The Circuit Court upheld a Residential Tenancies Board finding that Wow Investments Limited breached rent pressure zone rules, but reduced the financial penalty from €7,437.50 to €4,834.38. Judge John O’Connor delivered judgment on 3 November 2022 in the company’s appeal under the Residential Tenancies Act 2004.
The appeal concerned a decision dated 25 May 2021 that imposed a penalty for setting rent more than 4% above the previous rent within a 12-month period in a rent pressure zone. The company asked the court to set aside the decision or replace it with a decision imposing no sanction. The RTB argued that the decision should be confirmed.
The company bought the property from Permanent TSB in October 2019. It said it relied on a reply to a title requisition stating that the property was vacant and that the vendor, as mortgagee, was unaware of the terms of any previous letting. The company maintained that it did not know of a 2017 tenancy and argued that the tenancy should not count because the mortgagee had not consented to it. It also raised concerns about the investigation, the reasons given by the decision maker and fair procedures.
The court said the statutory appeal was not a rehearing from the beginning. The company had to show, on the balance of probabilities, a serious and significant error, or a series of errors, in the decision-making process. The judge found the investigation appropriate, fair and well reasoned, and said there was ample evidence to support the finding that the company had failed to comply with the rent pressure zone requirements.
The judgment said a purchaser’s lack of knowledge of earlier tenancies was not a defence to the Act’s application. The court described the vendor’s reply to the title requisition as ambiguous and of little value to a purchaser. It also said the possibility that the earlier tenancy was invalid without mortgagee consent was not a sufficient defence unless its invalidity was demonstrated.
The court noted that the RTB register was considerably out of date when the company bought the property. It also accepted the company’s genuine, though mistaken, belief that the earlier tenancy did not affect the new tenancy. Those matters, the company’s cooperation with the investigation and the case’s status as a novel test case informed the court’s assessment of the penalty.
The judge said the evidence showed a tenancy registered from 1 December 2017 at €1,150 a month, followed by another registered from 13 December 2019 at €1,850 a month. The judgment described this as a 61% increase over 24 months. It also noted that the company continued the conduct after the investigation and had not refunded the new tenant the overpaid rent. The court left the finding of improper conduct in place and reduced the penalty by 35%. It invited counsel to address any costs applications; the judgment does not record a costs order.