First Floor Flat, 91 Farmer Road, London E10 5DJ LON/00BH/HNA/2022/0065
FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No LON/00BH/HNA/2022/0065
Between
Mr Newton BellApplicantLondon Borough of Waltham ForestRespondent
Before
Judge N HawkesMr S Wheeler MCIEH, CEnvHMr Patrick Wise-Walsh of Counsel for the ApplicantMr Riccardo Calzavara of Counsel Appeal against a financial penalty - for the RespondentDate 17 April 2023Property: London E10 5DJ
DECISION
Decision of the Tribunal The Tribunal varies the final notice which forms the subject matter of this application so as to impose a financial penalty on the Applicant in the sum of £9,600. Background and procedural matters[1]By an application dated 2 October 2022, Mr Newton Bell (“the Applicant”) brought an appeal against a financial penalty in the sum of £12,000 which was imposed under section 249A of the Housing Act 2004 by the London Borough of Waltham Forest (“the Respondent”) pursuant to a financial penalty notice dated 7 September 2022.[2]This penalty was imposed on the grounds that, contrary to section 95(1) of the Housing Act 2004, from 1 May 2020 until 1 October 2021 the Applicant had failed to ensure that First Floor Flat, 91 Farmer Road, London, E10 5DJ (“the Property”) was licenced under the Respondent’s Selective Licensing Scheme.[3]The amount of the penalty would have been £15,000 had the Applicant not been entitled to a 20% discount by virtue of having made a licence application by 1 October 2021.[4]Paragraph 10 of Schedule 13A to the Housing Act 2004 provides: 10(1) A person to whom a final notice is given may appeal to the First-tier Tribunal against— (a) the decision to impose the penalty, or (b) the amount of the penalty.(2) If a person appeals under this paragraph, the final notice is suspended until the appeal is finally determined or withdrawn.(3) An appeal under this paragraph— (a) is to be a re-hearing of the local housing authority's decision, but (b) may be determined having regard to matters of which the authority was unaware.(4) On an appeal under this paragraph the First-tier Tribunal may confirm, vary or cancel the final notice.(5) The final notice may not be varied under sub-paragraph (4) so as to make it impose a financial penalty of more than the local housing authority could have imposed.[5]On 6 December 2022, the Tribunal issued Directions (“the Directions”) leading up to a final hearing which took place on 30 March 2023 at 10 Alfred Place, London WC1E 7LR.[6]The Applicant was represented by Mr Wise-Walsh of Counsel, instructed on a direct public access basis, at the final hearing. The Respondent was represented by Mr Calzavara of Counsel, instructed by Sharpe Pritchard LLP.[7]Mr Calzavara was accompanied by Ms Danni Wise, his instructing solicitor, and by the Respondent’s two witnesses. There were also three observers in attendance, two of whom were employees of the Respondent. The observers played no part in the proceedings.[8]The Applicant did not attend the hearing. The Tribunal was informed that he was in Jamaica and that steps had not been taken to ascertain whether there was any legal or diplomatic barrier to the Tribunal taking that evidence from him remotely from Jamaica, see Agbabiaka (evidence from abroad, Nare guidance) Nigeria [2021] UKUT 286 (IAC). Accordingly, no application was made for the Applicant to give evidence by video or telephone at the hearing which took place on 30 March 2022.[9]Mr Wise-Walsh stated that he was not instructed to seek an adjournment of the final hearing to a later date. In light of the fact that the Applicant had had a reasonable amount of time in which to prepare and could have sought an adjournment in advance of the hearing, this is unsurprising.[10]Rule 34 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 provides:[34]Hearings in a party's absence If a party fails to attend a hearing the Tribunal may proceed with the hearing if the Tribunal—(a) is satisfied that the party has been notified of the hearing or that reasonable steps have been taken to notify the party of the hearing; and(b) considers that it is in the interests of justice to proceed with the hearing.[11]The Applicant was clearly aware of the hearing, having instructed Counsel to attend on his behalf. The Applicant had also prepared a bundle for the hearing which included an expanded statement of reasons for bringing the appeal and a witness statement with a signed statement of truth attached. The Respondent did not object to the hearing proceeding in the Applicant’s absence and the Tribunal determined that it was in the interests of justice, in all the circumstances, to proceed.[12]The Tribunal took into account the Applicant’s written witness statement dated 8 March 2023 but gave it only limited weight because his evidence could not be tested through cross-examination.[13]The Tribunal heard oral evidence on behalf of the Respondent from:(i) Ms Sally Stewart, a Team Manager within the Respondent’s Private Sector Housing and Licencing team; and(ii) Ms Julia Morris, the Respondent’s Assistant Director of Regulatory Services.[14]The Tribunal permitted the Respondent to rely upon a supplemental witness statement from Ms Julia Morris dated 14 March 2023 confirming the accuracy of the contents a witness statement dated 20 September 2021 prepared by Ms Davinia Whittle, a Licensed Enforcement Officer. There was no objection and no prejudice to the Applicant because Ms Whittle’s statement had been served on the Applicant as part of the Respondent’s bundle and Ms Morris did not seek to add any new information. The Tribunal’s determination[15]Financial penalties were introduced by the Housing and Planning Act 2016 (“the 2016 Act”). The 2016 Act amended the Housing Act 2004 (“the 2004 Act”) by inserting section 249A and Schedule 13A. These provisions enable local authorities to impose financial penalties of up to £30,000 in respect of a number of offences under the 2004 Act, as an alternative to prosecution.[16]Subsection 249A(1) of the 2004 Act provides that a local authority may only impose a financial penalty if satisfied beyond reasonable doubt that a person’s conduct amounts to a relevant housing offence. The Tribunal must also be satisfied to the criminal standard of proof that an offence has been committed.[17]DCLG Guidance for Local Authorities (“the Guidance”) has been issued under paragraph 12 of Schedule 13A.[18]The Guidance encourages each local authority to develop their own policy for determining the appropriate level of penalty. The maximum amount should be reserved for the worse offenders.[19]The Guidance includes provision that: “Local housing authorities should consider the following factors to help ensure that the civil penalty is set at an appropriate level: a) Severity of the offence. The more serious the offence, the higher the penalty should be. b) Culpability and track record of the offender. A higher penalty will be appropriate where the offender has a history of failing to comply with their obligations and/or their actions were deliberate and/or they knew, or ought to have known, that they were in breach of their legal responsibilities. Landlords are running a business and should be expected to be aware of their legal obligations. c) The harm caused to the tenant. This is a very important factor when determining the level of penalty. The greater the harm or the potential for harm (this may be as perceived by the tenant), the higher the amount should be when imposing a civil penalty. d) Punishment of the offender. A civil penalty should not be regarded as an easy or lesser option compared to prosecution. While the penalty should be proportionate and reflect both the severity of the offence and whether there is a pattern of previous offending, it is important that it is set at a high enough level to help ensure that it has a real economic impact on the offender and demonstrate the consequences of not complying with their responsibilities. e) Deter the offender from repeating the offence. The ultimate goal is to prevent any further offending and help ensure that the landlord fully complies with all of their legal responsibilities in future. The level of the penalty should therefore be set at a high enough level such that it is likely to deter the offender from repeating the offence. f) Deter others from committing similar offences. While the fact that someone has received a civil penalty will not be in the public domain, it is possible that other landlords in the local area will become aware through informal channels when someone has received a civil penalty. An important part of deterrence is the realisation that(a) the local housing authority is proactive in levying civil penalties where the need to do so exists and(b) that the civil penalty will be set at a high enough level to both punish the offender and deter repeat offending. g) Remove any financial benefit the offender may have obtained as a result of committing the offence. The guiding principle here should be to ensure that the offender does not benefit as a result of committing an offence, i.e. it should not be cheaper to offend than to ensure a property is well maintained and properly managed.”[20]As regards the weight to be given to the local authority’s policy, in Sheffield City Council v Hussain [2020] UKUT 292 (LC)), the Upper Tribunal stated:[44]In London Borough of Waltham Forest v Marshall [2020] UKUT 35 (LC) the Tribunal (Judge Cooke) considered the weight to be given to a local housing authority’s policy on an appeal against a decision which had applied that policy. At [54] Judge Cooke explained the proper approach: “The court can and should depart from the policy that lies behind an administrative decision, but only in certain circumstances. The court is to start from the policy, and it must give proper consideration to arguments that it should depart from it. It is the appellant who has the burden of persuading it to do so. In considering reasons for doing so, it must look at the objectives of the policy and ask itself whether those objectives will be met if the policy is not followed.” At [55] she recognised the power of a court or tribunal to set aside a decision which was inconsistent with the decision-maker’s own policy. Furthermore, having regard to the fact that an appeal under Sch.13, 2004 Act is a rehearing: “It goes without saying that if a court or tribunal on appeal finds, for example, that there were mitigating or aggravating circumstances of which the original decision-maker was unaware, or of which it took insufficient account, it can substitute its own decision on that basis.”[45]The proper approach was also discussed by the Tribunal in Sutton v Norwich City Council [2020] UKUT 0090 (LC), at [254], as follows: “If a local authority has adopted a policy, the Tribunal should consider for itself what penalty is merited by the offence under the terms of the policy. If the authority has applied its own policy, the Tribunal should give weight to the assessment it has made of the seriousness of the offence and the culpability of the appellant in reaching its own decision.”[21]In Gateshead BC v City Estate Holdings [2023] UKUT 35 (LC), the Upper Tribunal stated:[26]… the FTT in hearing an appeal from a financial penalty is to make its own decision, not to review that of the local housing authority.[27]The question before the FTT is therefore not whether the local housing authority in imposing the penalty followed its own policy. The FTT is not conducting a review of the local housing authority’s decision … Mr Leviseur also and equally fairly conceded that the extent to which the policy was followed was relevant only insofar as the FTT was, incorrectly, reviewing the appellant’s decision; it is irrelevant to the FTT’s own decision-making process. The “reasonable excuse” defence[22]Part 3 of the 2004 Act provides for the selective licensing of areas designated for that purpose by the local housing authority.[23]Section 95(1) of the 2004 Act provides:(1) A person commits an offence if he is a person having control of or managing a house which is required to be licensed under this Part … but is not so licensed. … (4) In proceedings against a person for an offence under subsection (1) or(2) it is a defence that he had a reasonable excuse– (a) for having control of or managing the house in the circumstances mentioned in subsection (1) …[24]Section 249A of the 2004 Act includes provision that:(1) The local housing authority may impose a financial penalty on a person if satisfied, beyond reasonable doubt, that the person's conduct amounts to a relevant housing offence in respect of premises in England.(2) In this section “relevant housing offence” means an offence under— … (c) section 95 (licensing of houses under Part 3)[25]The onus is on person who relies upon the defence of reasonable excuse to establish on the balance of probabilities that he has that defence (see IR Management Services Limited v Salford City Council [2020] UKUT 81 (LC)). The Applicant accepts that, if he cannot establish that he has a reasonable excuse defence, he is guilty of an offence under section 95(1) of the 2004 Act.[26]Mr Wise-Walsh relies upon the Applicant’s witness statement and submits the Applicant had a reasonable excuse within the meaning of section 95 of the 2004 Act.[27]The Applicant’s witness statement includes the following evidence: “9. I am the registered owner for this property and receive rent from the tenant. He has been a tenant there for a long time – around 25 years.[10]Between 2016 and 2020, I was registered under the local authority’s previous landlord registration scheme.[11]However, I subsequently became aware that I was not registered for a period of around 18 months, from 2020 onwards. That was not intentional. But I do not dispute that there was a period of time when I was not registered.[12]I want to set out some of the relevant circumstances.[13]During the first week of March 2020, I left the UK to visit Jamaica. I went via British Airways.[14]When I was out of the UK, COVID-19 took hold. Flights were grounded.[15]The UK Government brought in measures preventing people travelling to the UK. I was unable to return to the UK.[17]I have been diagnosed with cancer. I was forced to receive treatment via online appointments. My consultant told me that, due to my vulnerability to COVID-19, I should not return to the UK for the time being. I followed that advice as I trusted my doctors.[18]It was not until July/August 2020 that British Airways was able to guarantee me a flight back to the UK.[19]From March 2020 onwards, I did not have access to the correspondence posted to my home address. The vast majority of my day-to-day bills were dealt with online. I was not back in the UK until later on.[21]I received a communication from the local authority - which I now understand was a Notice of Intent.[22]I replied promptly with an email dated 3 October 2021. I see that Ms Sally Stewart exhibits my email as ‘Exhibit SXS06’.[23]At the time my licence for 91 Farmer Road had come up for renewal, I was out of the country. I was stuck because of COVID-19 and I was unable to return to the UK. I returned to the UK in July 2021.[25]Soon after that date, I started my applications with the local authority, to get all of my licences in order. As I explained in my email dated 3 October 2021, I had to “park” the applications because I did not have all the supporting documents up to date, due to me not being in the UK.[26]In August 2021, I caught COVID-19. I was very unwell. I collapsed on my way to see my GP. I was rushed to the King George Hospital in Romford. I ended up in spending time in hospital.[27]I also have Type-2 diabetes which led to my health worsening.[28]After I was discharged on medication, I had ongoing symptoms of feeling weak and lethargic that left me unable to do much apart from rest. That delayed my making the application in respect of 91 Farmer Road.[29]By 3 October 2021, I described myself as ‘on the mend’. I was able to submit my application for a licence.”[28]On the Applicant’s own evidence, he is an experienced landlord with 25 years’ experience and it is not in dispute that he has, in the past, instructed managing agents.[29]The Respondent relied upon evidence, which the Tribunal accepts, that applications for licences can be made online, that reminders were sent to the Applicant by post and by email and that, if the Applicant had told the Respondent that he was unable to provide certain supporting documents whilst he was abroad, he would have been told that he could nonetheless make a licence application and provide the documents at a later date.[30]The Applicant did not attend the hearing to be questioned. However, by an email dated 3 October 2021, he offered to provide evidence in support of his assertions concerning the reasons why he delayed in making a licence application. The Respondent did not take up the offer to provide supporting evidence and did not appear to challenge the Applicant’s assertions. It is not in dispute that, up until the failure to obtain a licence, the Applicant had an “impeccable” record as a landlord.[31]As stated above, the Applicant’s witness statement must carry limited weight because it has not been tested through cross-examination. However, having considered this evidence in the context of the Applicant’s impeccable past history and together with his email correspondence which included an offer to provide supporting documents, and all the circumstances of the case, we find that it is likely on the balance of probabilities that the factual matters asserted by the Applicant are true.[32]However, we also accept submissions made by Mr Calzavara that the Applicant’s evidence does not contain sufficient detail to establish on the balance of probabilities that he was on 1 May 2020 (or throughout the relevant period of approximately 18 months) medically incapacitated to the extent that he could not have completed an online licence application.[33]Further, if the Applicant had attended the hearing, the Tribunal would have asked him why, if his personal circumstances were becoming such that he was finding it difficult to manage the Property (and, in particular, to keep himself informed of the licensing requirements and to apply for a licence), he did not instruct local managing agents to manage the Property and to apply for a licence on his behalf.[34]In Gateshead BC v City Estate Holdings, it was noted at [21] that: In Aytan v Moore and others [2022] UKUT 27 (LC) the Tribunal (Judge Cooke and Judge McGrath) said (emphasis supplied): “… a landlord’s reliance upon an agent will rarely give rise to a defence of reasonable excuse. At the very least the landlord would need to show that there was a contractual obligation on the part of the agent to keep the landlord informed of licensing requirements; there would need to be evidence that the landlord had good reason to rely upon the competence and experience of the agent; and in addition there would generally be a need to show that there was a reason why he landlord could not inform themselves of the licensing requirements without relying upon an agent, for example because the landlord lived abroad.”[35]The Applicant’s witness evidence does not include any account of a sudden decline. We are not satisfied on the evidence that it is likely that he would have been unable to instruct managing agents as his personal situation worsened, although we accept that he may have had other things on his mind.[36]On the basis of the limited information available, the Tribunal is not satisfied on the balance of probabilities that the defence of reasonable excuse is made out in respect of all or any part of the relevant period. Having considered the evidence relied upon by the Respondent concerning the commission of the offence, which is not disputed by the Applicant, we are satisfied beyond reasonable doubt that the housing offence which gave rise to the civil penalty was committed. The amount of the civil penalty[37]The Tribunal was referred by both parties to the Respondent’s Housing and Licensing Team Enforcement Policy (“the Policy”). The Applicant does not invite the Tribunal to depart from the Policy and the Tribunal has applied the Policy in making its determination.[38]The aims of the Policy are set out at paragraph 2 which provides:2.1 The council aims to protect public health, reduce anti-social behaviour and safeguard housing standards by ensuring compliance with the relevant legislation, whilst recognising needs of local businesses.2.2 The council considers the need for transparency and consistency in the discharge of its functions under the above legislation to be of primary importance. The objective of this policy is to promote both principles in the exercise of the council’s functions and, in particular, to maximise consistency on the use of the Council’s enforcement powers.[39]At paragraph 3 of the Policy includes provision that:3.1 The protection of public health and the tackling of anti-social behaviour will be paramount when enforcing the law and all assistance will be given to landlords and tenants to comply with legal requirements.3.2 All enforcement action taken will be proportional to the risk any situation presents and will always be in accordance with statutory Codes of Practice, Council procedures and protocols and official guidance from central and local government bodies.[40]The Tribunal asked whether the level of a civil penalty must therefore always be proportionate to the factors listed in the Statutory Guidance, as they apply to the specific circumstances of each individual case. However, for the avoidance of doubt, we have applied the exceptional circumstances test (see below) without considering the issue of proportionality.[41]It is not necessary to determine whether or not there is a need to consider if the level of the civil penalty is proportionate to the factors listed in the Statutory Guidance, as they apply to the specific circumstances of Mr Bell’s case, because we are satisfied that the result arrived at without considering proportionality is, in any event, proportionate within this meaning.[42]At section 7.8 of the Policy, it is stated that: “In circumstances where the Council has determined that it would be appropriate to issue a civil penalty as an alternative to prosecution, the level of the penalty will be calculated in accordance with the matrix and guidance set out in the attached Appendix 1”[43]Appendix 1 of the Policy includes a “Civil Penalties Matrix”. The Matrix sets out a number of different bands. Bands 1 and 2 apply to moderate offences. The range for Band 1 is £0 to £4,999 and for Band 2 it is £5,000 to £9,999. Bands 3 and 4 apply to serious offences. The range for Band 3 is £10,000 to £14,999 and for Band 4 it is £15,000 to £19,999. Bands 5 and 6 apply to severe offences. The range for Band 5 is £20,000 to £24,999 and the range for band 6 is £25,000 to £30,000.[44]Appendix 1 includes provision under the heading “Civil Penalties” that (emphasis supplied): “The Council may, exceptionally, increase the penalty above the band maximum or, again exceptionally, decrease it below the minimum ‘tariff”. In order to meet the objectives of this policy and of financial penalties in particular, however, including the need for transparency and consistency in the use of such penalties, the Council will exercise its discretion to increase or decrease a penalty beyond band limits in exceptional circumstances only [excluding any Discounts as set out below]. The Council will consider on a case-by-case basis, in light of the information with which it is provided, whether any such circumstances exist.”[45]Appendix 1 to the Policy also includes provision that: “Through the Selective Licensing scheme, which was introduced to combat anti-social behaviour, the Council intends to improve the professionalism of private landlords and drive up property standards. The Council would view the offence of failing to ensure that a rented home was licenced under the Selective licensing Scheme as a significant issue, meaning that the tenants and wider community are not protected by the additional regulatory controls afforded by licencing. Under the Council’s policy the civil penalty for a landlord controlling five or less dwellings with no other relevant factors or aggravating factors [see below] would be regarded as a moderate band 2 offence, attracting a civil penalty of at least £5,000 in respect of a failure to obtain the necessary Selective Licence under part 3 of the Housing Act 2004. Where a landlord or agent is controlling/owning a significant property portfolio and/or has demonstrated experience in the letting/ management of property the failure to obtain the necessary Selective Licence would be viewed as being a serious matter attracting a civil penalty of £15000 or above [a band 4 offence].”[46]Mr Wise-Walsh sought to challenge evidence given by Ms Morris that it can be inferred from Council tax and other records that the Applicant is currently the landlord of at least 5 properties, and the he was previously the landlord of 6 properties. It is noted that a landlord controlling 6 properties who has not demonstrated experience in the letting/management of property may fall within band 3.[47]In any event, regardless of the exact size of his property portfolio, the Applicant has, on his own evidence, demonstrated experience in the letting and management of property, having been a landlord of the Property for around 25 years. It common ground that the Applicant held a licence of the Property under a previous Selective Licencing Scheme from 9 May 2016 to 31 March 2020.[48]In our view, applying the Policy, the Applicant’s offence falls at the bottom of Band 4 unless, in his particular case, there are “exceptional circumstances” which serve to decrease the civil penalty below minimum tariff. We note that “exceptional circumstances” is a high threshold.[49]Ms Morris agreed when giving evidence that, prior to the licencing offence which gave rise to the civil penalty, the Applicant had an “impeccable record” as a landlord.[50]Mr Calzavara invites the Tribunal to find that there was nothing “exceptional” about the Applicant’s circumstances. Mr Wise-Walsh submits that the following matters amount to exceptional circumstances:(i) the Applicant’s impeccable record as a landlord;(ii) the fact that it is common ground that he only has a few properties to his name (as opposed to being an investor with portfolio of 10s or 100s of properties);(iii) the Applicant’s cancer, covid, diabetes and ultimately his hospitalisation;(iv) the global pandemic and the Applicant’s particular circumstances during the pandemic when he was unexpectedly “stuck out of the country”, was particularly vulnerable to covid 19 due to his state of health, and was forced to revert to online cancer treatment; and(v) a delay of over 11 months in the Respondent replying to the Applicant’s correspondence dated 3 October 2021.[51]Whilst other matters are set out in the Applicant’s bundle and have been considered by the Tribunal, these are the points which were said to carry the most weight.[52]In our view, the delay on the part of the Respondent in responding to the Applicant’s correspondence, which post-dates the commission of the offence, is not a relevant factor.[53]The Respondent’s witnesses were of the view that the Applicant’s record simply means that there are no aggravating factors. In our view, the Applicant’s “impeccable” record forms part of the context in which the rest of his evidence is to be considered as does the fact that, whilst an experienced landlord, he is said to have at most 5 or 6 properties, as opposed to an investment portfolio of 10s or 100s of properties.[54]On the evidence before us, we find that it is likely that the Respondent failed to consider whether the Applicant’s health conditions could amount to exceptional circumstances. In our view, his cancer, diabetes and covid are potentially relevant.[55]As stated above, Applicant’s evidence is not detailed and precise enough to establish that he had a reasonable excuse for failing to obtain a licence on 1 May 2020 and throughout the whole of the relevant period. However, we find that that being stranded outside the UK during the global pandemic when particularly vulnerable to covid, having cancer and having no choice but to revert to online cancer appointments, the Applicant’s diabetes and later covid and hospitalisation, when taken together in the context referred to above, amount to exceptional circumstances on the facts of this particular case making property management more difficult which serve to decrease the civil penalty below the minimum tariff of £15,000 for band 4.[56]Applying the terms of the Policy and having carefully considered all of the circumstances of this particular case (including the reasons why we were not satisfied that the reasonable excuse defence was made out), we find that a civil penalty in the sum of £12,000, reduced to £9,600 on account of the 20% discount, falls to be imposed. Accordingly, we vary the final notice which forms the subject matter of this application so as to impose a financial penalty on the Applicant in the sum of £9,600.[57]As stated above, we have not applied any proportionality test in reaching this conclusion. Name: Judge Hawkes Date: 17 April 2023 Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).