Global Guardians Management Ltd & Ors v London Borough of Hounslow & Ors (HOUSING – HOUSE IN MULTIPLE OCCUPATION – CIVIL PENALTY – Housing Act 2004 – whether First or Second Appellant a ‘lessee’ of the HMO – whether a person having control of or a person managing the HMO – meaning of ‘person managing’ and ‘person having control’) (2022) UKUT 259 (LC)
This was Global Guardians’ appeal of an FTT decisions that occupation by property guardians was capable of making a property a licensable HMO, and that Global Guardians (and Global 100) were in control and/or management of the property. This was in two matters – one being Global’s appeal of civil penalties imposed by LB Hounslow, and the other being rent payment orders made against Global 100 in favour of guardian occupiers.
On appeal Global argued again the the property was not an HMO because occupation by guardians meant that it was not solely ‘residential’ use for the purposes of s.254(2)(d) Housing Act 2004.
Global also argued that Global Guardians Management had not been granted a tenancy of the property.
Finally, Global argued that Global Guardians and Global 100 were not persons managing the property or having control of the property.
This did not go very well for Global, overall.
On ‘sole residential use’. that had been decided by the UT in Global Guardians v Jimenez (our note here) subsequent to the FTT decision in this matter. Nothing new was advanced by Global, so this ground failed, in view of the pending Court of Appeal hearing in Jimenez.
On whether Global Guardians had a tenancy of the property from the owner, NHS Property Services Limited, the UT found:
In my judgment, the FTT was clearly right for the reasons that it gave to reach a conclusion that GGM was a tenant of the Property, pursuant to the signed Proposal, and therefore a “lessee” within the terms of the 2004 Act. Although the Proposal is couched in terms of GGM providing services to NHSPSL, the reality is that those services were only provided by virtue of GGM having exclusive possession of the Property and being able to exploit it for its own gain, first by converting it to residential use and then by licensing up to 30 residential occupiers to occupy all the habitable space in the Property. The benefit – which NHSPSL sought – of protecting the Property from trespassers and vandalism was secured by means of the occupation of the Property by others. GGM was granted exclusive control of the Property for a term at a rent of £600 per month.
On the issues of management and control, here the FTT had erred in finding that both Global Guardians and Global 100 were in control and managing the property. The arrangement was that NHSPSL had entered into an agreement with Global Guardians (the tenancy, above) and Global Guardians had then entered a contract with its sister company Global 100 under which Global 100 was to identify guardian occupants, paying a monthly licence fee to Global 100.
Global Guardians and Global 100 had presented no evidence as to how the guardians’ licence fess were divided between them, although Global Guardians paid utility bills and £600 per month to NHSPSL, the owner. The FTT had decied that their interests were intertwined and therefore both were in recipt of the rack rent and so ‘in control’ of the property.
The UT found that while there was sufficient evidence (via an ‘opaque’ letter from Global’s lawyers to the council) to be confident that some of the rack rent reached Global Guardians from Global 100:
It is however not possible to go further, on the evidence available, and conclude that the whole of the income was passed to GGM, or that GGM was entitled to income as against Global 100.
On the basis that it could not be concluded that Global Guardians received a rack rent, Global Guardians were not a person in control. Global 100, who were certainly receiving a rack rent, were a person in control.
For being a person managing the property, the positions were reversed. While Global 100 could not be found to be Global Guardians’ agent, s.263(3)(b) Housing Act 2004 came into play. Would Global Guardians have received the rent/licence fees if it hadn’t entered into an agreement with Global 100.
S.263(3)(b) did not only address a situation where “an owner or lessee has diverted rent that it was already receiving to another person by entering into an agreement with that person.” It did include a situation where “the owner or lessee, who would otherwise have received income from occupiers of the premises, enters into an agreement to permit someone else to exploit the premises in their own right”. To conclude otherwise would be to find that the effect “is that neither the owner nor the other person receiving the rent is a “person managing” the premises, even though the lessee who owns a sufficient interest to manage and exploit them permits another person (which may be a company in the same group or a family member) to manage and exploit the full value of the premise.”
As a result, Global Guardians were indeed managing the property, though under s.263(3)(b) rather than the FTT’s reasons.
But Global 100 weren’t, as neither owner nor lessee of the property.
As a result, both Global Guardians and Global 100 remained liable for the council’s penalty notices, if not on wholly the same grounds as the FTT had hel, and the appeal was dismissed.
Likewise, Global 100’s appeal against the rent repayment orders was dismissed. They were a person in control of an unlicensed HMO.