London Borough of Waltham Forest v Lisa and Michael John

This is an appeal brought by a local housing authority, the London Borough of Waltham Forest, against the decision of the First-tier Tribunal in an appeal against civil penalties imposed on Mr Michael John and Mrs Lisa John. Essentially the appellant says that the penalty imposed on Mr John was too lenient as a result of errors of law by the FTT, and that the FTT’s decision to impose no penalty on Mrs John was, likewise, made in error.

The appeal has been decided under the Tribunal’s written representations procedure. Grounds of appeal for the appellant were written by Mr Riccardo Calzavara; the respondents have not taken part in the appeal.

Part 3 of the Housing Act 2004 enables a local housing authority to adopt a selective licensing scheme, with the effect that certain properties that are not houses in multiple occupation are nevertheless required to be licensed. Under section 95(1) of the 2004 Act it is an offence to be a person managing or in control of a house that is required to be licensed under a selective licensing scheme and is not licensed.

A local housing authority may respond to a failure to licence in a number of ways, ranging from a warning to the imposition of a civil penalty under section 249A of the 2004 Act to prosecution. In deciding what to do it must (by virtue of paragraph 12 of Schedule 13A to the 2004 Act) have regard to the Secretary of State’s guidance, Civil Penalties under the Housing and Planning Act 2016 (April 2018); that guidance provides (at paragraph 3.5) that local housing authorities should develop their own policies on determining the appropriate level of penalty and the appellant has done so. The policy relates, of course, to a range of offences and is not specific to the selective licensing offence.

Schedule 13A to the 2004 Act also prescribes the procedure for imposing financial penalties, which involves the service of a notice of intent, an opportunity for the person to make representations, and a final notice imposing a penalty. A person upon whom a civil penalty is imposed may appeal to the First-tier Tribunal. On such an appeal the First-tier Tribunal must make its own decision, rather than reviewing the decision of the authority; but it must start from the authority’s own policy and should not depart from it without explaining why: Waltham Forest LBC v Marshall [2020] UKUT 35 (LC) at paragraph 55.

One of the grounds of appeal in the present case is that the FTT failed to follow the appellant’s policy. The following points from that policy are important.

The document sets out the aims of the policy, and says:

“The council considers the need for transparency and consistency in the discharge of its functions under the above legislation to be of primary importance. The objective of this policy is to promote both principles in the exercise of the council’s functions and, in particular, to maximise consistency on the use of the council’s enforcement powers.”

It continues:

“3.3

Reasonable effort will be made to ensure compliance with the law by a process of advice and education. Formal action must be considered in the following circumstances:

• Where there is a serious risk to public health

• Where there is a blatant or deliberate contravention of the law

• Where there is history of non-compliance, or cooperation for an informal approach is not forthcoming

• Where landlords fail to take action in the timescales agreed within an informal process.”

Later the policy looks specifically at the formal actions available

“7.1

If formal action is considered appropriate in accordance with paragraph 3.3, the following options are available:

… 7.5.6 A failure to meet one or more of the licensing requirements will be individually assessed but may result in one, or a combination of 2 or more, enforcement outcomes including:

• A written warning or simple caution

• Prosecution

• The imposition of a civil penalty

• The service of formal notices

• Refusal or revocation of a licence and/or the granting of a shorter licence period through a consequent failure to meet fit and proper person criteria.”

The policy then provides notes on each of those options. There is no specific reference to a written warning, but as to a “simple caution” the policy says:

“7.6

Simple Caution

The purpose of a Simple Caution is to deal quickly and simply with less serious offenders by diverting them away from the courts, and to reduce the chances of repeat offences. Simple Cautions will be kept on file for three years.”

The reference to “band 2” is to a table or matrix in familiar form setting out the range of penalty to be imposed for different levels of offence; band 2 is from £5,000 to £9,999. The policy also states that the authority will exercise its discretion to increase or decrease a penalty beyond the band limits “in exceptional circumstances only” in view of the need for transparency and consistency. The policy provides for an automatic 20% discount where the offender complies with the identified breach within the representation period at the ‘Notice of Intent’ stage, and also where the offender pays the penalty within a specified time period, normally 28 days.

I come back to the policy later in this decision. I remind myself of this Tribunal’s role in this appeal from the FTT’s decision, which Newey LJ explained in Sutton v Norwich City Council [2021] EWCA Civ 20 at [31]:

Mrs John holds a long lease of a one-bedroom flat, Flat 12 Churchbank, 1 Teresa Mews, London E17. It has been let to Mr Shaun Lintern since 2015. Rent for the property was paid into a joint account; Mr and Mrs John regarded it as belonging to them both. On 1 April 2015 the appellant made a selective licensing designation in respect of the area where the property sits, with the designation to continue until March 2020. On 30 November 2016 Mr John applied for a licence for the property, describing himself as owner. The licence was granted on 4 January 2017 to expire in March 2020.

On 1 May 2020, the appellant redesignated the relevant area as a selective licensing area.. The evidence given for the appellant in the FTT by its officers was that in February 2021 they reminded Mr John by email that the property required a licence. An officer visited the property on 21 September 2022 and met Mr Lintern. An officer telephoned Mr John in September 2022 by way of further reminder, and followed that up by email and text. In November 2022 Mr John telephoned the appellant and said he was going to apply for a licence, and the appellant’s officer followed that up by email. On 21 November 2022 the appellant sent to Mr John a notice under s.235 of the 2004 Act, which enables it to require a person to produce documents to be provided; the notice asked for gas and electrical certificates, rent receipts and the tenancy agreement; there is no evidence that those documents have or have not been provided, but there is no tenancy agreement in the appeal bundle. On 1 December 2022 Mr and Mrs John commenced but did not submit a licence application in which they were both listed as leaseholders. On 17 February 2023 the appellant sent to them a Notice of Intention to impose penalties of £7,000 on Mr John and £5,000 on Mrs John. On 4 March 2023 Mrs John submitted an application for a licence. On 6 March Mr John made representations in respect of the proposed penalties. The penalties were imposed on 29 November 2023 reduced from the figures referred to above to £5,600 and £4,000 because an application for a licence had been made.

Mr and Mrs John appealed to the FTT. They claimed to have had a defence to the section 95(1) offence; subject to that, they challenged the amount of the penalties and also the fact that two separate penalties had been imposed. They said that they had not received emails from the appellant. They provided medical evidence in relation to their son which showed that he had been seriously ill in 2022 and said that that had distracted them from the need to licence the property.

The FTT agreed with the local housing authority that Mrs John as the owner of the flat was, pursuant to section 263 of the 2004 Act, a person managing the property and that Mr John - who undertook “most of the responsibilities associated with the letting” - was a person in control of the property, and there was no challenge to that in the FTT. The FTT rejected the defence of reasonable excuse, and found that both had committed the offence under section 95(1) of the 2004 Act. It stated, correctly, that the local housing authority had the power to impose a penalty on both of them (Shorr v London Borough of Camden [2024] UKUT 202 (LC)).

Turning to the amount of the financial penalty, the FTT directed itself as to the approach it should take to the appellant’s enforcement policy by reference to Waltham Forest LBC v Marshall. It observed that the policy stated that the appellant would impose a penalty above or below the relevant band “only in exceptional circumstances”, and noted the existence of automatic discounts (paragraph 8 above). It noted that in the present case the appellant had taken the bottom of band 2 as the starting point (£5,000), and then increased the penalty to £7,000 in the case of Mr John because of the aggravating feature that he was aware of the licensing process having held a previous licence. The appellant was not aware of any mitigating factors. Both penalties were reduced by 20% because by the time the Final Notice was served an application had been made for a licence.

The FTT said:

“72.

The Tribunal considers it appropriate to vary the financial penalties imposed by the Council, to reflect severity of the offence, the respective culpability of the two appellants, the lack of harm to the tenant, that punishing one appellant is effectively punishing both.

73.

Given that both the Council and the tenant treated Mr John as primarily responsible for the Property the Tribunal finds that there should have been a distinction made in the level of basic penalty imposed on each of the appellants.

74.

The Tribunal adopts the Council’s starting point of a moderate offence Band 2 for Mr John of £5,000. It finds that the aggravating factor of failing to ascertain that the property needed a new selective licence is mitigated by Mr John applying for a licence once he appreciated that it was required. It also finds that the ill-health of the appellants’ son is a mitigating factor as to the delay in applying for the new selective licence.

75.

The Tribunal finds the appropriate financial penalty for Mr John to be £4,000.

76.In the event that Mr John pays the penalty within 28 days of this decision it should be subject to the automatic 20% discount offered by the Council where the offender pays the penalty within a specified time period.

77.

The Tribunal finds that the Council did not sufficiently consider the different level of culpability of Mrs John, given that she had little or no involvement in the actual management of the Property. it notes that in Shorr no penalty was awarded against Mr Shorr by the Upper Tribunal. In paragraph 73 Deputy President Martin Rodger KC said,

‘ I do not consider that any financial penalty is appropriate in Mr Shorr’s case. He did not enter into any contractual relationship with Ms Ro’s tenants and he was not their landlord. He therefore owed them no contractual obligations and it was not unreasonable for him to leave management entirely to his wife.’

In that case Mr Shorr was a joint registered proprietor of the property and had a joint bank account with Ms Ro.

In this case Mrs John was the sole registered proprietor of the Property but the tenant viewed Mr John as his landlord and the person with the contractual obligations. From the evidence before the Tribunal it finds that Mr John was entirely responsible for the day-to-day management of the Property. The Tribunal therefore finds that it is not appropriate to award a financial penalty against Mrs John.”

The appellant appeals on four grounds, with permission from this Tribunal. The first three relate to Mr John and the fourth to Mrs John

Ground 1 is that the FTT went outside the relevant penalty band without identifying any exceptional circumstances, and thereby went outside the bounds of the appellant’s policy without explanation or justification. Nothing in the facts, says the appellant, could have amounted to exceptional circumstances taking the penalty outside band 2.

Ground 2 is that the FTT erred in identifying mitigating circumstances in respect of Mr John; First, it is not the case that he applied for a licence as soon as he realised one was required. He began the process of application in December 2022 after several reminders but the application was not submitted until 4 March 2023. Indeed, the appellant does not accept that Mr John was unaware of the need to obtain a licence when the designation was renewed in May 2020, since Mr John had signed up to the appellant’s email news service. The FTT did not make a finding of fact as to when Mr and Mrs John knew they needed a licence; they both said that emails had not reached them but so far as I can see from the written evidence they did not suggest that the telephone calls to and from Mr John, referred to by the appellant, did not happen. Second, Mr and Mrs John’s son’s ill-health took place in 2022, according to the medical evidence, and the appellant argues that it can have had no bearing on the failure to licence the property from May 2020 onwards, nor in early 2023.

The third ground of appeal is that the FTT erred in affording Mr John a discount outwith the policy. The 20% discount for early payment is granted when payment is made within 28 days, and there is nothing to say that that period is suspended pending an appeal.

I take those three grounds together.

As to mitigation, on the facts found by the FTT Mr John did not make an application as soon as he was aware of the need to make one. There was no challenge to the evidence that an application was commenced, but not submitted in December 2022. And there was no challenge to the evidence that Mr John had spoken to a housing officer on the telephone on at least two occasions during the preceding months. On any reckoning there was a delay of at least several months before an application was made. So I cannot see that there was a prompt application that amounted to mitigation.

As to Mr and Mrs John’s son’s illness, I accept that that did amount to mitigation. The FTT heard their evidence about that at the hearing; the medical evidence does indeed span a limited period, but a sustained period of caring for a sick-child can have a far-reaching impact on a parent’s ability to cope with other demands. I accept the FTT’s finding, as a mixture of fact and judgment, that this was a mitigating factor.

As to the 20% discount, the appellant is clearly right that the grant of that discount by the FTT was an unexplained departure from the appellant’s policy.

It is apparent that the FTT took the view that £7,000 was too high; however, whilst it was entitled to take account of the respondents’ son’s ill-health as mitigation that was not an “exceptional circumstance” that could justify the reduction of the penalty to £4,000, outside the appellant’s band 2. Nor was there any justification for reducing the penalty further to £3,200 by way of 20% discount. As the policy itself says, one of its objectives is consistency in the appellant’s response to offenders and there is no justification for an inconsistent approach in Mr John’s case. Grounds 1, 2 and 3 succeed and the FTT’s decision is set aside.

I substitute the Tribunal’s own decision. The FTT, which determined the facts, accepted that Mr John’s knowledge of the licensing requirement amounted to an aggravating factor. The FTT did not make any finding of dishonesty against Mr John, and I take it therefore that the FTT accepted that this was a case where the licensing requirement, of which Mr John had experience, was overlooked. Either he did not receive or did not pay attention to the appellant’s email newsletter which would have informed him about the new designation, and he failed to check the position after the earlier designation expired. Even when the appellant gave him further reminders in the autumn of 2022 by email and telephone he failed to apply for a licence for several months. That is an aggravating factor. But equally the FTT found that there was mitigation in the form of Mr and Mrs John’s son’s ill-health. I have not heard the oral evidence about that and I accept the FTT’s judgment. Accordingly I substitute a penalty of £5,000, thus remaining within but at the bottom of band 2; I then allow a 20% discount, in accordance with the policy, because a licence was applied for (see paragraph 11 above), so that the penalty is £4,000.

The fourth ground of appeal relates to the FTT’s decision not to impose a penalty on Mrs John. The argument is that whereas the FTT thought it was following the decision in Shorr, in this case the facts are different. In Shorr both Mr Shorr and Ms Ro (a married couple) were the registered proprietors of the property, but Ms Ro alone managed it and applied for a licence; all the income was accounted for on her tax return even though it was paid into the joint bank account. As we saw (paragraph 15 above, in the FTT’s paragraph 77) the Tribunal took the view that it was not appropriate to impose any penalty on Mr Shorr.

The present case, says the appellant, is quite different. Mrs John, unlike Ms Ro, is the sole proprietor of the property. Moreover, her culpability was irrelevant; the matrix of penalties imposes a band without regard to culpability, although the position within the band can then be adjusted to take into account aggravating and mitigating factors. In the present case both Mr and Mrs John were committing an offence, and Mrs John’s lesser culpability takes her to the bottom of the band but does not enable the FTT to take her outside that band and outside the civil penalty matrix altogether.

There are two points there. The first is about culpability. The appellant’s argument assumes that a civil penalty was the inevitable consequence of the commission of an offence. But it was not. As we saw above, the policy requires the local housing authority first to consider whether any formal action is needed at all and, if it decides it is, then to consider whether to administer a warning or a caution rather than imposing a financial penalty or prosecuting. In making a decision not to impose a penalty because – in its view – there was little or no culpability – the FTT was not stepping outside the bounds of the policy.

The grounds of appeal refer to there having been repeated reminders to both respondents before the penalty was imposed. But the evidence was that those warnings were addressed to Mr John and that all communications were with him. His email address looked like an address for Mrs John since it started with “lisa”, but Mrs John in her written statement said that that was Mr John’s email address, and the FTT has given no indication that it did not accept that. There is no finding that anything was sent to Mrs John before the notice of intention in February 2023. Again, therefore, in my judgment the FTT was right to consider afresh whether to impose a financial penalty at all.

The second point is the appellant’s argument that the circumstances here are quite different from those in Shorr. This is difficult to assess. The parties there were joint proprietors of the property; here Mrs John is sole leaseholder. In Shorr Ms Ro was the landlord under the tenancy agreement; but I can see no evidence as to which of Mr and Mrs John or both were named as landlord on the tenancy agreement, nor even whether there was a written agreement.

The appellant also takes issue with the FTT’s point at its paragraph 72 that “punishing one [of the couple] is effectively punishing both”; that, it says, is an irrelevant consideration. There can be no double punishment here, it is argued, as there are two separate offenders. I agree that that is correct in principle, but it does not mean that the two separate offenders are equally culpable, nor does it necessarily mean that a financial penalty should be imposed on both.

What the FTT found was that the reality of thesituation was that Mr John was in control of the property and was the one who in practice undertook the responsibilities of the landlord. There is no finding of fact about Mrs John in the FTT’s decision; nor is there really any evidence of her doing anything until the application for a licence in March 2023. The FTT conducted a hearing. It was best placed to make its own assessment as to who was, in practical terms, in control of the property and tenancy. It took the view that that was Mr John and that although Mrs John had committed the licensing offence she was not sufficiently at fault to justify the imposition of a financial penalty. That is an exercise of judgment with which the Tribunal will not interfere, even if it might not have reached the same conclusion itself.

The appeal succeeds as regards Mr John, the FTT’s decision is set aside, and a penalty of £4,000 is imposed. The appeal fails as regards Mrs John.