Dhir (Civil Appeal No. 1118 of 1951) [1952] EACA 296 (1 January 1952)

## APPELLATE CIVIL

## Before RUDD, J.

## RAM NATH DHIR, Appellant (Landlord)

## Civil Appeal No. 1118 of 1951

(Appeal from the decision of the Central Rent Control Board-Nairobi)

Landlord and Tenant—Standard rent—Meaning of "premises"—Whether Board can assess standard rent at less than 10 per cent of cost and value.

The appellant built a large house and applied to the Board to have the standard rent fixed for the whole house. The house was never let as a single unit or in one letting but after application was filed but before it was decided the appellant let various portions to individual tenants as separate dwelling houses.

The Board assessed the standard rent at Sh. 1,200 a month and apportioned this amount amongst the various premises let and comprising the whole house. The standard rent was assessed at less than 10 per cent of the market cost of construction plus the market value of the land. The appellant contended: (1) that the standard rent for the whole building exceeded £500 a year and the premises not being let prior to the commencement of the Increase of Rent (Restriction Amendment No. 2) Ordinance, 1949, the whole premises were decontrolled and not subject to the Ordinance: (2) that the standard rent should have been assessed at 10 per cent of the market cost of construction plus the market value of the land and not at a less sum.

*Held* (1-2-52).—(1) The word "premises" must be construed in relation to an actual letting or to a proposed letting and if the case is one of a proposed letting then that letting must be effected. The premises were controlled.

(2) The words "equal to" in section 2 (1) A (ii) defining standard rent—are redundant. There is a discretion to fix the standard rent at a sum which is less than 10 per cent of the cost and value. But reasons for such reduction should be given or be apparent<br>on the record. There being no such reasons standard rent fixed at 10 per cent of the market cost of construction and market value of land.

Cases referred to: Caw v. Casey, (1949) 1 A. E. R. 197, Carter v. Carburetter Co., (1942) 2 A. E. R. 228, Harnam Singh v. Jamal Pirbhai, (1951) A. C. 688, 705, Ram Nath Dhir, Civil Appeal 379 of 1951.

D. N. Khanna for appellant.

Pearson for Board.

JUDGMENT.—This is an appeal from the decision of the Central Rent Control Board.

The facts are that the appellant built a large dwelling house and applied to the Board to have the standard rent fixed for the whole house. The whole house was never let as a single unit or in one letting but after the application was filed and before it was decided the appellant let various portions of the house to individual tenants as separate dwelling houses.

The Board found that the market cost of the construction of the whole building was Sh. 153,000 and that the market value of the land was Sh. 2,000 and assessed the standard rent at Sh. 1,200 a month and apportioned this amount amongst the 'various premises comprising it which were let as separate dwellings.

Two points are taken by the appellant as follows:—

(1) That in as much as the standard rent of the whole building exceeds £500 a year and the premises were not let at the commencement of the Ordinance or between that date and the commencement of the Increase of Rent (Restriction Amendment No. 2) Ordinance, 1949, the whole premises are decontrolled and not subject to the Ordinance; and

(2) That the standard rent should have been assessed at 10 per cent of the market costs of construction plus the market value of the land and not at a less sum.

As to the first point. The argument proceeds on the maxim of Rent Control Law that if premises are decontrolled then and all the parts of the decontrolled premises are also decontrolled; that having regard to the definition of the word premises in section 2 the power of apportionment given to the Board by section 5 (1) (c) only empowers apportionment in respect of premises to which the Ordinance applies and does not empower apportionment of the standard rent among parts of premises to which the Ordinance does not apply.

That under section 8 the landlord was forced to apply to have a standard rent fixed for the whole premises before they were let, and that in view of the fact that the standard rent exceeded £500 per annum the Ordinance only applied to the premises for the purpose of enabling a standard rent to be fixed.

It was suggested that in the case of a storied building if parts of a building were to be considered as "premises" it would not be feasible to say when the erection of such premises in an upper storey commenced and that in consequence the provisions of section 1 (2) (b) could not be applicable in such circumstances. In short the contention is that "premises" mean the whole building constructed<br>in one building construction and not the parts of such a building and that the power of apportionment only applies where the whole of such building is governed by the Ordinance and not exempted under section 1 $(2)$ $(a)$ . In support of appellants contentions reliance was placed on *Caw v. Casey* (1949) 1 A. E. R. 197, Carter v. Carburetter Co., (1942) 2 A. E. R. 228 and Harnam Singh v. Jamal Pirbhai (1951) A. C. 688 at 705. This point has already been considered by this Court in C. A. 379/51 when Bourke, J. decided against the view contended for by the appellant in this present appeal. The Court is now invited to hold that the decision in $C. A.$ 379/51 was wrong.

It would take very strong reasons to induce me to arrive at such a decision and to over-rule a decision of this Court. Even if I disagreed with the decision I think I would have to follow it unless it became clear that there was some new consideration which had not been raised in the earlier case and which obviously affected the decision and demonstrated its incorrectness. I find nothing of that in the present case and in fact I agree with the ratio decidendi in C. A. 379/51.

In my opinion the word premises in the Ordinance must be considered in relation to an actual letting or else a proposed letting and if the case is one of a proposed letting then that letting must be effected.

If the whole premises had been let as a single dwelling house then I agree that the whole premises would be decontrolled and that if part of them were later sublet as a separate dwelling that part would also be decontrolled see Caw $v$ . Casey.

But I do not agree that control can be evaded by applying for a standard rent of the whole premises when the intention is to sub-divide them into a number of separate premises each of which is in fact a separate dwelling house

within the meaning of the Ordinance and when there is no intention to let the whole house in one letting and no such letting is made. If this construction of the Ordinance gives rise to difficulty of interpretation and application of the Ordinance in particular cases that would be no new thing in relation to legislation of this kind. But I think that most of the difficulty will disappear if the word premises in the Ordinance is considered in relation to lettings and<br>there is of course provision for assessing a standard rent of premises on another basis where it is not reasonably practicable to obtain sufficient evidence to enable the Board to ascertain the market cost of construction or the market value of the land.

On the second point taken by the appellant the relevant provision of the Ordinance is contained in the following words in section 2 (1) (A) (ii) "a rent to be assessed by the Board equal to a sum not exceeding 10 per centum per annum of the market cost of construction of the premises at the date of completing such construction plus the market value of the land at the prescribed date". The appellant contends that the effect of the words "equal to" means that no less sum than 10 per cent of the cost of construction and the market value of the land can be fixed.

1 confess that I find the provision difficult to construe so as to give effect to every word it contains unless it means that to a sum not exceeding 10 per cent of construction cost there shall be added the full market value of the land on the prescribed date. Such a construction has never to my knowledge been contended much less decided and I think that the proper construction is to apply 10 per cent limit to the market value of the land as well as to the cost of construction but such a construction would mean that the words equal to are redundant and have no meaning of their own or alternatively that the words "Not exceeding" are redundant and meaningless.

On the whole I am of opinion that the words "equal to" are redundant and have no special meaning of their own in the section which on consideration of the whole wording empowers the Board to fix the standard rent at a figure which does not exceed 10 per cent of the market cost of construction and the market value of the land and that there is a discretion to fix the standard rent at a sum which is less than 10 per cent of the said cost and value.

There is nothing in the Ordinance to indicate what would be proper reasons for the assessment for a reduced percentage but I am clearly of the opinion that such a reduction should not be a matter of chance or haphazard opinion and that when the Board assesses the standard rent at a less percentage than 10 per cent of the cost and value stated in the section reasons should be given or at least be apparent on the record.

Usually 1 should think that the full 10 per cent should be given on the market value of the land and certainly I see nothing on the record to justify a lower percentage in this particular case.

Similarly as regards the cost of construction I see no reason in this case to justify less than 10 per cent being assessed. The house appears to have been well constructed without any unnecessary extravagance.

The assessment of the standard rent of premises is one of the most important and far reaching powers of the Board. There is an appeal not only on matters of law but also on a matter of mixed fact and law if this right of appeal is to be effective then it is necessary for the board to state reasons for its decision on such an important point.

The Ordinance was enacted for the protection of tenants it is true but it is in the interest of the public as a whole that landlords should be encouraged to build proper houses and so help to relieve the shortage that creates the necessity for the Ordinance.

I can conceive cases in which a standard rent at a figure which is less than the maximum that can be assessed might be justified but in general I consider that the landlord should be allowed to have the benefit of the maximum amount allowed by the Ordinance and that if there are reasons in the particular case for a reduction of that maximum then I think they should be apparent on the record.

In the present appeal I see no reason against the standard rent being fixed at 10 per cent of the market cost of construction and the value of the land that is to say at Sh. 15,500 per annum and I remit the matter to the Board with a direction to increase the standard rent of the various dwelling houses (within the meaning of the Ordinance) comprised in the building on that basis.