Housing – House in multiple occupation – Civil penalty – Appellant local authority imposing penalties on respondent landlord of two houses in multiple occupation – First-tier Tribunal reducing amount of penalties – Appellant appealing – Whether remedial works carried out after date of offences relevant to assessment of seriousness of offences – Whether works carried out to comply with improvement notices amounting to mitigation – Appeal allowed
Numbers 249 and 251 Pitsmoor Road, Sheffield comprised the matching halves of a substantial two-storey stone building. The respondent was the freehold owner of No 251 and a long leaseholder of No 249. He was the manager of both HMOs for the purpose of the Management of Houses in Multiple Occupation (England) Regulations 2006. The appellant local authority treated the two halves of the building as separate houses in multiple occupation (HMOs).
The appellant identified significant breaches of the 2006 Regulations on a formal inspection of the properties. An advisory schedule of work was served on the respondent but none of the suggested works were carried out. In October 2018, the appellant served improvement notices requiring the respondent to remedy the hazards identified at both HMOs.
In November 2018, the appellant served six notices of intent to impose civil penalties on the respondent specifying breaches of regulations 4, 7 and 8 of the 2006 Regulations, Final notices subsequently confirmed penalties totalling £75,000, applying the appellant’s civil penalties policy.
The First-tier Tribunal (FTT) allowed the respondent’s appeal and reduced the penalties to £45,000, reducing the level of harm assessment from medium to low, taking into account that steps had been taken to remedy the defects after the offence had been committed.
The appellant appealed on the grounds that the FTT was bound to apply the appellant’s policy for the imposition of civil penalties and that, by determining that the level of harm was low by reason of the works carried out after the appellant’s decision had been made, it departed from the policy without properly considering whether there was any good reason to do so.
Held: The appeal was allowed.
(1) The FTT had focused its attention on the wrong point in time. The approach to civil penalties commended by the secretary of state’s guidance and adopted by the appellant required the seriousness of the offence to be determined by reference to the culpability of the offender and the harm or risk of harm to which the occupiers of the property in question were exposed. An assessment of the seriousness of the offence had to focus on the circumstances of the offence itself and take into account matters as they were at the date of the offence: Waltham Forest London Borough Council v Marshall [2020] UKUT 35 (LC) and Sutton v Norwich City Council [2020] UKUT 90 (LC) followed.
Once the seriousness of the offence had been identified, there was a starting point for determining the appropriate penalty which might be greater or less than the starting point, because of aggravating or mitigating factors. But both logically, and within the structure of the policy, the stage at which aggravating or mitigating features were to be taken into account was at the second stage when adjustments to the relevant figure were to be made. The seriousness of an offence could not be reduced by events which occurred after the elements of the offence were complete. The FTT was in error in treating the remedial works as reducing the seriousness of the offence.
Therefore, the FTT took into account an irrelevant consideration in its assessment of the seriousness of the respondent’s offences. It erred in law by departing from the appellant’s policy in a material way without giving any good reason for doing so (and intending to apply the policy). Therefore, the FTT’s decision would be set aside so far as it concerned the penalties appropriate to the breaches of regulations 4 and 7.
(2) The appropriate course was to substitute the tribunal’s decision for that of the FTT. Adopting the same approach as the appellant in its policy by first assessing the seriousness of the offence, the accumulation of defects recorded in each of the notices relating to fire safety precautions and the condition of the common parts created a medium risk of harm. There was no evidence of any individual having suffered any actual harm but there were many examples of disrepair and poor workmanship which might have caused a serious risk to the safety of residents in the event of a fire. There was no reason to disturb the appellant’s assessment that the starting point in each case for an offence of high culpability and medium harm was £15,000.
The most important fact was that the work had been carried out by the respondent under compulsion. Had he not complied with the notices he would have committed further relevant housing offences and would have been exposed to further financial penalties. Accordingly, the level of mitigation was small and justified a reduction of no more than 10%. Therefore, the civil penalties imposed for breaches of regulations 4 and 7 would be reduced from £15,000 to £13,500. The total penalty in respect of the four offences under appeal was therefore £54,000, to which had to be added a further £15,000 in respect of the two offences under regulation 8 which were not appealed.
(3) The appellant’s own policy required that, at the final stage, the decision maker considered whether the outcome arrived at in the previous stages was fair and consistent with the objectives of the policy. It was therefore necessary to stand back from the individual offences and assess the totality of the penalty.
The sum of £69,000 was more than double the maximum penalty which might be imposed for each individual offence. There was no challenge to the appellant’s treatment of the building as two HMOs but the risks to which the residents were exposed and the neglect and mismanagement which created those risks was substantially the same in both halves of the building. The imposition of the same penalties twice for offences involving substantially the same mismanagement in two halves of the same building had produced an excessive and unfair result.
Applying the appellant’s own policy, the appropriate penalty for the total offences committed by the respondent was £50,000. The penalties of £7,500 for each of the offences under regulation 8 had not been challenged. The FTT’s decision would be set aside and penalties totalling £50,000 imposed.
David Gilchrist (instructed by Sheffield City Council) appeared for the appellant; Jeremy Dable (instructed by Abbey Scott Law, of Sheffield) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Sheffield City Council v Hussain
