Civil penalties, and appeals of appeals

AA Homes & Housing Ltd & Anor v London Borough Of Croydon (Order) [2019] UKUT B1 (LC)

A bit of a curiosity, this. It is an Upper Tribunal decision on an application to for permission to adduce additional grounds of appeal to an appeal of an FTT decision on an appeal of the imposition of civil penalties by LB Croydon for failure to licence a flat under Croydon’s selective licensing scheme. The issue is, in part, what rules on new evidence apply to Upper Tribunal appeals on civil penalties.

Croydon had fined the owner and managers of the block and flat £26,000 and £12,000 by civil penalty. This was appealed to the First Tier Tribunal. The appellants were represented by solicitors and counsel. At the FTT, no evidence was brought by the appellants on whether an offence had been committed – it was accepted that it had been. The arguments went wholly to mitigation and the level of the fine. The FTT reduced one penalty to £20,000 and upheld the other penalty of £12,000.

In considering the level of penalty it regarded as material the length of time for which the property had been unlicensed, the fact that the appellants owned other properties that had been unlicensed during 2017, and the level of fire hazards at the property. It granted the appellants permission to appeal, giving four reasons as follows:

      1. It is arguable that the tribunal, in coming to its conclusions, wrongly gave (undue) weight to the issue of the fire risk at the building.
      2. It is arguable that the tribunal took account of irrelevant matters or failed to give due weight to other evidence before it.
      3. It is arguable that the tribunal erred in not applying its reasoning in respect of AA Homes, the first Applicant, to the Financial Penalty imposed in respect of Anabow, the Second Applicant.
      4. This is a relatively new jurisdiction for the tribunal. There may be a wider public interest in the Upper Tribunal considering the tribunal’s approach to Financial Penalties in these circumstances.

The Upper Tribunal decided that the appeal would be by way of review.

The appellants subsequently instructed new solicitors and sought permission to rely on further grounds of appeal, and that the appeal be by way of re-hearing, not review. The additional grounds were:

1)       The FTT’s findings of fact were incorrect and based on evidence that was fundamentally flawed.

2)       Flat 39 did not require a licence.

3)       The licence application fee was not properly demanded by the authority.

4)       The Appellants have a statutory defence under s.95(3): there was an outstanding application for a licence for Flat 39 from 12 September 2017.

5)       The Appellants have a statutory defence under s.95(4): if they did fail to licence Flat 39, they have a reasonable excuse.

6)       Mitigation: the authority’s approach to the imposition of financial penalties was unlawful.

All but ground 6 were largely challenges to the FTT finding that an offence had been committed, with some additional elements of mitigation.

On ground 1, the appellants sought to raise a number of issues:

a) fire safety. The FTT, they argued, was given inaccurate evidence on fire safety at the flat. They sought to adduce new evidence, from 3 individuals who had actually given evidence at the FTT and from an expert who hadn’t but whose report, it was conceded, could have have obtained for that hearing.

The issue, then, was whether the Ladd v Marshall [1954] 3 All ER 745 criteria applied:

first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; second, the evidence must be such that, if given, it would probably have an important influence on the result of the case. Although it need not be decisive; the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, although it need not be incontrovertible.

The appellants argued that

i) the failure to advance evidence at FTT on fire safety was down to the appellant’s then lawyers’ legal advice.

ii) this was a criminal matter and that if the appellants had been convicted in the magistrates’ court they would have been entitled to a re-hearing in the Crown Court with no restriction on the adducing of new evidence.

iii) Ladd v Marshall is not a decision about specialist tribunals, which can be more flexible in the way they admit evidence. He cites the decision of the Upper Tribunal in Davis v Wiggett [2016] UKUT358 (TCC), where new evidence was allowed to be adduced in a land registration case.

iv) The evidence of the Fire Brigade changed at the FTT hearing.

i) and iv) got short shrift. The decision on not submitting evidence had been made on legal advice, even if the decision not to apply to the FTT beforehand to exclude fire safety evidence was on the face of it, baffling. The Fire Brigade’s evidence had not changed at hearing.

On ii) and iii)

It is true that if this were an appeal in the Crown Court from the magistrates, there would be a re-hearing as of right and no restriction on new evidence. But it is not. Parliament has chosen to allow the imposition of civil penalties for this offence and to have the penalties appealed in civil proceedings. There is no reason why the criteria set out in Ladd v Marshall should not carry their usual weight. The idea that they are inapplicable in specialist tribunals is a novel suggestion and not, I think, sustainable; and if it is argued that they should be disregarded, or applied differently, because these are quasi-criminal proceedings, I do not agree. There are obvious benefits to the appellants in these being civil, and not criminal, proceedings; the other side of that coin is that the appellants are subject to the (very few) evidential constraints of civil proceedings.

I agree that the criteria in Ladd v Marshall are not absolute rules and must give way to the interests of justice, but this case is not on all fours, nor even close, to Davis v Wiggett . In that case I refused to allow the admission of new evidence that Mr Davis could have produced to the FTT, on the basis of Ladd v Marshall , save for one category of evidence which he could have produced but did not because he had no reason to suppose it would be relevant. He asked to produce it in response to evidence that Mr Wiggett had given to the FTT that was not in his witness statement and was not foreshadowed in his statement of case. That is not the case here.

Further the expert report was of the flat some 18 months after the date of inspection and his report could really only address the relevant standards at the time, not the condition of the flat.

No new evidence would be allowed on this, and permission refused on this ground.

On ground 2, the appellants also sought to adduce new evidence that the flat was not tenanted at the time. This was not admitted, with the Tribunal noting:

On 7 th September 2017 the respondent wrote the appellants and to all their tenants at 5 Sydenham Road requesting access on 13 September 2019, following a priority referral by the London Fire Brigade about the safety of the block on 5 September.

On 12 September 2017 the first appellant applied for a licence for flat 39. On the application form, in answer to the question “What tenure is the property?” the first appellant answered “Leasehold”. The first appellant also stated on the form “The current tenant is the first tenant I have rented the property to”. I note that these were standard answers chosen from a range of options and are not the first appellant’s own words, but this is how it chose to answer those questions. In answer to “when did the tenancy start” it gave the answer 9 th September 2017. It answered “yes” to “Are the tenants provided with written details of the terms of their tenancy”.

On 13 September the respondent visited the block; Flat 39 was occupied by Mr Watson, who filled in and signed a form on which he said that he was the tenant of Flat 39, that his tenancy began on 1 April 2017, and that he paid £900 per month.

On 25 October 2017 the respondent wrote to the appellants with a notice under section 235 of the Act asking for documentation including any licence or tenancy agreement. In response on 10 November 2017 the appellants provided a copy of an assured shorthold tenancy for Flat 39 in which the tenant’s name is given as Mr Ralph Watson, the tenancy is said to start on 1 April 2017 and the rent is given as £900 per month. The agreement is signed by Mr Watson and dated 1 April 2017 but is not executed by the company.

The appellants now seek to adduce evidence that Flat 39 was not let to Mr Watson and therefore does not fall within the terms of section 85 because it is not a house to which Part 3 applies. They say that the flat was not let out to anyone but was used as a “crash pad” for their employees from time to time. Dr Ansari says in his witness statement that Mr Watson was an independent contractor working for the appellants on a sporadic basis; and that he recalls being shown the assured shorthold tenancy and refused to sign it, and that the draft stayed on file which is why it was produced to the respondent. Mr Oram gives evidence that he stayed in Flat 39 now and then, as does Mr Lea.

This evidence could all have been offered to the respondent in response to notices of intention to impose a financial penalty, and could all have been produced to the FTT. It is not possible to understand why, if it is true, it was not. Again, it falls at the first of the Ladd v Marshall fences. It also falls at the third because, being in contradiction to the appellants’ position in 2017 (in the application for a licence, and in their production of the tenancy agreement on request without any suggestion that it was not effective), it is not credible.

The appellants also argued that a flat did not need a licence because it was not a ‘house’ within the meaning of s.85 Part 3 Housing Act 2004

Mr Manning argued that it was Parliament’s intention to require the licencing of houses, rather than of individual flats within a block. He concedes that a single flat in a block or in a house might require a licence if it was not held in common ownership with the rest of the building; he says that if two or more persons each owned and let out several of the flats in a block and if they were contiguous so as to form “part of a building” then they should be licensed under one licence; but that where, as in this case, a landlord owns all the flats in a block then that block is the “house” and the local authority may not require a licence for each flat. That was Parliament’s intention, argues Mr Manning; and if it were not, how could the common parts be licensed?

This was dismissed as unarguable. A flat is a part of a building under s.99 Housing Act 2004. If subject to a tenancy agreement, it is a ‘house’ to which part 3 applies.

Ground 2 was not given permission.

Ground 3 relied on a speculative assertion that the licence fees demanded by the council could not represent only the cost of processing and determining the application. This was wholly speculative and was not given permission

An argument that an underpayment of the licence fee for the flat should not have been used to reject the application because the council was holding £4,000 in overpaid fees on other properties also got nowhere. The only evidence for these ‘overpayments’ came from 2019, not 2017, and in any event the council could not have properly hunted around for overpaid fees by the appellants on other properties to use for this underpayment.

Ground 3 rejected.

Ground 4 and 5 were both rejected.

The application for a licence could not be a defence under HA 2004 s.95(3), it was mitigation at best.

There was no ‘reasonable excuse’ defence under s.95(4). The appellants argued

they have a reasonable excuse because they reasonably believed that none was required, because the flat was not let to Mr Watson, because of the illegality of the fee scheme, and because of the respondent’s retention of £4,000.

There is no evidence that the appellants believed any of these things during the time that the flat was unlicensed, and the evidence available points to their having known that a licence was needed – hence their application on 12 September.

In particular, as I noted above, the evidence of the letting to Mr Watson came from the appellants themselves in the form of their application on 12 September and of their production of the assured shorthold tenancy; they clearly did not believe that the flat was not let to Mr Watson and for that reason this ground is not arguable.

And finally, ground 6, no additional arguments on mitigation would be allowed over the existing ground, and those that relied on arguments arising from the ‘new evidence’ could not be put forward.

In view of this, there was no reason for the appeal to be by way of re-hearing rather than review. It would remain as review.

Comment

Regardless what one might think of the merits of the appellants’ application in this instance, this does raise at least one question about the civil/criminal overlap in these matters.

An appeal of a civil penalty is a civil appeal in the Tribunals, but the Tribunal’s findings and decision are on the criminal standard of proof, not the civil standard. What is the appropriate approach to evidence, and to appeals, where the finding is of a criminal offence?

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Housing law - All, Regulation and planning and tagged , .

3 Comments

  1. “Ground 3 relied on a speculative assertion that the licence fees demanded by the council could not represent only the cost of processing and determining the application. This was wholly speculative and was not given permission” Isn’t the finding of Hemmings v Westminister relevant here? In Hemmings the appeal found that councils can only charge the initial cost of licensing upfront – i.e. the actual administrative costs involved in processing the application, and not any possible ongoing costs which might be put towards enforcement etc and may not be required.

    • From the judgment:

      “It is not said that the entire licensing scheme was unlawful, only that the fee was unlawful in terms of its amount. That is a matter for judicial review. It is not a defence to the offence that the appellants have admitted, nor does it have any bearing on the appellants’ own conduct so as to go to mitigation. That may be why counsel for the appellants before the FTT confirmed that he was aware of the decision in Gaskin and did not seek to rely on it.”

  2. Pingback: Tessa Shepperson Newsround #121

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