[2025] UKUT 2 (LC)

The licensing of HMOs is dealt with in Part 2 of the Housing Act 2004 (the 2004 Act). Not all HMOs are required to be licensed, but under section 56, 2004 Act, a local housing authority may designate an area in its district as being subject to a scheme of licensing, referred to as additional licensing, so that any HMO in that area which is of a description specified in the designation must then be licensed (section 55(2)(b)).

There has never been any dispute that while it was managed by MPL, 1 Janson Road was an HMO which was required to be licensed under the Council’s additional licensing scheme which commenced on 1 April 2020 (immediately after the expiry of a previous licensing scheme under which the house had been licensed).

By section 72(1) of the 2004 Act it is an offence to manage or have control of an HMO which is required to be but is not licensed. Section 72(5) provides a defence where that person has a reasonable excuse.

By section 249A of the 2004 Act a local housing authority may impose a financial penalty on a person if satisfied beyond reasonable doubt that the person's conduct amounts to a relevant housing offence, including the offence of managing an unlicensed HMO contrary to section 72(1). By section 249A(4) the amount of a financial penalty is to be determined by the local housing authority but may not be more than £30,000.

Procedural requirements for imposing a financial penalty under section 249A are contained in Schedule 13A of the 2004 Act, paragraph 10 of which provides a right of appeal to the FTT against either or both of the decision to impose the penalty or the amount of the penalty; on such an appeal the FTT may confirm, cancel or vary the penalty notice (paragraph 10(4)). By paragraph 10(3)(a) any appeal is to be a re-hearing of the local housing authority’s decision, which means that the FTT is required to decide for itself whether a financial penalty should be imposed and, if so, the amount of that penalty, rather than considering whether the authority was entitled to impose the penalty it did. There is a further right of appeal to this Tribunal.

When the FTT determines a financial penalty appeal under paragraph 10 of Schedule 13A, it must pay particular attention to any enforcement policy adopted by the authority and will normally follow it. In London Borough of Waltham Forest v Marshall [2020] UKUT 35 (LC) the Tribunal (Judge Cooke) considered a number of authorities on appeals from decisions taken in accordance with local authority policies. At [42] she said that the local authority was entitled to adopt a policy about financial penalties, but:

“[…] it is trite law that in applying such a policy it must not fetter its discretion. It must be “willing to listen to anyone with something new to say”: British Oxygen Co Ltd v Board of Trade [1971] AC 610, 625 per Lord Reid. As Lord Denning MR put it in Sagnata Investments Ltd v Norwich Corpn [1971] 2 QB 614, 626—627: ‘the administrative body must not apply the policy so rigidly as to reject an applicant without hearing what he has to say’.”

The Tribunal’s guidance in Marshall, which was subsequently approved by the Court of Appeal in Sutton v Norwich City Council [2021] EWCA Civ 20, was as follows:

“54… The court can and should depart from the policy that lies behind an administrative decision, but only in certain circumstances. The court is to start from the policy, and it must give proper consideration to arguments that it should depart from it. It is the appellant who has the burden of persuading it to do so. In considering reasons for doing so, it must look at the objectives of the policy and ask itself whether those objectives will be met if the policy is not followed. […]

55.

Nothing in these cases, or in the present appeals, detracts from the court's or a tribunal's ability to set aside a decision that was inconsistent with the decision-maker's own policy. Nor have the above cases said anything to cast doubt upon the ability of a court or tribunal on appeal to substitute its own decision for the appealed decision but without departing from the policy … It goes without saying that if a court or tribunal on appeal finds, for example, that there were mitigating or aggravating circumstances of which the original decision-maker was unaware, or which of which it took insufficient account, it can substitute its own decision on that basis.”

In Kazi v Bradford Metropolitan District Council [2024] EWCA Civ 1037, the Court of Appeal has recently reiterated that an appeal under paragraph 10 of Schedule 13A allows the FTT “in effect to step into the local housing authority’s shoes, the point being that this is not a scheme for appealing the local housing authority’s housing policy, rather it is a scheme for appealing a penalty made by that authority” (Birss LJ at [20]). In the same appeal, at [47], the Court of Appeal preferred not to consider an issue raised before it by Mr Calzavara on behalf of the local authority and which he would like to raise again in this appeal. That issue concerns the relationship between two principles. Birss LJ characterised the first briefly as “the FTT not being the place to challenge a local authority's policy on penalties” which should be challenged instead in the Administrative Court. The second is the principle of administrative law which had been referred to by Judge Cooke in Marshall, namely that a public body may not adopt a policy which fetters its own discretion (so that on an appeal against a penalty the FTT could depart from an authority’s policy if it had that effect).