Elizabeth Dwomoh focuses on a rent repayment order case that has clarified further when ignorance of the law may give rise to a defence of reasonable excuse.
Key points
- To qualify as a reasonable excuse, an excuse had to be objectively reasonable
- The standard that landlords were generally expected to achieve was an important measure of what was objectively reasonable in a particular case
In Marigold v Wells [2023] UKUT 33 (LC); [2023] PLSCS 31, the Upper Tribunal (Tax and Chancery Chamber) provided guidance on how a decision-maker should approach the defence of “reasonable excuse”. First, the facts that purportedly gave rise to the defence had to be established. Second, those facts had to be proven to the requisite standard. Third, it fell to be determined objectively if those facts amounted to objectively reasonable excuses for that individual asserting the defence in the circumstances of the case.
In Newell v Abbott and another [2024] UKUT 181 (LC); [2024] PLSCS 116, the Upper Tribunal (Lands Chamber) was asked to determine whether the First-tier Tribunal had erred in applying the third stage.
The parties
John Newell was the owner of a flat situated in the London Borough of Tower Hamlets. Joe Abbott and Aleksander Okrojek were his former tenants.
The flat was Newell’s sole investment property. He was not a member of any landlords’ association and he managed the flat without agents. The UT termed his approach to managing the flat as a “minimalist management style”.
The flat was situated in an area subject to selective licensing under part 3 of the Housing Act 2004. The flat was unlicensed for the duration of Abbott and Okrojek’s tenancy. In May 2023, Abbott and Okrojek applied to the FTT for rent repayment orders to be made against Newell. They claimed that Newell had committed the offence under section 95(1) of managing an unlicensed house in multiple occupation.
The FTT’s determination
In his defence to the application, Newell raised the defence of “reasonable excuse”. He claimed to have been unaware of the selective licensing scheme as he had not received any information about the scheme from the council. Information sent by the council to the owner’s address in the register of title for the flat at HM Land Registry had not reached him because he had not updated his address. Further, information sent by the council, addressed to him at the flat, had not reached him either as it had not been forwarded to him by the tenants.
The FTT accepted that although Newell had been ignorant of the need to obtain a licence, he did not have a reasonable excuse for failing to do so. The FTT observed that “it was incumbent on landlords” to familiarise themselves with the relevant legal requirements and Newell ought to have known about the scheme. As a solicitor, albeit not a specialist in housing law, he was in a better position to familiarise himself with the law. Newell had failed to produce any evidence that showed the council had failed to adequately publicise the scheme. Further, the FTT found that Newell’s tenants could not be blamed for his default as they had not been instructed to forward on his mail.
Newell’s breach was deemed by the FTT to be “at the serious end of the spectrum” for the offence under section 95(1). It awarded both Abbott and Okrojek 80% of the rent paid during the final 12 months of their tenancy of the flat: namely, £5,760.
The appeal
On appeal, Newell argued that the FTT had erred in its application of the third stage of the guidance in Marigold. Rather than ask itself whether, in light of the circumstances, his lack of knowledge that a licence was required was objectively reasonable, the FTT had instead benchmarked him against a standard of management it identified as being reasonable for landlords to achieve.
Further, he contended that the mindset displayed by the FTT through its comments relating to his awareness of the scheme and the relevant statutory obligations that landlords should familiarise themselves with meant that it failed to consider the possibility that it might be reasonable for a particular landlord not to have been aware of every relevant statutory or regulatory obligation that they were subject to.
In its robust rejection of this ground of Newell’s appeal, the UT endorsed the approach taken by the FTT. The UT underscored that the FTT was entitled to consider the reasonable standard of management to be expected of landlords or property managers generally. It simply was not enough for a landlord to show that they made an honest mistake in failing to obtain a licence.
To qualify as a reasonable excuse, an excuse had to be objectively reasonable. The standard that landlords were generally expected to achieve was an important measure of what was objectively reasonable in a particular case. This, however, did not result in an absolute standard. It was possible for a particular landlord to have a reasonable excuse for failing to reach the reasonable standard to be expected of landlords taking into consideration their particular circumstances, knowledge and understanding, which may alter what was objectively reasonable. In this particular case, the FTT had taken Newell’s circumstances into consideration, but they did not amount to an objectively reasonable excuse.
The successful ground
Newell was ultimately successful on his second ground of appeal, challenging the FTT’s calculation of the RRO. The UT determined that the FTT had failed to quantify the amount of rent to be repaid by considering the relative seriousness of the section 95(1) licensing offence against other housing offences.
Elizabeth Dwomoh is a barrister at Lamb Chambers
Photo © Philip Silverman/Shutterstock
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