Financial Penalty Reduced for Housing Licence Breach

OUTCOME: Allowed in Part

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : MAN/00DA/HNA/2023/0022

Date of Hearing : 09 January 2024

Property : 254 [ADDRESS] [POSTCODE]

Appellant: [redacted]

Respondent : [redacted]

Type of Application : [NAME] 2004, Section 249A & Sch. 13A

Tribunal Members : Mr Phillip Barber (Tribunal Judge)

[NAME] (Valuer Member)

______________________________________________ DECISION AND REASONS ____________________________________

Decision

We have decided that the appropriate financial penalty under section 249A of the [NAME] 2004 for the offence of failing to comply with a selective licencing requirement under section 95(2) of the [NAME] 2004 is £12,000.

Reasons

Introduction

1. This Decision and Reasons relates to 1 appeal against the imposition by the Respondent of a financial penalty under section 249A of the [NAME] 2004 (“the Act”) in relation to 1 property owned by the Appellant, Mr [NAME] [APPELLANT]. The property is 254 [ADDRESS] [POSTCODE] (“the property”).

2. We held an oral video hearing of this appeal. The Appellant was represented by Mr [COUNSEL], of counsel. The Respondent was represented by [NAME], of counsel. We heard evidence from Ms [COUNSEL], [NAME] for Leeds City Council and evidence from Mr [APPELLANT], the Appellant.

3. There was no inspection of the property by the Tribunal, which was unnecessary, and we had a bundle of documents from the Respondent and a bundle of documents from the Appellant.

Findings of Fact

4. The Appellant is the registered owner of the Property which, at the relevant time, he rented out to paying tenants and which he has owned for several years.

5. On the 06 January 2020 the Harehills area of Leeds (as designated in a map) became a selective licensing area. The full designation is set out in the Respondent’s bundle and the Property is situated in that area. No issue was taken, correctly, in relation to that designation and on the 06 January 2020, a selective licence application was submitted by the Appellant in respect of the Property with a selective licence being granted on the 26 March 2021.

6. That licence is contained within the Respondent’s bundle at page 119 and includes a number of general conditions, as permitted under section 90 of the [NAME] 2004, in relation to the condition and general management of the Property. It is unnecessary to set them out in any detail, but the conditions are variously headed, Gas, [NAME], Anti- social Behaviour and Management of the Property.

7. On the 11 February 2022, the Respondent received a report in relation to the [NAME] conditions at the property from the tenant’s outreach worker and on the 16 February 2022, the Respondent wrote to the Applicant and the tenant in relation to the property and provided a month within which to investigate and report back. The Appellant did report to the Respondent on the 25 February 2022 advising that various works would be done but advised that the rubbish and cockroaches were the fault of the tenants.

During a conversation between the Appellant and an Officer of the Respondent on the 16 March 2022, the Appellant alleged that entry had been refused to the contractor, but he would speak to the tenants when he attends to collect rent. Following further contact between the Appellant and the Respondent, the Respondent inspected the property on the 14 June 2022 to ascertain whether the property was compliant with the licence conditions and various deficiencies were identified as set out in the letter to the Appellant on 29 June 2022 by way of a PACE letter enclosing a copy of the inspection report and requesting copies of various documents as set out on page 253 to 262 of the Respondent’s bundle.

8. Following Mr [APPELLANT]’s response to the questions raised in the PACE letter and a Notice of Intent to impose a monetary fine, the Respondent imposed a final civil penalty in the sum of £22,500 by way of a notice dated 21 December 2022, however after further representations were made by Mr [APPELLANT], including a copy of the fire alarm test certificate for April 2022, the Respondent withdrew that notice and replaced it with one dated 31 January 2023 fining Mr [APPELLANT] £13,500 for the various breaches.

9. Mr [APPELLANT] appealed the imposition of the fine to this Tribunal by way of an application notice dated 26 February 2023. His grounds for appeal include a video presentation and a statement in which he raises a number of challenges to the level of the fine, including the following: he has visited the property in December 2021 and there was no evidence that the tenants had caused considerable damage to the property; he has carried out a program of maintenance work; he did not undertake reference checks and the tenants were new to the UK; the neighbours have complained about his tenants; rent payments were late; there were language barriers with the tenants and that the tenants had generally refused entry to him and his workmen. He states in his grounds of appeal that the tenants themselves had caused the damage and that it was not in that condition when let and that eventually the tenants fled the property and have left the country. Finally, since the tenants have moved, Mr [APPELLANT] submits that he has carried out a schedule of refurbishment/renovation at the property at a cost of £22,649.36.

10. To his credit, the Appellant accepts that he could have “been more forceful in [his] approach to conducting further inspections on the property…” but that he was concerned about covid and his state of health at the time.

11. BY the 11 May 2023 at the reinspection by the Respondent, it was noted that most items of work had been carried out but that a few remained outstanding but by the 17 July 2023, as shown on various photographs, works had been completed.

The Legal Framework

12. By section 249A of the [NAME] 2004:

(1) The local [NAME] authority may impose a financial penalty on a person if satisfied, beyond reasonable doubt, that the person's conduct amounts to a relevant [NAME] offence in respect of premises in England.

(2) In this section “relevant [NAME] offence” means an offence under— ………….

(c)section 95 (licensing of houses under Part 3), ………..

13. Subsection 90(1) of the Act provides that a local [NAME] authority in granting a licence “may include such conditions as the local [NAME] authority consider appropriate for regulating the management, use or occupation of the house concerned”, and subsection 90(3) provides details of the type of conditions which might be included.

14. Section 95 of the Act provides that “(2) A person commits an offence if – (a) he is a licence holder…on whom restrictions or obligations under a licence are imposed in accordance with section 90(6), and (b) he fails to comply with any conditions of the licence.”

15. Subsection 95(4) provides that “it is a defence that he had a reasonable excuse…(b) for failing to comply with the condition”.

16. By subsection (4) of section 249A the maximum penalty is £30,000 and subsection (6) provides that the procedure for imposing such a fine and for an appeal against the financial penalty is as set out in schedule 13A to the Act.

17. Paragraphs 1 to 3 of Schedule 13A set out the provisions in relation to a “Notice of Intent” which must be served before imposing a financial penalty. Paragraph 2 provides that the notice must be served within 6 months unless the failure to act is continuing (which is the case in this appeal) and paragraph 3 sets out the information which must be contained within the Notice.

18. After service of the Notice of Intent and following consideration of any representation made, paragraph 6 provides for the service of a “Final Notice”, which must set out the amount of the financial penalty and the information required in paragraph 8: i.e., the amount, the reasons, how to pay and information about the right of appeal.

19. Paragraph 10 of schedule 13A sets out the provisions in relation to such an appeal:

(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 [NAME] 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 [NAME] authority could have imposed.

20.

Accordingly, the Tribunal, in this appeal, has jurisdiction over the decision to impose a penalty; the amount of the penalty and can confirm, vary or cancel the final notice including increasing, if it so determines, the amount of the penalty. The appeal is by way of a re-hearing, which we have conducted.

21. We had to be satisfied beyond reasonable doubt that the conduct of the Appellant amounts to a “relevant [NAME] offence” under section 95 of the Act – i.e. that Mr [APPELLANT] failed to comply with licensing condition under Part 3 and in particular section 90 of the [NAME] 2004.

Our Assessment of the Appeal 22. This is a re-hearing of the decision to impose a financial penalty for a purported offence committed by the Appellant as a result of contravening section 95 of the [NAME] 2004.

23. We held an oral hearing of the appeal by video on the 09 January 2024. Mr [APPELLANT] was represented Mr [COUNSEL], of Counsel and the respondent was represented by Mr [COUNSEL]. Of Counsel. We heard evidence from Mr [APPELLANT], the Appellant and Ms [APPELLANT], the [NAME].

The Evidence of Miss [NAME] 24. Ms [NAME] gave oral evidence to the Tribunal and was cross examined by Mr [NAME] on that evidence. We accept her evidence entirely and we are

satisfied that she carried out a thorough and professional assessment of the conditions at the property arriving at a sound and well-reasoned decision to impose a financial penalty. During cross questioning, Ms [NAME] reasonably accepted that there was little evidence of the condition of the property prior to the commencement of the tenancy, and she also accepted that Mr [APPELLANT] had been, on the whole, cooperative in relation to the investigation. We were therefore able to place a significant amount of reliance on her evidence.

The Evidence of the Appellant

25. The Appellant gave evidence before us and was cross questioned by [NAME] in relation to various aspects of the appeal. We found the Appellant to be generally reliable and we accept a lot of his evidence. Where we do not agree with the Appellant will be set out below.

The Statutory Process for Imposing a Financial Penalty

26. We find as fact that the Notice of Intent and Final Notice were properly served and that they contained the proper statutory information. There were no procedural irregularities. In any event the Appellant did not take issue with the process he was more concerned with the outcome.

Reasonable Excuse

27. Section 95(2) if the licence holder had a reasonable excuse for failing to comply with the conditions. However, for the reasons set out below we do not find that Mr [APPELLANT] had a reasonable excuse.

Our Findings in relation to each alleged breach

28. Working from the list of contraventions on page 430 of the bundle we find as follows.

29. [NAME] – we accept that Mr [APPELLANT] had a fire alarm system inspection and servicing report dated 11 April 2022. This demonstrates that at the date of the non-compliance visits between June 2022 and July 2022 there was a working fire detection system. However, Mr [APPELLANT] failed to provide a copy of this report by the 15 July 2022 and so we take this into account. The existence of the report is, however, reflected, quite rightly, in the reduction of the severity of harm.

30. The Management of the Property breaches – Mr [APPELLANT] does not dispute the existence of disrepair at the property during the relevant visits by Ms [NAME]. What he disputes is whether he responded appropriately to the disrepair and whether he was responsible for the disrepair, claiming that his tenants caused it. In support of this claim, he provided various documents including contemporaneous notes of visits and contact with his tenants – a typed version of some handwritten notes was included. He also provided various photographs showing his tenants and elements of what

he claims to be tenant damage at the property, and he included various written statements from workmen and the like.

31. We note that on the 15 February 2022, [NAME] from the GRT Outreach team sent an email to the [NAME] team raising concerns about disrepair at the property. In our view this is reliable evidence that there was disrepair. We note that in Mr [APPELLANT]’s tenancy notes, he visited the property in December 2021 and carried out what he describes as a “full inspection” and reports that there was “no significant damage that required repair work”. Given the extent of the disrepair demonstrated by the Respondent’s visit to the property in June 2022 and the Appellant’s claim that this was predominantly caused by the tenants we do not accept that the Appellant’s visit in December 2021 did not identify to him disrepair at the property.

32. Between 16 February 2022 and up to Ms [RESPONDENT] visit on 14 June 2022, the Respondent attempted to get Mr [APPELLANT] to carry out works of repair at the property and comply with the selective licence conditions. On 25 February 2022, Mr [APPELLANT] agreed to replace [NAME] and repair the kitchen ceiling but by 16 March 2022, Mr [APPELLANT] was already stating that the tenants would not allow access to his contractors. During a conversation on the 22 March 2022, Mr [APPELLANT] was advised to seek legal advice about the issues he was raising with his tenants, but we were not told of any action he took at that time.

33. In a video from the 29 March 2022, reported in paragraph 15 of Ms [NAME] statement it is recorded that a downstairs door is damaged and that the hinges are loose. The report also records that FD30s are not present.

34. Following a referral to the selective licence compliance team, as mentioned above, Ms [NAME] visited the property on 14 June 2022. A large number of photographs were taken of the condition of the property at that time as can be seen in exhibit BEB20 to her witness statement. The photographs demonstrate that the property was in a poor state of repair, many of which it is hard to see how they could have been brought about by the behaviour of the tenants. Photograph 92, for example, shows a step up to the property which appears to have partially collapsed; photograph 84 shows exposed wiring to an electric switch; photograph 79 shows old and damaged floor covering to the first-floor landing; photograph 76 shows exposed woodwork and damaged stair covering to the second floor. Photograph 1 shows a damaged and missing light fitting.

35. Throughout the property there are numerous photographs of damages walls and ceilings; there are photographs which demonstrate poorly fitted electrical switches and light fittings, the balustrade is missing at the top of the second-floor steps and the carpet throughout the property appears to be old and damaged.

36. In our view, the condition of the property is unlikely to have deteriorated to this extent between Mr [APPELLANT]’s visit in December 2021 and the visit by the Respondent in June 2022. We also find Mr [APPELLANT]’s claim that this is wilful tenant damage unlikely given that the tenants were complaining of disrepair in February 2022 (2 months after he visited). They would have had to carry out this level of destruction effectively between December 2021 and February 2022 which we think unlikely.

37. It follows that we are satisfied that the report of the respondent of licence breaches, set out in Exhibits BEB21 and 22 of Ms [NAME] witness statement accurately reflect the condition of the property at that time. We also find that as Mr [APPELLANT] visited the property in December 2021, it is likely that many of those breaches were already apparent at that time however, given that he was in any event put on notice of the disrepair by at least 25 February 2022, he had ample opportunity to bring the property up to compliance before the visit of [NAME] in June 2022.

38. We think that Mr [APPELLANT]’s defence to the penalty, that he was prevented from accessing the property, is unlikely for several reasons. Firstly, we note that he was able to gain access for the purposes of a full inspection in December 2021. It would be odd for a tenant to allow a full access in circumstances where they did not want access. Secondly, his tenants were allowing access to a support worker and had raised issues of disrepair with her so that she raised them with the [NAME] who made contact with Mr [APPELLANT]. It strikes us as unlikely that tenants would complain of disrepair and then refuse access – there is no plausible reason why they might do this. Thirdly, the evidence from Mr [APPELLANT]’s various witnesses do not support this claim. None of them mention difficulty gaining access and in fact they report that access was provided. So, for example, the plumber in his statement states that he visited in early 2022 to undertake various tasks and no issues were raised about entry. Further, the statement from the gas engineer mentions no issues with gaining access.

39. Finally, Mr [APPELLANT] has provided a photograph purporting to show his tenants refusing to allow him access. We do not accept that the photograph demonstrates this. It simply shows a family at the entrance of their home and for the reasons already given we do not accept that these tenants were refusing entry. In any event, and as he accepts, Mr [APPELLANT] could quite reasonable have taken appropriate steps to address this if that were the case – he could have instructed a solicitor to write to the tenants or taken some other steps to gain entry to carry out works of repair. The gas engineer mentions a heated discussion between Mr [APPELLANT] and his tenants about the condition of the property during the December 2021 visit and, it seems to us if he were concerned about the condition of the property, he could have taken appropriate action at least in early January 2022.

40. Accordingly, we accept that the property was in a state of disrepair at the visit on 14 June 2022 and that the table of licence breaches at Exhibit BEB21 of the Statement of Ms [NAME] are all made out, supported by the evidence and that Mr [APPELLANT] has been unable to demonstrate either that

they did not exist or that he was not responsible for them. We do not accept that they are tenant damage and neither do we accept that he was trying to gain entry to carry out works of repair but was refused.

41. We find that each of the items on the list at Exhibit BEB21 and the Property Inspection Report at Exhibit BEB22 constitute breaches of the selective licence conditions attached to the grant of a selective licence for this property and we are satisfied beyond reasonable doubt that an offence has been committed by Mr [APPELLANT], the licence holder, under section 95(2) of the [NAME] 2004.

42. We find, therefore that of the items listed in the Property Inspection Report as breaches are proven beyond reasonable doubt, that the Appellant, Mr [APPELLANT] has committed an offence and that he is liable for a financial penalty as follows.

The Amount of the Penalty 43. The starting point is the Respondent’s policy in relation to civil penalties which has been provided in the Respondent’s bundle. The policy document generally requires consideration of a matrix comprising of the level of culpability set against the level of harm. There are three levels of culpability ranging from high (intentional or reckless) through to medium (negligence) down to low (no fault) and likewise, three levels of harm, high (serious effect/vulnerability), medium (adverse effect that is not high) and low (low risk of harm or potential harm).

44. The policy thereafter sets out a harm/culpability matrix in which the level of harm is assessed in line with the level of culpability so as to provide a starting point banding with a starting point within which a range of financial penalties might be expected. That starting point can then be increased or reduced within that range by reference to aggravating and mitigating factors.

45. The Respondent has set out in both the final notices its reasons and conclusions in respect to the policy and the factors leading up to the assessment of the level of harm.

46. In the Respondent’s bundle, the Respondent has included part of its Civil Penalty Policy and at the hearing there was a discussion as to the meaning of the section headed “Final determinate of the level of any civil penalty” and the requirement that the “final determinate of any civil penalty MUST be the general principle: The civil penalty should be fair and proportionate but in all instances should act as a deterrent and remove any gain as a result of the offence”. It seems to us that this section gives a general discretion on the Authority and on the Tribunal when it comes to applying the policy as to the amount so as to ensure that the outcome is “fair and proportionate” but in any event it was suggested at the hearing that this was not the type of appeal where it would be appropriate to depart from the matrix. In this instance we agree, but only because it is possible to use the matrix in this

appeal so as to give a fair and proportionate outcome. In the event that a fair and proportionate outcome were not permissible under the matrix then we would have departed from the matrix so as to achieve a fair outcome.

Culpability and Harm 47. Taking account of the Respondent’s Civil Penalty Policy as set out on page 347 of the Respondent’s bundle, and assessing the issues anew, we think this offence gives rise to a high level of culpability for the following reasons.

48. We note that Mr [APPELLANT] is the holder of five licences in the selective licence area as set out in paragraph 44 of Ms [NAME] witness statement and as such he is an experienced and professional landlord. Each of these licences would be subject to similar licence conditions and we think on careful reading of any one of these licence conditions he should have been fully aware of his responsibilities as a landlord. We also note that he has previously been investigated by the Leeds City Council Rogue Landlord Unit and through 2016 and 2018 he was served 11 improvement notices. These would have been in relation to HHSRS hazards and as such he should have been aware of the importance of maintaining his property and ensuring that it is free of any disrepair or other hazard. The list of properties subject to and improvement notice is set out in paragraph 45 of Ms [APPELLANT] statement.

49. Finally, we note that Mr [APPELLANT] has had a previous selective licensing report for similar issues in respect of 14 Cowper Mount, and again it seems to us that having previously fallen foul of the selective licencing regime, he should have been acutely aware of the need to act promptly and decisively in ensuring that the property complied with the selective licence conditions.

50. It follows that we think that the degree of culpability on the Respondent’s matrix is high.

51. In relation to the level of harm, we think that although there are factors which might give rise to a high level of harm, such as the nature and degree of some of the breaches, we are satisfied that the level of harm is properly described as medium. This is because we think that there is a medium risk of harm to the occupiers of the property. They could trip on the stairs or carpet; and given the condition of some of the electrics we thought that there was a medium risk of harm from electric shock. In any event, the condition of the property is clearly not a low risk of harm as there is substantially more than “little risk of an adverse effect on individuals” and so this category would not be appropriate.

52. This gives a starting point for the level of a fine at £15,000.

Aggravating/Mitigating Factors

53. In relation to the aggravating factors, we do not think that Mr [APPELLANT] was motivated by financial gain such that this amounts to an aggravating factor. We accept that he should have been aware of the need to comply with the selective licence requirements and should have undertaken appropriate works of repair prior to the compliance visit but we do not see how this provided him with a serious market advantage over rivals or gave him additional income. We think, if anything, his inability to manage the property effectively was due to a combination of ineptitude and a belief that he was not at fault. We therefore disagree with the Respondent that this constitutes an aggravating factor. In relation to whether the offence continued over a long period of time we think that Mr [APPELLANT] was probably aware of the existence of breaches of the licence from his visit in December or at least he should have been. We had some difficulty in deciding whether this constitutes a “long period of time” for the purposes of an aggravating factor but decided that it probably does. If he were to have respond promptly to the issues, then works could have been completed within two or three months.

54. The level of the fine is there increased by 5% to 15,750.

55. In relation to mitigating factors, we agree with the Respondent that Mr [APPELLANT] responded to the PACE letter and provided documentation as requested. We also agree that he started works promptly once he was served with the PACE report and that he has no previous convictions. These are all mitigating factors. We also accept that he provided accommodation for a large family and that there may be an element of tenant neglect in relation to some of the minor items. This is supported to some extent by the letter from the neighbour provided by Mr [APPELLANT].

56. However, we also add to this list the fact that Mr [APPELLANT] had a degree of ill-health during the period in question. The Respondent initially did not include this as a mitigating factor as there was no supportive evidence, however Mr [APPELLANT] has obtained a letter from the [NAME] about his health condition and the reasons why he might be particularly worried about contracting Covid-19. We think we should recognise this by way of a further mitigating factor.

57. It follows that Mr [APPELLANT] has 5 mitigating factors reducing the level of the penalty by £3750.

Conclusion

58. In those circumstances from the Respondent’s matrix set out in its Civil Penalty Policy as reproduced in the bundle, a high degree of culpability and a medium degree of harm starts at £15,000. From this we add £750 for the aggravating factor and deduction £3750 for the mitigating factors to give a financial penalty of £12,000 for the offence under section 95(2) of the [NAME] 2004.

59. That is the decision of the Tribunal.

Signed

Phillip Barber, Judge of the First-tier Tribunal