[2023] UKUT 129 (LC)

The FTT referred to the notice of intention and the final notice and explained that the offence to which each referred was the offence of being in control of an unlicensed HMO contrary to section 72 of the 2004 Act. It did not mention the period during which that offence was alleged to have been committed. Having described the evidence and submissions it had received it then approached its task by considering first whether it was satisfied beyond reasonable doubt that a relevant housing offence had been committed.

Having noted Mr Mursa’s conflicting evidence about the use of Room 5, the FTT said that the evidence of Mr Sona and the text message he had received from Ms Morjaria asking him not to allow access to the Council’s officers (to which the FTT gave “substantial weight”) both pointed strongly to Ms Morjaria having attempted to cover up a letting of Room 5 by removing the occupier. The rent receipt clearly indicated rent had been paid for Room 5, and the FTT considered it likely that the person liable to pay that rent was the ‘Wojech’ named on the receipt. Mr Mursa’s responses to questions had been “not credible” in relation to the use of Room 5, and the FTT could not understand why the additional sum would not simply have been added to the rent he paid by bank transfer. It did not accept that Ms Morjaria could have visited the property between 2019 and 2020 and not noticed that the room was in use. Mr Mursa’s account of Ms Morjaria getting angry when she discovered that Wojech had been staying in Room 5 had not been mentioned by her and was inconsistent with her evidence that the room had been used only for storage. His description of Wojech needing somewhere to stay suggested he had nowhere else and that Room 5 was his only or main residence (with the result that the house was an HMO while he resided there). Weight was also placed on an email from Ms Morjaria as implying that Room 5 had been let in the past.

On that basis the FTT concluded that it was “satisfied beyond reasonable doubt that the alleged offence was committed and that the applicant was the person in control of the property.” Once again, at that stage the FTT did not say whether it was satisfied that the offence had been committed from 1 October 2018 to 11 August 2021, which was the period included in the particulars of the offence given in the Council’s notices.

The FTT then considered whether the penalty imposed by the Council had been set at an appropriate level. It began by saying this, at [110] and [111]:

“It is clear to the tribunal that in its notice of intent the respondent was influenced by its conclusion that the property had been let as a licensable HMO since the regulations changed on 1 August 2018. However, the tribunal determined that it could only be satisfied to the criminal standard that an offence occurred on 11 August 2021. The tribunal considered that the evidence of Mr Sona, when considered in isolation was not strong enough to substantiate occupation before that date. The tribunal therefore determined that this had to reduce the level of harm because the evidence can only prove that the occupier of Room 5 was exposed to risks for one day.

In terms of harm the tribunal determined that it was necessary to narrow it down to the period for which it can be proved to a criminal standard that the offence was taking place. The tribunal accepts that someone was in the room on 11 August 2021 (and almost certainly from 6 August 2021 given that this is the date on the rent receipt) but determined that there was only limited exposure to the risks.”

The FTT then made its own assessment of harm and observed that the psychological distress of living in an inadequate space “would only manifest over a period of time”, and that the same was true of exposure to harm caused by inadequate fire protection. Because the offence was failing to licence the HMO the FTT considered that “we cannot account for the other four occupiers as they could have resided there legally”. It also noted that there was no evidence of “any actual harm being caused” and later suggested that it was “not realistic to assume that a tenant is exposed to a risk simply because there is no licence in place”. Referring to the HHSRS system of categorising hazards in residential property, the FTT observed that the fact that the Council’s regulatory activity and the businesses of legitimate landlords were both undermined by a failure to licence “could not be considered in the same category as serious category 1 hazards where there are substantial risks of an occupier being killed or injured.” To punished a licensing offence by a penalty close to the maximum left no scope for more serious offences and was considerably beyond the level required to achieve deterrence or the fine which would have been imposed on a criminal prosecution. In short, the FTT was not persuaded that the penalty imposed by the Council was “in any way reasonable or reflects the actual failures of the applicant”.

The FTT arrived at its own penalty by cross referencing on the Council’s penalty matrix a low level of harm and deliberate culpability, which produced a starting point of £15,000. This was reduced by 30% as there was no evidence of a previous offence, and by a further 60% because Ms Morjaria’s annual income from renting three properties was only £15,000. A further £1,500 (10% of the starting level) was added to reflect Ms Morjaria’s admitted knowledge of the HMO regulations together with the £900 licence fee which had been avoided and which was to be deducted as “financial gain”. The FTT declined to include any sum to reflect the Council’s costs of investigating the offence on the basis that, in principle, these were irrelevant to the quantum of the penalty. This left a total of £3,900 which the FTT substituted for the penalty originally imposed by the Council.