Landlord and tenant – Rent repayment order (RRO) – Housing – Five appellant joint tenants applying for RRO – Grounds of application and statement of case supported by statements of truth – Application containing errors of fact – Appellants seeking to adduce further evidence to supplement and correct grounds of application and give oral evidence – First-tier Tribunal (FTT) dismissing application – Appellants appealing – whether FTT erring in law – Appeal allowed
The respondent owned a house at 153 Downton Avenue, Streatham Hill, London, a three-storey, four-bedroom, semi-detached house. In August 2017, the whole of the house was let to the five appellants. It was managed by professional managing agents.
The tenancy agreement provided that each appellant was responsible for the whole of the rent. It also included a covenant by the tenants not to sublet or part with possession of the property or let any other person live there.
The house was required to be licensed as a house in multiple occupation (HMO). As it was not licensed, the respondent committed the offence of being in control of or managing an unlicensed HMO contrary to section 72(1) Housing Act 2004, unless he had a reasonable excuse.
In October 2020, the appellants jointly applied to the First-tier Tribunal (FTT), under section 41 of the Housing and Planning Act 2016, for a rent repayment order (RRO) totalling £39,580 which was to be split among the appellants. Each appellant signed the statement of truth which was included in the FTT’s standard form.
The application stated that the house satisfied the standard test of an HMO in section 254 of the 2004 Act; and met the criteria for licensing under the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006 and 2018.
At the hearing before the FTT, the appellants sought to adduce further evidence to supplement and correct their grounds of application which, amongst other things, failed to mention that the appellants had sublet some of the rooms in breach of their tenancy. The FTT dismissed the application on the basis that, without any witness statements, the appellants were unable to provide evidence to prove beyond reasonable doubt that the respondent had committed the alleged offence. Permission for oral evidence in support of their application was also refused. The appellants appealed.
Held: The appeal was allowed.
(1) Case management decisions were discretionary. They often involved an attempt to find the least worst solution where parties had diametrically opposed interests. The discretion was entrusted to the first instance judge. An appellate court could interfere with the exercise of the discretion by a first instance judge where he had misdirected himself in law, had failed to take relevant factors into account, had taken into account irrelevant factors or had come to a decision that was plainly wrong in the sense of being outside the generous ambit where reasonable decision makers might disagree. The question was not whether the appeal court would have made the same decisions as the judge but whether the judge’s decision was wrong in that sense: Broughton v Kop Football (Cayman) Ltd [2012] EWCA Civ 1743
The FTT’s decision to refuse to permit the appellants to give oral evidence in support of their application was a case management decision. The FTT made no reference in its decision to the fact that the respondent had admitted that for the whole of the period in question the house was an HMO. The FTT had failed to appreciate that that was not something which the appellants were required to prove in order to be entitled to an RRO.
(2) Whether a property was an HMO did not depend on whether the people in occupation were tenants or subtenants, or a mixture of the two; it depended only on the number of people in occupation and their living arrangements. The standard test in section 254(2) of the 2004 Act focussed on the use being made of the accommodation, whether those who were in occupation formed a single household, and whether two or more of the households who occupied the accommodation shared one or more basic amenities. Similarly, the type of HMO which was required by the 2018 Order to be licensed did not depend on the status of the people in occupation. All that was required was that the HMO was occupied by five or more persons, living in two or more separate households, and that it met the standard test under section 254(2).
It was therefore irrelevant to the offence on which the application depended that, for part of the period under consideration, some of those in occupation of the house were subtenants, rather than direct tenants of the respondent. It was equally irrelevant that those who were in occupation were not the same people at all times.
(3) The FTT was wrong to regard the identity of those in occupation as fundamental to the question of whether and when any offence had been committed. The only issues between the parties identified in their statements of case were whether the respondent was the person managing or in control of the HMO, and whether he had a reasonable excuse for not having a licence. The burden of proving the defence of reasonable excuse was on the respondent and nothing in the appellants’ evidence was relevant to that question. The question whether he was the person in control or managing the HMO was a question of law which fell to be determined on the basis of the undisputed fact that the respondent was in receipt of the rent for the premises which, on any view, was a rack rent: see section 263(1) of the 2004 Act.
Therefore, when the FTT decided that the appellants should not be permitted to give further evidence about the periods of subletting of the property, it mistakenly regarded that material as fundamental evidence that went to the substance of the application.
(4) The FTT was wrong in its approach to the case management decision whether to permit the appellants to adduce further oral evidence supplementing and correcting their grounds of application and statement of case. The appellants were advised by unqualified lay representatives who failed to take proper instructions and who delayed in correcting errors. But even a professionally represented party could make mistakes. The appellants should have submitted a second statement correcting errors that were made in the original account. There was nothing in the errors themselves which stood in the way of the FTT determining the application on the day which had been appointed for it and it should have done so. The application would be remitted to the FTT for further consideration by a differently constituted panel.
Clara Sherratt (of Justice for Tenants) appeared for the appellants; Daniel Wand (instructed by Hanne & Co) appeared for the respondent.
Eileen O’Grady, barrister
