Beacon Cymru Group Ltd & Anor v Dawn Mitchell & Anor

A payment made under a mistake of law is recoverable in restitution only if the mistake caused the payment. The question is whether the payer would have paid had the true legal position been known at the time.

Where rent was paid despite a statutory entitlement not to pay it, the court must also consider whether the landlord was unjustly enriched. The statutory purpose of incentivising compliance with information duties does not necessarily require repayment after the relevant information has been supplied, particularly where the contract-holder suffered no loss and received the agreed accommodation.

Restitution will generally be inappropriate where the parties remain in a subsisting contract and neither the contract nor the statutory scheme provides a right to repayment or later set-off.

These test cases concerned counterclaims by contract-holders against social housing landlords under the Renting Homes (Wales) Act 2016 and associated Welsh regulations.

In the First Judgment, reported as [2024] EWHC 2831 (Ch), the court held that failure to provide electrical condition reports by the statutory deadline meant that the dwellings were treated as unfit for human habitation and that rent was not required to be paid until the reports were provided.

The defendants nevertheless paid rent during the relevant periods and sought repayment, principally on the basis of mistake of law and unjust enrichment. The issues included causation, statutory purpose, the effect of the subsisting contractual relationship, counter-restitution, set-off and Article 1 Protocol 1 of the European Convention on Human Rights.

1. Counterclaims dismissed. The defendants’ rent payments were not made as a result of their mistake of law. Applying the questions identified by Lord Hope in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, the court accepted that there had been a mistake and that the landlords were not entitled to the rent, but found that the mistake was not causative.
2. On the evidence, each defendant would have made enquiries and sought the electrical condition report rather than immediately withholding rent. The landlords would have supplied the existing reports promptly. Mrs Mitchell, Ms Jones and Mr Wadley would therefore have paid the rent even if they had known their legal rights.
3. In any event, the landlords were not unjustly enriched. The court accepted the conventional four-stage structure for unjust enrichment identified in Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221, while noting from Investment Trust Companies v Revenue and Customs Commissioners [2018] AC 275 that it was a structured approach rather than a series of rigid legal tests.
4. The statutory purpose was to incentivise landlords to provide electrical condition reports. That purpose was fulfilled once the reports were supplied and did not require rent already paid to be repaid. The defendants had received the housing contracted for, the properties had been inspected and found electrically safe, and no loss had been suffered.
5. Restitution was also inappropriate because the occupation contracts remained in force. Neither the contracts nor the statutory scheme provided a right to reclaim rent paid during the period of non-compliance. Sections 87 and 88 of the Act provided for compensation and contractual set-off in specified cases, but did not create the claimed right concerning electrical condition reports.
6. Mr Wadley had no right to withhold later rent by way of set-off because his counterclaim failed. The Article 1 Protocol 1 issue did not arise. All three counterclaims were dismissed.

The judgment was a first-instance decision on counterclaims following the court’s earlier decision in the same litigation, Coastal Housing Group Ltd and Others v Mitchell and Others [2024] EWHC 2831 (Ch). The earlier decision was not under appeal in this judgment.