Housing – Rent repayment order – Respondent tenants obtaining rent repayment order against appellant on basis that she committed offence of being in control of house in multiple occupation (HMO) without required licence – Appellant appealing on ground that First-tier Tribunal failed to consider whether she had reasonable excuse – Local authority employee appearing on behalf of respondents – Whether appellant committing HMO licence offence – Appeal allowed
The appellant owned 164 Telegraph Place, London E14, an end of terrace house with three bedrooms upstairs and two rooms downstairs, a kitchen and two bathrooms.
In 2015 she let the property to a company which let out rooms in houses in multiple occupation (HMOs); the rent payable by the company to the appellant was £2,250 per month.
Prior to 1 October 2018 the property did not need an HMO licence because it had only two storeys but after that date, whenever there were five or more occupants, it did.
On 31 July 2019, the appellant was told by the local authority that the property needed an HMO licence and she applied for one the same day. The property should have been licensed from 6 October 2018 when a fifth occupant moved in; all the respondent sub-tenants had assured shorthold tenancies granted by the company.
The respondents applied to the FTT for a rent repayment order against the appellant. The FTT directed that the company be added as a party as the immediate landlord.
The FTT found that the property was an HMO that required a licence from 6 October 2018 until 31 July 2019 when an application for a licence was made, and that an offence under section 72(1) of the Housing Act 2004 was committed for that period. It determined that the appellant had committed the offence as a person “in control” of the HMO and the company as a person “managing” the HMO.
The FTT made a rent repayment order of £16,000 against the appellant. The company was ordered to pay back £6,218.53, being the rent received from the respondents less the rent it paid to the appellant and what it paid for the utilities used by the respondents. The appellant appealed.
Held: The appeal was allowed.
(1) Not all landlords were aware of the defence of reasonable excuse, and it was important for the FTT to be alert to the possibility that the facts might give rise to it even where the landlord had not mentioned it: IR Management Services Ltd v Salford City Council [2020] UKUT 81 (LC); [2020] PLSCS 47 considered.
In the present case, the defence of reasonable excuse was set out in the appellant’s submissions and she was entitled to a decision about it. Either the FTT decided that the appellant did not have the defence and failed to say so and to explain why, or it failed to consider the defence at all. For that reason alone, the FTT’s decision had to be set aside.
(2) The Upper Tribunal had been provided with the witness statements given to the FTT and so could substitute its own decision on the point rather than remitting the proceedings to the FTT. It would do so on the basis that there was no appeal from any of the findings of fact.
It was difficult to understand why a landlord would not have the defence of reasonable excuse to the offence created by section 72(1) of the 2004 Act where he or she had been told by a local authority employee that their property did not need an HMO licence and that they would be told if that situation changed; and the appellant had that defence. She therefore did not commit the offence and no rent repayment order could be made against her.
(3) The FTT took the view that the appellant was entitled to expect the company to tell her if the property needed a licence. That appeared to have been a misunderstanding of the company’s lease, which required the tenant “Within seven days after receipt of any notice given or order made by any competent authority in respect of the property [to] give full particulars therefore to the landlord”.
The enactment of a statutory instrument was not a “notice or order” and did not trigger that obligation. But having made that finding the FTT ought to have given consideration to whether that gave her a defence of reasonable excuse.
(4) The appellant also argued that the FTT did not give proper consideration to the arguments before it about the relative culpability of the two landlords when deciding the amounts ordered against each. Although the FTT offered an explanation for its apportionment of liability between the two landlords, it was a purely arithmetical one, simply calculating the net amounts of the respondent’ rent left in the hands of the immediate and superior landlord respectively, less a deduction from what the appellant received in view of what the FTT regarded as mitigating circumstances. But the FTT did not address the appellant’s point about the extent of her involvement with the respondents, which she said had been so minimal that it was not appropriate for her to have to pay so much more than did their immediate landlord, which was a professional organisation with specialist knowledge about HMOs.
Although it was not necessary to make any findings about that ground in the present case, where the FTT considered similar cases in the future it might need to go beyond a simple arithmetical approach to the apportionment of liability; where two landlords were involved, the extent of each one’s control of the property and their relative culpability would obviously be relevant.
(5) The FTT’s decision would be set aside because it failed to consider the defence that the appellant had expressly raised; and that in any event should have been considered in view of the evidence before the FTT and the facts found.
(6) The 2004 Act empowered a local housing authority to support tenants in an application for a rent repayment order, to the extent of conducting proceedings for them. A local authority was a public body with duties to the public, and with a strong interest in the administration of justice. The appellant’s allegations of bad faith were rejected. However, if the local authority chose to enter the fray it should take pains to do so in a way that was fair to all parties.
The appellant appeared in person; The respondents were represented by Muhammed Williams, of the London Borough of Tower Hamlets.
Eileen O’Grady, barrister
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