Graham Freckelton FRICS (Chairman)Mr R Chumley Roberts MCIEH, J.PMr P Jackson, Nottingham Law Centre for the ApplicantMr Gibson, LDC Law for the RespondentDate 7 October 2020Type of application: Application under sections 40, 41(1), 43 & 44 of the Housing and Planning Act 2016 for a rent repayment order
DECISION
[44]In order to determine whether or not it is appropriate to consider making a rent repayment order it is first necessary for the Tribunal to determine whether or not an offence has been committed under section 1(2), (3) or (3a) of the Protection from Eviction Act 1977.[45]It is not disputed by the parties that the locks to the subject property were changed on 23rd April 2019. However, it is disputed whether or not the Applicant gave up possession by Mr MacGibbon handing over the key to the property and whether or not this was in any event sufficient to surrender occupation.[46]At this point it is fair to say that there is an obvious discrepancy in the evidence of the two parties. The Applicant submits that she left the property at around 9.00pm on the night of the 23rd April 2019 to stay with her daughter and that she received a telephone call from Mr MacGibbon on 24th April 2019 confirming that he could not gain access. The Respondent submits that he changed the locks during the afternoon of 23rd April 2019 (when, according to the Applicant she was still residing in the property). Although it does not have a material bearing on the case, for completeness, the Tribunal accepts the evidence of the Respondent that the locks were changed on 23rd April 2019 and from Mr MacGibbon that he was unable to gain access on 24th April 2019. The only logical conclusion is that the Applicant actually left the property to stay with her daughter on the evening of 22nd April 2019 to allow the Respondent to change the locks on 23rd April 2019. This is a minor discrepancy but it is referred to for completeness.[47]It is alleged by the Respondent that Mr MacGibbon handed his key to the Respondent confirming that he and the Applicant had left the property. This is denied by Mr MacGibbon (most strenuously at the hearing).[48]In this matter the Tribunal prefers the evidence of the Applicant. However, even if Mr MacGibbon did hand his key to the Respondent this is not sufficient to bring the tenancy to an end. The Tribunal is mindful of the case of Smith-v-Khan [2018] EWCA Civ 1137, where Patten LJ, held that surrender requires an “unequivocal representation” by the tenant that she wishes to give up her tenancy. In this case there is no suggestion by the Respondent that the Applicant surrendered her key or informed the Respondent that she was intending to vacate. An indication of such by the Applicant’s partner is not sufficient to bring the tenancy to an end.[49]The Tribunal is also mindful that at the time the Respondent changed the locks (during the afternoon of 23rd April 2019) the Applicant’s belongings remained in the property. The Tribunal is of the opinion that this should have indicated to the Respondent that the Applicant had not vacated.[50]It is worth noting that even if Mr MacGibbon had handed his key to the Respondent during the morning of 23rd April 2019 (which the Tribunal does not accept), to change the locks during the afternoon of the same day shows a degree of zeal on the part of the Respondent which is scarcely believable.[51]Having determined that an offence was committed by the Respondent the Tribunal went on to consider the question of any rent repayment order.[52]The Tribunal considered the application in four stages –(i) Whether the Tribunal was satisfied beyond reasonable doubt that the Respondent had committed an offence under section 79(1) of the 2004 Act in that at the relevant time he was a person who controlled or managed the property.(ii) Whether the Applicant was entitled to apply to the Tribunal for a rent repayment order.(iii) Whether the Tribunal should exercise its discretion to make a rent repayment order.(iv) Determination of the amount of any order. Offence under section 95(1) of the 2004 Act[53]In accordance with sections 43(1) of the 2016 Act, the Tribunal was satisfied beyond reasonable doubt that the Respondent, as landlord of the subject property, had committed an offence listed in section 40 of the 2016 Act, namely an offence under section 1(2), (3) or (3a) of the Protection from Eviction Act 1977.[54]Throughout the period from 24th April 2018 to 23rd April 2019 the subject property was occupied by the Applicant and:(i) The Applicant was unlawfully evicted on 23rd April 2019.(ii) The Respondent was the person having control and/or managing the subject property. Entitlement of the Applicants to apply for a rent repayment Order[55]The Tribunal determined that the Applicant was entitled to apply for a rent repayment order pursuant to section 41(1) of the 2016 Act. In accordance with section 41(2), the Respondent was committing the relevant offence as the subject property was let to the Applicant during the relevant period; and the offence was committed in the period of 12 months ending with the day on which the application was made to the Tribunal (21st April 2020). Discretion to make rent a repayment Order[56]The Tribunal was satisfied that there was no ground on which it could be argued that it was not appropriate to make a rent repayment order in the circumstances of the present case. Amount of the Rent Repayment Order[57]In accordance with section 44 of the 2016 Act, first, the amount of an order must relate to rent paid in a period of 12 months during which the landlord was committing an offence under section 95(1) of the 2004 Act. The Applicants’ claim satisfies that condition. Second, the amount that the landlord is required to pay in respect of a period must not exceed the rent paid in respect of that period. On this point there is no agreement between the parties. The Applicant submits that she paid rent at £550.00 per calendar month for the whole of the period although admits that she cannot be sure that all payments were made. Ms Augustus and Mr MacGibbon submit that they think monthly payments were made in cash for each month but there is no evidence by way of receipts submitted to prove this. The Respondent submits that he received payments of £363.60 every four weeks from Housing Benefit and therefore only received top up payments of £186.40 from the Applicant. However, his written submission contradicts this in that it states payments of £550.00 were outstanding for August and September 2018 with the ‘top up’ payments of £186.40 only being outstanding for January, February and March 2019. Third, in determining the amount of any rent repayment order, the Tribunal must, in particular, take into account the conduct of the parties, the financial circumstances of the landlord and whether the landlord has been convicted of any of the offences listed in section 40 of the 2o16 Act.[58]In the first instance the Tribunal considered the rent actually paid by the Applicant. During the Hearing the Tribunal asked detailed questions and received evidence from both parties regarding the rent payment. This evidence was contradictory and without proof of the amount of any payments made the Tribunal has had no alternative but to assess this on the balance of probability.[59]Based on the written admission of the Respondent as to the amount of rent he considered to be outstanding during 2018 the Tribunal determined that during the period April – December 2018 the Applicant paid rent to the Respondent at the rate of £550.00 per calendar month. This was in spite of the fact that the Respondent was also receiving payment on behalf of the Applicant directly from Housing Benefit.[60]The Applicant cannot remember whether or not she paid rent in August and September and at the hearing neither the Applicant, Ms Augustus or Mr MacGibbon could categorically confirm that rent was paid for those two months. The Tribunal therefore determined on the balance of probability that the Applicant paid rent of £550.00 per calendar month during the period April – December 2018 excluding the months of August and September (seven payments in total).[61]For the period January – April 2019, on the balance of probability the Tribunal determines that rent was paid by the Applicant at the rate of £186.40 per month being the ‘top up’ due to the Housing Benefit payment but that payment was not made in January, February and March but was made in April.[62]The Tribunal notes that Housing Benefit is paid every four weeks, whereas the rental is due monthly. The parties have not raised this point in their submissions and the Tribunal do not therefore intend to make any further determination on this point as despite the potential mathematical discrepancy it appears generally accepted by the parties that a top up rent of £186.40 would be required on a monthly basis. In any event, although it impacts on the amount of rent paid by Housing Benefit, it does not affect the amount of rent actually paid by the Applicant.[63]The Tribunal therefore determined that the eligible period for a Rent Repayment Order is as follows: Rent paid during 2018 (7 months @ £550.00 per month) 3,850.00 Rent paid during 2019 (1 month @ £186.40) 186.40 Total Rent paid during 12-month period £4,036.40[64]The Tribunal therefore determined that the maximum amount of any Rent Repayment Order is the sum of £4,036.40.[65]The Tribunal had regard to the case of Vadamalayan-v-Stewart and others (2020 UKUT 0183) which concerned the calculation of a rent repayment order under section 44 of the 2016 Act. In that case Judge Elizabeth Cook held that:[18]… under the current statute, in the absence of the provision of reasonableness, it is difficult to see a reason for deducting either a fine or a financial penalty, given Parliament’s obvious intention that the landlord should be liable both(1) to pay a fine or civil penalty, and(2) to make a repayment of rent.[19]The only basis or deduction is section 44 itself and there will certainly be cases where the landlord’s good conduct, or financial hardship, will justify an order less than the maximum. But the arithmetical approach of adding up the landlord expenses and deducting them from the rent, with a view to ensuring that he repay only his profit, is not appropriate and not in accordance with the law. I acknowledge that that will be seen by landlords as harsh, but my understanding is that Parliament intended a harsh and fiercely deterrent regime of penalties for the HMO licensing offence.[53]The provisions of the 2016 Act are rather more hard edged than those of the 2004 Act. There is no longer a requirement of reasonableness and therefore, I suggest, less scope for the balancing of factors that was envisaged in Parker-v-Waller [2012 UKUT0301]. The landlord has to repay the rent, subject to considerations of conduct and his financial circumstances.[66]In accordance with section 44(4)(a) of the 2016 Act, the Tribunal considered the conduct of the Applicant and Respondent.[67]There is no conduct on behalf of the Applicant which would cause the Tribunal to consider amending the amount of the Order.[68]However, the conduct of the Respondent is such that it determines that it should be reflected, if possible, in the Order.[69]Therefore, distilling the substance of the Act in this case the Tribunal determines that it should consider whether deductions should made from the maximum amount set out in paragraph 64. In particular the Tribunal had regard to the following: 1) The Respondent has committed a serious offence. 2) The Respondent has not been convicted of any offence listed in Section 40 of the 2016 Act. 3) The Respondent has previously issued two invalid Section 21 Notices in an attempt to obtain possession of the property. 4) The Respondent was aware that the Applicant’s possessions were still in the property when he changed the locks.[70]Based on the above the Tribunal determined that although it was unable to increase the maximum amount of any Rent Repayment Order, it would reduce the amount of any allowance it might make to reflect the Respondent’s personal circumstances to reflect the conduct of the Respondent.[71]In accordance with section 40 of the 2016 Act the Tribunal is obliged to take into account the personal circumstances of the Respondent. Although no written submissions had been made by the Respondent, at the hearing the Tribunal enquired as to the personal circumstances of the Respondent.[72]The Tribunal was informed by the Respondent that due to debts he had to sell his two other investment properties in 2017. Over the last three to four years he had struggled with his business. He and his wife ran a take-away. The last six months had been particularly difficult due to the COVID-19 Pandemic. The Respondent confirmed that all the funds realised from the sale of the two properties had gone to service outstanding debts and he still had some debts he was continuing to pay.[73]The Respondent submitted that he had four children and a mortgage on his own property of £1100.00 per month with a further mortgage of £400.00 per month on the subject property. His two elder children of 21 and 22 years of age were both at university although living at home and his two younger children of 11 and 15 years of age were still at school.[74]It was further submitted by the Respondent that he and his wife were each paid a monthly salary of £1,020.00 from the business.[75]On the basis of information provided the Tribunal determined that it was appropriate to make a deduction due to the personal circumstances of the Respondent of 10% of the maximum amount of the Rent Repayment Order. However, the Tribunal determined to reduce this to 5% in view of the conduct of the Respondent as detailed in paragraphs 69 and 70.[76]The Tribunal therefore determines that it will make a Rent Repayment Order for the period 22nd April 2018 – 23rd April 2019 as follows: Maximum amount of Repayment Order as per paragraph 64 4,036.40 Less 5% to reflect personal circumstances 201.82 Amount of Repayment Order £3,834.58[77]The Tribunal therefore determines the Rent Repayment Order in the sum of £3,834.58 (Three Thousand Eight Hundred and Thirty-Four Pounds Fifty-Eight Pence). Payment should be made by the Respondent to the Applicant in full within 28 days of the date of this Decision. APPEAL[78]Any appeal against this Decision must be made to the Upper Tribunal (Lands Chamber). Prior to making such an appeal an aggrieved party must apply in writing to the First-tier Tribunal for permission to appeal within 28 days of the date of this Decision specified above stating the grounds on which that party intend to rely in the appeal. Graham Freckelton FRICS Chairman. First-tier Tribunal (Property Chamber) (Residential Property)