In 2006 the freeholder of a block of flats granted a 999 year lease of one of the flats to a person who intended to let the premises (“the superior landlord”). In May 2016 the superior landlord granted a tenancy of the flat to a company to which he had been introduced by his letting agents. The tenancy was a short term residential tenancy for a term of 36 months, less one day. One clause provided that “the Tenant shall have the right to sublet each unit individually or the whole as part of the day to day management of their business”. Later in 2016 and at different times, the company entered into separate written agreements with the tenants, each of whom was granted the right to occupy one room in the flat. The documents were described as licence agreements and made provision for the payment of a licence fee. The superior landlord did not renew the company’s tenancy at the end of the fixed term in May 2019. In September 2019, the tenants applied to the First-tier Tribunal under section 41 of the Housing and Planning Act 2016 for rent repayment orders (“RRO”) against the superior landlord. The grounds for making the application were stated to be “control or management of an unlicensed house in multiple occupation”. In support of the application the tenants provided copies of the agreements between themselves and the company. In his response to the application the superior landlord invited the First-tier Tribunal to exercise its power under rule 9(3)(e) of the Property Chamber Rules to strike out the whole of the application on the ground that there was no reasonable prospect of it succeeding because an RRO could only be made against the immediate landlord of the person who made the application and not against a superior landlord. The First-tier Tribunal refused to strike out the application against the superior landlord and the Upper Tribunal dismissed his appeal. The superior landlord brought a further appeal, contending that so far as the language of section 40(2)(a) of the 2016 Act was concerned, “the landlord under a tenancy of housing” in the body of subsection (2) had to refer to the landlord under the same tenancy as the tenancy held by the “tenant” referred to in paragraph (a). Only one tenancy was referred to, and it was that tenancy which enabled identification of both the tenant who could apply for an RRO and the landlord who could be made the respondent to that application. Otherwise, any tenant in a chain of tenancies could apply against any landlord in the chain.
On the superior landlord’s appeal—
Held, appeal allowed. Section 40(2)(a) only enabled an RRO to be made against an immediate landlord and not a superior landlord. So far as the language of section 40(2)(a) was concerned, “the landlord under a tenancy of housing” in the body of subsection (2) had to refer to the landlord under the same tenancy as the tenancy held by the “tenant” referred to in paragraph (a). Only one tenancy was referred to, and it was that tenancy which enabled identification of both the tenant who could apply for an RRO and the landlord who could be made the respondent to that application. The absence of any express limitation to an immediate landlord in section 40(2)(a) was immaterial, because the language used connoted a direct relationship of landlord and tenant. The use of the indefinite article in section 40(2)(a) (which referred to “a tenant” and not “the tenant”) was not decisive and it would not make any difference if paragraph (a) said “the tenant”. If the intention had been to extend liability to superior landlords, it would have been easy for section 40(2)(a) to say so in terms rather than for that to be provided for merely by the use of the indefinite rather than the definite article. It was more likely that the drafter simply wanted to make it clear that an RRO could be made in favour of one out of a number of tenants. The more natural interpretation of the word “repay” in section 40(2)(a) was that it referred to the landlord repaying the rent paid to that landlord by the tenant, rather than referring to money paid by the tenant to a different landlord. That supported the conclusion to be derived from the references to “the landlord under a tenancy” and “tenant”. Furthermore, section 40(2)(b) only enabled an RRO to be made on the application of a local housing authority in respect of universal credit paid in respect of rent under the tenancy of which the respondent to the order was the landlord (ie the immediate landlord), because the words “the tenancy” in paragraph (b) had to refer back to the “tenancy of housing” mentioned in subsection (2). That was despite the fact that the universal credit might have been paid “to any person”. It was incorrect to suggest that paragraph (b) could also embrace an application against a superior landlord because of the absence of any limitation in subsection (2) to an immediate landlord. It would be illogical to interpret section 40(2)(a) as enabling an RRO to be made against a superior landlord when that was not permitted by section 40(2)(b), particularly when: (i) the words “the landlord under a tenancy” were common to both provisions; (ii) an application could be made under section 41 by both a tenant and a local housing authority in respect of rent and universal credit paid in respect of the same tenancy; (iii) section 40(2)(b) enabled public money to be recovered from defaulting landlords; and (iv) the underlying policy was the same. Each of the specified offences in section 40(3) might be committed by a superior landlord as well as by an immediate landlord. However it was incorrect to suggest that, in the absence of any limitation of section 40(2)(a) to immediate landlords, it was intended to apply to superior landlords as well. Many of the offences could be committed by persons who were not landlords at all, but section 40(2)(a) did not provide that an RRO could be made against any person who committed one of the specified offences. Nor did section 40(2)(a) provide that an RRO could be made against any landlord who had committed one of the offences: its wording was more specific. Accordingly, the court would strike out the tenants’ claim against the superior landlord (paras 22, 23, 25–30, 33, 43, 44, 48–51, 53, 55, 57, 58).
Tom Morris (instructed by Winckworth Sherwood LLP) for the superior landlord.
Edward Fitzpatrick (instructed by Edwards Duthie Shamash) for the tenants.
Justin Bates and Charles Bishop (instructed by Anthony Gold Solicitors LLP) made written submissions on the behalf of the intervener.