First-tier Tribunal Denies Rent Repayment Order Due to Insufficient Evidence

OUTCOME: Dismissed

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FIRST-TIER TRIBUNAL [NAME] CHAMBER ([NAME]) Case reference : LON/00BG/HMF/2024/0092 [NAME] : 62 [ADDRESS] [POSTCODE]. Applicants : [redacted] Ms [COUNSEL] [NAME] Ms [COUNSEL] : [COUNSEL] [NAME] of Environmental Health and Trading Standards, London Borough of Tower Hamlets

Respondent : [redacted] [RESPONDENT].

Representative : No appearance Type of application : Application for a rent repayment order by tenants Tribunal : Judge Adrian Jack, Tribunal Member [NAME] of decision : 15th November 2024.

DECISION

Procedural and the hearing on 4th November 2024 1. We heard this matter on 4th November 2024. The [NAME] tenants appeared represented by [NAME] [NAME] [NAME] of the London Borough of Tower Hamlets. Neither the [NAME] nor [COMPANY] (“[NAME]”) appeared, although on 1st November 2024 [NAME] [NAME] had had contact with [NAME] [NAME] (known to the tenants as “[NAME]), the sole director of [NAME].

2 2. The address given for [NAME] and Mrs [NAME] in the application to the Tribunal was [ADDRESS], the subject [NAME]. [NAME] [NAME] told us that he had on the morning of 4th November 2024 identified another address for them, 282A [ADDRESS] [POSTCODE], but had not made contact with them there. By letter of 11th November 2024, the [NAME] by their solicitor, [COUNSEL] LLP, wrote to the Tribunal. They said that the [NAME] had only recently been made aware of the current proceedings and asked for the opportunity to make representations. In the light of our determination below, however, there is no need for them to make representations and we determine this matter without further delay.

3. The Tribunal heard the matter on 4th November. The tenants confirmed their witness statements. They produced a copy of an agreement dated 16th August 2022 creating an assured shorthold tenancy at a rent of £2,000 per month for a term of one year. The [NAME] applicants were listed as tenants. The expression “Managing Agent” is not defined, but on the face of the document can only mean [NAME]. Clause 3.1 provides: “The Managing Agent lets the [NAME] to the Tenant(s) for the Term.” By clause 6.7(A) the tenants undertook “not to carry on or permit to be carried on at the [NAME] any trade or business or its use otherwise than as a single private dwelling for the Tenant(s).” 4. The tenants produced a bank statement showing payment of rent of £2,000 on 15th September 2022, which had been omitted from the bundle. Ms [NAME] explained that only £1,900 had been paid on 15th November 2022, because [NAME] [NAME] had allowed them to spend £100 on some works.

5. At the conclusion of the case, we indicated that there were a number of legal issues which arose and which were potentially fatal to the applicants’ case. These concerns we put into writing that day and had them sent to the parties (which is presumably how the [NAME] came to know of the proceedings). In accordance with our discussions with [NAME] [NAME] at the hearing, we gave the applicants a week within which to make written representations. This, he did, and we set out the relevant parts of his representations below. The [NAME]’ response we have set out above; from [NAME] we have heard nothing. The need for there to be a case to answer 6. This is a quasi-criminal matter, where the applicants need to prove in relation to each respondent that that respondent is guilty of a relevant offence, in this case section 72(1) of the Housing Act 2004. Proof is to the criminal standard, namely so that we are sure of the relevant respondent’s guilt or so that guilt is proved beyond reasonable doubt.

7. Because this is a quasi-criminal matter, the usual rule is that a respondent has the right to silence and is not obliged to give evidence or incriminate him or herself. [NAME] [NAME] in his written submissions accepted that the

3 right to silence was a fundamental constitutional right (on the right not to incriminate oneself he was silent), but he pointed out that section 235(1) of Housing Act 2004 states that a “person authorised in writing by a local housing authority may exercise the power conferred by subsection (2) in relation to documents reasonably required by the authority— (a) for any purpose connected with the exercise of any of the authority’s functions under any of Parts 1 to 4 in relation to any premises, or (b) for the purpose of investigating whether any offence has been committed under any of those Parts in relation to any premises. (2) A person so authorised may give a notice to a relevant person requiring him— (a) to produce any documents which— (i) are specified or described in the notice, or fall within a category of document which is specified or described in the notice, and (ii) are in his custody or under his control, and (b) to produce them at a time and place so specified and to a person so specified. (3) The notice must include information about the possible consequences of not complying with the notice. (4) The person to whom any document is produced in accordance with the notice may copy the document. (5) No person may be required under this section to produce any document which he would be entitled to refuse to provide in proceedings in the High Court on grounds of legal [NAME] privilege. (6) In this section ‘document’ includes information recorded otherwise than in legible form, and in relation to information so recorded, any reference to the production of a document is a reference to the production of a copy of the information in legible form. (7) In this section ‘relevant person’ means, in relation to any premises, a person within any of the following paragraphs— (a) a person who is, or is proposed to be, the holder of a licence under Part 2 or 3 in respect of the premises, or a person on whom any obligation or restriction under such a licence is, or is proposed to be, imposed, (b) a person who has an estate or interest in the premises, (c) a person who is, or is proposing to be, managing, or having control of the premises, (d) a person who is, or is proposing to be, otherwise involved in the management of the premises, (e) a person who occupies the premises.”

4 8. So far as section 235(1) is concerned, we express no view as to whether, where a local authority seeks information in connection with licensing, this provision impliedly overrules the right against self-incrimination. In the current case, however, the London Borough of Tower Hamlets has never served a notice under section 235(1) against any of the respondents. Thus there is in our judgment no basis on which any inference could be drawn against the respondents or any of them from a failure to respond to a section 235(1) notice. 9. [NAME] [NAME] written representations further submitted: “A court can draw an adverse inference from a defendant’s silence in circumstances as set out in sections 34 to 37 of the Criminal Justice and Public Order Act 1994… The respondent himself was not at the hearing to invoke the right to silence.” 10. As to the modification of the right to silence in the 1994 Act, section 35 (so far as material) provides: “(2) Where this subsection applies, the court shall, at the conclusion of the evidence for the [NAME], satisfy itself (in the case of proceedings on indictment with a [NAME], in the presence of the [NAME]) that [NAME] is aware that the stage has been reached at which evidence can be given for the defence and that he can, if he wishes, give evidence and that, if he chooses not to give evidence, or having been sworn, without good cause refuses to answer any question, it will be permissible for the court or [NAME] to draw such inferences as appear proper from his failure to give evidence or his refusal, without good cause, to answer any question. (3) Where this subsection applies, the court or [NAME], in determining whether [NAME] is guilty of the offence charged, may draw such inferences as appear proper from the failure of [NAME] to give evidence or his refusal, without good cause, to answer any question. (4) This section does not render [NAME] compellable to give evidence on his own behalf, and he shall accordingly not be guilty of contempt of court by reason of a failure to do so. (5) For the purposes of this section a person who, having been sworn, refuses to answer any question shall be taken to do so without good cause unless— (a) he is entitled to refuse to answer the question by virtue of any enactment, whenever passed or made, or on the ground of privilege; or (b) the court in the exercise of its general discretion excuses him from answering it.” 11. On its face, these provisions only apply to trials on indictment or in the Magistrates’ Court, however, the High Court in [COMPANY] v

5 Nazarov [2015] EWHC 3327 (QB), [2016] 4 WLR 1 at [31] (per Carr J, as she then was) (approved by the Court of Appeal in [NAME] v [NAME] SA [2024] EWCA Civ 33 at [91]) held that in quasi-criminal proceedings like an application to commit for contempt “[t]he burden of proof remains on the Claimant throughout, to the criminal standard, and the Claimant can invite the Court to conclude, on the basis of all the evidence in the case, that the Defendants [are in breach]. If the [NAME] chooses to remain silent in the face of that dispute, the Court can draw an adverse inference against him, if the Court considers that to be appropriate and fair, and recalling that silence alone cannot prove guilt.” Accordingly, we proceed on the basis that we must apply the provisions of the 1994 Act.

12. In a criminal case, the standard direction to the [NAME] would be this (substituting respondent for defendant): “In this country we have the right to silence. A respondent has an absolute right not to give evidence. The burden of proving the case rests throughout upon the [NAME]. The fact that a [NAME] did not give evidence is not evidence in support of the [NAME] case. However, the fact that a respondent did not give evidence means that there is no evidence from him or her to rebut, contradict or explain the evidence adduced by the [NAME]. You will remember the warning which I gave the respondents when [NAME] indicated that the respondents did not intend to give evidence. [NAME] confirmed that he had advised the respondents of the possible consequences of their not giving evidence. What approach should you take? Firstly, you must ask whether the [NAME] case is sufficiently strong to call for an answer. If you think that the [NAME] have not established a case for any [NAME] to answer, or if you are unsure that such a case has been established, then you should stop right there and bring in a verdict of Not Guilty. Secondly, assuming you are sure that the [NAME] have presented a sufficient case for a [NAME] to answer, you should ask yourself whether there is any sensible reason for that respondent not to have given evidence. If you think the reason he or she did not give evidence is that he or she has no answer to the [NAME] case or none that would stand up to cross-examination you are entitled to consider his or her failure to give evidence as lending some support to the [NAME] case.

6 Thirdly, I must warn you that an inference drawn from the fact that a [NAME] did not give evidence cannot of itself prove his or her guilt.” 13. In a quasi-criminal case such as the present, the Tribunal at the conclusion of the applicants’ case has to satisfy itself that there is a case for a respondent to answer. If there is not, then the Tribunal must dismiss the application for a rent repayment order. [NAME] [NAME] in his written submissions did not dissent from this. If there is no case for a respondent to answer, no question of drawing adverse inferences under the 1994 Act can arise.

14. We therefore proceed to consider whether the applicants have proved that there is a case for each respondent to answer. The landlord’s identity 15. The first issue is the landlord’s identity. Section 40 of the Housing and Planning Act 2016 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. (3) A reference to ‘an offence to which this Chapter applies’ is to an offence, of a description specified in the table, that is committed by a landlord in relation to housing in England let by that landlord.” A breach of section 72(1) of the 2004 Act is listed in the table.

16. In the current case, the tenancy agreement purports to name [NAME] as the landlord, although throughout the agreement the company is referred to as “the Managing Agent”.

17. If the landlord is [NAME], then no rent repayment order can be made against the [NAME]: Rakusen v Jepsen [2023] UKSC 9, [2023] 1 WLR 1028. This would appear to be the case even if there is only a tenancy by estoppel between [NAME] and the applicants. Likewise, if the true landlords were the [NAME], then no rent repayment order would lie against [NAME].

18. The applicants’ primary case as explained to us by [NAME] at the hearing before us was that [NAME] was just an agent for the [NAME], so that the [NAME] were liable to the applicants. In his written submissions [NAME]

7 [NAME] changed his position. The applicants’ primary case is now that [NAME] is the relevant respondent.

19. If there is uncertainty as to whether the landlord is [NAME] or the [NAME], then the Tribunal would be unable to be sure that any of them were the landlord. (In a criminal case, if one of two men had to be the murderer but the [NAME] could not establish which, then both men would have to be acquitted on a submission of no case to answer.)

20. Since we sent out our statement of issues on 4th November 2024, the Court of Appeal has handed down its judgment in [NAME] v Dezotti [2024] EWCA Civ 1358 (published 6th November 2024). This has some similarities to the current case. There the owner of the [NAME], a Ms [NAME], had signed a management agreement with [COMPANY], allowing [COMPANY] to grant holiday lets. [COMPANY] in turn had made an agreement in its own name with Ms [NAME] headed “Licence to occupy a room as holiday let”. Ms [NAME] signed as “Licensee” and [NAME] [NAME] (Ms [NAME] husband) signed on behalf of [COMPANY], “the Licensor”. In due course Ms [NAME] applied for a rent repayment order against Ms [RESPONDENT], who disputed that she was the relevant landlord. 21. [ADDRESS] of Appeal upheld the decisions of this Tribunal and the Upper Tribunal that she was in truth the landlord, acting through [RESPONDENT] as her agent. (Although expressed as a licence, the agreement notionally between [COMPANY] and Ms [NAME] was in truth a tenancy: Street v Mountford [1985] AC 809.) The significance of the case for current purposes is that in order to make its findings of fact that [COMPANY] was an agent (despite appearing as principal in the licence agreement), the Tribunals and the Court of Appeal had to make detailed findings as to the true relationship between Ms [NAME] and [COMPANY] and the true nature of the “management agreement”. Had the management agreement been a genuine agreement allowing [COMPANY] to let the [NAME] in its own name, then [RESPONDENT] would have been the appropriate respondent to the rent repayment order, but on the facts it was in effect a sham. The true landlord was [NAME]. In the current case, we have no evidence of the true relationship between the [NAME] on the one hand and [NAME] on the other. It is quite possible that the relationship in truth was one of principal and agent. (The fact that [NAME] was described in the assured shorthold agreement as “the managing agent” — our emphasis — may be an indication to that effect.) However, it is within the Tribunal’s knowledge that a not- uncommon arrangement, at least in London, is for a [NAME] to grant a lease (sometimes formal, sometimes less formal) to an [NAME] at a fixed rent. The [NAME] then lets the [NAME] at the best price he or she can and pockets the difference between the rent from the tenants and that payable to the [NAME].

8 23. In our judgment there is real uncertainty as to whether the true landlord was the [NAME] or [NAME]. The fact that [NAME] [RESPONDENT] vacillated between the relevant landlord first being the [NAME] and latterly being [NAME] shows his difficulty. Because there is real uncertainty, the applicants in our judgment have failed to establish a case to answer against either the [NAME] or [NAME]. Because there is no case to answer, no question of drawing inferences against any of them arises. The applicants’ case therefore fails on this ground. Separate households 24. Ms [NAME] email of 21st September 2023 at page 55 of the bundle says that the [NAME] tenants lived as separate households, but gives no further details. The witness statements of each of the applicants does not even state this perfunctorily. 25. [NAME] [NAME] submitted: “2. The Tribunal states in [para 19 of the Issues] that ‘on its face what is described is consistent with [NAME] deciding on a [NAME] share.’ Even if [NAME] decided to [NAME] share and entered a joint tenancy, if they form [NAME] separate households within the meaning of the Act, then the [NAME] is licensable. This is made entirely clear by sections 254 and 258 of Housing Act 2004. As far as I am aware, [NAME]-sharing is not excluded by the Act or by any regulations made under the Act. I stated in section 1 of my Full Details of the Alleged Offence that the Applicants were not related.

3. The Applicants, Ms [NAME], Ms [NAME], and Ms [NAME] are unrelated, and they met whilst studying at the same University. They did not occupy the premises at the same time. Ms [NAME] joined the two later. They paid a joint monthly of £2,000 to [APPELLANT]. Each tenant occupied a room, but they shared a kitchen and bathroom.

4. At the time Ms [NAME] reported to the Council after undertaking her own research the premises did not have a housing licence. The arrangement described above implied that the premises would require an Additional Licence. The Council advised her that this was in breach of s.72 of the Housing Act 2004.” 26. Having regard to section 258 of the 2004 Act and regulations 3 and 4 of the Licensing and of Management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions) (England) Regulations 2006, it seems to us that [NAME] [NAME] does raise a sufficient case to answer on this.

27. We note, however, the terms of clause 6.7(A) of the lease (the covenant to use the [NAME] as a single private dwelling) may raise the defence of reasonable excuse under section 72(5) of the 2004 Act. In the current case the respondents have not appeared. They have therefore not raised any

9 defence of reasonable excuse. Given that the burden of proof is on them, this means we do not have to consider this potential ground of defence. Additional licensing requirements: the map 28. The applicants say that with effect from 1st April 2019 the London Borough of Tower Hamlets introduced an additional licensing scheme. The copy of the scheme in the bundle states that the Designation applies “to the entire district of the London Borough of Tower Hamlets as delineated and shaded on the map below, excluding the pre 2014 wards of Weavers, Whitechapel, Spitalfields and Banglatown.” 29. The map itself is of exceptionally poor quality. No scale is stated on it, but it appears to be about two inches to the mile. Roads are very faintly marked but none are named. The applicants have adduced no evidence of where [ADDRESS] is on the map.

30. The reference to “pre 2014 wards” appears to be a reference to the wards established by The London Borough of Tower Hamlets (Electoral Changes) Order 2000 (SI 2000 No 787). The 2000 Order remained in force until replaced by The Tower Hamlets (Electoral Changes) Order 2013 (SI 2013 No 1786), which increased the number of wards to twenty with effect from the 2014 local government elections. The Schedule to the 2000 Order names as separate wards Weavers, Whitechapel and (as one ward) Spitalfields and Banglatown. However, the only means of identifying the areas comprising the wards is by reference to a map, which is defined in Article 1(3) as “the map prepared by the Department of the Environment, Transport and the Regions marked ‘Map of the London Borough of Tower Hamlets (Electoral Changes) Order 2000’, and deposited in accordance with regulation 27 of the Local Government Changes for England Regulations 1994.” A copy of this map was not in evidence. 31. [NAME] [NAME] in his oral submissions argued that it was for the respondents to prove that [ADDRESS] was in Weavers, Whitechapel or Spitalfields and Banglatown. He cited no authority for this proposition and we do not consider it correct. In his written submissions he resiled from this proposition and accepted that it was for the applicants to prove that the premises were within one of the sixteen pre-2014 wards to which the licensing scheme applied.

32. In order to do this he produced a map which showed the boundaries of the wards of Weavers, Whitechapel and Spitalfields and Banglatown much more clearly. He says that [ADDRESS] is in the former [ADDRESS] ward. He has marked the map so as to show the premises lying just to the north of the north-eastern boundary of the former Whitechapel ward. However, he gives no details of the provenance of the map. It is thus not clear whether it is a public document (in which case we would be able to

10 take judicial notice of it). If it is not and the map is a private document, then the applicants face the difficulty that they have closed their case and that permission to adduce further evidence has not been requested, still less granted.

33. Our preliminary view is that the Tribunal can rely on publicly available maps to make its own comparison with the map attached to the Designation to reach a view on whether [ADDRESS] is within or without the [NAME] wards carved out of the additional licensing area. Were it otherwise critical to the determination of the case, we would give [NAME] [NAME] another opportunity to show that there is public documentation showing that the [NAME] is outwith the excluded wards. In the event, however, this issue is not material to the outcome of the current case. Costs 34. The Tribunal has a discretion as to the fees payable to the Tribunal. Since the applicants have lost, it is appropriate to make no order for costs in respect of these costs.

35. As regards the other potential costs of the parties, the Tribunal’s powers are more limited: see The Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rules 2013 rules 13(1)(a) and (b). If a claim for such costs is made, the Tribunal will give further directions after compliance with the directions below.

DETERMINATION (a) The applicants’ application for a rent repayment order is dismissed.

(b) Any party seeking an order as to costs should make the same by 4pm on 28th November 2024 with a schedule of the costs claimed.

(c) The Tribunal makes no order in respect of the fees payable to the Tribunal.

Name: Judge Adrian Jack

Date: 15th November 2024