Metropolitan Properties Co (FGC) Ltd v Lannon

Factual and Procedural Background

This case concerns the determination of fair rents for three flats in Oakwood Court, West Kensington, specifically flats Nos. 31, 60A, and 61. These rents were to serve as benchmarks for other flats in the area and beyond. The procedure for rent determination is governed by the Rent Act of 1965, whereby a Rent Officer initially fixes a fair rent, subject to appeal to the Rent Assessment Committee. Oakwood Court was acquired in 1966 by Company A, part of a larger corporate group referred to as the Freshwater Group, which owns numerous London flats.

Following the acquisition, Company A sought to increase rents, prompting tenants of the three flats to apply for registration of fair rents. The Rent Officer set rents higher than the tenants' offers but lower than contractual rents. Company A appealed to the Rent Assessment Committee, which drastically reduced the rents below all expert and tenant proposals. Company A challenged this decision in the Divisional Court, initially on legal grounds and later alleging that the Committee Chairman, Attorney Lannon, was disqualified due to a conflict of interest. Attorney Lannon lived in a flat owned by a subsidiary of the Freshwater Group, where his father was a tenant engaged in a rent dispute with the same landlord. The question of Attorney Lannon's impartiality and disqualification became central to the appeal.

Legal Issues Presented

1. Whether Attorney Lannon, as Chairman of the Rent Assessment Committee, was disqualified from sitting due to a conflict of interest or bias arising from his involvement in his father's rent dispute with the same landlord group.
2. Whether the Rent Assessment Committee erred in law by failing to adequately explain the reasons for its decision to fix rents significantly below all expert and tenant figures.
3. The proper legal test for disqualification on grounds of bias or likelihood of bias in judicial or quasi-judicial tribunals.

Arguments of the Parties

Appellant's Arguments

• The Rent Assessment Committee's decision was legally flawed, particularly in its failure to provide sufficient reasons for departing from expert evidence and tenant offers.
• Attorney Lannon was disqualified from sitting as Chairman due to his close involvement in his father's rent dispute against the same landlord group, which created a real likelihood of bias.
• The Committee's decision was "startling" and unjustified, warranting quashing and rehearing.

Appellee's Arguments

• The Committee's informal nature and composition justify a less rigorous standard of reasons for decisions.
• There was no direct pecuniary interest or actual bias on the part of Attorney Lannon.
• The test for disqualification requires a real likelihood of bias, which was not established in this case.
• The Committee's decision on rents should not be invalidated on minor errors or suspicions of bias.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court examined the facts surrounding Attorney Lannon's role as Chairman of the Rent Assessment Committee and his involvement in his father's rent dispute against the same landlord group. Although there was no direct pecuniary interest or evidence of actual bias, the Court found that Attorney Lannon's assistance to his father in preparing representations against the landlords shortly before presiding over the Oakwood Court appeal created a real likelihood of bias or at least the appearance of bias. The principle that justice must not only be done but be seen to be done was paramount.

The Court noted that no reasonable person would distinguish between Attorney Lannon and his father in the context of conflicts of interest, especially given the close relationship and the son's active involvement in the dispute. The Court held that Attorney Lannon ought not to have sat on the Committee for the Oakwood Court case, rendering the Committee's decision voidable.

Regarding the Committee's decision on rents, the Court acknowledged the informal nature of the tribunal and its discretion to rely on its own knowledge. However, it criticized the Committee for failing to provide adequate reasons for fixing rents significantly below all expert valuations and tenant offers, especially when relying heavily on a comparable flat without proper explanation. Despite these criticisms, the Court did not find sufficient legal error to overturn the decision on this basis alone.

Overall, the Court allowed the appeal, quashed the Divisional Court's decision, and remitted the case for rehearing before a differently constituted Rent Assessment Committee.

Holding and Implications

The Court's final ruling was to ALLOW THE APPEAL and quash the decision of the Divisional Court. The decision of the Rent Assessment Committee dated 26 April 1967 was declared void due to the disqualification of its Chairman, Attorney Lannon, on grounds of real likelihood of bias arising from his involvement in a related dispute with the same landlord group.

The case was remitted to another Rent Assessment Committee for rehearing as soon as practicable. The Court emphasized the importance of impartiality and the appearance of justice in judicial and quasi-judicial proceedings. No new legal precedent was set beyond affirming established principles relating to bias and tribunal conduct. The decision directly affects the parties by requiring a fresh hearing but does not alter substantive rent law or procedural rules.