Global 100 Limited v Sasha Jam Ross & Ors

Following a hearing on 22 August 2024, on 23 September 2024 the First-tier Tribunal, Property Chamber (Residential Property) (“the FTT”) made rent repayment orders under s.43 Housing and Planning Act 2016 requiring Global 100 Ltd (“the appellant”) to pay specified sums to each of the respondents. This is an appeal from that decision.

The basic facts are straightforward. As the FTT stated in its decision, this is one of the many property guardian cases in which property guardian companies license property guardians to live in properties which would otherwise remain empty, for the purposes of securing and safeguarding those empty properties (para 8 of the FTT’s decision).

As the FTT found, the freehold of the property in question, Old Moselle School Building, Moira Close, London N17 6Z (“the property”) was owned by the London Borough of Haringey, a local housing authority. On 28 June 2013, the local authority entered into a written agreement with Global Guardians Management Ltd (“GGM”) under the terms of which GGM were permitted to use the property for live-in guardianship purposes. A copy of the agreement was in evidence. It provided that the consideration payable for that right should be £980 per calendar month payable by GGM. GGM then granted permission to the appellant to grant licences to live-in guardians, including the respondents. Copies of those licences, under which the guardians were each required to pay a weekly fee to the appellant, were also in evidence. It was accepted that the local authority did not itself receive payments from the people in occupation of the property (para 17 of the FTT decision).

A document headed THE INTER-COMPANY ARRANGEMENTS FOR APPOINTMENT AND DETERMINATION OF GUARDIAN LICENCES signed by Mr Theo Kyprianou as director of both GGM and the appellant, and dated 19 January 2018, was also in evidence before the FTT and was referred to in its decision (para 9 of the FTT decision). Although a copy was not in the appeal bundle, one was provided upon the hearing of this appeal.

The respondents (guardian occupiers) sought rent repayment orders pursuant to section 43 Housing and Planning Act 2016 on the ground that the FTT could be satisfied beyond reasonable doubt that the appellant had committed an offence to which the relevant Chapter applied, that is, an offence to which the table in section 40 of that Act referred, committed by a landlord in relation to housing in England let by that landlord.

The offence relied on was the one for which section 72 (1) Housing Act 2004 provides. That offence is committed by a person having control of or managing a house in multiple occupation (“HMO”) which ought to be licensed but is not. The only point at issue in this case was whether this property was such an HMO. It was accepted that unless the property fell within the statutory exception for which paragraph 2 Schedule 14 of the 2004 Act provided, it would be such an HMO. The relevant exception for present purposes applies to a building where the person managing or having control of it is a local housing authority. The question for the FTT was therefore whether the local housing authority was the person managing or having control of the property. The appellant argued that it was, so that the exception applied.

Section 263 Housing Act 2004 defines the meaning of “person having control” and “person managing.” So far as relevant, it reads as follows.

As the judgment of the FTT recites (para 15), the appellant accepted in the course of argument that it could not succeed in arguing that the local housing authority was a person having control of the property within s.263(1) because of the decision of the Tribunal in the case of Cottam v Lowe Management Ltd [2023] UKUT 306 (LC), where it was held (paras 48 and 49) that a freeholder who has let property at less than a rack-rent cannot be a person in control, as they are not a person who could, if they chose, grant a lease at a rack-rent.

Moreover, the appellant only relied on s. 263(3)(b) of the 2004 Act, since the local housing authority did not receive payments from the people in occupation of the property.

Accordingly, the FTT stated that,

On the first question, the FTT concluded that the agreement between the local authority and GGM was a not a lease. The second question therefore arose. The FTT considered (para 32) that

The FTT accepted that the appellant was not an owner of the premises and also accepted that, but for the agreement, the local housing authority would itself have received payments from occupiers. But, on the second question, the FTT held that the arrangement was not one “by virtue of which” GGM received those payments. No other matters being in dispute, it was satisfied that the appellant had committed the offence, and it made the rent repayment orders.

On 5 December 2024, the FTT granted permission in the following terms, so far as relevant.

While the terms of the permission to appeal do not positively assert that the FTT had in fact considered the wider context in which the licence agreement itself came about, it does not (contrary to the suggestion made on behalf of Counsel for the appellant), contain an acceptance on the part of the FTT that it had not, only that it was arguable that it had not and that it should have done.

The appellant’s skeleton argument set out its contention in clear terms, as follows.

By s. 263(3)(a) of the Housing Act 2004, “person managing” means, in relation to premises, the person who, being an owner or lessee of the premises, would so receive those rents or other payments but for having entered into an arrangement (whether in pursuance of a court order or otherwise) with another person who is not an owner or lessee of the premises by virtue of which that other person receives the rents or other payments.

On that basis, for the local authority to be the person managing the property (so that no offence was committed) it would have to be an owner of the premises (which it was), and it would have had to have entered into an arrangement with another person who was not an owner or lessee of the premises (which it did). The agreement with GGM was not one by virtue of which GGM received the rents or other payments from the occupying guardians. In particular, the agreement itself did not provide for GGM to receive the rents or other payments from the occupying guardians. It said nothing about that. It was the appellant which received the rents or other payments from the occupiers, but not by virtue of the agreement between the local housing authority and GGM.

The appellant therefore argues that the ‘arrangement’ must be taken to include all of the agreements, understandings and practices that made it possible to allow paying guardians to occupy the property for security, since that was the object of the exercise.

Plainly the category of arrangements is potentially wide, and wider than that of contractual agreements. I did not understand the respondents to argue otherwise. But there are additional requirements. The arrangement must be made by the local authority and with some other person. That other person must not be an owner or lessee of the property, but must receive the rents or other payments from occupiers. It may do so directly or through an agent or trustee. But it must do so by virtue of that arrangement. And it must be the case that the owner or lessee of the premises would receive those rents or other payments (whether directly or through an agent or trustee) but for having entered into that arrangement.

The FTT needed to consider whether the arrangement between the owner or lessee, on the one hand, and the person who receives the rents or other payments, on the other, had those features. The appellant’s proposition that the arrangement must be taken to include all of the agreements, understandings and practices making it possible to achieve the commercial objective (in this case, allowing paying guardians to occupy the property) is plainly too broadly expressed, therefore, and I reject it.

Even so, the appellant argues that the FTT in the present case asked itself the wrong question by limiting its consideration to the written agreement between the local authority and GGM.

It argues that the evidence was that the arrangement in the present case encompassed a number of parties, including the local authority, GGM, the appellant and the respondents. Admittedly there was no documentation in evidence identifying any money GGM may have received as having been paid by the occupiers. It was the wider business model which should have been considered. The point was that GGM and the appellant were in business. The parties agreed that it was plain that the appellant had been part of a group with GGM. Money passed from GGM to the local housing authority under the agreement: the £980/month. It must have come from somewhere. The FTT should or could have inferred that it had come from the respondents to GGM. It failed to do so because it had asked itself the wrong question, limiting its consideration to the effect of the agreement between the local authority and GGM, rather than considering the wider arrangement. It was submitted that while this Tribunal might not itself be able to infer that that the money had come from the respondents to GGM, it should remit the matter to the FTT for a re-hearing on the correct basis.

The Respondent argued that either the FTT was right for the reasons that it had given; or if not, its decision should be upheld on other grounds.

The first question is whether the FTT had indeed considered just the agreement between the local authority and GGM, or whether it had considered the arrangement between them as a whole.

The FTT plainly knew that it should consider the ‘arrangement,’ because it set out the statutory provision referring to it (in particular in paras. 16 and 18 of the decision). It referred not only to the agreement between the local authority and GGM but also to the document setting out the arrangement between GGM and the appellant - the document referred to at para 4 above (para. 9 of the FTT decision), so it had that in mind.

At para. 20 of its decision it, asked itself the right question, namely,

At para. 30 it recorded that “Mr. Owen [who appeared below] argued that but for its agreement with GGM the local authority would have received rent for the property”. In other words, that was the arrangement then relied on. There was no attempt on the part of the appellant to argue that this was a mischaracterisation of the argument raised in the FTT on the part of the appellant, but I take that to be implicit in its case.

At para. 32 it again asked itself the right questions in the following terms.

In dealing with the ‘but for’ element of the test, the FTT referred to both the agreement and the arrangement, and the appellant was successful on that point (para 33).

In dealing with the ‘by virtue of’ point, however, the FTT referred first (para 34) to the agreement between GGM and the local authority, and found that it made no mention of any payments made by occupiers and no reference to the appellant whatsoever; that nothing in the document set out inter-company arrangements between the appellant and GGM showing that the appellant was required to make any payments to GGM; and that nothing in that document showed that the appellant was acting as its agent or trustee. The FTT was therefore applying its mind to the wider arrangement, when considering the agreement as potential evidence of the arrangement.

At para 35, the FTT continued

The appellant relies on this passage as showing that the FTT had, at least at this point, wrongly confined its consideration to the agreement between the local authority and GGM. It is plain by this point in the decision, however, that the FTT was still asking itself the right questions, that is, whether the arrangement in question had the requisite features for the exception to apply. It was approaching the matter on the basis that the relevant arrangement in the case was the agreement between the local authority and GGM. It rejected the argument that the possibility that the way in which some money derived from the payments made by occupiers to the appellant might have made its way to GGM might have been part of the arrangement, on the footing that the agreement did not provide for it, so that it could not have been by virtue of the arrangement.

It was plainly right to do so. There was no evidence at all of any wider arrangement, beyond the agreement, by virtue of which GGM might have received rents or other payments made by the occupiers. Considering the wider business model, as proposed by the appellant, would not have founded an inference of such an arrangement outside or including the agreement. The FTT was of course aware that that GGM and the appellant were in business and that money passed from GGM to the local housing authority under the agreement (the £980/month) and that it must have come from somewhere. But there was no evidential basis for an inference that it came from the respondents; or that it did so by virtue of an arrangement into which the local housing authority had entered. Assuming money was indeed received by GGM, it may have come from other parties than the appellant with which it did business or had a relationship, or from other occupiers, including other occupiers of other properties; or from its own general mixed funds to which various sources might have contributed. There was no evidential basis upon which the moneys paid by the occupants might have been traced through to GGM.

Accordingly, it is not that the FTT did not consider the wider picture because it had asked itself the wrong question, but that it did not base its decision upon it precisely because had asked itself the right one. That is put beyond doubt by its observation in para 36 that the FTT

In oral argument, the appellant suggested that if the FTT had focused on the right question, namely the arrangement, rather than the specific agreement, it might have found or asked for evidence identifying a trail of payments from the occupiers to GGM. It was for the parties to decide what evidence they placed before the Tribunal. The appellant accepted before me that, on the evidence actually placed before the FTT, it was not possible to identify a trail of payments from the occupiers further than to the appellant.

It follows that the concern raised by the appellant, that the decision of the FTT might undermine the anti-avoidance effect of the statutory provision posited in Cabo v Dezotti [2022] UKUT 240 (LC), does not arise.

Accordingly, the appeal is dismissed. I do not need to consider the alternative arguments raised by the respondents for supporting the decision on other grounds.