Marek Kowalek v Hassanein Limited

A rent repayment order under the Housing and Planning Act 2016 is confined by both the period in which rent was paid and the period to which it relates. A payment made after the landlord ceased offending cannot be included merely because it discharges rent arrears from that period. The scheme is principally deterrent rather than compensatory. In assessing the amount, the First-tier Tribunal may treat a tenant’s failure to pay rent as part of the tenant’s conduct under section 44(4). It need not await County Court proceedings where arrears are sufficiently clear and undisputed, although sequencing or a joint hearing may be appropriate where a material dispute remains. The appeal was dismissed.

The appellants were tenants of a selectively licensed flat. The respondent landlord let it without a licence, later applied for one, and received it. The tenants sought a rent repayment order. The First-tier Tribunal awarded £11,909.99, reducing the possible maximum partly because of substantial rent arrears. The Upper Tribunal dismissed their appeal in [2021] UKUT 143 (LC). In the Court of Appeal, the tenants challenged the exclusion of a £2,000 payment made after the landlord had applied for a licence and the reliance on rent arrears as tenant conduct. The central questions were whether rent paid after the offence ended could be counted and whether arrears could reduce the order.

The appeal was dismissed.

1. Timing of rent payments. Section 44(2) of the Housing and Planning Act 2016 imposes two limits. The rent must have been paid during the statutory period, and it must relate to rent payable in respect of that period. Both conditions apply. A payment made after the landlord ceased committing the offence is excluded, even if it discharges arrears that accrued while the offence was being committed. Section 44(3) and section 52(2) do not require a different construction.
2. Purpose of the scheme. The rent repayment order provisions are principally deterrent rather than compensatory. They are intended to incentivise landlords to comply with licensing and other obligations. A tenant need not have suffered loss or inconvenience for the order to be available.
3. Tenant conduct. Section 44(4) refers generally to the conduct of the tenant. It therefore includes failure to pay rent. The authorities, including Regalgrand Ltd v Dickerson & Wade [1996] 29 HLR 620 and Awad v Hooley [2021] UKUT 0055 (LC), supported that approach. In this case, the substantial arrears were sufficiently established and were apparently undisputed and unexplained when the application was before the FTT. The FTT was entitled to take them into account and did not need to await the County Court proceedings.
4. Procedural guidance. Where the existence or extent of arrears is disputed in pending County Court proceedings and may materially affect the order, it may be appropriate to hear the FTT application afterwards or to hear the proceedings together. An FTT judge is also a County Court judge by virtue of section 5(2) of the County Courts Act 1984. The allocation of the £2,000 payment did not require determination because of the conclusion on timing.

• Court of Appeal (Civil Division): Appeal dismissed and the Upper Tribunal’s decision upheld: [2022] EWCA Civ 1041.
• Upper Tribunal (Lands Chamber): Appeal dismissed in a decision dated 18 June 2021: [2021] UKUT 143 (LC).
• First-tier Tribunal (Property Chamber): Rent repayment order made in favour of the appellants for £11,909.99.