First-tier Tribunal Reduces Penalties for Electrical Safety Violations

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case references : MAN/00CH/HNA/2023/0007 - 10 Properties : 55 and [ADDRESS], and 66 and [ADDRESS], [NAME] NE8 Applicant: [redacted] Respondent : [redacted] : Appeal against financial penalties under section 249A of the Housing Act 2004 (2004 Act) Tribunal : Tribunal Judge W L Brown Tribunal Member [NAME] (Valuer Member) Date of decision : 8th January 2024 __________________________________________________________

DECISION __________________________________________________________

The appeals are allowed and the Tribunal varies the financial penalties imposed by the Final Notices for the [RESPONDENT], dated 13 December 2022 issued by the Respondent to the Applicant, to £1,750.00 in relation to each of the [APPELLANT] – being a total of £7,000. .

© CROWN COPYRIGHT 2023

The Applications

1. By four Applications, the Applicant appealed against financial penalties of £2,100.00 for each of the Properties imposed upon him by the Respondent for the reasons set out in Final Notices dated 13 December 2022.

2. Directions were issued by the Tribunal on 27 March 2023

3. The Applications were opposed by the Respondent. The parties each presented their own bundle of documents. The Applicant provided a one page statement of June 2023 and copies of Certificates of Minor Electrical Works for the [COMPANY] from [COMPANY]; invoices from that contractor regarding “corrective works” at [ADDRESS] dated 21 December 2021 for £505 and 7 January 2022 for £370 and his written responses dated 7 December 2021 to questions posed under caution by the Respondent ([NAME]). The Respondent’s bundle comprised 422 pages, plus legal authorities and a Skeleton Argument dated 23 October 2023, which the Tribunal took time to read before the hearing.

4. The Applications were heard together at a face-to-face hearing at [NAME] on 24 October 2023. Mr [APPELLANT] represented himself, gave evidence and made representations. The Respondent was represented by Mr [COUNSEL], Counsel. The Respondent’s inhouse Solicitor, Ms [COUNSEL] was present. Also in attendance were Ms [NAME], Senior Environmental Health Officer and Ms [NAME], Environmental Health Officer, statements from whom were in the Respondent’s bundle in addition to statements, containing statements of truth, from Ms [RESPONDENT] and Ms [RESPONDENT] both from the [NAME].

Facts, Chronology and relevant Law 5. The facts were largely agreed and are set out in the Respondent’s Skeleton Argument. Mr [APPELLANT] neither disputed the facts as therein recorded nor raised opposition to the Respondent’s witness statements, which stood as evidence from each statement maker. His position was as set out below. However, to begin, we repeat from Counsel’s helpful Skeleton Argument the relevant law, background and events relevant to the Applications. In doing so we emphasise that we have analysed Counsel’s presentation very carefully and found it accurate and comprehensive. However, we have not taken it as definitive regarding matters presented by Mr [APPELLANT] as at issue.

6. The following is taken from the Skeleton Argument (omitting page references) for ease of explanation. We confirm that we cross-referred to the Respondent’s bundle to check for the presence of supporting document to which we were referred here and as below later.

1. Under s.80 of the 2004 Act, a local authority may designate an area on district subject to special licencing requirements provided certain criteria are met.

2. Under s.90 of the 2004 Act, a local authority may impose such conditions as it considers appropriate for regulating the management, use or occupation of the house concerned within a licence required under s.80.

3. It is an offence under s.95(2) of the 2004 Act if a person having control of or managing a house subject to the aforementioned licensing regime fails to comply with a condition imposed under s.90.

4. The role of the Tribunal in hearing an appeal against a financial penalty is to make its own decision, not to review that of the local housing authority (Sch.13A at para.10(3) of the 2004 Act and The Borough Council of [NAME] v [COMPANY] [2023] UKUT 35 ([NAME]) at para.26).

5. An offence under s.95 of the 2004 Act is one of strict liability, subject only to the statutory defence of reasonable excuse under s.95(4) ([COMPANY] v Salford City Council [2020] UKUT 81([NAME]) at para.27). The burden of proving ‘reasonable excuse’ on the balance of probabilities rests with the landlord.

6. It is worthy of note that the issue of reasonable excuse may arise on the facts of a particular case without the applicant articulating it as a defence (especially when the applicant is unrepresented). Tribunals should always consider the issue of reasonable excuse, therefore, even without it expressly being raised (I R Management Services at para.31).

7. Ignorance of the existence of a licencing requirement is theoretically capable of amounting to a defence of reasonable excuse (per Thurrock Council v Daoudi [2020] UKUT 209 ([NAME]) at para.26) but only if the applicant can demonstrate they took all reasonable steps to keep themselves informed (per Thurrock at para.27 and approved in [NAME] v [COMPANY] at para.21). Ignorance in itself is insufficient.

8. Assuming an offence has been committed for which no defence of reasonable excuse arises, a tribunal should consider for itself what penalty is appropriate under the local authority’s own policy on civil penalties. If the authority has applied its own policy, a 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 decision ([NAME] v Norwich City Council [2020] UKUT 90 ([NAME]) at para.245).

9. Unless of course it were provided for in the local authority’s policy on civil penalties, the case law is clear that ‘exceptional circumstances’ would be required to justify a decision not to impose a financial penalty altogether in circumstances were an offence had been committed and the applicant failed to establish a defence of reasonable excuse ([NAME] v [COMPANY] at para.29). Belated compliance with a regulatory requirement might mitigate the punishment for the original non-compliance but would not justify not imposing a penalty altogether (Thurrock at para.31). Commission of an Offence and Reasonable Excuse

10. The licensing area with which this case is concerned is known as Avenues Area Phase 1 and was designated as a selective licensing area under s.80 of the 2004 Act on 25th January 2018.

11. The Applicant was granted Selective Landlord Licences for the Properties on 17th June 2019.

12. The conditions in respect of ‘Electrical Safety’ at that time were more limited, requiring all portable electrical appliances to be in a safe condition and good working order, and annual PAT testing.

13. By The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 (‘the 2020 Regulations’), the following became mandatory licence conditions under Sch.4 para.3(c) of the 2004 Act: ‘to ensure that every electrical installation [meaning fixed electrical cables or fixed electrical equipment located within the property] in the house is in proper working order and safe for continued use; and

to supply the authority, on demand, with a declaration by him as to the safety of such installations’

14. The requirements applied to all new tenancies granted after 1st July 2020 and all existing tenancies from 1st April 2021.

15. To ensure compliance with the 2020 Regulations, the Respondent inserted Condition 1(g) into all its new and existing licences.

16. At the time of the legislative change, [ADDRESS] had been tenanted since 10th October 2019, [ADDRESS] had been tenanted since 1st June 2020 and [ADDRESS] had been tenanted since 19th September 2015. Council tax records show the occupancies. A new tenancy was created at [ADDRESS] on 5th October 2020. Hence, whilst a valid EICR was required at [ADDRESS] and 66 and [ADDRESS] from 1st April 2021, it was required at [ADDRESS] from 1st July 2020. The Applicant’s position 7. Mr [APPELLANT]’s oral evidence largely was in line with his written statement: “My sole defence which I stand by is, At the time I had no knowledge of the new EICR legislation. However when I came to know that this is a new legislation for all tenancies old and new I immediately acted and had all the necessary works completed and passed.. At the time as I spoke to a clerk from the the [NAME] council via phone call, I had called the council and was explained by a council employee over the phone that the electrical works I had taken out at the time of licensing should be sufficient, I now realise that perhaps the council employee may have misunderstood or thought I was referring to the new EICR of which Im unsure, however I at the time thought my previous works were compliant for

which I spent thousands of pounds to complete and were in effect the correct legislation. After not reading my emails for sometime also having set up my new business as a result of covid from which I lost my old businesses , I was rather stressed and occupied with my main source of income and this was in York many miles from home. I had missed communication from the council, however as soon as I realized that the EICr was the new legislation, I took out all the necessary works as a matter of great urgency and had all the works carried out and passed by a firm by the name of [NAME] who are a very good local firm. …………… The council were satisfied that the works were taken and have all the certificates sent to them directly from [NAME] firm.” The Respondent’s position 8. The Tribunal again repeats the summary from the Skeleton Argument, which having considered the Respondent’s statements and related documents we found to be accurate as to its position.

“1. The Respondent informed all existing license holders, including the Applicant at his email address [EMAIL], of the changes to the licensing requirements on numerous occasions as follows:

a. The Private Sector Housing Team sent a newsletter by email to existing licence holders on 23rd June 2020 informing them that the annual review of the licence will request a copy of the EICR from 1st April 2021 and that the 1st July 2020 was the compliance date for new tenancies. b. On 6th July 2020 a more detailed Licence Holder Briefing was sent by email containing further information about the 2020 Regulations and the requirement for licence holders to obtain an EICR. That also included details of the possible penalties which could be imposed for non-compliance. c. On 26th March 2021, a reminder that all existing tenancies required EICRs from 1st April 2021 was sent by email. That email also included the new wording of Condition 1(g) in full. d. On 6th May 2021, a request that all license holders who had not already provided EICRs should do so within 7 days, failing which formal action, including the imposition of a financial penalty or prosecution would be considered, was sent by email.

2. That the Applicant was using the email address to which the above correspondence was sent at the material time is demonstrated by a query he sent to the Private Sector Housing team regarding [ADDRESS] using that address on 6th July 2020 .

3. On 30th September 2021, four letters (one per property) were sent to the Applicant at 102 [ADDRESS], [POSTCODE] advising that no EICR had been received for any of the [COMPANY] and that

the same must be provided within fourteen days or investigation into the commission of an offence would commence.

4. The Applicant was advised of the need for EICRs in a telephone conversation with [NAME], Senior Environmental Health Officer, on 1st October 2021.

5. No EICRs had been provided by 1st November 2021, at which stage the Respondent invited the Applicant to attend a formal Police and Criminal Evidence Act 1984 interview at its offices as the first step in investigating the commission of an offence.

6. The Applicant did not attend a recorded interview but instead completed a schedule of interview questions in which, as in his witness statement, he asserted he was unaware of the need for EICRs and only used the email address to which the aforementioned literature had been sent very rarely.

7. Valid EICRs for the [COMPANY] were not provided until the following dates:

a. [ADDRESS] – 20th January 2022 b. [ADDRESS] – 22nd February 2022 c. [ADDRESS] – 3rd January 2022 d. [ADDRESS] – 3rd January 2022

8. In view of the above, the Tribunal is invited to conclude that the Applicant did indeed commit licencing offences in respect of each of the [COMPANY] in view of the considerable period of time during which no valid EICR was in place nor provided to the Respondent as required by Condition 1(g).

9. It is averred no defence of reasonable excuse arises on the present facts. The Applicant’s ignorance of the requirement for valid EICRs essentially arose from his failure to check his emails. It is notable he did not assert in his interview questions that the email address in question was no longer in use, only that he checked it infrequently and would have preferred to be provided such updating information by telephone. Any assertion he remained ignorant because the address was no longer in use must struggle in view of the email sent on 6th July 2020 and provision of a reminder by post. The Tribunal’s attention is further drawn to the advice in the covering letters for each license the Applicant obtained that he was required to keep his contact details up to date.

10. In short, by his own effective admission, it is averred the Applicant failed to do all that he reasonably could have done to keep himself informed of his regulatory obligations as a landlord, preventing his ignorance from amounting to a defence of reasonable excuse in law.”

Conclusions and Reasons

9. The Tribunal had in mind that the standard of proof regarding belief of commission of a relevant offence is a high one – beyond reasonable doubt. We found that the [APPELLANT] were let by the Applicant and required the relevant

level of electrical safety, from the dates set out in paragraph 6-16 above. Mr [APPELLANT] relied upon his ignorance of the need for the particular degree of electrical safety. There was no evidence presented to us to suggest that the provision of the relevant safety certificates to the Respondent were not on the dates set out in paragraph 8-7.

10. Mr [APPELLANT] gave cogent evidence about the distractions affecting him in 2020 - having lost a business in March 2020 (when lockdowns began due to the effects of COVID-19) and having to restart business operations subsequently in York in August 2020, away from his home in Newcastle upon Tyne and family pressures following diagnosis of his daughter with an autistic spectrum disorder. However, he did not deny that he had neglected paying attention to the [COMPANY] and had not been reading his emails.

11. We found on a balance of probabilities that Mr [APPELLANT] took part in a telephone conversation with Ms [APPELLANT] on 15 May 2020 about licensing obligations. We further found that he formally learned of the need for the enhanced electrical safety after receiving the Respondent’s four letters of 30 September 2021 and during a telephone discussion with Ms [NAME] on 1 October 2021. There was no evidence to corroborate his assertion that once he knew of the requirement, he had telephoned the Respondent around one month before the discussion with [NAME] and had spoken to a male clerk and received assurance of the sufficiency of the works he had undertaken at the start of his licence for each of the [COMPANY], effectively confirming compliance to him. His [NAME] refer only to him responding to the letters of 30 September 2021 in a telephone conversation – and he did not deny the conversation was with Ms [APPELLANT].

12. We found Mr [APPELLANT] frank in admitting his ignorance of the enhanced electrical safety requirements. We found his argument that he had a reasonable excuse to be unsustainable. In his [NAME] he accepted that he did not look at his emails frequently, more particularly in his oral evidence he accepted that the emails had been delivered to his email address, but that he did not read them and only responded to the letters of 30 September 2021. He informed the Tribunal that he has other residential premises let out in another local authority (Hartlepool) which did not require similar licensing compliance and that since the imposition of the financial penalties in this matter he had appointed a manager to look after the [COMPANY]. He told the Tribunal he had failed to keep up to date with his legislative obligations and had not visited any of the [COMPANY] in the period at issue. By omitting to keep up to date with the licensing requirements, arising from statutory Regulation, he did not carry out his responsibilities as a landlord with reasonable diligence.

13. While we have sympathy with Mr [APPELLANT] at the notion of having committed an “offence” and on the criminal standard of proof – however, we found the evidence overwhelming that he committed the relevant offence under section 95(2) 0f the 2004 Act and that the pressures and distractions upon him did not amount to a reasonable excuse. We found that the Applicant had no system in place to keep up to date with his legal obligations as a landlord, or to regularly monitor communications which may have relevance to housing management, to the email address he had supplied to the Respondent.

14. As to the level of the penalty, the Tribunal considered the Respondent’s Private Sector Housing Enforcement Policy presented in evidence and the explanation of process set out in Ms [APPELLANT] statement. Mr [APPELLANT] raised no particular challenge to the process, other than to assert that he considered the level of penalty to be unfair.

15. The Tribunal found no basis to dispute the Respondent’s decision to proceed with financial penalties – compared with prosecution, or to respond to the commission of the offence in some lesser way. We found that the Respondent followed its own checklist in making it decision to impose a financial penalty. We found the facts asserted by Mr [APPELLANT] did not give rise to an exceptional circumstance in which no action could have been the outcome. At best, his arguments went to mitigation of the penalty.

16. We found no reason to depart from consistency of assessment of the penalty for each of the [COMPANY].

17. The Tribunal found it relevant that regarding 66 and [ADDRESS] the certificates of compliance with the enhanced electrical safety requirements for existing tenancies were provided some 39 weeks after the obligation taking effect on 1 April 2021 and for [ADDRESS] 41 weeks after the effective date of the obligation and for [ADDRESS] 72 weeks after the new tenancy commenced on 5 October 2020 (the obligations for new tenancies began on 1 July 2020). These are significant periods over which there was non-compliance with the landlord’s obligation. The Respondent assessed the seriousness of harm arising from the Applicant’s breach of obligation to be “Low”, because no direct harm had occurred. It assessed the level of culpability as level 2 – negligent – meaning a starting point for the penalty of £3,000 in accordance with the policy. At the hearing Counsel addressed whether the classification could be “Low”, suggesting that meant a mere oversight. The Tribunal found that the omission here by the Applicant was not so insignificant. As recorded above, we found that the Applicant had no system in place to keep up to date with his legal obligations as a landlord, or to regularly monitor communications which may have relevance to housing management, to the email address he had supplied to the Respondent. We agreed that the level of culpability was “negligent”, hence the bracket for penalty is £2,000 - £4,000, in accordance with the Respondent’s policy.

18. We found that by starting with a mid-point of a penalty bracket the Respondent was able, fairly, to make adjustments – as its policy requires – for aggravating or mitigating factors. The Respondent applied one aggravating factor (for the Applicant having previously breached a licensing condition) and the following as mitigation:

a. The Applicant had never been previously subject to formal action. b. The Applicant had taken steps to resolve the breach. c. The Applicant had expressed genuine remorse. d. The Applicant’s daughter had been in poor health at the time for the breaches. The Respondent reduced the penalty to £2,100 per property, then added in accordance with its policy £300 per property for its costs, making a grand total of

£11,200, but to reflect that the same offence applied to each property in identical circumstances it made a reduction of 25% of the total.

19. At the hearing, [COUNSEL] conceded that in accordance with the decision of the Upper Tribunal in Leicester City Council v Morjaria [2023]UKUT 129 ([NAME]) the Respondent was now not entitled to assume it could include its costs of investigation. Therefore, Counsel asked the Tribunal to confirm penalties of £2,100 per property and to exclude any costs of investigation.

20. The Respondent explained in its letter of 13 December 2022 (from Ms [APPELLANT]) to the Applicant that from the starting point of £3,000 the Respondent had made adjustments of one addition for aggravation (+£166.67) and reduction for mitigation for the matters set out in paragraph 18 (-£666.67). In reality, the effect should have been a net reduction of £500. The nature of the aggravating factor was explained in the Respondent’s letter to the Applicant dated 25 October 2019, being an official breach of licence conditions notification, regarding [ADDRESS] and concerned failure to adequately manage anti-social behaviour and to manage the property effectively. No explanation was provided as to why the net effect had led to a final sum of £2,100 (£3,000 less £500 = £2,5000). Nevertheless, the representation at the hearing was clear – in favour of £2,100.

21. The Tribunal found that the Respondent intended to make adjustment of £166.67 for each factor. The Applicant made no persuasive representations suggesting the adjustment for the aggravating factor was inappropriate and the Tribunal was satisfied it should be included in the calculation. The Tribunal found that the Respondent ought to have taken into account a further mitigating factor, which was the effect of COVID-19 on the Applicant’s business affairs, causing him financial worry and contributing to distraction of his attention to the [COMPANY] and his legal obligations concerning them. Adding one additional mitigating factor as found by the Tribunal reduces the penalty for each property by a further £166.67. The Tribunal disregarded the Respondent’s representation regarding adoption of a penalty per property of £2,100 as the basis for that sum was unexplained. However, on the basis of a starting amount of £3,000, applying one aggravating factor and five mitigating factors the net effect is a sum of £2,333 per proerty. Applying the Respondent’s 25% reduction for the reason mentioned in paragraph 18 (now being a reduction of £583) the final sum per property is £1,750 and that is the amount determined by the Tribunal as the applicable financial penalty for each property.

22. In consequence of our determination the Tribunal varies the penalty to £1,750 for each of the Properties, making a total of £7,000.

Tribunal Judge Brown.