Financial Penalty Upheld for Failure to Comply with Improvement Notice

OUTCOME: Dismissed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : MAN/36UD/HNA/2019/0098

Property : 1, [ADDRESS] [POSTCODE]

Appellant: [redacted]

Respondent : [redacted]

Type of Application : Appeal against Financial Penalty, Section 249A Housing Act 2004

Tribunal Members : [NAME], [NAME] [NAME], MRICS

Date of Determination : 7 February 2020

Date of Decision : 13 February 2020

DECISION

© CROWN COPYRIGHT 2020

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DECISION: The Respondent’s Final Notice dated 11 September 2019 imposing a penalty of £15,000 on the Appellant is confirmed.

REASONS

BACKGROUND

1. On 4th April 2018 the Respondent served an Improvement Notice on Mr [RESPONDENT] following a complaint by his tenants at [ADDRESS], Harrogate (“the Property”). The Improvement Notice related to the flat above the convenience store at [ADDRESS] (“the Flat”) and detailed 3 Category 1 hazards - excess cold, fire and falling, and 4 Category 2 hazards – damp and mould, structural collapse, electrical and un-combusted fuel gas. Mr [NAME] did not appeal against the notice.

2. On 5 September 2018 the Appellant completed the purchase of the Property from Mr [APPELLANT] for the price of £125,000. The Property had previously been marketed at an asking price of £265,000, and offered to the tenants at the price of £225,000. The Appellant purchased the Property with full knowledge of the Improvement Notice.

3. The Respondent allowed an extension of time for completion of the works specified in the Improvement Notice to 8 January 2019. The Respondent’s [RESPONDENT] established during a site visit on 21 January 2019 that at that date no work had been started.

4. On 19 June 2019 the Respondent served on the Appellant Notice of Intention to Impose a Financial Penalty of £15,000. The work required by the Improvement Notice, together with other work to the Flat, began on 24 June 2019.

5. During an inspection of the Flat on 21 August 2019 [RESPONDENT], the Respondent’s Area EHO, noted that the following issues specified in the Improvement Notice had not been dealt with:

(a) the fire alarm system was incomplete and no installation report or test certificate had been provided to the Respondent (eventually received on 21 October 2019);

(b) no gas safety certificate or electrical safety certificate had been provided to the Respondent (these were eventually received on 8 October 2019).

6. Consequently a Final Notice dated 11 September 2019 was served on the Appellant, confirming the penalty of £15,000. On 1st October 2019 the Appellant appealed to this Tribunal against the decision to impose the penalty and the amount of the penalty.

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THE LAW

7. Under section 249A of the Housing Act 2004 (“the Act”) a local housing authority may impose a financial penalty if satisfied beyond reasonable doubt that a housing offence has been committed, including failure to comply with an Improvement Notice.

8. Under paragraph 3(2) of Part 1 of Schedule 1 to the Act the person responsible for compliance with an Improvement Notice in the case of a flat is a person who

(a) is an owner of the flat, and

(c) in the housing authority’s opinion ought to take the action specified in the notice.

Section 262 (7) of the Act further specifies that an “owner”, in relation to premises

(a) means a person (other than a [NAME] not in possession) who is for the time being entitled to dispose of the fee simple of the premises whether in possession or in reversion….

9. A person on whom a Final Notice of financial penalty is served may appeal to the First-tier Tribunal against (a) the decision to impose the penalty, or (b) the amount of the penalty, pursuant to paragraph 10(1) of Schedule 13A to the Act.

10. Section 249A and Schedule 13A to the Act specify the procedure to be followed and the content of an effective Final Notice. In the present case, the Appellant accepted that the correct procedure had been followed and that both the Notice of Intention and Final Notice complied with the requirements of the Act.

THE INSPECTION

11. The parties prepared bundles of documents as directed. The Tribunal inspected the Property prior to the hearing in the presence of Mr [COUNSEL] of counsel and representatives of the Appellant, Ms [COUNSEL] of counsel and representatives of the Respondent, and the Appellant’s tenants who occupy the shop and Flat at the Property under a 7 year lease which expires on 21 March 2020.

12. The Tribunal noted that the Appellant had carried out more work to the Flat than the minimum required by the Improvement Notice. Specific to the Improvement Notice, lighting to the outside metal staircase which is the only access to the Flat had been repaired; central heating and double glazing had been installed; the fire alarm system, electricity and gas supply had been modernised; and the stairs to the attic room had been remodelled so as to provide a safer means of exit in case of a fire in the kitchen.

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13. The Appellant says, and the Tribunal accepts, that some £12,000 has been spent on the Improvement Notice works, and a further sum exceeding £20,000 has been spent on general improvements to the Flat.

THE APPELLANT’S CASE

14. Mr [APPELLANT] for the Appellant acknowledged that the Appellant is the owner of the Property, and that it had committed an offence as defined in the Act. However he argued that in this case the Respondent had exercised its policy relating to financial penalties partially, unfairly and disproportionately. He based this argument firstly on the decision of the Respondent not to take any action against Mr [RESPONDENT], who had failed either to appeal against the Improvement Notice or to comply with it, and secondly on the Respondent’s correspondence with the Appellant which, Mr [APPELLANT] said, suggested to the Appellant that the Respondent’s staff understood the reasons for delay in starting the work and reassured him that they were not intending to impose any penalty.

15. As to the amount of the penalty, Mr [RESPONDENT] argued that the Respondent had wrongly assessed the level of culpability as “high” and the level of risk of harm as “medium”. He said that the Respondent had failed to give due weight to representations made by the Appellant in writing to the Respondent at various times from 6 September 2018. These representations were

that according to the lease of the Property the tenant (and not the Appellant) was responsible for its repair, including the works set out in the Improvement Notice;

(by email dated 1 February 2019) that despite its belief that it had no legal obligation to do so, the Appellant would carry out the required work, and would recover the cost subsequently from the tenant; and that the tenant refused access to the Appellant and its workmen on a number of occasions until work was finally started on 24 June 2019, and meanwhile had chosen to continue occupying the Flat in a potentially dangerous state.

16. Mr [APPELLANT] also said that the tenant was to blame for the condition of the Flat, which had not been repaired as required by the lease, and suggested that the tenant had deliberately caused delays and problems for the Appellant because of his disappointment that he had not been able to buy the Property himself.

THE RESPONDENT’S CASE

17. For the Respondent, Ms [RESPONDENT] said that, an offence having been committed and the work having been substantially delayed, it was appropriate to impose a financial penalty in line with the Respondent’s published policy and the Guidance issued by the Ministry of Housing, Communities and Local Government in April 2018. She said that the

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Appellant’s representations had been considered by the Respondent, and that its own policy and government guidelines had been followed when the level of penalty was assessed.

18. Ms [NAME] drew the Tribunal’s attention to the decision of the Upper Tribunal in recent appeals brought by the London Borough of Waltham Forest [2020] UKUT 0035 (LC) in relation to the application of the Local Authority’s published policy when determining financial penalties.

19. Ms [NAME] also referred the Tribunal to documents demonstrating that enforcement action against Mr [NAME] was being proposed in the period prior to his sale of the Property to the Appellant.

FINDINGS

20. The Tribunal finds that an offence was committed by the Appellant. In a letter dated 23 October 2018 the Respondent reproduced paragraph 3(2) of Schedule 1 of the Act, and answered the Appellant’s queries about liability as follows

“The act does not differentiate between freehold and leasehold, it simply states owner. Therefore we have served the notices on the person(s) we are of the opinion ought to take the action specified in the notices…… We deem you as freeholders the persons whom (sic) ought to take the action…..due to the significant structural issues and the severity of the other issues identified…..The current flat is not suitable accommodation, and the level of works required to make it suitable would be unreasonable for the leaseholder to carry out.”

21. The Appellant’s delay in agreeing to carry out the work was unjustifiable. Although the Appellant bought the property at a substantially discounted price on the express understanding that it would be responsible for complying with the Improvement Notice, it did not admit its culpability but continued to blame the tenant for the condition of the Property and to hold the tenant responsible for the improvements.

22. As it was bound to do, the Respondent sought at all times to persuade and encourage the Appellant to make the Flat safe for the tenant to live in. This aim exists alongside the Respondent’s right to impose a financial penalty where appropriate. The Respondent acted properly and fairly in its dealings with the Appellant. In a letter dated 17 April 2019 the Respondent warned the Appellant in the following terms:

“As you are now the owner of the above property, under the Housing Act 2004 for the purposes of the above offence you are deemed to be the person whom the [Improvement Notice] was served on. Furthermore please note if convicted of the above offence it leads to an unlimited fine on level 5. Therefore to avoid enforcement action being taken against you…...please ensure the works as detailed in the Improvement notice are undertaken as a matter of priority.”

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23. The Respondent correctly assessed the Appellant’s culpability as “high” and the risk of harm as “medium”, although the Tribunal considers the risk of harm was at the top end of the “medium” spectrum. The government’s Guidelines and the Respondent’s published financial penalty levels were correctly applied, as were the percentage additions and deductions for aggravating and mitigating aspects of the case. Despite the valiant efforts of Mr [NAME] to persuade them otherwise, the Tribunal has no grounds for varying the Final Notice.

[NAME] Tribunal Judge 13 February 2020