Housing – Selective licensing – Civil penalty – Appellant landlords appealing against decision of First-tier Tribunal (FTT) concerning level of penalty imposed for failure to obtain licence under selective licensing scheme – Whether FTT giving undue weight to fire risk at building – Whether FTT failing to take account of relevant matters or evidence before it – Whether FTT erring in not applying same reasoning in respect of both appellants – Appeal allowed
The first appellant bought the freehold of a former office block, known as NatWest Tower, 5 Sydenham Road, Croydon, for £11.7m. The property was converted into 54 residential flats over five storeys. The second appellant managed the block and arranged lettings. Flat 39 was let on 1 April 2017 at a rent of £900 per month.
In 2015, the respondent local authority had instituted a selective licensing scheme pursuant to part 3 of the Housing Act 2004. In September 2017, the building was inspected by a representative of the respondent after a priority referral from the London Fire Brigade. Flat 39 was found to be one of 36 in the block that should have been licensed but were not.
It was a criminal offence to have control of or manage a house that was required to be licensed under part 3 when it was not so licensed; and if a licence holder, or a person upon whom a licence imposed conditions, failed to comply with a condition of the licence: see section 95(1) and (2) of the 2004 Act.
A licence was subsequently issued and back-dated, but the property had been unlicensed for some five months. The respondent issued financial penalties against the appellants, in the sums of £26,000 and £12,000 respectively.
The appellants appealed against a decision of the First-tier Tribunal (FTT) about the level of penalty imposed. They contended that the FTT had: (i) wrongly given undue weight to the issue of the fire risk at the building; (ii) taken account of irrelevant matters or failed to give due weight to other evidence before it; and (iii) erred in not applying its reasoning in respect of the first appellant to the financial penalty imposed in respect of the second appellant.
The appeal was determined on written representations.
Held: The appeal was allowed.
(1) The appellants agreed that there were fire safety issues in the building but the offence was the failure to licence the flat; the harm taken into account, according to the respondent’s policy, had to be the harm caused by the offence; problems in the rest of the building were not relevant and would not have been prevented by the grant of a licence.
It was significant that the respondent did not suggest that any of the fire hazards could have been remedied by the grant of a licence, or was caused by the failure to licence, with the one exception of the tenant’s ignorance of the evacuation plan. The respondent did not say that conditions could have been attached to the licence of flat 39 to resolve issues such as the structure of the basement, the void in the building from basement to roof or the fire escape problems.
The reference to “harm” or “impact” at stage 1 of the respondent’s policy referred very clearly to harm caused by the offence itself, as there was no suggestion that the effect of anything else was under consideration. The fire hazards in the building could have had a serious impact on many people. But it was not caused by the failure to obtain a licence. Nor was it appropriate for the respondent to take a “holistic approach” to matters of criminal liability; there was no suggestion of such an approach in the policy. The starting point and the primary measure of the penalty had to be the harm caused by the offence and not by another one which fell to be punished by a different process or under different provisions.
Although the FTT was understandably very concerned about the evidence of fire hazards, it made a leap it should not have taken by making it a major factor in its assessment of harm which amounted to an error of law.
(2) In all the circumstances, the appellants had not established that the FTT had failed to take account of relevant matters or given undue weight to other evidence before it. The FTT had done the best it could with little evidence. It was entitled to draw inferences from the material before it and it could not be said to have erred or been irrational. It might be that at a rehearing the appellants could offer more assistance to the FTT and provide evidence on the basis of which the FTT might be able to see further matters of mitigation.
(3) It was not possible to understand the FTT’s reasoning in connection with the second appellant because of the brevity of the consideration given to the penalty to be imposed upon it. It appeared that, having reduced the penalty for the first appellant, the FTT might have taken the view that the much lower penalty for the second appellant was acceptable, without analysis. However, there should have been a separate reasoning process. If there was, as the FTT found, double-counting as regards the first appellant, there must have been double-counting as regards the second appellant. Moreover, it was likely that the fire safety issue, which was overplayed by the FTT as regards the first appellant, had a considerable bearing on the penalty imposed on the second appellant, although in the absence of any reasoning about the second appellant’s penalty it was not possible to understand the FTT’s thinking. For that reason also, a reconsideration was required. Accordingly, the matter would be remitted to the FTT for a rehearing.
Per curiam: The tribunal had no hesitation in regarding the fire hazards as an aggravating factor just as, in sentencing in the criminal courts, other offences might be an aggravating factor. Similarly, the efforts made by the appellants to set matters right would be a mitigating factor; in choosing not to give evidence the appellants did themselves no favours, and it might be that on a rehearing the fire hazards, and the efforts made to remedy them, could be given consideration at the proper stage of the assessment.
Archie Maddan (instructed by AA Homes & Housing Ltd) appeared for the appellants; Paul Sharkey (instructed by Croydon London Borough Council) appeared for the respondent.
Eileen O’Grady, barrister
