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Housing case law update - January 2021

Michael Owen, Natalie Hurst and Claire Hogan-Clark round up the latest judgments affecting housing associations and local authorities.

Taylor v Slough Borough Council [2020] EWHC 3520 (Ch)

High Court, 21 December 2020

The High Court has held that a local authority which had pursued possession proceedings against a disabled tenant in breach of its public sector equality duty (PSED) had subsequently cured the breach by vigorously complying with the duty.

A tenant (Ms Taylor) suffered from bipolar disorder, of which Slough Borough Council was aware. After allegations of drug use and the supply of drugs to and from the property, Ms Taylor was issued with a Closure Order and then served with a possession notice under the Housing Act 1985 due to anti-social behaviour.

Slough Borough Council carried out an impact assessment under the Equality Act 2010 on the mistaken premise that Ms Taylor had no disability (despite already knowing that she had a bipolar disorder) and commenced possession proceedings on that basis. At a Magistrates Court, the Closure Order was extended and Ms Taylor gave undertakings not to engage in anti-social behaviour. Whilst the anti-social behaviour at the property ceased, some neighbours complained that it recommenced when Ms Taylor was allowed to return to the property. Consequently, a possession order was served, this time on the ground of rent arrears, but was set aside by agreement. Both possession actions were heard together in May 2019. At the trial, the Judge made a possession order after finding that the two possession proceedings were a proportionate means of achieving a legitimate aim. Although Slough Borough Council had breached the PSED by erroneously failing to consider Ms Taylor’s disability when issuing possession proceedings, its housing officer had exercised the PSED with rigour when she became aware of her disability, by seeking information from relevant agencies and assessing how an eviction would impact Ms Taylor. Ms Taylor appealed.

The High Court, in dismissing the appeal, held that a breach of the PSED was capable of being “cured” by subsequent compliance with the PSED, providing that the local authority had complied with the PSED “with rigour and with an open mind” and that a subsequent purported compliance was not “tainted by the incentive not to depart from a decision already made”.

The decision will be of interest to social housing providers, as it shows the courts’ PSED compliance requirements when possession orders are sought, and provides guidance on best practice and how an initial breach of the PSED can be “cured” by subsequent compliance with the PSED. Whilst providers should ensure that they comply with the PSED before issuing possession proceedings, the decision shows that it may be possible to remedy mistakes made.

A copy of the judgment is here.

Rakusen v Jepsen and others [2020] UKUT 298 (LC)

Upper Tribunal (Lands Chamber),11 November 220

The Upper Tribunal (Lands Chamber) has held that a rent repayment order could be made against any landlord who had committed a statutory offence, including a superior landlord.

The freeholder of a property granted a lease of a flat to Mr Rakusen. Mr Rakusen and his partner lived in the flat, but then decided to move and in 2016 let the flat to Kensington Property Investment Group Ltd (KPIG) for 36 months. KPIG entered into separate written licence agreements with Mr Jepson and two others (the respondents), each of whom was granted the right to occupy one room in the flat. However, by 2018, there were four people living in the flat, meaning it was now a house in multiple occupation (HMO) and was required to be licensed. However, no license was obtained by KPIG from the local housing authority.

In May 2019, KPIG’s tenancy ended and the respondents applied to the First-tier Tribunal (Property Chamber) for a Rent Repayment Order (RRO) against Mr Rakusen and his partner on the basis that he was in control of an unlicensed HMO. However, Mr Rakusen countered this by arguing that an RRO could only be made against the immediate landlord of the person who had made the application (and he was not the immediate landlord). The First Tier Tribunal struck out the application against his partner on the basis that there was no reasonable prospect of it succeeding. However, It refused to strike out the application against Mr Rakusen, as it considered that it was bound by the case, Goldsbrough v CA Property Management Ltd [2019] UKUT 311, which had determined that an application for an RRO could be made against a superior landlord despite the parties never having been in the either a landlord/tenant or licensor/licensee relationship. Mr Rakusen appealed.

The Upper Tribunal (Lands Chamber) dismissed the appeal, finding that the First Tier Tribunal had jurisdiction to make an RRO against any landlord who had committed an offence, including a superior landlord. There was no additional requirement that the landlord be the immediate landlord of the tenant.

A copy of the judgment is here.

R (on the application of Flores) v London Borough of Southwark [2020] EWCA Civ 1697

Court of Appeal, 15 December 2020

The Court of Appeal has held that a local housing authority was not entitled to find that a family had deliberately moved into accommodation that would become statutorily overcrowded and, thus, refuse to award them the highest priority for housing under its housing allocation scheme.

Mr Flores, a Brazilian national, his partner and their two children lived in a one-bedroomed property. He applied to join London Borough of Southwark’s housing register, but was turned down as the family did not have a local connection. However, he was told to re-apply when Mr Flores’ partner had worked in the Borough for five years. When Mr Flores subsequently reapplied, the family were awarded ‘band three’ priority for housing. The family was deemed unqualified for ‘band 1’ (the highest priority category) as they had voluntarily moved into overcrowded accommodation (i.e. the one-bedroomed property). Mr Flores applied for a judicial review of this decision, arguing that London Borough of Southwark had failed to properly investigate the circumstances surrounding the family’s decision to move into the one-bedroomed property (i.e. that they could not afford a two-bedroomed property).

The High Court dismissed Mr Flores’ application, finding that London Borough of Southwark’s allocations policy precluded ‘band one’ priority being given to anyone who was living in statutorily overcrowded accommodation due to a “deliberate act”. Since Mr Flores and his family had moved into a one-bedroom flat, knowing that it would be occupied by four people and that his children would get older and require more space, the property was overcrowded due to a “deliberate act”. The Court also held that there is a discretion on the housing officer as to how far it is necessary to investigate an applicant’s circumstances in order to reach a lawful decision. Mr Flores appealed.

The Court of Appeal, in allowing the appeal, held that Mr Flores was entitled to be included within the highest priority category for housing. It held that it was wrong to ascertain that the overcrowding at the property had been due to Mr Flores’ decision to take the tenancy in the first place. He had obtained the best accommodation he could afford at the time and the only alternative to this was for him to leave his job and move elsewhere. The accommodation had only became statutorily overcrowded because his children naturally grew up during the time he was at the property. London Borough of Southwark’s housing scheme did not deal with the natural growth of children and it was wrong to find that Mr Flores, who had acted reasonably in taking the most suitable accommodation that he could afford, was disqualified from ‘band 1’ priority once his children had got older, rendering the accommodation statutorily overcrowded. Mr Flores was entitled to be placed in ‘band 1’.

A copy of the judgment is here.

R (Nur) v Birmingham City Council [2020] EWHC 3526 (Admin)

High Court, 19 December 2020

Ms Nur lived in private rented accommodation with her three adult daughters, including one (“Z”) who suffered from cerebral palsy and had learning difficulties. She was also registered on Birmingham City Council’s housing list. When Ms Nur’s landlord sought possession of the property, Birmingham City Council accepted that it owed her a homelessness duty under the Housing Act 1996. Following a Health and Housing Assessment, the Council’s occupational therapist concluded that Z had a high priority need for a property that was adapted to meet her needs. Birmingham City Council’s housing allocations policy stated that it gave preference for houses with two or more bedrooms to families with dependent children and that properties with adaptations would be allocated to people with a physical or sensory disability. Ms Nur subsequently bid for several suitable three-bedroom houses but her bids were “skipped” because either she had no dependent children, or because the property did not have adaptations. Ms Dur applied for judicial review of the Council’s housing allocation policy and how it had been applied to the family, arguing that Birmingham City Council had breached its duty under section 166A of the Housing Act 1996 by failing to allocate the family an adapted property.

The High Court, in finding in favour of Ms Dur in part, held that Birmingham City Council had acted unlawfully in misunderstanding the effect of its own housing allocation policy, but adjourned consideration of the grounds relating to indirect discrimination and breach of the public sector equality duty under the Equality Act 2010, unfairness, and irrationality. pending evidence from the Council.

The decision is a useful reminder to local housing authorities to review their housing allocation schemes and ensure that they are not discriminatory towards particular groups of housing applicants.

A copy of the judgment is here.

Northwood Solihull Ltd v Fearn & Ors [2020] EWHC 3538 (QB)

High Court, 21 December 2020

The High Court has held that a notice seeking possession issued by a corporate landlord can validly be signed on behalf of the landlord by an authorised signatory, but a confirmatory certificate served by a corporate landlord must be executed in accordance with the Companies Act 2006.

Northwood Solihull Ltd let a residential property to Mr Fearn and Ms Cooke (“the tenants”) under an assured shorthold tenancy. The tenants’ deposit was protected under the tenancy deposit protection scheme. Once the tenants had paid the deposit, Northwood Solihull Ltd served a confirmatory certificate, signed by a company director. Following non-payment of rent, Northwood Solihull Ltd served a section 8 notice seeking possession under the Housing Act 1988, which was signed by the company’s property manager, who was not a company director. The tenants, in opposing the making of a possession order, argued that (1) the notice seeking possession was invalid because it had breached the requirements of section 44 of the Companies Act 2006, as it not been signed by two authorised signatories or by a company director in the presence of a witness, and that (2) the section 44 requirements also applied to the confirmatory certificate, meaning that Northwood Solihull Ltd's non-compliance with section 44 had rendered it invalid. The County Court held that section 44 of the Companies Act 2006 did not apply to a notice seeking possession, but did apply to a confirmatory certificate. Thus, the former was valid, and the latter was invalid. The tenants appealed the notice seeking possession finding and Northwood Solihull Ltd cross-appealed against a financial penalty imposed on it for its failure to provide the tenants with a valid confirmatory certificate.

The High Court, in dismissing the tenants’ appeal and Northwood Solihull Ltd’s cross appeal, held that (1) when a corporate landlord serves a notice seeking possession under section 8 of the Housing Act 1988, that notice does not need to be executed in accordance with section 44 of the Companies Act 2006 to be valid; the requirement for a corporate landlord to execute a document only applies where the relevant statutory provision requires only the landlord to sign it; and that (2) a landlord’s confirmatory certificate must be executed in accordance with section 44 of the Companies Act 2006 in order to be valid, and failure to do so will prevent a landlord from serving a possession notice until a valid document has been served. In any case, the landlord will be liable for a financial penalty. The Court concluded that the signature requirement is a “binary matter”, meaning that it is either met or it’s not, and it is not something which can be “substantially achieved.”

The ruling will be welcomed by corporate landlords, as it makes clear that section 8 notices seeking possession do not need to be formally executed.

A copy of the judgment is here.

Sutton v Norwich City Council [2021] EWCA Civ 20

Court of Appeal, 13 January 2021

The Court of Appeal has rejected a company director's appeal over financial penalties imposed on him for breaches of regulations covering houses in multiple occupation and non-compliance with enforcement notices, finding that there was no rule requiring a court to determine the overall penalty and then apportion it between the company and the director.

Mr Sutton, the sole director of a company which owned a house in multiple occupation (HMO), had received, under section.249A of the Housing Act 2004, five financial penalties totalling £96,000 from Norwich City Council for breaches of the Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007 and five financial penalties totalling £140,000 for non-compliance with improvement notices, which had been served on the company. Norwich City Council also served a prohibition order on the HMO and consequently the company went into administration due to its rental income ceasing. Mr Sutton appealed to the Upper Tribunal (Lands Chamber), which found that Norwich City Council had been entitled to impose financial penalties, although it did reduce the penalties to £75,000 and £99,000 against the company and Mr Sutton respectively for the breaches and failures. Mr Sutton appealed, arguing that the allocation of penalties between the company and him as an individual was incorrect.

The Court of Appeal, in dismissing the appeal, held that the Upper Tribunal (Lands Chamber) had been aware of the danger of ‘double punishment’ when determining the level of financial penalty against a company and its director, and that it had adopted an approach that was overly generous to Mr Sutton. Also, although section 249A of the Housing Act 2004 stipulated that a financial penalty imposed under this section must not be more than £30,000, there was no bar on the aggregate of penalties imposed on two or more persons exceeding £30,000 – therefore £30,000 penalties could be imposed on both a company and one or more of its directors.

This ruling provides housing authorities with useful guidance on the risks of ‘double punishment’. However, the fact that the company went into administration before the issue was resolved highlights the fact that local housing authorities can face problems in recovering money owed.

A copy of the judgment is here.

Investigation into a complaint against East Lindsey District Council (reference number: 19 018 986)

Local Government and Social Care Ombudsman, 28 October 2020

The Local Government and Social Care Ombudsman has held that a local authority’s housing allocation scheme did not comply with the Housing Act 1996 and the public sector equality duty.

Mr and Mrs X lived in a different area and applied to join East Lindsey District Council’s social housing register (waiting list) so that they could provide support to, and receive support from, Mrs X’s mother (“Mrs Z”). The application form said that Mrs Z would be able to assist the couple with childcare and help support their mental health, whilst the couple would help Mrs Z with her cleaning, finances and medical appointments. However, the application was rejected because the couple did not have a “local connection”. Under the Council’s housing scheme, a “local connection” included a need to move to the area to receive support, but not to give it. The Council said that it was unclear how Mrs Z could give support to the couple due to her own poor health, age and lack of transport. The decision was upheld on review and the couple subsequently complained to the Local Government and Social Care Ombudsman.

The Local Government and Social Care Ombudsman found that the Council’s housing scheme did not comply with the statutory guidance on housing allocations issued under the Housing Act 1996. It accepted that the statutory guidance gives the Council discretion to formulate its own criteria on who may qualify for the housing register, but said that it “does not permit councils to adopt policies which exclude all or most of a class of persons who would have otherwise have a reasonable preference, from being qualifying persons.” It also found that the housing scheme breached the public sector equality duty, as it risked discriminating against elderly groups who needed care and support from outside the local area. However, no fault was found with the Council's assessment of Mrs Z's ability to support Mr and Mrs X.

The Council was told to reconsider Mr and Mrs X’s application and review its housing allocations policy to ensure that it meets the public sector equality duty. After reviewing its policy, the Council was told to review similar cases that had been rejected since October 2019 to ensure no other injustices had been carried out.

A copy of the decision is here.

Michael Owen is a partner, Natalie Hurst is an Associate and Claire Hogan-Clark is a Chartered Legal Executive at Capsticks.

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