HMO: the focus of the defence should be to the offence committed – underscored

The Court of Appeal in Palmview Estates Ltd v Thurrock Council [2021] EWCA Civ 1871; [2021] PLSCS 212 has underscored the finding of the Upper Tribunal (Lands Chamber) that when a landlord raises the defence of “reasonable excuse”, the substance of their defence should be focused on the actual statutory offence alleged to have been committed. The appellant landlord was the owner of a house in multiple occupation situated in South Stifford, Grays, Thurrock. Thurrock Council was the relevant local housing authority responsible for the licensing of HMOs within its area. The tenants of the property had complained to the council that the size of the kitchen was inadequate for the size of the property. In 2017, the council served a prohibition notice on the landlord, requiring enlargement of the kitchen. The landlord applied for prior planning approval for the same, but this was refused. The landlord appealed and approval was granted to extend the kitchen in February 2019. On 1 October 2018, the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 (the 2018 order) came into force. The effect of the 2018 order was to broaden the description of an HMO to include properties occupied by five or more persons divided between two or more separate households. The landlord’s property consequently became subject to mandatory licensing. The landlord was aware of the requirement to license the property, but failed to do so. In March 2019, the council informed the landlord in writing that it was committing an offence under section 72(1) of the Housing Act 2004. The landlord failed to remedy the matter and the council subsequently imposed a financial penalty on the landlord in the sum of £17,500. The landlord appealed the penalty to the First-tier Tribunal. The landlord admitted the offence, but relied on the defence of “reasonable excuse” under section 72(5). The landlord’s defence was that during the course of its application for prior planning approval, the landlord’s agent had been informed by an officer in the council’s planning department that it would be futile to apply for an HMO licence while the planning decision was still in dispute. The FTT accepted the landlord’s reasonable excuse. The council appealed the FTT’s decision to the UT on the basis that the FTT had misdirected itself in law by asking itself the wrong question. The question was not whether the landlord had a good reason for not applying for a licence, but whether the landlord had a reasonable excuse for managing or being in control of an HMO without a licence. The UT agreed and the landlord appealed to the Court of Appeal. The landlord argued that the UT had adopted an impermissibly narrow approach to the defence in section 72(5). The section 72(1) offence, for which section 72(5) provided a defence, was one of strict liability. In such circumstances, section 72(5) should be construed broadly in the light of the strict liability nature of the offence to which the defence related. The Court of Appeal disagreed. Applying the general principles of statutory interpretation, the Court of Appeal underscored the interrelationship between the defence and the statutory offence. Not applying for a licence and controlling or managing an HMO without a licence were not logically concomitant. A person might have a perfectly reasonable excuse for not applying for a licence, which did not give that person (all else being equal) a reasonable excuse to manage or control those premises as an HMO without a licence. Elizabeth Dwomoh is a barrister at Lamb Chambers