Cabo v Dezotti (2024) EWCA Civ 1358

We’ve seen this rent repayment order case in both the FTT (here) and the Upper Tribunal (here). It appears that Ms Cabo was not prepared to accept that she had to pay a rent repayment order and this is her appeal to the Court of Appeal.

In short Ms Cabo (a self proclaimed handbag designer to bankers) owned a property in West Kensington. It was let, long term, to 5 to 6 tenants via a management company, Top Holdings Ltd, which was owned by Ms Cabo’s ‘estranged’ husband, Mr Grasso, but the rent was paid to Ms Cabo’s brother (supposedly as an agent for Top Holdings, though not employed by TH), and a deposit was repaid by her ‘mentee’ in ‘Luxe Designers’, Ms Van Orden.

In the FTT proceedings, notable for MS Cabo’s evidence that

she did not want to know about property law, however we do not consider that this constitutes a reasonable excuse,

the FTT had found that these were tenancies, the property should have been licensed, and that Ms Cabo was both a person managing and a person in control of the HMO. The FTT decided she received rent because her account that she had granted her ‘estranged’ husband’s company (Top Holdings Ltd) the right to manage the property and take ALL the £5000 per month income from it, while she paid the £2000 mortgage and council tax. This evidence was given by video, while sitting next to her ‘estranged’ husband at home in lockdown. The FTT found it frankly implausible that she did not receive any rental income. But in any event, as Top Holdings did not itself have a tenancy of the property (and, the FTT wrongly found, could not therefore itself grant tenancies), and was managing for Ms Cabo, she was a person managing as she would have been entitled to receive the rent if not for the arrangement with her husband’s company.

The UT had corrected the FTT on whether Top Holdings could grant tenancies (an interest in land is not required to grant a tenancy) . It had also corrected the FTT on whether Ms Cabo was a person in control. That did require receipt of rack rent and the FTT had made no findings about how much Ms Cabo had actually received, so could not conclude she was a person in control.

However, Ms Cabo asserted she did not receive any rents. The management agreement entered into with her ‘estranged’ husband’s company was that the company would receive the rents. The company, as the husband insisted, did not itself have a lease or tenancy of the property. This was stated in the management agreement.

The company, Top Holdings Ltd, received the rent by virtue of the management agreement, and this was Ms Cabo’s case and her husband’s evidence.

Therefore s.263(3)(b) Housing Act 2004 applied, she would have received the rent but for that arrangement, and Ms Cabo was a person managing the Property, and an RRO could be made against her as the landlord.

On second appeal, Ms Cabo argued the Upper Tribunal was not justified in finding Ms Cabo to be an undisclosed principal, and so wrong to find she was the immediate landlord for the purposes of an RRO. She relied on clause 7 of her management agreement with Top Holdings (her husband Mr Grasso’s company) which provided that the property could only be let for ‘holiday let’ licenses.

The Court of Appeal, with regard to clause 7 and actual authority, noted that Ms Cabo had not raised a defence of reasonable excuse based on clause 7 and thereby blamed her husband for breach of the agreement.

(Granted this might have been difficult as, despite Ms Cabo’s assertion that they were estranged for many years, they gave video evidence to the FTT sitting beside each other and, as the Court of Appeal notes, there was social media evidence suggesting they were not that estranged

the FTT had evidence of social media posts by Ms Cabo announcing that the couple had recently celebrated their 22^nd wedding anniversary “in style at home”.  The couple’s pre-covid anniversary seems to have been even more delightful: “21 years ago today I walked down the aisle & there he was waiting for me (heart) (heart) & here we are today still blah blah ing around. #truelove #marriage #partnership”.  Mr Grasso’s recent birthday celebration were marked by more public declarations of affection: “My Francesco another day another birthday (heart)(kiss)(kiss) #love #husband #lovedoeslast”. 

The FTT had found that neither the management agreement nor the ‘occupation licence’ for the tenants was a ‘fully reliable guide’ to what was intended. The licence was a sham and the management agreement was not credible.

The UT was therefore justified in finding that Top Holdings had Ms Cabo’s authority to enter the occupation agreements.

The management agreement set out Top Holding’s intention to act on Ms Cabo’s behalf, so that was clear.

The Occupation Licence did not set out to exclude Ms Cabo from a right to sue and from a liability for being sued. That she was not mentioned, and that Top Holdings were described as the licensor, did not by itself evidence an intention to exclude Ms Cabo.

The Upper Tribunal was justified in its findings that Ms Cabo was the landlord as person managing the unlicensed HMO.

Comments

A couple of notes

The first is that the late Simon Mullings was acting for the tenant, Ms Dezotti in this appeal, and doing so pro bono with Justin Bates KC and George Penny. It is a great sadness that he did not get to see the hearing, or the judgment.

The second is that this is not the only appeal related to the unlicensed HMO that Ms Cabo (and Mr Grasso and Top Holdings Limited) have lost recently. They also appealed a conviction for running an unlicensed HMO. This did not go well, with the Crown Court upholding the convictions.

Ms Cabo was fined £7,000 and £14,500 in costs.Mr Grasso was fined £35,000 and £25,000 in costs. Top Holdings Ltd, of which he was the director, was also fined £35,000 and £25,000 in costs.