Landlord and tenant – Rent repayment order – Superior landlord – Respondent tenants applying for rent repayment order (RRO) against appellant superior landlord – Appellant seeking to strike out application as not immediate landlord – First-tier Tribunal refusing to strike out application – High Court upholding decision – Appellant appealing – Whether RRO available against superior landlord – Appeal allowed
The appellant held a lease of flat 9, Mandeville Court, Finchley Road, London, NW3 for a term of 999 years. In May 2016, the appellant 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 respondents under separate written agreements. The appellant appeared to accept that the flat was a house in multiple occupation (HMO) requiring a licence under the Housing Act 2004. No licence had been granted. The appellant did not renew KPIG’s tenancy at the end of the fixed term.
The respondents applied to the First-tier Tribunal (FTT) under section 41 of the Housing and Planning Act 2016 for rent repayment orders (RROs) against the appellant on the grounds that he was responsible for the “control or management of an unlicensed HMO”.
The appellant applied to strike out the application under rule 9(3)(e) of the Property Chamber Rules 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 appellant was not the immediate landlord of the respondents.
The FTT refused to strike out the application on the ground that it was bound by the decision of the Upper Tribunal in Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC) which held that an RRO could be made against a superior landlord.
The appellant’s appeal against that decision was dismissed: [2020] UKUT 298 (LC); [2020] PLSCS 203. The appellant appealed to the Court of Appeal. Safe Renting, as intervener, made written submissions.
Held: The appeal was allowed.
(1) Section 40(1) of the 2016 Act conferred power on the FTT to make an RRO where a landlord had committed one of the offences specified in section 40(3). Under section 40(2), an RRO was an order requiring the landlord under a tenancy of housing in England to: (a) repay an amount of rent paid by a tenant; or (b) pay a local housing authority an amount in respect of universal credit paid (to any person) in respect of rent under the tenancy.
Whether an RRO could only be made against an immediate landlord of an applicant tenant, and not against a superior landlord, depended upon the proper interpretation of section 40(2)(a) of the 2016 Act having regard to its language, context and purpose in circumstances where there was no definition of “landlord” in Chapter 4 of Part 2 of the 2016 Act.
The natural interpretation of section 40(2)(a) was that “the landlord under a tenancy of housing” in the body of subsection (2) had to refer to the landlord under the same tenancy as the tenancy held by the “tenant” referred to in para (a). Only one tenancy was referred to, and it was that tenancy which enabled identification of both the tenant who could apply for an RRO and the landlord who could be made the respondent to that application. Otherwise, any tenant in a chain of tenancies could apply against any landlord in the chain. The absence of any express limitation to an immediate landlord was immaterial, because the language used connoted a direct relationship of landlord and tenant.
If the intention had been to extend liability to superior landlords, it would have been easy for section 40(2)(a) to say so in terms rather than merely by the use of the indefinite rather than the definite article. It was more likely that the drafter simply wanted to make it clear that an RRO could be made in favour of one out of a number of tenants.
(2) The more natural interpretation of the word “repay” in section 40(2)(a) was that it referred to the landlord repaying the rent paid to that landlord by the tenant, rather than to money paid by the tenant to a different landlord. That supported the conclusion to be derived from the references to “the landlord under a tenancy” and “tenant”.
Section 40(2)(b) only enabled an RRO to be made on the application of a local housing authority in respect of universal credit paid in respect of rent under the tenancy of which the respondent to the order was the landlord (ie, the immediate landlord), because the words “the tenancy” in para (b) had to refer back to the “tenancy of housing” mentioned in subsection (2), despite the fact that the universal credit might have been paid “to any person”.
Thus when section 40(2) was construed as a whole, whether the applicant for the RRO was a tenant or a local authority, the tenancy of housing contemplated, but not yet identified in the opening words of that section, was the tenancy under which the tenant’s rent had been paid, or in respect of which universal credit had been paid, and the landlord who was the target of the RRO had to be the direct landlord irrespective of whether the application was made by the tenant under subsection (a) or the local authority under subsection (b).
(3) On its face, Part 2 of the 2016 Act conferred tough new powers to address the problem of rogue landlords and property agents and the courts had to interpret the statute with that in mind. Moreover, the policy of requiring landlords to comply with their obligations was one that a legislator could well regard as applicable to superior landlords as well as immediate landlords; Nevertheless, parliament had legislated to implement that policy only to the extent provided for by the language of section 40(2).
Therefore, section 40(2)(a) only enabled an RRO to be made against an immediate landlord and not a superior landlord. The fact that the offences specified in section 40(3) could be committed by superior landlords as well as by direct landlords was irrelevant. The statutory language was clear. The legislative context and policy arguments did not justify any other interpretation of the statutory language. Accordingly, the respondents’ application would be struck out.
Tom Morris (instructed by Winckworth Sherwood LLP) appeared for the appellant; Edward Fitzpatrick (instructed by Edwards Duthie Shamash) appeared for the respondents; Justin Bates and Charles Bishop (instructed by Anthony Gold Solicitors LLP) made written submissions for the intervener.
Eileen O’Grady, barrister
Click here to read a transcript of Rakusen v Jepsen and others (Safer Renting intervening)
