A landlord challenged The Rent Acts (Maximum Fair Rent) Order 1999, arguing the Secretary of State lacked power under section 31 of the Landlord and Tenant Act 1985 to cap fair rent increases to protect tenants from hardship. The House of Lords held the power was not limited to counter-inflationary purposes and upheld the Order.
Background
Spath Holme Ltd, a private landlord, challenged The Rent Acts (Maximum Fair Rent) Order 1999 (SI 6/1999) made by the Secretary of State for the Environment, Transport and the Regions and the Secretary of State for Wales. The Order imposed a cap on increases in registered fair rents for regulated tenancies, limiting them to the retail price index plus a percentage. The ministers purported to act under section 31 of the Landlord and Tenant Act 1985, which conferred a ‘reserve power to limit rents’.
The factual background was the longstanding shortage of private rented housing in England and Wales. The Rent Act 1977 governed the registration of ‘fair rents’, assessed by reference to open market rents adjusted for scarcity. Following the Housing Act 1988, which introduced assured tenancies negotiated at market rates, rent officers and rent assessment committees gained access to market comparators for setting fair rents. In some areas, notably London and the North West, officers had previously set rents well below the correct statutory level. When the Court of Appeal in Spath Holme Ltd v Chairman of the Greater Manchester and Lancashire Rent Assessment Committee (1995) and Curtis v London Rent Assessment Committee [1999] QB 92 clarified the correct approach, some tenants faced sharp and unexpected rent increases. The government responded by making the Order to cap those increases.
The Court of Appeal quashed the Order, holding that section 31 could only be used for counter-inflationary purposes, tracing the provision back to its origins in the Counter-Inflation Act 1973. The ministers appealed to the House of Lords.
The Issue(s)
Principal issue
Whether section 31 of the Landlord and Tenant Act 1985 conferred power on the ministers to make the Order for the purpose of protecting tenants from hardship caused by sharp rent increases, or whether the power was limited solely to counter-inflationary purposes.
Subsidiary issues
(1) Whether a consolidation statute could be interpreted by reference to its statutory predecessors; (2) whether reference to parliamentary materials (Hansard) was permissible under Pepper v Hart [1993] AC 593; and (3) various additional grounds including the definition of ‘dwelling’, the scope of modifications to Schedule 11 of the Rent Act 1977, procedural requirements, relevant considerations, and proportionality.
The Court’s Reasoning
The scope of section 31
Lord Bingham of Cornhill, delivering the leading speech, began from the established principle in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 that statutory discretions must be exercised to promote the policy and objects of the Act. He found the language of section 31 to be broad but not ambiguous:
I do not find, studying the language of section 31, that it is in any way ambiguous or obscure, or such as to lead to absurdity if given its full apparent effect.
Lord Bingham considered it legitimate, despite the consolidation, to examine section 11 of the Housing Rents and Subsidies Act 1975 to understand the factual and social context. However, he concluded that while section 11 had replaced the counter-inflation power in section 11 of the Counter-Inflation Act 1973, the 1975 Act was not exclusively directed at countering inflation. He identified four factors supporting this conclusion: the 1975 Act contained no reference to inflation in its long title or body; it imposed no time limit on the power (unlike the earlier counter-inflation legislation); it contained various tenant-protective provisions reflecting broader housing policy; and if Parliament had intended to confine the power to countering inflation, one would expect specific reference to that limitation.
Section 11 conferred a reserve power, to be exercised by the minister if he reasonably judged it necessary or desirable to protect tenants from hardship caused by increased or excessive rents. To treat countering inflation as the sole mischief at which section 11 was directed is to fall into the fallacy identified by Lord Simon and Lord Diplock of treating a single identified mischief as the only mischief.
Lord Hope of Craighead similarly emphasised the context of the 1985 Act as a whole, which dealt with fairness between landlords and tenants in housing, and found nothing to indicate a counter-inflationary limitation:
The inference which I would draw from the enactment of this power in the 1975 Act is that it was enacted for reasons of housing policy with a view to the power being exercised by housing ministers, not for counter-inflationary reasons which would be of concern primarily to ministers responsible for economic policy.
Use of Hansard
There was significant divergence among their Lordships on when resort to parliamentary materials was permissible. Lord Bingham held that the three conditions in Pepper v Hart must be strictly insisted upon and were not satisfied here. The legislation was neither ambiguous nor obscure, and there was no clear and unequivocal ministerial statement supporting the narrow construction. He observed:
Only if a minister were, improbably, to give a categorical assurance to Parliament that a power would not be used in a given situation, such that Parliament could be taken to have legislated on that basis, does it seem to me that a parliamentary statement on the scope of a power would be properly admissible.
Lord Hope took a narrower view still, arguing that Pepper v Hart should be confined to ambiguity in the wording of a statutory provision, not to uncertainty about the purpose of a statutory power:
I consider that to permit resort to Hansard as a source for material of that kind to define the scope of a discretionary power conferred by Parliament would be to extend the decision in Pepper v. Hart well beyond its proper limits.
Lord Hutton agreed with Lords Bingham and Hope. By contrast, Lord Nicholls of Birkenhead accepted that the legislation satisfied the first condition of ambiguity (given the width of the power and its counter-inflationary derivation) but found the parliamentary statements insufficiently clear and unequivocal to assist. Lord Cooke of Thorndon went furthest, endorsing a more liberal approach to Hansard and finding the ministerial statements in fact confirmed the wider interpretation.
Additional grounds
The House unanimously rejected all subsidiary challenges. The definition of ‘dwelling’ did not preclude restrictions based on tenancy characteristics. The ministers were entitled to modify Schedule 11 of the 1977 Act under section 31(2), which expressly permitted exclusion, adaptation or modification of any enactment relating to rent. The negative resolution procedure in section 31(4) was not overridden by the affirmative resolution requirement in section 74 of the 1977 Act. The ministers had not failed to consider relevant considerations or acted unreasonably or disproportionately; the European Court of Human Rights had recognised a wide margin of appreciation in housing policy, as shown by Mellacher v Austria (1989) 12 EHRR 391.
Practical Significance
This decision is significant in several respects. First, it confirms that the scope of broadly drafted ministerial powers must be ascertained from the statutory context, and that courts should be cautious about reading down clear statutory language by reference to the historical origins of consolidated provisions. Second, the case provides important guidance on the proper approach to interpreting consolidation statutes: while earlier enactments may be consulted where the court cannot otherwise grasp the social context or purpose, they should not be used to restrict clear statutory language. Third, the speeches contain substantial and divergent analysis of the proper application of Pepper v Hart, with the majority firmly insisting on strict compliance with its conditions and warning against routine resort to Hansard. The case distinguishes between ambiguity in statutory wording and uncertainty about the scope of a statutory power, with the majority holding that Pepper v Hart is directed at the former. Fourth, the case affirms the broad discretion available to ministers in balancing competing interests in housing policy, subject to Wednesbury review, and recognises the European Court of Human Rights’ acceptance of a wide margin of appreciation in this field.
Verdict: The House of Lords unanimously allowed the ministers’ appeal, quashed the order of the Court of Appeal, and dismissed Spath Holme Ltd’s application for judicial review, holding that section 31 of the Landlord and Tenant Act 1985 conferred power on the ministers to make The Rent Acts (Maximum Fair Rent) Order 1999 and that the Order was lawful.
