[2023] UKUT 292 (LC)

The second ground of appeal does not now arise but the underlying issue would have to be addressed if a penalty is to be imposed on a redetermination (whether by this Tribunal or on remission to the FTT) so it is convenient to consider it at this stage.

The Council adopted a policy on financial penalties as an addendum to its existing Housing Enforcement policy (“the Policy”). In it the Council referred to the Government Guidance.

Paragraph 3.5 of the Government Guidance requires local housing authorities to develop and document their own policy on determining the appropriate level of financial penalties. It is not prescriptive about what such a policy should contain but instead addresses the question: “what factors should a local housing authority take into account when deciding on the level of civil penalty?” In answer to that question the document suggests, amongst other things, that the penalty in any particular case “should reflect the severity of the offence as well as taking account of the landlord’s previous record of offending”. A list of relevant factors is then provided, including “culpability and track record of the offender”.

In the Policy each of the factors identified in the Guidance is referred to and attributed a numerical score, with the final penalty being determined by reference to the aggregate score after all factors have been taken into account.

The part of the Policy which caused difficulty for the FTT is under the heading “track record of the offender” and is as follows:

“First offence

•

No previous conviction of civil penalty for the same type of offence in the previous 4 years irrespective of the locality to which the offence relates.

•

For first offences a score of 10 would be added.

Second subsequent offence by same person/company

•

Any conviction or civil penalty in position for the same type of offence within 4 years of the first offence, irrespective of the locality of which the initial offence relates.

•

For second offences a score of 20 will be added”.

Mr Thompson argued that the fact that the appellant had no previous track record of offending behaviour ought to have counted in its favour and ought not to have led to the addition of 10 points. The scoring chart in the Policy is banded in units of 10, with the lowest penalty of £1,000 being imposed for a score of between 1 and 10, £2,000 for a score of between 11 and 20, and so on with increasing increments up to £30,000. The automatic addition of 10 to the score of any landlord with a good record would render the lowest band redundant and push the penalty into the band above, resulting in an additional penalty of up to £5,000. That, Mr Thompson suggested, was irrational.

In its statement of case in response to the appeal (although not in Mr Ward’s submissions) the Council suggested that the FTT’s decision to add 10 penalty points was “unimpeachable” because it was required by the Government Guidance. Far from being an “anomaly” as the FTT had suggested, the FTT had been obliged to follow it and this Tribunal had “no jurisdiction to disturb this determination”.

The FTT clearly had difficulty with the addition of 10 points to the score of an offender who had no track record of offending. It described that approach as “arbitrary” and, in its refusal of permission to appeal, as “an anomaly in the Government’s Guidance on Civil Penalties”. The reason it gave for following that arbitrary and anomalous approach was that “the guidance notes appear to confirm that this is the system.”

Both the FTT in its decision and the Council in its statement of case were mistaken about the contents of the Government Guidance. The FTT was also mistaken about the weight it was required to give to policy, whether in the form of the Government Guidance or the Council’s own Policy, if it took the view that the policy was arbitrary and anomalous.

The first mistake was that the requirement to increase the penalty imposed on an offender with a previously good track record is not found in the Government Guidance at all. It appears only in the Council’s Policy.

It is apparent from the FTT’s decision and from its refusal of permission to appeal that it thought it had been provided with the text of the Government Guidance, but in their witness statements the Council’s witnesses were quite specific about the document they had exhibited and were referring to in their evidence. That document was the Council’s own Policy.

It is possible that the FTT overlooked that evidence or (and perhaps this is the more likely explanation) that confusion was caused by the Policy itself, which gives the impression that it is quoting the text of the Government Guidance when it is not. The Policy includes a statement that “The guidance document issued by DCLG provides the following considerations when determining the level of civil penalty”. That statement is followed by a page of text which combines the relevant considerations identified in paragraph 3.5 of the Government Guidance with the Council’s own scoring system attributable to each of those factors. The original text taken from the Government Guidance and the text added as Council Policy are not distinguished from each other and the introductory words quoted above might quite reasonably be taken to imply that the whole of the text was taken from the Government Guidance when it was not.

The FTT’s first error was therefore that, for whatever reason, it misunderstood the source of the guidance it was applying when it made its own determination of the appropriate penalty. That misunderstanding appears to have been the cause of its second and more significant error.

The FTT’s second error was that it failed to appreciate that guidance, even the Government Guidance, is only guidance. A decision maker is not obliged to follow guidance or policy which it has been persuaded is arbitrary and anomalous; on the contrary, as the Tribunal explained in Marshall and Kazi (see paragraphs 23 and 24 above) the decision maker is required to make its own decision, starting from the policy but exercising its own discretion and departing from the policy where it is persuaded that it is right to do so.

When the FTT said that “the guidance notes appear to confirm that this is the system” and proceeded to apply the Policy despite its own view that in this respect “the system” was illogical, arbitrary and anomalous, the FTT was misdirecting itself and fettering its own discretion in the manner explained in Kazi. It was treating the Policy as a rule and failing to observe the important distinction explained by Lord Clarke in R (Alvi) v Secretary of State for the Home Department [2012] UKSC 33, at [120]:

“Guidance is advisory in character; it assists the decision maker but does not compel a particular outcome. By contrast a rule is mandatory in nature; it compels the decision maker to reach a particular result.”.

Mr Ward submitted that the FTT’s misunderstanding of the source of the Policy and its treatment of it as binding rather than advisory (neither of which he sought to defend) did not provide grounds on which this Tribunal could interfere with its decision. His contention was that the FTT had been obliged to start from the Policy and that there were no valid reasons to depart from it, so the correct result was, as the FTT determined, that an additional 10 points should be added to the appellant’s score. He disputed the FTT’s suggestion that punishing a first offender was arbitrary or anomalous, as they had committed an offence, and suggested that if one part of the scoring system was omitted the whole scheme would have to be recalibrated to increase the penalty imposed on first offenders and to achieve the outcome which the makers of the Policy had intended in those cases.

I do not accept Mr Ward’s submission. Where a decision maker has made a significant error in the course of exercising a discretion, an appellate tribunal would only be justified in leaving the decision undisturbed if it was confident that, on a proper exercise of the discretion, the decision maker would have reached the same conclusion. In the context of judicial review of the decisions of public authorities that principle finds expression in section 31(2A), Senior Courts Act 1981: if a claimant is successful in judicial review proceedings, but the Court considers that it is highly likely that the outcome for the claimant would not have been substantially different if the conduct complained of had not occurred, then the Court must refuse to grant any form of relief. If the FTT had directed itself properly and had not fettered its discretion by treating the Policy as something from which it could not depart, notwithstanding that it considered it arbitrary and anomalous, it seems very likely that it would have omitted the additional score of 10, which it would have been entitled to do. Even if all other components of the score remained the same that would have reduced the score to 24 points which would have reduced the penalty by £2,000.

As I have already decided that the appeal succeeds on ground 1 and the FTT’s decision is set aside, it is not necessary to consider Mr Ward’s defence of the substance of the Policy in its treatment of offenders with no previous track record of offending. The important point is that tribunals should give proper weight to local authority policies when they make their own decision on the level of a penalty and should provide their reasons for departing from a policy if that is what they decide to do.