[2023] UKUT 129 (LC)

The Policy specifically requires officers to adjust (i.e. increase) the default penalty to include costs incurred by the Council in investigating the offence. When it determined the original penalty the Council added the sum of £1417 specifically to cover those costs. The FTT considered that surcharge was inappropriate and refused to include it. Mr Bates challenged that refusal and submitted that such costs were properly include in the assessment of an appropriate penalty.

In support of this ground of appeal Mr Bates referred to policy papers predating the introduction of the financial penalty regime which indicated that the “polluter pays” principle should apply so that “the cost of enforcement should fall primarily on rogue landlords rather than on good landlords or the general tax payer”. That does not seem to me to justify the addition of costs as a separate component of a civil penalty. By regulation 4 of the Rent Repayment Orders and Financial Penalties (Amounts Recovered) (England) Regulations 2017 an authority may use the whole of the financial penalties it collects to meet the costs and expenses (whether administrative or legal) incurred in, or associated with, carrying out any of its enforcement functions in relation to the private rented sector. That is how the “polluter pays” principle is reflected in the rogue landlord regime. As the whole of the penalty is available as a contribution to the costs of enforcement it would savour of double counting to use the “polluter pays” principle to justify the addition of a specific sum for that purpose.

Next Mr Bates pointed out that there was nothing in section 249A, 2004 Act to prohibit the addition of enforcement costs, and referred to the fact that if, rather than imposing a financial penalty, the Council had chosen to prosecute, it would usually be allowed its costs of the investigation. Neither of those points seems to me to support Mr Bates’ argument, since in the criminal context there is specific statutory authority for a separate award of costs in favour of a prosecuting authority (section 18, Prosecution of Offences Act 1985).

In my judgment the FTT was entitled to ignore the Council’s policy of adding the cost of investigation to the financial penalty arrived at after consideration of all relevant factors. There is no reference to such a surcharge in the Guidance to which authorities are required to have regard and there is no specific statutory sanction for it. That is in contrast to the express powers given by section 49, 2004 Act allowing authorities to make reasonable charges to recover the cost of enforcement action and providing for national authorities to impose a cap on such charges. Had it been intended that the cost of investigating offences leading to financial penalties should be recoverable separately a reference to section 249A could have been included in section 49(1) when the rogue landlord regime was introduced in 2016. The fact that it was not suggests that there is no power to collect such a contribution through the penalty charge itself.