Under section 43 of the Housing and Planning Act 2016, the First-tier Tribunal has the power to make a rent repayment order if it is satisfied beyond reasonable doubt that a landlord has committed a housing-related offence listed in section 40 of the 2016 Act.
Having control of or managing an unlicensed house in multiple occupation, contrary to section 72(1) of the Housing Act 2004, is one such offence. Pursuant to section 72(5) of the 2004 Act, a landlord can rely on the defence of reasonable excuse to such a charge.
In Marigold and others v Wells [2023] UKUT 33 (LC); [2023] PLSCS 31, the Upper Tribunal (Lands Chamber) has provided useful guidance on what amounts to a reasonable excuse and whether ignorance of the law can amount to such an excuse.
The background
Robert Wells was the long leasehold owner of a property situated in Duckett Street, E1.
In 2018, Wells granted a tenancy of the entire flat to five friends. In February 2020, one of the tenants moved out and was replaced by the first appellant, George Marigold.
Until November 2020, the flat was tenanted by Marigold and his flatmates – Kathryn Bryan, Saskia Hughes, Martha Richards and Charlie Williams.
In 2018 there was no requirement for Wells to license the flat. Subsequently, in October 2018, the London Borough of Tower Hamlets, the relevant local housing authority, designated the area in which the flat was situated as being subject to additional licensing. The designation came into force in April 2019.
When the tenants vacated the flat they applied to the FTT for an RRO to be made on the basis that, between 13 November 2019 and 12 December 2020, Wells was either in control of or managing an unlicensed HMO contrary to section 72(1) of the 2004 Act.
Wells relied on the defence of reasonable excuse. The FTT proceedings Wells relied on the case of D’Costa v D’Andrea and others [2021] UKUT 144 (LC); [2021] PLSCS 113 in support of his defence.
In D’Costa the UT determined on the facts that the landlord had a reasonable excuse for being in control of an unlicensed HMO.
In that case an officer of the local housing authority had informed the landlord her property did not require a licence and that she would be contacted if the situation changed.
She was not contacted and was unaware the area in which her property was situated had become subject to mandatory licensing.
Wells gave evidence before the FTT that he had applied to Tower Hamlets for a licence in October 2018.
His application was acknowledged and, in November 2018, he was told by an officer of Tower Hamlets that a licence was not required for the flat, but in due course he would be contacted to apply for a different licence that was not yet available.
The FTT accepted Wells received no further communication in respect of the availability of the new licence from Tower Hamlets and only became aware that the flat required an HMO licence when the tenants applied for an RRO.
The FTT found that Wells’s defence of reasonable excuse was proved.
The appeal
The tenants argued on appeal that the FTT had placed undue weight on D’Costa.
It had treated the decision as establishing a rule, which it did not.
They asserted that the FTT had failed to evaluate the relevant facts of the case and apply its own judgment to those facts. The UT disagreed.
It found the FTT had carried out a proper assessment of the facts in reaching its decision.
The tenants further argued that the FTT had failed to consider whether Wells’s belief that he would be contacted by Tower Hamlets when the new licensing regime became operational remained a reasonable belief throughout the relevant period. The tenants were successful on this basis.
The UT determined it was an identifiable flaw in the FTT’s decision that this aspect of the tenant’s case was not addressed. The FTT did not have to respond to every point raised but did have to deal with the main points relied on by a party to proceedings.
Guidance
Relying on Perrin v HMRC [2018] UKUT 156 (TCC), the UT provided the following guidance as to the approach the FTT should adopt when considering a “reasonable excuse” defence:
- Establish the facts that are said to give rise to a reasonable excuse.
- Decide which of those facts are proven.
- Determine whether the proven facts amount to an objectively reasonable excuse for the default and identify when, if at all, a reasonable excuse ceased to objectively exist. Where relevant, the experience and attributes of the defaulting party should be taken into consideration.
The UT further held that, depending on the facts of a case, it was a matter of judgment for the FTT to determine whether ignorance of a requirement was objectively reasonable for the person in default.
Key points
- Whether a reasonable excuse remained valid for the duration a landlord was committing a housing-related offence must be addressed by the FTT if raised
- Ignorance of the law may provide a reasonable excuse in certain circumstances
Elizabeth Dwomoh is a barrister at Lamb Chambers
