[2023] UKUT 292 (LC)

The statutory provisions concerning improvement notices are contained in Part 1 and Schedule 1 of the Housing Act 2004 (2004 Act). The power to impose civil financial penalties is conferred on local housing authorities by section 249A, 2004 Act.

Part 1 of the 2004 Act contains a scheme for the enforcement of housing standards by reference to the existence of hazards and an assessment by local housing authorities of their seriousness. Section 5, 2004 Act provides that if a local housing authority considers that a category 1 hazard (the most serious type of hazard) exists on any residential premises it must take appropriate enforcement action. Where a less serious, category 2, hazard is found section 7 confers a power on the authority to take enforcement action, but no obligation to do so. One of the forms of enforcement action available is the service of an improvement notice.

Sections 11 to 19 and Schedule 1, 2004 Act contain provisions about improvement notices; notices relating to category 1 hazards are described in section 11, while section 12 is concerned with notices relating to hazards in category 2.

An improvement notice is a notice requiring the person on whom the notice is served to take such “remedial action” in respect of the hazard concerned as is specified in the notice (section 11(2)). “Remedial action” in this context, means action (whether in the form of carrying out works or otherwise) which in the opinion of the authority, will remove or reduce the hazard (section 11(8)).

Section 13 is concerned with the contents of an improvement notice. A notice must specify the nature of the hazard and the premises on which it exists and the premises in relation to which the remedial action is to be taken, and it must state what remedial action is required, by when that action must commence and when it must be completed. Section 8 additionally requires an authority which has decided to take enforcement action to prepare a statement of its reasons for taking that action and (in the case of an improvement notice) to serve a copy of it with the relevant notice.

Section 18 and paragraphs 1 to 5 of Schedule 1 deal with the service of improvement notices, including identifying the person on whom a notice may be served. Four distinct situations are catered for, each of which identifies the proper recipient of a notice by reference to the characteristics of the premises in relation to which remedial action is to be taken, referred to in section 13(5) as the “specified premises”.

In this case the specified premises in relation to the fire hazard represented by the defective alarm in Flat 2 was Flat 2 itself, because that is where fault was said to be and where the remedial action is required. Paragraph 3 of Schedule 1 provides that where the premises in relation to which remedial action is to be taken are a flat which is not subject to HMO licensing under Part 2 of the 2004 Act or subject to a selective licensing scheme under Part 3, the authority must serve the improvement notice either on the person managing the flat, or on a person who is both an owner of the flat, and, in the authority’s opinion, ought to take the action specified in the notice.

The “owner” in relation to any premises is defined in section 262(7). It always includes the owner of the freehold interest and thus in this case it includes the appellant. It also includes any person holding a lease of which the unexpired term exceeds 3 years. In this case it therefore includes the leaseholders of the individual flats.

The “person managing” premises is defined in section 263 and has no application where the specified premises comprise a flat.

It follows therefore that where the premises in which remedial action is required to be taken are a flat which is let for a term with more than 3 years remaining, an authority may serve an improvement notice either on the freeholder or on the leaseholder of the flat, whichever in its opinion ought to take the action specified in the notice.

In respect of hazards requiring remedial action to be taken in the common parts of a building containing one or more flats paragraph 4 of Schedule 1 provides that the authority must serve the improvement notice on a person who is “an owner of the specified premises” i.e. the common parts, and who, in the authority’s opinion, ought to take the action specified in the notice.

For this purpose an “owner” of common parts is an owner of the building or part of the building in which the common parts are comprised (paragraph 4(3)). As before, “owner” includes a holder of a lease with more than 3 years remaining. In this case, therefore, both the appellant, as owner of the freehold of the building, and the leaseholders, each as owners of part of that building, are owners of the common parts and could properly be recipients of an improvement notice requiring remedial action to be taken.

By section 30(1) it is a criminal offence for a person on whom an improvement notice is served to fail to comply with it; it is a defence that such a person had a reasonable excuse for failing to comply with the notice (section 30(4)).

Part 3 of Schedule 1 creates a right of appeal to the FTT against an improvement notice. One of the grounds of appeal is that someone other than the appellant, who is also an owner of the specified premises, ought to take the remedial action concerned (paragraph 11(1), Schedule 1). When a tribunal considers an appeal on that ground it is required to take account of three matters specified in paragraph 16(3). Those are: (a) the relevant interests in the premises of the appellant and the other owner (considering both the nature of the interests and the rights and obligations arising under or by virtue of them); (b) the relative responsibility for the state of the premises which gives rise to the need for the taking of the action concerned; and, (c) the relative degree of benefit to be derived from the taking of the action concerned.

Although paragraph 16(3) is concerned with decision making by a tribunal on an appeal, the factors identified in it are also plainly relevant to an authority’s own consideration of which of two or more owners ought to take the remedial action required to overcome a particular hazard.

Section 249A, 2004 Act enables a local housing authority as an alternative to prosecution to impose a financial penalty of up to £30,000 on a person whom they are satisfied beyond reasonable doubt has committed any of the housing offences listed in that section. Among those offences is the offence under section 30 of failing to comply with an improvement notice.

Schedule 13A, 2004 Act contains detailed provisions about financial penalties. Amongst these, paragraph 12 states that a local housing authority must have regard to any guidance given by the Secretary of State about civil penalties when it exercises its functions. Relevant guidance was issued by the Secretary of State in 2018, entitled Civil penalties under the Housing and Planning Act 2016, Guidance for Local Housing Authorities (“the Government Guidance”).

Paragraph 10 of Schedule 13A creates a right of appeal to the FTT against an authority’s decision to impose a financial penalty and against the amount of that penalty. The appeal takes the form of a re-hearing and the FTT is to make its own decision whether to impose a penalty and, if so, in what amount.

In determining an appeal under paragraph 10, the FTT must pay particular attention to any enforcement policy adopted by the authority, and will normally follow it; but it is not bound by the policy. The proper approach for a tribunal to take towards a local authority’s policy was reviewed by the Tribunal (Judge Cooke) in London Borough of Waltham Forest v Marshall [2020] UKUT 35 (LC). The following statement in that case was subsequently approved by the Court of Appeal in Sutton v Norwich City Council [2021] EWCA Civ 20:

“54… The court can and should depart from the policy that lies behind an administrative decision, but only in certain circumstances. The court is to start from the policy, and it must give proper consideration to arguments that it should depart from it. It is the appellant who has the burden of persuading it to do so. In considering reasons for doing so, it must look at the objectives of the policy and ask itself whether those objectives will be met if the policy is not followed.

55.

Nothing in these cases, or in the present appeals, detracts from the court's or a tribunal's ability to set aside a decision that was inconsistent with the decision-maker's own policy. Nor have the above cases said anything to cast doubt upon the ability of a court or tribunal on appeal to substitute its own decision for the appealed decision but without departing from the policy … It goes without saying that if a court or tribunal on appeal finds, for example, that there were mitigating or aggravating circumstances of which the original decision-maker was unaware, or which of which it took insufficient account, it can substitute its own decision on that basis.”

The Tribunal has recently revisited this topic in Kazi v Bradford Metropolitan District Council [2023] UKUT 263 (LC), where Judge Cooke added the following to what she had said in Marshall:

“13.

It is a principle of administrative law that a public body may not adopt a policy that has the effect of “fettering its discretion”; that means, in the present context, that it must not adopt a rigid policy that deprives it of the ability to consider the merits of the case and reflect them in its decision. The classic authority is R v Port of London Authority ex p Kynoch [1919] 1 KB 176. The FTT is likely to depart from a local housing authority’s policy if it has that effect.”

With the relevant legal context in mind it is now possible to turn in more detail to the facts of this appeal.