Rakusen v Jepsen & Ors [2023] UKSC 9 (01 March 2023)
Citation:Rakusen v Jepsen & Ors [2023] UKSC 9 (01 March 2023)
Rule of thumb:If a land-owner knows of illegal activity being perpetrated by people on in their land, can they sued by third-parties who are caused damage by this illegal activity? Yes, but the land-owner having actual clear knowledge of this being done, and not just reasonable suspicion of this, has to be proved, and it is very difficult to prove this.
Background facts:The basic facts of this case were that a tenant was rented a flat from a landlord. The tenant started sub-renting out rooms in the flat as a ‘bed sit’ flat to make a profit out of it. 3 different people then started living in the flat, so that it became a a ‘House in Multiple Occupation’ ‘HMO’. The landlord however did not have the flat registered and insured as a ‘House in Multiple Occupation’. The landlord was not aware that his tenant was sub-leasing the flat like this. However, the bed-sit people, essentially paid deposits & rents to the tenant and wanted these returned to them from the landlord as it was an illegal HMO, however the tenant providing the sub-leases did not have the money to pay them back, so the bed-sit people sued the landlord.
Parties argued:The bed-sit people suing the landlord argued that the principles of occupier’s liability and joint & several liability applied – they argued that the landlord either knew this, or should have made enquires to know this, should have measures in place to check on this, or turned a blind-eye to this happening, thereby making the landlord liable for the long period of rent money they were owed. The landlord argued that the principle of joint & several liability did not apply in this manner – with ‘should have known’. The landlord argued that he did not know that this was happening with his tenant, and he further argued that the tenants provided no evidence showing that he knew about this or indeed profited from it. The landlord concludingly argued that suspicion or reasonable suspicion was not the test for joint & several liability, rather it was actual knowledge of it happening on the property, so he was therefore not liable for his tenant’s actions.
Court held:The Court upheld the arguments of the landlord. The Court affirmed that joint & several liability at common law meant actual knowledge of the activity occurring in order for joint & several liability to apply, and there was no evidence that the landlord knew about this & had actual knowledge, nor was there any evidence of him profiting from this arrangement. The landlord was therefore not liable for the money the bed-sit people were claiming.
Ratio-decidendi:
‘According to this submission, there is not only the need for a direct relationship between the tenant and the landlord but the tenancy generating the relevant rent for an RRO must be the bottom tenancy, that is the tenancy under which a tenant is occupying the property, as it was on the facts of this case. Put another way, Mr Morris submitted that there were no circumstances in which a tenant (in our hypothetical example, Y), who has itself sub-let the property to the occupying tenant (Z), could obtain an RRO against its (Y’s) immediate landlord (X). We prefer not to decide whether this submission is correct in a case where nothing turns on it and where we are conscious that we have not had full submissions on all possible fact situations… The additional relevant interpretative factors that we have examined on balance support or, at least, are consistent with what we have referred to as the straightforward interpretation of the words in section 40(2). Overall conclusion: Although not always true in the law, in this case the simple answer to the question posed is also the correct answer. An RRO cannot be made against a superior landlord. The appeal is therefore dismissed. We should say, finally, that we are very grateful for the excellent submissions, written and oral, by counsel on both sides who were appearing pro bono’, Lord Briggs at 33 & 59-61.
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.