(1)Mr Harsh Mahendrakumar Agarwal (2) Ms Tan Sze Ling (3) Mr Siyuan Wang (4)Mr Nikhil Aditya Sen (5) Ms Ana Jaclyn TamApplicant(1)Mr Kehinde Michael Oladipupo (2)Mr Olalekan Oladipupo (3)Ms Oluwabunmi Alice Oladipupo (4) Kush Homes Ltd (5)Sophietom Rehoboth London LtdRespondent
Before
Judge N O’Brien, Professional Member S Coughlin MCIEHn/a for the ApplicantAG Gilead Solicitors Application for a rent repayment order by tenant for the RespondentDate 27 September 2024Property: Circus, Canary Warf, London E14 9RJ (1)Mr Harsh Mahendrakumar Agarwal (2) Ms Tan Sze LingType of application: Sections 40, 41, 43, & 44 of the Housing and Planning Act 2016. Judge N O’Brien, Professional
DECISION
[1]The Tribunal makes Rent Repayment orders against the First, Second and Third Respondents in the following sums;(i) The sum of £3000 in respect of the rent paid by the First Applicant(ii) The sum of £1482.14 in respect of the rent paid by the Second Applicant(iii) The sum of £1482.14 to be paid in respect of the rent paid by the Third Applicant(iv) The sum of £2400 in respect of the rent paid by the Fourth Applicant(v) The sum of £600 in respect of the rent paid by the Fifth Applicant[2]The Tribunal orders the Respondents to repay the application and hearing fees paid by the Applicants in the sum of £300.[3]The above sums are to be paid to the relevant applicants by 22 October 2024. CASE SUMMARY[1]On 26 October 2023 the tribunal received an application under section 41 of the Housing and Planning Act 2016 (HPA 2016) from the Applicants for a rent repayment order (RRO). The Applicants assert that the Respondents committed an offence of managing or operating a House in Multiple Occupation (HMO) which was required to be licenced, but which was not so licensed pursuant to s72(1) of the Housing Act 2004 (HA 2004). The Applicants seeks a Rent Repayment Order (RRO) in the sum of £10,550.[2]The tribunal issued directions to the parties on 10 January 2024. The directions required the Respondents to file and serve a bundle no later than 3 April 2024. The Respondents did not comply with this direction and on 2 July 2024 the tribunal wrote to the Respondents to notify them that the tribunal was minded to debar them from further participating in the proceedings and inviting them to respond by 16 July 2024. In response the Respondents filed a bundle that consisted only of a witness statement signed by the Second Respondent on behalf of all 5 Respondents seeking to have the application struck out. On 17 July 2024 the matter was reviewed by Judge Nicol who confirmed the barring order and dismissed the request to strike out the application. The Hearing[3]The matter was listed for a final hearing on 23rd September 2024 and proceeded as a remote hearing held via CVP. The hearing was attended by Ms Tan, Mr Sen and Ms Tam being the Second, Fourth and Fifth Applicants respectively. Mr Sen informed us that the First Applicant Mr Agarwal was unable to attend as he was travelling on the day of the hearing and the Third Applicant Mr Wang was unable to attend as he was in China and his remote attendance at the hearing was not possible. Ms Tan, Mr Sen and Ms Tam confirmed that they were all located in the UK at the time of the hearing. None of the Respondents attended or were represented.[4]At the start of the hearing we determined that it would be just to proceed in the absence of Mr Agarwal and Mr Wang and in the absence of the Respondents. The tribunal had notified all parties of the time and date of this hearing by email dated 26 June 2024 and none of the Respondents have indicated that they were unable to attend. Further Mr Sen confirmed that both Mr Agarwal and Mr Wang were content for the application to be considered in their absence.[5]Mr Sen presented the case to the tribunal on behalf of all 5 applicants. We considered the bundle and supplemental bundle they have filed. It contains signed witness statements from all 5 applicants. In addition we had oral evidence from Mr Sen, Ms Tam and Ms Tan, who all confirmed that the contents of their statements were true and who answered questions put to them by the tribunal in respect of the application. We consider the evidence given by the Applicants was truthful and credible.[6]At the end of the hearing we informed the attendees that we would give written reasons for our determination. Factual Background[7]The property is a 2-bedroom flat situated in a purpose-built block in the London Borough of Tower Hamlets (LBTH). The premises were initially rented by the First and Third Respondent from the leasehold owner, a Mr Ankur Dhamija, pursuant to an assured shorthold tenancy which commenced on 21 August 2023 for a term of 12 months. It appears that shortly after this head tenancy commenced, the Fourth Respondent, Kush Homes Ltd, began advertising individual rooms in the premises for rent. It transpires that Kush Homes Ltd is a company wholly owned by the Third Respondent. All 5 applicants signed ‘property rental agreements’ which commenced on 1 September 2024. The agreements were between each applicant and the Fifth Respondent, Sophietom Rehoboth London Ltd, which is described on the agreement as ‘agent’. The Second Respondent is the company secretary and sole shareholder of that company, and the First Respondent is its director.[8]The evidence of all five applicants is that they were shown around the flat by the First Respondent, Kehinde Oladipupo, and that he conducted all negotiations. The rent was paid into an account in the name of the Second Respondent, Olalekan Oladipupo. The First, Fourth and Fifth Applicants agreed to pay a deposit which was the equivalent of 1 month’s rent, and a month’s rent in advance. The Third and Fourth Applicants paid no deposit but paid 3 months’ rent in advance. Mr Agarwal rented the main bedroom, Ms Tan and Mr Wong rented the second bedroom and Mr Sen and Ms Tam occupied the living room, which had been converted into a bedroom. All 5 paid a ‘holding deposit’ (£200 per tenancy) prior to taking up occupation of the premises.[9]It became quickly apparent to the applicants that all was not as it had initially seemed. They all describe being instructed by the First Respondent, Kehinde Oladipupo, from the commencement of their occupation to avoid any interactions with building management. They were told not to accept delivery of any parcels or post addressed to them personally at the premises.[10]It appears that the building management quickly became suspicious. According to Ms Tam on 5thSeptember 2023 someone who introduced himself as Hector attended the property with a body-worn camera. He stated that he was employed by the managers of the building and proceeded to inspect the property on the pretext of investigating a leak from the bathroom. According to Mr Sen, Mr Dhamija arrived at the premises on 30 September 2023 and explained to him that he was the leasehold owner and that he had let the premises to the First and Third Respondents pursuant to an assured shorthold tenancy and that the Respondents had breached that tenancy by subletting the premises. Additionally he advised that the freehold owner of the building did not permit any of the flats to be used as a HMO.[11]Mr Sen and Ms Tam state that on the 18th October 2023 they were in the property when someone who identified herself as ‘Alice’ called at the flat accompanied by another person and aggressively demanded to be admitted. She asserted that she had ‘given’ them the property. She only left when the Mr Sen and Ms Tam called building security. Mr Sen and Tam were so concerned by this incident that they called a locksmith that evening to change the locks. They also reported the incident to the police.[12]The dates on which the applicants occupied the premises are as follows;(i) Mr Agarwal (the First Applicant) occupied the premises from 31 August 2023 until 3 November 2023(ii) Mr Wang and Ms Tan (The Second and Third Applicants) occupied the premises from 31 August 2023 until 30 October 2023(iii) Mr Sen and Ms Tam the Fourth and Fifth Applicants) occupied the premises from 31 August 2023 until 5 November 2023.[13]The Applicants made the following payments to the Third Respondent;(i) Mr Agarwal paid £200 as a holding deposit on 21 August 2023, which was to be set of against the agreed monthly rent of £1600 pcm. He paid a further £3,000 on 1 September 2023.(ii) Mr Wang and Ms Tan each paid £100 on 26 August 2023 and a further £ 2075 each on 31 August 2023. The sum of £4150 was paid from Ms Tan’s account but she confirmed in her evidence to us that 50% of that money was from Mr Wang. She confirmed to the tribunal that the payment was made in respect the period 1 September 2023 to 1 December 2023 i.e. for 3 months.(iii) Mr Sen paid a holding £200 on 25 August 2023. He paid a security deposit and one month’s rent on 31 August 2023 totalling £3000. Of that £2,600 was his money and £600 was Ms Tam’s money. It appears that no further payments were made by any of the applicants after their initial payments set out above. None of the applicants were in receipt of Universal Credit or Housing Benefit. The Requirement for a Licence[14]Since April 2019 LBTH has operated an additional licencing scheme which applies to all HMOs which fall outside the mandatory HMO licencing scheme. LBTH’s additional licencing regime applied to all privately rented properties anywhere in the borough occupied by 3 or more persons living as two or more households and sharing basic amenities. In particular the additional licencing regime applied to any self-contained purpose built flat in a block containing 3 or more self-contained flats. The applicants have made enquiries of LBTH as to whether the respondents held or had ever applied for a licence as set out in the bundle. LBTH has confirmed that the respondents have never obtained or applied for a HMO licence in respect of these premises.[15]Although the Respondents have been barred from taking further part in these proceedings we note that the witness statement filed by the Third Respondent accepts that all five applicants occupied the flat but asserts that they occupied as licensees and not as tenants. The First, Second and Third Respondents have identified each other as siblings in their correspondence with the tribunal. The Relevant Law[16]The power of local authorities to designate particular areas as being subject to an additional licencing regime is contained sections 56 to 60 of the Housing Act 2004 (HA 2004). By virtue of s.72(1) of the HA 2004 a person commits an offence if they are in control of or managing a house which is required to be licenced under that part of the Act but is not so licenced. S.72(5) HA 2004 provides that it is a defence in proceedings against a person for an offence under subsection 1 that the person had a reasonable excuse for controlling or managing the unlicenced HMO.[17]Section 40 of the Housing and Planning Act 2016 (HPA 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… (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.[18]Section 41 of the HPA 2016 provides(1) A tenant or a local housing authority may apply to the First-tier Tribunal for a rent repayment order against a person who has committed an offence to which this Chapter applies.(2) A tenant may apply for a rent repayment order only if — (a)the offence relates to housing that, at the time of the offence, was let to the tenant, and (b)the offence was committed in the period of 12 months ending with the day on which the application is made.[19]Section 43 HPA 2016 provides;(1) The First-tier Tribunal may make a rent repayment order if satisfied, beyond reasonable doubt, that a landlord has committed an offence to which this Chapter applies (whether or not the landlord has been convicted).(2) A rent repayment order under this section may be made only on an application under section 41.(3) The amount of a rent repayment order under this section is to be determined in accordance with— (a)section 44 (where the application is made by a tenant);[20]Section 44(1) HPA 2016 of the Act provides that where the First-tier Tribunal decides to make a rent repayment order under s41(1) in favour of a tenant, the order may be made in relation to rent paid in respect of a period not exceeding 12 months during which the landlord was committing the offence. An offence under s.72 of the HA 2004 is a relevant offence for the purposes of s.43 of the HPA 2016. Findings of the Tribunal[21]The tribunal is satisfied beyond all reasonable doubt that the First, Second and Third Respondents committed the offence of being in control of or managing an unlicenced HMO which is required to be licenced by virtue of the HA 2004 but is not so licenced, pursuant to s.72 of the 2004 Act. We are satisfied that this offence was being committed by those Respondents from 31 August 2023 until 3 November 2023 inclusive. The Fourth and Fifth respondent companies each appear to be vehicles through which the First, Second and Third Respondents operate. The fourth Respondent, Kush Homes Ltd, appears to have been responsible for advertising the property only and there is no evidence that the company was further involved. The Fifth Respondent is named on all three letting agreements as the agent for the property. No landlord is named on the agreements. As a person in receipt of the rackrent whether on their own account or as an agent the fifth Respondent is a person in control although there is no evidence of ongoing management other than the initial tenancy agreement and payments to the personal bank account of the second respondent.[22]We are satisfied that the First and Third Respondents were in control of or managing the property because they are the persons named in the head tenancy and thus had a legal interest in it. Additionally both the First and Third Respondents attended the property and effectively held themselves out to be the landlords including attempting to carry out repairs at the property. We are satisfied that the Second Respondent was also a person in control or managing the HMO because all payments were made into a bank account in the Second Respondent’s name. Additionally the witness statement filed by the Respondents is signed by the Second Respondent and he accepts that the agreement was between the Applicants and all of the Respondents, albeit he asserts that they were licensees and not tenants. All three rental agreements describe the applicants as lodgers. However we consider that this was a sham and was inserted into the agreements in order to avoid the respondent’s legal obligations as landlords. As Judge Nicol observed in his decision of 17 July 2024 the applicants’ occupation of this property had all the hallmarks of a tenancy.[23]There is nothing to suggest that the First Second and/or Third Respondent had a reasonable excuse for controlling or managing this unlicenced HMO. Amount of RRO[24]In the case of Acheampong v Roman [2022] UKUT 239 (LC) the Upper Tribunal set out a 4-stage test which the tribunal must apply when considering how much to order a landlord to pay by way of an RRO. In summary the tribunal must.[1]Ascertain the whole of the rent for the relevant period.[2]Subtract any element of that sum that represents payment for utilities that only benefit the tenant. It is for the Landlord to supply evidence of these, but an experienced Tribunal will be able to make an informed estimate.[3]Consider seriousness both compared to other types of offences for which an RRO can be made and examples of the same type of offence. What proportion of the rent (after deductions as above) is a fair reflection of the seriousness of the offence? This is the starting point. It is also the default penalty in the absence of any other factors but maybe higher or lower in light of the final step.[4]Consider deductions or additions in light of section 44(4) factors (conduct of landlord and tenant, financial circumstances of landlord and any previous convictions of the landlord in relation to offences set out in section 40)[25]In the case of Simpson House 3 Ltd v Osserman [2022] UKUT 164 (LC) the Upper Tribunal considered that in deciding the level of any RRO, the tribunal should distinguish between the rogue landlord against whom a RRO should be made at the higher end of the scale and the landlord whose failure was to take sufficient steps to inform themselves of the regulatory requirements.[26]In Kowalek v Hassanien Ltd [2022] EWCA Civ 1041; [2022] 1 W.L.R. 4558 the Court of Appeal held that when calculating the maximum in order to be recoverable under a rent repayment order, the rent in question has to be both paid to discharge indebtedness which had arisen during the relevant period of offending by the landlord and in fact paid in the period during which the offence was being committed. Thus rent paid by the tenant before the landlord's offending had commenced cannot be included in the calculation of the maximum amount of a rent repayment order even if it had been paid in order to satisfy a liability accruing during the relevant period.[27]As regards ascertaining the whole rent paid for the relevant period, we have discounted the sums paid prior to 31 August 2023 as no offence was being committed at this time. Additionally of the £2075 each paid by the Second and Third Applicants, only the sum of £1482.14 was paid in respect of the period 31 August 2023 to 3 November 2024. We are satisfied however that the security deposit paid by the First, Fourth and Fifth Applicants was offset against the rent for October 2023 and therefore was paid as rent by virtue of s.52(2) of the HPA 2016.[28]We note that the ‘Property Rental Agreement’ signed by the applicants states that the rent is inclusive of utility bills. We have no evidence that the First, Second and Third Respondents ever used any of the sums received by them to pay for any utilities. Mr Sen informed the tribunal that he was informed by the leaseholder that heat and hot water was supplied to the property via a communal heating system which Mr Dhamija paid for via his service charges. The Respondents have provided no details of any expenditure and in the circumstances of the case we do not consider it appropriate to make any deduction from the figures in paragraph 27.[29]We have also considered the seriousness of the offence and the conduct of the landlords. While the offence is not the most serious of offences in respect of which the tribunal can make a RRO, in our view the conduct of the Respondents was reprehensible. They sublet this property in breach of the terms of their head lease. They concealed the true nature of their interest in the property from the applicants and sought to co-opt them into concealing the nature of their occupation from the management of the building. The first Respondent lied to Ms Tam when she asked him to confirm before she signed the agreement that he had the appropriate consents and licenses. This caused a great deal of stress to the applicants who were put in the position of feeling as if they had done something wrong when they had not. The Respondents required the applicants to enter into a sham agreement which described them as lodgers. Moreover the agreements attempted to obfuscate the identity of the landlord of the flat. We conclude this was done in an attempt to evade their responsibilities as landlords. Finally we consider that the actions of the Third Respondent on 18 October 2023 were intended to intimidate the occupants into leaving, and we have no doubt that was done on account of the respondents collectively.[30]We have no information as regards the financial circumstances of the respondents which would cause us to reduce the RRO. In the circumstances of this case we consider that a RRO of 100% of the rent paid for the relevant period is justified. We make the following orders against the first, second and third respondents jointly;(i) A RRO in favour of the First Applicant in the sum of £3000(ii) A RRO in favour of the Second Applicant in the sum of £1,482.14(iii) A RRO in favour of the Third Applicant in the sum of £1,482.14(iv) A RRO in favour of the Fourth Applicant in the sum of £2,400(v) A RRO in favour of the Fifth Applicant in the sum of £600[31]In their application notice and in their submissions the applicants sought an order for the repayment of the fees they have paid in respect of these proceedings. We make such an order against the First, Second and Third Respondents. Name : Judge N O’Brien Date of Decision 24 September 2024 Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).