First-tier Tribunal – Procedure – Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 – Appellant’s appeal against financial penalty for operating unlicensed HMO struck out by FTT for failure to file bundle of documents – Appellant claiming no connection with HMO – FTT disregarding merits of appeal – Appellant appealing – Whether FTT properly exercising discretion – Appeal allowed
The appellant was accused by the respondent local authority of the offence, under section 72 of the Housing Act 2004, of having control of or managing an unlicensed house in multiple occupation (HMO), at 86A Hatherley Gardens, East Ham. The appellant’s defence was that he had nothing to do with the property, whether as owner or manager, and the defendant’s information to the contrary was the result of a mistake by a property agent.
The defendant imposed a penalty of £7,500 under section 249A of the 2004 Act which permitted a local housing authority to impose a financial penalty where it was satisfied beyond reasonable doubt that a person’s conduct amounted to a relevant housing offence.
The First-tier Tribunal struck out the appellant’s appeal against that penalty for failure to comply with its procedural directions under rule 9(3)(a) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.
The FTT identified the two factors in CPR 3.9(i) as of particular importance: (a) litigation was to be conducted efficiently and at proportionate cost; and (b) rules, practice directions and orders were to be enforced. It proceeded to determine the application to reinstate the appeal by addressing the three stages identified by the Court of Appeal in Denton v T H White Ltd [2014] 1 WLR 3926 and refused the appellant’s application for reinstatement under rule 9(5). The appellant appealed against that refusal.
Held: The appeal was allowed.
(1) Since the decision of the Supreme Court in BPP Holdings v Commissioners for HM Revenue and Customs [2017] UKSC 55, the approach to compliance with procedural rules and directions in tribunals had become more closely aligned with the stricter approach adopted by the civil courts. But it was important to recognise that FTT procedure rules, and specifically the 2013 Rules, were not a carbon copy of the Civil Procedure Rules. In particular, the overriding objectives identified in the two sets of rules were not identical with different emphases and nuances which reflected the different characteristics of dispute resolution in courts and tribunals.
(2) An appellate court should not interfere with case management decisions by a judge who had applied the correct principles, taken into account matters which should be taken into account and left out of account matters which were irrelevant, unless the court was satisfied that the decision was so plainly wrong that it had to be regarded as outside the generous ambit of the discretion entrusted to the judge.
The same restraint was necessary when considering an appeal against a decision not simply to debar a party from participation, as in Denton, but to strike out their appeal altogether and then to refuse to reinstate it.
(3) Although the FTT referred in its survey of the relevant law to the Civil Procedure Rules, and specifically to rule 3.9 concerning relief from sanctions, it did not refer to its own rules.
The difficulty with the FTT’s approach lay in the particular weight which it gave to the factors identified in CPR 3.9(1) at the third stage of its Denton assessment, and the absence of consideration of the FTT’s own overriding objective and especially of those aspects of rule 3 which might have tempered the draconian approach which it adopted. By concentrating on CPR 3.9, the FTT lost sight of rules 3 and 8(2) of the 2013 Rules.
The menu of responses in rule 8(2) had been included to assist the FTT in finding the just and proportionate response to non-compliance in a particular case, and it ought always to be kept in mind whenever the consequences of non-compliance were being considered.
(4) Where the burden of establishing that an offence had been committed fell on the defendant as respondent, as it did in an appeal against a financial penalty, the lesser sanction of barring or restricting participation need not have the same decisive effect on the outcome of the appeal as an order striking it out. The FTT was entitled to take a dim view of the excuses it was offered, but it ought not to have directed itself by reference to the wrong procedural rules. In doing so it erred in law.
In this case, the FTT took the view that the appellant’s involvement in the control or management of the property was a fact sensitive issue and that the late service of his documents necessarily meant that the hearing could not have proceeded. But it reached that conclusion without asking itself whether the evidence relied on by the defendant provided a basis on which it could properly be concluded that a criminal offence had been committed by the appellant. It justified that approach by reference to the principle in Haziri v Havering London Borough Council [2019] UKUT 330 (LC) but without considering the exception in favour of a party who was entitled to summary judgment in their favour.
(5) The offence to which the defendant referred was in section 72(1) of the 2004 Act. The concepts of having control of, or managing an HMO were both related to the receipt of rent, which was a necessary condition of being a person managing property. In the absence of any suggestion by the tenants that they paid rent to the appellant, and in the face of his repeated denials of involvement, the FTT ought to have considered whether the mere existence of an unsigned agreement provided evidence beyond reasonable doubt that the appellant had received rent or had any interest in the property at all. If there was insufficient evidence to discharge the burden of proof, the FTT should have taken that into account in determining whether to accede to the appellant’s application to reinstate the appeal.
In all the circumstances, the FTT’s decision not to reinstate the appeal was flawed and was not within the boundaries of its discretion.
The appropriate order was one confining the appellant to the documents and explanation supplied with his original notice of appeal. Subject to that limitation, no further restriction would be imposed on his right to make submissions if the appeal came to a hearing; it was not necessary to do so, and ensuring that the parties were able, so far as practicable, to participate fully in the proceedings was an important aspect of dealing with cases fairly and justly (rule 3(3)(c)).
The appeal was determined on written representations.
Eileen O’Grady, barrister
Click here to read a transcript of Deane v Newham London Borough Council
