Divisional Court rejects counterclaims from contract holders for rent repayments over failure of Welsh social landlords to provide electrical condition reports
A Divisional Court has rejected claims for repayment of rent in circumstances where two Welsh social landlords failed to provide the contract holders with electrical condition reports (ECR).
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His Honour Judge Jarman KC, sitting as a judge of the High Court, and Mr Justice Griffiths said in their judgment the contract holders - the equivalent, in Welsh housing law, of tenants, in English housing law – had not suffered loss and would have paid rent even had they been aware that the absence of a physical ECR technically rendered their homes unfit for habitation.
Landlords Beacon Cymru Group, Tai Calon Community Housing and Bron Afon Community Housing had all carried out the required electrical surveys and physical ECRs existed, but had not been supplied to residents.
The court noted residents were unaware of their right to a physical ECR and attached no importance to it so long as their homes were safe, which they were.
Three witnesses, contract holders Dawn Mitchell, Helen Jones and William Wadley, all told the court that even if they had been aware that living in an unfit home meant they did not have to pay rent, they would not have immediately withheld payment but would have contacted their landlord to investigate the matter.
Judges had decided the main issues involved in Coastal Housing Group Ltd and Others v Mitchell and Others [2024] EWHC 2831 (Ch) and now had the counterclaims to assess.
The landlords selected the three cases involved as test cases.
Judges noted that the contract holders did pay rent, although Mr Wadley withheld his for a token one month.
But they now argued the rent was paid because of a mistake of law as none of them knew that because they had not received an ECR their properties were deemed unfit for human habitation and they were not required to pay rent.
The landlords maintained that they were required to pay rent despite the late provision of ECRs and the contract holders “had no thoughts on the matter until (at the instigation of the landlords, who wanted to test the point in this litigation) they were provided with legal advice and representation, well after the ECRs had been given to them”, the judges said.
They said the issues before the court were: did the contract holders pay rent because of a mistake of law; if so, were the landlords unjustly enriched as a result; is a claim for unjust enrichment not available to the defendants in any event, given that there is a subsisting contractual relationship between them and the claimant landlords; are the claimant landlords entitled to retain the disputed rent on the basis of counter-restitution; was Mr Wadley entitled to withhold rent in February 2025 by way of set-off against his counterclaim; if the counterclaims succeed, in whole or in part, are the claimants' rights under Article 1 Protocol 1 of the European Convention on Human Rights (as enacted in Schedule 1 of the Human Rights Act 1998) engaged and breached?
The judges found the contract holders would in fact have paid their rent anyway even had they known their legal right not to because they would have felt that an error had occurred and approached their landlords for clarification rather than immediately withheld rent.
Mr Justice Griffith and HHJ Jarman KC said: “We therefore conclude that none of the rent counterclaimed in this case was paid as a result of a mistake. That is, in itself, fatal to all the counterclaims.”
They also said it was not unjust for the landlords to retain rent paid where the contract holders had suffered no loss as a result of the non-provision of the ECR.
“The defendants did not care about physical receipt of the ECR although they would no doubt care about the electrics being safe (which they were),” the judgment noted.
“They only became aware of the non-provision issue when the landlords themselves became aware of it and set about putting the position right. If the defendants are allowed to reclaim the rent in full, despite not having suffered any loss, it is they and not the landlords who will be unjustly enriched.”
The court also dismissed all other issues and concluded: “For these reasons, primarily because the mistake in this case was not causative of the defendants' payment of rent when it was not required to be paid, but also because it is not unjust for the claimants to retain such rent, and also because we should not grant restitution when the contract subsists and no damage has been sustained even assuming a breach of contract, the counterclaims of all three defendants fail and are dismissed.”
Mark Smulian
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22-10-2025 4:00 pm
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