Hughes v Borodex Ltd.

Where legislation creates an assured periodic tenancy to replace a long residential tenancy, provisions fixing the initial rent do not generally govern later rent reviews. Later reviews are governed by sections 13 and 14 of the Housing Act 1988.

A court cannot insert additional protection for tenant-funded improvements merely because the result appears harsh or anomalous. A disregard provided for the initial rent does not, without sufficient statutory indication, extend to later rent assessments.

The tenant occupied a flat under a long residential tenancy within Part I of the Landlord and Tenant Act 1954. Under Schedule 10 to the Local Government and Housing Act 1989, that tenancy was replaced by an assured periodic tenancy. The rent assessment committee disregarded the tenant’s improvements when fixing the initial rent.

On a later notice under section 13(2) of the Housing Act 1988, the committee included the improvements when determining the new rent. Collins J dismissed the tenant’s appeal. The central issue was whether Schedule 10 required the improvements to remain disregarded throughout the assured tenancy.

1. Appeal dismissed. Arden LJ gave the leading judgment, with Patten LJ and the Chancellor agreeing.
2. Paragraphs 9 and 11 of Schedule 10 to the Local Government and Housing Act 1989 provide machinery for fixing the initial terms, including the initial rent, of the assured periodic tenancy arising when the long residential tenancy ends. Once those terms are fixed, the paragraphs are spent.
3. Later rent increases are governed by sections 13 and 14 of the Housing Act 1988. Those sections form a complete code. They do not permit an improvement made under the former long residential tenancy to be disregarded because the statutory definition of a relevant improvement does not cover that situation.
4. Paragraph 9(2)(e) cannot be treated as an overriding principle governing rent throughout the tenancy. That reading would contradict section 14(3), leave important matters unaddressed, and give paragraph 11 provisions concerned with the initial tenancy an unwarranted continuing effect. Paragraph 12(2) provides further contextual support.
5. The apparent unfairness or anomaly did not justify adding words to the legislation. Parliament had considered the transition scheme, and the absence of an explanation for the changed treatment of improvements did not establish drafting error or an unintended result. The improvements were therefore properly taken into account on the later rent review.

• Court of Appeal (Civil Division) — appeal from the judgment of Collins J dated 25 March 2009 dismissed: [2010] EWCA Civ 425.
• High Court (Queen’s Bench Division) — dismissed the tenant’s appeal from the rent assessment committee’s determination.