Housing – Rent repayment order – Reasonable excuse – Defence of “insanity” – Appellant landlord failing to obtain licence for house in multiple occupation (HMO) – Respondent tenants applying for rent repayment orders – Appellant seeking to rely on common law defence of insanity due to mental illness at material time – FTT making rent repayment orders – Appellant appealing – Whether appellant having reasonable excuse for controlling unlicensed HMO – Appeal allowed
The appellant owned the long lease of a large five-bedroom flat in Camden, London in which he lived. In December 2015, the local authority introduced an additional licensing scheme under Part 2 of the Housing Act 2004 which required that any house of multiple occupation in the area to which it applied housing three or more people comprising two or more households had to be licensed. The scheme covered the area in which the appellant’s flat was located.
Between August 2018 and April 2019, the appellant began to let rooms in his flat but continued to live there himself. The five respondents each occupied a room. The flat was occupied by three or more persons comprising two or more households and had become an HMO which required to be licensed. The appellant failed to obtain a licence.
On 9 September 2019, the respondents applied to the FTT for a rent repayment order (RRO) pursuant to section 40(3) of the Housing and Planning Act 2016. Soon afterwards, the appellant was compulsorily detained under the Mental Health Act 1983.
In November 2019, the local authority determined that the appellant had been in control of an unlicensed HMO contrary to section 72(1) of the 2004 Act and imposed a financial penalty. The appellant appealed to the First-tier Tribunal (FTT).
At a hearing on 30 September 2020, the FTT determined the respondents’ application for rent repayment orders. It concluded that the appellant’s mental health justified a 30% reduction in the rent repayable. The appellant was required to repay rent totalling £10,611.37. The appellant appealed.
The main issue was whether, because of his poor mental health, the appellant had a reasonable excuse for controlling an unlicensed HMO.
Held: The appeal was allowed.
(1) A person who had control of or was managing an unlicensed HMO committed an offence under section 72(1) of the 2004 Act. By section 72(5) it was a defence that the person had a reasonable excuse for having had control of, or been managing, the HMO. Where a statute provided a specific defence to an offence, and common law provided a different defence with narrower limits, it was not helpful for a tribunal to focus separately on the two different defences. The broad, common-sense question which the section 72(5) defence obliged tribunals to consider was whether, in all the relevant circumstances, the person having control of or managing an unlicensed HMO had a reasonable excuse for doing so. It was irrelevant to that question whether the same circumstances also satisfied the common law conditions which would permit a jury or magistrate to record a special verdict of not guilty by reason of insanity.
(2) The foundation of the appellant’s case on reasonable excuse was that he did not know that his flat needed to be licensed as an HMO. An absence of knowledge of a licensing requirement might be relevant to the defence of reasonable excuse. Whether an excuse was reasonable or not was an objective question for the jury, magistrate or tribunal to decide. The mere fact that a defendant did not know about the licensing requirement, or honestly believed it was not necessary, could not of itself amount to a reasonable excuse. However, that lack of knowledge or belief could be a relevant factor to consider when determining whether or not the defendant had a reasonable excuse. Additionally, there had to be reasonable grounds for holding that belief: Sutton v Norwich City Council [2020] UKUT 90 (LC); [2020] PLSCS 53 followed.
The general view was that it was the responsibility of someone who wished to let their property to find out whether any relevant regulatory restrictions existed and ignorance of the need for a licence would not normally provide a reasonable excuse (although it might be relevant to culpability and therefore to the amount of a financial penalty to be imposed under section 249A). But there was no hard and fast rule and a reasonable excuse defence based on ignorance of the need for licensing would always require a careful evaluation of all the relevant facts. No matter how genuine a person’s ignorance of the need to obtain a licence, unless their failure was reasonable in all the circumstances, their ignorance could not provide a complete defence: Thurrock Council v Daoudi [2020] UKUT 209 (LC); [2020] PLSCS 141 followed.
(3) There was a critical gap in the FTT’s consideration of the defence of reasonable excuse covering the period from 8 September 2018 to 19 June 2019. It found that despite it being satisfied that the appellant suffered from mental illness during the period concerned, the psychiatric evidence was not sufficiently cogent to establish a defence of insanity. It found that although the appellant’s application to the local authority’s building control department was not the correct procedure for obtaining a licence, his mental state might have led him to take an incorrect course of action and provided him with a reasonable excuse. It did not ask itself at any point whether the fact that the appellant suffered from poor mental health provided a reasonable excuse for his failure to appreciate that his house had become an HMO which required licensing.
(4) An appellate tribunal 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 undermined the cogency of the conclusion: Prescott v Potamianos [2019] EWCA Civ 932 considered.
In the present case, the FTT’s conclusion that the appellant had committed the offence of being in control of an unlicensed HMO, contrary to section 72(1), was wrong because of its omission properly to consider the statutory defence of reasonable excuse and to make relevant findings concerning the whole of the period when the offence was said to have been committed. Accordingly, the proceedings would be remitted to the FTT to consider the appellant’s defence of reasonable excuse.
Justin Bates (instructed by advocate, acting pro bono) appeared for the appellant; Clara Sherratt (of Justice for Tenants) appeared for the respondents.
Eileen O’Grady, barrister
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