Waltham Forest London Borough Council v Nasim Hussain & Ors

The answer to the important issues raised by Ground 1 (and identified in paragraphs 2 and 3 of this judgment) depends on the correct interpretation of paragraph 34 of Schedule 5 to the 2004 Act, and in particular sub-paragraph (2).

It was common ground that the fact that the appeal is “by way of re-hearing” does not suffice in itself to provide an answer as to the time at which the fitness and propriety of the licence holder is to be judged by the appellate tribunal.

Statutory appeals “by way of re-hearing” may range from re-hearings “in the fullest sense of the word”, where the appellate body treats the matter as if it arises for consideration for the first time, with the opportunity to rely on fresh evidence, unconstrained or restricted by the decision under appeal, to something much closer to a review of the decision under appeal. See the discussion of that range by May LJ in E I Dupont de Nemours & Co v S T Dupont [2003] EWCA Civ 1368, [2006] 1 WLR 2793 at [84]–[98].

Whereabouts within the spectrum the appeal will fall, and how the appellate body will approach the matter, depends on the context, and in particular on the intention of Parliament to be discerned from the relevant statutory provisions. As Lord Reed PSC observed in R (Begum) v Secretary of State for the Home Department [2021] UKSC 7, [2021]AC 765 at [46]:

Mr Bates, who appeared with Mr Grant for the respondents, did not go so far as to submit that appeals under paragraph 34 of Schedule 5 were re-hearings in the fullest sense, with the FTT treating the matter as though it arises for consideration for the first time, unconstrained by the decision under appeal; but he did submit that they were close to that end of the spectrum, and that the task of the FTT is to make up its own mind as to whether the applicant is (now) a fit and proper person to hold a licence. He relied on the observations of the Deputy President of the Upper Tribunal in Clark v Manchester City Council [2015] UKUT 129 (LC) at [37]–[41], who decided by analogy with the approach taken in pre-2004 Act authorities, including the decision of the Court of Appeal in London Borough of Brent v Reynolds [2001] EWCA Civ 1843, [2002] HLR 15, that the appeal is “a complete re-hearing, but not one which disregards entirely the decision of the local housing authority”. That approach commended itself to the Judge in the present case.

Mr Bates submitted that the purpose of the statutory appeal was to achieve resolution of the position “on the ground”, and to avoid the processes that would be involved in the matter going back for the housing authority to make a fresh decision in the light of material developments since its decision under appeal was made. That could only be achieved by the FTT making up its own mind on the question of fitness and propriety on an up to date basis, taking into account all evidence that was relevant to determining that question, irrespective of when it arose. He sought to draw support for this submission from sub-paragraphs (3) and (4) of paragraph 34 of Schedule 5. He also drew a distinction between appeals under that paragraph and appeals to the County Court under section 204 of the Housing Act 1996, which (unlike appeals in respect of licensing decisions under Parts 2 and 3 of the 2004 Act) are expressly restricted to points of law.

Section 204(3) of the 1996 Act provides that “on appeal the court may make such order confirming, quashing or varying the decision as it thinks fit”. Mr Bates contrasted that language with the language of paragraph 34(3) of Schedule 5 to the 2004 Act, which contains no power to “quash” the decision of the local housing authority. Quashing involves the primary decision-maker remaking the decision, whereas under paragraph 34(3) the FTT has the power to vary the decision if it disagrees with it.

Moreover, Paragraph 34(4) expressly envisages the FTT directing the local authority to issue a licence, which Mr Bates contended is consistent with the FTT determining for itself that the applicant is a fit and proper person to hold the licence as at the time it makes that order.

Mr Underwood KC, who appeared with Mr Calzavara for the Council, submitted that matters relating to where on the spectrum of “re-hearings” an appeal under paragraph 34 lies, and cases such as Clark v Manchester City Council, were relevant to Ground 2, but shed no light on the question whether the date on which fitness and propriety was to be determined was the date of the primary decision or the date of the appeal. He submitted that on the ordinary interpretation of the language of paragraph 34 itself, and taking the context into account, the correct date had to be the former, not the latter.

The question for the FTT to determine on appeal was whether the decision of the Council that Farina and FHCO were not fit and proper persons to hold a licence was wrong. That question could only be answered by evaluating the decision at the time when it was made. It is irrelevant that if the FTT were looking at the matter afresh on the basis of all the information available to it at the time of the appeal, both predating and postdating the Council’s decision, it might reach a different conclusion at the time of the appeal. What matters is whether, after affording appropriate weight and respect to the Council’s decision, the FTT considered that the Council should have reached a different conclusion about fitness and propriety at the time when the decision was made. If it reaches that stage, it has the power to re-make the decision for itself.

Mr Underwood further submitted that Parliament plainly intended the decision as to fitness and propriety to be taken by the primary decision-maker (the local housing authority) on whom it had expressly conferred the responsibility for licensing, and not by the specialist tribunal. The “minded-to” process that must be followed each time a licensing decision is made by the authority involves it in exercising numerous value judgments, as indeed does the initial decision to designate an area as a selective housing area under Part 3 of the 2004 Act, thereby subjecting the authority itself to a host of statutory obligations. Even the relevance of the dishonesty of a person associated with the applicant to the applicant’s fitness and propriety is a value judgment to be exercised by the authority. He contended that it is not appropriate for an appellate tribunal, however specialist, to substitute its own value judgments because it simply disagrees with a decision of this nature reached by the person to whom responsibility for making it has been entrusted by Parliament.

Mr Underwood referred to the observations of Lord Hoffmann in Secretary of State for the Home Department v Rehman [2001] UKHL 47, [2003] 1 AC 153 at [49]:

Mr Underwood submitted that very clear language would be needed to displace the fact-finding and decision-making functions devolved upon the local authority by Parliament. It was very unlikely that Parliament intended this complex series of value judgments to be bypassed by enabling an applicant for a licence to throw all their armoury at an appeal. The idea that the FTT decides the question of fitness and propriety (a value judgment depending on findings of fact) as at the date of the appeal rides roughshod over Parliament’s intentions by treating the authority’s decision as just a stepping stone on the way to the final decision. An appeal should not be seen as an opportunity to address concerns or deficiencies highlighted by the authority. If there is a material change since the decision to refuse (or grant) the licence, the proper way to deal with it would be for the applicant to make a fresh application or for the authority to use its powers of revocation, as the case may be.

I begin consideration of Ground 1 by referring to the language of paragraph 34 itself. Sub-paragraph (2) states that the appeal is to be by way of a re-hearing, but may be determined having regard to matters of which the authority were unaware. The word “but” which introduces the proviso in (b) is important. In this context it enables something to be done which would not otherwise be permitted. Without the proviso, the FTT would not be entitled to consider matters that were unknown to the primary decision-maker. Thus Parliament cannot have intended there to be a re-hearing in the fullest sense.

In my judgment the proviso assists in resolving the issue as to the time at which the question of fitness and propriety must be considered. Were it not there, the FTT would be constrained to consider only those matters that were known to the housing authority, and therefore by necessary implication, known and in existence at the time when the decision was made. That points inexorably to the conclusion that the task of the FTT is to determine whether the decision under appeal was wrong at the time when it was taken.

“Wrong”, as Upper Tribunal Judge Cooke explained in Marshall v Waltham Forest LBC [2020] UKUT 35 (LC), [2020] 1 WLR 3187 at [61]–[62], means in this context that the appellate tribunal disagrees with the original decision despite having accorded it the deference (or “special weight”) appropriate to a decision involving the exercise of judgment by the body tasked by Parliament with the primary responsibility for making licensing decisions. It does not mean “wrong in law”. Put simply, the question that the FTT must address is, does the Tribunal consider that the authority should have decided the application differently?

I find considerable force in Mr Underwood’s submissions that Parliament intended the licensing decision to be taken by the local housing authority, and that their decision should not be treated as a mere step on the path to a final decision being taken by the FTT, based on the latter’s own evaluation of the evidence, including matters which could only be relevant if the decision were to be taken afresh as at the date of the appeal.

The fact that the FTT is empowered by the proviso to consider matters that were not known to the housing authority is an indication that the FTT must make up its own mind on the question of fitness and propriety, when deciding whether the application should have been refused or granted, or whether the licence should have been revoked. Plainly this would encompass a relevant matter which existed at the time of the decision, such as a conviction or relevant professional qualification.

The question whether the FTT is able to consider matters that did not exist at that time, and therefore could not have been taken into account when the decision was made, is more difficult to answer. The proviso contains no express time limit, but generally speaking, an event which occurs after a decision is taken will not be relevant to the assessment of whether that decision was right or wrong at that time. There is an obvious illogicality in the proposition that the Council were wrong to conclude that Farina was not a fit and proper person in November 2018 because she has subsequently achieved, or made significant progress towards achieving, certain relevant professional qualifications, and demonstrated to the satisfaction of the FTT that she has been doing a good job of managing the Westbury Road property in the intervening period.

At first sight, therefore, there is much to be said for interpreting the proviso as implicitly restricted to matters of which the authority was unaware at the time of the decision under appeal. The FTT would be considering whether, if the authority had taken into account further information that was available but not provided to it at the time, as well as the information on which it did rely, it should have reached a different conclusion.

However, the reason why I am not prepared to accept that restriction is that the test for determining what matters the FTT can take into account under the proviso must be one of relevance to the task it is performing. Evidence that an applicant may now be a fit and proper person, for reasons that the authority could not have taken into consideration, has no bearing on the answer to the question whether the authority was wrong to conclude that they were not a fit and proper person in November 2018, unless it can legitimately shed light on the applicant’s character at that time.

It is not impossible to conceive of scenarios in which matters arising after the decision might be relevant in that sense, though they may rarely arise. For example, suppose the authority has decided that someone is not a fit and proper person to be a licensee, and after the decision is made, that person is convicted of an offence of dishonesty committed before the decision was made. The conviction might serve to endorse the view formed by the authority about that person’s fitness and propriety at the time when the licensing decision was taken, even though it could not have been part of the material that was considered at that time.

It would probably be more difficult to argue that the licence holder’s bad behaviour after the decision to grant a licence was taken could be taken into account by the FTT on an appeal against the grant of the licence. Although much depends on the facts and circumstances of the individual case, it seems unlikely that such behaviour would be relevant to the question whether they were a fit and proper person at the time when the decision was taken, however relevant it might be to the question whether they are a fit and proper person to continue holding a licence. In those circumstances, the authority would probably have to go through the statutory procedure for revoking the licence.

Mr Bates argued that this would cause delay, and that restricting the material to which the FTT can refer is less satisfactory than resolving the issue of fitness and propriety once and for all on appeal. It would have the undesirable consequence that someone who is unfit to hold a licence would remain a licence holder. However, that difficulty is inherent in the licensing scheme, which places the primary responsibility for assessing suitability on the local authority, and expressly includes a revocation process. Parliament has decided that a certain procedure must be followed if a licence is to be revoked. Whilst that means some delay, the minimum consultation period under the “minded to” procedure is relatively short (14 days). If the local housing authority makes a decision to grant a licence and it subsequently transpires that the licence holder is not a fit and proper person, it can correct the situation by following that procedure. Conversely, if someone becomes a fit and proper person after the refusal and prior to the hearing of the appeal they can, and should, make a fresh licence application. That is operating the scheme in the way that Parliament intended.

For those reasons, I have concluded that the UT was wrong to find that it was open to the FTT to decide the appeal by addressing fitness and propriety as at the date of the appeal.

Moreover it was wrong to do so on the basis of material that did not exist at the time of the decision and which could not possibly have been relevant to the question whether the Council’s refusal or revocation of the licenses in November 2018 was wrong. It is plain from the FTT’s decision that it only regarded FHCO as a fit and proper person to hold a licence because of matters that had occurred after the decision under appeal was taken, including the appointment of a second director. Indeed it expressly found, at [127] in the context of Nasim’s appeal against the Council’s decision to make Interim Management Orders in respect of the Old Church Road properties, that it was “doubtful that as at 6 December 2018, FHCO would have been an appropriate alternative licence holder,” because it had no assets or reserves and no employees despite having been incorporated a year earlier, in November 2017. It took that view despite accepting Farina’s explanation for why FHCO did not trade in that year.

The FTT also took into account irrelevant matters arising after the decision (such as her more recent property management track-record, when compared with that of her mother) when considering Farina’s own appeal.

For those reasons, and the further reasons given by Lewison LJ, with which I respectfully agree, I would allow this appeal on Ground 1.

Where a re-hearing on appeal does not involve the appellate tribunal starting afresh, the appellate tribunal may still be required to make up its own mind on the application in place of the original decision maker. But even then, if the decision involves the exercise of a discretion, or judgment, by another person or body, the appellate tribunal will not interfere with the original decision unless, having afforded it what is variously described in the authorities as “great respect”, or “considerable weight”, it is satisfied that the decision was wrong. In making that evaluation the appellate tribunal must pay proper attention to the decision under challenge and the reasoning behind it. If the decision is based on the application of a lawful policy it must ask itself whether the impugned decision, and any different decision that it proposes to make, is in accordance with that policy. The burden lies on the party challenging the decision to satisfy the appellate tribunal that it should take a different view from the primary decision maker.

There is a long line of cases concerning the respect to be paid to decisions taken by local authorities on matters of policy, or decisions taken in the exercise of a discretion or value judgment, but I do not consider it necessary to refer to them in this judgment. Suffice it to say that Judge Cooke discusses them in detail in Marshall v Waltham Forest LBC (above). They include Sagnata Investments v Norwich Corporation [1971] 2 QB 614, R (Hope and Glory Public House Ltd) v City of Westminster Magistrates’ Court [2011] PTSR 868, and, perhaps most pertinently, Brent London Borough Council v Reynolds (above). That case is probably the most closely analogous, as it concerned the scheme for appealing to the County Court against licensing decisions in respect of HMOs taken under the Housing Act 1985.

Mr Bates submitted that it could be inferred that Parliament intended to “codify” the approach adopted in Brent v Reynolds in the statutory provisions for appealing against licensing decisions taken under the 2004 Act. I do not consider that inference can be safely drawn. The 2004 Act did not codify the previous licensing scheme. But that case does illustrate that, whilst the FTT is at liberty to depart from a licensing decision if it disagrees with it, it should “pay great attention to any view expressed by the local housing authority, and should be slow to disagree with it.”

Mr Bates submitted that the decision under appeal is the logical starting point for any appeal, but is no more than part of the factual matrix against which the FTT carries out its re-hearing. I disagree. True it is that the FTT is not asking itself whether the decision of the authority was within the range of decisions reasonably open to it, as it would do on a judicial review. It is deciding whether the authority made the wrong decision. But in doing so, the FTT must pay careful attention to the reasons why the authority reached the decision that it did, and explain why it disagrees with them. Since Parliament intended such decisions to be taken by the authority, the FTT must afford the decision the weight and respect that must be afforded to any decision involving a value judgment made by the decision maker which was also the finder of primary fact.

In the present case, the FTT referred at [61] to the Council’s statement of case in which it adumbrated its reasons for concluding that Farina was not a fit and proper person. It next referred to the relevant government guidance which Mr Beach said that he applied in accordance with the Council’s internal policy. This made it clear that the Council had to be satisfied that the wrongdoings of the person associated with the applicant for the licence were directly relevant to the fitness of the latter to manage the property or licence – another value judgment to which appropriate deference had to be shown.

Having set out in detail the evidence given by Farina and Wahab, the FTT concluded that the evidence did not support the Council’s assertions that Farina shared culpability for the provision of the false, misleading and fraudulent information that led to her parents’ convictions, that she played a vital role in the family business, that it was likely that she was a party to the false gas safety certificates, and that she was central to the attempted cover-up of the false declarations.

The FTT said at [83] that the Council’s suggestion that Farina was involved appeared to it to be “speculation” based on Nasim’s answers in her first interview. However that appears to me to be a mischaracterisation of the evidence. Nasim’s evidence in her first interview and repeated in her written statement, prepared when she was legally represented and supplied to the Council at the time of her “no comment” second interview, was direct evidence of Farina’s involvement in the day to day running of the family business, including assisting in the applications made to the Council. As the FTT noted, Nasim did not differentiate between the roles played by each family member (save in her prepared statement when she stated that Tariq was responsible for maintenance of the properties). However, that supports rather than negates the inference that they all had similar knowledge of the business.

Mr Underwood made the telling point that Nasim did not give evidence to the FTT and was not cross-examined, yet the FTT was prepared to make a finding, without having had the same advantage of hearing from her, that she was not telling the truth about her daughter’s involvement. There is nothing in its decision to indicate that it appreciated that it was hampered by the absence of a critical witness upon whom the primary decision-maker relied, let alone that it gave appropriate weight to the fact that the Council did see and hear her, and had the opportunity to test her answers by asking questions (albeit that she failed or refused to answer most of them). The FTT also disbelieved Tariq’s evidence that he was not involved in making the applications to the Council, again without attaching any weight to the fact that the Council officers interviewed him under caution, whereas the FTT did not see or hear from him.

Farina’s position in her evidence and under cross-examination that her involvement in the family business was confined to assisting her mother with the book-keeping at weekends fell to be assessed against her behaviour, including on the occasion of her mother’s first interview, in which she clearly associated herself with that business (using the expression “we” throughout) and did all that she could to prevent Nasim saying anything that might put the earlier licences in jeopardy.

Farina is plainly intelligent and articulate. Whilst her decision to give a “no comment” interview was taken on legal advice, she knew that the Council was interested in knowing the extent of her involvement in the family business, and chose to keep quiet about it despite understanding that an adverse inference could be drawn from her silence. She was the only member of the family who did not produce a prepared statement denying involvement in the application process. Against that background, the Council was plainly entitled to draw an adverse inference from Farina’s failure to do or say anything to contradict her mother’s statements to the Council at any stage prior to the decision being taken, notwithstanding that she was legally represented.

Farina also chose not to answer the 13 questions and as the Judge recognised at [88], her failure to answer questions on behalf of her company might have some bearing on the Council’s assessment of her character.

Whilst the FTT was entitled to take into account its own impression of Farina, having heard her give evidence and being cross-examined, it had to weigh that against the Council’s impression of her and its impression of her mother, who they had the advantage of seeing and hearing. The FTT disagreed with the decision despite the fact that it had not seen and heard from the key witness upon whom Mr Beach’s decision relied.

In my judgment the FTT failed to afford sufficient deference to the Council’s decision and the reasons for it. The Judge was wrong to say that the FTT did not have to defer to the earlier judgment of Mr Beach so long as it had regard to it and to the convictions of Nasim and Tariq. The FTT might have been entitled to reach the conclusions that it did, if it had properly directed itself; but it did not properly engage with the material which underpinned the Council’s decision and therefore wrongly assumed that it was based on speculation rather than hard evidence which the Council was best placed to assess.

I would allow this appeal on Ground 2 also.

Ground 3 is academic in the light of the answers to Grounds 1 and 2, but I consider that this Ground is also made out. There is an obvious illogicality and inconsistency of approach in the UT’s conclusion that Farina’s failure to answer the 13 questions was relevant to the assessment of her character as a director of FHCO for the purposes of determining whether that company, with Farina as a director, was a fit and proper person to hold a licence, but it was unnecessary to remit that matter to the FTT to be taken into consideration in the assessment of whether she was a fit and proper person to hold a licence in her own right.

Mr Bates acknowledged the force of that analysis, but submitted that it was open to the UT to decide that the matter was so tangential in the light of the FTT’s assessment of Farina’s character as to be irrelevant to the question whether her licence should be revoked. I am not persuaded. Having reached the conclusion that it did on its relevance to FHCO’s fitness and propriety, the UT clearly erred in failing to remit to the FTT the question whether Farina’s failure to answer the questions had a bearing on her own fitness and propriety.

I would allow the Council’s appeal on all three grounds. The correct legal approach and assessment of the relevant evidence would have resulted in the dismissal of Farina’s and FHCO’s appeals to the FTT. Farina failed to show that the Council’s decision to revoke her licence was wrong at the time when it was made. Indeed the FTT made no finding that it was wrong at that time. As the UT (unlike the FTT) recognised, the evidence before the Council that Farina was associated with her parents’ wrongdoing was strong. Farina had been afforded ample opportunity to explain her position within the family business, and had chosen not to do so. So far as FHCO was concerned, the FTT indicated that in its view the Council would have been right to find it was not a fit and proper person to hold a licence in December 2018 (and thus by necessary implication it would have been right to refuse its licence applications in November 2018).

It follows that this Court should confirm the Council’s decisions respectively to revoke Farina’s licence and refuse to grant licences to FHCO, pursuant to paragraph 34(3) of Schedule 5 to the 2004 Act, and set aside the decisions of the FTT and UT to the extent that they are inconsistent with that confirmation. Of course, it remains open to Farina or FHCO to make a fresh application to the Council for a licence.