Heffernan, R (On The Application of) v The Rent Service

The House of Lords considered the meaning and operation of paragraph 4(6) of Part I of Schedule 1 to the Rent Officers (Housing Benefit Functions) Order 1997, as amended by the Rent Officers (Housing Benefit Functions) (Amendment) Order 2001. The court held that the three sub-paragraphs of para 4(6) are cumulative: a "locality" must comprise at least two contiguous neighbourhoods (para 4(6)(a)), be an area within which a hypothetical tenant could reasonably be expected to live judged by reference to specified facilities and the distance of travel (para 4(6)(b)), and contain a sufficient variety of residential premises and tenancies (para 4(6)(c)).

The Lords concluded that once a rent officer has aggregated enough neighbourhoods to satisfy para 4(6)(c) he should generally stop adding more: sub-paras (a) and (c) govern the composition and necessary variety, while sub-para (b) excludes neighbourhoods that do not satisfy the accessibility/quality test. The rent officers in this case took an overly broad approach by treating the whole Sheffield area as the "locality" without adequate analysis under para 4(6)(b) and insufficient factual justification; their re-determinations were therefore quashed.

The claimant, Mr Heffernan, a welfare-benefits recipient, occupied a two-bedroom assured tenancy in Sheffield and sought judicial review of two Rent Service re-determinations of his maximum housing benefit. The rent officers had treated the whole of the Sheffield area (comprising 13 neighbourhoods and surrounding rural hinterland) as the relevant "locality" for fixing the local reference rent (LRR) under para 4 of Part I of Schedule 1 to the 1997 Order.

The principal legal issue was the proper construction and application of para 4(6): whether its sub-paragraphs are cumulative and how a rent officer should identify the extent of a "locality" for the LRR exercise. The parties' dispute included whether para 4(6)(b) refers to the whole area or to each neighbourhood and whether a rent officer may keep adding neighbourhoods once para 4(6)(c)'s variety requirement is satisfied.

The House of Lords reviewed the statutory scheme and prior authorities (including R (Gibson) and R (Saadat)). The Lords concluded that sub-paragraphs (a)-(c) operate together, that sub-paras (a) and (c) set minimum and thus limiting criteria (so that once sufficient neighbourhoods have been included to meet para 4(6)(c) further additions are not normally appropriate), and that sub-paragraph (b) operates to exclude neighbourhoods which do not meet the accessibility/quality test; in practice para 4(6)(b) should be applied as a qualitative but not over-detailed comparison of specified amenities. The court found the rent officers had not shown adequate analysis of accessibility and standards of amenities in each neighbourhood of the Sheffield area and so their choice of locality was not justified.

Remedies sought and procedural posture:

• The claimant sought quashing of the two re-determinations. The High Court (Administrative Court) quashed them ([2006] EWHC 2478 (Admin)). The Court of Appeal allowed the Rent Service's appeal ([2007] EWCA Civ 544). The House of Lords allowed the claimant's appeal and restored the High Court order.

The Lords emphasised (i) the limited but important scope of rent officer discretion under para 4(6), (ii) the requirement for a rational, fact-based assessment of accessible facilities and their standard, and (iii) that guidance from the Rent Service may assist but cannot substitute for an individual rent officer's reasoned application of the statutory test.

Appeal allowed. The House of Lords held that paragraph 4(6) of Part I of Schedule 1 must be applied with sub-paragraphs (a)-(c) read together: a locality must comprise at least two contiguous neighbourhoods, the locality must be an area in which a hypothetical tenant could reasonably be expected to live judged by reference to specified facilities and travel distance, and it must contain a sufficient variety of residential premises and tenancies. Once sufficient neighbourhoods have been aggregated to satisfy para 4(6)(c) the rent officer should generally stop adding further neighbourhoods; sub-paragraph (b) operates to exclude neighbourhoods that fail the accessibility/standard test. The re-determinations were quashed because the Rent Service failed to apply para 4(6) with adequate analysis and justification for treating the whole Sheffield area as the locality.

High Court (Administrative Court) quashed the re-determinations: [2006] EWHC 2478 (Admin). Court of Appeal allowed Rent Service's appeal: [2007] EWCA Civ 544. House of Lords allowed the appeal: [2008] UKHL 58.