Case No. UKUT-241-(LC)

80.The Council contends that the FTT was wrong to conclude that it had no power to ask questions about FHCO’s assets, reserves and employees, and therefore was wrong to reject the failure to answer those questions as irrelevant to FHCO’s fitness to be a licence holder.81.The matter arose in this way. Prior to refusing licences, Mr Beach had indicated to Ms Hussain that the Council would be prepared to grant licences to an unconnected third party having full day-to-day control over lettings and management. After the Respondents’ appeals against the Council’s decisions were filed with the FTT, there was correspondence between the solicitors then acting for them and the Head of Litigation at the Council. Under a heading “Various Appeals to the First-tier Property Tribunal”, solicitors for the Respondents wrote in an open letter dated 1 February 2019:“We are writing to make a proposal for settling the various issues in the various appeals currently before the Tribunal.In order to avoid the expense of fully litigation the appeals we propose that FHCO Limited be substituted as an alternative licence holder for all the properties in the attached schedule.”The letter then explained that FHCO was independent of Mr and Mrs Hussain, had an excellent track record to date, had Ms Hussain as the sole director and shareholder, and that Ms Hussain was fully independent of her family and would not be under any undue influence from them. It invited the Council to give reasons if it did not agree that FHCO was a suitable alternative licence holder.82.The Council replied on 20 February 2019, pointing out that they considered that Ms Hussain had a demonstrably close association with her parents and their unlawful conduct, and attached again the transcript of the interview of Mrs Nasim Hussain under caution. It then stated:“Notwithstanding that the Council has clear and cogent reasons for making the decision is has with regards to FHCO and Farina Hussain’s applications to be licence holders, the Council is prepared to consider the request set out in your letter. However, before doing so it will be necessary for Farina Hussain to provide written representations and materials addressing the following:a. Her precise day-to day involvement in management of the family properties at all material times;b. Her means of income at the material timesc. Whether she or her company own any of the properties the subject to the appeals and, if so, precisely how they were financed;d. …..e. Whether FHCO Ltd own any of the addresses;f. How many properties does FHCO manage, details of those properties, details of the addresses and owners of those properties;g Confirmation that she consents to the Council making enquiries of the clients of FHCO to obtain references from them;h. Details of her experience of letting and managing properties;i. Details of her professional qualifications ….j. How much time does she devote to company business and what is her role in the company business;k. Information about FHCO Ltd – where does it trade from? How many staff are employed? Does it have a trading name?l. If staff are employed what are their names and roles?m. Copy of the Management Agreement that FHCO Ltd uses for the purposes of its business with landlords.Following receipt of the above information the Council may wish to invite Ms Hussain for a meeting to explore further the proposal put forward and we trust that in that event Ms Hussain would be happy to attend such a meeting.”83.The response from the Respondents’ solicitors dated 4 March 2019 said that they were instructed “that Ms Hussain was willing to provide written representations to evidence that she is ‘fit and proper’ to be a licence holder. However, it will not be possible to provide this ahead of the hearing on 7 March 2019." That hearing was a first case management hearing in the appeals. 84.No written representations or further response were ever provided on behalf of Ms Hussain. At the appeal, she gave evidence to the effect that she had been advised by her lawyers not to answer the questions and had followed that advice. She argued, further, that the questions were an illegitimate attempt to compel the provision of information other than what was permitted by the 2006 Regulations in connection with an application for a licence, following the decision in Gaskin No.1. As summarised in para 34 above, the FTT accepted that argument and held that they amounted to the imposition of a condition precedent to the acceptance of an application, which the Council was disentitled to impose because its letter did not make it clear that the information sought was voluntary. It also noted that Ms Hussain said that her failure to answer the questions was done on legal advice, having concluded at [90] that she was entitled to follow that advice. The failure to answer was not therefore relevant to the question of FHCO’s suitability.85.It is clear that the FTT failed correctly to analyse the position. The application for a licence had been made by FHCO and others and was refused by the Council by letter dated 23 November 2018. Ms Hussain had previously applied for and been granted a licence, which was revoked by letter of the same date. The applications for a licence had therefore been disposed of and the matters were to be dealt with on appeal to the FTT. The timely appeals to the FTT meant that, pending disposal, the premises were deemed to be licensed. There were no further applications for licences that were live.86.The appeals lodged were on behalf of each of the Respondents, including FHCO itself. The letter dated 1 February 2019 was an offer to settle all the appeals. Since FHCO was itself an appellant in relation to 6 properties, the proposal effectively invited the Council to concede that FHCO was a fit and proper person to be a licence holder, contrary to its decision. The Council responded to the proposal on the basis on which it was made, namely as an offer to deal with all the appeal properties. It was only necessary for Ms Hussain to provide answers if the Council was to consider the settlement proposal, not as a condition precedent to a valid licence application being made. The request to consider settlement terms involving FHCO being licensed did not amount to a new, formal application for a licence, nor did it re-open the applications that FHCO had previously made and that had been refused. 87.Gaskin No.1 therefore had no materiality to the questions that were asked. That principle only applies where a local housing authority seeks to impose as a condition precedent to a valid application (which has effect as a pro tempore authorisation of the house, pending the authority’s decision) a requirement to provide information other than that specified in Schedule 2 to the 2006 Regulations.88.The failure of Ms Hussain to answer the questions relating (some more than others) to the suitability of FHCO with Ms Hussain as its director to be a licence holder was therefore relevant to the question that the FTT had to decide, namely whether the Council was wrong to conclude that FHCO was not a fit and proper person. It was relevant both because the Council and the FTT lacked information about how the business of FHCO was run and what its assets were, and because the failure to answer questions on its behalf might have some bearing on an assessment of the character of the company’s directors. In that regard, although the FTT concluded that Ms Hussain was entitled to follow legal advice, it did not direct itself that the question of whether to answer some or all of the questions was her decision (or FHCO’s), not the lawyers’ decision; nor did it consider whether there was good reason to refuse to answer, or whether legal advice was being used only as an excuse for not answering the questions. It is also likely that the FTT’s conclusion about the unlawfulness of the questions being asked influenced its view on what if any inference should be drawn from the failure to answer. 89.I consider that the FTT reached an erroneous conclusion on the relevance of the failure to answer the 13 questions. It may be that, had it directed itself correctly on the relevance of the questions and the decision to follow legal advice, it would have reached the same conclusion for different reasons, but that is not a conclusion that this Tribunal can draw. What significance and weight, if any, is to be placed on the failure to answer the 13 questions (to which answers could not have been required by the Council at the stage of processing the applications originally), and what if any inferences should be drawn from that failure, are matters for the FTT, correctly directing itself as to the relevance of the failure to answer the 13 questions, alongside other relevant matters. 90.The appeal of the Council therefore succeeds on Ground 2, but only to the extent of remitting the question of whether FHCO is a fit and proper to the FTT for a further decision, taking into account my conclusion on Ground 2 of this appeal.91.I have considered whether a failure reasonably to answer the 13 questions, if that were to be the FTT’s conclusion, could be material to the FTT’s assessment of Ms Hussain’s personal suitability, but the FTT came to the conclusion at [90] that such failure was not relevant to an assessment of Ms Hussain’s suitability even if it was relevant to an assessment of FHCO’s suitability. This was on the basis that the questions were being asked in relation to FHCO and questions asked about her own finances were irrelevant. In any event, the matter was quite peripheral to the arguments advanced as to why Ms Hussain personally was not a fit and proper person. There is no prospect of the outcome of the appeal against the revocation of Ms Hussain’s licence being different and therefore no need to remit her appeal to the FTT.