[2023] UKUT 283 (LC)

The FTT made a rent repayment order requiring the appellant, Mrs Irvine, to pay sums totalling £45,043.88 to the respondents. They had been tenants of a property owned by Mrs Irvine at 20 Hailsham Road in Tooting, a five bedroom semi-detached house on three floors. Each respondent occupied one room in the house at different times between March 2016 and August 2019. In February 2016 Mrs Irvine had let the whole house to a company called Uptown Properties Ltd (“Uptown”). The letting agreement included a term that Uptown must not allow the house to become licensable as a house in multiple occupation (“HMO”). Notwithstanding that stipulation Uptown let each of the five bedrooms in the property and it has never been disputed in these proceedings that, for at least part of the period under consideration, the house was an HMO for which a licence was required under Part 2, Housing Act 2004 (“the 2004 Act”).

It is a criminal offence to be in control of an HMO which requires to be licensed but which is not so licensed (section 72(1), 2004 Act). It is a defence that the person in question had a reasonable excuse for having control of or managing the house without the required licence (section 72(5), 2004 Act). A person in receipt of a rack rent for a house has control of it for this purpose (section 263(1), 2004 Act). More than one person can have control of a house at the same time(London Corporation v Cusack-Smith [1955] AC 337, 357-358).

Where a landlord commits a relevant housing offence, including the offence of being in control of an unlicensed HMO, Chapter 4 of Part 2, Housing and Planning Act 2016 (“the 2016 Act”) allows the FTT to make a rent repayment order requiring the landlord to repay rent paid by occupiers of the HMO for up to 12 months while the offence was being committed.

In Goldsbrough v CA Property Management Limited and Gardner [2019] UKUT 311 (LC) this Tribunal determined that a rent repayment order could be made against any landlord who had committed a relevant housing offence to which section 40, 2016 Act applied. On that basis, a head landlord in receipt of a rack rent from an intermediate landlord, and who was therefore a person having control of an HMO, could be the subject of a rent repayment order in favour of subtenants with whom they had no direct relationship, if they were found to have committed the offence under section 72(1). That understanding of the law was later found to be wrong. It was subsequently determined by the Court of Appeal, whose decision was confirmed by the Supreme Court, that a rent repayment order may only be made against the immediate landlord of the tenant making the claim: Rakusen v Jepsen [2023] UKSC 9 (“Rakusen”).

The decision of the FTT in this case was made after the Tribunal’s decision in Goldsbrough, and before its decision in Rakusen which followed Goldsborough. The first decision of this Tribunal in this case was made after its decision in Rakusen. The Tribunal had granted the unsuccessful landlord in that case permission to appeal to the Court of Appeal and the parties in this appeal were asked if they wanted to await the outcome of that appeal. Neither of them responded to that suggestion. Nor were any further representations made on Mrs Irvine’s behalf. It was hardly surprising, therefore, that the Tribunal was not persuaded to take a different view from the position it had already taken in Goldsbrough and in Rakusen. The Tribunal followed its earlier decisions and concluded that the FTT had been entitled to make a rent repayment order in favour of the tenants notwithstanding that Mrs Irvine, against whom the order was made, had not been their immediate landlord for the whole of the period during which the rent was paid (paragraph 17, March 2021 decision).

Mrs Irvine did not apply within the usual time limit for permission to appeal to the Court of Appeal against the Tribunal’s March 2021 decision. In normal circumstances that would have been the end of the proceedings. But this case has not followed a normal course.

Mrs Irvine’s appeal against the FTT’s decision had been brought with permission granted by this Tribunal. She had applied for permission to appeal on a number of different grounds but the only one for which permission was granted was her argument that Goldsbrough had been wrongly decided. Permission was refused on all other grounds.

In parallel with the appeal proceeding in the Tribunal, but unknown to the Tribunal at the time because the relevant proceedings were never served on it, in September 2020 Mrs Irvine had applied to the Administrative Court for permission to seek a judicial review of the Tribunal’s refusal to grant her permission to appeal on the other grounds which she wished to raise. The application was made under the High Court’s Cart jurisdiction (R (Cart)) v The Upper Tribunal [2011] UKSC 28) which allows a judicial review of a refusal by the Upper Tribunal to grant permission to appeal.

On 12 May 2021 Mostyn J, sitting in the Administrative Court, granted permission to Mrs Irvine to apply for judicial review of the Tribunal’s refusal of permission to appeal on her additional grounds. The Tribunal had been unaware of those proceedings and, by this time, had already dismissed the appeal in the March 2021 decision. Nevertheless, having reconsidered the original grounds of appeal in the light of Mostyn J’s observations when granting permission for the judicial review to proceed, the Tribunal did not request a hearing of the substantive application. The High Court therefore proceeded to quash the Tribunal’s original refusal of permission to appeal on 26 May 2021.

Thereafter, on 28 July 2021, on the basis that the High Court had determined that the additional grounds of appeal were arguable, the Tribunal granted permission to appeal on all of the grounds for which permission had originally been refused and which had not already been considered and dismissed in the March 2021 decision. Those additional grounds did not include any challenge to the decision in Goldsborough because that challenge had already been considered and dismissed.

The following day, 29 July 2021, the Court of Appeal allowed the appeal in Rakusen, ruling that a rent repayment order may only be made against the immediate landlord of the tenant making the application, and cannot be made against a superior landlord.

On 14 September 2021 Mrs Irvine’s solicitors applied for permission to rely on the Court of Appeal’s decision in Rakusen. The Tribunal initially postponed consideration of that request until after the expiry of time for an application for permission to appeal to the Supreme Court in Rakusen. When permission to appeal was granted, the appeal was stayed to await the outcome and nothing further occurred until the Supreme Court published its decision in Rakusen on 1 March 2023 confirming the Court of Appeal’s decision.

On 4 May 2023 the Tribunal granted Mrs Irvine permission to rely on the Supreme Court’s decision in Rakusen as an additional ground of appeal against the FTT’s decision.

It was only possible for the Tribunal to make that order by first reviewing and setting aside the March 2021 decision under the power in section 10, Tribunals, Courts and Enforcement Act 2007. On a review the Tribunal may set aside its own decision (section 10(4)(c), 2007 Act). By rule 55 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 the power of review may only be exercised when the Tribunal receives an application for permission to appeal, and only if it is satisfied that a ground of appeal is likely to be successful. The Tribunal treated the application of 14 September 2021 as a late application for permission to appeal the March 2021 decision and, rather than granting permission to appeal to the Court of Appeal, it permitted Mrs Irvine to file consolidated grounds of appeal against the FTT’s decision including, once again, her reliance on her status as a superior landlord. In doing so it set aside the March 2021 decision (this could have been more clearly expressed in the Tribunal’s order, but it is implicit in the decision not to grant permission to appeal to the Court of Appeal but to allow the same argument to be raised for a second time at this level).

After that lengthy procedural introduction it is now possible to turn to the substance of the appeal. At the hearing Mrs Irvine was represented by John Yianni and the tenants were represented by George Penny (neither of whom had appeared at the FTT). I am grateful to them both for their helpful submissions.