Compatriot Holdings Ltd Co & Anor v Chairwoman of London Rent Assessment Committee & Ors

When a statutory rent formula compares index figures expressed on different bases, the earlier figure must be rebased so that both figures have a common base. The phrase “published index” therefore refers to an index figure adjusted where necessary to permit a valid comparison, using the published data.

A statutory formula must also be construed purposively. A construction producing a nonsensical result, inconsistent with the legislation’s purpose, should not be adopted where the statutory language permits a coherent alternative. Where the formula would otherwise produce a figure below the existing rent, the statutory floor must be applied.

These conjoined statutory appeals concerned two determinations by the London Rent Assessment Committee of maximum fair rents for Rent Act protected tenancies. The Committee used the unrebased May 1985 retail price index figure when applying the formula in the Rent Acts (Maximum Fair Rent) Order 1999 to rents taking effect in 2008. It also overlooked the provision preventing the maximum fair rent from falling below the existing registered rent.

The landlords challenged the Committee’s construction and application of the Order. The central issue was whether the earlier index figure had to be rebased before being used with the later index figure.

1. Appeals allowed. The Committee’s determinations were set aside. The maximum fair rents were directed to be registered using rebased May 1985 index figures, with effect from 12 November 2008. No remittal was necessary because the correct figures were ascertainable.
2. Article 2(2) of the Rent Acts (Maximum Fair Rent) Order 1999 requires comparison of the index published for the month preceding the new determination with the index published for the month of the previous registration. Since the later figure was expressed on a different base following the January 1987 rebasing, the earlier figure had to be adjusted to a common base. “Published index” therefore meant the published index figure rebased where necessary for comparison.
3. The Committee’s approach was both unduly literal and purposively wrong. Rebasing did not involve interpolating or inventing an intermediate index figure. It involved a simple arithmetical adjustment using the published index data. A comparison of differently based figures could produce a negative and nonsensical result, contrary to the purpose of the statutory cap.
4. The Committee had additionally overlooked article 2(4). Where the relevant expression in the formula is less than zero, the maximum fair rent is the existing fair rent. The Committee’s reduced rents were therefore erroneous even on its own approach.
5. The judgment of Lord Bingham in R v Environment Secretary, ex parte Spath Holme Ltd [2001] 2 AC 349 was used to explain the background and purpose of the capping scheme.

The first respondent was ordered to pay the appellants’ agreed costs of £20,000.

The judgment describes statutory appeals from two decisions of the London Rent Assessment Committee. The Administrative Court allowed both appeals and replaced the Committee’s rent calculations.