Case No. UKUT-179-(LC)-UTLC-Case-Number:-LC-2022-146

41. It is central to the respondent’s case that although the FTT’s decision was correct, it does not have the consequence that the FTT thought it has as a result of section 91(1). The essence of the Part 3 regime, according to Mr Bhose, is flexibility. The Act does not prescribe whether a block of flats owned by a single freeholder must be subject to one licence or several. That enables an appropriate response to nuanced circumstances, as we saw in London Borough of Waltham Forest v Khan, and to practical requirements, for example where a landlord wants to appoint different managers for different parts of the building. There cannot be only one right answer to the question “what is the Part 3 house” in a situation involving two or more dwellings within a building, nor is there only one possible offence that the landlord of such a building can be charged with. Therefore section 91(1) cannot bear the weight placed upon it by Mr Morris. 42. Section 91(1) is worth repeating:“A licence may not relate to more than one Part 3 house.”43. For Mr Morris that means that a licence cannot be granted in respect of premises which could form more than one house. I take the view that that cannot be what it means, because the consequences that flow from that construction are unacceptable. If that is what it means then either the only possible subject for a licence is the smallest possible unit, as the FTT thought might be the case and as Mr Morris says is the result of the FTTs decision, or the licence must relate to the largest possible unit in relation to an individual, as Mr Morris argues. Either way the flexibility that the Act obviously intended is lost, and thousands of licences already granted are in fact invalid (licences of individual flats on Mr Morris’ construction, and licences of blocks if the FTT’s obiter comment is right).44. Mr Bhose argues that section 91(1) means that a licence must relate to premises that constitute a single Part 3 house. It cannot relate to premises that cannot be a single Part 3 house, such as two separate buildings, or two flats in a building that are several floors apart and so cannot be said to be “part” or “a part” of a building. 45. I accept that construction. I do not decide, because it is not relevant to this appeal, whether or not two flats that are several floors apart can constitute “part” of a building. But the meaning of section 91(1) can only be that the premises to which a licence relates must be a single Part 3 house – whether a flat, or a number of flats comprising part of a building, or the whole building. Any other construction leads to a loss of the flexibility that is crucial to the scheme, and flies in the face of the clear drafting of the statute by importing a complicated requirement to identify the smallest or largest possible unit that could be a Part 3 house in any given case. 46. Once the meaning of section 91(1) is resolved in that way, it is clear that the FTT’s decision did not lead to unacceptable consequences, and nothing stands in the way of its conclusion – that each of the five financial penalties related to a Part 3 house because each flat was a Part 3 house that required to be licensed. Each was in a designated area, part of a building consisting of one dwelling, (meaning part of a building occupied as a separate dwelling) (section 99), and the whole of each flat was occupied under a single non-exempt tenancy (section 79(2)(a)), and section 85 required it to be licensed. 47. It is true that the appellant could, had the respondent so chosen and had it had the requisite information, have been penalised for an offence in respect of the whole house or of any group of flats comprising part of it. It cannot know in advance how many offences he is committing. Nor can many who embark upon criminal conduct, since the outcome in terms of charges on an indictment will depend upon circumstances outside their control relating to the behaviour of others, the availability of evidence and so on. I do not think that the principle against doubtful criminalisation is engaged, because there is no doubt that the appellant is committing a criminal offence; the principle does not require that a statute be construed so that a person commits as few offences as possible.48. I could stop there. Mr Morris’ construction of Part 3 fails because section 91(1) does not give rise to any difficulty with the FTT’s conclusion – despite what the FTT itself thought, and because the principle against doubtful criminalisation does not invalidate the flexible scheme that arises from a plain reading of Part 3. The appeal fails.49. But it is worth noting the great difficulties that would arise from Mr Morris’ argument.50. First, the argument that premises must be licensed when they are intended to be occupied is an impossible reading of the plain words of section 79. There is no contradiction between section 99, which defines houses, and section 79 which tells us to which houses Part 3 applies. And the argument makes no practical sense because, as Mr Bhose points out, there is no reason why Parliament would have required empty premises to be licensed. The licence is for the protection of the occupier, and if there is none then there is no reason why the applicant should be put to the trouble and expense of applying, nor why the local housing authority should undertake the work of granting a licence. Moreover, the appellant’s argument appears to require a single house to be licensed once it is intended to be let, just as much as it would require the single empty flat in a block to be let, or the 19 empty flats when just one has been renovated. Far from explaining section 95(1) (see paragraph 38 above), the appellant’s construction would mean that the section 95(1) offence is committed when there is an intention to let, which is impracticable and pointless. 51. The statute requires a licence where premises are occupied as set out in section 79(2), but it caters for changing circumstances. Section 91(2) enables a licence to be obtained before premises are occupied and required to be licensed, so as to avoid commission of the offence once the premises are occupied. Section 91(5) ensures that a licence remains valid even if one flat in a licensed block becomes vacant (which resolves the point summarised at paragraph 39 above). A landlord who renovates one flat at a time and lets them one by one may get a licence for each as they are occupied, or may apply for a licence for the whole building once all the flats are let; there is no need for the landlord to apply to have the licence for one flat extended as the Part 3 house grows (and I make no decision as to whether section 92 could be used to extend the premises covered by the licence).52. So a licence is required when, as section 79(2)(b) says, the whole of the house (be it a building, part of a building, or a flat) is occupied as there specified. That means that the Part 3 house if defined as Mr Morris argues will fluctuate over time. That is not entirely fatal to his argument (because of his suggestion that the local housing authority does not need to know the extent of the Part 3 house when it prosecutes or imposes a financial penalty). But other considerations are.53. One is that if a landlord has a licence for one flat in a building comprising two flats, where he lets that flat on a shorthold tenancy and the other on an exempt tenancy, if the second flat unexpectedly ceases to be exempt then the licence for the first flat becomes invalid because it does not relate to a Part 3 house. If a landlord licences five flats in a building, not realising that he needs a licence for one or more other flats there, the licence he obtains is invalid, because there is only one Part 3 house and it is not licensed. Therefore Mr Morris’ construction requires the local housing authority to make enquiries of the landlord and perhaps of others in relation to the whole building in order to find out whether it can grant a valid licence in response to the application. The statute does not require such an enquiry, and it would be impracticable for the local housing authority to achieve it; it requires the local housing authority only to consider the application before it and to determine, using the statutory definition, whether the premises to which the application relate is a single Part 3 house, and then to follow the process set out in section 88 and following. If the premises is a Part 3 house, the licence can be granted and no detective work is required. The reality is as Mr Bhose QC describes: the Act anticipates that different people will make different applications for licences at different times for buildings, parts of buildings and individual flats. The role of the authority is not to carry out an audit of the building but to look at the application before it. Its licensing powers are flexible, to cater for the wide variety of factual circumstances that it will encounter.54. I have already mentioned that the appellant’s construction of the Act leaves landlords with no choice about what to licence. If a landlord wanted to appoint two different managers for different floors it would have to sub-let to a manager who would then apply itself for a licence for part of the building, to which there are obvious objections because the manager is unlikely to want a landlord’s responsibilities, or the landlord would have to make the arrangements it wants by delegation, which might be inconvenient. There would also be no choice for local housing authorities, and the sensible arrangement made in London Borough of Waltham Forest v Khan would be impossible.55. Another difficulty is that if there is only ever one Part 3 house for an individual, it will be necessary for local authorities to take decisions about prosecution and about financial penalties when they do not know the extent of the Part 3 house (see paragraph 40 above). One obvious disadvantage of that is that the extent of the harm caused by the offence would be unknown. Mr Morris argued that this was immaterial because the number of people at risk would not make a great deal of difference to the penalty; but I am not convinced that that is a satisfactory answer to the problem. 56. More generally I do not think that the statute enables or requires a local housing authority to prosecute a landlord, or to impose a civil penalty, in relation to a Part 3 house the extent of which is not known to the local housing authority or to the court or to the FTT as the case may be. All those persons need to be able to consider and respond to the Part 3 house to which the evidence relates (without considering whether any different house could have been or would have been the subject of a licence if one had been applied for); it makes no sense for their decisions to have an unknown impact upon unknown components of a Part 3 house of whose extent they are unaware.57. Inevitably therefore the local housing authority has a discretion in deciding what offences to prosecute. If it makes an irrational decision it can be challenged. But it has to have discretion and flexibility because it must respond to individual circumstances and because it must be able to act on the information available to it, as it does when granting a licence and as it did when imposing financial penalties in this case. The flexibility inherent in the scheme is crucial to it.