Ashmore Estates Limited v The London Borough of Enfield [2025] UKFTT 653 (GRC)

[2025] UKFTT 00653 (GRC)

Case Reference: FT/SL/2024/0080

First-tier Tribunal

(General Regulatory Chamber)

Hearing Heard on: 30 May 2025

Date 10 June 2025

Standards & Licensing

Heard by Cloud Video Platform

Before

JUDGE ALEXANDRA MARKS CBE

JUDGE SAWARD

Between

ASHMORE ESTATES LIMITEDAppellant

THE LONDON BOROUGH OF ENFIELDRespondent

Mr Chris Christodoulou, Director of Ashmore Estates Limited for Appellant

Mr Archie Maddan, Counsel for Respondent

Decision: The appeal is allowed as to the extent of the penalty. The Final Notice is varied to substitute a financial penalty of £1,000 instead of £1,500.

REASONS

Preliminary Matter

[1]It was established at the hearing that the correct name for the Respondent to be used in this Decision is the “The London Borough of Enfield” (“the Council”) rather than “Enfield Council” as appears in documents before the Tribunal.

Background

[2]The Appellant appeals against a financial penalty imposed by the Council in a Final Notice (“FN”) issued by its Trading Standards Service on 26 April 2024 under sections 83 to 88 of the Consumer Rights Act 2015 (“the Act”).

(c) of the Act on 25 January 2024, as follows:

“As a letting agent you have failed to display the following required information on your website: • Your landlord fees are displayed as a +VAT figure. Section 83(4)(c) of the legislation stipulates that agents must display the amount of each fee inclusive of any applicable tax or where the amount of each fee cannot reasonable [sic] be determined in advance, a description of how that fee is calculated.” • Your landlord fees are displayed as a +VAT figure. Section 83(4)(c) of the legislation stipulates that agents must display the amount of each fee inclusive of any applicable tax or where the amount of each fee cannot reasonable [sic] be determined in advance, a description of how that fee is calculated.”

[3]The FN imposed a financial penalty of £1,500. It followed a Notice of Intent (“NOI”) to impose a monetary penalty of £2,000 issued on 12 February 2024.

[4]By Case Management Directions dated 25 November 2024, the Tribunal admitted the Appellant’s appeal against the FN.

[5]The Tribunal has been provided with an updated final bundle of some 347 pages, and an Upper Tribunal case decision. The bundle includes a witness statement of Chris Christodoulou, a Director of the Appellant company. For the Council, witness statements are provided by Alexandra Cosgrove, Trading Standards Officer and Esther Hughes, Head of Service for Consumer Protection and Waste Enforcement. All witnesses attended the remote hearing. The hearing took the form of oral representations from both sides and questions put by the Tribunal. We are grateful to both sides for their succinct contributions.

Legal Framework

[6]The Act imposes a requirement on all letting agents to publicise details of their relevant fees and other information. This is achieved by sections 83 to 86 of the Act. It includes the requirement that a letting agent must publish a list of the fees on the agent’s website (if it has a website) (section 83(3)). That list of fees must include the amount of each fee inclusive of any applicable tax or, where the amount of a fee cannot reasonably be determined in advance, a description of how that fee is calculated (section 83(4)(c)).

[7]The duty applies to ‘relevant fees’. These are fees, charges, or penalties payable to the agent by a landlord or tenant in respect of letting agency work or property management work carried on by the agent or otherwise in connection with an assured tenancy of a dwelling-house or a dwelling-house that is, has been or is proposed to let under an assured tenancy (section 85(1)).

[8]Section 87 explains how the duty to publicise fees is to be enforced through the imposition of a financial penalty not exceeding £5,000.

[9]The system of financial penalties for breaches of section 83 is set out in Schedule 9 to the Act. Before imposing a financial penalty, the relevant authority must serve a notice of intent on the agent of its proposal to do so within 6 months of having sufficient evidence of the agent’s breach. If the breach is continuing, the notice of intent may be served at any time when the breach is continuing (paragraph 1).

[10]The letting agent may respond within 28 days of being sent the notice of intent (paragraph 2). Upon expiry of this period, if the authority decides to impose a financial penalty, then it must serve a final notice on the agent requiring the penalty to be paid within 28 days. The final notice must set out the amount of the penalty, the reasons for imposing it, information on how to pay, the period for payment, the rights of appeal and consequences on non-compliance.

[11]Paragraph 5 of Schedule 9 to the Act provides for appeals to the Tribunal. There are four grounds of appeal:(a) the decision to impose a financial penalty was based on an error of fact

(b) the decision was wrong in law

(d) the decision was unreasonable for any other reason.

[12]By virtue of paragraph 5(5) of Schedule 9, the Tribunal may quash, confirm or vary the final notice.

Main Issues

[13]In summary, the main issues before the Tribunal are:• Whether the Final Notice was invalidated and should be quashed.

• Whether the Final Notice should be varied to alter the amount of the financial penalty.

The Appellant’s case

[14]In his witness statement Mr Christodoulou identifies himself as the sole Director of the Appellant company responsible for daily operations and compliance. He claims to be genuinely unaware that including “+ VAT”, despite not being VAT registered, could be interpreted as misleading or unlawful. The company website and Terms of Business were immediately updated to remove any reference to VAT as soon as the matter was raised by the Council. No VAT was ever charged, as demonstrated in multiple invoices supplied to the Council.

[15]Mr Christodoulou submits that he acted promptly, transparently, and in good faith. The Appellant has not profited in any way from the error and no consumer was misled or disadvantaged.

[16]The Appellant further highlights that:16.1 the Council misplaced key correspondence from him in response to the NOI;

16.2 the wrong company was named in official correspondence;

16.3 the fine was imposed as if no engagement had occurred despite the Appellant’s prompt co-operation and correction; and

16.4 these procedural irregularities call into question the reasonableness and fairness of the process.

[17]The misplaced correspondence was the Appellant’s reply to the NOI in which he asked for “a review on the grounds that the decision to impose a monetary penalty is based on an error of fact”. The reply explained that the company’s website was constructed prior to the legislation coming into effect and was not updated in line with the legislation.

[18]The representation proceeded to argue that as the business was not VAT registered, it cannot breach section 83(4)(c) as the business is outside the scope of VAT. This line of argument was not pursued at the hearing.

[19]Mr Christodoulou denies intentional wrongdoing. He had acknowledged, as an honest mistake, that the website was not up-to-date. When the website was developed, the company had intended to become VAT registered although that never happened. It is submitted that there are no aggravating factors, such as delay, prior non-compliance, or evidence of gain or harm. In fact, every effort was made to comply immediately and responsibly.

[20]The Appellant refers to comparable cases such as La Casa Ltd v LB Lewisham [2022] and Ultra Estates Ltd as examples of financial penalties being significantly reduced where breaches are technical, promptly remedied, and without financial or consumer impact.

[21]The Appellant invites the Tribunal to either quash the FN or to reduce the amount of the financial penalty.

The Council’s case

[22]The Council acknowledges that the Appellant’s written representations on the NOI were not considered before issuing the FN because they were mislaid. The Appellant’s representations of 19 February 2024 have since been found. Having reviewed those representations, the Council submits that the Appellant is a professional entity and is expected to be aware of and to comply with all requirements imposed by law.

[23]The company was incorporated in January 2007. They should have been fully aware of and keep updated with regulations applicable to their business. It is irrelevant that the website was developed before the Act came into force. It has been in force for over 9 years, since May 2015.

[24]The fees were displayed as a +VAT figure, which is misleading to any potential consumer viewing their fees.

[25]There was an administrative error in the covering letter of 26 April 2024 by naming a different legal entity. The breach detailed in the letter was correct. The reasons were also correct at the time. Schedule 9 of the Act does not state that the letter is part of the mandatory requirements to be served on a letting agent who is in breach. The letter merely explains the reasons for imposing the penalty. The mandatory requirements are detailed within paragraph 3 of Schedule 9.

[26]The FN was correctly addressed and served on the Appellant as Ashmore Estates Limited and it contains all the mandatory information as prescribed by law.

[27]The normal starting point, in line with Government Guidance is £5,000 per breach. The penalty was lower in this case because the Appellant had breached only section 83(4)(c). It had published details of membership of a client money protection scheme and redress scheme as required by subsections 83(6) and (7) of the Act.

[28]The Council confirms that the decision would still have been the same had the Appellant’s representations of 19 February 2024 not been mislaid. The penalty was reduced in the FN because the Appellant amended the website quickly to become compliant with the legislation.

[29]The FN is in line with penalties issued in other boroughs across London and is in line with numerous First Tier and Upper Tier tribunal decisions.

[30]There is no requirement for the breach to be intentional. The Appellant has shown no remorse or acknowledgement of fault in relation to the breach. Simply rectifying a breach following on from a NOI being served does not negate the penalty.

The Hearing

[31]Points made at the Hearing which were already in evidence are not duplicated here.

[32]Mr Christodoulou confirmed that he had received both notices issued by the Council. He fully admitted the mistake on the company website, which was corrected immediately. It is a small business that takes its responsibilities seriously. The Appellant had been cooperative and has no history of breaches. It was a technical, unintentional breach. No VAT was charged, and no harm caused.

[33]Mr Christodoulou emphasised that he does not seek to avoid accountability, he just wants proportionality. He is aggrieved that his reply to the NOI was not considered. The Council did not acknowledge the reply or alter the penalty in response. Mr Christodoulou considers there has been a fairness gap between his mistake and that of the Council in neglecting to consider his response when imposing the penalty. He considers the penalty to be disproportionate.

[34]Mr Maddan for the Council accepted that it was a technical breach. After issuing the FN, the fuller picture became apparent. Ironically, had the Council seen the Appellant’s reply to the NOI and realised the length of breach, the penalty would probably have landed at £2,000, although Mr Maddan stressed that he does not push the point. The Council accepts that there was never any victim and the risk to consumers was relatively low.

[35]Nevertheless, the Council says that the Appellant is operating in a regulated environment that really matters. Consumers are making their single largest purchase whether renting or buying. It requires operators in the marketplace to be disciplined with strict obedience to the rules. It is not good enough for the Appellant to say it had not updated its website. A reputable business should show leadership. The Council finds it difficult to see how the penalty could be reduced further. The breach, while technical, does matter and has to be marked by a penalty that is more than de minimis.

Whether the Final Notice was invalid by failure to consider representations

[36]The Appellant produced an email sent to the Council on 19 February 2024 timed at 11.47 sending details of his representations in response to the Council’s letter of 12 February 2024, being the date of the NOI.

[37]It is undisputed that the Council received, but failed to take into account, the Appellant’s written representations of 19 February 2024 before deciding to issue the FN. During the hearing, Counsel for the Council requested a ruling on whether this failure invalidated the FN, the Council being unaware of any legal authority on the point. The Appellant’s case had not been explicitly argued in this way. However, the Appellant is not legally represented. The Tribunal considers the validity of the FN to be an obvious question flowing from the Council’s admission. Accordingly, it was appropriate for the Tribunal to decide the point as a preliminary consideration.

[38]Following a short adjournment for the panel to deliberate on the question, Judge Marks delivered an oral ruling. This was to the effect that the Tribunal finds no error of law sufficient to invalidate the FN for failure to consider the Appellant’s representations. The reasons articulated by Judge Marks referred to Schedule 9 of the Act, whichsets out the procedure for imposing financial penalties.

[39]In Schedule 9, the agent has the right to make written representations within 28 days of service of the notice of intent (paragraph 2). By paragraph 2, the authority can decide whether to impose a financial penalty and, if so, the amount of the penalty. If the authority decides to impose a financial penalty, it must serve a final notice imposing that penalty. The final notice must contain various information as set out in paragraph 3(4). There is no explicit provision requiring the authority to take the agent’s written representations into account before proceeding to issue the FN although it is probably implicit. Nor is there any requirement for the FN itself to say whether representations were made and considered.

[40]These factors led the Tribunal to conclude that there was not an error of a kind that would invalidate the notice. The hearing proceeded on that basis.

Findings and Analysis

[41]The Tribunal has considered all the information placed before it and made the findings below on the balance of probabilities. None of the facts are disputed.

Whether the Final Notice was Invalid for other reasons

[42]The Tribunal finds no basis to conclude that the decision to impose a financial penalty was based on an error of fact or was wrong in law. No case is pursued that the decision was unreasonable for any other reason.

[43]There are errors within the Council’s letter of 26 April 2024 accompanying the FN. The second paragraph of the letter gives the name of another unconnected company. Mr Christodoulou realised this was a mistake. Both covering letter and FN were addressed to the Appellant at the correct address and the website address is correct. The Appellant received the notices and took the opportunity to appeal.

[44]The covering letter also cited section 83(3C) of the Act. That section does not exist. This error was unlikely to mislead given that the correct section of the Act (i.e. section 83(4)(c)) is identified under “Details of breach” within the FN.

[45]The FN itself was correct. It was not invalidated by errors in the covering letter. The Appellant does not argue that he was prejudiced in any way by the above errors. The crux of the matter is whether the amount of the financial penalty is unreasonable, Paragraph 5(2)(c) of Schedule 9.

The financial penalty

[46]The Appellant is a small independent letting agency based in North London falling within the London Borough of Enfield. Its website was set up in 2007 and was never revised. The Appellant’s fees were displayed as being “+VAT”. The company was not registered for VAT when the website was set up or at any time since.

[47]The NOI issued by the Council on 12 February 2024 indicated an intention to impose a monetary penalty of £2,000. The Appellant replied to the NOI within the requisite 28-day period on 19 February 2024. The response stated: “The website does indeed state that the fees are plus VAT and I understand that this is a breach of [section 83(3)] of the Consumer Rights Act 2015”.

[48]The Tribunal finds that there was a breach of section 83(4)(c) of the Act because the Appellant’s website failed to give all fees as an amount inclusive of any applicable tax. No exemptions to that requirement applied.

[49]After expiry of the representation period, Council officers reinspected the Appellant’s website. There was a discussion among Council officers, and they decided to reduce the amount of the penalty by £500 due to the rapid correction of “+VAT” (although not comprehensively - one rogue reference remained). The FN followed on 26 April 2024. As already mentioned, in arriving at this decision, no account was taken of the Appellant’s reply to the NOI.

[50]The Upper Tribunal (“UT”) in London Borough of Camden v F Ltd

[2017] UKUT 349 (AAC)

accepted [27-29] that Schedule 9 of the Act provides for reasonableness as a consideration in the approach to be taken, including in relation to the amount of any penalty, and does not limit matters that may be included in representations to the local authority after the notice of intent has been served. A local authority would be acting unreasonably if it failed to consider any change of circumstances, and any change of circumstances should properly be taken into account in relation to any penalty. The UT further accepted the company’s submission that it would be wrong to prevent a letting agent from being able to rely on the fact that it has now remedied the breaches identified in the notice of intent.

[51]Whilst accepting those arguments, the UT chose to put it this way: “The overall purpose is to protect consumers. If letting agents are not in compliance, they should be encouraged to come into compliance. Allowing changes of circumstances that are beneficial to consumers to be taken into account before the final notice is issued contributes to this.” [29]

[52]In setting aside the First-tier Tribunal’s decision and substituting its own decision to impose a penalty, the UT found [at 31] that credit should be given for the company’s attempt to design a compliant revised wording although it was unsuccessful in this attempt. This led to a 25% discount for each breach.

[53]La Casa Ltd v London Borough of Lewisham (Appeal ref’ PR/2021/0049) is a First-tier Tribunal Decision from 1 February 2022. It is not binding, but it is persuasive not least because the facts are comparable. Both cases involve the application of section 83(4) of the Act. La Casa also concerned letting agent’s fees that were expressed as a percentage to be charged “+VAT”. Having considered all the circumstances, including mitigating factors, the Tribunal upheld the penalty of £1,000.

[54]Of course, each case must be decided on its individual merits. In this case, the harm or prospect of harm was mitigated by prompt action upon receipt of the NOI. The Council accepted that the Appellant is a small reputable company. There is no evidence that VAT was added to its fees. Consequently, no harm was caused. There were no complaints. The breach was unintentional. It was a technical breach, but a breach nonetheless.

[55]The Tribunal notes that the website not only listed the fees as +VAT but provided examples of fee calculations with the VAT inclusive amount. The fees information would clearly be misleading to consumers even if they would be delighted to find that the fees payable were less than expected.

[56]The Tribunal keeps well in mind that section 83(4)(c) contains an important statutory requirement designed to be enforced under the Act and with financial consequences for non-compliance. It is expected that there will be strict compliance with rules that are in place to protect the public. The Act is intended to reduce harm and the risk of harm to consumers from letting agents.

[57]It is somewhat surprising that it never occurred to the Appellant that the company website needed updating after its construction almost a decade earlier. This resulted in an ongoing breach over many years. If anything, it is an aggravating factor that the breach had been ongoing for so long. However, it was not a factor known to the Council when it reduced the penalty.

[58]Had the Council realised the duration of the breach, then the penalty could have been much higher. Government Guidance for Local Authorities provides that a £5,000 fine (per breach) is the normal starting point and that a lower penalty should only be imposed if satisfied that there are extenuating circumstances. The Council did not press this point, which was prudent given that the argument made at the hearing that the penalty would likely have been £2,000 contradicts its written response that the FN would have been unchanged by the Appellant’s reply.

[59]The Council’s covering letter to the FN incorrectly stated that the Appellant had not provided representations. It was entirely the Council’s own shortcoming that resulted in the Appellant’s representations being overlooked. That cannot be without consequences. A financial penalty has been set without having proper regard to what the Appellant has to say.

[60]As set out in La Casa, the penalty needs to be set at a level that reflects the public benefit in ensuring compliance with the Act whilst being proportionate to the scale of the business and the severity of the failure. Ultimately, a penalty should be fair and proportionate. In this case,there was no financial evidence about the turnover/scale of the business but the fact it is not registered for VAT suggests that it is a small business. However, there was no evidence or suggestion that the penalty would lead to the agent going out of business.

[61]In the circumstances of the case, the Tribunal finds that it is fair and proportionate to reduce the amount of the financial penalty to £1,000. This strikes the right balance in acknowledging the seriousness of the breach and need to uphold this important consumer protection provision, whilst recognising the mitigating factors and circumstances specific to this case.

Conclusion

[62]The amount of the financial penalty was unreasonable, and it shall be reduced from £1,500 to £1,000. To this extent the appeal succeeds.