Housing – Civil penalty – Joint landlords – Respondent local authority imposing separate financial penalties on appellant brothers owning house in multiple occupation (HMO) – First-tier Tribunal confirming separate financial penalties originally imposed on each of the two appellants – Appellants appealing – Whether joint landlords being person in control of or managing HMO – Whether only one civil penalty imposed on two joint landlords – Appeal dismissed
The appellants were two brothers who inherited a property at 68 Conway Road, London SE18, a small mid-terrace house, from their parents in March 2017. At that time the whole building was let to a single tenant (P) who was holding over under an expired tenancy granted to him by their father. The original tenancy had included a prohibition on sub-letting but the appellants were aware that P did not live at the property but instead sub-let it to the five elderly people who were unrelated and who shared kitchen and bathroom facilities. He paid £1,400 a month to the appellants and collected rents totalling £1,800 a month from his sub-tenants.
On 1 October 2017, the property became subject to an additional licensing scheme introduced by the respondent local authority under Part 2 of the Housing Act 2004 as a house in multiple occupation. The respondent subsequently imposed financial penalties, pursuant to section 249A of the 2004 Act, of £10,000 on each of the appellants because it was satisfied beyond reasonable doubt that they were both persons having control of an HMO which was required to be licensed under sections 263 of the 2004 Act, but was not.
The First-tier Tribunal confirmed the separate financial penalties but the appellants appealed. The question was whether section 249A allowed a financial penalty to be imposed on each of two joint landlords or only one penalty be imposed jointly on them both, or none at all.
Held: The appeal was dismissed.
(1) The status of being a person having control depended on being entitled to receive the rack rent of the property, and section 263(2) of the 2004 Act explained that the “rack-rent” meant a rent which was not less than two-thirds of the full net annual value of the premises.
There was no reason why the person having control had to mean one person only. The person having control might mean 42 separate individuals who had no property in common. In the commonplace and more straightforward situation where two persons had a joint interest in the whole of the building, there was no reason why they should not collectively be persons having control of the house if they were in receipt of the rack rent (or would be if the property were let at a rack rent). It was enough that, acting collectively, they could have received a rack rent by letting the whole of the residential parts of the building, and the fact that each would have been entitled to only their share of that rent was not an obstacle to that conclusion: London Corporation v Cusack-Smith [1955] AC 337, Pollway Nominees Ltd v Croydon London Borough Council [1987] 1 AC 79 and Ficcara v James [2021] UKUT 38 (LC); [2021] PLSCS 43 considered.
Joint owners of the whole of the building were entitled to receive the whole of the rent of the building, and it was immaterial that the terms on which they held their joint interests gave each of them an entitlement, as against the other, to only a proportion of the total rent. Where there were joint landlords, any one of them might give a good receipt for the rent, and on the death of one of them the rent was payable in full to the survivor: see Woodfall: Landlord and Tenant, para 7.073. For the purpose of section 263, both of the appellants were therefore persons entitled to receive the rack rent of the HMO and both were persons having control of it.
(2) It was permissible for separate financial penalties to be imposed on each of two or more joint landlords where each had committed a relevant housing offence based on the same acts and omissions.
The offence under section 72(1) of the 2004 Act was that of being “a person having control of or managing an HMO which is required to be licensed… but is not so licensed”. On the findings of the FTT each of the appellants was such a person. Each was a person having control of the HMO, and each held that status while the HMO was occupied in circumstances which required a licence but where none had been obtained. The appellants did not jointly commit the offence, they each committed it and each could have been separately prosecuted. In the same way, each could be the subject of a separate financial penalty because each has committed his own offence.
Section 249A(3) of the 2004 Act provided that only one financial penalty “may be imposed on a person in respect of the same conduct” (and by section 249A(9) a person’s conduct might include a failure to act). But that prohibition did not stand in the way of each of two individuals being subject to a separate penalty in respect of separate offences which they had each committed because each penalty was imposed on a different person. Nor was it possible to say that the conduct in each case was the same: the conduct relevant to each appellant’s liability was his own conduct and not that of his brother, although the things which each of them did or omitted to do was the same.
The purpose of section 249A(3) was not to limit the number of joint landlords on whom financial penalties could be imposed, but was to prevent the same facts being used to justify the imposition of more than one financial penalty on the same person.
(per curiam) The FTT had not differentiated between the appellants and treated them as equally culpable. But it was important that the penalty imposed on each joint landlord reflected his or her degree of responsibility. A local authority or FTT should give separate consideration to the conduct of each person on whom a penalty was to be imposed. Only one of two joint landlords might be responsible for the management of jointly owned property; or one joint landlord might have a relevant history of similar offences while the other did not. The proper response would depend on the facts found but the responsibilities, actions and circumstances of each landlord should be separately assessed.
The appellants appeared in person; Ali Dewji (instructed by Royal Borough of Greenwich Legal Services) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Gill and another v Royal Borough of Greenwich
