Rakusen v Jepsen

The Supreme Court decided that a rent repayment order under Chapter 4 of Part 2 of the Housing and Planning Act 2016 can be made only against the "landlord under a tenancy" that generated the rent in question, i.e. the immediate landlord, and not against a superior landlord higher up the chain of tenancies. The court reached this conclusion by a straightforward textual interpretation of section 40(2) read with sections 41, 43–46 and 56 of the 2016 Act, focusing on the linkage between the landlord, the tenancy and the rent to be repaid or paid to a local housing authority.

The court considered and accepted supporting contextual factors: the previous law under the Housing Act 2004 limited RROs to immediate landlords; pre-legislative material and explanatory notes did not indicate an intention to extend RROs to superior landlords; practical and distributive complexities of permitting recovery against superior landlords; the availability of other sanctions against rogue landlords; and the principle against doubtful penalisation. On balance these factors supported or were consistent with the immediate-landlord interpretation of section 40(2).

This appeal arose from applications by occupiers (described as tenants) for rent repayment orders under the Housing and Planning Act 2016. The applicants sought RROs against the freehold owner and superior landlord of a flat let to an intermediary tenant that had sub-let rooms to the applicants. The First-tier Tribunal struck out the application against one superior landlord and refused to strike out against the second, being bound by an earlier UT decision (Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC)). The Upper Tribunal dismissed the superior landlord's appeal. The Court of Appeal allowed the superior landlord's appeal [2021] EWCA Civ 1150. The tenants appealed to the Supreme Court.

The central issue was statutory: whether section 40(2) of the 2016 Act permits an RRO to be made against a superior landlord rather than only the immediate landlord under the tenancy that generated the rent or universal credit award. The Supreme Court framed the question as one of statutory interpretation and answered it by (i) construing the words "landlord under a tenancy of housing in England" and the subsequent phrases requiring repayment of rent paid by a tenant or payment to a local housing authority in respect of universal credit, and (ii) examining context and purpose.

The court held that the natural reading links the landlord to the particular tenancy which produced the rent and that a superior landlord is not "the landlord under" the sub-tenancy to which the applicant's rent relates. The judgment explained why the distinction between "repay" (used in relation to rent paid by a tenant) and "pay" (used in relation to universal credit) reinforces the direct landlord–tenant focus. The court also considered the previous regime under the Housing Act 2004, practical complexities of multiple or chained recoveries, the availability of alternative sanctions (criminal conviction, civil penalties, banning orders, database of rogue landlords, company law remedies), the pre-legislative materials which did not indicate an intention to extend RROs to superior landlords, and the principle against doubtful penalisation. On that basis the court dismissed the appeal and concluded that RROs cannot be made against superior landlords.

Relief sought: tenants applied for rent repayment orders against a superior landlord. Issues decided: whether the 2016 Act permits RROs against superior landlords; whether the statutory wording, context and purpose imported such an extension; practical and policy implications. Reasoning: textual construction of section 40(2) supported by statutory context, prior law and pre-legislative materials; concerns about complexity and alternative sanctions informed but did not alter the textual conclusion.

Appeal dismissed. The Supreme Court held that an RRO under the Housing and Planning Act 2016 must be made against the landlord under the tenancy that generated the relevant rent (the immediate landlord) and not against a superior landlord; this conclusion followed from the ordinary meaning of section 40(2) read in its statutory context and was supported by the prior 2004 Act scheme, pre-legislative materials, policy considerations and the principle against doubtful penalisation.

First-tier Tribunal (LON/00AG/HMJ/2019/0065): struck out application against Ms Field, refused to strike out against Mr Rakusen (bound by Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC)). Upper Tribunal [2020] UKUT 0298 (LC): dismissed Mr Rakusen's appeal. Court of Appeal [2021] EWCA Civ 1150, [2022] 1 WLR 324: allowed Mr Rakusen's appeal. Supreme Court [2023] UKSC 9: appeal dismissed.