of increase of rent, and it was held by Sir Boyd Merriman P who delivered the judgment of the court, that the expenditure in question did so rank. There had been no sanitary notice served in that case, but it does seem that evidence had been given by the chief sanitary inspector that the houses before the work was done were not in all respects fit for habitation in accordance with the Housing Act, 1925, s 1. The argument took a different course from the argument before us, but it does to some extent assist the present landlord's contention. The argument in Strood Estates Co Ltd v Gregory was that under s 1 of the Housing Act, 1925, there was to be implied in the contract of letting an undertaking that the house would be kept by the landlord during the tenancy in all respects reasonably fit for human habitation. That being an undertaking to be implied in the contract for the letting of houses of a class to which the house in question belonged, it was argued that, inasmuch as, in substituting the new system of drainage, the landlord had done no more than he was obliged to do by this statutory term of the tenancy, he could not claim any right to the increase. Sir Boyd Merriman P dealt with that argument mainly by reference to the proviso as to expenditure on unnecessary matters, and he said this ([1936] 2 All ER 366):

"As the subject-matter is a dwelling-house, it may, I think, fairly be assumed that in using the word 'unnecessary' the legislature meant that the work in respect of which the expenditure was incurred must be necessary for the purpose for which a dwelling-house is used-namely, for human habitation",

and it was pointed out, in effect, that, if the argument based on s 1 of the Housing Act was accepted, then no improvement or alteration in circumstances such as those in that case could rank for the statutory percentage or increased rent unless it was necessary in order to make the premises fit for human habitation, and then the claim would be defeated by the Housing Act, 1925, s 1.

I think that that case does assist the landlord, as showing that, at all events, the necessity or otherwise of work from the point of view of making premises fit for habitation does not necessarily govern the question whether the expenditure is expenditure on an improvement or structural alteration ranking for the increase. In Rabbitt v Grant, followed by the judge, the expenditure was on work consisting of removing an earth privy and substituting for it a modern water-closet, pursuant to a sanitary notice, and the court came to the (to my mind) somewhat surprising conclusion that this was not an improvement in respect of which the increase could be claimed, because it was a repair, inasmuch as it had to be installed in order to put the premises into good and tenantable repair, that expression being treated as extending to making the premises fit for human habitation according to modern sanitary standards by the installation of an entirely new and different type of convenience. I need only read a passage from the end of the judgment of Sullivan CJ where he said ([1940] IR 333):

"When this case was first heard we were not satisfied on two points, first, whether or not the earth privy had constituted a nuisance, and, secondly, whether the provision of a water closet in lieu of the privy was necessary for the purpose of putting the premises into good and tenantable repair. Those questions have now been answered by the learned judge. He has found that the earth privy was a nuisance and that the provision of a water closet was necessary for the purpose of putting the premises into good and tenantable reapir. Notwithstanding these findings, Mr. Kingsmill Moore on behalf of the appellant asks us to hold that the work done was not repairs but an 'improvement'. But to do so would be, in my opinion, to misinterpret the provisions of s. 8(1)(a) of the Act. Although the work done may have been an 'improvement' and a 'structural alteration', it was also a 'repair'. To entitle the landlord to an increase in rent it must be established that he has incurred expenditure which was not expenditure on repairs. On the facts as found in this case, the expenditure was on repairs. The question submitted for our decision should therefore be answered in the negative."

Then Murnaghan J said (ibid, 334):

"The tenant is entitled to have the house maintained in a tenantable condition, and GEOGHEGAN, J., has found that the only way of putting the premises into a tenantable condition was by installing a water closet. This, although a 'structural alteration', is in the circumstances clearly a repair within the meaning of s. 8 of the Act."

I should mention that the statutory provisions referred to in these passages were in all material respects similar to those applicable in the present case. With respect to the learned judges who decided the Irish case, it seems to me that they proceeded on the fallacy that all work required to put the premises into a condition fit for human habitation was necessarily "repairs" within the meaning of the section. That, I think, overlooks the fact that the definition of "repairs" in s 2(5) of the Act of 1920 defines that expression as meaning

"repairs required for the purpose of keeping premises in good and tenantable repair ..."

as distinct from work of any kind, whether in the nature of repairs or not, required to put the premises into a condition fit for human habitation, and I cannot regard the circumstances that before any work was done the premises were not in tenantable repair or not fit for human habitation and that after the work was done they were in such repair and were so fit as necessarily concluding against a landlord the question whether under this section his expenditure, or at all events some part of it, has been expenditure on improvements or structural alterations. The question is one, I think, which must turn very much on the facts of each particular case, and it would, in my view, be wrong for the court to regard the Irish case, itself hardly reconcilable with Strood Estates Co Ltd v Gregory, as laying down any general principle which ought to be followed here.

Turning again to the fact of the present case in their relation to the relevant statutory provisions, there is not 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 concerete. He has also incurred expenditure on what is prima facie, according to the ordinary meaning of the word, an "improvement", for on the the evidence he has made the house, as regards its substratum and the system of construction of the floor and its foundation, 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? In my judgment, the answer to that question is that up to a point the totality of the work done was work of repair. The tenant had a floor in the house when he went in, and clearly the house could not be said to be in good tenantable repair after the floor had become rotten. The replacement of a floor of some kind would, I think, therefore, fairly come within the description of "repairs".

It would be making good a defect arising from the action of the water underneath the floor which had caused the floor to rot, and the that extent the expenditure, in my view, could not properly rank for the eight per cent increase, and it is not contended that it should so rank. 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 concerete 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.

Accordingly, although this is not an easy case, in my view, the appeal should be allowed to the extent that the expenditure on the concrete work should be considered as expenditure on an improvement or structural alteration and not an expenditure on repairs. I assume that the parties will be able to agree the appropriate figure on that principle.