Housing – Rent repayment order – Reasonable excuse – Appellant tenants applying for rent repayment order – First-tier tribunal concluding that respondent had reasonable excuse for having control of unlicenced HMO – Appellants appealing – Whether FTT erred in finding respondent made out defence of reasonable excuse – Appeal allowed
In 2014, the respondent acquired the lease of 4, Weddell House, a former local authority flat in a purpose-built block in Duckett Street, Stepney, London E1. It was a large flat with an open plan kitchen, living room and five separate bedrooms.
On 23 November 2018, the respondent granted a single tenancy of the whole flat to five friends in circumstances which meant it was a house in multiple occupation (HMO). After the tenants left the flat, they applied to the First-tier Tribunal (FTT) under section 43 of the Housing and Planning Act 2016 for a rent repayment order. They claimed £34,490, the maximum amount possible for the final year of the tenancy, from 13 November 2019 to 12 December 2020.
When the tenancy of the flat was first granted, no licence under Part 2 of the Housing Act 2004 had been required in Tower Hamlets for HMOs which were self-contained flats. But on 31 October 2018, the council designated the area as one of additional licensing for all HMOs.
The respondent accepted that the flat should have been licensed from April 2019 and had not been. He nevertheless denied that he had committed the offence under section 72(1) of the Housing Act 2004 because
he had applied for a licence but had been informed by the council, in November 2028, that he did not yet need one, and that it would inform him when he did.
The FTT concluded that the respondent had proved, on the balance of probabilities, that he had a reasonable excuse for having control of an unlicensed HMO which provided a complete defence to the underlying offence. The appellants appealed.
Held: The appeal was allowed.
(1) The FTT was the primary fact-finding tribunal and permission would rarely be granted for appeals against its findings of fact; even fewer would succeed, and only then if the tribunal was satisfied that a finding of fact was unsupported by the evidence or was one which no reasonable tribunal could have reached.
The approach of an appellate court to the findings of a trial judge would depend on the nature of the issues the judge had to determine. A distinction could be drawn between challenges to conclusions of primary fact or inference from those facts and an evaluation of the facts. On a challenge to an evaluative decision of a first instance judge, the appeal court did not carry out a balancing task afresh but had to ask whether the decision of the judge was wrong by reason of some identifiable flaw in the judge’s treatment of the question to be decided, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion. A decision that a landlord had a reasonable excuse for being in control of an unlicensed HMO was the sort of evaluative decision to which that approach applied. On an appeal it was not for the tribunal judge to decide whether the landlord’s excuse was reasonable, but rather to consider whether a flaw had been identified in the FTT’s assessment: Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577 and Prescott v Potamianos [2019] EWCA Civ 932 considered.
(2) In the present case, it was apparent that the FTT accepted that the offer it found to have been made by the council, to be in touch with the respondent at a later date to invite him to apply for a different licence, provided the respondent with a reasonable excuse for the offence of having control of or managing an unlicensed HMO contrary to section 72(1) of the 2004 Act. That was a continuing offence which was committed by the person having control or managing on each day the relevant HMO remained unlicensed. To avoid liability for the offence the person concerned therefore had to establish the defence of reasonable excuse for the whole of the period during which it was alleged to have been committed.
The period to which the application for rent repayment related ran from November 2019 until the appellants vacated the flat in December 2020. The entirety of the FTT’s evaluation of the facts took the form of a conclusion rather than an explanation. If the FTT did not consider one of the main planks of the tenants’ case, that would amount to an identifiable flaw in its reasoning; if it did consider it, but did not explain what it made of it, that would amount to a failure to give adequate reasons for its decision. It did one or the other and on that basis the appeal had to be allowed and the FTT’s decision set aside.
(3) When considering for how long any reasonable excuse persisted, the systematic approach described in Perrin v HMRC [2018] UKUT 156 (TCC)provided some helpful guidance to the FTT, much of which was equally applicable in the sphere of property management and licensing. A useful approach might be to: (i) establish what facts asserted gave rise to a reasonable excuse (that might include the belief, acts or omissions of the landlord or any other person, the landlord’s own experience or relevant attributes, the situation of the landlord at any relevant time and any other relevant external facts); (ii) decide which of those facts were proven; and (iii) decide whether, viewed objectively, those proven facts amounted to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased. In doing so, it should take into account the experience and other relevant attributes of the landlord and the situation in which the landlord found himself at the relevant time.
It might assist the FTT, in that context, to ask itself whether, what the landlord did (or omitted to do or believed) was objectively reasonable for the landlord in those circumstances. It would be a matter of judgment for the FTT in each case whether it was objectively reasonable for the particular landlord, in the circumstances of the case, to have been ignorant of the requirement in question, and for how long. The application would be remitted to the FTT for further consideration.
Cameron Neilson (of Justice for Tenants) appeared for the appellants; Sebastian Reid (instructed by Archstone Solicitors) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Marigold and others v Wells