Hallet v Parker: a baseline for RRO awards?

Hallet v Parker: a baseline for RRO awards?

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In the recent case of Hallet v Parker, when discussing award levels made in RRO cases, Judge Rodger pointed out: “It would be fair to say that the Tribunal has not found it easy to provide guidance on how these provisions ought to be applied.”(§21)

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How true!

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The First Tier and Upper Tier Tribunal have long struggled with deciding how much awards should be in Rent Repayment Order cases.

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The Upper Tribunal (UT) decision in the Hallett v Parker & ORS appeal continues the process; this case helps to set the base-line of what the lower end of Rent Repayment Orders should be.

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Flat Justice represented the tenants in this matter at both the First-tier Tribunal Property Chamber (Residential Property) (FtT) and the UT so we are well placed to comment on this outcome in which a 75% discount to the original FtT award was made by the UT.

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In many ways, this case was unusual. As Judge Rodgers pointed out, this was one of the very least ‘serious’ examples of a licensing offence.

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In turn, Judge Rodgers considered that the landlord should face a less severe punishment. To justify his conclusion that the case was less ‘serious’, Judge Rodger pointed to the fact that:

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1.Mr Hallett, the landlord, was not a professional landlord: he let out only one property, the subject property which was previously his own home
2.He had relied on an agent who had failed to inform him of the licensing requirements for smaller HMOs in Brent, where there was an Additional Licensing scheme
3.He had always previously rented to single families and was unfamiliar with HMO rentals
4.Mr Hallett claimed ignorance of the licensing law himself as he was often abroad so would not have been reached by the public consultation and publicity on the Additional Licensing scheme’s introduction
5.The property was in reasonably good condition
6.The landlord immediately made an application when informed that a licence was required

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While Judge Rodger was inclined to make a less ‘serious’ award, he still noted the finding of Rakusen v Jepsen that amount of an RROs had to be significant enough to:

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‘to deter the commission of housing offences and to discourage the activities of “rogue landlords” in the residential sector by the imposition of stringent penalties’

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Balancing these two considerations, Judge Rodgers decided a 25% award was appropriate. In doing so, it seems Judge Rodgers has set an award of 25% as the new ‘base-line’ for the least ‘serious’ Rent Repayment Orders awards. If this is the case, then the case law around Rent Repayment Orders has been developed significantly.

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Putting Hallet v Parker in the broader context

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When Flat Justice first started in 2018, RRO decisions at the FtT were only guided by case law established under the The Housing Act 2004 (HA): there were none to speak of under the new scheme set up in the The Housing and Planning Act 2016 (HaPA).

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Judge Rodger alluded to the HA’s requirement that RRO awards should be “reasonable in the circumstances” (HA §74(5)). This original wording led of course to wildly varying awards at the FtTs, despite the clarification under Parker v Waller [2012] UKUT 301 (LC) which became the main guide to award levels.

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The latter even continued to guide judgments under HaPA (despite our frequent complaints)… until Vadamalayan. The latter brought about a sea change in awards: they had to relate to the rent paid, not the landlord’s profit. Vadamalayn insisted that the new scheme, under HaPA, was harsh and meant to be harsh. In the oft-quoted words of Judge Cooke, in Vadamalayan:

“this is a rent repayment order so we start with the rent.” (§12).

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Vadamalayan was followed by many decisions at the FtT which seemed to almost automatically make 100% RRO awards. It was apparent that the UT was concerned about this, as shown by comments (§51) in their decision on Ficcara & Ors v James (2021) UKUT 0038 (LC) where, again, Martin Rodger hinted that an award should “relate” to the rent paid, not “equate” to it.

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In the subsequent decision of Williams v Parmar & Ors [2021] UKUT 244 (LC) the UT clarified this point (§41), insisting that FtT should use the discretion allowed under s44(4)(a) of HaPA to adjust an award according to the circumstances and accordingly adjusted the award of the FtT for the As according to how much each had been impacted by the landlord’s behaviour and condition of the property.

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We see the instant decision as a continuation of this process: Vadamalayan has set the top of the scale at 100% rent award for tenant Applicants. In contrast, Hallet v Parker signifies the bottom of the scale. The case helps to show an appropriate award in circumstances where the Tribunals find very little in the way of aggravating circumstances and find some mitigation in the factors that led to the landlord’s failure to license the property. So, we believe the 25% award is a marker being set down by the UT as a baseline for awards where a conviction is made.

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Going forward:

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What seems certain is that the UT will likely receive many more appeals in the near term: both from landlords trying to achieve the same baseline, as well as from tenants where this ruling is overinterpreted by FtTs in making awards that appear too low. These future appeals will help to build a scale to fill in the gaps between 25-100%.

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What is also clear is that Tribunals cannot move back to the pre-Vadamalayan position of effectively making Parker v Waller-style awards that they consider “reasonable in the circumstances”. The Housing and Planning Act 2016 (HaPA) was introduced exactly because the previous legislation under The Housing Act 2004 (HA) was seen as (nearly totally) ineffective. It is very clear that the government intended harsh RRO awards to be made against criminal landlords: the current Hallet v Parker case is simply underlining that this harshness should be reduced in the unusual combination of circumstances found here.

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Reflecting this, in another UT RRO judgment Simpson House 3 Limited V Osserman & ORS, published the day before Hallet v Parker, the same Judge Rodger increased the award against the landlord (also living abroad and using an agent) who had threatened to confiscate the tenants deposit unless they complied with a vindictive eviction notice (§58 & 59). Clearly, deliberate flouting of the law by landlords that should know better will continue to be heavily punished in RRO cases.

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What does this mean for Renters making RROs?

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Renters should not be deterred from making RROs going forward, or conclude that the amount they will get back will continue to slide away after Hallet v Parker.

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While landlords will surely draw on Hallet v Parker to try to reduce awards, applicants can also make use of the judgment. Specifically, Applicants making claims may now:

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●Use Hallet v Parker to set a minimum award they should receive in ‘less serious’ circumstances. The considerations in Hallet v Parker that even the least serious offences must still serve as a strong deterrent, show that awards should not be negligible and must always be significant enough to serve as a deterrent to landlords.
●Use Hallet v Parker to challenge landlords who seek big reductions in more ‘serious’ cases. Applicants faced with landlords who try to claim they should have big ‘discounts’ may want to draw on Hallet v Parker to show that big discounts are only appropriate where many of the considerations in Hallet v Parker are present. Applicants may want to contrast the case with their own if their landlords:
–Did not rely on agents.
–Did not have a property in reasonably good conditions. Especially important here are compliance with fire regulations, As Judge Rodger stated in the Simpson House deliberations (§53): “Proper compliance with a landlord’s duties in relation to fire precautions is of the utmost importance”
–Did not rent to more than one household for the very first time
–Were not ignorant of the law .
–Were not abroad.
–Did not immediately apply for an HMO after finding out about the requirement.

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●Following the decision Applicants should also try to collate evidence, where it exists, that shows the conditions in Hallet v Parker were not present. For instance, if Applicants know that their landlord was aware of the law around licensing or was a professional landlord – Applicants should do what they can to evidence this.

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Flat Justice will also continue to appeal cases that appear to make RRO awards with undeserved discounts at the FtT so that RROs remain an effective tool in enforcing better and safer housing standards for tenants.

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