Housing – Rent repayment order (RRO) – Director – First-tier Tribunal dismissing application by appellant licensees for RRO against director of corporate landlord as having no jurisdiction to make order against anyone other than landlord – Appellants appealing – Whether RRO made against director of corporate landlord who himself committed relevant offence – Appeal dismissed
The appellants were licensees of a former children’s home in Croydon, which they occupied under agreements with Camelot Guardian Management Ltd (Camelot). In 2016 Camelot had agreed to provide property guardianship services to the local authority owner of the building, under an agreement which the First-tier Tribunal (FTT) found created a tenancy. Subsequent agreements between Camelot and the individual appellants, under which they were each granted the right to occupy the whole building, were found to be licences.
While it was occupied by the appellants, the building was a house in multiple occupation (HMO) which required to be licensed under Part 2 of the Housing Act 2004 but Camelot was informed by the local housing authority that no HMO licence was required.
On 6 November 2019, Camelot entered a creditor’s voluntary liquidation. The respondent was its managing director. In June 2020, the appellants applied under section 41 of the Housing and Planning Act 2016 seeking rent repayment orders (RROs) against the respondent on the basis that, contrary to the advice given by the local authority, the building had required a licence and Camelot had committed an offence under section 72(1) of the 2004 Act of being in control of an unlicensed HMO.
As Camelot was already in liquidation, the claim against the respondent was put on the basis that Camelot’s alleged offence had been committed with his consent or connivance. By section 251 of the 2004 Act, he had therefore committed the same offence and was liable to be proceeded against and punished accordingly, including by the imposition of RROs.
The FTT dismissed the application on the grounds that it had no jurisdiction to make an RRO against someone who was not a landlord. Further, the respondent had not committed a relevant housing offence. The appellants appealed.
Held: The appeal was dismissed.
(1) The effect of section 251(1) of the 2004 Act was that a person who was found to have consented to or connived in the commission of an offence by a company of which they were a director, was guilty of an offence and was liable to be proceeded against and punished.
In Rakusen v Jepson [2021] EWCA Civ 1150; [2021] PLSCS 138, the Court of Appeal decided that an RRO could only be made against the immediate landlord of the tenant who had made the application and who had paid the rent which was sought to be recovered. While the issue resolved in Rakusen did not arise in the present case, the Court of Appeal’s analysis of the operation of the Act was equally applicable. The power to make an order was defined and limited by section 40(2) of the 2016 Act. That section not only defined what an RRO was, but identified the person against whom such an order could be made.
(2) The relevant housing offences listed in the table in section 40(3) of the 2016 Act might be committed by landlords, superior landlords, their agents or, in the case of the offences of violence for securing entry and unlawful eviction or harassment, by persons who had no connection to the landlord. It was therefore necessary for parliament to specify whether RRO’s were a remedy available against any person who had committed a relevant housing offence or only some. That choice was made in section 40(2).
The only person against whom section 40(2) permitted an RRO to be made was a landlord. That was confirmed by other parts of the statutory scheme: section 40(1), 41(1), 42(1). Had it been intended to extend the scope of RRO’s to company directors, parliament would have said so in explicit terms.
(3) The matter of which the FTT had to be satisfied before it made an order was that “a landlord has committed an offence”: section 43(1). Although section 41(1) enabled a tenant or a local housing authority to apply to the FTT for a rent repayment order against “a person who has committed an offence to which this Chapter applies”, that did not free the FTT from the limitations already imposed by section 40(2). The offences to which the Chapter applied were all offences committed by a landlord, and the person referred to in section 41(1) therefore had to be a landlord.
The FTT also pointed out that the appellants were seeking to make the respondent liable to repay rent which he had never received. In Rakusen, Arnold LJ considered that the more natural interpretation of “repay” in section 40(2)(a) was that it referred to the landlord repaying rent which it had received from the tenant, rather than a sum which the tenant had paid to someone else. Repayment by someone other than the landlord who received the rent was not contemplated.
(4) The policy arguments with which the appellants supported their case on the construction of the statute were the same as those which failed to sway the Court of Appeal in Rakusen. It was true that, without the opportunity to proceed against the directors of an insolvent company which was their landlord, some tenants would fall outside the scope of RROs and the statutory policy of combatting the activities of rogue landlords might be less effective as a result. But it nevertheless remained the case that parliament had legislated to implement that policy only to the extent provided for by the language of section 40(2).
Accordingly, the FTT came to the right conclusion. It had no jurisdiction to make an RRO against the respondent and the appeal had to be dismissed.
George Penny (of Flat Justice) appeared for the appellants; Laura Phillips (instructed by Greenwoods LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Kaszowska and others v White
