[2025] UKUT 122 (LC)

The quantum of the rent repayment orders was a major issue between the parties.

Section 44(4) of the Housing and Planning Act 2016 says this:

“(4)

In determining the amount [of a rent repayment order] the tribunal must, in particular, take into account—

(a)

the conduct of the landlord and the tenant,

(b)

the financial circumstances of the landlord, and

(c)

whether the landlord has at any time been convicted of an offence to which this Chapter applies.

The FTT in its 2023 decision looked at the conduct of the parties and the financial circumstances of the landlord (as Mr Campbell had no criminal convictions). In terms of conduct, the FTT focussed on the condition and management of the property; its observations are summarised at paragraph 13 above. The question in the appeal is whether the FTT put right, on review, what it agreed had gone wrong at the first hearing. It is important to be clear that the FTT acknowledged, in its decision to review (paragraph 16 above) that the first hearing was unfair because Mr Campbell did not have time to make his submissions.

At the hearing of the appeal Ms Alvarez sought to argue that that was not the case. She was not present at the first hearing but her instructions from Mr Barrett were that none of the tenants gave oral evidence in chief so that there was time for Mr Campbell to cross-examine them all, and that Mr Campbell himself gave evidence and was cross-examined. That was in marked contrast to Mr Campbell’s account of the proceedings; according to him, all four tenants gave evidence in chief, that there was only time for him to question two of them, he did not get to open his case until 4:50pm, ten or 15 minutes before the end of the day, and he was not cross-examined on his own evidence.

It is too late for the tenants to challenge Mr Campbell’s account of what happened at the original hearing. They chose not to respond to his original grounds of appeal despite the FTT’s directions (paragraph 16 above); they did not challenge his account of the 2023 hearing in their response, filed in the Upper Tribunal, to his grounds of appeal against the 2023 decision nor in counsel’s skeleton argument. When asked why the point had not been raised before Ms Alvarez suggested that it was clear from the 2023 and 2024 decisions that Mr Campbell had cross-examined all four witnesses and had himself been cross-examined. None of the paragraphs to which Ms Alvarez took me goes anywhere near to suggesting that.

Ms Alvarez also challenged Mr Campbell’s assertion that he had not been able to cross-examine all the tenants, on the basis that the FTT in its decision to review mentioned the lack of time for him to make is submissions but did not say that there had been any problem about cross-examination. However, if Mr Campbell had cross-examined all four tenants, contrary to what he said in his grounds, it is hard to understand why the FTT would not have said so in its response to his grounds of appeal. In the 2024 reviewed decision the FTT reiterated without comment Mr Campbell’s assertion that he had not been able to cross-examine all the tenants.

Accordingly I accept Mr Campbell’s account of what happened at the 2023 hearing; crucially it is clear that the FTT did so too.

In circumstances where the FTT accepted that the original hearing had been unfair it is difficult to see how a review of the 2023 decision by way of a further hearing for submissions only could possibly have put things right. The thinking appears to have been that the hearing was incomplete, because Mr Campbell was rushed at the end of the day; in effect he was being given at the review hearing the opportunity to say what he wanted to say when he opened his case at 4:50 p.m. in the first hearing (the parties to the appeal do agree that that hearing ended soon after 5 p.m.). But that gives rise to two problems. One is that if Mr Campbell was not able to cross-examine all the tenants at the hearing in March 2023 a review hearing in the absence of the tenants could not remedy that, in circumstances where there were issues of fact between the parties about the condition of the property. The other is that by 1 June 2023 the FTT had already made its decision. Unless the outcome of the reviewed decision was completely different from the 2023 decision it was bound to be open to the criticism that the FTT’s mind was already made up and that therefore that Mr Campbell did not get and could not have a fair hearing in May 2024, contrary to the rules of natural justice.

For all those reasons the review hearing should not have been conducted; not only was it a review outside the scope of the statute, because the FTT did not state the “matter” that was under review, but also it was not going to be possible for the review to remedy the unfairness of the original hearing. The FTT should have set aside its 2023 decision and conducted a fresh hearing, in accordance with section 9(5) of the 2007 Act.

Nevertheless, at the hearing of the appeal Ms Alvarez argued that the 2024 reviewed decision was fair because the FTT considered Mr Campbell’s further submissions at length, and because the FTT changed its decision, moving from repayment of 70% of the rent to 60%. That argument cannot succeed, for the following reasons.

The first is that the 2024 reviewed decision repeated the 2023 decision’s expressions of concern with which Mr Campbell disagreed, as well as some limited findings of fact for example about the presence of damp. That could not be fair where the appellant had had no opportunity to cross-examine the witnesses. That alone means the decision has to be set aside.

The other reason is that it is clear from the 2024 reviewed decision that there had been no real re-think and that the FTT’s mind was already made up. I say that for a number of reasons.

First, the 2024 reviewed decision repeated almost verbatim the text of the 2023 decision, with the addition of paragraphs setting out Mr Campbell’s submissions and further paragraphs addressing some (but not all) of them). The thinking in the 2023 decision remains in place, with additions but without change.

Second, despite the fact that the FTT had now heard Mr Campbell’s submissions it still expressed “concerns” rather than making findings of fact. For example, the FTT recorded Mr Campbell’s submissions that the tenants had chosen to find their own replacements when they left, and had been paid a fee for finding the replacement, and his explanation of the procedures for testing smoke alarms and that the this was not the tenants’ responsibility. But it made no findings as to whether what Mr Campbell said was true; it simply repeated verbatim paragraph 111 of the 2023 decision (see paragraph 13 above) with its expressions of concern. That was in any event not a proper basis on which the FTT could make a decision about the quantum of rent repayment; but it also reinforces the impression that at the review hearing, again, Mr Campbell had not had a fair hearing.

Third, the FTT failed to take on board the implications of the fact that by the time of the review hearing an HMO licence had been issued for the property. The licence set out the size of the rooms and yet was issued without conditions, and it is impossible to understand why the FTT stated in paragraph 162 of the 2024 reviewed decision that the “cramped nature of the accommodation” was relevant to the landlord’s conduct and therefore to the amount of the rent repayment order. Furthermore, the FTT repeated its expressions of concern about fire precautions, adding a number of paragraphs to its discussion of the fire alarm including some observations based on the panel’s own on-line research (paragraphs 150 to 156). At paragraph 157 it repeated verbatim the entirety of the text of paragraph 119 of its 2023 decision, including the reference to the “potential existence” of category 1 hazards, and then went on to say that it took into account the fact that a licence had been granted without conditions. But it is impossible to see in what way it did so. It is difficult to avoid the conclusion that the FTT was endeavouring to bolster its imprecisely expressed concern about the alarm system, about which neither the tenants in their witness statements nor the local housing authority in the HMO licence had complained.

Where a property is unlicensed and the FTT makes findings of fact (rather than merely expressing concern) that there are hazards, or failures to meet regulatory requirements, which indicate that it could not be licensed, that might be relevant to its consideration of the landlord’s conduct; but where a licence has been issued despite the matters that are worrying the FTT then those matters should not influence the amount of the rent repayment order. It is for the local housing authority to enforce housing standards, and for the FTT to hear appeals where they are brought against enforcement action; it is not for the FTT to police those standards on its own initiative.

Finally, there is no reasoning to explain why the amount ordered to be repaid was 60% in the 2024 reviewed decision instead of the 70% ordered in the 2023 decision. Perhaps the reduction was made because of the grant of the HMO licence? The FTT did not say, and the impression is given that this was a token reduction.

The FTT’s comments about Mr Campbell’s financial circumstances were set out in the 2023 decision in a paragraph following its determination of the amount of the rent repayment order, and included a comment to the effect that the FTT was “not convinced” that his tax return was accurate. In the 2024 reviewed decision most of that paragraph was repeated, but not the comment about the tax return; and a sentence was added reiterating the FTT’s conclusion that Mr Campbell’s financial circumstances did not justify a reduction in the amount of the award. It is impossible to understand from that revised paragraph whether and how Mr Campbell’s further submissions about his financial circumstances had affected the FTT’s reasoning.

For all those reasons Ms Alvarez’s argument that the FTT properly reconsidered its decision on quantum, and cured the unfairness in the 2023 decision, cannot succeed. The FTT’s decision on the quantum of the order has to be set aside.