[2024] UKUT 40 (LC)

The appellant was granted permission to appeal on four grounds relating to the dismissal of its reasonable excuse defence and on an additional ground concerning the quantum of the FTT’s award.

The first ground of appeal was that the FTT was wrong to reject the appellant’s contention that Haringey had failed to appreciate that the additional licensing designation would affect purpose built student accommodation which was otherwise exempt from mandatory licensing. That proposition had featured significantly in the appellants criticisms of Haringey before the FTT, but the FTT had found no evidence to support it, and in particular, no evidence at the level of Haringey’s policy makers to show what they had or had not taken into account. It did not consider that inferences drawn from statements made by front line housing officers made up for that deficiency.

The short answer to this ground of appeal is that any suggested failure on the part of Haringey to take account of the particular circumstances of purpose built student accommodation when designing the additional licensing scheme cannot provide a reasonable excuse for the appellant’s failure to comply with the scheme once it was introduced. As the FTT pointed out, such an omission by Haringey (if established), might have provided grounds for the appellant to seek a judicial review of the scheme, but that is as far as it goes. It is not suggested that an additional licensing scheme could not lawfully be made to apply to the type of student accommodation managed by the appellant, as the appellant clearly appreciated, because it employed a member of staff with specific responsibility for licensing its HMOs. In those circumstances, Haringey’s decision making process is simply irrelevant.

In any event, the FTT was right that the evidence did not establish what Haringey’s policy makers had or had not taken into account, only that the housing team responsible for licensing HMOs were taken aback to receive, three years into the period of the scheme, a request from the appellant to licence 221 HMOs of which the officers had previously been unaware. There is no evidence that the appellant had informed Haringey that it was managing three blocks of student accommodation in the Borough, which explains why it was not consulted, nor is there evidence whether other providers of such accommodation were consulted.

It is convenient to deal with the fourth ground of appeal at this point. It is said that the FTT had regard to an irrelevant consideration when it suggested that the appellant could have addressed any failure of consultation by judicial review proceedings. The appellant says it could not have done so because it did not become aware of the additional licensing designation until three years after the scheme was introduced, and so would have been out of time for any judicial review proceedings. This ground misunderstands the point the FTT was making, which was that none of the evidence of Haringey’s decision making which would have been available in the context of a judicial review was available to it as there had been no judicial review challenge. In the absence of evidence from decision makers, the FTT was being asked by the appellant to draw inferences about what had or had not been overlooked from emails written by individual housing officers who were unlikely to have had any involvement in formulating the licensing scheme or considering what, if any, exemptions ought to be allowed. The FTT did not fall into error by pointing out that “if they [the appellant] had challenged the local authority properly via judicial review they could have sought disclosure” of policy documents.

The second ground of appeal is similar to the first, in that it focusses on what Haringey is said to have done wrong, this time that it had failed to consult as required by section 56(3) and failed in its duty to identify those who were likely to be affected by the designation of the additional licensing area.

It is not known what consultation Haringey undertook before making its designation, and it does not appear to have been asked for an account. It was not obliged by section 56(3) to consult any individual landlord, merely “to take reasonable steps to consult persons who are likely to be affected by the designation”. It may or may not have consulted providers of purpose built student accommodation of whom it was aware; all that is known is that it did not consult the appellant of whose existence in the Borough it was unaware. In my judgment the FTT was entitled to find that none of this established a defence of reasonable excuse for the appellant.

The appellant is in the position of many landlords who discover that have been committing an offence because they were unaware that a licensing scheme, mandatory or additional, applies to their property. Occasionally ignorance has been accepted as providing a reasonable excuse (generally where there has been a reasonable excuse for that ignorance) but usually it has not. The answer given to such landlords by tribunals has most often been that the responsibilities of managing residential property are not to be undertaken carelessly, and that managers and landlords are expected to make themselves aware of the current licensing or other regulatory requirements which affect their business. Generally, the bigger a landlord’s business, the more difficult it will be to provide a reasonable explanation for a failure to keep up to date. Landlords are assisted in keeping up to date by the obligation placed on local authorities to publicise additional licensing schemes. If an additional scheme had not been properly advertised ignorance of it might be reasonable especially if it could be shown that a landlord had taken reasonable steps to keep informed but had nevertheless been unaware of the scheme.

In this case, the appellant is one of the largest providers of student accommodation in the country. It had signed up to a code of management practice which, as Mr Penny pointed out, specifically requires providers of student housing to be aware of HMO licensing requirements and ensure they comply with them. Yet the appellant provided no evidence of any steps it had taken to keep itself informed of licensing requirements in Haringey, despite HMO licensing being one of the responsibilities of its London Universities Operations Manager. As the Tribunal explained in IR Management Ltd v Salford City Council [2020] UKUT 81 (LC)the burden of proving the existence of a reasonable excuse falls on the person seeking to rely on it, and that burden cannot be discharged without relevant evidence of what the person did in the particular circumstances. Before the FTT the appellant relied on the evidence of its Head of Operations for London, Mr White, but he had no personal responsibility for ensuring licensing requirements were adhered to. His account of conversations with the person who was responsible, Ms Stringer, suggested that at the relevant time the appellant’s procedures were not standardised and depended on a local housing authority making it aware of a licensing requirement or on ad hoc checks by local staff. No evidence was provided about how frequently such checks were made and in this case three years passed before the appellant became aware of the Haringey scheme. By focussing on the alleged absence of consultation with interested parties the appellant concentrated its evidence on the wrong target and this ground of appeal also fails.

The third ground of appeal was that the FTT erred in law by suggesting that the appellant’s position on consultation amounted to a contention that it was entitled to “special consultation treatment”. But that is not what the FTT decided. The “central tenor” of the appellant’s reasonable excuse defence, as the FTT saw it, was “that as a student provider of housing which is exempt from the mandatory licensing requirements, they are entitled to special consultation treatment which excuses them from making their own investigations into the existence and effect of the designation on their own properties” (emphasis added). The FTT’s criticism was of the appellant’s passive approach to its licensing responsibilities. The FTT’s characterisation of the appellant’s case was not inaccurate. By advancing no evidence about steps it may have taken to keep itself informed of licensing requirements in the locality the appellant’s case amounted to nothing more than an attempt to deflect blame for its own shortcomings onto Haringey. The FTT rightly rejected that case.

The appellant’s single ground of appeal on the quantum of the repayments ordered by the FTT is that the FTT failed to give adequate reasons for setting the award at 50% of the net rent paid by the tenants and failed to explain why it was ordering repayment of a sum greater than the 25% ordered by this Tribunal in the case of Hallett v Parker.

Despite Mr Whatley’s submissions to the contrary, the facts of Hallett v Parker were strikingly different from those of this case. For many years Mr Hallett let his former family home through a letting agent. At that time it was not an HMO because it was occupied by families. In 2019 it was relet through the same agent to three individuals who did not form a single household and it therefore became an HMO and licensable under a scheme of additional licensing introduced in 2015. The agent did not alert Mr Hallett to the need to obtain a licence, and he was unaware of it. The FTT ordered repayment of the full amount of the rent paid by the three tenants, but its assessment was set aside on appeal and an order for repayment of 25% of the rent was substituted on a redetermination by this Tribunal. The factors which led to that assessment were identified at paragraph [37], as follows:

“In fixing the appropriate sum I take account of the following: that the offence is not of the most serious type; that proper enforcement of licensing requirements against all landlords, good and bad, is necessary to ensure the general effectiveness of the licensing system and to deter evasion; that Mr Hallett failed to take sufficient steps to inform himself of the regulatory requirements associated with letting an HMO; that this was the first occasion on which he had let the property to a group of tenants who did not form a single household, and hence the first occasion when a licence was required; that he was not alerted by his letting agent to the need to obtain a licence, when he might reasonably have expected he would be (especially as the same agent had previously let the property on his behalf in circumstances which meant no licence was required); that the condition of the property was fairly good; that he applied for and was granted a licence as soon as he became aware that one was required; and that he lets no other property.”

No two cases are the same, and in any event, a decision of this Tribunal on the quantum of a rent repayment order in an individual case creates no binding precedent which must be followed by the FTT. Such decisions provide guidance and promote consistency, but they are not the only answer which a properly directed tribunal would be entitled to arrive at. Even if there had been a much greater similarity between the facts of the two cases, the FTT would have been under no obligation to comment on Hallett or explain why it considered a higher award was appropriate in this case, unless it was necessary to do so to explain why a particular argument was being rejected. But the facts of this case were very different from those of Hallett and the FTT was entitled to assess the appropriate penalty for this offence committed by this landlord at 50% without commenting on the earlier case.

The appellant is right that the FTT gave no detailed reasons for selecting 50% as the appropriate penalty rather than some other figure, but it identified the factors it was taking into account and there was little more that could be said. I can see nothing wrong with the explanation given at paragraph [45], although it must be read against the background of the facts already found by the FTT. It said this:

“The offence is not considered at the serious end of the scale either comparing the offence to other offences or other cases of the same offence. The respondents should have been aware of the need to license but this was not a deliberate breach. Hopefully they will ensure that they don’t fall foul of the law again. No addition is made for conduct for the reasons already give. We consider that a 50% penalty is appropriate.”

For these reasons I dismiss the appeal on all grounds.