The Court of Appeal (CoA) ruled that the Upper Tribunal (UT) had erred in fettering the discretion afforded by Private Sector Housing Enforcement Policy.
Background:
Mr. Kazi owned a portfolio of residential properties, including 2 Laisteridge Lane. This is a four-storey house converted without planning permission into 8 self-contained flats. In June 2021, after a complaint from a tenant and an inspection by an environmental health officer, Mr. Kazi was served with no fewer than 8 improvement notices. The requirements included the installation of a proper heating system and a new kitchen in each of the two flats, alongside repairs in the common parts.
A visit in October 2021 demonstrated that he had complied in part, yet no heating systems or kitchens had been installed. For the repairs in the common parts, one of the reasons for not carrying them out was the tenants’ behaviour. In December 2021, the Bradford Council issued 3 notices of intention to issue a financial penalty. A penalty of £14,250 was imposed for each of two offences of failing, contrary to Section 30 of the Housing Act 2004, to comply with improvement notices served on Mr Kazi. A third civil penalty was imposed for the offence of failing to comply with regulations relating to houses in multiple occupation (HMOs), contrary to Section 234 of the 2004 Act which was £18,790.31.
Mr. Kazi appealed to the First-tier Tribunal (FTT) which dismissed his appeal and upheld the penalties. He subsequently appealed to the UT, which allowed his appeal and substantially reduced the quantum of the penalties. The Council then appealed.
Decision:
The CoA allowed the appeal and held that the civil penalty for each of the three offences should be £13,500. The Court agreed with the Council that the UT had erred in identifying any fettering in the policy. Lord Justice Birss first looked at the culpability/harm matrix table and then at the list of aggravating and mitigating factors. He noted that the list was non-exhaustive and that other factors might be considered, depending on the circumstances of each case.
Turning to the two paragraphs under the list, the Judge noted that the first paragraph is clear, “For each aggravating or mitigating factor which applies the level of penalty will normally be adjusted upwards by 5% to the £30,000 statutory maximum (or the relevant minimum). So for any given mitigating or aggravating factor, each would normally carry a quantum of 5% but could be worth more or less. They would normally be cumulative and so two mitigating factors would normally be worth 10%, and so on”. Regarding the second paragraph, Lord Justice Birss acknowledged that the meaning of the paragraph was clear, although it could have been better drafted. It contains the only exception to the first paragraph. The Judge noted that the word ‘normally’ does not make it a “hard and fast rule” but more an exception.
The Judge then noted that “irrespective of whether the UT's decision about the rationality and lawfulness of the policy was open to it or not, on analysis, these aspects of the policy do not operate as a fetter on discretion, nor are they marred by any lack of clarity”. The FTT was justified in applying the 5% mitigation. The Court did not examine the first ground of appeal.
Implications:
This decision serves as a reminder that not respecting a notice to improve might lead to financial consequences. While local authorities and courts might take mitigating factors into consideration, the quantum applied depends on the relevant policy. The fact that the tenants made it hard to carry out the work was however taken into account.