Court partially allowed appeal to reduce financial penalty for Rent Pressure Zone breach by 35%.

AN CHÚIRT CHUARDA

THE CIRCUIT COURT

DUBLIN CIRCUIT COUNTY OF CITY OF DUBLIN

Record No. 2021/05519

IN THE MATTER OF THE RESIDENTIAL TENANCIES ACT 2004, AS AMENDED

NOTICE OF MOTION FOR RELIEF PURSUANT TO SECTION 148 OF THE

RESIDENTIAL TENANCIES ACT 2004, AS AMENDED

Between:

WOW INVESTMENTS LIMITED

APPELLANT

-AND-

RESIDENTIAL TENANCIES BOARD

RESPONDENT

Judgment of His Honour Judge John O’Connor delivered on the 3rd day of November, 2022

1. Introduction:

1.1 This is an appeal by the Appellant pursuant to section 148AA of the Residential Tenancies Act 2004 (as amended) [“RTA 2004”] seeking to set aside a decision of a decision maker to the effect that the Appellant should be the subject of a financial penalty in respect of an instance of improper conduct under Part 7A, specifically a breach of the Rent Pressure Zone [“RPZ”] restrictions occurring in a tenancy at a dwelling [“the dwelling”] and in respect of which tenancy the Appellant was the landlord.

1.2 The Appellant seeks the following:

(a) an order pursuant to section 148AA(3)(a)(ii) of the RTA 2004, setting aside the decision of the Decision Maker dated 25 May 2021, or

(b) as alternative relief, an order pursuant to section 148AA(3)(a)(iii)(II) of the RTA 2004, setting aside the said decision and replacing it with such other decision as the court considers appropriate, specifically a decision to impose no sanction on the Appellant.

1.3 The Respondent submits that the decision should be confirmed by the court pursuant to section 148AA(3)(a)(i) of the RTA 2004, as they submit the Appellant has failed to establish any error in the decision.

2. Background to Functions of the Respondent and the Investigation Regime

2.1 The Residential Tenancies Board (RTB) is an independent body corporate established under section 150 of the RTA 2004 and charged with performing the statutory functions conferred on it by the legislation. Pursuant to section 151(1)(ba) of the RTA 2004, the principal functions of the Board include “the investigation of landlords and the imposition of sanctions in accordance with the provisions of Part 7A of the RTA 2004”.

2.2 As defined by Part 7A of the RTA 2004, investigations into alleged improper conduct by landlords shall be caused by the RTB to be carried out following receipt by the Board of a complaint against a landlord in that respect or, as occurred in this case, may be caused to be carried out of the RTB’s own volition. Once a decision has been taken to initiate such an investigation, an Authorised Officer is appointed by the RTB to carry out an investigation into the relevant allegation(s) of improper conduct.

2.3 It is open to a landlord to acknowledge an allegation of improper conduct at the outset of an investigation. In such a case the matter is not required to be investigated in full and is instead referred to a decision maker, as defined under Part 7A of the RTA 2004, for determination of the question as to whether any sanction should be imposed on the landlord.

2.4 In cases where alleged improper conduct is not acknowledged by a landlord as having occurred, the Authorised Officer(s) proceed to conduct a full investigation of the allegation(s), gathering evidence as appropriate in the exercise of their statutory powers and compiling a draft investigation report. That draft investigation report is in all cases furnished to the landlord to allow an opportunity for any submissions to be made thereupon and to respond to the preliminary findings of the Authorised Officers, following which the investigation report is then finalised taking account of those submissions.

2.6 A Decision Maker under the RTA 2004 is independent in his or her role and function, is appointed to decide thereafter upon the allegation(s) investigated by the Authorised Officer(s) and to decide whether any sanction should be imposed on the landlord in the event improper conduct is found to have occurred or to be occurring. For this purpose, the final investigation report of the Authorised Officers, containing all the evidence and relevant documentation in the case, together with submissions of the landlord (and complainant, where applicable) on the draft investigation report, are furnished to the Decision Maker who makes a

decision on the allegation and the question of sanctions (if any). It is open to the Decision Maker if he or she considers it proper to do so for the purpose of assisting him or her in making that decision, to conduct an oral hearing and to invite further submissions from the landlord (and complainant, where applicable). Having considered matters, the Decision Maker proceeds to give to the Board notice in writing of his or her decision, and the Board in turn issues the

decision notice to the landlord (and complainant, where applicable).

3. Sanction

3.1 As outlined by Úna Cassidy and Jennifer Ring in the book “Landlord and Tenant Law: The Residential Sector”, section 148X(11) of the RTA 2004, as amended, provides for what sanction(s) can be imposed in relation to improper conduct. “Sanction” means one, more than one, or all of the following:

(a) a financial penalty not exceeding €15,000 for the improper conduct by the landlord;

(b) a direction that the landlord pay part or all of the RTB’s costs of the investigation to an amount not exceeding €15,000;

(c) the giving of a caution in writing to the landlord.

4. Matters to be considered in determining the nature of the sanction

4.1 Section 148AD of the RTA 2004, as amended, outlines the matters to be considered in determining the nature of the sanction. It reads as follows: “The Circuit Court or the Decision Maker, as appropriate, in considering the sanction (if any) to be imposed on a landlord pursuant to subsection (4)(a) or (5) of section 148X or confirmed or given under section 148AA(3) or 148AB(2), shall take into account the circumstances of the improper conduct concerned (including the factors occasioning

it) and, without prejudice to the generality of the foregoing, may have regard to—

(a) the need to ensure that any sanction imposed—

(i) is appropriate and proportionate to the improper conduct,

(ii) if applicable, will act as a sufficient incentive to ensure that any like improper conduct will not occur in the future, and

(iii) if applicable, will act in the public interest to encourage compliance with this Act,

(b) the seriousness of the improper conduct,

(c) if the landlord has, under section 148W(1), acknowledged the improper conduct,

(d) the extent of any failure by the landlord to co-operate with the investigation concerned of the improper conduct by the landlord,

(e) any explanation by the landlord for the improper conduct or failure to co-operate with the investigation concerned,

(f) any gain (financial or otherwise) made by the landlord or by any person in which the landlord has a financial interest as a consequence of the improper conduct,

(g) the amount of any loss suffered or costs incurred as a result of the improper conduct and any steps taken by the landlord to remediate the loss suffered or costs incurred,

(h) the duration of the improper conduct,

(i) if applicable, a re-occurrence of the improper conduct by the landlord,

(j) if applicable, the continuation of the improper conduct after the landlord was notified of the investigation concerned,

(k) if applicable, the extent and timeliness of any steps taken to end the improper conduct and any steps taken for remedying the consequences of the improper conduct, and

(l) whether a sanction has previously been imposed under this Part on the landlord on foot of a similar occurrence of improper conduct.

5. Appeal to the Circuit Court

5.1 The law in relation to an appeal to the Circuit Court is prescribed in Sections 148Z, 148AA, 148AB & 148AC, and summarised by Úna Cassidy and Jennifer Ring in the book “Landlord and Tenant Law: The Residential Sector”, at paragraph 11.52, as follows: “The landlord has a right to appeal the decision to impose a sanction to the Circuit Court. The appeal must be made within 21 days from the date the RTB gives the decision notice to the landlord. When hearing the appeal, the Circuit Court may consider evidence that was not before the authorised officer or the Decision Maker. The Circuit Court may confirm or set aside the decision the subject of the appeal or set aside the decision and replace it with such other decision as the court considers appropriate. When considering what decision to make, the Circuit Court may take into consideration the factors listed in section 148AD (above). The Circuit Court may also make such orders as to costs as it thinks fit in respect of the appeal. The decision of the Circuit Court is final, except that it may be appealed to the High Court on a point of law by the RTB or the landlord. To take such an appeal, leave of the Circuit Court is required in the first instance.”

6. Submission on the scope of the Appellate Jurisdiction of the Circuit Court

6.1 As this is the first appeal of its kind to come before the courts since the commencement of Part 7A of the RTA 2004, I am grateful to the Respondent Counsel who submitted [with which the Appellant Counsel concurred] as to what it to be the appropriate scope of an appeal pursuant to section 148AA of the RTA 2004.

6.2 The nature and scope of the court’s jurisdiction on a statutory appeal is a matter of statutory construction, “governed by the particular terms used by the relevant legislature when requiring that the appeal remedy be provided”.

6.3 Hogan, Morgan & Daly in “Administrative Law in Ireland” observes, at paragraph 11.58, that “determining the scope of an appeal will invariably require a close analysis of the text, surrounding context and animating purpose of the relevant statutory scheme”, with “factors such as the purpose of the appeal and the statutory context” being particularly important. Categories of a Statutory Appeal:

6.4 In Fitzgibbon v Law Society of Ireland [2014] IESC 48 (“Fitzgibbon”) Clarke J. conducted an overview of the various kinds of statutory appeal and categorised them as follows: (i) de novo appeals; (ii) appeals on the record; (iii) appeals against error; and (iv) appeals on a point of law. De Novo Appeal:

6.5 With de novo appeals, “the decision taken by the first instance body against whose

decision an appeal is brought is wholly irrelevant” and “the appeal body is required to come to its own conclusions on the evidence and materials properly available to it.” A full rehearing takes place whereby the “appellate body exercises its own judgment on the issues before it without any regard to the decision made by the first instance body against whom the appeal lies.”

6.6 By way of example, Clarke J. referred to “what is in substance a de novo appeal to the High Court from almost all civil decisions of the Circuit Court” under s.38 of Courts of Justice Act 1936. The latter provision expressly describes the appeal as one “by way of a rehearing of the action or matter”, language notably absent from section 148AA.

6.7 Neither the express statutory language of section 148AA nor the nature of the statutory scheme in Part 7A suggest that a de novo appeal is what is intended here. Part 7A envisages a thorough fact-finding investigation by Authorised Officers leading to issuance of a draft investigation report, an opportunity for written submissions from the landlord on the draft report, followed by issuance of a final investigation report before the matter is adjudicated upon by an independent Decision Maker (with power to require further evidence, submissions, and an oral hearing where necessary).

Appeal on the Record

6.8 With appeals on the record, “the appellate body must come to its own conclusions as to the proper result of the issues before it without regard to the decision made by the first instance body”, but always basing its ultimate decision largely on the record developed by the firstinstance body. The fact that the Circuit Court is empowered by section 148AA(2) to receive evidence adduced “whether or not adduced or made to an authorised officer or the Decision Maker” suggests that an appeal on the record is unlikely to be the correct scope of appeal under Part 7A. Appeal against Error:

6.9 With appeals against error, “the appellate body does have regard to the determination of the first instance body and must, in order for the appeal to be allowed, be satisfied that the first instance body was in some way in error.” The appeal court determines “whether the first instance body came to a correct or sustainable decision on the basis of [the] record.” Hogan & Morgan offer as the “locus classicus” the decision of Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare [1997] IESC 9, where a social welfare appeals officer was found to have correctly directed himself in law and his application of the legal principles to the facts could not be disturbed. Hamilton CJ., at paragraph 1, considered the courts: “Should be slow to interfere with the decision of expert administrative tribunals. Where conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a tribunal such conclusions must be corrected. Otherwise it should be recognised that [where] tribunals which have been given statutory tasks to perform and [who] exercise their functions, as is now usually the case, with a high degree of expertise and provide coherent and balanced judgments on the evidence and arguments heard by them, it should not be necessary for the courts to review their decision by way of appeal or judicial review.”

6.10 M&J Gleeson & Co. v Competition Authority [1999] 1 ILRM 401 and Orange Communications Ltd v Director of Telecommunications Regulation [2000] IESC 22 (“Orange”), are to a similar effect. Citing those seminal decisions, Hogan & Morgan consider that “it is now well-settled that an appeal from a regulatory body will generally not be de novo”. The standard of review was definitively established in Orange as being that the applicant must show “as a matter of probability that, taking the adjudication process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors” and “in arriving at a conclusion on that issue, the High Court will necessarily have regard to the degree of expertise and specialised knowledge” of the decision-making body. Appeal on a Point of Law:

6.11 These are usually the most restricted in scope of the Fitzgibbon categories and are usually expressly described as being limited to a point of law.

Factors relevant to Analysis

6.12 Importantly, section 148AA(3) anchors the Circuit Court’s jurisdiction in a consideration of the Decision. The Court: “may, on the hearing of an appeal [under section 148AA(1)] by a landlord –

(a) Either –

(i) Confirm the decision the subject of the appeal,

(ii) Set aside the decision the subject of the appeal, or

(iii) Set aside the decision and replace it with such other decision as the Court considers appropriate, which may be a decision – (I) To impose a different sanction on the landlord, or (II) To impose no sanction on the landlord, And

(b) Make such order as to costs as it thinks fit in respect of the appeal.”

6.13 As such the appellate review is required by section 148AA(3) to be anchored in the

Decision, with the court considering whether the Decision should be confirmed, set aside or substituted. The Oireachtas is unlikely to have intended that the investigation process under Part 7A should commence entirely afresh with the Court necessarily taking all the evidence itself and ignoring the content of the Decision, which is what a de novo appeal would involve. Therefore, the starting-point is the Decision.

6.14 In Fitzgibbon, at paragraph 23, the Supreme Court upheld the High Court which had declared itself: “quite satisfied that s.11(1) [Solicitors (Amendment) Act 1994] envisaged something other than a de novo appeal because if such an appeal was intended, the provision would simply have so stated: [Kearns P.] contrasted its terms with those governing an appeal from the Circuit Court to the High Court.”

6.15 In Manorcastle Ltd v Commission for Aviation Regulation [2009] 3 IR 495, a page 24, the High Court mentioned a number of factors relevant to determining the appropriate scope of the court’s jurisdiction, including:

“(4) the court must establish the intention of the legislature in creating the appeals mechanism, in particular the intended relevance of the original decision to the appeal proceedings; should the original decision be considered in detail or should the process operate akin to a de novo appeal from the Circuit Court to the High Court.

(5) the court must consider any powers which it has to gather information or, just as important, the absence of any power to gather information as this indicates that the original decision-making body is what is being reviewed, not that the High Court is entering the process itself.

(6) the effect of the original decision must be addressed …

(7) the court ought to have regard to whether the statutory scheme allows the decisionmaking body to actually meet with the applicant and therefore make a judgment as to credibility or reliability.”

6.16 Having regard to the above, it appears to the court that appeal against error most accurately describes the scope of the appeal under section 148AA of the RTA 2004, with the result that the burden is on the appellant to demonstrate “a serious and significant error or a series of such errors” sufficient to vitiate the Decision.

6.17 The “surrounding context and animating purpose of the relevant statutory scheme” is particularly relevant. The Oireachtas enacted in Part 7A of the RTA 2004 an extremely detailed statutory architecture for the investigation of, and adjudication upon, allegations of improper conduct. Wide-ranging statutory powers exist for the gathering of evidence by Authorised Officers, followed by a careful adjudicatory function to be performed by an Independent

Decision Maker. The final investigation report in this case runs to some 231 pages. The idea that the legislature intended the outcome of this procedure to be disregarded entirely on an appeal under section 148AA and for the Circuit Court to “start from scratch”, as it were, is supported neither by the express provisions of section 148AA nor the broader context of said Part 7A.

6.18 It is also relevant in this context that the Appellant in this case exercised, as is its entitlement, full rights of participation in the process under appeal. In Fitzgibbon, McKechnie

J. in considering that “the proceedings and the type of process involved in, and giving rise to, the decision under appeal” had a relevance for the standard of review, stated at paragraph 53: “in the instant case it is of considerable significance to note that the appellant had a full right of participation in, and in fact heavily engaged with, the statutory process, which gave rise to the adverse decision now standing against her.”

6.19 A similar situation arose in Carrickdale Hotel Ltd v Controller of Patents [2004] 3 IR

410 (“Carrickdale”), concerning the standard of review on appeals to the High Court under section 41(3) Copyright Act 1963. The statute empowered the Controller of Patents, Designs and Trademarks to determine “equitable remuneration” in the event of a dispute, and to refer same to an arbitrator. An appeal lay from any award to the High Court and, on the hearing thereof, the Court could make an order “confirming, annulling or varying” the award, as it saw fit.

6.20 Both parties accepted a hearing de novo was not envisaged, but equally the traditional judicial review standard was not appropriate. In this respect, Laffoy J. stated that: “The test to be applied on this appeal in determining whether the award should be confirmed, annulled or varied is whether the plaintiff has established as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious or significant error or a series of such errors. In applying the test regard must be had to the degree of expertise and specialist knowledge which the adjudicator has.”

6.21 In Ulster Bank Investments Funds Ltd v Financial Services Ombudsman [2006] IEHC 323, the legislation [section 57AL of Central Bank Act, 1942] provided that, on an appeal against a decision of the Financial Service Ombudsman, the High Court “may make such orders as it thinks appropriate in the circumstances”, which “include (but are not limited to) the following: (a) an order affirming the finding … with or without modification; (b) an order setting aside that finding …; (c) an order remitting that finding …”. Finnegan P. stated that “unless the words of the statute mandate otherwise it is appropriate that the standard of review in this case be that enunciated by Keane CJ. [in Orange] and Laffoy J. [in Carrickdale].”

6.22 The fact that section 148AA(2) permits the Circuit Court to receive additional evidence on appeal is by no means inconsistent with such an appellate jurisdiction. As Clarke J. stated, at paragraph 6.2, of appeal against error in Fitzgibbon: “The default position is, therefore, that the appellate body considers the record of the proceedings at first instance (and in the absence of any rules permitting further evidence or materials to be produced only that record) and considers whether the first instance body came to a correct or sustainable decision on the basis of that record.”

6.23 In other words, it is in the court’s view acceptable to interpret that the Oireachtas included, as in Part 7A, the procedural safeguard that additional evidence “may” be received by the Circuit Court, without that necessarily meaning that the appeal is a de novo one, “without any regard to the decision made by the first instance body against whom the appeal lies.” In Fitzgibbon, Kearns P. stated at paragraph 21 that “the appeal was of a fairly limited nature, notwithstanding that the court could receive oral evidence if deemed necessary”.

6.24 In circumstances where no additional evidence has been put forward by the Appellant, which was not considered by the Decision Maker, there is a particular onus on the Appellant to explain why the Court should not confirm the Decision on appeal.

6.25 However, it is important to note the court may be more circumspect in affording curial deference to aspects of the Decision based on questions of law. This is consistent with the modification of the Orange standard in cases such as Millar v Financial Service Ombudsman [2014] IEHC 434.

7. Facts as outlined by the Appellant

7.1 The Appellant is a property investment company and was at the relevant time the owner of the property the subject of these proceedings. Counsel for the Appellant outlined the facts as they see it as follows.

7.2 The property was purchased by the Appellant company from Permanent TSB in or around 21 October 2019. Enquiries at the time of the purchase as to the status of the property were made and Requisitions on Title were issued in this regard, which stated as follows:

“Requisitions on Title Question

10. Tenancies – Residential Only

1. a. Is the property or any part of it let or was it let within the last two years?”

7.3 The reply furnished on behalf of Permanent TSB was as follows: “No. The property is currently vacant and the Vendor as Mortgagee is not aware of the terms of any previous letting, if any.”

7.4 On 30 January 2020, a Notice of Investigation was issued by the Respondent informing the Appellant that the Respondent has decided, of its own accord, to conduct an investigation into “improper conduct” by the Appellant herein in respect of the rental property in question.

7.5 The improper conduct alleged against the Appellant was to the extent that the Appellant had failed to comply with the Rent Pressure Zone (RPZ) requirements, by setting the rent at its rental property at a price more than 4% in a 12-month period in a rent pressure zone.

7.6 Specifically, it was alleged that there was a prior tenancy in the property within the previous two years. This the Appellant alleges is contrary to the contents of the Requisition on Title, as a result of which the Appellant was accused of being in breach of section 19(4) of the Residential Tenancies Act 2004.

7.7 On subsequent dates between 11 February 2020 and 10 March 2020 a series of letters were exchanged between the Solicitors of the Appellant and the Respondent in connection with the investigation being conducted by Authorised Officers for and on behalf of the Respondent. At all material times, the Appellant, through its Solicitors, cooperated fully with the Respondent’s investigation and provided all information that it could in respect of the rental property.

7.8 On 16 June 2020, a draft investigation report (“the draft report”) was furnished by the Respondent to the Appellant’s Solicitors and the Appellant was invited to make submissions thereon to the Respondent. Acting on the Appellant’s instructions, a submission was made to the Authorised Officers and the Respondent on 3 July 2020 in response to the Respondent’s draft findings and conclusions made within the draft report.

7.9 The Appellant submits that a finalised Report was prepared and submitted by the Authorised Officers to the Decision Maker appointed by the Defendant on a date unknown. It further submits this final Report was not furnished to the Appellant, either prior to the Decision Maker or prior to the institution of the within proceedings. Furthermore, the Appellant submits that it was not made aware of the identity of the Decision Maker until 10 November 2021, when notified of the Decision Maker’s Decision.

7.10 The Appellant further submits that, notwithstanding the submissions made by the Applicant on 3 July 2020, the Decision Maker stated that he had “considered the evidence submitted to [him] and for the reasons set out [within his Decision, he] was satisfied that the alleged improper conduct … occurred and is occurring.” The Decision Maker concluded that given the seriousness of the improper conduct, in accordance with section 148X(4)(a) of the 2004 Act, “a sanction in the amount of €7, 437.50 be awarded against the [Appellant] with no order being made as to costs.”

8. The Nature of the Investigation and the Decision Findings

8.1 The Appellant submits in its defence that: (a) it purchased the Dwelling unaware of the existence of the 2017 Tenancy, and was not informed of same by the vendor notwithstanding the request; and (b) the 2017 Tenancy should be ignored for the purposes of the exemption from the RPZ restrictions under section 19(5)(a)(ii) because “[i]f the mortgagee – in this case Permanent TSB – did not consent to the alleged lease in December 2017, then no lease can be said to be in existence.”

8.2 This contention, the Appellant submits, appears to be acknowledged in the Appellant’s submissions, which note that the draft investigation report states that the “central issue for consideration is whether a tenancy of the dwelling existed at any point between 13 December 2017 and 12 December 2019.” The facts around the rent setting itself, and the figures involved, were not in controversy.

8.3 The Respondent submits that the difficulty with this aspect of the landlord’s defence to the allegation is that a lack of knowledge of the 2017 Tenancy does not mean it did not “subsist”. Section 19(5)(a)(ii) has never been interpreted to provide for an exemption from the RPZ restrictions where a tenancy subsisted during the relevant 2-year-period, but the landlord was unaware of same. As was noted by the Decision Maker, whether the Appellant may have a remedy against third parties potentially responsible for creating misstatement(s) as to the rental history of the Dwelling is simply not a matter within this appeal. To decide whether an RPZ exemption arises under section 19(5)(a)(ii), the question is whether or not a tenancy was subsisting in the 2-year-period prior to the rent setting in question.

8.4 Furthermore, the Respondent submits that it is clear on the authorities that it is not open to the Decision Maker to ignore or somehow consider “invalid” the 2017 Tenancy simply because the mortgagee may not have consented to it. The Appellant submitted to the Decision Maker that, if the mortgagee “did not consent to the alleged lease … there can be said to be no valid tenancy of the dwelling in existence between 13 December 2017 and 12 December 2019.” The Decision Maker rejected this submission and the Respondent further submits the authorities establish that:

(a) in the case of pre-2009 mortgages, a lease not having the consent of the mortgagee may be void as against the mortgagee, but that does not affect the validity of the lease as between landlord and tenant.

(b) in the case of post-2009 mortgages, a lease not having the consent of the mortgagee is voidable at the instance of the mortagee in certain circumstances, but the tenancy is not rendered automatically void.

9. Agreed facts on Appeal

9.1 Both parties accept that:

(a) the Appellant co-operated in the investigation conducted by the Authorised Officer of the Respondent,

(b) the Appellant had limited information in its possession in respect of the previous ownership of the rental property when Permanent TSB [the vendor] sold the property to the Appellant. However, as outlined in paragraph 7.2, one of the standard Law Society of Ireland Requisitions on Title queries raised by the Appellant to the vendor when it purchased the property was: Q: “Was the property or any part of it let within the last two years?” The Reply furnished on behalf of the vendor was as follows: R: “No. The property is currently vacant, and the vendor as mortgagee is not aware of the terms of any previous letting if any.”

10. Appellant’s Grounds of Appeal:

10.1 The Appellant’s submissions can be summarised as follows. The Appellant states a prior tenancy entered into without the knowledge of a mortgagor is not valid in law against the mortgagor. In this case the vendor as mortgagor sold the property to the Appellant. The Appellant furnished a letter [but restricted in value to the Appellant] which stated: “the property was sold with vacant possession and our understanding from the Receiver is that it was vacant for 2 years. This information was supplied to us by Pepper Asset Management”

10.2 The Appellant therefore submits the Respondent should have exercised its discretion on any reasonable doubt as to is the validity of the tenancy in favour of the Appellant.

10.3 In addition, there was not at the time of purchase a “publicly accessible register of tenancies” available to the Appellant to check on prior tenancies. It also submits there was a breach of fair procedures in the decision-making process by the Respondent.

10.4 The Respondent raised a number of queries with the Solicitors for the Appellant. In a letter dated the 10 March 2020 one query and reply stated as follows: Q: “What steps, if any, did you/your client take to confirm that no previous tenancy of the dwelling existed in the two-years prior to creation of the tenancy currently in place?” R: “Our clients are precluded from making any enquiry from the vendor and/or the Vendor’s Solicitors given that the contracts stipulate that the bank have taken the property from the paper title owner and therefore have no knowledge the history of the property. Our client did make enquiries with the estate agent and we have furnished you with the letter from [the estate agent sic] in this regard”

10.5 The Court has taken the first four grounds of the Appellant’s appeal together:

1. The Decision Maker failed to take into account the evidence that was and/or that should have been before him,

2. The Decision Maker failed to fulfil his statutory duty to consider all evidence presented to him,

3. The Decision Maker discounted evidence that was and/or should have been before him without a rational, logical and/or unlawful basis for doing so, and

4. The Appellant alleges there was a material conflict of fact and the Decision Maker failed to exercise his discretion in favour of the Appellant.

10.6 The Appellant points out that the draft investigation report stated that the “central issue for consideration is whether a tenancy of the dwelling existed at any point between 13 December 2017 and 12 December 2019”. In light of the contents of the Requisition on Title, the Appellant submitted that there was no tenancy of the property the subject matter of the investigation for two years prior to 12 December 2019 and that Permanent TSB during their period of ownership of the property did not let it out. Bearing in mind that Permanent TSB were mortgagor in possession, the Appellants submitted to the Authorised Officer that the tenancy at the property was not a valid tenancy, since any such tenancy would have had to have been created with the consent of Permanent TSB as mortgagee/vendor. In support of such a contention, the Appellant relied on the decision of the High Court in Fennell and ACC Bank PLC v N17 Electrics Ltd (In Liquidation) [2012] IEHC 228 (“Fennell”), which concluded that any lease created in breach of the mortgage deed did not bind the mortgagee.

10.7 Following the institution of the within proceedings, the Appellant has now had sight of the final Report of the Authorised Officers. As is apparent therefore, having considered the Appellant’s submissions of 3 July 2020, and the Fennell decision cited by the Appellant, the Authorised Officers made reference to section 112 of the Conveyancing and Law Reform Act 2009, which confirms that written consent of the mortgagee to any lease concerning the mortgaged property is required. The Appellant submits that it would have been apparent to anyone exercising some level of probity on this issue, given the replies to the requisitions on title, that consent, written or otherwise, was not given by Permanent TSB – being the mortgagor in possession. Notwithstanding this, and the level of additional detail that it now transpires was put into the final investigation report, neither the decision in Fennell, nor the provisions of section 112 of the Conveyancing and Law Reform Act 2009, are either referenced, discussed, examined or in any way dealt with within the Decision Maker’s Decision.

10.8 In addition, the Appellant submits that the Decision Maker’s remit was being asked to consider “whether a tenancy of the dwelling existed at any point between 13 December 2017 and 12 December 2019”. Considering the law and facts applicable, the Appellant submits that there had to be considerable doubt as to whether a “tenancy” in law existed, which ought to have been exercised in the Appellant’s favour.

10.9 The Appellant points out there was no mechanism for considering “publicly accessible register of tenancies” and that in this regard the Appellant then submits that the printouts of the RTB’s Register of Tenancies were neither considered, or even referenced in the Decision- Maker’s Decision.

10.10 The Appellant acknowledges it was afforded an opportunity, pursuant to statute, to provide a response to the draft Investigation Report, and did so on 3 July 2020. Thereafter, the Appellant submits that it was no longer afforded an opportunity to engage in the investigation process. The Appellant further submits that it did not have sight of the final Investigation Report presented to the Decision Maker in this case and was deprived of the opportunity to present further evidence to the Decision Maker. In doing so it relied on the case of Geraghty v Rohan Industrial Estates [1988] I.R. 419, where Carroll J. held: “It appears to me to be essential to the requirements of justice that all parties be given a reasonable opportunity to adduce evidence considered necessary and to make submissions relevant to the issues to be decided.”

10.11 According to the Appellant’s submissions this is not simply a case involving a Decision Maker rejecting evidence out of hand. It is suggested that it is more considerable because in circumstances where a party is not even entitled to know the final case that it has to meet before a sanction is imposed, it queries “how can such evidence be presented in the first instance to that Decision Maker”. In this case the Appellant submits the Decision Maker had the power “for the purpose of observing fair procedures” to give the Appellant a copy of the draft Investigation Report and allow the Appellant a further period of 14 days within which to make further submissions, in writing to the Decision Maker on the Investigation Report. The

Decision Maker did not do so, and this the Appellant submits amounts to a clear breach of the Appellant’s right to fair procedures.

10.12 Referring to the case of Leopardstown Club Ltd v Templeville Developments Ltd [2017] IESC 50 the Appellant quotes from paragraph 8 of the Judgment of Mr. Justice MacMenamin as follows: “Non-engagement with evidence must mean that there was something truly glaring, which the trial judge simply did not deal with or advert to, and where what was omitted with went to the very core, or the essential validity of his findings. There is, therefore, a high threshold. In effect, an appeal court must conclude that the judge's conclusion is so flawed, to the extent that it is not properly ‘reasoned’ at all. This would arise only in circumstances where findings of primary fact could not ‘in all reason’ be held to be supported by the evidence.”

11. Failure to Provide Adequate and/or Sufficient Reasons

11.1 The Appellant submits that contrary to the right of the Appellant to natural and constitutional justice, the Decision Maker failed to provide any reasons for its decision, “still less reasons that were certain, precise or cogent in relation to the principal issues in controversy.” The Appellant points out that the requirements of natural and constitutional justice impose a duty on the decision-making body to apply fair procedures in the exercise of its statutory powers and functions. Where the right to natural and constitutional justice is breached, the impugned decision is deemed to have been made ultra vires.

11.2 Referring to the case of Meadows v Minister for Justice, Equality and Law Reform [2010] 2 IR 701, it quotes from page 732: “Unless that is so then the constitutional right of access to the Courts to have the legality of an administrative decision judicially reviewed could be rendered either pointless or so circumscribed as to be unacceptably ineffective.”

11.3 The Appellant submits that the reasoning provided does not consider all arguments made by the Appellants, nor does it take into account the call of a further investigation of this matter by the Authorised Officer or indeed, as is fully within his power, the Decision Maker.

11.4 Referring to factual matters in dispute the Appellant questions the Decision Maker’s

decision not to conduct an oral hearing. The following cases are referred to by the Appellant:

• Meadows v Minister for Justice, Equality and Law Reform [2010] 2 IR 701

• State (Daly) v Minister for Agriculture [1987] IR 165

• Connelly v An Bord Pleanála [2018] IESC 31

• O’Keeffe v An Bord Pleanála [1993] 1 IR 39

• O’Neill v An Bord Pleanála [2009] IEHC 202

• Deerland Construction Ltd v Aquaculture Licences Appeals Board [2009] 1 IR 673

• Boylan v Limerick City & County Council [2020] IEHC 666

• Kelly v An Bord Pleanála [2014] IEHC 400

• Christian v Dublin City Council [2012] 2 IR 506

• M.D. v Minister for Social Protection [2016] IEHC 70

11.5 The Appellant submits that the legal principles in these cases support its contention that the legislature intended the Appellant should have been allowed to make representations regarding the content of the draft investigation report to the Authorised Officer. Referring to the legislation, it states the legislation provides for fair procedures.

12. Failure to Apply Relevant Principles of Construction when considering Pertinent Evidence

12.1 Referring to the replies to the requisitions on title which stated as follow Q: “Is the property or any part of it let within the last two years?” R: “No. The property is currently vacant, and the vendor as mortgagee is not aware of the terms of any previous letting if any.”

12.2 The Appellant submits that the cardinal rule of construction is that words ought to be given their plain and ordinary meaning. As per the decision of Denham J. in Lawlor v Flood [1999] 3 IR 107 at page 136: “the words of the Statute are clear and unambiguous. Thus, the ordinary sense of the words should be applied … As plain words make clear the meaning and intent of the section of the section it is unnecessary to apply any further Canon of Construction.”

12.3 Therefore, the Appellant submits that the Decision Maker was simply incorrect as a matter of law, to conclude “there is simply no way” this reply could have given the Applicant any comfort that there had been no tenancy within the dwelling in the two years prior to the sale.

13. The Appellant submits that the Decision Maker failed to investigate the matter fully considering the far-reaching statutory powers bestowed upon the Respondent and despite being requested to do so by the Appellant.

13.1 The Appellant submits that the Decision Maker has a duty to gather all the evidence and this duty is particularly important bearing in mind the consequences of a finding of improper conduct being the potential for a significant penalty and the publication of that penalty.

13.2 According to the Appellant, it presented sufficient evidence to warrant the Decision Maker to look into this matter further and exercising its powers of investigation in pursuance of his positive duty to “gather all evidence” related to the alleged improper conduct before making a finding. Referring to the case, J&E Davy v Financial Service Ombudsman [2008] IEHC 256, where the court held that an oral hearing is necessary where there is a material conflict of fact, it stated there should have been an oral hearing in this case.

14. Legal Submissions of the Respondent:

14.1 The Respondent submits that the Decision should be confirmed by the court pursuant to section 148AA(3)(a)(i) of the RTA 2004 in circumstances where they submit that the Appellant has failed to establish any error in the decision. In doing so it referred to the cases of:

• Fitzgibbon v Law Society of Ireland [2015] 1 IR 516

• M&J Gleeson v Competition Authority [1999]1 ILRM 410

• Orange v Director of Telecommunications Regulations [2000] 4 IR 159

14.2 The latter case lays down what has become known as “the Orange Test” and which states – “as a matter of probability that, taking the adjudicative process as a whole, the decision was vitiated by a serious and significant error or a series of such errors.” The Respondent points out that the RTA anchors the Circuit Court’s jurisdiction in a consideration of the

decision.

14.3 Specifically its response to the grounds of appeal by the Appellant are as follows:

Grounds 1 – 4 of the Appeal

14.4 The Respondent submits that the evidence to which the Decision Maker is alleged to have failed to take into account remains wholly unclear. The Respondent submits that neither case law nor legislative provisions constitute evidence. Therefore, they suggest the Decision Maker is not obliged to list his authorities in the application of law.

14.5 The Respondent further submits that the Decision Maker was correct not to express any “doubt as to whether … a ‘tenancy’ in law existed”. In this regard they suggest that the approach does not disclose any failure to consider relevant evidence. This is because:

(a) There was clear evidence of the subsistence and duration of the 2017 Tenancy, including from a letting agent and the former tenant, and

(b) The consent or otherwise of the mortgagee to the 2017 Tenancy was immaterial to the validity of the 2017 tenancy as between landlord and tenant.

14.6 The Respondent submits that Part 7A of the RTA sets out clearly the default position and in this regard the landlord is entitled to make submissions on the draft investigation report only but not the final investigation report.

14.7 The Respondent submits that, at investigation stage, the Appellant did not request to be furnished with a copy of the final investigation report for the purposes of making any further submissions.

14.8 The Respondent referred to the case of Minister for Education and Science v Information Commissioner [2009] 1 IR 588 where McGovern J held “[t]he court should be slow to admit new argument not advanced before the commissioner.”

14.9 The Respondent also referred to the case of R (Thompson) v The Law Society [2004] EWCA Civ 167 as persuasive authority and where the English Court of Appeal held that the claimant’s failure to ask for an oral hearing was fatal to his argument that he should have been granted one.

14.10 The Respondent referred to the case of National Maternity Hospital v Information Commissioner [2007] IEHC 113 where, at page 34, Mr. Justice Quirke states, “I know of no principle of natural or constitutional justice which confers upon parties who make submissions to a decision-making body the right to respond to the submission made by every other party who participates in the process”.

Ground 5 of the Appeal

14.11 The Respondent accepts that the duty to give adequate reasons for a decision are well established, and it acknowledges in this regard the authorities in the Appellant’s submission as uncontroversial.

14.12 However, the Respondent submits that the Appellant failed to explain how the decision was inadequately reasoned or did not consider all arguments made by the Appellants.

14.13 The Respondent further submits that discharging the obligation to give reasons is a question of quality in reasoning, rather than quantity. In this regard the Respondent suggests that the duty to give reasons has never been equated to a need for prolix or lengthy explanations, as opposed to the basic rationale for the decision.

14.14 Referring to the case of YY v Minister for Justice and Equality [2018] IEHC 469 at paragraph 11, it quoted, “the decision-maker has to give a reason for the decision on each of the main issues, but that is entirely distinct from an obligation to narratively discuss each and every one of an applicant’s arguments, submissions or pieces of evidence under each heading.”

14.15 The Respondent states that decision sets out findings of fact based on the documentary evidence establishing the two rent settings relevant to the allegation of improper conduct. Therefore, it suggests the tenancy is rooted in the evidence. It points out that the Appellant not only failed to request an oral hearing but also submits that it failed even at the appeal stage to outline why it was necessary to hold an oral hearing.

Ground 6 of the Appeal

14.16 The Respondent submitted that the Decision Maker did not fail to apply “relevant principles of construction” in considering the replies to the requisitions on title. It suggested that the case law referred to by the Appellant relates to statutory interpretation, not the weighing of evidence. In addition, it suggests that nothing contained in a third-party representation could produce the result that the 2017 Tenancy did not exist.

Ground 7 of the Appeal

14.17 According to the Respondent the Appellant has never explained what further “exercising of powers of investigation” ought to have occurred here.

14.18 The Respondent submits that the Decision Maker was entitled to conclude from the evidence furnished to it that a 2017 tenancy existed during the material time-period. They point out the fact that the Appellant was unaware of this tenancy or alternatively positively led by third parties to believe that it did not exist, does not alter that reality that there was a tenancy. The Respondent suggest that the question of the existence of the 2017 Tenancy is not a matter in respect of which any further statutory investigation would have availed the decision-making process. According to the Respondent “there was nothing either the Authorised Officers or

Decision Maker could have done to airbrush the 2017 Tenancy out of history.”

15. Submissions on Proportionality of the Sanction

15.1 In respect of the proportionality of the sanction the Respondent submits that the Appellant did not challenge the proportionality of the sanction imposed. However, in the courts view while this is correct in respect of the written submission, the position was alerted in oral submissions to the court.

16. Court’s Interpretation of the Appellate Jurisdiction of the Circuit Court

16.1 The court accepts the appropriate scope of the appeal is not a de novo appeal and the starting point in considering the appeal is the decision of the RTB Decision Maker. This was envisaged by section 148AA(3) of the Act, where the Oireachtas anchors the appeal in the

decision of the RTB.

16.2 The standard that is applicable to this type of appeal therefore is substantially that promulgated by Keane CJ in Orange v. Director of Telecommunications Regulations [2000] 4 IR 159 at pages 184 to 185 (“The Orange Test”) and approved in Nowak v. Data Protection Commissioner [2016] 2 IR 585 (“Nowak”), where the Supreme Court (O’Donnell J. as he then was) at paragraph 7, held that the test to be applied and/or reviewed to be applied on any appeal is, as follows: “In short, the appeal provided for under this legislation was not intended to take the form of re-examination from the beginning of the merits of the decision appealed from culminating, it may be, in the substitution by the High Court of its adjudication for that of the first defendant. It is accepted that, at the other end of the spectrum, the High Court is not solely confined to the issues which might arise if the decision of the first defendant was being challenged by way of judicial review. In a case of this legislation at least, an applicant will succeed in having the decision appealed from set aside where it establishes to the High Court as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error, or a series of such errors. In arriving at a conclusion on that issue, the High Court will necessarily have regard to the degree of expertise and specialised knowledge available to the first defendant.”

16.3 It is common case between the parties and the court that an appeal under the RTA to the Circuit Court is not a full re-hearing on the merits and is limited in nature. In doing so and in applying the Orange Test, as outlined by O’Donnell J. above, the following principles are applicable to this case.

(a) First, the appeal is not intended to take the form of a re-examination, from the beginning, of the merits of the decision.

(b) Secondly, the court is not confined to the issues which could be raised solely by way of judicial review. However, an Applicant must establish as a matter of probability that taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors.

(c) Thirdly, in its decision, the Court will necessarily have regard to the degree of expertise and specialised knowledge available to the RTB. However, this “curial deference” to the RTB is more circumspect to issues on questions of law. In addition, the court is entitled to consider any additional professional expertise offered to the court in assessing that curial deference.

(d) Fourthly, the court may, as outlined in section 148AA(2), on the hearing of the appeal consider any evidence adduced or argument made, whether or not adduced or made to an authorized officer or the Decision Maker. In this regard in coming to its judgment, the court is therefore not solely confined to the evidence assessed by the court on the basis of the evidence that was only before the RTB. However, this does not mean this is an appeal in name only. The right to admit new evidence should be in the interests of justice between the parties and is subject to qualifications. Having regard to the statutory framework of the RTA and the existing jurisprudence of the courts on the admission of new evidence as outlined in cases such as the Supreme Court decision in Murphy v Minster for Defence [1991] 2 IR 161; the High Court [Finnegan P.] in Ulster Bank Investments Funds Ltd v Financial Services Ombudsman [2006] IEHC 323 and the High Court [Kelly J, as he then was] in Murray v the Trustees and Administrators of Irish Airlines (General Employees Superannuation Scheme) [2007] IEHC 27, the following principles apply:

(i) The evidence should have been in existence at the time of the decision,

(ii) a cogent explanation must be given as to why the evidence was not given to the Decision Maker,

(iii) the evidence must be such that that if given, it would have an important influence on the result of the case though it need not be decisive,

(iv) the evidence must also be credible though it need not be incontrovertible,

16.4 The court is concerned with ascertaining justice between the parties. Therefore, it has an overall flexible approach as to interpreting these principles. An example of the flexible approach is an assessment by the court of the expertise of the RTB to make the decision.

17. Applicability of the law and facts to this case

17.1 It is accepted that the Appellant proceeded with the purchase and subsequent tenancy on the basis that there was no prior relevant tenancy.

17.2 The RTA legislation was created by the Oireachtas for the benefit of tenants. It cannot be ignored, or side stepped in a sale by vendors or purchasers. Mortgagors selling in possession do not have a preferential type of exemption or presumption on a lack of knowledge of previous tenancies. It is therefore incumbent, in the court’s view, on vendors and their advisors to carry out the appropriate research or searches. A purchaser similarly cannot take advantage of a vendor’s failure to investigate tenant’s rights under the legislation. There is, in the court’s view, a presumption that the Act applies. If the vendor does not know the situation, then it should be interpreted that the Act applies unless otherwise proven. To put it in another way, the Act applies irrespective of the attitude of the vendor and purchaser. A lack of knowledge of the applicability of the Act or of prior tenancies is not a meaningful defence. A purchaser’s remedy (if any) is against a vendor, not an affected tenant. Therefore, a purchaser should insist on comprehensive replies to requisitions raised in a sale and details of previous tenancies. By way of illustration only, this might be achieved for example by providing copies of previous tenancy agreements or if none, a statutory declaration or a statement from a competent person setting out the tenancies. It would also be prudent for a vendor and purchaser to carry out searches against the property with the RTB registry and relevant letting agents, where known.

17.3 Hypothetical scenarios, such as for example, a possibility that a tenancy is not valid due to the necessity of the consent of a financial institution is not a good defence to the applicability of the Act, unless it is demonstrated that the tenancy is not in fact a valid tenancy. In this regard it is important to emphasise that the Act does not create a criminal liability in its sanction but a legislative civil liability for property owners. Therefore, it is not necessary to engage in the criminal standard of proofs applicable to criminal trials.

17.4 In addition, in the court’s view, the vendor’s reply to the Appellant’s Requisitions on Title in respect of the applicability of the Act on the sale created deliberate ambiguity on the issue of prior tenancies to such an extent as to be of little value to a purchaser. The ambiguity is itself self-evident from the reply to the query on previous tenancies but also by the correspondence between the Appellant and Respondent in trying to interpret that reply.

17.5 In the court’s view, the vendor stated in the reply to requisitions that the property was being sold with vacant possession and that there were no prior tenancies. It then goes on to effectively negative that reply partly by saying it has no knowledge of prior tenancies.

17.6 The status of the estate agents’ letter is similarly vague, and it is clear even from this correspondence furnished retrospectively it could not be relied on in any legal forum.

17.7 The investigation carried out by the Decision Maker was both appropriate and conducted fairly and well-reasoned. It is difficult to ascertain what additional advantage would have occurred by carrying out an oral hearing. In short, in the court’s view, there was ample evidence to justify the decision by the Decision Maker that the Appellant failed to comply with the Rent Pressure Zone requirements, by increasing the rent by more than 4% in a 12-month period in a Rent Pressure Zone.

18. Court’s view on the Proportionality of the Sanction

18.1 The court takes no issue with the validity of the sanction of €7,437.50, bearing in mind that it is clear from the evidence that a tenancy was registered as commencing on 1 December 2017 at a rent of €1,150 per month and that a further tenancy was registered as commencing on the 13 December 2019 at a rent of €1850 per month, representing an increase level of 61% over a 24-month period.

18.2 It is also noted the Appellant proceeded with the “improper conduct” after the investigation and did not refund the new tenant the overpaid rent due. The court notes the aggravating factors identified in the decision.

18.3 Bearing in mind the co-operation by the Appellant in the investigation it would have been preferable if the Decision Maker quantified the mitigation factors identified in its

decision. However, it is acknowledged that it is difficult to be too prescriptive in defining which allowances should be awarded for co-operation in the decision, and discretion should lie with the Decision Maker.

18.4 In addition, and uniquely to this case I am noting the following:

(a) the accepted genuine belief of the Appellant that a prior tenancy did not affect the new tenancy even though it was an erroneous belief and while also noting that this is not a defence to the applicability of a sanction,

(b) the Register of Tenancies with the RTB, that could have been checked by a purchaser, was considerably out of date at the time of purchase by the appellant, and

(c) that this is in effect a novel test case which was conducted with considerable amount of co-operation by counsel acting for both Appellant and Respondent. By way of illustration of this co-operation, the concession by counsel for the Appellant on the applicable test that should apply to the appeal.

18.5 Therefore, in this case, I propose to reduce the monetary sanction of €7, 437.50 by 35%, leaving a net sanction of €4, 834.38. I will hear counsel as to costs applications, if any.