Court of Appeal rejects challenge to housing licensing designations over lack of standing

Lord Justice Lewis said Mrs Justice Heather Williams had also been correct to conclude that there was no arguable ground of challenge.

“Consequently, she was correct to refuse to grant this claimant permission to apply for judicial review of the designations,” the Court of Appeal judge said.

The background to the case was that Luton had made two designations under the 2004 Act in October 2023.

The first designated the whole of the borough as an area where houses in multiple occupation ("HMOs") had to be licensed.

The second designated part of the borough, comprising the town centre and Park Town areas (referred to as South Ward) as an area where a house which was let or occupied under a single tenancy or licence, or under two tenancies or licences in respect of different dwellings in the house, had to be licensed.

The claimant, Luton Landlords and Letting Agents Ltd, is a company limited by guarantee. Its sole director, and the only person named as having a controlling interest, is Rajdvinder Singh Bains, Lord Justice Lewis said.

In the statement of facts and grounds that accompanied the claim form, the claimant was described as "a limited company set up to support landlords in relation to selective licensing and additional licensing schemes".

Lord Justice Lewis said no other information was provided in the claim form and there was no witness statement accompanying it. The claim form set out a number of grounds for claiming that the designations were unlawful.

In its summary grounds of defence the council averred, amongst other things, that the claimant lacked standing to apply for permission to bring a claim for judicial review.

Permission was refused on the papers by Sir Peter Lane, sitting as a High Court judge, and then, following an oral hearing, by Mrs Justice Heather Williams.

Heather Williams J concluded that the claimant did not have standing to bring the claim as it had not established on the evidence that it had a sufficient interest in the matter. Secondly, she considered that each of the eight grounds of claim were unarguable.

Luton Landlords and Letting Agents was given permission to appeal the findings that it did not have standing, and that certain grounds of claim were unarguable:

(a) the council acted irrationally or unlawfully in relying on data included in a 2019 report when making the designations in October 2023;

(b) the executive (which took the decision) was given false and misleading information about the financial viability of the schemes for additional and selective licensing;

(c) the respondent acted unlawfully in requiring applicants who applied early for a licence to pay a fee which included both an amount reflecting the cost of processing the application and an amount reflecting the costs of enforcement of the licensing regime.

The Court of Appeal considered four issues:

• Sufficient interest
• Did the council act unlawfully by relying on the data in a 2019 report?
• The basis on which the licensing scheme would be financed.
• The upfront charge for enforcement costs as part of the "early-bird" flat fee.

On ground 1, counsel for the claimant argued before the Court of Appeal that Mrs Justice Heather Williams should have accepted the evidence of Mr Bains that the company was set up as a membership organisation and that it had 31 members.

A witness statement from the claimant’s solicitor also said the solicitor was aware that the claimant was a membership organisation and he had met the group.

Nor had the council challenged the standing of the claimant in relation to a previous judicial review claim over another licensing scheme in March 2022, which had been compromised by consent.

Counsel for Luton meanwhile emphasised that the issue for the Court of Appeal was whether the judge below was wrong in her conclusion that the claimant company had not demonstrated that it had sufficient interest to bring the claim.

The issue was, effectively, whether the claimant company was bringing the claim on behalf of others. The relevant witness statements were made after that issue arose. The judge was entitled to conclude that the evidence provided did not demonstrate that the claimant company was acting as a representative of others when bringing the claim, it was submitted.

Making some preliminary observations, Lord Justice Lewis noted that Section 31(3) of the Senior Courts Act 1981 provides that:

"(3) No application for judicial review shall be made unless the leave of the High Court has been obtained in accordance with rules of court, and the court shall not grant leave to make such an application unless –

(a) it considers that the applicant has a sufficient interest in the matter to which the application relates, and

(b) the applicant has provided the court with any information about the financing of the application that is specified in rules of court for the purposes of this paragraph."

The Court of Appeal judge said: “The question of whether a particular claimant has a sufficient interest in the matter to which the claim relates will involve consideration of, amongst other things, the nature of the interest of the claimant in the matter that is the subject of the claim. Individuals, or legal persons such as companies, will generally be regarded as having a sufficient interest in respect of decisions taken specifically in relation to them, or which affect them in some way.

“Other groups or legal entities may have a sufficient interest in a matter for the purposes of section 31(3) of the 1981 Act. Some groups act in a representative capacity, bringing a claim on behalf of, or to protect the interests of, their members. This has been referred to by commentators, and in some case law, as associational standing, although the phrase is, perhaps unhelpful, and does not fully reflect the basis upon which the body concerned has standing, i.e. the body is acting on behalf of, the interests of its members or those it represents. These types of situations typically but not exclusively involve bodies such as unions or professional bodies.

“Claims may also be brought by pressure groups who may be particularly active, and have particular expertise, in a particular area (such as environmental groups or social welfare groups) or be formed to campaign on particular national or local issues. They may have sufficient interest to bring a claim to challenge a particular measure, particularly if they have established expertise in an area. The fact that a company is incorporated to bring a challenge in such circumstances would not, of itself, prevent the company having a sufficient interest in the matter.”

Lord Justice Lewis also observed that there may be instances where a measure or decision affects the public generally, not merely a particular individual or even a group of individuals.

“In appropriate cases, the courts have held that an individual, or a group, may bring a claim because there is a serious issue of public importance which needs to be addressed (see the observations of Lord Reed in Axa General Insurance Ltd. v HM Advocate [2011] UKSC 46; [2021] 1 AC 868 at paragraph 170). It is also relevant to note that the courts have adopted an increasingly liberal approach to standing in such cases.”

The Court of Appeal judge said it was also right to note that, at the permission stage, the court is “primarily concerned with excluding hopeless cases where a claimant cannot establish he has a sufficient interest in the matter because, for example, he has no private interest in the matter and is not acting in the public interest or is otherwise a ‘meddlesome busybody’.”

Turning to the facts of the case, Lord Justice Lewis said: “The claimant company does not itself have any direct interest in the subject matter of the claim. It does not own any houses which are HMOs or which are let under a tenancy or licence. It will not have to apply for any licences. The claimant does not, therefore, have a sufficient interest in the matter on that basis.

“The claimant company, however, claims that it has a sufficient interest in the matter as it is a limited company ‘set up to support landlords in relation to the selective licensing and additional licensing schemes’ as it asserted at paragraph 6 of its statement of facts and grounds. That was challenged, and indeed, permission was refused on the papers on the basis that the claimant did not have a sufficient interest. It was in that context that Mr Bains put in his witness statement to provide information intended to support the claimant's claim that it had a sufficient interest because it was acting on behalf of its members.

“In the circumstances, the judge was not wrong when she concluded that the evidence before her did not establish that the claimant had been set up to support landlords in relation to the licensing schemes.”

Lord Justice Lewis found that:

1. The materials exhibited to Mr Bains' first witness statement did not show that the claimant company was dealing with the respondent on behalf of its members. “Rather, as the judge observed at paragraph 48 of her judgment, the exhibits to Mr Bains' witness statement ‘tend to show the converse, namely that his communications with council officers have been in other capacities’.”
2. There was an absence of evidence of the sort that one would have expected to be exhibited if the claimant company was a membership organisation acting for its members on issues concerning the licensing schemes.
3. There was no other documentary evidence to indicate that the claimant, which is a company limited by guarantee, was a membership organisation. “It had no shareholders and consequently no members in the sense of shareholders. There were no articles of association setting out how the membership organisation was structured. Its articles of association were of a very general nature.”

The Court of Appeal judge noted that Heather Williams J, “as she was entitled to”, gave little weight to those parts of Mr Bains' first witness statement referring to the number of members, or to the statements in Mr Bains' second statement, and that of the claimant's solicitor, referring to a group.

“Those generalised statements were insufficient to demonstrate that this claimant company was acting on behalf of any members in relation to the licensing scheme,” Lord Justice Liews said.

“Further, I would add that the fact that there had been proceedings issued before, which had been settled, does not assist in resolving this issue as the question of sufficient interest was not, it seems, raised and certainly not determined in those earlier proceedings.

In all those circumstances, Lord Justice Lewis said, the judge was not wrong to conclude that the claimant had not established that it had a sufficient interest in the way it had claimed.

On the second issue, Lord Justice Lewis said the executive had been expressly invited in respect of each of the two designations to consider whether it wished to update the data in the BRE report.

“The reports pointed out that this could provide the respondent with up to date information but that that would lead to a delay of around 3 months and might not provide any additional assistance,” Lord Justice Lewis said.

“It was not irrational for the executive to decide to proceed with its decision to authorise officers to make a designation in those circumstances. It had to weigh the data it had, the consequences in terms of delay of seeking further information, and the likelihood of that information not assisting. The decision it made to proceed on the basis of all the material it had was a rational one.”

That conclusion was reinforced in relation to the additional licensing scheme by a number of other considerations, the Court of Appeal judge said.

Turning to the third issue, it was argued on behalf of the claimant that the executive had misleadingly been told that the licensing schemes would be self-financing – for example if all those needing a licence made an “early-bird” application. The claimant also relied on extracts from e-mails of officers in the process up to the preparation of the two reports of the executive.

However, Lord Justice Lewis said: “The reports were not misleading and did not contain any defect….First, on the question of the impact of the "early-bird" flat-rate fees, as the judge said, this must have been obvious to members of the executive since they were told that fees could not be set so as to make a profit and that discounted fees (the "early-bird" fees) were less than the amount that a standard applicant would be charged to offset enforcement costs.

“Secondly, on the question of the e-mails from the officers, it is clear that the reports themselves, which went to the decision-makers, were correct. These grounds are not arguable.”

Finally, for the fourth ground, Lord Justice Lewis said the designation of the areas where additional, or selective, licensing is required does not depend on the operation of the licence fee.

“The terms of the designations…. show that they are concerned with bringing about a situation where licences for relevant properties under Part 2 or Part 3 of the 2004 Act are required. The charging structure for the issuing of such licences is separate.

“Indeed, the reports refer to the level of fees being set, reported to the executive, and reviewed through what is described as the scale of fees and charges process. The validity and lawfulness of the designations is not conditional, or dependent, on the lawfulness of the way in which fees are set and recovered. Those are two separate matters.”

The Court of Appeal judge said a claimant may be able to bring a claim that charges have been unlawfully levied, and may be able to recover any charges unlawfully paid. “But that would not invalidate the designations requiring a licence to be obtained for a particular property.”

Lord Justice Lewis added that, “secondly and separately, even if the charging system and the designations were to be seen as part of one system, it would only be defective in so far as it required an upfront payment of the amount of the application fee relating to enforcement. That aspect could be separated out from the arrangements and appropriate remedies granted, and the remainder of the scheme, including the designations, would be lawful. See R (Hemming) v Westminster City Council (No.2) [2017] UKSC 50, [2018] AC 676 at paragraph 10.”

Lady Justice Elisabeth Laing and Lord Justice Holgate agreed.

Harry Rodd