Civil penalties and the totality principle

Elizabeth Dwomoh takes a look at a recent housing civil penalty case involving joint landlords, in which the totality principle was considered by the Upper Tribunal (Lands Chamber). Key points It is important when joint landlords are to be penalised for the same conduct that the penalty imposed on each of them is determined separately The totality principle must be applied to ensure that civil penalties imposed on a landlord for multiple offences are just and proportionate The totality principle is engaged when an offender is sentenced for multiple offences. General guidance provided by the Sentencing Council and its specific guidance on totality provide that “the overriding principle of totality is that the overall sentence should reflect all of the offending behaviour with reference to the overall harm and culpability, together with the aggravating and mitigating factors relating to the offences and those personal to the offender… and [the sentence must] be just and proportionate”. In Shorr and another v London Borough of Camden [2024] UKUT 202 (LC); [2024] PLSCS 135, the Upper Tribunal (Lands Chamber) was asked to determine whether the First-tier Tribunal had correctly applied the totality principle in respect of civil penalties imposed on a married couple for multiple housing offences under section 249A of the Housing Act 2004. The parties Hyeon Jeong Ro and her husband, Aaron Shorr, were the registered long leaseholders of a buy-to-let flat situated in London, NW2. Although the flat was jointly registered in the names of Ro and Shorr, Ro was primarily responsible for managing and letting the flat. Shorr assisted Ro when she was out of the country. The freeholder of the building was the respondent, the London Borough of Camden. In 2015, Camden Council designated the area in which the property was situated as being subject to additional licensing. The property was deemed to be a house in multiple occupation and was required to be licensed. In September 2022, Ro granted a tenancy of the flat to four individuals. She was the only named landlord on the tenancy agreement. Ro failed to obtain the requisite HMO licence as she claimed not to have been aware of the need for it. The offences On 19 October 2022, officers from the council inspected the flat and determined that it was an HMO that was required to be licensed. A failure to license the flat was found to be contrary to section 72(1) of the 2004 Act. The officers also found a number of defects at the flat that breached section 234(3) of the 2004 Act and regulations 3, 4 and 7 of the Management of Houses in Multiple Occupation (England) Regulations 2006. Relying on its enforcement policy, the council served four final notices imposing penalties totalling £13,500 on both Ro and Shorr. They appealed to the FTT. They raised the defence of reasonable excuse, contending that they had been unaware of the additional licensing scheme. Further, they contended that, although the rent was received into their joint bank account, only Ro was responsible for managing the flat. The decision of the FTT The FTT dismissed Ro and Shorr’s defence of reasonable excuse, yet reduced Shorr’s overall penalty from £13,500 to £8,000. Reductions were made to Shorr’s penalty for the section 72(1) offence because the FTT found it better reflected “his individual responsibility” and ensured that the total penalty for that offence was brought “closer to a proportionate amount”. The FTT also reduced the penalties imposed on both Ro and Shorr for breaches of the 2006 Regulations. Ro and Shorr appealed. First, they argued that the FTT had erred in law in deciding to impose a financial penalty, as the correct application of the council’s enforcement policy should have resulted in them being subject to a warning only. The council’s then policy provided that enforcement action was intended for rogue landlords who resisted licensing their properties. Further, prosecution or a civil penalty would be imposed without any prior warning notice if a tenant’s welfare had been compromised. Second, they argued that the FTT had erred in determining the amount of the penalty imposed, particularly by failing to take into consideration Shorr’s limited culpability, if any. The decision of the UT The UT found that the FTT had correctly applied the enforcement policy when it determined that a financial penalty could be imposed instead of a warning even where the landlord was unaware of the licensing requirements if poor housing conditions existed or the tenants’ welfare may be compromised by an unlicensed HMO. Yet it had erred in not fully assessing Shorr’s culpability separately to that of Ro’s. The FTT acknowledged Shorr’s limited involvement in managing the flat but it did not consider whether a warning only should have been imposed. Further, the FTT had failed to consider at the quantum stage whether Shorr’s limited involvement in managing the flat should have resulted in a reduction in the penalties imposed or no penalties being imposed on him at all. The UT also found that the FTT fell into error by looking at Ro and Shorr as a couple and determining whether the aggregate penalties imposed on them were reasonable and proportionate. This approach also led to the misapplication of the totality principle by the FTT. It failed to add up the fines imposed separately on Ro and Shorr for each offence to determine whether they were just and proportionate. Elizabeth Dwomoh is a barrister at Lamb Chambers Photo © Tingey Injury Law Firm/Unsplash