Interested Party: Swindon Borough Council
Intervener: Secretary of State for Housing, Communities and Local Government
[2024] EWHC 2023 (Admin)
Why important?
This case highlights an important drafting error in the Management of Houses in Multiple Occupation (England) Regulations 2006 and sets out how and when the courts will intervene in such cases.
Background
CRH has contracted with the Home Office to provide accommodation for asylum seekers. The HO is under a duty to do this under the Immigration and Asylum Act 1999. The arrangement involves the HO paying CRH, with no payment made by the service users for their accommodation. CRH leased properties, including in Swindon, for this purpose. HMO licences were obtained – while these were originally sought in the names of the freeholders, SBC insisted that CRH applied for them. Following inspections SBC found conditions that justified enforcement action and laid 39 separate charges 27 of which were for offences under the Management Regulations. At the plea hearing CRH applied for these charges to be dismissed as they were not a “manager” for the purposes of the Regulations.
At the heart of the arguments was the interplay between the definition of HMO in Section 254(2) of the Housing Act 2004, the requirements relating to who can be licenced and be the manager under Section 64 of this Act, and the definitions of “person having control” and “person managing” under Section 263. Section 234 gives the power to the relevant national authority to make regulations. The Management Regulations in force apply to virtually all HMOs in England, not just those which are licensed. The term “manager” under Regulation 2(c) and Footnote 1 specifically link this to “person managing” under Section 263(3) of the Act. While CRH had said they would be managing the properties in the licence application process, at the hearing they argued that they could not come within the statutory definition as they did not receive any payments from the occupants for their accommodation. The District Judge came to the conclusion that neither the freeholders nor CRH could ever fit this definition in a case such as this, and that no accommodation provided for asylum seekers could therefore ever be licensed as an HMO. She therefore accepted SBC’s argument that this would lead to an absurd position so that she was entitled to look beyond the strict wording of the statute to consider the intentions of Parliament. Having regard to relevant case-law*, she refused the application to dismiss the charges by inserting words into Section 263(3) so that a “person managing” became someone who receives payment from or in respect of persons in occupation.
CRH sought judicial review of the refusal to dismiss the relevant charges.
High Court
The High Court held that the District Judge’s analysis was flawed and was based on an error of law. It was possible for a “person having control” to be licensed, and this status exists without the direct receipt of rent. It was therefore not possible to argue that the HMO regime would have no effect unless extra words were added to Section 263. The rules on when the courts could deviate from the literal meaning of a statute did not apply. SBC’s arguments had been based on the District Judge’s reasoning. The High Court also rejected the alternative reasoning put forward by SSCHLG that the HO was acting as the agent of the service users.
However, under Section 31(2A) of the Senior Courts Act 1981, relief can only be awarded in such actions if the outcome would have been materially different had the error of law not been made. The real issue in this case was the omission from the Regulations of a “person having control,” so that where there was no “person managing” there would be no need to comply with them. This exclusion was inexplicable and there was nothing in the Explanatory Note to explain or justify it. It was a clear error in drafting the Regulations which defeated their purpose. Section 234 of the 2004 Act allowed any such Regulations to include both “persons having control” and “persons managing”. The simplest way of rectifying the absurdity was to alter Regulation 2(c) to read “the manager means the person managing or the person having control of the HMO” and tying this back to the relevant definition in Section 263.
The matter needed to be returned to the Magistrates Court to assess liability as CRH also disputed whether they were a “person having control.” The High Court reminded everyone that it was usually inappropriate to use judicial review to deal with interlocutory issues. This case had been allowed to proceed because of the many service users subject to the same arrangements.
Comment
For those that are interested, this case sets out the relevant principles of statutory interpretation. Generally, the courts cannot look at what was said in Parliament or at associated information unless it is not possible to give effect to a literal interpretation of the words used*. The principles were set out in some detail by Lord Nicholls in Inco Europe Ltd** and again by Sales J (as he then was) in Bogdanic***. A key point to remember that the “intention of Parliament” is viewed objectively by the courts – it is what they think Parliament intended from the words which were used, not what the Minister and civil servants actually thought! An irony of this case is that had SBC allowed the freeholders to be the licensees, and/or they had pursued CRH for breaches of licence condition, this problem may not have emerged.
*Pepper v Hart [1993] AC 593.
**Inco Europe Ltd v First Choice [2000] 1 WLR 586.
***Bogdanic v Secretary of State for the Home Department [2014] EWHC 2872.