[2023] UKUT 129 (LC)

These representations did not dissuade the Council from issuing a final penalty notice in the full sum of £29,817 on 7 March 2022. The reasons given again asserted the appointed officer’s belief that the property had been operating as a licensable HMO from 1 October 2018 until 11 August 2021. The notice also explained that the quantum of the penalty had been determined according to the Council’s own Civil Penalty Policy.

The Council’s Policy stated that decisions on the appropriate penalty would be made “on a case by case basis” but it directed that the offence of operating an unlicenced HMO was “considered to be a very serious offence in every case even where the current occupants are not suffering harm or exposed to potential harm”. Two reasons were given for this assessment. First, because “HMOs by their nature pose enhanced risks to the health and safety of occupants and required high standards in the condition and management of the properties”, and secondly because a failure to licence “undermines the Council’s ability to carry out its statutory duties”.

The amount of the penalty was also explained in the notice of intent. Consistently with the Policy, the level of harm caused by the offence was assessed as very high and the two reasons given in the Policy were quoted. Additionally, it was said that the five occupants of the HMO had been put at serious risk because the fire detection system was inadequate, and that Room 5 was too small to be considered safe for an adult. It was noted that Ms Morjaria had confirmed that she was aware of the licensing regime, and it was therefore considered that she had deliberately chosen to ignore her responsibilities. Moreover, she had attempted to deceive the Council’s officers by moving the tenant of Room 5 out of the building. The officers therefore concluded that the penalty should be fixed by reference to the highest level of culpability. Cross-referencing very high harm and the highest level of culpability on the Policy’s penalty matrix, yielded a default penalty of £27,500 to which was added £900, that being the licence fee which had been avoided, and a further £1,417 to cover the Council’s costs of investigating the offence.

The final penalty of £29,817 was only £183 less than the maximum permitted by the statute.

Ms Morjaria appealed to the FTT. A supporting statement prepared by an organisation styling itself London Property Licensing asserted that the house had been let on a single room basis for seven years and that the occupancy level had always been lower than the HMO licensing threshold of five persons. Room 5 had never been used as living accommodation but had been used by Mr Mursa for storage, and the rent receipt recorded payment by him for that purpose. As far as quantum was concerned, the penalty was said to be disproportionate; reference was made to civil penalties imposed by tribunals for similar offences, of between £1,500 and £17,000.