Hughes v Borodex Ltd

When statutory wording disadvantages a tenant, the court may add, omit or substitute words only in a clear case of drafting error. The court must be abundantly sure of the provision’s purpose, inadvertent failure to give effect to that purpose, and the substance of the correction Parliament would have made. A perceived unfairness or imperfect legislative scheme is insufficient. Where a later rent application is made under Housing Act 1988 section 13(4), provisions governing the initial rent determination under Schedule 10 to the Local Government and Housing Act 1989 do not apply. Accordingly, an improvement made during a former long tenancy could not be disregarded on the basis of Schedule 10 paragraph 11(6) and (7).

The appellant was an assured tenant of a flat whose long residential tenancy had ended. A Rent Assessment Committee determined the rent at £2,340 per month following a later landlord’s notice of increase. The rent exceeded £25,000 per year, threatening the appellant’s security of tenure.

The appellant had improved the flat during the former long tenancy. She argued that the improvements should be disregarded when assessing the rent, and that the statutory scheme should be construed or supplemented to preserve the protection formerly available under the Landlord and Tenant Act 1954 and Rent Act 1977. The central issue was whether the court could read words into the legislation to remedy the alleged omission.

1. The appeal was dismissed. The statutory provisions meant that improvements made during the former long tenancy could not be disregarded in the later application under section 13(4) of the Housing Act 1988.
2. Schedule 10 to the Local Government and Housing Act 1989 applies to the initial reference to a Rent Assessment Committee following termination of the long tenancy. Paragraph 11(6) and (7) modifies section 14 of the 1988 Act by treating an improvement made during the long residential tenancy as a relevant improvement. A later application under section 13(4), however, is made under the 1988 Act and is not governed by Schedule 10.
3. The court considered the principle in Inco Europe Ltd v First Choice Distribution [2000] 1 W.L.R. 586. Words may be added, omitted or substituted to correct an obvious drafting error, but only where the court is sure of the statutory purpose, the inadvertent failure to give effect to it, and the substance of the provision Parliament would have enacted had the error been noticed.
4. Those conditions were not met. The 1989 Act deliberately altered the balance between landlords and tenants, and its provisions dealt comprehensively with the security to be provided following the end of long low-rent tenancies. The inclusion of some consequential protections showed that Parliament could have included further protection for improvements if it had intended to do so.
5. The earlier statutory protection did not justify a different result. R (Morris) v The London Rent Assessment Committee [2002] EWCA Civ 276 confirmed that a proper market rent could be determined even if it exceeded £25,000 and thereby ended assured-tenancy protection. That reasoning was unhelpful to the appellant’s proposed construction.
6. The appellant’s circumstances attracted considerable sympathy, but hardship and an imperfect statutory scheme could not justify judicial legislation. The appeal was therefore dismissed.