Landlord and tenant – Rent repayment order – Superior landlord – Appellant tenants applying for rent repayment order (RRO) against respondent superior landlord – Respondent seeking to strike out application as not immediate landlord – First-tier Tribunal refusing application – High Court upholding decision – Court of Appeal allowing appeal – Appellants appealing – Whether RRO available against superior landlord – Appeal dismissed
The respondent held a lease of flat 9, Mandeville Court, Finchley Road, London, NW3 for a term of 999 years. In May 2016, the respondent granted a tenancy of the whole of the flat to a company (KPIG) which gave the tenant the right to sublet the whole or part of the flat.
KPIG sub-let rooms in the flat to the three appellants under separate written agreements. It was accepted that the flat was a house in multiple occupation (HMO) requiring a licence under the Housing Act 2004. No licence had been granted.
The appellants applied to the First-tier Tribunal (FTT) under section 41 of the Housing and Planning Act 2016 for rent repayment orders (RROs) against the respondent on the grounds that he was responsible for the “control or management of an unlicensed HMO”.
The respondent applied to strike out the application on the grounds that it had no reasonable prospect of success – an RRO could only be made against the immediate landlord of the applicant and the respondent was not the immediate landlord of the appellants.
The FTT refused to strike out the application on the ground that an RRO could be made against a superior landlord. The respondent’s appeal against that decision was dismissed: [2020] UKUT 298 (LC); [2020] PLSCS 203. The Court of Appeal allowed the respondent’s appeal: [2021] EWCA Civ 1150; [2021] EGLR 39. The appellants appealed to the Supreme Court. National Residential Landlords Association and Safe Renting, as intervenors, made written submissions.
Held: The appeal was dismissed.
(1) The opening words of section 40(2) of the 2016 Act identified as a person against whom an RRO could be made “the landlord under a tenancy of housing in England”. A tenancy of housing consisted of the grant by one person to another of the right to occupy residential accommodation for a term in return for the payment of rent. At common law a tenancy was a grant of exclusive possession but the 2016 Act defined “tenancy” as including a licence. In relation to a particular tenancy, the grantor was the landlord under that tenancy.
As section 40(2)(a) and (b) made clear, RROs were of two types, one for repayment of an amount of rent paid by a tenant and the other for payment to a local housing authority of an amount in respect of universal credit. The words “rent paid by a tenant” referred to rent paid by a tenant under the “tenancy of housing in England” referred to earlier in the same sentence. That interpretation linked the landlord with the tenancy that generated the relevant rent. It rendered it artificial and unnatural to construe the opening words of section 40(2) as referring to any landlord other than the landlord under the tenancy which generated the relevant rent, ie, the rent to be repaid under section 40(2)(a) and the rent in respect of which the universal credit was paid under section 40(2)(b). It excluded a superior landlord because it was not the “landlord under” the tenancy which generated the rent.
(2) That straightforward exercise in interpretation of the words in section 40(2) indicated that the appeal should be dismissed; and that an RRO could not be made against a superior landlord, ie, a landlord higher up the chain of tenancies than the immediate landlord under the tenancy which generated the relevant rent.
Although perhaps not definitive in themselves, the use of the words “repay … rent paid by a tenant” in section 40(2)(a) supported that straightforward interpretation. Those words naturally referred to the landlord repaying the rent received directly from the tenant. Repayment of rent paid most naturally referred to a direct relationship of landlord and tenant.
It was forced language to say that a superior landlord would be repaying rent to a tenant from whom it had never received any rent. The different word “pay” in section 40(2)(b) did not cast doubt on the focus being on the rent payable under the direct relationship between the tenant and the landlord. Rather, the word “pay” rather than “repay” was used because the universal credit might have been paid to the tenant rather than to the landlord and, in any event, universal credit was paid by central government not by the local housing authority, which was the beneficiary of a universal credit RRO. It would therefore have been inappropriate to have used the word “repay” in respect of a universal credit RRO.
(3) The reforms made in respect of RROs in England by the 2016 Act included that the offences for which RROs could be ordered were extended. They could now be applied for by tenants directly and there was no need for a prior conviction of the landlord (provided the FTT was satisfied, beyond reasonable doubt, that the landlord had committed the offence). But there was nothing to suggest that those changes carried with them a major change in the reach of an RRO by extending the type of persons against whom such orders could be made. RROs could only be made against landlords.
The obvious policy reason for that was that landlords were those who directly benefitted from the payment of the rent, or from the associated universal credit. For the implementation of that policy, it was entirely rational to confine RROs to those to whom rent was directly paid, and those who benefitted from the associated universal credit. In both cases that meant the immediate landlord.
(4) On balance, the additional relevant interpretative factors (including pre-legislative materials, offences forming the basis of RROs and the sanctions available to combat rogue landlords) supported or, at least, were consistent with the straightforward interpretation of the words in section 40(2). The words of the 2016 Act were clear and unambiguous in not permitting RROs against a superior landlord.
If RRO’s were available against superior landlords, it would undermine the clear definition of an RRO, as set out in section 40(2), and would therefore require new legislation.
Edward Fitzpatrick and Timothy Baldwin (instructed by Hammersmith & Fulham Law Centre) appeared for the appellants; Tom Morris (instructed by Winckworth Sherwood LLP) appeared for the respondent; respondents; Robert Brown and Rosamund Baker (instructed by JMW Solicitors LLP); and Justin Bates and Charles Bishop (instructed by Anthony Gold Solicitors LLP) made written representations for the interveners.
Eileen O’Grady, barrister
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