Landlord Fined £7,500 for Not Complying with Improvement Notice

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : MAN/00DA/HNA/2021/0093

Date of Hearing : 10 November 2022

Property : 101 [ADDRESS] [POSTCODE]

Appellant: [redacted]

Respondent : [redacted]

Type of Application : Housing Act 2004, Section 249A & Sch. 13A

Tribunal Members : Mr Phillip Barber (Tribunal Judge)

[NAME] ([NAME])

______________________________________________ DECISION AND REASONS ____________________________________

Decision

We have decided that the appropriate financial penalty under section 249A of the Housing Act 2004 for the offence of failing to comply with an improvement notice under section 30 of the Housing Act 2004 is £7500.

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 Housing Act 2004 (“the Act”) in relation to 1 property owned by the Appellant, [APPELLANT]. The property is 101 [ADDRESS] [POSTCODE] (“the property”).

2. We held an oral video remote hearing of this appeal. The Appellant appeared by video link and represented himself. The Respondent was represented by [NAME], of Counsel. We heard evidence from the Appellant, and Ms [COUNSEL] and Ms [APPELLANT], Senior Housing Officers for the Respondent.

3. There was no inspection of the property by the Tribunal, but we had a bundle of documents comprising of some 470 pages from the Respondent and 54 pages from the Appellant.

Findings of Fact

4. Mr [APPELLANT] is the registered owner of 101 [ADDRESS] [POSTCODE], a property which he rents to private tenants. In July 2020, the tenant of the property complained to the Respondent about conditions within the property relating to a faulty boiler, damp and mould growth and problems with internal doors. Following unanswered correspondence to the Appellant and no remedial works having been carried out, the Respondent served notice under section 239 of the Housing Act 2004 to enter the property for the purpose of a HHSRS assessment, which was carried out on the 16 November 2020.

5. During the inspection several hazards were noted as set out in the Respondent’s statement of case at paragraph 4. Suffice it to say there were 2 category 1 hazards (entry by intruders and excessive cold) and 9 category 2 hazards, ranging from food safety, through to risk of falls, electrical hazards and fire, together with damp and mould growth.

6. On the 09 December 2020, an improvement notice was served on the Appellant with the remedial works to be carried out by the 08 February 2021. No appeal was made by Mr [APPELLANT] in relation to this improvement notice and the notice can be seen in the bundle as exhibit EL9 on page 338 to 351 of the bundle. At the same time the Respondent served a statement of reasons for taking action, and billed Mr [APPELLANT] the Respondent’s costs in the sum of £523.50.

7. Mr [APPELLANT] claims that his ability to comply with the improvement notice was impeded by Ms [NAME] leaving her role and Ms [APPELLANT] taking over that role and that at times the tenant at the property was isolating due to the Covid19 pandemic. As a

result, he states, he was unable to be sure what works were required and also unable to gain entry to carry out works. The Appellant told us that as he was unsure about the extent of the required works to comply with the terms of the improvement notice, he agreed a joint inspection when it was intended to explain to him the necessary works, Miss [NAME] carried out an inspection without him. However, we think that the Appellant is mistaken in relation to the timeframe. When [APPELLANT] took over from Ms [APPELLANT] in January 2021, she wrote to the Appellant to remind him that the works were required to commence at the latest on the 11 January 2021 and must be completed by the 08 February 2021. There was no response to this letter. On the 02 February 2021, Miss [APPELLANT] also rang the Appellant but received no answer and no subsequent response. It was not until the 09 February 2021, that the Appellant rang [APPELLANT]. We think that this was the first conversation [NAME] had with Mr [APPELLANT].

8. As is apparent from the contents of that conversation as set out in paragraph 11 of Miss [APPELLANT] witness statement, the Appellant states in his witness statement and told us in evidence, that some of the works in the improvement notice were inaccurate and did not need doing, however, as noted above he did not appeal that notice and for our purposes the notice stands as evidence for what was required at the property and what Mr [APPELLANT] was required to do in order to comply with its terms.

9. On the 10 March 2021, 30 days after the deadline in the improvement notice for compliance, the Respondent carried out a further formal inspection in the company of the Appellant, noting that none of the works had commenced. We note that at that time, [APPELLANT] had a conversation with the Appellant in which she explained the severity of the issues to him and told him that the non- compliance might lead to further action. Following further negotiation with the Appellant it was noted on the 25 May during a further inspection that whilst some works had been completed, many works were still outstanding including necessary works to the chimney flue, there was no mains wired fire detection system’ safety checks and remedial action in relation to electrical system, problems with the internal doors, the provision of appropriate handrails and the investigation and treatment of rising damp.

10. In the meantime, and following non- compliance with the improvement notice, on the 01 April 2021 the Respondent posted a PACE letter to the Appellant at his home address which he responded to by a signed response dated the 10 April 2021. He confirmed that he was the landlord of [ADDRESS], that he had received the section 11 and section 12 improvement notice and the accompanying section 8 and section 50 enforcement charge notices.

11. However, in his reply to the PACE letter, which can be seen at exhibit KH18, Mr [APPELLANT] raises various

objections to carrying out some of the works; he complains that the time frame was not sufficient for compliance amongst other things.

12. The decision to impose a financial penalty was made following the inspection on the 25 May 2021 when works remained outstanding. As at that date the Appellant had had a further 10 weeks within which to complete the works but still had failed to do so. The approach to calculating the penalty is set out in paragraphs 86 through to paragraph 90. Ultimately the Respondent imposed a penalty to reflect the financial gain which it was perceived Mr [APPELLANT] had made by his failure to comply with the improvement notice rather than by reference to the matrix, although the matrix was considered initially to establish which figure was higher.

The Legal Framework

13. By section 249A of the Housing Act 2004:

(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—

(a)section 30 (failure to comply with improvement notice), ………..

14. 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.

15. 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.

16. 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.

17. 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 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.

18.

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.

19. We had to be satisfied beyond reasonable doubt that the conduct of the Appellant amounts to a “relevant housing offence” under section 234 of the Act – i.e. that Mr [APPELLANT] failed to comply with the terms of an improvement notice.

Our Assessment of the Appeal 20. This is a re-hearing of the decision to impose a financial penalty for the offence committed by Mr [APPELLANT] as a result of contravening section 30 of the Housing Act 2004.

21. There was no dispute that Mr [APPELLANT] failed to commence the works by 11 January 2021 and complete the

works by 08 February 2021. Accordingly, it follows that we are satisfied beyond reasonable doubt that an offence has been committed under section 249A of the Housing Act 2004.

22. 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.

23. Accordingly, and given our findings of fact, that the breach is made out and that Mr [APPELLANT] is culpable the only remaining issue is the level of the financial penalty for the breach.

The Amount of the Penalty 24. The starting point is the Respondent’s policy in relation to civil penalties which has been provided in the Respondent’s bundle at pages 281 through to 295 of the bundle. The policy document lacks paragraph numbers making it difficult to refer to but 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). The policy defines a vulnerable tenant on page 290 as including those persons with health needs both physical and mental health needs.

25. 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.

26. 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.

27. The outcome of the Respondent’s assessment was a fine in the sum of £11,727. At first it was difficult to see how this figure was arrived at by reference to the matrix, but the policy provides that 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”. The policy then sets out how the Respondent will calculate “gain” by reference to the cost of the works, the cost of licence fee, rental income, the cost to the Respondent and “any other factor resulting in financial gain”. Thereafter the policy requires the Respondent to determine that the civil penalty is not less than the financial gain plus £2,000 or 10% of the penalty (whichever is the greater) up to the £30,000 statutory maximum.

28. The Respondent’s determination can be seen on pages 179 and 180 of the bundles The Respondent determines that the level of culpability is medium, and the level of harm is also medium and that the appropriate starting point on the matrix is £10,000. The Respondent adds in two aggravating factors – motivated by financial gain and less than 3 items of non-compliance at 5% each to reach £11,000 before taking off three mitigating factors: cooperation, element of tenant responsibility and no previous offence at 5% each to provide for a final fine of £9500. Thereafter the Respondent has considered the issue of financial gain by assessing the cost of the works at £6914, adding in rent at £2475 and the cost of the investigation at £338 to arrive at a baseline “gain” of £9727 before increasing this by £2000 to give a figure of £11,727. Because this is higher than the matrix figure, then this is the level of fine.

29. The only reference in the documents about the cost of compliance is the figure set out on page 180 - £6914. No evidence was presented in relation to this amount, and we were not in a position to make any assessment about how this had been arrived at or indeed what was included in it. It follows that we decided that our assessment should be by reference to the matrix alone and not by reference to any financial gain, which we could not reasonably determine on the evidence. Further, the Respondent did not appear to have taking into account the Appellant’s financial circumstances, for example any mortgage and other costs, and appears to regard gross rental income to be synonymous with financial gain.

The Offence 30. Taking account of the Respondent’s Civil Penalty Policy, and assessing the issues anew, we agree with the Respondent that the level of culpability is medium. This is clearly not a case of intentionality or recklessness but, as can be seen by the email exchange and the Appellant’s continuing attempt to remedy the defects, one of negligence. We accept the Appellant could have done more and in all the circumstances as we find them his failure to carry out the necessary repairs and improvements would not have been committed if he acted with reasonable care and diligence.

31. In relation to harm, we again agree with the Respondent that this is properly determined to be medium harm because the outstanding hazards were in the main category 2 hazards which did not give rise to a serious effect on the tenant and whilst we noted that the tenant may be classed as a vulnerable tenant, we did not think this took the level of harm into the “high” bracket. Neither was the level of harm “low” as there was not a “little risk of harm” but a medium risk of harm.

32. It follows that as the level of culpability is medium and the level of harm is medium, the appropriate starting point is £10,000.

Aggravating/Mitigating Factors 33. We did not agree with the Respondent as to the aggravating factors and instead determined this afresh. We did not think that the Appellant was motivated by financial gain. We note that he may well have questioned the need for the works and may well have been reluctant to undertake what he perceived as unnecessary, but we did not think this was in order to make a financial gain. We thought this was simply his misunderstanding of the process – he could have appealed this point, for example, but stated that he did not realise that he could do this. Likewise, we did not increase the level of the penalty due to the level of non-compliance. It seems to us that the offence itself is the non-compliance and the number of items, together with the level of risk is included in the overall assessment of culpability/harm – to increase the level of fine for things which are already included would not be fair. Especially given that the Appellant’s inability to carry out the remedial works also goes to the issue of mitigation.

34. In terms of mitigation, we agree with the assessment that he has cooperated with the investigation, the element of tenant responsibility and the fact of no previous convictions should each attract a 5% deduction. We also thought that the Appellant’s good character should be a mitigating factor – we note that good character is the final bullet point on the list on page 293 and represents a separate consideration to “no previous convictions” which has been taken into account above. The Appellant told us about his work as a chemist and his approach to being a landlord and we generally thought that the idea he is a “rogue landlord” to be misplaced. We thought that a 5% deduction would also be appropriate for his otherwise good character. Both these additional mitigating factors are in line with the Respondent’s policy. Finally, we also took account of the fact that this all happened during the pandemic, and we note how difficult it was to organise visits, get contractors to attend, arrange appropriate times with the tenant and undertake the works all within the very tight deadline set out in the improvement notice. We appreciate that extra time was afforded to Mr [APPELLANT] and that the decision to impose a civil penalty was not made until after this extra time had passed but in all the circumstances of the pandemic and the associated difficulties at that time, we think a 5% deduction is also appropriate. We would prefer to have given a significant percentage reduction as the effects of Covid were dramatic, both in trying to convince the tenant to grant access and to employ contractors but we have reluctantly adhered to the Respondent’s policy of restricting each mitigating factor to only 5%.

35. In those circumstances from the initial fine of £10,000 we deduct £2500 to arrive at £7500.

Conclusion

36. The result is that in relation to the offence with a starting point of £10,000 we take off £2,500 for mitigation to give a financial penalty of £7,500. We accordingly determine the appropriate financial penalty to be £7,500 which we think is “fair and proportionate but in all instances should act as a deterrent and remove any gain as a result of the offence”.

Signed Dated 15 December 2022 Phillip Barber, Judge of the First-tier Tribunal