Housing – House in multiple occupation – Civil penalty – Totality principle – Unlicensed HMO owned by appellant spouses but let and generally managed by wife – Four civil penalties imposed on each appellant for failure to license and other management offences – First-tier tribunal reducing penalties – Appellants appealing – Whether penalty consistent with respondent’s policy – Whether totality principle correctly applied – Appeal allowed in part
In 2015, the respondent local authority introduced a borough-wide additional licensing scheme requiring all houses in multiple occupation (HMOs) not already covered by the mandatory licensing obligation to be licensed.
The appellants were a married couple who held their home and other properties in joint names. 105, Fordwych Road, London NW2 was a large Victorian house converted into flats. The freehold belonged to the respondent. Flat C contained four bedrooms, a living room, kitchen and two bath or shower rooms. In 2002, the second appellant purchased a long lease of the flat which she registered in joint names. She took primary responsibility for managing and letting it.
In 2022, the second appellant let the flat to a group of four students for twelve months at a monthly rent of £3,200. Under the written tenancy agreement she alone was identified as the landlord. She did not obtain an HMO licence under the additional licensing scheme.
Eight separate financial penalty notices were imposed by the respondent on the appellants in respect of their management of the flat. Following an appeal to the First-tier Tribunal, the penalties were reduced. The appellants appealed.
The main issues concerned the proper application of the totality principle to the imposition of financial penalties for multiple offences under section 249A of the Housing Act 2004 and the treatment of joint owners, both found to have committed relevant offences, but only one of whom was responsible for the letting and management of the property.
Held: The appeal was allowed in part.
(1) It was clear from the respondent’s enforcement policy that there was a discretion to prosecute or impose a financial penalty without first administering a warning where there were poor conditions or the tenants’ welfare might be compromised in an unlicensed HMO. Since the object of licensing was to improve housing conditions, it was relevant to consider whether, due to a failure to licence, risks of harm had been allowed to continue.
The FTT had asked itself whether, notwithstanding the fact that the second appellant was unaware of the additional licensing scheme, and might ordinarily have been let off with a warning, the condition of the flat was such that a warning was inappropriate, and concluded that a penalty was justified. That was a conclusion in accordance with the respondent’s policy which it was entitled to reach: Ekweozoh v Redbridge London Borough Council [2021] UKUT 180 (LC); [2021] PLSCS 148 considered.
(2) It was important that the penalty imposed on each joint landlord reflected their degree of responsibility, and a local authority or the FTT had to give separate consideration to the conduct of each person. There might be cases where one of two joint landlords was responsible for the management of jointly owned property and the other played no part; and where one joint landlord had a relevant history of similar offences while the other did not. The proper response to such cases would depend on the facts. It was important that the responsibilities, actions and circumstances of each landlord were separately assessed: Gill v Greenwich Royal London Borough Council [2022] UKUT 26 (LC); [2022] EGLR 13 applied.
In the present case, while the FTT acknowledged the first appellant’s limited involvement, it did not specifically address the possibility that the appropriate penalty might be a warning. Having failed to distinguish between the appellants when considering whether the respondent’s policy pointed towards a warning, and not at that stage making any assessment of the first appellant’s culpability, the FTT did not consider, when reducing the penalty, whether the factors justifying a reduction might also apply when considering whether a penalty should be imposed at all.
(3) The FTT looked at the appellants as a couple and considered whether the aggregate penalties imposed on them both were proportionate. That was a clear error in the FTT’s reasoning which cast doubt on the whole of the FTT’s assessment of penalties, but it was particularly problematic in relation to the importance of assessing the responsibilities, actions and circumstances of each appellant separately.
While the FTT properly applied the respondent’s policy in deciding to impose financial penalties on the second appellant, it did not do so in the case of the first appellant and the penalties imposed against him would be set aside and his appeal against them redetermined.
(4) Ensuring that the total penalty reflected both the offending behaviour and was just and proportionate was the essence of the totality principle. Although the FTT was aware of the importance of ensuring that the total penalty was proportionate to the offences committed, it took a wrong turn when applying that approach. There was no justification for aggregating the penalties imposed on two offenders when considering whether those penalties were proportionate. Where more than one person was to be penalised for the same conduct, the penalty imposed on each of them should be determined separately and the only relevant aggregation was of the total penalty to be imposed on each for the various offences.
The FTT addressed the issue of proportionality by focussing, impermissibly, on the total amount of all the penalties to be imposed on the couple. That aspect of its decision had to be set aside and the proportionality of the penalties imposed on the second appellant redetermined.
(5) The proper approach was reflected in the guidance on criminal sentencing published by the Sentencing Council. There was no civil equivalent and it provided an invaluable resource when assessing financial penalties under section 249A of the Housing Act 2004, which were intended as an alternative to criminal sanctions.
In this case, the FTT addressed the totality issue by reducing the penalty imposed on the first appellant but did not separately consider whether the £13,000 total for second appellant was just and proportionate. That decision would be set aside and substituted by two penalties totalling £8,000. No financial penalty was appropriate in the first appellant’s case. The objects of enforcement had been fully met by the penalties imposed on his wife. His expenditure of time and money in challenging the notices and in pursuing the present appeal, which he would not recover, were a more than adequate sanction.
Karol Hart (of Freemans, solicitors) appeared for the appellants; David Mold (instructed by Camden London Borough Council) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Shorr and another v Camden London Borough Council
