Landlord and tenant – First-tier Tribunal – Procedure – Respondent tenants applying for rent repayment order – Appellant failing to comply with FTT’s directions within specified time limit – Appellant applying for extension of time to comply with directions – FTT overlooking application – FTT debarring appellant from participation in hearing – Appellant appealing – Whether appellant denied fair hearing by serious procedural irregularity – Appeal allowed
The appellant was a limited company whose business was property investment and management. It had owned and let a self-contained flat at 160C Muswell Hill Road, London. The flat had three bedrooms and a shared kitchen, bathroom and living room.
On 29 August 2020, the flat was let to the respondents for twelve months at a monthly rent of £1,980. The flat was a house in multiple occupation (HMO) within section 254 of the Housing Act 2004 which was required to be licensed but was not.
The respondents applied to the First-tier Tribunal (FTT) under section 41 of the Housing and Planning Act 2016 for a rent repayment order on the basis that the appellant had been in control or management of the HMO contrary to section 72(1) of the Housing Act 2004.
The FTT issued directions requiring the appellant to file and serve a statement of its reasons for resisting the application. When it failed to do so, the FTT debarred the appellant from participating in the hearing. It refused an application by the appellant’s director to give evidence in support of a defence of reasonable excuse. It found that the elements of the offence were made out and ordered the appellant to repay rent and tribunal fees totalling £16,866.
The appellant appealed on the ground that the appellant was denied a fair hearing by a serious procedural irregularity, namely the FTT’s debarring order. The appeal was determined on written submissions.
Held: The appeal was allowed.
(1) Although these were tribunal proceedings, it was appropriate to refer to the approach to non-compliance with directions developed in the civil courts. The basis of procedural enforcement in the civil courts was CPR 3.9(1) which provided that, on an application for relief from sanctions imposed for a failure to comply with any rule, practice direction or court order, the court would consider all the circumstances to enable it to deal justly with the application, including the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with rules, directions and orders. CPR 3.9(1) applied to an application for additional time to comply with a direction made after the time for compliance had expired.
In applying CPR 3.9(1), the civil courts had adopted a consistent and systematic approach. In Denton v TH White Ltd [2014] 1 WLR 3926, the Court of Appeal recommended a three-stage approach to applications for relief against sanctions: (i) assess the seriousness or significance of the breach in respect of which relief from sanctions was sought; (ii) consider why the failure or default occurred; and (iii) consider all the circumstances to enable the court to deal justly with the application.
In looking at all the circumstances, the court might also take into account the promptness of the application for relief against sanction and any other past or current breaches by the parties of the rules, practice directions and orders.
(2) The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 contained no equivalent of CPR 3.9(1). Their overriding objective was expressed differently, and it lacked the courts’ emphasis on enforcing compliance with rules and orders (CPR 3.9(f)). Nevertheless, a similar approach to compliance had become more widely adopted by tribunals following the decision of the Supreme Court in BPP Holdings v Commissioners for HM Revenue and Customs [2017] UKSC 55.
There was no justification for a more relaxed approach to compliance with rules and directions in the tribunals and the terms of the overriding objective in the tribunal rules likewise incorporate proportionality, cost, and timeliness. A tribunal’s orders, rules and practice directions were to be complied with in like manner to a court’s.
When determining previous appeals from decisions of the FTT, the Upper Tribunal (UT) had continued to encourage the adoption of the Denton guidance. It was for each panel to decide for itself what fairness and justice required in the case before it, but if all panels adopted the same framework for their decision, the risk of inconsistency, and therefore unfairness, would be reduced: Block A9 The Upper Drive Limited v Copse Mill Properties [2019] UKUT 337 (LC) and Silber v London Borough of Barnet [2021] UKUT 206 (LC) considered.
(3) It was not for the UT to interfere with the FTT’s management of its own cases. Its function, through the determination of appeals, was to give guidance on the implementation of the FTT’s Rules and to ensure that they were applied fairly and to ensure consistency of approach among FTT judges.
The grounds on which an appellate tribunal might interfere with a debarring order made by the FTT were limited. An appellate tribunal should not interfere with a case management decision by a judge who had applied correct principles and taken into account relevant matters and not taken into account irrelevant matters, unless it 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 FTT.
However, a debarring order could often have the effect of determining the substantive case and there had to be a limit to the permissible harshness (or generosity) of a decision relating to the imposition or confirmation (or discharge) of such an order.
(4) In the present case, a properly directed panel would have taken into account that the allegation faced by the appellant was that it was guilty of criminal conduct. The FTT did not direct itself properly. It was either unaware of the contents of the application by the appellant’s director to be allowed to rely on evidence despite non-compliance with the original directions, or it chose to ignore them and gave no indication that they had been taken into account in reaching the discretionary decision to bar the appellant from participation. The application was relevant to the assessment of the appellant’s culpability for the initial delay. The fact that the appellant was waiting for the application to be determined by the FTT provided an explanation why the delay had not been rectified sooner. The FTT’s omission meant that its decision to bar the appellant from participation could not stand.
Accordingly, the rent repayment order would be set aside and the case remitted to the FTT for reconsideration by a differently constituted panel.
Eileen O’Grady, barrister
Click here to read a transcript of Jalay Enterprises Ltd v Harrison Ramsdale and others
