Subletting, SPOs and unlawful profit orders

Monday 4 September 2017

Poplar Housing and Regeneration Community Association Ltd v Begum [2017] EWHC 2040 (QB), 4 August 2017

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Poplar Housing and Regeneration Community Association Ltd v Begum [2017] EWHC 2040 (QB), 4 August 2017

The Respondents, Ms Begum and Mr Rohim, lived in a flat in East London provided to them by the Appellant, Poplar Harca, under an assured tenancy. Following an investigation in relation to suspected social housing fraud on the part of the Respondents, the Appellant carried out an inspection of the flat. A couple were found to be in occupation of the flat, who explained that they have lived there for around three months, paying the Respondents rent of £400. They had access to the entire flat save for one bedroom (containing toys and a cot) which had been padlocked shut. That room, the occupants indicated, was kept locked in order to create the misleading impression that the Respondents were still in occupation in the event of an inspection. The Respondents were discovered to be living elsewhere, with the First Respondent’s mother. Though they subsequently attempted to return to the flat and threatened to unlawfully evict the occupants.

The Appellant duly served the Respondents with a notice seeking possession relying on grounds 10, 12 and 14, Part 2, Schedule 2 Housing Act 1988 together with a notice to quit, and commenced proceedings seeking possession and an unlawful profit order pursuant to s5 Prevention of Social Housing Fraud Act 2013.

Meanwhile, in the lead up to the trial of the possession claim the police raided the flat and found the Second Respondent to be in possession of a quantity of cannabis and drug dealing paraphernalia. He was arrested on suspicion of possessing a class B drug with intent to supply, but, when the matter reached court, pleaded guilty to simple possession.

The trial of the possession claim took place several months later. The Recorder who dealt with the trial found that the Respondents had not sublet or parted with possession of the whole of their flat, meaning that the conditions set out in s15A Housing Act 1988 were not made out, that they had retained their security and that the notice to quit was of no effect. However, they had sublet part of the flat in breach of their tenancy. On this basis the Recorder made a suspended order but refused to make an unlawful profit order.

Turner J allowed the Appellant’s appeal. The Recorder’s exercise of his discretion as to whether to suspend the order had been fundamentally flawed. He has erred in finding that the Respondents had not profited by subletting the property, overlooking the fact that they were in receipt of housing benefit throughout. This had contaminated the finding he had gone on to make, that the Respondents motives for living elsewhere had been purely in order to care for the First Respondent’s ill brother. As such it fell to exercise the discretion afresh. In view of the scale and persistence of the Respondent’s initial fraudulent deceit, the subsequent drug related offending and the dearth of any cogent evidence that the Respondent’s would mend their ways in future, an outright order was justified.

Turner J went on to make an unlawful profit order, finding that the judge, when carrying out the calculation required by s5 Prevention of Social Housing Fraud Act 2013, had wrongly excluded the housing benefit received by the Respondents in the course of their fraud.

The judgment is available here: Poplar Housing and Regeneration Community Association Ltd v Begum [2017] EWHC 2040

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