Factual and Procedural Background
This appeal arises from a rent repayment order made by the First-tier Tribunal ("FTT") against the Appellant, the owner of a six-bedroom property ("the Property") since 2005. The FTT found that the Property was a house in multiple occupation ("HMO") requiring a license, which had not been obtained, and ordered repayment of rent paid by the Respondent, an occupier of a room in the Property under a licence agreement signed with a company ("Company A") managing the Property on behalf of the Appellant. The Appellant had entered into a written management agreement with Company A, which was controlled by her spouse. The management agreement allowed Company A to let the Property exclusively for holiday lettings, retaining all income, while the Appellant remained responsible for mortgage, council tax, and insurance payments.
The Respondent occupied a room under a licence agreement with Company A, paying weekly licence fees, but treated the Property as her main residence rather than a holiday let. The FTT found the arrangements to be a sham and concluded the Appellant was a person managing the Property and the landlord for the purposes of the Housing and Planning Act 2016 ("the 2016 Act"). The Appellant appealed unsuccessfully to the Upper Tribunal ("UT"), which upheld the FTT’s conclusion that she was the landlord as an undisclosed principal of Company A. The Appellant now appeals to this Court on the issue of whether she was the Respondent’s landlord under the 2016 Act.
Legal Issues Presented
- Whether the Appellant was the Respondent’s landlord for the purposes of the Housing and Planning Act 2016.
- Whether the Appellant was a person having control of or managing the Property under the Housing Act 2004.
- Whether Company A acted as an agent with actual authority on behalf of the Appellant in granting the licence to occupy.
- Whether the terms of the licence agreement excluded the Appellant’s liability as an undisclosed principal.
Arguments of the Parties
Appellant's Arguments
- The Appellant contended that she was not the Respondent’s landlord under the 2016 Act because Company A was the true principal and the licence agreement limited lettings to holiday lets, which Company A was authorised to grant exclusively.
- Relying on the principles from Siu Yin Kwan v Eastern Insurance Co Ltd, the Appellant argued that Company A did not have actual authority to grant a tenancy outside the scope of holiday lettings.
- The Appellant submitted that the licence agreement excluded her right to sue or be sued as an undisclosed principal, and Company A was the true and only principal.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Rakusen v Jepsen [2020] UKUT 298 (LC), [2021] HLR 18 |
Jurisdiction to make rent repayment orders against a superior landlord. |
Referenced to explain the scope of landlord liability, later superseded by Supreme Court decision. |
| Jepsen v Rakusen [2023] UKSC 9, [2023] 1 WLR 1028 |
Clarification that rent repayment orders cannot be made against superior landlords above the immediate landlord. |
Determined that only the immediate landlord under the tenancy can be liable for rent repayment orders. |
| Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 |
A person with no proprietary interest can grant a tenancy and be a landlord. |
Supported the finding that Company A could grant a tenancy despite no legal interest in the Property. |
| Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199 |
Principles governing undisclosed principals and agency authority. |
Applied to assess whether the Appellant was an undisclosed principal and whether Company A acted with authority. |
| Humble v Hunter (1848) 12 QB 310 |
Undisclosed principals cannot sue or be sued when the agent contracts as principal. |
Distinguished and discussed in relation to the current case’s agency facts. |
| Fred Drughorn Ltd v Rederiaktiebolaget Transatlantic [1919] AC 203 |
Critique of the strictness of Humble v Hunter; modern approach to undisclosed principals. |
Supported the modern view allowing undisclosed principals to sue or be sued under certain conditions. |
| Epps v Rothnie [1945] KB 562 |
Evidence admissible to prove agency for an undisclosed principal despite contract naming another party as landlord. |
Analogous to the present case, supporting the Appellant’s status as undisclosed principal landlord. |
| Teheran-Europe Co Ltd v S. T. Belton (Tractors) Ltd [1968] 2 QB 545 |
Agent’s actual authority and third party’s willingness to treat principal as party to contract. |
Used to explain when an undisclosed principal can be liable despite not being named in the contract. |
Court's Reasoning and Analysis
The Court analysed the relationship between the Appellant and Company A under agency principles, focusing on whether Company A had actual authority to enter into the licence agreement on behalf of the Appellant and whether the Appellant was an undisclosed principal liable as landlord.
The Court noted that the Management Agreement expressly stated that Company A was managing the Property on behalf of the Appellant and was permitted to let it, albeit only for holiday lettings. However, the FTT found that the occupation agreements were a sham, not genuine holiday lets, and that the Appellant had not disavowed the agreements or denied Company A’s authority to enter into them.
The Court found no evidence that Company A acted outside the authority given by the Appellant, and the Appellant’s conduct indicated acquiescence in Company A’s actions. The Court also rejected the argument that the licence agreement excluded the Appellant’s liability as an undisclosed principal, finding no express or implied exclusion of the Appellant’s right to sue or be sued.
Drawing on precedent, including Bruton and Siu, the Court held that an undisclosed principal may be bound by contracts made by an agent within actual authority unless the contract excludes such liability. The Court distinguished older cases that limited undisclosed principal liability, noting modern authorities support the Appellant’s position.
The Court concluded that the Deputy President was justified in finding the Appellant to be the undisclosed principal and therefore the landlord under the 2016 Act, liable for the rent repayment order.
Holding and Implications
The Court DISMISSED THE APPEAL.
The direct effect is that the Appellant is confirmed as the landlord for the purposes of the Housing and Planning Act 2016 and remains liable for the rent repayment order made in favour of the Respondent. No new legal precedent was established beyond affirming the application of established agency principles to this statutory context.