Rakusen v Jepson & Ors, Safer Renting Intervenor (2021) EWCA Civ 1150
This is the Court of Appeal judgment on an appeal from the Upper Tribunal (Lands Chamber) appeal (our report here). It is of huge significance for Rent Repayment Order applications where the tenants’ immediate landlord is an intermediate landlord (like all rent to rent set ups) or where there are so many and various companies involved that it is hard to work out who the immediate landlord actually is.
Briefly, the Upper Tribunal had found that section 40 Housing and Planning Act 2016 meant that a rent repayment order application could be made against any landlord of the relevant property for the relevant period of the relevant offence. Section 40 provides:
(1) This Chapter confers power on the First-tier Tribunal to make a rent repayment order where a landlord has committed an offence to which this Chapter applies.
(2) A rent repayment order is 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 a relevant award of universal credit paid (to any person) in respect of rent under the tenancy.”
For the Upper Tribunal, the use of ‘a landlord’ in s.40(1) and ‘a tenant’ in s.40(2), rather than ‘the landlord’ and the tenant’ meant that an RRO application could be made against the superior landlord so long as the superior landlord could be found to have (also) committed the relevant offence. And that was what happened in Rakusen v Jepson – a failure to licence case, where the superior landlord was also found to be ‘in control’ because receiving a rack rent from the intermediate ‘rent to rent’ set up.
The superior landlord appealed to the Court of Appeal.
The Court of Appeal accepted that the policy background to the 2016 RRO regime might, in itself, extend to superior landlords as well as immediate landlords, but what fell to be decided in the appeal was the meaning of section 40(2).
I entirely accept that Chapter 4 of the 2016 Act is aimed at combatting a significant social evil and that the courts should interpret the statute with that in mind. I also accept that the policy of requiring landlords to comply with their obligations or leave the sector is one that that a legislator could well regard as applicable to superior landlords as well as immediate landlords. It nevertheless remains the case that Parliament has legislated to implement that policy only to the extent provided for by the language of section 40(2).
On the interpretation of s.40, the Court of Appeal preferred the appellant landlord’s argument.
‘Landlord’ was nowhere defined in Chapter 4 H&PA 2016. The reference to ‘a landlord’ in s.40(1) was because “the indefinite article is generally used where there is no antecedent reference to the landlord”. S.40(2) went on to refer the ‘the landlord’.
It was accepted by the Upper Tribunal that for a local authority, an RRO could only be made against the immediate landlord under s.40(2)(b) in respect of the universal credit paid in respect of rent under the tenancy. It would be illogical for s.40(2)(a) to be different in scope to s.40(2)(b).
The natural interpretation of s.40(2)(a) was
that “the landlord under a tenancy of housing” in the body of subsection (2) must refer to the landlord under the same tenancy as the tenancy held by the “tenant” referred to in paragraph (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 is immaterial, because the language used connotes a direct relationship of landlord and tenant.
If the drafter had intended the extension of RRO liability to superior landlords in s.40(2)(a) this would have been made more express.
It was the case that the offences set out in s.40(3) could be committed by a superior landlord, or in many cases, by someone who was not a landlord at all. However
section 40(2)(a) does not provide that an RRO can be made against any person who commits one of the specified offences. Nor does section 40(2)(a) provide that an RRO can be made against any landlord who has committed one of the offences: its wording is more specific.
The wording of section 1(3C) Protection from Eviction Act 1977, defining ‘landlord’ as ‘including any superior landlord’ did not assist the respondents, given the wording of s.40(3) H&PA 2016.
For transparency, I was instructed by Safer Renting, with Justin Bates and Charles Bishop as counsel, on the written intervention. A crumb of comfort is that the Court of Appeal accepted the the policy intent and the ‘on the ground’ situation with dodgy rent to rent/intermediate landlords may both merit the extension of RROs to superior landlords. But the Court of Appeal consider that is now a matter for parliament, given the reading of s.40 it makes in the judgment.
Practically, this will make a significant difference to those seeking RROs against less than salubrious landlords.
Firstly, there is the problem that many ‘rent to rent’ setups are companies or persons of straw. An RRO may be made against them, but never recovered as the company will just fold, to be replaced by another which is suspiciously similar. For tenants, this means that they are expected to take on the expense of the application and the difficulty of establishing to the criminal standard that a relevant offence has been committed by the landlord, while facing a very high degree of uncertainty that they will ever recover any sums ordered. This is not a way to encourage RROs as a wing of enforcement, driving bad landlords out of the sector.
Secondly, there is the ‘criminal’ problem, as set out by Safer Renting here, where multiple disposable ‘companies’ are involved precisely to obscure responsibility and liability. Being able to enforce against the property owner (often, in the dodgier end of the market, the actual beneficiary of the rent) was an effective way to short circuit the tangled web of intermediate companies.
But, barring any appeal to the Supreme Court, that is now a matter for the Government and Parliament to resolve. In express terms. We will see if it is taken up in the allegedly forthcoming Renters Reform Bill…