|Judgments - R (On The Application of Heffernan) (Fc) V The Rent Service
61. It therefore appears to me that the second interpretation would be a recipe for uncertainty and inconsistency. It is true that the Rent Service appears to have issued guidance, such as that which applies to Sheffield, for application throughout much of Great Britain, and, as a result, such problems could normally be expected to be avoided. However, the fact that it is possible to promulgate non-binding rules of practice to avoid the inherent uncertainty and subjectivity of a particular interpretation of statutory words is not a reason for rejecting that interpretation in favour of one which has no such inherent problems. Quite apart from anything else, a rent officer is not bound to follow the guidance issued by the Rent Service; indeed, whatever the correct interpretation of para 4(6), he would always have to exercise his own judgment in each particular case.
62. I am also concerned that, unlike the first interpretation, the second interpretation proceeds on the assumption that it is required that a neighbourhood can only be included in the locality if every part of it satisfies sub-para (b). (That is because, as indicated above, if it refers to the locality, then, unless sub-para (b) has to be satisfied in relation to every part of the locality, it would be meaningless, as the locality will always include the subject dwelling, which, by definition, must satisfy the sub-paragraph). Particularly given the size of some of the neighbourhoods as revealed by this case, this requirement could lead to a potentially contentious and difficult exercise. There could often be room for argument whether a neighbourhood of 100 sq km or more satisfies sub-para (b), on the basis that not every part of the neighbourhood has sufficient access to facilities and services of the appropriate quality; the possible difficulties involved in resolving such an argument speak for themselves.
63. The third interpretation involves sub-para (b) having the effect of requiring all neighbourhoods which satisfy sub-paras (a) and (b) to be included in the locality, provided that they satisfy the requirements of those two sub-paragraphs. I consider that this approach suffers from a number of problems.
64. First, it would lead to inevitable difficulties with sub-para (c) Once the rent officer has assembled the locality by aggregating all the neighbourhoods which satisfy sub-para (b), there would, at least normally, be nothing for sub-para (c) to bite on. If, on the other hand sub-para (c) was not satisfied once he had assembled the locality, then there is an obvious problem, as there would be no way of satisfying the sub-paragraph without adding a neighbourhood which did not satisfy sub-para (b).
65. Secondly, this third approach would present rent officers with a potentially very demanding exercise of looking at a large number of neighbourhoods which satisfy sub-para (a) to see if they satisfy sub-para (b). What is required of a rent officer by the schedule is difficult enough without adding such a potentially onerous additional responsibility. Thirdly, this interpretation would raise similar problems of uncertainty and issues relating to satisfying sub-para (b) as I have mentioned in relation to the second interpretation.
66. The second question is whether the words having regard to in sub-para (b) are exclusive or not. This raises the issue of whether, when deciding whether a neighbourhood is one in which a tenant of the dwelling could reasonably be expected to live", the rent officer has to restrict his enquiry to the facilities and services (hereafter amenities) specified in sub-para (b). The words having regard to", as a matter of language, may or may not be exclusive: whether they are or not inevitably depends on their context.
67. In this case, I consider that they are exclusive. The purpose of the amenities to which regard is to be had is, as I see it, to provide a useful way of deciding whether the neighbourhood should qualify in terms of rental value for the para 4(1) formula. Further, the matters left to the rent officers judgment are complex and difficult enough without being increased by his having to decide what amenities, in addition to those specified in sub-para (b), might be relevant in a particular case to the issue of the suitability of a neighbourhood. In addition, sub-para (b) raises a qualitative, and to some extent subjective, question which relates to the suitability of a neighbourhood for a hypothetical tenant. So it would be difficult to decide what other amenities could or would be relevant and what weight to give them. Similarly, some tenants would not be concerned about some of the amenities specified in sub-para (b) (in this case, I suspect, education), but all those amenities must be taken into account, which also suggests that the specified amenities are intended to be exhaustive.
68. Thirdly, there is the broader issue as to how para 4(6) works. It would be wrong for a court to be too prescriptive in this connection, as the legislature has left it to the rent officer. However, in order to explain its effect, it may help to set out how, at least as at present advised, I would expect that it might normally be operated.
69. In order to satisfy sub-para (a), the rent officer has to find at least one adjoining neighbourhood to add to the neighbourhood of the dwelling. Once such an additional neighbourhood is identified, the rent officer must ask himself whether it satisfies sub-para (b). This involves identifying the specified amenities which are in, or accessible from, that neighbourhood, and then comparing them with the specified amenities in, or accessible from, the neighbourhood of the dwelling. This in turn involves amassing information, but, in addition, an element of judgment is obviously involved in assessing what is reasonably accessible.
70. The rent officer must then assess the type of specified amenities available to a neighbourhood - e.g. sixth form colleges, secondary schools and primary schools; modern covered shopping malls, supermarkets or local small shops; hospitals with an accident and emergency facility and cottage hospitals. He must also consider their standard, which I consider involves more than simply satisfying himself that the services meet the requirements of the law and the appropriate public authorities as Pill LJ said -  EWCA 544 at para 36. In my view, as a matter of ordinary language, this must involve the rent officer carrying out an assessment of the quality of the specified amenities. As the Judge said, the rent officer has to make a qualitative judgment", although it need not go very deep; in the case of a school, for instance, his analysis would be less substantial, probably much less so, than a prospective parent would carry out -  EWHC 2478, para 28.
71. The rent officer must then ask himself whether a hypothetical tenant of a dwelling in a neighbourhood with access to the amenities of the type and standard it enjoys could reasonably be expected to move to the additional neighbourhood under consideration, bearing in mind the type and standard of the amenities to which it enjoys access. The additional neighbourhood does not have to enjoy the same level of amenities on an overall basis (i.e. taking the two sets of specified amenities together), let alone on an individual basis (i.e. taking each category of specified amenity separately). The question is simply whether, taking the type and standard of the various available specified amenities as a whole, a tenant living in the neighbourhood of the dwelling could reasonably be expected to move to the additional neighbourhood. In this connection, I agree with what Lord Rodger says in paras 20 to 23, and 25.
72. I do not consider that this exercise should impose an unrealistically demanding task on rent officers, and it is right to record that Mr David Pannick QC, who appeared for the Rent Service, did not suggest otherwise. There is a great deal of relevant information currently publicly available, for instance performance tables for schools and hospitals and records of recreational facilities. It is not as if the rent officer is required to calibrate precisely the quality of each amenity. Further, the exercise under the schedule is one which would have to be carried out relatively frequently by rent officers. Accordingly, as the Judge pointed out, rent officers would be well advised to keep a database of relevant information, which is continually updated. Indeed, it is clear from a circular, GA/09/2002, that, since June 2002, the Rent Service has, very sensibly, required rent officers to maintain a six-monthly review of localities and socio-economic profiles on a regional basis for this very purpose.
73. Having decided that an additional neighbourhood satisfies sub-paras (a) and (b), the rent officer must then consider whether, in his professional judgment, there are sufficient lettings, in terms of number and variety, across that neighbourhood plus the neighbourhood of the dwelling to satisfy the requirements of paras 4(2) and 4(6)(c). If so, he examines the rental figures to arrive at H and L. If not, he must search for another additional neighbourhood which satisfies sub-paras (a) and (b), and the exercise I have been discussing starts again.
74. The final issue concerns the meaning of the word locality". It is obviously dangerous to reformulate, or to put a gloss on, a legislative definition, however vague and unsatisfactory it is. However, when interpreting locality in para 4, it is legitimate to bear in mind its ordinary English meaning, especially given that there is nothing in para 4(6) which conflicts with that meaning. It seems to me that, while the expression could easily extend to an area which included, for instance, a postal district (or a number of postal districts), it could not apply (in addition or instead) to a long road outside, but running off, the district (or districts). On the other hand, albeit with some hesitation, I think it could cover a doughnut-shaped area. The word locality would not normally convey, as a matter of ordinary English, an area as large as a city, but it is such an imprecise word that I do not think it could be said that the attribution of such a meaning is excluded as a matter of ordinary language. Subject to that, it is hard to be prescriptive about what para 4(6) means, beyond analysing the effect of sub-paras (a), (b) and (c).
75. Having said that, it is right to mention a contention fairly strongly advanced in Mr Heffernans written case, albeit hardly mentioned in the oral submissions of Mr Richard Drabble QC. That contention is that the Court of Appeal failed to appreciate that a purpose of sub-para (b) is to distinguish between more and less prosperous areas". The application of the sub-paragraph in the case of a dwelling in a prosperous neighbourhood with access to high quality amenities may well result in another, less prosperous, neighbourhood with access to lower quality services being excluded from the locality because of the application of sub-para (b). However, that would be entirely because the rent officer concluded that a tenant of a dwelling could not be expected to live in the other neighbourhood because of its poorer quality of specified amenities, not because it was less prosperous.
76. There was no discussion before your Lordships as to the meaning of neighbourhood". However, particularly in the case of cities or urban areas, it seems to me that care should be taken not to interpret it as comprising too large an area. Every property in an additional neighbourhood will potentially be taken into account under para 4, once the rent officer is satisfied that some part of that neighbourhood has access to appropriate specified amenities. Accordingly, at least as at present advised, it seems to me that it cannot have been envisaged that, at least in a city or town, a neighbourhood would normally be very large or sprawling.
The re-determinations in this case
77. Having analysed the meaning and operation of the Schedule, it appears to me to follow that the two re-determinations under challenge in this case cannot stand. In the first place, neither of the rent officers approached the assessment of the locality as he should have done. He should have started by deciding which of the neighbourhoods adjoining Sheffield Central should be considered first, and then considering whether that neighbourhood satisfied sub-para (b). If it did not, then he would have had to look for another adjoining neighbourhood and consider the same issue with regard to it. Once he found an adjoining neighbourhood which satisfied sub-para (b), he should have asked himself whether the locality consisting of that neighbourhood and Sheffield Central had sufficient variety of evidence to satisfy sub-para (c). If the answer had been positive, he would have completed his search for the locality. If it had been negative, he would have had to find a second additional neighbourhood, adjoining Sheffield Central and/or the first additional neighbourhood, which satisfied sub-para (b), and asked himself whether the three neighbourhoods satisfied sub-para (c). If so, he would have had his locality; if not, a fourth neighbourhood would have had to be identified. And so on.
78. Instead of taking this course, the two rent officers simply took the Sheffield area as the locality, effectively for the reasons given by Mr Spedding (or so I assume in the case of Mr Shaw). The rather ambiguous sentence (i) in the quoted passage suggests to me that Mr Spedding did not regard satisfying sub-para (c) as the end, or limit, of his quest for the locality. Rather, he took the whole of the Sheffield area as the locality because, as he said in sentence (v), it represented the area in which a person who lived in any of the neighbourhoods within it could reasonably be expected to live. As I have explained, that was the wrong approach in principle.
79. If there is to be any prospect of justifying taking an area as large and populous as the Sheffield area (especially if it is to include the outlying rural locations) as the locality, rather more would be required of a rent officer than the rather bald statements contained in sentences (ii) and (iii). As the Judge said ( EWHC 2478, para 77), it does not appear that there has been any real analysis of the matters required by para 4(6)(b). The reference to similar facilities and services over a broad area is simply too superficial and general. There seems to have been no consideration of the different types and standards of the specified amenities in or accessible from each of the twelve selected additional neighbourhoods, and no real attention devoted to comparing them with those in, or accessible from, Sheffield Central. As my noble and learned friend Lord Walker of Gestingthorpe said, a general reference to the transport system in a large city cannot justify, without more, the conclusion that all neighbourhoods enjoy comparable access to similar types and standards of amenity.
80. As already mentioned, sub-para (b) does not require a minute and detailed analysis and comparison. However, it does give rise to a need for something more than a generalised assertion, such as is to be found in sentences (ii) and (iii) in the passage I have quoted from Mr Speddings evidence. In those sentences, he does not really address the issues raised by the sub-paragraph, and in any event, his consideration of the issues is far too cursory, especially given that he is seeking to justify taking as large and populous an area as the city of Sheffield, together with some outlying rural areas, as the locality.
81. In taking the Sheffield area as the locality, Mr Shaw and Mr Spedding appear to have adopted an approach which was generally taken by the Rent Service when assessing LRR for dwellings within that area, which in turn was based on the guidance in the circular. The circular could be misleading when it refers to a locality being a broad geographical area". The word broad may encourage rent officers to take a larger area than is appropriate (as, indeed, has probably happened here), and the word geographical appears to me to add nothing, and hence to risk misleading.
82. Having said that, I see nothing wrong in the Rent Service giving guidance not merely on the principles to be adopted when assessing LRR, but also on the appropriate areas to adopt in a city, or within any other location, when deciding on vicinities, neighbourhoods, and localities. Indeed, provided that the guidance is accurate and not prescriptive, it is desirable, as it should make determinations of LRR both easier and more predictable. However, such guidance cannot avoid the need for rent officers determining LRR in any particular case to consider the issues raised by sub-paras (a) to (c) by reference to the facts of that case. In particular, in many cases, what may be the right locality for one dwelling may not be the right locality for a dwelling in an adjoining neighbourhood.
83. The Judge observed that he could not go so far as to say that it would not be permissible, if it could be justified on the facts found and judgments made by the rent officer, to treat the Sheffield area as the locality of the apartment in this case. While the selection of the locality is a matter for the rent officer, I very much doubt if the proper approach to the build-up of a locality would ever lead to one as extensive (at least in a para 3(5)(a) case) or as populous as the Sheffield area.
84. For these reasons, I would allow Mr Heffernans appeal, and restore the order of the Judge quashing the two re-determinations of 20 December 2004 and 25 May 2005.
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