[2023] UKUT 129 (LC)

Mr Bates submitted that the FTT’s primary reason for reducing the penalty imposed by the Council was its conclusion that the evidence was not strong enough to support a finding of an offence on any date other than 11 August 2021. He argued that that conclusion was inconsistent with the evidence I have summarised above and was not one which any properly directed tribunal could have reached.

Mr Maddan referred to Viscount Sankey LC’s famous reference in Woolmington v DPP [1935] A.C. 462, 481 to the “golden thread” running through the “web of English criminal law”, namely that “it is the duty of the prosecution to prove the prisoner’s guilt”. In this case the FTT had analysed the evidence over nine pages before concluding that it was not satisfied to the criminal standard of proof that Room 5 had been occupied by Wojech on any day other than 11 August. It had been scrupulous in ensuring that the criminal standard of proof was met and stopped short of finding an offence had been committed, even on dates when it thought it was likely. That conclusion had reasonably been open to it on the evidence and was one with which this Tribunal should not interfere.

As Mr Bates acknowledged, an appellate court or tribunal will only be justified in interfering with a factual finding by a first instance tribunal “where a critical finding of fact is unsupported by the evidence or where the decision is one which no reasonable judge could have reached” (see Haringey LBC v Ahmed [2017] EWCA Civ 1861, at [29]-[31]). Mr Maddan also referred me to Point West GR Limited v Bassi [2020] EWCA Civ 795, in which Lewison LJ, discussing the FTT’s power to review its own decisions where there had been an error of law, said at [47]: “In this context an "error of law" would undoubtedly include a case in which the FTT had reached a factual conclusion which had no evidence to support it; or which was contrary to the only reasonable conclusion on the evidence.”

Financial penalty proceedings under section 249A, 2004 Act are civil proceedings, but they are unlike most civil proceedings in that proof is required to the criminal standard. The FTT was therefore required to be satisfied beyond reasonable doubt of the facts constituting the relevant offence.

It was not suggested by either counsel that this unusual feature of financial penalty cases requires a different approach by this Tribunal when considering a challenge to the FTT’s conclusion on the evidence. I was not shown any authority dealing with the proper appellate approach where it is said a first instance court or tribunal wrongly failed to find facts proven to the criminal standard. That may be because other contexts in which such a proposition could be advanced do not come easily to mind; in criminal cases there is of course generally no appeal against an acquittal.

The only other authority to which reference was made was the decision of the Court of Appeal in Sutton v Norwich City Council [2021] EWCA Civ 20. That was an appeal against a decision of this Tribunal, sitting as the first instance decision maker following the transfer of the case from the FTT, on a landlord’s appeal against financial penalties imposed under section 249A. But this Tribunal had found the offences on which the penalties were based to have been proven, and the appeal against its decision was by the landlord. The Court of Appeal’s guidance on the approach of an appellate court or tribunal (at [30]-[31]) does not address the peculiar question which arises in this case.

There does seem to me to be a difference between challenging an affirmative finding of fact that some event occurred, or some state of affairs existed and challenging a conclusion that evidence is not sufficient to prove a case beyond reasonable doubt. A conclusion of the second type is not a “finding of fact” or “factual conclusion” in the sense in which those expressions are used in the cases to which I was referred. Nor is it relevant to ask whether the conclusion was or was not supported by evidence, since the issue is whether the FTT should have been persuaded, not whether it could have been.

It does not seem to me to be possible for an appellate tribunal to set aside a first-tier tribunal’s conclusion that proof to the required criminal standard had not been provided unless it can be sure that some fundamental error of principle or approach entirely undermines the original decision. I am inclined to think that the relevant question must concern the integrity or coherence of the decision-making process, rather than simply an evaluation of the evidence, which may be sufficient to satisfy one decision maker to the necessary standard but not another. The approach taken where the Tribunal is asked to set aside an evaluative or discretionary decision may be a relevant guide, namely to consider whether the decision is wrong because of “an identifiable flaw in the judge’s reasoning, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion” (see Sutton v Norwich City Council, at [31]). But that alone would not justify an appellate tribunal substituting a conclusion that the relevant facts had been proven. It would additionally be necessary for it to be satisfied that the decision was contrary to the only reasonable conclusion possible on the evidence; that was the basis on which Mr Bates made his submissions.

The particular flaw in reasoning on which Mr Bates relied was the FTT’s statement, at [110], that “the evidence of Mr Sona, when considered in isolation was not strong enough to substantiate occupation before that date” i.e. 11 August 2021. That statement was not followed by any explanation, nor did the decision include any evaluation of Mr Sona as a witness or any examination of his evidence to identify flaws or inconsistencies which might call it into question. The statement indicates clearly that the FTT considered the evidence of Mr Sona “in isolation”, and concluded that, viewed in that way, it did not establish that Room 5 had been occupied in such a way that the premises were an HMO on any date other than 11 August. But there was no reason to treat Mr Sona’s evidence as if it had been given “in isolation”, and by approaching it in that way the FTT denied itself the opportunity of assessing the evidence as a whole.

It is striking that the part of the FTT’s decision in which it reached this conclusion came well after its determination that it was satisfied beyond reasonable doubt that the alleged offence had been committed. It occurred when the FTT considered the issue of harm to the occupiers of the HMO in the context of its assessment of the quantum of the penalty. It is not clear why the matter was approached in that way. Although the penalty notice stated the date of the offence as 11 August 2021, the particulars of the offence which followed in the same document asserted that the same state of affairs had continued since October 2018. Mr Sona’s evidence concerned the whole period of the offence and it was not Ms Morjaria’s case that the Room 5 had been let for only a single day – she maintained that it had not been let at all, and the FTT was satisfied beyond reasonable doubt that that was not true.

I am satisfied that, by looking at Mr Sona’s evidence in isolation, the FTT did make a fundamental mistake. It should have considered the evidence in context. The relevant context included its conclusion that the case was made out in respect of 11 August; the receipt in the name of Wojech showing that rent was being paid by 6 August at the latest; Mr Mursa’s evidence that Wojech had been allowed to stay “maybe for a few weeks”; Ms Morjaria’s evidence that she had been receiving rent for Room 6 since 2020; its own conclusion that Mr Mursa’s evidence was “conflicting” and “not credible”, and the fact that he was the only witness who gave oral evidence contradicting Mr Sona’s account that Room 5 had been continuously occupied for three years; its conclusion that Ms Morjaria had engaged in a cover-up of the letting of Room 5 and its acceptance of Mr Sona’s evidence that she had removed the tenant of Room 5. The FTT appears to have taken none of these matters into account when it considered how long the house had been an HMO but instead considered only Mr Sona’s evidence “in isolation”. That was not an appropriate or reliable way in which to make a decision and it led to a decision which defies logic; the receipt and Mr Mursa’s evidence alone establish that the room had been occupied by Wojech as his sole residence at least for a few weeks.

I do not accept Mr Maddan’s submission that viewing Mr Sona’s evidence together with the other evidence in the case still leaves it short of establishing the offence to the criminal standard in respect of any day other than 11 August. The conflicting evidence from Mr Mursa was found by the FTT to be “not credible”, a conclusion which was impossible to avoid when he had changed his account of how often he had paid for Room 5. The electrician who made a statement that on two visits to Room 5, in 2020 and 2021, “the room was empty with no sign of anyone living in there”, did not attend for cross examination; the FTT did not say what it made of his evidence, but it cannot reasonably be thought to undermine Mr Sona’s evidence about the duration or quality of the residential occupation of Room 5. Ms Morjaria’s denial that the room had ever been let was irreconcilable with the FTT’s acceptance that she had attended following the Council’s first visit to remove the occupant, and equally irreconcilable with the evidence of Mr Mursa. Against that, it does not appear to have been suggested to Mr Sona that his evidence was tainted by animosity towards his former landlord, nor did the FTT suggest any reason why it was not worthy of acceptance in full. I am satisfied that the only conclusion reasonably open to a tribunal which properly directed itself with regard to the whole of the evidence was that Mr Sona was a truthful witness and that the property had been controlled by Ms Morjaria as an unlicensed HMO for considerably longer than the FTT allowed and probably from the inception of the licensing requirement in October 2018.

Since the FTT was itself satisfied that an offence had been committed, my conclusion does not involve replacing a complete acquittal with a finding that an offence had been committed, which would be an even bolder determination for an appellate tribunal. The consequence of my conclusion is more limited; it is that the FTT made its assessment of the appropriate penalty on the basis of an incomplete appreciation of the duration and seriousness of Ms Morjaria’s offence. That was an omission to have regard to a material consideration and it justifies this Tribunal in setting aside the FTT’s decision on the quantum of the penalty and substituting its own.