[2023] UKUT 263 (LC)

Mr Kazi’s grounds of appeal were, I think, drafted before he had legal advice and the Tribunal in granting permission paraphrased his arguments so as to describe this ground as the question:

“whether the fact that, after carrying out an inspection, a local housing authority has placed vulnerable individuals or families which it has a responsibility to house in accommodation which it later adjudges to be below an acceptable standard is capable of providing mitigation when a penalty is imposed on the owner of the property.”

Mr Peterken asked the Tribunal to note that this was not being raised as a defence of reasonable excuse for nor complying with the improvement notice, but as mitigation so far as the level of the penalty is concerned. He presented three arguments about this ground.

The first is that the respondent was operating double standards and thereby confused Mr Kazi. Ms O’Brien saw flat 4, set out what needed to be done to make it “habitable and safe to use” and in particular did not regard either the heating or the kitchen as inadequate. Therefore Mr Kazi did not comply with the improvement notices because he did not agree that the work was required. Ms O’Brien’s approval was bound to have an effect on Mr Kazi’s view of the condition of the property, despite her disclaimer that she had not made a formal Housing Standards inspection; the fact that two departments of the respondent were pulling in opposite directions should therefore afford him some mitigation. The same mitigation should apply in relation to flat 1 where the kitchen and heating are in the same condition as in flat 4. And Ms O’Brien must have seen the common parts when she visited and so the point is said to be relevant to the management regulation offence too.

This argument has no prospect of success. I say that not because Ms O’Brien was not an environmental health officer; she spoke for the respondent, whatever her qualifications. But it is not inconsistent for the respondent to ask a landlord to accommodate a homeless person, to approve the property for the tenant’s initial entry, and then to serve improvement notices. Such notices do not require that the flat or building cease to be used for residential purposes, unlike prohibition notices which do. In effect the respondent is asking the appellant both to take a tenant and also to improve the condition of the flat. That would have been the case even if the improvement notices had been served back in September 2020 alongside Ms O’Brien’s request that Mr Douglas be accommodated, rather than ten months later. There is no inconsistency and no double standard, and I do not believe that Mr Kazi as an experienced landlord would have been confused.

The second limb of the argument, however, has more merit. Mr Kazi, in part at the respondent’s request, accommodated difficult tenants who damaged the property. They used drugs, they accumulated rubbish, they had visitors who broke in, to give just a few examples. Importantly Mr Kazi said in his witness statement to the FTT that people he sent to carry out repairs were often refused admission by the tenants; on other occasions workmen refused to enter because of the presence of drugs paraphernalia. There is no finding by the FTT that Mr Kazi was not telling the truth. And there is a letter in the bundle from Ms O’Brien in October 2021 explaining to a colleague that people break in to Mr Douglas’ flat and use drugs there.

The fact that tenants lead chaotic lifestyles does not mean that they are any less entitled to proper standards of health and safety and suitable services. Housing standards are for all tenants. However, if some of the problems were caused or exacerbated by the tenants that will in some cases provide a defence to the offence, and the FTT should be alert to that possibility even if a landlord does not raise it. If it does not provide a defence it must be a very significant item of mitigation, which is what is claimed here.

The FTT allowed this mitigation in respect of the common parts, but did not allow it for the two section 30 offences because, it said, the defective kitchens and heating systems were not the fault of the tenants (see paragraph 29 above). But the improvement notices relating to flats 1 and 4 listed more items than just the heating and the kitchen. They included the replacement of the door in flat 4 (Mr Douglas’ door, which his visitors had broken into), and they may well have included items where Mr Kazi had had difficulty getting work done because of the tenants’ behaviour. The listed items other than the kitchen and heating had been complied with, but in a situation where the notice required a long list of work to be done and the starting point for the penalty was the same whether all or only some parts of the notice have not been complied with (see paragraph 27 above), the mitigation relevant to any of the work should have been applied to that starting point.

The FTT, as we saw above, did allow a 5% reduction in the penalty for the breach of the HMO regulations because it accepted that some aspects of the condition of the property were within the control of the tenants, in particular its cleanliness. In doing so the FTT followed the respondent’s enforcement policy which states (at its page 33):

“For each aggravating or mitigating factor which applies to each specific case the level of fine [will] normally be adjusted by 5% of the initial fine… The only exception to this principle will normally be for the number of items of non-compliance which will be 5% for the first 5 items and 10% for any number of items greater than this level of non-compliance with items on any notice which has not been complied with.”

I do not know what that last sentence means. But it appears to be the respondent’s policy that each aggravating or mitigating actor will adjust the penalty by 5% and by no other amount. Mr Peterken’s third argument under this ground of appeal is that is an artificial limit.

I agree. The policy fetters the respondent’s discretion and I fail to see any purpose in it. The FTT in adopting that aspect of the policy fettered its own discretion.

The FTT adopted that policy not only in respect of the mitigation arising from the tenants’ contribution to the HMO offences, but also in respect of the mitigation allowed because of the fact that Mr Kazi had done some of the work required. Again, it fettered its discretion and the FTT should not have adopted this policy.

I take the view that the FTT exceeded the generous bounds of its discretion by failing to allow mitigation in respect of all three offences on the basis of the tenants’ contribution to the state of the property, and in adhering to the respondent’s inexplicable 5% limit upon the effect of mitigation.

Accordingly all three civil penalties are set aside. The Tribunal will substitute its own decision as to the amount of the penalty, but I consider first the other grounds of appeal.