[2024] UKUT 181 (LC)

It is a defence to the section 95(1) offence of having control of or managing an unlicensed house for the person concerned to show that they had a reasonable excuse for doing so (section 95(4)(a), 2004 Act). In this case Mr Newell maintained that he had such a defence in relation to the Flat.

In Marigold v Wells [2023] UKUT 33 (LC), in a passage quoted in full by the FTT in its decision, I drew attention to guidance given by the Upper Tribunal, Tax and Chancery Chamber, on how tribunals should approach a reasonable excuse defence.

The Tribunal then made some observations about cases in which the reasonable excuse relied on was simply that the taxpayer or landlord, as the case may be, did not know of the particular requirement that had been breached. It gave no weight to the maxim that “ignorance of the law is no excuse”, and acknowledged that ignorance of the law could indeed form the foundation of the defence:

The same approach is even more obviously applicable in cases where the knowledge which is lacking is not of some aspect of the general law, such as whether a dwelling housing only three residents can be the subject of a licensing requirement, but is of a particular fact, such as whether a selective licensing scheme is in force or whether the number of occupants has increased to the point where licensing is required.

In this case the FTT directed itself by reference to the guidance given in Marigold v Wells. It then listed the matters on which Mr Newell relied as giving rise to a reasonable excuse. These were: first, that he had been unaware of the existence of the selective licensing scheme. Secondly, that licensing in general and the Council’s scheme in particular were “not well known”. Thirdly, that the Council had tried to correspond with him at his old address. Fourthly, that he had later changed his address shown in the property register at HM Land Registry when he became aware in January 2020 that it was out of date. Fifthly, that his tenants did not pass on to him post which arrived for him at the Flat. Sixthly, that when he became aware that the owner of No.9A had been granted a licence after carrying out some works, he had carried out the same works in the Flat. Seventhly, when he was informed that the Council’s officer wanted to speak to him, he had telephoned and emailed her but she did not reply. Finally, he assumed the Council would be satisfied with what he had done, and he believed that the licensing requirements only applied to No.9A because it was used for Airbnb lettings.

Although the FTT accepted that Mr Newell was unaware of the selective licensing scheme, it said that “he ought not to have been”. It was incumbent on landlords to familiarise themselves with the legal requirements to which they were subject, and Mr Newell had failed to do so. His efforts to keep up to date consisted solely of “a few online searches” and he had not taken professional advice or considered joining a relevant national organisation, which might have provided him with relevant information. Even when he learned of the Council’s attempts to contact him his own efforts at communication were minimal. He had not provided his tenants with instructions on what to do with post addressed to him, and he did not attend the property to pick it up. In short, the matters he relied on, “do not remotely constitute a reasonable excuse for his failure to get the property licensed”.

Mr Newell’s first ground of appeal was that the FTT had not given proper consideration to his defence of reasonable excuse. He made a number of points in support of this submission, but his overarching complaint was that the FTT had failed to ask itself the third of the questions suggested in Marigold v Wells, namely whether his lack of awareness of the need for a licence was objectively reasonable for him in his circumstances. Instead, he submitted that it had identified a level of knowledge and standard of management which it considered to be reasonable and then expected all landlords to achieve it. Its assertion that all landlords are expected to familiarise themselves with the legal requirements to which they are subject effectively denied the possibility that it might be reasonable for a particular landlord not to have been aware of every relevant law and regulation, however obscure. That mindset, he suggested, was also apparent from the FTT’s statement that although it accepted that he was unaware of the Council’s selective licensing scheme, ‘he ought not to have been’.

I do not accept the general thrust of Mr Newell’s submissions. It is clear from its decision that the FTT had his particular circumstances well in mind, and had regard to them.

The FTT quoted in full that part of the Tribunal’s guidance which Mr Newell says it failed to apply. It is therefore understandable that Mr Newell has found it impossible to identify any contrary statement of principle clearly encapsulating the error he accuses the FTT of having made. Instead, he has had to pick out individual comments or turns of phrase and suggest that they disclose a flaw in the FTT’s reasoning. But an appellate tribunal is concerned with the substance of the decision under appeal, read as a whole, and not with individual phrases or even whole passages looked at in isolation. That is particularly true where, as in the case of a defence of reasonable excuse, the FTT’s task was to make a complex assessment taking into account both the standard of a reasonable landlord or property manager and the particular characteristics of the individual who has not achieved them.

The FTT was clearly right to have in mind the standard of management which is reasonably to be expected of landlords or property managers generally. It is not enough for a landlord to show that they made an honest mistake in failing to obtain a licence. To be reasonable, an excuse must be objectively reasonable, and the standards which landlords are generally expected to achieve are an important measure of what is objectively reasonable in a particular case. That does not mean that there can never be a reasonable excuse for a failure to achieve the standard of performance which landlords can usually be expected to meet; the circumstances of a particular case, including the circumstances, knowledge and understanding of the particular landlord who has failed to take the required action, may adjust what is objectively reasonable for that person in that case and provide just such an excuse. That is reflected in the question suggested in Marigold v Wells (adapted for this context):was what the landlord did (or omitted to do or believed) objectively reasonable for this landlord in those circumstances? I do not accept, therefore, that the FTT misdirected itself when it said that it was “incumbent on landlords” to familiarise themselves with relevant legal requirements.

Nor do I accept that the FTT ignored Mr Newell’s own circumstances, to the extent that it was made aware of them. It referred to the fact that he was a solicitor, and that he rented out only one property and had done so since 2006. It referred to his minimalist management style, and to the fact that he was not a member of any national landlords’ organisation. All of these circumstances help explain why he did not become aware of the Council’s introduction of selective licensing in 2016 or its renewal of the scheme in 2021.

The FTT recorded the factors relied on by Mr Newell as providing him with a reasonable excuse and he did not suggest that anything he had relied on was missing from that list. Having identified those factors it was then for the FTT to make its own assessment. In the absence of some error of principle, and I can see none, it is not for this Tribunal to substitute a different assessment of its own.

But I would go further than simply to refuse to interfere with the FTT’s assessment by making it clear that I agree with it.

The various factors which Mr Newell relied on can broadly be divided into those which explain why he did not act differently, and those which complain that others should have acted differently. In the first category is the basic fact that he was unaware of the selective licensing scheme, which he said was not well known. Whether the scheme was well known in Tower Hamlets was not something about which there was evidence; nor would the awareness of the population as a whole be relevant, rather than the awareness of landlords, about which, again, there was no evidence. It was not suggested that the Council had failed to advertise the scheme as it is required to do before it commences. The FTT was entitled to be critical of Mr Newell for his indifference to sources of information which would have kept him better informed. It is unfortunate that the only active steps which he took to seek information, when he tried to contact the Council, appear to have coincided with the first Covid-19 lockdown, but that was four years after the licensing scheme was introduced. He also seems to have been surprisingly quick to make assumptions about why No.9A might have required a licence while his flat did not. As the FTT said, there was no proper basis for those assumptions.

In the second category Mr Newell has drawn up a list of people whom he implies were also responsible to some extent for his failure to obtain a licence. The FTT dismissed the suggestion that his tenants were in any way at fault in not passing on information which may have arrived at the Flat addressed to him. They had no instructions to forward correspondence and the evidence of all three, including Ms Betts who was the most likely to take responsibility for communicating with Mr Newell, was that they had not been aware of any such correspondence. The implication that the Council ought to have given wider publicity to the scheme founders for lack of evidence, and the suggestion that individual officers should have responded to his limited attempts to contact them in early 2020 is equally unpromising. A local housing authority is not under an obligation to notify individual landlords of a licensing scheme and nothing had passed between Mr Newell and the Council which relieved him of the responsibility of keeping himself informed. The FTT was entitled to regard his belated enquiries as too little and too late.

As a solicitor (albeit not one specialising in housing law) Mr Newell was better equipped than many landlords to keep himself informed of his responsibilities and of the relevant regulatory environment. He did not do so and the FTT was entitled to find that he had no reasonable excuse for having managed the Flat without the required licence for almost six years. I therefore dismiss the first ground of his appeal.