[2025] EWHC 2477 (Ch)

In Coastal Housing Group Ltd and Others v Mitchell and Others [2024] EWHC 2831 (Ch) (“the First Judgment”) we decided issues between the parties arising from the relatively recent coming into force of the Renting Homes (Wales) Act 2016 (“the Act”). This judgment follows on from that decision and decides the counterclaims. Coastal Housing Group Ltd has now changed its name to Beacon Cymru Group Ltd and other parties have dropped out for various reasons. But, that said, the parties are essentially the same as before.

The claimants are social housing landlords with many properties and these cases have been selected and brought by them as test cases. The defendants are their contract-holders (the equivalent, in Welsh housing law, of tenants, in English housing law).

The following findings in the First Judgment are relevant to the counterclaims.

The claimants were under an obligation to give electrical condition reports (“ECRs”) to the defendants following the coming into force of the Act. Unfortunately, although they commissioned and obtained these reports, they failed physically to provide them by the due dates. By the time this oversight was spotted, they were several months overdue.

Consequently, the claimant landlords failed to provide the defendants with the ECRs required by regulation 6(3) of the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022 (“the Fitness Regulations”). Therefore, the landlords were “not in compliance with a requirement imposed by this regulation”, i.e. regulation 6, within the meaning of regulation 6(6). Therefore, by the operation of regulation 6(6), the defendants’ dwellings were “to be treated as unfit for human habitation” at the material times. They were so treated for the purposes of regulation 11 of the Renting Homes (Supplementary Provisions) (Wales) Regulations 2022 (“the Supplementary Regulations”). This meant that the defendants were “not required to pay rent” because the dwellings were “unfit for human habitation” within the meaning of regulation 11 as a result of the operation of regulation 6(6). The same applied to the contract provisions which were included in the contracts between the claimants and the defendants in compliance with the legislation. The contracts all provided, in terms, and in accordance with the legislation, that the defendants were not required to pay rent when their dwellings were unfit for human habitation. Regulation 6(6) applied to their cases and to their contracts, with the result that their dwellings were “to be treated as unfit for human habitation” in accordance with regulation 6(6). (These points are in para 121 of the First Judgment.)

In short, the defendants were not required to pay rent until they were provided, belatedly, with the ECRs to which they were entitled.

However, they did pay rent. The only exception is the defendant Mr William Wadley who, like the other defendants, did pay rent throughout the period when the lack of an ECR entitled him not to but who, unlike the other defendants, at a subsequent date withheld rent for a token period of one month. He did this by way of set-off against his counterclaim for repayment of the rent paid earlier, and has thereby created a subsidiary issue, which is whether set-off is available to him in the event that the underlying counterclaim succeeds.

By their counterclaims, the defendants claim repayment of the rent they paid when they were not required to pay rent.

They do this on the basis that the rent was paid because of a mistake of law. The mistake (as clarified by Leading Counsel in argument) was that none of the defendants knew that, because they had not received an ECR for their homes by the due date (which was, in each case, 15 December 2023), their properties were deemed unfit for human habitation (although they were not, in fact, unfit for human habitation) and they were not required to pay rent. The claimants accept that this was a mistake of law which is capable in principle of founding a restitutionary claim for repayment, on the basis of unjust enrichment, subject to the claimants’ other arguments opposing that claim: see Kleinwort Benson v Lincoln City Council [1999] 2 AC 349 at 366B, 366D and 375E.

To be precise, the mistake fell into two parts. None of the defendants knew (first) that the Act required their landlord to provide them with an ECR by 15 December 2023. And none of the defendants knew (second) that, by reason of the landlord’s failure to do so, they were not required to pay rent until the ECR was provided. They only became aware of these points much later, prior to the issue of these proceedings. They only became sure of the second point even later than that, when we delivered the First Judgment, it having been a strongly contested point of law between the parties until then. The landlords maintained that they were required to pay rent despite the late provision of ECRs. The defendants had no thoughts on the matter until (at the instigation of the landlords, who wanted to test the point in this litigation) they were provided with legal advice and representation, well after the ECRs had been given to them.

The counterclaims, as pleaded, include claims for damages for breach of contract, alleging that the landlords were in breach of contract when they demanded rent which was not due. Those claims are no longer pursued. The landlords contested whether this would have amounted to a breach of contract. But the concession is made because the defendants accept that, even if they could prove breach, the nature of the alleged breach is such that, on the facts of these cases, only nominal damages could be claimed. We agree. The defendants were not interested in the ECRs at the time and felt none the worse for not having them when they should have had them. They were not even aware of their right to have them. Proper inspections had been carried out. Satisfactory ECRs were, in fact, in existence. As far as the defendants were concerned, they were enjoying the full benefits of the properties which they were paying rent for. There is no basis in the evidence or on the facts of this case for them having suffered any loss which might sound in damages other than nominal damages. The claim for nominal damages is not pursued, and we therefore do not have to decide whether there was a breach of contract as alleged.

The issues have been formulated and re-formulated before us in various ways, and some issues have been withdrawn from us in order to concentrate on what is most important to the parties, or to reflect concessions. We deal with them in this judgment in the following order: